FORM10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
OSPREY
| Delaware | ||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
13241 Woodland Park Road Suite 300 Herndon, Virginia | 20171 | |||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
(Address of principal executive offices)
(212) 920 -1345
(Issuer’s
Title of each class | Trading Symbol(s) |
| Name of each exchange on which registered | |||||||
| BKSY | The New York Stock Exchange | |||||||||
| Warrants, each | BKSY.W | The New York Stock Exchange | ||||||||
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| Large accelerated filer | o | Accelerated filer | ||||||||||||
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| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||||||||||
| Emerging growth company | ☒ | |||||||||||||
OSPREY TECHNOLOGY ACQUISITION CORP.
FORM10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019
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PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
| September 30, 2019 | December 31, 2018 | |||||||
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ASSETS | ||||||||
Current asset—cash | $ | 35,405 | $ | 42,061 | ||||
Deferred offering costs | 435,983 | 172,277 | ||||||
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Total Assets | $ | 471,388 | $ | 214,338 | ||||
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LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 1,853 | $ | 1,488 | ||||
Accrued offering costs | 261,993 | 90,027 | ||||||
Promissory note—related party | 187,600 | 100,000 | ||||||
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Total Current Liabilities | 451,446 | 191,515 | ||||||
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Commitments (Note 6) | ||||||||
Stockholder’s Equity | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A Common stock, $0.0001 par value; 150,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class B Common stock, $0.0001 par value; 25,000,000 shares authorized; 7,906,250 and 9,487,500 shares issued and outstanding, respectively(1) | 791 | 949 | ||||||
Additionalpaid-in capital | 24,209 | 24,051 | ||||||
Accumulated deficit | (5,058 | ) | (2,177 | ) | ||||
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Total Stockholder’s Equity | 19,942 | 22,823 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | 471,388 | $ | 214,338 | ||||
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The accompanying notes are an integral part
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSEDSPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | For the Period from June 15, 2018 (inception) through September 30, 2018 | ||||||||||
Formation and operating costs | $ | 1,061 | $ | 2,881 | $ | 798 | ||||||
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Net Loss | $ | (1,061 | ) | $ | (2,881 | ) | $ | (798 | ) | |||
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Weighted average shares outstanding, basic and diluted(1) | 6,875,000 | 7,353,480 | 8,250,000 | |||||||||
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Basic and diluted net loss per share of common stock | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
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The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 2018 AND FOR THE PERIOD FROM JUNE 15, 2018 (INCEPTION) THROUGH SEPTEMBER 30, 2018
| Class B Common Stock(1) | Additional Paid-In Capital | Accumulated Deficit | Total Stockholder’s Equity | |||||||||||||||||
| Shares | Amount | |||||||||||||||||||
Balance—June 15, 2018 (inception) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Net loss | — | — | — | (798 | ) | (798 | ) | |||||||||||||
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Balance—June 30, 2018 | — | $ | — | $ | — | $ | (798 | ) | $ | (798 | ) | |||||||||
Issuance of common stock to Sponsor | 9,487,500 | 949 | 24,051 | — | 25,000 | |||||||||||||||
Net loss | — | — | — | — | — | |||||||||||||||
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Balance—September 30, 2018(1) | 9,487,500 | $ | 949 | $ | 24,051 | $ | (798 | ) | $ | 24,202 | ||||||||||
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THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
| Class B Common Stock(3) | Additional Paid-In Capital | Accumulated Deficit | Total Stockholder’s Equity | |||||||||||||||||
| Shares | Amount | |||||||||||||||||||
Balance—January 1, 2019 | 9,487,500 | $ | 949 | $ | 24,051 | $ | (2,177 | ) | $ | 22,823 | ||||||||||
Net loss | — | — | — | (801 | ) | (801 | ) | |||||||||||||
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Balance—March 31, 2019 | 9,487,500 | $ | 949 | $ | 24,051 | $ | (2,978 | ) | $ | 22,022 | ||||||||||
Forfeiture of common stock by Sponsor(2) | (1,581,250 | ) | (158 | ) | 158 | — | — | |||||||||||||
Net loss | — | — | — | (1,019 | ) | (1,019 | ) | |||||||||||||
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Balance—June 30, 2019 | 7,906,250 | $ | 791 | $ | 24,209 | $ | (3,997 | ) | $ | 21,003 | ||||||||||
Net loss | — | — | — | (1,061 | ) | (1,061 | ) | |||||||||||||
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Balance—September 30, 2019(3) | 7,906,250 | $ | 791 | $ | 24,209 | $ | (5,058 | ) | $ | 19,942 | ||||||||||
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The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, 2019 | For the Period from June 15, 2018 (inception) through September 30, 2018 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (2,881 | ) | $ | (798 | ) | ||
Changes in operating assets and liabilities: | ||||||||
Accrued expenses | 365 | 798 | ||||||
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Net cash used in operating activities | (2,516 | ) | — | |||||
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Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of common stock to Sponsor | — | 25,000 | ||||||
Proceeds from promissory note—related party | 87,600 | — | ||||||
Payment of offering costs | (91,740 | ) | (17,500 | ) | ||||
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Net cash (used in) provided by financing activities | (4,140 | ) | 7,500 | |||||
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Net Change in Cash | (6,656 | ) | 7,500 | |||||
Cash—Beginning | 42,061 | — | ||||||
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Cash—Ending | $ | 35,405 | $ | 7,500 | ||||
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Non-cash investing and financing activities: | ||||||||
Deferred offering costs included in accrued offering costs | $ | 171,966 | $ | 16,163 | ||||
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The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 1—Description of OrganizationThis Quarterly Report on Form 10-Q contains, and Business Operations
Osprey Technology Acquisition Corp. (formerly known as Osprey Energy Acquisition Corp. II) (the “Company”) was incorporated in Delaware as a blank check company under the name “Osprey Acquisition Corp. II” on June 15, 2018. The Company changed its nameour officers and representatives may from time to “Osprey Energy Acquisition Corp. II” on September 27, 2018 and then to “Osprey Technology Acquisition Corp.” on June 17, 2019. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
To date, the Company’s efforts have been limited to organizational activities and activities relating to the initial public offering. The Company has not identified any acquisition target and has not, nor has anyone on its behalf, initiated any discussions, directly or indirectly, with respect to identifying any acquisition target. The Company has generated no revenues to date and it does not expect that it will generate operating revenues until it consummates an initial business combination at the earliest. Although the Company may pursue an acquisition opportunity in any business or industry, it intends to focus on opportunities in the technology sector, particularly companies pursuing aSoftware-as-a-Service (“SaaS”) model.
As of September 30, 2019, the Company had not yet commenced operations. All activity for the period from June 15, 2018 (inception) through September 30, 2019 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below.
The registrationtime make, forward-looking statements for the Company’s Initial Public Offering were declared effective on October 31, 2019. On November 5, 2019, the Company consummated the Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $275,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,500,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Osprey Sponsor II, LLC (the “Sponsor”), generating gross proceeds of $7,500,000, which is described in Note 4.
Following the closing of the Initial Public Offering on November 5, 2019, an amount of $275,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), which will be invested in U.S. government securities, within the meaning set forth inof Section 2(a)(16)27A of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule2a-7 of the Investment CompanySecurities Act of 1940,1933, as amended (the “Investment Company“Securities Act”), as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described below.
On November 11, 2019, the underwriters notified the Company of their intention to exercise their over-allotment option in full on November 13, 2019. As such, on November 13, 2019, the Company consummated the sale of an additional 4,125,000 Units, at $10.00 per Unit, and the sale of an additional 825,000 Private Placement Warrants, at $1.00 per Private Placement Warrant, generating total gross proceeds of $42,075,000. A total of $41,250,000 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $316,250,000.
Transaction costs for the Initial Public Offering amounted to $18,047,876 consisting of $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees and $654,126 of other offering costs. In addition, $1,126,709 of cash was held outside of the Trust Account and is available for working capital purposes.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (excluding the deferred underwriting fees and taxes payable on income earned on the Trust Account) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940. There is no assurance that the Company will be able to complete a Business Combination successfully.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “plan,” “intend,” “could,” “would,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
| June 30, | December 31, | ||||||||||
| 2023 | 2022 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 41,100 | $ | 34,181 | |||||||
| Restricted cash | 1,835 | 2,835 | |||||||||
| Short-term investments | 16,578 | 37,982 | |||||||||
| Accounts receivable, net of allowance of $0 and $0, respectively | 7,375 | 3,112 | |||||||||
| Prepaid expenses and other current assets | 3,618 | 4,713 | |||||||||
| Contract assets | 8,643 | 5,706 | |||||||||
| Total current assets | 79,149 | 88,529 | |||||||||
| Property and equipment - net | 81,606 | 71,584 | |||||||||
| Operating lease right of use assets - net | 2,572 | 3,586 | |||||||||
| Goodwill | 9,393 | 9,393 | |||||||||
| Investment in equity method investees | 5,869 | 5,285 | |||||||||
| Intangible assets - net | 1,637 | 1,918 | |||||||||
| Satellite procurement work in process | 44,587 | 50,954 | |||||||||
| Other assets | 3,272 | 2,841 | |||||||||
| Total assets | $ | 228,085 | $ | 234,090 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 10,790�� | $ | 14,368 | |||||||
| Amounts payable to equity method investees | 2,231 | 3,728 | |||||||||
| Contract liabilities - current | 3,154 | 6,783 | |||||||||
| Other current liabilities | 1,178 | 2,048 | |||||||||
| Total current liabilities | 17,353 | 26,927 | |||||||||
| Long-term contract liabilities | 247 | 109 | |||||||||
| Operating lease liabilities | 3,108 | 3,132 | |||||||||
| Derivative liabilities | 32,396 | 5,113 | |||||||||
| Long-term debt - net of current portion | 79,414 | 76,219 | |||||||||
| Other liabilities | 7,022 | 716 | |||||||||
| Total liabilities | 139,540 | 112,216 | |||||||||
| Commitments and contingencies (Note 16) | |||||||||||
| Stockholders’ equity: | |||||||||||
| Class A common stock, $0.0001 par value-authorized, 300,000 shares; issued, 140,819 and 121,938 shares; outstanding, 138,409 shares and 119,508 shares as of June 30, 2023 and December 31, 2022, respectively. | 14 | 12 | |||||||||
| Additional paid-in capital | 684,388 | 666,973 | |||||||||
| Accumulated deficit | (595,857) | (545,111) | |||||||||
| Total stockholders’ equity | 88,545 | 121,874 | |||||||||
| Total liabilities and stockholders’ equity | $ | 228,085 | $ | 234,090 | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Imagery & software analytical services | $ | 15,328 | $ | 10,172 | $ | 31,088 | $ | 17,542 | |||||||||||||||
| Professional & engineering services | 3,999 | 4,930 | 6,636 | 11,456 | |||||||||||||||||||
| Total revenue | 19,327 | 15,102 | 37,724 | 28,998 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Imagery & software analytical service costs, excluding depreciation and amortization | 3,456 | 3,446 | 7,155 | 7,024 | |||||||||||||||||||
| Professional & engineering service costs, excluding depreciation and amortization | 5,070 | 6,340 | 7,849 | 13,717 | |||||||||||||||||||
| Selling, general and administrative | 18,768 | 17,743 | 37,717 | 40,283 | |||||||||||||||||||
| Research and development | 176 | 106 | 392 | 252 | |||||||||||||||||||
| Depreciation and amortization | 11,776 | 9,177 | 21,431 | 16,568 | |||||||||||||||||||
| Operating loss | (19,919) | (21,710) | (36,820) | (48,846) | |||||||||||||||||||
| (Loss) gain on derivatives | (11,098) | (4,646) | (9,567) | 3,494 | |||||||||||||||||||
| Income on equity method investment | 56 | 1,213 | 585 | 1,470 | |||||||||||||||||||
| Interest income | 648 | 178 | 1,083 | 178 | |||||||||||||||||||
| Interest expense | (2,242) | (1,275) | (4,095) | (2,530) | |||||||||||||||||||
| Other expense, net | (867) | (42) | (1,810) | (40) | |||||||||||||||||||
| Loss before income taxes | (33,422) | (26,282) | (50,624) | (46,274) | |||||||||||||||||||
| Income tax expense | (9) | — | (122) | — | |||||||||||||||||||
| Net loss | (33,431) | (26,282) | (50,746) | (46,274) | |||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||
| Total comprehensive loss | $ | (33,431) | $ | (26,282) | $ | (50,746) | $ | (46,274) | |||||||||||||||
| Basic and diluted loss per share of common stock: | |||||||||||||||||||||||
| Net loss per share of common stock | $ | (0.24) | $ | (0.22) | $ | (0.39) | $ | (0.40) | |||||||||||||||
| Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | 119,508 | $ | 12 | $ | 666,973 | $ | (545,111) | $ | 121,874 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 3,214 | — | 3,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 129 | — | 3 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock awards | 11 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | 787 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of equity issuance costs | 16,404 | 2 | 11,127 | — | 11,129 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (17,315) | (17,315) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | 136,839 | 14 | 681,317 | (562,426) | 118,905 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 2,488 | — | 2,488 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 95 | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock awards | 8 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | 668 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of equity issuance costs | 1,039 | — | 995 | — | 995 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options | (240) | — | (414) | — | (414) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (33,431) | (33,431) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | 138,409 | $ | 14 | $ | 684,388 | $ | (595,857) | $ | 88,545 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | 114,452 | $ | 11 | $ | 650,518 | $ | (470,909) | $ | 179,620 | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 10,862 | — | 10,862 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 404 | — | 17 | — | 17 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock awards | 129 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | 4,816 | 1 | — | — | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| Withholding of restricted stock to satisfy tax withholding obligations upon the vesting of the related restricted stock | (1,874) | — | (3,616) | — | (3,616) | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (19,992) | (19,992) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | 117,927 | 12 | 657,781 | (490,901) | 166,892 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 3,365 | — | 3,365 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 180 | — | 8 | — | 8 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock awards | 27 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | 520 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Withholding of restricted stock units to satisfy tax withholding obligations upon the vesting of restricted stock units | (201) | — | (444) | — | (444) | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (26,282) | (26,282) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | 118,453 | $ | 12 | $ | 660,710 | $ | (517,183) | $ | 143,539 | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (50,746) | $ | (46,274) | |||||||
| Depreciation and amortization expense | 21,431 | 16,568 | |||||||||
| Operating lease right of use assets amortization | 613 | 783 | |||||||||
| Bad debt expense (recovery) | 15 | (1) | |||||||||
| Stock-based compensation expense | 5,323 | 13,226 | |||||||||
| Amortization of debt discount and issuance costs | 189 | 1,018 | |||||||||
| Income on equity method investment | (585) | (1,470) | |||||||||
| Gain on disposal of property and equipment | (22) | — | |||||||||
| Loss (gain) on derivatives | 9,567 | (3,494) | |||||||||
| Interest income | (337) | — | |||||||||
| Other, net | — | 16 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (4,278) | (787) | |||||||||
| Contract assets - current and long-term | (4,101) | (3,824) | |||||||||
| Prepaid expenses and other current assets | 1,142 | 1,914 | |||||||||
| Other assets | 1,117 | (30) | |||||||||
| Accounts payable and accrued liabilities | 1,015 | 389 | |||||||||
| Other current liabilities | (1,097) | (759) | |||||||||
| Contract liabilities - current and long-term | (3,491) | (6,903) | |||||||||
| Other liabilities | 8,620 | 1,839 | |||||||||
| Net cash used in operating activities | (15,625) | (27,789) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (8,446) | (5,289) | |||||||||
| Satellite procurement work in process | (19,925) | (20,208) | |||||||||
| Purchases of short-term investments | (19,416) | (43,774) | |||||||||
| Proceeds from maturities of short-term investments | 41,110 | — | |||||||||
| Proceeds from sale of property and equipment | 22 | — | |||||||||
| Proceeds from equity method investment | — | 313 | |||||||||
| Net cash used in investing activities | (6,655) | (68,958) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from equity issuances, net of equity issuance costs | 30,074 | — | |||||||||
| Proceeds from options exercised | 5 | 25 | |||||||||
| Payments of transaction costs for debt modification | (561) | — | |||||||||
| Payments of transaction costs related to derivative liabilities | (905) | — | |||||||||
| Withholding tax payments on vesting of restricted stock units | (414) | (4,037) | |||||||||
| Net cash provided by (used in) financing activities | 28,199 | (4,012) | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 5,919 | (100,759) | |||||||||
| Cash, cash equivalents, and restricted cash – beginning of year | 37,016 | 168,104 | |||||||||
| Cash, cash equivalents, and restricted cash – end of period | $ | 42,935 | $ | 67,345 | |||||||
| June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash and cash equivalents | $ | 41,100 | $ | 64,827 | |||||||
| Restricted cash | 1,835 | 2,518 | |||||||||
| Total cash, cash equivalents, and restricted cash | $ | 42,935 | $ | 67,345 | |||||||
| Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | — | $ | 2 | |||||||
| Cash paid for income taxes | 122 | — | |||||||||
| Supplemental disclosures of non-cash financing and investing information: | |||||||||||
| Property and equipment additions accrued but not paid | $ | 2,334 | $ | 3,798 | |||||||
| Capitalized stock-based compensation | 379 | 1,001 | |||||||||
| Capitalized interest for property and equipment placed into service | 220 | 220 | |||||||||
| Accretion of short-term investments' discounts and premiums | 317 | 59 | |||||||||
| Withholding of stock units to satisfy tax withholding obligations upon the exercise of stock options | — | 23 | |||||||||
| Equity issuance costs accrued but not paid | 203 | — | |||||||||
| Debt modification costs accrued but not paid | 756 | — | |||||||||
| Satellite procurement costs included in settlement with LeoStella | 36 | — | |||||||||
| Credits from LeoStella applied to satellite procurement costs | 81 | — | |||||||||
industry's leading high-performance low earth orbit (“LEO”) small satellite constellations. The Sponsorconstellation is optimized to cost-efficiently capture imagery at high revisit rates where and when customers need it. BlackSky’s Spectra AI software platform processes millions of observations a day from our proprietary satellite constellation and from multiple external data sources including imaging, radar and radio frequency satellites, environmental sensors, asset tracking sensors, Internet of Things (“IoT”) connected devices, internet-enabled narrative sources, and a variety of geotemporal data feeds. Spectra AI employs advanced, proprietary artificial intelligence ("AI") and machine learning (“ML”) techniques to process, analyze, and transform these data feeds into alerts, information, and insights. Customers can access Spectra AI’s data and analytics through easy-to-use web services or through platform application programming interfaces.
The Company will have until November 5, 2021 to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at aper-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish the public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of the Company’s officers, directors or any of their affiliates acquires Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, Mr. Jonathan Cohen, the Company’sCo-Chairman, has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a definitive agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per share or (ii) such lesser amount per Public Share held in the Trust Account as of thematurity date of the liquidation ofloan, roll the Trust Accountcash interest payment due to reductions inon May 1, 2023 into the value of the trust assets. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemedoutstanding principal to be unenforceable against a third party, Mr. Jonathan Cohen will not be responsible topaid on the extentmaturity date, and increase the interest rate. See Note 8 for more information regarding the Amendment.
Note 2—Presentation and Summary of Significant Accounting Policies
Preparation
Exchange Commission (the "SEC"). The accompanying unaudited condensed consolidated financial statements should be read in conjunction with include the accounts of the Company and its wholly-owned subsidiaries. In addition, the unaudited condensed consolidated financial statements include
Emerging Growth Company
the six months ended June 30, 2022 in the unaudited condensed consolidated statements of operations and comprehensive loss.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply tonon-emerging growth companies, but any such election to opt out is irrevocable.Note 14 – Related Party Transactions. The Company has elected notbelieves the disclosure is immaterial to opt out of such extended transition period,the 2022 consolidated financial statements.
continuing operations.
Making These estimates requires managementare based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could materially differ from these estimates. Significant estimates made by the Company include, but are not limited to, exercise significant judgment. It is at least reasonably possible thatrevenue and associated cost recognition, the estimatecollectability of accounts receivable, the recoverability and useful lives of property and equipment, the valuation of equity warrants and warrant liabilities, fair value estimates, the recoverability of goodwill and intangible assets, the provision for income taxes, and stock-based compensation.
Cash and cash equivalents
best available information.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenue | $ | (1,145) | $ | (1,360) | $ | (1,500) | $ | (2,163) | ||||||||||||||||||
Deferred offering costs
OfferingMarch 2023 in accordance with the guidance contained in ASC 815-40-55-2, as liabilities at their fair value.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Imagery | $ | 12,778 | $ | 6,833 | $ | 25,690 | $ | 10,443 | ||||||||||||||||||
| Data, software and analytics | 2,550 | 3,339 | 5,398 | 7,099 | ||||||||||||||||||||||
| Professional services | 3,707 | 3,178 | 6,335 | 5,580 | ||||||||||||||||||||||
| Engineering services | 292 | 1,752 | 301 | 5,876 | ||||||||||||||||||||||
| Total revenue | $ | 19,327 | $ | 15,102 | $ | 37,724 | $ | 28,998 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| North America | $ | 14,492 | $ | 12,437 | $ | 28,511 | $ | 23,584 | ||||||||||||||||||
| Middle East | 1,370 | 782 | 2,895 | 1,376 | ||||||||||||||||||||||
| Asia | 3,177 | 1,584 | 5,802 | 3,578 | ||||||||||||||||||||||
| Other | 288 | 299 | 516 | 460 | ||||||||||||||||||||||
| Total revenue | $ | 19,327 | $ | 15,102 | $ | 37,724 | $ | 28,998 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| U.S. federal government and agencies | $ | 14,069 | $ | 12,162 | $ | 27,739 | $ | 23,225 | ||||||||||||||||||
| International governments | 4,871 | 2,742 | 9,254 | 5,487 | ||||||||||||||||||||||
| Commercial and other | 387 | 198 | 731 | 286 | ||||||||||||||||||||||
| Total revenue | $ | 19,327 | $ | 15,102 | $ | 37,724 | $ | 28,998 | ||||||||||||||||||
| June 30, | December 31, | ||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| U.S. federal government and agencies | $ | 1,669 | $ | 2,540 | |||||||
| International governments | 5,619 | 261 | |||||||||
| Commercial and other | 87 | 311 | |||||||||
| Total accounts receivable | $ | 7,375 | $ | 3,112 | |||||||
| June 30, | December 31, | ||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| Contract assets - current: | |||||||||||
| Unbilled revenue | $ | 8,643 | $ | 5,706 | |||||||
| Total contract assets - current | $ | 8,643 | $ | 5,706 | |||||||
| Contract assets - long-term: | |||||||||||
| Unbilled revenue - long-term | $ | 2,335 | $ | 1,287 | |||||||
| Contract assets - long-term | 797 | 681 | |||||||||
Total contract assets - long-term(1) | $ | 3,132 | $ | 1,968 | |||||||
| Contract liabilities - current: | |||||||||||
| Deferred revenue - short-term | $ | 3,154 | $ | 6,783 | |||||||
| Total contract liabilities - current | $ | 3,154 | $ | 6,783 | |||||||
| Contract liabilities - long-term: | |||||||||||
| Other contract liabilities - long-term | $ | 247 | $ | 109 | |||||||
| Total contract liabilities - long-term | $ | 247 | $ | 109 | |||||||
Income Taxes
as follows:
| Contract Assets | Contract Liabilities | ||||||||||
| (in thousands) | |||||||||||
| Balance on January 1, 2023 | $ | 7,674 | $ | 6,892 | |||||||
| Billings or revenue recognized that was included in the beginning balance | (2,892) | (5,616) | |||||||||
| Changes in contract assets or contract liabilities, net of reclassification to receivables | 8,150 | 1,761 | |||||||||
| Cumulative catch-up adjustment arising from changes in estimates to complete | (1,068) | 226 | |||||||||
| Cumulative catch-up adjustment arising from contract modifications | (205) | — | |||||||||
| Changes in costs to fulfill and amortization of commission costs | 116 | — | |||||||||
| Changes in contract commission costs | — | 138 | |||||||||
| Balance on June 30, 2023 | $ | 11,775 | $ | 3,401 | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| Summarized statements of operations | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenue | $ | 8,566 | $ | 14,526 | $ | 23,746 | $ | 31,259 | ||||||||||||||||||
| Net (loss) income | (1,397) | 965 | (3,800) | 1,066 | ||||||||||||||||||||||
| June 30, | December 31, | ||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| Satellites | $ | 138,617 | $ | 116,219 | |||||||
| Software | 12,296 | 8,503 | |||||||||
| Software development in process | 4,626 | 2,942 | |||||||||
| Computer equipment | 2,048 | 1,996 | |||||||||
| Office furniture and fixtures | 3,308 | 674 | |||||||||
| Other equipment | 631 | 631 | |||||||||
| Site equipment | 2,717 | 2,558 | |||||||||
| Total | 164,243 | 133,523 | |||||||||
| Less: accumulated depreciation | (82,637) | (61,939) | |||||||||
| Property and equipment — net | $ | 81,606 | $ | 71,584 | |||||||
| June 30, | December 31, | ||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| Current portion of long-term debt | $ | — | $ | — | |||||||
| Non-current portion of long-term debt | 80,622 | 77,132 | |||||||||
| Total long-term debt | 80,622 | 77,132 | |||||||||
| Unamortized debt issuance cost | (1,208) | (913) | |||||||||
| Outstanding balance | $ | 79,414 | $ | 76,219 | |||||||
ASC 740 prescribes a recognition thresholdCompany from the private placement were $29.4 million, before deducting the placement agent fees and a measurement attribute forother offering expenses payable by the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.Company. The Company recognizes accrued interestintends to use the net proceeds from the private placement for general corporate purposes, including working capital.
The Company may be subject to potential examination by federal, state and city taxing authorities in4.99% of the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company is subject to income tax examinations by major taxing authorities since inception. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The provision for income taxes was deemed to be immaterial for the periods presented.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding duringimmediately after giving effect to such exercise; provided, however, that each holder may increase or decrease the period, excluding sharesbeneficial ownership limitation by giving notice to the Company; but not to any percentage in excess of common stock subject9.99%.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. 2023.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements,” approximates the carrying amounts represented8.3 million private placement warrants, issued by Osprey, our predecessor company, in the accompanying balance sheet, primarily due to their short-term nature.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3—Initial Public Offering
Pursuant to the Initial Public Offering, the Company sold 27,500,000 units at a purchase price of $10.00 per Unit. On November 13, 2019 in connection with the underwriters’ exercise of the over-allotment option in full, the Company sold an additional 4,125,000 Units atits initial public offering as a purchase price of $10.00 per Unit. Each Unit consists ofspecial purpose acquisition company. The 2019 warrants are each exercisable for one share of the Company's Class A common stockstock.
Note 4—Private Placement
Simultaneously with the closing The Company's derivative liabilities were made up of the Initial Public Offering,only equity warrants and the Sponsor purchased an aggregate of 7,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $7,500,000. On November 13, 2019, in connection with the underwriters’ exercise of the over-allotment option in full, the Sponsor purchased an aggregate of 825,000 additional Private Placement Warrants, for an aggregate purchase price of $825,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50. The proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and all underlying securities will expire worthless.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 5—Related Party Transactions
Founder Shares
In June 2018, the Sponsor purchased 125,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. In September 2018, the Company effectuated a69-for-1 forward stock split of its Class B common stock, resulting in an aggregate of 8,625,000 Founder Shares outstanding, of which an aggregate of up to 1,125,000 shares were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full or in part (see Note 6). As adjusted for the 1.1 for 1 stock dividend in October 2019 (see below), such amounts totaled 9,487,500 Founder Shares outstanding, of which 1,237,500 shares were subject to forfeiture. In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,581,250 Founder Shares (as adjusted for the 1.1 for 1 stock dividend in October 2019), resulting in an aggregate of 7,187,500 Founder Shares outstanding, of which an aggregate of up to 937,500 shares were subject to forfeiture. In October 2019, the Company effected a 1.1 for 1 stock dividend for each share of Class B common stock outstanding, resulting in an aggregate of 7,906,250 Founder Shares outstanding, of which an aggregate of up to 1,031,250 shares were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Sponsor will own, on anas-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering). The Founder Shares will automatically convert into Class A common stock upon the consummation of a Business Combination on aone-for-one basis, subject to adjustments as described in Note 7. In connection with the underwriters’ exercise of the over-allotment option in full, 1,031,250 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any30-trading day period commencing at least 150 days after a Business Combination, the Founder Shares will be released from thelock-up.
Promissory Note—Related Party
On September 12, 2018, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering, of which $187,600 was outstanding as of SeptemberJune 30, 2019. The Promissory Note wasnon-interest bearing2023 and payable on the earlier of December 31, 2019 or the completion2022.
Administrative Support Agreement
The Company entered into an agreement whereby, commencing on November 5, 2019, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 6—Commitments
Registration Rights
Pursuant to a registration rights agreement entered into on October 31, 2019, the Sponsor and holders of warrants issued upon conversion of Working Capital Loans, if any, will have registration rights to require the Company to register a sale of any of its securities held by them (in the case of the Founder Shares, only after conversion to Class A common stock). These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include such securities in other registration statements filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicablelock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a45-day option to purchase up to 4,125,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less the underwriting discounts and commissions. On November 13, 2019, the underwriters exercised their over-allotment option in full for an additional 4,125,000 Units.
The underwriters were paid a cash underwriting discount of $0.20 per Unit, or $6,325,000 in the aggregate. The underwriters are entitled to a deferred fee of $0.35 per Unit, or $11,068,750 in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.
Note 7—Stockholder’s Equity
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2019, there were no shares of preferred stock issued or outstanding.
Class A Common Stock—The Company is authorized to issue 150,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2019, there were no shares of Class A common stock issued or outstanding.
Class B Common Stock—The Company is authorized to issue 25,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2019, there were 7,906,250 shares of Class B common stock issued and outstanding, of which an aggregate of up to 1,031,250 shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Sponsor would own, on anas-converted basis, 20% of the Company’s issued and outstanding common stock after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). In connection with the underwriters’ exercise of the over-allotment option in full, 1,031,250 Founder Shares are no longer subject to forfeiture.
Holders of Class B common stock will have the right to elect all of the Company’s directors prior to the consummation of a Business Combination. On any other matter submitted to a vote of the Company’s stockholders, holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law. These provisions of the Company’s Amended and Restated Certificate of Incorporation may only be amended if approved by holders of a majority of at least 90% of the Company’s common stock voting in a stockholder meeting.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on aone-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on anas-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including the shares of Class A common stock underlying the Private Placement Warrants) plus all shares
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent securities issued, or to be issued, to any seller in a Business Combination, or any private placement equivalent securities issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time.
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares ofCompany’s Class A common stock issuable upon exercise of warrants at June 30, 2023:
| Number of Shares | Exercise Price | Redemption Price | Expiration Date | Classification | Loss in value for the Six Months Ended June 30, | Fair Value at June 30, 2023 | |||||||||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| Public Warrants | 15,813 | $ | 11.50 | $ | 18.00 | 9/9/2026 | Liability | $ | (1,224) | $ | 3,321 | ||||||||||||||||||||||||||||||
| Private Placement Warrants - Issued October 2019 | 4,163 | 11.50 | 18.00 | 9/9/2026 | Liability | (666) | 1,540 | ||||||||||||||||||||||||||||||||||
| Private Placement Warrants - Issued October 2019 | 4,163 | 20.00 | 18.00 | 9/9/2026 | Liability | (375) | 833 | ||||||||||||||||||||||||||||||||||
| Private Placement Warrants - Issued March 2023 | 16,404 | 2.20 | N/A | 9/8/2028 | Liability | (6,069) | 23,785 | ||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Transaction costs associated with debt and equity financings | $ | 833 | $ | — | $ | 1,738 | $ | — | ||||||||||||||||||
| Other | 34 | 42 | 72 | 40 | ||||||||||||||||||||||
| $ | 867 | $ | 42 | $ | 1,810 | $ | 40 | |||||||||||||||||||
Once the warrants become exercisable, the Company may redeem the Public Warrants:
in whole and not in part;
at a price of $0.01 per warrant;
upon not less than 30 days’ prior written notice of redemption;
if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00and an equal number of corresponding warrants, for a purchase price of $1.79 per share and associated warrant. The Company received $29.4 million in gross proceeds from the private placement. The Company sold 1.0 million common shares in its June ATM offering, at an average purchase price per share of $1.82, resulting in gross proceeds of $1.9 million. The transaction costs for any 20 trading days within a30-trading day period ending three business days before the Company sends the noticethese equity issuances consisted of redemptionlegal fees, accounting fees, placement agent fees, and other third-party costs related directly to the warrant holders;equity issuances. During the six months ended June 30, 2023, $1.5 million of transaction costs that had been incurred were recorded as a reduction to additional paid-in capital in the unaudited condensed consolidated statements of changes in stockholders’ equity and
If, unaudited condensed consolidated balance sheets, and only if, there isas a current registration statement in effect with respectreduction to the sharesproceeds from the transaction in the unaudited condensed consolidated statements of cash flows.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands except per share information) | ||||||||||||||||||||||||||
| Net loss available to common stockholders | $ | (33,431) | $ | (26,282) | $ | (50,746) | $ | (46,274) | ||||||||||||||||||
| Basic and diluted net loss per share | $ | (0.24) | $ | (0.22) | $ | (0.39) | $ | (0.40) | ||||||||||||||||||
| Shares used in the computation of basic and diluted net loss per share | 137,208 | 118,112 | 130,712 | 116,803 | ||||||||||||||||||||||
| Three and Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted Class A common stock | 38 | 100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock warrants | 1,770 | 1,770 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options | 7,705 | 4,690 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units | 6,187 | 6,848 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Public Warrants (exercisable for Class A common stock) treated as liability | 15,813 | 15,813 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Private Placement Warrants (exercisable for Class A common stock) treated as liability | 24,729 | 8,325 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sponsor Shares | 2,372 | 2,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Imagery & software analytical service costs, excluding depreciation and amortization | $ | 52 | $ | 103 | $ | 145 | $ | 359 | ||||||||||||||||||
| Professional & engineering service costs, excluding depreciation and amortization | 112 | 245 | 294 | 911 | ||||||||||||||||||||||
| Selling, general and administrative | 2,147 | 2,638 | 4,884 | 11,956 | ||||||||||||||||||||||
| Total stock-based compensation expense | $ | 2,311 | $ | 2,986 | $ | 5,323 | $ | 13,226 | ||||||||||||||||||
| Amount Due to Related Party as of | ||||||||||||||||||||
| June 30, | December 31, | |||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||
| Name | Nature of Relationship | Description of the Transactions | (in thousands) | |||||||||||||||||
| Seahawk | Debt Issuer and subsidiary of Thales Alenia Space | In 2019, the Company raised and converted $18.4 million from prior debt into new, outstanding debt and issued 13.5 million warrants to purchase Legacy BlackSky common stock. | $ | 21,727 | $ | 20,787 | ||||||||||||||
| Intelsat | Debt Issuer | In 2019, the Company entered into a term loan facility for $50.0 million and issued 20.2 million warrants to purchase Legacy BlackSky common stock. | 58,895 | 56,345 | ||||||||||||||||
| Amount Due to Related Party as of | |||||||||||||||||||||||||||||
| Total Payments in the Six Months Ended June 30, | June 30, | December 31, | |||||||||||||||||||||||||||
| Nature of Relationship | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| Name | Description of the Transactions | (in thousands) | |||||||||||||||||||||||||||
| LeoStella | Joint Venture with Thales Alenia Space | The Company owns 50% of LeoStella, its joint venture with Thales. The Company contracts with LeoStella for the design, development and manufacture of satellites to operate its business. | $ | 11,325 | $ | 17,149 | $ | 2,231 | $ | 3,728 | |||||||||||||||||||
| X-Bow | Equity Method Investee | In 2017, the Company received stock in X-Bow. As of June 30, 2023, the Company had a less than 20% investment in X-Bow and had one Board seat. The Company has engaged X-Bow to develop a rocket for the Company. | — | — | — | — | |||||||||||||||||||||||
| Ursa Space Systems | Strategic Partner | The chairman of the Company’s board of directors, Will Porteous, is also an investor and member of the board of directors of Ursa Space Systems. The Company has a non-cancelable operational commitment with Ursa Space Systems. | 250 | 333 | — | — | |||||||||||||||||||||||
| Thales Alenia Space | Shareholder and Parent of Wholly-owned Subsidiary, Seahawk (Debt Issuer) | Design, development and manufacture of telescopes. | 3,464 | 5,163 | 658 | 693 | |||||||||||||||||||||||
| June 30, 2023 | Quoted Prices in Active Markets | Significant Other Observable Input | Significant Other Unobservable Inputs | |||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Public Warrants | $ | 3,321 | $ | — | $ | — | ||||||||||||||
| Private Placement Warrants - Issued October 2019 | — | — | 2,373 | |||||||||||||||||
| Private Placement Warrants - Issued March 2023 | — | — | 23,785 | |||||||||||||||||
| Sponsor Shares | — | — | 2,917 | |||||||||||||||||
| $ | 3,321 | $ | — | $ | 29,075 | |||||||||||||||
| December 31, 2022 | Quoted Prices in Active Markets | Significant Other Observable Input | Significant Other Unobservable Inputs | |||||||||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Public Warrants | $ | 2,097 | $ | — | $ | — | ||||||||||||||||||||
| Private Placement Warrants - Issued October 2019 | — | — | 1,332 | |||||||||||||||||||||||
| Sponsor Shares | — | — | 1,684 | |||||||||||||||||||||||
| $ | 2,097 | $ | — | $ | 3,016 | |||||||||||||||||||||
| Sponsor Shares | Private Placement Warrants - Issued October 2019 | Private Placement Warrants - Issued March 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Balance, January 1, 2023 | $ | 1,684 | $ | 1,332 | $ | — | |||||||||||
| Liability recorded at fair value | — | — | 17,716 | ||||||||||||||
| Loss from changes in fair value | 1,233 | 1,041 | 6,069 | ||||||||||||||
| Balance, June 30, 2023 | $ | 2,917 | $ | 2,373 | $ | 23,785 | |||||||||||
If the Company calls the Public Warrantssignificant reserve for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. Additionally, in no event will the Company be required to net cash settle the warrants.
If the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at a newly issued price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by them, as applicable, prior to such issuance), the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the market value (as defined in the warrant agreement) and the newly issued price.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
Note 8—
increases in our sales orders driven by stronger customer demand. DevelopmentItemManagement’s Discussion and Analysis of Financial Condition and Results of OperationsReferences in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Osprey Technology Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Osprey Sponsor II, LLC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSthe Company’sour financial condition and results of operations should be read in conjunction with theour consolidated financial statements and therelated notes thereto containedappearing elsewhere in this Quarterly Report. Certain information containedReport on Form 10-Q. As discussed in the section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis set forth below includes forward-lookingcontains forward looking statements that involve risks and uncertainties.Special Note Regarding Forward-Looking StatementsThis Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Actuncertainties, as well as assumptions that, are not historical facts and involve risks and uncertainties thatif they never materialize or prove incorrect, could cause actualour results to differ materially from those expected and projected. All statements, other than statementsexpressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled “Risk Factors” under Part I, Item IA of historical fact included in this Quarterlyour Annual Report including, without limitation, statementson Form 10-K filed with the SEC on March 23, 2023. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategyto “BlackSky”, “the Company”, “we”, “us” and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please“our” refer to the Risk Factors sectionbusiness and operations of BlackSky Technology Inc. and its consolidated subsidiaries and BlackSky Holdings, Inc. ("Legacy BlackSky") and its consolidated subsidiaries prior to the completion of its merger on September 9, 2021 with a wholly owned subsidiary of Osprey Technology Acquisition Corp (the "Merger").Registration Statementindustry's leading high-performance low earth orbit (“LEO”) small satellite constellations. Our constellation is optimized to cost-efficiently capture imagery at high revisit rates where and when our customers need it. The orbital configuration of our constellation is designed to collect data on FormS-1 (RegistrationNo. 333-234180) filedthe most critical and strategic locations in the world. Our constellation is able to image certain locations approximately every 60 minutes, from dawn to dusk, providing our customers with insights and situational awareness throughout the day. Our satellites are designed with agile pointing capabilities that enable our customers to task our constellation on demand to collect specific locations of interest. Our tasking methodology employs proprietary artificial intelligence (“AI”)-enabled software to efficiently collect images of the most important strategic and economic assets and areas of interest to our customers. We believe that our focus on critical strategies and economic infrastructure and the AI-enabled tasking of our constellation differentiates us from many of our competitors, who are primarily dedicated to mapping the entirety of the Earth on a routine basis. Our differentiated approach to space enables us to deliver highly targeted and valuable intelligence with a smaller constellation fleet that has the added benefit of greater operating and capital efficiencies.Companyvalue we deliver to our customers. Our two strategic assets—our satellite constellation and our Spectra AI platform—are mutually reinforcing: as we capture more information about the world’s most important strategic and economic assets and locations, our proprietary database expands and increases its utility; enabling us to better detect, understand, and predict changes that matter most to our customers. Our business has a natural and powerful “flywheel” effect: the more data we collect and analyze, the more valuable the insights we can deliver to our customers.SEC. The Company’s securities filingsmajority of our agreements structured as subscription contracts, followed by usage-based pricing and transactional licenses. These options provide customers flexibility to utilize our imagery and software analytical services in a manner that best suits their business needs. We offer a range of pricing tiers that enables the customer to manage collection priorities, when during critical events they can be accessedpay a premium to prioritize their monitoring and collection requirements. At other times, customers can select lower priority collections to allow for more economical utilization. We currently derive revenue from variable and fixed price plans that allow our customers to choose what matters most to them—platform licensing-levels, priority for imagery tasking, and whether to apply analytics or monitoring capabilities overtop the imaging service.EDGAR section of the SEC’s website at www.sec.gov. Exceptyear ending December 31, 2023 and beyond, as expressly required by applicable securities law, the Company disclaims any intention or obligationcompared to update or revise any forward-looking statements whethereach prior year, as a result of new information, future events or otherwise.Overviewblank check company formedcontract, primarily sales commissions on contracts greater than one year, which are capitalized and amortized to selling, general, and administrative expenses on a systematic basis consistent with the transfer of goods and services and directly identifiable costs to fulfill a contract. Expense related to stock-based payments is classified in the unaudited condensed consolidated statements of operations and comprehensive loss based upon the classification of each employees’ cash compensation. We recognize stock-based compensation expense for those employees whose work supports the imagery and software analytical service costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization.lawscost of internal labor for design and engineering in support of long-term development contracts for satellites and payload systems as well as subcontract direct materials and external labor costs to build and test specific components, such as the Statecommunications system, payload demands, and sensor integration. In addition, we also recognize internal labor costs and external subcontract labor costs for our customer-centric software service solutions. We recognize stock-based compensation expense for those employees who provide professional and engineering services support to customers, under professional and engineering service costs, excluding depreciation and amortization.Delaware on June 15, 2018,salaries and benefit costs, development costs, professional fees, and other expenses which includes other personnel-related costs, stock-based compensation expenses for those employees who generally support our business and operations, and occupancy costs. Our development costs include internal labor costs to design and plan critical real-time software and geospatial analytic solutions and solution enhancements, including mapping, analysis, site target monitoring, and news feeds.purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses.strategic development efforts to support our long-term strategy. In addition, we employ and classify third-party vendors who fulfill our strategic projects as research and development expense. We intend to effectuatecontinue to invest appropriate resources in research and development efforts, as we believe that investment is critical to maintaining our Business Combination using cash fromcompetitive position.proceedsThree and Six Months Ended June 30, 2023 and 2022Initial Public Offeringreorganization haveThree Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Revenue Imagery & software analytical services $ 15,328 $ 10,172 $ 5,156 50.7 % $ 31,088 $ 17,542 $ 13,546 77.2 % Professional & engineering services 3,999 4,930 (931) (18.9) % 6,636 11,456 (4,820) (42.1) % Total revenue 19,327 15,102 4,225 28.0 % 37,724 28,998 8,726 30.1 % Costs and expenses Imagery & software analytical service costs, excluding depreciation and amortization 3,456 3,446 10 0.3 % 7,155 7,024 131 1.9 % Professional & engineering service costs, excluding depreciation and amortization 5,070 6,340 (1,270) (20.0) % 7,849 13,717 (5,868) (42.8) % Selling, general and administrative 18,768 17,743 1,025 5.8 % 37,717 40,283 (2,566) (6.4) % Research and development 176 106 70 66.0 % 392 252 140 55.6 % Depreciation and amortization 11,776 9,177 2,599 28.3 % 21,431 16,568 4,863 29.4 % Operating loss (19,919) (21,710) 1,791 8.2 % (36,820) (48,846) 12,026 24.6 % (Loss) gain on derivatives (11,098) (4,646) (6,452) (138.9) % (9,567) 3,494 (13,061) (373.8) % Income on equity method investment 56 1,213 (1,157) (95.4) % 585 1,470 (885) (60.2) % Interest income 648 178 470 264.0 % 1,083 178 905 508.4 % Interest expense (2,242) (1,275) (967) (75.8) % (4,095) (2,530) (1,565) (61.9) % Other expense, net (867) (42) (825) NM (1,810) (40) (1,770) NM Loss before income taxes (33,422) (26,282) (7,140) (27.2) % (50,624) (46,274) (4,350) (9.4) % Income tax expense (9) — (9) (100.0) % (122) — (122) (100.0) % Net loss $ (33,431) $ (26,282) $ (7,149) (27.2) % $ (50,746) $ (46,274) $ (4,472) (9.7) % Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Imagery & software analytical revenue $ 15,328 $ 10,172 $ 5,156 50.7 % $ 31,088 $ 17,542 $ 13,546 77.2 % % of total revenue 79.3 % 67.4 % 82.4 % 60.5 % Professional & engineering services revenue 3,999 4,930 (931) (18.9) % 6,636 11,456 (4,820) (42.1) % % of total revenue 20.7 % 32.6 % 17.6 % 39.5 % Total revenue $ 19,327 $ 15,102 $ 4,225 28.0 % $ 37,724 $ 28,998 $ 8,726 30.1 % salethree and six months ended June 30, 2023, as compared to the same periods in 2022, driven by increased imagery and analytics orders from existing customers and several firm-fixed price subscription contracts with new domestic and international customers.Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Imagery & software analytical service costs, excluding depreciation and amortization $ 3,456 $ 3,446 $ 10 0.3 % $ 7,155 $ 7,024 $ 131 1.9 % Professional & engineering service costs, excluding depreciation and amortization 5,070 6,340 (1,270) (20.0) % 7,849 13,717 (5,868) (42.8) % Total costs $ 8,526 $ 9,786 $ (1,260) (12.9) % $ 15,004 $ 20,741 $ (5,737) (27.7) % Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Stock-based compensation expense $ 2,147 $ 2,638 $ (491) (18.6) % $ 4,884 $ 11,956 $ (7,072) (59.2) % Salaries and benefit costs 10,769 8,705 2,064 23.7 % 20,879 16,606 4,273 25.7 % Development costs 250 81 169 208.6 % 597 253 344 136.0 % Professional fees 920 1,201 (281) (23.4) % 2,020 2,519 (499) (19.8) % Information technology and other administrative expenses 2,369 1,526 843 55.2 % 4,584 2,615 1,969 75.3 % Selling and marketing 1,186 1,673 (487) (29.1) % 2,013 2,619 (606) (23.1) % Rent expense 292 674 (382) (56.7) % 1,070 1,232 (162) (13.1) % Insurance 835 1,245 (410) (32.9) % 1,670 2,483 (813) (32.7) % Selling, general and administrative $ 18,768 $ 17,743 $ 1,025 5.8 % $ 37,717 $ 40,283 $ (2,566) (6.4) % Private Placement Warrants,sales team and AI capabilities. In addition, our capital stock, debtcorporate insurance costs have decreased for both periods as a result of lower premiums.a combinationclassified in imagery and software analytical service costs and professional and engineering service costs:(in thousands) For the remainder of 2023 $ 3,399 For the years ending December 31, 2024 3,876 2025 2,901 2026 1,250 2027 14 $ 11,440 cash, stockContentsdebt.Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Research and development $ 176 $ 106 $ 70 66.0 % $ 392 $ 252 $ 140 55.6 % issuance of additional shares ofincrease was driven by contracting third-party vendors who fulfill our stockstrategic projects as research and development expense.Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) Depreciation of satellites $ 10,341 $ 8,666 $ 1,675 19.3 % $ 18,815 $ 15,768 $ 3,047 19.3 % Depreciation of all other property and equipment 1,294 371 923 248.8 % 2,335 519 1,816 349.9 % Amortization 141 140 1 0.7 % 281 281 — — % Depreciation and amortization $ 11,776 $ 9,177 $ 2,599 28.3 % $ 21,431 $ 16,568 $ 4,863 29.4 % a Business Combination:may significantly dilute2022, driven by an increase in the equity interest of investors;may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;could cause a change of control if a substantial number of sharessatellites in service.Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2023 2022 Change Change 2023 2022 Change Change (dollars in thousands) (Loss) gain on derivatives $ (11,098) $ (4,646) $ (6,452) (138.9) % (9,567) 3,494 (13,061) (373.8) % Income on equity method investment 56 1,213 (1,157) (95.4) % 585 1,470 (885) (60.2) % Interest income 648 178 470 264.0 % 1,083 178 905 508.4 % Interest expense (2,242) (1,275) (967) (75.8) % (4,095) (2,530) (1,565) (61.9) % Other expense, net (867) (42) (825) NM (1,810) (40) (1,770) NM Class A common stock are issued, which may affect, amongequity warrants and other things, our ability to use our net operating loss carry forwards, if any, and could resultequity instruments that we classify as derivative liabilities in the resignation or removal of our present officersunaudited condensed consolidated balance sheets and directors; andmay adversely affect prevailing market prices for our units, common stock and/or warrants.Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:default and foreclosure on our assets if our operating revenues after a Business Combinationmeasure at fair value are insufficient to pay our debt obligations;acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding;our inability to pay dividends on our common stock;using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends onsignificantly driven by our common stock if declared, our abilityprice. Fluctuations to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;limitations on our flexibility in planning for and reactingthese instruments are inversely related to changes in our businesscommon stock price and the gains or losses recognized in the industryperiod are non-cash fair value adjustments. These instruments generated losses during the three and six months ended June 30, 2023 and three months ended June 30, 2022. During the six months ended June 30, 2022, these instruments generated a gain.which we operate;increased vulnerabilityearnings from our equity method investment is directly related to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and executionthe operating performance of our strategy;joint venture LeoStella.other disadvantages compared to our competitors who have less debt.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from six months ended June 15, 2018 (inception) through September 30, 2019 were organizational activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generatenon-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We incur expenses2023 as a result of beingour short-term investments purchased in the second quarter of 2022.
result of a higher effective interest rate on our loans from related parties.
For the period from June 15, 2018 (inception) through September 30, 2018, we had anot rely on any single financial measure to evaluate our performance.
to adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net loss | $ | (33,431) | $ | (26,282) | $ | (50,746) | $ | (46,274) | |||||||||||||||
| Interest income | (648) | (178) | (1,083) | (178) | |||||||||||||||||||
| Interest expense | 2,242 | 1,275 | 4,095 | 2,530 | |||||||||||||||||||
| Income tax expense | 9 | — | 122 | — | |||||||||||||||||||
| Depreciation and amortization | 11,776 | 9,177 | 21,431 | 16,568 | |||||||||||||||||||
| Stock-based compensation expense | 2,311 | 2,986 | 5,323 | 13,226 | |||||||||||||||||||
| Loss (gain) on derivatives | 11,098 | 4,646 | 9,567 | (3,494) | |||||||||||||||||||
| Income on equity method investment | (56) | (1,213) | (585) | (1,470) | |||||||||||||||||||
| Forgiveness of non-trade receivables | — | 75 | — | 75 | |||||||||||||||||||
| Transaction costs associated with debt and equity financings | 833 | — | 1,738 | — | |||||||||||||||||||
| Severance | 111 | 705 | 199 | 705 | |||||||||||||||||||
| Investment loss on short-term investments | — | — | 55 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | (5,755) | $ | (8,809) | $ | (9,884) | $ | (18,312) | |||||||||||||||
| (in thousands) | |||||
| Cash and cash equivalents | $ | 41,100 | |||
| Restricted cash | 1,835 | ||||
Short-term investments(1) | 16,578 | ||||
| $ | 59,513 | ||||
Subsequent to the quarterly period covered by this Quarterly Report, on November 5, 2019, we consummated the Initial Public Offering of 27,500,000 Units at a price of $10.00 per Unit, generating gross proceeds of $275,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,500,000 Private Placement Warrants to our Sponsor at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $7,500,000.
On November 13, 2019, as a result of the underwriters’ election to fully exercise their over-allotment option, we consummated the sale of an additional 4,125,000 Units at $10.00 per Unit, and the sale of an additional 825,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $42,075,000.
Following the Initial Public Offering, the exercise of the over-allotment option in full and the sale of the Private Placement Warrants, a total of $316,250,000 was placed in the Trust Account and we had $1,126,709 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $18,047,876 in transaction costs, including $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees, and $654,126 of other costs.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required.at-the-market (“ATM”) offering. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close,decide, or are required, to seek additional financing from outside sources, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account wouldnot be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.
We do not believe we will needable to raise additional funds in orderit on terms acceptable to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertakingin-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combinationus or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination.at all. If we are unable to completeraise additional capital when desired, our Business Combination becausebusiness, financial condition and results of operations could be adversely affected.
Off-Balance Sheet Arrangements
We did not have anyoff-balance sheet arrangementsmaintain Adjusted EBITDA, measured quarterly as of the last day of each fiscal quarter, of not less than:
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate2025 and
availability and, or, the cost of potential future debt or equity financing.
| Six Months Ended June 30, | $ | ||||||||||||||||
| 2023 | 2022 | Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Net cash used in operating activities | $ | (15,625) | $ | (27,789) | $ | 12,164 | |||||||||||
Net cash used in investing activities(1) | (6,655) | (68,958) | 62,303 | ||||||||||||||
| Net cash provided by (used in) financing activities | 28,199 | (4,012) | 32,211 | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 5,919 | (100,759) | 106,678 | ||||||||||||||
| Cash, cash equivalents, and restricted cash – beginning of year | 37,016 | 168,104 | (131,088) | ||||||||||||||
Cash, cash equivalents, and restricted cash – end of period(2) | $ | 42,935 | $ | 67,345 | $ | (24,410) | |||||||||||
Estimates
Recent accounting standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would havehistorically been a material effect on our condensed financial statements.
ItemQuantitative and Qualitative Disclosures About Market RiskAs of September 30, 2019, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
CONTROLS AND PROCEDURESItemControls and Proceduresandare procedures that are designed to ensurewith the objective of ensuring that information required to be disclosed by us in our reports filed under the Exchange Act, reportssuch as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periodsperiod specified in the SEC’s rules and forms, andforms. Disclosureour principalthe chief executive officer and principalchief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.Under the supervision and Our management evaluated, with the participation of our management, including our principal executive officerChief Executive Officer and principal financial and accounting officer, we conducted an evaluation ofChief Financial Officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended SeptemberJune 30, 2019, as such term is defined in Rules13a-15(e) and15d-15(e)2023, pursuant to Rule 13a-15(b) under the Exchange Act. Based on thisupon that evaluation, our principal executive officer and principal financial and accounting officer haveCertifying Officers concluded that, during the period covered by this report,as of June 30, 2023, our disclosure controls and procedures were effective at a reasonable assurance levellevel.accordingly, providedevaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the information requiredmisstatements due to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarizederror or fraud will not occur or that all control issues and reportedinstances of fraud, if any, within the time periods specified in the SEC’s rules and forms.Company will be detected.
ItemLegal Proceedings.None.
ItemRisk Factors.Factors that could causeRISK FACTORSactual resultsbusiness, please refer to differ materially from those in this Quarterly Report are any of the risks describedsection entitled “Risk Factors” in our Registration StatementForm 10-K for the year ended December 31, 2022 and filed by us with the SEC.SEC on March 23, 2023. Any of thesethose factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no materialWe may disclose changes to the risksuch factors disclosedor disclose additional factors from time to time in our Registration Statement filedfuture filings with the SEC.
ItemUnregistered SalesUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Equity Securities and Use of Proceeds.In June 2018, the Sponsor purchased 125,000 shares of the Company’s Class Bour common stock forin negotiated transactions or transactions that are deemed to be an aggregate priceATM offering. The week of $25,000. In September 2018, the Company effectuated a69-for-1 forward stock split of its Class B common stock, resulting in an aggregate of 8,625,000 Founder Shares outstanding, of which an aggregate of up to 1,125,000 shares were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full or in part. As adjusted for the 1.1 for 1 stock dividend in October 2019 (see below), such amounts totaled 9,487,500 Founder Shares outstanding, of which 1,237,500 shares were subject to forfeiture. In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,581,250 Founder Shares (as adjusted for the 1.1 for 1 stock dividend in October 2019) Founder Shares, resulting in an aggregate of 7,187,500 Founder Shares outstanding, of which an aggregate of up to 937,500 shares were subject to forfeiture. In October 2019, the Company effected a 1.1 for 1 stock dividend for each share of Class B common stock outstanding, resulting in an aggregate of 7,906,250 Founder Shares outstanding. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.On November 5, 2019, the Company consummated the Initial Public Offering of 27,500,000 units, at $10.00 per Unit, generatingJune 12, 2023, we raised gross proceeds of $275,000,000. The securities issued in the offering were registered under the Securities Act on registration statements on FormS-1 (No.333-234180 and333-234418). The Securities and Exchange Commission declared the registration statements effective on October 31, 2019.Simultaneously with the closing of the Initial Public Offering, the Company consummated$1.9 million through the sale of 7,500,000 warrants1,039,439 shares in an ATM offering that concluded on June 16, 2023. We sold such shares at aan average purchase price per share of $1.00 per Private Placement Warrant in a private placement$1.82. After deducting commissions and other offering expenses associated with the ATM offering of $0.9 million, the net proceeds to us from the Sponsor, generating grosstransaction were approximately $1.0 million. of $7,500,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.On November 13, 2019 the Company consummated the sale of an additional 4,125,000 Units, at $10.00 per Unit,the shares for working capital and the sale of an additional 825,000 Private Warrants, at $1.00 per Private Warrant, generating total gross proceeds of $42,075,000.Of the gross proceeds received from the Initial Public Offering, the exercise of the over-allotment in full and the Private Placement Warrants, $316,250,000 was placed in the Trust Account.We paid a total of $6,325,000 in underwriting discounts and commissions and $654,126 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $11,068,750 in underwriting discounts and commissions.For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report on Form10-Q.
ItemDefaults Upon Senior Securities.None.
MINE SAFETY DISCLOSURESItemMine Safety Disclosures.Applicable.applicable.
OTHER INFORMATIONItemOther Information.
EXHIBITSItemExhibitsfollowing exhibitsdocuments listed below are filed as part of, or incorporated by reference into,or are filed with this Quarterly Report on Form10-Q.*Filed herewith.**Furnished.(1)Previously filed as an exhibit to our Current Report on Form8-K filed on November 5, 2019 and incorporated by reference herein.
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| August 9, 2023 | ||||||||||
| By: |
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| Chief Executive Officer and | ||||||||||
| (Principal Executive Officer) | ||||||||||
| By: /s/ Henry Dubois | ||||||||||
| Henry Dubois | ||||||||||
| Chief Financial Officer | ||||||||||
| (Principal Financial Officer) | ||||||||||
| By: |
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| (Principal | ||||||||||
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