Business context and reporting period
This filing is the fiscal 2020 Form 10-K of Osprey Technology Acquisition Corp., not an operating-company filing for BlackSky Technology Inc. Osprey was a Delaware blank-check company formed to complete a business combination, with a focus on technology and SaaS businesses. The reporting period ended December 31, 2020; the filing was signed March 30, 2021.
Osprey had not commenced operations and generated no operating revenue through December 31, 2020. Its activities consisted primarily of formation, its 2019 initial public offering, target searches, and transaction-related work.
Financial performance and financial position
| Metric | 2020 | 2019 |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $3.1 million | $0.3 million |
| Interest income and unrealized gain/(loss) | $1.8 million | $0.7 million |
| Net income/(loss) | $(1.34) million | $0.35 million |
| Cash used in operating activities | $(1.40) million | $(0.29) million |
| Cash outside the trust account | $0.40 million | $1.08 million |
| Trust account investments | $318.0 million | $317.0 million |
| Working capital | $(1.63) million | Not clearly provided |
| Total liabilities | $13.2 million | $11.3 million |
| Deferred underwriting fee payable | $11.1 million | $11.1 million |
The 2020 loss reflected higher operating costs, including transaction and public-company expenses, than in 2019. Interest income increased to $1.79 million from $0.71 million, but did not offset operating costs. No operating margin or meaningful operating cash-flow margin is applicable because the company had no operating revenue.
At year-end, 29.9 million Class A shares were subject to possible redemption at a recorded value of $300.6 million. Stockholders’ equity was $5.0 million. The company had no long-term debt, capital leases, or off-balance-sheet arrangements.
Material changes and subsequent developments
- Operating costs increased to $3.14 million from $0.26 million, and the company moved from net income of $0.35 million to a net loss of $1.34 million.
- Cash outside the trust account declined by approximately $0.68 million, while cash used in operating activities increased substantially.
- Trust account investments increased to $318.0 million, including approximately $1.79 million of interest and unrealized gains. The company withdrew $0.71 million of trust-account interest to pay taxes.
- On February 17, 2021, Osprey agreed to merge with BlackSky Holdings, Inc. The proposed merger consideration was based on $925 million, adjusted for certain option and warrant exercise proceeds, bridge-loan funding, and Class B consideration, with shares valued at $10.00 each.
- Osprey also secured commitments for a $180 million PIPE investment involving 18 million shares at $10.00 per share. The proceeds were expected to repay certain BlackSky debt and fund working capital.
Guidance, outlook, risks, contingencies, and unusual items
Management did not provide operating guidance or revenue forecasts for Osprey. The company expected no operating revenue before completing a business combination. The BlackSky transaction was expected to close in July 2021, subject to stockholder, regulatory, financing, cash, and other customary conditions.
- BlackSky’s obligation to close was conditioned, among other matters, on Osprey having at least $225 million of available cash at closing.
- The merger agreement could terminate if the transaction was not completed by September 17, 2021; certain termination circumstances could entitle Osprey to a $40.7 million termination fee.
- Osprey had until November 5, 2021 to complete a business combination. If unsuccessful, it would cease operations, redeem public shares from the trust account, and liquidate; warrants would expire worthless.
- Management and the auditor disclosed substantial doubt about the company’s ability to continue as a going concern because only $399,516 was available outside the trust account and the company had a working-capital deficit.
- COVID-19 created uncertainty regarding the target search, transaction timing, valuations, financing markets, and business-combination execution.
- Public stockholders faced redemption, dilution, sponsor-control, warrant, creditor-claim, and potential trust-account recovery risks. The sponsor held approximately 20% of voting power through founder shares and agreed to vote in favor of a proposed business combination if submitted for approval.
- The company paid its sponsor $10,000 per month for administrative services and owed $11.1 million of deferred underwriting fees payable only upon completion of a business combination.
Most important facts for investors to verify
- Confirm that the relevant issuer for this filing is Osprey Technology Acquisition Corp. and distinguish its SPAC financial statements from BlackSky’s operating-company financial statements.
- Verify the subsequent completion, amendment, or termination status of the February 2021 BlackSky merger agreement and the related $180 million PIPE.
- Review BlackSky’s standalone historical and projected revenue, profitability, cash flow, debt, liquidity, customer concentration, and government-contract exposure in the merger materials.
- Assess the final amount of trust-account cash after redemptions, deferred fees, transaction costs, and any debt repayment, and compare it with the $225 million minimum-cash condition.
- Evaluate dilution from founder shares, public and private warrants, PIPE shares, options, and any additional financing.
- Review the going-concern disclosure, the limited cash available outside the trust account, and the potential for sponsor or affiliate financing.