Business Context and Reporting Period
The filing is a Form 10-Q for the quarter and six months ended June 30, 2020, filed August 10, 2020. Although the request identifies BlackSky Technology Inc., the filing’s registrant is Osprey Technology Acquisition Corp., a blank-check company and shell company focused on completing a technology-sector business combination. The filing does not identify BlackSky as the target or operating business.
The company had not commenced operations or generated revenue through June 30, 2020. Its activities consisted of organizational work, its November 2019 initial public offering, and identifying a target for a business combination.
Financial Metrics
| Metric | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | Comparable 2019 Period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating costs | $198,382 | $456,708 | $1,019 and $1,820, respectively |
| Net income (loss) | $(114,443) | $934,511 | $(1,019) and $(1,820), respectively |
| Basic and diluted loss per share | $(0.02) | $(0.03) | $0.00 loss per share in each comparable period |
| Net cash used in operating activities | Not separately provided | $(664,904) | $(2,510) |
- Six-month net income was primarily attributable to $1.64 million of interest income from the Trust Account, partially offset by operating costs, taxes, and an unrealized securities loss.
- Second-quarter net loss reflected $198,382 of operating costs and a $382,449 unrealized loss on Trust Account securities, offset by $435,966 of interest income and a $30,422 tax benefit.
- Cash was $702,567 at June 30, 2020, compared with $1.08 million at December 31, 2019.
- Marketable securities held in the Trust Account were $318.3 million, compared with $317.0 million at December 31, 2019. The Trust Account primarily held short-term U.S. Treasury bills.
- Total current liabilities were $367,571, including $342,571 of income taxes payable. Deferred underwriting fees were $11.1 million.
- The company reported no long-term debt, capital lease obligations, operating lease obligations, or off-balance-sheet arrangements. It pays the Sponsor $10,000 per month for administrative support.
- Common stock subject to possible redemption was $302.8 million at June 30, 2020, representing 30,119,559 shares.
Material Changes Versus Prior Comparable Period
- Operating costs increased to $198,382 from $1,019 in the second quarter and to $456,708 from $1,820 for the six-month period, primarily reflecting post-IPO public-company and diligence expenses.
- Interest income increased to $435,966 for the quarter and $1.64 million for the six months, compared with no interest income in the 2019 periods because the IPO had not yet occurred.
- Six-month results shifted from a $1,820 net loss in 2019 to $934,511 of net income in 2020, while the second-quarter net loss increased from $1,019 to $114,443.
- Cash used in operating activities increased to $664,904 from $2,510 for the comparable six-month period.
- The Trust Account was funded with $316.25 million following the IPO, full exercise of the over-allotment option, and private warrant sales. It grew to $318.31 million by June 30, 2020, primarily from investment earnings.
Guidance, Outlook, Risks, and Unusual Items
- Management provided no operating revenue or earnings guidance. It expects no operating revenue until after a business combination.
- The company had until November 5, 2021 to complete a business combination. If unsuccessful, it must cease operations, redeem public shares using the Trust Account, and liquidate; warrants would expire worthless.
- A target business must generally have a fair market value of at least 80% of the Trust Account balance, excluding deferred underwriting fees and certain taxes, and the post-transaction company must acquire a controlling interest.
- Public stockholders may redeem shares for their pro rata share of the Trust Account, subject to the transaction terms and applicable requirements. The filing warns that the redemption value could be below $10 per share, including because of negative interest rates or other reductions in Trust Account value.
- COVID-19 created uncertainty around market conditions, due diligence, target-company operations, and the company’s ability to complete a business combination.
- The underwriters’ $11.1 million deferred fee is payable upon a completed business combination but is generally forfeited if no business combination is completed.
- The Sponsor and certain insiders may provide working-capital loans. Up to $1.5 million of such loans could be converted into warrants, although no such borrowing was reported as of June 30, 2020.
- Management concluded that disclosure controls and procedures were effective at a reasonable assurance level and reported no material change in internal control over financial reporting.
Important Facts for Investors to Verify
- Confirm the registrant identity: this filing is for Osprey Technology Acquisition Corp., not an operating BlackSky Technology Inc. filing.
- Verify whether a business combination with BlackSky or another target was subsequently announced or completed.
- Review the Trust Account balance, redemption terms, deferred underwriting fee, and the November 5, 2021 liquidation deadline.
- Assess dilution from 30.1 million redeemable public shares, 7.9 million Founder Shares, and approximately 24.1 million public and private warrants.
- Evaluate whether the company’s cash outside the Trust Account was sufficient for transaction and operating costs and whether Sponsor working-capital loans were later required.
- Consider the effect of COVID-19, interest-rate changes, potential negative Trust Account yields, and failed-target or liquidation scenarios.