Business Context and Reporting Period
This filing is the unaudited Form 10-Q of Osprey Technology Acquisition Corp., not an entity named BlackSky Technology Inc., for the quarter and nine months ended September 30, 2020. Osprey was a Delaware blank-check company formed to pursue a business combination, with an intended focus on technology and SaaS businesses. It had generated no operating revenue and had not commenced operations as of the reporting date.
The company completed its initial public offering in November 2019 and held substantially all related proceeds in a Trust Account pending a business combination. The filing identifies Osprey as a shell company, smaller reporting company, and emerging growth company.
Key Financial Metrics
| Metric | Three months ended September 30, 2020 | Nine months ended September 30, 2020 | Comparable 2019 period |
|---|---|---|---|
| Operating costs | $2.205 million | $2.662 million | $1,061 / $2,881 |
| Interest income | $101,658 | $1.745 million | None |
| Net loss | $1.868 million | $933,862 | $1,061 / $2,881 loss |
| Basic and diluted loss per share | $0.21 | $0.25 | Approximately $0.00 |
| Net cash used in operating activities | Not separately reported | $1.256 million | $2,516 |
- Cash outside the Trust Account was $501,925 at September 30, 2020, compared with $1.084 million at December 31, 2019.
- Marketable securities in the Trust Account totaled $318.010 million, compared with $316.959 million at December 31, 2019. The securities were substantially U.S. Treasury bills.
- Current liabilities were $1.873 million, including accounts payable and accrued expenses. The deferred underwriting fee payable was $11.069 million.
- Common stock subject to possible redemption was recorded as temporary equity at $300.967 million.
- Stockholders’ equity was approximately $5.000 million. The company reported a working capital deficit of $1.204 million, excluding $30,000 of franchise taxes payable and $255,364 of prepaid income taxes.
- The company had no long-term debt, capital leases, operating leases, or off-balance-sheet arrangements reported in the filing.
- The company withdrew $673,860 of Trust Account interest to pay tax obligations through September 30, 2020.
Material Changes Versus the Prior Comparable Period
- Operating costs increased substantially from $1,061 to $2.205 million in the third quarter and from $2,881 to $2.662 million for the nine-month period, primarily reflecting public-company, transaction, diligence, and administrative expenses.
- Net losses increased to $1.868 million for the quarter and $933,862 for the nine months, compared with minimal losses in the 2019 periods.
- Interest income of $1.745 million for the nine months partially offset operating costs; no comparable interest income was recorded in 2019 because the IPO had not yet occurred.
- Cash outside the Trust Account declined by approximately $582,000 during the first nine months of 2020, while Trust Account assets increased by approximately $1.051 million, principally from investment income and related adjustments.
- Accounts payable and accrued expenses increased from $181,732 at December 31, 2019 to $1.873 million at September 30, 2020.
- Class A common shares subject to possible redemption declined from 30.143 million to 29.909 million shares, while the recorded redemption value declined from $301.901 million to $300.967 million.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- The company had no operating revenue guidance and did not expect operating revenue before completing a business combination.
- Osprey was required to complete a business combination by November 5, 2021. If unsuccessful, it must cease operations, redeem public shares from the Trust Account, and liquidate, subject to applicable law.
- Management stated that additional capital would likely be needed to fund working capital and transaction costs. The Sponsor, affiliates, officers, and directors may provide loans, but are not obligated to do so.
- These liquidity conditions raised substantial doubt about the company’s ability to continue as a going concern through November 5, 2021. The financial statements contain no going-concern adjustment.
- COVID-19 created uncertainty regarding the identification and completion of a target business, due diligence processes, financial markets, and target-company operations. The filing states that the specific impact was not readily determinable.
- The deferred underwriting fee of $11.069 million would be forfeited if the company failed to complete a business combination, subject to the underwriting agreement.
- Public stockholders could redeem shares for a pro rata portion of the Trust Account upon a business combination or liquidation. Warrants would receive no liquidation distribution and could expire worthless.
- Potential negative interest rates on Trust Account investments could reduce the per-share redemption amount below $10.00.
- The company reported effective disclosure controls and procedures and no material change in internal control over financial reporting during the quarter. No legal proceedings were reported.
Important Facts for Investors to Verify
- Verify the issuer identity: this filing is for Osprey Technology Acquisition Corp.; the supplied company name, BlackSky Technology Inc., does not match the filing registrant.
- Confirm whether and when Osprey completed a business combination after September 30, 2020, including any subsequent name change, merger terms, redemption activity, or change in sponsor ownership.
- Review the amount of cash remaining outside the Trust Account and whether additional Sponsor or related-party financing was obtained.
- Assess the going-concern disclosure and the November 5, 2021 deadline for completing a business combination.
- Evaluate the potential dilution from 24.1375 million public and private placement warrants, founder shares, and any securities issued in a business combination.
- Confirm the treatment of the $11.069 million deferred underwriting fee and any claims that could reduce Trust Account proceeds.
- Review the impact of COVID-19, market conditions, investment yields, and redemptions on the Trust Account and public-share redemption value.