Business Context and Reporting Period
Osprey Technology Acquisition Corp. filed this unaudited Form 10-Q for the quarter ended March 31, 2020. Although the request identifies BlackSky Technology Inc., the filing registrant is Osprey Technology Acquisition Corp., a Delaware blank-check company and shell company. The filing does not present operating results for an operating BlackSky business.
The company was formed to pursue a merger, acquisition, or similar business combination, with an intended focus on technology and Software-as-a-Service businesses. It had not commenced operations or generated operating revenue as of March 31, 2020. Its initial business combination deadline was November 5, 2021.
Financial Highlights
| Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 |
|---|---|---|
| Operating revenue | $0 | $0 |
| Operating costs | $258,326 | $801 |
| Interest income | $1,207,866 | $0 |
| Unrealized gain on Trust Account securities | $378,250 | $0 |
| Net income (loss) | $1,048,954 | $(801) |
| Adjusted net loss attributable to non-redeemable shares | $(148,479) | $(801) |
| Basic and diluted loss per share | $(0.02) | $(0.00) |
| Net cash used in operating activities | $(342,023) | $(801) |
The 2020 net income was generated by interest and unrealized gains on investments held in the Trust Account, partially offset by operating costs and $278,836 of income tax expense. Operating margins and comparable operating profitability are not meaningful because the company had no revenue or operating business.
Balance Sheet, Cash Flow, Debt, and Liquidity
- Cash outside the Trust Account was $856,980 at March 31, 2020, down from $1,083,611 at December 31, 2019.
- Marketable securities in the Trust Account totaled $318,429,238, compared with $316,958,514 at December 31, 2019. The investments were substantially U.S. Treasury bills.
- Total assets were $319,519,675; total liabilities were $11,569,881; and stockholders’ equity was $5,000,009.
- Common stock subject to possible redemption was recorded as temporary equity at $302,949,785, representing 30,120,192 shares.
- Liabilities included an $11,068,750 deferred underwriting fee payable, $421,699 of current liabilities, and a $79,432 deferred tax liability.
- The company had no long-term debt, capital lease obligations, operating lease obligations, or off-balance-sheet arrangements. It paid the Sponsor $30,000 during the quarter under a $10,000-per-month administrative support agreement.
- Cash provided by investing activities was $115,392, representing interest withdrawn for tax payments. Cash flow from financing activities was zero in 2020.
- Management stated that it did not expect to need additional funds for planned expenditures, but acknowledged that additional financing could be required if transaction costs exceed estimates or if substantial public-share redemptions occur.
Material Changes Versus the Prior Comparable Period
- Net income improved to $1.05 million from a net loss of $801, primarily because the company had completed its initial public offering and earned Trust Account income during 2020.
- Operating costs increased to $258,326 from $801 as the company incurred public-company, diligence, and administrative expenses.
- Cash used in operating activities increased to $342,023 from $801.
- Trust Account securities increased by approximately $1.47 million, reflecting interest income and unrealized investment gains.
- Cash outside the Trust Account decreased by approximately $226,631 during the quarter.
- Shares subject to possible redemption decreased slightly from 30,142,702 to 30,120,192, while non-redeemable Class A shares increased from 1,482,298 to 1,504,808.
Guidance, Outlook, Risks, and Unusual Items
Management did not provide operating revenue, earnings, or margin guidance. Its stated objective was to identify and complete a qualifying business combination. The company had discretion to use substantially all Trust Account proceeds for that transaction, subject to redemption rights and minimum net tangible asset requirements.
- The company was required to complete a business combination by November 5, 2021 or liquidate and redeem the public shares. Warrants would expire worthless if no transaction was completed.
- Public stockholders could redeem shares for their pro rata portion of the Trust Account, subject to the transaction terms and applicable restrictions. The underwriters’ deferred fee would be forfeited if no business combination occurred.
- COVID-19 was identified as a material uncertainty that could disrupt diligence, target-company operations, financial markets, and the company’s ability to complete a business combination.
- Lower interest rates could reduce Trust Account interest income and the company’s earnings.
- A business combination could involve substantial dilution, additional debt, preferred securities, or significant redemption obligations.
- The Sponsor, its affiliates, or company officers and directors could provide working-capital loans, potentially including conversion of up to $1.5 million into warrants. No such borrowing was reported as outstanding in the filing.
- Management reported effective disclosure controls and no material changes in internal control over financial reporting. No legal proceedings were reported.
Important Facts for Investors to Verify
- Confirm the registrant identity: this filing is for Osprey Technology Acquisition Corp., not an operating BlackSky Technology Inc. entity.
- Verify whether and when the contemplated business combination was completed, including the target, transaction consideration, financing, and any subsequent name or ticker changes.
- Review the Trust Account balance, public-share redemption activity, and the status of the $11.07 million deferred underwriting fee.
- Assess the effect of founder shares, public and private placement warrants, potential working-capital loans, and any transaction-related securities issuance on dilution.
- Evaluate whether the company completed a business combination before the November 5, 2021 deadline or instead liquidated and redeemed public shares.
- Review later filings for the ultimate impact of COVID-19, changes in interest rates, and any amendments to the business combination structure.