424B3 1 d138775d424b3.htm 424B3 424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-256103

 

OSPREY TECHNOLOGY ACQUISITION CORP.

1845 Walnut Street, Suite 1111,

Philadelphia, PA 19103

 

LOGO

Dear Stockholders of Osprey Technology Acquisition Corp.:

On February 17, 2021, Osprey Technology Acquisition Corp., a Delaware corporation (“Osprey”), and Osprey Technology Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Osprey (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be amended and/or restated from time to time, the “merger agreement”) with BlackSky Holdings, Inc., a Delaware corporation (“BlackSky”). A copy of the merger agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A; any inconsistencies between this proxy statement/consent solicitation statement/prospectus and the merger agreement shall be determined by reference to the merger agreement. If the merger agreement and the transactions contemplated thereby are approved by BlackSky’s stockholders and Osprey’s stockholders, and the other conditions to the merger set forth in the merger agreement are satisfied or waived, Merger Sub will merge with and into BlackSky, with BlackSky being the surviving company and a wholly-owned subsidiary of Osprey (the “merger” and the effective time of the merger, the “effective time”). As used in this proxy statement/consent solicitation statement/prospectus, “New BlackSky” refers to Osprey and its consolidated subsidiaries after giving effect to the merger, and “New BlackSky Parent” refers to Osprey after giving effect to the merger.

Pursuant to the merger agreement, at the effective time, each outstanding share of BlackSky capital stock (other than shares of BlackSky Class B common stock, treasury shares and shares with respect to which appraisal rights under the General Corporation Law of the State of Delaware (the “DGCL”) are properly exercised and not withdrawn) will be converted into a number of shares of Osprey Class A common stock based on the Per Share Exchange Ratio applicable thereto (as defined in the merger agreement and described herein) and each outstanding BlackSky restricted stock unit, option and warrant will be converted into an Osprey restricted stock unit, option or warrant based on the Per Share Exchange ratio applicable to shares of BlackSky Class A common stock.

The total number of shares of Osprey Class A common stock issuable to the BlackSky equityholders (including shares issuable upon the exercise or conversion of BlackSky Stock Options, BlackSky Warrants and BlackSky RSU Awards assumed by Osprey) in connection with the merger (which is referred to herein as the “Total Consideration Share Amount”) will be calculated by dividing (x) an amount equal to (a) $925,000,000, plus (b) the aggregate exercise prices that would be paid to BlackSky if all options and warrants to purchase BlackSky capital stock outstanding immediately prior to the effective time were exercised in full, minus (c) an amount (not to exceed $1.8 million) equal to the unfunded portion of a bridge loan BlackSky has the right to incur prior to the closing of the merger, and minus (d) the total consideration payable for shares of BlackSky’s Class B common stock in connection with the merger (which amount will equal less than $1,000 in the aggregate) by (y) $10.00. Based on the aggregate exercise prices of the BlackSky options and warrants anticipated to be outstanding as of immediately prior to the effective time and the amount of the BlackSky bridge loan that is anticipated to remain unfunded as of the effective time, it is currently expected that the total number of shares of Osprey Class A common stock constituting the Total Consideration Share Amount will equal approximately 92,470,589 shares. For an illustrative example calculation of the Total Consideration Share Amount, see the section in this proxy statement/consent solicitation statement/prospectus titled “The Merger Agreement—Merger Consideration”. The actual Total Consideration Share Amount will not be determined until the closing of the merger, and any change in the amounts used to calculate the Total Consideration Share Amount at the time of closing, as compared to the amounts used for purposes of the above estimate, will result in a change to the actual amount of the Total Consideration Share Amount.

Pursuant to the merger agreement, each issued and outstanding share of BlackSky Class B common stock will be converted into the right to receive cash consideration equal to $0.00001 per share. The total cash consideration


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payable to the holders of BlackSky Class B common stock in connection with the merger will equal less than $1,000 in the aggregate. For a detailed description of the treatment of BlackSky’s Options, RSU and Warrants in the merger, see “Treatment of BlackSky Options, RSU & Warrants in the Merger”.

Following the closing of the merger, Osprey intends to change its name to BlackSky Technology Inc. Osprey’s units, Class A common stock and public warrants are publicly traded on the New York Stock Exchange (the “NYSE”) under the symbols “SFTW.U”, “SFTW” and “SFTW.WS”, respectively. Following the merger, New BlackSky Parent Class A common stock (including common stock issuable in the merger) and New BlackSky Parent warrants will be listed on the NYSE under the symbols “BKSY” and “BKSY.W”, respectively. New BlackSky Parent will not have units traded following the closing of the merger.

Osprey will hold a special meeting of stockholders (the “Osprey Special Meeting”) to consider matters relating to the proposed merger. Osprey and BlackSky cannot complete the merger unless the conditions to the merger set forth in the merger agreement are satisfied or waived in accordance with their terms, including the condition that the Osprey stockholders vote to approve (among other things) the merger agreement and the transactions contemplated thereby, and the issuance of Osprey Class A common stock to be issued as a portion of the merger consideration and the PIPE Investment, and BlackSky’s stockholders consent to the adoption of the merger agreement and the approval of the transactions contemplated thereby. Osprey is sending you this proxy statement/consent solicitation statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/consent solicitation statement/prospectus.

The Osprey Special Meeting will be held on September 8, 2021 at 10:00 A.M., New York City time, at https://www.cstproxy.com/ospreytechnology/sm2021.

In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Osprey stockholders and the community, the Osprey Special Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/ospreytechnology/sm2021 and entering your control number as further explained in the accompanying proxy statement/consent solicitation statement/prospectus.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF OSPREY COMMON STOCK YOU OWN. To ensure your representation at the Osprey Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/consent solicitation statement/prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to attend the meeting. Submitting a proxy now will NOT prevent you from being able to vote virtually at the meeting. If you hold your shares in “street name”, you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

After careful consideration, the Osprey board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and recommends that Osprey stockholders vote “FOR” the approval of the merger agreement and the transactions contemplated thereby, “FOR” the issuance of Osprey Class A common stock to be issued as the merger consideration and the PIPE Investment and “FOR” the other matters to be considered at the Osprey Special Meeting.

After careful consideration, the BlackSky board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and recommends that BlackSky stockholders consent to adopt the merger agreement and approve the transactions contemplated thereby (the “BlackSky Business Combination Proposal”).

This proxy statement/consent solicitation statement/prospectus provides you with detailed information about the proposed merger. It also contains or references information about Osprey and BlackSky and certain related

 

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matters. You are encouraged to read this proxy statement/consent solicitation statement/prospectus carefully. In particular, you should read the “Risk Factors ” section beginning on page 33 for a discussion of the risks you should consider in evaluating the proposed merger and how they will affect you.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT OSPREY REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO OSPREY’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT SUCH MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE MERGER IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

If you have any questions regarding the accompanying proxy statement/consent solicitation statement/prospectus, you may contact Morrow Sodali LLC, Osprey’s proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400.

On behalf of the Osprey board of directors, I would like to thank you for your support and look forward to the successful completion of the merger.

Sincerely,

/s/ David DiDomenico

David DiDomenico

Chief Executive Officer and President

August 11, 2021

NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER, THE SHARES OF OSPREY CLASS A COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER OR THE OTHER TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This proxy statement/consent solicitation statement/prospectus is dated August 11, 2021, and is first being mailed to stockholders of Osprey on or about August 11, 2021.

 

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OSPREY TECHNOLOGY ACQUISITION CORP.

NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 8, 2021

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the “Osprey Special Meeting”), of Osprey Technology Acquisition Corp., a Delaware corporation (which is referred to as “Osprey”) will be held on September 8, 2021, at 10:00 A.M., New York City time, at https://www.cstproxy.com/ospreytechnology/sm2021. In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Osprey stockholders and the community, the Osprey Special Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/ospreytechnology/sm2021 and entering your control number as further explained in the accompanying proxy statement/consent solicitation statement/prospectus.

You are cordially invited to attend the Osprey Special Meeting for the following purposes:

 

1.

The Business Combination Proposal—To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of February 17, 2021 (as it may be amended and/or restated from time to time, the “merger agreement”), by and among Osprey Technology Acquisition Corp., a Delaware corporation (“Osprey”), Osprey Technology Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Osprey (“Merger Sub”), and BlackSky Holdings, Inc., a Delaware corporation (“BlackSky”), pursuant to which Merger Sub will merge with and into BlackSky, with BlackSky being the surviving company and a wholly-owned subsidiary of Osprey (the “merger”) and the transactions contemplated thereby, including the merger. A copy of the merger agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A (Proposal No. 1 or the “Business Combination Proposal”);

 

2.

The Amendment Proposals

 

  (a)

To consider and vote upon separate proposals to approve the following material differences between the proposed amended and restated certificate of incorporation of Osprey (the “proposed charter”) that will replace Osprey’s existing certificate of incorporation (the “existing charter”) at the effective time and the existing charter (a copy of the proposed charter is attached to this proxy statement/consent solicitation statement/prospectus as Annex B);

 

  (i)

to increase the number of authorized shares of Class A common stock of Osprey and to eliminate the Class B common stock classification (Proposal No. 2);

 

  (ii)

to increase the number of authorized shares of preferred stock of Osprey (Proposal No. 3);

 

  (iii)

to require the affirmative vote of a majority of the entire board of directors and holders of at least 66 2/3% of the voting power of all then outstanding voting securities entitled to vote thereon, voting together as a single class, to amend, repeal or modify certain provisions of the proposed charter (Proposal No. 4);

 

  (iv)

to provide that the number of authorized shares of any series of preferred stock authorized under the proposed charter may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares of any such series then outstanding) by the adoption of a resolution by the board of directors (Proposal No. 5);

 

  (v)

to provide for the classification of the board of directors into three classes of directors and for the removal of directors only for cause and only upon the affirmative vote of holders of at least 66 2/3% of the voting power of the issued and outstanding shares of capital stock entitled to vote in the election of directors, voting together as a single class (Proposal No. 6);

 

  (b)

conditioned upon the approval of Proposals No. 2 through 6, a proposal to approve the proposed charter, which includes the approval of all other changes in the proposed charter in connection with replacing the existing charter with the proposed charter as of the closing of the merger (Proposal No. 7 and together with Proposals No. 2 through 6, the “Amendment Proposals”);

 

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3.

The Director Election Proposal—To consider and vote upon a proposal to elect six directors, effective immediately upon the closing of the merger, to be allocated by the board of directors into three classes of directors and to serve staggered terms on the Osprey board of directors until the first, second and third annual meetings of stockholders following the date of the filing of the proposed charter, as applicable, and until their respective successors are duly elected and qualified (Proposal No. 8 or the “Director Election Proposal”);

 

4.

The NYSE Proposal—To consider and vote upon a proposal, for purposes of complying with the applicable NYSE listing requirements (including Section 312.03 of the NYSE’s Listed Company Manual), to approve the issuance of shares of Osprey Class A common stock in accordance with the terms of the merger agreement and the PIPE documents in connection with the merger and the PIPE Investment (as defined below) (Proposal No. 9 or the “NYSE Proposal”);

 

5.

The Omnibus Incentive Plan Proposal—To consider and vote upon a proposal to approve and adopt the 2021 Equity Incentive Plan (the “Omnibus Incentive Plan”), including the authorization of the initial share reserve under the Omnibus Incentive Plan (Proposal No. 10 or the “Omnibus Incentive Plan Proposal”);

 

6.

The ESPP Proposal—To consider and vote upon a proposal to approve and adopt the Employee Stock Purchase Plan (the “ESPP”), including authorization of the initial share reserve under the ESPP (Proposal No. 11 or the “ESPP Proposal”); and

 

7.

The Adjournment Proposal—To consider and vote upon a proposal to adjourn the Osprey Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Osprey Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal or the ESPP Proposal (Proposal No. 12 or the “Adjournment Proposal”).

The Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal (if necessary) are collectively referred to as the “Proposals”.

Only holders of record of Osprey common stock at the close of business on July 16, 2021 are entitled to notice of the Osprey Special Meeting and to vote at the Osprey Special Meeting and any adjournments or postponements of the Osprey Special Meeting. A complete list of Osprey stockholders of record entitled to vote at the Osprey Special Meeting will be available for 10 days before the Osprey Special Meeting at the principal executive offices of Osprey for inspection by stockholders during ordinary business hours for any purpose germane to the Osprey Special Meeting.

Pursuant to Osprey’s existing charter, Osprey will provide holders (“public stockholders”) of its Class A common stock (“public shares”) with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account (as defined below), which holds the proceeds of Osprey’s initial public offering (the “initial public offering”) as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal (including interest earned on the funds held in the Trust Account and not previously released to Osprey to pay its franchise and income taxes) upon the closing of the transactions contemplated by the merger agreement. For illustrative purposes, based on funds in the Trust Account of $318,053,820 on March 31, 2021, the estimated per share redemption price would have been approximately $10.05, excluding additional interest earned on the funds held in the Trust Account and not previously released to Osprey to pay its franchise and income taxes. Public stockholders may elect to redeem their shares without voting, and if they do vote, irrespective of whether they vote for or against the Business Combination Proposal. A public stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a “group” (as defined in Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the public shares. Osprey Sponsor II, LLC, a Delaware limited liability company (the “Sponsor”), solely in its capacity as a stockholder of Osprey, has agreed to waive its redemption

 

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rights in connection with the consummation of the merger with respect to any shares of Osprey stock it may hold. Currently, the Sponsor holds shares representing approximately 20% of the aggregate voting power of the Osprey common stock, consisting of Class B common stock (“Founder Shares”). Such Founder Shares and warrants held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor, solely in its capacity as a stockholder of Osprey, has agreed to vote any shares of Osprey stock owned by it in favor of the Proposals.

Approval of each of the Business Combination Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal (if necessary) requires the affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present. Approval of the Director Election Proposal requires the affirmative vote of at least a plurality of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present. Approval of the Amendment Proposals requires the affirmative vote of (i) holders of a majority of the outstanding shares of Osprey common stock, voting together as a single class, and (ii) holders of a majority of the outstanding shares of Osprey Class B common stock, voting separately as a single class. The Osprey board of directors unanimously recommends that you approve the Proposals.

As of March 31, 2021, there was $318,053,820 in the Trust Account, which Osprey intends to use for the purposes of consummating a business combination within the time period described in this proxy statement/consent solicitation statement/prospectus and to pay approximately $11.1 million in deferred underwriting commissions to the underwriters of Osprey’s initial public offering. Each redemption of public shares by its public stockholders will decrease the amount in the Trust Account. Osprey will not consummate the merger if the redemption of public shares would result in Osprey’s failure to have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) (or any successor rule).

The merger agreement provides that the obligation of BlackSky to consummate the merger is conditioned (among other things) on the amount of cash held in the Trust Account, minus the aggregate amount of cash required to satisfy all Osprey stockholder redemptions, plus the proceeds from the private placement of shares of New BlackSky Parent Class A common stock being issued at the closing of the merger (the “PIPE Investment”), equaling or exceeding $225,000,000. This condition to closing of the merger is for the sole benefit of BlackSky and may be waived by it. If, as a result of redemptions of Class A common stock by Osprey public stockholders, this condition is not met (or waived), then BlackSky may elect not to consummate the merger.

If Osprey stockholders fail to approve the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal or the ESPP Proposal, the merger will not occur. The proxy statement/consent solicitation statement/prospectus accompanying this notice explains the merger agreement and the transactions contemplated thereby, as well as the proposals to be considered at the Osprey Special Meeting. Please review the proxy statement/consent solicitation statement/prospectus carefully.

The Osprey board of directors has set the close of business on July 16, 2021 as the record date for the Osprey Special Meeting. Only holders of record of shares of Osprey common stock at the close of business on July 16, 2021 will be entitled to notice of and to vote at the Osprey Special Meeting and any adjournments or postponements thereof. Any stockholder entitled to attend and vote at the Osprey Special Meeting is entitled to appoint a proxy to attend and vote on such stockholder’s behalf. Such proxy need not be a holder of shares of Osprey common stock.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF OSPREY COMMON STOCK YOU OWN. Whether or not you plan to attend the Osprey Special Meeting, please complete, sign, date and mail the enclosed proxy card in the postage-paid envelope provided at your earliest convenience. You may also submit a proxy by telephone or via the Internet by following the instructions printed on your proxy card. If you hold your shares through a broker, bank or other nominee, you should direct the vote of your shares in accordance with the voting instruction form received from your broker, bank or other nominee.

 

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After careful consideration, the Osprey board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and recommends that you vote “FOR” the Business Combination Proposal, “FOR” the Amendment Proposals, “FOR” the Director Election Proposal, “FOR” the NYSE Proposal, “FOR” the Omnibus Incentive Plan Proposal, “FOR” the “ESPP Proposal” and “FOR” the Adjournment Proposal (if necessary).

If you have any questions or need assistance with voting, please contact Morrow Sodali LLC, Osprey’s proxy solicitor, by calling (800) 662-5200 or banks and brokers can call collect at (203) 658-9400.

Please read carefully the sections in the proxy statement/consent solicitation statement/prospectus regarding attending and voting at the annual meeting to ensure that you comply with these requirements.

 

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Jonathan Z. Cohen

Jonathan Z. Cohen

Co-Chairman of the Board of Directors

August 11, 2021

 

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LOGO

BlackSky Holdings, Inc.

13241 Woodland Park Road, Suite 300

Herndon, VA 20171

NOTICE OF SOLICITATION OF WRITTEN CONSENT

To the Stockholders of BlackSky Holdings, Inc.:

Pursuant to the Agreement and Plan of Merger, dated as of February 17, 2021 (as it may be amended and/or restated from time to time, the “merger agreement”), by and among BlackSky Holdings, Inc. (“BlackSky”), Osprey Technology Acquisition Corp. (“Osprey”), and Osprey Technology Merger Sub, Inc., a wholly owned subsidiary of Osprey (“Merger Sub”), Merger Sub will merge with and into BlackSky with BlackSky surviving the merger as a wholly owned subsidiary of Osprey (the “merger”).

The accompanying proxy statement/consent solicitation statement/prospectus is being delivered to you on behalf of the BlackSky board of directors to request that holders of BlackSky common stock and the holders of BlackSky preferred stock execute and return written consents to (i) adopt the merger agreement and approve the transactions contemplated thereby; (ii) waive all notice requirements applicable to, or triggered by, the merger, the merger agreement and the transactions contemplated thereby; and (iii) waive any appraisal or dissenters’ rights or any similar rights that such stockholders may have in connection with the merger.

The accompanying proxy statement/consent solicitation statement/prospectus describes the proposed merger and the actions to be taken in connection with the merger and provides additional information about the parties involved. Please give this information your careful attention. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement/consent solicitation statement/prospectus.

A summary of the appraisal rights that may be available to you is described in “Appraisal Rights”. Please note that if you wish to exercise appraisal rights you must not sign and return a written consent adopting the merger agreement. However, so long as you do not return a consent form at all, it is not necessary to affirmatively vote against or disapprove the merger. In addition, you must take all other steps necessary to perfect your appraisal rights in accordance with Section 262 of the DGCL.

After careful consideration, the BlackSky board of directors has unanimously approved the merger and the merger agreement and recommends that BlackSky stockholders adopt the merger agreement and approve the transactions contemplated thereby by submitting a written consent.

Please complete, date and sign the written consent furnished with the accompanying proxy statement/consent solicitation statement/prospectus and return it promptly to BlackSky by one of the means described in “BlackSkys Solicitation of Written Consents” of the accompanying proxy statement/consent solicitation statement/prospectus.

 

By Order of the Board of Directors,

/s/ Brian O’Toole

Brian O’Toole

President


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TABLE OF CONTENTS

 

     Page  

NOTICE OF SOLICITATION OF WRITTEN CONSENT

     1  

TABLE OF CONTENTS

     i  

REFERENCES TO ADDITIONAL INFORMATION

     iv  

QUESTIONS AND ANSWERS

     i  

SUMMARY

     1  

SUMMARY HISTORICAL FINANCIAL DATA FOR OSPREY

     22  

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF OSPREY AND BLACKSKY

     29  

FORWARD-LOOKING STATEMENTS

     31  

RISK FACTORS

     33  

Risks Related to BlackSky’s Business and Industry

     33  

Risks Related to the Merger

     76  

Additional Risks Relating to Ownership of New BlackSky Parent Class  A Common Stock Following the Merger

     85  

Risks Relating to Redemption

     91  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     93  

BLACKSKY’S SOLICITATION OF WRITTEN CONSENTS

     116  

OSPREY SPECIAL MEETING OF STOCKHOLDERS

     118  

General

     118  

Date, Time and Place

     118  

Purpose of Osprey Special Meeting

     118  

Recommendation of the Osprey Board of Directors

     118  

Voting Power; Record Date

     118  

Vote of the Sponsor and Osprey’s Directors and Officers

     119  

Quorum and Required Vote for Proposals for the Osprey Special Meeting

     119  

Recommendation of the Osprey Board of Directors

     120  

Abstentions and Broker Non-Votes

     121  

Voting Your Shares

     122  

Revoking Your Proxy

     122  

No Additional Matters May Be Presented at the Osprey Special Meeting

     122  

Who Can Answer Your Questions About Voting

     122  

Redemption Rights

     123  

Appraisal Rights

     124  

Proxy Solicitation Costs

     124  

The Sponsor

     124  

OSPREY PROPOSALS

     126  

PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL

     126  

PROPOSAL NO. 2 THROUGH NO. 7—THE AMENDMENT PROPOSALS

     126  

PROPOSAL NO. 8—THE DIRECTOR ELECTION PROPOSAL

     130  

PROPOSAL NO. 9—THE NYSE PROPOSAL

     131  

PROPOSAL NO. 10—THE OMNIBUS INCENTIVE PLAN PROPOSAL

     132  

PROPOSAL NO. 11—THE ESPP PROPOSAL

     141  

PROPOSAL NO. 12—THE ADJOURNMENT PROPOSAL

     147  

INFORMATION ABOUT OSPREY

     148  

General

     148  

Initial Public Offering and Private Placement

     148  

Fair Market Value of Target Business

     148  

Stockholder Approval of Merger and Redemptions

     149  

 

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Voting Restrictions in Connection with Stockholder Meeting

     149  

Liquidation if No Initial Business Combination

     150  

Facilities

     153  

Employees and Human Capital

     153  

Periodic Reporting and Financial Information

     154  

Legal Proceedings

     154  

MANAGEMENT OF OSPREY

     155  

Directors and Executive Officers

     155  

Management Compensation

     158  

Compensation Committee Interlocks and Insider Participation

     159  

SELECTED HISTORICAL FINANCIAL INFORMATION OF OSPREY

     160  

OSPREY’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     162  

Overview

     162  

Recent Developments

     164  

Results of Operations

     164  

Liquidity and Capital Resources

     165  

Related Party Transactions

     166  

Critical Accounting Policies and Estimates

     168  

Off-Balance Sheet Arrangements

     168  

Contractual Obligations

     169  

Quantitative and Qualitative Disclosures About Market Risk

     169  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     170  

INFORMATION ABOUT BLACKSKY

     175  

MANAGEMENT OF BLACKSKY

     181  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF BLACKSKY

     193  

BLACKSKY’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     195  

MANAGEMENT OF NEW BLACKSKY AFTER THE MERGER

     224  

THE MERGER

     232  

Terms of the Merger

     232  

Conversion of Shares; Exchange Procedures

     232  

Unaudited Prospective Financial Information of BlackSky

     234  

Background of the Merger

     238  

Recommendation of the BlackSky Board of Directors and Reasons for the Merger

     248  

Recommendation of the Osprey Board of Directors and Reasons for the Merger

     251  

Interests of Osprey’s Directors and Officers in the Merger

     254  

Interests of BlackSky’s Directors and Executive Officers in the Merger

     256  

REGULATORY APPROVALS REQUIRED FOR THE MERGER

     260  

ACCOUNTING TREATMENT

     261  

PUBLIC TRADING MARKETS

     261  

THE MERGER AGREEMENT

     262  

Effects of the Merger

     262  

Merger Consideration

     262  

Closing and Effective Time

     265  

Covenants and Agreements

     265  

Representations and Warranties

     279  

Conditions to the Merger

     282  

Termination

     284  

Effect of Termination

     286  

Amendments

     286  

 

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     Page  

Specific Performance

     286  

Stock Market Listing

     286  

Fees and Expenses

     286  

OTHER AGREEMENTS

     287  

Sponsor Support Agreement

     287  

Stockholder Support Agreements

     288  

Subscription Agreements

     288  

Registration Rights Agreement

     289  

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     290  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     295  

General

     295  

Comparison of Stockholders’ Rights

     296  

DESCRIPTION OF NEW BLACKSKY CAPITAL STOCK

     315  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     321  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     330  

EXPERTS

     330  

LEGAL MATTERS

     330  

OTHER MATTERS

     331  

APPRAISAL RIGHTS

     331  

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     F-1  

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

     II-1  

Indemnification of Directors and Officers

     II-1  

Exhibits and Financial Statement Schedules

     II-1  

Undertakings

     II-4  

ANNEX A—AGREEMENT AND PLAN OF MERGER

     A-1  

ANNEX B—PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF OSPREY

     B-1  

ANNEX C—PROPOSED AMENDED AND RESTATED BYLAWS OF OSPREY

     C-1  

ANNEX D—GENERAL CORPORATION LAW OF THE STATE OF DELAWARE SECTION 262

     D-1  

ANNEX E—OMNIBUS INCENTIVE PLAN

     E-1  

ANNEX F—EMPLOYEE STOCK PURCHASE PLAN

     F-1  

ANNEX G—SPONSOR SUPPORT AGREEMENT

     G-1  

ANNEX H—FORM OF STOCKHOLDER SUPPORT AGREEMENT

     H-1  

ANNEX I—FORM OF REGISTRATION RIGHTS AGREEMENT

     I-1  

ANNEX J—FORM OF SUBSCRIPTION AGREEMENT

     J-1  

 

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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/consent solicitation statement/prospectus incorporates important business and financial information that is not included in or delivered with this proxy statement/consent solicitation statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement/ consent solicitation statement/prospectus and any of the documents incorporated by reference into this proxy statement/consent solicitation statement/prospectus or other publicly available information concerning Osprey, without charge, by written request to Secretary at Osprey Technology Acquisition Corp., 1845 Walnut Street, Suite 1111, Philadelphia, PA 19103 or by telephone request at (212) 920-1345; or Morrow Sodali LLC, Osprey’s proxy solicitor, by calling (800) 662-5200 or banks and brokers can call collect at (203) 658-9400, or request such documents in writing at Morrow Sodali LLC, 1335 N Astor Street, #3A, Chicago, Illinois 60610-2142; or from the SEC through the SEC website at the address provided above.

In order for Osprey’s shareholders to receive timely delivery of the documents in advance of the special meeting of Osprey to be held on September 8, 2021, you must request the information no later than August 31, 2021, five business days prior to the date of the special meeting.

 

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BASIS OF PRESENTATION AND GLOSSARY

As used in this proxy statement/consent solicitation statement/prospectus, unless otherwise noted or the context otherwise requires:

 

   

references to “BlackSky” are to BlackSky Holdings, Inc. and its consolidated subsidiaries;

 

   

references to “BlackSky equityholders” are to the holders of any (i) shares of BlackSky preferred stock, BlackSky common stock, (ii) options to purchase shares of BlackSky common stock, (iii) BlackSky restricted stock units or (iv) warrants to purchase shares of any BlackSky common stock or BlackSky preferred stock, collectively;

 

   

references to the “effective time” are to the time at which the merger becomes effective;

 

   

references to “Insider PIPE Investors” are to PIPE Investors that are existing directors or officers of, or otherwise affiliated or associated with, or identified by, Osprey;

 

   

references to the “merger” are to the proposed merger of Merger Sub with and into BlackSky, with BlackSky being the surviving corporation;

 

   

references to “Merger Sub” are to Osprey Technology Merger Sub, Inc.;

 

   

references to “New BlackSky” are to BlackSky Technology Inc. (f/k/a Osprey Technology Acquisition Corp.) as of immediately following the effective time and its consolidated subsidiaries, and references to “New BlackSky Parent” refer only to BlackSky Technology Inc. (f/k/a Osprey Technology Acquisition Corp.) as of immediately following the effective time, exclusive of its subsidiaries, in each case, after giving effect to the merger;

 

   

references to “Osprey” are to Osprey Technology Acquisition Corp. before giving effect to the merger;

 

   

references to “Osprey common stock” are to, prior to the effective time, collectively, Osprey Class A common stock and Osprey Class B common stock, and at and after the effective time, New BlackSky Parent Class A common stock;

 

   

references to the “PIPE Investment” are to the private placement of shares of New BlackSky Parent Class A common stock being issued at the closing of the merger;

 

   

references to “PIPE Investors” are to those certain investors participating in the PIPE Investment pursuant to the Subscription Agreements;

 

   

references to “public shares” are to, prior to the effective time, shares of Osprey Class A common stock;

 

   

references to “Subscription Agreements” are to the subscription agreements pursuant to which the PIPE Investment will be consummated;

 

   

references to “Third Party PIPE Investor” are to any PIPE Investor who is not an Insider PIPE Investor.

Unless specified otherwise, amounts in this proxy statement/consent solicitation statement/prospectus are presented in United States (“U.S.”) dollars.

Defined terms in the financial statements contained in this proxy statement/consent solicitation statement/prospectus have the meanings ascribed to them in the financial statements.

 

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QUESTIONS AND ANSWERS

The following are answers to certain questions that you may have regarding the merger, the stockholder meeting and the consent solicitation. We urge you to read carefully the remainder of this proxy statement/consent solicitation statement/prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to this proxy statement/consent solicitation statement/prospectus.

QUESTIONS AND ANSWERS ABOUT THE MERGER

In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Osprey stockholders and the community, the Osprey Special Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast.

 

Q:

HOW DO I ATTEND A VIRTUAL MEETING?

 

  A:

As a registered stockholder, along with this proxy statement/consent solicitation statement/prospectus, you received a proxy card from Continental Stock Transfer & Trust Company, our transfer agent, which contains instructions on how to attend the virtual Osprey Special Meeting, including the URL address and your control number. You will need your control number for access. If you do not have your control number, contact Continental Stock Transfer & Trust Company (“Continental”) at (917) 262-2373, or email at proxy@continentalstock.com.

You can pre-register to attend the virtual Osprey Special Meeting starting on August 31, 2021 (5 business days prior to the meeting). Enter the following URL address into your browser https://www.cstproxy.com/ospreytechnology/sm2021, then enter your control number, name and email address. Once you pre-register, you can vote or enter questions in the chat box. At the start of the Osprey Special Meeting, you will need to re-log in using the same control number and, if you want to vote during the meeting, you will be prompted to enter your control number again.

Beneficial owners who own their investments through a bank or broker will need to contact Continental to receive a control number. If you plan to vote at the Osprey Special Meeting, you will need to have a legal proxy from your bank or broker, or if you would like to join and not vote Continental can issue you a guest control number with proof of ownership. Either way you must contact Continental for specific instructions on how to receive the control number, at the number or email address above. Please allow up to 72 hours prior to the meeting for processing your control number.

If you do not have internet capabilities, you can listen only to the Osprey Special Meeting by dialing within the U.S. and Canada: 1 (877) 770-3647 (toll free) or outside of the U.S. and Canada: +1 (312) 780-0854 and when prompted enter the pin #38458611. This is listen only, so you will not be able to vote or enter questions during the Osprey Special Meeting.

 

Q:

WHAT IS THE MERGER?

 

  A:

Osprey, Merger Sub, a wholly-owned subsidiary of Osprey, and BlackSky have entered into an Agreement and Plan of Merger, dated as of February 17, 2021 (as it may be amended and/or restated from time to time, the “merger agreement”), pursuant to which Merger Sub will merge with and into BlackSky, with BlackSky being the surviving company and a wholly-owned subsidiary of Osprey.

Osprey will hold the Osprey Special Meeting to, among other things, obtain the approvals required for the merger and the other transactions contemplated by the merger agreement and you are receiving this proxy statement/consent solicitation statement/prospectus in connection with such meeting. BlackSky is also providing these consent solicitation materials to the holders of BlackSky common stock and preferred stock, to solicit, among other things, the required written consent to adopt the merger

 

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agreement and approve the transactions contemplated thereby (the “BlackSky Business Combination Proposal”). See “The Merger Agreement” for more information. In addition, a copy of the merger agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A. We urge you to read carefully this proxy statement/consent solicitation statement/prospectus and the merger agreement in their entirety.

 

Q:

WHY AM I RECEIVING THIS DOCUMENT?

 

  A:

Osprey is sending this proxy statement/consent solicitation statement/prospectus to its stockholders to help them decide how to vote their shares of Osprey common stock with respect to the matters to be considered at the Osprey Special Meeting. BlackSky is also providing these consent solicitation materials to the holders of BlackSky common stock and preferred stock in order to solicit such holders’ written consent to, among other things, the BlackSky Business Combination Proposal.

The merger cannot be completed unless the conditions to the merger set forth in the merger agreement are satisfied or waived, including (among others) the approval by Osprey’s stockholders of the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal set forth in this proxy statement/consent solicitation statement/prospectus for their approval and the approval by BlackSky’s stockholders of the BlackSky Business Combination Proposal. Information about the Osprey Special Meeting, the consent solicitation, the merger and the other business to be considered by stockholders at the Osprey Special Meeting is contained in this proxy statement/consent solicitation statement/prospectus.

This document constitutes a proxy statement of Osprey, a consent solicitation statement of BlackSky and a prospectus of Osprey. It is a proxy statement because the board of directors of Osprey is soliciting proxies using this proxy statement/consent solicitation statement/prospectus from its stockholders. It is a consent solicitation statement because the board of directors of BlackSky is soliciting written consent using this proxy statement/consent solicitation statement/prospectus from its stockholders. It is a prospectus because Osprey, in connection with the merger, is offering shares of Osprey Class A common stock in exchange for the outstanding shares of BlackSky capital stock, options, RSUs and warrants. See “The Merger Agreement—Merger Consideration” for more information.

 

Q:

WHAT WILL BLACKSKY EQUITYHOLDERS RECEIVE IN THE MERGER?

 

  A:

If the merger is completed, at the effective time, each outstanding share of BlackSky capital stock (other than shares of BlackSky Class B common stock, treasury shares and shares with respect to which appraisal rights under the General Corporation Law of the State of Delaware (the “DGCL”) are properly exercised and not withdrawn) will be converted into a number of shares of Osprey Class A common stock based on the Per Share Exchange Ratio applicable thereto (as defined in the merger agreement and described herein) and each outstanding BlackSky restricted stock unit, option and warrant will be converted into an Osprey restricted stock unit, option or warrant based on the Per Share Exchange ratio applicable to shares of BlackSky Class A common stock.

The total number of shares of Osprey Class A common stock issuable to the BlackSky equityholders (including shares issuable upon the exercise or conversion of BlackSky Stock Options, BlackSky Warrants and BlackSky RSU Awards assumed by Osprey) in connection with the merger (which is referred to herein as the “Total Consideration Share Amount”) will be calculated by dividing (x) an amount equal to (a) $925,000,000, plus (b) the aggregate exercise prices that would be paid to BlackSky if all options and warrants to purchase BlackSky capital stock outstanding immediately prior to the effective time were exercised in full, minus (c) an amount (not to exceed $1.8 million) equal to the unfunded portion of a bridge loan BlackSky has the right to incur prior to the closing of the merger,

 

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and minus (d) the total consideration payable for shares of BlackSky’s Class B common stock in connection with the merger (which amount will equal less than $1,000 in the aggregate) by (y) $10.00. Based on the aggregate exercise prices of the BlackSky options and warrants anticipated to be outstanding as of immediately prior to the effective time and the amount of the BlackSky bridge loan that is anticipated to remain unfunded as of the effective time, it is currently expected that the total number of shares of Osprey Class A common stock constituting the Total Consideration Share Amount will equal approximately 92,470,589 shares. For an illustrative example calculation of the Total Consideration Share Amount, see the section in this proxy statement/consent solicitation statement/prospectus titled “The Merger Agreement—Merger Consideration”. The actual Total Consideration Share Amount will not be determined until the closing of the merger, and any change in the amounts used to calculate the Total Consideration Share Amount at the time of closing, as compared to the amounts used for purposes of the above estimate, will result in a change to the actual amount of the Total Consideration Share Amount.

Effective as of the effective time and by virtue of the merger, each share of BlackSky preferred stock and each share of BlackSky Class A common stock that is issued and outstanding immediately prior to the effective time will be cancelled and automatically converted into the right to receive a number of shares of Osprey Class A common stock equal to the Per Share Exchange Ratio (as defined in the merger agreement) that is applicable to such share.

Pursuant to the merger agreement, each issued and outstanding share of BlackSky Class B common stock will be converted into the right to receive cash consideration equal to $0.00001 per share. The total cash consideration payable to the holders of BlackSky Class B common stock in connection with the merger will equal less than $1,000 in the aggregate.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky preferred stock will be equal to the greater of (i) a number of shares of Osprey Class A common stock equal in value (based on the Acquiror Closing Trading Price, as described below) to the liquidation preference payable with respect to such share of BlackSky preferred stock pursuant to BlackSky’s amended and restated certificate of incorporation and (ii) a number of shares of Osprey Class A common stock issuable with respect to one share of BlackSky Class A common stock in connection with the merger. Pursuant to the merger agreement, “Acquiror Closing Trading Price” means the average closing sale price of one share of Osprey Class A common stock on the New York Stock Exchange (“NYSE”) over the thirty day period ending three days prior to the closing of the merger.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky Class A common stock (also referred to herein as the “Class A Common Exchange Ratio”) will equal the quotient of (A) the portion of the Total Consideration Share Amount remaining after deducting the portion thereof payable in connection with the merger to the holders of BlackSky preferred stock, divided by (B) the number of participating shares of BlackSky Class A common stock issued and outstanding as of immediately prior to the effective time on a fully diluted basis (excluding shares of BlackSky Class A common stock issuable upon the conversion of BlackSky preferred stock that will receive their liquidation preference in connection with the merger and excluding shares of BlackSky Class B common stock).

Effective as of the effective time and by virtue of the merger, each BlackSky Stock Option that is outstanding and unexercised as of immediately prior to the effective time will be converted into an option to acquire a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of BlackSky Class A common stock subject to the applicable BlackSky Stock Option and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky Stock Option (each an “Assumed Osprey Stock Option”). The exercise price per share of each Assumed Osprey Stock Option will be equal to the quotient obtained by dividing (x) the exercise price per share applicable to such BlackSky Stock Option by (y) the Class A Common Exchange Ratio.

 

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Effective as of the effective time and by virtue of the merger, each BlackSky RSU Award that is outstanding as of immediately prior to the effective time will be converted into an award of Osprey restricted stock units covering a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of BlackSky common stock subject to the applicable BlackSky RSU Award and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky RSU Award.

Each warrant exercisable for shares of BlackSky common stock and BlackSky preferred stock (each a “BlackSky Warrant”) that is outstanding and unexercised as of immediately prior to the effective time will be (i) automatically exercised in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically exercised in connection with the merger (an “Exercising BlackSky Warrant”), (ii) automatically terminated in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically terminated if not exercised prior to the effective time (a “Terminating BlackSky Warrant”) or (iii) assumed by Osprey and converted into a warrant to acquire Osprey Class A common stock if the BlackSky Warrant is not a Terminating BlackSky Warrant or Exercising BlackSky Warrant.

 

Q:

WHEN WILL THE MERGER BE COMPLETED?

 

  A:

The parties currently expect that the merger will be completed during the third quarter of 2021. However, neither Osprey nor BlackSky can assure you of when or if the merger will be completed and it is possible that factors outside of the control of both companies could result in the merger being completed at a different time or not at all. Osprey must first obtain the approval of Osprey stockholders for each of the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal set forth in this proxy statement/consent solicitation statement/prospectus, BlackSky must first obtain the written consent of BlackSky stockholders adopting the merger agreement and approving the transactions contemplated thereby and Osprey and BlackSky must also first obtain certain necessary regulatory approvals and satisfy other closing conditions. See “The Merger Agreement—Conditions to the Merger” for more information.

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

 

  A:

If the merger is not completed, BlackSky equityholders will not receive any consideration for their shares of BlackSky common stock and BlackSky preferred stock or other BlackSky equity interests. Instead, BlackSky will remain an independent company. Under specified circumstances, BlackSky will be required to pay to Osprey a fee with respect to the termination of the merger agreement. See “The Merger Agreement—Termination—BlackSky Termination Fee” and “Risk Factors” for more information.

QUESTIONS AND ANSWERS ABOUT OSPREY’S SPECIAL STOCKHOLDER MEETING

 

Q:

WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

 

  A:

Osprey stockholders are being asked to vote on the following proposals:

 

  1.

the Business Combination Proposal;

 

  2.

the Amendment Proposals;

 

  3.

the Director Election Proposal;

 

  4.

the NYSE Proposal;

 

  5.

the Omnibus Incentive Plan Proposal;

 

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  6.

the ESPP Proposal; and

 

  7.

the Adjournment Proposal (if necessary).

The merger is conditioned upon the approval of the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal, subject to the terms of the merger agreement. The merger is not conditioned upon the approval of the Adjournment Proposal. Each of the Proposals (except the Adjournment Proposal) is cross-conditioned on the approval of each other.

 

Q:

WHY IS OSPREY PROPOSING THE MERGER?

 

  A:

Osprey was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (collectively, a “business combination”).

On November 5, 2019, Osprey completed its initial public offering, generating gross proceeds of $275,000,000. On November 11, 2019, the underwriters notified Osprey of their intention to exercise their over-allotment option in full on November 13, 2019, as a result of which the aggregate proceeds deposited in the Trust Account in connection with the initial public offering amounted to $316,250,000. Since Osprey’s initial public offering, Osprey’s activity has been limited to the evaluation of business combination candidates.

BlackSky is a leading provider of real-time geospatial intelligence, imagery and related data analytic products and services and mission systems. BlackSky monitors activities and facilities worldwide by harnessing the world’s emerging sensor networks and leveraging its own satellite constellation. BlackSky processes millions of observations from its constellation as well as a variety of space, IoT, and terrestrial based sensors and data feeds. BlackSky’s on-demand constellation of satellites can image a location multiple times throughout the day. BlackSky monitors for pattern-of-life anomalies to produce alerts and enhance situational awareness. BlackSky’s monitoring service is powered by cutting-edge compute techniques including machine learning, artificial intelligence, computer vision, and natural language processing. BlackSky’s global monitoring solution is available via a simple subscription and requires no IT infrastructure or setup. Based on its due diligence investigations of BlackSky and the industry in which it operates, including the financial and other information provided by BlackSky in the course of their negotiations in connection with the merger agreement, Osprey believes that BlackSky has a leading position in real-time geospatial intelligence, imagery and related data analytic products and services and mission systems and a management team with skills that are complementary to those of Osprey. As a result, Osprey’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to Osprey, that the proposed merger represents the best potential business combination for Osprey and the most attractive opportunity for Osprey’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential acquisition targets, and Osprey’s board of directors’ belief that such process has not presented a better alternative. See “The Merger—Recommendation of the Osprey Board of Directors and Reasons for the Merger”.

 

Q:

DID THE OSPREY BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE MERGER?

 

  A:

Osprey’s board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the merger. Osprey’s officers, directors and advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries, and concluded that their experience and backgrounds, together with the experience and sector expertise of Osprey’s financial advisors, enabled them to make the necessary analyses and determinations regarding the merger. In addition, Osprey’s officers, directors and advisors have

 

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  substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of Osprey’s board of directors and advisors in valuing BlackSky’s business.

 

Q:

DO I HAVE REDEMPTION RIGHTS?

 

  A:

If you are a holder of public shares, you have the right to demand that Osprey redeem such shares for a pro rata portion of the cash held in the Trust Account regardless of whether you vote for or against or abstain from voting on the Business Combination Proposal (such rights, “redemption rights”).

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption with respect to more than 15% of the public shares. Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group”, will not be redeemed.

Under Osprey’s existing charter, the merger may be consummated only if Osprey has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand redemption of their shares for cash. Additionally, BlackSky will not be required to consummate the merger if the amount of cash held in the Trust Account, minus the aggregate amount of cash required to satsify all Osprey stockholder redemptions, plus the proceeds from the PIPE Investment does not equal or exceed $225,000,000.

 

Q:

WILL HOW I VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?

 

  A:

No. You may exercise your redemption rights (subject to compliance with the requirements for redemption as described in “Osprey Special Meeting of Stockholders—Redemption Rights”) whether you vote your shares of Class A common stock for or against or abstain from voting on the Business Combination Proposal or any other Proposal described in this proxy statement/consent solicitation statement/prospectus. As a result, the merger can be approved by stockholders who will redeem their shares and no longer remain stockholders.

 

Q:

HOW DO I EXERCISE MY REDEMPTION RIGHTS?

 

  A:

If you are a holder of public shares and wish to exercise your redemption rights, you must (i) demand that Osprey redeem your shares for cash no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock to Continental, Osprey’s transfer agent, physically or electronically using Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system prior to the vote at the Osprey Special Meeting. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was $317,991,044.63, or approximately $10.05 per share, as of July 16, 2021, the Osprey record date). Such amount, including interest earned on the funds held in the Trust Account and not previously released to Osprey to pay its franchise and income taxes, will be paid promptly upon consummation of the merger. However, under Delaware law, the proceeds held in the Trust Account could be subject to claims which could take priority over those of Osprey’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time at which the vote is taken with respect to the Business Combination Proposal at the Osprey Special Meeting. If you deliver your shares for redemption to Osprey’s transfer agent and later decide prior to the Osprey Special Meeting not to elect redemption, you may simply request that Osprey’s transfer agent return the shares (physically or electronically).

 

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Any corrected or changed proxy card or written demand of redemption rights must be received by Osprey’s transfer agent prior to the vote taken on the Business Combination Proposal at the Osprey Special Meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the Osprey Special Meeting.

If a holder of public shares votes for or against the Business Combination Proposal and demand is properly made as described above, then, if the merger is consummated, Osprey will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your public shares for cash.

For a summary of the U.S. federal income tax considerations for holders of public shares with respect to the exercise of these redemption rights, see “United States Federal Income Tax Considerations—Redemption of Osprey Class A common stock”.

 

Q:

DOES A HOLDER OF OSPREY COMMON STOCK HAVE APPRAISAL RIGHTS IF THE HOLDER OBJECTS TO THE PROPOSED BUSINESS COMBINATION?

 

  A:

No. There are no appraisal rights available to holders of shares of Osprey common stock in connection with the merger.

 

Q:

WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE MERGER?

 

  A:

Following the closing of Osprey’s initial public offering, an amount equal to $275,000,000 ($10.00 per unit) from the net proceeds together with funds raised from the private sale of warrants simultaneously with the consummation of Osprey’s initial public offering, was placed in the Trust Account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 of the Investment Company Act which invest only in direct U.S. government treasury obligations until the earlier of (i) the consummation of a business combination or (ii) the distribution of the trust account. On November 13, 2019, in connection with the underwriters’ full exercise of their over-allotment option, Osprey consummated the sale of additional units and warrants, and an additional $41,250,000 of net proceeds was placed in the Trust Account, resulting in $316,250,000 held in the trust account as of November 13, 2019. After consummation of the merger, the funds in the Trust Account will be used to pay holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the merger (including aggregate fees of approximately $11,068,750 as deferred underwriting commissions related to Osprey’s initial public offering) and for New BlackSky’s working capital and general corporate purposes, including to pay down a portion of BlackSky’s debt.

 

Q:

WHAT HAPPENS IF A SUBSTANTIAL NUMBER OF PUBLIC STOCKHOLDERS VOTE IN FAVOR OF THE OSPREY BUSINESS COMBINATION PROPOSAL AND EXERCISE THEIR REDEMPTION RIGHTS?

 

  A:

Osprey’s public stockholders may vote in favor of the merger and still exercise their redemption rights. Accordingly, the merger may be consummated even though the funds available from the Trust Account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. However, BlackSky will not be required to consummate the merger if the amount of cash held in the Trust Account, minus the aggregate amount of cash required to satisfy all Osprey stockholder redemptions, plus the proceeds from the PIPE Investment does not equal or exceed $225,000,000. As of March 31, 2021, there was approximately $318,053,820 in the Trust Account. Thus, assuming there are $180,000,000 of proceeds from the PIPE Investment and a price of

 

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  approximately $10.05 per share of Osprey common stock, Osprey public stockholders holding approximately 27,169,534 shares of Osprey Class A common stock may exercise their redemption without depleting the amount held in the Trust Account below $225,000,000. Additionally, a public stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the public shares. With fewer public shares and public stockholders, the trading market for Osprey Class A common stock may be less liquid than the market for Osprey Class A common stock prior to the merger and Osprey may not be able to meet the listing standards of a national securities exchange. In addition, with fewer funds available from the Trust Account, the capital infusion from the Trust Account into BlackSky’s business will be reduced and New BlackSky may not be able to reduce its outstanding indebtedness as currently contemplated.

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT CONSUMMATED?

 

  A:

If Osprey does not complete the merger for any reason, Osprey would search for another target business with which to complete a business combination. If Osprey does not complete the merger with BlackSky or another target business by November 5, 2021, Osprey must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account divided by the number of outstanding public shares. The Sponsor has no redemption rights in the event a business combination is not effected in the required time period and, accordingly, its Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to Osprey’s outstanding warrants. Accordingly, such warrants will expire worthless.

 

Q:

HOW DOES THE SPONSOR INTEND TO VOTE ON THE PROPOSALS?

 

  A:

The Sponsor owns of record and is entitled to vote an aggregate of approximately 20% of the outstanding shares of Osprey common stock. The Sponsor, solely in its capacity as a stockholder of Osprey, has agreed to vote any Founder Shares and any other shares of Osprey stock held by them as of the record date in favor of the Proposals. See “Other Agreements—Sponsor Support Agreement” for more information.

 

Q:

WHAT CONSTITUTES A QUORUM AT THE OSPREY SPECIAL MEETING?

 

  A:

A majority of the voting power of the issued and outstanding Osprey stock entitled to vote at the Osprey Special Meeting must be present in person or represented by proxy at the Osprey Special Meeting to constitute a quorum and in order to conduct business at the Osprey Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The holder of the Founder Shares, who currently owns approximately 20% of the issued and outstanding shares of Osprey common stock, will count towards this quorum. In the absence of receipt of proxies representing a sufficient number of shares of Osprey common stock to approve the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal, the chairman of the Osprey Special Meeting has power to adjourn the Osprey Special Meeting. As of the record date for the Osprey Special Meeting, 19,765,626 shares of Osprey common stock would be required to achieve a quorum.

 

Q:

WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE OSPREY SPECIAL MEETING?

 

  A:

The Business Combination Proposal: The affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the Business

 

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  Combination

Proposal. Osprey stockholders must approve the Business Combination Proposal in order for the merger and the other transactions contemplated by the merger agreement to occur. If Osprey stockholders fail to approve the Business Combination Proposal, the merger will not occur. As further discussed in “Other Agreements—Sponsor Support Agreement”, the Sponsor has entered into an agreement with Osprey and BlackSky, pursuant to which the Sponsor, solely in its capacity as a stockholder of Osprey, has agreed to vote any shares of Osprey stock held by it in favor of the Business Combination Proposal and the other Proposals. Currently, the Sponsor holds shares representing approximately 20% of the aggregate voting power of the Osprey common stock.

The Amendment Proposals: The affirmative vote of the (i) holders of a majority of the outstanding shares of Osprey common stock, voting together as a single class, and (ii) the holders of a majority of the outstanding shares of Osprey Class B common stock, voting separately as a single class, is required to approve the Amendment Proposals. The merger is conditioned upon the approval of the Amendment Proposals, subject to the terms of the merger agreement. Notwithstanding the approval of the Amendment Proposals, if the merger is not consummated for any reason, the actions contemplated by the Amendment Proposals will not be effected.

The Director Election Proposal: The affirmative vote of at least a plurality of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the Director Election Proposal. The merger is conditioned upon the approval of the Director Election Proposal. Notwithstanding the approval of the Director Election Proposal, if the merger is not consummated for any reason, the actions contemplated by the Director Election Proposal will not be effected.

The NYSE Proposal: The affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the NYSE Proposal. The merger is conditioned upon the approval of the NYSE Proposal, subject to the terms of the merger agreement. Notwithstanding the approval of the NYSE Proposal, if the merger is not consummated for any reason, the actions contemplated by the NYSE Proposal will not be effected.

The Omnibus Incentive Plan Proposal: The affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the Omnibus Incentive Plan Proposal. The merger is conditioned upon the approval of the Omnibus Incentive Plan Proposal. Notwithstanding the approval of the Omnibus Incentive Plan Proposal, if the merger is not consummated for any reason, the actions contemplated by the Omnibus Incentive Plan Proposal will not be effected.

The ESPP Proposal: The affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the ESPP Proposal. The merger is conditioned upon the approval of the ESPP Proposal. Notwithstanding the approval of the ESPP Proposal, if the merger is not consummated for any reason, the actions contemplated by the ESPP Proposal will not be effected.

The Adjournment Proposal: The affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present, is required to approve the Adjournment Proposal. The merger is not conditioned upon the approval of the Adjournment Proposal. The chairman of the Osprey Special Meeting has the power to adjourn the Osprey Special Meeting only in the absence of receipt of proxies representing a sufficient number of shares of Osprey common stock to approve the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal.

 

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Q:

DO ANY OF OSPREY’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF OSPREY STOCKHOLDERS?

 

  A:

Certain members of the board of directors and executive officers of Osprey and the Sponsor, including their directors and executive officers, have interests in the merger that are different from, or in addition to, those of Osprey stockholders generally. The Osprey board of directors was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the merger agreement and in recommending that the Business Combination Proposal, the Amendment Proposal and the other proposals be approved by Osprey stockholders. See the section titled “The Merger—Interests of Osprey’s Directors and Officers in the Merger” of this proxy statement/consent solicitation statement/prospectus.

 

Q:

WHAT DO I NEED TO DO NOW?

 

  A:

After carefully reading and considering the information contained in this proxy statement/consent solicitation statement/prospectus, please submit your proxies as soon as possible so that your shares will be represented at the Osprey Special Meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by your broker, bank or other nominee if your shares are held in the name of your broker, bank or other nominee.

 

Q:

HOW DO I VOTE?

 

  A:

If you are a stockholder of record of Osprey as of July 16, 2021 (the “Osprey record date”) you may submit your proxy before the Osprey Special Meeting in any of the following ways:

 

   

use the toll-free number shown on your proxy card;

 

   

visit the website shown on your proxy card to vote via the Internet; or

 

   

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

If you are a stockholder of record of Osprey as of the Osprey record date, you may also cast your vote virtually at the Osprey Special Meeting.

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. “Street name” stockholders who wish to vote at the Osprey Special Meeting will need to obtain a proxy form from their broker, bank or other nominee.

 

Q:

WHEN AND WHERE IS THE OSPREY SPECIAL MEETING?

 

  A:

The Osprey Special Meeting of stockholders will be held on September 8, 2021, at 10:00 A.M., New York City time, at https://www.cstproxy.com/ospreytechnology/sm2021. In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Osprey stockholders and the community, the Osprey Special Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/ospreytechnology/sm2021 and entering your control number as further explained in the accompanying proxy statement/consent solicitation statement/prospectus. All Osprey stockholders as of the Osprey record date, or their duly appointed proxies, may attend the Osprey Special Meeting.

 

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Q:

IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

 

  A:

If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to Osprey or by voting virtually at the Osprey Special Meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank or other nominee. In addition to such legal proxy, if you plan to attend the Osprey Special Meeting, but are not a stockholder of record because you hold your shares in “street name”, please bring evidence of your beneficial ownership of your shares (e.g., a copy of a recent brokerage statement showing the shares) and valid photo identification with you to the Osprey Special Meeting.

Under the rules of the NYSE, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Osprey Special Meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are an Osprey stockholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal or the Adjournment Proposal. Such broker non-votes will have no effect on such proposals, except for the Amendment Proposals for which a broker non-vote will be the equivalent of a vote “AGAINST” such proposals.

 

Q:

WHAT IF I ATTEND THE OSPREY SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?

 

  A:

For purposes of the Osprey Special Meeting, an abstention occurs when a stockholder attends the meeting in person and does not vote or returns a proxy with an “abstain” vote.

If you are an Osprey stockholder that attends the Osprey Special Meeting in person and fails to vote on the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal or the Adjournment Proposal, or if you respond to such proposals with an “abstain” vote, your failure to vote or “abstain” vote in each case will have no effect on such proposals, except for the Amendment Proposals for which your failure to vote will be the equivalent of a vote “AGAINST” such proposal.

 

Q:

WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

 

  A:

If you sign and return your proxy card without indicating how to vote on any particular proposal, the Osprey stock represented by your proxy will be voted as recommended by the Osprey board of directors with respect to that proposal.

 

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Q:

MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?

 

  A:

Yes. You may change your vote at any time before your proxy is voted at the Osprey Special Meeting. You may do this in one of three ways:

 

   

filing a notice with the corporate secretary of Osprey;

 

   

mailing a new, subsequently dated proxy card; or

 

   

by attending the Osprey Special Meeting virtually and electing to vote your shares virtually.

If you are a stockholder of record of Osprey and you choose to send a written notice or to mail a new proxy, you must submit your notice of revocation or your new proxy to c/o Osprey, 1845 Walnut Street, Suite 1111, Philadelphia, PA 19103, and it must be received at any time before the vote is taken at the Osprey Special Meeting. Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 10:00 A.M., New York City time, on September 8, 2021, or by voting virtually at the Osprey Special Meeting. Simply attending the Osprey Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares of Osprey common stock, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

 

Q:

WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE OSPREY SPECIAL MEETING?

 

  A:

If you fail to take any action with respect to the Osprey Special Meeting and the merger is approved by stockholders and consummated, you will continue to be a stockholder of Osprey. You may exercise your redemption rights (subject to compliance with the requirements for redemption as described in “Osprey Special Meeting of Stockholders—Redemption Rights”) whether you vote your shares of Class A common stock for or against or abstain from voting on the Business Combination Proposal or any other Proposal described in this proxy statement/consent solicitation statement/prospectus. If you fail to take any action with respect to the Osprey Special Meeting and the merger is not approved, you will continue to be a stockholder of Osprey while Osprey searches for another target business with which to complete a business combination.

 

Q:

WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

 

  A:

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/consent solicitation statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered under more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares.

 

Q:

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY REDEMPTION RIGHTS?

 

  A:

The U.S. federal income tax consequences of the redemption depend on each stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your particular tax consequences from the merger. See “United States Federal Income Tax Considerations” for more information.

 

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Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS OR VOTING?

 

  A:

If you have any questions about the proxy materials, need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/consent solicitation statement/prospectus or the enclosed proxy card, you should contact Morrow Sodali LLC, Osprey’s proxy solicitor, by calling (800) 662-5200 or banks and brokers can call collect at (203) 658-9400, or request such documents in writing at Morrow Sodali LLC, 1335 N Astor Street, #3A, Chicago, Illinois 60610-2142. You may also request additional copies of this proxy statement/consent solicitation statement/prospectus or the enclosed proxy card by calling (212) 920-1345 or by written request to Secretary at Osprey Technology Acquisition Corp., 1845 Walnut Street, Suite 1111, Philadelphia, PA 19103.

QUESTIONS AND ANSWERS ABOUT BLACKSKY’S CONSENT SOLICITATION

 

Q:

WHO IS ENTITLED TO GIVE A WRITTEN CONSENT FOR BLACKSKY?

 

  A:

Holders of outstanding shares of BlackSky common stock and holders of outstanding BlackSky preferred stock will be entitled to give a consent using the form of written consent furnished with this proxy statement/consent solicitation statement/prospectus.

 

Q:

WHAT APPROVAL IS REQUIRED BY BLACKSKY STOCKHOLDERS TO ADOPT THE MERGER AGREEMENT?

 

  A:

The merger cannot be completed unless the conditions to the merger set forth in the merger agreement are satisfied or waived, including (among others) the approval by BlackSky’s stockholders of the BlackSky Business Combination Proposal. The BlackSky Business Combination Proposal requires the approval of the holders of (i) at least a majority of the voting power of the outstanding shares of BlackSky common stock and preferred stock (calculated on an as-converted to BlackSky common stock basis), voting or acting by written consent together as a single class, and (ii) at least a majority of outstanding shares of BlackSky preferred stock, voting or acting by written consent together as a single class. As of June 30, 2021, there were 353,555,227 shares of BlackSky Class A common stock, 71,976,536 shares of BlackSky Class B common stock and 79,055,236 shares of BlackSky preferred stock outstanding and entitled to vote.

 

Q:

DO ANY OF BLACKSKY’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF BLACKSKY STOCKHOLDERS?

 

  A:

BlackSky’s executive officers and directors may have interests in the merger that may be different from, or in addition to, the interests of BlackSky stockholders generally. The BlackSky board of directors was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the merger agreement and in recommending that the merger agreement be approved by the stockholders of BlackSky. See “The Merger—Interests of BlackSky Directors and Executive Officers in the Merger” for more information.

 

Q:

HOW CAN I RETURN MY WRITTEN CONSENT?

 

  A:

If you hold shares of BlackSky common stock or BlackSky preferred stock and you wish to submit your consent, you must fill out the written consent furnished with this proxy statement/consent solicitation statement/prospectus, date and sign it, and promptly return it to BlackSky. Once you have completed, dated and signed your written consent, deliver it to BlackSky by emailing a .pdf copy of your written consent to Blacksky-IR@blacksky.com or by mailing your written consent to BlackSky Holdings, Inc., 13241 Woodland Park Road, Suite 300, Herndon, VA 20171, Attention: Chief Financial

 

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  Officer. BlackSky does not intend to hold a stockholders’ meeting to consider the BlackSky Business Combination Proposal, and, unless BlackSky decides to hold a stockholders’ meeting for such purposes, you will be unable to vote in person by attending a stockholders’ meeting.

 

      

Certain BlackSky stockholders (the “Key Stockholders”) entered into support agreements with Osprey, BlackSky and Merger Sub (the “Stockholder Support Agreements”). There are no additional members of BlackSky management other than Brian O’Toole and Brian Daum who are among the Key Stockholders and there are no additional greater than 10% stockholders among the Key Stockholders other than Mithril, Seahawk SPV Investment LLC and VCVC IV LLC. As of June 30, 2021, the Key Stockholders held approximately 78.11% of the outstanding shares of BlackSky common stock (calculated on an as-converted basis) and approximately 76.21% of the outstanding shares of BlackSky preferred stock. Under the Stockholder Support Agreements, the Key Stockholders agreed, promptly following the SEC declaring this proxy statement/consent solicitation statement/prospectus effective, to execute and deliver a written consent with respect to the outstanding shares of BlackSky common stock and BlackSky preferred stock held by the Key Stockholders, adopting the merger agreement and approving the merger, subject to certain exceptions. For a more detailed description of the Stockholder Support Agreement, see “Other Agreements—Stockholder Support Agreement.”

 

Q:

WHAT OPTIONS DO I HAVE WITH RESPECT TO THE PROPOSED MERGER?

 

  A:

With respect to the shares of BlackSky common stock and BlackSky preferred stock that you hold, you may execute a written consent to approve the BlackSky Business Combination Proposal (which is equivalent to a vote for the proposal). If you fail to execute and return your written consent, or otherwise withhold your written consent, it has the same effect as voting against the BlackSky Business Combination Proposal.

 

Q:

CAN I DISSENT AND REQUIRE APPRAISAL OF MY SHARES?

 

  A:

If you are a BlackSky stockholder who does not consent to the merger agreement, and the merger is completed, you will, by complying with Section 262 of the DGCL, not otherwise waiving or losing appraisal rights and continuously holding such shares from the date of making a written demand for appraisal through the effective time of the merger, be entitled, under Section 262 of the DGCL, to have your shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be “fair value” (or in certain circumstances described herein, on the difference between the amount determined to be the fair value and the amount paid by the surviving corporation in the merger to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding). The “fair value” of your shares as so determined by the Delaware Court of Chancery could be greater than, the same as or less than the consideration payable pursuant to the merger agreement. Section 262 of the DGCL is attached to this proxy statement/consent solicitation statement/prospectus as Annex D. Failure to follow any of the statutory procedures set forth in Annex D may result in the loss or waiver of appraisal rights under Delaware law. Delaware law requires that, among other things, if the merger agreement receives the requisite BlackSky stockholder approval, then a notice of appraisal rights must be given, which notice will be given to non-consenting BlackSky stockholders in the future. This proxy statement/consent solicitation statement/prospectus is not intended to constitute such a notice, BlackSky is not yet obligated to give such notice and it is not yet known whether you are entitled to such appraisal rights. As such, BlackSky recommends that you not send in any demand for appraisal rights before such notice (if any) is given because any demand for appraisal made prior to your receipt of such notice may not be effective to perfect your rights. See “Appraisal Rights” for more information.

 

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Q:

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO BLACKSKY EQUITYHOLDERS?

 

  A:

The parties intend for the merger to qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986 (the “Code”).

The U.S. federal income tax consequences of the merger depend on each stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your particular tax consequences from the merger. See “United States Federal Income Tax Considerations” for more information.

 

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE CONSENT SOLICITATION?

 

  A:

If you are a BlackSky stockholder and have any questions about the merger or how to return your written consent, or if you need additional copies of this proxy statement/consent solicitation statement/prospectus or a replacement written consent, you should contact BlackSky by email at Blacksky-IR@blacksky.com or by mail to BlackSky Holdings, Inc., 13241 Woodland Park Road, Suite 300, Herndon, VA 20171, Attention: Chief Financial Officer.

 

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SUMMARY

This summary highlights selected information included in this proxy statement/consent solicitation statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annexes and the other documents to which we refer before you decide how to vote.

The Merger and the Merger Agreement

The terms and conditions of the merger are contained in the merger agreement, which is attached as Annex A to this proxy statement/consent solicitation statement/prospectus. We encourage you to read the merger agreement carefully, as it is the legal document that governs the merger.

If the merger agreement and the transactions contemplated thereby are approved by BlackSky stockholders and Osprey stockholders, and the other conditions to the merger set forth in the merger agreement are satisfied or waived, Merger Sub will merge with and into BlackSky, with BlackSky being the surviving company and a wholly-owned subsidiary of Osprey.

Merger Consideration

Pursuant to the merger agreement, at the effective time, each outstanding share of BlackSky capital stock (other than shares of BlackSky Class B common stock, treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) will be converted into a number of shares of Osprey Class A common stock based on the Per Share Exchange Ratio applicable thereto (as defined in the merger agreement and described herein) and each outstanding BlackSky restricted stock unit, option and warrant will be converted into an Osprey restricted stock unit, option or warrant based on the Per Share Exchange ratio applicable to shares of BlackSky Class A common stock.

The total number of shares of Osprey Class A common stock issuable to the BlackSky equityholders (including shares issuable upon the exercise or conversion of BlackSky Stock Options, BlackSky Warrants and BlackSky RSU Awards assumed by Osprey) in connection with the merger (which is referred to herein as the “Total Consideration Share Amount”) will be calculated by dividing (x) an amount equal to (a) $925,000,000, plus (b) the aggregate exercise prices that would be paid to BlackSky if all options and warrants to purchase BlackSky capital stock outstanding immediately prior to the effective time were exercised in full, minus (c) an amount (not to exceed $1.8 million) equal to the unfunded portion of a bridge loan BlackSky has the right to incur prior to the closing of the merger, and minus (d) the total consideration payable for shares of BlackSky’s Class B common stock in connection with the merger (which amount will equal less than $1,000 in the aggregate) by (y) $10.00. Based on the aggregate exercise prices of the BlackSky options and warrants anticipated to be outstanding as of immediately prior to the effective time and the amount of the BlackSky bridge loan that is anticipated to remain unfunded as of the effective time, it is currently expected that the total number of shares of Osprey Class A common stock constituting the Total Consideration Share Number will equal approximately 92,470,589 shares. For an illustrative example calculation of the Total Consideration Share

Amount, see the section in this proxy statement/consent solicitation statement/prospectus titled “The Merger Agreement—Merger Consideration”. The actual Total Consideration Share Amount will not be determined until the closing of the merger, and any change in the amounts used to calculate the Total Consideration Share Amount at the time of closing, as compared to the amounts used for purposes of the above estimate, will result in a change to the actual amount of the Total Consideration Share Amount.

Pursuant to the merger agreement, each issued and outstanding share of BlackSky Class B common stock will be converted into the right to receive cash consideration equal to $0.00001 per share. The total cash consideration payable to the holders of BlackSky Class B common stock in connection with the merger will equal less than $1,000 in the aggregate.


 

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Effective as of the effective time and by virtue of the merger, each share of BlackSky preferred stock and each share of BlackSky Class A common stock that is issued and outstanding immediately prior to the effective time will be cancelled and automatically converted into the right to receive a number of shares of Osprey Class A common stock equal to the Per Share Exchange Ratio (as defined in the merger agreement) that is applicable to such share.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky preferred stock will be equal to the greater of (i) a number of shares of Osprey Class A common stock equal in value (based on the Acquiror Closing Trading Price, as described below) to the liquidation preference payable with respect to such share of BlackSky preferred stock pursuant to BlackSky’s amended and restated certificate of incorporation and (ii) a number of shares of Osprey Class A common stock issuable with respect to one share of BlackSky Class A common stock in connection with the merger. Pursuant to the merger agreement, “Acquiror Closing Trading Price” the average closing sale price of one share of Osprey Class A common stock on the NYSE over the thirty day period ending three days prior to the closing of the merger.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky Class A common stock (also referred to herein as the “Class A Common Exchange Ratio”) will equal the quotient of (A) the portion of the Total Consideration Share Amount remaining after deducting the portion thereof payable in connection with the merger to the holders of BlackSky preferred stock, divided by (B) the number of participating shares of BlackSky Class A common stock issued and outstanding as of immediately prior to the effective time on a fully diluted basis (excluding shares of BlackSky Class A common stock issuable upon the conversion of BlackSky preferred stock that will receive their liquidation preference in connection with the merger and excluding shares of BlackSky Class B common stock).

Treatment of BlackSky Options, RSU & Warrants in the Merger

Effective as of the effective time and by virtue of the merger, each BlackSky Stock Option that is outstanding and unexercised as of immediately prior to the effective time will be converted into an option to acquire a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of BlackSky Class A common stock subject to the applicable BlackSky Stock Option and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky Stock Option (each an “Assumed Osprey Stock Option”). The exercise price per share of each Assumed Osprey Stock Option will be equal to the quotient obtained by dividing (x) the exercise price per share applicable to such BlackSky Stock Option by (y) the Class A Common Exchange Ratio.

Effective as of the effective time and by virtue of the merger, each BlackSky RSU Award that is outstanding as of immediately prior to the effective time will be converted into an award of Osprey restricted stock units covering a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of BlackSky common stock subject to the applicable BlackSky RSU Award and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky RSU Award.

Each BlackSky Warrant that is outstanding and unexercised as of immediately prior to the effective time will be (i) automatically exercised in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically exercised in connection with the merger (an “Exercising BlackSky Warrant”), (ii) automatically terminated in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically terminated if not exercised prior to the effective time (a “Terminating BlackSky Warrant”) or (iii) assumed by Osprey and converted into a warrant to acquire Osprey Class A common stock if the BlackSky Warrant is not a Terminating BlackSky Warrant or Exercising BlackSky Warrant.


 

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Recommendation of the BlackSky Board of Directors

After consideration, the BlackSky board of directors unanimously adopted resolutions, determining that the merger agreement and the transactions contemplated thereby, including the merger agreement, were advisable, fair to, and in the best interests of BlackSky and its stockholders, approved and authorized the merger agreement and the transactions contemplated thereby, including the merger and authorized and directed that the merger agreement be submitted to the stockholders of BlackSky for consideration and the solicitation of a written consent of such stockholders to, among other things, adopt and approve the merger agreement. The BlackSky board of directors unanimously recommends that the BlackSky stockholders adopt and approve the merger agreement and approve the transactions contemplated thereby by executing and delivering the written consent furnished with this proxy statement/consent solicitation statement/prospectus.

For a description of various factors considered by the BlackSky board of directors in reaching its decision to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, see “The Merger—Recommendation of the BlackSky Board of Directors and Reasons for the Merger”.

Recommendation of the Osprey Board of Directors

The Osprey board of directors has unanimously determined that the merger, on the terms and conditions set forth in the merger agreement, is advisable and in the best interests of Osprey and its stockholders and has directed that the proposals set forth in this proxy statement/consent solicitation statement/prospectus be submitted to its stockholders for approval at the Osprey Special Meeting on the date and at the time and place set forth in this proxy statement/consent solicitation statement/prospectus. The Osprey board of directors unanimously recommends that Osprey’s stockholders vote “FOR” the Business Combination Proposal, “FOR” the Amendment Proposals, “FOR” the Director Election Proposal, “FOR” the NYSE Proposal, “FOR” the Omnibus Incentive Plan Proposal, “FOR” the ESPP Proposal and “FOR” the Adjournment Proposal (if necessary). See “The Merger—Recommendation of the Osprey Board of Directors and Reasons for the Merger for more information.

BlackSky Solicitation of Written Consents

BlackSky Stockholders Entitled to Consent

Only BlackSky stockholders of record holding shares of BlackSky common stock or BlackSky preferred stock outstanding are entitled to sign and deliver written consents with respect to the BlackSky Business Combination Proposal pursuant to the instructions in the “Submission of Consents” section below. As of June 30, 2021, there were 353,555,227 shares of BlackSky Class A common stock, 71,976,536 shares of BlackSky Class B common stock and 79,055,236 shares of BlackSky preferred stock outstanding and entitled to sign and deliver written consents with respect to the BlackSky Business Combination Proposal.

Consents; Required Consents

Written consents from the holders of (i) at least a majority of the voting power of the outstanding shares of BlackSky common stock and preferred stock (calculated on an as-converted to BlackSky common stock basis), voting or acting by written consent together as a single class, and (ii) a majority of the outstanding shares of BlackSky preferred stock, acting together as a single class, are required to adopt the BlackSky Business Combination Proposal.

In connection with the entry by the parties into the merger agreement, the Key Stockholders entered into the Stockholder Support Agreements with Osprey and BlackSky. Under the Stockholder Support Agreements, the Key Stockholders agreed, promptly following the SEC declaring this proxy statement/consent solicitation


 

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statement/prospectus effective and solely in their capacities as stockholders of BlackSky, to execute and deliver a written consent with respect to the outstanding shares of BlackSky common stock and BlackSky preferred stock held by the Key Stockholders adopting the merger agreement and approving the merger unless the merger is no longer recommended by the BlackSky board of directors in accordance with the merger agreement, in which case, the Key Stockholders would vote 35% of their shares of BlackSky stock adopting the merger agreement and would be entitled, in their sole discretion, to vote their remaining shares in any manner. The shares of BlackSky common stock that are owned by the Key Stockholders and subject to the Stockholder Support Agreements represent approximately 78.11% of the outstanding voting power of BlackSky common stock and approximately 76.21% outstanding voting power of BlackSky preferred stock (on an as converted to BlackSky common stock basis). The delivery of the written consents by the Key Stockholders pursuant to the Stockholder Support Agreements with respect to the shares of BlackSky common stock and BlackSky preferred stock that are owned by the Key Stockholders adopting the merger agreement will be sufficient to adopt the merger agreement and thereby approve the merger and the other transactions contemplated by the merger agreement, except in the event of a change of recommendation by the BlackSky board of directors in accordance with the merger agreement.

Submission of Consents

You may consent to the BlackSky Business Combination Proposal with respect to your shares of BlackSky common stock and/or BlackSky preferred stock by completing, dating and signing the written consent enclosed with this proxy statement/consent solicitation statement/prospectus and returning it to BlackSky.

If you hold shares of BlackSky common stock or BlackSky preferred stock and you wish to give your written consent, you must fill out the written consent furnished with this proxy statement/consent solicitation statement/prospectus, date and sign it, and promptly return it to BlackSky. Once you have completed, dated and signed the written consent, you may deliver it to BlackSky by emailing a .pdf copy to Blacksky-IR@blacksky.com or by mailing it to BlackSky Holdings, Inc., 13241 Woodland Park Road, Suite 300, Herndon, VA 20171, Attention: Chief Financial Officer.

Once a sufficient number of consents to adopt the merger agreement has been received, the consent solicitation will conclude. The delivery of the written consents by the Key Stockholders pursuant to the Stockholder Support Agreements with respect to the shares of BlackSky common stock and/or BlackSky preferred stock that are owned by the Key Stockholders adopting the merger agreement will be sufficient to adopt the merger agreement and thereby approve the merger and the other transactions contemplated by the merger agreement, except in the event of a change of recommendation by the BlackSky board of directors in accordance with the merger agreement.

Executing Consents; Revocation of Consents

You may execute a written consent only to approve the BlackSky Business Combination Proposal. A written consent to approve the BlackSky Business Combination Proposal is equivalent to a vote for such proposals.

If you do not return your written consent, it will have the same effect as a vote against the BlackSky Business Combination Proposal. If you are a record holder of shares of BlackSky common stock or BlackSky preferred stock and you return a signed written consent, you will have consented to the proposals.

Solicitation of Consents; Expenses

The expense of preparing, printing and mailing these consent solicitation materials to BlackSky stockholders is being borne by BlackSky. Officers and employees of BlackSky may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular salaries but no special compensation for soliciting consents.


 

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Stock Ownership of BlackSky Directors and Executive Officers

As of the close of business on the record date, the directors and executive officers of BlackSky collectively beneficially owned and were entitled to vote (i) 244,515,772 shares of BlackSky common stock, which represent, in the aggregate, approximately 38.27% of BlackSky common stock outstanding on that date and (ii) 12,996,727 shares of BlackSky preferred stock, which represent, in the aggregate, approximately 16.27% of BlackSky preferred stock outstanding on that date.

Osprey Special Meeting of Stockholders

The special meeting of Osprey stockholders (the “Osprey Special Meeting”) will be held on September 8, 2021, at 10:00 A.M., New York City time, at https://www.cstproxy.com/ospreytechnology/sm2021. In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Osprey stockholders and the community, the Osprey Special Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/ospreytechnology/sm2021 and entering your control number as further explained in the accompanying proxy statement/consent solicitation statement/prospectus. At the Osprey Special Meeting, Osprey stockholders will be asked to approve the Business Combination Proposal, the Amendment Proposals, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal (if necessary).

The Osprey board of directors has fixed the close of business on July 16, 2021 (“Osprey record date”) as the record date for determining the holders of Osprey common stock entitled to receive notice of and to vote at the Osprey Special Meeting. As of the Osprey record date, there were 31,625,000 shares of Osprey Class A common stock and 7,906,250 shares of Osprey Class B common stock outstanding and entitled to vote at the Osprey Special Meeting. Each share of Osprey common stock entitles the holder to one vote at the Osprey Special Meeting on each proposal to be considered at the Osprey Special Meeting. As of the Osprey record date, the Sponsor owned and was entitled to vote 7,906,250 shares of Osprey common stock, representing approximately 20% of the shares of Osprey common stock outstanding on that date. Osprey currently expects that the Sponsor will vote its shares in favor of the Proposals set forth in this proxy statement/consent solicitation statement/prospectus, and, pursuant to the Sponsor Support Agreement, the Sponsor, solely in its capacity as a stockholder of Osprey, has agreed to do so. As of the Osprey record date, BlackSky did not beneficially hold any shares of Osprey common stock.

A majority of the voting power of the issued and outstanding Osprey stock entitled to vote at the Osprey Special Meeting must be present in person or represented by proxy at the Osprey Special Meeting to constitute a quorum and in order to conduct business at the Osprey Special Meeting.

Approval of each of the Business Combination Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal (if necessary) requires the affirmative vote of at least a majority of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present. Approval of the Director Election Proposal requires the affirmative vote of at least a plurality of the votes cast by the stockholders of Osprey present in person or represented by proxy at the Osprey Special Meeting and entitled to vote thereon, assuming a quorum is present. Approval of the Amendment Proposals requires the affirmative vote of (i) holders of a majority of the outstanding shares of Osprey common stock, voting together as a single class and (ii) holders of a majority of the outstanding shares of Class B common stock voting separately as a single class.

The merger is conditioned upon the approval of the Business Combination Proposal, the Amendment Proposal, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the


 

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ESPP Proposal, subject to the terms of the merger agreement. The merger is not conditioned upon the approval of the Adjournment Proposal. Each of the Proposals (except the Adjournment Proposal) is cross-conditioned on the approval of each other.

BlackSky’s Directors and Executive Officers Have Financial Interests in the Merger

Certain of BlackSky’s executive officers and directors may have interests in the merger that may be different from, or in addition to, the interests of BlackSky’s stockholders generally. The BlackSky board of directors was aware of and considered these interests to the extent that such interests existed at the time, among other matters, in approving the merger agreement and in recommending that BlackSky stockholders approve the BlackSky Business Combination Proposal. See “The Merger—Interests of BlackSky’s Directors and Executive Officers in the Merger” for more information.

Osprey’s Directors and Executive Officers Have Financial Interests in the Merger

Certain members of the board of directors and executive officers of Osprey and the Sponsor, including their directors and executive officers, have interests in the merger that may be different from, or in addition to, those of Osprey stockholders generally. The Osprey board of directors was aware of and considered these interests, among other matters, in approving the merger agreement and in recommending that Osprey stockholders approve the Business Combination Proposal, the Amendment Proposal and the other proposals. See “The Merger—Interests of Osprey’s Directors and Officers in the Merger” for more information.

Regulatory Approvals Required for the Merger

Completion of the merger is subject to the termination or expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and consents, approvals, and/or notices under the Communications Act of 1934, as amended (the “Communications Act”) and the Land Remote Sensing Policy Act of 1992, as amended (the “Policy Act”). Osprey has agreed to use its reasonable best efforts to obtain all required regulatory approvals and/or consents and BlackSky has agreed to request early termination of any waiting period under the HSR Act. Osprey and BlackSky are in the process of filing notices and applications to obtain the necessary regulatory consents and/or approvals. The parties submitted filings under the Communications Act to the Federal Communications Commission (the “FCC”) and a notice under the Policy Act to the National Oceanic and Atmospheric Administration (“NOAA”). The FCC granted the required regulatory approvals on April 27, 2021. NOAA acknowledged receipt of the notice filed and since March 22, 2021, has not sought additional information, although there can be no assurance that NOAA will not seek additional information or take action as a result of the transaction that would impose terms, conditions or restrictions not currently contemplated. The regulatory approvals and/or consents to which completion of the merger is subject are described in more detail in “Regulatory Approvals Required for the Merger.

United States Federal Income Tax Considerations

A holder of Osprey Class A common stock that exercises its redemption rights to receive cash in exchange for such shares may be treated as selling Osprey Class A common stock resulting in the recognition of capital gain or capital loss (assuming such holder holds its Osprey Class A common stock as a capital asset). There may be certain circumstances in which the redemption may be treated as a distribution, which would result in alternative treatment. See “United States Federal Income Tax Considerations” for more information.

Tax consequences to any given holder will depend on such holder’s particular facts and circumstances. Accordingly, each holder should consult its tax advisors as to the tax consequences of a redemption.


 

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Appraisal Rights

Under Section 262 of the DGCL, if the merger is completed, holders of shares of BlackSky common stock who do not consent to the adoption of the merger agreement, and who otherwise follow the procedures set forth in Section 262 of the DGCL, who have not otherwise waived or lost appraisal rights and who continuously hold such shares from the date of making written demand for appraisal through the effective time of the merger will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be “fair value” (or in certain circumstances described herein, on the difference between the amount determined to be the fair value and the amount paid by the surviving corporation in the merger to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding). BlackSky stockholders considering seeking appraisal should be aware that the “fair value” of their shares as so determined by the Delaware Court of Chancery could be greater than, the same as or less than the consideration they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

Any holder of shares of BlackSky common stock wishing to exercise appraisal rights must, within 20 days after the date of mailing of the notice of their right to demand appraisal is given (which is not this proxy statement/consent solicitation statement/prospectus, has not yet been given and will only be given if the merger agreement receives requisite BlackSky stockholder approval), make a written demand for the appraisal of the stockholder’s shares to BlackSky (as the surviving corporation in the merger), and that stockholder must not submit a written consent approving the adoption of the merger agreement. Failure to follow the procedures specified under Section 262 of the DGCL may result in the loss of appraisal rights. See “Appraisal Rights” and Section 262 of the DGCL attached to this proxy statement/consent solicitation statement/prospectus as Annex D for more information.

Conditions to the Merger

Conditions to Each Party’s Obligations

The respective obligations of each of BlackSky and Osprey to complete the merger are subject to the satisfaction of the following conditions (any one or more of which may be waived (if legally permitted) by the mutual written agreement of BlackSky and Osprey):

 

   

(i) the applicable waiting period(s) under the HSR Act in respect of the transactions contemplated by the merger agreement shall have expired or been terminated, (ii) all approvals and/or consents under the Communications Act required under such applicable laws to be obtained prior to the closing of the merger shall have been obtained, or deemed to have been obtained, and (iii) all approvals and/or consents under the Policy Act required under such applicable laws to be obtained prior to the closing of the merger shall have been obtained, or deemed to have been obtained;

 

   

there shall not have been enacted, promulgated or in effect any law, governmental order, statute, rule or regulation that has been promulgated or enacted by a governmental authority of competent jurisdiction enjoining, prohibiting or making illegal the consummation of the merger;

 

   

the redemption offer in relation to the public shares shall have been completed in accordance with the terms of the merger agreement and this proxy statement/consent solicitation statement/prospectus;

 

   

Osprey shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining in the Trust Account after the closing of the merger and after giving effect to the payment of the aggregate amount of cash that will be required to satisfy the redemption of any shares of Osprey Class A common stock pursuant to the redemption offer;


 

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BlackSky shall have solicited and obtained the approval of the merger by holders of (i) at least a majority of the voting power of the outstanding shares of BlackSky preferred stock, on an as-converted to BlackSky common stock basis, voting or acting by written consent together as a single class, and (ii) a majority of the then outstanding BlackSky common stock then issued or issuable upon conversion of the then outstanding shares of BlackSky preferred stock, voting or acting by written consent together as a single class (the “BlackSky Stockholder Approval”);

 

   

the required approval by Osprey stockholders of the Business Combination Proposal, the Amendment Proposal, the Director Election Proposal, the NYSE Proposal, the Omnibus Incentive Plan Proposal and the ESPP Proposal shall have been obtained;

 

   

the Osprey Class A common stock to be issued in connection with the merger and the PIPE shall have been approved for listing on the NYSE (subject to official notice of issuance) and, as of immediately following the effective time, Osprey shall be in compliance, in all material respects, with applicable initial and continuing listing requirements of the NYSE, and Osprey shall not have received any notice of non-compliance therewith from the NYSE that has not been cured or would not be cured at or immediately following the effective time; and

 

   

this registration statement on Form S-4 shall have become effective and no stop order suspending the effectiveness shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.

Conditions to Obligations of Osprey

The obligation of Osprey to complete the merger is also subject to the satisfaction, or waiver by Osprey, of the following conditions:

 

   

the accuracy of the representations and warranties of BlackSky as of the date of the merger agreement and as of the closing date of the merger (or, to the extent such representations and warranties expressly relate to an earlier date, the accuracy on and as of such earlier date), other than, in most cases, any failure to be true and correct that has not had and would not reasonably be expected to have a material adverse effect on BlackSky;

 

   

the performance of or compliance with, in all material respects, each of the covenants of BlackSky required by the merger agreement to be performed or complied with as of or prior to the closing of the merger;

 

   

the absence of a material adverse effect on BlackSky since the date of the merger agreement;

 

   

BlackSky’s delivery to Osprey of a certificate signed by an officer of BlackSky certifying that the three preceding conditions have been fulfilled; and

 

   

the delivery by BlackSky to Osprey of either (A) the Secured Loan Agreement consents, duly executed by the requisite lenders and agents under the Secured Loan Agreement, which consents shall be in full force and effect as of the closing date and all conditions required to be satisfied as of the closing date under the Secured Loan Agreement consents shall have been (or simultaneously with closing will be) satisfied, or (B) a customary “payoff letter” or similar document for the Secured Loan Agreement (the “Secured Payoff Letter”), which Secured Payoff Letter shall (x) specify the aggregate amount required to be paid to fully satisfy all amounts outstanding as of the closing with respect to the Secured Loan Agreement (the “Secured Payoff Amount”), (y) state that upon receipt of the Secured Payoff Amount under such Secured Payoff Letter, the payment obligations of BlackSky under the Secured Loan Agreement and all related loan documents shall be automatically terminated and (z) provide for the release of all guarantees, liens and other security over the properties and assets of BlackSky and its subsidiaries securing any obligations under the Secured Loan Agreement upon payment of the Secured Payoff Amount;


 

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the delivery by BlackSky to Osprey of a customary “payoff letter” or similar document for the SVB Loan Agreement (the “SVB Payoff Letter”), which SVB Payoff Letter shall (x) specify the aggregate amount required to be paid to fully satisfy all amounts outstanding as of the closing with respect to the SVB Loan Agreement (the “SVB Payoff Amount”), (y) state that upon receipt of the SVB Payoff Amount under such SVB Payoff Letter, the payment obligations of BlackSky under the SVB Loan Agreement and all related loan documents shall be automatically terminated and (z) provide for the release of all guarantees, liens and other security over the properties and assets of BlackSky and its subsidiaries securing any obligations under the SVB Loan Agreement upon payment of the SVB Payoff Amount; and

 

   

the delivery by BlackSky to Osprey of a customary “payoff letter” or similar document for the PPP Loan Agreement or proof of termination and payment in full of all amounts outstanding under the PPP Loan Agreement.

Conditions to Obligations of BlackSky

The obligation of BlackSky to complete the merger is also subject to the satisfaction or waiver by BlackSky of the following conditions:

 

   

the accuracy of the representations and warranties of Osprey and Merger Sub as of the date of the merger agreement and as of the closing date of the merger (or, to the extent such representations and warranties expressly relate to an earlier date, the accuracy as of such earlier date), other than, in most cases, any failure to be true and correct that has not had and would not reasonably be expected to have a material adverse effect on Osprey and Merger Sub;

 

   

the performance of or compliance with, in all material respects, each of the covenants of Osprey and Merger Sub required by the merger agreement to be performed or complied with as of or prior to the closing of the merger;

 

   

the absence of a material adverse effect on Osprey and Merger Sub since the date of the merger agreement;

 

   

Osprey’s and Merger Sub’s delivery to BlackSky of certificates signed by an officer of each of Osprey and Merger Sub, certifying that the three preceding conditions have been fulfilled;

 

   

Osprey’s delivery to BlackSky of duly executed resignation letters, to be effective as of the closing of the merger, evidencing the resignation of certain Osprey and Merger Sub directors and officers;

 

   

the composition, as of immediately following the effective time, of the board of directors of New BlackSky Parent, including the number, classes and identity of directors, being in accordance with the merger agreement; provided that BlackSky shall have performed the covenants of BlackSky related to the composition of the board of directors to be performed prior to the effectiveness of this registration statement;

 

   

the existing charter and bylaws of Osprey having been amended and restated in accordance with the forms agreed among the parties to the merger agreement, respectively;

 

   

the amount in the Trust Account, plus the proceeds from the PIPE Investment, minus the cash amounts required to satisfy Osprey’s stockholder redemptions, equaling or exceeding $225,000,000; and

 

   

the delivery by Osprey to BlackSky of the Registration Rights Agreement, duly executed by New BlackSky Parent and the Sponsor.

No Solicitation

Under the terms of the merger agreement, BlackSky has agreed not to, and to cause its subsidiaries not to and to use its reasonable best efforts to cause its representatives acting on their behalf not to, directly or indirectly


 

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(i) initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or requests for information with respect to, or the making of, any inquiry regarding, or any proposal or offer that constitutes, or could reasonably be expected to result in or lead to, any proposal or offer from any person or group (other than Osprey, Merger Sub or their respective affiliates and other than pursuant to the permitted issuances) relating to, in a single transaction or series of related transactions, (A) any direct or indirect acquisition or purchase of a business that constitutes 20% or more of the net revenues, net income or assets of BlackSky and its subsidiaries, taken as a whole, (B) any direct or indirect acquisition of 20% or more of the consolidated assets of BlackSky and its subsidiaries, taken as a whole (based on the fair market value thereof, as determined in good faith by the BlackSky board of directors), including through the acquisition of one or more subsidiaries of BlackSky owning such assets, (C) acquisition of beneficial ownership, or the right to acquire beneficial ownership, of 20% or more of the total voting power of the equity securities of BlackSky, any tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of the total voting power of the equity securities of BlackSky, or any merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving BlackSky (or any subsidiary of BlackSky whose business constitutes 20% or more of the net revenues, net income or assets of BlackSky and its subsidiaries, taken as a whole) or (D) any issuance or sale or other disposition (including by way of merger, reorganization, division, consolidation, share exchange, business combination, recapitalization or other similar transaction) of 20% or more of the total voting power of the equity securities of BlackSky (an “Acquisition Proposal”), (ii) engage in, continue or otherwise participate in any negotiations or discussions concerning, or provide access to its properties, books and records or any confidential information or data to, any person or entity (other than Osprey or its subsidiaries) relating to any proposal, offer, inquiry or request for information that constitutes, or could reasonably be expected to result in or lead to, any Acquisition Proposal, (iii) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Acquisition Proposal, (iv) execute or enter into any letter of intent, memorandum of understanding, agreement in principle, confidentiality agreement (other than an acceptable confidentiality agreement executed in accordance with the no solicitation provisions), merger agreement, acquisition agreement, exchange agreement, joint venture agreement, partnership agreement, option agreement or other similar agreement for or relating to any Acquisition Proposal, or (v) resolve or agree to do any of the foregoing.

BlackSky also agreed that promptly following the execution of the merger agreement it shall, and shall cause each of its subsidiaries and shall use its reasonable best efforts to cause its and their representatives acting on their behalf to, cease any solicitations, discussions or negotiations with any person or entity (other than the parties to the merger agreement and their respective representatives) conducted prior to the merger agreement in connection with an Acquisition Proposal or any inquiry or request for information that could reasonably be expected to lead to, or result in, an Acquisition Proposal. BlackSky also agrees that within three business days of the execution of the merger agreement, BlackSky shall request each person and entity (other than the parties to the merger agreement and their respective representatives) that has prior to the date of the merger agreement executed a confidentiality agreement in connection with its consideration of acquiring BlackSky (and with whom BlackSky has had contact during the 12-month period immediately prior to the date of the merger agreement regarding the acquisition of BlackSky) to return or destroy all confidential information furnished to such person or entity by or on behalf of it or any of its subsidiaries prior to the date of the merger agreement and terminate access to any physical or electronic data room maintained by or on behalf of BlackSky or any of its subsidiaries. Without limiting the foregoing, any violation of the no solicitation provisions by any of BlackSky’s subsidiaries, or any of BlackSky’s or its subsidiaries’ respective representatives acting on BlackSky’s or one of its subsidiaries’ behalf, shall be deemed to be a breach of the no solicitation provisions by BlackSky.

Notwithstanding the restrictions described above, the merger agreement provides that, under certain limited circumstances specified in the merger agreement, if any person or entity has made a bona fide written Acquisition Proposal that did not result from a material breach of the no solicitation provisions of the merger agreement, such no solicitation provisions will not prevent the BlackSky board of directors from, prior to


 

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obtaining the BlackSky Stockholder Approval, making a company change in recommendation with respect to such Acquisition Proposal (subject to complying with Osprey’s rights under the merger agreement, including the payment of a termination payment by BlackSky to Osprey), so long as (i) such proposal constitutes a Superior Proposal and (ii) the failure to take such action would constitute a breach of the fiduciary duties of the BlackSky board of directors under applicable law.

Osprey has agreed not to take, and to cause any of its affiliates and each of their respective representatives not to take, whether directly or indirectly, any action to solicit, initiate, continue, cooperate or engage in discussions or negotiations with, or enter into any agreement with or encourage, respond, provide information to or commence due diligence with respect to, any person or entity (other than BlackSky, its stockholders and/or any of their affiliates or representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any business combination other than with BlackSky, its stockholders and their respective affiliates and representatives. Osprey has agreed to, and to cause its affiliates and representatives to, immediately cease any and all existing discussions or negotiations with any person or entity conducted prior to the date of the merger agreement with respect to, or which is reasonably likely to give rise to or result in, a proposal for a business combination. Osprey agrees to (i) notify BlackSky promptly upon receipt of any business combination proposal other than with BlackSky, and to describe the material terms and conditions of any such business combination proposal in reasonable detail (including the identity of the person or entity making such business combination proposal) and (ii) to keep BlackSky reasonably informed on a current basis of any material modifications to such offer or information.

Notwithstanding the restrictions described above, the merger agreement provides that, under certain limited circumstances specified in the merger agreement, if the Osprey board determines in good faith, in response to an Osprey intervening event, after consultation with its outside legal counsel, that the failure to make an Osprey change in recommendation would constitute a breach of its fiduciary duties under applicable law, the Osprey board may, prior to obtaining the required Osprey stockholder approval, make an Osprey change in recommendation (subject to complying with BlackSky’s rights under the merger agreement).

Termination; BlackSky Termination Fee

Mutual termination rights.

The merger agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the closing of the merger by mutual written consent of BlackSky and Osprey.

BlackSky termination rights.

The merger agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the closing of the merger:

 

   

by written notice to Osprey from BlackSky if (i) there is any breach of any representation, warranty, covenant or agreement on the part of Osprey set forth in the merger agreement such that the conditions described in the first two bullet points under the heading “—Additional Conditions to the Obligations of BlackSky” would not be satisfied at the closing (a “terminating acquiror breach”), except that, if such terminating acquiror breach is curable by Osprey through the exercise of its commercially reasonable efforts, then, for a period of 45 days after receipt by Osprey of notice from BlackSky of such breach, but only as long as Osprey continues to exercise such commercially reasonable efforts to cure such terminating acquiror breach (the “acquiror cure period”), such termination shall not be effective, and such termination shall become effective only if the terminating acquiror breach is not cured by 11:59 PM pacific time on the last day of the acquiror cure period, (ii) the closing of the merger has not


 

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occurred on or before 11:59 PM pacific time on September 17, 2021 (the “Termination Date”), (iii) the consummation of the merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or a statute, rule or regulation, in each case, promulgated or enacted by a governmental authority of competent jurisdiction or (iv) if the Osprey Special Meeting has been held and concluded (including any adjournment or recess of the Osprey Special Meeting and Osprey’s shareholders have duly voted) and the required Osprey stockholder approval has not been obtained at the Special Meeting; provided, however, that (x) the right to terminate the merger agreement pursuant to clause (i) of this paragraph shall not be available if BlackSky is in material breach of its obligations under the merger agreement or any ancillary agreement and (y) the right to terminate the merger agreement pursuant to clause (ii) of this paragraph shall not be available if BlackSky’s breach of any term of the merger agreement or any ancillary agreement has been the primary cause of, or primarily resulted in, the failure of the closing to occur on or before the Termination Date; or

 

   

by written notice to Osprey from BlackSky if, prior to obtaining the requisite approval of Osprey stockholders, there shall have been a change in recommendation by the Osprey board of directors.

Osprey termination rights.

The merger agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the closing of the merger:

 

   

by written notice to BlackSky from Osprey if (i) there is any breach of any representation, warranty, covenant or agreement on the part of BlackSky set forth in the merger agreement, such that the conditions described in the first two bullet points under the heading “—Additional Conditions to Obligations of Osprey” would not be satisfied at the closing (a “terminating company breach”), except that, if such terminating company breach is curable by BlackSky, then, for a period of 45 days after receipt by BlackSky of notice from Osprey of such breach, but only as long as BlackSky continues to use its commercially reasonable efforts to cure such terminating company breach (the “company cure period”), such termination shall not be effective, and such termination shall become effective only if the terminating company breach is not cured by 11:59 PM, pacific time, on the last day of the company cure period, (ii) the closing of the merger has not occurred on or before 11:59 PM, pacific time, on the Termination Date, or (iii) the consummation of the merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or a statute, rule or regulation, in each case, promulgated or enacted by a governmental authority of competent jurisdiction or (iv) if the Special Meeting has been held and concluded (including any adjournment or recess of the Special Meeting and Osprey’s shareholders have duly voted) and the required Osprey stockholder approval has not been obtained at the Special Meeting; provided, however, that (x) the right to terminate the merger agreement pursuant to clause (i) of this paragraph shall not be available if Osprey or any of its affiliates is in material breach of its obligations under the merger agreement or any ancillary agreement and (y) the right to terminate the merger agreement under clause (ii) of this paragraph shall not be available if Osprey’s or any of its affiliates’ breach of any term of the merger agreement or any ancillary agreement has been the primary cause of, or primarily resulted in, the failure of the closing to occur on or before the Termination Date;

 

   

by written notice to BlackSky from Osprey if BlackSky shall have failed to deliver to Osprey written consents from BlackSky stockholders representing the BlackSky requisite approval within five business days following the date that this registration statement on Form S-4 becomes effective; provided, however, that the right to terminate the merger agreement pursuant to this paragraph shall terminate upon delivery of such written consents to Osprey; or

 

   

by written notice to BlackSky from Osprey if, prior to obtaining the BlackSky requisite approval, there shall have been a change in recommendation by the BlackSky board of directors; provided, however,


 

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that the right to terminate the merger agreement pursuant to this paragraph shall terminate upon delivery to Osprey of written consents from BlackSky stockholders representing the BlackSky requisite approval.

BlackSky Termination Fee.

BlackSky must pay Osprey a termination fee of $40,700,000 if the merger agreement is terminated by Osprey prior to BlackSky delivering to Osprey written consents from BlackSky stockholders representing the BlackSky requisite approval due to a change in recommendation by the BlackSky board of directors.

See “The Merger Agreement—Termination” for more information.

Sponsor Support Agreement

Concurrently with the execution of the merger agreement, the Sponsor, Osprey and BlackSky entered into a Sponsor Support Agreement (the “Sponsor Support Agreement”), which is attached as Annex G to this proxy statement/consent solicitation statement/prospectus. Pursuant to the Sponsor Support Agreement, the Sponsor, solely in its capacity as a stockholder of Osprey, has agreed, among other things, (a) to waive certain anti-dilution rights set forth in Section 4.3(b) of Osprey’s amended and restated certificate of incorporation that may result from the transactions contemplated by the merger agreement, (b) not to, directly or indirectly, transfer any of their shares of Class B common stock and warrants of Osprey prior to the effective time, (c) to vote in favor of the adoption of the merger agreement and the transactions and any other proposals or actions necessary or reasonably requested by BlackSky in connection with the consummation of the transactions at a meeting of Osprey’s stockholders to be held to approve the proposed transactions and other related matters, (d) not to redeem or elect to cause Osprey to redeem any of its shares of Class B common stock or warrants of Osprey in connection with the transactions, (e) with respect to 50% of its shares of Class B common stock (and Class A shares issued upon conversion) not to transfer such shares until the seven-year anniversary of the consummation of the transactions (subject to certain limited exceptions) or until their earlier release in two tranches (each equal to approximately one-half of the restricted shares held by the Sponsor) in the event the Osprey Class A common stock achieves a trading price of $15.00 and $17.50, respectively, for 10 of any 20 consecutive trading days after the closing of the merger involving BlackSky upon which time such shares will be released, respectively, in two tranches (each equal to approximately one-half of the restricted Founder Shares held by the Sponsor) and (f) with respect to certain warrants, not exercise any such warrants unless and until Osprey common stock reaches a trading price of $20.00 per share, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.

See “Other Agreements—Sponsor Support Agreement” for more information.

Stockholder Support Agreements

Concurrently with the execution of the merger agreement, Osprey and BlackSky entered into Stockholder Support Agreements (the “Stockholder Support Agreements”) with the Key Stockholders, a form of which is attached as Annex H to this proxy statement/consent solicitation statement/prospectus. The Key Stockholders, as a group, are expected to beneficially own and be entitled to vote (i) 498,972,902 shares of BlackSky common stock, which represent, in the aggregate, approximately 78.11% of BlackSky common stock outstanding on the date of the Stockholder Support Agreements and (ii) 60,890,761 shares of BlackSky preferred stock, which represent, in the aggregate, approximately 76.21% of BlackSky preferred stock outstanding on of the Stockholder Support Agreements. Pursuant to the Stockholder Support Agreement, the Key Stockholders have agreed, solely in their capacities as stockholders of BlackSky, to, among other things, vote in favor of the merger agreement and the transactions contemplated thereby, including agreeing to execute a written consent constituting the


 

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requisite BlackSky Stockholder Approval within five (5) business days of the Registration Statement becoming effective, unless the Merger is no longer recommended by the Company board of directors in accordance with the merger agreement, in which case the Key Stockholders have agreed to vote a number of shares not to exceed 35% of their shares of the Company stock approving the merger agreement and the transactions contemplated thereby and are entitled, in their sole discretion, to vote their remaining shares in any manner. Each Stockholder Support Agreement will terminate upon the earlier to occur of: (a) the effective time, (b) the date of the termination of the merger agreement in accordance with its terms, (c) the effective date of a written agreement of Osprey, Merger Sub, BlackSky and the Key Stockholder party thereto terminating such Stockholder Support Agreement, and (d) the election of the Key Stockholder party thereto, in its sole discretion, to terminate such Stockholder Support Agreement following any amendment, waiver or other modification of any term or provision of the merger agreement without the prior written consent with respect thereto of such stockholder that reduces or changes the form of consideration payable to BlackSky stockholders pursuant to the merger agreement.

See “Other Agreements—Stockholder Support Agreements” for more information.

Registration Rights Agreement

The merger agreement contemplates that, at the closing, New BlackSky Parent, the Sponsor, certain affiliates of the Sponsor and certain stockholders of New BlackSky Parent named therein will enter into the Registration Rights Agreement, a form of which is attached as Annex I to this proxy statement/consent solicitation statement/prospectus. Pursuant to the Registration Rights Agreement, New BlackSky Parent will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of New BlackSky Parent common stock and other equity securities of New BlackSky Parent that are held by the parties thereto from time to time. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the merger and rights to require Osprey to register for resale such securities pursuant to Rule 415 under the Securities Act. The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by Osprey, the Sponsor and the other parties thereto in connection with Osprey’s initial public offering.

See “Other Agreements—Registration Rights Agreement” for more information.

Subscription Agreements

In connection with the execution of the merger agreement, Osprey entered into Subscription Agreements with certain: (i) existing directors or officers of Osprey, (ii) persons otherwise affiliated or associated with Osprey, (iii) persons identified by Osprey and (iv) other investors, a form of which is attached as Annex J to this proxy statement/consent solicitation statement/prospectus. Pursuant to the Subscription Agreements, the PIPE Investors agreed to purchase, in the aggregate, 18,000,000 newly-issued shares of Osprey Class A common stock to be issued at the closing of the merger for a purchase price of $10.00 per share, for an aggregate of $180 million in gross cash proceeds. The shares of Osprey Class A common stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The obligation of the parties to consummate the purchase and sale of the shares covered by each Subscription Agreement is conditioned upon (i) there not being in force any injunction or order enjoining or prohibiting the issuance and sale of the shares covered by the Subscription Agreement, (ii) there not being any amendment or modification of the terms of the merger agreement in a manner that is materially adverse to the PIPE Investor (in its capacity as such), (iii) all conditions precedent to the closing of the merger, including all necessary approvals of Osprey’s stockholders and regulatory approvals, if any, having been satisfied or waived by the parties to the merger agreement as provided therein (iv) a customary bringdown of the representations and warranties of the PIPE Investor and Osprey in the


 

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Subscription Agreement and (v) the prior or substantially concurrent consummation of the transactions contemplated by the merger agreement.

See “Other Agreements—Subscription Agreements” for more information.

Listing

Osprey’s units, Class A common stock and public warrants are publicly traded on the NYSE under the symbols “SFTW.U”, “SFTW” and “SFTW.WS”, respectively. Following the merger, New BlackSky Parent Class A common stock (including common stock issuable in the merger) and New BlackSky Parent warrants will be listed on the NYSE under the symbols “BKSY” and “BKSY.W.” New BlackSky Parent will not have units traded following the closing of the merger.

Comparison of Stockholders’ Rights

Following the merger, the rights of BlackSky equityholders who become New BlackSky Parent stockholders in the merger will no longer be governed by BlackSky’s certificate of incorporation (“BlackSky’s charter”) and BlackSky’s bylaws (“BlackSky’s bylaws”) and instead will be governed by New BlackSky Parent’s amended and restated certificate of incorporation (“New BlackSky Parent’s charter”) and New BlackSky Parent’s amended and restated bylaws (“New BlackSky Parent’s bylaws”). See “Comparison of Stockholders’ Rights” for more information.

Risk Factors (page 33)

Unless the context otherwise requires, all references in this subsection to “BlackSky”, “we”, “our”, “us” and the “Company” generally refer to BlackSky and its consolidated subsidiaries prior to the merger and New BlackSky after giving effect to the merger.

You should consider all the information contained in this proxy statement/consent solicitation statement/prospectus in deciding how to vote for the proposals presented in the proxy statement/consent solicitation statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page 33. Such risks include, but are not limited to, the following:

 

   

We have incurred significant losses each year since our inception, we expect our operating expenses to increase, and we cannot give assurances of our future profitability, if any.

 

   

Significant redemptions among Osprey’s public shareholders may require New BlackSky Parent to raise future financing after the closing of the merger.

 

   

If we are unable to procure the requisite consent to the merger from the lenders under our Amended and Restated Loan and Security Agreement, we will be obligated to pay off our obligations under such loan agreement upon the consummation of the merger, which would reduce our cash and capital resources and could harm our business.

 

   

If we fail to manage future growth effectively, our business could be harmed.

 

   

We may not be able to sustain our revenue growth rate in the future.

 

   

Intelsat has a right of first offer with respect to the sale of BlackSky Holdings, Inc., (which will be a subsidiary of New BlackSky Parent following the merger), which might discourage, delay or prevent a sale of BlackSky Holdings, Inc., and therefore, depress the trading price of BlackSky Parent Class A common stock.


 

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Our ability to grow our business depends on the successful production, launch, commissioning and/or operation of our satellites and related ground systems, software and analytic technologies, which is subject to many uncertainties, some of which are beyond our control.

 

   

Loss of, or damage to, a satellite and the failure to obtain data or alternate sources of data for our geospatial intelligence, imagery and related data analytic products and services and mission systems may have an adverse impact on our business, financial condition, and results of operations. If our satellites and related equipment have shorter useful lives than we anticipate, we may be required to recognize impairment charges.

 

   

We have not historically carried launch or in-orbit insurance on our satellites or payloads, and we may not do so in the future. If one or more of our launches result in catastrophic failure or one or more of our in-orbit satellites or payloads fail, we could be required to record significant impairment charges for the satellite or payload.

 

   

Satellites are subject to construction and launch delays, launch failures, damage or destruction during launch, the occurrence of which can materially and adversely affect our operations.

 

   

If our satellites fail to operate as intended, it could have a material adverse effect on our business, financial condition, and results of operations.

 

   

The market for geospatial intelligence, imagery and related data analytics has not been established with precision, is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected.

 

   

Our business is subject to a wide variety of additional extensive and evolving government laws and regulations. Failure to comply with such laws and regulations or failure to satisfy any criteria or other requirement under such laws or regulations could have a material adverse effect on our business.

 

   

The loss of one or more of our largest customers could adversely affect our results of operations. In addition, if existing customers do not make subsequent purchases from us or renew their contracts with us, our revenue could decline, and our results of operations would be adversely impacted.

 

   

The majority of our customer contracts may be terminated by the customer at any time for convenience and may contain other provisions permitting the customer to discontinue contract performance, and if terminated contracts are not replaced, our results of operations may differ materially and adversely from those anticipated. In addition, our contracts with government customers often contain provisions with additional rights and remedies favorable to such customers that are not typically found in commercial contracts.

 

   

Our business with various governmental entities is subject to the policies, priorities, regulations, mandates, and funding levels of such governmental entities and may be negatively or positively impacted by any change thereto.

 

   

We have contracts with governments that involve classified programs, which create additional compliance obligations and which may also limit investor insight into portions of our business.

 

   

We face risks and uncertainties associated with defense-related contracts, which may have a material adverse effect on our business.

 

   

Currently, we are dependent on LeoStella LLC (“LeoStella”), a joint venture owned 50-50 between us and Thales Alenia Space US Investment LLC, as the sole manufacturer of our satellites. Any significant disruption to LeoStella’s operations or facilities could have a material adverse effect on our business, financial condition, and results of operations.

 

   

Our business is dependent upon our ability to keep pace with the latest technological changes. If we do not successfully develop new technologies and if the technologies we are successful in developing do not meet the needs of our customers, our business and results of operations could suffer.


 

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We rely on the significant experience and specialized expertise of our senior management, engineering, sales and operational staff and must retain and attract qualified and highly skilled personnel in order to grow our business successfully. If we are unable to successfully build, expand, and deploy additional members of our management, engineering, sales and operational staff in a timely manner, or at all, or to successfully hire, retain, train, and motivate such personnel, our growth and long-term success could be adversely impacted.

 

   

Our technologies contain “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.

 

   

We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay implementation of our services should we not be able to continue or obtain a commercially reasonable license to such technology.

 

   

Each of Osprey and BlackSky stockholders will have a reduced ownership and voting interest in the combined company after the merger.

 

   

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

 

   

The consummation of the merger is subject to a number of conditions and if those conditions are not satisfied or waived, the merger agreement may be terminated in accordance with its terms and the merger may not be completed.

 

   

Osprey’s and BlackSky’s ability to consummate the merger, and the operations of New BlackSky Parent following the consummation of the merger, may be materially adversely affected by the coronavirus (COVID-19) pandemic.

 

   

Osprey’s and BlackSky’s ability to consummate the merger may be materially adversely affected by the outcome of any legal proceedings that have been or may be instituted against Osprey or BlackSky following announcement of the proposed merger and related transactions, including proceedings challenging the merger.

 

   

Osprey’s warrants are accounted for as a liability and the change in value of Osprey’s warrants or any other similar derivative liabilities could have a material effect on Osprey’s financial results.

 

   

Osprey has identified a material weakness in its internal control over financial reporting as of December 31, 2020. If Osprey is unable to develop and maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Osprey and materially and adversely affect its business and operating results.

 

   

Osprey may face litigation and other risks as a result of the material weakness in its internal control over financial reporting.

 

   

There is no guarantee that an Osprey public stockholder’s decision whether to redeem their shares for a pro rata portion of the Trust Account will put such stockholder in a better future economic position.

 

   

If Osprey public stockholders fail to comply with the redemption requirements specified in this proxy statement/consent solicitation statement/prospectus, they will not be entitled to redeem their public shares for a pro rata portion of the funds held in the Trust Account.

 

   

If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of more than 15% of the public shares, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the public shares.


 

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Information about Osprey

Osprey is a special purpose acquisition company 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. Osprey’s Class A common stock, units and warrants are currently listed on the NYSE under the symbols “SFTW”, “SFTW.U” and “SFTW.WS”, respectively. The mailing address of Osprey’s principal executive office is 1845 Walnut Street, Suite 1111, Philadelphia, PA 19103 and the telephone number of Osprey’s principal executive office is (212) 920-1345.

Information about BlackSky

BlackSky is a leading provider of geospatial intelligence, imagery and data analytic products and services and mission systems. BlackSky monitors activities and facilities worldwide by harnessing the world’s emerging sensor networks and leveraging its own satellite constellation. BlackSky processes millions of observations from its constellation as well as a variety of space, IoT, and terrestrial based sensors and data feeds. BlackSky’s on-demand constellation of satellites can image a location multiple times throughout the day. BlackSky monitors for pattern-of-life anomalies to produce alerts and enhance situational awareness. BlackSky’s monitoring service is powered by cutting-edge compute techniques including machine learning and artificial intelligence. BlackSky’s global monitoring solution is available via a simple subscription and requires no IT infrastructure or setup.

BlackSky Holdings, Inc. is a Delaware corporation that was formed in September 2014 under the name “Spaceflight Industries, Inc.” and subsequently changed its name in February 2021 to “BlackSky Holdings, Inc.” The mailing address of BlackSky’s principal executive office is BlackSky Holdings, Inc. 13241 Woodland Park Road, Suite 300, Herndon, VA 20171, and the telephone number of BlackSky’s principal executive office is (571) 267-1571.

Summary of the Transactions

Set forth below is a summary of transactions that are contemplated to occur in connection with the merger.

Effective as of the effective time and by virtue of the merger, each share of BlackSky preferred stock and each share of BlackSky Class A common stock that is issued and outstanding immediately prior to the effective time will be cancelled and automatically converted into the right to receive a number of shares of Osprey Class A common stock equal to the Per Share Exchange Ratio that is applicable to such share. The Class A Common Exchange Ratio will equal the quotient of (A) the remaining portion of the Total Consideration Share Amount after deducting the portion thereof payable in connection with the merger to the holders of BlackSky preferred stock, divided by (B) the number of participating shares of BlackSky Class A common stock issued and outstanding as of immediately prior to the effective time on a fully diluted basis (excluding shares of BlackSky Class A common stock issuable upon the conversion of BlackSky preferred stock that will receive their liquidation preference in connection with the merger and excluding shares of BlackSky Class B common stock). Based on the aggregate exercise prices of the BlackSky options and warrants anticipated to be outstanding as of immediately prior to the effective time and the amount of the BlackSky bridge loan that is anticipated to remain unfunded as of the effective time, it is currently anticipated the total number of shares of Osprey Class A common stock constituting the Total Consideration Share Amount will equal approximately 92,470,589 shares.

Effective as of the effective time and by virtue of the merger, each BlackSky Stock Option, that is outstanding and unexercised as of immediately prior to the effective time will be converted into an option to acquire a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of


 

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BlackSky Class A common stock subject to the applicable BlackSky Stock Option and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky Stock Option. The exercise price per share of each Assumed Osprey Stock Option will be equal to the quotient obtained by dividing (x) the exercise price per share applicable to such BlackSky Stock Option by (y) the Class A Common Exchange Ratio.

Effective as of the effective time and by virtue of the merger, each BlackSky RSU Award that is outstanding as of immediately prior to the effective time will be converted into an award of Osprey restricted stock units covering a number of shares of Osprey Class A common stock equal to the product of (x) the number of shares of BlackSky common stock subject to the applicable BlackSky RSU Award and (y) the Class A Common Exchange Ratio, and will be subject to the same terms and conditions as were applicable to such BlackSky RSU Award.

Each BlackSky Warrant that is outstanding and unexercised as of immediately prior to the effective time will be (i) automatically exercised in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically exercised in connection with the merger, (ii) automatically terminated in accordance with its terms immediately prior to the effective time if such BlackSky Warrant provides that it will be automatically terminated if not exercised prior to the effective time (a “Terminating BlackSky Warrant”) or (iii) assumed by Osprey and converted into a warrant to acquire Osprey Class A common stock if the BlackSky Warrant is not a Terminating BlackSky Warrant or Exercising BlackSky Warrant.

Organizational Structure

The following diagram illustrates, in a simplified form, the ownership structure of BlackSky and Osprey as of the date of this proxy statement/consent solicitation statement/prospectus.

Ownership Structure of Osprey

 

LOGO


 

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Ownership Structure of BlackSky

 

LOGO

Ownership of New BlackSky Parent

The following diagram illustrates, in a simplified form, the ownership structure of New BlackSky immediately following consummation of the merger.

LOGO


 

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As of the date of this proxy statement/consent solicitation statement/prospectus, there are 31,625,000 shares of Osprey Class A common stock issued and outstanding, and 7,906,250 shares of Osprey Class B common stock issued and outstanding, each of which shares of Osprey Class B common stock will be converted into one share of Osprey Class A common stock. As of the date of this proxy statement/consent solicitation statement/prospectus, there are 15,812,500 public warrants outstanding and 8,325,000 Private Placement Warrants outstanding. Each whole warrant entitles the holder thereof to purchase one share of Osprey Class A common stock. Therefore, as of the date of this proxy statement/consent solicitation statement/prospectus (without giving effect to the merger or the PIPE Investment and assuming no redemptions), assuming that each outstanding warrant is exercised and one Osprey Class A ordinary share is issued as a result of such exercise, the Osprey fully diluted share capital would be 63,668,750.

The following table illustrates varying ownership levels in New BlackSky Parent immediately following the consummation of the transactions assuming the levels of redemptions by the public stockholders indicated:

 

     Share Ownership in New BlackSky Parent  
     No redemptions     Maximum redemption condition  
     Number of
Shares
     Percentage of
Outstanding
Shares
    Number of
Shares
     Percentage of
Outstanding
Shares
 

BlackSky stockholders

     74,747,085        57     74,747,085        71 %

Osprey public stockholders

     31,625,000        24 %     4,455,466        4 %

Sponsor(1)

     7,906,250        6     7,906,250        8 %

PIPE Investors

     18,000,000        13 %     18,000,000        17 %
  

 

 

      

 

 

    

Total

     132,278,335          105,108,801     
  

 

 

      

 

 

    

 

  (1)

Represents the Sponsor’s holdings of Osprey Class A common stock subsequent to the one-for-one conversion of the Sponsor’s Osprey Class B common stock into Osprey Class A common stock immediately prior to the consummation of the merger, including those shares subject to performance targets.


 

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SUMMARY HISTORICAL FINANCIAL DATA FOR OSPREY

The following table summarizes financial results achieved by Osprey for the periods and at the dates indicated and should be read in conjunction with Osprey’s financial statements and the notes to the financial statements contained in reports that Osprey has previously filed with the SEC. Historical financial information for Osprey can be found in its Annual Report on Form 10-K for the year ended December 31, 2020, as restated. You should not assume the results of operations for past periods indicate results for any future period.

 

     Three Months Ended March 31,     Year Ended December 31,  
     2021     2020     2020     2019  

Operating costs

   $ 2,201,632     $ 258,326     $ 3,136,234     $ 264,346  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    
(2,201,632

   
(258,326

   
(3,136,234

   
(264,346

Other income:

        

Interest income on marketable securities held in Trust Account

     47,155       1,207,866       1,793,627       714,993  

Change in fair value of warrant liabilities

     (10,721,500     5,393,500       (13,924,875     (6,999,875

Transaction costs

     —         —         —         (560,698

Unrealized gain (loss) on marketable securities held in Trust Account

     4,987       378,250       3,447       (6,479
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income, net

     (10,669,358     6,979,616       (12,127,801     (6,852,059
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (12,870,990     6,721,290       (15,264,035     (7,116,405

Provision for income taxes

           (278,836     (1,361     (93,275
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (12,870,990   $ 6,442,454     $ (15,265,396   $ (7,209,680
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption

     28,793,444       27,965,424       27,639,376       28,129,383  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, Class A common stock subject to possible redemption

     0.00       0.04       0.05       0.02  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted weighted average shares outstanding, Non-redeemable common stock

     10,737,806       11,565,826       11,891,874       7,814,396  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share, Class A and Class B non-redeemable common stock

   $ (1.20   $ 0.46     $ (1.39   $ (0.98
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents
     March 31,
2021
    December 31,
2020
 
     (Unaudited)     (Audited)  

ASSETS

    

Current assets

    

Cash

   $ 171,208     $ 399,516  

Prepaid expenses

     64,167       90,424  

Prepaid income taxes

     255,364       255,364  
  

 

 

   

 

 

 

Total Current Assets

     490,739       745,304  

Marketable securities held in Trust Account

     318,053,820       318,041,728  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 318,544,559     $ 318,787,032  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

    

Current liabilities

    

Accounts payable and accrued expenses

   $ 4,064,980     $ 2,157,963  

Total Current Liabilities

     4,064,980       2,157,963  

Warrant liabilities

     46,453,375       35,731,875  

Deferred underwriting fee payable

     11,068,750       11,068,750  
  

 

 

   

 

 

 

Total Liabilities

     61,587,105       48,958,588  
  

 

 

   

 

 

 

Commitments (Note 7)

    

Class A common stock subject to possible redemption, 31,625,000 and 26,315,833 shares at redemption value at March 31, 2021 and December 31, 2020, respectively

     318,259,184       264,828,435  
  

 

 

   

 

 

 

Stockholders’ (Deficit) 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; 0 and 5,309,167 shares issued and outstanding (excluding 31,625,000 and 26,315,833 shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively

     —         530  

Class B Common stock, $0.0001 par value; 25,000,000 shares authorized; 7,906,250 shares issued and outstanding at March 31, 2021 and December 31, 2020

     791       791  

Additional paid-in capital

     —         27,475,941  

Accumulated deficit

     (61,302,521     (22,477,253
  

 

 

   

 

 

 

Total Stockholders’ (Deficit) Equity

     (61,301,730     5,000,009  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

   $ 318,544,559     $ 318,787,032  
  

 

 

   

 

 

 

 

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SUMMARY HISTORICAL FINANCIAL AND OTHER DATA FOR BLACKSKY

The following table summarizes financial results achieved by BlackSky for the periods and at the dates indicated and should be read in conjunction with BlackSky’s consolidated financial statements and the accompanying notes included elsewhere in this proxy statement/consent solicitation statement/prospectus. The Company adopted the provisions of the new revenue recognition standard, Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASC 606”), for the fiscal year beginning January 1, 2020. You should not assume the results of operations for past periods indicate results for any future period.

 

     Three Months Ended March 31,     Year Ended December 31,  
           2021                 2020                 2020                 2019        
     (dollars in thousands except per
share data)
    (dollars in thousands,
except per share data)
 

Consolidated Statement of Operations Data:

    

Revenues:

        

Service

   $ 5,998   $ 3,546   $ 18,737   $ 13,325

Product

     1,296     547     2,398     388
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     7,294     4,093     21,135     13,713

Costs and expenses:

        

Service costs, excluding depreciation and amortization

     4,379     3,000     13,331     11,098

Product costs, excluding depreciation and amortization

     1,130     4,066     10,535     399

Selling, general and administrative

     8,491     7,744     28,609     33,745

Research and development

     28     45     255     1,099

Depreciation and amortization

     2,764     1,885     9,803     6,897

Satellite impairment loss

     —         —         —         6,606
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (9,498     (12,647     (41,398     (46,131

Gain/(loss) on debt extinguishment

     —         —         284     (3,267

Realized gain on conversion of notes

     —         —         —         4,113

Unrealized loss on derivative

     (14,008     (139     (558     541

Income/(loss) on equity method investment

     196     (300     (953     (1,241

Interest expense

     (1,168     (1,644     (5,201     (13,693

Other (expense)/income, net

     (144,091     142     103     (190
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (168,569     (14,588     (47,723     (59,868

Income tax (provision) benefit

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (168,569     (14,588     (47,723     (59,868

Gain/(loss) from discontinued operations, net of tax (including gain from disposal of Launch Division of $30,672 and $0 for the years ended December 31, 2020 and 2019, respectively)

     —         1,315     28,185     (6,160
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (168,569   $ (13,273   $ (19,538   $ (66,028
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted income/(loss) per share of common stock:

        

Loss from continuing operations

   $ (0.70   $ (0.20   $ (0.56   $ (2.22

Gain/(loss) from discontinued operations, net of tax

     —         0.02     0.33     (0.23
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share of common stock

   $ (0.70   $ (0.18   $ (0.23   $ (2.45
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents
     March 31,
2021
    December 31,  
    2020     2019  
     (dollars in thousands)  

Balance Sheet Data:

  

Cash and cash equivalents

   $ 44,787   $ 5,098   $ 31,715

Total current assets

     59,801     18,237     65,863

Total assets

     162,882     119,915     163,364

Debt - current portion

     17,200     16,739     41,198

Long-term debt - net of current portion

     157,056     84,869     78,815

Total liabilities

     258,509     152,728     181,659

Total redeemable convertible preferred stock

     174,568     174,568     171,321

Accumulated deficit

     (392,021     (223,452     (203,264

Total stockholders’ deficit

     (270,195     (207,381     (189,616

 

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SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma combined financial information (the “selected unaudited pro forma data”) gives effect to the merger between Osprey and BlackSky, which will be accounted for as a reverse recapitalization. Pursuant to the accounting treatment for a reverse recapitalization, Osprey will be treated as the acquired company for financial reporting purposes, and the merger will be treated as the equivalent of BlackSky issuing stock for the net assets of Osprey, accompanied by a recapitalization. Accordingly, the net assets of Osprey will be recorded at historical cost, the merger will not result in the recognition of goodwill or any other intangible assets, and operations prior to the merger will be those of BlackSky.

The selected unaudited pro forma data that has been presented reflects the combination of historical financial information of Osprey and BlackSky, adjusted to give effect to (1) the merger, inclusive of the exchange of Osprey common stock for BlackSky’s issued and outstanding Class A common stock, preferred stock and bridge loans in accordance with the terms of the merger agreement, (2) the repayment of certain of BlackSky’s outstanding notes, (3) certain related equity financing transactions, and (4) the payment of transaction costs (collectively, the “Transactions”). Additional details related to the aforementioned transactions, their estimated pro forma impact, and the assumptions used to determine the estimated pro forma impact are described in the section of this proxy statement/consent solicitation statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information,” which should be read together with this selected unaudited pro forma data.

The unaudited pro forma balance sheet data, which has been presented for the combined company as of March 31, 2021, gives effect to the Transactions as if they were consummated on March 31, 2021. The unaudited pro forma statement of operations data, which has been presented for the combined company for the three months ended March 31, 2021 and the year ended December 31, 2020, gives pro forma effect to the Transactions as if they had occurred on January 1, 2020. The unaudited pro forma balance sheet data does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had the Transactions taken place on March 31, 2021, nor is this data indicative of the financial condition of the combined company as of any future date. The unaudited pro forma statement of operations data does not purport to represent, and is not necessarily indicative of, what the actual results of operations of the combined company would have been had the Transactions taken place on January 1, 2020, nor is this data indicative of the results of operations of the combined company for any future period.

Pursuant to Osprey’s amended and restated certificate of incorporation, Osprey’s public stockholders may demand that Osprey redeem their shares of Class A common stock for cash if the merger is consummated, irrespective of whether they vote for or against the merger. If a public stockholder properly demands redemption of their shares, Osprey will redeem each share for cash equal to the public stockholder’s pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the merger. Due to the redemption rights held by Osprey’s public stockholders, the selected unaudited pro forma data has been presented assuming the following two alternative levels of redemptions of Osprey’s publicly-traded shares:

 

   

Scenario 1 – Assuming no redemptions: This presentation assumes that no Osprey stockholders exercise redemption rights with respect to their public shares upon consummation of the merger; and

 

   

Scenario 2 – Assuming redemption of public shares of Osprey Class A common stock for cash: This presentation assumes that Osprey stockholders exercise their redemption rights with respect to a maximum of 27.1 million public shares upon consummation of the merger. The maximum number of shares subject to redemption was derived from the merger agreement’s requirement for the Transactions to result in a minimum of $225 million from (i) Osprey (inclusive of cash available to be released from the Trust Account) and (ii) the PIPE Investment, after giving effect to the payments to redeeming stockholders. Scenario 2 gives effect to all pro forma adjustments contained in Scenario 1, as well as additional adjustments to reflect the effect of the maximum redemption.


 

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The selected unaudited pro forma data should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in this proxy statement/consent solicitation statement/prospectus, and from which Osprey’s and BlackSky’s historical financial information and certain pro forma adjustments were derived:

 

   

The historical unaudited condensed financial statements of Osprey as of and for the three months ended March 31, 2021 and the historical audited financial statements of Osprey as of and for the year ended December 31, 2020 (as restated); and

 

   

The historical unaudited condensed consolidated financial statements of BlackSky as of and for the three months ended March 31, 2021 and the historical audited consolidated financial statements of BlackSky as of and for the year ended December 31, 2020.

The selected unaudited pro forma data should also be read together with the sections of this proxy statement/consent solicitation statement/prospectus entitled “Osprey’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “BlackSky’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Proposal No. 1— The Business Combination Proposal,” as well as other information included elsewhere in this proxy statement/consent solicitation statement/prospectus.

 

Statement of Operations Data - Three Months Ended
March 31, 2021

 

(dollars in thousands, except per share amounts)

   Osprey
(Historical)
    BlackSky
(Historical)
    Pro Forma
Combined
Assuming
No
Redemptions
    Pro Forma
Combined
Assuming
Maximum
Redemptions
 

Total revenue

   $ —     $ 7,294   $ 7,294   $ 7,294

Operating loss

     (2,202     (9,498     (15,528     (15,528

Net loss (1)

     (12,872     (168,569     (171,116     (171,116

Basic and diluted net income (loss) per share (2)

     —         (0.70     (1.27     (1.59

Basic and diluted net loss per share, Non-redeemable common stock (3)

     (1.20     N/A       N/A       N/A  

Balance Sheet Data - As of March 31, 2021

        

Total current assets

     490     59,801     471,888       198,834  

Total assets

     318,544     162,882     571,604       298,550  

Total current liabilities

     4,065     91,056     45,238       45,238  

Total liabilities

     61,587     258,509     162,630     162,630  

Total stockholders’ equity (deficit)

     (61,302     (270,195     408,974       135,920  

 

Statement of Operations Data - Year Ended December 31, 2020

 

(dollars in thousands, except per share amounts)

   Osprey
(Historical)
    BlackSky
(Historical)
    Pro Forma
Combined
Assuming
No
Redemptions
    Pro Forma
Combined
Assuming
Maximum
Redemptions
 

Total revenue

   $ —     $ 21,135   $ 21,135   $ 21,135

Operating loss

     (3,136     (41,398     82,472       82,472  

Net loss (1)

     (15,265     (47,723     (99,727     (99,727

Basic and diluted net income (loss) per share (2)

     0.05     (0.23     (0.75     (0.95

Basic and diluted net loss per share, Non-redeemable common stock (3)

     (1.39     N/A       N/A       N/A  

 

(1)

For purposes of the presentation the “Selected Unaudited Pro Forma Combined Financial Information” for each of the periods, the net loss presented in the column labelled BlackSky historical financial information represents BlackSky’s loss from continuing operations, consistent with the presentation in the “Unaudited Pro Forma Condensed Combined Financial Information.” Accordingly, this amount excludes BlackSky’s discontinued operations.


 

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Table of Contents
(2)

For purposes of the historical financial data presented for Osprey for each period, “Basic and diluted net income (loss) per share” has been calculated based upon the weighted-average number of Osprey’s Class A common shares outstanding and not subject to redemption, as presented in Osprey’s financial statements. For purposes of the historical financial data presented for BlackSky, “Basic and diluted net income (loss) per share” has been calculated based upon the weighted-average number of BlackSky’s Class A common shares outstanding, as presented in BlackSky’s financial statements.

 

(3)

For purposes of the historical financial data presented for Osprey for each period, “Basic and diluted net loss per share, Non-redeemable common stock” has been calculated based upon a combination of the weighted-average number of Osprey’s Class B common shares outstanding and the weighted-average number of Osprey’s Class A common shares that are outstanding and subject to redemption. This calculation was not applicable (i.e., N/A) for BlackSky and for pro forma purposes as loss per share for BlackSky and for purposes of preparation of the selected pro forma financial information has been determined using the single class method. BlackSky only has a single class of participating equity securities for purposes of calculating earnings or loss per share and, subsequent to the merger, Osprey’s will have single class of common stock, of which no shares will be redeemable.


 

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UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF OSPREY AND BLACKSKY

 

                Pro Forma Combined     BlackSky Equivalent Pro
Forma Per Share Data(3)
 
    Osprey     BlackSky     Assuming
No
Redemption
    Assuming
Maximum
Redemption
    Assuming
No
Redemption
    Assuming Maximum
Redemption
 

Three Months Ended March 31, 2021

           

Weighted average number of shares outstanding - basic and diluted(1)

    28,793,444       242,288,554       135,128,142       107,958,607       74,747,085       74,747,085  

Weighted average number of shares outstanding - Osprey non-redeemable common stock(2)

    10,737,806       N/A       N/A       N/A       N/A       N/A  

Basic and diluted net income (loss) per share

    —         (0.70     (1.27     (1.59     (0.15     (0.19

Osprey non-redeemable common stock basic and diluted net loss per share

    (1.20     N/A       N/A       N/A       N/A       N/A  

Stockholders’ equity (deficit) per share - basic and diluted

    (2.13     (1.12     3.03       1.26       5.47       1.82  

 

                Pro Forma Combined     BlackSky Equivalent Pro
Forma Per Share Data(3)
 
    Osprey     BlackSky     Assuming
No
Redemption
    Assuming
Maximum
Redemption
    Assuming
No
Redemption
    Assuming
Maximum
Redemption
 

Year Ended December 31, 2020

           

Weighted average number of shares outstanding - basic and diluted(1)

    27,639,376       85,618,244       132,240,556       105,071,022       74,747,085      
74,747,085
 

Weighted average number of shares outstanding - Osprey non-redeemable common stock(2)

    11,891,874       N/A       N/A       N/A       N/A       N/A  

Basic and diluted net income (loss) per share

    0.05       (0.23     (0.75     (0.95     (0.09     (0.11

Osprey non-redeemable common stock basic and diluted net loss per share

    (1.39     N/A       N/A       N/A       N/A       N/A  

 

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Table of Contents
(1)

Weighted average number of shares outstanding - basic and diluted for Osprey includes amounts related to Osprey Class A common stock subject to possible redemption.

 

(2)

Non-redeemable common stock includes 7,906,250 shares of Osprey Class B common stock and 2,831,556 shares of Osprey Class A common stock not subject to redemption for the three months ended March 31, 2021, and 7,906,250 shares of Osprey Class B common stock and 3,985,624 shares of Osprey Class A common stock not subject to redemption for the year ended December 31, 2020.

 

(3)

The equivalent pro forma basic and diluted per share data for BlackSky is calculated by multiplying the combined pro forma per share data by the blended exchange ratio of 0.118 for the Class A common stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Class A common stock (outstanding due to exercise at closing and reflects forfeiture due to net exercise), Series B Preferred Stock (outstanding due to exercise at closing), Series C Preferred Stock (outstanding due to exercise at closing), and convertible bridge loans (principle and interest, rights offering incentive shares, and warrant coverage) of BlackSky that are exchanged into Osprey’s shares set forth in the Merger Agreement.


 

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FORWARD-LOOKING STATEMENTS

This proxy statement/consent solicitation statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial of Osprey and BlackSky. These statements are based on the beliefs and assumptions of the management of Osprey and BlackSky. Although Osprey and BlackSky believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither Osprey nor BlackSky can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “forecasts”, “may”, “will”, “should”, “seeks”, “plans”, “scheduled”, “anticipates” or “intends” or similar expressions. Forward-looking statements contained in this proxy statement/consent solicitation statement/prospectus include, but are not limited to, statements about the ability of Osprey and BlackSky prior to the merger, and New BlackSky following the merger, to:

 

   

meet the closing conditions to the merger, including approval by stockholders of Osprey and BlackSky on the expected terms and schedule;

 

   

realize the benefits expected from the proposed merger;

 

   

maintain and protect BlackSky’s intellectual property;

 

   

attract and retain key employees;

 

   

increase client renewal and retention rates for products over time;

 

   

leverage analytical capabilities and access external sensor networks;

 

   

expand to international and commercial markets;

 

   

improve geospatial data and cloud-based platform capabilities and invest in innovation efforts;

 

   

grow distribution channels;

 

   

maintain and protect BlackSky’s brand;

 

   

enhance future operating and financial results by increasing total revenue and profits generally over time;

 

   

comply with laws and regulations applicable to its business;

 

   

successfully defend litigation; and

 

   

successfully deploy the proceeds from the merger.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/consent solicitation statement/prospectus, could affect the future results of Osprey and BlackSky prior to the merger, and New BlackSky following the merger, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/consent solicitation statement/prospectus:

 

   

the risk that the transactions contemplated by the merger may not be completed in a timely manner or at all, which may adversely affect the price of Osprey’s securities;

 

   

the risk that the transactions contemplated may not be completed within Osprey’s Combination Period (as defined below) and the potential failure to obtain an extension of the Combination Period if sought by Osprey;

 

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the failure to satisfy the conditions to the consummation of the merger, including the adoption of the merger agreement by the stockholders of Osprey and BlackSky, the satisfaction of the minimum cash closing condition and the receipt of certain governmental and regulatory approvals;

 

   

the lack of a third party valuation in determining whether or not to pursue the merger;

 

   

the inability to complete the PIPE Investment;

 

   

the sufficiency of sources of funding;

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

 

   

the effect of the announcement or pendency of the transactions on BlackSky’s business relationships, operating results, and business generally;

 

   

risks that the proposed transactions disrupt current plans and operations of BlackSky;

 

   

the outcome of any legal proceedings that may be instituted against BlackSky or against Osprey related to the merger agreement or the transactions contemplated thereby;

 

   

negative impacts to BlackSky’s customers’ budgets related to COVID-19, which may result in reductions to upcoming renewals and/or negatively impact BlackSky’s ability to collect on receivables for contracted services;

 

   

the ability to maintain the listing of Osprey’s securities on a national securities exchange;

 

   

changes in the competitive and regulated industries in which BlackSky operates, variations in operating performance across competitors, changes in laws and regulations affecting BlackSky’s business and changes in the combined capital structure;

 

   

the impact of significant acquisitions, dispositions and other similar or material transactions;

 

   

ability to meet legal obligations and user expectations regarding data privacy and security;

 

   

the ability to implement business plans, forecasts, and other expectations after the completion of the merger, and to identify and realize additional opportunities;

 

   

BlackSky’s projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, BlackSky’s projected revenues, Adjusted EBITDA, market share, expenses and profitability may differ materially from its expectations;

 

   

the ability to invest in and deliver product development innovations and deliverables on time and with high quality;

 

   

the risk of downturns and a changing regulatory landscape in BlackSky’s highly competitive industry;

 

   

the effects of natural disasters, terrorist attacks and the spread and/or abatement of infectious diseases, such as COVID-19, on the merger or on the ability to implement business plans, forecasts, and other expectations after the completion of the merger and the transactions contemplated thereby.

 

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RISK FACTORS

In addition to the other information contained in this proxy statement/consent solicitation statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements”, you should carefully consider the following risk factors in deciding how to vote on the proposals presented in this proxy statement/consent solicitation statement/prospectus.

The references to “BlackSky”, “we”, “our”, “us” and the “Company” in the below sections entitled “—Risks Related to BlackSky’s Business and Industry,” “—Risks Related to BlackSky’s Satellites and Geospatial Intelligence, Imagery and Related Data Analytic Products and Services and Mission Systems,” “—Risks Related to BlackSky’s Government Contracts,” “—General BlackSky Risks,” “—Risks Related to BlackSky’s Indebtedness and Alternative Financings,” “—Risks Related to BlackSky’s Intellectual Property” and “—Risks Related to BlackSky’s Regulatory, Environmental and Legal Issues” generally refer to BlackSky and its consolidated subsidiaries prior to the effective time and New BlackSky as of the effective time.

Risks Related to BlackSky’s Business and Industry

We have incurred significant losses each year since our inception, we expect our operating expenses to increase, and we cannot give assurances of our future profitability, if any.

We have incurred significant losses each year since our inception and we may never achieve or maintain profitability. As of December 31, 2020, we had an accumulated deficit of $223.5 million. As we continue to expand our business, and the breadth of our operations, upgrade our infrastructure, expand into new markets, invest in research and development, invest in sales and marketing, including expanding our sales organization, and incur costs associated with general administration, including expenses related to being a public company and hiring additional employees, we expect that our costs of revenue and operating expenses will continue to increase. As we seek to grow our customer base, we may also incur increased losses because the costs associated with acquiring and growing our customers and with research and development are generally incurred upfront, while our revenue from customer contracts is generally recognized over the contract term. We may not be able to increase our revenue at a rate sufficient to offset increases in our costs of revenue and operating expenses in the near term or at all, which would prevent us from achieving or maintaining profitability in the future. Any failure by us to achieve, and then sustain or increase, profitability on a consistent basis could adversely affect our business, financial condition, and results of operations. If we are unable to become profitable, we may not be able to execute our business plan, our prospects may be harmed, and our stock price may be adversely affected and decline.

If we fail to manage future growth effectively, our business could be harmed.

We have recently experienced rapid growth. We operate in a growing market and have experienced, and may continue to experience, significant expansion of our operations. This growth has placed, and may continue to place, a strain on our employees, management systems, operational, financial, and other resources. As we have grown, we have increasingly managed larger and more complex deployments of satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, with a broader base of government and commercial customers. As we continue to grow, we face challenges of integrating, developing, retaining, and motivating a rapidly growing employee base. In the event of continued growth of our operations, our operational resources, including our information technology systems, our employee base, or our internal controls and procedures may not be adequate to support our operations and deployments. Managing our growth may require significant expenditures and allocation of valuable management resources, improving our operational, financial, and management processes and systems, and effectively expanding, training, and managing our employee base. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, financial condition, and results of operations would be harmed.

 

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In addition, our rapid growth may make it difficult to evaluate our future prospects. Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies with global operations in rapidly changing industries. If we fail to achieve the necessary level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business, financial condition, and results of operations would be harmed.

We may not be able to sustain our revenue growth rate in the future.

Although our revenue increased in 2020, there can be no assurances that revenue will continue to grow or do so at current rates, and you should not rely on the revenue of any prior quarterly or annual period as an indication of our future performance. Our revenue growth rate may decline in future periods. Many factors may contribute to declines in our revenue growth rate, including increased competition, slowing demand for our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems from existing and new customers, increased regulatory burdens domestically or abroad, a failure by us to continue capitalizing on growth opportunities, terminations of existing contracts by our customers, and the maturation of our business, among others. If our revenue growth rate declines, our business, financial condition, and results of operations could be adversely affected.

The loss of one or more of our largest customers could adversely affect our results of operations. In addition, if existing customers do not make subsequent purchases from us or renew their contracts with us, our revenue could decline, and our results of operations would be adversely impacted.

We are dependent on a small number of customers for a large portion of our revenues. A significant decrease in the sales to or loss of any of our major customers would have a material adverse effect on our business, financial condition, and results of operations. In fiscal 2020, we had five customers that each accounted for more than 10% of our total revenues and in the aggregate, accounted for 74% of our total net revenues. In fiscal 2019, we had four customers that each accounted for more than 10% of our total revenues and in the aggregate, accounted for 69% of our total net revenues. Customers in the defense market generally purchase our services in connection with government programs that have a limited duration, leading to fluctuating sales to any particular customer in this market from year to year. If we lose one or more of our major enterprise or government customers, or if we experience a significant reduction in business from one or more major enterprise or government customers, there is no assurance that we would be able to replace those customers to generate comparable revenue over a short time period, which could harm our operating results and profitability.

We derive a significant portion of our revenue from existing customers that expand their relationships with us. Increasing the size and number of the deployments of our existing customers is a major part of our growth strategy. We may not be effective in executing this or any other aspect of our growth strategy. It is not possible for us to predict the future level of demand from our larger customers for our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems.

Our contract terms with our customers and resellers vary in length, may not provide for automatic renewal and may require the customer or reseller to opt-in to extend the term. Our customers and resellers have no obligation to renew, upgrade, or expand their contracts with us after the terms of their existing contracts have expired. In addition, many of our customer and reseller contracts permit the customer or reseller to terminate their contracts with us with notice periods of varying lengths. If one or more of our customers or resellers terminate their contracts with us, whether for convenience, for default in the event of a breach by us, or for other reasons specified in our contracts, as applicable; if our customers or resellers elect not to renew their contracts with us; if our customers or resellers renew their contractual arrangements with us for shorter contract lengths; or

 

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if our customers or resellers otherwise seek to renegotiate terms of their existing contracts on terms less favorable to us, our business, financial condition, and results of operations could be adversely affected. This adverse impact would be even more pronounced for customers or resellers that represent a material portion of our revenue or business operations.

Our ability to renew or expand our customer relationships may decrease or vary as a result of a number of factors, including our customers’ satisfaction or dissatisfaction with our geospatial data and analytics platform and/or our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, the frequency and severity of errors or disruptions in our platform and/or our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, reliability of our satellites and/or our platform, our pricing, the effects of general economic conditions, competitive offerings or alternatives, or reductions in our customers’ spending levels. Our business, financial condition, and results of operations would also be adversely affected if we face difficulty collecting our accounts receivable from our customers or if we are required to refund customer prepayments and deposits.

Achieving renewal or expansion of deployments may require us to increasingly engage in sophisticated and costly sales efforts that may not result in additional sales. In addition, our customers’ decisions to expand the use of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems depends on a number of factors, including general economic conditions, the functioning of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, and our customers’ satisfaction with our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. If our efforts to expand within our existing customer base are not successful, our business may suffer.

The majority of our customer contracts may be terminated by the customer at any time for convenience and may contain other provisions permitting the customer to discontinue contract performance, and if terminated contracts are not replaced, our results of operations may differ materially and adversely from those anticipated. In addition, our contracts with government customers often contain provisions with additional rights and remedies favorable to such customers that are not typically found in commercial contracts.

The majority of our customer contracts are government contracts, which often contain termination for convenience provisions. Customers that terminate their contracts may also be entitled to a pro rata refund of the amount of the customer deposit for the period of time remaining in the contract term after the applicable termination notice period expires. If a customer were to unexpectedly terminate, cancel, or decline to exercise an option to renew with respect to one or more of our significant contracts, or if a government were to suspend or debar us from doing business with such government, our business, financial condition, and results of operations would be materially harmed.

We rely on the significant experience and specialized expertise of our senior management, engineering, sales and operational staff and must retain and attract qualified and highly skilled personnel in order to grow our business successfully. If we are unable to successfully build, expand, and deploy additional members of our management, engineering, sales and operational staff in a timely manner, or at all, or to successfully hire, retain, train, and motivate such personnel, our growth and long-term success could be adversely impacted.

Our performance is substantially dependent on the continued services and performance of our senior management and our highly qualified team of engineers and data scientists, many of whom have numerous years of experience, specialized expertise in our business, and security clearances required for certain defense projects. If we are not successful in hiring and retaining highly qualified engineers and data scientists, we may not be able

 

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to extend or maintain our engineering and data science expertise, and our future product development efforts could be adversely affected. Competition for hiring these employees is intense, especially regarding engineers and data scientists with specialized skills and security clearances required for our business, and we may be unable to hire and retain enough engineers and data scientists to implement our growth strategy.

Certain U.S. government contracts require us, and some of our employees, to maintain national security clearances. Obtaining and maintaining national security clearances for employees involves a lengthy process, and it is difficult to identify, recruit, and retain employees who already hold national security clearances. Further, some of our contracts contain provisions requiring us to staff an engagement with personnel that the customer considers key to our successful performance under the contract. In the event we are unable to provide these key personnel or acceptable substitutions, the customer may terminate the contract. As a result, if we are unable to recruit and retain a sufficient number of qualified employees, we may lose revenue and our ability to maintain and grow our business could be limited.

Our future success also depends on the successful execution of our strategy to increase our sales to existing customers, identify and engage new customers, and enter new U.S. and non-U.S. markets will depend, among other things, on our ability to successfully build and expand our sales organization and operations. Identifying, recruiting, training, and managing sales personnel requires significant time, expense, and attention, including from our senior management and other key personnel, which could adversely impact our business, financial condition, and results of operations in the short and long term.

In order to successfully scale our sales model, we must, and we intend to, increase the size of our direct sales force, both in the United States and outside of the United States, to generate additional revenue from new and existing customers. If we do not hire and retain a sufficient number of qualified sales personnel, our future revenue growth and business could be adversely impacted. It may take a significant period of time before our sales personnel are fully trained and productive, and there is no guarantee we will be successful in adequately training and effectively deploying our sales personnel. Our business would be adversely affected if our efforts to build, expand, train, and manage our sales organization are not successful. Any future sales organization changes may result in a temporary reduction of productivity, which could negatively affect our rate of growth. In addition, any significant change to the way we structure the compensation of our sales organization may be disruptive and may affect our revenue growth. If we are unable to attract, hire, develop, retain, and motivate qualified sales personnel, if our new sales personnel are unable to achieve sufficient sales productivity levels in a reasonable period of time or at all, if our marketing programs are not effective or if we are unable to effectively build, expand, and manage our sales organization and operations, our sales and revenue may grow more slowly than expected or materially decline, and our business may be significantly harmed.

Our sales efforts involve considerable time and expense and our sales cycle is often long and unpredictable.

Our results of operations may fluctuate, in part, because of the intensive nature of our sales efforts and the length and unpredictability of our sales cycle. As part of our sales efforts, we invest considerable time and expense evaluating the specific organizational needs of our potential customers and educating these potential customers about the technical capabilities and value of our satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. In addition, we have a limited direct sales force, and our sales efforts have historically depended on the significant involvement of our senior management team. The length of our sales cycle tends to be long and varies substantially from customer to customer. Because decisions to purchase our imagery services involve significant financial commitments, potential customers generally evaluate our systems, products and technologies at multiple levels within their organization, each of which often have specific requirements, and typically involve their senior management and multiple internal approvals. We sometimes spend substantial time, effort, and money in our sales efforts without producing any sales. As a result of these and other factors, our sales efforts typically require an extensive effort throughout a customer’s organization, a significant investment of human resources, expense and time, including by our senior management, and there can

 

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be no assurances that we will be successful in making a sale to a potential customer. If our sales efforts to a potential customer do not result in sufficient revenue to justify our investments, our business, financial condition, and results of operations could be adversely affected.

We may not be able to convert our orders in backlog into revenue.

Backlog is typically subject to large variations from quarter to quarter and comparisons of backlog from period to period are not necessarily indicative of future revenues. The contracts comprising our backlog may not result in actual revenue in any particular period or at all, and the actual revenue from such contracts may differ from our backlog estimates. The timing of receipt of revenues, if any, on projects included in backlog could change because many factors affect the scheduling of projects. Cancellation of or adjustments to contracts may occur. Additionally, all U.S. government contracts included in backlog may be terminated at the convenience of the U.S. government. If a U.S. government contract is terminated before completion of all of the contracted work, we may not receive all potential revenue from these orders.

The failure to realize all amounts in our backlog could adversely affect our future revenues and gross margins. As a result, our backlog as of any particular date may not be an accurate indicator of our future earnings. Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition. In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates.

Our results of operations are subject to fluctuation from period to period and may not be an accurate indication of future performance.

Our quarterly results of operations, including cash flows, have fluctuated significantly in the past and are likely to continue to do so in the future. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our quarterly results, financial position, and operations are likely to fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business. Fluctuation in quarterly results may negatively impact the value of New BlackSky Parent Class A common stock.

Our financial performance is dependent on our ability to generate a sustainable order rate for our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. This can be challenging and may fluctuate on an annual basis as the number of contracts awarded varies. Many satellite operators in the space data and analytics industry have continued to defer new satellite construction awards to evaluate other competing satellite system architectures and other market factors. If we are unable to win new contracts or execute existing contracts as expected, our business, results of operations and financial position could be further adversely affected.

The timing of our sales and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our products and services. We are often required to spend significant time and resources to better educate and familiarize potential customers with the value proposition of paying for our products and services. Therefore, our sales cycle is often long and can vary substantially from customer to customer. As a result, large individual sales have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. The loss or delay of one or more large sales transactions in a quarter would impact our results of operations and cash flow for that quarter and any future quarters in which revenue from that transaction is lost or delayed. In addition, downturns in new sales may not be immediately reflected in our revenue because we generally recognize revenue over the term of our contracts. The timing of customer billing and payment varies from contract to contract. A delay in the timing of receipt of such collections, or a default on a large contract, may negatively impact our liquidity for the period and in the future. Because a

 

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substantial portion of our expenses are relatively fixed in the short-term and require time to adjust, our results of operations and liquidity would suffer if revenue falls below our expectations in a particular period. In addition, our pricing model includes both subscription-based and fixed fee contracts, adding further variability to the timing of our revenue recognition across customer contracts.

Other factors that may cause fluctuations in our quarterly results of operations and financial position include, without limitation, those listed below:

 

   

the number of satellites in our satellite constellation;

 

   

unexpected weather patterns, natural disasters or other events that impact image quality or force a cancellation or rescheduling of satellite launches;

 

   

satellite or geospatial data and analytics platform failures that reduce the planned network size below projected levels, which result in contract delays or cancellations;

 

   

the cost of raw materials or supplied components for the manufacture and operation of our satellites;

 

   

the timing and cost of, and level of investment in, research and development relating to our technologies;

 

   

termination of one or more large contracts by customers, including for convenience;

 

   

changes in the competitive dynamics of our industry; and

 

   

general economic, regulatory, and market conditions, including the impact of the COVID-19 pandemic.

The individual or cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. These factors make it difficult for us to accurately predict financial metrics for any particular period.

The variability and unpredictability of our quarterly results of operations, cash flows, or other operating metrics could also result in our failure to meet our expectations or those of analysts that cover us or investors with respect to revenue or other key metrics for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the trading price of New BlackSky Parent Class A common stock could fall, and we could face costly lawsuits, including securities class action suits.

We could incur significant unanticipated costs if we do not accurately estimate and execute the costs of fixed-price engagements.

Certain mission systems and solution contracts are fixed-price contracts, rather than contracts in which payment to us is determined on a time and materials or other basis. Our failure to estimate accurately the resources and schedule required for a project, or our failure to complete our contractual obligations in a manner consistent with the project plan upon which our fixed-price contract was based, could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition, and results of operations. We are consistently entering into long-term contracts for large projects that magnify this risk. We have been required to commit unanticipated additional resources to complete certain projects, which has resulted in losses on those contracts. In addition, we may fix the price for some projects at an early stage of the project engagement, which could result in a fixed price that is too low. Therefore, any changes from our original estimates could adversely affect our business, financial condition, and results of operations.

The global COVID-19 outbreak has affected our business and operations.

In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, which may negatively impact our business.

 

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We are designated as an “essential critical infrastructure” for national security as defined by the U.S. Department of Homeland Security, and consistent with federal guidelines and with state and local orders to date, our business has continued to operate through the COVID-19 pandemic. Notwithstanding our continued operations, COVID-19 has had negative impacts on certain of our operations, our supply chain, vendors, transportation networks and customers, which have reduced certain of our sales and our margins, including as a result of preventative and precautionary measures that we, our suppliers, other businesses, and governments are taking. The COVID-19 outbreak is a widespread public health crisis that is adversely affecting the economies and financial markets globally. The progression of this pandemic could negatively impact our business or results of operations through the temporary or extended closure of our operating locations or those of our customers or suppliers.

While the COVID-19 pandemic has provided certain new opportunities for our business to expand, it has also created many negative headwinds that present risks to our business and results of operations. For example, the COVID-19 pandemic has generally disrupted the operations of our vendors, customers and prospective customers, and may continue to disrupt their operations, including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets or other harm to their business and financial results, which could result in a reduction to information technology budgets, delayed purchasing decisions, longer sales cycles, extended payment terms, the timing of payments, and postponed or canceled projects, all of which would negatively impact our business and operating results, including sales and cash flows. We do not yet know the net impact of the COVID-19 pandemic on our business and cannot guarantee that it will not be materially negative. Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, the ongoing effects of the COVID-19 pandemic and/or the precautionary measures that we have adopted may create operational and other challenges, any of which could harm our business and results of operations.

Risks Related to BlackSky’s Satellites and Geospatial Intelligence, Imagery and Analytic Products and Services and Mission Systems

Our ability to grow our business depends on the successful production, launch, commissioning and/or operation of our satellites and related ground systems, software and analytic technologies, which is subject to many uncertainties, some of which are beyond our control.

Our current primary research and development objectives focus on the development of our satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. We have limited operational experience with our Gen-2 satellites, and our Gen-3 satellites are still in development and may not be completed on time or at all and the costs associated with it may be greater than expected. While we estimate the gross costs associated with designing, building and launching our Gen-3 satellites will be significant, there can be no assurance that we will complete this on a timely basis, on budget or at all. Design, manufacture and launch of satellite systems are highly complex and historically have been subject to delays and cost over-runs. If we do not complete development of these satellites in our anticipated timeframes or at all, our ability to grow our business will be adversely affected. The successful development, integration, and operations of our satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems involves many uncertainties, some of which are beyond our control, including, but not limited to:

 

   

timing in finalizing satellite design and specifications;

 

   

performance of satellites and our space system meeting design specifications;

 

   

failure of satellites and our space system as a result of technological or manufacturing difficulties, design issues or other unforeseen matters;

 

   

engineering and/or manufacturing performance failing or falling below expected levels of output or efficiency;

 

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increases in costs of materials;

 

   

changes in project scope;

 

   

our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintaining current approvals, licenses or certifications;

 

   

performance of manufacturing facilities that we use despite risks that disrupt productions, such as natural disasters, catastrophic events or labor disputes;

 

   

performance of a limited number of suppliers for certain raw materials and supplied components, the accuracy of supplier representations as to the suitability of such raw materials and supplied components for our products, and their willingness to do business with us;

 

   

performance of our internal and third-party resources that support our research and development activities;

 

   

our ability to protect our intellectual property critical to the design and function of our satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems;

 

   

our ability to continue funding and maintaining our research and development activities;

 

   

successful completion of demonstration missions; and

 

   

the impact of the COVID-19 pandemic on us, our customers and suppliers, and the global economy.

If any of the above events occur, they could have a material adverse effect on our ability to continue to develop, integrate and operate our satellites and related infrastructure, products and services, which would materially adversely affect our business, financial condition and results of operations.

Loss of, or damage to, a satellite and the failure to obtain data or alternate sources of data for our geospatial intelligence, imagery and related data analytic products and services and mission systems may have an adverse impact on our business, financial condition, and results of operations. If our satellites and related equipment have shorter useful lives than we anticipate, we may be required to recognize impairment charges.

We rely on data collected from a number of sources including data obtained from our satellites and from third parties. We may become unable or limited in our ability to collect such data. For example, satellites can temporarily go out of service and be recovered, or cease to function for reasons beyond our control, including the quality of design and construction, the supply of fuel, the expected gradual environmental degradation of solar panels, the durability of various satellite components and the orbits and space environments in which the satellites are placed and operated. Electrostatic storms, collisions with other objects (including, but not limited to, space debris and other spacecrafts) or actions by malicious actors, including cyber related, could also damage the satellites and subject us to liabilities for any damages caused to other spacecrafts. Additionally, in certain instances, governments may discontinue for periods of time the access to or operation of a satellite for any particular area on the Earth and for various reasons may not permit transmission of certain data, whether from a satellite owned by the government or not.

Satellites can experience malfunctions, commonly referred to as anomalies, which have occurred and may occur in the future in our satellites. Any single anomaly could materially and adversely affect our ability to utilize the satellite. Anomalies may also reduce the expected capacity, commercial operation and/or useful life of a satellite, thereby reducing the revenue that could be generated by that satellite or create additional expenses due to the need to provide replacement or back-up satellites or satellite capacity earlier than planned and could have a material adverse effect on our business. In the past, we have had a satellite that never went into commercial operations as a result of anomalies. Further, on May 15, 2021, a Rocket Lab Electron rocket carrying two of our satellites suffered a failure during flight, preventing a successful deployment of our resulting in the loss of both

 

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satellites. In addition, if a satellite experiences a malfunction, our backup satellite capacity may be insufficient to meet all of our customers’ needs or cause service interruptions, and we may need to potentially blackout or reduce service to certain customers, which would adversely affect our relationships with our customers and result in loss of revenues. Although we work closely with our satellite manufacturer to determine and eliminate the cause of anomalies in new satellites and provide for redundancies of many critical components in the satellites, we may not be able to prevent the impacts of anomalies in the future.

Satellites have certain redundant systems which can fail partially or in their entirety and accordingly satellites may operate for extended periods without all redundant systems in operation, but with single points of failure. The failure of satellite components could cause damage to or loss of the use of a satellite before the end of its expected operational life. For example, in 2019, we reduced the useful life of one of our operational satellites from three years to 1.5 years to reflect its impaired ability to collect imagery subsequent to launch. Certain of our satellites are nearing the end of their expected operational lives. As satellites near the end of their expected operational lives, we expect the performance of each satellite to decline gradually near the end of its expected operational life. We can offer no assurance that satellites will maintain their prescribed orbits or remain operational and we may not have replacement satellites that are immediately available.

We evaluate our satellites for impairment and test for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Certain of the anomalies previously disclosed may be considered to represent a significant adverse change in the physical condition of a particular satellite. There can be no assurance as to the actual operational life of a satellite or that the operational life of individual components will be consistent with their design life. A number of factors will impact the useful lives of our satellites, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks affecting the satellites during launch and in orbit. In addition, any improvements in technology may make obsolete our existing satellites or any component of our satellites prior to the end of their lives. If our satellites and related equipment have shorter useful lives than we currently anticipate, this may lead to delays in increasing the rate of our commercial payloads and declines in actual or planned revenues, which would have a material adverse effect on our business, financial condition, and results of operations.

Long-lived assets, including goodwill and intangible assets, are tested annually for impairment in the fourth quarter or whenever there is an indication that an asset may be impaired. Disruptions to our business, unexpected significant declines in our operating results, adverse technological events or changes in the regulatory markets in which we operate may result in impairment charges to our tangible and intangible assets. Any future impairment charges could substantially affect our reported results.

Our business involves significant risks and uncertainties that may not be covered by insurance.

We endeavor to obtain insurance coverage from established insurance carriers to cover certain risks and liabilities related to our business. However, the amount of insurance coverage that we maintain may not be adequate to cover all claims or liabilities. Existing coverage may be canceled while we remain exposed to the risk and it is not possible to obtain insurance to protect against all operational risks, natural hazards and liabilities.

Although we maintain insurance policies, we cannot provide assurance that this insurance will be adequate to protect us from all material judgments and expenses related to potential future claims or that these levels of insurance will be available in the future at economical prices or at all. A successful liability claim could result in substantial cost to us. Even if we are fully insured as it relates to a claim, the claim could nevertheless diminish our brand and divert management’s attention and resources, which could have a negative impact on our business, financial condition, and results of operations.

In addition, even though we carry business interruption insurance policies, any business interruption losses could exceed the coverage available or be excluded from our insurance policies. Any disruption of our ability to

 

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operate our business could result in a material decrease in our revenues or significant additional costs to replace, repair or insure our assets, which could have a material adverse impact on our business, financial condition, and results of operations.

We do not maintain launch or in-orbit insurance coverage for our satellites to address the risk of potential systemic anomalies, failures, collisions with our satellites or other satellites or debris, or catastrophic events affecting the existing satellite system. If one or more of our launches result in catastrophic failure or one or more of our in-orbit satellites or payloads fail, we could be required to record significant impairment charges for the satellite or payload.

We do not maintain launch or in-orbit insurance coverage for our satellites to address the risk of potential systemic anomalies, failures, collisions with our satellites or other satellites or debris, or catastrophic events affecting the existing satellite system. If one or more of our in-orbit uninsured satellites or payloads fail, or one or more of our uninsured satellites is destroyed during failed launch, we could be required to record significant impairment charges for the satellite or payload. We may review the purchase of launch insurance on a case by case basis evaluating the launch history of our launch provider, number of satellites to be deployed on the launch vehicle, the status of our constellation, our ability to launch additional satellites in the near term, and the cost of insurance, among other factors. We do not maintain third-party liability insurance with respect to our satellites. Accordingly, we currently have no insurance to cover any third-party damages that may be caused by any of our satellites, including personal and property insurance. If we experience significant uninsured losses, such events could have a material adverse impact on our business, financial condition and results of operations.

Satellites are subject to construction and launch delays, launch failures, damage or destruction during launch, the occurrence of which can materially and adversely affect our operations.

Delays in the construction of future satellites and the procurement of requisite components and launch vehicles, limited availability of appropriate launch windows, possible delays in obtaining regulatory approvals, satellite damage or destruction during launch, launch failures, or incorrect orbital placement could have a material adverse effect on our business, financial condition, and results of operations. The loss of, or damage to, a satellite due to a launch failure could result in significant delays in anticipated revenue to be generated by that satellite and/or significant impairment charges. For example, in 2019, one of our two satellites was damaged during launch commissioning, which resulted in an impairment loss of $6.6 million, the full carrying value of the satellite. Also, on May 15, 2021, a Rocket Lab Electron rocket carrying two of our satellites suffered a failure during flight, resulting in the loss of both satellites, which resulted in an impairment loss of $18.3 million, the full carrying value of the satellites. Any significant delay in the commencement of service of a satellite could delay or potentially permanently reduce the revenue anticipated to be generated by that satellite. In addition, if the loss of a satellite were to occur, we may not be able to accommodate affected customers with our other satellites or data from another source until a replacement satellite is available, and we may not have on hand, or be able to obtain in a timely manner, the necessary funds to cover the cost of any necessary satellite replacement. An extended launch delay beyond planned contingency, launch failure, underperformance, delay or perceived delay could have a material adverse effect on our business prospects, financial condition, and results of operations.

If our satellites fail to operate as intended, it could have a material adverse effect on our business, financial condition and results of operations.

The manufacturing, testing, launching and operation of satellites involves complex processes and technology. Our satellites employ advanced technologies and sensors that are exposed to severe environmental stresses that have and could affect the performance of our satellite. Hardware component problems could lead to deterioration in performance or loss of functionality of a satellite. In addition, human operators may execute improper implementation commands that may negatively impact a satellite’s performance. Exposure of our satellites to an unanticipated catastrophic event, such as a meteor shower or a collision with space debris, could

 

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reduce the performance of, or completely destroy, the affected satellite. Even if a satellite is operated properly, minor technical flaws in the satellite’s sensors could significantly degrade their performance, which could materially affect our ability to collect imagery and market our products and services successfully.

We cannot provide assurances that our satellites will continue to operate successfully in space throughout their expected operational lives. Even if a satellite is operated properly, technical flaws in that satellite’s sensors or other technical deficiencies or anomalies could significantly hinder its performance, which could materially affect our ability to collect imagery and market our products and services successfully. While certain software deficiencies may be corrected remotely, most, if not all, of the satellite anomalies or debris collision damage cannot be corrected once the satellites are placed in orbit. Further, although we have some ability to actively maneuver our satellites to avoid potential collisions with space debris or other spacecraft, this ability is limited by, among other factors, uncertainties and inaccuracies in the projected orbit location of and predicted conjunctions with debris objects tracked and cataloged by the U.S. government. Additionally, some space debris is too small to be tracked and therefore its orbital location is completely unknown; nevertheless, this debris is still large enough to potentially cause severe damage or a failure of our satellites should a collision occur.

If we suffer a partial or total loss of a deployed satellite, we could need a significant amount of time and could incur substantial expense to replace that satellite. We may experience other problems with our satellites that may reduce their performance. During any period of time in which a satellite is not fully operational, we may lose most or all of the revenue that otherwise would have been derived from that satellite. Our inability to repair or replace a defective satellite or correct any other technical problem in a timely manner could result in a significant loss of revenue. If a satellite experiences a significant anomaly such that it becomes impaired or is no longer functional, it could significantly impact our business, prospects and profitability.

The market for geospatial intelligence, imagery and related data analytics and mission systems has not been established with precision, is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected.

The market for geospatial intelligence, imagery and related data analytics and mission systems has not been established with precision as the commercialization of space is a relatively new development and is rapidly evolving. Our views of the total addressable market are based on a number of third-party reports which may or may not accurately reflect future market size and growth. As a result, our views of the total addressable market may prove to be incorrect.

The market may not accept our geospatial intelligence, imagery and related data analytic products and services and mission systems, and our business is dependent upon our ability to keep pace with the latest technological changes.

The market for our geospatial intelligence, imagery and related data analytic products and services and mission systems is characterized by rapid technological change and evolving industry standards. Failure to respond in a timely and cost-effective way to these technological developments would result in serious harm to our business and operating results. We have derived, and we expect to continue to derive, a substantial portion of our revenues from providing geospatial intelligence, imagery and related data analytic products and services and mission systems that are based upon today’s leading technologies and that are capable of adapting to future technologies. As a result, our success will depend, in part, on our ability to develop and market service offerings that respond in a timely manner to the technological advances and needs of our customers, and evolving industry standards.

We believe that, in order to remain competitive in the future, we will need to continue to invest significant financial resources to develop new offerings and technologies or to adapt or modify our existing offerings and technologies, including through internal research and development, acquisitions and joint ventures or other teaming arrangements. These expenditures could divert our attention and resources from other projects, and we

 

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cannot be sure that these expenditures will ultimately lead to the timely development of new offerings and technologies or identification of and expansion into new markets. Due to the design complexity of our products, we may, in the future, experience delays in completing the development and introduction of new products. Any delays could result in increased costs of development or deflect resources from other projects. In addition, there can be no assurance that the market for our geospatial intelligence, imagery and related data analytic products and services and mission systems will develop or continue to expand or that we will be successful in newly identified markets as we currently anticipate. The failure of our technology to gain market acceptance could

significantly reduce our revenues and harm our business. Market acceptance of our commercial high-resolution imagery and related products and services depends on a number of factors, including the quality, scope, timeliness, sophistication, price and the availability of substitute products and services. We cannot be sure that our competitors will not develop competing technologies that gain market acceptance in advance of our technologies or develop technologies that better meet the needs of our customers. The possibility exists that our competitors might develop new technology or offerings that might cause our existing technology and offerings to become obsolete. If we fail to develop, manufacture, and market innovative technologies or services that meet customers’ requirements or our technologies and services fail to achieve market acceptance more rapidly as compared to our competitors, our ability to procure new contracts could be negatively impacted and our business may not continue to grow in line with historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our business strategy, expand our business or fund other liquidity needs and our business, financial condition, and results of operations could be materially and adversely affected.

Currently we are dependent on LeoStella as the sole manufacturer of our satellites. Any significant disruption to LeoStella’s operations or facilities could have a material adverse effect on our business, financial condition, and results of operations.

In 2018, we formed LeoStella, a joint venture owned 50-50 between us and Thales Alenia Space US Investment LLC (“Thales”). LeoStella currently manufactures BlackSky’s Gen-2 satellites, is assisting with the design of BlackSky’s Gen-3 satellites and has certain exclusivity and/or right of first refusal and right of last offer rights with respect to the supply of our satellites and certain related services to us, subject to certain exceptions. Our ability to execute our business strategy and grow our satellite constellation depends on efficient, proper, and uninterrupted operations at our satellite manufacturers. A significant disruption to our satellite manufacturers could have a material adverse effect on our business, financial condition and results of operations.

Our reliance on our satellite manufacturers poses a number of risks, including lack of control over the manufacturing process and ultimately over the quality and timing of delivery of our satellites. An infrastructure failure at a manufacturer’s facilities could result in the destruction of satellites under construction or inventory, manufacturing delays or additional costs incurred. LeoStella has limited operations and does not currently maintain back-up manufacturing facilities or operations. In addition, our arrangement with LeoStella limits our ability to use an alternative manufacturer for our satellites. A change in our relationship with LeoStella could result in a material adverse effect on our business, financial condition, and results of operations. A decision to change manufacturers would result in longer times for design and production as we develop relationships with new suppliers.

We are dependent on third parties to transport and launch our satellites into space and any delay could have a material adverse impact to our business, financial condition, and results of operations.

Currently there are only a handful of companies who offer launch services, and if this sector of the space industry does not grow or there is consolidation among these companies, we may not be able to secure space on a launch vehicle or such space may be more costly.

We are dependent on third-parties to transport our satellites and ground station equipment around the world and to launch and deliver our satellites into space. We are subject to timely and affordable access to launch services that meet our business and technical requirements for our constellation. If the number of companies

 

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offering launch services or the number of launches does not grow in the future or there is a consolidation among companies who offer these services, this could result in a shortage of space on these launch vehicles, which may cause prices to increase or cause delays in our launch schedule. Additionally, a shortage of transportation providers for our satellites and ground station equipment may cause our costs to increase, delays in our ability to launch our satellites, gaps in our service coverage and adversely affect our ability to meet customer demand. Any of these situations could have a material adverse effect on our business, financial condition, and results of operations.

Further, in the event that a launch is delayed, our timing for recognition of revenue may be impacted depending on the length of the delay and the nature of our customer contracts. While such delays are common in the space industry, any delay in a launch could result in a delay in recognizing revenue which could materially impact our financial statements or result in negative impacts to our earnings during a specified time period, which could have a material effect on our business, financial condition, and results of operations.

Prolonged unfavorable weather conditions could negatively impact our operations.

In order for satellites to collect and deliver imagery effectively, the satellite must be able to view the desired area on a certain day at a certain time as it passes overhead. Adverse weather conditions, such as clouds or haze, may prevent satellites from collecting data and imagery or could cause the satellite to experience technical difficulties communicating with the ground terminals or collecting imagery in the same quality or volume that was intended. In addition, space weather, such as solar flares, could take our satellites out of orbit, disrupt our ground communication networks and affect the decay rate of our satellites. The occurrence of any of the foregoing could result in lengthy interruptions in our services and/or damage our reputation, which could have a material adverse effect on our business, financial condition, and results of operations.

We face intense competition that may cause us to have to either reduce our prices for geospatial intelligence, imagery and related data analytic products and services and mission systems or to lose market share.

We operate in highly competitive industries and many of our competitors are larger and have substantially greater resources than we have. Our products and services compete with satellite and aerial imagery and related products and services offered by a range of private and government providers. Our current or future competitors may have superior technologies or greater financial, personnel and other resources than we have. The value of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems may also be diluted by related products and services that are available free of charge.

Competition in our imagery services business is highly diverse, and while our competitors offer different products, there is often competition for contracts that are part of governmental budgets. Our major existing and potential competitors for our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems include commercial satellite imagery companies, state-owned imagery providers, aerial imagery companies, free sources of imagery and unmanned aerial vehicles. We also face competition from companies that provide geospatial data analytic information and services to the U.S. government, including defense prime contractors.

Our competitors or potential competitors could, in the future, offer satellite-based imagery or other products and services with more attractive features than our products and services. The emergence of new remote imaging technologies or the continued growth of low-cost imaging satellites, could negatively affect our marketing efforts. More importantly, if competitors develop and launch satellites or other imagery-content sources with more advanced capabilities and technologies than ours, or offer products and services at lower prices than ours, our business and results of operations could be harmed. Due to competitive pricing pressures, such as new product introductions by us or our competitors or other factors, the selling price of our products and services may

 

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further decrease. If we are unable to offset decreases in our average selling prices by increasing our sales volumes or by adjusting our product mix, our revenue and operating margins may decline and our financial position may be harmed.

The U.S. government and foreign governments may develop, construct, launch and operate their own imagery satellites, which could reduce their need to rely on us and other commercial suppliers. In addition, such governments could sell or provide free of charge Earth imagery from their satellites and thereby compete with our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. Also, governments may at times make our imagery freely available for humanitarian purposes, which could impair our revenue growth with non-governmental organizations.

In addition, some of our foreign competitors currently benefit from, and others may benefit in the future from, subsidies and other protective measures by their home countries where governments are providing financial support, including significant investments in the development of new technologies. Government support of this nature greatly reduces the commercial risks associated with satellite development activities for these competitors. This market environment may result in increased pressures on our pricing and other competitive factors.

Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions. As a result of such acquisitions, our current or potential competitors may be able to accelerate the adoption of new technologies that better address customer needs, devote greater resources to bring these products and services to market, initiate or withstand substantial price competition, or develop and expand their product and service offerings more quickly than we do. These competitive pressures in our market or our failure to compete effectively may result in fewer orders, reduced revenue and margins, and loss of market share. In addition, it is possible that industry consolidation may impact customers’ perceptions of the viability of smaller or even mid-size companies and consequently customers’ willingness to purchase from such firms.

We may not compete successfully against our current or potential competitors. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition, and results of operations could be adversely affected. In addition, companies competing with us may have an entirely different pricing or distribution model. Increased competition could result in fewer customer orders, price reductions, reduced margins, and loss of market share, any of which could harm our business and results of operations.

Issues in the use of artificial intelligence (“AI”) (including machine learning) in our geospatial data and analytics platforms may result in reputational harm or liability.

AI is enabled by or integrated into some of our geospatial data and analytics platforms and is a growing element of our business offerings. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed. Datasets may be insufficient, of poor quality, or contain biased information. Inappropriate or controversial data practices by data scientists, engineers, and end-users of our systems could impair the acceptance of AI solutions. If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm. Some AI scenarios present ethical issues. Though our technologies and business practices are designed to mitigate many of these risks, if we enable or offer AI solutions that are controversial because of their purported or real impact on our financial condition and operations or the financial condition and operations of our customers, we may experience competitive harm, legal liability and brand or reputational harm.

 

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Our products and services are complex and could have unknown defects or errors, which may increase our costs, harm our reputation with customers, give rise to costly litigation, or divert our or our customers’ resources from other purposes. We devote substantial resources to research and development, which could cause our operating results to decline.

Our satellites and component parts, geospatial data and analytics platform, and geospatial intelligence, imagery and related data analytic products and services and mission systems are extremely complex and must operate successfully with complex hardware and software from other vendors. Despite testing, our platform and products have contained defects and errors and may in the future contain defects or errors, or experience performance problems when first introduced, when new versions or enhancements are released, or even after these products have been used by our customers for a period of time. These problems could result in expensive and time-consuming design modifications or warranty charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance costs, diversion of our personnel’s attention from our product development efforts, exposure to liability for damages, damaged customer relationships, and harm to our reputation, any of which could materially harm our results of operations. In addition, increased development costs could be substantial and could reduce our operating margins.

The existence of any defects, errors, or failures in our products or the misuse of our products could also lead to lawsuits against us, result in injury, death, or property damage, and significantly damage our reputation and support for our products and services in general. Alleviating any of these problems could require additional significant expenditures of our capital and other resources and could cause interruptions, delays, or cessation of our product licenses, which could cause us to lose existing or potential customers and could adversely affect our business, financial condition, results of operations, and growth prospects.

In addition, our products and services integrate a wide variety of other elements, and our products and services must successfully interoperate with products from other vendors and our customers’ internally developed software. As a result, when problems occur for a customer using our products and services, it may be difficult to identify the sources of these problems. The occurrence of software or errors in data, whether or not caused by our products and services, could delay or reduce market acceptance of our products and services and have an adverse effect on our business and financial performance, and any necessary revisions may cause us to incur significant expenses. In addition, we may not deliver or maintain interoperability quickly or cost-effectively, or at all. These efforts require capital investment and engineering resources. If we fail to maintain the compatibility of our products and services with our customers’ network and security infrastructures, our customers may not be able to fully adopt our offerings, and we may, among other consequences, experience reduced demand for our products and services, which could adversely affect our business, financial condition, and results of operations. Further, the incorrect or improper implementation or use of our software, our failure to train customers on how to benefit from full utilization of our platform, or our failure to provide support services to our customers may result in errors or loss of data and as a result, dissatisfied customers, negative publicity, and harm to our reputation and brand, or legal claims against us.

There can be no assurance that we will be successful in developing and marketing, on a timely basis, new products or product enhancements or that the new products will adequately address the changing needs of the marketplace or that we will successfully manage the transition from existing products. There can be no assurance that errors will not be found in any new or enhanced products. Certain products require a higher level of sales and support expertise or external validation. Failure of our sales channel and sales representatives, particularly the independent channel partners, to obtain this expertise and to sell the new product offerings effectively could have an adverse impact on our sales in future periods. We do not have a comprehensive network of resellers, VARs and OEMs and we may not be successful in developing a global sales network with qualified and experienced channel partners. Any of these problems may result in the loss of or delay in customer acceptance, diversion of development resources, damage to our reputation, or increased service costs, any of which could have a material adverse effect on our business, financial position, results of operations and cash flows.

 

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We often rely on a limited number of vendors to provide certain key raw materials, supplied components, products or services and the inability of these key vendors to meet our needs could have a material adverse effect on our business.

Many raw materials and components, particularly for the construction of satellites and management of certain remote ground terminals and direct access facilities, are procured or subcontracted on a single or sole-source basis. If a sole source supplier cannot meet our needs or is otherwise unavailable, we may be unable to find a suitable alternative. Our ability to manage inventory and meet delivery requirements may be constrained by our suppliers’ inability to scale production and adjust delivery of long-lead time products during times of volatile demand. Our inability to fill our supply needs would jeopardize our ability to fulfill obligations under commercial and government contracts, which could, in turn, result in reduced sales, contract penalties or terminations and damage to customer relationships and could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

In addition, manufacturing of our satellites depends on specific technologies and companies for which there may be a limited number of vendors. If these vendors are unable to meet our needs because they fail to perform adequately, are unable to match new technological requirements or problems, or are unable to dedicate engineering and other resources necessary to provide the services contracted for, our business, financial condition, and results of operations may be adversely affected. While alternative sources for these key raw materials, supplied components, products, services, and technologies may exist, we may not be able to develop these alternative sources quickly and cost-effectively, which could materially impair our ability to operate our business. Furthermore, these vendors may request changes in pricing, payment terms or other contractual obligations, which could cause us to make substantial additional investments. Moreover, the imposition of tariffs or import/export restrictions on raw materials or supplied components could have a material adverse effect on our operations.

We have in the past experienced and may in the future experience delays in manufacturing or operation as we go through the requalification process with any replacement third-party supplier, as well as the limitations imposed by the ITAR, EAR, or other restrictions on transfer of sensitive technologies.

We have limited experience with respect to determining the optimal prices and pricing structures for our products and services.

We expect that we may need to change our pricing model from time to time, including as a result of competition, global economic conditions, reductions in our customers’ spending levels generally, changes in product mix, pricing studies or changes in how information technology infrastructure is broadly consumed. Similarly, as we introduce new products and services, or as a result of the evolution of our existing products and services, we may have difficulty determining the appropriate price structure for our products and services. In addition, as new and existing competitors introduce new products or services that compete with ours, or revise their pricing structures, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, as we continue to target selling our products and services to larger organizations, these larger organizations may demand substantial price concessions. As a result, we may be required from time to time to revise our pricing structure or reduce our prices, which could adversely affect our business, financial condition, and results of operations.

Any failure to offer high-quality technical support may harm our relationships with our customers and have a negative impact on our business and financial condition.

Our customers depend on our customer support team to resolve technical and operational issues relating to our products and services. Our ability to provide effective customer support is largely dependent on our ability to attract, train, and retain qualified personnel with experience in supporting customers with products and services such as ours. The number of our customers has grown significantly and that has and will put additional pressure

 

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on our customer support team. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. We also may be unable to modify the scope and delivery of our technical support to compete with changes in the technical support provided by our competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect our operating results. In addition, as we continue to grow our operations and expand internationally, we need to be able to provide efficient customer support that meets our customers’ needs globally at scale and our customer support team will face additional challenges, including those associated with delivering support, training, and documentation in languages other than English. If we are unable to provide efficient customer support globally at scale, our ability to grow our operations may be harmed and we may need to hire additional support personnel, which could negatively impact our operating results. In addition, we provide self-service support resources to our customers. Some of these resources rely on engagement and collaboration with other partners. If we are unable to continue to develop self-service support resources that are easy to use and that our customers utilize to resolve their technical issues, customers may continue to direct support requests to our customer support team instead of relying on our self-service support resources and our customers’ experience with our geospatial data and analytics platform may be negatively impacted. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation, our ability to sell our products and services to existing and prospective customers, and our business, financial condition, and results of operations.

If we fail to meet our service level commitments, our business, results of operations and financial condition could be adversely affected.

Our agreements with customers and resellers may provide for service level commitments, which contain specifications regarding the availability and performance of our products and services such as assured access and guaranteed capacity. Any failure of or disruption to our infrastructure could impact the performance of our satellites and the availability of our products and services to our customers. If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our products and services, we may be contractually obligated to provide affected customers with service credits for future subscriptions, and, in certain cases, face contract termination with refunds of prepaid amounts. If we suffer performance issues or downtime that exceeds the service level commitments under our contracts with our customers, our business, financial condition, and results of operations would be adversely affected.

Natural disasters, unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business and satellite launch schedules. Interruption or failure of our infrastructure could hurt our ability to effectively perform our daily operations and provide and produce our products and services, which could damage our reputation and harm our operating results.

We are vulnerable to natural disasters and significant disruptions including tsunamis, floods, earthquakes, fires, water shortages, other extreme or unusual weather conditions, epidemics or pandemics, acts of terrorism or disruptive political events where our facilities or the launch facilities of our transport partners are located, or where are third-party suppliers’ facilities are located, power shortages and blackouts, aging infrastructures and telecommunications failures. Furthermore, climate change has, and may continue to, increased the rate, size and scope of these natural disasters. In the event of such a natural disaster or other disruption, we could experience disruptions to our operations or the operations of suppliers, subcontractors, distributors or customers, which could affect our ability to maintain launch schedules or fulfill our customer contracts.

The availability of many of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems depends on the continuing operation of our satellite operations infrastructure, satellite manufacturing operations, information technology and communications systems. Any downtime, damage to or failure of our systems could result in interruptions in our service, which could reduce our revenues. Our systems are vulnerable to damage or interruption from floods, fires, power loss, aging infrastructure, telecommunications failures,

 

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computer viruses, computer denial of service attacks or other attempts to harm our systems. In the event we are unable to collect, process and deliver imagery from our facility, our daily operations and operating results would be materially and adversely affected. In addition, our ground terminal centers are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, aging infrastructure, telecommunications failures and similar events. The occurrence of any of the foregoing could result in lengthy interruptions in our services and/or damage our reputation, which could have a material adverse effect on our business, financial condition, and results of operations.

Risks Related to BlackSky’s Government Contracts

Our business with various governmental entities is subject to the policies, priorities, regulations, mandates, and funding levels of such governmental entities and may be negatively or positively impacted by any change thereto.

We have contracts with the U.S. government, and we may enter into additional contracts with the U.S. government in the future, and this subjects a large part of our business to statutes and regulations applicable to companies doing business with the government, including the Federal Acquisition Regulation (“FAR”). These government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors. FAR governs all aspects of government contracting, including contractor qualifications and acquisition procedures. The FAR provisions in U.S. government contracts must be complied with in order for the contract to be awarded and provides for audits and reviews of contract procurement, performance and administration.

For instance, most U.S. government agencies include provisions that allow the government to unilaterally terminate or modify contracts for convenience, and in that event, the counterparty to the contract may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source.

Government contracts often also contain provisions and are subject to laws and regulations that provide government customers with additional rights and remedies not typically found in commercial contracts. These rights and remedies allow government customers, among other things, to:

 

   

Terminate existing contracts for convenience with short notice;

 

   

Reduce orders under or otherwise modify contracts;

 

   

For contracts subject to the Truth in Negotiations Act, reduce the contract price or cost where it was increased because a contractor or subcontractor furnished cost or pricing data during negotiations that was not complete, accurate, and current;

 

   

For some contracts, (i) demand a refund, make a forward price adjustment, or terminate a contract for default if a contractor provided inaccurate or incomplete data during the contract negotiation process and (ii) reduce the contract price under triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated;

 

   

Cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;

 

   

Decline to exercise an option to renew a multi-year contract;

 

   

Claim rights in solutions, systems, or technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services, and disclose such work-product to third parties, including other government agencies and our competitors, which could harm our competitive position;

 

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Prohibit future procurement awards with a particular agency due to a finding of organizational conflicts of interest based upon prior related work performed for the agency that would give a contractor an unfair advantage over competing contractors, or the existence of conflicting roles that might bias a contractor’s judgment;

 

   

Subject the award of contracts to protest by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction, or modification of the awarded contract;

 

   

Suspend or debar us from doing business with the applicable government; and

 

   

Control or prohibit the export of our services.

In addition, government contracts normally contain additional requirements that may increase our costs of doing business, reduce our gross margins, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example:

 

   

specialized disclosure and accounting requirements unique to government contracts;

 

   

financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;

 

   

public disclosures of certain contract and company information;

 

   

mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements; and

 

   

requirements to procure certain materials, components and parts from supply sources approved by the customer.

Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits and investigations regarding our compliance with government contract requirements. New regulations or procurement requirements (including, for example regulations regarding counterfeit and corrupt parts, supply chain diligence and cybersecurity) or changes to current requirements could increase our costs and risk of non-compliance. In addition, if we fail to comply with government contracting laws, regulations and contract requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under our contracts, the Federal Civil False Claims Act (including treble damages and other penalties), or criminal law. In particular, the False Claims Act’s “whistleblower” provisions also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results.

Our role as a contractor to agencies and departments of the U.S. government results in our being routinely subject to investigations and reviews relating to compliance with various laws and regulations, including those associated with organizational conflicts of interest, procurement integrity, bid integrity and claim presentation, among others. These investigations may be conducted without our knowledge. Adverse findings in these investigations or reviews can lead to criminal, civil or administrative proceedings, and we could face civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with U.S. government agencies. In addition, we could suffer serious harm to our reputation and competitive position if allegations of impropriety were made against us, whether or not true. If our reputation or relationship with U.S. government agencies were impaired, or if the U.S. government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, our revenue would decline.

 

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Further, changes in government policies, priorities, regulations, use of commercial data providers to meet U.S. government imagery needs, government agency mandates, funding levels through agency budget reductions, the imposition of budgetary constraints or a decline in government support or deferment of funding for programs in which we or our customers participate could result in contract terminations, delays in contract awards, reduction in contract scope, performance penalties or breaches of our contracts, the failure to exercise contract options, the cancellation of planned procurements and fewer new business opportunities, all of which could negatively impact our business, financial condition, results of operations and cash flows. In addition, continued uncertainty related to recent and future disruptions in U.S. federal government operations, such government shutdowns, the U.S. budget and/or failure of the U.S. government to enact annual appropriations, such as long-term funding under a continuing resolution, could have a material adverse impact on our revenues, earnings and cash flow and may negatively impact regulatory approvals and guidance that are important to our operations.

We face other risks and uncertainties associated with defense-related contracts, which may have a material adverse effect on our business.

Our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems are incorporated into many different domestic and international defense programs Whether our contracts are directly with the U.S. government, a foreign government, or one of their respective agencies, or indirectly as a subcontractor or team member, our contracts and subcontracts are subject to special risks. For example:

 

   

Changes in government administration and national and international priorities, including developments in the geo-political environment, could have a significant impact on national or international defense spending priorities and the efficient handling of routine contractual matters. These changes could have a negative impact on our business in the future.

 

   

Because we contract to supply goods and services to the U.S. and foreign governments and their prime and subcontractors, we compete for contracts in a competitive bidding process. We may compete directly with other suppliers or align with a prime or subcontractor competing for a contract. We may not be awarded the contract if the pricing or product offering is not competitive, either at our level or the prime or subcontractor level. In addition, in the event we are awarded a contract, we are subject to protests by losing bidders of contract awards that can result in the reopening of the bidding process and changes in governmental policies or regulations and other political factors. In addition, we may be subject to multiple rebid requirements over the life of a defense program in order to continue to participate in such program, which can result in the loss of the program or significantly reduce our revenue or margin from the program. The government’s requirements for more frequent technology refreshes on defense programs may lead to increased costs and lower long term revenues.

 

   

Consolidation among defense industry contractors has resulted in a few large contractors with increased bargaining power relative to us. The increased bargaining power of these contractors may adversely affect our ability to compete for contracts and, as a result, may adversely affect our business or results of operations in the future.

Our customers include U.S. government contractors who must comply with and are affected by laws and regulations relating to the formation, administration, and performance of U.S. government contracts. In addition, when we contract with the U.S. government, we must comply with these laws and regulations. A violation of these laws and regulations could result in the imposition of fines and penalties to us or our customers or the termination of our or their contracts with the U.S. government. As a result, there could be a delay in our receipt of orders from our customers, a termination of such orders, or a termination of contracts between us and the U.S. government.

 

   

Certain of our contracts with U.S. and international defense contractors or directly with the U.S. government are on a commercial item basis, eliminating the requirement to disclose and certify cost data. To the extent that there are interpretations or changes in the FAR regarding the qualifications

 

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necessary to sell commercial items, there could be a material impact on our business and operating results. For example, there have been legislative proposals to narrow the definition of a “commercial item” (as defined in the FAR) or to require cost and pricing data on commercial items that could limit or adversely impact our ability to contract under commercial item terms. Changes could be accelerated due to changes in our mix of business, in federal regulations, or in the interpretation of federal regulations, which may subject us to increased oversight by the Defense Contract Audit Agency (“DCAA”) for certain of our products or services. Such changes could also trigger contract coverage under the Cost Accounting Standards (“CAS”), further impacting our commercial operating model and requiring compliance with a defined set of business systems criteria. Growth in the value of certain of our contracts has increased our compliance burden, requiring us to implement new business systems to comply with such requirements. Failure to comply with applicable CAS requirements could adversely impact our ability to win future CAS-type contracts.

 

   

We are subject to the Defense Federal Acquisition Regulation Supplement (“DFARS”) and the Department of Defense (“DoD”) and other federal cybersecurity requirements, in connection with our defense work for the U.S. government and defense prime contractors. Amendments to DoD cybersecurity requirements, such as through amendments to the FAR or DFARS, may increase our costs or delay the award of contracts if we are unable to certify that we satisfy such cybersecurity requirements.

 

   

The U.S. government or a defense prime contractor customer could require us to relinquish data rights to a product in connection with performing work on a defense contract, which could lead to a loss of valuable technology and intellectual property in order to participate in a government program.

 

   

We currently have a cost reimbursable contract with the U.S. government, and in the future, we may enter into additional contracts with the U.S. government or a defense prime contractor customer that require us to enter into additional cost reimbursable contracts that could offset our cost efficiency initiatives.

 

   

We are subject to various U.S. federal export-control statutes and regulations, which affect our business with, among others, international defense customers. In certain cases, the export of our products and technical data to foreign persons, and the provision of technical services to foreign persons related to such products and technical data, may require licenses from the U.S. Department of Commerce or the U.S. Department of State. The time required to obtain these licenses, and the restrictions that may be contained in these licenses, may put us at a competitive disadvantage with respect to competing with international suppliers who are not subject to U.S. federal export control statutes and regulations. In addition, violations of these statutes and regulations can result in civil and, under certain circumstances, criminal liability as well as administrative penalties which could have a material adverse effect on our business, financial condition, and results of operations.

 

   

Sales to our U.S. prime defense contractor customers as part of foreign military sales (“FMS”) programs combine several different types of risks and uncertainties highlighted above, including risks related to government contracts, risks related to defense contracts, timing and budgeting of foreign governments, and approval from the U.S. and foreign governments related to the programs, all of which may be impacted by macroeconomic and geopolitical factors outside of our control.

 

   

We derive a portion of our revenue from programs with governments and government agencies that are subject to security restrictions (e.g., contracts involving classified information, classified contracts, and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation. In general, access to classified information, technology, facilities, or programs requires appropriate personnel security clearances, is subject to additional contract oversight and potential liability, and may also require appropriate facility clearances and other specialized infrastructure. Therefore, certain of our employees with appropriate security clearances may require access to classified information in connection with the performance of a U.S. government contract. We must comply with security requirements pursuant to the National

 

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Industrial Security Program Operating Manual (“NISPOM”) administered by the Defense Counterintelligence and Security Agency (“DCSA”), and other U.S. government security protocols when accessing sensitive information. Failure to comply with the NISPOM or other security requirements may subject us to civil or criminal penalties, loss of access to sensitive information, loss of a U.S. government contract, or potentially debarment as a government contractor. Further, the DCSA has transitioned its review of a contractor’s security program to focus on the protection of controlled unclassified information and assets. Failure to meet DCSA’s new, broader requirements could adversely impact the ability to win new business as a government contractor.

 

   

We may need to invest additional capital to build out higher level security infrastructure at certain of our facilities to win contracts related to defense programs with higher level security requirements. Failure to invest in such infrastructure may limit our ability to obtain new contracts with defense programs.

Changes in U.S. government policy regarding use of commercial data or space infrastructure providers, or material delay or cancellation of certain U.S. government programs, may have a material adverse effect on our revenue and our ability to achieve our growth objectives.

Current U.S. government policy encourages the U.S. government’s use of commercial data and space infrastructure providers to support U.S. national security objectives. We are considered by the U.S. government to be a commercial data provider. U.S. government policy is subject to change and any change in policy away from supporting the use of commercial data and space infrastructure providers to meet U.S. government imagery and space infrastructure needs, or any material delay or cancellation of planned U.S. government programs, could materially adversely affect our revenue and our ability to achieve our growth objectives.

Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail to operate in the expected manner.

Our satellites and satellite systems must function under demanding and unpredictable operating conditions and in harsh and potentially destructive environments.

We employ sophisticated design and testing processes and practices, which include a range of stringent factory and on-site acceptance tests with criteria and requirements that are jointly developed with customers. Our systems may not be successfully implemented, pass required acceptance criteria, or operate or give the desired output, or we may not be able to detect and fix all defects in the satellites and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, or resolve any delays or availability issues in the launch services we procure. Failure to do so could result in increased costs, lost revenue and damage to our reputation, termination of contracts for convenience or default, and may adversely affect our ability to win new contract awards, all of which could have a material adverse effect on our financial results.

If our subcontractors or suppliers fail to perform their contractual obligations, our performance and reputation as a contractor and our ability to obtain future business could suffer.

As a prime contractor to the U.S. government, from time to time we rely upon other companies as subcontractors to perform work we are obligated to perform for our customers. As we secure more work under certain of our contracts, we may require an increasing level of support from subcontractors that provide complementary and supplementary services to our offerings. We are responsible for the work performed by our subcontractors, even though in some cases we have limited involvement in that work. If one or more of our subcontractors fails to satisfactorily perform the agreed-upon services on a timely basis or violates U.S. government contracting policies, laws or regulations, our ability to perform our obligations as a prime contractor or meet our customers’ expectations may be compromised. In extreme cases, performance or other deficiencies

 

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on the part of our subcontractors could result in a customer terminating our contract for default. A termination for default could expose us to liability, including liability for the agency’s costs of re-procurement, could damage our reputation and could hurt our ability to compete for future contracts.

We also are required to procure certain materials and parts from supply sources approved by the U.S. government. The inability of a supplier to meet our needs or the appearance of counterfeit parts in our products could have a material adverse effect on our financial position, results of operations or cash flows.

Our employees or others acting on our behalf may engage in misconduct or other improper activities, which could cause us to lose contracts or cause us to incur costs.

We are exposed to the risk that employee fraud or other misconduct from our employees or others acting on our behalf could occur. Misconduct by employees or others could include intentional failures to comply with U.S. government procurement regulations, engaging in unauthorized activities, insider threats to our cybersecurity, or falsifying time records. Misconduct by our employees or others acting on our behalf could also involve the improper use of our customers’ sensitive or classified information, which could result in regulatory sanctions against us, serious harm to our reputation, a loss of contracts and a reduction in revenues, or cause us to incur costs to respond to any related governmental inquiries. It is not always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses, which could cause us to lose contracts or cause a reduction in revenues. In addition, alleged or actual misconduct by employees or others acting on our behalf could result in investigations or prosecutions of persons engaged in the subject activities, which could result in unanticipated consequences or expenses and management distraction for us regardless of whether we are alleged to have any responsibility.

We may in the future experience such misconduct, despite our various compliance programs. Misconduct or improper actions by our employees, agents, subcontractors, suppliers, business partners and/or joint ventures could subject us to administrative, civil or criminal investigations and enforcement actions; monetary and non-monetary penalties; liabilities; and the loss of privileges and other sanctions, including suspension and debarment, which could negatively impact our reputation and ability to conduct business and could have a material adverse effect on our financial position, results of operations and cash flows.

General BlackSky Risks

Intelsat has a right of first offer with respect to the sale of BlackSky Holdings, Inc., (which will be a subsidiary of New BlackSky Parent following the merger), which might discourage, delay or prevent a sale of BlackSky Holdings, Inc., and therefore, depress the trading price of BlackSky Parent Class A common stock.

In October 2019, BlackSky Holdings, Inc. (which will be a subsidiary of New BlackSky Parent following the merger) entered into a Right of First Offer Agreement with Intelsat (the “Right of First Offer Agreement”). Pursuant to the terms of the Right of First Offer Agreement, prior to commencing or engaging in a sale of our subsidiary BlackSky Holdings, Inc., BlackSky Holdings, Inc. is obligated to provide written notice of any such proposed sale to Intelsat and Intelsat will have the opportunity to provide BlackSky Holdings, Inc. with an offer to purchase BlackSky Holdings, Inc. (an “Intelsat Offer”). Pursuant to the terms of the Right of First Offer Agreement, if BlackSky Holdings, Inc. does not accept an acquisition offer made by Intelsat, BlackSky Holdings, Inc. would be permitted to negotiate and enter into an alternative sale transaction, so long as the total enterprise value for BlackSky Holdings, Inc. and its subsidiaries is greater than 110% of the value implied by any Intelsat Offer. The Right of First Offer Agreement is scheduled to expire on October 31, 2026. This description of the Right of First Offer Agreement is only a summary. You should also refer to a copy of the complete Right of First Offer Agreement, which has been filed with the SEC as an exhibit to this proxy statement/consent solicitation statement/prospectus.

The Right of First Offer Agreement may delay our ability to undertake a sale of BlackSky Holdings, Inc. and, since BlackSky Holdings, Inc. will be the main operating subsidiary of New BlackSky Parent following the

 

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merger, the existence of the Right of First Offer Agreement could limit the price that investors might be willing to pay in the future for shares of BlackSky Parent Class A common stock. The Right of First Offer Agreement could also deter potential acquirers of BlackSky Holdings, Inc., thereby reducing the likelihood that you could receive a premium for your shares of BlackSky Parent Class A common stock in an acquisition.

We depend on computing infrastructure operated by Amazon Web Services (“AWS”), Microsoft, and other third parties to support some of our customers and any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect our business, financial condition, and results of operations.

We rely on the technology, infrastructure, and software applications, including software-as-a-service offerings, of certain third parties, such as AWS and Microsoft Azure, in order to operate some or all of certain key features or functions of our business, including deployment of our cloud-based imagery services and other geospatial and data analytic services, customer relationship management activities, billing and order management, and financial accounting services. We do not have control over the operations of the facilities of the third parties that we use. If any of these third-party services experience errors, disruptions, security issues, or other performance deficiencies, if they are updated such that they become incompatible, if these services, software, or hardware fail or become unavailable due to extended outages, interruptions, defects, or otherwise, or if they are no longer available on commercially reasonable terms or prices (or at all), these issues could result in errors or defects in the delivery of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems, our revenue and margins could decline, or our reputation and brand could be damaged, we could be exposed to legal or contractual liability, our expenses could increase, our ability to manage our operations could be interrupted, and our processes for managing our sales and servicing our customers could be impaired until equivalent services or technology, if available, are identified, procured, and implemented, all of which may take significant time and resources, increase our costs, and could adversely affect our business. Many of these third-party providers attempt to impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures, and if enforceable, we may have additional liability to our customers or third-party providers.

We depend and rely upon SaaS technologies from third parties to operate our business and interruptions or performance problems with these technologies may adversely affect our business and results of operations.

We rely on hosted SaaS applications from third parties in order to operate critical functions of our business, including enterprise resource planning, order management, contract management billing, project management and accounting and other operational activities. If these services become unavailable due to extended outages, interruptions or because they are no longer available on commercially reasonable terms, our expenses could increase, our ability to manage finances could be interrupted and our processes for managing sales of our geospatial data and analytics platform and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and implemented, all of which could adversely affect our business.

Joint ventures, partnerships, and strategic alliances may have a material adverse effect on our business, results of operations and prospects.

We expect to continue to enter into joint ventures, partnerships, and strategic alliances as part of our long-term business strategy. Joint ventures, partnerships, strategic alliances, and other similar arrangements involve significant investments of both time and resources, and there can be no assurances that they will be successful. They may present significant challenges and risks, including that they may not advance our business strategy, we may get an unsatisfactory return on our investment or lose some or all of our investment, they may distract management and divert resources from our core business, they may expose us to unexpected liabilities, or we may choose a partner that does not cooperate as we expect them to and that fails to meet its obligations or that has economic, business, or legal interests or goals that are inconsistent with ours. For example, in 2018 we

 

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formed LeoStella, a 50-50 joint venture focusing on building small imaging satellites for sale on a commercial basis, with Thales, from which we procure our satellites. LeoStella operates in a highly competitive environment and the interests of Thales may not be aligned with ours, or may change over time, which could affect the effectiveness and success of the joint venture.

Entry into certain joint ventures, partnerships, or strategic alliances now or in the future may be subject to government regulation, including review by U.S. or foreign government entities related to foreign direct investment. If a joint venture or similar arrangement were subject to regulatory review, such regulatory review might limit our ability to enter into the desired strategic alliance and thus limit our ability to carry out our long-term business strategy.

As our joint ventures, partnerships, and strategic alliances come to an end or terminate, we may be unable to renew or replace them on comparable terms, or at all. When we enter into joint ventures, partnerships, and strategic alliances, our partners may be required to undertake some portion of sales, marketing, implementation services, engineering services, or software configuration that we would otherwise provide. In such cases, our partner may be less successful than we would have otherwise been absent the arrangement. In the event we enter into an arrangement with a particular partner, we may be less likely (or unable) to work with one or more direct competitors of our partner with which we would have worked absent the arrangement. We may have interests that are different from our joint venture partners and/or which may affect our ability to successfully collaborate with a given partner. Similarly, one or more of our partners in a joint venture, partnership, or strategic alliance may independently suffer a bankruptcy or other economic hardship that negatively affects its ability to continue as a going concern or successfully perform on its obligation under the arrangement. In addition, customer satisfaction with our products provided in connection with these arrangements may be less favorable than anticipated, negatively impacting anticipated revenue growth and results of operations of arrangements in question. Further, some of our strategic partners offer competing products and services or work with our competitors. As a result of these and other factors, many of the companies with which we have joint ventures, partnerships, or strategic alliances may choose to pursue alternative technologies and develop alternative products and services in addition to or in lieu of ours, either on their own or in collaboration with others, including our competitors. If we are unsuccessful in establishing or maintaining our relationships with these partners, our ability to compete in a given marketplace or to grow our revenue would be impaired, and our results of operations may suffer. Even if we are successful in establishing and maintaining these relationships with our partners, we cannot assure you that these relationships will result in increased customer usage of our systems, products or technologies or increased revenue.

Further, winding down joint ventures, partnerships, or other strategic alliances can result in additional costs, litigation, and negative publicity. Any of these events could adversely affect our business, financial condition, results of operations, and growth prospects.

If we do not maintain good relationships with the members of our distribution channel, our ability to generate revenue will be adversely affected. If our distribution channel suffers financial losses, becomes financially unstable or insolvent, or is not provided the right mix of incentives to sell our subscriptions, our ability to generate revenue will be adversely affected.

We expect our revenue derived from indirect channel sales to increase in the near future. Our ability to effectively distribute our geospatial data and analytics platform, and our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems depends in part upon the financial and business condition of our distributor and reseller network. Distributors and resellers may not be highly capitalized and experience difficulties during times of economic contraction. If our distributors and resellers were to become insolvent, they would not be able to maintain their business and sales or provide customer support services, which would negatively impact our business and revenue.

 

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Over time, we have modified and will continue to modify aspects of our relationship with our distributors and resellers, such as their incentive programs, pricing to them, and our distribution model to motivate and reward them for aligning their businesses with our strategy and business objectives. Changes in these relationships and underlying programs could negatively impact their business and harm our business. Further, our distributors and resellers may lose confidence in our business, move to competitive products, or may not have the skills or ability to support customers. The loss of or a significant reduction in business with those distributors or resellers could harm our business. In particular, if one or more of such distributors or resellers were unable to meet their obligations with respect to accounts payable to us, we could be forced to write off such accounts and may be required to delay the recognition of revenue on future sales to these customers. These events could have a material adverse effect on our financial results.

Future acquisitions may adversely affect our financial condition.

Although we have no current plans or commitments with respect to any acquisition, as part of our strategy for growth, in the future we may explore acquisitions or strategic alliances, which ultimately may not be completed or be beneficial to us. The risks associated with such acquisitions include the difficulty of assimilating solutions, operations, and personnel; inheriting liabilities such as intellectual property infringement claims; the failure to realize anticipated revenue and cost projections and expected synergies; and the diversion of management’s time and attention. We may not be successful in overcoming such risks, and such acquisitions and investments may negatively impact our business. In addition, such acquisitions and investments may in the future contribute to fluctuations in our quarterly financial results. These fluctuations could arise from transaction-related costs and charges associated with eliminating redundant expenses or write-offs of impaired assets recorded in connection with acquisitions and investments. These costs or charges could negatively impact our financial results for a given period, cause quarter-to-quarter variability in our financial results, or negatively impact our financial results for future periods.

We use our judgment and estimates relating to our critical accounting policies including accounting for contracts, and any changes in such estimates or errors in our underlying assumptions could have an adverse effect on our overall financial performance.

The preparation of our financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

When agreeing to contractual terms, our management makes assumptions and projections about future conditions and events, many of which extend over long periods. These projections assess the productivity and availability of labor, complexity of the work to be performed, cost and availability of materials, impact of delayed performance and timing of product deliveries. Contract accounting requires judgment relative to assessing risks, estimating contract revenues and costs, and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total revenues and costs at completion is complicated and subject to many variables. For example, assumptions are made regarding the length of time to complete a contract since costs also include expected increases in wages, prices for materials and allocated fixed costs. Similarly, assumptions are made regarding the future impact of our efficiency initiatives and cost reduction efforts. Incentives, awards or penalties related to performance on contracts are considered in estimating revenue and profit rates and are recorded when there is sufficient information to assess anticipated performance. Suppliers’ assertions are also assessed and considered in estimating costs and profit rates.

Because of the significance of the judgment and estimation processes described above, it is possible that materially different amounts could be obtained if different assumptions were used or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may have a

 

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material adverse effect upon the profitability of one or more of the affected contracts, future period financial reporting and performance. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of New BlackSky Parent Class A common stock. Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, stock-based compensation, common stock valuations, and income taxes.

In addition, the projected financial information appearing elsewhere in this proxy statement/consent solicitation statement/prospectus has been prepared by management and reflects estimates of future performance as of the date such projected financial information was prepared. The projected results depend on the successful implementation of management’s growth strategies and are based on assumptions and events over which we have only partial or no control. The assumptions underlying such projected information require the exercise of judgment and may not occur, and the projections are subject to uncertainty due to the effects of economic, business, competitive, regulatory, legislative, and political or other changes. As a result of recent business developments, we have revised our projected results for 2021, as described in more detail in the section entitled “Unaudited Prospective Financial Information of BlackSky”. There can be no assurance that BlackSky’s financial condition, including its cash flows or results of operations, will be consistent with those set forth in such projected results, which could have an adverse impact on the market price of New BlackSky Parent Class A common stock or the financial position of New BlackSky Parent following the merger.

We are exposed to risks related to geopolitical and economic factors, laws and regulations and our international business subjects us to numerous political and economic factors, legal requirements, cross-cultural considerations and other risks associated with doing business globally.

Our operations and performance depend significantly on global macroeconomic, specific foreign country and U.S. domestic economic conditions. Adverse conditions in the macroeconomic environment may result in a decreased demand for our products and services, constrained credit and liquidity, reduced government spending and volatility in equity and foreign exchange markets. In addition, to the extent the global economy experiences a significant downturn or volatility, we may be exposed to impairments of certain assets if their values deteriorate. Tighter credit due to economic conditions may diminish our future borrowing ability and increase borrowing costs under our existing credit facilities. Customers’ ability to pay for our products and services may also be impaired, which could lead to an increase in our allowance for doubtful accounts and write-offs of accounts receivable.

If any of the foreign economies in which we do business deteriorates or suffers a period of uncertainty, our business and performance may be negatively impacted through reduced customer and government spending, changes in purchasing cycles or timing, reduced access to credit for our customers, or other factors impacting our international sales and collections. Furthermore, customer spending levels in any foreign jurisdiction may be adversely impacted by changes in domestic policies, including tax and trade policies. The services we provide internationally are sometimes in countries with unstable governments, economic or fiscal challenges, military or political conflicts and/or developing legal systems. This may increase the risk to our employees, subcontractors or other third parties, and/or increase the risk of a wide range of liabilities, as well as loss of property.

We cannot predict the timing, strength, or duration of any crisis, economic slowdown or any subsequent recovery generally, or for any industry in particular. Although certain aspects of the effects of a crisis or an economic slowdown may provide potential new opportunities for our business, we cannot guarantee that the net impact of any such events will not be materially negative. Accordingly, if the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be adversely affected.

 

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Our business, financial condition, results of operations, and prospects may be harmed if we are unable to cross-sell our solutions.

A significant component of our growth strategy is to increase the cross-selling of our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems to current and future customers, however, we may not be successful in doing so if our customers find our additional solutions to be unnecessary or unattractive. We have invested, and intend to continue to invest, significant resources in developing and acquiring additional solutions, which resources may not be recovered if we are unable to successfully cross-sell these solutions to customers using our existing solutions. Any failure to sell additional solutions to current and future customers could harm our business, financial condition, results of operations, and prospects.

Our management has limited experience in operating a public company. We will incur significantly increased costs and devote substantial management time as a result of operating as a public company.

Our management has limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Our management team’s limited experience in dealing with the increasingly complex laws pertaining to public companies could result in an increasing amount of their time that may be devoted to these activities which could result in less time being devoted to the management of our business. We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the United States.

Following the merger, the combined company will incur significant legal, accounting, and other expenses that BlackSky did not incur as a private company. Compliance with these requirements will increase our legal and financial compliance costs and make some activities more time consuming and costly. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. We cannot predict or estimate the amount of additional costs we may incur in the future as a result of being a public company or the timing of such costs. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and results of operations.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. We will continue to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

As a result of disclosure of information as a public company, our business and financial condition have become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If the claims are successful, our business operations and financial results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business operations and financial results. These factors could also make it more difficult for us to attract and retain qualified colleagues, executive officers, and members of our board of directors.

Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, or theft or tampering of intellectual property, any of which could materially adversely impact our business.

Our operations, products, solutions, analysis and intellectual property are inherently at risk of loss, inappropriate access or use, or tampering by both insider threats and external bad actors. In particular, as a

 

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defense contractor, we face various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks; insider threats; threats to the safety of our directors, officers and employees; threats to the security and viability of our facilities, infrastructure and supply chain; and threats from state-sponsored and otherwise sophisticated actors, terrorist acts or other acts of aggression. Our customers and partners (including our supply chain and joint ventures and our service providers) face similar threats and growing requirements. Customer or partner proprietary, classified, or sensitive information stored on our networks is at risk. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. We have suffered incidents of physical intrusions to our facilities in the past. Any further incidents or other security breaches or incidents could lead to losses or unauthorized disclosure of sensitive information or capabilities; unauthorized access to infrastructure or equipment theft or exposure of data; harm to personnel, infrastructure or products; regulatory actions; and/or financial liabilities, as well as potential damage to our reputation as a government contractor and provider of cyber-related or cyber-protected goods and services.

Cyber and other security threats are continuously evolving and include, but are not limited to: malicious software, destructive malware, attempts to gain unauthorized access to data, disruption or denial of service attacks, phishing and other social engineering attacks, and other physical and electronic security breaches and incidents that could lead to disruptions in mission critical systems; unauthorized release of confidential, personal or otherwise protected information (our Company’s information or that of our employees, customers or partners); corruption of data, networks or systems; harm to individuals; and loss of assets. Threats to and vulnerabilities in our systems and infrastructure and those of our partners may result from human error, fraud or malice on the part of our employees, third-party service providers and other partners or by malicious third parties, including state-sponsored organizations with significant financial and technological resources, or from accidental technological failure. In addition, we could be impacted by cyber threats or other disruptions or vulnerabilities found in products we use or in our partners’ or customers’ systems that are used in connection with our business. Any of these events, if not prevented or effectively mitigated, could damage our reputation, require remedial actions and other actions in response, and lead to loss of business and harm to our market position, regulatory investigations and proceedings, potential claims and liability and other financial losses. We may face difficulties or delays in identifying, responding to, and otherwise mitigating security breaches and incidents, and in the event of any security event, we may be required or find it appropriate to expend increased financial and other resources in an effort to prevent and otherwise address security breaches and incidents.

We provide systems, products and services to various customers (both governmental and commercial) who also face cyber threats. Our systems, products and services may themselves be subject to cyber threats and/or they may not be able to detect or properly deter threats, or effectively mitigate resulting losses. These losses could adversely affect our customers and our company.

The impact of these various factors is difficult to predict, but one or more of them could result in the loss of information or capabilities, harm to individuals or property, damage to our reputation, loss of business, contractual or regulatory actions and potential liabilities, and perception or report that any such security breach or incident may harm our reputation and market position, any of which could have a material adverse effect on our financial position, results of operations and/or cash flows. We could be forced to expend significant financial and operational resources in response to any actual or perceived security breach or security incident, including in repairing system damage, increasing cybersecurity protection costs by deploying additional personnel and modifying or enhancing our protection technologies, investigating and remediating any information security vulnerabilities, notifying affected individuals and otherwise remediating or responding to any such breach or incident, and litigating and resolving regulatory investigations and other proceedings and legal claims and litigation, all of which could divert resources and the attention of our management and key personnel. In addition, a security event that involves classified or other sensitive government information or certain controlled technical information, could subject us to civil or criminal penalties and could result in loss of our facility security clearance and other accreditations, loss of our government contracts, loss of access to classified information, loss of export privileges or debarment as a government contractor.

 

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Cybersecurity risks and cyber incidents could result in the compromise of confidential data or critical data systems and give rise to potential harm to customers, remediation and other expenses under consumer protection laws or other laws or common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.

Cyber incidents can result from deliberate attacks or unintentional events. We collect and store on our networks sensitive information, including intellectual property, proprietary business information and personal data of individuals, such as our customers and employees. The secure maintenance of this information and technology is critical to our business operations. We have implemented multiple layers of security measures designed to protect the confidentiality, integrity, availability and privacy of this data and the systems and devices that store and transmit such data. We utilize current security technologies, and our defenses are monitored and routinely tested internally. Despite these efforts, threats from malicious persons and groups, new vulnerabilities and advanced new attacks against information systems create risk of cybersecurity incidents. These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures.

These threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or other service providers to state-sponsored attacks. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the past several years, cyber-attacks have become more prevalent and much harder to detect and defend against. Our network and storage applications may be vulnerable to cyber-attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may be subject to unauthorized access by hackers, employees, consultants or other service providers. In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff.

There can be no assurance that we will not be subject to cybersecurity incidents that bypass our security measures, impact the integrity, availability or privacy of data that may be subject to privacy laws or disrupt our information systems, devices or business. As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our enterprise, information systems and data from attack, damage or unauthorized access remain a priority for us. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities. The occurrence of any of these events could result in:

 

   

harm to customers;

 

   

business interruptions and delays;

 

   

the loss, misappropriation, corruption or unauthorized access of data;

 

   

litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws;

 

   

notification to governmental agencies, the media and/or affected individuals pursuant to various federal, state and international privacy and security laws;

 

   

regulatory fines and sanctions;

 

   

reputational damage;

 

   

increase to insurance premiums; and

 

   

foreign, federal and state governmental inquiries.

 

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Any of the foregoing events could have a material, adverse effect on our financial position and operating results and harm our business reputation.

We maintain cyber liability insurance policies covering certain security and privacy damages. However, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. Risks related to cybersecurity will increase as we continue to grow the scale and functionality of our geospatial data and analytics platform and process, store, and transmit increasingly large amounts of our customers’ information and data, which may include proprietary or confidential data or personal data.

We have previously identified material weaknesses in our internal control over financial reporting. If we fail to develop and maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected, which may adversely affect investor confidence in the combined company.

In connection with the audit of our financial statements as of the year ended December 31, 2019, we identified material weaknesses in the design and operating effectiveness of our internal controls over financial reporting. These material weaknesses related to technical accounting, review of balance sheet reconciliations, review of Launch Division revenue and cost of sales schedule and review of manual journal entries. To address these material weaknesses, we took actions to improve our control environment related to certain aspects of review functions and we also enhanced our use of third-party technical consultants for complex transactions. As of December 31, 2020, these material weaknesses have been addressed and remediated.

As of the year ended December 31, 2020, we identified a material weakness over the accounting for forward loss contracts. To address this material weakness, we have initiated compensating controls including, but not limited to, more comprehensive analyses, increased review by reviewers with a deep understanding of the contracts and contract accounting, enhanced documentation requirements and an expansion of our accounting team of employees with technical accounting expertise to address complex transactions.

We cannot at this time estimate how long it will take to remediate this material weakness, and we may not ever be able to remediate the material weakness. If we are unable to successfully remediate the material weakness and otherwise to establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be materially and adversely affected. Similarly, if our remedial measures are insufficient to address the material weakness on a timely basis, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.

Additionally, the process of designing and implementing internal control over financial reporting required to comply with Section 404 will be time consuming, costly and complicated. Moreover, the effectiveness of our controls and procedures may be limited by a variety of factors, including:

 

   

faulty human judgment and simple errors, omissions or mistakes;

 

   

fraudulent action of an individual or collusion of two or more people;

 

   

inappropriate management override of procedures; and

 

   

the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control.

Lastly, we may discover other control deficiencies in the future, and we cannot assure you that we will not have a material weakness in future periods.

If not permanently remediated, these material weaknesses could result in material misstatements to New BlackSky’s annual or interim consolidated financial statements that might not be prevented or detected on a

 

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timely basis, or in delayed filing of required periodic reports. In addition, we can give no assurance that additional material weaknesses will not be identified in the future. If the combined company is unable to assert that its internal control over financial reporting is effective, or when required in the future, if the combined company’s independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the New BlackSky Parent Class A common stock could be adversely affected and the combined company could become subject to litigation or investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Our projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, our projected revenues, Adjusted EBITDA, market share, expenses and profitability may differ materially from our expectations.

We operate in a rapidly changing and competitive industry and our projections will be subject to the risks and assumptions made by management with respect to our industry. Operating results are difficult to forecast because they generally depend on a number of factors, including the competition we face, and our ability to attract and retain customers and enterprise partnerships, while generating sustained revenues. This may result in decreased revenue levels, and we may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in income. This inability could cause our operating results in a given quarter to be higher or lower than expected. These factors make creating accurate forecasts and budgets challenging and, as a result, we may fall materially short of our forecasts and expectations, which could cause our stock price to decline and investors to lose confidence in us.

Our ability to use net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2020, BlackSky had $24.6 million of tax-effected U.S. federal net operating loss carryforwards available to reduce future taxable income. It is possible that we will not generate taxable income in time to use these net operating loss carryforwards before their expiration or at all. Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such net operating losses is limited. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law. In addition, the federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), respectively, and similar provisions of state law. Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership (by value) by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We have not yet undertaken an analysis of whether the merger constitutes an “ownership change” for purposes of Section 382 and Section 383 of the Code.

Risks Related to BlackSky’s Indebtedness and Alternative Financings

If we are unable to procure the requisite consent to the merger from the lenders under our Amended and Restated Loan and Security Agreement, we will be obligated to pay off our obligations under such loan agreement upon the consummation of the merger, which would reduce our cash and capital resources and could harm our business, financial condition, and results of operations.

BlackSky Holdings, Inc., together with its subsidiaries, are parties to that certain Amended and Restated Loan and Security Agreement, dated as of October 31, 2019 (“Intelsat LSA”), with Intelsat Jackson Holdings SA, as agent and lender, and Seahawk SPV Investment LLC, as lender. As of December 31, 2020, the

 

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outstanding principal amounts under the Intelsat LSA equaled approximately $71.2 million. The operating covenants under the Intelsat LSA require BlackSky to obtain consent from the lenders under the Intelsat LSA in connection with the merger. While we are working to procure consent from such lenders, we cannot guarantee that such consent will be obtained. If such consent is not obtained prior to the consummation of the merger, the lenders under the Intelsat LSA could require BlackSky to pay all of its obligations under the Intelsat LSA. Such repayment would reduce our cash and capital recourses and, if we are unable to replace such indebtedness with alternative equity or debt financing, we may be required to alter our business plan, reduce or delay expenditures or sell assets, which could harm our business.

We cannot guarantee that we will be able to obtain alternative equity or debt financing on satisfactory terms or at all. Further, the cost and availability of credit are subject to changes in the economic and business environment. If conditions in major credit markets deteriorate, our ability to replace the indebtedness under the Intelsat LSA on satisfactory terms, or at all, may be negatively affected.

Our ability to generate the amount of cash needed to pay interest and principal on our outstanding indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.

Our ability to make scheduled payments on, or to refinance our obligations under, our existing debt agreements depends on our financial and operating performance and prevailing economic and competitive conditions.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, raise additional equity capital, or restructure our debt. However, there is no assurance that such alternative measures may be successful or permitted under the agreements governing our indebtedness and, as a result, we may not be able to meet our scheduled debt service obligations. In the absence of such results of operations and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations, which could harm our business, financial condition, and results of operations.

We cannot guarantee that we will be able to refinance our indebtedness or obtain additional financing on satisfactory terms or at all, including due to existing guarantees on our assets or our level of indebtedness and the debt incurrence restrictions imposed by the agreements governing our indebtedness. Further, the cost and availability of credit are subject to changes in the economic and business environment. If conditions in major credit markets deteriorate, our ability to refinance our indebtedness or obtain additional financing on satisfactory terms, or at all, may be negatively affected.

The agreements governing our debt permit us, under some circumstances, to incur certain additional indebtedness or obligations. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our leverage described above, including our possible inability to service our debt, would increase.

Our debt agreements contain restrictions that may limit our flexibility in operating our business.

Our existing loan agreements and related documents contain, and instruments governing any future indebtedness of ours would likely contain, a number of covenants that will impose significant operating and financial restrictions on us. These restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict corporate activities. Any failure to comply with these covenants could result in a default under our term loan agreement or instruments governing any future indebtedness of ours. Additionally, our existing indebtedness is secured by substantially all of our assets. Upon a default, unless waived, the lenders under our secured credit facility could elect to terminate their commitments, cease making further loans, foreclose on our assets pledged to such lenders to secure our obligations under our credit agreement and force us into bankruptcy or liquidation. In addition, a default under our line of credit could trigger a cross default under

 

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agreements governing any future indebtedness. Our results of operations may not be sufficient to service our indebtedness and to fund our other expenditures, and we may not be able to obtain financing to meet these requirements. If we experience a default under our existing loan agreements or instruments governing our future indebtedness, our business, financial condition, and results of operations may be adversely impacted.

In addition, a material portion of our cash is pledged as cash collateral for letters of credit and bank guarantees which support our debt obligations, certain of our real estate leases, customer contracts, and other obligations. While these obligations remain outstanding and are cash collateralized, we do not have access to and cannot use the pledged cash for our operations or to repay our other indebtedness. As of December 31, 2020, we were in compliance with all covenants and restrictions associated with our existing loan agreements.

Our business is capital intensive, and we may not be able to raise adequate capital to finance our business strategies, including funding future satellites, or we may be able to do so only on terms that significantly restrict our ability to operate our business.

The implementation of our business strategies, such as expanding our satellite constellation and our products and services offerings, requires a substantial outlay of capital. As we pursue our business strategies and seek to respond to opportunities and trends in our industry, our actual capital expenditures may differ from our expected capital expenditures, and there can be no assurance that we will be able to satisfy our capital requirements in the future. We are highly leveraged, but we currently expect that our ongoing liquidity requirements for sustaining our operations will be satisfied by cash on hand, cash from the business combination with Osprey, cash generated from our existing and future operations supplemented, where necessary or advantageous, by available credit. However, we cannot provide assurances that our businesses will generate sufficient cash flow from operations in the future or that additional capital will be available in amounts sufficient to enable us to execute our business strategies. Our ability to increase our debt financing and/or renew existing credit facilities may be limited by our existing financial and non-financial covenants, credit objectives, or the conditions of the debt capital market generally. Furthermore, our current financing arrangements contain certain restrictive financial and non-financial covenants that may impact our access to those facilities and significantly limit future operating and financial flexibility.

We have in the past, and may continue in the future to, receive government grants and funding for research and development activities and other business initiatives. Any agreement or grant of this nature with the government may be accompanied by contractual obligations applicable to us, which may result in the grant money becoming repayable if certain requirements are not met. A failure to meet contractual obligations under such agreements and grants and a consequent requirement to repay money received could negatively impact our business, financial condition, and results of operations.

Changes in our credit ratings or macroeconomic conditions may affect our liquidity, increasing borrowing costs and limiting our financing options.

Macroeconomic conditions, such as increased volatility or disruption in the credit markets, could adversely affect our ability to refinance existing debt or obtain additional financing at terms satisfactory to us, thereby affecting our resources to support operations or to fund new initiatives. In addition, if our credit ratings are lowered, borrowing costs for future long-term debt or short-term credit facilities may increase and our financing options, including our access to the unsecured credit market, could be limited. We may also be subject to restrictive covenants that would reduce our flexibility.

Risks Related to BlackSky’s Intellectual Property

Our technologies contain “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.

Many of our products are designed to include software licensed from third parties under “open source” licenses. Some of these licenses contain requirements that we make available source code for modifications or

 

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derivative works we create based upon the open source software, and that we license these modifications or derivative works under the terms of a particular open source license or other license granting third-parties certain rights of further use. If we combine our proprietary technologies with open source software in a certain manner, we could, under certain provisions of the open source licenses, be required to release the source code of our proprietary software. In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide updates, warranties, support, indemnities, assurances of title, or controls on origin of the software. Likewise, some open source projects have known security and other vulnerabilities and architectural instabilities, or are otherwise subject to security attacks due to their wide availability, and are provided on an “as-is” basis. We have implemented processes to help alleviate these risks, including a review process for evaluating open source software and using software tools to review our source code for identifying open source software, but we cannot be sure that such processes will be accurate or effective. In addition, open source license terms may be ambiguous and many of the risks associated with usage of open source software cannot be eliminated, and could, if not properly addressed, negatively affect our business. If we were found to have inappropriately used open source software, we may be required to re-engineer our technology, to release proprietary source code, to remove features or functionalities, or to take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, financial condition, results of operations and growth prospects. In addition, if the open source software we use is no longer maintained by the relevant developer or open source community, then it may be more difficult to make the necessary revisions to our software, including modifications to address security vulnerabilities, which could impact our ability to mitigate cybersecurity risks or fulfill our contractual obligations to our customers. We may also face claims from others seeking to enforce the terms of an open source license, including by demanding release under certain open source licenses of the open source software, derivative works or our proprietary source code that was developed using such software. Such claims, with or without merit, could result in litigation, could be time-consuming and expensive to settle or litigate, could divert our management’s attention and other resources, could require us to lease some of our proprietary code, or could require us to devote additional research and development resources to change our technologies, any of which could adversely affect our business.

Many of these risks associated with usage of open source software could be difficult to eliminate or manage, and could, if not properly addressed, negatively affect the performance of our offerings and our business.

We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay delivery of our services should we not be able to continue or obtain a commercially reasonable license to such technology.

We rely on software and other intellectual property licensed from third parties. It may be necessary in the future to renew licenses relating to various aspects of these platforms or to seek new licenses for existing or new platforms or other products. There can be no assurance that the necessary licenses would be available on commercially acceptable terms, if at all. Third parties may terminate their licenses with us for a variety of reasons, including actual or perceived failures or breaches of security or privacy, or reputational concerns, or they may choose not to renew their licenses with us. In addition, we may be subject to liability if third-party software that we license is found to infringe, misappropriate, or otherwise violate intellectual property or privacy rights of others. The loss of, or inability to obtain, certain third-party licenses or other rights or to obtain such licenses or rights on reasonable terms, or the need to engage in litigation regarding these matters, could result in product roll-backs, delays in product releases until equivalent or comparable technology can be identified, acquired, licensed, or developed, if at all, and integrated into our technologies, and may have a material adverse effect on our business, financial condition, and results of operations. Moreover, the inclusion in our technologies of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to differentiate our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems from offerings of our competitors and could inhibit our ability to provide the current level of service to existing customers.

 

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In addition, any data that we license from third parties for potential use with our technologies may contain errors or defects, which could negatively impact our geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operations of satellite and ground systems. This may have a negative impact on how our products and services are perceived by our current and potential customers and could materially damage our reputation and brand.

Changes in or the loss of third-party licenses could lead to our technologies becoming inoperable or the performance of our technologies being materially reduced resulting in our potentially needing to incur additional research and development costs to ensure continued performance of our products and services or a material increase in the costs of licensing, and we may experience decreased demand for our products and services.

We may be unable to protect our intellectual property rights. Disclosure of trade secrets could cause harm to our business.

To protect our proprietary rights, we rely on a combination of trademarks and trade secret laws, and confidentiality agreements and license agreements with consultants, subcontractors, vendors and customers. Our efforts to protect our intellectual property and proprietary rights may not be sufficient. Although we apply rigorous standards, documents and processes to protect our intellectual property, there is no absolute assurance that the steps taken to protect our technology will prevent misappropriation or infringement. Our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by us. Competitors also may harm our sales by designing products that mirror the capabilities of our products or technology without infringing on our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue.

We attempt to protect our trade secrets and other proprietary information by entering into confidentiality, licensing and invention assignment agreements or other contracts with similar provisions with third parties, our employees and consultants. However, these agreements can be breached and, if they are, there may not be an adequate remedy available to us. In addition, others may independently discover or reverse engineer our trade secrets and proprietary information, and in such cases we could not assert any trade secret or proprietary rights against such party. Litigation may be necessary to enforce or protect our intellectual property rights, our trade secrets or determine the validity and scope of the proprietary rights of others. Litigating a claim that a party illegally or unlawfully obtained and uses our trade secret without authorization is difficult, expensive and time consuming, and the outcome is unpredictable. If we are unable to protect our intellectual property, our competitors could market services or products similar to our services and products, which could reduce demand for our offerings. Any litigation to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others could result in substantial costs and diversion of resources, with no assurance of success.

Our technology may violate the proprietary rights of third parties and our intellectual property may be misappropriated or infringed upon by third parties, each of which could have a negative impact on our operations.

If any of our technology violates proprietary rights of any third party, including copyrights and patents, such third party may assert infringement claims against us. Certain software and other intellectual property used by us or in our satellites, systems and products make use of or incorporate licensed software components or other licensed technology. These components are developed by third parties over whom we have no control. Any claims brought against us may result in limitations on our ability to use the intellectual property subject to these claims. We may be required to redesign our satellites, systems or products or to obtain licenses from third parties to continue offering our satellites, systems or products without substantially re-engineering such products or systems.

 

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Our intellectual property rights may be invalidated, circumvented, challenged, infringed or required to be licensed to others. An infringement or misappropriation could harm any competitive advantage we currently derive or may derive from our proprietary rights.

Risks Related to BlackSky’s Regulatory, Environmental and Legal Issues

Our business is subject to a wide variety of additional extensive and evolving government laws and regulations. Failure to comply with such laws and regulations could have a material adverse effect on our business.

We are subject to a wide variety of laws and regulations relating to various aspects of our business, including employment and labor, licensing, export, tax, privacy and data security, health and safety, communications, and environmental issues. Laws and regulations at the foreign, federal, state and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably estimate the impact from, or the ultimate cost of compliance with, current or future regulatory or administrative changes. We monitor these developments and devote a significant amount of management’s time and external resources towards compliance with these laws, regulations and guidelines, and such compliance places a significant burden on management’s time and other resources, and it may limit our ability to expand into certain jurisdictions. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition. For example, our products and services may be subject to state sales and use taxes to which we may not be compliant, and taxability is generally determined by statutory state laws, as well as an assessment of nexus. Whether the sale of our products and services is subject to additional states’ sales and use taxes is uncertain, due in part to the unique nature and delivery of our products and services, as well as applicability of whether our customers are exempt from tax. There is a risk that one or more states may seek to impose sales or use tax or other tax collection obligations on us for past sales and it could have a material adverse impact on our sales, profitability, cash flows and financial condition.

Failure to comply with these laws or regulations or failure to satisfy any criteria or other requirement under such laws or regulations, such as with respect to obtaining and maintaining licenses, certificates, authorizations and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or result in a delay or the denial, suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business. For example, our business requires licenses and permits from the Federal Communications Commission (the “FCC”) and review by and/or coordination with other agencies of the U.S. Government, including the Department of Defense, the National Oceanic and Atmospheric Administration (“NOAA”) and the National Aeronautics and Space Administration (“NASA”). License approval can include an interagency review of safety, operational, radio frequency interference, national security, and foreign policy and international obligations implications, as well as a review of foreign ownership. Since our satellites have space-qualified photographic equipment installed, we are also subject to licensing requirements and regulations of NOAA’s Commercial Report Sensing Regulatory Affairs office.

The rules and regulations of U.S. and foreign authorities, and their interpretation and application, may change, and such authorities may adopt regulations that impact our ability to collect imagery or otherwise limit or restrict our operations as presently conducted or currently contemplated. Such authorities may also make changes in the licenses of our competitors that affect our spectrum. These changes in rules or regulatory policy may significantly affect our business. For example, the FCC has an open notice of proposed rulemaking relating to mitigation of orbital debris, which could affect us and our operations. Application of these laws to our business may negatively impact our performance in various ways, limiting the collaborations we may pursue, further regulating the export and re-export of our products, services, and technology from the U.S. and abroad, and increasing our costs and the time necessary to obtain required authorization. The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly

 

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where the layers are in conflict, could require alteration of our manufacturing processes or operational parameters which may adversely impact our business. In addition, the U.S. government could in the future exercise “shutter control” authority – the interruption of service by limiting imagery collection and/or distribution as necessary to meet significant U.S. government national security or foreign policy interests or international obligations – which, for example, could limit the resolution, collection or distribution of imagery over certain geographies. We cannot anticipate whether or under what circumstances the U.S. government would exercise its “shutter control” authority, nor can we reasonably determine what costs and terms would be negotiated between us and the U.S. government in such event.

Further, because regulations in each country are different, we may not be aware if some of our partners or persons with whom we or they do business do not hold the requisite licenses and approvals. Our failure to provide services in accordance with the terms of our licenses or our failure to operate our satellites or ground stations as required by our licenses and applicable laws and government regulations could result in the imposition of government sanctions on us, including the suspension or cancellation of our licenses. Our failure or delay in obtaining the approvals required to operate in other countries would limit or delay our ability to expand our operations into those countries. Our failure to obtain industry-standard or government-required certifications for our products could compromise our ability to generate revenue and conduct our business in other countries. Any imposition of sanctions, loss of license or failure to obtain the authorizations necessary to use our assigned radio frequency spectrum and to distribute our products in the U.S. or foreign jurisdictions could cause us to lose sales, hurt our reputation and impair our ability to pursue our business plan.

If we do not maintain regulatory authorizations for our existing satellites, associated ground facilities and terminals, services we provide, or obtain authorizations for our future satellites, associated ground facilities and terminals, and services we provide, we may not be able to operate our existing satellites or expand our operations.

We hold FCC licenses for our satellite constellation and earth stations (collectively, our “satellite system”) and, because our satellites have space-qualified photographic equipment installed, licenses from NOAA’s Commercial Remote Sensing Regulatory Affairs office. As we build out our satellite constellation, we will require new licenses from the FCC and NOAA or modifications to existing licenses. Changes to our satellite system may also require prior FCC and/or NOAA approval. From time to time, we may have pending applications for permanent or temporary changes in frequencies and technical design. From time to time, we have filed or will need to file applications to replace or add satellites to our satellite constellation. The FCC has waived certain application processing rules for certain of the frequencies on which we operate but there is no guarantee that the FCC will continue to waive those rules. The FCC licenses are also subject to modification by the FCC. In addition, the FCC licenses require coordination with various entities, including other federal government agencies. There can be no assurance that the FCC or NOAA will renew the licenses we hold, modify the licenses we currently hold, or grant new licenses, or that coordination conditions can continue to be met. If the FCC or NOAA revokes, modifies or fails to renew the licenses we hold, or fails to grant a new license or modification, or if we fail to satisfy any of the conditions of our respective licenses, we may not be able to continue to provide our products and services. In addition, the operation of ground station assets in non-U.S. jurisdictions may require either direct or indirect licensing from non-U.S. regulatory bodies.

We believe our current operations adhere to FCC, NOAA and non-U.S. licensing jurisdiction requirements. In some cases, we rely upon partners or persons with whom we or they do business to obtain and maintain required non-U.S. regulatory approvals. However, if we or they do not maintain the authorizations necessary to operate our existing satellites, we will not be able to operate the satellites covered by those authorizations, unless we obtain authorization from another licensing jurisdiction. Some of our authorizations provide waivers of regulations. If we do not maintain these waivers, we will be subject to operational restrictions or interference that will affect our use of existing satellites. Loss of a satellite authorization could cause us to lose the revenue from services provided by that satellite at a particular orbital location or using a particular frequency band, to the extent these services cannot be provided by satellites at other orbital locations or with a different frequency band.

 

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Our launch and operation of planned satellites and ground stations may require additional regulatory authorizations from the FCC, NOAA, and/or a non-U.S. licensing jurisdiction. Obtaining launch windows for planned satellites and ground stations, preparing for launch, and working with the requisite equipment in foreign jurisdictions may require coordination with U.S. and foreign regulators. If any of our current operations are deemed not to be in compliance with applicable regulatory requirements, we may be subject to various sanctions, including fines, loss of authorizations, or denial of applications for new authorizations or renewal of existing authorizations. It is not uncommon for licenses for new satellites to be granted just prior to launch. If we do not obtain required authorizations in the future, we will not be able to operate our planned satellites. If we obtain a required authorization but we do not meet milestones regarding the construction, launch and operation of a satellite by deadlines that may be established in the authorization, we may lose our authorization to operate a satellite using certain frequencies in an orbital location. Any authorizations we obtain may also impose operational restrictions or permit interference that could affect our use of planned satellites.

Coordination results may adversely affect our ability to use our satellites in certain frequency bands for our proposed service or coverage area, or may delay our ability to launch satellites and thereby operate our proposed services.

We are required to record frequencies and operational parameters of our satellites with the International Telecommunication Union and to coordinate with other satellite operators and national administrations the use of these frequencies and operational parameters in order to avoid interference to or from other satellites. The results of coordination may adversely affect our use of our satellites using certain frequencies, as well as the type of applications or services that we can accommodate. If we are unable to coordinate our satellites by specified deadlines, we may not be able to use our satellites or certain frequencies for our proposed service or coverage area or we may lose interference protection for our satellites. The use of our satellites may also be temporarily or permanently adversely affected if the operation of other satellite networks does not conform to coordination agreements resulting in the acceptable interference levels being exceeded (such as due to operational errors associated with the transmissions to other satellite networks).

Loss of existing export control approvals or the inability to obtain required new approvals for the use of particular components, the transfer of company technologies, or the provision of analytical products or related services may have an adverse impact on our business, financial condition, and results of operations.

Many of our products, services, and technologies are regulated by the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) under the International Traffic in Arms Regulations (“ITAR”) and/or the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) under the Export Administration Regulations (“EAR”).

We require export control licenses for certain activities associated with the development of our satellites, preparation and launch of our satellites, placement of equipment at foreign ground stations, and the provision of certain services to selected non-U.S. customers. As a result, we hold various licenses from DDTC and BIS in support of those activities. As we build out our satellite constellation or provide services to additional customers, we may require new licenses from DDTC or BIS, or modifications to existing licenses. These licenses are also subject to modification by the U.S. government. There can be no assurance that DDTC or BIS will renew the licenses we hold, modify the licenses we currently hold, or grant new licenses. If DDTC or BIS revokes, modifies or fails to renew the licenses we hold, or fails to grant a new license or modification, or if we fail to satisfy any of the conditions of our respective licenses, we may not be able to continue to provide our products and services.

Increasing regulatory focus on privacy issues and expanding laws may impact our business or expose us to increased liability.

We collect and process customer data and other data relating to individuals, which may include personal data. Due to the sensitivity of the personal information and data we manage and expect to manage in the future,

 

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as well as the nature of our customer base, the security features of our information systems are critical. A variety of federal, state and foreign laws and regulations govern the collection, use, retention, sharing and security of this information. Laws and regulations relating to privacy, data protection and consumer protection are evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations. For example, in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”), which took effect in January 2020. The CCPA, among other things, gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. In November 2020, California voters passed the California Privacy Rights Act (the “CPRA”). The CPRA, which is expected to take effect on January 1, 2023, significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers such as correction of personal information and additional opt-out rights, and creates a new entity to implement and enforce the law. While we do not yet know the extent of the impact the CCPA and CPRA will have on our business or operations, they will require us to modify our data processing practices and policies and may cause us to incur substantial costs and expenses in order to comply. Additionally, the CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States. The CCPA has prompted a number of proposals for federal and state privacy legislation. For example, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act (“CDPA”), a comprehensive privacy statute that shares similarities with the CCPA, CPRA, and legislation proposed in other states. The CDPA will require us to incur additional costs and expenses in an effort to comply with it before it becomes effective on January 1, 2023. The CDPA and any other state or federal legislation that is passed could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs and adversely affect our business.

We expect that new industry standards, laws and regulations will continue to be proposed regarding privacy, data protection and information security in many jurisdictions, including the European e-Privacy Regulation, which is currently in draft form. We cannot yet determine the impact such future laws, regulations and standards may have on our business. Complying with these evolving obligations is costly. For instance, expanding definitions and interpretations of what constitutes “personal data” (or the equivalent) within the United States, the European Economic Area (the “EEA”) and elsewhere may increase our compliance costs and legal liability.

We are also subject to additional privacy laws and regulations, many of which, such as the European Union’s General Data Protection Regulation (“GDPR”) and national laws supplementing the GDPR, as well as legislation substantially implementing the GDPR in the United Kingdom, are significantly more stringent than those currently enforced in the United States. The GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals located in the EEA. The law also includes significant penalties for noncompliance, which may result in monetary penalties of up to the higher of €20.0 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The United Kingdom’s version of the GDPR, the UK GDPR, which it maintains along with its Data Protection Act (collectively, the “UK GDPR”), also provides for substantial penalties that, for the most serious violations, can go up to the greater of £17.5 million or 4% of a group’s worldwide turnover for the preceding financial year. The GDPR, UK GDPR, and other similar regulations require companies to give specific types of notice and informed consent is required for certain actions, and the GDPR and UK GDPR imposes additional conditions in order to satisfy such consent, such as bundled consents.

The GDPR, UK GDPR, CCPA, and other state and global laws and regulations have increased our responsibility and potential liability in relation to personal data, and we have and will continue to put in place additional processes and programs to demonstrate compliance. New privacy laws and regulations are under development at the U.S. federal and state level and in many international jurisdictions. Any actual or perceived failure to comply with the GDPR, UK GDPR, the CCPA, or other data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims,

 

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and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.

Additionally, we store customer information and content and if our customers fail to comply with contractual obligations or applicable laws, it could result in litigation or reputational harm to us. The GDPR, UK GDPR, CCPA, and other laws, regulations, standards and self-regulatory codes may affect our ability to reach current and prospective customers, understand how our offerings and services are being used, respond to customer requests allowed under the laws, and implement our new business models effectively. These new laws and regulations would similarly affect our competitors as well as our customers. These requirements could impact demand for our offerings and services and result in more onerous contract obligations.

We are subject to governmental export and import controls and economic sanctions programs that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

The export of our software, satellites and ground station equipment, and the provision of services and related technical data, in some cases, are subject to U.S. and international export control laws and regulations and trade and economic sanctions including the ITAR, the EAR, trade and economic sanctions maintained by the Office of Foreign Assets Control (“OFAC”). As such, an export license may be required to export or reexport our software and services to certain countries and end-users for certain end-uses. In addition, as we grow, we may hire employees in jurisdictions outside of the United States or engage a professional employer organization to hire such and employ such persons, which may subject us to foreign export and import rules and regulations. If we do not maintain our existing authorizations or obtain future export licenses in accordance with the export control laws and regulations, we may be unable to export our software or ground station equipment or provide services and related technical information to non-U.S. persons and companies. If we were to fail to comply with such export controls laws and regulations, economic sanctions, or other similar laws, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of our export or import privileges. Obtaining the necessary export license for a particular sale or offering may not be possible, may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, export control laws and economic sanctions in many cases prohibit the export of software and services to certain embargoed or sanctioned countries, governments and persons, as well as for prohibited end-uses. Monitoring and ensuring compliance with these complex export controls and sanctions is particularly challenging because our offerings are available throughout the world. Even though we take precautions to ensure that we and our partners comply with all relevant export and import control laws and regulations, any failure by us or our partners to comply with such laws and regulations could have negative consequences for us, including reputational harm, government investigations and penalties.

In addition, various countries regulate the import of certain encryption software and technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products and services or could limit our end-customers’ ability to implement our products in those countries. Because we incorporate encryption functionality into our products, we are subject to certain of these provisions. Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our products and services into international markets, prevent our end-customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our products and services to certain countries, governments or persons altogether. The following developments could result in decreased use of our products and services by, or in our decreased ability to export or sell our products to, existing or potential end-customers with international operations: any change in export or import laws or regulations, economic sanctions or related legislation; shift in the enforcement or scope of existing export, import or sanctions laws or regulations; or change in the countries, governments, persons, or technologies targeted by such export, import or sanctions laws or regulations. Any decreased use of our products or services or limitation on our ability to export to or sell our products or services in international markets could adversely affect our business, financial condition and operating results.

 

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In addition, U.S. export control laws and regulations are continuing to evolve, as are our products and services. For example, the U.S. State Department, the U.S. Department of Commerce, and other cognizant U.S. government agencies are evaluating the imposition of additional export restrictions on so-called “emerging and foundational technologies.” Any changes to or further extension of U.S. export control laws and regulations could negatively impact our ability to provide our products and services internationally, or to retain talent required for further development of our products or services.

Failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act (“FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, and other anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we do business, both domestic and abroad. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly. These laws and regulations generally prohibit companies, their employees, business partners, third-party intermediaries, representatives, and agents from authorizing, offering, or providing, directly or indirectly, improper payments to government officials, political candidates, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.

We have interactions with foreign officials, including in furtherance of sales to governmental or quasi-governmental entities in the United States and in non-U.S. countries. We sometimes leverage third parties to conduct our business abroad, and our third-party business partners, representatives, and agents may also have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We may be held liable for the corrupt or other illegal activities of our employees or such third parties even if we do not explicitly authorize such activities. The FCPA and other applicable laws and regulations also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While we have implemented policies and procedures to address compliance with such laws, we cannot assure you that our employees, business partners, third-party intermediaries, representatives, and agents will not engage in conduct in violation of our policies or applicable law for which we might ultimately be held responsible. Our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.

Violations of the FCPA and other applicable anti-bribery and anti-corruption laws may result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, as well as severe criminal or civil sanctions, settlements, prosecution, enforcement actions, fines, damages, or suspension or debarment from government contracts, all of which could have an adverse effect on our reputation, business, stock price, financial condition, results of operations, and growth prospects. In addition, responding to any investigation or action will likely result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

We are subject to environmental laws and regulations which could result in material liabilities or obligations. In addition, our operations have involved the handling, storage and disposal of hazardous materials, which could result in potential exposure to environmental liabilities.

We are subject to various U.S. federal, state, local and non-U.S. laws and regulations related to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, as well as third-party claims for property damage or personal injury, if we were to violate or become liable under environmental laws or regulations. In addition, new laws and regulations, more stringent enforcement of existing laws and regulations, or the discovery of previously unknown contamination could result in material obligations and costs.

 

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Furthermore, our operations are subject to federal, state and local environmental laws and regulations regarding the handling, storage and disposal of hazardous materials, including the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), and the Toxic Substances Control Act. These laws and regulations could require us to incur significant expenses to comply with environmental regulations. We may also have to pay regulatory fines, penalties or other costs (including remediation costs) if we were to fail to comply with environmental laws and regulations, which could materially reduce our revenues and adversely affect our financial condition. Permits issued pursuant to certain environmental laws are required for our operations, and these permits are subject to renewal, modification and, in some cases, revocation.

In addition, under environmental laws, ordinances or regulations, a current or previous owner or operator of property may be liable for the costs of removal or remediation of some kinds of petroleum products or other hazardous substances on, under, or in its property, adjacent or nearby property, or offsite disposal locations, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. We could be subject to future liabilities under CERCLA and other environmental laws at our current or former facilities, adjacent or nearby properties or offsite disposal locations if any such properties are discovered to be contaminated with hazardous substances.

We may be subject to assertions that taxes must be collected based on gross receipts, sales and use of our services in various states, which could expose us to liability and cause material harm to our business, financial condition, and results of operations.

Our products and services may be subject to gross receipts, sales and use taxes in certain states and taxability is generally determined by statutory state laws and regulations, as well as an assessment of physical and economic nexus. Whether sales of our products and services are subject to additional states’ sales and use taxes is uncertain, due in part to the unique nature of our products and services, the delivery method of our products and services, whether our customer is subject to tax as a government entity, as well as changing state laws and interpretations of those laws. One or more additional states may seek to impose sales or use tax or other tax collection obligations on us, whether based on sales by us or our resellers or customers, including for past sales. A successful assertion that we should be collecting sales or other related taxes on our products and services could result in substantial audit defense fees and tax liabilities for past sales, discourage customers from offering or billing for our products and services, or otherwise cause material harm to our business, financial condition, and results of operations.

We may become involved in litigation that may materially adversely affect us.

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability or require us to change our business practices. For example, we have been notified that a former BlackSky executive is considering pursuing legal action against us related to a dispute regarding the number of vested shares of BlackSky Class A common stock he was entitled to in connection with his separation of employment from BlackSky. We believe that any such claim would be without merit, and we intend to vigorously defend our position. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business.

 

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Risks Related to the Merger

Because the market price of shares of Osprey Class A common stock will fluctuate, BlackSky stockholders cannot be sure of the value of the merger consideration they will receive.

Upon completion of the merger, each share of BlackSky preferred stock and each share of BlackSky Class A common stock that is issued and outstanding immediately prior to the effective time will be cancelled and automatically converted into the right to receive a number of shares of Osprey Class A common stock equal to the Per Share Exchange Ratio that is applicable to such share. Other than the limited adjustments described herein, the merger consideration that BlackSky stockholders will receive is a fixed number of shares of Osprey Class A common stock; it is not a number of shares with a particular fixed market value. See “The Merger—Terms of the Merger” for more information. The market value of Osprey Class A common stock and BlackSky common stock at or after the effective time of the merger may vary significantly from their respective values on the date the merger agreement was executed or at other dates, including the date on which BlackSky stockholders provide written consent to the adoption of the merger agreement and the approval of the transactions contemplated thereby. At the time of providing written consent to the BlackSky Business Combination Proposal, BlackSky stockholders will not know or be able to calculate the market value of the shares of Osprey Class A common stock they would receive upon the completion of the merger. Stock price changes may result from a variety of factors, including changes in the business, operations or prospects of Osprey or BlackSky, regulatory considerations, and general business, market, industry or economic conditions. Many of these factors are outside of the control of Osprey and BlackSky.

Each of Osprey and BlackSky stockholders will have a reduced ownership and voting interest in the combined company after the merger.

Upon the completion of the merger, while it is expected that BlackSky equityholders who become stockholders of New BlackSky Parent, as a group, will hold immediately following the merger a majority of the voting interest in New BlackSky Parent, such voting interest will be smaller than such group’s current percentage ownership of BlackSky. It is anticipated that BlackSky equityholders, as a group, will receive shares of Osprey Class A common stock in the merger constituting approximately (i) 57% of New BlackSky Parent’s common stock expected to be outstanding immediately after the merger, assuming no Osprey stockholders exercise redemption rights with respect to their public shares upon consummation of the merger or (ii) 71% of New BlackSky Parent’s common stock expected to be outstanding immediately after the merger, assuming Osprey stockholders exercise their redemption rights with respect to a maximum of 27.1 million public shares upon consummation of the merger. In addition, based on the number of issued and outstanding shares of Osprey common stock and Osprey outstanding warrants and the number of shares anticipated to be issued to the BlackSky equityholders in the merger, it is anticipated that BlackSky equityholders, as a group, will receive shares of Osprey Class A common stock (or options, RSUs and warrants to purchase Osprey Class A common stock) in the merger constituting approximately 53% of New BlackSky Parent’s capital stock (calculated on an as converted to Osprey Class A common stock basis) expected to be outstanding immediately after the merger.

In addition, upon the issuance of the shares to BlackSky equityholders, current Osprey stockholders’ percentage ownership will be diluted. Additionally, of the expected members of the New BlackSky Parent board of directors after the completion of the merger, only one will be a current director of Osprey and will be designated by Osprey, and the rest will be designated by BlackSky.

The market price of shares of New BlackSky Parent Class A common stock after the merger may be affected by factors different from those currently affecting the prices of shares of Osprey Class A common stock.

Upon completion of the merger, holders of shares of BlackSky common stock and preferred stock will become holders of shares of New BlackSky Parent Class A common stock. Prior to the merger, Osprey has had limited operations. Upon completion of the merger, New BlackSky’s results of operations will depend upon the performance of New BlackSky’s businesses, which are affected by factors that are different from those currently affecting the results of operations of Osprey.

 

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Osprey has not obtained an opinion from an independent investment banking firm, and consequently, there is no assurance from an independent source that the consideration payable by Osprey in connection with the merger is fair to its stockholders from a financial point of view.

Osprey is not required to, and has not, obtained an opinion from an independent investment banking firm that the merger consideration it is paying for BlackSky is fair to Osprey’s stockholders from a financial point of view. The fair market value of BlackSky has been determined by Osprey’s board of directors based upon standards generally accepted by the financial community, including without limitation potential sales and the price for which comparable businesses or assets have been valued. Osprey’s stockholders will be relying on the judgment of its board of directors with respect to such matters.

If the merger’s benefits do not meet the expectations of financial analysts, the market price of New BlackSky Parent Class A common stock may decline.

The market price of the New BlackSky Parent Class A common stock may decline as a result of the merger if New BlackSky does not achieve the perceived benefits of the merger as rapidly, or to the extent anticipated by, financial analysts or the effect of the merger on New BlackSky’s financial results is not consistent with the expectations of financial analysts. Accordingly, holders of New BlackSky Parent Class A common stock may experience a loss as a result of a decline in the market price of New BlackSky Parent Class A common stock. In addition, a decline in the market price of New BlackSky Parent Class A common stock could adversely affect New BlackSky’s ability to issue additional securities and to obtain additional financing in the future.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Notwithstanding the expiration of the applicable waiting period under the HSR Act, before the transactions contemplated by the merger agreement can be completed, consent must be obtained under the Communications Act, and, to the extent the transaction changes a material fact in BlackSky’s NOAA licenses, notice and approval must be provided to and obtained from NOAA pursuant to the Policy Act. The FCC granted the required regulatory approvals on April 27, 2021, but there can be no assurance that third parties will not challenge this approval or that the FCC, by its own motion, will not revisit its decision in the thirty-day statutory reconsideration period established by the Communications Act. If the FCC were to reconsider its approvals, this could delay the closing of the merger or diminish the anticipated benefits of the merger. BlackSky also has a pending application for FCC authorization for another satellite earth station, and as of April 30, 2021, the FCC has not acted on the application or BlackSky’s request to extend the Special Temporary Authorization (“STA”) that BlackSky relies on to operate this earth station during the pendency of its license application. There can be no assurance that the FCC will grant the license application or the related STA extension, and Osprey and BlackSky cannot be certain whether any such grant would impose requirements, limitations or costs, or place restrictions on the conduct of New BlackSky’s business. NOAA acknowledged receipt of the notice filed and, since March 22, 2021, has not sought additional information, although there can be no assurance that NOAA will not seek additional information or take action as a result of the transaction that would impose terms, conditions or restrictions not currently contemplated. Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory authority of competent jurisdiction that would prohibit or make illegal the completion of the merger. Osprey and BlackSky believe that the merger should not raise significant regulatory concerns and that Osprey and BlackSky will be able to obtain all requisite regulatory approvals in a timely manner. However, Osprey and BlackSky cannot be certain when or if regulatory approvals will be obtained or, if obtained, the conditions that may imposed. In addition, neither Osprey nor BlackSky can provide assurance that any such conditions, terms, obligations or restrictions will not result in delay. See “Regulatory Approvals Required for the Merger” for more information.

 

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The consummation of the merger is subject to a number of conditions and if those conditions are not satisfied or waived, the merger agreement may be terminated in accordance with its terms and the merger may not be completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include, among others, approval of the merger agreement by BlackSky stockholders, approval of the proposals required to effect the merger by Osprey stockholders, as well as receipt of certain requisite regulatory approvals, absence of laws and orders prohibiting completion of the merger, effectiveness of the registration statement of which this proxy statement/consent solicitation statement/prospectus is a part, approval of the shares of Osprey Class A common stock to be issued to BlackSky stockholders for listing on the NYSE, satisfaction of the minimum cash condition with respect to the Trust Account, the accuracy of the representations and warranties by both parties (subject to the materiality standards set forth in the merger agreement) and the performance by both parties of their covenants and agreements. These conditions to the closing of the merger may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time prior to the closing of the merger, or Osprey or BlackSky may elect to terminate the merger agreement in certain other circumstances. See “The Merger Agreement—Termination—BlackSky Termination Fee” for more information.

Termination of the merger agreement could negatively impact BlackSky and Osprey.

If the merger is not completed for any reason, including as a result of BlackSky equityholders declining to adopt the merger agreement or Osprey stockholders declining to approve the proposals required to effect the merger, the ongoing businesses of BlackSky and Osprey may be adversely impacted and, without realizing any of the anticipated benefits of completing the merger, BlackSky and Osprey would be subject to a number of risks, including the following:

 

   

Osprey may experience negative reactions from the financial markets, including negative impacts on its stock price (including to the extent that the current market price reflects a market assumption that the merger will be completed);

 

   

BlackSky may experience negative reactions from its customers, vendors and employees;

 

   

BlackSky and Osprey will have incurred substantial expenses and will be required to pay certain costs relating to the merger, whether or not the merger is completed; and

 

   

since the merger agreement restricts the conduct of BlackSky’s and Osprey’s businesses prior to completion of the merger, each of BlackSky and Osprey may not have been able to take certain actions during the pendency of the merger that would have benefitted it as an independent company, and the opportunity to take such actions may no longer be available (see “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to BlackSky and Osprey).

If the merger agreement is terminated and BlackSky’s board of directors seeks another business combination, BlackSky equityholders cannot be certain that BlackSky will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Osprey has agreed to provide in the merger or that such other business combination is completed. If the merger agreement is terminated under certain specified circumstances, BlackSky will be required to pay a termination fee of $40,700,000 to Osprey. If the merger agreement is terminated and Osprey’s board of directors seeks another business combination, Osprey stockholders cannot be certain that Osprey will be able to find another acquisition target that would constitute a business combination or that such other business combination will be completed. See “The Merger Agreement—Termination—BlackSky Termination Fee” for more information.

 

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Osprey’s and BlackSky’s ability to consummate the merger, and the operations of New BlackSky Parent following the consummation of the merger, may be adversely affected by the coronavirus (COVID-19) pandemic.

The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the merger, and the business of BlackSky or New BlackSky Parent following the merger could be adversely affected. The extent of any such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

The parties will be required to consummate the merger even if BlackSky, its business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and if BlackSky is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, BlackSky’s ability to consummate the merger and New BlackSky Parent’s financial condition and results of operations following the merger may be materially adversely affected. Each of BlackSky and New BlackSky Parent may also incur additional costs due to delays caused by COVID-19, which could adversely affect New BlackSky Parent’s financial condition and results of operations.

Osprey and its directors are, or may in the future be, subject to claims, suits and other legal proceedings, including challenging the merger, that may result in adverse outcomes, including preventing the merger from becoming effective or from becoming effective within the expected time frame.

Transactions like the proposed merger are frequently subject to litigation or other legal proceedings, including actions alleging that Osprey’s board of directors breached its fiduciary duties to Osprey’s stockholders by entering into the merger agreement or otherwise. Osprey and its directors are, or may in the future be, subject to claims, suits and other legal proceedings, including challenging the merger. Such claims, suits and legal proceedings are inherently uncertain, and their results cannot be predicted with certainty. An adverse outcome in such legal proceedings, as well as the costs and efforts of a defense even if successful, can have an adverse impact on Osprey or New BlackSky because of legal costs, diversion or distraction of management and other personnel, negative publicity and other factors. In addition, it is possible that a resolution of one or more such legal proceedings could result in reputational harm, liability, penalties, or sanctions, as well as judgments, consent decrees, or orders, which could in the future materially and adversely affect Osprey’s or New BlackSky’s business, operating results and financial condition. Furthermore, one of the conditions to the completion of the merger is that no injunction by any court or other governmental entity of competent jurisdiction will be in effect that enjoins, prohibits or makes illegal the consummation of the merger. As such, if any of the plaintiffs are successful in obtaining an injunction preventing the consummation of the merger, that injunction may prevent the merger from becoming effective or from becoming effective within the expected time frame.

Osprey and the members of its board of directors are defendants in a lawsuit commenced by Michael Luster, a putative stockholder, in the Supreme Court of the State of New York, County of New York, captioned Luster v. Osprey Technology Acquisition Corp., et al., No. 653633/2021 (filed June 7, 2021) (the “Luster Complaint”). The Luster Complaint alleges that the Registration Statement is materially incomplete and misleading and that the merger consideration is unfair. The Luster Complaint asserts a claim for breach of fiduciary duty against the members of Osprey’s board of directors, and a claim for aiding and abetting against Osprey. The Luster Complaint seeks, among other things, to enjoin the proposed transaction with BlackSky, rescission of the merger agreement and damages if the transactions are completed, as well as an award of attorneys’ fees. Osprey believes that these allegations are without merit; however, if the plaintiff is successful in enjoining the merger, the merger would not be completed.

 

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In addition, Osprey could be held liable for damages. The Osprey board of directors also has received three demands from putative stockholders of Osprey dated May 20, 2021, May 24, 2021 and July 26, 2021 (together, the “Demands”). Two of the Demands allege that this registration statement is materially misleading and/or omits material information concerning the merger and seek the issuance of corrective disclosures in an amendment or supplement to the registration statement. One of these Demands also asserts that the merger consideration is inadequate and that an increase in consideration should be negotiated by the parties. The third Demand is regarding the voting in connection with the vote to be held concerning one of the proposals in this registration statement.

BlackSky will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on BlackSky and consequently on Osprey. These uncertainties may impair BlackSky’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with BlackSky to seek to change existing business relationships with BlackSky. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, New BlackSky’s business following the merger could be negatively impacted. In addition, the merger agreement restricts BlackSky from making certain expenditures and taking other specified actions without the consent of Osprey until the merger occurs. These restrictions may prevent BlackSky from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements” for more information.

BlackSky directors and officers may have interests in the merger different from the interests of BlackSky’s stockholders.

Executive officers of BlackSky negotiated the terms of the merger agreement with their counterparts at Osprey, and the BlackSky board of directors determined that entering into the merger agreement was in the best interests of BlackSky and its stockholders, declared the merger agreement advisable and recommended that BlackSky stockholders adopt the merger agreement and approve the transactions contemplated thereby. In considering these facts and the other information contained in this proxy statement/consent solicitation statement/prospectus, you should be aware that BlackSky’s executive officers and directors may have interests in the merger that may be different from, or in addition to, the interests of BlackSky’s stockholders generally. The BlackSky board of directors was aware of and considered these interests to the extent that such interests existed at the time, among other matters, in approving the merger agreement and in recommending that BlackSky stockholders approve the BlackSky Business Combination Proposal. For a detailed discussion of the special interests that BlackSky’s directors and executive officers may have in the merger, please see “The Merger—Interests of BlackSky’s Directors and Executive Officers in the Merger”.

Osprey directors and officers may have interests in the merger different from the interests of Osprey Stockholders.

Executive officers of Osprey negotiated the terms of the merger agreement with their counterparts at BlackSky and the Osprey board of directors determined that entering into the merger agreement was in the best interests of Osprey and its stockholders, declared the merger agreement advisable and recommended that Osprey stockholders approve the proposals required to effect the merger. In considering these facts and the other information contained in this proxy statement/consent solicitation statement/prospectus, you should be aware that Osprey’s executive officers and directors may have financial interests in the merger that may be different from, or in addition to, the interests of Osprey stockholders. The Osprey board of directors and the audit committee thereof was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the merger and in recommending to Osprey’s stockholders that they vote to approve the merger. For a detailed discussion of the special interests that Osprey’s directors and executive officers may have in the merger, please see “The Merger—Interests of Osprey’s Directors and Officers in the Merger”.

 

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The merger will result in changes to the board of directors of New BlackSky Parent that may affect the strategy of New BlackSky.

If the parties complete the merger, the composition of New BlackSky Parent’s board of directors will change from the current boards of directors of Osprey and BlackSky. The board of directors of New BlackSky Parent will consist of Brian O’Toole, Will Porteous and David DiDomenico as well as Magid Abraham, Timothy Harvey, and James Tolonen. This new composition of the New BlackSky Parent board of directors may affect the business strategy and operating decisions of New BlackSky upon the completion of the merger.

The merger agreement contains provisions that may discourage other companies from trying to acquire BlackSky for greater merger consideration.

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to BlackSky that might result in greater value to BlackSky’s stockholders than the merger or may result in a potential competing acquirer proposing to pay a lower per share price to acquire BlackSky than it might otherwise have proposed to pay absent such provisions. These provisions include a general prohibition on BlackSky from soliciting, or, subject to certain exceptions relating to the exercise of fiduciary duties by BlackSky’s board of directors, entering into discussions with any third party regarding any acquisition proposal or offers for competing transactions. BlackSky also has an unqualified obligation to solicit the written consent of its stockholders to adopt the merger agreement and approve the transactions contemplated thereby, even if BlackSky receives an alternative acquisition proposal that its board of directors believes is superior to the merger, unless the merger agreement has been terminated in accordance with its terms.

In addition, BlackSky will be required to pay Osprey a termination fee of $40,700,000 upon termination of the merger agreement in certain specified circumstances involving acquisition proposals for competing transactions. See “The Merger Agreement—Termination—BlackSky Termination Fee” for more information.

The merger agreement contains provisions that may discourage Osprey from seeking an alternative business combination.

The merger agreement contains provisions that prohibit Osprey from seeking alternative business combinations during the pendency of the merger. Further, if Osprey is unable to obtain the requisite approval of its stockholders, either party may terminate the merger agreement.

The unaudited pro forma condensed combined financial information included in this proxy statement/consent solicitation statement/prospectus is preliminary and the actual financial condition and results of operations after the merger may differ materially.

The unaudited pro forma condensed combined financial information included in this proxy statement/consent solicitation statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what New BlackSky’s actual financial position or results of operations would have been had the merger been completed on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that Osprey and BlackSky currently believe are reasonable. The unaudited pro forma condensed combined financial information has been prepared based on a number of assumptions including, but not limited to, Osprey being treated as the “acquired” company for financial reporting purposes, the total debt obligations and the amount of cash and cash equivalents of BlackSky on the date the merger closes and the number of Osprey public shares that are redeemed in connection with the merger. See “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

Osprey and BlackSky will incur transaction costs in connection with the merger.

Each of Osprey and BlackSky has incurred and expects that it will incur significant, non-recurring costs in connection with consummating the merger. Osprey and BlackSky may also incur additional costs to retain key

 

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employees. Osprey and BlackSky will also incur significant legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the merger. Some of these costs are payable regardless of whether the merger is completed. See “The Merger—Terms of the Merger” for more information.

Subsequent to the closing of the merger, New BlackSky may be exposed to unknown or contingent liabilities and may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.

Osprey and BlackSky cannot assure you that the due diligence conducted in relation to BlackSky has identified all material issues or risks associated with BlackSky, its business or the industry in which it competes. Furthermore, Osprey and BlackSky cannot assure you that factors outside of BlackSky’s and Osprey’s control will not later arise. As a result of these factors, New BlackSky Parent may be exposed to liabilities and incur additional costs and expenses and New BlackSky Parent may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in New BlackSky Parent’s reporting losses. Even if Osprey’s due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Osprey’s preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on New BlackSky Parent’s financial condition and results of operations and could contribute to negative market perceptions about New BlackSky Parent’s securities or New BlackSky.

BlackSky’s and Osprey’s equityholders will have their rights as stockholders governed by New BlackSky Parent’s organizational documents.

As a result of the completion of the merger, BlackSky and Osprey equityholders will become holders of shares of New BlackSky Parent Class A common stock, which will be governed by New BlackSky Parent’s organizational documents. As a result, there will be differences between the rights currently enjoyed by BlackSky and Osprey equityholders and the rights that BlackSky and Osprey equityholders who become New BlackSky Parent stockholders will have as stockholders of New BlackSky Parent. See “Comparison of Stockholders’ Rights” for more information.

The Sponsor has agreed to vote in favor of the Proposals at the Osprey Special Meeting, regardless of how public stockholders vote.

As of the date hereof, the Founder Shares owned by Osprey’s Sponsor represent approximately 20% of the aggregate voting power of the outstanding Osprey common stock. Pursuant to the Sponsor Support Agreement, the Sponsor, solely in its capacity as a stockholder of Osprey, has agreed to vote any Founder Shares and any other shares of Osprey stock held by it as of the record date in favor of the Proposals at the Osprey Special Meeting, regardless of how public stockholders vote. Accordingly, the agreement by the Sponsor to vote in favor of each of the Proposals at the Osprey Special Meeting will increase the likelihood that Osprey will receive the requisite stockholder approval for the merger and the transactions contemplated thereby. Furthermore, it should be understood that none of the Sponsor, its direct or indirect members or their affiliates have an investment management, advisory or consulting agreement with us and no such person should be viewed as owing any fiduciary duties to Osprey under the Investment Advisers Act of 1940, as amended.

Osprey currently intends to only complete one business combination with the proceeds of Osprey’s initial public offering and the sale of the private placement warrants, which will cause Osprey to be solely dependent on BlackSky’s business. This lack of diversification may negatively impact Osprey’s operations and profitability.

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with only a single entity our lack of diversification may subject Osprey to numerous economic, competitive and regulatory risks. Further, Osprey would not be able to diversify its operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for Osprey’s success will be solely dependent upon the business and financial performance of BlackSky.

This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which Osprey may operate subsequent to the business combination. See “—Risks Related to BlackSky’s Business and Industry” for risks we may face as a result of consummating the business combination with BlackSky.

If third parties bring claims against Osprey, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share (which was the offering price per unit in Osprey’s initial public offering).

Osprey’s placing of funds in the Trust Account may not protect those funds from third-party claims against it. Although Osprey will seek to have all vendors, service providers (other than its independent registered public accounting firm), prospective target businesses or other entities with which Osprey does business execute agreements with Osprey waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Osprey’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to Osprey than any alternative.

Osprey’s warrants are accounted for as a liability and the change in value of Osprey’s warrants or any other similar derivative liabilities could have a material effect on Osprey’s financial results.

On April 12, 2021, the SEC’s Acting Director of the Division of Corporation Finance and Acting Chief Accountant together issued guidance regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Guidance”). Specifically, the SEC Guidance focused on certain settlement terms and provisions related to certain partial tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing Osprey’s warrants. As a result of the SEC Guidance, Osprey reevaluated the accounting treatment of its 15,812,500 public warrants and 8,325,000 Private Placement Warrants, and concluded that the warrants should be classified as a liability measured at fair value, with changes in fair value each period reported in earnings.

In connection with the audit of Osprey’s financial statements for the period ended December 31, 2020, Osprey’s management evaluated the warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, Osprey’s audit committee, in consultation with management and after discussion with Osprey’s independent registered public accounting firm, concluded that Osprey’s warrants are not indexed to Osprey’s common shares in the manner contemplated by ASC Section 815-40-15 because the holder of

 

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the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, Osprey’s audit committee, in consultation with management and after discussion with Osprey’s independent registered public accounting firm, concluded the tender offer provision included in the warrant agreement fails the “classified in shareholders’ equity” criteria as contemplated by ASC Section 815-40-25. As a result of the above, Osprey should have classified the warrants as derivative liabilities in its previously issued financial statements. Under this accounting treatment, Osprey is required to measure the fair value of the warrants at the end of each reporting period and recognize changes in the fair value from the prior period in Osprey’s operating results for the current period.

Osprey has identified a material weakness in its internal control over financial reporting as of December 31, 2020. If Osprey is unable to develop and maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Osprey and materially and adversely affect its business and operating results.

Osprey’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Osprey’s internal control over financial reporting is designed to provide reasonable assurance to Osprey’s management and board of directors regarding the preparation and fair presentation of published financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of Osprey’s annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.

Following the issuance of the SEC Guidance, Osprey’s audit committee, in consultation with management and after discussion with Osprey’s independent registered public accounting firm, concluded that Osprey should have classified its warrants as derivative liabilities in its previously issued financial statements, and it was appropriate to correct errors in Osprey’s previously issued audited financial statements as of and for the period ended December 31, 2020 by restating such audited financial information (the “Restatement”). See “—Osprey’s warrants are accounted for as a liability and the change in value of Osprey’s derivative liabilities could have a material effect on Osprey’s financial results.” As part of such process, Osprey’s management, including Osprey’s principal executive and financial officers, have evaluated the effectiveness of Osprey’s internal control over financial reporting and concluded that Osprey did not maintain effective internal control over financial reporting as of December 31, 2020 because of a material weakness in Osprey’s internal control over financial reporting related to the accounting for a significant and unusual transaction related to the warrants Osprey issued in connection with Osprey’s initial public offering, Such material weakness resulted in a material misstatement of Osprey’s warrant liability, change in fair value of warrant liability, additional paid-in capital and accumulated deficit as of and for the years ended December 31, 2020 and 2019.

To respond to this material weakness, Osprey has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of Osprey’s internal control over financial reporting. While Osprey has processes to identify and appropriately apply applicable accounting requirements, Osprey plans to enhance these processes to better evaluate Osprey’s research and understanding of the nuances of the complex accounting standards that apply to Osprey’s financial statements. Osprey’s plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among Osprey’s personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of Osprey’s remediation plan can only be accomplished over time, and Osprey can offer no assurance that these initiatives will ultimately have the intended effects.

If the merger with BlackSky is not consummated and Osprey identifies any new material weaknesses in the future, any such newly identified material weakness could limit Osprey’s ability to prevent or detect a misstatement of its accounts or disclosures that could result in a material misstatement of its annual or interim financial statements. In such case, Osprey may be unable to maintain compliance with securities law

 

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requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in Osprey’s financial reporting and Osprey stock price may decline as a result. If the merger with BlackSky is not consummated, Osprey cannot assure you that the measures it has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses. If the merger with BlackSky is consummated, New BlackSky Parent’s internal controls and procedures over financial reporting will instead be established and maintained following closing of the merger, and Osprey can provide no assurance that New BlackSky Parent’s internal controls and procedures over financial reporting will be effective.

Osprey may face litigation and other risks as a result of the material weakness in its internal control over financial reporting.

Following the issuance of the SEC Guidance, Osprey’s audit committee, in consultation with management and after discussion with Osprey’s independent registered public accounting firm, concluded that Osprey should have classified its warrants as derivative liabilities in its previously issued financial statements, and it was appropriate to correct errors in Osprey’s previously issued audited financial statements as of and for the period ended December 31, 2020 by restating such audited financial information. See “—Osprey’s warrants are accounted for as a liability and the change in value of Osprey’s warrants or any other similar derivative liabilities could have a material effect on Osprey’s financial results.” As part of the Restatement, Osprey’s management, including Osprey’s principal executive and financial officers, have evaluated the effectiveness of Osprey’s internal control over financial reporting and concluded that Osprey did not maintain effective internal control over financial reporting as of December 31, 2020 because of a material weakness in Osprey’s internal control over financial reporting related to the accounting for a significant and unusual transaction related to the warrants Osprey issued in connection with Osprey’s initial public offering. Such material weakness resulted in a material misstatement of Osprey’s warrant liability, change in fair value of warrant liability, additional paid-in capital and accumulated deficit as of and for the years ended December 31, 2020 and 2019.

As a result of such material weakness, the Restatement, the change in accounting for the warrants, and other matters raised publicly by the SEC, Osprey faces potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws or other claims arising from the Restatement and material weaknesses in Osprey’s internal control over financial reporting and the preparation of Osprey’s financial statements. As of the date of this proxy statement/consent solicitation statement/prospectus, Osprey has no knowledge of any such litigation or dispute. However, Osprey can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on Osprey’s business, results of operations and financial condition or Osprey’s ability to complete the proposed merger with BlackSky.

Additional Risks Relating to Ownership of New BlackSky Parent Class A Common Stock Following the Merger

New BlackSky Parent’s stock price may change significantly following the merger and you could lose all or part of your investment as a result.

The trading price of the New BlackSky Parent Class A common stock is likely to be volatile. The stock market has experienced extreme volatility in the past and may experience similar volatility moving forward. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “—Risks Related to BlackSky’s Business and Industry” and the following:

 

   

results of operations that vary from the expectations of securities analysts and investors;

 

   

results of operations that vary from those of New BlackSky’s competitors;

 

   

changes in expectations as to New BlackSky’s future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

 

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declines in the market prices of stocks generally;

 

   

strategic actions by New BlackSky or its competitors;

 

   

announcements by New BlackSky or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

 

   

any significant change in New BlackSky’s management;

 

   

changes in general economic or market conditions or trends in New BlackSky’s industry or markets;

 

   

changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to New BlackSky’s business;

 

   

future sales of New BlackSky’s common stock or other securities;

 

   

investor perceptions or the investment opportunity associated with New BlackSky’s common stock relative to other investment alternatives;

 

   

the public’s response to press releases or other public announcements by New BlackSky or third parties, including New BlackSky Parent’s filings with the SEC;

 

   

litigation involving New BlackSky, New BlackSky’s industry, or both, or investigations by regulators into New BlackSky’s operations or those of New BlackSky’s competitors;

 

   

guidance, if any, that New BlackSky provides to the public, any changes in this guidance or New BlackSky’s failure to meet this guidance;

 

   

the development and sustainability of an active trading market for New BlackSky Parent’s stock;

 

   

actions by institutional or activist stockholders;

 

   

changes in accounting standards, policies, guidelines, interpretations or principles;

 

   

general economic and political conditions such as recessions, interest rates, fuel prices, trade wars, pandemics (such as COVID-19), currency fluctuations and acts of war or terrorism; and

 

   

the effects of natural disasters, terrorist attacks and the spread and/or abatement of infectious diseases, such as COVID-19, including with respect to potential operational disruptions, labor disruptions, increased costs, and impacts to demand related thereto.

These broad market and industry fluctuations may adversely affect the market price of New BlackSky Parent Class A common stock, regardless of New BlackSky’s actual operating performance. In addition, price volatility may be greater if the public float and trading volume of New BlackSky Parent Class A common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If New BlackSky was involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from New BlackSky’s business regardless of the outcome of such litigation.

New BlackSky Parent will be an emerging growth company and any decision to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make the New BlackSky Parent Class A common stock less attractive to investors.

Osprey currently is, and following the merger, New BlackSky Parent will be, an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). For as long as it continues to be an emerging growth company, New BlackSky Parent may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including:

 

   

not being required to have independent registered public accounting firm audit New BlackSky Parent’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

 

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reduced disclosure obligations regarding executive compensation in New BlackSky Parent’s periodic reports and annual report on Form 10-K; and

 

   

exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

As a result, the stockholders may not have access to certain information that they may deem important. New BlackSky Parent’s status as an emerging growth company will end as soon as any of the following takes place:

 

   

the last day of the fiscal year in which New BlackSky Parent has at least $1.07 billion in annual revenue;

 

   

the date New BlackSky Parent qualifies as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates;

 

   

the date on which New BlackSky Parent has issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or

 

   

the last day of the fiscal year ending after the fifth anniversary of the Osprey IPO.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. New BlackSky Parent may elect to take advantage of this extended transition period and as a result, its financial statements may not be comparable with similarly situated public companies.

New BlackSky Parent cannot predict if investors will find the New BlackSky Parent Class A common stock less attractive if it chooses to rely on any of the exemptions afforded emerging growth companies. If some investors find the New BlackSky Parent Class A common stock less attractive because New BlackSky Parent relies on any of these exemptions, there may be a less active trading market for the New BlackSky Parent Class A common stock.

Because there are no current plans to pay cash dividends on New BlackSky Parent Class A common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

New BlackSky intends to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of New BlackSky Parent Class A common stock will be at the sole discretion of New BlackSky Parent’s board of directors. New BlackSky Parent’s board of directors may take into account general and economic conditions, New BlackSky’s financial condition and results of operations, New BlackSky’s available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by New BlackSky Parent to its stockholders or by its subsidiaries to it and such other factors as New BlackSky Parent’s board of directors may deem relevant. In addition, New BlackSky Parent’s ability to pay dividends is limited by covenants of BlackSky’s existing and outstanding indebtedness and may be limited by covenants of any future indebtedness New BlackSky incurs. As a result, you may not receive any return on an investment in New BlackSky Parent Class A common stock unless you sell New BlackSky Parent Class A common stock for a price greater than that which you paid for it.

If securities analysts do not publish research or reports about New BlackSky’s business or if they downgrade New BlackSky Parent’s stock or New BlackSky’s sector, New BlackSky Parent’s stock price and trading volume could decline.

The trading market for New BlackSky Parent Class A common stock will rely in part on the research and reports that industry or financial analysts publish about New BlackSky or its business. New BlackSky will not control these analysts. In addition, some financial analysts may have limited expertise with BlackSky’s model

 

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and operations. Furthermore, if one or more of the analysts who do cover New BlackSky downgrade its stock or industry, or the stock of any of its competitors, or publish inaccurate or unfavorable research about its business, the price of New BlackSky Parent’s stock could decline. If one or more of these analysts ceases coverage of New BlackSky or fails to publish reports on it regularly, New BlackSky could lose visibility in the market, which in turn could cause its stock price or trading volume to decline.

Future sales, or the perception of future sales, by New BlackSky or its stockholders in the public market following the merger could cause the market price for New BlackSky Parent Class A common stock to decline.

The sale of shares of New BlackSky Parent Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of New BlackSky Parent Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for New BlackSky Parent to sell equity securities in the future at a time and at a price that it deems appropriate.

Pursuant to the amended and restated bylaws to become effective upon the consummation of the merger, during the Lock-up Period, BlackSky’s directors and executive officers will not, subject to the exceptions noted therein, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of any shares of New BlackSky Parent Class A common stock, or any stock options, restricted stock units, or other equity awards outstanding as of immediately following the closing of the merger in respect of awards of BlackSky outstanding immediately following the closing of the merger. Following the expiration or waiver of the Lock-up Period, such shares will be eligible for resale, subject to volume, manner of sale and other limitations under Rule 144. Sales of substantial amounts of New BlackSky Parent Class A common stock in the public market after the merger, or the perception that such sales will occur, could adversely affect the market price of New BlackSky Parent Class A common stock and make it difficult for us to raise funds through securities offerings in the future.

Upon consummation of the merger and the PIPE Investment, New BlackSky Parent will have an aggregate of approximately 174,139,340 shares of New BlackSky Parent Class A common stock outstanding (calculated on a fully diluted basis), which reflects (i) 31,625,000 shares represented by Osprey Class A common stock outstanding as of the merger (assuming that no Osprey stockholders exercise redemption rights with respect to their public shares upon consummation of the merger), (ii) 31,625,000 shares represented by Osprey Class A common stock outstanding as of the merger (assuming that no Osprey stockholders exercise redemption rights with respect to their public shares upon consummation of the merger), (ii) 7,906,250 shares issuable upon the conversion of Osprey Class B common stock, which will be converted on a one-for-one basis into an equivalent number of shares of New BlackSky Parent Class A Common Stock, (iii) 24,137,500 shares issuable upon the exercise of Osprey’s outstanding warrants to purchase Osprey Class A common stock, (iv) 18,000,000 shares contemplated to be issued in the PIPE Investment, and (iv) 92,470,589 shares issuable to the securityholders of BlackSky (including shares issuable upon the exercise or conversion of BlackSky Stock Options, BlackSky Warrants and BlackSky RSU Awards assumed by Osprey) in connection with the merger (which, with respect to the shares issuable to securityholders of BlackSky in connection with the merger, is based on (i) the aggregate exercise prices of the BlackSky options and warrants anticipated to be outstanding as of immediately prior to the effective time and (ii) the amount of the BlackSky bridge loan that is anticipated to remain unfunded as of the effective time). All shares issued in the merger will be freely tradable without registration under the Securities Act and without restriction by persons other than New BlackSky Parent’s “affiliates” (as defined under Rule 144 of the Securities Act, “Rule 144”), including New BlackSky Parent’s directors, executive officers and other affiliates.

The merger agreement contemplates that, at the closing, New BlackSky Parent, the Sponsor, certain affiliates of the Sponsor and certain stockholders of New BlackSky Parent named therein will enter into the Registration Rights Agreement, pursuant to which New BlackSky Parent will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of New BlackSky Parent common stock and other equity securities of New BlackSky Parent that are held by the parties thereto from time to time. The Registration

 

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Rights Agreement amends and restates the registration rights agreement that was entered into by Osprey, the Sponsor and the other parties thereto in connection with Osprey’s initial public offering. If these stockholders exercise their registration rights, the market price of shares of New BlackSky Parent Class A common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for New BlackSky to raise additional funds through future offerings of New BlackSky Parent Class A common stock or other securities.

In addition, the shares of New BlackSky Parent Class A common stock reserved for future issuance under New BlackSky Parent’s equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. A total of 18,003,900 shares of New BlackSky Parent Class A common stock, plus any shares of New BlackSky Parent Class A common stock subject to the equity awards that are assumed in the merger and that on or after the effective date of the merger are terminated without being exercised in full, are tendered to or withheld by New BlackSky Parent to satisfy exercise price or tax withholding obligations, or are forfeited to or repurchased by New BlackSky Parent due to failure to vest (provided that the maximum number of shares that may be added to the Omnibus Incentive Plan pursuant to the foregoing clause (b) is 13,050,300 shares) are expected to be reserved for future issuance under its equity incentive plans. New BlackSky Parent is expected to file one or more registration statements on Form S-8 under the Securities Act to register shares of New BlackSky Parent Class A common stock or securities convertible into or exchangeable for shares of New BlackSky Parent Class A common stock issued pursuant to New BlackSky Parent’s equity incentive plans. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. The initial registration statement on Form S-8 is expected to cover approximately 30,705,684 shares of New BlackSky Parent Class A common stock, which includes the existing number of BlackSky Options and BlackSky RSU Awards issued and outstanding as of as of June 30th that would be assumed by Osprey.

In the future, New BlackSky Parent may also issue its securities in connection with investments or acquisitions. The amount of shares of New BlackSky Parent Class A common stock issued in connection with an investment or acquisition could constitute a material portion of New BlackSky Parent’s then-outstanding shares of Class A common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to New BlackSky Parent’s stockholders.

Anti-takeover provisions in New BlackSky Parent’s organizational documents could delay or prevent a change of control.

Certain provisions of New BlackSky Parent’s amended and restated certificate of incorporation and amended and restated bylaws to become effective upon the consummation of the merger may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by New BlackSky Parent’s stockholders.

These provisions provide for, among other things:

 

   

a classified board of directors whose members serve staggered three-year terms;

 

   

the ability of New BlackSky Parent’s board of directors to issue one or more series of preferred stock;

 

   

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at New BlackSky Parent’s annual meetings;

 

   

certain limitations on convening special stockholder meetings;

 

   

limiting the ability of stockholders to act by written consent;

 

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providing that New BlackSky Parent’s board of directors is expressly authorized to make, alter or repeal New BlackSky Parent’s bylaws; and

 

   

the removal of directors only for cause and only upon the affirmative vote of holders of at least 66 2/3% of the voting power of the issued and outstanding capital stock of New BlackSky Parent entitled to vote in the election of directors, voting together as a single class.

These anti-takeover provisions could make it more difficult for a third party to acquire New BlackSky Parent, even if the third-party’s offer may be considered beneficial by many of New BlackSky Parent’s stockholders. As a result, New BlackSky Parent’s stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause New BlackSky to take other corporate actions you desire. See “Description of New BlackSky Capital Stock” for more information.

New BlackSky Parent’s amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by New BlackSky Parent’s stockholders, which could limit New BlackSky Parent’s stockholders’ ability to obtain a favorable judicial forum for disputes with New BlackSky or its directors, officers, employees or stockholders.

New BlackSky Parent’s amended and restated certificate of incorporation will provide that, subject to limited exceptions, any (1) derivative action or proceeding brought on behalf of New BlackSky Parent, (2) action asserting a claim of breach of a duty (including any fiduciary duty) owed by any current or former director, officer, stockholder, employee or agent of New BlackSky Parent to New BlackSky Parent or its stockholders, (3) action asserting a claim against New BlackSky Parent or any current or former director, officer, stockholder, employee or agent of New BlackSky Parent arising out of or relating to any provision of the DGCL or New BlackSky Parent’s amended and restated certificate of incorporation or New BlackSky Parent’s amended and restated bylaws (each, as in effect from time to time) or (4) action asserting a claim against New BlackSky Parent or any current or former director, officer, stockholder, employee or agent of New BlackSky Parent governed by the internal affairs doctrine of the State of Delaware shall, to the fullest extent permitted by applicable law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court lacks subject matter jurisdiction thereof, another state or federal court located within the State of Delaware, provided that, unless New BlackSky Parent consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint against any person in connection with any offering of New BlackSky Parent’s securities, asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of New BlackSky Parent’s capital stock shall be deemed to have notice of and to consent to the provisions of New BlackSky Parent’s amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New BlackSky or its directors, officers or other employees, which may discourage such lawsuits against New BlackSky and its directors, officers and employees. Alternatively, if a court were to find these provisions of New BlackSky Parent’s amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, New BlackSky may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect New BlackSky’s business and financial condition.

Transformation of BlackSky into a listed public company will increase its costs and may disrupt the regular operations of its business.

BlackSky has operated as a privately owned company and expects to incur additional legal, regulatory, finance, accounting, investor relations and other administrative expenses as a result of having publicly traded common stock. In addition, while BlackSky is currently in compliance with portions of the Sarbanes-Oxley Act

 

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of 2002 (the “Sarbanes-Oxley Act”), BlackSky will be required under the Sarbanes-Oxley Act, as well as rules adopted by the SEC and the NYSE, to implement specified corporate governance practices that currently do not apply to BlackSky as a private company.

New BlackSky will be required to ensure that it has the ability to prepare financial statements on a timely basis that fully comply with all SEC reporting requirements and maintain effective internal controls over financial reporting.

The additional demands associated with being a public company may disrupt regular operations of New BlackSky’s business by diverting the attention of some of its senior management team away from revenue producing activities to management and administrative oversight, adversely affecting New BlackSky’s ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing New BlackSky’s businesses. In addition, failure to comply with any laws or regulations applicable to New BlackSky Parent as a public company may result in legal proceedings and/or regulatory investigations, and may cause reputational damage. Any of these effects could harm New BlackSky’s business, financial condition and results of operations.

Risks Relating to Redemption

Significant redemptions among Osprey’s public shareholders may require New BlackSky Parent to raise future financing after the closing of the merger.

Pursuant to the merger agreement, Osprey would need to have net tangible assets of at least $5,000,001 in the Trust Account after giving effect to the redemptions as a closing condition to the merger. Further, BlackSky is not obligated to consummate the transaction if the amount of cash held in the Trust Account, minus the aggregate amount of cash required to satisfy all Osprey stockholder redemptions, plus the proceeds from the private placement of shares of New BlackSky Parent Class A common stock being issued at the closing of the merger (the “PIPE Investment”), does not equal or exceed $225,000,000.

Even if New BlackSky Parent will receive greater than $225,000,000 of cash on the closing of the merger, if redemptions are significant, New BlackSky Parent may need to arrange for third party debt or equity financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Further, if redemptions are significant, New BlackSky Parent would not have as much working capital as anticipated following the closing of the merger, which could harm our business and financial condition.

There is no guarantee that an Osprey public stockholder’s decision whether to redeem their shares for a pro rata portion of the Trust Account will put such stockholder in a better future economic position.

No assurance can be given as to the price at which a public stockholder may be able to sell the shares of New BlackSky Parent Class A common stock in the future following the completion of the merger. Certain events following the consummation of any business combination, including the merger, may cause an increase in New BlackSky Parent’s stock price, and may result in a lower value realized now than an Osprey stockholder might realize in the future had the stockholder not elected to redeem such stockholder’s public shares. Similarly, if an Osprey public stockholder does not redeem his, her or its shares, such stockholder will bear the risk of ownership of New BlackSky Parent Class A common stock after the consummation of the merger, and there can be no assurance that a stockholder can sell his, her or its shares of New BlackSky Parent Class A common stock in the future for a greater amount than the redemption price set forth in this proxy statement/consent solicitation statement/prospectus. An Osprey public stockholder should consult his, her or its own tax and/or financial advisor for assistance on how this may affect its individual situation.

 

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If Osprey public stockholders fail to comply with the redemption requirements specified in this proxy statement/consent solicitation statement/prospectus, they will not be entitled to redeem their public shares for a pro rata portion of the funds held in the Trust Account.

Holders of public shares are entitled to exercise their rights to redeem their public shares for a pro rata portion of the Trust Account regardless of whether they vote for or against or abstain from voting on the Business Combination Proposal or any other Proposal. In addition, to exercise their redemption rights, holders are required to deliver their stock, either physically or electronically using Depository Trust Company’s DWAC System, to Osprey’s transfer agent prior to the vote at the Osprey Special Meeting. If a holder properly seeks redemption as described in this proxy statement/consent solicitation statement/prospectus and the merger with BlackSky is consummated, Osprey will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own such shares following the merger. See “Osprey Special Meeting of StockholdersRedemption Rights” for additional information on how to exercise your redemption rights.

Osprey does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Osprey to complete the merger with which a substantial majority of Osprey’s stockholders do not agree.

Osprey’s existing charter does not provide a specified maximum redemption threshold, except that Osprey will not redeem public shares in an amount that would cause Osprey’s net tangible assets to be less than $5,000,001 (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act).

Additionally, BlackSky’s obligation to consummate the merger is conditioned on, among other things, the amount of cash held in the Trust Account, minus the aggregate amount of cash required to satisfy all Osprey stockholder redemptions, plus the proceeds from the PIPE Investment, equaling or exceeding $225,000,000. This condition is for the sole benefit of BlackSky and may be waived by BlackSky. As a result, Osprey may be able to complete the merger even though a substantial portion of public stockholders do not agree with the merger and have redeemed their public shares.

If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of more than 15% of the public shares, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the public shares.

A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its public shares or, if part of such a group, the group’s public shares, in excess of 15% of the public shares. Your inability to redeem any such excess public shares could result in you suffering a material loss on your investment in Osprey if you sell such excess public shares in open market transactions. Osprey cannot assure you that the value of such excess public shares will appreciate over time following the merger or that the market price of the public shares will exceed the per-share redemption price.

However, Osprey’s stockholders’ ability to vote all of their public shares (including such excess shares) for or against the Business Combination Proposal is not restricted by this limitation on redemption.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. This information has been provided to aid in your analysis of the financial aspects of the merger and related transactions. The pro forma financial information reflects the combination of historical financial information of Osprey and BlackSky, adjusted to give effect to (1) the merger, inclusive of the issuance of Osprey common stock for BlackSky’s issued and outstanding Class A common stock, preferred stock, and bridge notes in accordance with the terms of the merger agreement, (2) the repayment of certain of BlackSky’s outstanding debt, (3) certain related equity financing transactions, and (4) the payment of transaction costs (collectively, the “Transactions”). Hereinafter, Osprey and BlackSky are collectively referred to as the “companies,” and the companies, subsequent to the merger, are referred to herein as the “combined company.”

The unaudited pro forma condensed combined balance sheet, which has been presented for the combined company as of March 31, 2021, gives effect to the Transactions as if they were consummated on March 31, 2021. The unaudited pro forma condensed combined statements of operations, which have been presented for the combined company for the three months ended March 31, 2021 and for the year ended December 31, 2020, give pro forma effect to the Transactions as if they had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had the Transactions taken place on March 31, 2021, nor is it indicative of the financial condition of the combined company as of any future date. The unaudited pro forma condensed combined statements of operations do not purport to represent, and are not necessarily indicative of, what the actual results of operations of the combined company would have been had the merger taken place on January 1, 2020, nor are they indicative of the results of operations of the combined company for any future period.

The unaudited pro forma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and the accompanying notes, which are included elsewhere in this proxy statement/consent solicitation statement/prospectus:

 

   

The historical unaudited condensed financial statements of Osprey as of and for the three months ended March 31, 2021 and the historical audited financial statements of Osprey as of and for the year ended December 31, 2020 (as restated); and

 

   

The historical unaudited condensed consolidated financial statements of BlackSky as of and for the three months ended March 31, 2021 and the historical audited consolidated financial statements of BlackSky as of and for the year ended December 31, 2020.

The unaudited pro forma condensed combined financial information should also be read together with “Osprey’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “BlackSky’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Proposal No. 1—The Business Combination Proposal,” as well as other information included elsewhere in this proxy statement/consent solicitation statement/prospectus.

Description of the Transactions

On February 17, 2021, Osprey, Merger Sub, and BlackSky entered into a merger agreement, pursuant to which Osprey plans to acquire all of the issued and outstanding equity interests of BlackSky. Upon consummation of the merger, the newly-formed Merger Sub, as a wholly-owned and direct subsidiary of Osprey, will merge with and into BlackSky, with BlackSky surviving as a wholly-owned subsidiary of Osprey. In addition, Osprey, as the issuer of the publicly-traded equity of the combined company, will immediately change its name to BlackSky Technology Inc.

 

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Consideration for the merger will consist of shares of Osprey Class A common stock issued in exchange for (1) all issued and outstanding shares of BlackSky’s Class A common stock, inclusive of those shares of BlackSky’s Class A common stock that will become issuable immediately prior to consummation of the Transactions as a result of the conversion or exercise of certain of BlackSky’s other outstanding financial instruments (e.g., warrants and the bridge notes) and (2) all of BlackSky’s issued and outstanding shares of preferred stock, inclusive of those shares of Series B and Series C preferred stock that will become issuable upon the exercise of outstanding warrants immediately prior to consummation of the Transactions. No fractional shares of Osprey Class A common stock will be issued. In lieu of the issuance of any such fractional shares, Osprey has agreed to pay to each former holder of BlackSky Class A common stock, preferred stock or convertible notes who otherwise would be entitled to receive such fractional share an amount in cash, without interest, rounded down to the nearest cent, equal to the product of (i) the amount of the fractional share interest in a share of Osprey Class A common stock to which such holder otherwise would have been entitled multiplied by (ii) the average of Osprey’s Class A common stock’s trading price over the 30-day period ending three days prior to consummation of the merger.

The following additional activities will occur immediately prior to or upon closing of the merger and, accordingly, are also reflected in the unaudited pro forma condensed combined financial statements below:

 

   

The cash repayment of all outstanding borrowings and any unpaid interest under BlackSky’s debt facility with Silicon Valley Bank (“SVB”).

 

   

The payment of certain consent fees (which may be settled with shares instead of cash at lenders’ election) incurred with existing lenders at the time that BlackSky obtained its 2021 Bridge Financing pursuant to the Consent Agreement. The fees set forth in the Consent Agreement are payable on the earlier to occur of (a) the maturity date of the Intelsat Facility, (b) the termination of the Intelsat Facility, (c) any occurrence of an event of default under Section 8.5 of the Intelsat Facility, (d) the acceleration of the obligations under the Intelsat Facility in connection with any other event of default thereunder, (e) the date of the consummation of the merger, (f) the date on which the Company or any of its subsidiaries consummates any equity capital raise or incurs additional Indebtedness (as defined in the Intelsat Facility) other than the 2021 Bridge Financing in respect of borrowed money that results in aggregate net proceeds equal to or greater than $50,000,000, or (g) twelve (12) months after the date of the Consent Agreement. The Consent Agreement further provides that, in connection with the consummation of the merger, each of Seahawk and Intelsat, may elect to receive, solely with respect to such lender, payment of the applicable fee in either (i) fully paid and nonassessable shares of Osprey Class A common stock as issued in connection with the PIPE Investment at a price per share equal to 80% of the applicable price per share of Osprey Class A common stock paid by the other PIPE Investors (provided, that if the PIPE Investment does not close on or about the date of the merger, then the conversion price will be equal to 80% of the price per share of Osprey Class A common stock in the merger), or (ii) cash.

 

   

The partial payment of $2.5 million on the Andrews Notes. See “Certain Relationships and Related Person Transactions—BlackSky—Andrews Notes” for more information.

 

   

The payment of transaction costs incurred by both Osprey and BlackSky;

 

   

The payment of underwriting fees of $11,068,750 incurred in connection with Osprey’s initial public offering, for which payment was deferred until Osprey consummated a business combination or similar transaction, which fees amount to approximately (i) $0.08 per share on a pro forma basis (or 0.8% of the value of shares assuming a trading price of $10.00 per share), assuming no redemptions, and (ii) $0.11 per share on a pro forma basis (or 1.1% of the value of shares assuming a trading price of $10.00 per share), assuming maximum redemptions;

 

   

The exchange of all issued, outstanding, and unexercised BlackSky warrants, RSUs and stock options (excluding any warrants that will automatically terminate if not exercised prior to consummation of the merger), for New BlackSky Parent warrants, RSUs and stock options.

 

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Pursuant to the merger agreement, the total number of shares of Osprey Class A common stock issuable to the BlackSky equity holders (including shares issuable upon the exercise or conversion of BlackSky Stock Options, BlackSky Warrants and BlackSky RSU Awards assumed by Osprey) in connection with the merger (which is referred to herein as the “Total Consideration Share Amount”) will be calculated by dividing (x) an amount equal to (a) $925,000,000, plus (b) the aggregate exercise prices that would be paid to BlackSky if all options and warrants to purchase BlackSky capital stock outstanding immediately prior to the effective time of the merger were exercised in full, minus (c) $1,426,825, which amount equals the unfunded portion of the bridge loan that BlackSky had the right to incur prior to the closing of the merger, and minus (d) the total consideration payable for shares of BlackSky’s Class B common stock in connection with the merger (which amount will equal less than $1,000 in the aggregate) by (y) $10.00.

Pursuant to the merger agreement, each issued and outstanding share of BlackSky Class B common stock will be converted into the right to receive cash consideration equal to $0.00001 per share. The total cash consideration payable to the holders of BlackSky Class B common stock in connection with the merger will equal less than $1,000 in the aggregate.

As of the effective time of and by virtue of the merger, each share of BlackSky preferred stock and each share of BlackSky Class A common stock that is issued and outstanding immediately prior to the effective time of the merger will be cancelled and automatically converted into the right to receive a number of shares of Osprey Class A common stock equal to the Per Share Exchange Ratio (as defined in the merger agreement) that is applicable to such share.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky preferred stock will be equal to the greater of (i) a number of shares of Osprey Class A common stock equal in value (based on the Acquiror Closing Trading Price, as described below) to the liquidation preference payable with respect to such share of BlackSky preferred stock pursuant to BlackSky’s amended and restated certificate of incorporation and (ii) a number of shares of Osprey Class A common stock issuable with respect to one share of BlackSky Class A common stock in connection with the merger. Pursuant to the merger agreement, the “Acquiror Closing Trading Price” shall be the average closing sale price of one share of Osprey Class A common stock on the NYSE over the thirty day period ending three days prior to the closing of the merger.

The Per Share Exchange Ratio with respect to each outstanding share of BlackSky Class A common stock (also referred to herein as the “Class A Common Exchange Ratio”) will equal the quotient of (A) the portion of the Total Consideration Share Amount remaining after deducting the portion thereof payable in connection with the merger to the holders of BlackSky preferred stock, divided by (B) the number of participating shares of BlackSky Class A common stock issued and outstanding as of immediately prior to the effective time of the merger on a fully diluted basis (excluding shares of BlackSky Class A common stock issuable upon the conversion of BlackSky preferred stock that will receive their liquidation preference in connection with the merger and excluding shares of BlackSky Class B common stock).

Concurrently with the execution of the merger agreement on February 17, 2021, Osprey entered into Subscription Agreements with the PIPE Investors pursuant to which the PIPE Investors agreed to purchase, in the aggregate, 18,000,000 newly-issued shares of Osprey Class A common stock to be issued at the closing of the merger for a purchase price of $10.00 per share, or an aggregate of $180 million in gross cash proceeds. The obligation of the parties to consummate the purchase and sale of the shares covered by each Subscription Agreement is conditioned upon (i) there not being in force any injunction or order enjoining or prohibiting the issuance and sale of the shares covered by the Subscription Agreement, (ii) there not being any amendment or modification of the terms of the merger agreement in a manner that is materially adverse to the PIPE Investor (in its capacity as such), (iii) all conditions precedent to the closing of the merger, including all necessary approvals of Osprey’s stockholders and regulatory approvals, if any, having been satisfied or waived by the parties to the merger agreement as provided therein (iv) a customary bring down of the representations and warranties of the PIPE Investor and Osprey in the Subscription Agreement and (v) the prior or substantially concurrent consummation of the transactions contemplated by the merger agreement.

 

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Accounting for the Merger

Notwithstanding the legal form of the merger pursuant to the merger agreement, the merger will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Osprey will be treated as the acquired company for financial reporting purposes, and BlackSky will be treated as the accounting acquiror. In accordance with this accounting method, the merger will be treated as the equivalent of BlackSky issuing stock for the net assets of Osprey, accompanied by a recapitalization. The net assets of Osprey will be stated at historical cost, with no goodwill or other intangible assets recorded, and operations prior to the merger will be those of BlackSky. BlackSky has been deemed the accounting acquiror for purposes of the merger based on an evaluation of the following facts and circumstances:

 

   

Immediately subsequent to the merger, BlackSky’s stockholders as of immediately prior to the merger will hold a majority (i.e., greater than 50%) of the outstanding voting interests in the combined company, irrespective of whether or not existing stockholders of Osprey exercise their right to redeem their shares of Osprey common stock;

 

   

Immediately subsequent to the Transactions, BlackSky’s existing senior management team will comprise senior management of the combined company;

 

   

BlackSky will have designated a majority of the members of the Board of New BlackSky Parent as of immediately following the merger;

 

   

BlackSky is the larger of the combining companies, measured based upon historical operating activity and employee base; and

 

   

BlackSky’s operations will comprise the ongoing operations of the combined company.

Basis of Pro Forma Presentation

In accordance with Article 11 of Regulation S-X, pro forma adjustments to the combined historical financial information of Osprey and BlackSky give effect to transaction accounting adjustments that (1) depict in the pro forma condensed combined balance sheet, the accounting for the Transactions required by GAAP, and (2) depict in the pro forma condensed combined statement of operations, the effects of the pro forma balance sheet adjustments, assuming those adjustments were made as of the beginning of the fiscal year presented. Accordingly, nonrecurring pro forma adjustments that impact the pro forma income of the combined company have been recorded to the pro forma condensed combined statement of operations for the year ended December 31, 2020, as the Transactions are assumed to have occurred on January 1, 2020 for purposes of presenting pro forma income statement information. The pro forma condensed combined financial information does not give effect to any management adjustments or any synergies, operating efficiencies, or other benefits that may result from consummation of the Transactions. In addition, as (i) Osprey and BlackSky have not had any historical relationship prior to the Transactions and (ii) there is no historical activity with respect to Merger Sub, preparation of the accompanying pro forma financial information did not require any adjustments with respect to such activities.

The unaudited pro forma condensed combined financial information has been presented to provide relevant information necessary for an understanding of the combined company subsequent to completion of the Transactions. Accordingly, the unaudited pro forma condensed combined financial information includes, among other things, pro forma adjustments to reflect the completion of the merger, the PIPE Investment, the full or partial repayment of certain of BlackSky’s borrowings in accordance with the merger agreement, the conversion of the promissory notes issued pursuant to BlackSky’s bridge loan financing agreement executed in February 2021, the settlement of transaction costs that have been reported in the companies’ historical financial statements or will be incurred upon consummation of the merger, and the impact of certain other associated pro forma adjustments necessary to give full effect to the Transactions.

Pursuant to Osprey’s amended and restated certificate of incorporation, Osprey’s public stockholders may demand that Osprey redeem their shares of Class A common stock for cash if the merger is consummated,

 

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irrespective of whether they vote for or against the merger. If a public stockholder properly demands redemption of their shares, Osprey will redeem each share for cash equal to the public stockholder’s pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the merger.

Due to the redemption rights held by Osprey’s public stockholders, the unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemptions of Osprey’s publicly-traded shares:

 

   

Scenario 1—Assuming no redemptions: This presentation assumes that no Osprey stockholders exercise redemption rights with respect to their public shares upon consummation of the merger; and

 

   

Scenario 2—Assuming redemption of public shares of Osprey Class A common stock for cash: This presentation assumes that Osprey stockholders exercise their redemption rights with respect to a maximum of 27.1 million public shares upon consummation of the merger. The maximum number of shares subject to redemption was derived from the merger agreement’s requirement for the Transactions to result in a minimum of $225 million from (i) Osprey (inclusive of cash available to be released from the Trust Account) and (ii) the PIPE Investment, after giving effect to the payments to redeeming stockholders. Scenario 2 gives effect to all pro forma adjustments contained in Scenario 1, as well as additional adjustments to reflect the effect of the maximum redemption.

The following table provides a pro forma summary of the shares of the combined company’s common stock that would be outstanding under each of the two redemption scenarios if the Transactions had occurred on March 31, 2021:

 

     Scenario 1—     Scenario 2—  
     Assuming No Redemptions     Assuming Maximum Redemptions  

Stockholder

           Shares                      %                     Shares                      %          

BlackSky stockholders(1)

     74,747,085        57     74,747,085        71

Osprey public stockholders

     31,625,000        24     4,455,466        4

Osprey sponsor

     7,906,250        6     7,906,250        8

PIPE Investors

     18,000,000        13     18,000,000        17
  

 

 

      

 

 

    
     132,278,335          105,108,801     
  

 

 

      

 

 

    

The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only. The table represents the Sponsor’s holdings of Osprey Class A common stock subsequent to the one-for-one conversion of the Sponsor’s Osprey Class B common stock into Osprey Class A common stock immediately prior to the consummation of the merger, including those shares subject to performance targets. The pro forma adjustments represent estimates based on information available as of the dates of the unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available. Assumptions and estimates underlying the pro forma adjustments set forth in the unaudited pro forma condensed combined financial information are described in the accompanying notes. The actual financial position and results of operations of the combined company subsequent to consummation of the Transactions may differ significantly from the pro forma amounts reflected herein.

 

 

(1) 

Refer to balance sheet tickmark “f” for additional information regarding calculation of the amounts set forth herein.

 

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PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF March 31, 2021

(UNAUDITED)

(in thousands)

 

                ASSUMING NO
REDEMPTIONS
          ASSUMING MAXIMUM
REDEMPTIONS
 
    Osprey
(Historical)
    BlackSky
(Historical)
    Transaction
Accounting
Adjustments
    Ref     Pro Forma
Combined
          Transaction
Accounting
Adjustments
    Ref     Pro forma
Combined
 

Assets

                 

Current assets:

                 

Cash and cash equivalents

    171       44,787     411,597       (A     456,555         (273,054     (S     183,501  

Restricted cash

    —         5,475     —           5,475       —           5,475

Accounts receivable, net of allowance of $0 and $0, respectively

    —         4,554     —           4,554       —           4,554

Prepaid expenses and other current assets

    64       1,123     —           1,187       —           1,187

Contract assets

    —         3,862     —           3,862       —           3,862

Prepaid income taxes

    255       —         —           255       —           255