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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-03-31 · 14 added, 195 removed, 3 unchanged (99% of the section changed)

MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY

MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our units commenced public trading on November 1, 2019, and our Class A common stock and warrants commenced separate trading on

December 20, 2019.

Our Class A common stock, warrants and units are each listed on the New York Stock Exchange under the symbols SFTW, SFTW.WS and SFTW.U, respectively.

On March 19, 2021, the

numbers of record holders of the Companys Class A common stock, units and warrants were 1, 1 and 2, respectively, not including beneficial holders whose securities are held in street name.

We have not paid any cash

dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination.

The payment of cash dividends in the future will depend upon our revenues and earnings, if any, capital

requirements and general financial condition subsequent to completion of an initial business combination, and will be at the discretion of our board of directors at such time.

In addition, our board of directors is not currently contemplating and

does not anticipate declaring any stock dividends in the foreseeable future.

Further, if we incur any indebtedness in connection with a business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in

connection therewith.

Securities Authorized for Issuance Under Equity Compensation Plans

Recent Sales of Unregistered

In June 2018, the sponsor purchased 125,000 shares of our Class B common stock for an aggregate price of $25,000.

September 2018, we effectuated a 69-for-1 forward stock split of our Class B common stock, resulting in an aggregate of 8,625,000 founder shares

outstanding, of which an aggregate of up to 1,125,000 shares were subject to forfeiture to the extent the underwriters over-allotment option was not exercised in full or in part.

As adjusted for the 1.1 for 1 stock dividend in October 2019

(see below), such amounts totaled 9,487,500 founder shares outstanding, of which 1,237,500 shares were subject to forfeiture.

In April 2019, the sponsor contributed back to us, for no consideration, 1,581,250 founder shares (as adjusted for the 1.1

for 1 stock dividend in October 2019) founder shares, resulting in an aggregate of 7,187,500 founder shares outstanding, of which an aggregate of up to 937,500 shares were subject to forfeiture.

In October 2019, we effected a 1.1 for 1 stock

dividend for each share of Class B common stock outstanding, resulting in an aggregate of 7,906,250 founder shares outstanding.

The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the

Securities Act.

On November 5, 2019, we consummated the initial public offering of 27,500,000 units, at $10.00 per Unit, generating

gross proceeds of $275,000,000.

The securities issued in the initial public offering were registered under the Securities Act on registration statements on Form S-1 (No.

333-234180 and 333-234418).

The Securities and Exchange Commission declared the registration statements effective on October 31, 2019.

Simultaneously with the closing of the initial public offering, we consummated the sale of 7,500,000 warrants at a price of $1.00 per private

placement warrant in a private placement to the sponsor, generating gross proceeds of $7,500,000.

The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

The private placement warrants are identical to the warrants underlying the units sold in

the initial public offering, except that the private placement warrants are not transferable, assignable or salable until after the completion of a business combination, subject to certain limited exceptions.

On November 13, 2019, we consummated the sale of an additional 4,125,000 units to the underwriters, at $10.00 per unit, and the sale of

an additional 825,000 private placement warrants to the sponsor, at $1.00 per private placement warrant, generating total gross proceeds of $42,075,000, as a result of the underwriters exercising the over-allotment option in full.

Of the gross proceeds received from the initial public offering, the exercise of the over-allotment in full and the private placement

warrants, $316,250,000 was placed in the Trust Account.

We paid a total of $6,325,000 in underwriting discounts and commissions and

$654,126 for other costs and expenses related to the initial public offering.

In addition, the underwriters agreed to defer $11,068,750 in underwriting discounts and commissions.

Our Class A common stock is listed on the NYSE under the symbol “BKSY” and our Public Warrants are traded on the NYSE under the symbol “BKSY.W.” Prior to the consummation of the Business Combination, our Class A common stock and our Public Warrants were listed on the NYSE under the symbols “SFTW” and “SFTW.WS,” respectively.

Holders of Common Stock

As of March 29, 2022, there were approximately 597 holders of record of our Class A common stock.

Because many of the shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by these record holders.

Dividend Policy

We have not paid any cash dividends on our Class A common stock to date.

We may retain future earnings, if any, for future operations, expansion and debt repayment and we have no current plans to pay cash dividends for the foreseeable future.

The payment of cash dividends in the future will depend upon our results of operations, capital requirements and general financial condition, and will be at the discretion of our board of directors at such time.

In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future.

Further, our ability to pay dividends may be limited by covenants of any future outstanding indebtedness we or our subsidiaries incur.

Unregistered Sales of Equity Securities and Use of Proceeds

On November 13, 2018, Legacy BlackSky entered into subordinated promissory notes with each of Jason Andrews and Marian Joh, the founders of BlackSky (the “Founders”), for an aggregate amount of $12.5 million, in connection with their separation from Legacy BlackSky (the “Andrews Notes”).

On December 7, 2021, with the consent of our senior lenders, we entered into an agreement with the Founders under which we issued the Founders 958,082 shares of our Class A common stock in full satisfaction of amounts owed under the Andrews Notes, and the Andrews Notes were cancelled.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide the information required by this Item.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in

conjunction with our audited financial statements and the notes related thereto contained elsewhere in this Annual Report.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve

risks and uncertainties.

All statements other than statements of historical fact included in this Annual Report including, without

limitation, statements under Managements Discussion and Analysis of Financial Condition and Results of Operations regarding the Companys financial position, business strategy and the plans and objectives of management for

future operations, are forward-looking statements.

When used in this Annual Report, words such as anticipate, believe, estimate, expect, intend and similar expressions, as they relate to us

or the Companys management, identify forward-looking statements.

Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Companys management.

Actual results could differ materially from those contemplated by the forward-looking statements as a result of many factors, including those set forth under Cautionary Note Regarding Forward-Looking Statements, Item 1A.

Factors and elsewhere in this Annual Report.

We are a blank check company formed under the laws of the State of Delaware on June 15, 2018, for the purpose of effecting a merger,

capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses.

We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering

and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.

In March 2020, the COVID-19 outbreak was declared a National Public Health Emergency that continues to spread throughout the world and has adversely impacted global activity and contributed to significant declines and volatility in

financial markets.

The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown.

The rapid development and fluidity of this situation precludes any prediction as to

the ultimate material adverse impact of the coronavirus outbreak.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Nevertheless, the outbreak presents uncertainty and risk with respect

to the Company and its ability to successfully complete a Business Combination.

Recent Developments

On February 17, 2021, we entered into a Merger Agreement with Merger Sub and BlackSky, which provides for, among other things, the merger

of Merger Sub with and into BlackSky, with BlackSky continuing as the surviving entity (the Merger and, collectively with the other transactions contemplated by the Merger Agreement, the Transactions).

The Transactions set

forth in the Merger Agreement, including the Merger, will constitute a Business Combination.

Pursuant to the Merger

Agreement, the aggregate merger consideration payable to equity holders of BlackSky at closing (the Total Consideration) will be paid in a number of shares of newly-issued Class A common stock of the Company, valued at $10.00 per

share (the Company Common Stock), calculated by dividing (x) $925,000,000, plus (a) the aggregate exercise prices that would be paid to BlackSky if all stock options and all warrants outstanding as of immediately prior to the

closing were exercised in full, minus (b) any unfunded amount

under BlackSkys bridge loan, minus (c) the total consideration payable to shares of BlackSkys Class B common stock, which is equal to the product of (i) the total

number of shares of BlackSkys Class B common stock, par value $0.00001 per share, issued and outstanding as of immediately prior to the effective time of the Merger and (ii) an amount in cash equal to $0.00001 by (y) $10.00.

Effective as of the effective time of the Merger and by virtue of the Merger, each option to purchase shares of BlackSky Class A Common

Stock (each, a BlackSky Stock Option) that is outstanding and unexercised as of immediately prior to the effective time of the Merger will be converted into an option to acquire a number of shares of Company Class A Common Stock

equal to the product obtained by multiplying (x) the number of shares of BlackSky Common Stock subject to the applicable BlackSky Stock Option by (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 Company Stock Option).

For purposes of the Merger Agreement, the Class A Common Exchange Ratio equals the quotient of (A) the residual Total

Consideration after taking into account the preferred series preference amounts, divided by $10.00, divided by (B) the number of participating shares of BlackSky Common Stock on a fully diluted basis.

The exercise price per share of each

Assumed Company 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.

The Transactions will be consummated subject to the deliverables and provisions as further described in the Merger Agreement.

Results of Operations

We have neither

engaged in any operations nor generated any revenues to date.

Our only activities from inception to December 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, identifying a target for our

Business Combination, and activities in connection with the proposed acquisition of BlackSky.

We do not expect to generate any operating revenues until after the completion of our Business Combination.

non-operating income in the form of interest income on marketable securities held after the Initial Public Offering.

We incur expenses as a result of being a public company (for legal, financial reporting,

accounting and auditing compliance), as well as for due diligence expenses.

For the year ended December 31, 2020, we had a net loss

of $1,340,521, which consists of operating costs of $3,136,234 and provision for income taxes of $1,361, offset by interest income on marketable securities held in the Trust Account of $1,793,627 and an unrealized gain on marketable securities held

in our Trust Account of $3,447.

For the year ended December 31, 2019, we had net income of $350,893, which consists of interest

income on marketable securities held in the trust account of $714,993, offset by an unrealized loss on marketable securities held in our trust account of $6,479, operating costs of $264,346 and a provision for income taxes of $93,275.

Liquidity and Capital Resources

November 5, 2019, we consummated the Initial Public Offering of 27,500,000 Units at a price of $10.00 per Unit, generating gross proceeds of $275,000,000.

Simultaneously with the closing of the Initial Public Offering, we consummated the sale

of 7,500,000 Private Placement Warrants to our Sponsor at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $7,500,000.

On November 13, 2019, as a result of the underwriters election to fully exercise their over-allotment option, we consummated the

sale of an additional 4,125,000 Units at $10.00 per Unit, and the sale of an additional 825,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $42,075,000.

Following the Initial Public Offering, the exercise of the over-allotment option in full and the sale of the Private Placement Warrants, a

total of $316,250,000 was placed in the Trust Account.

We incurred $18,047,876 in transaction costs, including $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees, and $654,126 of other costs in connection with the Initial

Public Offering.

For the year ended December 31, 2020, cash used in operating activities was $1,397,955.

Net loss of $1,340,521 was affected by interest earned on marketable securities held in the Trust Account of $1,793,627, an unrealized gain on marketable securities held in our Trust Account of $3,447 and a deferred income tax provision of $1,361.

Changes in operating assets and liabilities provided $1,738,279 of cash from operating activities.

For the year ended December 31,

2019, cash used in operating activities was $286,574.

Net income of $350,893 was affected by interest earned on marketable securities held in the Trust Account of $714,993, an unrealized loss on marketable securities held in our trust account of

$6,479 and a deferred income tax benefit of $1,361.

Changes in operating assets and liabilities provided $72,408 of cash from operating activities.

As of December 31, 2020, we had marketable securities held in the Trust Account of $318,041,728 (including approximately $1,792,000 of

interest income and unrealized gains) consisting of U.S.

treasury bills with a maturity of 185 days or less.

Interest income on the balance in the Trust Account may be used by us to pay taxes.

Through December 31, 2020, we withdrew $713,860 of

interest earned on the Trust Account to pay for our tax obligations.

We intend to use substantially all of the funds held in the Trust

Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete our Business Combination.

To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our

Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, an

affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required.

If we complete a Business Combination, we would repay such loaned amounts.

In the event that a Business Combination does not

close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment.

Up to $1,500,000 of such loans may be convertible into warrants

identical to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.

As of December 31, 2020,

we had cash of $399,516 held outside of the Trust Account and working capital deficit of $1,627,973.

Until the consummation of a Business Combination, we will be using the funds not held in the Trust Account primarily to identify and evaluate target

businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material

agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

Our Sponsor, officers, directors or their affiliates are not under any obligation to advance us funds, or to invest in us.

Accordingly, we may

not be able to obtain additional financing.

If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending

the pursuit of a potential transaction, and reducing overhead expenses.

We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.

These conditions raise substantial doubt about our

ability to continue as a going concern.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements

as of December 31, 2020.

We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose

of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities,

guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to

pay the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support.

Upon completion of the Business Combination or our liquidation, we will cease paying these monthly fees.

In addition, we have an agreement to pay the underwriters a deferred fee of $11,068,750.

The deferred fee will become payable to the

representatives of the underwriters from the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies

preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.

Actual results could materially differ from those estimates.

We have identified the

following critical accounting policies:

Class A Common Stock Subject to Possible Redemption

We account for our Class A common stock subject to possible conversion in accordance with the guidance in Accounting Standards

Codification (ASC) Topic 480 Distinguishing Liabilities from Equity. Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value.

Conditionally

redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as

temporary equity.

At all other times, common stock is classified as stockholders equity.

Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain

future events.

Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders equity section of our balance sheets.

Net Income Per Common Share

two-class method in calculating earnings per share.

Net income (loss) per common share, basic and diluted for Class A common stock subject to possible redemption is calculated by dividing the interest income earned on the Trust Account, net of

applicable taxes, if any, by the weighted average number of shares of Class A common stock subject to possible redemption outstanding for the period.

Net income (loss) per common share, basic and diluted for and non-redeemable common stock is

calculated by dividing net loss less income attributable to Class A common stock subject to possible redemption, by the weighted average number of shares of non redeemable common stock outstanding for the period presented.

Recent Accounting Standards

does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

This information appears following Item 15 of this Annual Report and is included herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity