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Item 1A. Risk Factors

2023-03-23 compared with 2022-03-31 · 241 added, 254 removed, 858 unchanged (37% of the section changed)

An investment in our Class A common stock involves a high degree of risk.

In addition to the risk and uncertainties described under the section titled “Special Note Regarding Forward-Looking Statements” you should consider carefully the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before deciding to invest in our Class A common stock.

The risks and uncertainties described below are not the only ones we face.

Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations.

If any of the following events occur, our business, financial condition and operating results may be materially adversely affected.

You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before deciding to invest in our Class A common stock.

Additional risks and uncertainties that we are currently unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations.

If any of the following risks occur, our business, financial condition and operating results may be materially adversely affected.

In that event, the trading price of our Class A common stock could decline, and you could lose all or part of your investment.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that you should consider before investing in our company, as more fully described below.

The principal factors and uncertainties that make investing in our company risky include, among others:

Our business is subject to numerous risks and uncertainties that you should consider before investing in our Class A common stock, as more fully described below this summary.

The principal factors and uncertainties that could adversely affect our business include, among others:

• We have a limited history of operating at our current scale and under our current strategy, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future.

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• The market for our products and services 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.

• Operating as a newly listed public company will increase our costs and may disrupt the regular operations of our business.

Our management has limited experience in operating a public company.

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

For example, if one or more of our satellite launches result in catastrophic failure or one or more of our in-orbit satellites or payloads fail, and we have not obtained insurance coverage, we could be required to record significant impairment charges for the satellite or payload.

• 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.

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

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

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

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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 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.

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.

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.

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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 year 2021 and 2020, we had three and five customers that each accounted for more than 10% of our total revenue and in the aggregate, accounted for 45% and 74% of our total net revenue, respectively.

In fiscal years 2022 and 2021, we had two and three customers, respectively, that each accounted for more than 10% of our total revenue and in the aggregate, accounted for 42% and 45% of our total net revenue, respectively.

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.

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Cancellation of or adjustments to contracts may occur.

Additionally,

Additionally, all U.S.

government contracts included in backlog may be terminated at the convenience of the U.S.

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Therefore, any changes from our original estimates could adversely affect our business, financial condition, and results of operations.

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.

If we do not establish relationships with high-impact distributors and resellers, or if we fail to optimize relationships with existing members of our distribution channel, or if our distribution channel members suffer financial losses due to adverse economic conditions or otherwise, 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 products and services depends in part upon the financial and business condition of our distributor and reseller network.

The robustness of our distributor and reseller network depends on our ability to establish relationships with high-impact distributors and resellers, our ability to structure products bundles, business terms, promote system integrations, and optimize the effectiveness of our distributor and reseller network.

Distributors and resellers may not be highly capitalized and experience difficulties during times of economic contraction.

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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.

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.

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The market for our products and services 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 products and services 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 and management estimates, which may or may not accurately reflect future market size and growth.

The market for our products and services 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 and management estimates, 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.

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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.

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.

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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.

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

As a result of the COVID-19 pandemic, we took a variety of precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, such as remote working, requirements for social distancing, masking, vaccination where appropriate or required by customers, and limiting travel (both domestically and abroad).

As many COVID-19 mandates are lessened and even lifted, we continue to evaluate the long-term impacts on our operations and work force, such as our ability to sustain productivity and the mental health of our workforce, to transition to a hybrid work environment, to maintain and grow our culture in a hybrid environment, to comply with regulations and laws for workers we have hired in new states, to mitigate the physical and cybersecurity risks that stem from a decentralized work environment, to manage growth in light of the longer sales cycles and delayed purchasing decisions resulting from the financial insecurity caused by COVID-19 for our customers, and to manage the continued delays in the supply chain.

We continue to manage the above-impacts and determine the net impact of the COVID-19 pandemic on our business.

Although we continue to monitor the situation and may adjust our current policies, the ongoing effects of the COVID-19 pandemic may create further operational and other challenges, any of which could harm our business and results of operations.

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.

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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.

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.

The global COVID-19 pandemic has created operational challenges that have negatively affected our business and operations.

As a result of the COVID-19 pandemic, our workforce has been operating in a hybrid environment.

We are monitoring and evaluating the impacts on our operations and work force from the transition to a hybrid work environment, such as our ability to sustain productivity and the mental health of our workforce, to maintain and grow our culture in a hybrid environment, to comply with regulations and laws for workers we have hired in new states, to mitigate the physical and cybersecurity risks that stem from a decentralized work environment, and to manage the continued delays in the supply chain.

The longer-term impacts of the various operational challenges associated with the transition to a hybrid work environment could continue to harm our business and results of operations.

Risks Related to Our Operations

Operating as a newly listed public company will increase our costs and may disrupt the regular operations of our business.

Our management has limited experience in operating a public company.

As a new public company, we incur significant legal, accounting, regulatory, finance, insurance, investor relations, and other expenses that we did not incur as a private company.

Having gone public through a merger with a special purpose acquisition company (“SPAC”), there are additional and specific rules and regulations applicable to our operations.

Compliance with public company, and SPAC specific, regulatory requirements will increase our legal and financial compliance costs and we may need to hire additional staff with appropriate public company experience, particularly those with technical accounting knowledge.

We may not accurately 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.

We are required to prepare financial statements on a timely basis that comply with SEC reporting requirements and maintain effective internal controls over financial reporting.

The additional demands associated with being a public company may disrupt our regular business operations by diverting management’s attention away from revenue producing activities to compliance and administrative oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our businesses.

In addition, changing laws, regulations, and standards relating to corporate governance and public company disclosures are creating uncertainty for public companies, especially those who have gone public through a SPAC merger transaction, further 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.

Failure to comply with any laws or regulations applicable to us as a public company may result in legal proceedings and/or regulatory investigations, and may cause reputational damage, any of which could harm our business, financial condition and results of operations.

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.

The real or perceived increased threat of litigation against us as a public company could also make it more difficult for us to attract and retain qualified colleagues, executive officers, and members of our board of directors.

Finally, although we recently enhanced our management team to include senior leaders with public company experience, our management team may be unable to effectively manage the significant regulatory oversight and reporting obligations we are now subject to under the federal securities laws.

Our company’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.

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.

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.

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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.

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;

Any further incidents or other security breaches or incidents suffered by us or those on which we rely could lead to losses or unauthorized disclosure of sensitive information or capabilities;

unauthorized access to infrastructure or equipment theft or loss of, or unauthorized access to, use of, or other processing 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.

and/or financial liabilities.

Further, any such event, or any perception any such event has occurred, could result in private claims, demands and litigation, regulatory investigations and other proceedings, fines, penalties, and other 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:

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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.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.

During times of war and other major conflicts, we, and the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.

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.

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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.

Further, as the COVID-19 pandemic continues to result in a significant number of people working remotely, the cybersecurity risks we face may be heightened by an increased attack surface across our business and those of our service providers and other third parties we work with.

Additionally, in connection with Russia’s actions in Ukraine, cybersecurity researchers anticipate an increase in cybersecurity activity.

Further, with the COVID-19 pandemic having resulted in a significant number of people working remotely, the cybersecurity risks we face may be heightened by an increased attack surface across our business and those of our service providers and other third parties we work with.

Additionally, in connection with Russia’s actions in Ukraine, cybersecurity researchers have warned of the potential for increases cybersecurity activity.

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, including data that may be subject to privacy or security laws or disrupt our information systems, devices or business.

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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:

The occurrence of any of these events, or the perception any such event has occurred, could result in:

• harm to customers;

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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, which have since then been remediated.

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 our company.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f).

Our internal control over financial reporting is designed to provide reasonable assurance to our 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 our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.

As of the year ended December 31, 2020, Legacy BlackSky identified a material weakness over the accounting for forward loss contracts and Osprey identified a material weakness over the accounting for a significant and unusual transaction related to the warrants Osprey issued in connection with Osprey’s initial public offering.

As of December 31, 2021, we have remediated these material weaknesses and we did not identify any additional material weaknesses in our controls over financial reporting as of and for the year ended December 31, 2021.

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 we are unable to successfully remediate any future 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 Class A common stock could be materially and adversely affected.

Similarly, if our remedial measures are insufficient to address any future 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 of the Sarbanes-Oxley Act of 2002 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;

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

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

As of December 31, 2021, we had $44.9 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 our merger with Osprey Technology Acquisition Corp.

constitutes an “ownership change” for purposes of Section 382 and Section 383 of the Code.

We depend on computing infrastructure operated by Amazon Web Services (“AWS”), Microsoft, and other third parties, including other SaaS companies, 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.

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The market for our products and services is characterized by rapid technological change and evolving industry standards and, as we try to define a new market for first-to-know insights, the need to evolve is even more acute.

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.

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 revenue from providing products and services 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.

arrangements.

These expenditures could divert our attention and resources from other projects, and we 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.

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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 have in the past procured, and may in the future procure, launch insurance, but such insurance policies are subject to the typical terms and conditions regarding, among other things, cancellation and scope of coverage.

We do not maintain third-party liability insurance with respect to our satellites once in-orbit.

We will evaluate risks associated with our satellite business and strive to ensure that such risks are appropriately insured.

In some instances, we may not maintain launch or in-orbit insurance coverage for our satellites.

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.

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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 operate our business could result in a material decrease in our revenue 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.

Any disruption of our ability to operate our business could result in a material decrease in our revenue 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.

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.

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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.

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.

The occurrence of software errors 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.

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.

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A significant component of our growth strategy is to increase the cross-selling of our products and services 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.

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.

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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 on our customer support team, especially as we expand our hours of operation.

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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.

We are obligated to develop and maintain proper and effective internal control over financial reporting.

If we identify material weaknesses in the future, or otherwise 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 our company and the value of our Class A common stock.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f).

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

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;

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

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

As of December 31, 2022, we had $53.1 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 sufficient 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 to 80% of taxable income.

Limitations under state law may differ.

In addition, our 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.

Similar rules may apply under state tax laws.

We completed our analysis of historical “ownership changes” for purposes of Section 382 and Section 383 of the Code and believe an immaterial portion of our cumulative federal net operating loss carryforwards will expire unutilized.

Risks Related to Our Government Contracts

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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.

These government contracts customarily contain provisions that give the government substantial, and sometime unilateral, rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors.

The 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 provide for audits and reviews of contract procurement, performance and administration.

government contracts must be complied with in order for the contract to be awarded and provides for government 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.

government agencies include provisions that allow the government to unilaterally terminate or modify contracts for its 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.

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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;

• Terminate existing contracts for convenience with no prior notice;

• Reduce orders under or otherwise modify contracts unilaterally;

• 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;

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• 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.

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

• 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;

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

• requirements to procure certain materials, components and parts from specific countries or 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.

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If our reputation or relationship with U.S.

government agencies were impaired, or if the U.S.

government agencies were impaired, or if

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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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.

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, re-evaluation and new award of the contract to another bidder.

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.

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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.

• Certain of our contracts with U.S.

• A large portion of our contracts are 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 necessary to sell commercial items, there could be a material impact on our business and operating results.

government 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 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.

Such changes could also trigger contract coverage under the Federal 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.

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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.

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.

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• We may need to invest additional capital to build out higher level security infrastructure/obtain certain security accreditations to win contracts, and maintain them, 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 or maintain existing contracts that contain such contractual or regulatory security requirements.

Failure to invest in such infrastructure may limit our ability to obtain new contracts

with defense programs or maintain existing contracts that contain such contractual or regulatory security requirements.

If we win contracts that require a higher level of security infrastructure/accreditation status and do not maintain such standards/accreditations, then it could result in contract termination that has a material adverse effect on our business, financial condition and results of operations, and reputational harm.

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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 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.

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Our current primary research and development objectives focus on the development of our satellites and our products and services.

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.

We have limited operational experience with our 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.

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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.

For example, we have experienced the loss of a satellite that never went into commercial operations as a result of an anomaly, as well as a launch failure in 2021 in which we lost two satellites before getting to orbit.

Since the launch anomaly in 2021, we have since had three successful launches.

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 revenue.

For example, we have previously experienced the loss of a satellite that never went into commercial operations as a result of an anomaly, as well as a launch failure in which we lost two satellites before getting to orbit.

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.

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.

Certain of our satellites are nearing the end of their expected operational lives.

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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 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.

For example, on May 15, 2021, a rocket carrying two of our satellites suffered a failure during flight, resulting in the loss of both satellites and, an impairment loss of $18.4 million.

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.

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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.

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 reduce the performance of, or completely destroy, the affected satellite.

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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.

During any period of time in which a satellite is not fully operational, we may lose most or all of the revenue that would have otherwise 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.

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In 2018, we formed LeoStella, a joint venture owned 50-50 between us and Thales Alenia Space US Investment LLC (“Thales”).

LeoStella currently manufactures our Gen-2 satellites, is assisting with the design of our 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.

LeoStella currently manufactures our Gen-2 and Gen-3 satellites, is assisting with the design of our 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.

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We are dependent on a limited number of vendors to provide certain key raw materials, supplied components, products or services, including launch transport and launch services.

The inability of these key vendors to meet our needs could have a material adverse effect on our business 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.

The inability of these key vendors to meet our needs could have a material adverse effect on our business, financial condition, and results of operations.

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.

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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.

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 other 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.

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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.

employees and consultants.

However, these agreements can be breached and, if they are, there may not be an adequate remedy available to us.

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An infringement or misappropriation could harm any competitive advantage we currently derive or may derive from our proprietary rights.

Risks Related to Our Indebtedness and Alternative Financings

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.

Risks Related to Our Indebtedness and Financings

Our business is capital intensive, and we may not be able to adequately finance our capital needs through operations, or by raising capital, 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 and cash generated from our existing and future operations supplemented, where necessary or advantageous, by available credit.

We currently expect that our ongoing liquidity requirements for sustaining our operations will be satisfied by cash on hand, cash generated from our existing and future operations and by raising additional capital by equity financings, 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.

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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.

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.

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.

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As of December 31, 2022, we were in compliance with all covenants and restrictions associated with our existing loan agreement.

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

Changes in our credit ratings, adverse macroeconomic conditions or adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity and default, may negatively affect our liquidity, increase borrowing costs and limit 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.

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We may also be subject to restrictive covenants that would reduce our flexibility.

Additionally, events involving limited liquidity or defaults in the financial services industry, or concerns or rumors about events of this kind, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

We subsequently diversified our cash and cash equivalent holdings across multiple banks.

Although our ongoing cash management strategy is to maintain deposit accounts at multiple financial institutions, there can be no assurance that this strategy will be successful.

If other banks and financial institutions enter receivership or become insolvent in the future, our ability to access our cash and cash equivalents may be threatened and could have a material adverse effect on our business and financial condition.

Also, a recent ruling by the Delaware Court of Chancery introduced uncertainty as to whether Section 242(b)(2) of the Delaware General Corporation Law (“DGCL”) would have required a separate vote of the holders of a majority of Osprey’s then-outstanding shares of Class A common stock to approve an amendment to our certificate of incorporation in connection with the merger.

The Company's September 8, 2021 charter amendment received a majority of affirmative votes of each class of outstanding common stock, and the Company continues to believe that such vote is sufficient to approve an amendment of the Company's charter;

however in order to resolve any potential uncertainty, we filed a petition under Section 205 of the DGCL with the Delaware Court of Chancery.

If we are not successful in the Section 205 proceeding, our ability to pursue equity or debt financing transactions could be impacted, which may limit our financing options.

Risks Related to Our Regulatory, Environmental and Legal Issues

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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.

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.

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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.

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, both the FCC and a bipartisan group of legislators are championing rules related to to the mitigation of orbital debris, which could affect us and our operations.

For example, the FCC recently adopted rules requiring the deorbiting of certain satellites – including those maintained by BlackSky – after five years to mitigate the risk of orbital debris.

The FCC continues to consider the imposition of additional rules and reporting obligations that could affect us and our operations;

in addition, some legislators have discussed vesting additional authority in NASA in certain areas related to 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.

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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, and 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.

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.

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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.

There can be no assurance that the FCC or NOAA will renew the licenses we hold, modify the licenses we currently hold, 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 in a timely manner, 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.

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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.

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.

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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.

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).

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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.

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.

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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.

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.

Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

We are and will be generally subject to tax laws, regulations, and policies of several taxing jurisdictions.

Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates and otherwise adversely affect our tax positions and/or our tax liabilities.

For example, in August 2022 the United States enacted a 1% excise tax on stock buybacks, which could affect our common stock repurchases, and a 15% alternative minimum tax on adjusted financial statement income as part of the Inflation Reduction Act of 2022.

Further, many countries, and organizations such as the Organization for Economic Cooperation and Development, have proposed implementing changes to existing tax laws, including a proposed 15% global minimum tax.

Any of these developments or changes in federal, state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results.

There can be no assurance that our effective tax rates, tax payments, or tax credits and incentives will not be adversely affected by these or other developments or changes in law.

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

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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 both in the United States (such as the California Consumer Privacy Act, the California Privacy Rights Act, the Virginia Consumer Data Protection Act, and the Colorado Privacy Act) and abroad (such as the European Union’s General Data Protection Regulation or the United Kingdom’s version of the GDPR).These statutes and any other state, federal, or foreign legislation that is passed could increase our potential liability, add layers of complexity to compliance in the markets in which we operate, increase our compliance costs and adversely affect our business.

Any actual or perceived failure to comply with applicable data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, 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.

states, including legislation enacted in Virginia, Colorado, Utah and Connecticut) and abroad (such as the European Union’s General Data Protection Regulation or the United Kingdom’s version of the GDPR).These statutes and any other state, federal, or foreign legislation that is passed could increase our potential liability, add layers of complexity to compliance in the markets in which we operate, increase our compliance costs and adversely affect our business.

Any actual or perceived failure to comply with applicable laws or regulations relating to privacy, data protection, or information security, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, restrictions upon our operations, 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.

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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.

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.

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 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.

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

In October 2019, BlackSky Holdings, Inc.

(which is our subsidiary) 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 Annual Report on Form 10-K.

The Right of First Offer Agreement may delay our ability to undertake a sale of BlackSky Holdings, Inc.

and, since BlackSky Holdings, Inc.

is our main operating subsidiary, the existence of the Right of First Offer Agreement could limit the price that investors might be willing to pay in the future for our shares of Class A common stock.

The Right of First Offer Agreement could also deter potential acquirers of BlackSky Holdings, Inc.

We could be subject to future liabilities under 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.

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

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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.

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.

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Any of these events could adversely affect our business, financial condition, results of operations, and growth prospects.

Risks Related to Other General Risks

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 revenue, 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 revenue.

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;

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.

Future acquisitions may adversely affect our financial condition.

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 pursuing 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 any acquisitions and strategic alliance 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 Generally Accepted Accounting Principles in the United States of America (“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 revenue 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 revenue 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 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 our 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.

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, such as the ongoing geopolitical tensions related to Russia’s actions in Ukraine, resulting sanctions imposed by the United States and other countries, and retaliatory actions taken by Russia in response to such sanctions, 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.

Additional Risks Relating to Ownership of Our Class A Common Stock

Risks Relating to Ownership of Our Class A Common Stock

Sales of a substantial number of shares of our Class A common stock in the public market could cause our stock price to fall.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, our stock price could decline.

Pursuant to our resale registration statement on Form S-3

declared effective by the SEC in October 2022, certain stockholders may sell shares of our Class A common stock, subject to applicable limitations under Rule 144.

Further, in March 2023 we completed a private placement, issuing an aggregate of 16,403,677 shares of our Class A common stock and accompanying warrants to purchase the same number of shares.

We are obligated to file a resale registration statement with the SEC to register the 16,403,677 shares sold in the private placement, which shares will be eligible for resale following effectiveness of the resale registration statement, subject to applicable resale restrictions.

Actual sales of our Class A common stock, or the perception that these sales might occur, pursuant to current or future resale registration statements may adversely affect the prevailing market prices of our securities.

If we sell shares of our Class A common stock in future financings, or existing warrant holders exercise warrants, you may experience immediate dilution and, as a result, our stock price may decline.

We may from time to time issue additional shares of Class A common stock and as a result our stockholders would experience immediate dilution.

In addition, as opportunities present themselves, we may enter into financing arrangements, including the issuance of debt securities, preferred stock or Class A common stock, including Class A common stock at a discount to prevailing market prices.

For example, our shelf registration statement on Form S-3, declared effective in December 2022, provides for aggregate offerings of up to $200.0 million of our securities, inclusive of up to $75.0 million of shares of our Class A common stock through an at-the-market offering program.

In addition, our private placement in March 2023 included the sale of warrants to purchase shares of our Class A common stock.

As of March 20, 2023, the number of shares of our common stock outstanding was 138,734,688.

This number does not include shares of our Class A common stock issuable upon the exercise of warrants.

Until exercised, the shares issuable upon the exercise of warrants are not included in the number of our outstanding shares and the dilutive impact of such warrant exercises may be difficult to compute.

If we issue Class A common stock, or securities convertible into our Class A common stock, in future financings, or if any of our outstanding warrants are exercised, our existing stockholders will experience dilution and our stock price may decline.

Intelsat has a right of first offer with respect to the sale of BlackSky Holdings, Inc., our main operating subsidiary, which might discourage, delay or prevent a sale of our operating subsidiary, and therefore, depress the trading price of our Class A common stock.

In October 2019, our subsidiary BlackSky Holdings, Inc.

("BlackSky Holdings") 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 is obligated to provide written notice of any such proposed sale to Intelsat and Intelsat will have the opportunity to submit a competing offer to purchase BlackSky Holdings (an “Intelsat Offer”).

Pursuant to the terms of the Right of First Offer Agreement, if BlackSky Holdings does not accept an Intelsat Offer, BlackSky Holdings would be permitted to negotiate and enter into an alternative sale transaction, as long as the total enterprise value for BlackSky Holdings and its subsidiaries is greater than 110% of the value implied by any Intelsat Offer.

The Right of First Offer Agreement expires on October 31, 2026.

The Right of First Offer Agreement may negatively impact our ability to undertake a sale of BlackSky Holdings and could deter potential acquirers of BlackSky Technology Inc., which could therefore limit the price that investors are willing to pay for shares of our Class A common stock.

Our stock price may fluctuate significantly and you could lose all or part of your investment as a result.

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Further, as a smaller reporting company we may take advantage of certain reduced disclosure requirements, such as, among others, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which the market value of our common stock held by non-affiliates is equal to or exceeds $250,000,000 as of the end of that fiscal year’s second quarter, or, if the market value of our common stock held by non-affiliates is less than $700,000,000 as of the end of that fiscal year’s second quarter, we will remain a smaller reporting company until our annual revenue is equal to or exceeds $100,000,000.

We will remain a smaller reporting company until the last day of the fiscal year in which the market value of our common stock held by non-affiliates is equal to or exceeds $250 million as of the end of that fiscal year’s second quarter, or, if the market value of our common stock held by non-affiliates is less than $700 million as of the end of that fiscal year’s second quarter, we will remain a smaller reporting company until our annual revenue is equal to or exceeds $100 million.

To the extent we take advantage of reduced disclosure requirements available to smaller reporting companies, a comparison of our financial statements to those of other public companies may be difficult.

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The trading market for our Class A common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business.

We have no influence over these analysts, some of whom may have limited expertise with our business model and operations.

We have no influence over these analysts, some of whom may

have limited expertise with our business model and operations.

Furthermore, if one or more of the analysts who do cover us downgrade our stock or industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline.

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

We have broad discretion in the use of our assets and may not use them effectively.

We cannot specify with certainty the particular uses of our assets, including cash that s we received from our merger.

Our management will have broad discretion in the use of our assets.

Our management may spend a portion or all of BlackSky's cash or utilize BlackSky's assets in ways that our stockholders may not desire or that may not yield a favorable return.

The failure by our management to apply these funds effectively could harm our business financial condition, results of operations and prospects.

Pending their use, we may invest our cash in a manner that does not produce income or that loses value.

There can be no assurance that we will be able to comply with the continued listing standards of the New York Stock Exchange.

If the NYSE delists our shares of Class A common stock from trading on its exchange for failure to meet NYSE’s listing standards, such as effective controls over financial reporting, we and our stockholders could face significant material adverse consequences including:

• a limited availability of market quotations for our securities;

• reduced liquidity for our securities;

• a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

• a limited amount of analyst coverage;

• a decreased ability to issue additional securities or obtain additional financing in the future.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

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As a result, our 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 us to take other

corporate actions you desire.

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 us to take other corporate actions you desire.

See “ Description of Securities ” filed as an Exhibit to this Annual Report on Form 10-K for more information.

Our amended and restated certificate of incorporation designates 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 our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, any (1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders, (3) action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the Delaware General Corporation Law (“DGCL”) or our amended and restated certificate of incorporation or our amended and restated bylaws (each, as in effect from time to time) or (4) action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents 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 we consent 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 our securities, asserting a cause of action arising under the Securities Act.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, any (1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders, (3) action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws (each, as in effect from time to time) or (4) action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents 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 we consent 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 our securities, asserting a cause of action arising

under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to consent to the provisions of our amended and restated certificate of incorporation described above.

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Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

General Risks

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.

We may in the future experience such misconduct, despite our various compliance programs.

monetary and non-monetary penalties;

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.

Contract accounting requires judgment relative to assessing risks, estimating contract revenue 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 revenue 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.

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.