What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-20 compared with 2023-03-23 · 406 added, 573 removed, 912 unchanged (52% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms.

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms.

Disclosure controls are also designed with the objective of reasonably ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting, (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting, (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

During the three months ended December 31, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408 of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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The consolidated financial statements and financial statement schedules of BlackSky required by Part II, Item 8, are included in Part IV of this report.

See Index to Consolidated Financial Statements and Financial Statement Schedules beginning on Page F-1.

See Index to Consolidated Financial Statements and Financial Statement Schedules beginning on Page 81 .

The documents listed below are incorporated by reference or are filed with this report, in each case as indicated therein.

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Description of Securities

4.6 Form of Warrant

8-K 001-39113 4.1 March 9, 2023

10.1 Private Placement Warrants Purchase Agreement, dated October 31, 2019, by and between Osprey Technology Acquisition Corp.

and Osprey Sponsor II, LLC

8-K 001-39113 10.4 November 5, 2019

March 23, 2023

F orm of Warrant

8-K 001-39113 4.1

March 9, 2023

BlackSky Technology Inc.

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Outside Director Compensation Policy

8-K 001-39113 10.13 September 15, 2021

BlackSky Technology Inc.

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S-4 333-256103 10.10 May 13, 2021

10.7 Sponsor Support Agreement, dated as of February 17, 2021

8-K 001-39113 10.3 February 22, 2021

10.8 Form of Stockholder Support Agreement

424(b)(3) 333-256103 Annex H August 11, 2021

Sponsor Support Agreement, dated as of February 17, 2021 by and among BlackSky Holdings, Inc., Osprey Sponsor II, LLC, and Osprey Technology Acquisition Corp.

001-39113 10.3 February 22, 2021

Form of Registration Rights Agreement

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8-K 001-39113 10.1 February 22, 2021

10.11+ Executive Employment Agreement for Brian O’Toole

S-4/A 333-256103 10.15 June 25, 2021

Offer Letter from BlackSky Holdings Inc.

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Offer Letter from BlackSky Holdings Inc.

to Johan Broekhuysen, dated August 18, 2021

8-K 001-39113 10.2 August 18, 2021

10.14+ Offer Letter from BlackSky Holdings Inc.

to Henry Dubois, dated August 18, 2021

8-K 001-39113 10.3 August 18, 2021

Amendment to Offer Letter from BlackSky Holdings Inc.

to Henry Dubois, dated June 10, 2022

10-Q 001-39113 10.2 August 10, 2022

Offer Letter from BlackSky Holdings Inc.

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Filing Date Filed or Furnished Herewith

10.16+ Transition and Consulting Agreement from BlackSky Holdings Inc.

to Brian Daum, dated August 18, 2021

8-K 001-39113 10.5 August 18, 2021

Amended and Restated Loan and Security Agreement, dated October 31, 2019, by and between Intelsat Jackson Holdings SA, Seahawk SPV Investment LLC, Spaceflight Industries, Inc.

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S-4/A 333-256103 10.20 June 25, 2021

10.21 Palantir Subscription Agreement, dated as of September 13, 2021, by and between BlackSky Holdings, Inc.

and Palantir Technologies, Inc.

8-K 001-39113 99.2 September 1, 2021

10.22 Sponsor Support Agreement, dated as of February 17, 2021, by and among BlackSky Holdings, Inc., Osprey Sponsor II, LLC, and Osprey Technology Acquisition Corp.

8-K 001-39113 10.3 February 22, 2021

First Amendment, Consent and Joinder to Amended and Restated Loan and Security Agreement, dated as of September 9, 2021, by and among BlackSky Holdings, Inc.

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8-K 001-39113 10.5 September 15, 2021

10.24 BlackSky HQ Lease Agreement

Second Amendment to Amended and Restated Loan and Security Agreement, dated as of May 9, 2023 by and among BlackSky Technology Inc.

and the subsidiaries named therein, Intelsat Jackson Holdings SA and Seahawk SPV Investment LLC

BlackSky HQ Lease Agreement, dated February 28, 2019, by and between Northridge Office Building LLC and Spaceflight Industries, Inc.

S-1 333-260458 10.25 October 25, 2021

BlackSky HQ Lease Agreement, dated November 20, 2023, by and between 2411 Dulles Corner Metro Owner LLC and BlackSky Holdings, Inc.

BlackSky Technology Inc.

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10-K 001-39113 10.34 March 31, 2022

10.34+ Separation Agreement and Release, by and between Johan Broekhuysen and BlackSky Technology Inc., dated June 14, 2022

10-Q 001-39113 10.3 August 10, 2022

10.35+ Amendment to Offer Letter from BlackSky Holdings Inc.

to Henry Dubois, dated June 10, 2022

10-Q 001-39113 10.2 August 10, 2022

NRO Contract, dated May 23, 2022, by and between the National Reconnaissance Office and BlackSky Technology Inc.

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8-K 001-39113 1.1 December 15, 2022

Form of Registration Rights Agreement, dated as of March 6, 2023 by and among the Company and the Investors

001-39113 10.2

March 9, 2023

Production Work Order 003, dated November 13, 2023, by and between BlackSky Global LLC and LeoStella LLC

Exhibit Description Form SEC File No.

Filing Date Filed or Furnished Herewith

10.38 Form of Securities Purchase Agreement, dated as of March 6, 2023 by and among the Company and the Investors

8-K 001-39113 10.1 March 9, 2023

10.39 Form of Registration Rights Agreement, dated as of March 6, 2023 by and among the Company and the Investors

8-K 001-39113 10.2 March 9, 2023

16.1 Letter from Marcum LLP to the SEC, dated September 14, 2021

8-K 001-39113 16.1 September 15, 2021

Subordinated Loan and Security Agreement, dated November 3, 2023, by and between BlackSky Technology Inc.

and the subsidiaries named therein and Rocket Lab USA, Inc.

21.1 List of Subsidiaries

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Certification of the Company’s Chief Financial Officer, Henry Dubois, pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

C ompensation Recovery Policy

101.INS Inline XBRL Instance Document X

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* The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

** Certain schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

A copy of any omitted schedule will be furnished supplementally to the SEC upon request;

provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished.

FORM 10-K SUMMARY

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/s/ Tracy Ward

Vice President and Controller

Senior Vice President and Controller

(Principal Accounting Officer)

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/s/ Tracy Ward

Vice President and Controller (Principal Accounting Officer)

Senior Vice President and Controller (Principal Accounting Officer)

March 19, 2024

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm F-2

Report of Independent Registered Public Accounting Firm 82

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss F-4

Consolidated Statements of Changes in Stockholders' Equity (Deficit) F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-8

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of BlackSky Technology Inc.

To the shareholders and the Board of Directors of BlackSky Technology Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of BlackSky Technology Inc.

(the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

(the "Company") as of December 31, 2023 and 2022 , the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 , and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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Total current liabilities 27,491 26,927

Liability for estimated contract losses 714 6,054

Long-term contract liabilities 109 568

Operating lease liabilities 3,041 3,132

Derivative liabilities 15,149 5,113

Long-term debt - net of current portion 76,219 71,408

Long-term debt 83,502 76,219

Other liabilities 1,724 825

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Depreciation and amortization 43,431 35,661

Satellite impairment loss — 18,407

Operating loss ( 55,980 ) ( 86,549 )

Gain on debt extinguishment — 4,059

Gain on derivatives 7,679 11,812

Income on equity method investment 2,087 1,027

Income on equity method investments 4,165 2,087

Interest income 2,063 1,116

Interest expense ( 9,306 ) ( 5,426 )

Other income (expense), net 2,081 ( 147,656 )

Other (expense) income, net ( 1,807 ) 2,081

Loss before income taxes ( 53,186 ) ( 74,879 )

Income tax (expense) benefit — —

Income tax expense ( 673 ) —

Loss from continuing operations ( 53,859 ) ( 74,879 )

Discontinued operations:

Gain (loss) from discontinued operations 707 ( 1,650 )

Gain from discontinued operations — 707

Income tax (expense) benefit — —

Gain (loss) from discontinued operations, net of income taxes 707 ( 1,650 )

Gain from discontinued operations, net of income taxes — 707

Net loss ( 53,859 ) ( 74,172 )

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Loss from continuing operations $ ( 0.40 ) $ ( 0.64 )

Gain (loss) from discontinued operations, net of income taxes 0.01 ( 0.02 )

Gain from discontinued operations, net of income taxes — 0.01

Net loss per share of common stock $ ( 0.40 ) $ ( 0.63 )

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BLACKSKY TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

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Issuance of common stock upon vesting of restricted stock units 4,029 — — — —

Issuance of common stock, net of equity issuance costs 19,866 2 14,971 — 14,973

Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options ( 1,007 ) — ( 1,410 ) — ( 1,410 )

Repurchase and retirement of common stock ( 15 ) — — ( 30 ) ( 30 )

Net loss — — — ( 53,859 ) ( 53,859 )

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Year Ended December 31, 2022

Common Stock Additional Paid-In Accumulated Total Stockholders' Equity

Shares Amount Capital Deficit (Deficit)

Balance as of January 1, 2021, as adjusted 34,692 $ 3 $ 191,168 $ ( 223,984 ) $ ( 32,813 )

Common Stock Additional Paid-In Accumulated Total Stockholders'

Shares Amount Capital Deficit Equity

Balance as of January 1, 2022 114,452 $ 11 $ 650,518 $ ( 470,909 ) $ 179,620

Stock-based compensation — — 21,477 — 21,477

Issuance of common stock due to Bridge Notes 20,343 2 106,351 — 106,353

Issuance of common stock upon exercise of stock options 709 — 47 — 47

Issuance of common stock upon exercise of warrants, inclusive of preferred stock warrants exercised then converted to common stock in connection with the merger 3,251 — 2,289 — 2,289

Issuance of common stock upon vesting of restricted stock awards 200 — — — —

Issuance of common stock upon vesting of restricted stock units 6,728 1 — — 1

Conversion of bridge notes and accrued interest into common stock 7,736 1 77,096 — 77,097

Exercise of warrants in connection with merger 11,187 1 38,328 — 38,329

Issuance of sponsor earn-out shares — — ( 17,659 ) — ( 17,659 )

Reverse recapitalization, net (Note 4) 34,584 4 202,195 ( 1,282 ) 200,917

Issuance of common stock upon settlement of promissory notes 958 — 8,038 — 8,038

Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options ( 2,566 ) — ( 5,069 ) — ( 5,069 )

Repurchase and retirement of common stock ( 15 ) — — ( 30 ) ( 30 )

Net loss — — — ( 74,172 ) ( 74,172 )

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Net loss $ ( 53,859 ) $ ( 74,172 )

Gain (loss) from discontinued operations, net of income taxes 707 ( 1,650 )

Gain from discontinued operations, net of income taxes — 707

Loss from continuing operations ( 53,859 ) ( 74,879 )

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Depreciation and amortization expense 43,431 35,661

Transfer of satellite procurement work in process to engineering service costs 4,854 —

Operating lease right of use assets amortization 883 1,640

Gain on debt extinguishment — ( 4,059 )

Bad debt (recovery) expense ( 22 ) 58

Bad debt expense (recovery) 179 ( 22 )

Stock-based compensation expense 10,862 20,025

Loss on issuance of 2021 convertible Bridge Notes — 99,669

Issuance costs for derivative liabilities and debt carried at fair value — 48,009

Amortization of debt discount and issuance costs 1,805 1,807

Income on equity method investment ( 4,165 ) ( 2,087 )

Loss on disposal of property and equipment 127 —

Loss on impairment of assets 81 —

Gain on derivatives ( 7,679 ) ( 11,812 )

Satellite impairment loss — 18,407

Interest income ( 656 ) —

Amortization of debt issuance costs and non-cash interest expense 7,967 1,805

Non-cash interest income ( 796 ) ( 656 )

Other, net — 106

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Contract liabilities - current and long-term ( 3,053 ) ( 4,942 )

Liability for estimated contract losses ( 5,340 ) ( 198 )

Other liabilities ( 538 ) ( 2,985 )

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Satellite procurement work in process ( 28,441 ) ( 32,385 )

Purchase of short-term investments ( 50,343 ) —

Purchases of short-term investments ( 40,078 ) ( 50,343 )

Proceeds from maturities of short-term investments 59,110 13,000

Purchase of domain name — ( 7 )

Proceeds from equity method investment 804 302

Proceeds from sale of equity method investment 9,450 —

Proceeds from sale of property and equipment 22 —

Distributions from equity method investment — 804

Cash flows used in investing activities - continuing operations ( 15,211 ) ( 80,601 )

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Cash flows from financing activities:

Proceeds from recapitalization transaction, net of payment of equity issuance costs — 244,880

Payments of transaction costs related to Sponsor Shares — ( 291 )

Proceeds from issuance of debt — 58,573

Proceeds from equity issuances, net of equity issuance costs 32,733 —

Proceeds from options exercised 10 47

Proceeds from warrants exercised — 163

Capital lease payments — ( 2 )

Debt payments — ( 22,198 )

Payments for deferred offering costs ( 31 ) —

Payments for debt issuance costs — ( 6,238 )

Withholding tax payments on vesting of restricted stock units ( 1,410 ) ( 5,069 )

Net cash (used in) provided by financing activities ( 5,053 ) 275,017

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 131,088 ) 157,531

Payments of transaction costs for debt modification ( 1,311 ) —

Payments of transaction costs related to derivative liabilities ( 905 ) —

Payments for deferred financing costs ( 67 ) —

Payments for deferred offering costs — ( 31 )

Net cash provided by (used in) financing activities 29,050 ( 5,053 )

Net decrease in cash, cash equivalents, and restricted cash ( 3,582 ) ( 131,088 )

Cash, cash equivalents, and restricted cash – beginning of year 37,016 168,104

Cash, cash equivalents, and restricted cash – end of period $ 37,016 $ 168,104

Cash, cash equivalents, and restricted cash – end of year $ 33,434 $ 37,016

See notes to consolidated financial statements

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Cash paid for interest $ 989 $ 5

Cash paid for income taxes 460 —

Supplemental disclosures of non-cash financing and investing information:

Property and equipment additions accrued but not paid $ 6,455 $ 5,222

Property and equipment additions accrued but not yet paid $ 10,420 $ 6,455

Increase of debt principal for paid-in-kind interest 7,446 3,006

Transfer of satellite procurement work in process to engineering service costs 4,854 —

Accretion of short-term investments' discounts and premiums 777 640

Capitalized stock-based compensation 709 1,470

Capitalized interest for property and equipment placed into service 220 220

Accretion of short-term investments' discounts and premiums 640 —

Credits from LeoStella applied to satellite procurement costs 125 —

Satellite procurement costs included in settlement with LeoStella 36 —

Equity issuance costs accrued but not yet paid 13 491

Deferred financing costs accrued but not yet paid 4 —

Repurchase and retirement of common stock — 30

Equity issuance costs accrued but not paid 491 —

Issuance of common stock due to Bridge Notes, net of issuance costs — 106,353

Issuance of common stock warrants due to Bridge Notes — 18,800

Issuance of common stock upon settlement of promissory notes — 8,038

Net exercise of common stock warrants — 210

Net exercise of common stock warrants in connection with merger — 1,324

Conversion of Bridge Notes — 77,097

Net exercise of Bridge Note warrants — 38,329

Contingent liability for working capital adjustment and use taxes to M&Y Space Co.

Increase of debt principal for paid-in-kind interest 3,006 2,889

See notes to consolidated financial statements

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Organization and Business

On September 9, 2021, Osprey Technology Acquisition Corp.

(“Osprey”) consummated the previously announced merger (the “Merger”) with BlackSky Holdings, Inc.

(f/k/a Spaceflight Industries, Inc.), a Delaware corporation (“Legacy BlackSky”), pursuant to the agreement and plan of merger, dated February 17, 2021, by and among Osprey, Osprey Technology Merger Sub, Inc., a direct, wholly owned subsidiary of Osprey, and Legacy BlackSky.

Immediately following the Merger, Osprey changed its name to BlackSky Technology Inc.

(“BlackSky” or the “Company”).

Legacy BlackSky survived the Merger and is now a wholly owned subsidiary of BlackSky.

As a special purpose acquisition corporation, Osprey had no pre-Merger operations other than to identify and consummate a merger.

Therefore, BlackSky’s operations post-Merger are attributable to those of Legacy BlackSky and its subsidiaries, and references to “BlackSky” or the “Company” should be read to include BlackSky’s wholly owned subsidiaries.

References in this report to Company actions, assets/liabilities, or contracts may be references to actions taken, assets/liabilities held, or contracts entered into by one or more current Company subsidiaries;

however, the Company has distinguished between actions taken by Legacy BlackSky or Osprey for certain time based, historical transactions.

BlackSky, headquartered in Herndon, Virginia, is a leading provider of real-time geospatial intelligence.

The Company owns and operates one of the industry's leading high-performance low earth orbit small satellite constellations.

Our constellation is optimized to cost-efficiently capture imagery at high revisit rates where and when our customers need it.

BlackSky’s Spectra AI software platform processes millions of observations a day from our proprietary satellite constellation and from multiple external data sources including imaging, radar and radio frequency satellites, environmental sensors, asset tracking sensors, Internet of Things (“IoT”) connected devices, internet-enabled narrative sources, and a variety of geotemporal data feeds.

Spectra AI employs advanced, proprietary artificial intelligence ("AI") and machine learning (“ML”) techniques to process, analyze, and transform these data feeds into alerts, information, and insights.

Customers can access Spectra AI’s data and analytics through easy-to-use web services or through platform application programming interfaces.

As of December 31, 2022, BlackSky had 14 satellites in commercial operation.

BlackSky Technology Inc.

(“BlackSky” or the “Company”), headquartered in Herndon, Virginia, is a space-based intelligence company that delivers real-time imagery, analytics and high-frequency monitoring.

The Company owns and operates an advanced purpose-built commercial, real-time intelligence system that combines the power of the BlackSky Spectra tasking and analytics software platform and the Company's proprietary high-resolution low earth orbit (“LEO”) small satellite constellation.

The constellation is optimized to cost-efficiently capture imagery at high revisit rates where and when customers need it.

The BlackSky Spectra software platform processes millions of observations a day by integrating data from the Company's proprietary satellite constellation and from other third-party sensors such as synthetic aperture radar and radio frequency satellites, millions of GPS-enabled terrestrial data sources and Internet of Things (“IoT”) connected devices.

Blacksky Spectra applies advanced, proprietary artificial intelligence ("AI") and machine learning (“ML”) techniques to process, analyze, and transform these raw feeds into actionable intelligence via alerts, information, and insights.

Customers can access Blacksky Spectra's data and analytics through easy-to-use web services or through platform application programming interfaces.

BlackSky has two primary operating subsidiaries, BlackSky Global LLC and BlackSky Geospatial Solutions, Inc.

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LeoStella is a vertically-integrated small satellite design and manufacturer based in Tukwila, Washington, from which the Company procures satellites to operate its business.

The Company accounts for LeoStella and X-Bow Launch Systems Inc.

(“X-Bow”), a space technology company specializing in additive manufacturing of solid rocket motors of which BlackSky owns less than 20 %, as equity method investments (Note 7).

The Company made two disclosures related to 2021 that were previously undisclosed.

The first relates to a supplemental cash flow disclosure on the paid-in-kind interest on a loan.

The second relates to payments made to Thales Alenia Space in the FN 22 – Related Party Transactions.

The Company believes both disclosures are immaterial to the 2021 consolidated financial statements.

The Company accounts for LeoStella as an equity method investment.

The Company's equity issuances during the year ended December 31, 2023 included a private placement and an at-the-market (“ATM”) offering.

In March 2023, the Company completed the private placement of 16.4 million shares of the Company’s Class A common stock and an equal number of corresponding warrants, for a purchase price of $ 1.79 per share and associated warrant.

The Company received $ 29.4 million in gross proceeds from the private placement.

The Company also sold 3.5 million common shares in its ATM offering, at an average purchase price per share of $ 1.45 , resulting in gross proceeds of $ 5.0 million.

The transaction costs for these equity issuances consisted of legal fees, accounting fees, placement agent fees, and other third-party costs directly related to the equity issuances.

During the year ended December 31, 2023, $ 1.8 million of transaction costs that had been incurred were recorded as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ equity and consolidated balance sheets, and as a reduction to the proceeds from the transaction in the consolidated statements of cash flows.

On May 9, 2023, BlackSky and its subsidiaries entered into the Second Amendment (the “Amendment”) to its Amended and Restated Loan and Security Agreement with Intelsat Jackson Holdings SA (“Intelsat”) and Seahawk SPV Investment LLC (“Seahawk”), dated October 31, 2019 and previously amended on September 9, 2021.

The Amendment amended the secured loan facility to, among other things, extend the maturity date of the loan, roll the cash interest payment due on May 1, 2023 into the outstanding principal to be paid on the maturity date, and increase the interest rate.

See Note 13 for more information regarding the Amendment.

Basis of Presentation and Summary of Significant Accounting Policies

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The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

In addition, the consolidated financial statements include the Company’s proportionate share of the earnings or losses of its equity method investments and a corresponding increase or decrease to its investment, with recorded losses

limited to the carrying value of the Company’s investment.

All intercompany transactions and balances have been eliminated upon consolidation.

For accounting purposes, the Merger constituted a reverse recapitalization (the “Reverse Recapitalization”), with Osprey treated as the “acquired” company and Legacy BlackSky as the “acquirer”.

The Reverse Recapitalization was treated as the equivalent of Legacy BlackSky issuing equity for the net assets of Osprey, accompanied by a recapitalization, rather than a business combination, which would have included goodwill and intangible assets.

Legacy BlackSky was considered the acquirer based on the facts and circumstances, including the following factors evaluated at the time of the Merger:

• Legacy BlackSky’s former stockholders held a majority ownership interest in BlackSky;

• Legacy BlackSky’s senior management team comprise senior management of BlackSky;

• Legacy BlackSky was able to designate all but one director to BlackSky’s initial board;

• Legacy BlackSky was the larger of the companies based on historical operating activity and employee base;

• Legacy BlackSky’s operations comprise the ongoing operations of BlackSky.

Accordingly, all historical financial information presented in these consolidated financial statements represents the accounts of Legacy BlackSky and its wholly owned subsidiaries “as if” Legacy BlackSky is the predecessor and legal successor.

The historical operations of Legacy BlackSky are deemed to be those of the Company.

Thus, the financial statements included in this report reflect (i) the historical operating results of Legacy BlackSky prior to the Merger;

(ii) the combined results of Osprey and Legacy BlackSky following the Merger;

(iii) the assets and liabilities of Legacy BlackSky at their historical carrying value;

and (iv) the Company’s equity structure for all periods presented.

Effective January 1, 2022, the Company reorganized its captions on the consolidated statements of operations and comprehensive loss to better align the Company’s broad portfolio.

As a result, for the year ended December 31, 2021, the amounts presented to reflect the impact of the reorganization have been recasted.

This resulted in a $ 9.7 million reclassification between imagery & software analytical services revenue and professional & engineering services revenue and an $ 8.5 million reclassification between imagery & software analytical service costs, excluding depreciation and amortization and professional & engineering service costs, excluding depreciation and amortization in the Company's consolidated statements of operations and comprehensive loss.

Effective January 1, 2022, we adopted Accounting Standards Codification (ASC) Topic 842, " Leases" ("ASC 842") (Note 3).

The adoption of this standard is reflected in the amounts and disclosures set forth in this Form 10-K.

The Company’s consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities, including derivative financial instruments, which are stated at fair value.

The Company also incurred debt, which was also stated at fair value and subsequently converted to equity in the Merger.

Unless otherwise indicated, amounts presented in the Notes pertain to the Company’s continuing operations.

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(ii) provide certain of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd Frank Wall Street Reform and Consumer Protection Act;

(iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);

and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

(iii) comply with the requirement in Public Company Accounting Oversight Board Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, to communicate critical audit matters in the auditor’s report;

(iv) comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

Use of Estimates

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Actual results could materially differ from these estimates.

Significant estimates made by the Company include, but are not limited to, revenue and associated cost recognition, the collectability of accounts receivable, the recoverability and useful lives of property and equipment, the valuation of equity warrants and warrant liabilities, fair value estimates, the recoverability of goodwill and intangible assets, the provision for income taxes, and stock-based compensation.

Segment Information

The Company’s Chief Operating Decision Maker (as defined under GAAP), who is the Company’s Chief Executive Officer, has determined the allocation of resources and assessed performance based upon the consolidated results of the Company.

Accordingly, the Company is currently deemed to be comprised of only one operating segment and one reportable segment.

This segment, which comprises the continuing operations of the Company’s single operating and reportable segment, provides geospatial intelligence, imagery and related data analytic products and services, and mission systems that include the development, integration, and operation of satellite and ground systems to government and commercial customers.

Cash and Cash Equivalents

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Accounts receivable are customer obligations due to the Company under normal trade terms.

The majority of the Company's sales are with U.S.

federal government and agencies, which limits uncollectible accounts receivable.

The majority of the Company's sales are with domestic and international government and agencies, which limits uncollectible accounts receivable.

The Company performs continuing credit evaluations on each customer’s financial condition and reviews accounts receivable on a periodic basis to determine if any accounts receivable will potentially be uncollectible.

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After all attempts to collect an accounts receivable balance have failed, the accounts receivable balance is written off against the allowance for doubtful accounts.

The Company assessed all existing accounts receivable and recorded an allowance for doubtful accounts of $ 0 and $ 39 thousand as of December 31, 2022 and 2021, respectively.

The Company assessed all existing accounts receivable and recorded an allowance for doubtful accounts of $ 151 thousand and $ 0 as of December 31, 2023 and 2022, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses are advance payments made in the ordinary course of business and are amortized on a straight-line basis over the period of benefit.

Other current assets consist primarily of non-trade receivables.

In May 2022, we began investing a portion of our cash and cash equivalents in short-term investments, which generally consist of A-1, or higher, rated corporate debt and governmental securities.

Our investments are

classified as held-to-maturity and have a stated maturity date of one year or less from the balance sheet date.

Other current assets consist primarily of non-trade receivables and short-term deposits.

The Company invests in short-term investments, which generally consist of A-1, or higher, rated corporate debt and governmental securities.

The investments are classified as held-to-maturity and have a stated maturity date of one year or less from the balance sheet date.

Any investments with original maturities less than three months are considered cash equivalents.

As of December 31, 2022 and 2021, the Company’s short-term investments had a carrying value of $ 38.0 million and $ 0 , respectively, which represents amortized cost, and an aggregate fair value of $ 37.9 million and $ 0 , respectively.

The gross unrecognized holding losses as of December 31, 2022 and 2021 was $ 134 thousand and $ 0 , respectively;

there were not any gross unrecognized holding gains as of December 31, 2022 or 2021.

As of December 31, 2023 and 2022, the Company’s short-term investments had a carrying value of $ 19.7 million and $ 38.0 million, respectively, which represents amortized cost, and an aggregate fair value of $ 19.7 million and $ 37.9 million, respectively, which represents a Level 1 measurement based off of the fair value hierarchy.

The gross unrecognized holding gains as of December 31, 2023 and 2022 were $ 6 thousand and $ 0 , respectively;

the gross unrecognized holding losses as of December 31, 2023 and 2022 were $ 0 and $ 134 thousand, respectively.

Property and Equipment - net

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Office furniture and fixtures 5

Capitalized software

Leasehold improvements shorter of useful life or remaining lease term

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We regularly review our capitalized software projects for impairment.

The Company leases office space under various non-cancellable operating leases with varying lease expiration dates through 2033.

Several leases contain renewal options and termination options that were not reasonably certain to be exercised upon inception of the lease and are not included in the lease expiration dates.

We determine whether a contract is or contains a lease and whether the lease should be classified as an operating or finance lease at contract inception.

The Company determines if an arrangement is a lease at inception of the contract.

Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities, and long-term operating lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use underlying assets for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the leases.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company uses the implicit rate when readily determinable.

For leases where the rate is not determinable, the Company determines the incremental borrowing rate.

We do not recognize a ROU asset and a lease liability for leases with an initial term of 12 months or less;

we recognize lease expense for these leases on a straight-line basis over the lease term.

Many of the Company’s lease agreements contain incentives for tenant improvements.

For tenant improvement incentives received, if the incentive is determined to be a leasehold

improvement owned by the lessee, the Company generally records the incentives as a reduction to the ROU asset, which reduces rent expense over the lease term.

For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

Many of the Company’s lease arrangements contain multiple lease components, such as fixed rent payments and non-lease components, such as common-area maintenance ("CAM") costs.

The Company elected not to separate the lease and non-lease components for new and modified leases executed after the adoption date.

The Company's variable lease expense primarily consists of CAM expenses paid directly to lessors of real estate leases.

Finance leases are not material to our consolidated financial statements and the Company is not a lessor in any material arrangements.

We do not have any material restrictions or covenants in our lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

Goodwill, Intangible Assets - net, and Other Long-Lived Assets

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Goodwill is tested for impairment at the reporting unit level by first taking a qualitative approach to determine whether it is more likely than not that a reporting unit's fair value is less than its carrying value.

If the Company determines that it is more likely than not that a

reporting unit's fair value is less than its carrying amount, the Company compares the reporting unit’s carrying amount to the fair value of the reporting unit.

If the Company determines that it is more likely than not that a reporting unit's fair value is less than its carrying amount, the Company compares the reporting unit’s carrying amount to the fair value of the reporting unit.

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

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Technology 3 - 5

The Company leases office space under various non-cancellable operating leases with varying lease expiration dates through 2033.

We determine whether a contract is or contains a lease and whether the lease should be classified as an operating or finance lease at contract inception.

The Company determines if an arrangement is a lease at inception of the contract.

ROU assets represent the Company’s right to use underlying assets for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the leases.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company uses the implicit rate when readily determinable.

For leases where the rate is not determinable, the Company determines the incremental borrowing rate.

We do not recognize a ROU asset and a

lease liability for leases with an initial term of 12 months or less;

we recognize lease expense for these leases on a straight-line basis over the lease term.

Many of the Company’s lease agreements contain incentives for tenant improvements.

For tenant improvement incentives received, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records the incentives as a reduction to the ROU asset, which reduces rent expense over the lease term.

Finance leases are not material to our consolidated financial statements and the Company is not a lessor in any material arrangements.

We do not have any material restrictions or covenants in our lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

Equity Method Investments

Investments where the Company has the ability to exercise significant influence, but not control, are accounted for under the equity method of accounting and are included in investment in equity method investees on the Company's consolidated balance sheets.

Significant influence typically exists if the Company has a 20% to 50% ownership interest in the investee or retains a voting seat on the investee's board of directors.

Significant influence typically exists if the Company has a 20% to 50% ownership voting interest in the investee or retains a voting seat on the investee's board of directors.

In evaluating whether the Company has significant influence, the Company considers the nature of its ownership interest in the investee, as well as other factors that may give the Company the ability to exercise significant influence over the investee's operating and capital financial policies.

Under this method of accounting, the Company's share of the net earnings or losses of the investee are included in the Company's consolidated statements of operations and comprehensive loss.

Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.

If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

In November 2023, the Company sold its equity method investment in X-Bow Launch Systems Inc.

("X-Bow"), a space technology company specializing in additive manufacturing of solid rocket motors, and received $ 9.5 million from the sale of the investment.

The $ 9.5 million gain on the sale of X-Bow was recognized as income on equity method investments in the consolidated statements of operations and comprehensive loss.

As of December 31, 2023, the Company accounts for its LeoStella joint venture as its only equity method investment.

The investment in LeoStella is not significant to the financial statements.

Intra-entity profits arising from the sale of assets from the equity method investments to the Company are eliminated and deferred if those assets are still held by the Company at the end of the reporting period.

The intra-entity profits will be recognized as the assets are consumed.

As of December 31, 2023 and 2022, the Company had differences between the carrying value of its equity method investment and the underlying equity in the net assets of the investee of $ 1.2 million and $ 2.6 million, respectively.

Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.

If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

Satellite Procurement Work in Process

Satellite procurement work in process primarily represents deposits paid to (a) LeoStella for the progress payments associated with the engineering, long lead procurement of satellite components, and manufacturing of the Company's satellites and (b) launch service vendors for the costs associated with launching the Company's satellites.

Satellite procurement work in process capitalized, but not yet paid, is recognized as the Company has the rights to the in-process assets that LeoStella is engineering on the Company's behalf or a refund of amounts paid to date, less certain costs.

Satellite procurement work in process primarily represents deposits paid to (a) third party vendors, including LeoStella, for progress payments associated with the engineering, long lead procurement of satellite components, and manufacturing of the Company's satellites and (b) launch service vendors for the costs associated with launching the Company's satellites.

Satellite procurement work in process capitalized, but not yet paid, is recognized as the Company has the rights to the in-process assets being engineered on the Company's behalf or a refund of amounts paid to date, less certain costs.

At launch, these costs, and other costs incurred to put a satellite into service, are aggregated and reclassified as property and equipment, subject to depreciation (Note 7).

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The Company accrues a liability for those contingencies where the occurrence of a loss is probable and the amount can be reasonably estimated.

If a loss is probable and a range of amounts can be reasonably estimated but no amount within the range is a better estimate than any other amount in the range, then the minimum of the range is accrued.

If a loss is probable and a range of amounts can be reasonably estimated but no amount within the range is a better estimate than any

other amount in the range, then the minimum of the range is accrued.

We do not accrue a liability when the likelihood that the liability has been incurred is believed to be probable but the amount cannot be reasonably estimated or when the likelihood that a liability has been incurred is believed to be only reasonably possible or remote.

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The Company generates revenue from the sale of imagery and software analytical services and professional and engineering services.

Imagery and software analytical services revenue includes imagery, data, software, and analytics.

This revenue is recognized from services rendered under non-cancellable subscription order agreements or variable not-to-exceed purchase orders.

Imagery and software analytical services revenue, which is mostly from contracts from government agencies, includes imagery, data, software, and analytics.

This revenue is primarily recognized from services rendered under non-cancellable subscription order agreements or, in limited circumstances, variable not-to-exceed purchase orders.

Professional and engineering services revenue is generated from both time and materials basis contracts and firm fixed price service solutions contracts and firm fixed price long-term engineering and construction contracts.

The Company generates revenue primarily through contracts with government agencies.

Some of the fixed price contracts include multiple promises, which are generally separated as distinct performance obligations.

The Company allocates the transaction price to each performance obligation based on the relative standalone selling prices using observable sales transactions where applicable.

In accordance with Accounting Standards Update No.

2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“ASC 606”), the Company uses the five-step model of identifying the performance obligations contained in a contract, determining transaction price, allocating transaction price, and determining when

performance obligations are satisfied can require the application of significant judgment, as further discussed below.

2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“ASC 606”), the Company uses the five-step model of identifying the contract with a customer, identifying the performance obligations contained in a contract, determining the transaction price, allocating the transaction price, and determining when performance obligations are satisfied, which can require the application of significant judgment, as further discussed below.

Revenue is measured at the fair value of consideration received or receivable and net of discounts.

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Imagery & Software Analytical Services Revenue

Imagery services include imagery delivered from the Company’s satellites in orbit via our Spectra AI platform and in limited cases directly uploaded to certain customers.

Imagery services include imagery delivered from the Company’s proprietary satellite constellation and Spectra software platform and in limited cases directly uploaded to certain customers.

Customers can directly task our proprietary satellite constellation to collect and deliver imagery over specific locations, sites and regions that are critical to their operations.

We offer customers several service level options that include basic plans for on-demand tasking or multi-year assured access programs, where customers can secure priority access and imaging capacity at a premium over a region of interest on a take or pay basis.

Imagery revenue is recognized ratably over the subscription period or at the point in time the customer receives access to the imagery.

We offer customers several service level subscription options that include on-demand tasking or multi-year assured access programs, where customers can secure priority access and imaging capacity at a premium over a region of interest on a take or pay basis.

Imagery revenue is recognized ratably over the subscription period based on the promise to continuously provide contractual satellite capacity for tasked imagery or analytics at the discretion of the customer.

Data, Software, and Analytics

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commodities stockpiles;

and other sites that contain critical commodities and supply chain information .

Our analytics services are also offered on a subscription or consumption basis and provide customers with access to our site monitoring, event monitoring and global data services.

Software analytical services revenue derived from data, software, and analytics is recognized from the rendering of analytical and monitoring services over time on a firm fixed price, or at the point in time the customer receives access to an analytic product.

and other sites that contain critical commodities and supply chain inventory .

Our analytics services are also offered on a similar subscription basis and provide customers with access to our site monitoring, event monitoring and global data services.

Analogous with the recognition of revenue for imagery, software analytical services revenue is recognized ratably over the subscription period.

Professional and Engineering Services Revenue

The Company provides technology enabled professional service solutions to support customer-specific software development requests, integration, testing, and training.

The Company uses system engineers to support customer efforts to manage mass quantities of data.

For firm fixed price professional service contracts, the Company recognizes revenue using total estimated costs to complete the performance obligation, ("Estimate at Completion" or "EAC").

A performance obligation’s EAC includes all direct costs such as labor, materials, subcontract costs and overhead.

In addition, an EAC of a performance obligation includes future losses estimated to be incurred on contracts, as and when known.

The Company performs various professional services, that are highly-interrelated, including providing technology enabled professional service solutions to support customer-specific software development requests, integration, testing, and training.

The Company also provides engineering services, which include, developing and delivering advanced satellite and payload systems for a limited number of customers that leverage the Company’s capabilities in mission systems engineering and operations, ground station operations, and software and systems development.

These promises, based on the context of the contract, are capable of being distinct performance obligations.

For firm fixed price professional and engineering service contracts, the Company recognizes revenue over time using the cost-to-complete method to measure progress to complete the performance obligation, ("Estimate at Completion" or "EAC").

A performance obligation's EAC includes all direct costs such as labor, fringe, materials, subcontract costs and overhead.

Significant judgment is used to estimate total costs at completion on a contract by contract basis including, but not limited to, labor productivity, program schedule, technical risk analysis, complexity, scope of the work to be performed and other identified risks.

Due to the continuous nature of the work, as well as when a change in circumstances warrants a modification, the EAC is reviewed and may result in cumulative changes to the contract profit.

We recognize changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis in the period in which the change is identified.

If at any time, the estimate of contract profitability indicates a probable anticipated loss on the contract, we recognize the total loss as and when known.

The following table presents the effect of aggregate net EAC adjustments on our professional and engineering services contracts:

Years Ended December 31,

2023 2022 (1)

(in thousands)

Revenue $ ( 1,477 ) $ ( 2,316 )

Basic and diluted net loss per share $ ( 0.01 ) $ ( 0.02 )

(1) For the year ended December 31, 2022, the amounts represent the effect of aggregate net EAC adjustments on two professional and engineering service contracts

For contracts structured as cost-plus-fixed-fee or on a time and materials basis, the Company generally recognizes revenue based on the right-to-invoice when practically expedient, as the Company is contractually able to invoice the customer based on the control transferred to the customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date.

The Company also develops and delivers advanced launch vehicle, satellite and payload systems for a limited number of customers that leverage the Company’s capabilities in mission systems engineering and operations, ground station operations, and software and systems development.

These systems are sold to

government customers under fixed price contracts.

The Company generally recognizes revenue over time using the cost-to-cost method to measure progress, pursuant to which the extent of progress towards completion is measured based on the ratio of costs incurred to date to the EAC.

The estimation of total estimated costs at completion is subject to many variables and requires judgment.

The Company recognizes changes in contract estimates on a cumulative catch-up basis in the period in which the changes are identified.

Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period.

If at any time, the estimate of profitability for a performance obligation indicates a probable anticipated loss, the Company recognizes the total loss for the performance obligation in the period it is identified.

Changes in estimates related to contracts accounted for using the cost-to-cost measure of progress are recognized in the period in which such changes are made for the inception-to-date effect of the changes.

For the year ended December 31, 2022, the Company recognized $ 2.3 million of unfavorable cumulative adjustments to revenue directly from estimated cost increases on two professional and engineering services contracts (Note 6).

All, or a portion, of this cumulative adjustment will be recognized in future revenue as the percentage of completion increases over time.

During the year ended December 31, 2021, the Company recognized a $ 4.6 million unfavorable impact to revenue attributable to changes in estimates for two professional and engineering services contracts.

During the year ended December 31, 2022, there was no revenue recognized from performance obligations satisfied in previous period s .

Imagery and Software Analytical Service and Professional and Engineering Service Costs

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For those employees who provide these services to support customer-based programs, the stock-based compensation expense is classified under imagery and software analytical services costs.

Professional and engineering service costs primarily include the cost of internal labor for design and engineering in support of long-term development contracts for launch vehicle, satellite, and payload systems, as well as subcontract direct materials and external labor costs to build and test specific components, such as the communications system, payload demands, and sensor integration.

Professional and engineering service costs primarily include the cost of internal labor for design and engineering in support of long-term development contracts for satellites and payload systems, as well as subcontract direct materials and external labor costs to build and test specific components, such as the communications system, payload demands, and sensor integration.

In addition, we also recognize internal labor costs and external subcontract labor costs for our customer-centric software service solutions.

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Research and Development Costs

The Company primarily incurs research and development costs, which are expensed as incurred, for data science modeling and algorithm development related to its geospatial analytical platform.

The Company incurs research and development costs, which are expensed as incurred, for data science modeling and algorithm development related to its geospatial analytical platform.

In addition, the Company recognizes costs incurred before the technological feasibility stage for internal projects, such as aerospace and other satellite developments, as research and development costs.

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The Company's income tax expense or benefit, liability and/or receivable, deferred tax assets and liabilities, and liabilities for uncertain tax benefits reflect management’s best assessment of estimated current and future taxes to be paid or received.

Sponsor Shares

On September 9, 2021, BlackSky's predecessor company, Osprey Technology Acquisition Corp.

(“Osprey”), completed its merger (the "Merger") with Osprey Technology Merger Sub, Inc., a wholly owned subsidiary of Osprey, and BlackSky Holdings, Inc.

Osprey pre-Merger Class B common shares were exchanged for shares of the Company’s Class A common stock (the "Sponsor Shares") upon completion of the Merger.

The Company accounted for the Sponsor Shares in accordance with the guidance contained in ASC 815-40, under which the Sponsor Shares did not meet the criteria for equity treatment and were recorded as derivative liabilities in the Company’s consolidated balance sheets as of December 31, 2023.

The Sponsor Shares are adjusted to fair value at each reporting period and the change in fair value is recognized in gain on derivatives in the Company’s consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

Restricted Stock Awards and Restricted Stock Units

The Company has granted restricted stock awards ("RSAs") and grants restricted stock units ("RSUs") to certain employees, for which the grant date fair value is equal to the trading price fair value of the Class A common stock on the date of grant.

In order to determine the fair value of its Class A common stock on the date of grant and prior to the Merger, Legacy BlackSky historically performed a valuation analysis using a combination of market and income approaches.

The Company has granted restricted stock awards ("RSAs") and grants restricted stock units ("RSUs") to certain employees, for which the grant date fair value is equal to the fair value of the Class A common stock on the date of grant.

In order to determine the fair value of its Class A common stock on the date of grant prior to the Merger, we historically performed a valuation analysis using a combination of market and income approaches.

Subsequent to the Merger, the Company uses the New York Stock Exchange (“NYSE”) trading price as the fair value of the Class A common stock for valuation purposes.

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Stock Options

The Company uses the Black-Scholes option pricing model to value all options and the straight-line method to recognize the fair value as compensation cost over the requisite service period.

The fair value of each option

granted was estimated as of the date of grant.

The Company uses the Black-Scholes option pricing model to value all options, including options under the 2021 Employee Stock Purchase Plan ("ESPP"), and the straight-line method to recognize the fair value as compensation cost over the requisite service period.

The fair value of each option granted was estimated as of the date of grant.

The Company granted options in the year ended December 31, 2023.

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The dividend yield is based on historical experience and expected future changes.

The Company currently has no plans to pay dividends on its Class A common stock.

The Company has not historically paid and currently has no plans to pay dividends on its Class A common stock.

Expected Volatility .

The Company does not have enough historical share price history;

The Company does not have sufficient historical share price history;

therefore, the expected volatility was estimated based upon the historical share price volatility of guideline comparable companies.

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Expected Term .

For options granted in 2021 and 2022, since there is not a history of option exercises as a public company, the Company considered the option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term.

For options granted prior to 2021, the expected term was the estimated duration to a liquidation event based on a weighted average consideration of the most likely exit prospects for that stage of development.

For options granted in 2021 through 2023, since there was not a history of option exercises as a public company, the Company considered the option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term.

For options granted prior to 2021, the expected term was the estimated duration to a liquidity event based on a weighted average consideration of the most likely exit prospects for that stage of development.

Legacy BlackSky was privately funded and, accordingly, the lack of marketability was factored into the expected term of options granted.

The Company will review its estimate in the future and adjust it, if necessary, due to changes in the Company’s historical exercises.

The most significant assumption used to determine the fair value of the Legacy BlackSky equity-based awards was the estimated fair value of the Class A common stock on the grant date.

Subsequent to the Merger, the Company uses the NYSE trading price as the fair value of the Class A common stock for valuation purposes.

The most significant assumption used to determine the fair value of the Legacy BlackSky equity-based awards was the estimated fair value of the Legacy BlackSky Class A common stock on the grant date.

In order to determine the fair value of its Class A common stock on the date of grant prior to the Merger, Legacy BlackSky historically relied on a valuation analysis performed using a combination of market and income approaches.

Subsequent to the Merger, the Company uses the NYSE trading price as the fair value of the Company's Class A common stock for valuation purposes.

Legacy BlackSky historically adjusted the exercise price of certain outstanding stock options.

For each award with an adjusted exercise price, Legacy BlackSky calculated the incremental fair value, which was the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

For each award with an adjusted exercise price, Legacy BlackSky calculated the incremental fair value, which was the

excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

The incremental fair value was recognized as stock-based compensation expense immediately to the extent that the modified stock option already had vested, and for stock options that were not yet vested, the incremental fair value has been recognized as stock-based compensation expense over the remaining vesting period.

Common Stock Repurchases and Retirements

The Company may repurchase common stock from employees or former employees and recognizes any excess of the repurchase price over the fair value of the instruments repurchased as additional compensation cost.

Further, when that same common stock is retired, the excess is charged entirely to retained earnings.

During the year ended December 31, 2022, the Company repurchased and retired 14,603 shares of common stock.

The Company recorded $ 30 thousand to retained earnings in the consolidated balance sheets as of December 31, 2022 and $ 18 thousand to stock-based compensation as part of selling, general, and administrative expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022.

Segment Information

Accordingly, the Company is currently deemed to be comprised of only one operating segment and one reportable segment.

Sponsor Shares

Osprey pre-Merger class B common shares were exchanged for the Company’s class A common shares upon the consummation of the merger (“Sponsor Shares”).

Warrant Liabilities

In October 2019, Osprey, BlackSky's predecessor company and special purpose acquisition company, issued 15.8 million public warrants and 8.3 million Private Placement Warrants in connection with its public offering.

In March 2023, the Company issued 16.4 million Private Placement Warrants in connection with a private placement of shares of Class A common stock and accompanying warrants (see Note 14 and Note 16).

The Company accounts for its warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “ Distinguishing Liabilities from Equity ” (“ASC 480”) and ASC 815, “ Derivatives and Hedging ” (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments that would require classification as a liability under ASC 480, as well as whether the warrants qualify for equity classification or require liability classification after consideration of the guidance and criteria outlined in ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions that impact classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance.

The Company accounted for the warrants issued in October 2019 and March 2023 in accordance with the guidance contained in ASC 815-40-55-2 as liabilities at their fair value.

As of December 31, 2023, the Company’s consolidated balance sheets included liability classified warrants, reported as derivative liabilities.

The fair value of the public warrants was estimated as of December 31, 2023 using the public warrants’ quoted market price.

The October 2019 and March 2023 Private Placement Warrants were valued using a Black-Scholes option pricing model for initial and subsequent measurements.

The liabilities associated with the public warrants and the Private Placement Warrants are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in gain on derivatives in the Company’s consolidated statements of operations and comprehensive loss.

Transaction Costs

Transaction costs consist of legal fees, accounting fees, underwriting fees, and other third-party costs related directly to the Reverse Recapitalization.

As a reverse recapitalization transaction between a private operating company and a public shell company that had cash on its balance sheet and that was accounted for as the issuance of equity by Legacy BlackSky for the cash of the shell company, the transaction costs incurred by Legacy BlackSky were permitted to be charged directly to equity.

Upon the closing of the Merger, $ 19.2 million of transaction costs that had been incurred by Legacy BlackSky, inclusive of amounts that previously had been capitalized as other assets prior to the closing of the Merger, were recorded as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ equity (deficit) and consolidated balance sheets, and as a reduction to proceeds from the transaction in the consolidated statements of cash flows.

The transaction costs of $ 0.3 million related to the Sponsor Shares were expensed.

Transaction costs consist of legal fees, accounting fees, placement agent fees, commissions, and other third-party costs related directly to equity issuances and debt restructuring.

Transaction costs incurred for equity issuances are allocated to the components of the transaction based on their relative fair market value, including common equity and equity warrants classified as derivatives and, as such, based on the Company's allocation, are either expensed in the consolidated statements of operations and comprehensive loss or recorded as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ equity and consolidated balance sheets.

The Company incurred lender fees and other incremental third-party costs associated with its debt Amendment, as described in Note 13.

Lender fees were capitalized and included in long-term debt in the consolidated balance sheets.

Third-party costs associated with the debt modification were expensed in the consolidated statements of operations and comprehensive loss.

Deferred Offering Costs

Offering costs consist of legal fees, accounting fees, underwriting fees, and other third-party costs that are directly related to the Company’s future equity offering(s) and will be charged to additional paid in capital upon the completion of the applicable future transaction.

During the year ended December 31, 2022 the Company incurred offering costs of $ 0.5 million, which are included in other assets in the Company's consolidated balance sheets as of December 31, 2022;

During the year ended December 31, 2022 the Company incurred offering costs of $ 0.5 million, which were included in other assets in the Company's consolidated balance sheets as of December 31, 2022;

there were no deferred offering costs capitalized as of December 31, 2023.

Deferred Financing Costs

Financing costs consist of legal fees, accounting fees, and other third-party costs that are directly related to the Company’s future financing transactions and will be assigned to the cost of financing upon the completion of the applicable future transaction(s).

During the year ended December 31, 2023, the Company incurred financing costs of $ 0.1 million, which are included in other assets in the Company's consolidated balance sheets as of December 31, 2023;

there were no deferred financing costs capitalized as of December 31, 2022.

Accounting Standards Updates (“ASU”)

Accounting Standards Recently Adopted

Effective January 1, 2022, the Company adopted ASC 842.

The amendments in this update required the recognition of lease assets and lease liabilities on the balance sheet, as well as certain qualitative disclosures regarding leasing arrangements.

The Company adopted ASC 842 using the modified retrospective method, with the cumulative effect of initially applying these updates recognized at the date of initial application.

The adoption of this standard is reflected in the amounts and disclosures set forth in this Form 10-K.

Upon adoption, the Company recognized operating lease ROU assets of $ 3.6 million, current operating lease liabilities of $ 530 thousand and long-term operating lease liabilities of $ 3.1 million, respectively in its consolidated balance sheets.

There were no material impacts to the consolidated statements of operations and comprehensive loss or consolidated statements of cash flows.

Effective January 1, 2022, the Company adopted ASU No.

2019-12, Income Taxes (Topic 740):

“ Simplifying the Accounting for Income Taxes ”.

The amendments in this update are intended to simplify various aspects related to accounting for income taxes.

This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This ASU was applied on a prospective basis.

There were no material impacts to the consolidated financial statements upon adoption.

Accounting Standards Recently Issued But Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, “ Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ”.

The amendments in this update are primarily for entities holding financial assets and net investment leases measured under an incurred loss impairment methodology.

A new methodology must be adopted to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, which would include losses on trade accounts receivable.

This ASU requires modified retrospective application.

The guidance is effective for public business entities that are not smaller reporting companies for fiscal years beginning after December 15, 2019, including interim periods therein.

For all other entities, the guidance is effective for fiscal years beginning after December 15, 2022, including interim periods therein.

The Company will adopt this guidance as of January 1, 2023 and we do not expect this guidance will materially impact the Company.

Reverse Recapitalization

As described in Note 1, the Merger between Osprey and Legacy BlackSky closed on September 9, 2021.

In connection with the Merger:

• A number of parties agreed to purchase an aggregate of 18.0 million shares of Osprey class A common stock (the “PIPE Shares”), for a purchase price of $ 10.00 per share, and an aggregate purchase price of $ 180.0 million, pursuant to the subscription agreements dated February 17, 2021.

While executed pre-Merger, the sale of PIPE Shares was consummated substantially concurrently with the closing of the Merger and participants received shares of BlackSky Class A common stock.

• As part of a strategic partnership, Palantir Technologies Inc.

(“Palantir”) agreed to purchase an aggregate of 0.8 million shares of Osprey class A common stock for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 8.0 million pursuant to a subscription agreement entered into on August 31, 2021, which contained substantially similar terms as the PIPE subscription agreement described above.

The Palantir subscription agreement closed on September 13, 2021, two business days subsequent to the closing of the Merger, and Palantir received 0.8 million shares of BlackSky Class A common stock.

• 79.0 million shares of Osprey class A common stock were issued for all of the issued and outstanding equity interests of Legacy BlackSky, inclusive of shares of Osprey’s class A common stock issued in exchange for Legacy BlackSky’s (1) issued and outstanding class A common stock, (2) issued and outstanding preferred stock, (3) shares of common stock issued upon the conversion of Legacy BlackSky’s convertible promissory notes (inclusive of interest accrued thereon), as if each had converted into Legacy BlackSky class A common stock immediately prior to the Merger, and (4) shares of preferred stock and common stock issued upon the manual or automatic exercise of certain warrants immediately prior to the Merger.

Both outstanding preferred stock shares and preferred stock share activity related to all of Legacy BlackSky’s redeemable convertible preferred stock have been retrospectively adjusted for the exchange and included as equity in the Company’s consolidated balance sheets and statements of changes in redeemable convertible preferred stock and stockholders’ equity (deficit) from the beginning of the earliest period presented in order to reflect the Company’s equity structure for all reporting periods.

• Outstanding Legacy BlackSky RSUs, RSAs, options, and common stock warrants that were neither exercised nor forfeited immediately prior to the Merger were exchanged, based on the exchange ratio applicable to shares of Legacy BlackSky’s class A common stock, for RSUs, RSAs, options, and warrants, respectively, that vest into or become exercisable for the Company’s Class A common stock.

Upon exchange, these awards remained subject to the same vesting and exercise terms and conditions as were applicable to the awards pre-Merger.

• 21.4 million shares of Osprey class A common stock were redeemed by Osprey pre-Merger public shareholders.

The price paid in excess of the pro-rata portion of additional paid-in capital was recorded

in accumulated deficit in the consolidated balance sheets and consolidated statements of changes in stockholders’ equity (deficit) as of and for the year ended December 31, 2021.

• 7.9 million shares of Osprey class B common stock that were outstanding immediately prior to the Merger were converted to 7.9 million shares of Osprey class A common stock, inclusive of 2.4 million shares that are subject to (1) up to a seven year lockup period, with release terms that are based upon the performance of the Company’s common stock or a change in control event and (2) potential forfeiture.

The following table reconciles the elements of the Merger to the consolidated statements of cash flows and the consolidated statement of changes in stockholder's equity (deficit) for the year ended December 31, 2021 (in thousands):

Cash – Osprey’s trust and cash (net of redemptions) $ 103,049

Cash - PIPE financings (PIPE Shares and Palantir) 188,000

Gross Merger proceeds $ 291,049

fees paid to Osprey IPO underwriters ( 11,173 )

other Osprey transaction costs ( 15,831 )

BlackSky transaction costs ( 19,165 )

Proceeds from Reverse Recapitalization, net payment of BlackSky equity issuance costs $ 244,880

non-cash assets and warrant liabilities assumed from Osprey ( 43,963 )

Net impact from Reverse Recapitalization to BlackSky's equity $ 200,917

The number of shares of Company Class A common stock originally issued by Osprey prior to Merger and the recapitalization of the Class A common stock following the Merger are as follows:

Number of Shares

(in thousands)

Osprey class A common stock, outstanding prior to Merger 31,625

redemption of Osprey class A common stock ( 21,375 )

Total Osprey class A common stock pre-Merger 10,250

Osprey Founder class A common stock 5,534

Class A common stock issued in PIPE and Palantir financing 18,800

Total Merger, PIPE, and Palantir financing class A common stock 34,584

On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

Among other new disclosure requirements, ASU 2023-07 requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM").

ASU 2023-07 will be effective for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025.

ASU 2023-07 must be applied retrospectively to all prior periods presented in the financial statements.

The Company is assessing the effect of this update on our consolidated financial statements and related disclosures.

On December 14, 2023, the FASB issued ASU No.

2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid.

ASU 2023-09 will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively.

The Company is assessing the effect of this update on our consolidated financial statements and related disclosures.

Other accounting standards updates adopted and/or issued, but not effective until after December 31, 2023, are not expected to materially impact the Company.

Disaggregation of Revenue

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(ii) data, software and analytics;

and (iii) professional and engineering services.

(iii) professional services;

and (iv) engineering services.

This disaggregation allows the Company to evaluate market trends in certain imagery and software analytical services and professional and engineering services.

These offerings currently have both recurring and non-recurring price attributes, particularly the professional and engineering services offerings.

The following table disaggregates revenue by type for the years ended December 31, 2023 and 2022:

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Data, software, and analytics 10,761 13,173

Engineering services 9,372 9,039

Professional services 16,824 8,563

Engineering services 12,277 9,372

Total revenue $ 94,492 $ 65,350

The approximate revenue based on geographic location of customers is as follows for the years ended December 31, 2022 and 2021:

The approximate revenue based on geographic location of end customers is as follows for the years ended December 31, 2023 and 2022:

Years Ended December 31,

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Middle East 8,385 3,459

Asia 6,246 1,300

Asia Pacific 25,058 6,246

Other 1,026 1,593

Total revenue $ 94,492 $ 65,350

Revenue from significant customers for the years ended December 31, 2022 and 2021 is as follows:

Revenue from categories of end customers for the years ended December 31, 2023 and 2022 is as follows:

Years Ended December 31,

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federal government and agencies $ 5,994 $ 2,540

International government 261 76

International governments 895 261

Commercial and other 333 311

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Total accounts receivable $ 7,071 $ 3,112

Backlog represents the future sales we expect to recognize on firm orders received by the Company and is equivalent to the Company’s remaining performance obligations at the end of each period.

Backlog represents the future sales the Company expects to recognize on firm orders it receives and is equivalent to the Company’s remaining performance obligations at the end of each period.

It comprises both

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As of December 31, 2023, the Company had $ 261.7 million of backlog, which represents the transaction price of executed contracts less inception to date revenue recognized.

The Company expects to recognize revenue relating to our backlog, of which a portion is recorded in deferred revenue in the consolidated balance sheets, of $ 63.0 million, $ 28.5 million, and $ 167.9 million in the fiscal year 2023, 2024, and thereafter, respectively.

The Company expects to recognize revenue relating to its backlog, of which a portion is recorded in deferred revenue in the consolidated balance sheets, of $ 65.1 million, $ 34.4 million, and $ 162.2 million in fiscal year 2024, fiscal year 2025, and thereafter, respectively.

Contract Assets and Liabilities

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Unbilled revenue $ 15,213 $ 5,706

Contract assets — 890

Total contract assets - current $ 15,213 $ 5,706

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Total contract assets - long-term (1)

$ 8,760 $ 1,968

Contract liabilities - current:

Deferred revenue - short-term $ 6,783 $ 11,082

Other contract liabilities - short-term — 184

Deferred revenue - current $ 3,670 $ 6,783

Total contract liabilities - current $ 3,670 $ 6,783

Deferred revenue - long-term — 568

Contract liabilities - long-term:

Other contract liabilities - long-term $ 169 $ 109

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(1) Total contract assets - long term is included in other assets in the consolidated balance sheets.

Deferred revenue and other contract liabilities are reported as contract liabilities in the accompanying consolidated balance sheets.

Contract liabilities include payments received and billings made in advance of the satisfaction of performance obligations under the contract and are realized when the associated revenue is recognized under the contract.

Contract assets include (i) unbilled revenue, which is the amount of revenue recognized in excess of the amount billed to customers, where the rights to payment are not just subject to the passage of time;

and (ii) costs incurred to fulfill contract obligations.

and (ii) costs incurred incremental to the contract and to fulfill contract obligations.

Other contract assets and other contract liabilities primarily relate to contract commissions on customer contracts.

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(in thousands)

Balance on January 1, 2022 $ 1,678 $ 11,834

Balance as of January 1, 2023 $ 7,674 $ 6,892

Billings or revenue recognized that was included in the beginning balance ( 3,063 ) ( 6,191 )

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Cumulative catch-up adjustment arising from changes in estimates to complete 595 225

Cumulative catch-up adjustment arising from contract modification — 614

Cumulative catch-up adjustment arising from contract modifications ( 16 ) 341

Changes in costs to fulfill and amortization of commission costs ( 71 ) —

Changes in contract commission costs — 60

Balance on December 31, 2022 $ 7,674 $ 6,892

Equity Method Investments

The Company accounts for its investment in LeoStella as an equity method investment.

The Company did not make any additional capital investments in LeoStella during the years ended December 31, 2022 or 2021;

the Company received distributions of $ 0.8 million and $ 0.3 million during the years ended December 31, 2022 and 2021, respectively.

During the years ended December 31, 2022 and 2021, the Company remitted $ 28.0 million and $ 19.3 million, respectively, of payments to LeoStella for satellite manufacturing and satellite software development.

LeoStella's revenue from related parties was $ 26.1 million and $ 46.2 million for the years ended December 31, 2022 and 2021, respectively.

The Company had differences between the carrying value of its equity method investments and the underlying equity in the net assets of the investees of $ 2.6 million and $ 2.9 million as of December 31, 2022 and 2021, respectively.

The difference is the result of the elimination of upstream intra-entity profits from the sale of satellites.

In 2017, the Company entered into a stock subscription and technology transfer agreement with X-Bow, whereby the Company assigned and transferred certain intellectual property rights owned by the Company to X-Bow in exchange for 13.5 million shares of X-Bow, a strategic investment in a space technology company specializing in additive manufacturing of solid rocket motors.

As of December 31, 2022, the Company's interest in X-Bow was less than 20 %.

The following tables present summarized financial information for the Company’s equity method investments as of December 31, 2022 and December 31, 2021 and for the years ended December 31, 2022 and 2021.

December 31, December 31,

Summarized balance sheets 2022 2021

(in thousands)

Current assets $ 61,473 $ 60,652

Non-current assets 10,308 5,798

Total assets $ 71,781 $ 66,450

Current liabilities $ 35,695 $ 39,612

Noncurrent liabilities 2,642 706

Total liabilities $ 38,337 $ 40,318

Years Ended December 31,

Summarized statements of operations 2022 2021

(in thousands)

Revenue $ 41,668 $ 61,802

Net (loss) income ( 6,000 ) 6,540

Current assets of the Company’s equity method investees primarily consisted of cash of $ 30.5 million and $ 25.8 million as of December 31, 2022 and 2021, respectively.

Total liabilities of the Company’s equity method investees primarily consisted of customer advances of $ 29.2 million and $ 35.2 million as of December 31, 2022 and 2021, respectively.

Balance as of December 31, 2023 $ 23,973 $ 3,839

Discontinued Operations

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Settlement Arrangement for the Sale of Spaceflight

On March 30, 2021, the Company settled certain disputes with respect to the purchase price in the total amount of $ 6.8 million, which was accrued as a liability as of December 31, 2020.

The Company paid the settlement amount in two tranches—(i) $ 2.0 million on April 1, 2021 and (ii) the remaining $ 4.8 million was triggered at the closing of the Merger.

In April 2021, the Company also terminated a launch arrangement with Spaceflight and, as agreed upon by the parties, offset the amount due to M&Y Space with a contractual refund of $ 3.9 million, of which the net amount of $ 819 thousand was settled for cash in September 2021.

As a result, the Company recorded a reduction to the accrued liability and a reduction to satellite procurement in the consolidated balance sheet as of December 31, 2021.

On February 9, 2022, the Company received an indemnification claim notice regarding certain collection and tax payments related to the Share Purchase Agreement dated as of January 31, 2020 among BlackSky Holdings, Inc., Spaceflight, and M&Y Space.

On October 21, 2022, the parties agreed to the framework for a global settlement of such indemnification claims, to include a settlement payment by the Company of $ 1.0 million and a holdback amount of $ 0.1 million subject to M&Y Space Co.’s ability to collect against certain receivables.

As a result, we reduced our existing contingent liability by $ 0.7 million, which was recorded as a gain from discontinued operations in the year ended December 31, 2022.

The following summarizes the components of the gain (loss) from discontinued operations, net of income taxes, that the Company has reported in the consolidated statements of operations and comprehensive loss.

The Company recognized an unfavorable working capital adjustment of $ 1.7 million during the year ended December 31, 2021 primarily related to a potential shortfall in accounts receivable in the closing balance sheet delivered to M&Y Space.

Years Ended December 31,

(in thousands)

Major classes of line items constituting loss from discontinued operations:

Revenue - launch services $ — $ —

Total operating costs and expenses — —

Operating loss — —

Loss from discontinued operations, before income taxes — —

Gain (loss) on disposal of discontinued operations 707 ( 1,650 )

Total gain (loss) from discontinued operations, net of income taxes 707 ( 1,650 )

As a result, the existing contingent liability was reduced by $ 0.7 million, which was recorded as a gain from discontinued operations in the year ended December 31, 2022.

Property and Equipment - net

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Property and equipment — net $ 67,116 $ 71,584

Depreciation of property and equipment from continuing operations was $ 35.1 million and $ 12.9 million for the years ended December 31, 2022 and 2021, respectively.

The Company disposed of property and equipment, which consisted of site equipment, furniture and ground station equipment of $ 0.6 million and $ 2.9 million, during the years ended December 31, 2022 and 2021, respectively, for a loss of $ 0 and $ 24 thousand for the years ended December 31, 2022 and 2021, respectively.

On May 15, 2021, a rocket carrying two of the Company's satellites suffered a failure during flight, resulting in the loss of both satellites.

This resulted in the total carrying value of $ 18.4 million being impaired in the second quarter of 2021.

The $ 18.4 million includes satellite procurement, launch, shipping, launch support and other associated costs.

There was no impairment for the year ended December 31, 2022.

Depreciation of property and equipment was $ 42.9 million and $ 35.1 million for the years ended December 31, 2023 and 2022, respectively.

The Company recognized impairment losses of $ 121 thousand of capitalized software and leasehold improvements, resulting in a net impairment loss of $ 81 thousand.

As of December 31, 2023 and 2022, the Company's primary long-lived assets, including satellites in service, are owned and operated by United States entities and are classified within the United States geographic region.

Goodwill and Intangible Assets

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The Company determined that no triggering events occurred that would require the Company to quantitatively test goodwill for impairment during the year ended December 31, 2023.

As of December 31, 2022, the Company believes that the estimated fair values of the BlackSky reporting unit is still in excess of its respective carrying value and therefore is not at-risk of being impaired.

As of December 31, 2023, the Company believes that the estimated fair value of the BlackSky reporting unit is still in excess of its respective carrying value and therefore is not at-risk of being impaired.

To the extent this reporting unit realizes actual operating results in the future below forecasted results, or realizes decreases in forecasted results as compared to previous forecasts or, in the event the estimated fair value of the reporting unit decreases (as a result, among other things, of changes in market capitalization, including further declines in the stock price), the Company may incur goodwill impairment charges in the future.

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Net carrying value of goodwill $ 9,393 $ 9,393

Intangible Assets

The components of intangible assets were as follows:

Intangible Assets - net

Intangible assets - net was as follows:

December 31, 2023 December 31, 2022

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(1) For the years ended December 31, 2023 and 2022, the net carrying amount of intangible assets was made up entirely of customer relationships.

For the years ended December 31, 2022 and 2021, amortization expense related to intangible assets was $ 0.6 million and $ 1.4 million, respectively.

These amounts were included in depreciation and amortization expense in the consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2023 and 2022, amortization expense related to intangible assets was $ 0.6 million.

This amount is included in depreciation and amortization expense in the consolidated statements of operations and comprehensive loss.

The Company estimates that it will have the following amortization expense for the future periods indicated below:

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Accrued interest 344 1,176

Current portion of capital lease — 49

Operating lease right-of-use liabilities 621 530

Contingent liability 86 761

Working capital liability — 1,685

Estimated non-income tax liability 196 86

Total other current liabilities $ 1,405 $ 2,048

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The Company has a 401(k) savings plan.

Eligible employees may voluntarily contribute a percentage of their compensation to their 401(k) account.

The Company provides a 401(k) employer match of 50 % of the first 6 % of the employee’s salary contribution.

The benefit vests over a five-year period beginning 90 days after the employee’s date of hire.

For the years ended December 31, 2022 and 2021, the 401(k) employer match expense was $ 0.9 million and $ 0.6 million, respectively, for continuing operations.

The Company's consolidated effective income tax rate from continuing operations for the years ended December 31, 2022 and 2021 was 0.0 %.

Eligible employees may voluntarily contribute a percentage of their compensation to their 401(k) plan account.

The Company provides a 401(k) employer match of 50 % of the first 6 % of the employee’s contribution of eligible compensation.

For the years ended December 31, 2023 and 2022, the 401(k) employer match expense was $ 1.1 million and $ 0.9 million, respectively.

The Company's consolidated effective income tax rate from continuing operations for the years ended December 31, 2023 and 2022 was - 1.26 % and 0 %, respectively.

The Company's provision for income taxes from continuing operations for the years ended December 31, 2023 and 2022 is as follows:

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Federal $ — $ —

Foreign 104 —

Total current $ 673 $ —

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Total provision for income taxes $ 673 $ —

The Company’s operations are domestically located and therefore, the Company is not subject to tax in foreign jurisdictions.

Income tax (benefit) expense differed from the amount computed by applying the federal statutory income tax rate of 21% to loss before income taxes due to the following items for the years ended December 31, 2022 and 2021:

The Company’s primary operations are domestically located and the Company is subject to tax in one foreign jurisdiction.

The provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% to loss before income taxes due to the following items for the years ended December 31, 2023 and 2022:

Years Ended December 31,

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Shortfall of stock compensation deduction 2,666 3,190

Non-deductible interest — 21,715

Non-taxable warrants ( 1,613 ) ( 2,481 )

Uncertain tax position — 8,449

Other 589 501

Income tax (expense) benefit $ — $ —

The income tax (expense) benefit as of December 31, 2022 and 2021 was $ 0 .

Income tax expense $ 673 $ —

The deferred income tax expense as of December 31, 2023 and 2022 was $ 0 .

The tax benefits associated with losses generated by the consolidated group have been reduced by a full valuation allowance as the Company does not believe it is more-likely-than-not that the losses will be utilized.

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Net deferred tax liabilities $ — $ —

The Company continues to provide for a full valuation allowance on its net deferred tax assets as the Company does not believe it is more-likely-than-not that the losses will be utilized after evaluation of all significant positive and negative evidence including, but not limited to, historical cumulative losses over the prior three-year period, as adjusted for permanent items, insufficient sources of taxable income in prior carryback periods and unavailability of prudent and feasible tax-planning strategies.

significant positive and negative evidence including, but not limited to, historical cumulative losses over the prior three-year period, as adjusted for permanent items, insufficient sources of taxable income in prior carryback periods and unavailability of prudent and feasible tax-planning strategies.

Below is a summary of the Company's estimated loss and tax credit carryforwards.

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State NOL carryforwards 10,548 2034-2043

At December 31, 2022 and 2021 the Company had $ 252.8 million and $ 213.9 million of net operating loss (“NOL”) carryforwards for U.S.

At December 31, 2023 and 2022 the Company had $ 275.4 million and $ 252.8 million of NOL carryforwards for U.S.

federal tax purposes, respectively.

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Unrecognized tax benefits - January 1 $ 9,006 $ 8,443

Gross decrease - tax positions in current period — —

Gross increase - tax positions in current period — 563

Gross increase - tax positions in prior period 563 —

Unrecognized tax benefits - December 31 $ 9,006 $ 9,006

The majority of the unrecognized tax benefits as of the year ended December 31, 2022 is from the valuation of guaranteed incentives shares issued for SVB guarantors.

The majority of the unrecognized tax benefits in the year ended December 31, 2023 is from the valuation of guaranteed incentives shares issued for SVB guarantors.

The balance of unrecognized tax benefits as of December 31, 2023 and 2022, if recognized, would not affect our effective tax rate and would result in adjustments to other tax accounts, primarily deferred tax assets and the net operating loss carry forward.

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(in thousands)

Current portion of long-term debt $ — $ —

Non-current portion of long-term debt $ 84,578 $ 77,132

Total long-term debt 77,132 74,126

Unamortized debt issuance cost ( 1,077 ) ( 913 )

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The outstanding debt was solely comprised of loans from related parties with effective interest rates of 12.23 % to 12.57 % and a maturity date of October 31, 2026.

On May 9, 2023, BlackSky and its subsidiaries entered into an Amendment to its Amended and Restated Loan and Security Agreement with Intelsat and Seahawk, dated October 31, 2019 and previously amended on September 9, 2021.

The Amendment amended the secured loan facility to, among other things:

(i) extend the maturity date of the loan from October 31, 2024 to October 31, 2026, (ii) roll the cash interest payment due on May 1, 2023 into the outstanding principal to be paid on the maturity date, (iii) increase the interest rate on the loan as of the Amendment date from 9 % to 12 %, of which (x) 9.6 % will be paid in kind as principal due on the maturity date, with the remainder paid as cash interest on a semi-annual basis, until May 1, 2025 and (y) after May 1, 2025, up to 4 % can be paid in kind as principal due on the maturity date, with the remainder to be paid as cash interest on a semi-annual basis, and (iv) add certain financial covenants.

This facility is secured by substantially all of the Company’s assets, is guaranteed by the Company’s subsidiaries, and contains customary covenants and events of default.

The Amendment was accounted for as a debt modification and related transaction costs of 1.3 million were recorded during the year ended December 31, 2023.

Under the Company’s loan agreements, minimum required maturities are as follows:

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Total outstanding $ 84,578

Bridge Notes and Related Transactions

On February 2, 2021, Legacy BlackSky amended its omnibus agreement dated June 27, 2018 (the “2021 Omnibus Amendment”).

As a result of the amendment, Legacy BlackSky was permitted to enter into additional indebtedness by issuing new subordinated, unsecured convertible promissory notes (the "Bridge Notes"), between February 2, 2021 and June 30, 2021, for up to an aggregate principal amount of $ 60 million.

During the period from February 2, 2021 through February 3, 2021, Legacy BlackSky completed the closing of its initial tranche of the Bridge Notes from existing stockholders.

The aggregate principal amount of the Bridge Notes issued in the initial tranche was $ 18.1 million.

All investors participating in the initial tranche also received incentive equity equal to seven shares of class A common stock of Legacy BlackSky for each dollar invested.

Certain investors participating in the initial tranche additionally received warrants exercisable for shares of Legacy BlackSky class A common stock in amounts ranging from 0.14 % of Legacy BlackSky’s

fully-diluted share capital for each dollar invested divided by $ 1.0 million to 3.5 % of Legacy BlackSky’s fully-diluted share capital (Note 16).

On February 18, 2021, the Company completed the closing of a second tranche of the Bridge Notes, raising an aggregate principal amount of $ 40.0 million from an existing stockholder and from new investors.

Participants in the second tranche did not receive shares of Legacy BlackSky class A common stock or warrants to purchase Legacy BlackSky class A common stock.

Upon the closing of the two previously mentioned tranches, $ 1.9 million of Bridge Notes remained available to be offered to certain shareholders under terms similar to the initial tranche pursuant to a rights offering (“Rights Offering”).

The Company subsequently completed the Rights Offering in June 2021 with a total of $ 0.5 million additional investment, resulting in final aggregate proceeds of $ 58.6 million in principal investments pursuant to the Bridge Notes.

As the terms of the Rights Offering were substantially identical to those offered in the initial tranche of the Bridge Notes, participants received seven shares of the Legacy BlackSky's class A common stock for each dollar invested, as well as warrants.

The Bridge Notes, in all three tranches, bore interest at a rate of 10 % and had a maturity date of April 30, 2025.

There were no covenants in the Bridge Notes that were tied to financial metrics.

The Company made an irrevocable election to carry the Bridge Notes at fair value.

In connection with the Merger, all of the Company’s issued and outstanding Bridge Notes were converted into Legacy BlackSky class A common stock at a conversion price of 80 % of the deemed value of a single Legacy BlackSky class A common share and, immediately thereafter, those Legacy BlackSky class A common shares were exchanged for Osprey class A common shares based on the class A common stock exchange ratio.

As of December 31, 2022 and 2021, the Company had no convertible Bridge Notes outstanding.

In connection with the 2021 Omnibus Amendment, the investors guaranteeing the Silicon Valley Bank (“SVB”) line of credit further reaffirmed their guarantees and received a one-time issuance of seven shares of Legacy BlackSky class A common stock for every dollar guaranteed.

Additionally, Legacy BlackSky agreed to pay a fee to each of its senior secured lenders (“Consent Fees”).

The Consent Fees were payable in either cash or shares of Legacy BlackSky’s class A common stock at the choice of the lender.

The Consent Fees were considered variable share-settled liabilities and were recorded at fair value.

All of the Consent Fees were settled for cash at the closing of the Merger.

The following table summarizes the additional shares of Legacy BlackSky class A common stock and warrants to purchase Legacy BlackSky class A common stock issued as a result of the Bridge Notes.

Legacy BlackSky Class A Common Stock (1)

Legacy BlackSky Class A Common Stock Warrants (1)

(in thousands)

Issued to SVB guarantors 8,485 —

Issued in connection with the initial tranche of Bridge Notes 11,544 3,873

Issued as incentive shares and as incentive warrants, in connection with the Rights Offering 314 51

Total 20,343 3,924

(1) Issuance of class A common stock and class A common stock warrants has been retroactively restated to give effect to the reverse recapitalization.

In connection with the Merger, all issued and outstanding Legacy BlackSky Bridge Notes and Class A common stock warrants granted in accordance with the Bridge Notes were automatically exercised into Legacy BlackSky class A common stock and those shares were exchanged for the Company's common shares at the exchange rate applicable to the Company’s common stock.

Loans from Related Parties

After the Merger, the Company’s primary debt (and its sole secured debt) consists of its amended and restated loan and security agreement dated October 31, 2019, as amended or modified from time to time, with Intelsat Jackson Holdings SA (“Intelsat”) and Seahawk SPV Investment LLC (“Seahawk”).

Interest accrues on the amounts outstanding under this facility at a fixed rate of 9 % until October 31, 2023 and 10 % from November 1, 2023 to the maturity date of October 31, 2024.

Interest is payable in cash semi-annually in arrears commencing on May 1, 2023.

This facility is secured by substantially all of the Company’s assets, is guaranteed by the Company’s subsidiaries, and contains customary covenants and events of default.

There are no covenants tied to financial metrics.

Fair Value of Debt

The estimated fair value of all of the Company’s outstanding long-term debt was $ 73.2 million and $ 76.1 million as of December 31, 2022 and December 31, 2021, respectively, which is different than the historical costs of such long-term debt as reflected in the Company’s consolidated balance sheets.

The estimated fair value of the Company’s outstanding long-term debt was 78.7 million and $ 73.2 million as of December 31, 2023 and 2022, respectively, which is different than the historical cost of the long-term debt as reflected in the Company’s consolidated balance sheets.

The fair value of the long-term debt was estimated using Level 3 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements and credit rating.

Compliance with Debt Covenants

As of December 31, 2022, all debt instruments contain customary covenants and events of default.

There are no covenants tied to financial metrics and the Company was in compliance with all non-financial covenants as of December 31, 2022.

As part of the Amendment, the Company is required to maintain a minimum cash and cash equivalents balance of not less than $ 10.0 million, measured quarterly as of the last day of each fiscal quarter.

In addition, the Company is required to maintain Adjusted EBITDA, measured quarterly as of the last day of each fiscal quarter, of not less than:

• $ 5.0 million for the trailing four quarter period ending as of December 31, 2024 through September 30, 2025 and

• $ 10.0 million for the trailing four quarter period ending as of December 31, 2025 and as of the end of each fiscal quarter thereafter.

As of December 31, 2023, all debt instruments contained customary covenants and events of default.

The Company was in compliance with all covenants as of December 31, 2023.

Equity Warrants Classified as Derivative Liabilities

Equity warrants that are classified as d erivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration and are included in derivative liabilities in the Company's consolidated balance sheets.

Any change in fair value between the respective reporting dates is recognized as an unrealized gain or loss in the accompanying consolidated statements of operations and comprehensive loss (Note 23).

In the year ended December 31, 2022, the Company's derivative liabilities were made up of only the equity warrants and the Sponsor Shares.

In the year ended December 31, 2021, the Company's derivative liabilities included warrants, Consent Fees from the Bridge Notes (see Note 15), and Legacy BlackSky preferred stock warrants.

Warrant Issuances

In March 2023, the Company completed the closing of a private placement whereby the Company issued warrants to purchase up to 16.4 million shares of Class A common stock.

The purchase price of each share and associated warrant was $ 1.79 .

Including the issuance of Company’s Class A common stock (see Note 16), the aggregate gross proceeds to the Company from the private placement were $ 29.4 million, before deducting the placement agent fees and other offering expenses payable by the Company.

The Company uses the net proceeds from the private placement for general corporate purposes, including working capital.

The warrants have an exercise price of $ 2.20 per share of Class A common stock, and are exercisable until September 8, 2028.

The March 2023 Private Placement Warrants provide that a holder of warrants will not have the right to exercise any portion of its warrants if such holder, together with its affiliates, would beneficially own in excess of 4.99 % of the number of shares of common stock outstanding immediately after giving effect to such exercise;

provided, however, that each holder may increase or decrease the beneficial ownership limitation by giving notice to the Company;

but not to any percentage in excess of 9.99 %.

The Company incurred transaction costs which consisted of legal fees, accounting fees, placement agent fees, and other third-party costs directly related to the March 2023 private placement.

The transaction costs of $ 0.9 million related to the 2023 Private Placement Warrants were included in other (expense) income, net in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

The Company also has approximately 24.1 million additional outstanding warrants, including 15.8 million public warrants and 8.3 million Private Placement Warrants, issued by Osprey, the Company's predecessor company, in 2019 in connection with its initial public offering as a special purpose acquisition company.

The 2019 warrants are each exercisable for one share of the Company's Class A common stock.

Warrant Valuation

Equity warrants that are classified as derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration and are included in derivative liabilities in the Company's consolidated balance sheets.

Any change in fair value between the respective reporting dates is recognized as an unrealized gain or loss in the accompanying consolidated statements of operations and comprehensive loss (see Note 21).

The Company's derivative liabilities were made up of only equity warrants and the Sponsor Shares as of December 31, 2023 and December 31, 2022.

The following table is a summary of the number of shares of the Company’s Class A common stock issuable upon exercise of warrants at December 31, 2023:

Number of Shares Exercise Price Redemption Price Expiration Date Classification Gain in value for the year ended December 31, 2022 Fair Value at December 31, 2022

Number of Shares Exercise Price Redemption Price Expiration Date Classification Gain in Value for the Year Ended December 31, 2023 Fair Value as of December 31, 2023

(in thousands) (in thousands)

Public Warrants 15,813 $ 11.50 $ 18.00 9/9/2026 Liability $ 1,301 $ 795

Private Placement Warrants 4,163 $ 11.50 $ 18.00 9/9/2026 Liability 1,623 874

Private Placement Warrants 4,163 $ 20.00 $ 18.00 9/9/2026 Liability 541 458

Private Placement Warrants - Issued October 2019 4,163 11.50 18.00 9/9/2026 Liability 458 416

Private Placement Warrants - Issued October 2019 4,163 20.00 18.00 9/9/2026 Liability 291 167

Private Placement Warrants - Issued March 2023 16,404 2.20 N/A 9/8/2028 Liability 5,249 12,467

In addition, the Company has 1.8 million Class A common stock warrants outstanding which have an exercise price of $ 0.11 and expiration dates from June 27, 2028 to October 31, 2029.

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(in thousands)

Loss on issuance of Bridge Notes tranche one $ — $ ( 84,291 )

Loss on issuance of Bridge Notes tranche two — ( 12,185 )

Loss on issuance of Bridge Notes Rights Offering — ( 3,193 )

Debt issuance costs expensed for debt carried at fair value — ( 47,718 )

Transaction costs associated with derivative liabilities — ( 291 )

Transaction costs associated with debt and equity financings $ ( 1,738 ) $ —

Proceeds from earn-out payment — 2,000

Other ( 69 ) 81

$ ( 1,807 ) $ 2,081

In the year ended December 31, 2022, performance on an earn-out condition within the Share Purchase Agreement dated as of January 31, 2020 among BlackSky Holdings, Inc., Spaceflight, and M&Y Space was met and thus, the Company received payment of $ 2.0 million.

In February 2021, Legacy BlackSky issued Bridge Notes in two tranches (Note 15).

The first tranche of the Bridge Notes were issued at par to several existing investors at a principal amount of $ 18.1 million and a fair value of $ 24.2 million.

Additionally, certain investors in the first tranche of Bridge Notes received 11.5 million shares of Legacy BlackSky class A common stock with a fair value of $ 59.8 million and warrants to purchase 3.9 million shares of Legacy BlackSky class A common stock with a fair value of $ 18.4 million.

The transaction involved investments primarily by the existing Legacy BlackSky investors at that time.

Legacy BlackSky, which had an external valuation performed on the Bridge Notes, Legacy BlackSky class A common stock, and Legacy BlackSky warrants, determined that the fair value of the financial instruments issued exceeded the cash proceeds received.

Since no unstated rights and/or privileges were identified with the first tranche of the Bridge Notes, Legacy BlackSky recorded a loss on issuance of $ 84.3 million.

The second tranche of the Bridge Notes were issued at par to several new investors and an existing investor at a principal amount of $ 40.0 million and a fair value of $ 52.2 million, resulting in a loss on issuance of $ 12.2 million.

Legacy BlackSky incurred and expensed $ 47.6 million in debt issuance costs related to the Bridge Notes issued in February 2021 and the modification of existing debt arrangements at that time.

These debt issuance costs consisted of 8.5 million shares of Legacy BlackSky class A common stock valued at $ 43.9 million that were issued to certain guarantors in conjunction with modification of Legacy BlackSky’s SVB line of credit and $ 3.7 million paid to third-parties in cash.

Additionally, the Company incurred $ 0.1 million in debt issuance costs related to the rights offering, which was expensed.

The debt issuance costs were expensed because the Bridge Notes were being carried on the balance sheet at fair value.

The modification of existing debt did not qualify as a troubled debt restructuring, nor did it result in the extinguishment of the debt.

Stockholders’ Equity

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Forfeiture Provision If, within the seven year period, the Sponsor Shares have not met the Release provisions, the Sponsor Shares will automatically forfeit and be cancelled.

Private Placement

In March 2023, the Company completed a private placement of 16.4 million shares of the Company’s Class A common stock and an equal number of corresponding warrants, for a purchase price of $ 1.79 per share and associated warrant.

The Company received $ 29.4 million in gross proceeds from the private placement.

The Company sold 3.5 million common shares in its ATM offering during the years ended December 31, 2023, at an average purchase price per share of $ 1.45 , resulting in gross proceeds of $ 5.0 million.

The transaction costs for these equity issuances consisted of legal fees, accounting fees, placement agent fees, and other third-party costs related directly to the equity issuances.

Net Loss Per Share of Class A Common Stock

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Loss from continuing operations $ ( 53,859 ) $ ( 74,879 )

Gain (loss) from discontinued operations 707 ( 1,650 )

Gain from discontinued operations — 707

Net loss available to common stockholders $ ( 53,859 ) $ ( 74,172 )

Basic and diluted net loss per share - continuing operations $ ( 0.40 ) $ ( 0.64 )

Basic and diluted net gain (loss) per share - discontinued operations 0.01 ( 0.02 )

Basic and diluted net gain per share - discontinued operations — 0.01

Basic and diluted net loss per share $ ( 0.40 ) $ ( 0.63 )

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Restricted Class A common stock 23 57

Common Stock warrants 1,770 1,770

Class A common stock warrants 1,770 1,770

Stock options 8,340 8,641

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Stock-Based Compensation

The Company adopted two equity incentive plans in prior years.

Legacy BlackSky issued equity and equity-based awards under its 2014 stock incentive plan (the “2014 Plan”) and 2011 stock incentive plan (the “2011 Plan”, together with the 2014 Plan, collectively the “Plans”), which are now administered by the Company’s board of directors.

The Plans are no longer active;

however, outstanding awards granted under these Plans will not be affected.

Both Plans allowed the board of directors to grant stock options, designated as incentive or nonqualified, and stock awards to employees, officers, directors, and consultants.

Stock options were granted with an exercise price per share equal to at least the estimated fair value of the underlying class A common stock on the date of grant.

Legacy BlackSky adopted two equity incentive plans in prior years and issued equity and equity-based awards under the 2014 Equity Incentive Plan (the “2014 Plan”) and the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”, together with the 2014 Plan, collectively the “Prior Plans”), which are now administered by the Company’s board of directors.

The Prior Plans are no longer active;

however, outstanding awards granted under these Prior Plans were not affected by the termination of the Prior Plans.

Both of the Prior Plans allowed the board of directors of Legacy BlackSky to grant stock options, designated as incentive or nonqualified, and other equity awards to employees, officers, directors, and consultants.

Stock options were granted with an exercise price per share equal to at least the estimated fair value of the underlying shares of Legacy BlackSky Class A common stock on the date of grant.

The vesting period was determined through individual award agreements and was generally over a four-year period.

Awards generally expired 10 years from the date of grant.

As of December 31, 2022, the Company had 41 thousand and 1.4 million options outstanding, respectively, under the 2011 and 2014 Plans.

As of December 31, 2023, the Company had 2 thousand and 945 thousand options outstanding, respectively, under the 2011 and 2014 Plans.

In connection with the Merger, the Company adopted its 2021 Equity Incentive Plan (the "2021 Plan", together with the Prior Plans, collectively the “Plans”) under which it has granted equity awards following the Merger and the Company adopted its ESPP under which eligible employees began participating in December 2023.

The stock-based compensation expense attributable to continuing operations is included in the consolidated statements of operations and comprehensive loss as indicated in the table below:

Effective January 1, 2022, the Company reorganized its captions on the consolidated statements of operations and comprehensive loss to better align the Company’s broad portfolio.

As a result, for the year ended December 31, 2021, the amounts presented to reflect the impact of the reorganization have been recasted.

This resulted in a $ 2.3 million reclassification of stock compensation expense between imagery & software analytical service costs, excluding depreciation and amortization and professional & engineering service costs, excluding depreciation and amortization in the Company's consolidated statements of operations and comprehensive loss.

Years Ended December 31,

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Total stock-based compensation expense $ 10,862 $ 20,025

The stock-based compensation expense recorded for the RSUs during the year ended December 31, 2021 included a cumulative adjustment for service completed from the grant date to the close of the Merger as the result of a vested performance condition.

Additionally, the Company recorded stock-based compensation related to capitalized internal labor for software development activities of $ 1.5 million and $ 11 thousand during the years ended December 31, 2022 and 2021, respectively.

The Company recorded stock-based compensation related to capitalized internal labor for software development activities of $ 0.7 million and $ 1.5 million during the years ended December 31, 2023 and 2022, respectively.

These amounts are included in property, plant, and equipment - net in the consolidated balance sheets.

Stock Options

Following the Merger, the outstanding stock options issued under the 2011 Plan and the 2014 Plan may be exercised (subject to their original vesting, exercise and other terms and conditions) to purchase a number of shares of class A common stock equal to the number of shares of Legacy BlackSky class A common stock, as adjusted for the common stock exchange ratio, subject to the same terms and conditions as were applicable to such Legacy BlackSky stock option (each an “Assumed Company Stock Option”).

Following the Merger, the outstanding stock options issued under the 2011 Plan and the 2014 Plan may be exercised (subject to their original vesting, exercise and other terms and conditions) to purchase a number of shares of Class A common stock equal to the number of shares of Legacy BlackSky Class A common stock, as adjusted for the common stock exchange ratio in the Merger, subject to the same terms and conditions as were applicable to such Legacy BlackSky stock option (each an “Assumed Company Stock Option”).

The exercise price per share of each Assumed Company Stock Option was equal to the quotient obtained by dividing the exercise price per share applicable to such Legacy BlackSky stock option by the common stock exchange ratio.

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Fair value per common share $ 1.27

$ 2.06 - $ 2.15

Weighted-average risk-free interest rate 4.31 %

3.20 % - 4.72 %

Volatility 31.20 %

33.90 % - 41.10 %

Expected term (in years) 8.00 7.63

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incremental fair value has been recognized as stock-based compensation expense over the remaining vesting period.

A summary of the Company’s stock option activity under the Plans during the year ended December 31, 2023 is presented below:

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Forfeited ( 1,726 ) 4.62

Expired ( 243 ) 2.06

Outstanding - December 31, 2023 8,340 2.51 8.20 $ 1,364

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The total fair value of options vested during the years ended December 31, 2023 and 2022 was $ 2.0 million and $ 1.2 million, respectively.

As of December 31, 2022, there was $ 6.6 million of total unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 3.4 years.

As of December 31, 2023, there was $ 4.4 million of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.5 years.

Restricted Stock Awards

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The Company has not granted any RSAs since 2020.

As of December 31, 2022, there was $ 1 thousand of total unrecognized compensation cost related to nonvested RSAs granted under the Plan, which is expected to be recognized over a weighted-average period of 1.7 years.

The total grant date fair value of shares vested during the year ended December 31, 2022 was $ 2 thousand.

Restricted Stock Units

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The general vesting provisions are that 25 % will vest on the one -year anniversary of the vesting commencement date and 75 % will vest ratably over twelve consecutive quarters on specified quarterly vesting dates, with the first of such quarterly vesting dates occurring at least three months after the vesting of the initial 25 % of the RSUs.

During March 2022, 155 thousand RSUs were granted with a different vesting schedule, whereby 50 % will vest annually on the anniversary of the vesting commencement date and during September 2022, 419 thousand RSUs were granted whereby 100% of such RSUs will vest at the earlier of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting following the grant date.

A summary of the Company’s nonvested RSU activity during the year ended December 31, 2023 is presented below:

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Nonvested - December 31, 2023 16,132 1.69

A significant portion of the pre-Merger RSU grants vested in accordance with the vesting schedule of 180 days subsequent to the Merger.

During the year ended December 31, 2023, 1.0 million of the vested RSUs were withheld to satisfy payroll tax withholding obligations, which was recorded to additional paid-in capital totaling $ 1.4 million.

Unrecognized compensation costs related to nonvested restricted stock units totaled $ 18.0 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of 2.5 years.

Unrecognized compensation costs related to nonvested RSUs totaled $ 21.8 million as of December 31, 2023, which is expected to be recognized over a weighted-average period of 2.9 years.

Employee Stock Purchase Plan

Beginning in December 2023, the Company's eligible employees were able to begin participating in the Company's ESPP.

The ESPP allows eligible participants to contribute up to 15 % of their eligible compensation towards the purchase of Class A common stock at a discounted price, subject to certain limitations,.

The purchase price of the shares on each purchase date is equal to 85 % of the lower of the fair market value of Class A common stock on the first and last trading days of each offering period.

The offerings under the ESPP are currently designed to be intended to qualify under Section 423 of the Internal Revenue Code.

The Company estimates the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes valuation model and uses the straight-line attribution approach to record the expense over the six-month offering period.

The maximum number of shares that may be issued under the ESPP is 3,000,700 plus any shares added to the ESPP under the automatic annual increase at the beginning of each fiscal year.

Total Lease Cost

As described in Note 3, effective January 1, 2022, we adopted ASC 842 using the optional transition method.

We did not recast the prior period consolidated financial statements and all prior period amounts and disclosures are presented under ASC Topic 840, " Leases" .

The components of rent expense, which are included in selling, general and administrative expenses in the Company's consolidated statements of operations and comprehensive loss, were as follows:

Year Ended December 31, 2022

Years Ended December 31,

(in thousands)

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Supplemental Balance Sheet Information

Supplemental operating lease balance sheet information consists of the following:

As of December 31, 2022

As of December 31, 2023 and 2022, supplemental operating lease balance sheet information consisted of the following:

December 31, December 31,

(in thousands)

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Other Supplemental Information

Other supplemental operating lease information consists of the following for the year ended December 31, 2022:

Operating cash flows for operating leases (in thousands) $ 1,771

ROU assets obtained in exchange for new lease liabilities (in thousands) $ 5,225

Other supplemental operating lease information consisted of the following for the years ended December 31, 2023 and 2022:

Years Ended December 31,

(dollars in thousands)

Operating cash flows for operating leases

$ 586 $ 1,771

ROU assets obtained in exchange for new lease liabilities

$ 222 $ 5,225

Weighted average remaining lease term (in years) 8.33 9.36

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Related Party Transactions

A summary of the Company’s related party transactions during the year ended December 31, 2022 is presented below:

Amount Due to Related Party as of

December 31, December 31,

Name Nature of Relationship Description of the Transactions (in thousands)

Seahawk Debt Issuer In 2019, the Company raised and converted $ 18.4 million from prior debt into new, outstanding debt and issued 13.5 million warrants to purchase Legacy BlackSky common stock.

$ 20,787 $ 19,977

Intelsat Debt Issuer In 2019, the Company entered into a term loan facility for $ 50.0 million and issued 20.2 million warrants to purchase Legacy BlackSky common stock.

56,345 54,149

A summary of the Company’s related party transactions during the years ended December 31, 2023 and 2022 is presented below:

Amount Due to Related Party as of

Total Payments in the year ended December 31, December 31, December 31,

Total Payments in the Years Ended December 31, December 31, December 31,

Nature of Relationship 2023 2022 2023 2022

Name Description of the Transactions (in thousands)

LeoStella Joint Venture Design, development and manufacture of multiple satellites.

$ 28,042 $ 19,257 $ 3,728 $ 8,381

X-Bow Equity Method Investee In 2017, the Company received stock in X-Bow.

As of December 31, 2022, the Company had a less than 20 % investment in X-Bow and had one Board seat.

As described in Note 7, the Company has engaged X-Bow to develop a rocket for the Company.

LeoStella Joint Venture with Thales Alenia Space The Company owns 50% of LeoStella, its joint venture with Thales.

The Company contracts with LeoStella for the design, development and manufacture of satellites to operate its business.

$ 23,910 $ 28,042 $ 10,843 $ 3,728

X-Bow Equity Method Investee The Company had a less than 20 % investment in X-Bow and held one Board seat through November 2023 when it sold its investment.

Ursa Space Systems Strategic Partner The chairman of the Company’s board of directors, Will Porteous, is also an investor and member of the board of directors of Ursa Space Systems.

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8,092 11,388 750 693

In January 2023, the Company finalized a settlement agreement with LeoStella whereby the Company agreed to pay certain outstanding invoices of $ 1.4 million and LeoStella agreed to purchase certain customer satellite equipment from the Company for $ 1.0 million.

The net amount due from the Company of $ 0.4 million was paid to LeoStella in February 2023.

As a result of the agreement, as of December 31, 2022, the Company accrued for the proceeds from the sale of the equipment as a reduction in the amounts owed to LeoStella and reduced professional & engineering service costs, excluding depreciation and amortization for the year ended December 31, 2022.

Interest on the term loan facility is accrued and compounded annually.

No significant interest payments were made in the years ended December 31, 2022 or 2021.

The Company had interest due to related parties of $ 1.2 million, included in other current liabilities as of December 31, 2022, and $ 0.5 million included in other liabilities as of December 31, 2021.

In February 2021, in connection with the Bridge Notes, the Company agreed to pay Consent Fees of $ 2.5 million to Intelsat and Seahawk, which were settled for cash at the closing of the Merger (Note 15).

During the first half of 2021, the Company paid $ 2.5 million to the Founders towards the principal balance, along with a $ 25 thousand interest payment.

In December 2021, the Company issued Class A common stock in exchange for the outstanding principal and accrued interest totaling $ 12.1 million (Note 15).

The total number of Class A common stock exchanged to settle the outstanding debt was 958,082 .

Seahawk Debt Issuer and subsidiary of Thales Alenia Space In 2019, the Company raised and converted $ 18.4 million from prior debt into new, outstanding debt and issued 13.5 million warrants to purchase Legacy BlackSky common stock.

375 — 22,793 20,787

Intelsat Debt Issuer In 2019, the Company entered into a term loan facility for $ 50.0 million and issued 20.2 million warrants to purchase Legacy BlackSky common stock.

1,042 — 61,785 56,345

The Company recorded revenue from related parties of $ 11.5 million and $ 0 for the years ended December 31, 2023 and 2022, respectively.

Accounts receivable from related parties was $ 0 as of December 31, 2023 and 2022.

The Company incurred $ 0.4 million of offering costs to related parties in relation to the Amendment.

See Note 13 for information regarding the Amendment.

Interest on the term loan facility is accrued and is due semi-annually.

The Company made interest payments of $ 1.0 million and $ 0 during the years ended December 31, 2023 and 2022, respectively.

December 31, 2023, the Company had interest due to related parties of $ 1.7 million, of which $ 0.3 million is to be paid as cash interest on a semi-annual basis and was included in other current liabilities and $ 1.4 million is paid in kind as principal due on the maturity date and was included in other liabilities.

As of December 31, 2022, the Company had interest due to related parties of $ 1.2 million that was included in other current liabilities.

Fair Value of Financial Instruments

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Public Warrants $ 795 $ — $ —

Private Placement Warrants — — 1,332

Private Placement Warrants - Issued October 2019 — — 583

Private Placement Warrants - Issued March 2023 — — 12,467

Sponsor Shares — — 1,304

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Public Warrants $ 2,097 $ — $ —

Private Placement Warrants — — 3,496

Private Placement Warrants - Issued October 2019 — — 1,332

Sponsor Shares — — 1,684

$ 2,097 $ — $ 3,016

The carrying values of the following financial instruments approximated their fair values as of December 31, 2022 and December 31, 2021 based on their maturities:

cash and cash equivalents, restricted cash, short-term investments, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, leases payable and other current liabilities.

The carrying values of the following financial instruments approximated their fair values as of December 31, 2023 and 2022 based on their maturities:

cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and other current liabilities.

There were no transfers into or out of any of the levels of the fair value hierarchy during the years ended December 31, 2023 or 2022.

Changes in the fair value of the Level 3 liabilities during the year ended December 31, 2021 of $ 3.4 million included the Bridge Notes, Private Placement Warrants, Sponsor Shares, Class A common stock warrants, Legacy BlackSky preferred stock warrants, and Consent Fees.

Changes in the fair value of the Level 3 liabilities during the year ended December 31, 2022 of $ 5.2 million included the Sponsor Shares and the October 2019 Private Placement Warrants.

The following is a summary of changes in the fair value of the Level 3 liabilities during the year ended December 31, 2023:

Sponsor Shares Private Placement Warrants

Sponsor Shares Private Placement Warrants - Issued October 2019 Private Placement Warrants - Issued March 2023

(in thousands)

Balance, January 1, 2022 $ 4,732 $ 3,496

Balance as of January 1, 2023 $ 1,684 $ 1,332 $ —

Liability recorded at fair value — — 17,716

Gain from changes in fair value ( 380 ) ( 749 ) ( 5,249 )

Balance, December 31, 2022 $ 1,684 $ 1,332

Balance as of December 31, 2023 $ 1,304 $ 583 $ 12,467

Commitments and Contingencies

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Present value of lease liabilities $ 3,662

As of December 31, 2022, the Company has approximately $ 149 thousand of commitments for an office space lease that has not yet commenced.

As of December 31, 2023, the Company has approximately $ 7.3 million of commitments for an office space lease that has not yet commenced.

The lease commenced in January 2024 with a lease term of 13 years.

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Legal Proceedings

From time to time, we may become involved in various claims and legal proceedings arising in the ordinary course of business, which, by their nature, are inherently unpredictable.

We are not currently a party to any material claims or legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.

Regardless of outcome, litigation and other legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Other Contingencies

The Company analyzed its unique facts and circumstances related to potential obligations in a certain state jurisdiction, including the delivery nature of its prior year intercompany services, payroll and other benefits-

related services, current shared services between the parent and subsidiaries, and changing state laws and interpretations of those laws, and has determined that the Company may have an indirect tax obligation.

The Company has continued correspondence with the applicable authorities in an effort toward identifying a taxpayer-favorable resolution of the potential liabilities.

As a result of this correspondence, the Company has updated its liability including interest and penalties based on its best estimate as of December 31, 2022.

The following table summarizes the estimated indirect tax liability activity during the year ended December 31, 2022:

(in thousands)

Balance, January 1, 2022 $ 737

Payments ( 504 )

Adjustment to Expense ( 146 )

Balance, December 31, 2022 $ 87

The Company continues to analyze the additional obligations it may have, if any, and it will adjust the liability accordingly.

From time to time, the Company may become involved in various claims and legal proceedings arising in the ordinary course of business, which, by their nature, are inherently unpredictable.

The Company is not currently a party to any material claims or legal proceedings the outcome of which, if determined adversely to the Company, would individually or in the aggregate, have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows.

Regardless of outcome, litigation and other legal proceedings can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Other Commitments

The Company has a commitment for launch and integration services with a launch services provider.

As of December 31, 2022, the Company had a commitment for one launch, to include up to two satellites at a future estimated launch date for $ 1.7 million.

The terms of the arrangement also allow the Company to remanifest the satellites if significant delays in excess of 365 days or other inexcusable delays occur with the provider.

Subsequent to remanifest efforts four months after the 365 days, the Company can request a refund of all recoverable costs.

Payment terms are 15 days from invoice date.

In addition, we have various other operational commitments for the next several years totaling $ 9.8 million as of December 31, 2022.

During the year ended December 31, 2023, the Company entered into a commitment for non-refundable multi-launch and integration services.

The Company also entered into a commercial agreement with financing terms for multiple launches providing for $ 3.0 million to be paid upfront, and for $ 27.0 million, of which a portion will be drawn down equally per launch and will be repaid quarterly on a pro-rata basis across a three-year period after each successful launch milestone.

Payments will accrue interest at 12.6 % per annum.

The Company may prepay at any time until the maturity date without premium or penalty.

As of December 31, 2023, the minimum commitment associated with the agreement was $ 8.4 million.

Under certain circumstances, a default interest rate will apply on all outstanding and payable obligations during the existence of an event of default under the Loan Agreement at 18.9 % per annum above the applicable interest rate.

We have operational commitments for the next several years that contain termination for convenience options, subject to applicable termination fees.

For example, we have work orders to manufacture our Gen-3 satellites at LeoStella, our satellite manufacturing joint venture.

Our work orders with LeoStella and other manufacturing partners all contain termination for convenience options that allow us to manage the satellite production process from design through manufacturing.

In addition to the above, the Company entered into various operational commitments for the next several years totaling $ 6.6 million as of December 31, 2023.

Concentrations, Risks, and Uncertainties

The Company maintains all cash and cash equivalents with one financial institution.

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily accounts receivable and cash deposits.

For the years ended December 31, 2022 and 2021, revenue from customers representing 10% or more of the consolidated revenue from continuing operations was $ 27.3 million and $ 15.4 million, respectively.

Accounts receivable related to these customers as of December 31, 2022 and 2021 was $ 0 and $ 1.3 million, respectively.

Revenue from the U.S.

federal government and agencies was $ 53.2 million and $ 29.4 million for the years ended December 31, 2022 and 2021, respectively.

Accounts receivable related to U.S.

federal government and agencies was $ 2.5 million and $ 2.6 million as of December 31, 2022 and 2021, respectively.

The Company has a concentration of contractual revenue arrangements with the U.S.

federal government and agencies as well as with commercial customers.

The Company had the following customers whose revenue and accounts receivable balances individually represented 10% or more of the Company’s total revenue and/or accounts receivable:

Accounts Receivable

Years Ended December 31, As of December 31,

2023 2022 2023 2022

(in thousands)

federal government and agencies 62 % 81 % 83 % 82 %

Customer B 14 % * * *

Customer C 12 % * * *

* Revenue and/or accounts receivable from these customers were less than 10% of total revenue and/or accounts receivable during the year.

The Company generally extends credit on account, without collateral.

Outstanding accounts receivable balances are evaluated by management, and accounts are reserved when it is determined collection is not probable.

As of December 31, 2022 and 2021, the Company evaluated the realizability of the aged accounts receivable, giving consideration to each customer’s financial history and liquidity position, credit rating and the facts and circumstances of collectability on each outstanding account, and did not have a significant reserve for uncollectible account.

As of December 31, 2023 and 2022, the Company evaluated the realizability of the aged accounts receivable, giving consideration to each customer’s financial history and liquidity position, credit rating and the facts and circumstances of collectability on each outstanding account, and did not have a significant reserve for uncollectible accounts.

Subsequent Events

On March 8, 2023, the Company completed the closing of a private placement whereby the Company issued 16,403,677 shares of the Company’s Class A common stock and warrants to purchase up to an additional 16,403,677 shares of Common Stock.

The purchase price of each share and associated warrant was $ 1.79 .

The aggregate gross proceeds to the Company from the private placement were approximately $ 29.5 million, before deducting the placement agent fees and other offering expenses payable by the Company.

The Company intends to use the net proceeds from the private placement for general corporate purposes, including working capital.

The warrants have an exercise price of $ 2.20 per share of common stock, and are exercisable beginning on September 8, 2023 until September 8, 2028.

The warrants issued in the private placement provide that a holder of warrants will not have the right to exercise any portion of its warrants if such holder, together with its affiliates, would beneficially own in excess of 4.99 % of the number of shares of common stock outstanding immediately after giving effect to such exercise;

provided, however, that each holder may increase or decrease the beneficial ownership limitation by giving notice to the Company;

but not to any percentage in excess of 9.99 %.

The Company evaluated subsequent events through March 19, 2024 and determined that there have been no events that have occurred that would require adjustments to our disclosures or the consolidated financial statements.

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

What changed 10-K

Item 9A. Controls and Procedures