BlackSky Technology Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES 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 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. Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at a reasonable assurance level. In designing and evaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company will be detected. Management’s Report on Internal Control Over Financial Reporting Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In November 2024, we acquired the remaining 50% of common units of LeoStella LLC (“LeoStella”) and LeoStella became a wholly-owned subsidiary of BlackSky. As part of the ongoing integration of LeoStella, we are in the process of incorporating the controls and related procedures of this businesses. As permitted by the SEC rules, management's assessment and conclusion on the effectiveness of our internal control over financial reporting as of December 31, 2024 excludes an assessment of the internal control over financial reporting of LeoStella, acquired on November 6, 2024. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. and management believes that we maintained effective internal control over financial reporting as of December 31, 2024 based on those criteria. Attestation Report of the Registered Public Accounting Firm 76 Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting for as long as we are a non-accelerated filer. Changes in Internal Control Over Financial Reporting In November 2024, we acquired the remaining 50% of common units of LeoStella and LeoStella became a wholly-owned subsidiary of BlackSky. As part of the ongoing integration of LeoStella, we are in the process of incorporating the controls and related procedures of this businesses. Other than incorporating controls for LeoStella, 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, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2024, 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). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE We will provide information that is responsive to this Item 10 in our definitive proxy statement for our 2025 Annual Meeting of Stockholders or in an amendment to this Annual Report on Form 10-K not later than 120 days after December 31, 2024. Such information is incorporated into this Item 10 by reference. ITEM 11. EXECUTIVE COMPENSATION We will provide information that is responsive to this Item 11 in our definitive proxy statement for our 2025 Annual Meeting of Stockholders or in an amendment to this Annual Report on Form 10-K not later than 120 days after December 31, 2024. Such information is incorporated into this Item 11 by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS We will provide information that is responsive to this Item 12 in our definitive proxy statement for our 2025 Annual Meeting of Stockholders or in an amendment to this Annual Report on Form 10-K not later than 120 days after December 31, 2024. Such information is incorporated into this Item 12 by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE We will provide information that is responsive to this Item 13 in our definitive proxy statement for our 2025 Annual Meeting of Stockholders or in an amendment to this Annual Report on Form 10-K not later than 120 days after December 31, 2024. Such information is incorporated into this Item 13 by reference. 77 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information about aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34 ) will be presented in our definitive proxy statement for our 2025 Annual Meeting of Stockholders or in an amendment to this Annual Report on Form 10-K not later than 120 days after December 31, 2024. Such information is incorporated into this Item 14 by reference. 78 PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 1. and 2. Financial Statements and Financial Statement Schedules 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 84 . 3. Exhibits The documents listed below are incorporated by reference or are filed with this report, in each case as indicated therein. Exhibit No. Exhibit Description Form SEC File No. Exhibit No. Filing Date Filed or Furnished Herewith 2.1† Agreement and Plan of Merger, dated as of February 17, 2021, by and among Osprey Technology Acquisition Corp., Osprey Technology Merger Sub, Inc., and BlackSky Technology Inc. 424(b)(3) 333-256103 Annex A August 11, 2021 3.1 Amended and Restated Certificate of Incorporation of the Company, as amended X 3.2 Amended and Restated Bylaws of the Company 8-K 001-39113 3.2 September 15, 2021 4.1 Specimen Common Stock Certificate X 4.2 Form of Indenture S-3 333-267889 4.3 October 14, 2022 4.3 Specimen Warrant Certificate X 4.4 Warrant Agreement, dated October 31, 2019, between Continental Stock Transfer & Trust Company and Osprey Technology Acquisition Corp. 8-K 001-39113 4.1 November 5, 2019 4.5 Description of Securities X 4.6 Form of Warrant 8-K 001-39113 4.1 March 9, 2023 10.1+ BlackSky Technology Inc. 2021 Equity Incentive Plan 424(b)(3) 333-256103 Annex E August 11, 2021 10.2+ BlackSky Technology Inc. 2021 Employee Stock Purchase Plan 424(b)(3) 333-256103 Annex F August 11, 2021 10.3+ BlackSky Technology Inc. Outside Director Compensation Policy X 10.4+ BlackSky Technology Inc. Form of Indemnification Agreement 8-K 001-39113 10.4 September 15, 2021 10.5 Right of First Offer Agreement, dated as of October 31, 2019, by and between Spaceflight Industries, Inc. and Intelsat Jackson Holdings, S.A. S-4 333-256103 10.10 May 13, 2021 10.6 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/A 001-39113 10.3 February 22, 2021 10.7 Form of Registration Rights Agreement 8-K 001-39113 10.5 February 22, 2021 10.8 Form of Subscription Agreement 8-K 001-39113 10.1 February 22, 2021 10.9+ Offer Letter from BlackSky Holdings Inc. to Brian O’Toole, dated August 18, 2021 8-K 001-39113 10.1 August 18, 2021 10.10+ Offer Letter from BlackSky Holdings Inc. to Henry Dubois, dated August 18, 2021 8-K 001-39113 10.3 August 18, 2021 10.11+ Amendment to Offer Letter from BlackSky Holdings Inc. to Henry Dubois, dated June 10, 2022 10-Q 001-39113 10.2 August 10, 2022 10.12+ Offer Letter from BlackSky Holdings Inc. to Chris Lin, dated August 18, 2021 8-K 001-39113 10.4 August 18, 2021 79 Exhibit No. Exhibit Description Form SEC File No. Exhibit No. Filing Date Filed or Furnished Herewith 10.13 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. and its subsidiaries. S-4/A 333-256103 10.17 June 28, 2021 10.14 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. and the subsidiaries named therein, Intelsat Jackson Holdings SA and Seahawk SPV Investment LLC 8-K 001-39113 10.5 September 15, 2021 10.15 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 10-Q 001-39113 10.3 May 10, 2023 10.16 BlackSky HQ Lease Agreement, dated November 20, 2023, by and between 2411 Dulles Corner Metro Owner LLC and BlackSky Holdings, Inc. 10-K 001-39113 10.20 March 20, 2024 10.17+ BlackSky Technology Inc. Executive Change in Control and Severance Plan, adopted August 16, 2021, and form of P articipation A greement attached as A ppendix A 8-K 001-39113 10.6 August 18, 2021 10.18+ Form of Stock Option Agreement under the BlackSky 2021 Equity Incentive Plan S-8 333-261778 4.4 December 20, 2021 10.19+ Form of Restricted Stock Unit Agreement under the BlackSky 2021 Equity Incentive Plan S-8 333-261778 4.5 December 20, 2021 10.20+ Form of Stock Appreciation Right Agreement under the BlackSky 2021 Equity Incentive Plan S-8 333-261778 4.7 December 20, 2021 10.21+ Form of Restricted Stock Award Agreement under the BlackSky 2021 Equity Incentive Plan S-8 333-261778 4.6 December 20, 2021 10.22+ BlackSky Holdings, Inc. 2014 Equity Incentive Plan S-8 333-261778 4.8 December 20, 2021 10.23+ Form of Restricted Stock Unit Agreement under the BlackSky 2014 Equity Incentive Plan S-8 333-261778 4.4 March 4, 2022 10.24+ Executive Incentive Compensation Plan 10-K 001-39113 10.34 March 31, 2022 10.25† NRO Contract, dated May 23, 2022, by and between the National Reconnaissance Office and BlackSky Technology Inc. 10-Q 001-39113 10.1 August 10, 2022 10.26 Open Market Sale Agreement, dated December 15, 2022, by and between BlackSky Technology Inc. and Jefferies LLC 8-K 001-39113 1.1 December 15, 2022 10.27 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 10.28†** 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. 10-K 001-39113 10.34 March 20, 2024 10.29** Loan and Security Agreement, dated as of April 11, 2024, by and among BlackSky Technology Inc., BlackSky Holdings, Inc., BlackSky Geospatial Solutions, Inc. (n/k/a BlackSky Geospatial Solutions, LLC), BlackSky Global LLC, SFI IP Holdco LLC, BlackSky International, Building 5 LLC and Stifel Bank 8-K 001-39113 10.1 April 15, 2024 19.1 I nsider Tradi ng Policy X 21.1 List of Subsidiaries X 23.1 Consent of Deloitte & Touche LLP, independent registered public accounting firm of BlackSky Technology Inc. X 80 Exhibit No. Exhibit Description Form SEC File No. Exhibit No. Filing Date Filed or Furnished Herewith 24.1 Power of Attorney (included in signature pages hereto) X 31.1 Certification of the Company’s Chief Executive Officer, Brian O’Toole, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of the Company’s Chief Financial Officer, Henry Dubois, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1* Certification of the Company’s Chief Executive Officer, Brian O’Toole, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of the Company’s Chief Financial Officer, Henry Dubois, pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. X 97.1 Compensation Recovery Policy 10-K 001-39113 97.1 March 20, 2024 101.INS Inline XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X ________________ + Indicates management contract or compensatory plan. † Certain portions of this exhibit have been omitted in accordance with Item 601 of Regulation S-K. The Registrant agrees to furnish an unredacted copy of the exhibit to the SEC upon request. * 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. ITEM 16. FORM 10-K SUMMARY None. 81 ITEM 16A. SIGNATURES SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. March 19, 2025 BlackSky Technology Inc. By: /s/ Brian E. O’Toole Brian E. O'Toole Chief Executive Officer and Director (Principal Executive Officer) By: /s/ Henry Dubois Henry Dubois Chief Financial Officer (Principal Financial Officer) By: /s/ Tracy Ward Tracy Ward Senior Vice President and Controller (Principal Accounting Officer) 82 POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Brian O’Toole, Henry Dubois, and Tracy Ward, and each one of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such individual in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or the individual’s substitute, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons in the capacities and on the dates indicated on behalf of the registrant. Signature Title Date /s/ Brian E. O’Toole Chief Executive Officer, President and Director (Principal Executive Officer) March 19, 2025 Brian O’Toole /s/ Henry Dubois Chief Financial Officer (Principal Financial Officer) March 19, 2025 Henry Dubois /s/ Tracy Ward Senior Vice President and Controller (Principal Accounting Officer) March 19, 2025 Tracy Ward /s/ Magid Abraham Director March 19, 2025 Magid Abraham /s/ David DiDomenico Director March 19, 2025 David DiDomenico /s/ Susan Gordon Director March 19, 2025 Susan Gordon /s/ Timothy Harvey Director March 19, 2025 Timothy Harvey /s/ William Porteous Director March 19, 2025 William Porteous /s/ James Tolonen Director March 19, 2025 James Tolonen 83 Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm 85 Consolidated Balance Sheets 87 Consolidated Statements of Operations and Comprehensive Loss 88 Consolidated Statements of Changes in Stockholders' Equity 89 Consolidated Statements of Cash Flows 90 Notes to Consolidated Financial Statements 92 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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, 2024, and 2023, 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, 2024, 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, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and 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 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Business Acquisition — Valuation of LeoStella and Related Intangible Assets — Refer to Note 7 to the financial statements Critical Audit Matter Description On November 6, 2024, the Company acquired the remaining 50% of the common units of LeoStella, which the Company’s initial 50% ownership interest was previously accounted for as an equity method investment. The transaction was accounted for as a step acquisition using the acquisition method of accounting for business combinations. As of the date of the acquisition the Company determined the fair value of LeoStella using a combination of cost approaches and discounted cash flow methods. With respect to intangible assets, the estimated 85 fair values were determined based on relief from royalty and multi-period Excess Earnings Method approach. The Company remeasured its pre-existing 50% interest in LeoStella at fair value immediately prior to the acquisition and recorded a gain on its investment of $0.9 million in the Statement of Operations and Comprehensive Loss. The identifiable assets and liabilities of LeoStella were recorded at fair value on the date of acquisition. The fair value determination of LeoStella and identifiable intangible assets required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rate. We identified the valuation of LeoStella and the related acquired identifiable intangible assets to be a critical audit matter because of the significant estimates and assumptions management made to determine the fair value of LeoStella and acquired identifiable intangible assets. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasts of future cash flows, and other valuation assumptions, including the selection of the discount rate. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the valuation of LeoStella and the related acquired identifiable intangible assets included the following, among others: • We tested the design and implementation of controls over the valuation of LeoStella and the related intangible assets, including management’s controls over forecasts of future cash flows and selection of the discount rates. • We tested the completeness and accuracy of the underlying data used in the fair value models which included inspecting contractual documents, comparing projected cash flows to both historical actuals, management's plans and inquiring of management. • We involved our valuation specialists to assist with the evaluation of the methodology used by the Company and significant valuation assumptions included in the fair value estimates, including the discount rate applied to future cash flows. • We performed a sensitivity analysis over assumptions used in the fair value model, to evaluate the risk associated with a change in the fair value of the intangible assets resulting from changes in the assumptions. /s/ Deloitte & Touche LLP McLean, VA March 19, 2025 We have served as the Company's auditor since 2015. 86 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BLACKSKY TECHNOLOGY INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value) December 31, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 13,056 $ 32,815 Restricted cash 1,322 619 Short-term investments 39,406 19,697 Accounts receivable, net of allowance of $ 45 and $ 151 , respectively 14,701 7,071 Contract assets 27,852 15,213 Inventories 6,043 — Prepaid expenses and other current assets 4,356 3,916 Total current assets 106,736 79,331 Property and equipment - net 45,613 67,116 Operating lease right of use assets - net 4,029 1,630 Goodwill 10,260 9,393 Intangible assets - net 5,446 1,357 Satellite work in process 80,601 55,976 Other assets 1,461 9,263 Total assets $ 254,146 $ 224,066 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued liabilities $ 20,419 $ 11,573 Amounts payable to equity method investees — 10,843 Contract liabilities - current 2,183 3,670 Debt - current portion 1,927 — Other current liabilities 1,493 1,405 Total current liabilities 26,022 27,491 Operating lease liabilities 8,048 3,041 Derivative liabilities 17,964 15,149 Long-term debt - net of current portion 105,736 83,502 Other liabilities 2,387 1,724 Total liabilities 160,157 130,907 Commitments and contingencies (Note 23) Stockholders’ equity: Class A common stock, $ 0.0001 par value-authorized, 300,000 shares; issued, 30,960 and 18,154 shares; outstanding, 30,663 shares and 17,855 shares as of December 31, 2024 and 2023, respectively. 3 2 Additional paid-in capital 750,174 692,127 Accumulated deficit ( 656,188 ) ( 598,970 ) Total stockholders’ equity 93,989 93,159 Total liabilities and stockholders’ equity $ 254,146 $ 224,066 See notes to consolidated financial statements 87 BLACKSKY TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share amounts) Years Ended December 31, 2024 2023 Revenue Imagery & software analytical services $ 70,062 $ 65,391 Professional & engineering services 32,031 29,101 Total revenue 102,093 94,492 Costs and expenses Imagery & software analytical service costs, excluding depreciation and amortization 13,907 13,793 Professional & engineering service costs, excluding depreciation and amortization 13,525 19,988 Selling, general and administrative 74,069 72,617 Research and development 1,344 643 Depreciation and amortization 43,536 43,431 Operating loss ( 44,288 ) ( 55,980 ) (Loss) gain on derivatives ( 2,815 ) 7,679 Income on equity method investments 879 4,165 Interest income 1,560 2,063 Interest expense ( 12,187 ) ( 9,306 ) Other income (expense), net 3 ( 1,807 ) Loss before income taxes ( 56,848 ) ( 53,186 ) Income tax expense ( 370 ) ( 673 ) Net loss ( 57,218 ) ( 53,859 ) Other comprehensive income — — Total comprehensive loss $ ( 57,218 ) $ ( 53,859 ) Basic and diluted loss per share of common stock: Net loss per share of common stock $ ( 2.67 ) $ ( 3.18 ) See notes to consolidated financial statements 88 BLACKSKY TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands) Year Ended December 31, 2024 Common Stock Additional Paid-In Accumulated Total Stockholders' Shares Amount Capital Deficit Equity Balance as of January 1, 2024 17,855 $ 2 $ 692,127 $ ( 598,970 ) $ 93,159 Stock-based compensation — — 11,724 — 11,724 Issuance of common stock upon exercise of stock options and ESPP shares purchased 64 — 308 — 308 Issuance of common stock upon vesting of restricted stock awards 3 — — — — Issuance of common stock upon vesting of restricted stock units 852 — — — — Issuance of common stock, net of equity issuance costs 11,999 1 46,982 — 46,983 Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options ( 110 ) — ( 967 ) — ( 967 ) Net loss — — — ( 57,218 ) ( 57,218 ) Balance as of December 31, 2024 30,663 $ 3 $ 750,174 $ ( 656,188 ) $ 93,989 Year Ended December 31, 2023 Common Stock Additional Paid-In Accumulated Total Stockholders' Shares Amount Capital Deficit Equity Balance as of January 1, 2023 14,939 $ 1 $ 666,984 $ ( 545,111 ) $ 121,874 Stock-based compensation — — 11,571 — 11,571 Issuance of common stock upon exercise of stock options 51 — 10 — 10 Issuance of common stock upon vesting of restricted stock awards 4 — — — — Issuance of common stock upon vesting of restricted stock units 504 — — — — Issuance of common stock, net of equity issuance costs 2,483 1 14,972 — 14,973 Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options ( 126 ) — ( 1,410 ) — ( 1,410 ) Net loss — — — ( 53,859 ) ( 53,859 ) Balance as of December 31, 2023 17,855 $ 2 $ 692,127 $ ( 598,970 ) $ 93,159 See notes to consolidated financial statements 89 BLACKSKY TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 57,218 ) $ ( 53,859 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 43,536 43,431 Transfer of satellite work in process to engineering service costs 334 4,854 Operating lease right of use assets amortization 583 883 Bad debt expense 145 179 Stock-based compensation expense 11,169 10,862 Amortization of debt issuance costs and non-cash interest expense 9,207 7,967 Loss (gain) on derivatives 2,815 ( 7,679 ) Non-cash interest income ( 1,074 ) ( 796 ) Loss on impairment of assets 131 81 Loss on disposal of assets 44 127 Income on equity method investment ( 879 ) ( 4,165 ) Changes in operating assets and liabilities: Accounts receivable ( 7,775 ) ( 4,137 ) Contract assets - current and long-term ( 4,989 ) ( 16,299 ) Prepaid expenses and other current assets 556 1,118 Other assets 2,428 1,328 Accounts payable and accrued liabilities ( 4,080 ) 3,316 Other current liabilities ( 356 ) ( 1,041 ) Contract liabilities - current and long-term ( 978 ) ( 3,053 ) Other liabilities 17 ( 538 ) Net cash used in operating activities ( 6,384 ) ( 17,421 ) Cash flows from investing activities: Purchase of property and equipment ( 15,678 ) ( 15,274 ) Satellite work in process ( 34,558 ) ( 28,441 ) Purchases of short-term investments ( 52,860 ) ( 40,078 ) Proceeds from maturities of short-term investments 34,225 59,110 Cash received from business acquisition 541 — Proceeds from sale of equity method investment — 9,450 Proceeds from sale of property and equipment — 22 Net cash used in investing activities ( 68,330 ) ( 15,211 ) Cash flows from financing activities: Proceeds from equity issuances, net of equity issuance costs 47,009 32,733 Proceeds from issuance of debt 20,000 — Proceeds from options exercised and ESPP shares purchased 308 10 Debt payments ( 10,000 ) — Withholding tax payments on vesting of restricted stock units ( 967 ) ( 1,410 ) Payments for debt issuance costs ( 632 ) — Payments for deferred financing costs — ( 67 ) Payments for deferred offering costs ( 60 ) — Payments of transaction costs for debt modification — ( 1,311 ) Payments of transaction costs related to derivative liabilities — ( 905 ) Net cash provided by financing activities 55,658 29,050 Net decrease in cash, cash equivalents, and restricted cash ( 19,056 ) ( 3,582 ) Cash, cash equivalents, and restricted cash – beginning of year 33,434 37,016 Cash, cash equivalents, and restricted cash – end of year $ 14,378 $ 33,434 See notes to consolidated financial statements 90 The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows: December 31, 2024 2023 Cash and cash equivalents $ 13,056 $ 32,815 Restricted cash 1,322 619 Total cash, cash equivalents, and restricted cash $ 14,378 $ 33,434 Years Ended December 31, 2024 2023 (in thousands) Supplemental disclosures of cash flow information: Cash paid for interest $ 2,523 $ 989 Cash paid for income taxes 476 460 Supplemental disclosures of non-cash financing and investing information: Increase of debt principal for paid-in-kind interest $ 8,456 $ 7,446 Vendor financed satellite launch costs 6,000 — Transfer of satellite work in progress to inventories 5,997 — Accretion of short-term investments' discounts and premiums 1,074 777 Property and equipment additions accrued but not yet paid 1,117 10,420 Capitalized stock-based compensation 555 709 Transfer of satellite work in process to engineering service costs 334 4,854 Capitalization of depreciation expense 177 — Deferred offering costs accrued but not yet paid 54 4 Equity issuance costs accrued but not yet paid 46 13 Capitalized interest for property and equipment placed into service — 220 Credits from LeoStella applied to satellite procurement costs — 125 Satellite procurement costs included in settlement with LeoStella — 36 See notes to consolidated financial statements 91 BLACKSKY TECHNOLOGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 1. Organization and Business 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, LLC. On November 6, 2024, the Company acquired the remaining 50 % of the common units of LeoStella LLC (“LeoStella”). LeoStella was previously a joint venture with Thales Alenia Space US Investment LLC (“Thales”) and the Company accounted for LeoStella as an equity method investment. On the acquisition date, LeoStella became a wholly-owned subsidiary of the Company. LeoStella is a vertically-integrated small satellite design and manufacturer based in Tukwila, Washington and it is expected that this acquisition will allow the Company to improve its control over the Gen-3 supply chain and production operations. See Note 7 - "Business Acquisition"- for further detail. In September 2024, the Company effected a one-for-eight reverse stock split (the “Reverse Stock Split”) of its issued Class A common stock. As a result, every eight shares of its issued common stock were combined into one share of common stock. No fractional shares of the Company's common stock were issued as a result of the Reverse Stock Split. Each stockholder who would otherwise have been entitled to receive a fractional share as a result of the Reverse Stock Split received a cash payment equal to the product obtained by multiplying the number of shares of common stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional share interest by the closing price per share of the common stock as reported on the New York Stock Exchange (“NYSE”) on September 6, 2024, the date of the effective time of the Reverse Stock Split. As a result of the Reverse Stock Split, proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of the Company's common stock. These notes to the consolidated financial statements and the accompanying consolidated financial statements give retroactive effect to the Reverse Stock Split for all periods presented. The shares of common stock retained a par value of $ 0.0001 per share. The Company's equity issuances during the year ended December 31, 2024 included a public offering of shares and shares sold as part of the Company's at-the-market (“ATM”) offering program. In September 2024, the Company raised gross proceeds of $ 46.0 million via a public offering comprised of 11.5 million shares of the Company's Class A common stock for a public offering price of $ 4.00 per share. The Company also sold 500 thousand shares from the ATM offering program at an average purchase price per share of $ 9.68 , resulting in gross proceeds of $ 4.8 million during the year ended December 31, 2024. The transaction costs of $ 3.9 million for the equity issuances incurred during the year ended December 31, 2024, consisting of underwriting discounts and commissions, legal fees, and placement agent fees, have been recorded as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ equity and consolidated balance sheets. 92 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Preparation The Company has prepared its consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) and the instructions to Form 10-K and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. As noted in Note 1 and Note 7, on November 6, 2024, the Company acquired the remaining 50 % of the common units of LeoStella and LeoStella became a wholly-owned subsidiary of BlackSky. Prior to the acquisition, the consolidated financial statements included the Company’s proportionate share of the earnings or losses of its equity method investments and a corresponding increase or decrease to its investments, with recorded losses limited to the carrying value of the Company’s investments. All intercompany transactions and balances have been eliminated upon consolidation. 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. Unless otherwise indicated, amounts presented in the Notes pertain to the Company’s continuing operations. Use of Estimates The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies at the reporting date, and the reported amounts of revenue and expenses during the reporting period. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. 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, the incremental borrowing rate to measure the operating lease right of use assets, the effective interest rate of the vendor financing agreement, the fair value of assets acquired and liabilities assumed of a business combination, and stock-based compensation. Cash and Cash Equivalents Cash and cash equivalents are comprised of cash in banks and highly liquid investments with original maturities of three months or less. Restricted Cash The Company classifies cash as restricted when the cash is unavailable for withdrawal or usage for general operations. Restricted cash represents certificates of deposits held by a bank as a compensating balance for letters of credit that facilitate certain contracts with customers and cash collateral for leasing arrangements. Investments 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, 2024 and December 31, 2023, the Company’s short-term investments had a carrying value of $ 39.4 million and $ 19.7 million, respectively, which represents amortized cost, and an aggregate fair 93 value of $ 39.4 million and $ 19.7 million, respectively, which represents a Level 1 measurement based off of the fair value hierarchy. Accounts Receivable - net Accounts receivable are customer obligations due to the Company under normal trade terms. 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. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for doubtful accounts. 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 $ 45 thousand and $ 151 thousand as of December 31, 2024 and 2023, respectively. Inventories Inventories are categorized into raw materials and work in process. Raw materials are costs used to build satellites, including those materials and labor that are in process of being built. Work in process primarily consists of costs associated with specific anticipated contracts. As of December 31, 2024, the Company had $ 46 thousand of raw materials inventory and $ 6.0 million of work in process inventory. As of December 31, 2023, the Company did not have any inventory. Inventories are stated on a consistent basis at the lower of historical cost or net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company estimates future sales and will write down excess inventories as needed. The Company had a reserve of $ 0 for inventory as of December 31, 2024, and 2023, respectively. The Company’s estimates of future sales are based on confirmed and expected contracts. The carrying values of inventories approximated their fair values as of December 31, 2024. 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 and short-term deposits. The carrying values of prepaid expenses and other current assets approximated their fair values as of December 31, 2024. Property and Equipment - net Property and equipment are stated at cost, less accumulated depreciation. Depreciation expense is recognized in the consolidated statements of operations and comprehensive loss on a straight-line basis over the estimated useful life of the related asset to its residual value. 94 The estimated useful lives are as follows: Estimated useful lives (years) Satellites 3 Capitalized software 3 Office furniture and fixtures 5 Production and engineering equipment 3 - 6 Computer equipment and software 3 Site and other equipment 3 - 4 Leasehold improvements shorter of useful life or remaining lease term Capitalized satellite costs include material costs, labor costs incurred from the start of the pre-acquisition stage through the construction stage, insurance, and the costs incurred to launch the satellite into orbit for its intended use. Labor costs incurred prior to and after the pre-acquisition and construction stages are charged to expense. Once the satellite has reached orbit and makes contact with the Company's network, the Company commences depreciation. The designated useful life of the Company's satellites is estimated to be three years , and depreciation is recognized using the straight-line method. Subsequent to launch, the Company's satellites must meet certain performance and operational criteria to be deemed commercially viable. If the criteria are not met, the Company assesses the satellite for impairment. The Company capitalizes internal and external costs incurred to develop and implement internal-use software, which consist primarily of costs related to design, coding, and testing. Internal costs include salaries and allocations of fringe and stock-based compensation. When the software is ready for its intended use, capitalization ceases and such costs are amortized on a straight-line basis over the estimated life to either depreciation or cost of sales depending on the nature of the software. Costs incurred prior to and after the application development stage are charged to expense. The Company regularly reviews its capitalized software projects for impairment. Leases The Company leases office space under various non-cancellable operating leases with varying lease expiration dates through 2036. 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. The Company determines 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. The Company does not recognize a ROU asset and a lease liability for leases with an initial term of 12 months or less; the Company recognizes 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 95 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 the Company's consolidated financial statements and the Company is not a lessor in any material arrangements. The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees. Goodwill, Intangible Assets - net, and Other Long-Lived Assets Goodwill Goodwill represents the excess of purchase price over the fair value of the identifiable assets acquired less the liabilities assumed in the acquisition of a business. Goodwill is tested annually for impairment at October 1, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. 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 carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In testing for goodwill impairment, the Company may utilize a mix of income and market approaches that include the use of comparable multiples of publicly traded companies whose services are comparable to ours. The Company concluded it has one reporting unit as of December 31, 2024 with goodwill of $ 10.3 million. The Company continuously evaluates whether indicators of impairment exist to determine whether it is necessary to perform a quantitative goodwill impairment test. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include (a) a significant decline in the Company's common stock value; (b) a significant decline in the Company's expected future cash flows; (c) a significant adverse change in legal factors or in the business climate; (d) unanticipated competition; (e) the testing for recoverability of a significant asset group within a reporting unit; or (f) slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on the consolidated financial statements. Long-Lived Assets and Intangible Assets The Company reviews long-lived assets, including intangible assets, property and equipment, satellite work in process and other long-term assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Significant judgments in this area involve determining whether a triggering event has occurred and determining the future cash flows for assets involved. In conducting this analysis, the Company compares the undiscounted cash flows expected to be generated from the long-lived assets (or asset group) to the related net book values. If the undiscounted cash flows exceed the net book value, the long-lived assets are considered not to be impaired. If the net book value exceeds the undiscounted cash flows, an impairment charge is measured and recognized based upon the difference between the carrying value of long-lived assets (or asset group) and their fair value. Finite-lived intangible assets include various assets that are subject to amortization, which primarily includes trade names, trademarks, and customer relationships. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the Company's finite-lived intangible assets are as follows: 96 Estimated useful lives (years) Trade names and trademarks 5 Customer relationships 10 Indefinite life intangible assets is made up of in-process research and development, which has an indefinite life until development is complete. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Satellite Work in Process Satellite work in process primarily represents (a) amounts paid to third party vendors for progress payments associated with the engineering, long lead procurement of satellite components, and manufacturing of the Company's satellites, (b) internal labor costs incurred to develop and integrate the Company's satellites, including salaries and allocations of fringe and stock-based compensation and (c) launch service vendors for the costs associated with launching the Company's satellites, which includes launch and launch insurance costs. Satellite 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 8). Equity Method Investments As noted in Note 1 and Note 7, on November 6, 2024, the Company acquired the remaining 50 % of the common units of LeoStella and LeoStella became a wholly-owned subsidiary of BlackSky. Prior to the acquisition, the Company had the ability to exercise significant influence, but not control, over LeoStella and accounted for it under the equity method of accounting, including it as an in investment in equity method investees on the Company's consolidated balance sheets. Significant influence typically exists if a 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 had significant influence, the Company considered the nature of its ownership interest in the investee, as well as other factors that may have given 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 were included in the Company's consolidated statements of operations and comprehensive loss. The Company did not recognize any percentage of LeoStella's estimated net loss during the year ended December 31, 2024 through the acquisition date since its investment in LeoStella was recorded at $ 0 as of December 31, 2023. The investment in LeoStella prior to acquisition was not significant to the Company's consolidated financial statements. Intra-entity profits arising from the sale of assets from the equity method investments to the Company were eliminated and deferred if those assets were still held by the Company at the end of a reporting period. The intra-entity profits were partially recognized as the assets were consumed. As of December 31, 2023, 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. This amount was fully recognized during the year ended December 31, 2024 as part of the accounting for the acquisition of LeoStella in November 2024. 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. Equity method investments were evaluated for impairment whenever events or changes in circumstances indicated that the carrying amounts of such investments could be impaired. If a decline in the value of an equity method investment was determined to be other than temporary, a loss would have been recorded in earnings that period. 97 Contingent Liabilities The Company may become involved in litigation or other financial claims in the normal course of its business operations. The Company periodically analyzes currently available information relating to these claims, assesses the probability of loss, and provides a range of possible outcomes when it believes that sufficient and appropriate information is available. 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. The Company does 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. For contingencies where an unfavorable outcome is reasonably possible and the impact could potentially be material, the Company discloses the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss. Debt Issuance Costs and Debt Discount Debt issuance costs are capitalized and amortized to interest expense using the effective interest method over the life of the related debt. Short-term and long-term debt are presented net of the unamortized debt issuance costs and debt discount in the consolidated balance sheets. Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The process for analyzing the fair value measurement of certain financial instruments on a recurring, or non-recurring, basis includes significant judgment and estimates of inputs including, but not limited to, share price, volatility, discount for lack of marketability, application of an appropriate discount rate, and probability of liquidating events. The Company utilizes the market valuation methodology and specific option pricing methodology, such as the Monte Carlo simulation, to value the more complex financial instruments and the Black-Scholes option-pricing model to value standard common stock warrants and common stock options. The framework for measuring fair value specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 Inputs. Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 Inputs. Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 Inputs. Inputs are unobservable inputs which reflect the Company’s own assumptions on what assumptions market participants would use in pricing the asset or liability based on the best available information. Revenue Recognition 98 The Company generates revenue from the sale of imagery and software analytical services and professional and engineering services. Imagery and software analytical services revenue, which is mostly from contracts from domestic and international 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 time and materials basis, firm fixed price service solutions, and firm fixed price long-term engineering and construction contracts. In accordance with Accounting Standards Update No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“Accounting Standards Codification (“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. The Company applies a policy election to exclude transaction taxes collected from customer sales when the tax is both imposed on and concurrent with a specific revenue-producing transaction. The Company estimates any variable consideration, and whether the transaction price is constrained, upon execution of each contract. The Company did not have any active contracts with significant variable consideration as of December 31, 2024. Imagery & Software Analytical Services Revenue Imagery 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 the Company's proprietary satellite constellation to collect and deliver imagery over specific locations, sites and regions that are critical to their operations. The Company offers 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 The Company leverages proprietary AI and ML algorithms to analyze data coming from both the Company’s proprietary sensor network and third-party space and terrestrial sources to provide hard-to-get data, insights, and analytics for customers. The Company continues to integrate and enhance its offerings by performing contract development, while retaining the intellectual property rights. The Company also offers services related to object, change and anomaly detection, site monitoring, and enhanced analytics, through which the Company can detect key pattern of life changes in critical locations such as ports, airports, and construction sites; retail activity; commodities stockpiles; and other sites that contain critical commodities and supply chain inventory . The Company's analytics services are also offered on a similar subscription basis and provide customers with access to the Company's 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 99 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 services, 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. The Company recognizes 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, the Company recognizes the total loss as and when known. The following table presents the effect of aggregate net EAC adjustments on the Company's professional and engineering services contracts: Years Ended December 31, 2024 (1) 2023 (in thousands) Revenue $ 1 $ ( 1,477 ) Basic and diluted net loss per share $ 0.00 $ ( 0.09 ) (1) For the year ended December 31, 2024, the Company had a favorable EAC adjustment of $ 1.1 million for an existing individual professional services contract. The remaining EAC adjustments are not individually significant to the Company. 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 Company’s performance completed to date. Imagery and Software Analytical Service and Professional and Engineering Service Costs Imagery and software analytical service costs primarily include internal labor to support the ground station network and space operations, third-party data and imagery, and cloud computing and hosting services. The Company recognizes stock-based compensation expense for those employees whose work supports the imagery and software analytical service costs it provides to customers, under imagery and software analytical service costs, excluding depreciation and amortization. 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 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, the Company also recognizes internal labor costs and external subcontract labor costs for its customer-centric software service solutions. The Company recognizes stock-based compensation expense for those employees who provide professional and engineering services support to customers, under professional and engineering service costs, excluding depreciation and amortization. 100 Research and Development Costs The Company incurs research and development costs, which are expensed as incurred, for researching next generation space and ground architectures in support of its long-term strategy. With the Company's acquisition of LeoStella in November 2024, research and development expense also includes investments in next generation satellite design and functionality. 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. Advertising Costs Advertising costs are expenses associated with promoting the Company’s services and products. Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. For the years ended December 31, 2024 and 2023, advertising costs were $ 1.6 million and $ 1.5 million, respectively. Income Taxes The Company accounts for income taxes following the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. The Company measures deferred tax assets based on the amount that the Company believes is more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including reversals of existing taxable temporary differences, tax-planning strategies, and historical results of recent operations. In evaluating the objective evidence that historical results provide, the Company considers three trailing years of cumulative operating income or loss. Valuation allowances are provided, if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. A full valuation allowance was recorded against the deferred tax assets as of December 31, 2024 and 2023. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company's effective tax rate in the future. The Company believes that its tax positions comply with applicable tax law. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. 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, 2024. The Sponsor Shares are adjusted to fair value at each reporting period and the change in fair value is recognized in (loss) gain on derivatives in the Company’s consolidated statements of operations and comprehensive loss. 101 Stock-Based Compensation Restricted Stock Awards and Restricted Stock Units The Company 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, the Company 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. For all awards for which vesting is only subject to a service condition, including those subject to graded vesting, the Company has elected to use the straight-line method to recognize the fair value as compensation cost over the requisite service period. Certain of the Company’s outstanding RSUs had performance vesting conditions that were triggered upon the consummation of the Merger. Therefore, since the performance conditions attributable to these RSUs had been met, the Company commenced recording the associated compensation expense, inclusive of a catch-up amount for the service period between their grant date and satisfaction of the performance condition, as of the closing of the Merger. The fair value of the RSUs that include a performance condition is recognized as compensation expense over the requisite service period using the accelerated attribution method, which accounts for RSUs with discrete vesting dates as if they were separate awards. Expense related to stock-based payments is classified in the consolidated statements of operations and comprehensive loss based upon the classification of each employee's cash compensation. As of December 31, 2024, 4 thousand RSUs with performance vesting conditions were outstanding and the associated remaining expense of $ 26 thousand will be recognized through September 30, 2025. Stock Options The Company uses the Black-Scholes option pricing model to value all options, including stock options and 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 did not grant any stock options during the year ended December 31, 2024; stock options were granted during the year ended December 31, 2023. The Company uses the following inputs when applying the Black-Scholes option pricing model: Expected Dividend Yield . The Black-Scholes valuation model requires an expected dividend yield as an input. The dividend yield is based on historical experience and expected future changes. 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 sufficient historical share price history; therefore, the expected volatility was estimated based upon the historical share price volatility of guideline comparable companies. Risk-free Interest Rate . The yield on actively traded non-inflation indexed U.S. Treasury notes was used to extrapolate an average risk-free interest rate based on the expected term of the underlying grants. Expected Term . For stock options granted in 2021 through 2024, since there was not a significant history of stock option exercises as a public company, the Company considered the stock option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term. For stock 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. BlackSky Holdings, Inc. (“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 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 102 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. 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. Warrant Liabilities In October 2019, Osprey, BlackSky's predecessor company and special purpose acquisition company, issued 2.0 million public warrants and 1.0 million Private Placement Warrants in connection with its public offering. In March 2023, the Company issued 2.1 million Private Placement Warrants in connection with a private placement of shares of Class A common stock and accompanying warrants. 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, 2024, 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, 2024 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 (loss) gain on derivatives in the Company’s consolidated statements of operations and comprehensive loss. Transaction Costs The Company incurs underwriting discounts and commissions, legal fees, accounting fees, placement agent fees, and other third-party costs related directly to equity issuances. 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. 103 The Company has also incurred lender fees and other incremental third-party costs associated with its debt financing, as described in Note 14. Lender fees have been capitalized and included in either debt - current portion or long-term debt - net of current portion in the consolidated balance sheets, depending on the classification of the associated debt. Third-party costs associated with the debt modification were expensed in the consolidated statements of operations and comprehensive loss. Additionally, during 2024, the Company incurred legal fees, accounting fees, information technology fees, and other incremental third-party costs related to its business acquisition, as described in Note 7. Transaction fees were expensed as incurred as selling, general and administrative in the consolidated statements of operations and comprehensive loss. 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). There were no deferred financing costs capitalized as of December 31, 2024. During the year ended December 31, 2023, the Company incurred deferred financing costs of $ 0.1 million, which were included in other assets in the Company's consolidated balance sheets as of December 31, 2023. Deferred Offering Costs Deferred 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 transactions. During the year ended December 31, 2024 the Company incurred $ 0.1 million of deferred offering costs, which were included in other assets in the Company's consolidated balance sheets as of December 31, 2024. The Company did not incur any deferred offering costs during the year ended December 31, 2023. Business Combinations Business acquisitions are accounted for using the acquisition method of accounting, in accordance with ASC 805, Business Combinations , and are included in the Company's consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date using the appropriate valuation method. Goodwill generated from acquisitions is recognized if the fair value of the purchase consideration transferred, or the fair value of the acquirer’s interest in the acquiree if no consideration is transferred, and any noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed. In determining the fair value of identifiable assets, the Company uses various valuation techniques which requires it to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. 3. Accounting Standards Updates (“ASU”) Accounting Standards Recently Adopted 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. ASU 2023-07 is 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 adopted ASU 2023-07 during the year ended December 31, 2024 . See Note 4—“Segment Information” for further detail. 104 Accounting Standards Recently Issued But Not Yet Adopted 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 currently evaluating the impacts of this update and plans to adopt these amendments using the prospective approach for annual disclosures in 2025. On November 4, 2024, the FASB issued ASU No. 2024-03 Disaggregation of Income Statement Expenses. ASU 2024-03 requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 will be effective for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028 and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is evaluating the disclosure impact of ASU 2024-03; however, it is not expected that the standard will have a material impact on the Company’s consolidated financial position, results of operations and/or cash flows. 4. Segment Information The Company’s Chief Operating Decision Maker (“CODM”) 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. The CODM uses consolidated net loss to assess financial performance and allocate resources. 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, of which the Company incurs costs and recognizes revenue on professional and engineering services including but not limited to, the development, integration, and operation of satellites and software platforms, as well as ground systems, that support the Company's primary imagery service subscriptions. The following table presents selected financial information with respect to the Company’s single reportable segment for the years ended December 31, 2024 and 2023: 105 Years Ended December 31, 2024 2023 Revenue Imagery & software analytical services $ 70,062 $ 65,391 Professional & engineering services 32,031 29,101 Total revenue 102,093 94,492 Costs and Expenses Imagery & software analytical direct labor costs 2,502 3,304 Imagery & software analytical direct materials costs 11,405 10,489 Professional & engineering direct labor costs 9,167 13,160 Professional & engineering direct materials costs 4,358 6,828 Salaries and benefit costs 41,742 40,720 Stock-based compensation expense 10,526 10,118 Other segment items 23,145 22,422 Depreciation and amortization 43,536 43,431 Loss (gain) on derivatives 2,815 ( 7,679 ) Income on equity method investments ( 879 ) ( 4,165 ) Interest income ( 1,560 ) ( 2,063 ) Interest expense 12,187 9,306 Other (income) expense, net ( 3 ) 1,807 Income tax expense 370 673 Net loss $ ( 57,218 ) $ ( 53,859 ) (1) Other segment items included in net loss primarily includes selling, general, and administrative costs and research and development costs. As of December 31, 2024 and 2023, the Company's segment assets, which are equal to the Company's consolidated assets on the consolidated balance sheets, are owned and operated by United States entities and are classified within the United States. See Note 5—“Revenue” for additional information about revenue by geographic region. 5. Revenue Disaggregation of Revenue The Company earns revenue through the sale of imagery and software analytical services and professional and engineering services. The Company’s management primarily disaggregates revenue as follows: (i) imagery; (ii) data, software and analytics; (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. 106 The following table disaggregates revenue by type for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (in thousands) Imagery $ 62,518 $ 54,630 Data, software, and analytics 7,544 10,761 Professional services 26,101 16,824 Engineering services 5,930 12,277 Total revenue $ 102,093 $ 94,492 The approximate revenue based on geographic location of end customers was as follows for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (in thousands) North America $ 63,782 $ 60,023 Middle East (1) 14,557 8,385 Asia Pacific (2) 22,768 25,058 Other 986 1,026 Total revenue $ 102,093 $ 94,492 (1) For the year ended December 31, 2024, Middle East revenue included $ 12.3 million of revenue from Country A; the amount of revenue from Country A for the year ended December 31, 2023 was not individually significant to the Company. The remaining Middle East countries were not individually significant to the Company. (2) For the years ended December 31, 2024 and 2023, Asia Pacific revenue included $ 16.5 million and $ 13.3 million of revenue, respectively, from Country B. Asia Pacific revenue included $ 11.5 million of revenue from Country C for the year ended December 31, 2023; the amount of revenue from Country C for the year ended December 31, 2024 was not individually significant to the Company. The remaining Asia Pacific countries were not individually significant to the Company. Revenue from categories of end customers for the years ended December 31, 2024 and 2023 was as follows: Years Ended December 31, 2024 2023 (in thousands) U.S. federal government and agencies $ 61,257 $ 58,445 International governments 37,970 34,580 Commercial and other 2,866 1,467 Total revenue $ 102,093 $ 94,492 Backlog 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 funded backlog (firm orders for which funding is authorized and appropriated) and unfunded backlog. The Company's backlog excludes unexercised contract options. As of December 31, 2024, the Company had $ 261.7 million of backlog, which represents the transaction price of executed contracts less inception to date 107 revenue recognized. 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 $ 75.9 million, $ 45.2 million, and $ 140.6 million in fiscal year 2025, fiscal year 2026, and thereafter, respectively. 6. Contract Assets and Liabilities The components of contract assets and contract liabilities consisted of the following: December 31, December 31, 2024 2023 (in thousands) Contract assets - current: Unbilled revenue $ 27,852 $ 15,213 Total contract assets - current $ 27,852 $ 15,213 Contract assets - long-term: Unbilled revenue - long-term $ 173 $ 8,150 Other contract assets - long-term 937 610 Total contract assets - long-term (1) $ 1,110 $ 8,760 Contract liabilities - current: Deferred revenue - current $ 2,160 $ 3,670 Other contract liabilities - current 23 — Total contract liabilities - current $ 2,183 $ 3,670 Contract liabilities - long-term: Other contract liabilities - long-term $ 678 $ 169 Total contract liabilities - long-term (2) $ 678 $ 169 (1) Total contract assets - long term is included in other assets in the consolidated balance sheets. (2) Total contract liabilities - long term is included in other liabilities in the 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 incremental to the contract and to fulfill contract obligations. Other contract assets and other contract liabilities primarily relate to contract commissions on customer contracts. 108 Changes in short-term and long-term contract assets and contract liabilities for the year ended December 31, 2024 were as follows: Contract Assets Contract Liabilities (in thousands) Balance as of January 1, 2024 $ 23,973 $ 3,839 Billings or revenue recognized that was included in the beginning balance ( 12,992 ) ( 3,258 ) Changes in contract assets or contract liabilities, net of reclassification to receivables 17,599 1,694 Cumulative catch-up adjustment arising from changes in estimates to complete during the year 55 65 Cumulative catch-up adjustment arising from contract modifications — ( 11 ) Changes in costs to fulfill and amortization of commission costs 327 — Changes in contract commission costs — 532 Balance as of December 31, 2024 $ 28,962 $ 2,861 7. Business Acquisition On November 6, 2024, the Company acquired the remaining 50 % of the common units of LeoStella, and LeoStella became a wholly-owned subsidiary of the Company. Purchase consideration of $ 0.9 million consisted of the value of the Company's 50% ownership in LeoStella at the time of the business combination. It is expected that this acquisition will allow the Company to improve its control over the Gen-3 supply chain and production operations. Prior to obtaining a controlling interest, the Company accounted for its 50 % ownership in LeoStella as an equity method investment (see Note 2 for information regarding the previous treatment of LeoStella). This transaction was accounted for as a “step acquisition” (as defined by GAAP) and, as such, the Company remeasured its pre-existing equity interest in LeoStella immediately prior to the completion of the acquisition to its estimated fair value. The results of LeoStella since the acquisition date have been included in the Company’s consolidated financial statements. The following table presents the preliminary purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. The purchase price allocation is preliminary and is subject to change during the measurement period, which is generally one year from the acquisition date. All intra-entity deferred profits have been excluded from the table (see Note 2—“Basis of 109 Presentation and Summary of Significant Accounting Policies” for discussion of the Company's pre-existing relationship with LeoStella). (in thousands) Assets Current assets, including cash acquired of $ 541 $ 1,561 Property and equipment 5,106 Intangible assets: In-process research and development 3,500 Trade names and trademarks 1,200 Total intangible assets 4,700 Other assets 1,525 Total assets $ 12,892 Liabilities Current liabilities $ 11,910 Other liabilities 970 Total liabilities $ 12,880 Goodwill of $ 0.9 million from the business acquisition was primarily attributed to the value expected from the workforce acquired from the acquisition. In addition, $ 0.5 million of the goodwill recognized is expected to be deductible for income tax purposes. Intangible assets acquired included in-process research and development, which has an indefinite life until development is complete, and various finite-lived intangible assets that are subject to amortization, including trade names and trademarks with estimated useful lives of 5 years. The acquisition-date fair value was determined using a combination of cost approaches and discounted cash flow methods. With respect to intangible assets, the estimated fair values were determined based on relief from royalty and multi-period excess earnings methods. These models used primarily Level 3 inputs, including estimates of projected revenue growth rates, projected EBITDA margins, and an estimated discount rate. In accordance with accounting for a step acquisition, the Company recognized a gain of $ 0.9 million as a result of remeasuring its pre-existing interest in LeoStella held immediately before the business combination, which is included in income on equity method investments in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2024, the Company incurred $ 0.5 million of acquisition-related transactions costs, which is included in selling, general and administrative costs in the consolidated statements of operations and comprehensive loss. The amounts of LeoStella's revenue and net loss included in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 were not significant. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information summarizes the combined results of the Company and LeoStella as if the acquisition had occurred on January 1, 2023. The pro forma results have been prepared for comparative purposes only, and do not necessarily represent what the results of operations would have been had the acquisition been completed on January 1, 2023. In addition, these pro forma results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved. The unaudited pro forma financial information includes adjustments for the pro forma impact of the Company's preliminary purchase price allocation, including the amortization of newly acquired intangible assets; the impact of transaction costs; and the alignment of accounting policies. 110 Years Ended December 31, 2024 2023 (in thousands) Pro forma revenue $ 107,032 $ 102,371 Pro forma net loss ( 68,128 ) ( 63,295 ) 8. Property and Equipment - net The following summarizes property and equipment - net as of: December 31, December 31, 2024 2023 (in thousands) Satellites $ 107,004 $ 125,124 Software 32,587 20,384 Office furniture and fixtures 9,171 4,039 Production and engineering equipment 2,986 — Software development in process 3,656 2,673 Site equipment 2,502 2,557 Computer equipment 1,578 1,642 Other equipment 812 811 Total 160,296 157,230 Less: accumulated depreciation ( 114,683 ) ( 90,114 ) Property and equipment — net $ 45,613 $ 67,116 Depreciation of property and equipment was $ 42.9 million for each of the years ended December 31, 2024 and 2023. 9. Goodwill and Intangible Assets Goodwill The Company performed an annual qualitative goodwill assessment of the goodwill held related to its reporting unit as of October 1, 2024. 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, 2024. As of December 31, 2024, the Company believes that the estimated fair value of its reporting unit is still in excess of its respective carrying value and therefore is not at-risk of being impaired. As a result, the Company did not have any impairment losses during the years ended December 31, 2024 and 2023. 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. Goodwill was as follows: 111 Gross Carrying Amount Accumulated Impairment Losses Net Carrying Value of Goodwill (in thousands) December 31, 2024 Balance as of January 1, 2024 $ 9,393 $ — $ 9,393 Acquisition 867 — 867 Balance as of December 31, 2024 $ 10,260 $ — $ 10,260 December 31, 2023 Balance as of January 1, 2023 $ 9,393 $ — $ 9,393 Balance as of December 31, 2023 $ 9,393 $ — $ 9,393 Intangible Assets - net Intangible assets - net was as follows: Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) December 31, 2024 Finite-lived intangible assets: Trade names and trademarks $ 1,200 $ ( 49 ) $ 1,151 Customer relationships 5,614 ( 4,819 ) 795 Total finite-lived intangible assets: 6,814 ( 4,868 ) 1,946 Indefinite-lived intangible assets: In-process research and development 3,500 — 3,500 Total intangible assets at December 31, 2024 $ 10,314 $ ( 4,868 ) $ 5,446 December 31, 2023 Finite-lived intangible assets: Customer relationships $ 6,530 $ ( 5,173 ) $ 1,357 Distribution agreements 326 ( 326 ) — Technology and domain name 3,948 ( 3,948 ) — Total intangible assets at December 31, 2023 $ 10,804 $ ( 9,447 ) $ 1,357 For the years ended December 31, 2024 and 2023, 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: 112 For the years ending December 31: (in thousands) 2025 $ 788 2026 474 2027 240 2028 240 2029 204 Thereafter 3,500 Total $ 5,446 10. Accounts Payable and Accrued Liabilities The components of accounts payable and accrued liabilities were as follows: December 31, December 31, 2024 2023 (in thousands) Accounts payable $ 8,239 $ 2,318 Accrued payroll 7,481 5,828 Accrued professional services, legal, and other general and administrative 1,656 1,107 Accrued cost of goods sold and other expenses 3,043 2,320 Total accounts payable and accrued liabilities $ 20,419 $ 11,573 11. Other Current Liabilities The components of other current liabilities were as follows: December 31, December 31, 2024 2023 (in thousands) Other current liabilities $ 182 $ 244 Accrued interest 378 344 Operating lease right-of-use liabilities 775 621 Estimated non-income tax liability 158 196 Total other current liabilities $ 1,493 $ 1,405 12. Employee Benefit Plan The Company has a 401(k) savings plan. 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. The 401(k) employer match expense was $ 1.2 million and $ 1.1 million for the years ended December 31, 2024 and 2023, respectively. 13. Income Taxes The Company's consolidated effective income tax rate from continuing operations for the years ended December 31, 2024 and 2023 was - 0.70 % and - 1.26 %, respectively. The Company's provision for income taxes from continuing operations for the years ended December 31, 2024 and 2023 was as follows: 113 Years Ended December 31, 2024 2023 (in thousands) Current: Federal $ — $ — State 205 569 Foreign 165 104 Total current 370 673 Deferred: Federal — — State — — Total deferred — — Total provision for income taxes $ 370 $ 673 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, 2024 and 2023: Years Ended December 31, 2024 2023 (in thousands) Tax benefit at federal statutory rate $ ( 11,938 ) $ ( 11,169 ) Non-deductible compensation 171 2,342 State tax, net of federal benefit ( 95 ) ( 9,393 ) Valuation allowance 10,773 17,251 Shortfall of stock compensation deduction 1,288 2,666 Non-taxable warrants 591 ( 1,613 ) Other ( 420 ) 589 Income tax expense $ 370 $ 673 The deferred income tax expense as of December 31, 2024 and 2023 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. 114 Deferred tax assets and liabilities as of December 31, 2024 and 2023, consisted of the following: December 31, 2024 2023 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 73,482 $ 68,374 Sec. 163(j) carryforward 11,603 9,214 Accruals and reserves 1,664 1,841 Deferred revenue 115 194 Capital loss carryforward 3,993 4,004 Section 174 - research expenditures 11,869 7,914 Other deferred tax assets 7,223 6,604 Total deferred tax assets 109,949 98,145 Valuation allowance ( 108,162 ) ( 97,388 ) Total net deferred tax assets 1,787 757 Deferred tax liabilities Basis difference in intangibles ( 1,233 ) ( 332 ) Other deferred tax liabilities ( 554 ) ( 425 ) Total deferred tax liabilities ( 1,787 ) ( 757 ) 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. Below is a summary of the Company's estimated loss and tax credit carryforwards. In the year ended December 31, 2022, the Company performed a historic ownership change analysis and concluded that $ 1.5 million of federal net operating loss carryforward pre-tax attributes were subject to limitations, as defined by the Internal Revenue Code Sections 382 and 383, will go unutilized. Tax Effected Expiration (in thousands) Federal net operating loss (“NOL”) carryforward $ 8,313 2033-2037 Federal NOL carryforward 54,595 Indefinite Federal capital loss carryforward 3,993 2025 State NOL carryforwards 10,574 2034-2043 At December 31, 2024 and 2023 the Company had $ 299.6 million and $ 275.4 million of NOL carryforwards for U.S. federal tax purposes, respectively. U.S. federal tax NOL carryforwards generated prior to 2018 of $ 39.6 million will expire, if unused, between 2033-2037. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely. As of December 31, 2024, the Company had $ 260.0 million of NOL carryforwards generated after 2017 for U.S. federal tax purposes, which may be used to offset 80% of its taxable income annually. 115 The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. Tax years 2015-2023 remain open for examination. Below is a tabular reconciliation of the total amounts of unrecognized tax benefits: 2024 2023 (in thousands) Unrecognized tax benefits - January 1 $ 9,006 $ 9,006 Gross decrease - tax positions in current period — — Gross increase - tax positions in current period — — Unrecognized tax benefits - December 31 $ 9,006 $ 9,006 The majority of the unrecognized tax benefits in the year ended December 31, 2024 is from the valuation of guaranteed incentives shares issued for SVB guarantors. The balance of unrecognized tax benefits as of December 31, 2024 and 2023, if recognized, would not affect the Company's effective tax rate and would result in adjustments to other tax accounts, primarily deferred tax assets and the net operating loss carry forward. 14. Debt and Other Financing The carrying value of the Company’s outstanding debt consisted of the following amounts: December 31, December 31, 2024 2023 (in thousands) Current portion of long-term debt $ 2,000 $ — Non-current portion of long-term debt 107,034 84,578 Total long-term debt 109,034 84,578 Unamortized debt issuance costs ( 1,371 ) ( 1,077 ) Outstanding balance $ 107,663 $ 83,502 Effective Interest Rate December 31, December 31, Name of Loan 2024 2023 (in thousands) Loans from related parties 12.23 % - 12.57 % $ 93,034 $ 84,578 Satellite launch vendor financing 10.45 % 6,000 — Commercial bank line 10.98 % 10,000 — Total $ 109,034 $ 84,578 Loans from Related Parties 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 116 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. Satellite Launch Vendor Financing In November 2023, the Company entered into a vendor financing agreement for multiple satellite launches providing for $ 27.0 million, of which a portion can be drawn down equally per satellite 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, beginning on each launch date. The Company may prepay at any time until the maturity date without premium or penalty. During the year ended December 31, 2024, the Company incurred $ 6.0 million of debt related to the satellite launch vendor financing agreement. Commercial Bank Line In April 2024, the Company, and certain subsidiaries of the Company, as co-borrowers, entered into a commercial bank line with Stifel Bank. The commercial bank line provides for a $ 20.0 million revolving credit facility, including a $ 0.5 million sub-facility for the issuance of letters of credit and other ancillary banking services. As of December 31, 2024, there was $ 10.0 million outstanding under the revolving credit facility. The commercial bank line matures on June 30, 2026. The commercial bank line accrues interest at a rate equal to the greater of (A) the prime rate or (B) 6 %. Interest on the loan is payable quarterly in arrears. The Company is required to pay an unused line fee of 0.25 % per annum, payable quarterly in arrears. The Company may borrow, prepay and re-borrow revolving loans, without premium or penalty. The principal amount of outstanding loans, together with accrued and unpaid interest, is due on the loan maturity date. The Company is also obligated to pay a fee to the lender upon the occurrence of certain change of control events or the refinancing, repayment, or termination of the commercial bank line, along with other customary fees for a loan facility of this size and type. The Company’s obligations under the commercial bank line are secured by substantially all of the Company’s assets, including intellectual property. Pursuant to a subordination arrangement, the security interest granted to Stifel Bank is senior to the security interest the Company granted to Intelsat Jackson Holdings SA pursuant to that certain Amended and Restated Loan and Security Agreement, dated as of October 31, 2019, as amended. Debt Maturities Under the Company’s loan agreements, minimum required maturities are as follows: For the years ending December 31, (in thousands) 2025 $ 2,000 2026 105,034 2027 2,000 Total outstanding $ 109,034 Fair Value of Debt The estimated fair value of the Company’s outstanding long-term debt was $ 120.3 million and $ 78.7 million as of December 31, 2024 and 2023, 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 The Company is required to maintain the following financial covenants: 117 • $ 10.0 million of minimum cash and cash equivalents balance, measured quarterly as of the last day of each fiscal quarter. • 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. • Quarterly minimum revenue targets agreed upon by the Company and the bank at the beginning of each year. • Unrestricted and unencumbered cash and cash equivalents in an amount equal to at least one hundred percent of the outstanding debt at all times. In addition, the commercial bank line contains customary affirmative and negative covenants, including covenants limiting the Company's ability to, among other things, incur debt, grant liens, pay dividends and distributions on its capital stock, make investments and acquisitions, and make capital expenditures, in each case subject to customary exceptions for a loan facility of this size and type. If the Company fails to meet the minimum cash covenant, the commercial bank line provides the Company with the ability to cure the breach with the deposit of proceeds from the issuance of capital stock or subordinated debt. As of December 31, 2024, all debt instruments contained customary covenants and events of default. The Company was in compliance with all financial and non-financial covenants as of December 31, 2024. 15. Equity Warrants Classified as Derivative Liabilities Warrant Issuances In March 2023, the Company completed the closing of a private placement whereby the Company issued warrants to purchase up to 2.1 million shares of Class A common stock. The purchase price of each share and associated warrants was $ 17.61 . Including the issuance of Company’s Class A common stock, 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 $ 17.61 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 income (expense), net in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023. The Company also has outstanding warrants, which includes public warrants exercisable for 2.0 million shares and Private Placement Warrants exercisable for 1.0 million shares (certain of which are subject to the achievement of trading price targets), issued by Osprey, the Company's predecessor company, in 2019 in connection with its initial public offering as a special purpose acquisition company. 118 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 22). The Company's derivative liabilities were made up of only equity warrants and the Sponsor Shares as of December 31, 2024 and 2023. 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, 2024: Number of Shares Exercise Price Redemption Price Expiration Date Classification Loss in Value for the Year Ended December 31, 2024 Fair Value as of December 31, 2024 (in thousands) (in thousands) Public Warrants 1,977 $ 92.00 $ 144.00 9/9/2026 Liability $ 933 $ 1,728 Private Placement Warrants - Issued October 2019 520 92.00 144.00 9/9/2026 Liability 68 484 Private Placement Warrants - Issued October 2019 520 160.00 144.00 9/9/2026 Liability 62 229 Private Placement Warrants - Issued March 2023 2,050 17.61 N/A 9/8/2028 Liability 1,353 13,820 In addition, the Company has 221 thousand Class A common stock warrants outstanding which have an exercise price of $ 0.88 and expiration dates from June 27, 2028 to October 31, 2029. These warrants are equity classified and were included in additional paid-in capital in the Company’s consolidated balance sheets. 16. Other Income (Expense) Years Ended December 31, 2024 2023 (in thousands) Transaction costs associated with debt and equity financings $ — $ ( 1,738 ) Other 3 ( 69 ) $ 3 $ ( 1,807 ) 17. Stockholders’ Equity Class A Common Stock As of December 31, 2024, the Company was authorized to issue 300.0 million shares of Class A common stock and 100.0 million shares of preferred stock. Issued and outstanding stock as of December 31, 2024 consisted of 31.0 million and 30.7 million shares of Class A common stock, respectively. The par value of each share of the Class A common stock is $ 0.0001 per share. 119 The Company had reserved shares of Class A common stock for issuance in connection with the following: December 31, December 31, 2024 2023 (in thousands) Common stock warrants (exercisable for Class A common stock) treated as equity 221 221 Stock options outstanding 876 1,043 Restricted stock units outstanding 2,419 2,016 Public Warrants (exercisable for Class A common stock) treated as liability 1,977 1,977 Private Placement Warrants (exercisable for Class A common stock) treated as liability 3,091 3,091 Shares available for future grant 260,456 273,797 Total Class A common stock reserved 269,040 282,145 The Company has approximately 0.3 million Sponsor Shares that are subject to specific lock-up provisions and potential forfeitures depending upon the post-Merger performance of the Company’s Class A common stock (the “Lock-Up Sponsor Shares”), and therefore are required to be recorded as derivative liabilities at their fair value and adjusted to fair value at each reporting period. As a result, as of December 31, 2024 and 2023, the Company's derivative liabilities in the consolidated balance sheets included Sponsor Shares of $ 1.7 million and $ 1.3 million, respectively. The Company recorded a $ 0.4 million loss on derivatives in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 related to the fair value adjustments of these Sponsor Shares. The Sponsor Shares have the following provisions: Terms Contractual Life Seven years from the closing date of the Merger Release Provision Exactly half of the Lock-Up Sponsor Shares have a release provision (“Release”) at such time that the volume weighted average price (“VWAP”) is equal to, or greater than, $ 120.00 per share for ten of any twenty consecutive trading days. The remaining Lock-Up Sponsor Shares Release at such time that the VWAP is equal to, or greater than, $ 140.00 per share for ten of any twenty consecutive trading days. There is an additional provision for acceleration of the Release upon a defined change in control. Forfeiture Provision If, within the seven year period, the Lock-Up Sponsor Shares have not met the Release provisions, the Lock-Up Sponsor Shares will automatically forfeit and be cancelled. 120 18. Net Loss Per Share of Class A Common Stock The following table includes the calculation of basic and diluted net loss per share: Years Ended December 31, 2024 2023 (in thousands except per share information) Net loss available to common stockholders - basic and diluted $ ( 57,218 ) $ ( 53,859 ) Basic and diluted net loss per share $ ( 2.67 ) $ ( 3.18 ) Shares used in the computation of basic and diluted net loss per share 21,443 16,931 The potentially dilutive securities listed below were not included in the calculation of diluted weighted average common shares outstanding, as their effect would have been anti-dilutive during the years ended December 31, 2024 and 2023. Years Ended December 31, 2024 2023 (in thousands) Restricted Class A common stock — 3 Class A common stock warrants 221 221 Stock options 876 1,043 Restricted stock units 2,419 2,017 Public Warrants (exercisable for Class A common stock) treated as liability 1,977 1,977 Private Placement Warrants (exercisable for Class A common stock) treated as liability 3,091 3,091 Sponsor Shares 296 296 19. Stock-Based Compensation 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, 2024, the Company had no options outstanding under the 2011 Plan and 93 thousand options outstanding under the 2014 Plan. 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 121 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: Years Ended December 31, 2024 2023 (in thousands) Imagery & software analytical service costs, excluding depreciation and amortization $ 173 $ 242 Professional & engineering service costs, excluding depreciation and amortization 470 502 Selling, general and administrative 10,526 10,118 Total stock-based compensation expense $ 11,169 $ 10,862 The Company recorded stock-based compensation related to capitalized internal labor for software development activities and satellite work in process of $ 0.6 million and $ 0.7 million during the years ended December 31, 2024 and 2023, respectively. These amounts were included in property, plant, and equipment - net and satellite work in process 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 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. The Black-Scholes option pricing model is used to determine the fair value of stock options granted. The Company utilized assumptions concerning expected term, a risk-free interest rate, and expected volatility to determine such values. The Company did not grant any stock options in the year ended December 31, 2024. A summary of the weighted-average assumptions used by the Company during the year ended December 31, 2023 is presented below: Year Ended December 31, 2023 Fair value per common share $ 1.27 Weighted-average risk-free interest rate 4.31 % Volatility 31.20 % Expected term (in years) 8.00 Dividend rate 0 % 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. 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. 122 A summary of the Company’s stock option activity under the Plans during the year ended December 31, 2024 is presented below: Options Weighted-Average Exercise Price Weighted Average Contractual Term Aggregate Intrinsic Value (in thousands) (in years) (in thousands) Outstanding - January 1, 2024 1,101 $ 19.94 Exercised ( 23 ) 0.10 Forfeited ( 202 ) 49.57 Outstanding - December 31, 2024 876 13.62 7.62 $ 954 Exercisable - December 31, 2024 876 13.62 7.62 954 For stock options exercised, intrinsic value is calculated as the difference between the estimated fair value on the date of exercise and the exercise price. The total intrinsic value of stock options exercised during the years ended December 31, 2024 and 2023 was $ 0.2 million and $ 0.6 million, respectively. The total fair value of stock options vested during the years ended December 31, 2024 and 2023 was $ 2.3 million and $ 2.0 million, respectively. As of December 31, 2024, there was $ 2.3 million of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 1.7 years. Restricted Stock Units The Company granted an aggregate of 1.3 million RSUs to certain employees and service providers during the year ended December 31, 2024 under the 2021 Plan. 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. A summary of the Company’s nonvested RSU activity during the year ended December 31, 2024 is presented below: Restricted Stock Units Weighted-Average Grant-Date Fair Value (in thousands) Nonvested - January 1, 2024 2,016 $ 13.52 Granted 1,319 7.48 Vested ( 852 ) 15.52 Canceled ( 64 ) 12.87 Nonvested - December 31, 2024 2,419 9.54 During the year ended December 31, 2024, 48 thousand of the vested, but not yet issued, RSUs were withheld to satisfy payroll tax withholding obligations, which was recorded to additional paid-in capital totaling $ 1.6 million. Unrecognized compensation costs related to nonvested RSUs totaled $ 21.4 million as of December 31, 2024, which is expected to be recognized over a weighted-average period of 2.6 years. 123 20. Leases Total Lease Cost The components of rent expense, which are primarily included in selling, general and administrative expenses in the Company's consolidated statements of operations and comprehensive loss, were as follows: Years Ended December 31, 2024 2023 (in thousands) Operating lease expense $ 1,399 $ 1,287 Variable lease expense 341 245 Short-term lease expense 138 273 Total rent expense $ 1,878 $ 1,805 Supplemental Balance Sheet Information As of December 31, 2024 and 2023, supplemental operating lease balance sheet information consisted of the following: December 31, December 31, 2024 2023 (in thousands) Operating lease right of use assets - net $ 4,029 $ 1,630 Operating lease liabilities: Other current liabilities $ 775 $ 621 Operating lease liabilities 8,048 3,041 Total operating lease liabilities $ 8,823 $ 3,662 Other Supplemental Information Other supplemental operating lease information consisted of the following for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (dollars in thousands) Operating cash flows for operating leases $ 1,102 $ 586 ROU assets obtained in exchange for new lease liabilities $ 5,450 $ 222 Weighted average remaining lease term (in years) 9.03 8.33 Weighted average discount rate 10.15 % 11.48 % 124 21. Related Party Transactions A summary of the Company’s related party transactions during the years ended December 31, 2024 and 2023 is presented below: Amount Due to Related Party as of Total Payments in the Years Ended December 31, December 31, December 31, Nature of Relationship 2024 2023 2024 2023 Name Description of the Transactions (in thousands) LeoStella (1) Former Joint Venture with Thales Alenia Space The Company owned 50 % of LeoStella, its joint venture with Thales. The Company contracted with LeoStella for the design, development and manufacture of satellites to operate its business. In November 2024, the Company acquired the remaining 50 % of common units of LeoStella and LeoStella became a wholly-owned subsidiary of BlackSky. $ 27,127 $ 23,910 N/A $ 10,843 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. The Company has a non-cancelable operational commitment with Ursa Space Systems. 500 458 42 42 Thales Alenia Space Shareholder and Parent of Wholly-owned Subsidiary, Seahawk (Debt Issuer) Design, development and manufacture of telescopes. 5,560 8,092 — 750 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. 570 375 25,072 22,793 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. 1,844 1,042 67,962 61,785 (1) For the year ended December 31, 2024, the total payments to LeoStella presented are from January 1, 2024 through the acquisition date of November 6, 2024. Subsequent to the acquisition date, all payments to and from LeoStella are considered intercompany transactions and are eliminated in consolidation. The Company recorded revenue from related parties of $ 4.3 million and $ 11.5 million for the years ended December 31, 2024 and 2023, respectively. Accounts receivable from related parties was $ 0 as of December 31, 2024 and December 31, 2023. Interest on the term loan facility is accrued and is due semi-annually. The Company made interest payments of $ 2.4 million and $ 1.0 million during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had interest due to related parties of $ 1.9 million, of which $ 0.4 million is to be paid as cash interest on a semi-annual basis and was included in other current liabilities and $ 1.5 million is paid in kind as principal due on the maturity date and was included in other liabilities. As of December 31, 2023, the Company had interest due to related parties of $ 1.7 million, of which $ 0.3 million was included in other current liabilities and $ 1.4 million was included in other liabilities. 125 22. Fair Value of Financial Instruments The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of December 31, 2024 and 2023 and indicate the fair value hierarchy level of the valuation techniques and inputs that the Company utilized to determine such fair value: December 31, 2024 Quoted Prices in Active Markets Significant Other Observable Input Significant Other Unobservable Inputs (Level 1) (Level 2) (Level 3) (in thousands) Liabilities Public Warrants $ 1,728 $ — $ — Private Placement Warrants - Issued October 2019 — — 713 Private Placement Warrants - Issued March 2023 — — 13,820 Sponsor Shares — — 1,703 $ 1,728 $ — $ 16,236 December 31, 2023 Quoted Prices in Active Markets Significant Other Observable Input Significant Other Unobservable Inputs (Level 1) (Level 2) (Level 3) (in thousands) Liabilities Public Warrants $ 795 $ — $ — Private Placement Warrants - Issued October 2019 — — 583 Private Placement Warrants - Issued March 2023 — — 12,467 Sponsor Shares — — 1,304 $ 795 $ — $ 14,354 The carrying values of the following financial instruments approximated their fair values as of December 31, 2024 and 2023 based on their short-term maturities: cash and cash equivalents, restricted cash, short-term investments, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, short-term debt, and other current liabilities. See Note 7—“Business Acquisition” for additional information on the fair value of assets acquired via business acquisition. There were no transfers into or out of any of the levels of the fair value hierarchy during the years ended December 31, 2024 or 2023. Changes in the fair value of the Level 3 liabilities during the year ended December 31, 2023 of $ 11.3 million included the Sponsor Shares, the October 2019 Private Placement Warrants, and the March 2023 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, 2024: Sponsor Shares Private Placement Warrants - Issued October 2019 Private Placement Warrants - Issued March 2023 (in thousands) Balance as of January 1, 2024 $ 1,304 $ 583 $ 12,467 Loss from changes in fair value 399 130 1,353 Balance as of December 31, 2024 $ 1,703 $ 713 $ 13,820 126 23. Commitments and Contingencies Leases The Company leases office space under various non-cancellable operating leases with varying lease expiration dates through 2036. Future minimum lease payments under non-cancellable office leases as of December 31, 2024 are as follows: (in thousands) For the years ending December 31, 2025 $ 1,233 2026 1,757 2027 1,469 2028 1,209 2029 1,242 Thereafter 7,496 Total lease payments 14,406 Less: imputed interest ( 5,583 ) Present value of lease liabilities $ 8,823 Ground Station Services The Company has service agreements for ground station services to be performed by third-parties subsequent to December 31, 2024. Future purchase commitments under non-cancellable ground station service contracts as of December 31, 2024 are as follows: (in thousands) For the years ending December 31, 2025 $ 1,199 2026 887 2027 398 2028 80 $ 2,564 Legal Proceedings 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. 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. On May 7, 2024, a putative class action relating to the Merger of Legacy BlackSky on September 9, 2021 with a wholly-owned subsidiary of Osprey was filed in the Delaware Court of Chancery. The action is captioned Drulias v. Osprey Sponsor II, LLC, et al. (“Drulias”) (Del. Ch. 2024). The Drulias complaint asserts breach of fiduciary duty and unjust enrichment claims against the former directors of Osprey (the “Osprey Board”); the former officers of Osprey; and Osprey Sponsor II, LLC (the “Sponsor”); and aiding and abetting breach of fiduciary duty claims against HEPCO Capital Management, LLC; JANA Partners LLC; and a director 127 of Legacy BlackSky. The Drulias complaint seeks, among other things, damages and attorneys’ fees and costs. The terms of the Merger required the Company to indemnify the directors of Osprey. On May 8, 2024, a putative class action relating to the Merger was filed in the Delaware Court of Chancery. The action is captioned Cheriyala v. Osprey Sponsor II, LLC (“Cheriyala”) (Del. Ch. 2024). The Cheriyala complaint asserts breach of fiduciary duty claims against the former directors of the Osprey Board, the former officers of Osprey, and the Sponsor; aiding and abetting breach of fiduciary duty claims against BlackSky Holdings, Inc. and certain directors and officers of Legacy BlackSky; and unjust enrichment claims against an Osprey director. The Cheriyala complaint seeks, among other things, damages and attorneys’ fees and costs. The Court of Chancery granted Drulias’ motion to (i) consolidate the Drulias and Cheriyala actions, and (ii) appoint Drulias as lead plaintiff, and Drulias’ counsel as lead counsel, in the consolidated action. Though BlackSky Technology Inc. is not named in either suit, the Company expects to have certain indemnification requirements of directors, officers and former directors and officers. Other Commitments The Company entered into a non-refundable commitment during the year ended December 31, 2024 for launch insurance, which will cover the risk of total or partial loss for multiple upcoming satellite launches. The minimum commitment associated with the launch insurance is $ 6.0 million. In addition to the commitment above, the Company entered into various operational commitments for the next several years totaling $ 5.6 million as of December 31, 2024. 24. Concentrations, Risks, and Uncertainties The Company has a concentration of contractual revenue arrangements with the U.S. federal government and agencies as well as with international governments. Accounts receivable related to U.S. federal government and agencies was $ 11.2 million and $ 6.0 million as of December 31, 2024 and 2023, respectively. The Company had the following customers whose revenue and accounts receivable balances individually represented 10% or more of the Company’s total revenue: Revenue Years Ended December 31, 2024 2023 (in thousands) U.S. federal government and agencies 60 % 62 % Customer B 16 % 14 % Customer C 12 % * Customer D * 12 % Accounts Receivable As of December 31, 2024 2023 (in thousands) U.S. federal government and agencies 76 % 83 % Customer B * * Customer C * * Customer D * * 128 * Revenue and/or accounts receivable from these customers were less than 10% of total revenue and/or accounts receivable during the period. 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, 2024 and 2023, 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. 25. Subsequent Events The Company evaluated subsequent events through March 19, 2025 and determined that there have been no events that have occurred that would require adjustments to its disclosures or the consolidated financial statements. 129