Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
(a) On April 12, 2021, the staff (the "Staff") of the Securities and Exchange
Commission (the "SEC") issued a statement entitled "Staff Statement on
Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies ("SPACs")." In the statement, the Staff, among other
things, highlighted potential accounting implications of certain terms that are
common in warrants issued in connection with the initial public offerings of
special purpose acquisition companies such as Osprey Technology Acquisition
Corp. ("Osprey" or the "Company").
The warrant agreement governing the warrants includes a provision that provides
for potential changes to the settlement amounts dependent on the characteristics
of the holder of the warrant. Upon review of the statement by the Staff, the
Company's management further evaluated the warrants under Accounting Standards
Codification ("ASC") Subtopic 815-40, Contracts in Entity's Own Equity.
ASC Section 815-40-15 addresses equity versus liability treatment and
classification of equity-linked financial instruments, including warrants, and
states that a warrant may be classified as a component of equity only if, among
other things, the warrant is indexed to the issuer's common stock. Under
ASC Section 815-40-15, a warrant is not indexed to the issuer's common stock if
the terms of the warrant require an adjustment to the exercise price upon a
specified event and that event is not an input to the fair value of the warrant.
Based on management's evaluation, the Company's audit committee (the "Audit
Committee"), in consultation with management, concluded that the Company's
warrants are not indexed to the Company's ordinary shares in the manner
contemplated by ASC Section 815-40-15 because the characteristics of the holder
of the instrument is not an input into the pricing of a fixed-for-fixed option
on equity shares.
On May 4, 2021, the Audit Committee, based on the recommendation of, and after
consultation with, management, concluded that the Company's previously issued
audited financial statements for the years ended December 31, 2020 and 2019, and
its previously issued unaudited interim financial statements for the periods
ended September 30, 2020 and 2019, June 30, 2020, and March 31, 2020
(collectively, the "Non-Reliance Periods"), should no longer be relied upon
based on the reclassification of warrants as described above. Similarly, the
related press releases, Report of Independent Registered Public Accounting Firm
on the financial statements as of December 31, 2020 and December 31, 2019 and
for the period from June 15, 2018 (date of inception) through December 31, 2018,
and the stockholder communications, investor presentations or other
communications describing the relevant portions of the Company's financial
statements for these periods that need to be restated should no longer be relied
upon.
As a result, the Company today is announcing that it will restate its historical
financial results for the Non-Reliance Periods, in each case to reflect the
change in accounting treatment (the "Restatement"). The Company expects to file
its Form 10-K/A for the year ended December 31, 2020 to reflect the Restatement
shortly after the filing of this Form 8-K.
The Company's prior accounting for the warrants as components of equity instead
of as derivative liabilities did not have any effect on the Company's previously
reported operating expenses, cash flows or cash.
In connection with the Restatement, the Company's management reassessed the
effectiveness of its disclosure controls and procedures for the periods affected
by the restatement. As a result of that reassessment, the Company's management
determined that its disclosure controls and procedures for such periods were not
effective with respect to the classification of the Company's warrants as
components of equity instead of as derivative liabilities.
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The Audit Committee and management have discussed the matters disclosed in this
Item 4.02(a) with the Company's independent registered public accounting firm.
Participants in Solicitation
The Company and BlackSky Holdings, Inc. ("BlackSky") and their directors and
executive officers may be deemed to be participants in the solicitation of
proxies from Company stockholders in connection with the previously announced
proposed transactions with BlackSky Holdings, Inc. The Company's stockholders
and other interested persons may obtain, without charge, more detailed
information regarding the directors and officers of the Company in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which
was filed with the SEC on March 31, 2021, and in the Company's registration
statement on Form S-4, which is expected to be filed by the Company with the SEC
in connection with the business combination. Information regarding the persons
who may, under SEC rules, be deemed participants in the solicitation of proxies
to the Company's shareholders in connection with the proposed business
combination is set forth in the proxy statement/prospectus on Form S-4 for the
proposed business combination, which is expected to be filed by the Company with
the SEC in connection with the business combination.
A list of the names of such directors and executive officers and information
regarding their interests in the transactions will be contained in the proxy
statement/prospectus when available. You may obtain free copies of these
documents as described in the preceding paragraph.
This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of any securities in any state or jurisdiction in which
such offer, solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of such other jurisdiction.
Additional Information and Where to Find It
This document relates to the proposed transactions between Osprey and BlackSky.
This document does not constitute an offer to sell or exchange, or the
solicitation of an offer to buy or exchange, any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer, sale or exchange
would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. Osprey intends to file a registration statement
on Form S-4 with the SEC, which will include a document that serves as a
prospectus and proxy statement of Osprey, referred to as a proxy
statement/prospectus. A proxy statement/prospectus will be sent to all Osprey
stockholders. Osprey also will file other documents regarding the proposed
transactions with the SEC. Before making any voting or investment decision,
investors and security holders of Osprey are urged to read the registration
statement, the proxy statement/prospectus and all other relevant documents filed
or that will be filed with the SEC in connection with the proposed transactions
as they become available because they will contain important information about
the proposed transactions.
Investors and security holders will be able to obtain free copies of the
registration statement, the proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC by Osprey through the website
maintained by the SEC at www.sec.gov.
The documents filed by Osprey with the SEC also may be obtained free of charge
at Osprey's website at https://www.ospreytechnology or from Osprey upon written
request to 1845 Walnut Street, Suite 1111, Philadelphia, Pennsylvania 19103.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws with respect to the proposed
merger involving Osprey with BlackSky, pursuant to the terms of that certain
Agreement and Plan of Merger, dated as of February 17, 2021, by and among
Osprey, Osprey Technology Merger Sub, Inc. and BlackSky (the "Merger
Agreement"). These forward-looking statements generally are identified by the
words "believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions.
Forward-looking statements are predictions, projections and other statements
about future events that are based on current expectations and assumptions and,
as a result, are subject to risks and uncertainties. Many factors could cause
actual future events to differ materially from the forward-looking statements in
this document, including but not limited to: (i) the risk that the transactions
may not be completed in a timely manner or at all, which may adversely affect
the price of Osprey's securities, (ii) the risk that the transactions may not be
completed by the business combination deadline and the potential failure to
obtain an extension of the deadline if sought by Osprey, (iii) the failure to
satisfy the conditions to the consummation of the transactions, including the
adoption of the Merger Agreement by the stockholders of Osprey, the satisfaction
of the minimum trust account amount following redemptions by Osprey's public
stockholders and the receipt of certain governmental and regulatory approvals,
(iv) the lack of a third-party valuation in determining whether or not to pursue
the proposed transactions, (v) the inability to complete the PIPE investment in
connection with the transaction, (vi) the occurrence of any event, change or
other circumstance that could give rise to the termination of the Merger
Agreement, (vii) the effect of the announcement or pendency of the transactions
on BlackSky's business relationships, operating results, and business generally,
(viii) risks that the proposed transactions disrupt current plans and operations
of BlackSky, (ix) the outcome of any legal proceedings that may be instituted
against BlackSky or against the Osprey related to the Merger Agreement or the
proposed transactions, (x) the ability to maintain the listing of Osprey's
securities on a national securities exchange, (xi) changes in the competitive
and regulated industries in which BlackSky operates, variations in operating
performance across competitors, changes in laws and regulations affecting
BlackSky's business and changes in the combined capital structure, (xii) the
ability to implement business plans, forecasts, and other expectations after the
completion of the proposed transactions, and identify and realize additional
opportunities and (xiii) the effects of natural disasters, terrorist attacks and
the spread and/or abatement of infectious diseases, such as COVID-19, on the
proposed transactions or on the ability to implement business plans, forecasts,
and other expectations after the completion of the proposed transactions. The
foregoing list of factors is not exhaustive. You should carefully consider the
foregoing factors and the other risks and uncertainties described in the "Risk
Factors" section of Osprey's registration on Form S-1 (File No. 333-234180), the
registration statement on Form S-4 that Osprey intends to file with the SEC and
other documents filed by Osprey from time to time with the SEC. These filings
identify and address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained in the
forward-looking statements. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Osprey and BlackSky assume no obligation and do
not intend to update or revise these forward-looking statements, whether as a
result of new information, future events, or otherwise. Neither Osprey nor
BlackSky gives any assurance that either the Osprey or BlackSky, or the combined
company, will achieve its expectations.
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