BlackSky Technology Inc

Previous wording

Our next generation satellites (“Gen-3”), expected to launch in 2024, are designed to improve imaging resolution even further and include short wave infrared imaging technology for a broad set of imaging conditions, including nighttime and low-light. We believe these advancements will expand the relevance and certainty of our analytics to continue to ensure our importance to our customers. We also believe the combination of our high-revisit, small satellite constellation, our BlackSky Spectra platform, and low constellation cost is transforming the market for real-time, space-based imagery and analytics.

Current wording

Our next generation satellites (“Gen-3”), expected to launch in the fourth quarter of 2024, are designed to improve imaging resolution even further and include short wave infrared imaging technology for a broad set of imaging conditions, including nighttime and low-light. We believe these advancements will expand the relevance and certainty of our analytics to continue to ensure our importance to our customers. We also believe the combination of our high-revisit, small satellite constellation, our BlackSky Spectra platform, and low constellation cost is transforming the market for real-time, space-based imagery and analytics.

Previous wording

•Imagery and software analytical services costs primarily include internal aerospace and geospatial software development labor, third-party data and imagery, internal labor to support the ground stations and space operations, and cloud computing and hosting services. Costs are expensed as incurred except for incremental costs to obtain a contract, which are primarily sales commissions on contracts greater than one year and are capitalized and amortized to selling, general, and administrative expenses on a systematic basis consistent with the transfer of goods and services and directly identifiable costs to fulfill a contract. Expense related to stock-based payments is classified in the unaudited condensed consolidated statements of operations and comprehensive loss based upon the classification of each employee's cash compensation. We recognize stock-based compensation expense for those employees whose work supports the imagery and software analytical service costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization.

Current wording

•Imagery and software analytical services costs primarily include internal aerospace and geospatial software development labor, third-party data and imagery, internal labor to support the ground stations and space operations, and cloud computing and hosting services. Costs are expensed as incurred except for incremental costs to obtain a contract, which are primarily sales commissions on contracts greater than one year and are capitalized and amortized to selling, general, and administrative expenses on a systematic basis consistent with the transfer of goods and services and directly identifiable costs to fulfill a contract. Expense related to stock-based payments is classified in the unaudited condensed consolidated statements of operations and comprehensive loss based upon the classification of each employee's cash compensation. We recognize stock-based compensation expense for those employees whose work supports the imagery and software analytical services costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization.

Previous wording

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

The following table provides the components of results of operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table provides the components of results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

Imagery and software analytical services revenue increased for the three months ended March 31, 2024 as compared to the same period in 2023, primarily driven by incremental imagery and analytics subscription orders and renewals from existing customers.

Current wording

Imagery and software analytical services revenue increased for the three and six months ended June 30, 2024 as compared to the same periods in 2023, primarily driven by incremental imagery and analytics subscription orders and renewals from existing customers.

Previous wording

Professional and engineering services revenue increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to two new significant engineering contracts that began after the comparable prior period. In addition, revenue increased for certain firm-fixed price existing contracts as the measure of progress increased over the comparable prior period. For the impacts of changes in estimates on our contracts, see Note 2—"Basis of Presentation and Summary of Significant Accounting Policies" of the notes to the consolidated financial statements contained within this Quarterly Report on Form 10-Q.

Current wording

Professional and engineering services revenue increased for the three and six months ended June 30, 2024 as compared to the same periods in 2023. The increase was primarily due to a favorable change in the estimation of total costs at completion from identified changes in an engineering program which produced incremental revenue on a cumulative catch-up basis. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. In addition, the incremental revenue was from a new significant engineering contract that began after the comparable prior period. For the impacts of changes in estimates on our contracts, see Note 2—"Basis of Presentation and Summary of Significant Accounting Policies" of the notes to the consolidated financial statements contained within this Quarterly Report on Form 10-Q.

Previous wording

Imagery & software analytical service costs, excluding depreciation and amortization, decreased slightly for the three months ended March 31, 2024 as compared to the same period in 2023.

Current wording

Imagery & software analytical service costs, excluding depreciation and amortization, decreased slightly for the three and six months ended June 30, 2024 as compared to the same periods in 2023.

Previous wording

Selling, general, and administrative expenses decreased during the three months ended March 31, 2024 as compared to the same period in 2023 primarily due to lower corporate insurance premiums and reduced office space in our Seattle location that drove cost savings. These decreases were partially offset by increased salaries and payroll-related benefits due to continued expansion of our sales team and investments in AI capabilities. Stock-based compensation expense increased by $0.4 million due to the acceleration of expense for options that were voluntarily forfeited during the three months ended March 31, 2024.

Current wording

For the six months ended June 30, 2024, these decreases were partially offset by increased stock-based compensation expense of $0.5 million due to the acceleration of expense for options that were voluntarily forfeited and increased salaries and payroll-related benefits due to the continued expansion of our sales team.

Previous wording

Research and development expense increased for the three months ended March 31, 2024 as compared to the same period in 2023. The increase was driven by contracting third-party vendors who fulfill our strategic projects as research and development expense.

Current wording

Research and development expense increased for the three and six months ended June 30, 2024 as compared to the same periods in 2023. The increase was driven by contracting third-party vendors who fulfill our strategic projects as research and development expense.

Previous wording

Depreciation expense from satellites increased for the three months ended March 31, 2024 as compared to the same period in 2023, driven by new satellites placed into service in March 2023.

Current wording

Depreciation expense from satellites decreased for the three and six months ended June 30, 2024 as compared to the same periods in 2023 as satellites became fully depreciated.

Previous wording

Depreciation expense from all other property and equipment increased for the three months ended March 31, 2024 as compared to the same period in 2023, primarily driven by capitalization of software and the buildout of new office space.

Current wording

Depreciation expense from all other property and equipment increased for the three and six months ended June 30, 2024 as compared to the same periods in 2023, primarily driven by capitalization of software and the build-out of new office spaces.

Previous wording

Amortization expense remained flat for the three months ended March 31, 2024 as compared to the same period in 2023.

Current wording

Amortization expense remained flat for the three and six months ended June 30, 2024 as compared to the same periods in 2023.

Previous wording

Fluctuations in our equity warrants and other equity instruments that we classify as derivative liabilities in the unaudited condensed consolidated balance sheets and measure at fair value are significantly driven by our common stock price. Fluctuations to these instruments are inversely related to changes in our common stock price, the volatility of the markets, and the duration of the equity warrants. The gains or losses recognized in the period are non-cash fair value adjustments. These instruments generated a loss during the three months ended March 31, 2024 and a gain during the three months ended March 31, 2023.

Current wording

Fluctuations in our equity warrants and other equity instruments that we classify as derivative liabilities in the unaudited condensed consolidated balance sheets and measure at fair value are significantly driven by our common stock price. Fluctuations to these instruments are inversely related to changes in our common stock price, the volatility of the markets, and the duration of the equity warrants. The gains or losses recognized in the period are non-cash fair value adjustments. These instruments generated a gain during the three and six months ended June 30, 2024 and a loss during the three and six months ended June 30, 2023.

Previous wording

The fluctuations in income on equity method investment are solely impacted by the operating results of our joint venture LeoStella. We did not recognize any percentage of LeoStella's estimated net loss during the three months ended March 31, 2024 since our investment in LeoStella was $0 as of December 31, 2023.

Current wording

The fluctuations in income on equity method investment are solely impacted by the operating results of our joint venture LeoStella. We did not recognize any percentage of LeoStella's estimated net loss during the three and six months ended June 30, 2024 since our investment in LeoStella was $0 as of December 31, 2023.

Previous wording

Interest income decreased during the three months ended March 31, 2024 as a result of less short-term investments held during the quarter, as compared to the three months ended March 31, 2023.

Current wording

Interest income decreased during the three and six months ended June 30, 2024 as a result of fewer short-term investments held during the periods, as compared to the three and six months ended June 30, 2023.

Previous wording

Interest expense increased during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, as a result of a higher effective interest rate on our loan from related parties, as amended during the second quarter of 2023.

Current wording

Interest expense increased during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, as a result of increased debt outstanding during the second quarter of 2024 and a higher effective interest rate on our loans from related parties that were amended during the second quarter of 2023.

Previous wording

For the three months ended March 31, 2023, other income (expense), net, included $0.9 million of allocated transaction costs associated with new warrants that are accounted for as derivative liabilities that did not reoccur in the three months ended March 31, 2024.

Current wording

For the three and six months ended June 30, 2023, other income (expense), net, included $0.8 million of transaction costs associated with our debt modification during the second quarter of 2023. For the six months ended June 30, 2023, other expense, net also included $0.9 million of transaction costs associated with new warrants that are accounted for as derivative liabilities.

Previous wording

Adjusted EBITDA is defined as net income or loss attributable to us before interest income, interest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses as our management believes these items are not useful in evaluating our core operating performance. These items include, but are not limited to, stock-based compensation expense, unrealized (gain) loss on certain warrants/shares classified as derivative liabilities, severance, income on equity method investment, transaction costs associated with debt and equity financings, and investment loss on short-term investments. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results. In addition, we believe that Adjusted EBITDA provides additional information for investors to use in evaluating our ongoing operating results and trends. This non-GAAP measure provides investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations.

Current wording

Adjusted EBITDA is defined as net income or loss attributable to us before interest income, interest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses as our management believes these items are not useful in evaluating our core operating performance. These items include, but are not limited to, stock-based compensation expense, unrealized (gain) loss on certain warrants/shares classified as derivative liabilities, litigation, settlements, and related costs, severance, income on equity method investment, transaction costs associated with debt and equity financings, and investment loss on short-term investments. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results. In addition, we believe that Adjusted EBITDA provides additional information for investors to use in evaluating our ongoing operating results and trends. This non-GAAP measure provides investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations.

Previous wording

The table below reconciles our net loss to Adjusted EBITDA for the three months ended March 31, 2024 and 2023:

Current wording

The table below reconciles our net loss to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023:

Previous wording

As of March 31, 2024, our existing sources of liquidity included cash and cash equivalents and short-term investments. Our cash and cash equivalents excluding restricted cash totaled $15.0 million and $32.8 million as of March 31, 2024 and December 31, 2023, respectively, and our short-term investments totaled $20.4 million and $19.7 million as of March 31, 2024 and December 31, 2023, respectively. We have incurred losses and generated negative cash flows from operations since our inception in September 2014. As of March 31, 2024, we had an accumulated deficit of $614.8 million.

Current wording

As of June 30, 2024, our existing sources of liquidity included cash and cash equivalents and short-term investments. Our cash and cash equivalents excluding restricted cash totaled $25.6 million and $32.8 million as of June 30, 2024 and December 31, 2023, respectively, and our short-term investments totaled $15.7 million and $19.7 million as of June 30, 2024 and December 31, 2023, respectively. We have incurred losses and generated negative cash flows from operations since our inception in September 2014. As of June 30, 2024, we had an accumulated deficit of $624.2 million.

Previous wording

Our short-term liquidity as of March 31, 2024 was $35.8 million. Including the commercial bank line that we entered into in April 2024, under which we drew $10.0 million of the total line amount of $20.0 million at close, we had access to approximately $45.8 million of short-term liquidity. We expect cash and cash equivalents and cash generated from operating activities to be sufficient to meet our working capital and capital expenditure needs for the foreseeable future. Our future long-term capital requirements will depend on many factors including our growth rate, customer demand for capacity, the timing and extent of spending to support solution development efforts, the expansion of sales and marketing activities, the ongoing investments in technology infrastructure, the introduction of new and enhanced solutions, and the continuing market acceptance of our solutions. From time to time, we may seek additional equity or debt financing to fund capital expenditures, strategic initiatives or investments and our ongoing operations.

Current wording

Our short-term liquidity as of June 30, 2024 was $42.3 million. We expect cash and cash equivalents and cash generated from operating activities to be sufficient to meet our working capital and capital expenditure needs for the foreseeable future. Our future long-term capital requirements will depend on many factors including our growth rate, customer demand for capacity, the timing and extent of spending to support solution development efforts, the expansion of sales and marketing activities, the ongoing investments in technology infrastructure, the introduction of new and enhanced solutions, and the continuing market acceptance of our solutions.

Previous wording

On April 11, 2024, we entered into a commercial bank line with Stifel Bank, as lender. 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. The commercial bank line provides that $10.0 million of the commitments were immediately available for borrowing, and the remaining $10.0 million of commitments are available at any time after June 28, 2024. The commercial bank line matures on June 30, 2026. We may use the proceeds of the loans for the funding of growth initiatives, including working capital needs, and general corporate purposes. We borrowed $10.0 million in revolving loans at the closing of the commercial bank line.

Current wording

In April 2024, we entered into a commercial bank line with Stifel Bank, as lender. 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. The commercial bank line matures on June 30, 2026. As of June 30, 2024, we had borrowed $20.0 million in revolving loans. We plan to use the proceeds of the loans for the funding of growth initiatives, including working capital needs, and general corporate purposes. The Company may increase or decrease its borrowings at its discretion with no penalty to meet the funding needs of these growth initiatives.

Previous wording

We were in compliance with all covenants as of March 31, 2024 and expect to remain in compliance with all covenants, including additional covenants discussed above from the commercial bank line, in the next 12 months from the issuance of the financial statements.

Current wording

We were in compliance with all covenants as of June 30, 2024 and expect to remain in compliance with all covenants in the next 12 months from the issuance of the financial statements.

Previous wording

An additional source of liquidity is our ability to offer and sell from time to time up to $75.0 million of newly issued shares in open trading windows at market prices through a designated broker dealer pursuant to an ATM offering, of which we have sold $6.4 million through March 31, 2024. If we decide, or are required, to seek additional financing from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.

Current wording

The Company also has the ability to offer and sell from time to time up to $75.0 million of newly issued shares in open trading windows at market prices through a designated broker dealer pursuant to an ATM offering, of which we have sold $3.2 million during the six months ended June 30, 2024. If we decide, or are required, to seek additional financing from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.

Previous wording

The Company entered into a vendor financing agreement for multiple launches providing for $27.0 million, of which a portion will be drawn down equally per launch and will be repaid quarterly on a pro-rata basis across a three-year period after each successful launch milestone. Payments will accrue interest at 12.6% per annum, beginning on each launch date. The Company may prepay at any time until the maturity date without premium or penalty. See Note 7—“Debt and Other Financing” of the notes to the consolidated financial statements for further information on our debt and financing arrangements.

Current wording

The Company entered into a vendor financing agreement for multiple launches providing for $27.0 million, of which a portion will be drawn down equally per launch and will be repaid quarterly on a pro-rata basis across a three-year period after each successful launch milestone. Payments will accrue interest at 12.6% per annum, beginning on each launch date. The Company may prepay at any time until the maturity date without premium or penalty. See Note 7—“Debt and Other Financing” of the notes to the consolidated financial statements for further information on our debt and financing arrangements and Note 14 —" Commitments and Contingencies" of the notes to the consolidated financial statements for further information on our contractual obligations.

Previous wording

We have had two consecutive quarters of positive Adjusted EBITDA; however, we cannot be sure our revenues will continue to exceed expenses in the near term due to the ongoing investments we are making in sales, marketing and products to increase our market share. We expect to continue to incur capital expenditures as we procure and launch Gen-3 satellites, as well as investing in our BlackSky Spectra software platform tosignificantly expand our product capabilities in the future. Please refer to the section entitled "Non-GAAP Financial Measures" for additional information on our definition of Adjusted EBITDA.

Current wording

We continue to generate positive Adjusted EBITDA; however, we cannot be sure our revenues will continue to exceed expenses in the near term due to the ongoing investments we are making in sales, marketing and products to increase our market share. We expect to continue to incur capital expenditures as we procure and launch Gen-3 satellites, as well as investing in our BlackSky Spectra software platform tosignificantly expand our product capabilities in the future. Please refer to the section entitled "Non-GAAP Financial Measures" for additional information on our definition of Adjusted EBITDA.

Previous wording

As of March 31, 2024, our current assets were $69.4 million, consisting primarily of cash and cash equivalents, short-term investments, and contract assets.

Current wording

As of June 30, 2024, our current assets were $82.4 million, consisting primarily of cash and cash equivalents, short-term investments, and contract assets.

Previous wording

As of March 31, 2024, our current liabilities were $17.3 million, consisting primarily of accounts payable and accrued liabilities. Accordingly, we have sufficient cash and working capital to fund our short-term liquidity requirements.

Current wording

As of June 30, 2024, our current liabilities were $19.7 million, consisting primarily of accounts payable and accrued liabilities. Accordingly, we have sufficient cash and working capital to fund our short-term liquidity requirements.

Previous wording

The following table provides a summary of cash flow data for the three months ended March 31, 2024 and 2023. Our short-term liquidity at March 31, 2024 was $35.8 million. Short-term investments of $20.4 million are not classified as cash, cash equivalents, or restricted cash.

Current wording

The following table provides a summary of cash flow data for the six months ended June 30, 2024 and 2023. Our short-term liquidity at June 30, 2024 was $42.3 million. Short-term investments of $15.7 million are not classified as cash, cash equivalents, or restricted cash.

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities was $3.8 million. The contributors to the significant decrease in cash used during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 were the decrease in the operating loss, adjusted for depreciation, amortization, stock-based compensation expense, (loss) gain on derivatives, and other non-cash items as well as a decrease in cash used for working capital. The operating loss decrease in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was due to increased contribution margin from renewals with existing customers and new customers. The decrease in cash used for working capital was primarily the result of delayed cash receipts from our largest customers as we restructured our banking relationships with new and existing financial institutions during the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities was $5.6 million. The contributor to the significant decrease in cash used during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was the decrease in the operating loss, adjusted for depreciation, amortization, stock-based compensation expense, gain (loss) on derivatives, and other non-cash items. The operating loss decrease in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was due to increased professional & engineering services revenue from a new significant engineering contract that began after the comparable prior period as well as increased imagery revenue driven by incremental subscription orders and renewals from existing customers.

Previous wording

The change in net cash (used in) provided by investing activities was primarily due to decreased proceeds from the redemption and maturity of $9.0 million of our short-term investments in corporate debt and governmental securities in addition to decreased purchases of these same type of investments of $9.5 million during the three months ended March 31, 2024. Comparatively, during the three months ended March 31, 2023, we recognized $38.1 million related to the redemption and maturity of short-term investments, largely due to restructuring our banking relationships with new and existing financial institutions; during the three months ended March 31, 2023, we purchased $11.8 million of short-term investments to replace maturing investments.

Current wording

The change in net cash used in investing activities was primarily due to decreased proceeds from the redemption and maturity of $18.0 million of our short-term investments in corporate debt and governmental securities in addition to decreased purchases of these same type of investments of $13.5 million during the six months ended June 30, 2024. Comparatively, during the six months ended June 30, 2023, we recognized $41.1 million related to the redemption and maturity of short-term investments, largely due to restructuring our banking relationships with new and existing financial institutions; during the six months ended June 30, 2023, we purchased $19.4 million of short-term investments to replace maturing investments.

Previous wording

We continue to have significant cash outflows for satellite procurement and launch related services and incur labor costs for internally developed capitalized software as we add innovative new services and tools to our Blacksky Spectra software platform; however, the total amount paid for capital expenditures decreased slightly during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

We continue to have significant cash outflows for satellite procurement and launch related services and incur labor costs for internally developed capitalized software as we add innovative new services and tools to our BlackSky Spectra software platform. The total amount paid for capital expenditures was relatively flat during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Previous wording

The decrease in cash flows from financing activities in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 is due to the decrease in proceeds from our equity issuances, net of equity issuance costs. Our equity issuances in the three months ended March 31, 2024 of $1.3 million included the sale of 953 thousand shares under our ATM offering program, which resulted in $1.4 million in gross proceeds. During the three months ended March 31, 2023, we received proceeds of $29.4 million from our March 2023 private placement of equity and accompanying warrants, of which $17.7 million was allocated to the private placement warrants.

Current wording

The decrease in cash flows from financing activities in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is due to the decrease in proceeds from our equity issuances, net of equity issuance costs. Our equity issuances in the six months ended June 30, 2024 of $2.9 million included the sale of 2.6 million shares under our ATM offering program, which resulted in $3.2 million in gross proceeds. Our equity issuances in the six months ended June 30, 2023 included a private placement of 16.4 million shares at a purchase price of $1.79 per share, which resulted in $29.4 million in gross proceeds as well as the sale of 1.0 million shares under our ATM offering program, which resulted in $1.9 million in gross proceeds. The decrease in proceeds from equity issuances was partially offset by borrowings from our revolving credit facility of $20.0 million during the six months ended June 30, 2024.

Previous wording

We have equity and equity-based awards outstanding under our 2021 Equity Incentive Plan ("2021 Plan"), 2014 Equity Incentive Plan ("2014 Plan"), and Amended and Restated 2011 Equity Incentive Plan ("2011 Plan"). Awards issued include stock options, restricted stock awards (“RSAs”), and RSUs. In addition, our eligible employees are able to participate in our 2021 Employee Stock Purchase Plan ("ESPP") pursuant to purchase right offerings that are established under the ESPP.

Current wording

We have equity and equity-based awards outstanding under our 2021 Equity Incentive Plan ("2021 Plan"), 2014 Equity Incentive Plan ("2014 Plan"), and Amended and Restated 2011 Equity Incentive Plan ("2011 Plan"). Awards issued include stock options, restricted stock awards ("RSAs"), and restricted stock units ("RSUs"). In addition, our eligible employees are able to participate in our 2021 Employee Stock Purchase Plan ("ESPP") pursuant to purchase right offerings that are established under the ESPP.

Previous wording

We have classified the Private Placement Warrants issued in October 2019 and March 2023 and the Osprey pre-merger Class B common shares that were exchanged for shares of our Class A common stock (the "Sponsor Shares") as long-term liabilities in our unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023. The Private Placement Warrants issued in October 2019 and the Sponsor Shares were initially recorded at fair value on the date of the merger and the Private Placement Warrants issued in March 2023 were recorded at fair value on the date of issuance. The Private Placement Warrants were recorded at fair value using a Black-Scholes option pricing model and the Sponsor Shares were recorded at fair value using a Monte Carlo simulation model. These liabilities are re-measured to fair value at each subsequent reporting date and recorded to (loss) gain on derivatives in our unaudited condensed consolidated statements of operations and comprehensive loss.

Current wording

We have classified the Private Placement Warrants issued in October 2019 and March 2023 and the Osprey pre-merger Class B common shares that were exchanged for shares of our Class A common stock (the "Sponsor Shares") as long-term liabilities in our unaudited condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023. The Private Placement Warrants issued in October 2019 and the Sponsor Shares were initially recorded at fair value on the date of the merger and the Private Placement Warrants issued in March 2023 were recorded at fair value on the date of issuance. The Private Placement Warrants were recorded at fair value using a Black-Scholes option pricing model and the Sponsor Shares were recorded at fair value using a Monte Carlo simulation model. These liabilities are re-measured to fair value at each subsequent reporting date and recorded to gain (loss) on derivatives in our unaudited condensed consolidated statements of operations and comprehensive loss. We will continue to adjust the liability for changes in fair value until the financial instruments are exercised, redeemed, cancelled or released.