General form of registration statement for all companies including face-amount certificate companies

Equity Method Investments

v3.21.2
Equity Method Investments
 9 Months Ended 12 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]    
Equity Method Investments
7.
Equity Method Investments
LeoStella
The Company accounts for its investment in LeoStella as an equity method investment. The Company did not make any additional capital investments in LeoStella during the nine months ended September 30, 2021 and 2020. During the nine months ended September 30, 2021 and 2020, respectively, the Company remitted $15.0 million and $8.2 million of payments to LeoStella for satellite manufacturing and satellite software development.
X-Bow
In 2017, the Company entered into a stock subscription and technology transfer agreement with
X-Bow,
whereby the Company assigned and transferred certain intellectual property rights owned by the Company to
X-Bow
in exchange for 13.5 million shares of
X-Bow,
a strategic investment in a space technology company specializing in additive manufacturing of solid rocket motors. As of September 30, 201, the Company’s interest in
X-Bow
was 17.9%.
The following tables present summarized financial information for the Company’s equity method investments as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, 2021, and September 30, 2020.​​​​​​​
Summarized balance sheets
  
September 30,
2021
 
  
December 31,
2020
 
 
  
(in thousands)
 
Current assets
  
$
73,494
  
  
$
64,355
  
Non-current
assets
  
 
6,305
  
  
 
7,468
  
 
  
 
 
 
  
 
 
 
Total assets
  
$
79,799
  
  
$
71,823
  
 
  
 
 
 
  
 
 
 
Current liabilities
  
$
59,139
  
  
$
57,040
  
Non-current
liabilities
  
 
896
  
  
 
6,589
  
 
  
 
 
 
  
 
 
 
Total liabilities
  
$
60,035
  
  
$
63,629
  
 
  
 
 
 
  
 
 
 
 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
Summarized statements of operations
  
2021
 
  
2020
 
  
2021
 
  
2020
 
 
  
(in thousands)
 
  
(in thousands)
 
Revenue
  
$
3,494
  
  
$
9,604
  
  
$
24,212
  
  
$
12,946
  
Gross margin
  
$
553
  
  
$
1,381
  
  
$
7,110
  
  
$
1,924
  
Net income/(loss)
  
$
(1,590
) 
  
$
184
  
  
$
570
  
  
$
(1,494
) 
Current assets of the Company’s equity method investees primarily consisted of inventories of $41.1 million as of September 30, 2021 and $47.3 million as of December 31, 2020. Total liabilities of the Company’s equity method investees primarily consisted of customer advances from related parties of $52.5 million as of September 30, 2021 and $51.4 million as of December 31, 2020.
The revenue related to equity method investments attributable to related parties was $3.5 million and $20.9 million for the three and nine months ended September 30, 2021, respectively. The revenue related to equity method investments attributable to related parties was $9.6 million and $12.9 million for the three and nine months ended September 30, 2020, respectively. The Company eliminates intercompany transactions;, therefore, the revenue of the equity method investees is not included in the Company’s unaudited condensed consolidated financial statements. The Company has differences between the carrying value of its equity method investments and the underlying equity in the net assets of the investees of $0.6 million as of September 30, 2021 and $0.5 million as of December 31, 2020. The differences are a result of the elimination of upstream intra-entity profits from the sale of satellites, the recognition of unearned profits as the satellites are depreciated, and the elimination of bad debt expense reserves arising from intra-entity sales.
6.
Equity Method Investments
LeoStella
In 2018, BlackSky and Thales formed a joint venture named LeoStella, a vertically-integrated small satellite design and manufacturer based in Tukwila, Washington, from which the Company procures satellites to operate its business. BlackSky and Thales each own 50% of LeoStella. The Company accounted for the initial investment of $7.0 million as an equity method investment. The Company did not make any additional capital investments in LeoStella during the years ended December 31, 2020 and 2019.
In 2018, BlackSky entered into a fixed price, fixed quantity satellite program contract (“SPC”) with LeoStella, which was amended in 2019 and 2020, pursuant to which the Company agreed to purchase 20 satellites for $79.0 million. The Company executed a side letter in 2020 providing for a reduction, at the Company’s election, of the number of satellites the Company is required to procure from LeoStella, with a resulting reduction in the total purchase price under the SPC based on the satellite and certain hardware and integration costs of up to $8.8 million. The Company has received credits in the year ended December 31, 2020 of $5.1 million. The SPC requires payments to LeoStella for the procurement of long lead parts, which amounts are recorded as satellite procurement work in process. In conjunction with the closing of the Intelsat Facility (Note 14), the Company contractually agreed to remit at least $2.0 million per month to LeoStella. Subsequently, in July 2020, the Company
re-negotiated
the agreement to remit at least $1.0 million per month to LeoStella. In the years ended December 31, 2020 and 2019, respectively, the Company remitted $8.2 million and $23.3 million of payments to LeoStella.
X-Bow
In 2017, the Company entered into entered into a Stock Subscription and Technology Transfer Agreement with
X-Bow,
whereby the Company assigned and transferred certain intellectual property rights owned by the Company to
X-Bow
in exchange for 13.5 million shares of
X-Bow.
As of December 31, 2020, the Company’s interest in
X-Bow
is 20.6%.
In 2019, BlackSky was awarded a contract to build a working rocket, and
X-Bow
was selected as one of the
sub-contractors
to BlackSky and will perform the majority of the development work.
The following tables present summarized financial information for the Company’s equity method investments as of and for the years ended December 31, 2020 and 2019.
 
    
December 31,
  
Summarized balance sheets
   
2020
     
2019
  
    
(in thousands)
  
Current assets
    $ 64,355      $ 62,208  
Non-current
assets
      7,468        11,319  
    
 
 
     
 
 
  
Total assets
      71,823        73,527  
    
 
 
     
 
 
  
Current liabilities
      57,040        24,222  
Non-current
liabilities
      6,589        36,543  
    
 
 
     
 
 
  
Total liabilities
    $ 63,629      $ 60,765  
    
 
 
     
 
 
  
 
    
Year Ended December 31,
  
Summarized statements of operations
   
    2020    
     
    2019    
  
    
(in thousands)
  
Revenue
    $ 14,917      $ 2,676  
Gross margin
    $ 2,636      $ 711  
Net loss
    $ (1,873 )     $ (3,116 ) 
Current assets of Company’s equity method investees primarily consist of inventories of $47.3 million as of December 31, 2020 and $31.9 million as of December 31, 2019. Total liabilities of the Company’s equity method investees primarily consist of customer advances from related parties of $51.4 million as of December 31, 2020 and $56.0 million as of December 31, 2019.
The Company has differences between the carrying value of its equity-method investments and the underlying equity in the net assets of the investees of $0.5 million as of December 31, 2020, and there were no differences as of December 31, 2019. The differences are a result of the elimination of upstream intra-entity profits from the sale of a satellite, the recognition of unearned profits as the satellites are depreciated, and the elimination of bad debt expense reserve arising from intra-entity sales.