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Except as otherwise noted or where the context requires otherwise, references in
this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to
SpaceMobile, Inc.
refer to our officers and directors.
The following discussion and analysis of the Company’s financial condition and
results of operations should be read in conjunction with our unaudited condensed
consolidated financial statements and related notes included in Item 1 of this
Quarterly Report and with our Annual Report on Form 10-K for the year ended
related notes contained therein.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” for the purposes of
federal securities laws that are not historical facts and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” regarding the Company’s financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as “expect,” “believe,” “anticipate,”
“intend,” “estimate,” “seek” and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management’s current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to Part I, “Item 1A. Risk Factors”
included in our Annual Report on Form 10-K for the year ended
The Company’s securities filings can be accessed on the EDGAR section of the
securities law, the Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.
Overview
We and our global partners are building what we believe is the first space-based
cellular broadband network designed to be accessible by standard unmodified
mobile phones. Our SpaceMobile Service is being designed to provide
cost-effective, high-speed mobile broadband services with global coverage to all
end-users, regardless of where they live or work, without the need to purchase
special equipment. We believe the SpaceMobile Service would be the first global
direct mobile broadband network using LEO satellites to provide connectivity to
any standard, unmodified, off-the-shelf mobile phone or 2G/3G/4G LTE/5G and
IoT-enabled device. We intend to work with Mobile Network Operators (“MNOs”) to
offer the SpaceMobile Service to the MNOs’ end-user customers. Our vision is
that users will not need to subscribe to the SpaceMobile Service directly with
us, nor will they need to purchase any new or additional equipment. Instead,
users will be able to access the SpaceMobile Service when prompted on their
mobile device that they are no longer within range of the land-based facilities
of the MNO operator or will be able to purchase a plan directly with their
existing mobile provider.
The SpaceMobile Service currently is planned to be provided through a network of
168 high-powered, large phased-array satellites in LEO. The worldwide mobile
traffic will be directed by the SpaceMobile constellation to terrestrial
gateways via high throughput Q/V-band links and then directed to the in-country
MNO’s core cellular network infrastructure, located at our dedicated gateways.
Our intent is that users will be able to connect to the SpaceMobile Service as
if they were using a local cell tower, with less communication delay effects
than existing geostationary satellite communication systems experience.
On
which was used to validate our satellite to cellular architecture and was
capable of managing communications delays from LEO and the effects of doppler in
a satellite to ground cellular environment using the 4G-LTE protocols.
We launched our BlueWalker 3 (“BW3”) test satellite on
BW3 test satellite has an aperture of 693 square feet and is designed to
communicate directly with cellular devices via 3GPP standard frequencies. On
communication array of the BW3 test satellite in orbit to conduct a series of
tests to directly communicate with standard/unmodified cellular devices in
conjunction with various MNOs across the world. The goal of these tests is to
work with third parties to demonstrate the BW3 test satellite’s ability to
operate a communications circuit with standard/unmodified cellular devices at
speeds typically used in 5G settings. The planned testing of the BW3 test
satellite is subject to a number of factors, including but not limited to, loss
of satellite connectivity, destruction of the satellite, or other communication
failures. As of
of capitalized costs (including launch cost and
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non-recurring engineering costs) related to the assembly, testing and deployment
of the BW3 test satellite. We expect to incur certain post-deployment costs
related to the BW3 test satellite, including software integration testing.
We are also currently developing and designing our constellation of BlueBird
(“BB”) satellites. We plan to leverage skills, know-how and technological
expertise derived from the design and assembly of our BW3 test satellite in the
development of our BB satellite platform. We are currently planning the first
generation of commercial BB satellites (“Block 1 BB Satellites”) utilizing the
BB satellite platform. We expect the Block 1 BB Satellites will be of similar
size and weight to the BW3 test satellite and have design improvements for
enhanced power efficiency and throughput designed to increase capacity. We
currently expect to launch five Block 1 BB Satellites in late 2023. Following
the launch and deployment of five Block 1 BB Satellites, we currently plan to
initiate a limited, noncontinuous SpaceMobile Service in certain countries and
seek to generate revenue from such service. Prior to initiating such service, we
will need to obtain regulatory approvals in each jurisdiction where we would
provide such service and would need to enter into definitive agreements with the
MNOs relating to the offering of such service in each jurisdiction.
We believe the deployment of Block 1 BB Satellites and subsequent initiation of
limited service may provide numerous benefits including a potential first mover
advantage and helping to demonstrate the advantages of a satellite to cellular
broadband service in the marketplace. We believe that these new services could
include emergency services for locations that have lost cellular and other
telecommunications infrastructure, emergency services for individual cellular
subscribers and Internet of Things services. This market activity may commence
while we continue the development and testing of the next generation of the BB
satellites. Our future generations of BB satellites are expected to derive
greater throughput by taking advantage of growing improvements in the processing
power of our radio frequency systems and the power output of our solar arrays as
well as the capacity advantages of deploying larger sized antennas. We currently
plan to achieve substantial global coverage following the launch of
approximately 110 BB satellites. Following the completion of substantial global
coverage, we expect to introduce MIMO capabilities as we complete our
constellation of 168 satellites. The timeline for the development and
commercialization of our BB satellites has been, and continues to be, subject to
numerous uncertainties, many of which are beyond our control, including,
satisfactory and timely completion of satellite components and assembly and
testing of the satellites, availability of launch windows by the launch
providers, proposed orbits and resulting satellite coverage, launch costs,
ability to enter into agreements with MNOs, regulatory approvals, and other
factors. Accordingly, we may adopt a deployment and commercialization strategy
that may differ materially from our previous and/or current plans.
The SpaceMobile Service has not been launched and therefore has not yet
generated revenue. After we begin to launch and deploy our Block 1 BB
Satellites, we currently plan to initiate a limited, noncontinuous SpaceMobile
Service in certain countries and seek to generate revenue from such service. We
plan to deploy our BB satellites in a phased approach over time and expect to
offer continuous coverage SpaceMobile Service in targeted geographical locations
once we have deployed the necessary number of satellites for each area. We may
adopt a strategy for commercial launch of the SpaceMobile Service, including the
nature and type of services offered and the countries where we may launch such
services, that may differ materially from our current plan.
We operate from multiple locations that include our corporate headquarters and
185,000 square foot satellite assembly, integrating and testing facilities in
integration, and testing processes for the future production of the BB
satellites. We are making the necessary capital investments in the assembly,
integration and testing (“AIT”) facilities in
to continue hiring, assembly, integration, and testing employees necessary for
the production of the BB satellites and engineers that will be required to test
and integrate the BB satellites. Also, we are continuing to implement and
integrate various systems, such as product lifecycle management, manufacturing
execution system, enterprise resource planning system, and other systems
required to industrialize the manufacturing processes of the BB satellites. We
are also actively engaged with the third-party vendors to secure supply of
components and materials for our BB satellites. Furthermore, we are continuing
to expand our research and development (“R&D”) efforts for the development of
electronics required for BB satellites and cellular and ground infrastructure
and gateways.
In
Technologies Corp.
our satellites through
service agreements relating to the launch of future BB satellites. The exact
timing of the satellite launches is contingent on a number of factors, including
satisfactory and timely completion of assembly and testing of the BB satellites.
The Multi-Launch Agreement permits us to delay launches of our satellites upon
payment of certain rebooking fees.
We have received an experimental license from the
Commission
The license covers BW3 test satellite space-to-ground testing in
States
subject to certain restrictions. We require additional authorizations, including
operating licenses from the
constellation of BB satellites.
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We are an early stage and emerging growth company and, as such, we are subject
to all of the risks associated with early stage and emerging growth companies.
Please refer to Risk Factors contained in Part I, “Item 1A. Risk Factors”
included in our Annual Report on Form 10-K for the year ended
Recent Developments
On September 6, 2022,
51% interest in its former subsidiary, NanoAvionika UAB (“Nano”) headquartered
in
and recognized a net gain of
unaudited condensed consolidated statement of operations. The final
consideration amount is subject to customary working capital and net debt
adjustments. Upon closing of the Nano Share Sale, all amounts outstanding under
the Nano Financing Agreement were paid and the Nano Financing Agreement was
terminated. As Nano represented substantially all our revenue and cost of sales
to date, we do not expect to recognize any revenue or any cost of sales until we
begin to launch our SpaceMobile Service.
On
“Sales Agreement”) with
(collectively, the “agents”) to sell shares of our Class A common stock having
an aggregate sales price of up to
the market offering” program under which the agents act as sales agents. The
sales of the Shares made under the Sales Agreement may be made by any method
permitted by law deemed to be an “at the market offering” as defined in Rule 415
promulgated under the Securities Act of 1933, as amended. Under the Sales
Agreement, the agents are entitled to total compensation at a commission rate of
up to 3.0% of the gross sales price per share sold. Refer to Liquidity and
Capital Resources below for further information.
Impact of COVID-19 Pandemic and Global Macroeconomic Conditions
We continue to closely monitor the impact of the COVID-19 pandemic and
macroeconomic conditions, including heightened inflation, slower growth or
recession, changes to fiscal and monetary policies, higher interest rates,
volatility in the capital markets, and supply chain challenges, on all aspects
of our business across geographies, including how it has and may continue to
impact our operations, workforce, suppliers, and our ability to raise additional
funds to fund operating and capital expenditures. Changes in the prices of
satellite materials due to inflation, supply chain challenges, and other
macroeconomic factors may affect our capital costs estimates to build and launch
the satellite constellation and adversely affect our financial condition. The
extent of impact of these factors on our business will depend on future
developments that are highly uncertain and cannot be predicted with confidence
at this time. To date, these factors have not had a material impact on our
technology development efforts or results of our operations. However, if
macroeconomic conditions deteriorate or there are unforeseen developments with
respect to the current COVID-19 pandemic, our results of operations and
financial condition may be adversely affected.
Factors Affecting Comparability of Our Future Results of Operations to Our
Historical Results of Operations
The consolidated assets, liabilities and results of operations for the period
from
business combination (the “Business Combination”), are those of our accounting
predecessor,
funding of
initiatives, made significant progress on the BW3 test satellite and design of
the BB satellites, increased the headcount of employees and consultants, and
expanded our operations through
assembly and launch of our BW3 test satellite, advanced research and development
initiatives for the design and development of Block 1 and Block 2 BB Satellites,
particularly around long-lead components, and made significant progress in
Application-Specific Integrated Circuit (“ASIC”) development, industrialized our
AIT facilities for production of BB satellites, and increased the headcount of
employees and consultants to support our growing operations.
Our future results of operations will be driven by our ability to execute on our
strategy and could differ materially from the historical results of operations.
We intend to continue to make necessary capital investments to industrialize our
AIT facilities, procure satellite materials and components, set up ground
infrastructure, establish network and software operations centers, continue the
research and development initiatives, and increase the headcount of our
employees and consultants to support the production and launch of the BB
satellites and expand our operations. All of these factors could result in
materially different capital and operating expenses during the future periods.
We do not expect to generate revenue in future periods until we launch the
SpaceMobile Service.
Components of Results of Operations
Revenues
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To date, we have not generated any revenues from our SpaceMobile Service. Our
former subsidiary, Nano, generated revenue from the development and manufacture
of satellite technology, and ancillary sales and services globally. Nano also
sold individual satellite parts, subsystems, and software to be configured to
customers’ satellites, and entered into “rideshare” type agreements whereby Nano
provided hosted payload services using customers’ payloads integrated with
Nano-owned satellite buses for scheduled launches. Accordingly, all revenue
presented herein exclusively relates to Nano’s sales of goods and services.
Following the completion of the sale of Nano on
expect to generate revenue in future periods until we launch the SpaceMobile
Service.
Cost of Sales
Cost of sales includes the purchase price of various products used and services
performed to execute Nano’s sales contracts. Cost of sales also includes
operational costs to fulfil Nano customer orders, including costs for Nano
employees and overhead. Following the completion of the sale of Nano on
cost of sales in future periods until we launch the SpaceMobile Service.
Engineering Services Costs
Engineering services costs are charged to expense as incurred. Engineering
services costs consist primarily of the expenses associated with our ongoing
engineering efforts related to integration, testing, and development of our
satellites, as well as the cost of internal staff (such as engineers and
consultants) to support these efforts and general expenses related to
engineering centers.
General and Administrative Costs
General and administrative costs include the costs of insurance, cost of
non-engineering personnel and personnel related expenses such as recruiting and
travel and lodging expenses, software licensing and subscriptions, office and
facilities expenses, investor relations, and professional services, including
public relations, accounting and legal fees.
Research and Development Costs
R&D costs consist principally of non-recurring development activities in which
we typically engage third-party vendors. Currently, major R&D activities include
engaging with vendors to help design and develop the electronic componentry,
software, and mechanical deployment systems to be used in the BB satellites and
in connection with the planned SpaceMobile Service.
Depreciation and Amortization
Depreciation and amortization expense includes amounts related to property and
equipment as well as definite lived intangible assets. Once the necessary
testing to connect the BW3 test satellite to a cellphone is complete, we expect
to depreciate the BW3 test satellite over its expected useful life of two years
resulting in a significant increase in future depreciation expense.
Gain (Loss) on Remeasurement of Warrant Liabilities
Public and private warrants issued by us are accounted for as
liability-classified instruments at their initial fair value on the date of
issuance. They are remeasured on each balance sheet date and changes in the
estimated fair value are recognized as an unrealized gain or loss in the
unaudited condensed consolidated statements of operations.
Other Income (Expense), Net
Other income (expense), net consists of the gain from sale of Nano, interest
earned on cash and cash equivalents held by us in interest bearing demand
deposit accounts, net of any interest expense, as well as transaction costs
incurred in connection with the Common Stock Purchase Agreement and other
miscellaneous non-operating items, including foreign exchange gains or losses.
Income Tax Expense
purposes. Also, we had a controlling ownership interest in our former
subsidiary, Nano, a Lithuanian company, through
subject to foreign income taxes and is also treated as a partnership for
federal and state and local taxes. Accordingly, for
income tax purposes, all income, losses, and other tax attributes pass through
to the members’ income tax returns, and no
provision for income taxes has been recorded for these entities in the unaudited
condensed consolidated financial statements. Certain foreign wholly-owned
entities are taxed as corporations in the jurisdictions in which they operate,
and accruals for such taxes are included in the unaudited condensed consolidated
financial statements.
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Noncontrolling Interest
Noncontrolling interest primarily represents the equity interest in
by the Existing Equityholders other than us. As of
Existing Equityholders’ equity ownership percentage in
70.6%. Also, noncontrolling interest includes approximately 49% equity interests
in our former subsidiary, Nano, held by equityholders other than us up to
eliminated in connection with the sale of the Company’s 51% interest in Nano. We
attribute a portion of net income or loss generated at
noncontrolling interests based on their ownership interests.
Results of Operations
Three Months Ended
The following table sets forth a summary of our unaudited condensed consolidated
statements of operations for the three months ended
(in thousands) and the discussion that follows compares the three months ended
For the Three Months Ended September 30,
(unaudited)
2022 2021 $ Change % Change
Revenues $ 4,168 $ 2,450 $ 1,718 70 %
Cost of sales (exclusive of items
shown separately below) 2,525 2,103 422 20
Gross profit 1,643 347 1,296 373
Operating expenses:
Engineering services 14,492 8,026 6,466 81
General and administrative costs 12,916 9,331 3,585 38
Research and development costs 13,543 4,888 8,655 177
Depreciation and amortization 1,172 867 305 35
Total operating expenses 42,123 23,112 19,011 82
Other income (expense):
(Loss) gain on remeasurement of
warrant liabilities (15,897 ) 39,401 (55,298 ) 140
Other income, net 24,875 184 24,691 (13,419 )
Total other income, net 8,978 39,585 (30,607 ) (77 )
(Loss) income before income tax
expense (31,502 ) 16,820 (48,322 ) (287 )
Income tax expense 550 16 534 3,338
Net (loss) income before allocation
to noncontrolling interest (32,052 ) 16,804 (48,856 ) (291 )
Net (loss) income attributable to
noncontrolling interest (22,286 ) 12,689 (34,975 ) (276 )
Net (loss) income attributable to
common stockholders $ (9,766 ) $ 4,115 $ (13,881 ) (337 ) %
Revenues
Total revenues increased by
months ended
30, 2021
of performance obligations associated with existing Nano customer contracts
prior to the sale of our 51% interest in Nano on
Cost of Sales
Total cost of sales increased by
three months ended
increased production and services under existing Nano customer contracts during
the three months ended
in Nano on
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Engineering Services Costs
Total engineering services costs increased by
million
months ended
stock-based compensation expense, as a result of an increase in headcount period
over period. The remaining increase relates to a
general expenses at engineering centers to support the engineering efforts
related to the integration, testing, and development of our satellites.
General and Administrative Costs
Total general and administrative costs increased by
three months ended
to a
an increase in headcount as well as an increase in stock-based compensation
awards granted since the prior period. The remaining
primarily attributable to increases in travel expenses, facilities costs,
software license costs, and legal expenses.
Research and Development Costs
Total R&D costs increased by
three months ended
design and development efforts of our BB satellites along with payments made
upon achieving certain milestones of our ASIC development program. R&D costs are
primarily attributable to third-party development efforts relating to the BB
satellites to be used in the SpaceMobile constellation, which fluctuate quarter
over quarter, as these costs are largely driven by the achievement of milestones
that trigger payments.
Depreciation and Amortization
Total depreciation and amortization expense increased by
to
three months ended
purchase of additional fixed assets and leasehold improvements during the
period. Depreciation expense is expected to increase significantly in future
periods once we begin to depreciate the BW3 test satellite over its expected
useful life of two years.
(Loss) Gain on Remeasurement of Warrant Liabilities
An increase in fair value of warrant liabilities resulted in a loss of
million
Other Income
Increase in other income during the three months ended
primarily due to the net gain of
sale of Nano on
cash and cash equivalents held at financial institutions partially offset by the
transaction costs incurred in connection with the Common Stock Purchase
Agreement.
Income Tax Expense
The provision for income taxes was
The consolidated effective tax rate for the three months ended
2022
in the effective rates between periods is driven by income tax expense assessed
against non-
Taxes to our unaudited condensed consolidated financial statements included in
Item 1 of this report.
Net (Loss) Income Attributable to Noncontrolling Interest
Net loss attributable to noncontrolling interest was
three months ended
to noncontrolling interest of
30, 2021
the three months ended
income generated at
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Nine Months Ended
30, 2021
The following table sets forth a summary of our consolidated results of
operations for the interim periods indicated below and the changes between the
periods.
For the Nine Months Ended September 30,
(unaudited)
2022 2021 $ Change % Change
Revenues $ 13,825 $ 6,185 $ 7,640 124 %
Cost of sales (exclusive of items
shown separately below) 6,714 4,122 2,592 63
Gross profit 7,111 2,063 5,048 245
Operating expenses:
Engineering services 38,208 18,757 19,451 104
General and administrative costs 37,634 24,031 13,603 57
Research and development costs 30,969 15,491 15,478 100
Depreciation and amortization 3,457 2,049 1,408 69
Total operating expenses 110,268 60,328 49,940 83
Other income (expense):
Gain (loss) on remeasurement of
warrant liabilities 1,669 (2,276 ) 3,945 173
Other income, net 24,211 156 24,055 (15,420 )
Total other income (expense), net 25,880 (2,120 ) 28,000 (1,321 )
Loss before income tax expense (77,277 ) (60,385 ) (16,892 ) 28
Income tax expense
747 73 674 923 Net loss before allocation to noncontrolling interest (78,024 ) (60,458 ) (17,566 ) 29 Net loss attributable to noncontrolling interest (54,613 ) (33,015 ) (21,598 ) 65 Net loss attributable to common stockholders$ (23,411 ) $ (27,443 ) $ 4,032 (15 ) % Revenues
Total revenues increased by
months ended
30, 2021
of performance obligations associated with both new and existing Nano customer
contracts during the nine months ended
our 51% interest in Nano on
Cost of Sales
Total cost of sales increased by
nine months ended
in revenue and was primarily attributable to increased production and services
under new and existing Nano sales contracts during the nine months ended
2022
Engineering Services Costs
Total engineering services costs increased by
million
months ended
stock-based compensation expense, as a result of an increase in headcount to
support growing engineering operations in 2022. The remaining
increase relates to general expenses at engineering centers to support
engineering efforts related to the integration, testing, and development of our
satellites.
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General and Administrative Costs
Total general and administrative costs increased by
nine months ended
to a
an increase in headcount period over period, as well as an increase in
stock-based compensation awards granted since the prior period. Also, there was
a
related costs, rent and office supplies, a
increased insurance expense and a
increased professional services fees, software licensing costs, and other
miscellaneous expenses.
Research and Development Costs
Total R&D costs increased by
nine months ended
development efforts relating to the BB satellites to be used in the SpaceMobile
constellation. Prior to the second quarter of 2021, our operations primarily
related to constructing the BW3 test satellite, and therefore R&D efforts were
limited. The increase in R&D costs was primarily due to increased design and
development efforts for our BB satellites along with achievement of certain
milestones of our ASIC development program. R&D costs are expected to fluctuate
quarter over quarter, as R&D costs are largely driven by the achievement of
milestones that trigger payments.
Depreciation and Amortization
Total depreciation and amortization expense increased by
to
nine months ended
purchase of additional fixed assets and leasehold improvements over the last
twelve months ended
Gain (Loss) on Remeasurement of Warrant Liabilities
Decrease in fair value of warrant liabilities resulted in a gain of
for the nine months ended
million
Other Income
Increase in other income is primarily due to the net gain of
recognized in connection with the Nano Share Sale on
increase in interest income from the cash and cash equivalents held at financial
institutions, partially offset by the transaction costs incurred in connection
with the Common Stock Purchase Agreement.
Income Tax Expense
The provision for income taxes was
2021
30, 2022
difference in the effective rates between periods is driven by income tax
expense assessed against non-
Note 17: Income Taxes to our unaudited condensed consolidated financial
statements included in Item 1 of this report.
Net Loss Attributable to Noncontrolling Interest
Net loss attributable to noncontrolling interest was
nine months ended
months ended
noncontrolling interest for the nine months ended
with the increase in net loss generated at
Liquidity and Capital Resources
We require capital to fund our operating expenses and to make capital
expenditures. As of
equivalents on hand, which includes
our cash on hand is sufficient to meet our current working capital needs,
planned operating expenses and capital expenditure for a period of at least 12
months from the date of this Quarterly Report.
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The design, assembly, integration, testing and launch of satellites and related
ground infrastructure is capital-intensive. We currently estimate the capital
expenditures required for the design, assembly and launch of our first 20
commercial satellites to be between approximately
million
from our BW3 test satellite design including FPGA (Field Programmable Gate
Array), reaction wheels and antennas. We believe that utilizing these existing
components and technology will enable us to launch these satellites sooner, but
will also result in an increase in cost per satellite due to the current higher
costs of these first generation components. The cost of the satellite
configuration has also increased due to the impacts of inflation, supply chain
disruptions, design changes, and increases in the cost of electronic components,
assembly equipment, launch costs, salaries and other aspects of our satellite
design and assembly activities. These estimated costs are preliminary estimates
and based on certain assumptions and information currently available to us and
are subject to changes based on numerous factors, including potential price
changes, supply chain disruptions, design changes, delays in development of
components and materials, launch costs, launch insurance, and other factors.
Accordingly, actual costs may materially differ from our current estimates.
We will require additional capital to assemble and launch the BB satellites and
provide the SpaceMobile Service. We expect to raise additional funds through the
issuance of equity, equity related or debt securities, or through obtaining
credit from government or financial institutions or commercial partners,
although our ability to access the capital markets during this period of
volatility may require us to modify our current expectations. We are in
discussions with financial institutions regarding equipment financing to enhance
liquidity. The additional capital will be necessary to fund ongoing operations,
continue research, development and design efforts, improve infrastructure, and
launch satellites. There can be no assurance that additional funds will be
available to us on favorable terms or at all. If we cannot raise additional
funds when needed, our financial condition, results of operations, business and
prospects may be materially and adversely affected.
We have contractual obligations, including non-cancellable operating leases for
office space, with terms expiring through
ended
annual rental payments required under the operating lease agreements described
in our Annual Report on Form 10-K for the fiscal year ended
As of
the aggregate amount of
improvements, and procurement of BB satellite components. We expect these
commitments will continue to increase as we complete the supply chain and
electronics development in preparation for the production and launch of the BB
satellites.
Common Stock Purchase Agreement
On
Stock Purchase Agreement”) with
Agreement, we have the right, in our sole discretion, to sell to
weighted average price (“VWAP”) of the Class A common stock calculated in
accordance with the Common Stock Purchase Agreement, over a period of 24 months
subject to certain limitations and conditions contained in the Common Stock
Purchase Agreement. Sales and timing of any sales of Class A common stock are
solely at our election, and we are under no obligation to sell any securities to
Riley’s
have issued 43,938 shares of our Class A common stock as commitment shares and
will issue up to an aggregate of 43,938 shares of our Class A common stock if
certain conditions are met. Other than the issuance of the commitment shares of
our Class A common stock to
common stock to raise capital under the Common Stock Purchase Agreement as of
Common Stock Purchase Agreement. Proceeds from the sale of our Class A common
stock under the Common Stock Purchase Agreement were and will continue to be
used for general corporate purposes.
Equity Distribution Agreement
On
L.L.C.
of our Class A common stock having an aggregate sales price of up to
million
act as sales agents. The agents are entitled to total compensation at a
commission rate of up to 3.0% of the gross sales price per share sold. Under the
Sales Agreement, the Company issued 522,051 shares of its Class A common stock
as of
commissions paid to agents and transaction costs. In addition, the Company sold
95,512 shares of its Class A common stock for total net proceeds of
million
2022
sale of our Class A common stock under the Sales Agreement were and will
continue to be used for general corporate purposes.
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Texas Financing Agreement
In
Texas”), entered into a new Credit Agreement providing for a
loan secured by the property. Borrowings under the term loan bear interest at a
fixed rate equal to 4.20% per annum until
2026
adjustment if the index rate as defined in the Credit Agreement is greater than
4.20%. See the notes to the unaudited condensed consolidated financial
statements (Refer to Note 9 for further information).
The Credit Agreement contains certain customary events of default, and certain
covenants that limit AST Texas’ ability to, among other things, create liens on
collateral, consolidate, merge, sell, or otherwise dispose of all or
substantially all of its assets; and enter into certain transactions with its
affiliates. If AST Texas fails to perform its obligations under these and other
covenants, or should any event of default occur, the term loan may be terminated
and any outstanding borrowings, together with unpaid accrued interest, could be
declared immediately due and payable, and the lender will be authorized to take
possession of the collateral.
Cash Flows
Historical Cash Flows
The following table summarizes our sources and uses of cash for the nine months
ended
For the Nine Months Ended September 30,
(unaudited)
2022 2021
Cash, cash equivalents and restricted cash $ 199,529 $ 360,390
Cash used in operating activities $ (121,424 ) $ (58,612 )
Cash used in investing activities (19,814 ) (40,494 )
Cash provided by financing activities 17,298 416,878
Operating activities
Cash used in operating activities was
provider related to the first BB initial payment and a launch reservation fee
for a future BB launch, as compared to cash used in operating activities of
increase in cash used in operating activities, excluding the above mentioned
deposits paid to the launch provider, was attributable to higher operating
expenses as a result of an increase in headcount, research and development
efforts, software license costs, professional services fees and other office
related expenses, and an increase in advances paid to vendors for development
and procurement of long-lead components for our BB satellites.
Investing activities
Cash used in investing activities was
million
in cash used in investing activities was primarily attributable to net proceeds
(net of transaction costs and cash balance of Nano deconsolidated as on the date
of sale) of
decrease in BW3 test satellite assembly costs offset by
purchases of property and equipment including construction costs incurred at our
new
Financing activities
Cash provided by financing activities was
ended
of
by financing activities for the nine months ended
attributable to the proceeds from the Business Combination. Cash provided by
financing activities for the nine months ended
attributable to the sale of shares of Class A common stock under the Common
Stock Purchase Agreement and Sales Agreement.
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Impact of Inflation
While inflation may impact our capital and operating expenditures, we believe
the effects of inflation on our historical results of operations and financial
condition have not been significant. However, there can be no assurance that our
results of operations, capital cost estimates, and financial condition will not
be materially impacted by the current heightened levels of inflation.
Funding Requirements
We believe our existing cash and cash equivalents will be sufficient to meet
anticipated cash requirements for at least 12 months from the date hereof.
However, our forecast of the period of time through which our financial
resources will be adequate to support operations is a forward-looking statement
that involves risks and uncertainties, and actual results could vary materially.
We have based this estimate on assumptions that may prove to be wrong, and we
could expend capital resources sooner than we expect.
Future capital requirements will depend on many factors, including:
•
Establishing and maintaining supply and manufacturing relationships with third
parties that can provide adequate, in both amount and quality, products and
services to support our satellite development;
•
Technological or manufacturing difficulties, design issues or other unforeseen
matters;
•
Negotiation of launch agreements (including launch costs), launch delays or
failures, deployment failures, or in-orbit satellite failures;
•
Addressing any competing technological and market developments;
•
Seeking and obtaining market access approvals; and
•
Attracting, hiring, and retaining qualified personnel.
Until such time, if ever, as we can generate substantial revenues to support our
cost structure, we expect to finance cash needs through a combination of equity
offerings, debt financings, commercial and other similar arrangements. To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the ownership interest of stockholders will be, or
could be, diluted, and the terms of these securities may include liquidation or
other preferences that adversely affect the rights of common stockholders. Debt
financing and equity financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take specific actions,
such as incurring additional debt, making capital expenditures or declaring
dividends. If we raise funds through commercial agreements or other similar
arrangements with third parties, we may have to relinquish valuable rights to
our technologies and/or future revenue streams, or grant licenses on terms that
may not be favorable to us and/or may reduce the value of our common stock.
Also, our ability to raise necessary financing could be impacted by the COVID-19
pandemic, recent geopolitical events, and inflationary economic conditions and
their effects on the market conditions. If we are unable to raise additional
funds through equity or debt financings when needed, we may be required to
delay, limit, reduce or terminate our commercialization efforts or grant rights
to develop and market other services even if we would otherwise prefer to
develop and market these services ourselves, or potentially discontinue
operations.
Critical Accounting Policies
Our unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in
(
make judgments, estimates and assumptions that impact the reported amount of
revenue and expenses, assets and liabilities and the disclosure of contingent
assets and liabilities. We consider an accounting judgment, estimate or
assumption to be critical when (1) the estimate or assumption is complex in
nature or requires a high degree of judgment and (2) the use of different
judgments, estimates and assumptions could have a material impact on our
unaudited condensed consolidated financial statements. For a discussion of our
critical accounting policies, see “Critical Accounting Policies” in Item 7 of
our Annual Report on Form 10-K for the year ended
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
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