8-K
AST SpaceMobile, Inc. (ASTS)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): November 14, 2023 |
|---|
AST SpaceMobile, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-39040 | 84-2027232 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| Midland Intl. Air & Space Port<br><br>2901 Enterprise Lane | ||
| Midland, Texas | 79706 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: (432) 276-3966 | ||
| --- | ||
| Not Applicable | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A common stock, par value $0.0001 per share | ASTS | The Nasdaq Stock Market LLC |
| Warrants exercisable for one share of Class A common stock at an exercise price of $11.50 | ASTSW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 14, 2023, AST SpaceMobile, Inc. (“AST SpaceMobile” or the “Company”) issued a press release announcing financial results for the three and nine months ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information included in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
AST SpaceMobile is also furnishing a Third Quarter Business Update, dated November 14, 2023 (the “Presentation”), attached as Exhibit 99.2 to this Current Report on Form 8-K, which may be referred to on the Company’s third quarter 2023 conference call to be held on November 14, 2023. The Presentation will also be available on the Company’s website at www.ast-science.com.
The information included in this Item 7.01 and in Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated November 14, 2023 |
| 99.2 | Third Quarter 2023 Business Update |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AST SpaceMobile, Inc. | |||
|---|---|---|---|
| Date: | November 14, 2023 | By: | /s/ Sean R. Wallace |
| Name: Sean R. Wallace<br>Title: Chief Financial Officer |
EX-99.1
| PRESS RELEASE | EXHIBIT 99.1 |
|---|
AST SpaceMobile Provides Third Quarter 2023 Business Update
MIDLAND, TX, November 14, 2023 – AST SpaceMobile, Inc. (“AST SpaceMobile”) (NASDAQ: ASTS), the company building the first and only space-based cellular broadband network accessible directly by everyday smartphones, is providing its business update for the third quarter ended September 30, 2023.
“The manufacturing of our first five commercial satellites is at full speed at our Texas facilities, and we are looking forward to our expected launch in Q1 2024 as we target initial commercial service for both mobile network operators and governmental entities starting in 2024”, said Abel Avellan, Chairman and Chief Executive Officer of AST SpaceMobile. “In the third quarter, AST SpaceMobile announced another historic achievement and the capstone of our BlueWalker 3 testing program – the first-ever space-based 5G cellular broadband connection directly to an everyday smartphone. I am grateful for the dedication of our team and support of our network partners who have helped us reach multiple groundbreaking milestones this year.”
Business Update
• BlueWalker 3 Makes History Again
o Demonstrated space-based 5G cellular broadband capabilities
o Increased performance to 14 Mbps data rates per 5MHz channels
• First Five Commercial Satellites Expected to be Launched in Q1 2024
o Manufacturing at full speed in Midland, Texas facilities
o Approximately 85% of planned capital expenditures paid as of September 30, 2023
• Total and Adjusted Operating Expenses Expected to Decrease by $10 Million to $15 Million Per Quarter Beginning Q1 2024
o Expected reduction driven by completion of Block 1 design and development, substantial completion of the ASIC design, and partial completion of Block 2 design, with no material change in headcount
• IP Portfolio Has Grown to More than 3,100 Patent and Patent Pending Claims Worldwide
• Strategic Investment Process
o We are moving forward on definitive documentation and completion of diligence with multiple strategic partners
o Seeking to close and fund with multiple strategic partners in November or December 2023
o There can be no assurance that we will enter into any such transactions on acceptable terms, on this timing, or at all
Third Quarter 2023 Financial Highlights
• As of September 30, 2023, we had cash, cash equivalents, and restricted cash of $135.7 million
• Total operating expenses for the third quarter of 2023 were $59.0 million, including $21.6 million of depreciation and amortization and stock-based compensation expense. This represents an increase of $0.9 million as compared to $58.1 million in the second quarter of 2023, due to a $4.9 million increase in depreciation and amortization expense and a $0.8 million increase in general and administrative costs offset by a $1.5 million decrease in research and development costs and a $3.3 million decrease in engineering services costs
• Total Adjusted operating expenses for the third quarter of 2023 were $37.3 million, a decrease of $1.1 million as compared to $38.4 million in the second quarter of 2023, due to a $1.5 million decrease in research and development costs and a $0.3 million decrease in Adjusted engineering services costs offset by a $0.7 million increase in Adjusted general and administrative costs(1)
• As of September 30, 2023, we have incurred approximately $265.8 million of gross capitalized property and equipment costs and accumulated depreciation and amortization of $41.6 million. The capitalized costs include costs of our BlueWalker 3 satellite, assembly and integration facilities including assembly and test equipment, satellite materials, advance launch payments and ground antennas
(1) See reconciliation of Adjusted operating expenses to Total operating expenses, Adjusted engineering services costs to Engineering services costs and Adjusted general and administrative costs to General and administrative costs in the tables accompanying this press release.
Non-GAAP Financial Measures
We refer to certain non-GAAP financial measures in this press release, including Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs. We believe these non-GAAP financial measures are useful measures across time in evaluating our operating performance as we use these measures to manage the business, including in preparing our annual operating budget and financial projections. These non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP, and therefore have limits in their usefulness to investors. Because of the non-standardized definitions, these measures may not be comparable to the calculation of similar measures of other companies and are presented solely to provide investors with useful information to more fully understand how management assesses performance. These measures are not, and should not be viewed as, a substitute for their most directly comparable GAAP measures. Reconciliation of non-GAAP financial measures and the most directly comparable GAAP financial measures are included in the tables accompanying this press release.
Conference Call Information
AST SpaceMobile will hold a quarterly business update conference call at 5:00 p.m. (Eastern Time) on Tuesday, November 14, 2023. The call will be accessible via a live webcast on the Events page of AST SpaceMobile’s Investor Relations website at https://ast-science.com/investors/. An archive of the webcast will be available shortly after the call.
About AST SpaceMobile
AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on our extensive IP and patent portfolio. Our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today’s five billion mobile
subscribers and finally bring broadband to the billions who remain unconnected. For more information, follow AST SpaceMobile on YouTube, X (Formerly Twitter), LinkedIn and Facebook. Watch this video for an overview of the SpaceMobile mission.
Forward-Looking Statements
This communication contains “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results of AST SpaceMobile to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside AST SpaceMobile’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) expectations regarding AST SpaceMobile’s strategies and future financial performance, including AST’s future business plans or objectives, expected functionality of the SpaceMobile Service, anticipated timing and results of the BW3 satellite tests, anticipated timing and level of deployment of satellites, anticipated demand and acceptance of mobile satellite services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance its research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and AST’s ability to invest in growth initiatives; (ii) the negotiation of definitive agreements with mobile network operators relating to the SpaceMobile service that would supersede preliminary agreements and memoranda of understanding and the ability to enter into commercial agreements with other parties or government entities; (iii) the ability of AST SpaceMobile to grow and manage growth profitably and retain its key employees and AST SpaceMobile’s responses to actions of its competitors and its ability to effectively compete; (iv) changes in applicable laws or regulations; (v) the possibility that AST SpaceMobile may be adversely affected by other economic, business, and/or competitive factors; (vi) the outcome of any legal proceedings that may be instituted against AST SpaceMobile; and (vii) other risks and uncertainties indicated in the Company’s filings with the SEC, including those in the Risk Factors section of AST SpaceMobile’s Form 10-K filed with the SEC on March 31, 2023.
The ongoing testing of the BW3 satellite may not be completed due to a variety of factors, which could include loss of satellite connectivity, destruction of the satellite, or other communication failures, and even if completed, the BW3 testing may indicate adjustments that are needed or modifications that must be made, any of which could result in additional costs, which could be material, and delays in commercializing our service. If there are delays or issues with additional testing, it may become more costly to raise capital, if we are able to do so at all.
AST SpaceMobile cautions that the foregoing list of factors is not exclusive. AST SpaceMobile cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors incorporated by reference into AST SpaceMobile’s Form 10-K filed with the SEC on March 31, 2023. AST SpaceMobile’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable
securities law, AST SpaceMobile disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Investor Contact:
Scott Wisniewski
investors@ast-science.com
Media Contact:
Allison
Eva Murphy Ryan
917-547-7289
AstSpaceMobile@allisonpr.com
Third Quarter Financial Results
AST SPACEMOBILE, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands, except share data)
| December 31,<br>2022 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 133,310 | $ | 238,588 | ||
| Restricted cash | 2,416 | 668 | |||
| Prepaid expenses | 6,261 | 4,100 | |||
| Other current assets | 21,084 | 24,954 | |||
| Total current assets | 163,071 | 268,310 | |||
| Property and equipment: | |||||
| Property and equipment, gross | 265,798 | 152,968 | |||
| Less: Accumulated depreciation and amortization | (41,556 | ) | (6,979 | ) | |
| Total property and equipment, net | 224,242 | 145,989 | |||
| Other non-current assets: | |||||
| Operating lease right-of-use assets, net | 13,212 | 7,671 | |||
| Other non-current assets | 1,605 | 16,402 | |||
| Total other non-current assets | 14,817 | 24,073 | |||
| TOTAL ASSETS | 402,130 | $ | 438,372 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 7,811 | 13,929 | |||
| Accrued expenses and other current liabilities | 17,706 | 13,145 | |||
| Current operating lease liabilities | 1,384 | 722 | |||
| Total current liabilities | 26,901 | 27,796 | |||
| Warrant liabilities | 17,492 | 38,946 | |||
| Non-current operating lease liabilities | 11,979 | 7,046 | |||
| Long-term debt, net | 58,536 | 4,758 | |||
| Total liabilities | 114,908 | 78,546 | |||
| Commitments and contingencies | |||||
| Stockholders' Equity: | |||||
| Class A Common Stock, .0001 par value; 800,000,000 shares authorized; 89,675,329 and 71,819,926 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | 9 | 7 | |||
| Class B Common Stock, .0001 par value; 200,000,000 shares authorized; 50,041,757 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | 5 | 5 | |||
| Class C Common Stock, .0001 par value; 125,000,000 shares authorized; 78,163,078 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | 8 | 8 | |||
| Additional paid-in capital | 285,525 | 235,384 | |||
| Accumulated other comprehensive income | 11 | 229 | |||
| Accumulated deficit | (157,736 | ) | (102,101 | ) | |
| Noncontrolling interest | 159,400 | 226,294 | |||
| Total stockholders' equity | 287,222 | 359,826 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 402,130 | $ | 438,372 |
All values are in US Dollars.
AST SPACEMOBILE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except share and per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Revenues | $ | - | $ | 4,168 | $ | - | $ | 13,825 | ||||
| Cost of sales (exclusive of items shown separately below) | - | 2,525 | - | 6,714 | ||||||||
| Gross profit | - | 1,643 | - | 7,111 | ||||||||
| Operating expenses: | ||||||||||||
| Engineering services costs | 19,523 | 14,492 | 58,818 | 38,208 | ||||||||
| General and administrative costs | 10,995 | 12,916 | 31,073 | 37,634 | ||||||||
| Research and development costs | 9,418 | 13,543 | 36,721 | 30,969 | ||||||||
| Depreciation and amortization | 19,029 | 1,172 | 34,877 | 3,457 | ||||||||
| Total operating expenses | 58,965 | 42,123 | 161,489 | 110,268 | ||||||||
| Other income (expense): | ||||||||||||
| Gain (loss) on remeasurement of warrant liabilities | 7,481 | (15,897 | ) | 21,454 | 1,669 | |||||||
| Other income (expense), net | 1,002 | 24,875 | (5,926 | ) | 24,211 | |||||||
| Total other income (expense), net | 8,483 | 8,978 | 15,528 | 25,880 | ||||||||
| Loss before income tax (expense) benefit | (50,482 | ) | (31,502 | ) | (145,961 | ) | (77,277 | ) | ||||
| Income tax (expense) benefit | (266 | ) | (550 | ) | 408 | (747 | ) | |||||
| Net loss before allocation to noncontrolling interest | (50,748 | ) | (32,052 | ) | (145,553 | ) | (78,024 | ) | ||||
| Net loss attributable to noncontrolling interest | (29,839 | ) | (22,286 | ) | (89,918 | ) | (54,613 | ) | ||||
| Net loss attributable to common stockholders | $ | (20,909 | ) | $ | (9,766 | ) | $ | (55,635 | ) | $ | (23,411 | ) |
| Net loss per share attributable to holders of Class A Common Stock | ||||||||||||
| Basic and diluted | $ | (0.23 | ) | $ | (0.18 | ) | $ | (0.70 | ) | $ | (0.45 | ) |
| Weighted-average shares of Class A Common Stock outstanding | ||||||||||||
| Basic and diluted | 89,514,621 | 53,233,552 | 79,065,471 | 52,292,972 |
AST SPACEMOBILE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net loss before allocation to noncontrolling interest | $ | (50,748 | ) | $ | (32,052 | ) | $ | (145,553 | ) | $ | (78,024 | ) |
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustments | (358 | ) | (1,267 | ) | (526 | ) | (1,865 | ) | ||||
| Total other comprehensive loss | (358 | ) | (1,267 | ) | (526 | ) | (1,865 | ) | ||||
| Total comprehensive loss before allocation to noncontrolling interest | (51,106 | ) | (33,319 | ) | (146,079 | ) | (79,889 | ) | ||||
| Comprehensive loss attributable to noncontrolling interest | (30,050 | ) | (23,083 | ) | (90,226 | ) | (55,915 | ) | ||||
| Comprehensive loss attributable to common stockholders | $ | (21,056 | ) | $ | (10,236 | ) | $ | (55,853 | ) | $ | (23,974 | ) |
AST SPACEMOBILE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
| For the Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net loss before allocation to noncontrolling interest | $ | (145,553 | ) | $ | (78,024 | ) |
| Adjustments to reconcile net loss before noncontrolling interest to cash <br>used in operating activities: | ||||||
| Gain on sale of Nano | - | (24,646 | ) | |||
| Depreciation and amortization | 34,877 | 3,457 | ||||
| (Gain) loss on remeasurement of warrant liabilities | (21,454 | ) | (1,669 | ) | ||
| Amortization of debt issuance costs | 374 | - | ||||
| Non-cash lease expense | 659 | 364 | ||||
| Stock-based compensation | 10,595 | 7,093 | ||||
| Issuance of common stock for commitment shares | - | 332 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | - | (2,241 | ) | |||
| Prepaid expenses and other current assets | 1,601 | (20,444 | ) | |||
| Inventory | - | (2,461 | ) | |||
| Accounts payable and accrued expenses | (6,215 | ) | 12,259 | |||
| Operating lease liabilities | (605 | ) | (323 | ) | ||
| Deferred revenue | - | 2,395 | ||||
| Other assets and liabilities | 1,680 | (17,516 | ) | |||
| Net cash used in operating activities | (124,041 | ) | (121,424 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchase of property and equipment and advance launch payments | (96,462 | ) | (45,850 | ) | ||
| Proceeds from the sale of Nano, net of cash deconsolidated and transaction costs | - | 26,036 | ||||
| Net cash used in investing activities | (96,462 | ) | (19,814 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from debt | 63,500 | 230 | ||||
| Repayments of debt | (180 | ) | - | |||
| Payment for debt issuance costs | (9,653 | ) | - | |||
| Proceeds from issuance of common stock, net of issuance costs | 63,476 | 16,994 | ||||
| Issuance of equity under employee stock plan | 225 | 60 | ||||
| Proceeds from warrant exercises | - | 14 | ||||
| Net cash provided by financing activities | 117,368 | 17,298 | ||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (395 | ) | (1,068 | ) | ||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (103,530 | ) | (125,008 | ) | ||
| Cash, cash equivalents and restricted cash, beginning of period | 239,256 | 324,537 | ||||
| Cash, cash equivalents and restricted cash, end of period | $ | 135,726 | $ | 199,529 | ||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for interest | 1,071 | - | ||||
| Non-cash transactions: | ||||||
| Purchases of property and equipment in accounts payable and accrued expenses | $ | 7,120 | $ | 4,721 | ||
| Right-of-use assets obtained in exchange for operating lease liabilities | 6,709 | 1,129 |
AST SPACEMOBILE, INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED MEASURES (UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended September 30, 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| GAAP Reported | Stock-Based Compensation Expense | Adjusted | ||||||
| Engineering services costs | $ | 19,523 | $ | (1,507 | ) | $ | 18,016 | |
| General and administrative costs | 10,995 | (1,082 | ) | 9,913 | ||||
| Research and development costs | 9,418 | - | 9,418 | |||||
| Depreciation and amortization | 19,029 | - | 19,029 | |||||
| Total operating expenses | $ | 58,965 | $ | (2,589 | ) | $ | 56,376 | |
| Less: Depreciation and amortization | (19,029 | ) | ||||||
| Adjusted operating expenses | $ | 37,347 | ||||||
| For the Three Months Ended June 30, 2023 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| GAAP Reported | Stock-Based Compensation Expense | Adjusted | ||||||
| Engineering services costs | $ | 22,813 | $ | (4,458 | ) | $ | 18,355 | |
| General and administrative costs | 10,221 | (1,074 | ) | 9,147 | ||||
| Research and development costs | 10,921 | - | 10,921 | |||||
| Depreciation and amortization | 14,115 | - | 14,115 | |||||
| Total operating expenses | $ | 58,070 | $ | (5,532 | ) | $ | 52,538 | |
| Less: Depreciation and amortization | (14,115 | ) | ||||||
| Adjusted operating expenses | $ | 38,423 |
Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs are alternative financial measures used by management to evaluate our operating performance as a supplement to our most directly comparable U.S. GAAP financial measure. We define Adjusted operating expense as Total operating expenses adjusted to exclude amounts of stock-based compensation expense and depreciation and amortization expense and define Adjusted engineering services costs and Adjusted general and administrative costs as engineering services costs and general and administrative costs adjusted to exclude stock-based compensation expenses.
We believe Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs are useful measures across time in evaluating our operating performance as we use these measures to manage the business, including in preparing our annual operating budget and financial projections. Adjusted operating expenses, Adjusted engineering services costs, and Adjusted general and administrative costs are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP, and therefore have limits in their usefulness to investors. Because of the non-standardized definitions, these measures may not be comparable to the calculation of similar measures of other companies and are presented solely to provide investors with useful information to more fully understand how management assesses performance. These measures are not, and should not be viewed as, a substitute for their most directly comparable GAAP measure of Total operating expenses, Engineering services costs and General and administrative costs.
Transforming how the world connects Business Update – Third Quarter 2023 November 14, 2023 NASDAQ: ASTS
ast-science.com Forward Looking Statements The information in this presentation and the oral statements made in connection therewith 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 in this presentation and the oral statements made in connection therewith regarding AST SpaceMobile, Inc.’s, collectively with its subsidiaries (“SpaceMobile” or the “Company”), 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 the Risk Factors contained in AST SpaceMobile’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable 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. Use of Non-GAAP Financial Measures Adjusted operating expense is an alternative financial measure used by management to evaluate our operating performance as a supplement to our most directly comparable U.S. GAAP financial measure. We define Adjusted operating expense as Total operating expenses adjusted to exclude amounts of stock-based compensation expense and depreciation and amortization expense. We believe Adjusted operating expenses is a useful measure across time in evaluating the Company's operating performance as we use Adjusted operating expenses to manage the business, including in preparing our annual operating budget and financial projections. Adjusted operating expense is a non-GAAP financial measure that has no standardized meaning prescribed by U.S. GAAP, and therefore has limits in its usefulness to investors. Because of the non-standardized definition, it may not be comparable to the calculation of similar measures of other companies and are presented solely to provide investors with useful information to more fully understand how management assesses performance. This measure is not, and should not be viewed as, a substitute for its most directly comparable GAAP measure of Total operating expenses. Industry and Market Data This presentation includes market data and other statistical information from sources believed to be reliable, including independent industry publications, governmental publications or other published independent sources. Although AST SpaceMobile believes these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness. Trademarks and Trade Names AST SpaceMobile owns or has rights to various trademarks, service marks and trade names that they use in connection with the operation of their respective businesses. This presentation also contains trademarks, service marks and trade names of third parties, which are the property of their respective owners. The use or display of third parties’ trademarks, service marks, trade names or products in this presentation is not intended to, and does not imply, a relationship with AST SpaceMobile, or an endorsement or sponsorship by or of AST SpaceMobile. Solely for convenience, the trademarks, service marks and trade names referred to in this presentation may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that AST SpaceMobile will not assert, to the fullest extent under applicable law, their rights or the right of the applicable licensor to these trademarks, service marks and trade names.
Building the first and only space-based cellular broadband network
Key highlights BlueWalker 3 Makes History Again Demonstrated space-based 5G cellular broadband capabilities Increased performance to 14 Mbps data rates per 5MHz channels First Five Commercial Satellites Expected to be Launched in Q1 2024 Manufacturing at full speed in Midland, Texas facilities Approximately 85% of planned capital expenditures paid1 Updated Cost Structure Following Completion of Non-Recurring R&D Adjusted operating expenses expected to be $25 million to $30 million per quarter beginning from Q1 20242 Strategic Investment Process Continues to Move Forward3 Seeking to close and fund with multiple strategic partners in November or December 2023 Includes launch costs, as of September 30, 2023. Total expected operating expense run rate per quarter starting in Q1 2024 is $47-$54 million, including depreciation and amortization and stock-based compensation expense of $22-24 million. There can be no assurance that we will enter into any such transactions on acceptable terms, on this timing, or at all.
Strategic investment process continues to move forward We are moving forward on definitive documentation and completion of diligence with multiple strategic partners The strategic investment process is intended to result in new capital and establish new and incremental financial, commercial and strategic relationships within the wireless ecosystem This new investment is intended to fund the manufacturing, launch and operations of additional BlueBird satellites beyond our first five commercial satellites We are seeking to close and fund the strategic investment process in November or December 2023 Note: There can be no assurance that we will enter into any such transactions on acceptable terms, on this timing, or at all.
History made: connecting everyday smartphones directly from space using BlueWalker 3 The first voice call was made from the Midland, Texas area to Rakuten in Japan over AT&T spectrum using a Samsung Galaxy S22 smartphone 2G Voice Calls 4G LTE Voice Calls 10 Mbps Data Rate In a LTE first-ever, using AT&T spectrum, we again connected everyday smartphones to BlueWalker 3 April 2023 June 2023 September 2023 In a 5G first-ever, we demonstrated space-based 5G connectivity by placing a call from Maui, Hawaii, USA, to a Vodafone engineer in Madrid, Spain, using AT&T spectrum 5G Voice Calls 14 Mbps Data Rate (Per 5MHz Channels)
Less than half of the geographic US has 5G coverage with download speeds ≥7Mbps “The entire country benefits when everyone, including those living and working in rural areas, can communicate and innovate equally through access to high-speed, mobile broadband services. Access to high-speed, mobile services allows connections to essential civic, economic, and social opportunities. It touches almost all aspects of daily life, including work and education, access to news and entertainment, public safety information and services, and healthcare, and allows interconnection in times of national crisis. The importance of expanding access to high-speed, 5G services in rural communities cannot be overstated.” FCC Further Notice of Proposed Rulemaking Establishing a 5G Fund for Rural America FCC National Mobile Broadband Map “And the reality of finding those spots where there are no services today…satellite's going to become an important element in doing that, in getting ubiquitous connectivity everywhere.” - John Stankey, CEO, AT&T September 21, 2023
Our collaboration has been highlighted by our MNO partners
MOUs and agreements with over 40 of largest mobile network operators around the world Select MNO Partners potential coverage Note: Memoranda of understanding and preliminary agreements are not binding and are subject to negotiation of definitive documentation. Over 2 billion subscribers represented by MNOs with whom we have MOUs and agreements
Substantial tech advantage from proprietary IP, R&D investments and patent portfolio Thousands of patent claims to maintain and sustain competitive advantage 3,100+ Patent and patent pending claims 30+ Patent families 25+ US patent applications 10+ Additional patents spanning countries from Europe to Asia
Manufacturing in Midland, Texas is at full speed ahead of expected Q1 2024 launch Approximately 85% of planned capital expenditures paid (including launch costs) Ramped to approximately 160 employees in Midland to support manufacturing Production lines running 3 shifts First five BlueBird commercial satellites expected to be launched in Q1 2024
Production of key subsystems for the first five commercial satellites is in advanced stages High level of vertical integration across key satellite subsystems Solar Panels Batteries Microns Electronics Antennas
Production of key subsystems for the first five commercial satellites is in advanced stages (cont’d) High level of vertical integration across key satellite subsystems ControlSat Avionics Software
Third quarter 2023 financial metrics Adj. Operating Expenses 1 Liquidity 4 $mm $mm Non-GAAP. See appendix for a reconciliation. Adjusted operating expenses is equal to total operating expense less non-cash operating expense such as depreciation and amortization and stock based-compensation expense. Depreciation and amortization for the three months ended September 30, 2023 and June 30, 2023 was $19.0 million and $14.1 million, respectively. Stock-based compensation for the three months ended September 30, 2023 and June 30, 2023 consisted of $1.5 million and $4.5 million of engineering services expense and $1.1 million and $1.1 million of general and administrative costs, respectively. Amounts depicted in chart represent gross property and equipment costs. $26.8 million and $71.7 million of gross property and equipment costs during the second and third quarters of 2023, respectively, disclosed herein include advance launch payments reclassified to property and equipment during the second and third quarters of 2023, respectively. Gross property and equipment as of September 30, 2023, June 30, 2023, and December 31, 2022 was $265.8 million, $194.1 million, and $153.0 million, respectively. Accumulated depreciation as of September 30, 2023, June 30, 2023, and December 31, 2022 was $41.6 million, $22.5 million, and $7.0 million, respectively. $12.1 million of gross property and equipment costs disclosed during the second quarter of 2023 excluded advance launch payments reclassified to property and equipment during the second quarter of 2023 which has been included herein. Cash Position as of September 30, 2023 and June 30, 2023 includes $2.4 million and $0.7 million of restricted cash, respectively. Capital Expenditures 2 $mm 3
Guidance for Adjusted operating expenses: targeting $25-$30M recurring expenses Completion of Block 1 design and development Substantial completion of the ASIC design Partial completion of Block 2 design No material change in headcount ($10-$15M) Current run rate per quarter is based on adjusted operating expenses reported in the last four quarters. Total expected operating expense run rate per quarter starting in Q1 2024 is $47-$54 million, including depreciation and amortization and stock-based compensation expense of $22-24 million. 1 2
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Appendix
Reconciliation to non-GAAP measures – adj. operating expenses Adj. operating expenses – 3 months ended ($ in thousands) Sept 30, ’23 June 30, ’23 Sept 30, ’22 Engineering services 19,523 22,813 14,492 General and administrative costs 10,995 10,221 12,916 Research and development costs 9,418 10,921 13,543 Depreciation and amortization 19,029 14,115 1,172 Total operating expenses 58,965 58,070 42,123 Less: Depreciation and amortization (19,029) (14,115) (1,172) Less: Stock-based compensation expense 1 (2,589) (5,532) (2,399) Total adj. operating expenses 37,347 38,423 38,552 Adj. operating expenses – 9 months ended ($ in thousands) Sept 30, ’23 Sept 30, ’22 Engineering services 58,818 38,208 General and administrative costs 31,073 37,634 Research and development costs 36,721 30,969 Depreciation and amortization 34,877 3,457 Total operating expenses 161,489 109,998 Less: Depreciation and amortization (34,877) (3,457) Less: Stock-based compensation expense 2 (10,595) (7,093) Total adj. operating expenses 116,017 99,448 Stock-based compensation for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022 consisted of $1.5 million, $4.5 million, and $1.3 million of engineering services expense and $1.1 million, $1.0 million, and $1.1 million of general and administrative costs, respectively. Stock-based compensation for the nine months ended September 30, 2023 and 2022 consisted of $7.4 million and $3.5 million of engineering services expense and $3.2 million and $3.6 million of general and administrative costs, respectively.