Business Context and Reporting Period
AST SpaceMobile, Inc. filed this Form 8-K on April 6, 2021, following the completion of the business combination between New Providence Acquisition Corp. and AST & Science LLC. The transaction converted the registrant into an Up-C structure, with substantially all operating assets held by AST and AST SpaceMobile serving as its managing member and consolidating AST’s results.
The company’s Class A common stock and warrants began trading on Nasdaq on April 7, 2021 under the symbols ASTS and ASTSW. The filing includes AST historical financial information for the years ended December 31, 2020 and 2019.
Financial and Capitalization Highlights
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $6.0 million | $1.4 million |
| Cost of sales | $3.0 million | $1.0 million |
| Gross profit | $2.9 million | $0.5 million |
| Gross margin | Approximately 49.3% | Approximately 32.5% |
| Total operating expenses | $27.3 million | $11.5 million |
| Net loss | $24.4 million | $11.1 million |
| Cash and cash equivalents at year-end | $42.8 million | $26.5 million |
| Total assets | $99.6 million | $35.9 million |
| Total liabilities | $19.7 million | $6.2 million |
Engineering services expense increased to $13.1 million from $4.7 million, while general and administrative expense increased to $12.3 million from $5.4 million. Research and development expense was $1.0 million in 2020 versus $1.1 million in 2019. The filing text does not provide a clear consolidated cash-flow figure, debt balance, or liquidity runway.
At closing, AST SpaceMobile received approximately $227.0 million remaining in NPA’s trust account after deferred underwriting commissions, redemptions, and repayment of a related-party loan. The A&R Operating Agreement states that the company contributed $456 million in gross proceeds to AST, including transaction proceeds.
Material Changes Versus the Prior Comparable Period
- Revenue increased by approximately $4.6 million, or 322%, from 2019 to 2020.
- Gross profit increased by approximately $2.5 million, although operating expenses grew substantially faster than gross profit.
- Net loss widened by approximately $13.3 million, or 119%.
- Property and equipment increased to $37.1 million from $3.8 million, reflecting significant infrastructure and development investment.
- Cash and cash equivalents increased by approximately $16.3 million, while total liabilities increased by approximately $13.5 million.
- The business combination resulted in 23.0 million PIPE shares issued for $230.0 million, 51.6 million Class B shares issued to existing AST equityholders, and 78.2 million Class C shares issued to Abel Avellan.
- Immediately after closing, former NPA public stockholders and PIPE investors each owned approximately 12.7% of outstanding common stock and approximately 2.6% of voting power. The Sponsor and existing AST equityholders owned approximately 77.8% of common stock and approximately 95.5% of voting power.
Guidance, Outlook, Risks and Unusual Items
AST was manufacturing, procuring, and assembling its BlueWalker 3 test satellite and targeted a launch in late fourth quarter 2021. The launch timing depended on completion of construction and testing, availability of a launch window and vehicle, and coordination with a delayed primary payload. A change in launch provider or vehicle could cause additional delay and cost.
The filing provides no formal revenue, earnings, cash-flow, or margin guidance. Management’s forward-looking statements address satellite deployment, SpaceMobile service functionality, customer demand, regulatory approvals, financing needs, commercial partnerships, operating expenses, capital expenditures, liquidity, and growth investments.
- Key risks include the ability to finance research and development and satellite deployment.
- Regulatory approvals, spectrum matters, geopolitical developments, and changes in law could affect operations.
- Commercial acceptance, competition, partnership retention, and pricing remain uncertain.
- Operational execution, launch availability, satellite construction and testing, and potential COVID-19 disruption could materially affect results.
- The company identified potential accounting treatment requiring former SPAC warrants to be classified as fair-value liabilities. That treatment was not reflected in the historical or unaudited pro forma financial information included with the filing.
- The company expects to retain any future earnings and does not anticipate paying dividends in the foreseeable future.
Important Facts for Investors to Verify
- Reconcile the stated $227.0 million trust-account proceeds with the $456 million gross contribution to AST and the related transaction sources and uses.
- Review the audited AST financial statements, pro forma financial information, and MD&A incorporated as Exhibits 99.1 through 99.3.
- Assess the effect of potential warrant-liability accounting on reported assets, liabilities, earnings, and equity.
- Review the terms and potential dilution from 17.6 million warrants, up to 136.3 million Class A shares issuable upon AST Common Unit redemptions, and the equity incentive and employee stock purchase plans.
- Evaluate the concentrated voting control: Abel Avellan’s Class C shares represented approximately 88.3% of voting power immediately after closing, while the Sponsor and existing AST equityholders collectively represented approximately 95.5%.
- Monitor BlueWalker 3 construction, testing, launch-provider availability, launch timing, and any resulting cost increases.
- Confirm current cash balances, debt and contractual obligations, cash burn, and financing requirements because the filing text does not provide a clear current debt or cash-flow value.