10-Q 1 asts-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File No. 001-39040

 

AST SPACEMOBILE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

84-2027232

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Midland Intl. Air & Space Port

 

2901 Enterprise Lane

Midland, Texas

79706

(Address of principal executive offices)

(Zip Code)

 

(432) 276-3966

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading 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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No

 

As of May 13, 2024 there were 139,621,085 shares of Class A common stock, $0.0001 per value, 39,747,447 shares of Class B common stock, $0.0001 par value, and 78,163,078 shares of Class C common stock, $0.0001 par value, issued and outstanding.

 

 


 

AST SPACEMOBILE, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS

Page

Part I. Financial Information

1

Item 1. Interim Financial Statements

1

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)

1

Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited)

2

Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023 (Unaudited)

3

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (Unaudited)

4

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)

5

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

33

Item 4. Controls and Procedures

33

Part II. Other Information

34

Item 1. Legal Proceedings

34

Item 1A. Risk Factors

34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3. Defaults Upon Senior Securities

34

Item 4. Mine Safety Disclosures

35

Item 5. Other Information

35

Item 6. Exhibits

36

Part III. Signatures

37

i


 

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

 

AST SPACEMOBILE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except share data)

 

 

 

As of

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

209,973

 

 

$

85,622

 

Restricted cash

 

 

2,467

 

 

 

2,475

 

Prepaid expenses

 

 

5,033

 

 

 

4,591

 

Other current assets

 

 

22,036

 

 

 

14,194

 

Total current assets

 

 

239,509

 

 

 

106,882

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net

 

 

245,284

 

 

 

238,478

 

Operating lease right-of-use assets, net

 

 

12,796

 

 

 

13,221

 

Other non-current assets

 

 

4,139

 

 

 

2,311

 

TOTAL ASSETS

 

$

501,728

 

 

$

360,892

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,528

 

 

$

20,575

 

Accrued expenses and other current liabilities

 

 

15,593

 

 

 

23,926

 

Current operating lease liabilities

 

 

1,505

 

 

 

1,468

 

Current portion of long-term debt

 

 

255

 

 

 

252

 

Total current liabilities

 

 

31,881

 

 

 

46,221

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

Warrant liabilities

 

 

11,746

 

 

 

29,960

 

Non-current operating lease liabilities

 

 

11,429

 

 

 

11,900

 

Long-term debt, net

 

 

160,827

 

 

 

59,252

 

Total liabilities

 

 

215,883

 

 

 

147,333

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $.0001 par value; 800,000,000 shares authorized; 138,153,310 and 90,161,309 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

14

 

 

 

9

 

Class B Common Stock, $.0001 par value; 200,000,000 shares authorized; 39,747,447 and 50,041,757  shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

4

 

 

 

5

 

Class C Common Stock, $.0001 par value; 125,000,000 shares authorized; 78,163,078 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

373,773

 

 

 

288,404

 

Accumulated other comprehensive income

 

 

121

 

 

 

227

 

Accumulated deficit

 

 

(209,392

)

 

 

(189,662

)

Noncontrolling interest

 

 

121,317

 

 

 

114,568

 

Total stockholders' equity

 

 

285,845

 

 

 

213,559

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

501,728

 

 

$

360,892

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

1


 

AST SPACEMOBILE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in thousands, except share and per share data)

 

 

For the Three Months ended
March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Revenues

 

$

500

 

 

$

-

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Engineering services costs

 

 

19,511

 

 

 

16,483

 

General and administrative costs

 

 

12,287

 

 

 

9,857

 

Research and development costs

 

 

4,257

 

 

 

16,381

 

Depreciation and amortization

 

 

19,945

 

 

 

1,733

 

Total operating expenses

 

 

56,000

 

 

 

44,454

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

Gain on remeasurement of warrant liabilities

 

 

18,214

 

 

 

7,498

 

Interest (expense) income, net

 

 

(2,222

)

 

 

2,093

 

Other (expense) income, net

 

 

(2

)

 

 

(10,237

)

Total other income (expense), net

 

 

15,990

 

 

 

(646

)

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(39,510

)

 

 

(45,100

)

Income tax expense

 

 

(294

)

 

 

(116

)

Net loss before allocation to noncontrolling interest

 

 

(39,804

)

 

 

(45,216

)

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interest

 

 

(20,074

)

 

 

(28,898

)

Net loss attributable to common stockholders

 

$

(19,730

)

 

$

(16,318

)

Net loss per share attributable to holders of Class A Common Stock

 

 

 

 

 

 

Basic and diluted

 

$

(0.16

)

 

$

(0.23

)

Weighted-average shares of Class A Common Stock outstanding

 

 

 

 

 

 

Basic and diluted

 

 

121,447,138

 

 

 

71,845,206

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

2


 

AST SPACEMOBILE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(Dollars in thousands)

 

 

 

For the Three Months ended
March 31,

 

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

Net loss before allocation to noncontrolling interest

 

$

(39,804

)

 

$

(45,216

)

 

Other comprehensive loss

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(216

)

 

 

(128

)

 

Total other comprehensive loss

 

 

(216

)

 

 

(128

)

 

Total comprehensive loss before allocation to noncontrolling interest

 

 

(40,020

)

 

 

(45,344

)

 

Comprehensive loss attributable to noncontrolling interest

 

 

(20,184

)

 

 

(28,980

)

 

Comprehensive loss attributable to common stockholders

 

$

(19,836

)

 

$

(16,364

)

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

3


 

AST SPACEMOBILE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands, except share data)

 

 

 

 

 

Class A
Common Stock

 

 

Class B
Common Stock

 

 

Class C
Common Stock

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Values

 

 

Shares

 

 

Values

 

 

Shares

 

 

Values

 

 

Paid-in
Capital

 

 

Comprehensive Income

 

 

Accumulated Deficit

 

 

Noncontrolling Interest

 

 

Total Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

 

90,161,309

 

 

$

9

 

 

 

50,041,757

 

 

$

5

 

 

 

78,163,078

 

 

$

8

 

 

$

288,404

 

 

$

227

 

 

$

(189,662

)

 

$

114,568

 

 

$

213,559

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,775

 

 

 

-

 

 

 

-

 

 

 

158

 

 

 

4,933

 

Issuance of common stock, net of issuance costs

 

 

37,096,773

 

 

 

4

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

69,551

 

 

 

-

 

 

 

-

 

 

 

38,132

 

 

 

107,687

 

Vesting of restricted stock units

 

 

288,259

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(121

)

 

 

-

 

 

 

-

 

 

 

(193

)

 

 

(314

)

Redemption of AST LLC Common Units for Class A Common Stock

 

 

10,606,969

 

 

 

1

 

 

 

(10,294,310

)

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

11,164

 

 

 

-

 

 

 

-

 

 

 

(11,164

)

 

 

-

 

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(106

)

 

 

-

 

 

 

(110

)

 

 

(216

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,730

)

 

 

(20,074

)

 

 

(39,804

)

Balance, March 31, 2024

 

 

138,153,310

 

 

$

14

 

 

 

39,747,447

 

 

$

4

 

 

 

78,163,078

 

 

$

8

 

 

$

373,773

 

 

$

121

 

 

$

(209,392

)

 

$

121,317

 

 

$

285,845

 

 

 

 

 

 

Class A
Common Stock

 

 

Class B
Common Stock

 

 

Class C
Common Stock

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Values

 

 

Shares

 

 

Values

 

 

Shares

 

 

Values

 

 

Paid-in
Capital

 

 

Comprehensive Income

 

 

Accumulated Deficit

 

 

Noncontrolling Interest

 

 

Total Equity

 

Balance, December 31, 2022

 

 

71,819,926

 

 

$

7

 

 

 

50,041,757

 

 

$

5

 

 

 

78,163,078

 

 

$

8

 

 

$

235,384

 

 

$

229

 

 

$

(102,101

)

 

$

226,294

 

 

$

359,826

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,307

 

 

 

-

 

 

 

-

 

 

 

167

 

 

 

2,474

 

Issuance of equity under employee stock plan

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(801

)

 

 

-

 

 

 

-

 

 

 

897

 

 

 

96

 

Vesting of restricted stock units

 

 

57,633

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4

)

 

 

-

 

 

 

-

 

 

 

(119

)

 

 

(123

)

Foreign currency translation adjustments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(46

)

 

 

-

 

 

 

(82

)

 

 

(128

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16,318

)

 

 

(28,898

)

 

 

(45,216

)

Balance, March 31, 2023

 

 

71,877,559

 

 

$

7

 

 

 

50,041,757

 

 

$

5

 

 

 

78,163,078

 

 

$

8

 

 

$

236,886

 

 

$

183

 

 

$

(118,419

)

 

$

198,259

 

 

$

316,929

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

4


 

AST SPACEMOBILE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

 

 

For the Three Months ended
March 31,

 

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss before allocation to noncontrolling interest

 

 

$

(39,804

)

 

$

(45,216

)

Adjustments to reconcile net loss before noncontrolling interest to cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

19,945

 

 

 

1,733

 

Gain on remeasurement of warrant liabilities

 

 

 

(18,214

)

 

 

(7,498

)

Amortization of debt issuance costs

 

 

 

900

 

 

 

-

 

Stock-based compensation

 

 

 

4,933

 

 

 

2,474

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

 

(8,306

)

 

 

(12,168

)

Accounts payable and accrued expenses

 

 

 

(8,396

)

 

 

5,553

 

Operating lease right-of-use assets and operating lease liabilities

 

 

 

(8

)

 

 

6

 

Other assets and liabilities

 

 

 

828

 

 

 

17,383

 

Net cash used in operating activities

 

 

 

(48,122

)

 

 

(37,733

)

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment and advance launch payments

 

 

 

(39,568

)

 

 

(15,388

)

Net cash used in investing activities

 

 

 

(39,568

)

 

 

(15,388

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from debt

 

 

 

110,000

 

 

 

-

 

Repayments of debt

 

 

 

(62

)

 

 

(60

)

Payment for debt issuance costs

 

 

 

(5,162

)

 

 

-

 

Proceeds from issuance of common stock, net of issuance costs

 

 

 

107,718

 

 

 

-

 

Issuance of equity under employee stock plan

 

 

 

-

 

 

 

96

 

Employee taxes paid for stock-based compensation awards

 

 

 

(314

)

 

 

-

 

Net cash provided by financing activities

 

 

 

212,180

 

 

 

36

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

 

(147

)

 

 

(475

)

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

 

124,343

 

 

 

(53,560

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

 

88,097

 

 

 

239,256

 

Cash, cash equivalents and restricted cash, end of period

 

 

$

212,440

 

 

$

185,696

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

Purchases of property and equipment in accounts payable and accrued expenses

 

 

$

5,734

 

 

$

4,077

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

 

 

-

 

 

 

5,507

 

Cash paid for:

 

 

 

 

 

 

 

Interest

 

 

$

2,205

 

 

$

52

 

Income taxes, net

 

 

 

710

 

 

 

282

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

5


 

AST SPACEMOBILE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(Unaudited)

1.
Organization and Nature of Operations

 

AST SpaceMobile, Inc., collectively with its subsidiaries (”SpaceMobile” or the “Company”) is currently designing and developing the constellation of BlueBird (“BB”) satellites in advance of launching its planned space-based Cellular Broadband network distributed through a constellation of Low Earth Orbit (“LEO”) satellites. Once deployed and operational, the BB satellites are designed to provide connectivity directly to off-the-shelf and unmodified devices at broadband speeds (the “SpaceMobile Service”). At that point, the Company intends to offer the SpaceMobile Service to cellular subscribers and others through wholesale commercial agreements with cellular service providers. The Company is headquartered in Texas where it operates 185,000 square feet satellite assembly, integrating and testing (“AIT”) facilities. The Company’s intellectual property (“IP”) portfolio is diverse, containing numerous and various innovations of the direct-to-cell satellite ecosystem from space to Earth. The Company’s IP portfolio consists of 36 patent families worldwide. As of March 31, 2024, the Company has more than 3,350 patent and patent pending claims worldwide, of which approximately 1,050 have been officially granted or allowed.

 

The Company launched its BlueWalker 3 (“BW3”) test satellite on September 10, 2022, and announced the completion of the deployment of the communication phased array antenna of the BW3 test satellite in orbit on November 14, 2022. On April 25, 2023, the Company announced that it had successfully completed two-way voice calls directly to standard unmodified smartphones using the BW3 test satellite. On June 21, 2023, the Company announced that it had achieved repeated successful 4G download speeds of above 10 megabits per second (“Mbps”) to standard unmodified smartphones using the BW3 test satellite. On September 19, 2023, the Company announced it had achieved repeated successful two-way voice calls directly to standard unmodified smartphones using 5G connectivity and successful download speeds of approximately 14 Mbps utilizing 5 megahertz (“Mhz”) of low band spectrum via the BW3 test satellite. The Company intends to continue testing capabilities of the BW3 test satellite, including further testing with cellular service providers and devices.

 

On April 6, 2021, the Company completed a business combination (the “Business Combination”) with AST & Science, LLC (“AST LLC”). Following the consummation of the Business Combination, the combined company was organized in an “Up-C” structure in which the business is operated by AST LLC and its subsidiaries and in which the Company's only direct assets consist of equity interests in AST LLC. As the managing member of AST LLC, the Company has full discretion to manage and control the business of AST LLC and to take all action it deems necessary to accomplish the purposes of AST LLC. The Company’s Class A Common Stock and Public Warrants are listed on the Nasdaq Capital Market under the symbols “ASTS” and “ASTSW”, respectively.

 

The Company operates from multiple locations that include its corporate headquarters and 185,000 square feet AIT facilities in Texas where the final AIT is performed, and engineering and development centers elsewhere in the United States, India, Scotland, Spain, and Israel.

 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in the Company's periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

2.
Summary of Significant Accounting Policies

 

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company, AST LLC and its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. Certain comparative amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal and recurring adjustments) necessary to fairly state the unaudited condensed consolidated financial statements.

6


 

 

The financial statements of AST LLC and its subsidiaries have been prepared on a consolidated basis with the Company as the Company is the sole managing member of AST LLC and has full discretion to manage and control the business of AST LLC and to take all action it deems necessary to accomplish the purposes of AST LLC.

 

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, included in its Annual Report on Form 10-K filed with the SEC on April 1, 2024 (the “2023 Annual Report on Form 10-K”). The results of operations for the periods presented are not indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or other future year.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on historical experience when available and on other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, useful lives assigned to property and equipment, the fair values of warrant liabilities, potential impairment of long-lived assets, and equity-based compensation expense. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates due to risks and uncertainties, including the continued uncertainty surrounding rapidly changing market and economic conditions due to geopolitical conflicts and macroeconomic conditions including changes in inflation and interest rates.

 

The Company’s significant accounting policies are described in Note 2: Summary of Significant Accounting Policies of the 2023 Annual Report on Form 10-K, and there have been no significant changes in these significant accounting policies as compared to those described therein.

 

Revenue Recognition

 

Revenue generated from sales of goods and services is recognized when a customer obtains control of promised goods or services in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue for services provided over time as the Company’s performance does not result in an asset with an alternative use and the Company is entitled to be compensated for performance completed to date. For performance obligations that do not meet the criteria for over time recognition, the Company recognizes revenue upon transfer of control of the performance obligation to the customer. The Company defers revenue in the event the performance obligations are not satisfied for which compensation has been received. Revenue associated with unsatisfied performance obligations are contract liabilities, and are recorded within accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets, and are recognized once performance obligations are satisfied.

To date, the Company has not generated any revenues from its SpaceMobile Service or from the resale of gateway equipment and associated services to mobile network operators and other third parties. During the three months ended March 31, 2024, the Company recognized $0.5 million of revenue from performance obligations completed to date under an agreement with a prime contractor for a U.S. government contract. As of March 31, 2024, $0.8 million of contract liabilities were recorded for unsatisfied performance obligations related to resale of gateway equipment and associated services to the customers.

 

Recently Adopted Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, that requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. It requires a public entity to also disclose the title and position of the Chief Operating Decision Maker. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The ASU was effective for the Company on January 1, 2024, and interim periods within fiscal years beginning January 1, 2025. The adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

7


 

Future Adoption of Recently Issued Accounting Pronouncement

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. ASU 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The ASU is effective for the Company on January 1, 2025. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this ASU on its consolidated financial statements.

 

All other new accounting pronouncements issued, but not yet effective or adopted, have been deemed to be not relevant to the Company and, accordingly, are not expected to have a material impact once adopted.

3.
Fair Value Measurement

The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):

 

 

As of March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

198,891

 

 

$

-

 

 

$

-

 

Total assets measured at fair value

 

$

198,891

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Public warrant liability

 

$

7,390

 

 

$

-

 

 

$

-

 

Private placement warrant liability

 

 

-

 

 

 

4,356

 

 

 

-

 

Total liabilities measured at fair value

 

$

7,390

 

 

$

4,356

 

 

$

-

 

 

 

 

As of December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

69,661

 

 

$

-

 

 

$

-

 

Total assets measured at fair value

 

$

69,661

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Public warrant liability

 

$

18,707

 

 

$

-

 

 

$

-

 

Private placement warrant liability

 

 

-

 

 

 

11,253

 

 

 

-

 

Total liabilities measured at fair value

 

$

18,707

 

 

$

11,253

 

 

$

-

 

 

As of March 31, 2024 and December 31, 2023, the Company had $212.4 million and $88.1 million of cash and cash equivalents and restricted cash, respectively, of which $198.9 million and $69.7 million, respectively, is classified as cash equivalents, which consists principally of short-term money market funds with original maturities of 90 days or less. As of March 31, 2024 and December 31, 2023, restricted cash of $2.5 million represents a deposit into an interest reserve escrow account for the senior secured credit facility, and a deposit against the bank guaranty issued to the landlord for lease of a property. For certain instruments, including cash, accounts payable, and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments.

 

Warrant liabilities are comprised of both publicly issued warrants (“Public Warrants”) and private placement warrants (“Private Placement Warrants”), exercisable for shares of Class A Common Stock. Warrant liabilities are described in detail at Note 6: Warrant Liabilities. As of March 31, 2024 and December 31, 2023, the Public Warrants are classified as Level 1 due to the use of an observable market quote in an active market under the ticker “ASTSW”.

 

The Private Placement Warrants are valued using a Black-Scholes-Merton Model. As of March 31, 2024 and December 31, 2023, the Private Placement Warrants are classified as Level 2 as the transfer of Private Placement Warrants to anyone outside of a small group of individuals who are permitted transferees would result in the Private Placement Warrants having substantially the same terms as the Public Warrants. For this reason, the Company determined that the volatility of each Private Placement Warrant is equivalent to that of each Public Warrant.

 

8


 

The Company’s Black-Scholes-Merton model to value Private Placement Warrants required the use of the following subjective assumption inputs:

The risk-free interest rate assumption was initially based on a weighted average of the three and five-year U.S. Treasury rate, which was commensurate with the contractual term of the Warrants, which expire on the earlier of (i) five years after the completion of the initial business combination and (ii) upon redemption or liquidation. As of March 31, 2024, the risk-free rate assumption was based on the two- and three-year U.S. Treasury rates as the estimated time to expire was 2.02 years (compared to an estimated time to expire of 2.26 years as of December 31, 2023). An increase in the risk-free interest rate, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa.
The expected volatility assumption was based on the implied volatility of the Company’s publicly-traded warrants, which as of March 31, 2024 and December 31, 2023 was 103.0% and 80.4%, respectively.
4.
Property and Equipment

 

Property and equipment, net consisted of the following (in thousands):

 

 

 

As of

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Land

 

$

1,350

 

 

$

1,350

 

Buildings

 

 

14,711

 

 

 

14,555

 

Leasehold improvements

 

 

9,088

 

 

 

9,111

 

Satellite in orbit

 

 

92,464

 

 

 

92,464

 

Lab, assembly, and integration equipment

 

 

40,371

 

 

 

31,957

 

Satellite antenna

 

 

7,209

 

 

 

7,188

 

Computer hardware and software

 

 

14,233

 

 

 

11,112

 

Other

 

 

1,325

 

 

 

1,230

 

Construction in progress

 

 

 

 

 

 

Satellite materials, satellites under construction, and advance launch payments

 

 

142,996

 

 

 

125,428

 

Other

 

 

2,616

 

 

 

5,256

 

Total property and equipment, gross

 

$

326,363

 

 

$

299,651

 

Accumulated depreciation and amortization

 

 

(81,079

)

 

 

(61,173

)

Total property and equipment, net

 

$

245,284

 

 

$

238,478

 

 

Depreciation expense for the three months ended March 31, 2024 and 2023 was approximately $19.9 million and $1.7 million, respectively.

 

9


 

 

5.
Long-Term Debt

 

Long-term debt consists of the following (in thousands):

 

 

 

As of

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Convertible notes

 

$

110,000

 

 

$

-

 

Senior secured credit facility(1)

 

 

52,023

 

 

 

52,023

 

Capital equipment loan

 

 

15,000

 

 

 

15,000

 

Term loan

 

 

4,696

 

 

 

4,758

 

Total debt

 

$

181,719

 

 

$

71,781

 

Less: current portion of long-term debt

 

 

(255

)

 

 

(252

)

Less: unamortized debt issuance costs(1)

 

 

(20,637

)

 

 

(12,277

)

Long-term debt, net of issuance costs

 

$

160,827

 

 

$

59,252

 

(1)
Includes estimated exit fee of $3.5 million due at maturity.

 

As of March 31, 2024 and December 31, 2023, the aggregate fair value of the Company’s debt was $166.6 million and $68.7 million, respectively. The fair value of debt, excluding convertible notes, have been determined under the discounted cash flow method using significant inputs derived from, or corroborated by, observable market data (Level 2 inputs). The fair value of the convertible notes has been determined based on a lattice-based binomial model using significant inputs derived from, or corroborated by, observable market data (Level 2 inputs).

 

Debt issuance costs are comprised of costs incurred in connection with debt issuance and are presented in the consolidated balance sheets as a deduction to the carrying amount of the debt and amortized using the effective interest method to interest expense over the term of the debt. During the three months ended March 31, 2024 and three months ended March 31, 2023, the Company recognized $4.4 million and less than $0.1 million of interest expense related to the debt noted above, respectively. The interest expense included amortization of debt issuance costs of $0.9 million for the three months ended March 31, 2024. Interest expense is included in interest (expense) income, net in the accompanying unaudited condensed consolidated statements of operations.

 

As of March 31, 2024, the Company was in compliance with all debt covenants requirements.

 

Convertible Notes

On January 16, 2024, the Company entered into a Convertible Security Investment Agreement (the “Investment Agreement”) with AT&T, Google and Vodafone (the “Investors”). Pursuant to the Investment Agreement, the Investors have agreed to purchase the Company’s subordinated convertible notes for an aggregate principal amount of $110.0 million (such notes, the “Convertible Notes” and such investments, the “Investments”). The Company incurred debt issuance costs of $9.3 million upon closing of the Convertible Notes. As of March 31, 2024, $4.1 million of debt issuance cost remains due and is included in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheet.

The Convertible Notes bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 30 and December 30 of each year, beginning on June 30, 2024. The Company has the option to pay interest on the Convertible Notes in cash or in kind. If the Company elects to pay interest on the Convertible Notes in kind, the principal amount of the Convertible Notes will be increased by the amount of the interest payment, and interest will accrue on such increased principal amount in subsequent interest periods. The Convertible Notes have a ten-year term unless earlier converted.

The holders of the Convertible Notes (the “Holders”) may convert the Convertible Notes (subject to certain exceptions) at an initial conversion rate of 173.9130 shares of Class A Common Stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of $5.75 per share of Class A Common Stock). The Holders may convert their Convertible Notes at their option at any time on or after January 16, 2025. The Holders will also have the right to convert the Convertible Notes prior to January 16, 2025 in the event that the Company undergoes a fundamental change (defined to include change of control, certain mergers of the Company with another company, the sale of all or substantially all of the assets of the Company, and liquidation). The conversion rate is also subject to customary anti-dilution adjustments if certain events occur.

On or after January 16, 2025, the Company may require the Holders to convert the Convertible Notes (subject to certain exceptions), at an initial conversion rate of 173.9130 shares of Class A Common Stock per $1,000 principal amount of Convertible Notes

10


 

(equivalent to an initial conversion price of $5.75 per share of Class A Common Stock) at its option, if the VWAP of the Class A Common Stock has been at least 130% of the conversion price then in effect for 30 consecutive trading days, on the immediately succeeding trading day after the last trading day of such 30 day period.

The Convertible Notes may be accelerated upon the occurrence of certain events of default and fundamental change. In the case of an event of default with respect to the Convertible Notes arising from specified events of bankruptcy or insolvency of the Company, 100% of the principal of, and accrued and unpaid interest on, the Convertible Notes will automatically become due and payable. If any other event of default with respect to the Convertible Notes occurs or is continuing (which include customary events of default, including the failure to pay principal or interest when due and the failure to comply with other covenants contained in the Investment Agreement), the Holders of at least 60% in aggregate principal amount of the then outstanding Subordinated Obligations (as defined in the Investment Agreement to include the obligations under the Convertible Notes) may declare the principal amount of the Convertible Notes to be immediately due and payable. In the case of fundamental change as defined in the Investment Agreement prior to the conversion or maturity of the Convertible Notes, the Company is required to repay the Convertible Notes immediately prior to the consummation of such fundamental change in an amount equal to the aggregate principal amount of such Convertible Notes, plus any accrued and unpaid interest thereon.

 

Other than as described above, there were no new debt issuances or significant changes related to the above listed debt during the three months ended March 31, 2024. See Note 8: Debt to the Company’s Consolidated Financial Statements included in its 2023 Annual Report on Form 10-K for additional information regarding the debt listed above.

 

6.
Warrant Liabilities

 

Warrant liabilities are comprised of both Public Warrants and Private Placement Warrants. Each whole Public Warrant entitles the registered holder to purchase one whole share of Class A Common Stock at a price of $11.50 per share. Pursuant to the warrant agreement, a holder of Public Warrants may exercise its warrants only for a whole number of shares of Class A Common Stock.

 

This means that only a whole warrant may be exercised at any given time by a warrant holder. The Public Warrants expire on April 6, 2026, five years after the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The Company may redeem the Public Warrants under the following conditions:

In whole and not in part;
At a price of $0.01 per warrant;
Upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
If, and only if, the reported last sale price of the Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.

The redemption criteria discussed above prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise its warrant prior to the scheduled redemption date. However, the price of the Class A Common Stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) as well as the $11.50 warrant exercise price after the redemption notice is issued.

 

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

 

During the three months ended March 31, 2024 and 2023, there were no Public Warrants or Private Placement Warrants exercised. As of March 31, 2024 and December 31, 2023, there were 11,547,600 Public Warrants and 6,050,000 Private Placement Warrants outstanding, respectively.

 

As of March 31, 2024 and December 31, 2023, the Company recorded warrant liabilities of $11.7 million and $30.0 million in the unaudited condensed consolidated balance sheets, respectively. For the three months ended March 31, 2024 and 2023, the Company recognized a gain of $18.2 million and a gain of $7.5 million, respectively, on the change in the fair value of the warrant liabilities in the unaudited condensed consolidated statements of operations.

 

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7.
Commitments and Contingencies

 

Purchase Commitments

 

As of March 31, 2024, the Company had contractual commitments with third parties of approximately $94.6 million, primarily related to procurement of BB satellite components, R&D programs, capital improvements and future launch payments for Block 2 Bluebird satellite.

 

Legal Proceedings

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of any recorded accrual, with respect to loss contingencies. However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.

 

Delaware Class Action Litigations

 

Following books and records demands pursuant to 8 Del. C. § 220, two stockholders filed putative class action complaints in the Delaware Court of Chancery against the Company, certain current and former directors of the Company and its predecessor entity and manager, New Providence Acquisition Corp. and New Providence Management LLC, and Abel Avellan, alleging claims of breach of fiduciary duties and aiding and abetting such breaches, relating to the de-SPAC merger. The first of those complaints, Taylor v. Coleman, et al. (C.A. No. 2023-1292), was filed on December 27, 2023, and the second, Drulias v. New Providence Management LLC, et al., was filed on March 29, 2024 (collectively, the “Delaware Stockholder Class Actions”). Both complaints seek equitable relief and unspecified monetary damages. On March 15, 2024, prior to the filing of the Drulias action, Defendants had moved to dismiss the Taylor action. On April 29, 2024, the court entered a stipulation by the parties to both actions to be consolidated under the caption In re AST SpaceMobile, Inc. Stockholders Litigation (C.A. No. 2023-1292), and for the plaintiffs to file a consolidated amended complaint by May 29, 2024. Defendants must respond within 45 days of the filing of the consolidated amended complaint.

 

Federal Class Action Litigations

 

A federal putative class action complaint was filed in the Western District of Texas on April 17, 2024 against the Company, Abel Avellan, and Sean Wallace (Klarkowskiv. AST SpaceMobile, Inc. et al. (No. 7:24-cv-00102)), which asserts claims for violations of the federal securities laws, and generally alleges that the Company and individual defendants made materially false and misleading statements relating to the status and timeline of satellite production in November 2023 - April 2024.

 

 

8.
Stockholders’ Equity

 

Class A Common Stock

As of March 31, 2024, there were 138,153,310 shares of Class A Common Stock issued and outstanding. Holders of Class A Common Stock are entitled to one vote for each share. The Company is authorized to issue 800,000,000 shares of Class A Common Stock with a par value of $0.0001 per share.

Class B Common Stock

As of March 31, 2024, there were 39,747,447 shares of Class B Common Stock issued and outstanding. Shares of Class B Common Stock were issued to then existing equity holders of AST LLC (other than Abel Avellan, the Company’s Chairman and Chief Executive Officer (“Mr. Avellan”)) at the time of Business Combination and are noneconomic, but entitle the holder to one vote per share. The Company is authorized to issue 200,000,000 shares of Class B Common Stock with a par value of $0.0001 per share.

 

The existing equity holders of AST LLC (other than Mr. Avellan) at the time of Business Combination own economic interests in AST LLC which are redeemable into either shares of Class A Common Stock on a one-for-one basis or cash at the option of the Redemption Election Committee. Upon redemption of the AST LLC Common Units by the existing equity holders (other than Mr. Avellan), a corresponding number of shares of Class B Common Stock held by such existing equity holders will be cancelled.

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During the three months ended March 31, 2024, the existing equity holders redeemed 10,294,310 AST LLC Common Units into Class A Common Stock and subsequently 10,294,310 Class B Common Stock held by such existing equity holders were cancelled.

 

Class C Common Stock

As of March 31, 2024, there were 78,163,078 shares of Class C Common Stock issued and outstanding. Shares of Class C Common Stock were issued to Mr. Avellan in connection with the Business Combination and are non-economic, but entitle the holder to the lesser of ten votes per share and the Class C Share Voting Amount, the latter of which is a number of votes per share equal to (1) (x) an amount of votes equal to 88.3% of the total voting power of the outstanding voting stock, minus (y) the total voting power of the outstanding capital stock (other than Class C Common Stock) owned or controlled by Mr. Avellan and his permitted transferees, divided by (2) the number of shares of Class C Common Stock then outstanding (the “Super-Voting Rights”). The Company is authorized to issue 125,000,000 shares of Class C Common Stock with a par value of $0.0001 per share.

Mr. Avellan owns economic interests in AST LLC which are redeemable into either shares of Class A Common Stock on a one-for-one basis or cash at the option of the Redemption Election Committee. Upon redemption of the AST LLC Common Units by Mr. Avellan, a corresponding number of shares of Class C Common Stock held by Mr. Avellan will be cancelled. Correspondingly, the Super-Voting Rights associated with the shares of Class C Common Stock cancelled will be terminated.

 

Preferred Stock

As of March 31, 2024, there were no shares of preferred stock issued or outstanding. The Company is authorized to issue 100,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors.

 

Noncontrolling Interest

The noncontrolling interests primarily represent the equity interest in AST LLC held by members other than the Company. Changes in the Company’s ownership interest in AST LLC while retaining control of AST LLC are accounted for as equity transactions. Income or loss is attributed to the noncontrolling interests based on their contractual distribution rights, and the relative percentages of equity interest held by the Company and the other members during the period.

As the sole managing member of AST LLC controlling the operating decisions of AST LLC, the Company consolidates the financial position and results of operations of AST LLC and its subsidiaries. The Company reports equity interests in AST LLC held by members other than the Company as noncontrolling interest in the consolidated balance sheets. The noncontrolling interest is classified as permanent equity within the consolidated balance sheets as the Company may only elect to settle a redemption request in cash if the cash delivered in the exchange is limited to the amount of net proceeds from the issuance and sale of a Class A Common Stock from a new permanent equity offering.

 

Each issuance of the Company's Class A Common Stock is accompanied by a corresponding issuance of AST LLC Common Units to the Company, which results in changes in ownership and reduction in noncontrolling interest. As of March 31, 2024, there were 11,547,600 Public Warrants and 6,050,000 Private Placement Warrants outstanding (see Note 6: Warrant Liabilities for further details), each of which entitles the holder to purchase one whole share of Class A Common Stock at a price of $11.50 per share. Each warrant exercise is accompanied by a corresponding issuance of AST LLC Common Units to the Company, which results in a change in ownership and reduces the amount recorded as noncontrolling interest and increases additional paid-in capital.

 

In addition, the Fifth Amended and Restated Limited Liability Company Operating Agreement of AST LLC permits the noncontrolling interest holders of AST LLC Common Units to exchange AST LLC Common Units, together with related shares of the Class B Common Stock or Class C Common Stock, for shares of the Class A Common Stock on a one-for-one basis or, at the election of the Company, for cash (a “Cash Exchange”). A Cash Exchange is limited to the amount of net proceeds from the issuance and sale of Class A Common Stock. Future redemptions or direct exchanges of AST LLC Common Units by the noncontrolling interest holders will result in a change in ownership and reduce the amount recorded as noncontrolling interest and increase additional paid-in capital. Certain members of AST LLC also hold incentive stock options that are subject to service or performance conditions (see Note 9: Stock-Based Compensation for further details), that are exercisable for AST LLC Common Units. The exercise of the options results in a change in ownership and increases the amount recorded as noncontrolling interest and decreases additional paid-in capital.

 

As of March 31, 2024 and December 31, 2023, the noncontrolling interest in AST LLC was approximately 46.0% and 58.7%, respectively. The decrease in noncontrolling interest percentage during the three months ended March 31, 2024 was a result of the issuance of Class A Common Stock under the January 2024 Common Stock Offering, redemption of AST LLC Common Units in

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exchange for Class A Common Stock and the vesting of the Company’s restricted stock units, partially offset by exercise of options to AST LLC Common Units.

 

Common Stock Purchase Agreement

On May 6, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively referred to as the “Common Stock Purchase Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”). Pursuant to the Common Stock Purchase Agreement, the Company has the right, in its sole discretion, to sell to B. Riley up to $75.0 million of shares of the Class A Common Stock at 97% of the volume 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 the election of the Company, and the Company is under no obligation to sell any securities to B. Riley under the Common Stock Purchase Agreement.

 

Under the Common Stock Purchase Agreement, the Company had issued 1,756,993 shares of its Class A Common Stock as of December 31, 2023, aggregating to net proceeds of $13.4 million. The Company did not issue any shares of its Class A Common Stock under the Common Stock Purchase Agreement during the three months ended March 31, 2024. Proceeds from the sale of the Class A Common Stock under the Common Stock Purchase Agreement were and are expected to continue to be used for general corporate purposes.

 

Equity Distribution Agreement

On September 8, 2022, the Company entered into an Equity Distribution Agreement (the “Sales Agreement” or “At The Market Equity Program”) with Evercore Group L.L.C. and B. Riley Securities, Inc. (collectively, the “agents”) to sell shares of the Class A Common Stock having an aggregate sale price of up to $150.0 million through an “at 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 (the “Securities Act”). The agents sell the Class A Common Stock based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). 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.

Under the Sales Agreement, the Company had issued 4,225,000 shares of its Class A Common Stock as of December 31, 2023, aggregating to proceeds of $27.2 million, net of commissions paid to the agents and transaction costs. The Company did not issue any shares of its Class A Common Stock under the Sales Agreement during the three months ended March 31, 2024. Proceeds from the sale of the Class A Common Stock under the Sales Agreement were and are expected to continue to be used for general corporate purposes.

 

January 2024 Common Stock Offering

 

On January 23, 2024, the Company issued 32,258,064 shares of Class A Common Stock in a public offering and received proceeds of $93.6 million, net of underwriting commissions of $6.0 million and transaction costs of $0.4 million. The Company provided a 30-day option to the underwriting agent to purchase up to an additional 4,838,709 shares of Class A common stock (the “Option Shares”) from the Company on the same terms and conditions. On January 25, 2024 the Option Shares were exercised in full. The offering of the Option Shares closed on January 29, 2024 for proceeds of $14.1 million, net of underwriting commissions of $0.9 million. Proceeds from the sale of the Company’s Class A common stock under the January 2024 Common Stock Offering were and are expected to be used for general corporate purposes.

 

9.
Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation, measured at the grant date based on the fair value of the award, is typically recognized ratably over the requisite services period, using the straight-line method of expense attribution. The Company recorded stock-based compensation expense in the following categories of its unaudited condensed consolidated statements of operations(in thousands):

 

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For the Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Engineering services

 

$

1,607

 

 

$

1,392

 

General and administrative costs

 

 

3,326

 

 

 

1,082

 

Total

 

$

4,933

 

 

$

2,474