UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from _____ to _____
Commission File Number:
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Warrants, each to purchase one share of Common Stock |
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NNAVW |
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The Nasdaq Capital Market |
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
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
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.
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Large accelerated filer |
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Smaller reporting company |
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Accelerated filer |
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Emerging growth company |
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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
There were
NEXTNAV INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2023
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “NextNav,” the “Company,” “we,” “us,” and “our” include NextNav Inc. and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1034, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and are not guarantees of future performance. The words “may,” “anticipate,” “believe,” “expect,” “intend,” “might,” “plan,” “possible,” “potential,” “aim,” “strive,” “predict,” “project,” “should,” “could,” “would,” “will” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements may relate to, but are not limited to: expectations regarding our strategies and future financial performance, including future business plans or objectives, expected functionality of our geolocation services, anticipated timing and level of deployment of our services, including our TerraPoiNT system, anticipated demand and acceptance of our services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance our research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenue, liquidity, cash flows and uses of cash, capital expenditures, and our ability to invest in growth initiatives; our ability to realize the anticipated technical and business benefits associated with the acquisition of Nestwave (as defined below), and any subsequent mergers, acquisitions, or other similar transactions, which may be affected by, among other things, competition, and the ability of the combined business to grow and manage growth profitably; factors relating to our future operations, projected capital resources and financial position, estimated revenue and losses, projected costs and capital expenditures, prospects and plans, including the potential increase in customers on our Pinnacle network, the expansion of our services in Japan through MetCom (as defined below), and expectations about other international markets; projections of market growth and size, including the level of market acceptance for our services; our ability to adequately protect key intellectual property rights or proprietary technology; our ability to maintain our Location and Monitoring Service (“LMS”) licenses and obtain additional LMS licenses as necessary; our ability to maintain adequate operational financial resources or raise additional capital or generate sufficient cash flows, including the adequacy of our financial resources to meet our operational and working capital requirements for the 12-month period following the issuance of this report and our ability to meet longer term expected future cash requirements and obligations; our ability to develop and maintain effective internal controls; our success in recruiting and/or retaining officers, key employees or directors; expansion plans and opportunities; costs related to being a public company; our ability to maintain the listing of our securities on Nasdaq; macroeconomic factors and their effects on our operations; and the outcome of any known and unknown litigation and regulatory proceedings, as well as assumptions relating to the foregoing.
Forward-looking statements are based on information available as of the date of this quarterly report on Form 10-Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views of any subsequent date, and we do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
For additional information regarding risk factors, see Part II, Item 1A, “Risk Factors” of this quarterly report on Form 10-Q and Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 as well as those otherwise described or updated from time to time in our other filings with the Securities and Exchange Commission (the “SEC”).
Item 1. Financial Statements
NextNav Inc.
CONDENSED Consolidated Balance Sheets
(IN THOUSANDS, EXCEPT SHARE DATA)
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June 30, 2023 (unaudited) |
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December 31, 2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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| Short term investments |
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Accounts receivable |
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Other current assets |
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Total current assets |
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$ |
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$ |
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Network under construction |
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Property and equipment, net of accumulated depreciation of $ |
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Operating lease right-of-use assets |
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| Goodwill | ||||||||
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Intangible assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease current liabilities |
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Deferred revenue |
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Total current liabilities |
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$ |
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$ |
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Warrants |
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Operating lease noncurrent liabilities |
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Other long-term liabilities |
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| Long term debt, net of debt issuance cost and discount | ||||||||
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Total liabilities |
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$ |
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$ |
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Stockholders’ equity: |
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Common stock, authorized |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
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( |
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Common stock in treasury, at cost; |
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( |
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( |
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Total stockholders’ equity |
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$ |
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$ |
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Non-controlling interests |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes.
| 1 |
NextNav INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
2022 |
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2023 |
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2022 |
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Revenue |
$ | $ |
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$ |
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$ |
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Operating expenses: |
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Cost of goods sold (exclusive of depreciation and amortization) |
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Research and development |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
$ | $ |
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$ |
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$ |
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Operating loss |
$ | ( |
) | $ | ( |
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$ |
( |
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$ |
( |
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Other income (expense): |
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Interest income (expense) |
( |
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Change in fair value of warrants |
( |
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( |
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Other income (loss) |
( |
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( |
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( |
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Income (loss) before income taxes |
$ | ( |
) | $ |
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$ |
( |
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$ |
( |
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Benefit (Provision) for income taxes |
( |
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( |
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( |
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Net income (loss) |
$ | ( |
) | $ |
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$ |
( |
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$ |
( |
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Foreign currency translation adjustment |
( |
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( |
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Comprehensive income (loss) |
$ | ( |
) | $ |
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$ |
( |
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$ |
( |
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| Net income (loss) | ( |
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Net income (loss) attributable to common stockholders |
$ | ( |
) | $ |
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$ |
( |
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$ |
( |
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Weighted average of shares outstanding – basic |
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| Weighted average of shares outstanding – diluted | ||||||||||||||||
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Net income (loss) attributable to common stockholders per share - basic |
$ | ( |
) | $ |
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$ |
( |
) |
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$ |
( |
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| Net income (loss) attributable to common stockholders per share - diluted | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
See accompanying notes.
NEXTNAV INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
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Class A Common Stock |
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Additional Paid-In |
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Accumulated |
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Accumulated Other Comprehensive |
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Treasury stock, |
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Stockholders’ (Deficit) |
Non- controlling |
Total |
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Units |
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Value |
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Capital |
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Deficit |
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(Loss) |
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at cost |
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Equity | interests |
Equity |
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Balance, December 31, 2021 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
$ |
— |
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$ | $ | — |
$ |
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Impact from adoption of new accounting standards |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
) | — |
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( |
) |
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Balance, January 1, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
$ |
— |
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$ | $ | — |
$ |
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Exercise of common stock options |
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— |
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— |
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— |
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— |
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— |
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Exercise of common warrants |
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— |
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— |
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— |
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— |
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— |
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— | — |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) | — |
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( |
) |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) | — |
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( |
) |
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Common stock received for tax withholding |
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( |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) | — |
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( |
) | ||||||
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Balance, March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
$ |
( |
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$ | $ | — |
$ |
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Vesting of RSUs |
— | — | — | — | — | — | — |
— | ||||||||||||||||||||||||||||
| Issuance of RSUs | — | — | — | — | — | — | — |
— | ||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Exercise of common warrants | — | — | — | — | — | — |
— | — | ||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — |
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| Net income | — | — | — | — | — | — |
||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( |
) | — | ( |
) | — |
( |
) | ||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | — | $ | |||||||||||||||||||||
See accompanying notes.
| 3 |
NextNav INC.
CONDENSED Consolidated Statements of Changes in Stockholders’ equity
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
|
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Class A Common Stock |
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Additional Paid-In |
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Accumulated |
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Accumulated Other Comprehensive |
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Treasury stock, |
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Stockholders’ (Deficit) |
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Non- controlling |
Total |
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Units |
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Value |
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Capital |
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Deficit |
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Income |
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at cost |
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Equity |
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interests |
Equity |
||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||
| Vesting of RSUs | — |
— |
— |
— |
— |
— | — | |||||||||||||||||||||||||||||
| Issuance of RSAs | — | — | — |
— | — | — |
— | |||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | — |
— | — | — |
— |
— | ||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | — |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — |
— | — | — | — | ||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||
| Vesting of RSUs | — |
— |
— |
— |
— |
— | — | — | ||||||||||||||||||||||||||||
| Issuance of RSAs | — | — | — |
— | — | — |
— | — | ||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | — |
— | — | — |
— |
— | ||||||||||||||||||||||||||||||
| Issuance of common warrants | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | — |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — |
— | — | — | — | ||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | |
$ | $ | |||||||||||||||||||||||
See accompanying notes.
| 4 |
NextNav INC.
CONDENSED Consolidated Statements of Cash Flows
(UNAUDITED)
(IN THOUSANDS)
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Six Months Ended June 30, |
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2023 |
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2022 |
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Operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Equity-based compensation |
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Change in fair value of warranty liability |
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( |
) | |
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Realized and unrealized gain on marketable securities |
( |
) | ||||||
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Equity method investment loss |
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Asset retirement obligation accretion |
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| Amortization of debt discount | ||||||||
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Other current assets |
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Other assets |
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Accounts payable |
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( |
) |
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( |
) |
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Deferred revenue |
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( |
) |
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( |
) |
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Accrued expenses and other liabilities |
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( |
) | |
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Operating lease right-of-use assets and liabilities |
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Net cash used in operating activities |
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$ |
( |
) |
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$ |
( |
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Investing activities |
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Capitalization of costs and purchases of network assets, property, and equipment |
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( |
) |
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( |
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| Purchase of marketable securities |
( |
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| Sale and maturity of marketable securities | ||||||||
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Purchase of internal use software |
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( |
) |
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( |
) |
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Net cash used in investing activities |
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$ |
( |
) |
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$ |
( |
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Financing activities |
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| Proceeds from senior secured notes | ||||||||
| Payments towards debt issuance cost | ( |
) | ||||||
| Payments towards debt | ( |
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Proceeds from exercise of stock options |
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Repurchase of common stocks (withholding taxes) |
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( |
) | |
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Net cash provided by financing activities |
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$ |
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$ |
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Effect of exchange rates on cash and cash equivalents |
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( |
) |
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( |
) |
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Net decrease in cash and cash equivalents |
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( |
) | |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Non-cash financing information |
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Capital expenditure included in accounts payable |
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$ |
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$ |
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| Issuance of warrants | $ | $ | ||||||
See accompanying notes.
NextNav INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
For the six months ended June 30, 2023
1. Organization and Business
Principal Business
NextNav Inc. and its consolidated subsidiaries (collectively “NextNav” or the “Company”) deliver next generation positioning, navigation and timing (“PNT”) solutions built on a robust asset platform, including 8MHz of nearly nationwide wireless spectrum in the 900MHz band, intellectual property and deployed network systems. The Company’s Pinnacle system provides “floor-level” altitude service to any device with a barometric pressure sensor, including most off-the-shelf Android and iOS smartphones. The Company’s TerraPoiNT system is a terrestrial-based, encrypted network designed to overcome the limitations inherent in the space-based nature of global positioning system (“GPS”) through a network of specialized wide area location transmitters that broadcasts an encrypted PNT signal over the Company’s licensed spectrum.
Since its inception, NextNav has incurred recurring losses and generated negative cash flows from operations and has primarily relied upon debt and equity financings to fund its cash requirements. During the six months ended June 30, 2023 and 2022, the Company incurred net losses of $
Managing liquidity and the Company’s cash position is a priority of the Company. The Company continually works to optimize its expenses in light of the growth of its business, and adapt to changes in the economic environment. The Company believes that the cash and cash equivalents and marketable securities as of June 30, 2023 will be sufficient to meet its working capital and capital expenditure needs, including all contractual commitments, for the next 12 months. The Company believes it will meet longer term expected future cash requirements and obligations through a combination of its existing cash and cash equivalents balances and marketable securities, cash flows from operations, and issuance of equity securities or debt offerings. However, this determination is based upon internal projections and is subject to changes in market and business conditions.
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in these condensed consolidated financial statements.
Unaudited Interim Financial Information
The condensed consolidated financial statements as of June 30, 2023 are unaudited. These interim financial statements of NextNav have been prepared in accordance with U.S. GAAP and SEC instructions for interim financial information and should be read in conjunction with NextNav’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), which the Company filed with the SEC on March 30, 2023.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments of a normal, recurring nature that are necessary for the fair statement of the Company’s financial position as of June 30, 2023, results of operations for the three and six months ended June 30, 2023 and 2022, and changes in stockholders’ equity and cash flows for the six months ended June 30, 2023 and 2022, but are not necessarily indicative of the results expected for the full fiscal year or any other period.
There have been no changes to the Company’s significant accounting policies described in the 2022 Form 10-K that have had a material impact on these condensed consolidated financial statements and related notes.
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Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period and accompanying notes. These estimates include those related to the useful lives and recoverability of long-lived and intangible assets, valuation of common stock warrants, income taxes and equity-based compensation, among others. NextNav bases estimates on historical experience, anticipated results and various other assumptions, including assumptions of future events, it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, equity, revenue and expenses, that are not readily apparent from other sources. Actual results and outcomes could differ materially from these estimates and assumptions.
Cash and Cash Equivalents and Marketable Securities
Cash and cash equivalents include all cash in banks and highly liquid investments with an original maturity of three months or less when purchased. The combined account balances held on deposit at each institution typically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company seeks to reduce this risk by maintaining such deposits with high quality financial institutions that management believes are creditworthy. Further, the Company seeks to minimize its exposure to banking risk by limiting the amount of uninsured deposits and investing its excess cash in U.S. government and government agency bonds, and money market funds.
The Company invests excess cash primarily in U.S. government and government agency bonds, and money market funds. The Company classifies all marketable securities that have stated maturities of three months or less from the date of purchase as cash equivalents, and those that have stated maturities of over three months as short-term investments on the Consolidated Balance Sheets. The Company determines the appropriate classification of investments in marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company’s marketable securities are classified as trading and are measured at fair value with the related gains and losses, including unrealized, recognized in interest income (expense).
Revenue
The following table presents the Company’s revenue disaggregated by category and source:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
2022 |
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2023 |
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2022 |
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(in thousands) |
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(in thousands) |
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Commercial |
$ | $ |
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$ |
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$ |
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Government contracts |
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Equipment sales |
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Total revenue |
$ | $ |
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$ |
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$ |
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Contract Balances
Accounts receivable are billed and unbilled amounts related to the Company’s rights to consideration as performance obligations are satisfied when the rights to payment become unconditional but for the passage of time. As of June 30, 2023 and December 31, 2022, the Company’s accounts receivable balances were comprised of $
Contract liabilities relate to amounts billed in advance, or advance consideration received from customers, for which transfer of control of the good or service occurs at a later point in time. As of June 30, 2023 and December 31, 2022, the Company’s contract liabilities were $
Equity-Based Compensation
Measurement of equity-based compensation with employees is based on the estimated grant date fair value of the equity instruments issued. The fair value of stock options is determined using the Black-Scholes option pricing model. The fair value of restricted stock awards is based on the closing price of NextNav’s common stock on the date of grant. NextNav recognizes equity-based compensation on a straight-line basis over the requisite service period of the grant, which is generally equal to the vesting period. NextNav accounts for forfeitures as they occur.
The following details the amount of stock-based compensation included in cost of goods sold, research and development, and selling, general and administrative expenses:
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2023 |
2022 |
2023 | 2022 | ||||||||||||
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Cost of goods sold |
$ | $ | $ | $ | ||||||||||||
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Research and development |
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Selling, general and administrative |
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Total stock-based compensation expense |
$ | $ | $ | $ | ||||||||||||
Basic and Diluted Net Earnings (Loss) per Share
Basic earnings (loss) per share (“EPS”) excludes dilution for common share equivalents and is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common share equivalents.
Restricted shares are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. Outstanding options and warrants are included in the computation of diluted EPS, to the extent they are dilutive, determined using the treasury stock method.
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The determination of the diluted weighted average shares is included in the following calculation of EPS:
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2023 |
2022 |
2023 | 2022 | ||||||||||||
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(in thousands, except per share amounts) |
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Numerator |
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Net income (loss) attributable to common stockholders |
$ | ( |
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