Ast spacemobile provides third quarter 2022 business update
Midland, texas--(business wire)--ast spacemobile, inc. (“ast spacemobile”) (nasdaq: asts), the company building the first and only space-based cellular broadband network accessible directly by standard mobile phones, today is providing its business update for the third quarter ended september 30, 2022. “the successful unfolding of bluewalker 3 is a major step forward for our patented space-based cellular broadband technology and paves the way for the ongoing production of our bluebird satellites,” said abel avellan, chairman and chief executive officer of ast spacemobile. “in completing this deployment, as well as the other learnings from stowing, launching, operating, testing and flying the satellite over the last 2 months, we feel confident in our architecture and do not foresee any major changes to the architecture of our block 1 satellites.” business update progress with our bluewalker 3 test satellite completed the successful launch of the bluewalker 3 (“bw3”) test satellite from cape canaveral, fl acquired control of the bluewalker 3 test satellite shortly after deployment and implemented telemetry, tracking and control protocols for operations control of the satellite successfully unfolded the largest communications array ever deployed on a commercial low earth orbit satellite completed validation of key aspects of our satellite architecture after two months of in-orbit operation industrialization of our spacemobile constellation plan to launch five block 1 bluebird satellites in late 2023 continued to ramp up the assembly, testing and implementation processes at our site 2 facility in midland to build five block 1 bluebird satellites grew portfolio of patent and patent pending claims to more than 2,600 worldwide as of november 14, 2022 compared to the 2,400 discussed at our last earnings call third quarter 2022 financial highlights ended the third quarter with cash, cash equivalents, and restricted cash of $199.5 million total operating expenses increased by $6.7 million to $42.1 million for the third quarter of 2022, as compared to $35.4 million in the second quarter of 2022, due to a $4.4 million increase in research and development costs and $2.5 million increase in engineering services offset by a $0.2 million decrease in general and administrative costs as of september 30, 2022, the company incurred $92.1 million of capitalized costs (including launch costs and non-recurring engineering costs) related to the assembly, testing and deployment of the bluewalker 3 test satellite as of september 30, 2022, the company incurred approximately $43.5 million of capitalized property and equipment costs primarily related to the texas facilities, satellite antennas, satellite parts assembly and test equipment, and leasehold improvements completed the sale of 51% interest in nanoavionika uab ("nano") for net proceeds of $26.7 million issued shares of class a common stock under the common stock purchase agreement and equity distribution agreement for net proceeds of $17.0 million conference call information ast spacemobile will hold a quarterly business update conference call at 5:00 p.m. (eastern time) today, november 14, 2022. the call will be accessible via a live webcast on the events page of ast spacemobile’s investor relations website at https://ast-science.com/investors/. an archive of the webcast will be available shortly after the call. about ast spacemobile ast spacemobile is building the first and only global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on our extensive ip and patent portfolio. our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today’s five billion mobile subscribers and finally bring broadband to the billions who remain unconnected. for more information, follow ast spacemobile on youtube, twitter, linkedin and facebook. watch this video for an overview of the spacemobile mission. forward-looking statements this communication contains “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results of ast spacemobile to differ materially from those expected and projected. these forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. these forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. most of these factors are outside ast spacemobile’s control and are difficult to predict. factors that may cause such differences include, but are not limited to: (i) expectations regarding ast spacemobile’s strategies and future financial performance, including ast’s future business plans or objectives, expected functionality of the spacemobile service, anticipated timing and level of deployment of satellites, anticipated demand and acceptance of mobile satellite services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance its research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and ast’s ability to invest in growth initiatives; (ii) the negotiation of definitive agreements with mobile network operators relating to the spacemobile service that would supersede preliminary agreements and memoranda of understanding; (iii) the ability of ast spacemobile to grow and manage growth profitably and retain its key employees and ast spacemobile’s responses to actions of its competitors and its ability to effectively compete; (iv) changes in applicable laws or regulations; (v) the possibility that ast spacemobile may be adversely affected by other economic, business, and/or competitive factors; (vi) the outcome of any legal proceedings that may be instituted against ast spacemobile; and (vii) other risks and uncertainties indicated in the company’s filings with the sec, including those in the risk factors section of ast spacemobile’s form 10-k filed with the sec on march 31, 2022. the planned testing of the bw3 test satellite may not be completed due to a variety of factors, which could include loss of satellite connectivity, destruction of the satellite, or other communication failures, and even if completed as planned, the bw3 testing may indicate adjustments that are needed or modifications that must be made, any of which could result in additional costs, which could be material, and delays in commercializing our service. if there are delays or issues with our testing, it may become more costly to raise capital, if we are able to do so at all. ast spacemobile cautions that the foregoing list of factors is not exclusive. ast spacemobile cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. for information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the risk factors incorporated by reference into ast spacemobile’s form 10-k filed with the sec on march 31, 2022. ast spacemobile’s securities filings can be accessed on the edgar section of the sec’s website at www.sec.gov. except as expressly required by applicable securities law, ast spacemobile disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. ast spacemobile, inc. condensed consolidated balance sheets (unaudited) (dollars in thousands, except share data) september 30, 2022 december 31, 2021 assets current assets: cash and cash equivalents $ 198,869 $ 321,787 restricted cash (1) 660 2,750 accounts receivable - 2,173 inventories - 1,412 prepaid expenses 5,650 2,831 other current assets 20,127 4,850 total current assets 225,306 335,803 property and equipment: bluewalker 3 satellite - construction in progress 92,094 67,615 property and equipment, net 43,543 28,327 total property and equipment, net 135,637 95,942 other non-current assets: operating lease right-of-use assets, net 7,901 7,991 goodwill - 3,641 other non-current assets 17,424 559 total other non-current assets 25,325 12,191 total assets $ 386,268 $ 443,936 liabilities and stockholders' equity current liabilities: accounts payable $ 9,546 $ 6,638 accrued expenses and other current liabilities 10,837 7,469 deferred revenue - 6,636 current operating lease liabilities 803 634 total current liabilities 21,186 21,377 warrant liabilities 56,390 58,062 non-current operating lease liabilities 7,195 7,525 long-term debt 4,820 5,000 total liabilities 89,591 91,964 commitments and contingencies stockholders' equity: class a common stock, $.0001 par value; 800,000,000 shares authorized; 54,369,296 and 51,730,904 shares issued and outstanding as of september 30, 2022 and december 31, 2021, respectively. 5 5 class b common stock, $.0001 par value; 200,000,000 shares authorized; 51,636,922 shares issued and outstanding as of september 30, 2022 and december 31, 2021, respectively. 5 5 class c common stock, $.0001 par value; 125,000,000 shares authorized; 78,163,078 shares issued and outstanding as of september 30, 2022 and december 31, 2021, respectively. 8 8 additional paid-in capital 185,435 171,155 accumulated other comprehensive loss (271 ) (433 ) accumulated deficit (93,872 ) (70,461 ) noncontrolling interest 205,367 251,693 total stockholders' equity 296,677 351,972 total liabilities and stockholders' equity $ 386,268 $ 443,936 (1) as of september 30, 2022, restricted cash of $0.7 million represents deposits against the bank guaranty issued to the landlord for lease of a property. as of december 31, 2021, restricted cash of $2.8 million represented deposits with a bank to exclusively use for capital improvements at the company’s facility in texas, united states. ast spacemobile, inc. condensed consolidated statements of operations (unaudited) (dollars in thousands, except share and per share data) for the three months ended september 30, for the nine months ended september 30, 2022 2021 2022 2021 revenues $ 4,168 $ 2,450 $ 13,825 $ 6,185 cost of sales (exclusive of items shown separately below) 2,525 2,103 6,714 4,122 gross profit 1,643 347 7,111 2,063 operating expenses: engineering services 14,492 8,026 38,208 18,757 general and administrative costs 12,916 9,331 37,634 24,031 research and development costs 13,543 4,888 30,969 15,491 depreciation and amortization 1,172 867 3,457 2,049 total operating expenses 42,123 23,112 110,268 60,328 other income (expense): (loss) gain on remeasurement of warrant liabilities (15,897 ) 39,401 1,669 (2,276 ) other income, net 24,875 184 24,211 156 total other income (expense), net 8,978 39,585 25,880 (2,120 ) (loss) income before income tax expense (31,502 ) 16,820 (77,277 ) (60,385 ) income tax expense 550 16 747 73 net (loss) income before allocation to noncontrolling interest (32,052 ) 16,804 (78,024 ) (60,458 ) net (loss) income attributable to noncontrolling interest (22,286 ) 12,689 (54,613 ) (33,015 ) net (loss) income attributable to common stockholders $ (9,766 ) $ 4,115 $ (23,411 ) $ (27,443 ) net (loss) income per share of common stock attributable to common stockholders (1) basic $ (0.18 ) $ 0.08 $ (0.45 ) $ (0.31 ) diluted $ (0.18 ) $ 0.07 $ (0.45 ) $ (0.31 ) weighted average shares used in computing net (loss) income per share of common stock (1) basic 53,233,552 51,729,704 52,292,972 51,729,704 diluted 53,233,552 51,839,841 52,292,972 51,729,704 (1) earnings per share information excludes earnings for the periods prior to the business combination, as it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. ast spacemobile, inc. condensed consolidated statements of comprehensive income (loss) (unaudited) (dollars in thousands) for the three months ended september 30, for the nine months ended september 30, 2022 2021 2022 2021 net loss before allocation to noncontrolling interest $ (32,052 ) $ 16,804 $ (78,024 ) $ (60,458 ) other comprehensive loss foreign currency translation adjustments (1,267 ) (220 ) (1,865 ) (494 ) total other comprehensive loss (1,267 ) (220 ) (1,865 ) (494 ) total comprehensive loss before allocation to noncontrolling interest (33,319 ) 16,584 (79,889 ) (60,952 ) comprehensive loss attributable to noncontrolling interest (23,083 ) 12,490 (55,915 ) (33,283 ) comprehensive loss attributable to common stockholders $ (10,236 ) $ 4,094 $ (23,974 ) $ (27,669 ) ast spacemobile, inc. condensed consolidated statements of cash flows (unaudited) (dollars in thousands) for the nine months ended september 30, 2022 2021 cash flows from operating activities: net loss before allocation to noncontrolling interest $ (78,024 ) $ (60,458 ) adjustments to reconcile net loss before noncontrolling interest to cash used in operating activities: gain on sale of nano (24,646 ) - depreciation and amortization 3,457 2,049 (gain) loss on remeasurement of warrant liabilities (1,669 ) 2,276 non-cash lease expense 364 505 stock-based compensation 7,093 1,899 issuance of common stock for commitment shares 332 - changes in operating assets and liabilities: accounts receivable (2,241 ) 710 prepaid expenses and other current assets (20,444 ) (2,700 ) inventory (2,461 ) (282 ) accounts payable and accrued expenses 12,259 (1,069 ) operating lease liabilities (323 ) (354 ) deferred revenue 2,395 1,662 other assets and liabilities (17,516 ) (2,850 ) net cash used in operating activities (121,424 ) (58,612 ) cash flows from investing activities: purchase of property and equipment (20,685 ) (11,293 ) bluewalker 3 satellite - construction in process (25,165 ) (29,201 ) proceeds from sale of nano, net of cash deconsolidated and transaction costs 26,036 - net cash used in investing activities (19,814 ) (40,494 ) cash flows from financing activities: proceeds from issuance of common stock 16,994 - proceeds from business combination - 456,420 direct and incremental costs incurred for the business combination - (39,542 ) issuance of incentive units under employee stock plan 60 warrant exercises 14 - proceeds from debt 230 - net cash provided by financing activities 17,298 416,878 effect of exchange rate changes on cash and cash equivalents (1,068 ) (159 ) net (decrease) increase in cash, cash equivalents and restricted cash (125,008 ) 317,613 cash, cash equivalents and restricted cash, beginning of period 324,537 42,777 cash, cash equivalents and restricted cash, end of period $ 199,529 $ 360,390 supplemental disclosure of cash flow information: non-cash transactions: purchases of construction in process in accounts payable $ 3,966 $ 2,266 purchases of property and equipment in accounts payable 755 1,306 right-of-use assets obtained in exchange for operating lease liabilities 1,129 -
