NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Note
1 — Description of Organization and Business Operations
As
of March 31, 2021, New Providence Acquisition Corp., a Delaware corporation (“NPA”, or the “the Company”),
our predecessor, was a blank check company incorporated in Delaware on May 28, 2019. The Company was formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses.
On April 6, 2021 (the “Closing
Date”), NPA completed the previously announced business combination (the “Business Combination”) pursuant to
that certain Equity Purchase Agreement, dated as of December 15, 2020 (the “Equity Purchase Agreement”), by and among NPA,
AST & Science LLC, a Delaware limited liability company (“AST”), the existing equityholders of AST, New Providence Acquisition
Management LLC, a Delaware limited liability company (“Sponsor”), and Abel Avellan. Immediately, upon the completion of the
Business Combination, NPA was renamed AST SpaceMobile, Inc. and AST became a subsidiary of the AST SpaceMobile, Inc. The Business
Combination is documented in greater detail at Note 10.
The
Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with
early stage and emerging growth companies.
As
of March 31, 2021, the Company had not commenced any operations. All activity through March 31, 2021 relates to the Company’s formation,
the initial public offering (“Initial Public Offering”), which is described below, and, after the Initial Public Offering,
the Business Combination. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering was declared effective on September 10, 2019. On September
13, 2019, the Company completed the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to
the shares of Class A common stock included in the Units sold, the “Public Shares”), generating gross proceeds of
$200,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company completed the sale of 5,500,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to New Providence Management LLC, a
Delaware limited liability company (the “Sponsor”), generating gross proceeds of $5,500,000, which is described in
Note 4.
Following
the closing of the Initial Public Offering on September 13, 2019, an amount of $200,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(the “Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out
as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), as determined by the Company, until the earlier of: (i) the completion of a Business
Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below.
On
September 19, 2019, in connection with the underwriters’ election to fully exercise their over-allotment option, the Company
completed the sale of an additional 3,000,000 Units at $10.00 per Unit and the sale of an additional 600,000 Private Placement
Warrants at $1.00 per Private Placement Warrant, generating total gross proceeds of $30,600,000. Following the closing, an additional
$30,000,000 of net proceeds was deposited into the Trust Account, resulting in $230,000,000 held in the Trust Account.
Transaction
costs incurred in connection with the Initial Public Offering amounted to $13,260,927, consisting of $4,600,000 of underwriting
fees, $8,050,000 of deferred underwriting fees and $610,927 of other offering costs.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
The
Company’s Certificate of Incorporation provides for the Company to have until March 15, 2021 (the “Combination Period”)
to complete a Business Combination or obtain a Charter Extension from Shareholders. A Charter Extension was proposed and adopted at the
Annual Meeting on March 12, 2021, amending the Existing Certificate of Incorporation to extend the March 15, 2021 deadline for completing
a business combination to June 15, 2021. On April 6, 2021, the Company completed the previously announced Business Combination,
which is discussed in greater detail at Note 10.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of
intent, confidentiality or similar agreement or business combination agreement, reduce the amounts in the Trust Account to below
the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date
of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of trust assets,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver
of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against
a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will
seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring
to have all vendors, service providers (except the Company’s independent registered accounting firm), prospective target
businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s financial position and the specific impact is not readily determinable as
of the date of these financial statements. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions
to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for
interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 6, 2021, which contains the audited financial statements
and notes thereto. The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results
to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it 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 independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval
of any golden parachute payments not previously approved.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of Estimates
The
preparation of the condensed financial statements in conformity with GAAP requires the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2021 and December 31, 2020.
Cash
and Marketable Securities Held in Trust Account
At
March 31, 2021 and December 31, 2020, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
During the three months ended March 31, 2021, the Company withdrew $303,228 of interest earned on the Trust Account to pay its
franchise and income taxes.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory
redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including
common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other
times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.
Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside
of the stockholders’ equity section of the Company’s condensed balance sheets.
Warrant
Liabilities
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in the ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”).
Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether
they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the
warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional
paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
they are recorded at their initial fair value on the date of issuance and subject to remeasurement each balance sheet date with
changes in the estimated fair value of the warrants to be recognized as a non-cash gain or loss in the statement of operations.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of
tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for
interest and penalties as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review
that could result in significant payments, accruals or material deviation from its position. The Company is subject to income
tax examinations by major taxing authorities since inception.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Net
Income Per Common Share
Net
income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during
the period. The Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible
redemption at March 31, 2021 and 2020, which are not currently redeemable and are not redeemable at fair value, have been excluded
from the calculation of basic income per share since such shares, if redeemed, only participate in their pro rata share of the
Trust Account earnings. The Company has not considered the effect of warrants sold in the Initial Public Offering and private
placement to purchase an aggregate of 17,600,000 shares of common stock. As a result, diluted income per common share is the same
as basic income per common share for the periods presented.
Reconciliation
of Net Income Per Common Share
The
Company’s net income is adjusted for the portion of income that is attributable to common stock subject to possible redemption,
as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly,
basic and diluted income per common share is calculated as follows:
|
|
For the Three Months Ended
|
|
|
|
March 31 2021
|
|
|
March 31 2020
|
|
Net income
|
|
|
597,052
|
|
|
|
7,772,252
|
|
Less: Income attributable to common stock subject to possible redemption
|
|
|
27,616
|
|
|
|
890,626
|
|
Adjusted net income
|
|
|
569,436
|
|
|
|
6,881,626
|
|
Weighted average common shares subject to possible redemption outstanding,
basic and diluted
|
|
|
14,922,915
|
|
|
|
20,157,878
|
|
Basic and diluted income per common share subject to possible redemption
|
|
|
0.00
|
|
|
|
0.04
|
|
Weighted average non-redeemable common shares outstanding, basic and diluted
|
|
|
13,827,085
|
|
|
|
8,592,122
|
|
Basic and diluted net loss per non-redeemable common share
|
|
|
0.04
|
|
|
|
0.80
|
|
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these
accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
U.S.
GAAP requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are
recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of
realization or settlement.
In
assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates
of market conditions and risks existing at the time. For certain instruments, including cash, accounts receivable, accounts payable,
and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these
instruments.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s condensed financial statements.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Note
3 — Initial Public Offering
Pursuant
to the Initial Public Offering, the Company sold 20,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of
one share of Class A common stock and one-half of one warrant (“Public Warrant”). On September 19, 2019, in connection
with the underwriters’ exercise of the over-allotment option in full, the Company sold an additional 3,000,000 Units at
a price of $10.00 per Unit. Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at an
exercise price of $11.50 per whole share (see Note 8).
Note
4 — Private Placement
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,500,000 Private Placement Warrants at
a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $5,500,000. On September 19, 2019, in connection
with the underwriters’ exercise of the over-allotment option in full, the Company sold an additional 600,000 Private Placement
Warrants at a price of $1.00 per Private Placement Warrant. Each Private Placement Warrant is exercisable to purchase one share
of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement
Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account.
Note
5 — Fair Value Measurement
The
Company follows the guidance in ASC 820, Fair Value Measurement, for its financial assets and liabilities that are re-measured
and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported
at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets
or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples
of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets
or liabilities in markets that are not active.
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions
that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis as of December 31, 2020 and 2019 and indicates the fair value hierarchy of the valuation inputs the Company utilized to
determine such fair value:
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Description
|
|
Level
|
|
|
2021
|
|
|
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
231,913,996
|
|
|
$
|
232,196,027
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Public warrant liability
|
|
|
1
|
|
|
$
|
40,710,000
|
|
|
$
|
43,470,000
|
|
Private placement warrant liability
|
|
|
2
|
|
|
$
|
25,376,000
|
|
|
$
|
24,644,000
|
|
The
Public Warrants as of March 31, 2021 and December 31, 2020 are classified as Level 1 due to the use of an observable market quote
in an active market under the ticker ASTSW.
The
Private Warrants are valued using a Black-Scholes-Merton Model. As of March 31, 2021 and December 31, 2020 the Private Warrants
are classified as Level 2 as the transfer of Private 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 Warrant is equivalent to that of each Public Warrant.
The
Company’s Black-Scholes-Merton model to value Private Warrants required the use of the following subjective assumptions
inputs:
|
●
|
The
risk-free interest rate assumption was based on the 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. 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 term was determined to be one year, as the Warrants become exercisable on the
later of (i) 30 days after the completion of a business combination and (ii) 12 months
from the Initial Public Offering date. An increase in the expected term, 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.
|
Note
6 — Related Party Transactions
Founder
Shares
In
June 2019, the Sponsor purchased 3,593,750 shares of Class B common stock (the “Founder Shares”) for an aggregate
purchase price of $25,000. On August 23, 2019, the Company effected a stock split resulting in an increase on the total
number of shares of Class B common stock outstanding from 3,593,750 to 5,750,000 shares. Subsequent to such stock split, in August
2019, the Sponsor transferred 10,000 Founder Shares to each of Mr. Bradley, the Company’s Chief Financial Officer and, and
Messrs. Gannon, Ginsberg and Mazer, the Company’s independent directors.
The
5,750,000 Founder Shares included an aggregate of up to 750,000 shares subject to forfeiture to the extent that the underwriters’
over-allotment option was not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the
Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public
Shares in the Initial Public Offering). As a result of the underwriters’ election to fully exercise their over-allotment
option, 750,000 Founder Shares are no longer subject to forfeiture. The Founder Shares will automatically convert into shares
of Class A common stock upon completion of a Business Combination on a one-for-one basis, subject to certain adjustments, as described
in Note 8.
The
Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur
of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price
of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business
Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction
that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities
or other property.
Promissory Note – Related Party
On June 20, 2019, the Sponsor agreed to loan the
Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory
Note”). The Promissory Note is non-interest bearing and payable on the earlier of December 31, 2019 or the completion of the Initial
Public Offering. At September 30, 2019, the outstanding balance under the Promissory Note in the aggregate amount of $155,093 was repaid.
Administrative
Support Agreement
The
Company entered into an agreement whereby, commencing on September 13, 2019 through the earlier of the Company’s completion
of a Business Combination and its liquidation, the Company will pay an affiliate of the Sponsor a total of $10,000 per
month for office space, utilities and secretarial and administrative support services. For the three months ended March 31, 2021
and 2020, the Company incurred $30,000 and $30,000, respectively, in fees for these services. As of March 31, 2021 and December
31, 2020, $10,000 and $30,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheets,
respectively.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon
completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be
converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical
to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds
held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay
the Working Capital Loans.
On
January 28, 2021 and on February 18, 2021, the Sponsor agreed to loan the Company $200,000 and $500,000 for an aggregate of $700,000,
respectively. The promissory notes (“Notes”) are provided to cover certain expenses related to the business combination.
The Notes are non-interest bearing and payable on the earlier of June 30, 2021 or the completion of the Business Combination.
As of March 31, 2021, the Company borrowed $600,000 under the Notes.
Note
7 — Commitments
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company,
the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Registration
and Stockholder Rights
Pursuant
to a registration rights and stockholder agreement entered into on September 13, 2019, the holders of the Founder Shares, Private
Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common
stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working
Capital Loans and upon conversion of the Founder Shares) will be entitled to registration and stockholder rights requiring the
Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s
Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short
form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require
the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
underwriters of the Initial Public Offering are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate.
Up to 40% of such amount (or $3,220,000) may be paid at the sole discretion of the Company’s management team to the underwriters
in the allocations determined by the management team and/or to third parties not participating in the Initial Public Offering
(but who are members of FINRA) that assist the Company in completing a Business Combination. The deferred fee will become payable
to the underwriters from the amounts held in the Trust Account solely in the event the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
Equity
Purchase Agreement
On
December 15, 2020, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with AST
& Science LLC, a Delaware limited liability company (“AST”), the existing equityholders of AST (the “Existing
Equityholders”), the Sponsor and Abel Avellan (“Existing Equityholder Representative”) in his capacity as Existing
Equityholder Representative. The transactions contemplated by the Equity Purchase Agreement are referred to herein as the “AST
Business Combination.”
Following
the closing of the AST Business Combination (the “Closing”), the Company will be organized as an umbrella partnership-C
corporation structure, in which substantially all of the operating assets of AST’s business will be held by AST, and the
Company’s only assets will be its equity interests in AST. The Company will be renamed AST SpaceMobile, Inc. (“SpaceMobile”)
at Closing.
At
the Closing, the Company will (i) amend and restate its existing Certificate of Incorporation (the “A&R Certificate
of Incorporation”) to, among other things, (a) change the name of the Company to AST SpaceMobile, Inc., (b) convert all
then-outstanding Founder Shares, excluding any Forfeited Founder Shares into shares of Class A common stock, par value $0.0001
per share, of SpaceMobile (“Class A Common Stock”) and (c) authorize the issuance of Class B common stock, par value
$0.0001 per share, of SpaceMobile (“Class B Common Stock”) and Class C common stock, par value $0.0001 per share,
of SpaceMobile (“Class C Common Stock”) and (ii) replace the Amended and Restated By-Laws of the Company (the “Existing
Bylaws”), by adopting the Bylaws of AST SpaceMobile, Inc. (the “SpaceMobile Bylaws”).
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Concurrently
with the Equity Purchase Agreement, the Company entered into various subscription agreements (the “Subscription Agreements”)
with certain third-party investors wherein the investors have committed to make private investments in public equity (“PIPE”)
in the form of Class A Common Stock in an aggregate amount of $230 million (the “PIPE Investment”). In exchange for
the PIPE Investment, these “PIPE Investors” will receive an aggregate of 23 million shares of Class A Common Stock.
The
Equity Purchase Agreement contains customary representations, warranties and covenants by the parties thereto and the Closing
is subject to certain conditions as further described in the Equity Purchase Agreement.
Upon
closing the business combination, the Company and AST anticipate incurring transaction costs to investment bankers, attorneys
and other service providers.
In
anticipation of a proxy vote to approve the AST Business Combination, certain PIPE Investors deposited $50,000,000 into the Company’s
operating account. As such, these funds are presented as a liability (Deposit from investors) within the balance sheet as an offset
to the increase in cash.
Note
8 — Stockholders’ Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share
with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s
board of directors. At March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class
A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value
of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2021 and December
31, 2020, there were 8,017,512 and 8,077,085 shares of Class A common stock issued and outstanding, excluding 14,982,488 and 14,922,915
shares of Class A common stock subject to possible redemption, respectively.
Class
B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001
per share. Holders of Class B common stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there
were 5,750,000 shares of Class B common stock issued and outstanding.
Holders
of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders
except as required by law; provided that only holders of shares of Class B common stock have the right to vote on the election
of the Company’s directors prior to the initial Business Combination.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination
on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities,
are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business
Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect
to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all
shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all
shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock
and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued
to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of Founder Shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided
above, at any time.
Note
9 — Warrant Liabilities
Public
Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b)
12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of
a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have
no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares
of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the
Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated
to issue shares of Class A common stock upon exercise of a warrant unless the Class A common stock issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants.
The
Company has agreed that, as soon as practicable, but in no event later than fifteen (15) business days, after the closing of a
Business Combination, the Company will use its best efforts to file with the SEC a registration statement covering the shares
of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to
maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified
in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the
warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when the Company will have failed to maintain
an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act or another exemption. If that exemption, or another exemption, is not available, holders will not be able to
exercise their warrants on a cashless basis.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
|
●
|
In
whole and not in part;
|
|
●
|
At
a price of $0.01 per warrant;
|
|
●
|
Upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
If,
and only if, the reported last sale price of the Company’s 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.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not
be adjusted for issuance of Class A common stock at a price below its exercise price. If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants
will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In
addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes
in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share
(with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and
in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the
Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceed, and interest thereon, available for the funding
of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted
average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to
the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per
share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except
that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants
will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain
limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be 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.
The
warrants contain a settlement alternative which is triggered upon the occurrence of a tender, exchange or redemption offer which
has been made to and accepted by more than 50% of the outstanding shares of common stock (other than a tender, exchange, or redemption
offer made by the Company in connection with the redemption rights previously discussed). Upon the occurrence of such an event
(the “Alternative Issuance”), the holders of the warrants shall be entitled to receive the highest amount of cash,
securities, or other property to which such holder would have been entitled as a stockholder if the holder of the warrants had
exercised the warrants prior to the expiration of such tender, exchange, or redemption offer and accepted such offer. If an Alternative
Issuance were to occur in which a cash tender offer is made by a third party and accepted by 50% or more of outstanding shares
of common stock, the warrants would be net cash settled, in an event that is outside of the Company’s control, and for which
not all holders of the underlying shares also would receive cash (assuming not all shareholders accepted the tender offer). The
presence of this potential settlement alternative precludes the Company from classifying the warrants within stockholders’
equity, regardless of the likelihood of such an event occurring.
As
of March 31, 2021 and December 31, 2020, the Company recorded warrant liabilities of $66,086,000 and $68,114,000, respectively, in the
balance sheets. For the three months ended March 31, 2021 and 2020, the Company recognized a gain on the change in the fair value
of the warrant liabilities of $2,028,000 and $6,925,000, respectively, in the statements of operations.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events
that would have required adjustment or disclosure in the financial statements.
On
April 6, 2021, the Closing Date, NPA completed the previously announced business combination pursuant to that certain Equity
Purchase Agreement, by and among NPA, AST, the existing equityholders of AST, New Providence Acquisition Management LLC, a Delaware limited
liability company (“Sponsor”), and Abel Avellan. As contemplated by the Equity Purchase Agreement (a) NPA was appointed as
the managing member of AST and AST became a subsidiary of NPA; (b) NPA changed its name to “AST SpaceMobile, Inc.”; (c) immediately
prior to the closing of the Business Combination, all then-outstanding shares of Class B common stock, par value $0.0001 per share, of
NPA (“NPA Class B Common Stock”) held by Sponsor (the “Sponsor Stock”) converted into shares of Class A common
stock, par value $0.0001 per share, of NPA (“NPA Class A Common Stock”) immediately prior to the Business Combination; (d)
each share of NPA Class A Common Stock, including those converted as described in (c) above, was converted into one share of Class A
common stock, par value $0.0001 per share, of the Company (“Class A Common Stock”), and each warrant of NPA (an “NPA
Warrant”) was converted into one warrant of the Company (a “Warrant”); (e) AST restructured its capitalization, appointed
the Company as its managing member and issued to the Company 51,729,704 units of ownership interest in AST (the “AST Common Units”),
which entitle the holder to the distributions, allocations, and other rights under the Fifth Amended and Restated Limited Liability Company
Operating Agreement of AST (the “A&R Operating Agreement”), in exchange for which AST received approximately $227.0 million
remaining in NPA’s trust account following (i) the $4.8 million payment of deferred underwriting commissions (ii) $0.2 million
of redemptions made in connection with NPA’s special meeting of stockholders relating to the transactions contemplated by the Equity
Purchase Agreement (the “Special Meeting”) and NPA’s annual meeting of stockholders to approve, among other things,
a charter amendment to extend the date by which it had to complete an initial business combination and (iii) the repayment of a $0.6
million related party loan between the Sponsor and NPA; (f) AST issued to the Company warrants to purchase up to 17,600,000 AST
Common Units; (g); certain investors (the “PIPE Investors”) purchased 23,000,000 shares of Class A Common Stock; (h) the
Company issued 51,636,922 shares of Class B common stock, par value $0.0001 per share, of the Company, which carries one vote per share
but no economic rights (“Class B Common Stock”) to the Existing AST Equityholders (other than Avellan); and (i) the Company
issued 78,163,078 shares of Class C common stock, par value $0.0001 per share, of the Company, which carries ten votes per share but
no economic rights (“Class C Common Stock”) to Avellan (the transactions referred to in clauses (a) through (i), collectively,
the “Business Combination”).
As
a result of the Business Combination, the Company is organized in an “Up-C” structure in which substantially all of
the operating assets of AST’s business are held by AST, and the Company’s only assets are its equity interests in
AST.
As
of the open of trading on April 7, 2021, the Class A Common Stock and Warrants of AST SpaceMobile, Inc., formerly those of NPA,
began trading on The Nasdaq Capital Market (“Nasdaq”) as “ASTS” and “ASTSW,” respectively.
In
connection with the Business Combination, holders of 8,460 shares of NPA Class A Common Stock exercised their rights to redeem
those shares for cash at an approximate price of $10.09 per share, for an aggregate of approximately $85,348, which was paid to
such holders on the Closing Date.