Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-255842
PROSPECTUS
SUPPLEMENT NO. 1
(to
prospectus dated May 14, 2021)
AST
SPACEMOBILE, INC.
28,750,000
SHARES OF CLASS A COMMON STOCK
6,100,000 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
17,600,000
SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS
This
prospectus supplement is being filed to update and supplement the information contained in the prospectus dated May 14, 2021 (the “Prospectus”),
related to (i) the offer and sale, from time to time, by the selling stockholders identified in the Prospectus, or their permitted transferees,
of (a) an aggregate of 28,750,000 shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”),
of AST SpaceMobile, Inc., a Delaware corporation, and (b) 6,100,000 warrants to purchase Class A Common Stock at an exercise price of
$11.50 per share (the “private placement warrants”) and (ii) the issuance by us of up to 17,600,000 shares of Class A Common
Stock upon the exercise of outstanding public warrants (the “public warrants”) and private placement warrants (collectively,
the “warrants”), with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission (“SEC”) on May 18, 2021 (the “Quarterly Report”). Accordingly, we have attached the Quarterly
Report to this prospectus supplement.
This
prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered
or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should
be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus
supplement, you should rely on the information in this prospectus supplement.
Our
shares of Class A Common Stock are listed on The Nasdaq Capital Market LLC under the symbol “ASTS.” On May 17, 2021,
the closing sale price per share of our Class A Common Stock was $7.26. Our public warrants are listed on The Nasdaq Capital Market
under the symbol “ASTSW.” On May 17, 2021, the closing sale price per warrant of our public warrants was $2.43.
Investing
in our securities involves risks that are described in the “Risk Factors” section beginning on page 5 of the Prospectus.
Neither
the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined
if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus supplement is May 18, 2021.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2021
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File No. 001-39040
AST
SPACEMOBILE, INC.
|
(Exact
name of registrant as specified in its charter)
|
Delaware
|
|
84-2027232
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
Midland
Intl. Air & Space Port
|
|
|
2901
Enterprise Lane
Midland,
Texas
|
|
79706
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
(432)
276-3966
|
(Registrant’s
telephone number, including area code)
|
New
Providence Acquisition Corp.
10900
Research Blvd
Ste
160C PMB 1081
Austin,
TX 78759
|
(Former
name, former address and former fiscal year, if changed since last report)
|
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
|
|
Trading
Symbol(s)
|
|
Name
of each exchange on which registered
|
Class
A common stock, par value $0.0001 per share
|
|
ASTS
|
|
The
Nasdaq Stock Market LLC
|
Warrants
exercisable for one share of Class A common stock at an exercise price of $11.50
|
|
ASTSW
|
|
The
Nasdaq Stock Market LLC
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes [X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
[ ]
Large accelerated filer
|
[ ]
Accelerated filer
|
[X]
Non-accelerated filer
|
[X]
Smaller reporting company
|
|
[X]
Emerging growth company
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes [ ] No
[X]
As
of May 17, 2021, there were 51,729,704 shares of Class A common stock, $0.0001 per value, 51,636,922 shares of Class
B common stock, $0.0001 par value, and 78,163,078 shares of Class C common stock, $0.0001 par value, issued and outstanding.
EXPLANATORY NOTE
On April 6, 2021, New Providence
Acquisition Corp., our predecessor company (“NPA”), completed the previously announced business combination pursuant to that
certain Equity Purchase Agreement, dated as of December 15, 2020, 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, and Abel Avellan. Immediately, upon the completion of the Business Combination, NPA was renamed AST SpaceMobile, Inc. and AST
became a subsidiary of AST SpaceMobile, Inc. As a result of the Business Combination, AST SpaceMobile, Inc. is organized in an “Up-C”
structure in which substantially all of the operating assets of AST’s business are held by AST SpaceMobile, Inc., the only assets
of which 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.
Unless stated otherwise, this
report contains information about NPA before the Business Combination.
References to the “Company”
in this report refer to NPA before the consummation of the Business Combination or AST SpaceMobile, Inc. after the Business Combination,
as the context suggests.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
FORM
10-Q FOR THE QUARTER ENDED MARCH 31, 2021
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
Item
1. Interim Financial Statements.
AST SPACEMOBILE, INC.
(FORMERLY KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
CONDENSED
BALANCE SHEETS
(UNAUDITED)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
50,052,736
|
|
|
$
|
131,151
|
|
Prepaid expenses
|
|
|
47,667
|
|
|
|
23,278
|
|
Prepaid income tax
|
|
|
54,439
|
|
|
|
54,439
|
|
Total Current Assets
|
|
|
50,154,842
|
|
|
|
208,868
|
|
Marketable securities held in Trust Account
|
|
|
231,913,996
|
|
|
|
232,196,027
|
|
TOTAL ASSETS
|
|
$
|
282,068,838
|
|
|
$
|
232,404,895
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,258,263
|
|
|
$
|
634,286
|
|
Promissory note - related party
|
|
|
600,000
|
|
|
|
-
|
|
Total Current Liabilities
|
|
|
1,858,263
|
|
|
|
634,286
|
|
Deferred tax liability
|
|
|
-
|
|
|
|
9,680
|
|
Deposit from investors
|
|
|
50,000,000
|
|
|
|
-
|
|
Deferred underwriting fee payable
|
|
|
8,050,000
|
|
|
|
8,050,000
|
|
Warrant liabilities
|
|
|
66,086,000
|
|
|
|
68,114,000
|
|
Total Liabilities
|
|
|
125,994,263
|
|
|
|
76,807,966
|
|
Commitments and Contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption, 14,982,488 and 14,922,915 shares at redemption value as of March 31, 2021 and December 31, 2020, respectively
|
|
|
151,074,574
|
|
|
|
150,596,928
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 8,017,512 and
8,077,085 shares issued and outstanding (excluding 14,982,488 and 14,922,915 shares subject to possible redemption) as of
March 31, 2021 and December 31, 2020, respectively
|
|
|
948
|
|
|
|
941
|
|
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020.
|
|
|
575
|
|
|
|
575
|
|
Additional paid-in capital
|
|
|
59,243,594
|
|
|
|
59,840,653
|
|
Accumulated Deficit
|
|
|
(54,245,116
|
)
|
|
|
(54,842,168
|
)
|
Total Stockholders’ Equity
|
|
|
5,000,001
|
|
|
|
5,000,001
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
282,068,838
|
|
|
$
|
232,404,895
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
AST SPACEMOBILE, INC.
(FORMERLY KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
For the Three Months Ended March 31, 2021
|
|
|
For the Three Months Ended March 31, 2020
|
|
Operating costs
|
|
$
|
1,434,836
|
|
|
$
|
185,257
|
|
Loss from operations
|
|
|
(1,434,836
|
)
|
|
|
(185,257
|
)
|
Other income:
|
|
|
|
|
|
|
|
|
Changes in fair value of warrant liabilities
|
|
|
2,028,000
|
|
|
|
6,925,000
|
|
Interest income on marketable securities held in Trust Account
|
|
|
21,197
|
|
|
|
886,099
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
-
|
|
|
|
371,628
|
|
Other income
|
|
|
2,049,197
|
|
|
|
8,182,727
|
|
Profit before income taxes
|
|
|
614,361
|
|
|
|
7,997,470
|
|
Provision for income taxes
|
|
|
(17,309
|
)
|
|
|
(225,218
|
)
|
Net Income
|
|
$
|
597,052
|
|
|
$
|
7,772,252
|
|
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 shares outstanding, basic and diluted
|
|
|
13,827,085
|
|
|
|
8,592,122
|
|
Basic and diluted net income per non-redeemable common share
|
|
$
|
0.04
|
|
|
$
|
0.80
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
AST SPACEMOBILE, INC.
(FORMERLY KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2021
|
|
Class A common stock
|
|
|
Class B common stock
|
|
|
Additional Paid
|
|
|
Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
in Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance - December 31, 2020
|
|
|
8,077,085
|
|
|
$
|
941
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
59,840,653
|
|
|
$
|
(54,842,168
|
)
|
|
$
|
5,000,001
|
|
Change in value of Class A common stock subject to possible redemption
|
|
|
(59,573
|
)
|
|
|
7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(597,059
|
)
|
|
|
-
|
|
|
|
(597,052
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
597,052
|
|
|
|
597,052
|
|
Balance – March 31, 2021
|
|
|
8,017,512
|
|
|
$
|
948
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
59,243,594
|
|
|
$
|
(54,245,116
|
)
|
|
$
|
5,000,001
|
|
THREE MONTHS ENDED MARCH 31, 2020
|
|
Class A common stock
|
|
|
Class B common stock
|
|
|
Additional Paid
|
|
|
(Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
in Capital
|
|
|
Deficit) Retained Earnings
|
|
|
Equity
|
|
Balance - December 31, 2019
|
|
|
2,842,122
|
|
|
$
|
409
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
7,880,362
|
|
|
$
|
(2,881,345
|
)
|
|
$
|
5,000,001
|
|
Change in value of Class A common stock subject to possible redemption
|
|
|
(691,202
|
)
|
|
|
(68
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,772,184
|
)
|
|
|
-
|
|
|
|
(7,772,252
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,772,252
|
|
|
|
7,772,252
|
|
Balance – March 31, 2020
|
|
|
2,150,920
|
|
|
$
|
341
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
108,178
|
|
|
$
|
4,890,907
|
|
|
$
|
5,000,001
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
AST SPACEMOBILE, INC.
(FORMERLY KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For
the Three Months Ended March 31, 2021
|
|
|
For
the Three Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
597,052
|
|
|
|
7,772,252
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Interest
earned on securities held in Trust Account
|
|
|
(21,197
|
)
|
|
|
(886,099
|
)
|
Unrealized
loss on securities held in Trust Account
|
|
|
-
|
|
|
|
(371,628
|
)
|
Deferred
income provision (benefit)
|
|
|
(9,680
|
)
|
|
|
74,431
|
|
Change
in fair value of warrant liabilities
|
|
|
(2,028,000
|
)
|
|
|
(6,925,000
|
)
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid
expenses and other current assets
|
|
|
(24,389
|
)
|
|
|
(9,016
|
)
|
Accounts
payable and accrued expenses
|
|
|
623,977
|
|
|
|
3,626
|
|
Income
tax payable
|
|
|
-
|
|
|
|
150,787
|
|
Net
cash used in operating activities
|
|
|
(862,237
|
)
|
|
|
(190,647
|
)
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Interest
withdrawn for tax payments
|
|
|
303,228
|
|
|
|
217,146
|
|
Net
cash used in investing activities
|
|
|
303,228
|
|
|
|
217,146
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds
from Investors due to PIPE Financing
|
|
|
50,000,000
|
|
|
|
-
|
|
Proceeds
from promissory note - related party
|
|
|
600,000
|
|
|
|
-
|
|
Redemption
of Common Shares
|
|
|
(119,406
|
)
|
|
|
-
|
|
Net
cash provided by financing activities
|
|
|
50,480,594
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net
Change in Cash
|
|
|
49,921,585
|
|
|
|
26,499
|
|
Cash
– Beginning
|
|
|
131,151
|
|
|
|
493,128
|
|
Cash
– Ending
|
|
$
|
50,052,736
|
|
|
$
|
519,627
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$
|
26,989
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
Change
in value of shares subject to redemption
|
|
$
|
477,646
|
|
|
$
|
7,772,252
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
AST
SPACEMOBILE, INC.
(FORMERLY
KNOWN AS NEW PROVIDENCE ACQUISITION CORP.)
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.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References
in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to
AST SPACEMOBILE, INC. (formerly known as New Providence Acquisition Corp.). References to our “management” or our
“management team” refer to our officers and directors, and references to the “Sponsor” refer to New Providence
Management LLC. The following discussion and analysis of the Company’s financial condition and results of operations should
be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain
information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and
uncertainties.
Special
Note Regarding Forward-Looking Statements
This
Quarterly Report includes “forward-looking statements” for the purposes of federal securities laws that are not historical
facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business
strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,”
“believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and
similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors
could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking
statements. 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 section of the Company’s Annual Report on Form 10-K filed with
the U.S. Securities and Exchange Commission (the “SEC”). The Company’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, the Company disclaims any
intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We
are a blank check company formed under the laws of the State of Delaware on May 28, 2019 and as of March 31, 2021, we were still
operating with for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”).
On
April 6, 2021 (the “Closing Date”), we completed the previously announced 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.
We
are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and
emerging growth companies.
As
indicated in the accompanying financial statements, at March 31, 2021 and December 31, 2020, we had $50,052,736 and $131,151 in
cash, respectively, and working capital of $48,292,140 and a working capital deficit of $337,484, respectively, which excludes
prepaid income taxes and franchise taxes payable as the net amounts can be paid from the interest earned in the trust account,
respectively.
Recent
Developments
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.
Results
of Operations
We
have neither engaged in any operations nor generated any revenues to date. Our only activities March 31, 2021 were organizational
activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering,
identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion
of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in
the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For
the three months ended March 31, 2021, we had net income of $597,052, which consisted of interest income on marketable securities
held in the trust account of $21,197, changes in fair value of warrant liabilities of $2,028,000, offset by operating costs
of $1,434,836 and a provision for income taxes of $17,309.
For
the three months ended March 31, 2020, we had net income of $7,772,252, which consisted of interest income on marketable securities
held in the trust account of $886,099, changes in fair value of warrant liabilities of $6,925,000, and an unrealized gain on marketable
securities held in our trust account of $371,628, offset by operating costs of $185,257 and a provision for income taxes of $225,218.
Liquidity
and Capital Resources
On
September 13, 2019, we completed the Initial Public Offering of 20,000,000 Units at a price of $10.00 per Unit, generating gross
proceeds of $200,000,000. Simultaneously with the closing of the Initial Public Offering, we completed the sale of 5,500,000 Private
Placement Warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $5,500,000.
On
September 19, 2019, in connection with the underwriters’ full exercise of their over-allotment option, we completed the
sale of an additional 3,000,000 Units and the sale of an additional 600,000 Private Placement Warrants, generating total gross
proceeds of $30,600,000.
Following
the Initial Public Offering, the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total
of $230,000,000 was placed in the Trust Account. We incurred $13,260,927 in transaction costs, including $4,600,000 of underwriting
fees, $8,050,000 of deferred underwriting fees and $610,927 of other costs.
As
of March 31, 2021, we had marketable securities held in the Trust Account of $231,913,996 (including $21,197 of
interest income) consisting of U.S. Treasury Bills with a maturity of 180 days or less. Interest income on the balance in the
Trust Account may be used by us to pay taxes. During the three months ended March 31, 2021, we withdrew $303,228 of interest earned
on the Trust Account to pay our franchise and income taxes.
Cash
was $50,052,736 as of March 31, 2021 as a result of an early deposit of $50,000,000 into our operating account by certain private investment
of public entity investors (“PIPE Investors”). In anticipation of a proxy vote to approve the AST Business Combination, certain
PIPE Investors made the deposit in advance of the merger being approved. Although cash in our operating account increased by the early
deposit, we also recorded a corresponding offset to Deposit from investors within liabilities recorded on our balance sheet.
For
the three months ended March 31, 2021, cash used in operating activities was $862,237. Net income of $597,052 was affected by
interest earned on marketable securities held in the Trust Account of $21,197, a $2,028,000 gain on the change in fair value of
the warrant liability, a deferred tax benefit of $9,680 and changes in operating assets and liabilities, which provided $599,588
of cash.
Off-Balance
Sheet Arrangements
We
did not have any off-balance sheet arrangements as of March 31, 2021.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an
agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services to
the Company. We began incurring these fees on September 11, 2019 and will continue to incur these fees monthly until the earlier
of the completion of the Business Combination and the Company’s liquidation.
The
underwriters are entitled to a deferred fee of $0.35 per unit, or $8,050,000 in the aggregate. The deferred fee will become payable
to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject
to the terms of the underwriting agreement.
Critical
Accounting Policies
The
preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical
accounting policies:
Common
Stock Subject to Possible Redemption
We
account for 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. Our common stock features certain redemption rights that are considered to be outside of our control
and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders’ equity section of our condensed balance sheets.
Net
Income Per Share of Common Stock
We
apply the two-class method in calculating earnings per share. Common stock subject to possible redemption which is not currently
redeemable and is not redeemable at fair value, has been excluded from the calculation of basic net income per common share since
such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our 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 our income or losses.
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.
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.
|
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 our condensed financial statements.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise
required under this item.
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management, including our co-principal executive officers and principal financial
officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management conducted an evaluation
of the effectiveness of our internal control over financial reporting as of December 31, 2020 based upon the framework in “Internal
Control – Integrated Framework” (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
On March 1, 2021, we filed our Annual Report on Form 10-K for the year ended December 31, 2020. At that time, our
then principal executive and financial officers had performed an evaluation and concluded that our internal control over financial reporting
was effective as of December 31, 2020. Subsequent to performing that evaluation, our management, including our current principal executive
and financial officers, concluded that we did not maintain effective internal control over financial reporting as of December 31, 2020,
due to a material weakness in our internal control over financial reporting, described below, related to mistakes in our accounting for
warrants issued in connection with the September 2019 initial public offering.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
or detected and corrected on a timely basis.
The
aforementioned material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities,
additional paid-in capital and accumulated deficit for the periods under audit within our Annual Report on Form 10-K for the year
ended December 31, 2020. The mistake in classification was brought to our attention on the date that the SEC issued a Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) dated April
12, 2021 (the “SEC Staff Statement”). The SEC Staff Statement addresses certain accounting and reporting considerations related
to warrants of a kind similar to those we issued at the time of our initial public offering in September 2019.
In
response to this material weakness, we have filed an amended 10-K/A and we have committed significant effort and resources
to the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify
and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions,
we are improving these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the
increasingly complex accounting standards. Specifically, we plan to provide enhanced access to accounting literature and research
materials and consult with third party professionals regarding complex accounting matters. The elements of our remediation plan
can only be accomplished over time, and we cannot guarantee that these initiatives will ultimately have the intended effects.
Changes
in Internal Control over Financial Reporting
There
was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2021 covered by this Quarterly
Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Due solely to the events that led to our restatement of our financial statements, as described above, management identified a material
weakness in internal controls related to the accounting of our warrants. As disclosed above, the Company has committed significant effort
and resources to the remediation and improvement of our internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
From time to time, we may
become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently party
to any material legal proceedings. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense
and settlement costs, diversion of resources and other factors and there can be no assurances that favorable outcomes will be obtained.
Item
1A. Risk Factors.
Factors that could cause our
actual results to differ materially from those in this report include the risk factors described in our Registration Statement on
Form S-1 and supporting financial statements therein filed with the SEC on May 6, 2021. As of the date of this Report, there have
been no material changes to the risk factors disclosed within the Risk Factors section of our Registration Statement on
Form S-1 filed with the SEC.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
In
June 2019, the Sponsor purchased 3,593,750 Founder Shares of the Company for an aggregate price of $25,000. On August 23,
2019, we 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. The foregoing issuance was made pursuant to the exemption from registration contained in Section
4(a)(2) of the Securities Act.
On
September 13, 2019, we completed the Initial Public Offering of 23,000,000 Units, inclusive of 3,000,000 Units sold on September
19, 2019 pursuant to the underwriters exercising their over-allotment option. The Units sold in the Initial Public Offering, including
pursuant to the over-allotment option, were sold at an offering price of $10.00 per unit, generating total gross proceeds of $230,000,000.
BTIG, LLC acted as sole book-running manager of the Initial Public Offering. The securities in the offering were registered under
the Securities Act on a registration statement on Form S-1 (No. 333-233449). The Securities and Exchange Commission declared the
registration statement effective on September 10, 2019.
Simultaneous
with the completion of the Initial Public Offering, we completed the private placement of an aggregate of 5,500,000 Private Placement
Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant, generating total proceeds of $5,500,000. Thereafter,
the Company completed the sale of an additional 600,000 Private Placement Warrants at a price of $1.00 per warrant, generating
total proceeds of $600,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of
the Securities Act.
The
Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that
the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination,
subject to certain limited exceptions.
Of
the gross proceeds received from the Initial Public Offering, including the full exercise of the underwriters’ over-allotment
option, and the Private Placement Warrants, $230,000,000 was placed in the Trust Account.
We
paid a total of $4,600,000 in underwriting discounts and commissions and $610,927 for other costs and expenses related to the
Initial Public Offering. In addition, the underwriters agreed to defer up to $8,050,000 in underwriting discounts and commissions.
For
a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not
Applicable.
Item
5. Other Information.
None.
Item
6. Exhibits
The
following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
AST
SPACEMOBILE, INC.
(formerly
known as New Providence Acquisition Corp.)
|
|
|
|
Date:
May 18, 2021
|
By:
|
/s/
Abel Avellan
|
|
Name:
|
Abel
Avellan
|
|
Title:
|
Chairman
and Chief Executive Officer
|
|
|
Principal
Executive Officer
|
|
|
|
Date:
May 18, 2021
|
By:
|
/s/
Tom Severson
|
|
Name:
|
Tom
Severson
|
|
Title:
|
Chief
Operating Officer and Chief Financial Officer
|
|
|
Principal
Financial Officer
|
EXHIBIT
31.1
CERTIFICATION
OF CHIEF EXECUTIVE OFFICER
PURSUANT
TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Abel Avellan, certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of AST SPACEMOBILE, INC. (formerly known as New Providence Acquisition Corp.);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; and
|
|
b)
|
Design such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
|
Date:
May 18, 2021
|
/s/
Abel Avellan
|
|
Abel
Avellan
|
|
Chairman
and Chief Executive Officer
|
|
Principal
Executive Officer
|
EXHIBIT
31.2
CERTIFICATION
OF CHIEF FINANCIAL OFFICER
PURSUANT
TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Tom Severson, certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of AST SPACEMOBILE, INC. (formerly known as New Providence Acquisition Corp.);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; and
|
|
b)
|
Design
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
|
Date:
May 18, 2021
|
/s/
Tom Severson
|
|
Tom
Severson
|
|
Chief
Operating Officer and Chief Financial Officer
|
|
Principal
Financial Officer
|
EXHIBIT
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of AST SPACEMOBILE, INC. (formerly known as New Providence Acquisition Corp.) (the “Company”)
on Form 10-Q for the quarterly period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”),
I, Abel Avellan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the
Sarbanes-Oxley Act of 2002, that:
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company as of and for the period covered by the Report.
|
Dated:
May 18, 2021
|
/s/
Abel Avellan
|
|
Abel
Avellan
|
|
Chairman
and Chief Executive Officer
|
|
Principal
Executive Officer
|
EXHIBIT
32.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of AST SPACEMOBILE, INC. (formerly known as New Providence Acquisition Corp.) (the “Company”)
on Form 10-Q for the quarterly period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”),
I, Tom Severson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the
Sarbanes-Oxley Act of 2002, that:
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company as of and for the period covered by the Report.
|
Dated:
May 18, 2021
|
/s/
Tom Severson
|
|
Tom
Severson
|
|
Chief
Operating Officer and Chief Financial Officer
|
|
Principal
Financial Officer
|
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