10-K/APeriod: FY2020

AST SpaceMobile, Inc. Annual Report (Amendment), Year Ended Dec 31, 2020

Filed May 6, 2021For Securities:ASTS

Summary

AST SpaceMobile, Inc., formerly New Providence Acquisition Corp., is filing an amendment to its 2020 10-K to restate its financial statements due to a reclassification of warrants from equity to liabilities. This restatement, prompted by SEC guidance on SPAC warrants, resulted in a $55.7 million increase in accumulated deficit as of December 31, 2020, and impacts previously reported periods. This filing also highlights a material weakness in the company's internal control over financial reporting as of December 31, 2020, related to the accounting for equity instruments, specifically warrants. Consequently, the company concluded that its disclosure controls and procedures were not effective at that date. While the restatement impacts reported financial figures and requires investor reliance solely on the restated information, it did not affect liquidity or cash position, and no revenues or operating expenses were impacted as the changes in warrant fair value were recorded in "other income (expense)."

Financial Highlights

48 data points
Beta

Revenue

$5.97M

49.3% Gross Margin

Net Income

-$24.41M

-409.0% Net Margin

EPS (Diluted)

$-6.13

Total Assets

$99.64M

Cash & Equivalents

$42.78M

Free Cash Flow

-$30.93M

Financial Statements
Beta
Revenue$5.97M
Cost of Revenue$3.02M
Gross Profit$2.94M
R&D Expenses$1.01M
Operating Expenses$27.30M
Operating Income-$1.12M
Net Income-$24.41M
EPS (Basic)$-6.13
Shares Outstanding (Basic)8.60M

Key Highlights

  • 1Restatement of Financial Statements: AST SpaceMobile has restated its financial statements for affected periods primarily due to the reclassification of warrants from equity to liabilities, as required by new SEC guidance for SPACs.
  • 2Material Weakness in Internal Controls: A material weakness was identified in the company's internal control over financial reporting as of December 31, 2020, related to accounting for equity instruments (warrants).
  • 3Disclosure Controls Ineffectiveness: As a result of the material weakness, the company concluded that its disclosure controls and procedures were not effective as of December 31, 2020.
  • 4Impact on Accumulated Deficit: The restatement resulted in a $55,689,024 increase in the company's accumulated deficit as of December 31, 2020, due to accounting for warrants as liabilities.
  • 5No Impact on Cash or Operations: The restatement and the change in accounting for warrants did not impact the company's liquidity, cash position, revenues, operating expenses, or operating loss.
  • 6Reliance on Restated Filings: Investors should rely only on the financial information and disclosures within this amended report and future filings, and not on previously issued reports for the affected periods.
  • 7SPAC Structure and Business Combination: The company is a blank check company formed for a business combination, with plans to proceed with an "Up-C" structure merger with AST & Science, LLC.

Frequently Asked Questions

AST SpaceMobile has restated its financial statements due to a change in accounting for its issued warrants. Following the SEC's Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACs), the company determined that its warrants should be accounted for as liabilities measured at fair value, rather than as equity. This change required a restatement of previously issued financial statements to reflect these warrant liabilities and their changes in fair value in earnings.

The primary financial impact of the restatement is a $55,689,024 increase in AST SpaceMobile's accumulated deficit as of December 31, 2020. While the changes in the fair value of warrant liabilities are recognized in the statement of operations (as other income/expense), they did not affect the company's reported revenues, operating expenses, or operating loss. Importantly, the restatement did not impact the company's liquidity or cash position.

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 annual or interim financial statements will not be prevented or detected and corrected on a timely basis. AST SpaceMobile identified a material weakness related to the accounting for its warrants. This signifies that the company's internal controls were not sufficient to prevent or detect errors in the financial reporting of warrant-related items, leading to the restatement. As a result, management also concluded that disclosure controls and procedures were not effective as of December 31, 2020.

Investors should no longer rely on previously issued financial reports, press releases, corporate presentations, or similar communications related to the affected periods (as defined in the filing). They should instead rely solely on the financial information and disclosures provided in this amended Annual Report (Form 10-K/A) and in future SEC filings.