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AST SpaceMobile, Inc. 8-K Report, Unregistered Securities Sale (May 29, 2024)

Filed May 29, 2024For Securities:ASTS

Summary

AST SpaceMobile, Inc. (ASTS) has announced a significant investment and commercial commitment from Verizon Communications, Inc. totaling $100.0 million. This includes a $35.0 million subordinated convertible note issued to Verizon Ventures LLC, which carries similar terms to previously issued convertible notes from other strategic investors. This $35 million investment is structured as a private placement, exempt from registration requirements under the Securities Act. In addition to the convertible note, Verizon Wireless has entered into a Memorandum of Understanding (MOU) that includes two commercial prepayments totaling $65.0 million. The first $20.0 million is an initial payment, with a subsequent $45.0 million payment contingent on the company securing necessary regulatory approvals for its SpaceMobile Service and finalizing a definitive commercial agreement. These agreements with Verizon represent a crucial step in commercializing AST SpaceMobile's satellite-based cellular network.

Key Highlights

  • 1Verizon invested $35.0 million via a subordinated convertible note, joining other strategic investors like AT&T, Google, and Vodafone.
  • 2Verizon Wireless committed an additional $65.0 million through commercial prepayments under a Memorandum of Understanding (MOU).
  • 3The commercial payments from Verizon are creditable against future service revenue.
  • 4A $45.0 million portion of the commercial payment is contingent on regulatory approvals for AST SpaceMobile's service and a definitive commercial agreement.
  • 5The Verizon convertible note was issued in a private placement transaction exempt from registration requirements.
  • 6Verizon Ventures LLC also became a party to the existing Investor and Registration Rights Agreement.
  • 7This announcement signifies substantial commercial validation and funding from a major telecommunications player.

Frequently Asked Questions

The total value of the investment and commercial prepayment commitment from Verizon is $100.0 million. This is comprised of a $35.0 million convertible note and $65.0 million in commercial prepayments.

The Verizon convertible note has the same terms as the $110.0 million in convertible notes issued in January 2024 to AT&T, Google, and Vodafone, with the exception that it will bear interest only from its date of issuance. It was issued in a private placement transaction exempt from registration requirements.

The second commercial payment of $45.0 million is subject to AST SpaceMobile receiving certain regulatory approvals for its SpaceMobile Service and the subsequent entry into a definitive commercial agreement between the parties.

This $100.0 million commitment from Verizon provides significant funding and commercial validation for AST SpaceMobile's direct-to-device satellite technology. The commercial prepayments signal strong intent for future service utilization upon regulatory clearance and successful launch.