AST SpaceMobile(ASTS) - 2024 Q4 - Annual Report

Financial Risks - The company faces potential default risks due to non-compliance with covenants in its debt instruments, which could adversely affect its financial condition and liquidity[157]. - Servicing debt requires cash that could otherwise fund business plans, and insufficient cash flow may hinder scheduled payments[159]. - If cash flows are inadequate, the company may face liquidity issues, leading to reduced investments or asset disposals[160]. - The company may incur significant expenses related to the Tax Receivable Agreement, which could impact its financial condition[195]. - The Tax Receivable Agreement (TRA) requires the company to pay TRA Holders 85% of tax savings realized from certain tax attributes, which could result in substantial cash payments[197]. - Payments under the TRA will reduce overall cash flow available to the company, and any unpaid amounts will accrue interest until paid[203]. - The company may incur material payments under the TRA that could adversely affect its financial condition[202]. - If the company cannot raise additional capital, it may face going concern qualifications in future financial statements, negatively impacting stock price[209]. Operational Risks - The company relies on third parties for satellite launches, and any failure in this area could delay the operational timeline of the SpaceMobile Service[162]. - Operational problems with satellites could disrupt service quality, affecting customer satisfaction and revenue[167]. - The company’s satellites have a limited lifespan, and in-orbit malfunctions could lead to significant impairment charges[170]. - Cyberattacks pose a significant risk to the company's operations, potentially leading to equipment failures and reputational damage[179]. - The shared use of terrestrial broadband spectrum requires implementation of procedures to avoid harmful interference, which remains to be practically proven[188]. - The company may face challenges in obtaining necessary governmental approvals, which could compromise its ability to generate revenue or conduct business in certain countries[183]. - The inability to provide the SpaceMobile Service in certain markets could impair the company's revenue and growth plans[186]. Regulatory and Compliance Risks - The company is subject to extensive government regulation worldwide, which may increase the cost of providing services and expansion into new markets[182]. - The company expects to provide the SpaceMobile Service in the U.S. and elsewhere on frequencies not regularly allocated for mobile-satellite service, requiring regulatory approval from the FCC[187]. - Regulatory changes could significantly affect the company's business, including potential limitations on service offerings in important jurisdictions[186]. - The company may be subject to financial penalties or enforcement actions if it fails to comply with regulatory requirements related to commercial mobile radio service[189]. Capital and Investment Needs - The company anticipates significant capital needs to develop the SpaceMobile Service, including costs for satellite design, development, and launch[210]. - The company may face substantial dilution from future equity offerings, which could be significant given its capital requirements[208]. - A $550 million financing commitment has been obtained to support the Ligado Transaction, but it is subject to conditions and may not be secured[221]. Corporate Governance and Structure - The multi-class structure of the company's Common Stock concentrates voting power with the CEO, potentially limiting investor influence over important transactions[192]. - Anti-takeover provisions in the company's organizational documents may delay or prevent beneficial changes in control[212]. Transactions and Agreements - The Ligado Transaction involves a binding agreement for long-term access to up to 45 MHz of lower mid-band spectrum in the U.S. and Canada for direct-to-device satellite operations[216]. - The company may face significant dilution as it is required to issue approximately 4.7 million shares of Class A Common Stock and pay$350 million in cash or stock upon consummation of the Ligado Transaction[218]. - The Ligado Transaction is contingent upon regulatory approvals and the approval of the Delaware bankruptcy court overseeing Ligado's restructuring[217]. - The company anticipates that the Ligado Transaction will enhance its technology and space-based network capabilities, integrating low-band and mid-band spectrum[219]. - There are risks associated with the integration of Ligado's assets, including potential disruptions to business operations and technology issues[220]. Financial Position and Market Conditions - The company holds $567.5 million in cash and equivalents as of December 31, 2024, with interest rate risk potentially impacting annual interest income[366]. - The 2034 Convertible Notes, totaling$145 million, were fully outstanding as of December 31, 2024, and were converted into shares of Class A Common Stock in January 2025[367]. - A capital equipment loan of $15 million was secured in August 2023, with a variable interest rate based on the Prime Rate plus 0.75$5.0 million, with $4.5 million outstanding as of December 31, 2024[369]. - The term loan has a fixed interest rate, eliminating financial statement risk from interest rate changes[369]. - Revenue and operating expenses are primarily denominated in U.S. dollars, resulting in minimal foreign currency risk[370]. - Future exposure to foreign currency fluctuations may increase as operations grow[371]. - The company did not enter into any forward foreign currency exchange contracts for the periods presented[372]. - There is a potential for the company to engage in forward foreign currency exchange contracts in the future as exposures become material[372].