NextNav(NN) - 2025 Q2 - Quarterly Report

Part I. FINANCIAL INFORMATION Financial Statements NextNav reported $2.7 million revenue and a $121.8 million net loss for H1 2025, with assets increasing to $256.7 million and equity shifting to a $47.2 million deficit Note 1: Organization and Business NextNav leads in resilient PNT solutions, evolving its platform with 5G New Radio technologies, delivering services despite recurring losses and negative cash flows - NextNav is a market leader in resilient, next-generation Positioning, Navigation, and Timing (PNT) solutions, designed to complement and overcome the limitations of GPS, evolving its platform to use 5G New Radio (NextGen) technologies[26] - The company continues to deliver services through its Pinnacle (altitude service for E911) and TerraPoiNT (terrestrial 3D PNT network) solutions while pursuing regulatory changes for its Lower 900 MHz spectrum[27] - The company has a history of recurring losses and negative cash flows, with a net loss of $121.8 million for the first six months of 2025, though management believes its current cash, cash equivalents, and marketable securities of $176.1 million are sufficient to fund operations for more than 12 months[28][29] Note 2: Summary of Significant Accounting Policies The unaudited financial statements adhere to U.S. GAAP and SEC interim reporting instructions, with no material changes to accounting policies - The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and SEC instructions for interim reporting, with no material changes to the company's significant accounting policies since the 2024 Form 10-K[31][33] Revenue by Category (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Commercial | $1,016 | $1,100 | $1,948 | $2,141 | | Government contracts | $186 | $5 | $793 | $10 | | Total revenue | $1,202 | $1,105 | $2,741 | $2,151 | Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Cost of goods sold | $156 | $393 | | Research and development | $1,160 | $2,203 | | Selling, general and administrative | $2,334 | $5,378 | | Total | $3,650 | $7,974 | Note 5: Asset Purchase Agreement The company agreed to acquire M-LMS licenses for $2.5 million cash and $7.5 million stock, with a contingent $20 million stock payment upon FCC approval, which was granted - On March 7, 2024, the Company entered into an agreement to acquire certain Multilateration Location and Monitoring Service (M-LMS) licenses from Telesaurus Holdings and Skybridge Spectrum Foundation[73] - Consideration includes $2.5 million in cash (paid in April 2024), $7.5 million in stock (issued in November 2024), and a contingent payment of $20.0 million in stock upon FCC approval of the license assignment[74][75] - On June 20, 2025, the FCC consented to the assignment of 128 M-LMS licenses, and the Company has concluded that it is probable the transaction will close[76][77] Note 7: Fair Value Financial assets and liabilities measured at fair value include money market funds, debt securities, warrants, and a derivative liability, with Level 3 liabilities valued using unobservable inputs - The company's financial assets and liabilities measured at fair value on a recurring basis include money market funds, available-for-sale debt securities, Private Placement Warrants, and a Derivative Liability related to a conversion option[81] - The Private Placement Warrants and the Derivative Liability-Conversion Option are classified as Level 3 liabilities, valued using unobservable inputs such as a Monte Carlo simulation and a binomial lattice model, respectively, with the fair value of the derivative liability being $93.8 million as of June 30, 2025[85][88][89] Note 8: Long term debt, net The company issued $190 million in 5.00% Senior Secured Convertible Notes due 2028, using proceeds to redeem prior notes, resulting in a $14.4 million extinguishment loss - On March 12, 2025, the Company issued $190 million of 5.00% Senior Secured Convertible Notes due 2028 (the "2028 Notes") and 7.8 million related warrants[93] - A portion of the proceeds from the 2028 Notes was used to redeem all of the $70 million of senior secured notes due 2026 (the "2026 Notes"), resulting in a $14.4 million loss on early extinguishment[98][99] - The conversion option embedded in the 2028 Notes was bifurcated as a derivative liability with a fair value of $93.8 million as of June 30, 2025, with the carrying value of the 2028 Notes being $152.5 million[104][105] Note 9: Warrants and Warrant Liability As of June 30, 2025, NextNav had 37,267,199 warrants outstanding, comprising public, private placement, 2026, and 2028 Warrants - As of June 30, 2025, NextNav had 37,267,199 warrants outstanding, comprising public warrants, private placement warrants, 2026 Warrants, and 2028 Warrants[111] Condensed Consolidated Balance Sheets Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $58,866 | $39,330 | | Short term investments | $117,186 | $40,785 | | Total assets | $256,743 | $161,740 | | Long term debt, net | $246,295 | $54,621 | | Total liabilities | $303,958 | $111,619 | | Total stockholders' equity (deficit) | ($47,215) | $50,121 | Condensed Consolidated Statements of Comprehensive Loss (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,202 | $1,105 | $2,741 | $2,151 | | Operating loss | ($17,240) | ($15,332) | ($34,244) | ($31,481) | | Net loss | ($63,195) | ($24,390) | ($121,774) | ($56,000) | | Net loss per share | ($0.48) | ($0.21) | ($0.93) | ($0.47) | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($25,703) | ($19,279) | | Net cash used in investing activities | ($75,498) | ($22,319) | | Net cash provided by financing activities | $120,431 | $22,671 | | Net increase (decrease) in cash | $19,536 | ($18,905) | Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue increased 27.4% to $2.7 million, but net loss widened to $121.8 million due to derivative and debt extinguishment losses, with new $190 million notes boosting liquidity to $176.1 million - The company is focused on evolving its PNT solutions to use 5G New Radio (NextGen) technologies and has petitioned the FCC to reconfigure the Lower 900 MHz band to enable both PNT and 5G broadband services[129][130] Comparison of Results for the Six Months Ended June 30 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,741 | $2,151 | $590 | 27.4% | | Cost of Goods Sold | $4,568 | $5,685 | ($1,117) | (19.6)% | | Research and Development | $8,862 | $8,780 | $82 | 0.9% | | Selling, General and Administrative | $20,753 | $16,554 | $4,199 | 25.4% | | Operating loss | ($34,244) | ($31,481) | ($2,763) | 8.8% | - The significant increase in 'Other expense' to $81.7 million for H1 2025 from $19.9 million in H1 2024 was primarily driven by a loss on the fair value of a derivative liability, a debt extinguishment loss, and expenses related to warrants issued with new debt financing[161] - The company's liquidity was significantly enhanced by the March 2025 private placement of $190 million in 5% Senior Secured Convertible Notes due 2028, with cash, cash equivalents, and marketable securities totaling $176.1 million as of June 30, 2025[162][164] Quantitative and Qualitative Disclosures About Market Risk The company reported no material changes in its market risks from those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the company's market risks from those disclosed in the 2024 Form 10-K[177] Controls and Procedures Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management's evaluation concluded that disclosure controls and procedures were effective as of June 30, 2025[179] - No changes occurred in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[180] Part II. OTHER INFORMATION Legal Proceedings The company states that it is not involved in any legal proceedings that it believes would have a material adverse effect on its business, financial condition, results of operations, or cash flows - The company is not currently involved in any legal matters expected to have a material adverse effect on its business[182] Risk Factors New risk factors include restrictive covenants and potential default events from the 2028 Notes, which could limit operations and accelerate debt, alongside significant dilution risk from outstanding warrants - A new risk factor has been introduced concerning the restrictive covenants in the indenture for the 2028 Notes, which may limit the company's ability to incur debt, make investments, sell assets, and pay dividends[185][186] - The indenture for the 2028 Notes includes several events of default, which, if triggered, could result in the acceleration of the debt and have a material adverse effect on the company's liquidity[187][188] - A significant number of outstanding warrants are exercisable, which could lead to the issuance of additional common stock, resulting in dilution to existing stockholders and potentially depressing the market price of the stock[191][192][193] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of proceeds from the sale of registered equity securities, and no purchases of its equity securities during the fiscal quarter ended June 30, 2025 - There were no unregistered sales of equity securities during the quarter ended June 30, 2025[195] Other Information No officers or directors adopted, amended, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the quarter[200] Exhibits This section lists the exhibits filed as part of the Quarterly Report, including certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002 and Inline XBRL data files