CONX (CONX) - 2020 Q4 - Annual Report

FORM 10-K Filing Information Registrant Information CONX Corp., incorporated in Nevada with IRS Employer Identification No. 85-2728630, is located at 5701 S. Santa Fe Dr., Littleton, CO 80120, with its Class A common stock (CONX), warrants (CONXW), and units (CONXU) registered on The Nasdaq Stock Market LLC - CONX Corp. is incorporated in Nevada with its principal executive offices in Littleton, CO[2][3] Trading Securities on The Nasdaq Stock Market LLC | Class of Security | Trading Symbol(s) | Exchange Registered On | | :---------------- | :---------------- | :--------------------- | | Units | CONXU | The Nasdaq Stock Market LLC | | Class A common stock | CONX | The Nasdaq Stock Market LLC | | Warrants | CONXW | The Nasdaq Stock Market LLC | Filing Status The company filed its annual report for the fiscal year ended December 31, 2020, as a non-accelerated filer and an emerging growth company, not being a well-known seasoned issuer or a shell company - The registrant is a non-accelerated filer and an emerging growth company[5] - The registrant is not a well-known seasoned issuer and is a shell company[4][6] - The registrant has filed all required reports during the past 12 months and has been subject to filing requirements for the past 90 days[4] Outstanding Shares As of March 31, 2021, CONX Corp. had 75,020,000 shares of Class A common stock and 18,750,000 shares of Class B common stock issued and outstanding Outstanding Shares as of March 31, 2021 | Class of Stock | Number of Shares Outstanding | | :------------- | :--------------------------- | | Class A common stock | 75,020,000 | | Class B common stock | 18,750,000 | Table of Contents Cautionary Note Regarding Forward-Looking Statements Nature of Forward-Looking Statements This report contains forward-looking statements regarding the company's future expectations, hopes, beliefs, intentions, or strategies, identifiable by words like 'anticipate,' 'believe,' 'expect,' and 'plan' - Forward-looking statements relate to expectations, hopes, beliefs, intentions, or strategies regarding the future[11] - Key identifying words include 'anticipate,' 'believe,' 'continue,' 'could,' 'estimate,' 'expect,' 'intends,' 'may,' 'might,' 'plan,' 'possible,' 'potential,' 'predict,' 'project,' 'should,' and 'would'[11] Potential Risks and Uncertainties Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from projections, as detailed in the 'Risk Factors' section - Actual results may differ materially due to risks, uncertainties, and assumptions, including those detailed in 'Risk Factors'[12] - Potential risks include: - Ability to select and complete an appropriate target[11] - Expectations around target performance[11] - Success in retaining or recruiting officers, key employees, or directors[11] - Potential conflicts of interest among officers and directors[11] - Ability to obtain additional financing[11] - Impact of the COVID-19 pandemic on consummating a business combination[11] PART I Business Overview CONX Corp. is a blank check company formed to effect a business combination, primarily targeting the technology, media, and telecommunications (TMT) industry, leveraging its management team's extensive experience and network - CONX Corp. is an early-stage blank check company focused on business combinations in the TMT industry, including wireless communications[16][23] - The company leverages: - Management's broad and deep relationship network[17] - Unique industry experiences and proven deal sourcing capabilities[17] - Focus on building industry-leading companies and disrupting incumbents through innovation and strategic acquisitions[17] Introduction CONX Corp. was incorporated on August 26, 2020, as a blank check company to pursue mergers, acquisitions, or similar business combinations, primarily focusing on the technology, media, and telecommunications (TMT) industry - CONX Corp. was incorporated on August 26, 2020, as a blank check company to pursue mergers, acquisitions, or similar business combinations[16] - The company's primary focus for acquisition is the technology, media, and telecommunications (TMT) industry, including wireless communications[16] Competitive Advantages The company's competitive advantages stem from its management's diverse network, extensive experience in execution and structuring, and significant value-add capabilities within the TMT industry - Competitive advantages include: - Diverse Network: Management's career-long track record in TMT provides proprietary investment opportunities[18] - Execution and Structuring Capability: Over 40 years of experience in evaluating, structuring, and executing various transactions[19] - Broad and Extensive Experience: Operating, investing, and financing experience across public and private markets, including multi-billion dollar companies[20] - Significant Value-Add Capability: Deep understanding of the TMT industry and entrepreneurial experience in building and leading companies[21] Industry Opportunity The TMT industry presents a large target market with substantial actionable opportunities, driven by continuous innovation, significant M&A activity, and favorable macroeconomic trends, particularly in wireless assets - Industry opportunities include: - Large Target Market: TMT industry benefits from positive macroeconomic trends and substantial actionable targets, driven by continuous innovation and significant M&A activity[23][24] - Broad Universe of Potential Targets: Flexibility to acquire companies or wireless spectrum assets across various sub-vertical markets and life cycle stages[25] - Wireless Asset Opportunity: Evolution to 5G driven by rising consumer demand for connectivity creates significant growth potential in wireless spectrum assets[26] - Favorable Trends: Total global TMT expenditure growing substantially above inflation, driving global economy through growth, development, and market expansion[27] Business Combination Criteria The company seeks targets with significant value creation potential, recurring revenue growth, strong free cash flow generation, a robust competitive position, and an experienced management team - Business combination criteria include: - Value Creation: Targets with significant potential for future shareholder value through growth and operational improvements, including strong operating/financial results or a path to long-term profitability[30] - Recurring and Embedded Revenue/Earnings Growth: Targets with existing or potential for significant revenue and earnings growth via organic expansion, acquisitions, new markets, or efficiency[31] - Strong Free Cash Flow Generation: Targets with, or potential for, consistent, stable, and recurring free cash flow and predictable revenue streams[32] - Strong Competitive Position: Targets with leading, growing, or niche market positions and demonstrable advantages over competitors[33] - Experienced Management Team: Targets with a complete, experienced management team that can be complemented by the company's executive team and board[34] Initial Business Combination Process The initial business combination must have an aggregate fair market value of at least 80% of the trust account assets, and the company may pursue joint acquisitions with affiliated entities while maintaining a controlling interest in the target - Nasdaq rules require the business combination to have an aggregate fair market value of at least 80% of the trust account assets (excluding deferred underwriting commissions and taxes)[37] - The company may pursue joint acquisitions with affiliated entities like DISH Network Corporation and EchoStar Corporation, potentially involving co-investment or equity issuance[38] - The post-transaction company will own or acquire 50% or more of the target's voting securities or a controlling interest to avoid registration as an investment company[39] Potential Initial Business Combination Targets Acquisition opportunities are sourced from management's extensive network and unaffiliated market participants, though potential conflicts of interest may arise if targets are affiliated with the Sponsor or management - Acquisition opportunities are sourced from management's wide network in the TMT industry and from unaffiliated sources like investment market participants, private equity groups, and investment banks[41][42] - Conflicts of interest may arise if the target is affiliated with the Sponsor or management, or if officers/directors have fiduciary obligations to other entities (e.g., DISH, EchoStar)[43][44][45] Financial Position As of December 31, 2020, the company had $723,750,000 available for a business combination, with flexibility to use various financing methods, though no third-party financing is currently secured - As of December 31, 2020, the company had $723,750,000 available for a business combination (after deferred underwriting fees and assuming no redemptions)[48] - The company has flexibility to use cash, debt, equity, or a combination for the business combination, but has not secured third-party financing[48][49] Lack of Business Diversification Post-business combination, the company's success may depend entirely on a single business, leading to a lack of diversification and increased exposure to negative economic, competitive, and regulatory developments - Post-business combination, success may depend entirely on a single business, leading to lack of diversification and increased exposure to negative economic, competitive, and regulatory developments[51] Limited Ability to Evaluate the Target's Management Team The assessment of a target's management may be incorrect, and there is no assurance that key personnel will remain post-combination, potentially impacting the combined company's performance - Assessment of a target's management may be incorrect, and future management may lack skills for a public company, potentially impacting the combined company's performance[52] - No assurance that key personnel will remain in senior management or advisory positions post-combination, and recruiting additional managers may be difficult[53][54] Stockholders May Not Have the Ability to Approve Our Initial Business Combination The company may conduct redemptions without a stockholder vote, but will seek approval if required by law or Nasdaq rules, or for business reasons, with specific thresholds for certain transaction types - The company may conduct redemptions without a stockholder vote, but will seek approval if required by law or Nasdaq rules, or for business reasons[55] Stockholder Approval Requirements for Transaction Types | Type of Transaction | Stockholder Approval Required | | :------------------ | :---------------------------- | | Purchase of assets | No | | Purchase of stock of target not involving a merger with the company | No | | Merger of target into a subsidiary of the company | No | - Stockholder approval is required if shares issued equal or exceed 20% of outstanding common stock (excluding public offerings)[58] - Approval is also needed if directors, officers, or substantial stockholders have a 5% or greater interest in the target, and common stock issuance could increase outstanding stock or voting power by 5% or more[58] - A change of control resulting from common stock issuance also requires approval[58] Permitted Purchases of Our Securities The Sponsor, initial stockholders, directors, executive officers, advisors, or their affiliates may purchase shares or public warrants to influence a business combination or satisfy closing conditions, potentially affecting market liquidity - Sponsor, initial stockholders, directors, executive officers, advisors, or their affiliates may purchase shares or public warrants in privately negotiated transactions or open market, to vote in favor of a business combination or satisfy closing conditions[59][61] - Such purchases could reduce the public 'float' and beneficial holders, potentially affecting listing or trading on a national exchange[63] Redemption Rights for Public Stockholders upon Completion of Our Initial Business Combination Public stockholders can redeem Class A common stock upon business combination completion at a pro rata price from the trust account, subject to limitations like minimum net tangible asset requirements and proper delivery of shares - Public stockholders can redeem Class A common stock upon business combination completion at a per-share price equal to the pro rata amount in the trust account (approx. $10.00 as of Dec 31, 2020)[65] - Redemption rights are subject to limitations, including a minimum net tangible asset requirement of $5,000,001 and potential minimum cash requirements for the business combination[66][77] - Redemptions can be conducted via a stockholder meeting (requiring majority vote approval) or a tender offer, at the company's discretion[68][71][72] - Stockholders must deliver stock certificates or shares electronically to the transfer agent prior to the specified date for redemption[76][81] Redemption of Public Shares and Liquidation if No Initial Business Combination If no business combination is completed by November 3, 2022, the company will liquidate, redeeming public shares at a pro-rata price from the trust account, and warrants will expire worthless - If no business combination is completed by November 3, 2022, the company will cease operations, redeem public shares at a pro-rata price from the trust account, and liquidate[87] - Warrants will expire worthless if a business combination is not completed by the deadline[87] - The Sponsor has agreed to indemnify the trust account against third-party claims that reduce funds below $10.00 per public share, with certain exceptions[93] Competition The company faces significant competition for acquisition opportunities from various entities, often with greater resources, which may create a competitive disadvantage due to the company's limited financial resources and redemption obligations - The company faces competition from other SPACs, private equity groups, public companies, and operating businesses for acquisition opportunities[106] - Competitors often have greater financial, technical, human, and other resources, and the company's limited financial resources and redemption obligations may create a competitive disadvantage[106] Periodic Reporting and Financial Information The company is subject to Exchange Act reporting obligations, requiring GAAP or IFRS financial statements, and as an 'emerging growth company,' it is exempt from certain requirements, potentially affecting investor attractiveness - The company is subject to Exchange Act reporting obligations, including annual, quarterly, and current reports with the SEC[107] - Target financial statements must be prepared in accordance with GAAP or IFRS and potentially audited by PCAOB standards, which may limit the pool of potential targets[108] - As an 'emerging growth company' under the JOBS Act, the company is exempt from certain reporting requirements, such as auditor attestation for internal controls, which may affect investor attractiveness[112][113] Human Capital Resources The company currently has one executive officer, CEO Jason Kiser, who will dedicate time as needed for business combination activities, with no full-time employees anticipated before the initial business combination - The company currently has one executive officer, CEO Jason Kiser, who is not obligated to devote a specific number of hours but will dedicate time as needed for business combination activities[115] - No full-time employees are anticipated before the completion of the initial business combination[115] Risk Factors The company faces numerous risks, including those related to its blank check status, the business combination process, securities, management conflicts of interest, and potential international operations, with the inability to complete a business combination by the deadline being a key concern - The company is a newly formed entity with no operations or revenues, making its ability to achieve its business objective uncertain[118][131] - Key risks include: - Initial stockholders and management team will vote in favor of a business combination, regardless of public stockholder votes[118] - Public stockholders' redemption rights may make the company unattractive to targets or limit capital structure optimization[119] - Deadline of November 3, 2022, for business combination completion may give targets leverage and limit due diligence time[120] - Limited resources and significant competition may hinder business combination completion, potentially leading to warrant expiration[121] - Insufficient funds outside the trust account may necessitate loans from the Sponsor or management[122] - Changes in D&O insurance market could increase costs and difficulty of business combinations[123] - Post-combination write-downs or charges could negatively affect financial condition and stock price[127] - Potential conflicts of interest due to management's other business commitments and their investment in the company[128] - Risks related to the TMT industry, including product development, security, regulatory compliance, and competition[134] Summary of Risk Factors The company faces risks such as initial stockholders influencing business combination votes, redemption rights making the company unattractive, a looming business combination deadline, limited resources, potential need for Sponsor loans, and the impact of the COVID-19 pandemic - Key risk factors include: - Initial stockholders and management team will vote in favor of a business combination, regardless of public stockholder votes[118] - Public stockholders' ability to redeem shares may make the company unattractive to targets[119] - Deadline for business combination (November 3, 2022) may give targets leverage[120] - Limited resources and significant competition may hinder business combination completion[121] - Insufficient funds outside the trust account may require loans from Sponsor or management[122] - Changes in D&O liability insurance market could increase costs[123] - Post-combination write-downs or charges could negatively affect financial condition[124] - Potential to seek business combinations outside TMT industry or with early-stage/financially unstable companies[125] - Limited ability to assess target management teams[126] - Lack of market for securities could adversely affect liquidity and price[127] - Dependence on key personnel and potential conflicts of interest[128] - COVID-19 outbreak may adversely affect business combination search and target operations[130][131][132][133][134] Risks Related to Business Combination Search and Consummation Risks include stockholders having limited voting power, redemption rights deterring targets, a strict deadline for business combination completion, potential liquidation, and various financial and operational challenges post-combination - Stockholders may not have a vote on the business combination, and even if they do, founder shares will influence the outcome[135][136] - Redemption rights may make the company unattractive to targets or limit capital structure optimization[137][138] - The November 3, 2022 deadline for completing a business combination may give targets leverage and limit due diligence[140][141] - Failure to complete a business combination by the deadline will result in liquidation and warrants expiring worthless[142][143] - Sponsor and affiliates may purchase shares to influence votes or meet closing conditions, potentially reducing public float[144][145] - Failure to receive notice or comply with redemption procedures may prevent stockholders from redeeming shares[147][148] - Stockholders have no rights to trust account funds except under limited circumstances (redemption/liquidation)[149][150] - Holding over 15% of Class A common stock may limit redemption rights for 'Excess Shares'[151][152] - Limited resources and significant competition may make business combination difficult[154][155] - Insufficient funds outside the trust account may require loans from Sponsor or management[156][157] - Changes in D&O liability insurance could increase costs and difficulty of business combinations[158][159] - Post-combination write-downs or charges could negatively affect financial condition[161][162] - Third-party claims against the company could reduce per-share redemption amount[163][164] - May pursue business combinations outside the TMT industry, where management's expertise may not apply[165][166] - May acquire early-stage or financially unstable businesses, leading to volatile revenues or difficulty retaining personnel[168][169] - Not required to obtain an independent fairness opinion unless combining with an affiliated entity or board cannot determine fair value[170][171] - Underwriter's financial incentives tied to business combination completion may create conflicts of interest[172][173] - Requirement to furnish target financial statements may limit the pool of potential targets[175][176] - Sarbanes-Oxley Act compliance obligations may increase time and costs for business combination[177][178] - Limited ability to assess target management, potentially leading to negative impacts on post-combination business[179][180] - Incurring substantial debt for business combination may adversely affect leverage and financial condition[181][183] - Sole dependence on a single business post-combination due to limited diversification[184][185] - Attempting multiple simultaneous business combinations may increase costs and risks[186][187] - Acquiring private companies with limited information may result in less profitable outcomes[189][190] - Absence of a specified maximum redemption threshold may allow completion of business combinations not supported by a majority of stockholders[191][192] - Charter amendments may be sought to facilitate business combinations that stockholders may not support[193][194] - Lower amendment threshold (65% of common stock) for pre-business combination activity provisions[195][196] - Inability to obtain additional financing could compel restructuring or abandonment of a business combination[197][198] - Management team may not maintain control of a target after initial business combination[199][200] - Uncertainty of target operations due to broad search criteria, including wireless spectrum assets[202][203][204][205][207][208][209][210][211][212][213](index=213&type=chunk][215][216][217][218][219][220](index=220&type=chunk][222][223][224][225][226](index=226&type=chunk][228][229][230][231] Risks Related to Securities Risks include potential Nasdaq delisting, being deemed an investment company, unregistered Class A common stock upon warrant exercise, dilution from additional stock issuance, and adverse warrant amendments - Nasdaq may delist securities, limiting transactions and subjecting the company to additional trading restrictions[233][234] - Being deemed an investment company under the Investment Company Act could impose burdensome compliance requirements and restrict activities[235][236] - Class A common stock issuable upon warrant exercise is not registered, potentially precluding cash exercise and causing warrants to expire worthless[237][239] - Grant of registration rights to initial stockholders and private placement warrant holders may make business combination more difficult and adversely affect stock price[240][241] - Issuance of additional Class A common stock or preferred stock could dilute existing stockholders' interests and present other risks[242][243] - Warrant terms may be amended adversely to public warrant holders with 50% approval[245][246] - Unexpired warrants may be redeemed prior to exercise at a disadvantageous time, making them worthless[247][248] - Warrants may adversely affect the market price of Class A common stock and make business combination more difficult[249][251] - Units containing one-fourth of one warrant may be worth less than units of other SPACs[252][253](index=253&type=chunk] - A warrant agreement provision may make it more difficult to consummate an initial business combination if certain equity issuances occur below a specified price[254][255] - A sustained market for securities may not develop, affecting liquidity and price[256][258] - Holders of Class A common stock are not entitled to vote on director appointments prior to initial business combination[259][260] - The company may be considered a 'controlled company' by Nasdaq, potentially qualifying for corporate governance exemptions[261][262] - Initial stockholders receive additional Class A common stock if certain shares are issued to consummate a business combination, differing from some other SPACs[264][265] - Warrants may become exercisable for a security other than Class A common stock, with unknown information at the time[266][267][268][269](index=269&type=chunk][271][272][273][274][275][276][277](index=277&type=chunk][279][280] Risks Related to Sponsor and Management Team Risks include potential waste of resources on uncompleted business combinations, dependence on key personnel, conflicts of interest due to other business affiliations, and the influence of initial stockholders - Independent directors may not enforce Sponsor's indemnification obligations, reducing funds for public stockholders[281][282] - Resources may be wasted on uncompleted business combinations, adversely affecting subsequent attempts[283][284] - Dependence on executive officers and directors, whose loss could adversely affect operations[286][287] - Ability to effect business combination depends on key personnel, some of whom may join post-combination[288][289] - Key personnel may negotiate employment/consulting agreements with targets, creating conflicts of interest[290][291] - Officers and directors of an acquisition candidate may resign, negatively impacting post-combination business[292][293] - Executive officers and directors allocate time to other businesses, causing conflicts of interest[295][296] - Officers and directors have fiduciary/contractual obligations to other entities (e.g., DISH, EchoStar), leading to conflicts in presenting business opportunities[297][298] - Executive officers, directors, security holders, and affiliates may have competitive pecuniary interests[299][300] - Potential conflicts of interest if engaging in business combinations with targets affiliated with Sponsor or management[301][303] - Sponsor, executive officers, and directors will lose their investment if no business combination is completed, creating a conflict of interest[304][305] - Initial stockholders control a substantial interest, influencing stockholder votes[306][307] - Public company requirements may strain resources and divert management's attention[309] Risks Related to Foreign Business Operations Acquiring a target outside the U.S. introduces additional burdens and risks, including cross-border transaction complexities, foreign exchange rate fluctuations, and diverse regulatory and economic challenges - Acquiring a target outside the U.S. introduces additional burdens and risks, including cross-border transaction complexities and foreign exchange rate fluctuations[310][311][312] - Risks include: - Difficulties in managing cross-border operations[313] - Rules and regulations regarding currency redemption and corporate withholding taxes[313] - Laws governing future business combinations and exchange listing requirements[313] - Tariffs, trade barriers, and customs/import-export regulations[313] - Local economic policies, market conditions, and unexpected regulatory changes[313] - Challenges in managing international staff, longer payment cycles, and tax issues[315] - Currency fluctuations, exchange controls, and inflation rates[315] - Difficulties in collecting accounts receivable, cultural/language differences, and employment regulations[315] - Underdeveloped legal/regulatory systems, corruption, social unrest, and political instability[315] General Risk Factors As a blank check company with no operating history, the company faces general risks including potential liability from bankruptcy filings, regulatory changes, the impact of COVID-19, and cyber incidents - As a blank check company with no operating history or revenues, there is no basis to evaluate its ability to achieve its business objective[317][318] - General risk factors include: - Bankruptcy filings could lead to recovery of distributed proceeds from stockholders and potential punitive damages against directors[319][320](index=320&type=chunk] - Creditor claims in bankruptcy could have priority over stockholders, reducing per-share liquidation amounts[322][323] - Changes in laws or regulations, or non-compliance, may adversely affect business and ability to complete a business combination[324][325] - Stockholders may be liable for third-party claims up to the extent of distributions received upon redemption[326][327] - COVID-19 outbreak may materially adversely affect business combination search and target operations[328][330] - Past performance of management team or affiliates is not indicative of future performance[331][332] - As an emerging growth company, reliance on disclosure exemptions may make securities less attractive and comparisons difficult[333][334] - Provisions in articles of incorporation and Nevada law may inhibit takeovers and entrench management[335][336](index=336&type=chunk] - Cyber incidents or attacks could result in information theft, data corruption, operational disruption, and financial loss[338][339](index=339&type=chunk] - Provisions in articles of incorporation and Nevada law may discourage lawsuits against directors and officers[340][341](index=341&type=chunk] - Certain agreements related to the initial public offering may be amended without stockholder approval[343][344](index=344&type=chunk] - Risks related to businesses in the TMT industry, including product development, security, regulatory compliance, and competition[345][346][347][348](index=348&type=chunk][350][351][352][353][354] Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[355] Properties The company does not own any material real estate or physical properties, with its principal executive offices provided by its founder at no cost and considered adequate - The company does not own any real estate or other physical properties materially important to its operation[356] - Principal executive offices are provided by the founder at no compensation[356] Legal Proceedings To the best of management's knowledge, there is no litigation currently pending against the company, its officers, or directors - No litigation is currently pending against the company, its officers, or directors[357] Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable[358] PART II Market for Common Equity and Stockholder Matters The company's units, Class A common stock, and warrants are traded on the Nasdaq Capital Market, with specific numbers of record holders as of March 15, 2021, and no equity compensation plans or unregistered sales - Units, Class A common stock, and warrants are traded on the Nasdaq Capital Market under symbols CONXU, CONX, and CONXW, respectively[361] Holders of Record as of March 15, 2021 | Security Type | Number of Holders of Record | | :------------ | :-------------------------- | | Units | 1 | | Class A common stock | 3 | | Warrants | 2 | | Class B common stock | 1 | - No securities were authorized under equity compensation plans, no unregistered securities were sold, and no issuer purchases of equity securities were made[363][364][365] Selected Financial Data This item is not applicable to the company - Selected Financial Data is not applicable[366] Management's Discussion and Analysis CONX Corp. is an early-stage blank check company with no operating revenues, focused on identifying a target in the TMT industry for a business combination, having completed its IPO in November 2020 and incurred a net loss of $(158,161) - CONX Corp. is an early-stage blank check company with no operating revenues, focused on a business combination in the TMT industry[368][374] - The company consummated its IPO on November 3, 2020, raising $750 million, with $750 million placed in a Trust Account and $1.7 million for working capital[370][371] Financial Performance (August 26, 2020 - December 31, 2020) | Metric | Amount | | :----- | :----- | | Net Loss | $(158,161) | Overview CONX Corp., a Nevada-incorporated blank check company formed on August 26, 2020, completed its IPO on November 3, 2020, raising $750.0 million for a Trust Account and $1.7 million for working capital, with a deadline of November 3, 2022, to complete a business combination - CONX Corp. is a Nevada-incorporated blank check company (August 26, 2020) aiming for a business combination, primarily in the TMT industry[368] - The Initial Public Offering (IPO) on November 3, 2020, generated $750.0 million gross proceeds, with $750.0 million placed in a Trust Account and $1.7 million cash outside for working capital[370][371] - The company must complete a business combination by November 3, 2022, or liquidate, redeeming public shares[373] Results of Operations The company has generated no operating revenues to date, with activities focused on formation and IPO preparation, resulting in a net loss of $(158,161) for the period from inception through December 31, 2020 - No operating revenues generated to date; activities focused on formation and IPO preparation, then identifying a target[374] Statement of Operations Summary (August 26, 2020 - December 31, 2020) | Metric | Amount | | :----- | :----- | | General and administrative expenses | $162,382 | | Loss from operations | $(162,382) | | Interest income on securities held in Trust Account | $5,343 | | Loss before income tax expense | $(157,039) | | Income tax expense | $1,122 | | Net loss | $(158,161) | Liquidity and Capital Resources The company's initial liquidity came from a $25,000 founder investment and a promissory note, with the IPO and Private Placement generating $750.0 million for the Trust Account and $1.7 million for working capital, and $751,217,180 in the Trust Account as of December 31, 2020 - Initial liquidity was from a $25,000 founder investment and a promissory note from Charles W. Ergen, which was repaid[376] - IPO and Private Placement generated $750.0 million for the Trust Account and $1.7 million cash outside for working capital, after $42.3 million in transaction costs[377][379] Cash Flow from Operating Activities (August 26, 2020 - December 31, 2020) | Metric | Amount | | :----- | :----- | | Net cash used in operating activities | $(115,223) | - As of December 31, 2020, cash and marketable securities in the Trust Account totaled $751,217,180[381] - Funds outside the Trust Account are used for identifying and evaluating targets, due diligence, and transaction costs; Sponsor or affiliates may provide working capital loans, convertible into warrants[383][384] Contractual Obligations The company has no long-term debt or lease obligations, but holders of Founder Shares, Private Placement Warrants, Independent Director Shares, and Working Capital Loan warrants are entitled to registration rights, and underwriters are due $26.3 million in deferred commissions - The company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[386] - Holders of Founder Shares, Private Placement Warrants, Independent Director Shares, and Working Capital Loan warrants are entitled to registration rights[388] - Underwriters received $15 million cash and are due $26.3 million in deferred underwriting commissions upon business combination completion[389] Critical Accounting Policies Management has not identified any critical accounting policies - Management has not identified any critical accounting policies[390] Recent Accounting Standards Management believes no recently issued, but not yet effective, accounting standards would materially affect financial statements if currently adopted - Management believes no recently issued, but not yet effective, accounting standards would materially affect financial statements if currently adopted[391] Off-Balance Sheet Arrangements As of December 31, 2020, the company had no off-balance sheet arrangements - As of December 31, 2020, the company had no off-balance sheet arrangements[392] JOBS Act The company qualifies as an 'emerging growth company' under the JOBS Act and elects to delay adoption of new or revised accounting standards, potentially affecting comparability with other public companies - The company qualifies as an 'emerging growth company' under the JOBS Act and elects to delay adoption of new or revised accounting standards, potentially affecting comparability with other public companies[393][394] Quantitative and Qualitative Disclosures about Market Risk The company's funds in the Trust Account are invested in short-term U.S. government securities or money market funds, resulting in no material exposure to interest rate risk, and the company has not engaged in hedging activities - Net proceeds in the Trust Account are invested in short-term U.S. government securities or money market funds[396] - Due to the short-term nature of investments, there is no material exposure to interest rate risk[396] - The company has not engaged in hedging activities[397] Financial Statements and Supplementary Data The audited financial statements and notes are provided starting on page F-1 of the report - Financial statements and notes are included starting on page F-1[398] Changes in and Disagreements with Accountants There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[399] Controls and Procedures As of December 31, 2020, the company's disclosure controls and procedures were evaluated as effective, with no material changes in internal control over financial reporting during the most recent fiscal quarter - Disclosure controls and procedures were effective as of December 31, 2020[400] - Report does not include management's assessment or auditor attestation on internal control over financial reporting due to transition period for newly public companies[402] - No material changes in internal control over financial reporting during the most recent fiscal quarter[403] Other Information There is no other information to report under this item - No other information to report[404] PART III Directors, Executive Officers and Corporate Governance The company's leadership includes Chairman Charles W. Ergen and CEO Jason Kiser, with a staggered board of independent directors, and policies in place to address potential conflicts of interest arising from officers' and directors' other business affiliations Officers and Directors | Name | Age | Position | | :--- | :-- | :------- | | Charles W. Ergen | 68 | Chairman | | Jason Kiser | 56 | Chief Executive Officer, Director | | Gerald Gorman | 65 | Director | | Adrian Steckel | 53 | Director | - The board of directors is divided into three classes with staggered terms[412] - Gerald Gorman and Adrian Steckel are independent directors[415] - Executive officers and directors have not received cash compensation but hold founder shares and independent director shares, and are reimbursed for out-of-pocket expenses[416] - The company has an audit committee (chaired by Mr. Gorman) and a compensation committee (chaired by Mr. Gorman)[420][421][425] - Conflicts of interest may arise due to officers' and directors' fiduciary/contractual obligations to other entities (e.g., DISH, EchoStar), but the company's articles of incorporation address the corporate opportunity doctrine[433] Officers and Directors The company's leadership team includes Chairman Charles W. Ergen and CEO Jason Kiser, alongside directors Gerald Gorman and Adrian Steckel, with key members holding positions at affiliated entities like DISH and EchoStar Officers and Directors | Name | Age | Position | | :--- | :-- | :------- | | Charles W. Ergen | 68 | Chairman | | Jason Kiser | 56 | Chief Executive Officer, Director | | Gerald Gorman | 65 | Director | | Adrian Steckel | 53 | Director | - Charles W. Ergen is the founder and Executive Chairman of DISH and EchoStar[407] - Jason Kiser is the CEO and Treasurer of DISH[407][408] - Gerald Gorman is CEO of World Media Group, LLC, with extensive experience in technology and investment banking[409] - Adrian Steckel is a technology executive with experience in mobile carriers and satellite communications[410] Number and Terms of Office The board of directors is divided into three classes with staggered three-year terms, and prior to a business combination, vacancies can be filled by founder share holders, who can also remove directors - The board of directors is divided into three classes with staggered three-year terms[412] - Prior to a business combination, vacancies can be filled by founder share holders, and directors can be removed by two-thirds of founder share voting power[413] - The Sponsor can nominate three individuals to the board after a business combination[414] Director Independence Nasdaq listing standards require a majority of independent directors within one year of IPO, with Mr. Gorman and Mr. Steckel currently deemed independent - Nasdaq listing standards require a majority of independent directors within one year of IPO[415] - Mr. Gorman and Mr. Steckel are deemed independent[415] Executive Officer and Director Compensation No cash compensation has been paid to executive officers or directors to date, but they hold founder shares and independent director shares, and are reimbursed for out-of-pocket expenses - No cash compensation paid to executive officers or directors for services rendered to date[416] - Compensation includes: - Founder shares were purchased by Charles W. Ergen and transferred to Jason Kiser and the Sponsor[416] - Independent Director Shares were granted to Gerald Gorman (10,000 shares on Oct 23, 2020) and Adrian Steckel (10,000 shares on Jan 27, 2021)[417] - Sponsor, executive officers, and directors are reimbursed for out-of-pocket expenses, reviewed quarterly by the audit committee[417] - No finder's or consulting fees will be paid prior to business combination completion[417] - Post-combination, founder may receive consulting/management fees, determined by the combined company's directors[417] Committees of the Board of Directors The board has an Audit Committee and a Compensation Committee, with specific responsibilities for financial oversight, auditor independence, executive compensation, and director nominations - The board has an Audit Committee and a Compensation Committee[420] - Committee details: - Audit Committee: Members are Mr. Gorman (chairman), Mr. Steckel, and Mr. Kiser; Mr. Gorman is an 'audit committee financial expert'; responsibilities include overseeing audits, monitoring auditor independence, and reviewing related party payments[421][422](index=422&type=chunk][424] - Compensation Committee: Members are Mr. Gorman (chairman) and Mr. Kiser; responsibilities include reviewing and approving CEO and executive officer compensation, and implementing incentive plans[425][427](index=427&type=chunk] - Director Nominations: No standing nominating committee; a majority of independent directors may recommend nominees; the board considers various qualifications for directors[429] Compliance with Section 16(a) of the Exchange Act All Section 16(a) reports for executive officers, directors, and greater than 10% beneficial owners were filed in a timely manner - All Section 16(a) reports for executive officers, directors, and greater than 10% beneficial owners were filed in a timely manner[431] Conflicts of Interest Officers and directors have fiduciary obligations to other entities, potentially leading to conflicts in presenting business opportunities, though the company's articles of incorporation renounce corporate opportunity expectancy under specific conditions - Officers and directors have fiduciary/contractual obligations to other entities (e.g., DISH, EchoStar), potentially leading to conflicts in presenting business opportunities[433] - The company's articles of incorporation renounce corporate opportunity expectancy, except under specific conditions[433] - Conflicts of interest may arise from: - Executive officers and directors not committing full time to the company, leading to time allocation conflicts[437] - Initial stockholders and independent directors waiving redemption rights for founder/independent director shares, creating a conflict of interest in business combination decisions[438] - Officers and directors negotiating employment/consulting agreements with targets, influencing business combination decisions[439] - The company pursuing affiliated joint acquisitions or transactions with affiliated targets, requiring an independent fairness opinion[439] Limitation on Liability and Indemnification Officers and directors are indemnified to the fullest extent permitted by Nevada law, with liability eliminated except for intentional misconduct, fraud, or knowing violation of law, and they waive rights to Trust Account monies - Officers and directors are indemnified to the fullest extent permitted by Nevada law, and liability is eliminated except for intentional misconduct, fraud, or knowing violation of law[442] - The company has contractual indemnification agreements and may purchase D&O liability insurance[443][444] - Officers and directors waive rights to Trust Account monies, except for public shares they may acquire[444] Availability of Documents The Code of Ethics, audit committee charter, and compensation committee charter are filed as exhibits and available on the SEC website - Code of Ethics, audit committee charter, and compensation committee charter are filed as exhibits and available on the SEC website[447] Executive Compensation Executive officers and directors have not received cash compensation but hold founder shares and independent director shares, are reimbursed for out-of-pocket expenses, and may receive consulting or management fees post-combination - No cash compensation has been paid to executive officers or directors for services rendered[449] - Compensation arrangements include: - Founder shares were acquired by Charles W. Ergen and Jason Kiser, then contributed to the Sponsor[449] - Independent Director Shares were granted to Gerald Gorman (10,000 shares) and Adrian Steckel (10,000 shares)[450] - Sponsor, executive officers, and directors are reimbursed for out-of-pocket expenses, subject to audit committee review[450] - No finder's or consulting fees will be paid by the company prior to the completion of an initial business combination[450] - Post-business combination, the founder may receive consulting or management fees, with amounts disclosed to stockholders[450] - The company does not intend to ensure management team retention post-combination, though employment/consulting arrangements may be negotiated[451] Security Ownership and Related Stockholder Matters As of March 31, 2021, nXgen Opportunities LLC and Charles W. Ergen beneficially own 100% of Class B common stock, while Gerald Gorman and Adrian Steckel each own 10,000 shares of Class A common stock, with other significant beneficial owners of Class A common stock identified Beneficial Ownership as of March 31, 2021 | Name and Address of Beneficial Owners | Class A Number of Shares Beneficially Owned | Class A % of Class | Class B Number of Shares Beneficially Owned | Class B % of Class | | :------------------------------------ | :------------------------------------------ | :----------------- | :------------------------------------------ | :----------------- | | Magnetar Financial LLC | 4,655,000 | 6.21% | | | | HGC Investment Management Inc. | 4,204,999 | 5.61% | | | | Palestra Capital Management LLC | 4,000,000 | 5.33% | | | | nXgen Opportunities LLC | | | 18,750,000 | 100% | | Charles W. Ergen | | | 18,750,000 | 100% | | Jason Kiser | — | | — | | | Gerald Gorman | 10,000 | * | | | | Adrian Steckel | 10,000 | * | | | | All directors and executive officers as a group (four individuals) | 20,000 | * | 18,750,000 | 100% | - Class B common stock (founder shares) automatically converts to Class A common stock on a one-for-one basis at the time of the initial business combination, subject to adjustment[455] - Charles W. Ergen controls the Sponsor and disclaims beneficial ownership over Sponsor's securities beyond his pecuniary interest[457] Certain Relationships and Related Transactions Related party transactions include the founder's purchase and transfer of founder shares, the Sponsor's purchase of private placement warrants, and grants of Independent Director Shares, with potential conflicts of interest arising from officers' and directors' other fiduciary obligations - Related party transactions include: - Founder shares were initially purchased by Charles W. Ergen, transferred to Jason Kiser, and then contributed to the Sponsor[459] - Sponsor purchased 11,333,333 Private Placement Warrants for $1.50 each, totaling $17.0 million[460] - Independent Director Shares (10,000 each) were granted to Gerald Gorman and Adrian Steckel[461] - Officers and directors have fiduciary/contractual obligations to other entities (DISH, EchoStar), potentially leading to conflicts of interest[462][464] - The company uses office space provided by its founder at no compensation[465] - Related parties are reimbursed for out-of-pocket expenses, reviewed quarterly by the audit committee[466][467] - A policy for approval of related party transactions requires audit committee review for transactions exceeding $120,000 or 1% of average total assets[468][469][470] - Nasdaq listing standards require a majority of independent directors, and Mr. Gorman and Mr. Steckel are considered independent[471] Principal Accounting Fees and Services The company paid WithumSmith+Brown, PC $87,035 in audit fees for the period from August 26, 2020, through December 31, 2020, with no other fees paid,