CONX (CONX) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents CONX Corp.'s unaudited condensed financial statements, management's discussion, and disclosures on market risk and controls Financial Statements Presents CONX Corp.'s unaudited condensed financial statements as of March 31, 2023, reflecting its SPAC status and non-revenue operations Condensed Balance Sheets Details CONX Corp.'s financial position as of March 31, 2023, showing trust account assets, increased liabilities, and stockholders' deficit Condensed Balance Sheet Data (unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,132,718 | $1,397,296 | | Cash held in trust account | $84,744,289 | $84,243,386 | | Total Assets | $85,958,362 | $85,663,787 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $2,291,934 | $2,136,864 | | Derivative warrant liabilities | $5,436,058 | $4,512,500 | | Total Liabilities | $34,252,992 | $33,174,364 | | Class A common stock subject to possible redemption | $84,744,289 | $84,243,386 | | Total Stockholders' Deficit | ($33,038,919) | ($31,753,963) | Unaudited Condensed Statements of Operations Compares net loss for Q1 2023 to net income for Q1 2022, primarily driven by changes in derivative warrant liabilities Statements of Operations Highlights (unaudited) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Loss from operations | ($277,914) | ($211,260) | | Change in fair value of derivative warrant liabilities | ($923,558) | $12,935,833 | | Net (Loss) Income | ($784,053) | $12,727,972 | | Basic and diluted net (loss) income per common share | ($0.03) | $0.14 | Unaudited Condensed Statements of Cash Flows Summarizes cash flows for Q1 2023, showing net cash used in operations and the impact of an Extension Note Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($264,578) | ($201,364) | | Net cash used in investing activities | ($500,903) | $0 | | Net provided by financing activities | $500,903 | $0 | | Net change in cash | ($264,578) | ($201,364) | | Cash - end of the period | $1,132,718 | $549,005 | Notes to Condensed Financial Statements Provides detailed notes on CONX Corp.'s SPAC formation, business combination deadline extension, trust account redemptions, and going concern uncertainty - The company is a SPAC formed to effect a business combination, focusing on the Technology, Media, and Telecommunications (TMT) industry[17] - The deadline to complete a business combination was extended from November 3, 2022, to June 3, 2023, leading to the redemption of 66,651,616 shares of Class A common stock and removing approximately $669.9 million from the Trust Account[22] - The company is in discussions with DISH Network Corp regarding a potential business combination, but no definitive agreement has been executed[26] - The company's ability to continue as a going concern is in substantial doubt if a business combination is not consummated by the June 3, 2023 deadline[40] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management's analysis of CONX Corp.'s financial condition and operations, focusing on its SPAC status, business combination deadline, and going concern risk - The company is a blank check company with a business purpose to effect a business combination, intending to focus on the TMT industry[107] - The business combination deadline was extended to June 3, 2023, resulting in stockholders redeeming 66,651,616 shares and removing ~$669.9 million from the Trust Account[111] - The Sponsor agreed to provide monthly 'Extension Loans' of $166,968 to be deposited into the Trust Account, with $834,838 advanced as of March 31, 2023[114] - A net loss of $784,053 for Q1 2023 was primarily due to a non-cash charge of $923,558 for the change in fair value of derivative warrant liabilities[122] - The company's ability to continue as a going concern is in doubt as it must complete a business combination by June 3, 2023, or be forced to liquidate[132] Quantitative and Qualitative Disclosures About Market Risk States the company is not subject to material market or interest rate risk, with trust account funds converted to cash - The company is not subject to any material market or interest rate risk[142] - Effective October 12, 2022, all investments in the Trust Account were converted into cash, removing exposure to interest rate risk from government securities[142] Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in accounting for complex financial instruments - Management concluded that disclosure controls and procedures were not effective as of March 31, 2023[144] - A material weakness exists related to the accounting for complex financial instruments, including the classification of warrants and redeemable Class A common stock[146][147] PART II. OTHER INFORMATION Provides other required disclosures including legal proceedings, risk factors, unregistered sales, and a list of exhibits Legal Proceedings Reports no legal proceedings against the company - There are no legal proceedings to report[152] Risk Factors No material changes to previously disclosed risk factors since the last Annual Report - No material changes to risk factors have occurred since the last Annual Report[153] Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities or use of proceeds - None[154] Exhibits Lists exhibits filed with the quarterly report, including a promissory note and officer certifications - Exhibits filed include a Promissory Note dated March 1, 2023, for $250,000 from nXgen Opportunities, LLC, and certifications by the CEO[159]