Good afternoon, everyone and welcome to NextNav's First Quarter 2023 Earnings Conference Call. Participating on today's call are Gary Parsons, NextNav's Chairman; Ganesh Pattabiraman; NextNav's Co-Founder and CEO; and Chris Gates, NextNav's Chief Financial Officer. Before we begin, please note that during today's presentation, the company may make forward-looking statements either in our prepared remarks or in the associated question-and-answer session. These statements, which involve risks and uncertainties relate to analysis and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to NextNav's future prospects, developments and business strategies. In particular, such forward-looking statements include statements about NextNav's position to drive growth in its 3D geolocation businesses and expansion of its next-generation GPS platform, the business plans, objectives, expectations and intentions of NexNav. NextNav's partnerships and the potential success thereof in NextNav estimated and future business strategies, competitive position, industry environment and potential growth opportunities. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors many of which are outside NextNav's control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks, uncertainties, assumptions and other important factors include, but are not limited to, the ability of NextNav to continue to gain traction in key markets and with notable platforms and partners both within the US and internationally. The ability of NextNav to grow and manage growth profitably, maintain relationships with partners, customers and suppliers including with respect to NextNav Pinnacle 911 solution and its TerraPoiNT network, and the ability to retain its management and key employees, the ability to main balance sheet flexibility and generate and effectively deployed capital in line with its business strategies, the possibility that NextNav may be adversely affected by economic business and/or competitive factors including the impact of the ongoing COVID-19 coronavirus pandemic, other risks and uncertainties indicated from time to time in documents filed with the Securities and Exchange Commission by NextNav. New risks and uncertainties arise from time to time and it is impossible for us to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements which speak only as the date made. And NextNav undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information future events or otherwise. Risk factors that may impact our performance are identified in our most recent SEC filings. Following our prepared remarks, the company will host an operator-led question-and-answer session. In addition, at the conclusion of today's call, a replay of our discussion will be posted to the company's Investor Relations website. With that, I'll turn the call over to NextNav's Chairman, Gary Parsons. Please go ahead.

Thank you, operator. Good afternoon everyone and welcome to NextNav's First Quarter 2023 Earnings Call. And as the operator said joining me today is NextNav's CEO, Ganesh Pattabiraman; and NextNav's CFO, Chris Gates. 2023 is really off to a solid start. Having established a strong operational foundation and expanded our product and technology capabilities in 2022, we are continuing to execute against our three strategic priorities. As a reminder, those priorities are: first being an industry leader and resilient position navigation and timing or PNT. Secondly, leveraging our recent Nestwave acquisition to dramatically reduce our future capital needs and add significant capabilities to our spectrum assets. And then finally expanding our global reach. To begin however, I'd like to touch on our newly announced $50 million debt financing which includes additional levers for potential expansion of the notes up to $80 million. In short, we're thrilled to have closed this transaction and see this both as a significant milestone for the business and the strong marketplace validation of the significant underlying value of our asset base, including our intellectual property portfolio, our nationwide spectrum assets and our deployed network. Now Chris will get into some of the specifics. But in my view the new financing provides us with multiple years of funding with modest equity dilution. As you'll hear from Ganesh, we continue to see growing customer and governmental traction in our 3D location and our GPS resiliency services, but even without material revenue increases. Given our ongoing management and refining of our expenses this financing provides multiple years of funding. It's also important to consider the successful financing in concert with several other significant accomplishments over the past several months, which are designed to unlock additional value and strengthen our long-term fundamentals of the business. You'll remember starting in…

Thank you, Gary and good afternoon everyone. It's been a busy quarter for the team and we've had several notable achievements as Gary highlighted. We closed the debt financing that Chris will get into in more detail, secured approval from the FCC on our build-out requirements for a vast majority of the major markets and continue to make progress on our resilient P&T activities globally. The debt financing signals significant confidence from the investment community in our portfolio of assets. It also provides us with multiple years of funding to advance our strategic priorities and efficiently maximize the full value of our asset-rich platform for shareholders and customers. We were also very pleased with the many recent FCC approvals regarding our spectrum and build-out milestones. As you may be aware the FCC requires spectrum holders to demonstrate its ability to meet construction milestones in one of two ways either using population coverage or using substantial service. Consistent with the latest SEC order on 911, we had planned our initial service to cover multistory structures around the country and we petitioned the FCC to adopt the same model for our build-out requirements. This approach really allows us to allocate capital efficiently and provide our service to the areas with the highest need first. We were therefore very pleased to see the FCC's concurrence on the approach in the order that they issued on March 29. The SEC approved 78 of our licenses which represents about 256 cellular market areas in major markets around the country like New York, L.A., San Francisco and Chicago. The approvals are obviously a significant milestone for our business marking the final step in meeting our spectrum license obligations in these markets. Turning now to our Pinnacle technology. We continue to expand our footprint in the public…

Thanks Ganesh, and good afternoon, everyone. Before I dive into the first quarter's results, I'd like to provide more detail on our recently announced debt financing. On May 9, we closed on $50 million of senior secured notes due on December one 2026, a total term of approximately 3.5 years in a private placement. The notes bear interest at a 10% rate payable semiannually and importantly from a cash point of view we can elect to pay 50% of any accrued interest in shares of our common stock. For the next 30 days the noteholders have the option to acquire up to $20 million of additional senior secured notes and we have the further option to sell $10 million to $15 million of carried past-due notes to existing or new parties in the future depending on the exercise of the current option up to an aggregate total of $80 million. The notes are redeemable at 101% of the principal value on or after the first anniversary of the initial issuance. In conjunction with the sale of the notes, we are also issuing warrants to purchase our common stock with an aggregate strike price of $40, million which will result in approximately 12.5% ownership on a fully diluted basis. The warrants are exercisable for cash and are partially callable beginning in 2025. The warrants will expire on June one 2027. As Gary and Ganesh both mentioned, this note issuance substantially extends our operational funding and we believe especially in this market is a strong endorsement of the opportunity presented by NextNav's unique asset platform. And now, I'll turn to our first quarter results. First quarter 2023 top line revenue was approximately $830,000 compared to approximately $1.2 million in the first quarter of 2022. The year-over-year decrease was driven by a decline…

The floor is now open for your questions. [Operator Instructions]. Our first question comes from the line of Mike Crawford from B. Riley Securities. Your line is open.

Thank you. It's nice to see you get that cash on your balance sheet one quarter ahead of and we've been modeling. And also thanks for the update in Europe. What can you tell us about progress in Japan with Pinnacle and FairPoint?

Yes. So we continue to make good progress in Japan, as we noted Mike earlier. In Japan, MetCom our partner launched the service in Tokyo and Osaka for the Pinnacle service. They are right now in several commercial – or several of their trials are now converging to a point where we expect commercial activities to begin later this year. And we are also continuing to work with them and the Japanese government, as they've finalized and established their resilient P&T strategy along with folks like Jackso [ph], who are the NASA equivalent organization responsible for a lot of their P&T strategy. And they were especially heartened to see so much of the findings from the European GRC report especially on the spectrum piece that reinforces their views on the desire to establish spectrum capability for P&T services in Japan and that is now still progressing within the MIC as they evaluate the next steps to bear fruits there.

Okay. Thank you. And then can you elaborate on the access data carrying capacity you have, given the spectral efficiency achieved with the way that you're implementing your P&T signal now or intend to be doing so? And then maybe extend beyond that, what would be an appropriate ask to the FCC and/or others and other jurisdictions to maybe enable you to capitalize on the excess spectrum in addition to what you're able to achieve for timing and location.

Thanks very much, Mike. Let me hit some of that. I mean actually the Nestwave acquisition and the integration of the technologies that as I indicated, we actually have deployed some in the Bay Area and are testing there right now to ensure that the accuracy, time to fix all of the other elements that are part of our overall services can be accomplished through this combined technology, which just as a reminder, combines our atomic clocks from our signals and our server system with the other 4G, 5G signals from various carriers and corrects the timing of their signals such that you get an accurate fix and a timing capability off of that. That's what the combined technology does. So as I mentioned before, that in and of itself, dramatically drives down the cost of any deployment for P&T services or physician navigation and is timing. And it also would speed it because you have far fewer beacons that you have to put out there in order to achieve it. So that's the first element of integration and what we get from that. The second element that I think would be useful is, with our experimental license that we have in the Bay Area as well, we'll be developing both 4G but more particularly 5G waveforms that we can test to determine whether or not those meet the characteristics that we believe they will meet as well too. The key to that factor is, if we converted our waveforms, the current waveforms that we have from a GPS-oriented base over to a 5G waveform base then it's not so much a matter of having surplus spectrum that creates. It's the fact that your spectrum and your waveform can support simultaneously both your physician navigation and timing services all of the E911 and backup GPS capabilities that are so attractive to the federal government and the first responders but it simultaneously carries the full data payload that a 5G signal would normally carry as any carrier that deployed 5G would gain out of that. So it's that combined capability that reinforces and actually improves the P&T capability because of the number of beacons that you would have access to combined with the data carrying capability that obviously has a significant commercial value that we think is again, in the public interest, promoting the public interest and the needs of the Public Safety community, while simultaneously, providing a significant commercial value. So relative to what flexibilities, we would request from the FCC? I think obviously, it's just the ability to do both of those simultaneously, with what we would be looking for. So is that responsive to your question?

Yes. Thanks Gary. And then, the last one for me is, I know you are reluctant to provide guidance given the early stage of your revenue opportunities, but to any extent you could opine on what vertical markets might be most promising for near to midterm revenue? And when we might expect to see some upward trajectory and/or magnitude thereof would be quite helpful.

Yeah. Let me let Chris address that or as potentially for what possible consumers or customer potential would be. I mean, I think obviously, it's pretty clear that the various government agencies have a significant interest in these PNT capabilities whether that manifests itself, in initial TerraPoiNT deployment of those trials or eventual purchase of the capabilities versus whether it comes from people bidding on government contracts. And needing to respond to RFPs that require backup GPS or resilient PNT, as part of those procurements, not clear how much of that will come directly from the government versus parties who are bidding to government contracts. But I think those are significant elements. And I think the other element you can initially see from the announcements we're currently making and announcements that we think will continue to roll out quarter-after-quarter this year is an expansion of the E911 capabilities, not only with Verizon as the anchor carrier direct contract, but other ones that we're in the process of putting in place and announcing as we go along there. I guess, Chris, you can decline to provide a projection or I can decline to provide whichever one.

Yeah. You go right ahead, Gary. But I think you captured the key verticals very nicely there.

And obviously, Mike, I think you can see the one other point that, I would make is you'll see from like when you look at quarter-over-quarter sequential going forward versus past year. Last year's first quarter was a bit distorted because of the integration, one-time NRE integration of funding that we got from Verizon to pull things together for their network. The revenue from Verizon this quarter is all recurring revenue. So I think we're migrating more and more towards a fully recurring revenue type of standpoint. And while we'll still have NRE that may come with other carriers or other handset providers that pay us for that portion, I think it will flow more into an ongoing recurring revenue mode at least in the United States. I think it's quite possible in international either deployments or joint ventures that we do that some of that could in fact take the place as it has in MetCom with payments for services or capabilities that we provide to them to integrate or turn up their networks. Is that helpful Mike?

Yes. Thanks very much.

Our final question comes from the line of Jamie Perez from RF Lafferty. Your line is open.

Hi. Good day everybody. Thanks for taking my question. Now that we have the JRC what's the next step? I mean, what's it going to take for you guys to start deploying equipment? I know it's a long-term question but maybe give us some idea of what are the process leading to that point?

Yeah. …

Yeah. Do you want to address that one both? I guess domestically and internationally?

Yeah. So to be clear, Jamie the JRC report was focused primarily on the European Union and the activities that's driven by the European Commission. Obviously, this is very similar to the U.S. Department of Transportation report that came out in 2021 and had a set of recommendations that the U.S. federal government is now trying to follow through the Executive Order 13905 and some of the federal and state initiatives that are already in place. So in the U.S., the framework exists and we see the government starting to move towards the implementation phase. In Europe, the JRC report is the first report that captures sort of the recommendations from a technology perspective. We expect that to then be reflected in the European radio navigation plan, which we expect to be released imminently. That would have the policy recommendations for the European Union on what they want to do in terms from a policy perspective to implement the recommendations. And I think individual governments and countries will obviously pay close attention to the recommendations. And as we noted, the technical report recommended allocation of spectrum for instance and we were one of the technologies that were tested to demonstrate P&T capabilities on an extensive basis. So we think if you follow it has a very good footing and it will follow similar to the framework that's been established in the U.S. And we do see the European governments wanting to act more quickly, just given the nature of the disruption that they're experiencing on a daily basis today in the Russian Ukrainian conflict and much of Eastern Europe with Poland and the Baltic states. And therefore, we do see several activities that the European Union has already started to fast-track or implement, for instance, they launched a lower orbit P&T constellation just recently to start experimenting with the LEO system and seeing the impact of that on TNT capability. Similar to the U.S., the European Commission and the European governments also believe it's a multi-technology approach to solving the P&T resilience problem. And so the terrestrial component is going to be a strong feature in that framework. And so we continue to have a lot of discussions with the European Union folks and some of the policymakers there. And we see once the radio navigation plant comes out the sort of concrete next steps that will lead towards implementation of the recommendations.

Jamie, I'd also note though that because our capability is viewed more as a platform. It's kind of a foundational technology that has to be in place for these things. A lot of the activity may well take place in advance of actual revenues. In other words, whether we're partnering with other companies over there to license the technology, or to jointly develop the technology or jointly bid on the spectrum or apply for the spectrum allocation. I think those are things that could be reasonable next steps that will occur, before you actually have a situation where France or Germany is doing something like the United States has, with this executive order or actually putting out bids on that front. And candidly, I don't want to overlook the Middle East either, because there is a lot of interest there. It's not as formalized as the European Commission's efforts have been with the JRC, but an intense interest from individual countries there.

All right. So, basically, you're working on -- it seems like it's working both the European and American, front. And so, yes, so since you basically license out your technology you put much developed the platform, you're pretty much going to be working with developers. And I mean, the developers are going to pay you a fee? How is the fee structure?

Well, it's a question. And whether it's a JV or I wouldn't necessarily say, a developer, because it quite potentially may be a telecom entity or a carrier, of some sort that may want to put that together. But I think Japan, is a pretty good precedent, for what can take place that way. And yes, we have gotten revenues from them for the purchase of equipment or for licensing fees. We've also in that case gotten the carried interest in the company. So, it is truly a joint venture from that standpoint. So, it's unclear right now, exactly what the form of those relationships will be. I think the part that we feel most comfortable with is, it's very clear whether it's tested in Japan, in Europe, in the United States, we are viewed as the leader in the P&T capabilities. In fact, deriving this desire to allocate spectrum for that purpose, across the EU. So all of those things, establish a pretty good platform for us.

All right. Well, I can't wait next step go global.

No. That's not unreasonable. I mean, that is part of our strategic plan. But I do want to clarify one thing, Jamie is that in the US obviously, we are the service provider that is providing the service. In Japan and in Europe, potentially we may partner with other companies and partners to provide a service capability in that local market, and they would license the technology and the equipment from us similar to what MetCom, has done in Japan. But in the US market, we are working with the governments we're working with the end users of the service who may potentially benefit from the capability, right? So, that's what you see for instance, with our Pinnacle service, where we've got several of the Tier 1 wireless operators leveraging or buying service from us to meet certain of their requirements on geolocation purposes.

All right, sounds great. That’s all the questions I have. Thanks for taking my question.

Thanks Jamie

I would now like to turn the call over to Gary Parsons, for closing remarks.

Well, thank you very much, operator. And once again, thanks to everybody, for calling in and listening to the report. We feel very good about the progress that we've made and the number of substantial let's call it, achievements that we've had over the last number of months that I mentioned and most particularly this financing, let's face it. It's a challenging marketplace out there, particularly when you're looking at debt financing as well too. We did not want to do a highly dilutive equity deal. We knew from past experience, that we would be able to have secured debt because of the asset base that we have. And we feel good about, how it's pulled together, which provides us an awful lot of certainty and stability from a financial standpoint, to allow us to drive forward and achieve the milestones operationally revenue-wise and then strategically, that we think are important going forward. So we look forward to next quarter's call, and thanks very much to everyone for participating.