UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 001-39677

CONX CORP.

(Exact name of registrant as specified in its charter)

Nevada		85-2728630
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

5701 S. Santa Fe Dr.

Littleton, CO 80120

(Address of principal executive offices including zip code)

(303) 472-1542

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A common stock and one-fourth of one redeemable warrant	CONXU	The Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per share	CONX	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share	CONXW	The Nasdaq Stock Market LLC

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

As of November 5, 2021, 75,030,000 shares of Class A common stock, par value $0.0001 per share, and 18,750,000 shares of Class B common stock, par value $0.0001 per share, were issued and outstanding.

Table of Contents

CONX CORP.

FORM 10-Q

For the period ended September 30, 2021

INDEX


		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Condensed Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 (audited)	2
	Unaudited Condensed Statement of Operations for each of the periods ended September 30, 2021 and 2020	3
	Unaudited Condensed Statement of Changes in Stockholders’ Equity (Deficit) for each of the periods ended September 30, 2021 and 2020	4
	Unaudited Condensed Statement of Cash Flows for each of the periods ended September 30, 2021 and 2020	5
	Unaudited Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signatures		27

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CONX CORP.

CONDENSED BALANCE SHEETS


	September 30, 2021		December 31,
	(unaudited)		2020
Assets:
Current assets:
Cash	$	866,309	$	1,211,837
Prepaid expenses		22,883		22,333
Other receivable		3,508		3,508
Total current assets		892,700		1,237,678
Investments held in trust account		750,061,652		750,005,343
Total assets		750,954,352		751,243,021
Liabilities and Stockholders’ Equity (Deficit):
Current liabilities:
Accounts payable		1,983		112,500
Accrued expenses		186,000		25,000
Income taxes payable		9,082		1,122
Total current liabilities		197,065		138,622
Deferred legal fees		275,000		275,000
Deferred underwriting fee payable		26,250,000		26,250,000
Derivative warrant liabilities		34,595,832		45,726,666
Total liabilities		61,317,897		72,390,288
Commitments and Contingencies
Class A common stock subject to possible redemption, 75,000,000 and 75,000,000 shares, respectively at $10.00 per share		750,000,000		750,000,000
Stockholders’ Equity (Deficit):
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; none issued and outstanding		—		—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized; 20,000 and 10,000 shares issued and outstanding, respectively		2		1
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 18,750,000 shares issued and outstanding		1,875		1,875
Additional paid-in capital		—		—
Retained earnings (accumulated deficit)		(60,365,422)		(71,149,143)
Total Stockholders’ Equity (Deficit)		(60,363,545)		(71,147,267)
Total Liabilities and Stockholders’ Equity (Deficit)		750,954,352		751,243,021

The accompanying notes are an integral part of the unaudited condensed financial statements.

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CONX Corp.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS


			Period from				Period from
			August 26,				August 26,
	For Three		2020				2020
	Months		(Inception) -		For Nine Months		(Inception) -
	Ended September 30,		September 30,		Ended		September 30,
	2021		2020		September 30, 2021		2020
General and administrative expenses	$	92,765	$	8,525	$	389,537	$	8,525
Loss from operations		(92,765)		(8,525)		(389,537)		(8,525)
Other income
Change in fair value of derivative warrant liabilities		6,016,667		—		11,130,834		—
Interest income on investments held in Trust Account		18,907		—		56,309		—
Total other income		59,428,109		—		10,797,606		—
Income (loss) before income tax expense		5,942,809		(8,525)		10,797,606		(8,525)
Income tax expense		4,420		—		13,885		—
Net income (loss)		5,938,389		(8,525)		10,783,721		(8,525)
Weighted average common shares outstanding, basic and diluted
Class A – Common stock		75,000,000		—		75,000,000		—
Class B – Common stock		18,750,000		18,750,000		18,750,000		18,750,000
Basic and diluted net (loss) income per common share
Class A – Common stock	$	0.06	$	—	$	0.12	$	—
Class B – Common stock	$	0.06	$	—	$	0.12	$	—

The accompanying notes are an integral part of the unaudited condensed financial statements.

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CONX Corp.

UNAUDITED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY ( DEFICIT)


	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
	Common Stock						Additional
	Class A			Class B			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Deficit
Balance—January 1, 2021	10,000	$	1	18,750,000	$	1,875	$	—	$	(71,149,143)	$	(71,147,267)
Issuance of Director Shares	10,000		1	—		—		—		—		1
Net income	—		—	—		—		—		8,671,529		8,671,529
Balance— March 31, 2021	20,000	$	2	18,750,000	$	1,875	$	—	$	(62,477,614)	$	(62,475,737)
Net loss	—		—	—		—		—		(3,826,197)		(3,826,197)
Balance—June 30, 2021	20,000	$	2	18,750,000	$	1,875	$	—	$	(66,303,811)	$	(66,301,934)
Net income	—		—	—		—		—		5,938,389		5,938,389
Balance—September 30, 2021	20,000	$	2	18,750,000	$	1,875	$	—	$	(60,365,422)	$	(60,363,545)


	FOR THE PERIOD FROM AUGUST 26, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020
	Common Stock						Additional
	Class A			Class B			Paid-In		Accumulated		Stockholder’s
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance—August 26, 2020 (inception)	—	$	—	—	$	—	$	—	$	—	$	—
Sale of common stock to Founders at $0.001 per share	—		—	21,562,500		2,156		22,844		—		25,000
Net loss	—		—	—		—		—		(8,525)		(8,525)
Balance—September 30, 2020	—	$	—	21,562,500	$	2,156	$	22,844	$	(8,525)	$	16,475

The accompanying notes are an integral part of the unaudited condensed financial statements.

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CONX Corp.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS


				August 26,
		Nine Months		2020
		Ended		(Inception)-
		September 30,		September 30,
		2021		2020
Cash flows from Operating Activities:
Net income (loss)	$	10,783,721	$	(8,525)
Adjustments to reconcile net income to net cash provided by operating activities:
Interest earned on investments held in Trust Account		(56,309)		—
Change in fair value of derivative warrant liabilities		(11,130,834)		—
Prepaid expenses		(550)		—
Accounts payable		(110,516)		—
Accrued expenses		161,000		8,525
Income tax payable		7,960
Net cash used in operating activities		(345,528)		—
Financing Activities
Proceeds from sale of common stock to founder		—		25,000
Proceeds from promissory note – related party		—		200,000
Deferred offering costs paid		—		(5,000)
Net cash provided by financing activities		—		220,000
Net change in cash		(345,528)		220,000
Cash—beginning of the year	$	1,211,837	$	—
Cash—end of the period	$	866,309	$	220,000
Supplemental Disclosure of Non-cash Financing Activities:

Deferred offering costs included in promissory note – related party	$	—	$	173,000
Deferred offering costs included in accrued expenses	$	—	$	180,000

The accompanying notes are an integral part of the unaudited condensed financial statements.

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CONX Corp.

UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1—Description of Organization, Business Operations and Basis of Presentation

CONX Corp. (the “Company”) was incorporated in Nevada on August 26, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or assets (the “Business Combination”). While the Company may pursue an acquisition opportunity in any industry or geographic region, the Company intends to focus its search on identifying a prospective target that can benefit from its operational expertise in the technology, media and telecommunications (“TMT”) industries, including the wireless communications industry.

As of September 30, 2021, the Company had not commenced operations. All activity for the period from August 26, 2020 (inception) through September 30, 2021 relates to the Company’s initial public offering and subsequent search for a potential Business Combination target. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on marketable investments held in a Trust Account (as defined below) from the net proceeds derived from the Initial Public Offering (as defined below). The Company recognizes changes in the fair value of warrant liability as other income (expense).

The Company’s Sponsor is nXgen Opportunities, LLC, a Colorado limited liability company (the “Sponsor”). The registration statement for the Initial Public Offering was declared effective on October 29, 2020. On November 3, 2020, the Company consummated the Initial Public Offering of 75,000,000 Units (the “Units” and the shares of Class A common stock included in the Units, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $750.0 million (the “Initial Public Offering”), and incurring offering costs of approximately $42.3 million, inclusive of approximately $26.3 million in deferred underwriting commissions (Note 5).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 11,333,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor, each exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $17.0 million (Note 4).

Upon the closing of the Initial Public Offering and the Private Placement, a total of $750.0 million ($10.00 per Unit), consisting of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement, was placed in a trust account (“Trust Account”), located in the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee, and is invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of (i) the completion of a Business Combination or (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

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The Company will provide holders of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Initial Public Offering (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares (as defined below) upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). In accordance with Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Articles of Incorporation (the “Articles of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4), the independent directors have agreed to vote the shares granted to them as compensation (the “Independent Director Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders and independent directors have agreed to waive their redemption rights with respect to their Founder Shares, the Independent Director Shares and Public Shares in connection with the completion of a Business Combination.

The Articles of Incorporation provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor, Messrs. Charles W. Ergen and Jason Kiser (the “initial stockholders”) have agreed not to propose an amendment to the Articles of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination by November 3, 2022 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less amounts released to pay taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject, in each case, to its obligations under Nevada law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

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The initial stockholders and independent directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares and Independent Director Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders or independent directors acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective targets or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Basis of Presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in the unaudited condensed financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s annual report on Form 10-K/A, as filed with the SEC on May 24, 2021. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the period ended December 31, 2021 or for any future periods.

Prior Period Financial Statement Correction of Immaterial Error

During the preparation of the Company’s financial statements as of September 30, 2021, management determined it should revise its previously reported financial statements. The Company determined, at the closing of the Company’s Initial Public Offering, it had improperly valued its shares of Class A common stock subject to possible redemption. The Company previously determined the shares of Class A common stock subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A common stock while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the shares of Class A common stock issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore, management concluded that the redemption value should include all shares of Class A common stock subject to possible redemption, resulting in the shares of Class A common stock subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the shares of Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and shares of Class A common stock.

In connection with the change in presentation for the shares of Class A common stock subject to redemption, the Company also revised its earnings per share calculation to allocate net income (loss) evenly to shares of Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of common stock share pro rata in the income (loss) of the Company.

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There has been no change in the Company’s total assets, liabilities, operating results or cash flows.

The impact of the revision on the Company’s financial statements is reflected in the following table.


	As of December 31, 2020
	As
	Previously
	Reported		Adjustment		As Revised
Balance Sheet
Total assets	$	751,243,021	$	—	$	751,243,021
Liabilities and stockholders’ equity (deficit)
Total current liabilities	$	138,622	$	—	$	138,622
Deferred legal fees		275,000				275,000
Deferred underwriting fee payable		26,250,000		—		26,250,000
Derivative warrant liabilities		45,726,666		—		45,726,666
Total liabilities		72,390,288		—		72,390,288
Class A common stock subject to redemption		673,852,730		76,147,270		750,000,000
Stockholders’ equity (deficit)
Preferred stock, $0.0001 par value		—		—		—
Class A common stock - $0.0001 par value		762		(761)		1
Class B common stock - $0.0001 par value		1,875		—		1,875
Additional paid-in-capital		2,879,871		(2,879,871)		—
Retained earnings (accumulated deficit)		2,117,495		(73,266,638)

SEC Form 10-Q filed by CONX Corp.