Good afternoon, everyone, and welcome to NextNav's Third Quarter 2022 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 will 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 analyses 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 NextNav, NextNav's partnerships, and the potential success thereof NextNav's estimated and future business strategies, competitive position, industry environment, and potential growth opportunities.

These statements are based on current expectations or belief 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 material 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 U.S.

and internationally; the ability of NextNav to grow and manage growth profitably, maintain relationships with partners, customers, and suppliers, including with respect to NextNav's Pinnacle 911 solution and it's TerraPoiNT network, and the ability to retain its management and key employees; the ability to maintain balance sheet flexibility and generate and effectively deploy capital line with its business strategies; the possibility that NextNav may be adversely affected by economic -- other 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 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 forward-looking statements, which speak only as of the date made.

And NextNav undertakes no commitment to update or revise 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 the 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 on 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, and good afternoon, everyone. We're pleased to have all of you with us here today to discuss our third quarter results. And joining me on the call today, as you heard, are NextNav's CEO, Ganesh Pattabiraman; and NextNav's CFO, Chris Gates.

It was another eventful quarter for our business and I'm excited about the new opportunities that are in front of us. Before we dive into the discussion of the quarter specifically, I want to step back to frame how we view our business and how we drive shareholder value. Specifically, we've oriented our efforts around three key strategic priorities.

Those include being the industry leader in resilient PNT; unleashing the full value of our spectrum; and finally, expanding our global reach. Prior to the acquisition of Nestwave, these objectives were longer-term goals that we understood would take significant time and investment to bring to fruition.

Nestwave's synergistic technology, however, significantly accelerates our ability to achieve these goals by improving our underlying spectral efficiency and data-carrying capability, dramatically reducing our future capital and network operating expenses and enabling global 3D positioning, navigation and timing or PNT capabilities even prior to securing dedicated spectrum allocation.

The combination of NextNav's technology and Nestwave's LTE 5G capabilities allows us to intelligently combine signals from existing terrestrial LTE 5G networks with our own highly synchronized TerraPoiNT system. And therefore to deliver near nationwide resilient 3D PNT capabilities along with dramatically lowering TerraPoiNT deployment cost.

Ganesh and Chris will provide more color around the technology synergies and the result in cost savings. We also know that this market for backup to GPS and resilient PNT services is ready.

There continues to be a significant, in fact a very growing government interest both in the United States and internationally around the need for resilient PNT services to address well-known GPS vulnerabilities.

Because Nestwave is based in France, it also helps us to establish a strong foothold in the critical European market and along with our existing presence with MetCom in Japan to scale in additional markets globally.

Notably, with our Pinnacle deployment already now in place in select international markets like Japan and the integration of this new Nestwave technology, we can deliver a 3D PNT service and timing solution that will allow us to move forward internationally even without those initial spectrum allocations we expect.

Ganesh will expand more on that in a moment. And then, finally, the acquisition and technology integration also enables us to drive greater spectral efficiency from our underlying spectrum asset. As a reminder, NextNav owns an 8 megahertz contiguous low band spectrum asset covering 2.5 billion megahertz pops and 93% of the U.S.

population, including almost all urban areas. As Ganesh will discuss by leveraging Nestwave's unique software technology and the LTE 5G wave form compatibility, NextNav can gain significant spectral efficiency and release the underlying spectrum capacity for high speed data oriented services.

As an additional benefit of standard LTE 5G waveform also enables much broader penetration of NextNav's applications and technology across the global handset and device ecosystem. With that, let me turn it over to Ganesh to provide a review of the quarter.

Ganesh?.

Thanks, Gary, and good afternoon, everyone. We're happy to be here to provide an update on the business. As Gary mentioned, we're focused on three key strategic objectives that we believe will accelerate our resilient PNT capabilities and drive long-term shareholder value.

In my remarks today, I would like to expand on what Gary had shared and provide context around our strategy following the acquisition of Nestwave. First, as we've said before, we're committed to being the leader in resilient PNT services. Our technology had proven to be at the cutting edge of advanced PNT solutions as evidenced by the 2021 U.S.

Department of Transportation test results. From day one, we work diligently to bring our technology to market quickly and in a capital efficient manner.

Our Pinnacle service is already deployed in 4,400 cities and towns across the country and select markets internationally, and we continue to build our industry-leading next-gen 3D, GPS equal and terrestrial network TerraPoiNT.

While both of these technologies are significant by adding the unique technological capability that Nestwave brings to us, we have an even more compelling opportunity ahead of us as a combined entity.

As Gary mentioned, the federal government is increasingly energized around finding viable solutions to address GPS interference to protect critical assets and national security.

With this acquisition, we incorporate a unique technology that will allow us to rapidly meet the growing needs for PNT resilience for the government critical infrastructure, public safety, and other sectors.

By combining TerraPoiNT's technology with existing LTE and 5G seller network signals, we create a highly accurate and highly synchronized resilient PNT network, utilizing full TerraPoiNT transmitters only in locations with the greatest need. As a result, we have enormous flexibility in our future deployment.

We believe a full resilient PNT service will now be achievable across the United States at a fraction of the initial CapEx deployment cost, in fact, a reduction of approximately 75% or in excess of $250 million from our prior estimates. This would also include a commensurate reduction in associated network operating cost.

By combining these technologies, some services including basing timing may be achieved even without a separate TerraPoiNT signal thus facilitating early global services initiative ahead of new spectrum allocation. We continue to see the issue of critical GPS interference, not just overseas, but also here in the U.S.

For example, as recently as two weeks ago on October 18 and 19, Dallas-Fort Worth airport experienced GPS jamming impacting air traffic safety and rerouting flights. As I noted, governments in both the U.S. and globally are putting increasingly more time and attention towards finding actionable solutions to address PNT resilience.

Notably in the U.S., we anticipate that Executive Order 13905 will be released in the spring of 2023. After completing interagency review, the order is expected to direct key federal agencies to begin including PNT resilience requirements in their procurements.

As a reminder, the order seeks to require the current users of GPS in certain critical applications, incorporate resilient PNT technologies as the solutions they use thereby acquiring broader usage across many sectors. We believe this would also enable state and local governments to tap into a portion of the infrastructure bill grants for resiliency.

The acquisition also increases the spectrum efficiency of our underlying spectrum asset. As we talked about on our last quarterly call, we're committed to unleashing the full value of this asset.

By deploying TerraPoiNT transmitters only in places that are critical to meet PNT resiliency requirements, more locations become available where the NextNav spectrum could be leveraged for additional use such as private networks.

As we think about optimizing our spectrum moving forward, we intend to utilize our experimental license to evaluate these new configurations, including LTE and 5G waveforms in the coming months to facilitate widespread adoption of a more optimized network.

Use of the LTE 5G waveforms will allow dramatically expand data-carrying capacity in addition to TerraPoiNT's core 3D PNT functionality. Regarding our Pinnacle service, to-date, we see continued traction in signing new partnerships, especially within public safety.

In Q1 of this year, we announced an agreement with one of the nation's largest wireless carriers for E911, and we expect them to make Pinnacle 911 commercially available later in the fourth quarter. With our Pinnacle technology and increased awareness of vertical location, we expect additional carrier handset adoption to follow.

As you may know, there are wide variety of handsets, particularly feature phones, which don't use Android or Apple iOS operating systems as affordable consumer devices including, Kyocera, Sonim, and Alcatel to name just a few.

We're closely working with many of these handset manufacturers to ensure they have our Pinnacle 911 capabilities embedded in their device. One example is our recent agreement with Hot Pepper Mobile to bring our Pinnacle technology to their upcoming feature phone on a Tier 1 carrier's network. The phone is scheduled for release in 2023.

Our partnership with Hot Pepper is yet another step towards bringing Pinnacle highly accurate Z access to your location capabilities to 911 emergency services. Search and rescue and loan worker safety with several of our existing partners moving forward with implementation and are expected to launch their solutions in the first quarter of 2023.

We're also pushing ahead with our Pinnacle services internationally, notably, just yesterday, MetCom celebrated the commercial launch of the Pinnacle system on National Firefighter Day in Tokyo, Japan. This partnership is our first large scale commercial deployment of NextNav's Pinnacle technology outside of the U.S.

and leverages MetCom and NextNav's deep history and management expertise in the globalization of wireless industry standards and technology. It's an exciting milestone for our Pinnacle service. In addition, we're seeing continued traction for our Pinnacle services globally and our in active trials with various parties as we speak today.

But what is even more exciting is how our Pinnacle service combined with the LTE 5G technology, we can further amplify our international expansion and deliver a resilient 3D PNT services and timing solutions and not necessarily even without immediate spectrum allocation.

If you recall, the European unit conducted a trial of alternate PNT solutions earlier in the year. We were one of the seven companies in the test, and we expect the European Union to publish its final report in the first quarter of 2023.

Overall, we feel very confident that we are on the right path towards bringing PNT resilience to market in a time and cost efficient manner. We believe we have the right team, the right technology and the right implementation plan to get us there as we move forward. With that, let me turn it over to Chris for a review of the financials.

Chris?.

Thanks, Ganesh. Good afternoon, everyone. Let me first dig into the financials tied to our acquisition of Nestwave. As detailed in our release, we acquired Nestwave for an enterprise value of $18 million, an aggregate consideration of $19.3 million, consisting of $4.3 million in cash and $15 million in NextNav common stock.

The transaction resulted in the issuance of 4 million shares of NextNav common stock upon close and up to 1.1 million shares of common stock will be issued upon exercise of certain Nestwave employee options. All such shares were subject to a lockup expiring on the first anniversary of transaction close.

While we expect this transaction to only marginally increase our operational costs, I'd like to reiterate that it is expected to substantially reduce our future capital needs by decreasing the CapEx network OpEx required for a broad TerraPoiNT deployment in the U.S.

by approximately 75% whereas Ganesh and Gary have highlighted in excess of $250 million compared to our prior estimates. As outlined previously, it also facilitates our global expansion plans. Now, let me turn into our third quarter and year-to-date results.

Starting with the top-line, this quarter we recognized revenue of $503,000 and an operating loss of $17.9 million. This number includes depreciation and amortization of $891,000, stock-based compensation expense of $6.6 million and $200,000 of non-cash network operations expense.

Operating expenses for the quarter also included $530,000 in transaction-related expenses. Total operating expenses for the quarter were $18.4 million, and net loss is $18.7 million. In addition to the previous non-cash charges, net loss included a non-cash expense element of $1 million related to a change in fair value of our warrant liability.

For the first nine months of 2022, we reported revenue of $3.1 million and an operating loss of $51 million, which includes $2.7 million in depreciation and amortization, $20.6 million in stock-based compensation, and $600,000 in non-cash network operating expenses.

Operating expenses for the first nine months of 2022 also included $530,000 in transaction-related expenses previously discussed. Our net loss for the nine-month period ending September 30, was $27.6 million, and included a non-cash income element of $23.2 million related to the change in fair value of our warrant liability.

Now for the quarter, our operating expenses before depreciation, stock compensation expense and non-cash network operations expenses, and one-time acquisition-related costs, with $10.2 million substantially in line with our second quarter.

Managing liquidity and our cash position is a priority of the company, continually to work to optimize our expenses in light of the growth of our business and adapt to changes in the economic environment.

As we've mentioned, expenses, we continue to maintain -- excuse me, as we've managed our expenses, we continue to maintain substantial capital flexibility, a debt free balance sheet, and approximately $72 million in cash, cash equivalents and short-term investments as of September 30.

Now, as we mentioned on our very first earnings call back in 2021, we continue to expect our revenue to be lumpy as new customers bring our products into service, and as we pursue the tremendous value inherent in our unique PNT capabilities, which are now even more attractive given the reduced capital requirements driven by our Nestwave acquisition, the government initiatives outlined by Ganesh, and of course 2.4 billion megahertz pops to spectrum.

With that, I'll now turn the call over to the operator for questions.

Operator?.

Thank you. [Operator Instructions]. Your first question comes from the line of Mike Crawford with B. Riley. Your line is now open..

Thank you.

Can you just expound a little bit further on how NextNav will be able to make more spectrum available for wireless networks given less of a need for TerraPoiNT beacons and such magnitude is previously envisioned?.

Let me hit some of that and Ganesh can expand on it technologically if you want to, but the conversion first off the Nestwave technology and I think we've explained even when we made the announcement on Nestwave a few weeks ago, allows us to place fewer pure TerraPoiNT beacons and to integrate that with the signals that are already there from 4G and 5G existing wireless carriers signals.

While still maintaining because of our highly synchronized system in ability to correct the inherent timing frailties that exist in those LTE signals, we're able to keep that same level of accuracy that we have renowned for in our existing TerraPoiNT system.

But by moving our own and migrating our own TerraPoiNT signal over to an LTE waveform, then simultaneous with being able to carry this core PNT timing and GPS backup resiliency, we also now have a pretty awesome data carriage machine.

Obviously, the GPS waveform that we have been using historically has very limited data-carrying capability and yet, obviously very good PNT or positioning capabilities. So the first element of that is inherently in what we do deploy as a network, we've got a raw data-carrying capability.

Secondly, by using the LTE waveform, we're able to utilize the signal and an amount of spectrum that spans all across what a normal LTE capability would be, whether its 3 megahertz, 5 megahertz, 8 megahertz, whatever we may require.

So from that perspective, that gives us additional flexibility and the amount of spectrum that we may be using for the pure PNT signal.

And then, finally, as I think Ganesh mentioned a little bit in his comments as well too, if we decide to deploy more beacons, maybe in the case of a campus or a private network or something that obviously is an alternate use of our capabilities as long as we're also carrying forward the core PNT functionality that would exist in any case.

So it gives us an order of magnitude more capability in the fact that what we'll even deploy now for PNT also is a full LTE channels worth of data-carrying capability.

Is that helpful in any sense, Mike?.

It is, Gary.

Would you need any regulatory authorization from the FCC or anyone in order to be able to offer these additional services?.

Well, if you look at it some subtleties that exist in the license is probably are worth noting for -- particularly for investors who are quite interested and obviously that that's the primary thing they're interested in is the underlying value of the spectrum on that front.

The spectrum requirements are for PNT, but it doesn't restrict it only to PNT. So the fact that it's a location monitoring service or a capability of providing this physician navigation and timing capabilities, as long as it's providing that capability, what else you do with the data that's carried is not restricted in any manner.

For example, even the existing GPS waveforms that we are currently using have dedicated data packets within them that we could use, but enforcing those are obviously fairly limited in their throughput and performance. So from that standpoint, yes, it's already been there.

The existing system and waivers that we got for the particular system we put in place do not -- we actually have on the underlying license the ability to do two-way capabilities while our existing MDS signal is right now a one-way signal. It's not restricted in the sense that you do have a two-way capability in the underlying license.

Now, we do expect and I think was mentioned in the script there some in Ganesh’s prior comments, we have experimental licenses that we've had for a number of years in a number of locations around the country that we've worked with OET and the FCC in order to test various different configurations.

We expect to be testing some of these additional configurations including additional waveforms to prove that in fact, we are able to not only provide a data carriage capability, but also the underlying PNT capability.

So yes, there will be some interactions with the FCC on ensuring that that what we do meet the requirements of our licenses, but we've been proving that all along for many years, and I think we have a very good relationship and proof with the FCC that we have in fact accomplished that.

And certainly, what we are putting forward right now for not only the E911 and public safety, emergency, situational awareness of first responders and very valuable governmental services, but also the backup GPS element is something that many of the government agencies and certainly the FCC is aware of that are highly interested in.

And so they would be encouraging us to do that in the most cost effective way possible. I mean, we can get into more depth on what we see coming out of the governments desires both federal government and in state and local governments under the infrastructure bill at grants.

It's something that I think that we want to be in a position to be able to respond to those governmental demands and requests on an expeditious basis and without a huge expense to the government..

Okay. Thank you.

Just one more on this tack and then just one other and I'll stop, but Gary, given that you can now broadcast your spectrum over LTE, does that mean that you are more or less likely to go ahead and try to broadcast your whole 8 megahertz block versus 5 megahertz block and maybe get 3 megahertz repurposed for --?.

Mike, that's a very insightful question. And I think that the answer to that will be determined in the future. We want to use the external license to look at all of those configurations, but what you are clearly picking up on is there is just a greater likelihood that we would utilize the entire 8 megahertz with a full LTE payload or 5G payload.

We'll be testing both of those waveforms, rather than simply having the PNT on one set of licenses and trying to surplus the other set of licenses. Those options both exist, but we don't know yet, which would be the most powerful implementation of that, what partner we would work with in achieving that.

But you're -- it was good that you noted that it doesn't necessarily mean that we will stick with, yes, we're only going to use 5 megahertz and we're going to surplus 3. There's the potential of that, or the potential using 3 and surplusing 5 or the potential of using all 8, but doing it with a full payload..

Okay. Thank you. And then, just a final question. Clearly, our CapEx and depreciation, amortization estimates come way down with the improved, I would say, business plan enabled by Nestwave.

But 18 months ago in the Spartacus de-SPAC, I mean, there was a slide of "robust, incredible long-term projections that had revenue numbers well in advance of where you are today." And so I'm wondering what if any comments you can make about long-term revenue projections given that you previously issued such projections in the 2028..

You mean from the original pipe on presentations pre-SPAC..

Yes..

Yes. I think -- I think I guess I will address that from this standpoint.

Our very first earnings call when we became a public company, we clearly tried to note at that point in time that we expected our revenue to be lumpy because in fact, it would not necessarily be just a normal progression of recurring revenue from end user customers that we're putting on board, but it would likely be impacted significantly by integration costs, adoption costs from our partners, and how quickly they're able to roll that out, some of which is not within our control.

So for that reason, we have consistently for the last year declined to provide a forward-looking guidance on the thing. And certainly that, that's where we'll continue to be today. I will have to say though; we are obviously continuing to work on both the Pinnacle service and the near-term revenue.

We do have good adoption within the public safety and our AT&T partner and FirstNet and certainly with the Tier 1 carrier for 911 service and some of the upcoming handset deals that we're doing. So that progress is something we have people working hard on, and we will be driving that as aggressively as we can.

But I will also say that when we talk to our largest shareholders, they encourage us to focus on the big numbers. And the value that exists if we are able to actualize the value of the underlying spectrum and to tap into these government revenues and the unique opportunities that exist with this backup GPS and resilient PNT service.

For that reason, that is what our strategic focus is. Not to say we're not going to be continuing to push forward as hard as we can to ensure that we bring revenues on as rapidly as possible, but we want to keep our eye on the prize..

Your next question comes from the line of Timothy Horan with Oppenheimer. Your line is now open..

Thanks, guys.

And just to be clear on the spectrum, do you own all 8 megahertz? And does all 8 megahertz have to meet the requirements for the location-based services? And once you meet those requirements, you can kind of do what you want with the rest of the spectrum?.

We do own all 8 megahertz. Just as a reminder to folks listening who may not be as aware of it, it's generally side-by-side licenses in most of these markets. Both the B block, which is like a 3 megahertz and the C block, which is like a 5 megahertz. It's somewhat more nuanced than that, but they're co-located, I mean, they're side-by-side continuous.

And we do have permission from the FCC to use those either separately or together, consistent with say the answer that, I gave to Mike on the prior question, so that -- now that is an understanding that when we brought those into service, that was for the purpose of location 911 services and position navigation and timing.

That's what we are using them for. And that is what we would continue to expect to have as an underlying corollary. It may not be, for example, it may not even end up being the primary revenue generator from that spectrum potentially.

But it certainly needs to be something that consistent with the license that we have right now, that that is a usage that its -- that's being used for..

And if you were to just send an LTE signal, I mean that would kind of be the best of all worlds, right? Because you can or a 5G signal, sorry, because then almost every device can pick it up and --?.

Yes, actually that a really, really good point. And I can't remember whether we said that in the remarks earlier, but it's not just that suddenly you go from a numbers of kilobits of data-carrying capability to mega and gigabits of data-carrying capability under LTE or 5G.

And I use both of those because there are different implementations, which may be favorable to LTE versus 5G. But what the wonderful part is virtually all of the handsets that are out there globally do have those capabilities within it. And this spectrum band is part of the LTE band use plans actually used in Europe currently.

So you've already got the antennas and the processing capability for those handsets to pick up LTE signals. Obviously, those LTE signals today aren't very well timed. Matter of fact, they're very poorly timed, that's why they rely upon GPS to even get the timing that they have.

What we are doing with ourself going forward is taking our superior atomic clock and disciplining those LTE signals. But the -- as you know, the end user devices, whether it's handsets or other devices, now can be much more effectively and lower cost mass produced to be consistent with that particular waveform..

And I know we don't really know yet, but well, before I ask that, and are you allowed to send a signal out at a stronger power level than what a typical mobile carrier can?.

No. And frankly, if you look at it quite often, the limiting factor for RF network design for carriers ends up being the return link from the handset since it's -- at it milliwatts rather than hertz so that's -- that isn't a thing.

We're not able to blast out very large signals and stuff, but that doesn't tend to be the limiting factor for your network design..

But do you think you built it open on? Yes. Sorry..

Sorry, Tim and Gary, if I may add, I think it is one of those elements we would be experimenting as part of our experimentations as configurations..

That's actually a good point. We actually previously have had experimental license that allowed us to go up to higher power levels beyond the 30 that we have. And in fact, slices of our license currently are allowed to go to 300 lots..

300 lots, yes..

So there will be a number of different trials and tests that we will use using the experimental license before we lock in with the final network design..

Right.

And even if a small piece of it had a very powerful signal, I mean, that's all you would really need for the massively improved location-based services and hard to reach areas in particular, right?.

And that would be certainly a part of it. But the real key there that I think is important to understand is we will be using for our location service, for our PNT services. We will be using all existing carriers, wireless signals already.

So it -- that doesn't necessarily require a deployment other than our -- some number of limited beacons to ensure that we have the accurate clocking and trilateration capabilities..

And so why do you even need your beacons to do that? Is that a requirement? Is mix and matching? Is it like one plus one equals 10 in that process?.

It tremendously improves the accuracy levels, if we're able to place beacons where a lot of cellular systems don't necessarily have the right angularity of the signals coming in. So you'd like to be able to add that to it. And it's also a way of perpetuating across a very large area the accurate clocking.

But I think and Ganesh maybe then this in a little bit more detail if you'd like, but that's also why we noted that this does provide us now a unique capability to go into another country, which may desperately desire the timing links particularly as a backup timing source without actually having a separate dedicated spectrum allocation from that country.

I mean, obviously right now in Japan MetCom is using 5 megahertz that the government has provided to them on an initial basis. But if we were able to hit at least some significant portion of the value of this without getting a spectrum allocation and without providing our beacons, that would be a desirable jumpstart to it.

We still do believe that the very best capabilities for resilience for accuracy of location as well as for consistent timing and the ability to track that timing back to a central clock source is best done if you do have a at least some limited number of TerraPoiNT beacons and a dedicated spectrum allocation.

But now, it will not be absolutely essential before you can even start..

Got it. Got it.

And how much of an improvement is it if using spectrum and your beacons do you think?.

It depends and I hate and jumping on Ganesh it’s a ethical part. It depends on the location and what's available for --.

Well, I think -- yes, I think it's -- I would say -- I think Tim, the way to think about it is with the TerraPoiNT dedicated network, you could get a Cadillac type of solution which was clocked in, you could get timing sub 100 nanoseconds in our entire footprint.

Now that number with cellular signals combined with our systems, you probably are looking at 3 -- 200, 300 nanosecond or sub that order of magnitude. So it is not as good. And that's why we say it's a combination of systems.

And -- but it is also not too bad because for a lot of the applications, the requirements are really closer to a microsecond, whereas for some applications which require higher position such as automotive or aviation, you probably will still want the dedicated TerraPoiNT system to give you that positioning capability, of course, along with the resiliency capability that we bring that and the clocking that that LTE systems on their own don't have very good clocks for..

Got it. Got it. Yes, now I completely get it.

And how long's it going to take you to do the trials here before you kind of make a decision which way to go?.

I think that's going to be a lot of our activities for the first half of the year. And then I think we would be in a position to sort of make some determinations from there on out..

And so can you help with --.

I would say it's important that it's a month, not year's type of a situation on that front, because we pretty well know how to put the capabilities together. Now we want to deploy enough of that in limited areas to be able to truly test it out and prove it..

And can you give us a sense of what's going to drive or generate revenues next year? Maybe some order of magnitude, I guess how many major carriers are using Pinnacle now? How many can use it next year? And is that -- is the one carrier fully reflected in this quarter's revenue?.

No..

Yes. So I think we spoke to that a little bit, right? I mean in terms of the -- we're not necessarily giving guidance. How many carriers are using our solution for between 911 and public safety? I think we've said at least a couple of them are already in using that.

And as -- and then we just announced the -- a new device that is based on the Hot Pepper device, which is on a different carrier. So I would say a lot of the Tier 1 carriers are using our solution in some shape or form for public safety and 911 purposes. And I think --.

But actually on that front Ganesh, we might want to let Chris weigh in a little bit just to clarify that, there -- the revenue streams that you were saying from say the integration that we've had with our Tier 1 carrier versus his actual commercial operation of that 911 in there -- that's in a process where the commercialization of that will be later in the fourth quarter.

So it's not really that element --.

Well, I -- and ultimately, we're just trying to get a somewhat of a range like if Pinnacle is fully operational with all three carriers, what kind of revenue is that generating quarterly. We have nowhere near -- obviously, we don't know from the outside at all what's going on. Yes..

Sure..

And I think as we have a number of public safety partners and hence that folks that are going onto other carriers that are not presently our carrier partners right now, that will be occurring in the first part of 2023 that will -- we think will be added to that.

And then on the public safety front, we have a goodly number of some of the announced deals or partnerships that we've put in place, several of which will be actually, they're in the middle of implementing right now, but will go live in the first quarter..

And so when Pinnacle is fully up and running is just $10 million per quarter, $100 million per quarter. Can you give us --.

Yes. I'd love to be able to lay that out for you. But we really are trying to avoid from a guidance type situation. I mean again, it's something where that sort of lumpiness of when they come in and --.

No, no, no, I'm not asking lumpiness. I -- what I'm asking is when it's fully and completely and totally implemented by all the carriers, is this going to be $1 million per quarter in revenue, $10 million, $100 million, $1 billion? Just a rough idea when it's fully implemented.

Is it tens of millions? Is it millions? Is it hundreds of millions? We're sitting here on the outside, we have no idea..

Cumulatively across all 911, is that sort of what you're --.

Yes, yes.

Quarterly, once it's fully -- once Pinnacle's fully implemented, what's the revenue run rate?.

Well, you're asking just for the 911 element is what you're saying, because Pinnacle obviously we're looking not only in 911, but the other public safety applications of the loan worker, I mean the gaming and other elements like that that we think will be coming along. But it -- it's not something --.

Well, I mean, if you can break -- yes, I mean if you can break it down between 911 and everything else, just a rough idea would be really helpful..

Well, I think the only thing that we can have we announced the amounts that we have for the existing Tier 1 carrier that we have in place currently that's rolling out. I don't believe. I don't believe that we have that number out there..

We don't. We don't, Gary, it'll -- we anticipate that a portion of that will be reflected in the fourth quarter and it'll be fully reflected in the first quarter. If the -- sort of current implementation schedule maintains, but we have not disclosed broadly what that looks like..

Okay. So one carrier -- so one carry will have largely implemented for 911 by the end of the year, and the first quarter will be fully reflected of that. And then, the other two carriers, the rough timing of it..

I think as we've mentioned in the -- some of these devices that are rolling out will be in the first quarter of 2023, but those would be slightly different. It -- those would be on the per device model rather than the per carrier model.

So I think it -- the numbers will skew, which over time will aggregate, but again that's -- so it'd be a slight variation from the model that Chris talked about, where it's on a per carrier basis. But those would be and probably in the end of Q1 being of Q2 type of timeframe, Tim..

Okay.

So is the 911 revenue for Pinnacle going to be fully reflected in the like next year's second half run rate?.

For -- for 911 that's probably the case..

Okay. And no -- I -- okay, fine.

And then so your cash burn at this point, how much do you think, do you need to -- I know it's a wide range, but can you give us a range of how much cash you need to raise to kind of get the free cash flow positive at this point?.

Well, some of that depends upon the model of the adoption whether we're going with a partner in these other countries like we have been with MetCom, where they're bearing the capital expense of it, and in fact they're purchasing beacons or things like that potentially for us from us on a going forward basis, so whether you're using that sort of an implementation criteria.

I think the biggest way of doing it is that the -- I think what's $370 million CapEx program we had put in the model originally for a nationwide expansive TerraPoiNT build-out is now $100 million or sub $100 million. So -- and those sort of numbers can likely be covered with debt if we want to go that direction.

So from that sort of a capital conservancy situation, we're being careful with how we use our funds currently.

But we do believe that now we have the ability to bring the TerraPoiNT system into operation at a much more manageable cost, some of which may be borne by government partners or grants, and some of which may be borne by debt based on the fixed assets that we have right now.

So from a capital standpoint or capital needs standpoint, that's probably the best way of looking at it..

Yes. And sorry, my last question.

So when do you think TerraPoiNT gets largely shut-on for a majority of the United States?.

Ganesh, I'll let you hit that one because we've looked at various implementations of that..

Yes. I think -- like I said, I think we will be -- it -- we will be making a sort of evaluations of various configurations in the first half of the year. And I think we would be in a position to -- we're hopeful that within the 12-month period we can have certain implementations of resilient PNT in the marketplace..

And that's -- I know that's not a number or a timeframe that we've ever put out there before.

It's obviously been much longer viewed and partially one of the reasons when you look at it is, we've often spoken before that we have an initial deployment in TerraPoiNT in the top 50 markets, which by the way are the biggest top 50 markets in the country, roughly half the population, frankly in those markets.

Those implementations under our previous requirements would've had to be significantly densified, adding a lot more beacons to get the accuracy levels that we would want to have for a final commercial service.

It is quite conceivable that those beacons that are already deployed in those markets, maybe not totally sufficient, but close to sufficient to provide us the early implementation of a PNT service without additional bills.

I think we've also mentioned, and Chris, as before we've got -- we'll have some modest capital expenditures fourth quarter and also first quarter next year as we're building out additional markets to meet our construction milestones with the FCC. So those are actually already underway.

So that that does in our view facilitate the potential that that we might have a pretty comprehensive service a year from now..

Your next question comes from the line of Jaime Perez with RF Lafferty. Your line is now open..

Yes. Thanks for taking my question, and good day, everybody.

A key question on TerraPoiNT --?.

Hey, Jamie..

Hey Gary, how you're doing? On TerraPoiNT, since you're going to be building the infrastructure for the government for defense and national security, is it going to be a separate network for surveillance use because imagine that or is there any --?.

No..

Crossover or security? No.

So it's all going to be one complete network?.

No..

For -- no, fortunately they would be a dual use of that single network capability. Quite frankly, that is something that across the government actually even including the military, they're pointing their procurements towards that rather than separate isolated dedicated networks.

They did last year DHS provided us specific grants in order to cyber secure our beacons in order they wanted us to put in the levels of confidence and resiliency and protection that they would need for a governmental service.

But now the current trend is far more towards them using commercial services, even for the protection of fairly critical infrastructure..

Yes. And just let me address that a little bit, Jaime. I think fundamentally there is really just one network, right? I mean I think that that's the key here. And if you think about it 80% of critical infrastructure is really owned by private entities. It's not owned by the government.

And I think the government's view is to secure those elements along with their own needs. And I think that is with domestically and that that is a combination that can be served with this type of a resilient network that that serves all of those needs..

Yes. Maybe that's a good thing because give it to a government, they find a way to mess things up a little bit..

Yes..

Now as far as revenues for the government contracts, are the -- is the government going to pay you a blanket coverage or are you going to be collecting fees from the developers that, that are creating apps and solutions for the government?.

Yes. No, so there isn't a sort of a single fee that the government pays for PNT resilience. I think as we've mentioned the government through their federal procurement process, the Executive Order 13905 would ensure their procurement is satisfied by the fees that they pay.

But we also believe the once the order is passed at the state and local levels the -- some of the funds through the infrastructure grants would be made available for PNT resilience along with all resilience as they call it for cyber and other purposes.

So I -- we believe there's those types of funds would be -- would include these types of capabilities to be met through those types of funding schemes that were envisioned in the -- or that have been put in place as part of the infrastructure bill..

All right. Now, I'm looking at Page 5 of the slide that you put in the acquisition. Now, is there any limitation on beacons as far as terrain or sublevel, I mean or any limitations on that? For example, let's say, I mean, for example, on Slide 5 you have a something with pre-Nestwave and then you have post-Nestwave.

But is there -- after, is there any limitations in like in valleys or terrain that has to be met? Because I mean you mentioned that if there's a campus that needs some type of equipment, you could put it on there. Yes..

Yes. So two -- I think those are two different questions. On the first part, in terms of are there limitations on where the signal is able to reach from -- from in valleys and other places? Yes.

I mean, we're governed by the same sort of laws of physics, so we have to have the same impact, but I think that the benefit here is because we're using LTE -- ambient LTE signals that different carriers put out in addition to our own signals. We are able to then take advantage of that.

And the limitations are not as much, it's probably as good or as bad as maybe some of the cellular coverage, but we don't listen to just necessarily one carrier. It's all the operators in the area. So you may actually get a better reception capability because we would take whatever is available from any of the operators..

All right. So that's all the questions I have for tonight, but thanks for taking my questions and have a great evening..

Great. Thanks, Jaime..

Thanks, Jaime..

This concludes our question-and-answer session. I would like to turn the call back to Gary Parsons..

Well, thank you very much, operator, and we appreciate everyone dialing in today. As they say, it is an exciting time for us. We're very, very pleased with the recent acquisition.

We can't wait to get that manifested into our full business plan since that we can put forward that resilient PNT capability much more rapidly than what we had expected before. And then hopefully do the right things to make sure that we actualize the value of the underlying spectrum asset.

We appreciate everybody's calling in today and look forward to hosting you on our next call. Thanks a lot..

This concludes today's conference call. Thank you for attending. You may now disconnect..