NEXTNAV INC. (NN) FY 2021 MD&A

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of
our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related
notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K. In addition to historical information,
some of the information contained in the following discussion and analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results
and outcomes could differ materially for a variety of reasons. You should review “Cautionary Note Regarding Forward-Looking Statements”
and “Item 1A. Risk Factors” of this Annual Report on Form 10-K for a discussion of important factors that could cause our
actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following
discussion and analysis.

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Overview

We are the market leader in delivering next
generation PNT solutions that overcome the limitations of existing space-based GPS. The world increasingly requires more accurate and
resilient PNT capabilities. Public safety, autonomous vehicles, eVTOLs, UAVs, and the app economy all require precise 3D location solutions.
Paramedics need to know which apartment a 911 call originated from, ride hailing and delivery apps need to know precisely where you are
standing and game developers need precise 3D location data to deliver a next generation augmented reality experience.

In early 2021, we launched the first element
of our next generation GPS service through initial commercial service on our nationwide Pinnacle network that was deployed in partnership
with AT&T. The Pinnacle network provides “floor-level” altitude detection to over 90% of commercial structures over three
stories in the U.S., and is being utilized by FirstNet® for public safety, as well as a growing number of commercial apps and app
development platforms, including Atlas Earth, Unity Engine, Eco3d, CRG, Qualcomm, and the Unreal Engine. In December 2021, we entered
into an agreement with one of the nation’s largest wireless carriers to deliver vertical location for E911, using our Pinnacle 911 solution
for all its customers. We believe that ramp up of services using our existing deployed network will support significant revenue growth
over the coming years.

We will be extending our capabilities by expanding
the deployment our TerraPoiNT system, which is a nationwide network that is designed to overcome the inherent limitations of traditional
GPS. TerraPoiNT utilizes a network of specialized wide area location transmitters that broadcast an encrypted PNT signal on our licensed
900 MHz spectrum with a signal that is 100,000 times stronger than GPS. TerraPoiNT is well suited for urban and indoor environments where
existing GPS signals are either distorted or blocked all together. In addition, TerraPoiNT provides redundancy for GPS, which is vulnerable
to spoofing and jamming. GPS redundancy is increasingly a U.S. national security priority and is a rising priority in the other parts
of the world. Critical infrastructure, including communications networks and power grids, require a reliable GPS signal for accurate
timing. A failure of GPS would be catastrophic, and there is no back-up today.

Since the inception of NextNav, LLC in 2007,
we have secured valuable FCC licenses covering approximately 93% of the U.S. population for a continuous 8 MHz band of 900 MHz spectrum,
filed over 120 patents related to our systems and services, deployed the nationwide Pinnacle network and launched commercial service.
In addition, we have deployed our TerraPoiNT solution in 51 markets, and TerraPoiNT received the highest scores in testing by the Department
of Transportation of potential PNT back-up solutions.

The Business Combination; Public Company Costs

On October 28, 2021 (the “Closing Date”),
we consummated the previously announced Business Combination pursuant to the terms of the Merger Agreement. As a result of the Business
Combination, we changed our name to NextNav Inc., and certain blocker entities formed by Holdings equity holders, Holdings and the various
operating subsidiaries of Holdings became the Company’s wholly owned subsidiaries, with the equity holders of each of such blocker
entities and Holdings and Spartacus’ stockholders becoming our stockholders. The Nasdaq ticker symbols for our common stock, par
value $0.0001 per share, and warrants are “NN” and “NNAVW,” respectively. See Note 1 to our consolidated financial
statements for the year ended December 31, 2021 included elsewhere in this Annual Report on Form 10-K for additional information.

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As a publicly traded company, we will continue
to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability
insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit
and legal fees that Holdings has not previously incurred.

Impact of COVID-19 on NextNav’s Business

In March 2020, the COVID-19 outbreak was declared
a pandemic by the World Health Organization. There are many uncertainties regarding the current pandemic, and we continue to closely
monitor the impact of the pandemic on all aspects of our business, including how it will continue to impact our employees, suppliers,
vendors and business partners.

The pandemic has resulted in government authorities
implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, stay-at-home or shelter-in-place
orders, and business shutdowns. These measures may adversely impact our employees and operations and the operations of our suppliers
and business partners. In addition, various aspects of our business cannot be conducted remotely. These measures by government authorities
may continue to remain in place for a significant period of time and could adversely affect our development plans, sales and marketing
activities, and business operations.

The evolution of the virus is unpredictable
at this point and any resurgence may slow down our customer adoption and deployment of the TerraPoiNT network. The COVID-19 pandemic
could limit the ability of suppliers and business partners to perform, including third-party suppliers’ ability to provide components
and materials. We have also experienced and may continue to experience an increase in the cost of raw materials.

The full impact of the COVID-19 pandemic continues
to evolve as of the date of this Annual Report on Form 10-K. As such, it is not possible to determine the duration and scope of the pandemic,
the scale and rate of economic recovery from the pandemic, supply chain disruptions, and labor availability and costs, or the impact
of other indirect factors that may be attributable to the pandemic, and the extent to which these or other currently unanticipated consequences
of the pandemic are reasonably likely to materially affect our results of operations. In addition, these direct and indirect factors
can make it difficult to isolate and quantify the portion of our costs that are a direct result of the pandemic and costs arising from
factors that may have been influenced by the pandemic, including increased wage rates and incentives resulting from constrained labor
markets and global supply chain constraints. Management continues to actively monitor our financial condition, liquidity, operations,
suppliers, industry and workforce. We expect these factors and their effects on our operations to continue into 2022.

Key Components of Results of Operations

Revenue

We have generated limited revenue since our
inception. We derive our revenue from “floor-level” altitude location data, and related products and services, and PNT products
and services. Our revenue includes revenue generated through services contracts with wireless carriers, services with applications developers,
technology demonstration, assessment and support contracts with government customers, sales of equipment, and licensing of proprietary
technology. We recognize revenue when an arrangement exists, services, equipment or access to licensed technology are delivered, the
transaction price is determined, the arrangement has commercial substance, and collection of consideration is probable.

Operating Expense

Cost of Goods Sold

Cost of goods sold (“COGS”) consist
of personnel-related expenses, including salaries, benefits and stock-based compensation, and allocated facility costs for our operations
and manufacturing teams. COGS also includes expenses for site leases, cost of equipment, and professional services related to the maintenance
of the equipment at each leased site. We expect our operations costs to increase for the foreseeable future as we continue to invest
in the expansion of our Pinnacle and TerraPoiNT networks in domestic U.S. and international markets.

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Research and Development

Research and development expenses consist of
personnel-related expenses, including salaries, benefits and stock-based compensation, and allocated facility costs for our research
and development functions. Research and development costs also include outside professional services for software and hardware development,
cloud hosting costs, and software licensing costs. We expect our research and development costs to increase for the foreseeable future
as we continue to invest in research and development for our current products and future products.

Selling, General and Administrative

Selling, general and administrative expenses
consist of personnel-related expenses, including salaries, benefits and stock-based compensation, and allocated facility costs for our
business development, marketing, corporate, executive, finance legal, human resources, IT and other administrative functions. Selling,
general and administrative expenses also include expenses for outside professional services, including legal, auditing and accounting
services, recruitment expenses, travel expenses and certain non-income taxes, insurance and other administrative expenses.

We expect our selling, general and administrative
expenses to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as
a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor
relations activities, and other administrative and professional services. As a result, we expect our selling, general and administrative
expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue over time.

Depreciation and Amortization

Depreciation and amortization expense results
from depreciation and amortization of our property and equipment and intangible assets that is recognized over their estimated useful
lives.

Interest Expense

Interest expense relates to interest on our
senior secured loan facility, which was fully repaid in connection with closing of the Business Combination.

Other Income (expense)

Other income (expense) consists of miscellaneous
non-operating items, such as change in fair value of warrants and foreign currency gains (losses).

Results of Operations

The following table sets forth our statements
of operations for the periods indicated:

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Comparison of the Fiscal Years Ended December 31, 2021 and
2020

Revenue

Revenue increased by $0.19 million, or 34%, to $0.8 million for the
year ended December 31, 2021 from $0.6 million for the year ended December 31, 2020. The increase was driven by increased revenue from
technology and services contracts with commercial customers. For the year ended December 31, 2021, three customers accounted for 40%,
31%, and 19% of total revenue. For the year ended December 31, 2020, three customers accounted for 53%, 27%, and 18% of total revenue.
The accounts receivables as of December 31, 2021, was $1.7 million and $0.1 million as of December 31, 2020, whereas deferred revenue
balance as of December 31, 2021 was $1.6 million and zero as of December 31, 2020.

Operating Expense

Cost of Goods Sold (COGS)

COGS increased by $10.6 million, or 137%, to
$18.4 million for the year ended December 31, 2021 from $7.8 million for the year ended December 31, 2020. The increase was
primarily driven by a $9.0 million increase in rent expense related to contingent rent recorded for warrants vested in the year 2021
(see NextNav Inc. Notes to the Consolidated Financial Statements — Note 3 for more information), a $1.0 million increase in site
rental and maintenance expense related to new TerraPoiNT and Pinnacle sites, a $0.6 million increase in outside consulting expense due
to the Pinnacle network deployment and a $0.6 million increase in maintenance and operations of the Pinnacle network. The increases were
partially offset by a decrease of $0.3 million in equipment and material costs, and a decrease of $0.2 million in payroll-related expenses.

Research and Development

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Research and development expenses increased
by $0.7 million, or 7.8%, to $9.5 million for the year ended December 31, 2021 from $8.8 million for the year ended December 31,
2020. The increase was primarily driven by a $0.6 million increase in payroll-related expenses driven by increased headcount and annual
bonus, and a $0.5 million increase in software licenses. The increases were partially offset by a $0.3 million decrease in material and
equipment cost.

Selling, General and Administrative

Selling, general and administrative expenses
increased by $0.3 million, or 2.3%, to $13.6 million during the year ended December 31, 2021, from $13.3 million in the year ended
December 31, 2020. The increase was primarily driven by a $1.4 million increase in outside consulting and professional services,
a $0.7 million increase in directors’ and officers’ insurance, and a $0.7 million increase in IT related expenses. The increases
were partially offset by a $2.5 million decrease in payroll-related expenses.

Depreciation and Amortization

Depreciation and amortization expenses increased
by $1.5 million, or 658%, to $1.8 million during the year ended December 31, 2021, from $0.2 million during the year ended December 31,
2020. The increase in depreciation and amortization expense is primarily attributable to placing the Pinnacle and TerraPoiNT network
assets in service since the third quarter of 2020.

Interest Expense

Interest expense increased by $7.8 million,
or 78%, to $17.8 million during the year ended December 31, 2021, from $10.0 million during the year ended December 31, 2020.
The increase in interest expense is primarily attributable to write off of unamortized debt discount upon full repayment of debt as a
part of the Business Combination (see NextNav Inc. Notes to the Consolidated Financial Statements — Note 6 for more information).

Other Income (Expense)

Other expense decreased by $13.4 million, or
14%, to $84.3 million during the year ended December 31, 2021, from $97.8 million during the year ended December 31, 2020.
The decrease was primarily driven by change in the fair value of warrants.

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Liquidity and Capital Resources

We have incurred losses since our inception
and to date have generated only limited revenue. Prior to the closing of the Business Combination, we had funded our operations primarily
through the issuances of convertible preferred units and through borrowing under an existing senior secured loan facility (the “Financing
Agreement”), which Holdings entered into in December 2019 and amended in June 2021 with Fortress Credit Corporation.

In connection with the consummation of the Business
Combination (see NextNav Inc. Notes to the Consolidated Financial Statements — Note 1 for more information), all amounts outstanding
under the Financing Agreement were repaid and the Financing Agreement was terminated. As a result, we had no debt outstanding as of December
31, 2021 (see NextNav Inc. Notes to the Consolidated Financial Statements — Note 6 for more information).

As a part of the Business Combination our cash
balance increased by approximately $104.2 million which is available to fund future operations with no debt outstanding.

During the years ended December 31, 2021 and
2020, we incurred net losses of $144.7 million and $137.3 million, respectively. During the year ended December 31, 2021, our net cash
used in operating activities and investing activities was $47.9 million and $1.3 million, respectively. During the year ended December
31, 2020, our net cash used in operating activities and investing activities was $28.4 million and $7.2 million, respectively. As of
December 31, 2021, we had cash and cash equivalents of $100.1 million and an accumulated deficit of $647.9 million. We expect to incur
additional losses and higher operating expenses for the foreseeable future. Our primary uses of cash are to fund our operations as we
continue to grow our business. We will require a significant amount of cash for expenditures as we invest in ongoing research and development
and the expansion of the TerraPoiNT network.

Cash Flows

The following table summarizes our cash flows for
the period indicated:

Cash Flows from Operating Activities

Our cash flows used in operating activities
are significantly affected by the growth of our business primarily related to research and development, sales and marketing, and selling,
general and administrative activities. Our operating cash flows are also affected by our working capital needs to support growth in personnel-related
expenditures and fluctuations in accounts payable and other current assets and liabilities.

Net cash used in operating activities during
2021 was $47.9 million, resulting primarily from a net loss of $144.7 million adjusted for non-cash charges of $84.3 million for change
in the fair value of warrant liability, $9.3 million for amortization of debt issuance cost, $9.0 million related to issuance of warrant
for rent expense, $1.7 million for stock-based compensation, $4.7 million for paid-in-kind interest expense, $1.8 million for depreciation
and amortization, and $0.2 million for asset retirement obligation accretion. Additionally, there was a net increase in operating assets
and liabilities of $14.4 million.

Net cash used in operating activities during
2020 was $28.4 million, resulting from a net loss of $137.3 million and non-cash charge of $97.6 million for the change in fair value
of warrant liability, adjusted for non-cash charges of $7.4 million in stock based compensation charges, non-cash charges of $3.6 million
in interest expense that is primarily attributable to the increase in borrowing from the financing arrangement, non-cash charges of $0.7
million in amortization of debt issuance costs, non-cash charges of $0.2 million in depreciation, and a decrease of $0.9 million in accounts
payable, prepaid and other current assets.

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Cash Flows from Investing Activities

Net cash used in investing activities during
2021 was $1.3 million, representing additions to property and equipment primarily related to the deployment of the Pinnacle and TerraPoiNT
network and internal use software.

Net cash used in investing activities during
2020 was $7.2 million, representing additions to property, equipment and related installation costs primarily related to the deployment
of the Pinnacle Network.

Cash Flows from Financing Activities

Net cash provided by financing activities during
2021 was $135.6 million, primarily reflecting cash proceeds from the Business Combination and PIPE investments of $230.9 million (net
of costs paid directly related to the Business Combination and PIPE investment of $23.1 million), and borrowing of $24.6 million from
the Financing Agreement. The equity and debt proceeds were partially offset by $96.9 million of debt repayments in connection with the
consummation of the Business Combination.

Net cash provided by financing activities during
2020 was $34.8 million, primarily reflecting $40.3 million in borrowing from the Financing Agreement offset by $5.5 million in financing
issuance costs.

Critical Accounting Policies and Significant Management Estimates

Our discussion and analysis of our financial
condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts
reported in our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements. We base our estimates
on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the ongoing and potential
impacts of the COVID-19 pandemic and related government mandates and restrictions. These estimates may change as new events occur or
additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control
and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual
results may differ from these estimates under different assumptions or conditions.

The following critical accounting discussion
pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results
of operations and that require significant, difficult, subjective or complex judgments.

Long Lived Assets

Our property and equipment and network under
construction are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
If circumstances require a long-lived asset or asset group to be tested for possible impairment, impairment is determined by comparing
the carrying value of these long-lived assets to management’s probability weighted estimate of the future undiscounted cash flows
expected to result from the use of the assets or asset group. In the event an impairment exists, a loss is recognized based on the amount
by which the carrying value exceeds the fair value of the asset group.

Revenue Recognition

We derive our revenue from indoor and dense-urban
positioning technology, products and services including revenue generated through technology demonstration and assessment contracts with
customers, support services provided to customers, sales of equipment, and licensing of proprietary technology.

We recognize revenue when an arrangement exists,
services, equipment or access to licensed technology are delivered, the transaction price is determined, the arrangement has commercial
substance, payment terms are determined and collection of consideration is probable.

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We sell software licenses and services through
arrangements that may bundle software, equipment, and other services. When we determine that we have separate distinct performance obligations,
we allocate the bundled contract price among the various performance obligations based on each deliverable’s stand-alone selling
price. If the stand-alone selling price is not directly observable, we estimate the amount to be allocated for each performance obligation
based on observable market transactions. When we determine the performance obligations are not distinct, we recognize revenue on a combined
basis as the obligation is satisfied. To the extent our contracts include variable consideration, the transaction price includes both
fixed and variable consideration. The variable consideration contained within our contracts with customers may include discounts, credits
and other similar items. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine
whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent
that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is subsequently resolved.

We recognize equipment sales and the related costs
when control of the equipment passes to the customer, typically upon shipment. Customers do not have rights of return without our prior
consent. Revenue pursuant to licensing agreements for our technology represents performance obligations that are satisfied over time.
We recognize support services ratably over the periods in which the services are provided; the related costs are expensed as incurred.

The timing of revenue recognition, billings and
cash collections results in billed accounts receivable, unbilled receivables, and deferred revenue on the Consolidated Balance Sheets.
We bill amounts under our agreed-upon contractual terms at periodic intervals for services, upon shipment for equipment, or upon achievement
of contractual milestones or as work progresses. Billing may occur subsequent to revenue recognition, resulting in accounts receivable.
We may also receive payments from customers before revenue is recognized, resulting in deferred revenue.

Intangible Assets

We hold wireless Multilateration LMS licenses.
Certain general regulatory requirements apply to all licensed wireless spectrum, including, for example, certain build-out or “substantial
service” requirements, which generally must be satisfied as a condition to the retention of the license. We are actively engaged
in either meeting such requirements currently or seeking an extension of such requirements from the FCC for each of our LMS licenses.
Although licenses are issued for only a fixed time, ten years, such licenses are subject to renewal by the FCC, based on the achievement
of certain milestones and a finding that such renewal would serve the public interest. Renewal of our licenses has occurred previously
and at nominal cost. As a result, we treat our wireless LMS spectrum licenses as an indefinite-lived intangible asset. We reevaluate
the useful life determination for wireless licenses each year to determine whether events and circumstances continue to support an indefinite
useful life. Costs incurred to maintain the FCC licenses are recorded in operating expenses.

We assess indefinite-lived intangible assets
for potential impairment annually as of October 1, or during the year if an event or other circumstance indicates that we may not be
able to recover the carrying amount of the asset. In evaluating indefinite-lived intangible assets for impairment, we first assess qualitative
factors to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount. If we conclude
that it is not more likely than not that the fair value of the asset is less than its carrying value, then no further testing is required.
However, if we conclude that it is more likely than not that the fair value of the asset is less than its carrying value, then we perform
a two-step impairment test to identify potential impairment and measures the amount of impairment we will recognize, if any.

Warrants

Private Placement Warrants are classified as
non-current liabilities and reported at fair value at each reporting period. The fair value of the Private Placement Warrants is accounted
for using the Monte-Carlo simulation analysis. The Monte-Carlo simulation analysis requires us to make certain assumptions, including
the expected volatility, the risk-free interest rate, and the dividend yield. The expected dividend rate of zero is based on the fact
that we have not historically paid and do not expect to pay a dividend on our common stock. The risk free rate was based on U.S. Treasury
yields for securities with similar terms. Volatility was calculated based on the trading prices for a group of comparable public companies.

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Stock-Based Compensation

We estimate the fair value of stock-based awards
on the date of grant. The fair value of stock options is determined using the Black-Scholes option pricing model. The fair value of restricted
stock units (“RSUs”) and restricted stock awards is based on the closing price of our common stock on the date of grant.
We amortize the fair value of awards expected to vest on a straight-line basis over the requisite service periods of the awards, which
is generally the period from the grant date to the end of the vesting period. The determination of the fair value of our stock option
awards is based on a variety of factors, including, but not limited to, our common stock price, risk-free rate, expected stock price
volatility over the expected life of awards, dividend yield and, award’s expected term. The assumptions used to determine the fair
value of the stock options represent management’s best estimates. These estimates involve inherent uncertainties and the application
of management’s judgment. Additionally, we account for forfeitures for stock-based awards as they occur.

Income Taxes

Under Accounting Standards Codification (“ASC”)
740, “Income Taxes,” deferred tax assets and liabilities are recognized for the expected future tax consequences attributable
to net operating losses, tax credits, and temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, which will result in taxable or deductible amounts in the future. Our income tax expense/benefit,
deferred tax assets and tax receivable liability reflect management’s best assessment of estimated current and future taxes. Significant
judgments and estimates are required in determining the consolidated income tax expense/benefits, deferred tax assets and tax receivable
agreement liability. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence,
including projected future taxable income and results of recent operations. Estimating future taxable income is inherently uncertain,
requires judgment and is consistent with estimates we are using to manage our business. If we determine in the future that we will not
be able to fully utilize all or part of the deferred tax assets, we would record a valuation allowance through earnings in the period
the determination was made.

Recently Issued and Adopted Accounting Standards

For information regarding new accounting pronouncements,
and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 2 to our consolidated financial
statements for the year ended December 31, 2021 included elsewhere in this Annual Report on Form 10-K.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial accounting standards until private companies are required
to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage
of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election
to not take advantage of the extended transition period is irrevocable. Spartacus previously elected to avail itself of the extended
transition period, and following the consummation of the Business Combination, we became an emerging growth company (for the period described
in the immediately succeeding paragraph) and will continue to take advantage of the benefits of the extended transition period emerging
growth company status permits. During the extended transition period, it may be difficult or impossible to compare our financial results
with the financial results of another public company that complies with public company effective dates for accounting standard updates
because of the potential differences in accounting standards used.

We will remain an emerging growth company under
the JOBS Act until the earliest of (a) December 31, 2025, (b) the last date of our fiscal year in which we have total annual gross revenue
of at least $1.07 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC
or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.