x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
41-2116508
|
(State or Other Jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
Incorporation or Organization)
|
|
|
Large accelerated filer
¨
|
|
Accelerated filer
x
|
|
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
(Do not check if a smaller reporting company)
|
|
|
|
Page
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
Item 1A.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2014 |
|
June 30,
2013 |
|
June 30,
2014 |
|
June 30,
2013 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
17,887
|
|
|
$
|
15,409
|
|
|
$
|
34,136
|
|
|
$
|
30,799
|
|
Subscriber equipment sales
|
6,107
|
|
|
4,426
|
|
|
10,394
|
|
|
8,369
|
|
||||
Total revenue
|
23,994
|
|
|
19,835
|
|
|
44,530
|
|
|
39,168
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
7,120
|
|
|
7,205
|
|
|
14,058
|
|
|
14,732
|
|
||||
Cost of subscriber equipment sales
|
4,332
|
|
|
3,587
|
|
|
7,404
|
|
|
6,527
|
|
||||
Cost of subscriber equipment sales - reduction in the value of inventory
|
7,317
|
|
|
—
|
|
|
7,317
|
|
|
—
|
|
||||
Marketing, general, and administrative
|
8,247
|
|
|
6,577
|
|
|
16,016
|
|
|
13,501
|
|
||||
Depreciation, amortization, and accretion
|
22,013
|
|
|
22,067
|
|
|
45,346
|
|
|
42,399
|
|
||||
Total operating expenses
|
49,029
|
|
|
39,436
|
|
|
90,141
|
|
|
77,159
|
|
||||
Loss from operations
|
(25,035
|
)
|
|
(19,601
|
)
|
|
(45,611
|
)
|
|
(37,991
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on extinguishment of debt
|
(16,484
|
)
|
|
(47,240
|
)
|
|
(26,679
|
)
|
|
(47,240
|
)
|
||||
Loss on equity issuance
|
—
|
|
|
(13,969
|
)
|
|
—
|
|
|
(13,969
|
)
|
||||
Interest income and expense, net of amounts capitalized
|
(13,864
|
)
|
|
(15,216
|
)
|
|
(24,786
|
)
|
|
(22,968
|
)
|
||||
Derivative loss
|
(376,283
|
)
|
|
(29,903
|
)
|
|
(585,652
|
)
|
|
(29,377
|
)
|
||||
Other
|
(1,092
|
)
|
|
(224
|
)
|
|
(379
|
)
|
|
417
|
|
||||
Total other income (expense)
|
(407,723
|
)
|
|
(106,552
|
)
|
|
(637,496
|
)
|
|
(113,137
|
)
|
||||
Loss before income taxes
|
(432,758
|
)
|
|
(126,153
|
)
|
|
(683,107
|
)
|
|
(151,128
|
)
|
||||
Income tax expense
|
972
|
|
|
119
|
|
|
1,166
|
|
|
222
|
|
||||
Net loss
|
$
|
(433,730
|
)
|
|
$
|
(126,272
|
)
|
|
$
|
(684,273
|
)
|
|
$
|
(151,350
|
)
|
Loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(0.48
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.31
|
)
|
Diluted
|
(0.48
|
)
|
|
(0.25
|
)
|
|
(0.78
|
)
|
|
(0.31
|
)
|
||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
904,994
|
|
|
496,169
|
|
|
877,309
|
|
|
484,244
|
|
||||
Diluted
|
904,994
|
|
|
496,169
|
|
|
877,309
|
|
|
484,244
|
|
||||
Comprehensive loss
|
$
|
(432,875
|
)
|
|
$
|
(126,353
|
)
|
|
$
|
(684,651
|
)
|
|
$
|
(152,000
|
)
|
|
June 30,
2014 |
|
December 31, 2013
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
23,800
|
|
|
$
|
17,408
|
|
Accounts receivable, net of allowance of $4,620 and $7,419, respectively
|
16,767
|
|
|
15,723
|
|
||
Inventory
|
28,633
|
|
|
31,817
|
|
||
Advances for inventory
|
2,253
|
|
|
9,359
|
|
||
Prepaid expenses and other current assets
|
6,913
|
|
|
7,059
|
|
||
Total current assets
|
78,366
|
|
|
81,366
|
|
||
Property and equipment, net
|
1,131,884
|
|
|
1,169,785
|
|
||
Restricted cash
|
37,918
|
|
|
37,918
|
|
||
Deferred financing costs
|
69,871
|
|
|
76,436
|
|
||
Intangible and other assets, net
|
9,319
|
|
|
7,103
|
|
||
Total assets
|
$
|
1,327,358
|
|
|
$
|
1,372,608
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current portion of long-term debt
|
$
|
7,271
|
|
|
$
|
4,046
|
|
Accounts payable, including contractor payables of $6,520 and $7,665, respectively
|
12,374
|
|
|
14,627
|
|
||
Accrued contract termination charge
|
23,919
|
|
|
24,133
|
|
||
Accrued expenses
|
21,989
|
|
|
22,700
|
|
||
Payables to affiliates
|
264
|
|
|
202
|
|
||
Derivative liabilities
|
—
|
|
|
57,048
|
|
||
Deferred revenue
|
21,471
|
|
|
17,284
|
|
||
Total current liabilities
|
87,288
|
|
|
140,040
|
|
||
Long-term debt, less current portion
|
624,816
|
|
|
665,236
|
|
||
Employee benefit obligations
|
3,336
|
|
|
3,529
|
|
||
Derivative liabilities
|
773,816
|
|
|
405,478
|
|
||
Deferred revenue
|
6,937
|
|
|
7,079
|
|
||
Debt restructuring fees
|
20,795
|
|
|
20,795
|
|
||
Other non-current liabilities
|
14,824
|
|
|
13,696
|
|
||
Total non-current liabilities
|
1,444,524
|
|
|
1,115,813
|
|
||
Commitments and contingent liabilities (Notes 7 and 8)
|
|
|
|
|
|
||
Stockholders’ (deficit) equity:
|
|
|
|
|
|
||
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at June 30, 2014 and December 31, 2013:
|
|
|
|
|
|
||
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at June 30, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Voting Common Stock of $0.0001 par value; 1,200,000,000 shares authorized; 763,972,273 and 535,883,461 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
|
76
|
|
|
54
|
|
||
Nonvoting Common Stock of $0.0001 par value; 400,000,000 shares authorized; 209,008,656 and 309,008,656 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
|
21
|
|
|
31
|
|
||
Additional paid-in capital
|
1,438,267
|
|
|
1,074,837
|
|
||
Accumulated other comprehensive income
|
493
|
|
|
871
|
|
||
Retained deficit
|
(1,643,311
|
)
|
|
(959,038
|
)
|
||
Total stockholders’ (deficit) equity
|
(204,454
|
)
|
|
116,755
|
|
||
Total liabilities and stockholders’ (deficit) equity
|
$
|
1,327,358
|
|
|
$
|
1,372,608
|
|
|
Six Months Ended
|
||||||
|
June 30,
2014 |
|
June 30,
2013 |
||||
Cash flows provided by (used in) operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(684,273
|
)
|
|
$
|
(151,350
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation, amortization, and accretion
|
45,346
|
|
|
42,399
|
|
||
Change in fair value of derivative assets and liabilities
|
585,652
|
|
|
28,472
|
|
||
Stock-based compensation expense
|
1,133
|
|
|
793
|
|
||
Amortization of deferred financing costs
|
5,043
|
|
|
4,081
|
|
||
Provision for bad debts
|
1,050
|
|
|
794
|
|
||
Reduction in the value of inventory
|
7,317
|
|
|
—
|
|
||
Noncash interest and accretion expense
|
10,942
|
|
|
12,083
|
|
||
Loss on extinguishment of debt
|
26,679
|
|
|
47,240
|
|
||
Loss on equity issuance
|
—
|
|
|
13,969
|
|
||
Discount on future shares issued to vendor
|
748
|
|
|
—
|
|
||
Other, net
|
1,101
|
|
|
407
|
|
||
Unrealized foreign currency gain
|
(504
|
)
|
|
(1,176
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(2,289
|
)
|
|
(1,851
|
)
|
||
Inventory
|
3,524
|
|
|
3,493
|
|
||
Prepaid expenses and other current assets
|
(723
|
)
|
|
(1,349
|
)
|
||
Other assets
|
(1,199
|
)
|
|
556
|
|
||
Accounts payable and accrued expenses
|
(2,177
|
)
|
|
(106
|
)
|
||
Payables to affiliates
|
63
|
|
|
86
|
|
||
Other non-current liabilities
|
725
|
|
|
(837
|
)
|
||
Deferred revenue
|
4,195
|
|
|
470
|
|
||
Net cash provided by (used in) operating activities
|
2,353
|
|
|
(1,826
|
)
|
||
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
||
Second-generation satellites, ground and related launch costs (including interest)
|
(3,315
|
)
|
|
(27,666
|
)
|
||
Property and equipment additions
|
(1,483
|
)
|
|
(569
|
)
|
||
Investment in business
|
—
|
|
|
(355
|
)
|
||
Restricted cash
|
—
|
|
|
8,625
|
|
||
Net cash used in investing activities
|
(4,798
|
)
|
|
(19,965
|
)
|
||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||
Payments to reduce principal amount of exchanged 5.75% Notes
|
—
|
|
|
(13,544
|
)
|
||
Payments for 5.75% Notes not exchanged
|
—
|
|
|
(6,250
|
)
|
||
Payments to lenders and other fees associated with exchange
|
—
|
|
|
(2,482
|
)
|
||
Proceeds from equity issuance to related party
|
—
|
|
|
39,000
|
|
||
Payments of deferred financing costs
|
(164
|
)
|
|
(1,481
|
)
|
||
Proceeds from issuance of common stock and exercise of warrants
|
8,986
|
|
|
1,206
|
|
||
Net cash provided by (used in) financing activities
|
8,822
|
|
|
16,449
|
|
||
Effect of exchange rate changes on cash
|
15
|
|
|
(213
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
6,392
|
|
|
(5,555
|
)
|
||
Cash and cash equivalents, beginning of period
|
17,408
|
|
|
11,792
|
|
||
Cash and cash equivalents, end of period
|
$
|
23,800
|
|
|
$
|
6,237
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for:
|
|
|
|
|
|
||
Interest
|
$
|
10,335
|
|
|
$
|
11,445
|
|
Income taxes
|
63
|
|
|
63
|
|
||
Supplemental disclosure of non-cash financing and investing activities:
|
|
|
|
|
|
||
Increase in non-cash capitalized accrued interest for second-generation satellites and ground costs
|
847
|
|
|
2,910
|
|
||
Capitalization of the accretion of debt discount and amortization of prepaid financing costs
|
1,308
|
|
|
3,901
|
|
||
Payments made in convertible notes and common stock
|
1,638
|
|
|
3,673
|
|
||
Principal amount of debt converted into common stock
|
69,232
|
|
|
8,615
|
|
||
Reduction of debt discount and deferred financing costs due to conversion of debt
|
25,340
|
|
|
5,166
|
|
||
Fair value of common stock issued upon conversion of debt
|
221,799
|
|
|
—
|
|
||
Reduction in derivative liability due to conversion of debt
|
151,034
|
|
|
—
|
|
||
Extinguishment of principal amount of 5.75% Notes
|
—
|
|
|
(71,804
|
)
|
||
Issuance of principal amount of 8.00% Notes Issued in 2013
|
—
|
|
|
54,611
|
|
||
Issuance of common stock to exchanging note holders
|
—
|
|
|
12,127
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Globalstar System:
|
|
|
|
|
|
||
Space component
|
|
|
|
|
|
||
Second-generation satellites in service
|
$
|
1,212,099
|
|
|
$
|
1,212,099
|
|
Prepaid long-lead items
|
17,040
|
|
|
17,040
|
|
||
Second-generation satellite, on-ground spare
|
32,365
|
|
|
32,365
|
|
||
Ground component
|
48,766
|
|
|
48,378
|
|
||
Construction in progress:
|
|
|
|
|
|
||
Space component
|
72
|
|
|
—
|
|
||
Ground component
|
121,144
|
|
|
116,377
|
|
||
Other
|
1,445
|
|
|
1,115
|
|
||
Total Globalstar System
|
1,432,931
|
|
|
1,427,374
|
|
||
Internally developed and purchased software
|
15,921
|
|
|
14,931
|
|
||
Equipment
|
12,531
|
|
|
12,385
|
|
||
Land and buildings
|
3,866
|
|
|
3,768
|
|
||
Leasehold improvements
|
1,672
|
|
|
1,644
|
|
||
Total property and equipment
|
1,466,921
|
|
|
1,460,102
|
|
||
Accumulated depreciation
|
(335,037
|
)
|
|
(290,317
|
)
|
||
Total property and equipment, net
|
$
|
1,131,884
|
|
|
$
|
1,169,785
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2014
|
|
June 30, 2013
|
|
June 30, 2014
|
|
June 30, 2013
|
||||||||
Interest cost eligible to be capitalized
|
$
|
11,361
|
|
|
$
|
11,927
|
|
|
$
|
23,615
|
|
|
$
|
25,732
|
|
Interest cost recorded in interest expense, net
|
(9,395
|
)
|
|
(7,484
|
)
|
|
(19,808
|
)
|
|
(14,151
|
)
|
||||
Net interest capitalized
|
$
|
1,966
|
|
|
$
|
4,443
|
|
|
$
|
3,807
|
|
|
$
|
11,581
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2014
|
|
June 30, 2013
|
|
June 30, 2014
|
|
June 30, 2013
|
||||||||
Depreciation Expense
|
$
|
21,377
|
|
|
$
|
21,817
|
|
|
$
|
44,386
|
|
|
$
|
41,690
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Principal
Amount
|
|
Carrying
Value
|
||||||||
Facility Agreement
|
$
|
586,342
|
|
|
$
|
586,342
|
|
|
$
|
586,342
|
|
|
$
|
586,342
|
|
Thermo Loan Agreement
|
64,119
|
|
|
27,721
|
|
|
60,383
|
|
|
22,854
|
|
||||
8.00% Convertible Senior Notes Issued in 2013
|
29,840
|
|
|
18,024
|
|
|
46,971
|
|
|
26,291
|
|
||||
8.00% Convertible Senior Unsecured Notes Issued in 2009
|
—
|
|
|
—
|
|
|
51,652
|
|
|
33,795
|
|
||||
Total Debt
|
680,301
|
|
|
632,087
|
|
|
745,348
|
|
|
669,282
|
|
||||
Less: Current Portion
|
7,271
|
|
|
7,271
|
|
|
4,046
|
|
|
4,046
|
|
||||
Long-Term Debt
|
$
|
673,030
|
|
|
$
|
624,816
|
|
|
$
|
741,302
|
|
|
$
|
665,236
|
|
|
Outstanding Warrants
|
|
Strike Price
|
||||||||||
|
June 30,
2014 |
|
December 31,
2013 |
|
June 30,
2014 |
|
December 31,
2013 |
||||||
Contingent Equity Agreement (1)
|
37,088,418
|
|
|
41,467,980
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Thermo Loan Agreement (2)
|
—
|
|
|
4,205,608
|
|
|
—
|
|
|
0.01
|
|
||
5.0% Notes (3)
|
8,000,000
|
|
|
8,000,000
|
|
|
0.32
|
|
|
0.32
|
|
||
8.00% Notes Issued in 2009 (4)
|
—
|
|
|
39,842,813
|
|
|
—
|
|
|
0.32
|
|
||
|
45,088,418
|
|
|
93,516,401
|
|
|
|
|
|
|
|
(1)
|
Pursuant to the terms of the Contingent Equity Agreement, the Company has issued to Thermo warrants to purchase shares of common stock pursuant to the annual availability fee and subsequent reset provisions in the Contingent Equity Agreement. These warrants have a
five
year exercise period from issuance. These warrants were issued between June 2009 and June 2012, and the exercise periods expire between June 2014 and June 2017. As of
June 30, 2014
, Thermo exercised warrants to purchase approximately
4.4 million
of these shares prior to the expiration of the associated warrants.
|
(2)
|
As consideration for the Loan Agreement with Thermo, the Company issued Thermo warrants to purchase shares of common stock. The exercise period of the warrants issued in connection with the Thermo Loan Agreement was five years from issuance, which expired in June 2014. Thermo exercised all of these warrants in the second quarter of 2014.
|
(3)
|
The
5.0%
Warrants are exercisable until June 2016, which is
five years
after their issuance.
|
(4)
|
The exercise period for the
8.00%
Warrants began on December 19, 2009 and ended on June 14, 2014. All
8.00%
Warrants were exercised in the second quarter of 2014.
|
•
|
At the closing of the exchange transaction and thereafter each week until no later than July 31, 2013, an amount sufficient to enable the Company to maintain a consolidated unrestricted cash balance of at least
$4.0 million
;
|
•
|
At the closing of the exchange transaction,
$25.0 million
to satisfy all cash requirements associated with the exchange transaction, including agreed principal and interest payments to the holders of the
5.75%
Notes as contemplated by the Exchange Agreement, with any remaining portion being retained by the Company for working capital and general corporate purposes;
|
•
|
Contemporaneously with, and as a condition to the closing of, any restructuring of the Facility Agreement,
$20.0 million
(less any amount contributed pursuant to the commitment described above with respect to the Company’s minimum cash balance);
|
•
|
Subject to the prior closing of the Facility Agreement restructuring, on or prior to December 26, 2013,
$20.0 million
; and
|
•
|
Subject to the prior closing of the Facility Agreement restructuring, on or prior to December 31, 2014,
$20.0 million
, less the amount by which the aggregate amount of cash received by the Company under the first, third and fourth commitments described above exceeds
$40 million
.
|
|
June 30,
2014 |
|
December 31, 2013
|
||||
Intangible and other assets:
|
|
|
|
|
|
||
Interest rate cap
|
$
|
79
|
|
|
$
|
185
|
|
Total intangible and other assets
|
$
|
79
|
|
|
$
|
185
|
|
Derivative liabilities, current:
|
|
|
|
|
|
||
Warrants issued with 8.00% Notes Issued in 2009
|
$
|
—
|
|
|
$
|
(57,048
|
)
|
Derivative liabilities, non-current:
|
|
|
|
|
|
||
Compound embedded derivative with 8.00% Notes Issued in 2009
|
$
|
—
|
|
|
$
|
(66,022
|
)
|
Compound embedded derivative with 8.00% Notes Issued in 2013
|
(183,963
|
)
|
|
(109,794
|
)
|
||
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
|
(589,853
|
)
|
|
(229,662
|
)
|
||
Total derivative liabilities, non-current:
|
(773,816
|
)
|
|
(405,478
|
)
|
||
Total derivative liabilities, current and non-current
|
$
|
(773,816
|
)
|
|
$
|
(462,526
|
)
|
|
Three Months Ended
|
||||||
|
June 30, 2014
|
|
June 30, 2013
|
||||
Interest rate cap
|
$
|
(58
|
)
|
|
$
|
101
|
|
Warrants issued with 8.00% Notes Issued in 2009
|
(31,725
|
)
|
|
(23,411
|
)
|
||
Compound embedded derivative with 8.00% Notes Issued in 2009
|
6,681
|
|
|
(7,127
|
)
|
||
Contingent put feature embedded in the 5.0% Convertible Senior Notes
|
—
|
|
|
1,439
|
|
||
Compound embedded derivative with 8.00% Notes Issued in 2013
|
(93,471
|
)
|
|
(905
|
)
|
||
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
|
(257,710
|
)
|
|
—
|
|
||
Total derivative loss
|
$
|
(376,283
|
)
|
|
$
|
(29,903
|
)
|
|
Six Months Ended
|
||||||
|
June 30, 2014
|
|
June 30, 2013
|
||||
Interest rate cap
|
$
|
(105
|
)
|
|
$
|
116
|
|
Warrants issued with 8.00% Notes Issued in 2009
|
(67,523
|
)
|
|
(22,626
|
)
|
||
Compound embedded derivative with 8.00% Notes Issued in 2009
|
(16,406
|
)
|
|
(7,247
|
)
|
||
Contingent put feature embedded in the 5.0% Convertible Senior Notes
|
—
|
|
|
1,285
|
|
||
Compound embedded derivative with 8.00% Notes Issued in 2013
|
(141,427
|
)
|
|
(905
|
)
|
||
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
|
(360,191
|
)
|
|
—
|
|
||
Total derivative loss
|
$
|
(585,652
|
)
|
|
$
|
(29,377
|
)
|
|
Fair Value Measurements at June 30, 2014:
|
||||||||||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Total
Balance
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate cap
|
$
|
—
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
79
|
|
Total assets measured at fair value
|
$
|
—
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
79
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compound embedded derivative with 8.00% Notes Issued in 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
(183,963
|
)
|
|
$
|
(183,963
|
)
|
|
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
|
—
|
|
|
—
|
|
|
(589,853
|
)
|
|
(589,853
|
)
|
||||
Total Derivative Liabilities
|
—
|
|
|
—
|
|
|
(773,816
|
)
|
|
(773,816
|
)
|
||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liability for contingent consideration
|
—
|
|
|
—
|
|
|
(1,545
|
)
|
|
(1,545
|
)
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(775,361
|
)
|
|
$
|
(775,361
|
)
|
Balance at March 31, 2014
|
$
|
(633,332
|
)
|
Earnout payments made related to liability for contingent consideration
|
377
|
|
|
Change in fair value of contingent consideration
|
(467
|
)
|
|
Derivative adjustment related to conversions and exercises
|
234,286
|
|
|
Unrealized loss, included in derivative loss
|
(376,225
|
)
|
|
Balance at June 30, 2014
|
$
|
(775,361
|
)
|
Balance at December 31, 2013
|
$
|
(464,449
|
)
|
Earnout payments made related to liability for contingent consideration
|
998
|
|
|
Change in fair value of contingent consideration
|
(620
|
)
|
|
Derivative adjustment related to conversions and exercises
|
274,257
|
|
|
Unrealized loss, included in derivative loss
|
(585,547
|
)
|
|
Balance at June 30, 2014
|
$
|
(775,361
|
)
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Accrued interest
|
$
|
897
|
|
|
$
|
1,200
|
|
Accrued compensation and benefits
|
2,947
|
|
|
3,927
|
|
||
Accrued property and other taxes
|
5,957
|
|
|
5,744
|
|
||
Accrued customer liabilities and deposits
|
2,654
|
|
|
2,663
|
|
||
Accrued professional and other service provider fees
|
1,684
|
|
|
705
|
|
||
Accrued liability for contingent consideration
|
1,545
|
|
|
1,922
|
|
||
Accrued commissions
|
1,008
|
|
|
1,316
|
|
||
Accrued telecommunications expenses
|
1,322
|
|
|
649
|
|
||
Other accrued expenses
|
3,975
|
|
|
4,574
|
|
||
Total accrued expenses
|
$
|
21,989
|
|
|
$
|
22,700
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Long-term accrued interest
|
$
|
170
|
|
|
$
|
451
|
|
Asset retirement obligation
|
1,133
|
|
|
1,083
|
|
||
Deferred rent and capital lease obligations
|
459
|
|
|
456
|
|
||
Liabilities related to the Cooperative Endeavor Agreement with the State of Louisiana
|
1,608
|
|
|
1,575
|
|
||
Uncertain income tax positions
|
6,937
|
|
|
5,918
|
|
||
Foreign tax contingencies
|
4,517
|
|
|
4,213
|
|
||
Total noncurrent liabilities
|
$
|
14,824
|
|
|
$
|
13,696
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
General and administrative expenses
|
$
|
63
|
|
|
$
|
155
|
|
|
$
|
63
|
|
|
$
|
155
|
|
Non-cash expenses
|
137
|
|
|
137
|
|
|
274
|
|
|
274
|
|
||||
Loss on equity issuance
|
—
|
|
|
13,969
|
|
|
—
|
|
|
13,969
|
|
||||
Total
|
$
|
200
|
|
|
$
|
14,261
|
|
|
$
|
337
|
|
|
$
|
14,398
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Accumulated other comprehensive income (loss), March 31, 2014 and 2013 and December 31, 2013 and 2012, respectively
|
$
|
(364
|
)
|
|
$
|
(2,327
|
)
|
|
$
|
871
|
|
|
$
|
(1,758
|
)
|
Other comprehensive income (loss) :
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
857
|
|
|
(81
|
)
|
|
(378
|
)
|
|
(650
|
)
|
||||
Accumulated other comprehensive income (loss), June 30, 2014 and 2013, respectively
|
$
|
493
|
|
|
$
|
(2,408
|
)
|
|
$
|
493
|
|
|
$
|
(2,408
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||
Service:
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
11,853
|
|
|
$
|
11,048
|
|
|
$
|
22,733
|
|
|
$
|
22,225
|
|
Canada
|
3,636
|
|
|
3,035
|
|
|
6,869
|
|
|
5,677
|
|
||||
Europe
|
1,401
|
|
|
771
|
|
|
2,752
|
|
|
1,551
|
|
||||
Central and South America
|
783
|
|
|
633
|
|
|
1,447
|
|
|
1,293
|
|
||||
Others
|
214
|
|
|
(78
|
)
|
|
335
|
|
|
53
|
|
||||
Total service revenue
|
$
|
17,887
|
|
|
$
|
15,409
|
|
|
$
|
34,136
|
|
|
$
|
30,799
|
|
Subscriber equipment:
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
3,515
|
|
|
2,828
|
|
|
5,829
|
|
|
5,068
|
|
||||
Canada
|
1,487
|
|
|
978
|
|
|
2,769
|
|
|
1,763
|
|
||||
Europe
|
555
|
|
|
401
|
|
|
1,087
|
|
|
900
|
|
||||
Central and South America
|
335
|
|
|
206
|
|
|
493
|
|
|
534
|
|
||||
Others
|
215
|
|
|
13
|
|
|
216
|
|
|
104
|
|
||||
Total subscriber equipment revenue
|
$
|
6,107
|
|
|
$
|
4,426
|
|
|
$
|
10,394
|
|
|
$
|
8,369
|
|
Total revenue
|
$
|
23,994
|
|
|
$
|
19,835
|
|
|
$
|
44,530
|
|
|
$
|
39,168
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Long-lived assets:
|
|
|
|
|
|
||
United States
|
$
|
1,126,323
|
|
|
$
|
1,164,358
|
|
Canada
|
279
|
|
|
247
|
|
||
Europe
|
542
|
|
|
408
|
|
||
Central and South America
|
3,717
|
|
|
3,595
|
|
||
Others
|
1,023
|
|
|
1,177
|
|
||
Total long-lived assets
|
$
|
1,131,884
|
|
|
$
|
1,169,785
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenues
|
$
|
18,962
|
|
|
$
|
1,541
|
|
|
$
|
6,212
|
|
|
$
|
(8,828
|
)
|
|
$
|
17,887
|
|
Subscriber equipment sales
|
269
|
|
|
4,364
|
|
|
2,254
|
|
|
(780
|
)
|
|
6,107
|
|
|||||
Total revenue
|
19,231
|
|
|
5,905
|
|
|
8,466
|
|
|
(9,608
|
)
|
|
23,994
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
2,419
|
|
|
2,385
|
|
|
2,431
|
|
|
(115
|
)
|
|
7,120
|
|
|||||
Cost of subscriber equipment sales
|
212
|
|
|
3,187
|
|
|
2,672
|
|
|
(1,739
|
)
|
|
4,332
|
|
|||||
Cost of subscriber equipment sales - reduction in the value of inventory
|
7,258
|
|
|
19
|
|
|
40
|
|
|
—
|
|
|
7,317
|
|
|||||
Marketing, general and administrative
|
1,908
|
|
|
4,192
|
|
|
3,294
|
|
|
(1,147
|
)
|
|
8,247
|
|
|||||
Depreciation, amortization, and accretion
|
19,135
|
|
|
3,084
|
|
|
6,530
|
|
|
(6,736
|
)
|
|
22,013
|
|
|||||
Total operating expenses
|
30,932
|
|
|
12,867
|
|
|
14,967
|
|
|
(9,737
|
)
|
|
49,029
|
|
|||||
Loss from operations
|
(11,701
|
)
|
|
(6,962
|
)
|
|
(6,501
|
)
|
|
129
|
|
|
(25,035
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on extinguishment of debt
|
(16,484
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,484
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(13,774
|
)
|
|
(9
|
)
|
|
(81
|
)
|
|
—
|
|
|
(13,864
|
)
|
|||||
Derivative loss
|
(376,283
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(376,283
|
)
|
|||||
Equity in subsidiary earnings
|
(14,889
|
)
|
|
(2,102
|
)
|
|
—
|
|
|
16,991
|
|
|
—
|
|
|||||
Other
|
(550
|
)
|
|
44
|
|
|
(586
|
)
|
|
—
|
|
|
(1,092
|
)
|
|||||
Total other income (expense)
|
(421,980
|
)
|
|
(2,067
|
)
|
|
(667
|
)
|
|
16,991
|
|
|
(407,723
|
)
|
|||||
Loss before income taxes
|
(433,681
|
)
|
|
(9,029
|
)
|
|
(7,168
|
)
|
|
17,120
|
|
|
(432,758
|
)
|
|||||
Income tax expense
|
49
|
|
|
19
|
|
|
904
|
|
|
—
|
|
|
972
|
|
|||||
Net (loss) income
|
$
|
(433,730
|
)
|
|
$
|
(9,048
|
)
|
|
$
|
(8,072
|
)
|
|
$
|
17,120
|
|
|
$
|
(433,730
|
)
|
Comprehensive (loss) income
|
$
|
(433,730
|
)
|
|
$
|
(9,048
|
)
|
|
$
|
(7,227
|
)
|
|
$
|
17,130
|
|
|
$
|
(432,875
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
16,598
|
|
|
$
|
2,479
|
|
|
$
|
4,269
|
|
|
$
|
(7,937
|
)
|
|
$
|
15,409
|
|
Subscriber equipment sales
|
54
|
|
|
2,903
|
|
|
10,196
|
|
|
(8,727
|
)
|
|
4,426
|
|
|||||
Total revenue
|
16,652
|
|
|
5,382
|
|
|
14,465
|
|
|
(16,664
|
)
|
|
19,835
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
2,556
|
|
|
2,334
|
|
|
2,290
|
|
|
25
|
|
|
7,205
|
|
|||||
Cost of subscriber equipment sales
|
1
|
|
|
2,388
|
|
|
10,204
|
|
|
(9,006
|
)
|
|
3,587
|
|
|||||
Marketing, general and administrative
|
1,042
|
|
|
3,480
|
|
|
3,168
|
|
|
(1,113
|
)
|
|
6,577
|
|
|||||
Depreciation, amortization, and accretion
|
17,416
|
|
|
5,394
|
|
|
5,689
|
|
|
(6,432
|
)
|
|
22,067
|
|
|||||
Total operating expenses
|
21,015
|
|
|
13,596
|
|
|
21,351
|
|
|
(16,526
|
)
|
|
39,436
|
|
|||||
Loss from operations
|
(4,363
|
)
|
|
(8,214
|
)
|
|
(6,886
|
)
|
|
(138
|
)
|
|
(19,601
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on extinguishment of debt
|
(47,240
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,240
|
)
|
|||||
Loss on equity issuance
|
(13,969
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,969
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(14,669
|
)
|
|
(5
|
)
|
|
(542
|
)
|
|
—
|
|
|
(15,216
|
)
|
|||||
Derivative loss
|
(29,903
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,903
|
)
|
|||||
Equity in subsidiary earnings
|
(15,724
|
)
|
|
1,794
|
|
|
—
|
|
|
13,930
|
|
|
—
|
|
|||||
Other
|
(339
|
)
|
|
(65
|
)
|
|
133
|
|
|
47
|
|
|
(224
|
)
|
|||||
Total other income (expense)
|
(121,844
|
)
|
|
1,724
|
|
|
(409
|
)
|
|
13,977
|
|
|
(106,552
|
)
|
|||||
Loss before income taxes
|
(126,207
|
)
|
|
(6,490
|
)
|
|
(7,295
|
)
|
|
13,839
|
|
|
(126,153
|
)
|
|||||
Income tax expense
|
65
|
|
|
21
|
|
|
33
|
|
|
—
|
|
|
119
|
|
|||||
Net (loss) income
|
$
|
(126,272
|
)
|
|
$
|
(6,511
|
)
|
|
$
|
(7,328
|
)
|
|
$
|
13,839
|
|
|
$
|
(126,272
|
)
|
Comprehensive (loss) income
|
$
|
(126,272
|
)
|
|
$
|
(6,511
|
)
|
|
$
|
(7,409
|
)
|
|
$
|
13,839
|
|
|
$
|
(126,353
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenues
|
$
|
37,370
|
|
|
$
|
3,365
|
|
|
$
|
10,890
|
|
|
$
|
(17,489
|
)
|
|
$
|
34,136
|
|
Subscriber equipment sales
|
315
|
|
|
7,495
|
|
|
4,153
|
|
|
(1,569
|
)
|
|
10,394
|
|
|||||
Total revenue
|
37,685
|
|
|
10,860
|
|
|
15,043
|
|
|
(19,058
|
)
|
|
44,530
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
5,056
|
|
|
4,448
|
|
|
4,726
|
|
|
(172
|
)
|
|
14,058
|
|
|||||
Cost of subscriber equipment sales
|
212
|
|
|
5,616
|
|
|
4,592
|
|
|
(3,016
|
)
|
|
7,404
|
|
|||||
Cost of subscriber equipment sales - reduction in the value of inventory
|
7,258
|
|
|
19
|
|
|
40
|
|
|
—
|
|
|
7,317
|
|
|||||
Marketing, general and administrative
|
3,596
|
|
|
8,144
|
|
|
6,502
|
|
|
(2,226
|
)
|
|
16,016
|
|
|||||
Depreciation, amortization, and accretion
|
38,457
|
|
|
7,710
|
|
|
13,139
|
|
|
(13,960
|
)
|
|
45,346
|
|
|||||
Total operating expenses
|
54,579
|
|
|
25,937
|
|
|
28,999
|
|
|
(19,374
|
)
|
|
90,141
|
|
|||||
Loss from operations
|
(16,894
|
)
|
|
(15,077
|
)
|
|
(13,956
|
)
|
|
316
|
|
|
(45,611
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on extinguishment of debt
|
(26,679
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,679
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(24,598
|
)
|
|
(20
|
)
|
|
(168
|
)
|
|
—
|
|
|
(24,786
|
)
|
|||||
Derivative loss
|
(585,652
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(585,652
|
)
|
|||||
Equity in subsidiary earnings
|
(29,818
|
)
|
|
(4,216
|
)
|
|
—
|
|
|
34,034
|
|
|
—
|
|
|||||
Other
|
(528
|
)
|
|
(9
|
)
|
|
279
|
|
|
(121
|
)
|
|
(379
|
)
|
|||||
Total other income (expense)
|
(667,275
|
)
|
|
(4,245
|
)
|
|
111
|
|
|
33,913
|
|
|
(637,496
|
)
|
|||||
Loss before income taxes
|
(684,169
|
)
|
|
(19,322
|
)
|
|
(13,845
|
)
|
|
34,229
|
|
|
(683,107
|
)
|
|||||
Income tax expense
|
104
|
|
|
27
|
|
|
1,035
|
|
|
—
|
|
|
1,166
|
|
|||||
Net (loss) income
|
$
|
(684,273
|
)
|
|
$
|
(19,349
|
)
|
|
$
|
(14,880
|
)
|
|
$
|
34,229
|
|
|
$
|
(684,273
|
)
|
Comprehensive (loss) income
|
$
|
(684,273
|
)
|
|
$
|
(19,349
|
)
|
|
$
|
(15,273
|
)
|
|
$
|
34,244
|
|
|
$
|
(684,651
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
31,626
|
|
|
$
|
6,066
|
|
|
$
|
8,380
|
|
|
$
|
(15,273
|
)
|
|
$
|
30,799
|
|
Subscriber equipment sales
|
159
|
|
|
5,764
|
|
|
12,194
|
|
|
(9,748
|
)
|
|
8,369
|
|
|||||
Total revenue
|
31,785
|
|
|
11,830
|
|
|
20,574
|
|
|
(25,021
|
)
|
|
39,168
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
5,108
|
|
|
4,821
|
|
|
4,850
|
|
|
(47
|
)
|
|
14,732
|
|
|||||
Cost of subscriber equipment sales
|
—
|
|
|
4,714
|
|
|
12,504
|
|
|
(10,691
|
)
|
|
6,527
|
|
|||||
Marketing, general and administrative
|
2,548
|
|
|
7,044
|
|
|
6,121
|
|
|
(2,212
|
)
|
|
13,501
|
|
|||||
Depreciation, amortization, and accretion
|
32,893
|
|
|
11,022
|
|
|
10,682
|
|
|
(12,198
|
)
|
|
42,399
|
|
|||||
Total operating expenses
|
40,549
|
|
|
27,601
|
|
|
34,157
|
|
|
(25,148
|
)
|
|
77,159
|
|
|||||
Loss from operations
|
(8,764
|
)
|
|
(15,771
|
)
|
|
(13,583
|
)
|
|
127
|
|
|
(37,991
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on extinguishment of debt
|
(47,240
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,240
|
)
|
|||||
Loss on equity issuance
|
(13,969
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,969
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(22,092
|
)
|
|
(36
|
)
|
|
(836
|
)
|
|
(4
|
)
|
|
(22,968
|
)
|
|||||
Derivative loss
|
(29,377
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,377
|
)
|
|||||
Equity in subsidiary earnings
|
(30,223
|
)
|
|
(1,065
|
)
|
|
—
|
|
|
31,288
|
|
|
—
|
|
|||||
Other
|
436
|
|
|
1
|
|
|
(103
|
)
|
|
83
|
|
|
417
|
|
|||||
Total other income (expense)
|
(142,465
|
)
|
|
(1,100
|
)
|
|
(939
|
)
|
|
31,367
|
|
|
(113,137
|
)
|
|||||
Loss before income taxes
|
(151,229
|
)
|
|
(16,871
|
)
|
|
(14,522
|
)
|
|
31,494
|
|
|
(151,128
|
)
|
|||||
Income tax expense
|
121
|
|
|
29
|
|
|
72
|
|
|
—
|
|
|
222
|
|
|||||
Net (loss) income
|
$
|
(151,350
|
)
|
|
$
|
(16,900
|
)
|
|
$
|
(14,594
|
)
|
|
$
|
31,494
|
|
|
$
|
(151,350
|
)
|
Comprehensive (loss) income
|
$
|
(151,350
|
)
|
|
$
|
(16,900
|
)
|
|
$
|
(15,244
|
)
|
|
$
|
31,494
|
|
|
$
|
(152,000
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Elimination
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
19,274
|
|
|
$
|
1,708
|
|
|
$
|
2,818
|
|
|
$
|
—
|
|
|
$
|
23,800
|
|
Accounts receivable
|
5,875
|
|
|
5,696
|
|
|
5,030
|
|
|
166
|
|
|
16,767
|
|
|||||
Intercompany receivables
|
701,523
|
|
|
428,676
|
|
|
22,764
|
|
|
(1,152,963
|
)
|
|
—
|
|
|||||
Inventory
|
2,025
|
|
|
12,060
|
|
|
14,548
|
|
|
—
|
|
|
28,633
|
|
|||||
Advances for inventory
|
2,181
|
|
|
28
|
|
|
44
|
|
|
—
|
|
|
2,253
|
|
|||||
Prepaid expenses and other current assets
|
3,655
|
|
|
305
|
|
|
2,953
|
|
|
—
|
|
|
6,913
|
|
|||||
Total current assets
|
734,533
|
|
|
448,473
|
|
|
48,157
|
|
|
(1,152,797
|
)
|
|
78,366
|
|
|||||
Property and equipment, net
|
1,121,277
|
|
|
5,043
|
|
|
6,774
|
|
|
(1,210
|
)
|
|
1,131,884
|
|
|||||
Restricted cash
|
37,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,918
|
|
|||||
Intercompany notes receivable
|
13,178
|
|
|
—
|
|
|
4,285
|
|
|
(17,463
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
(230,707
|
)
|
|
2,114
|
|
|
28,033
|
|
|
200,560
|
|
|
—
|
|
|||||
Deferred financing costs
|
69,871
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,871
|
|
|||||
Intangible and other assets, net
|
6,269
|
|
|
799
|
|
|
2,266
|
|
|
(15
|
)
|
|
9,319
|
|
|||||
Total assets
|
$
|
1,752,339
|
|
|
$
|
456,429
|
|
|
$
|
89,515
|
|
|
$
|
(970,925
|
)
|
|
$
|
1,327,358
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current portion of long-term debt
|
$
|
7,271
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,271
|
|
Accounts payable
|
8,542
|
|
|
1,544
|
|
|
2,288
|
|
|
—
|
|
|
12,374
|
|
|||||
Accrued contract termination charge
|
23,919
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,919
|
|
|||||
Accrued expenses
|
5,711
|
|
|
7,710
|
|
|
8,568
|
|
|
—
|
|
|
21,989
|
|
|||||
Intercompany payables
|
475,965
|
|
|
541,788
|
|
|
137,147
|
|
|
(1,154,900
|
)
|
|
—
|
|
|||||
Payables to affiliates
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|||||
Deferred revenue
|
3,625
|
|
|
14,920
|
|
|
2,926
|
|
|
—
|
|
|
21,471
|
|
|||||
Total current liabilities
|
525,297
|
|
|
565,962
|
|
|
150,929
|
|
|
(1,154,900
|
)
|
|
87,288
|
|
|||||
Long-term debt, less current portion
|
624,816
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
624,816
|
|
|||||
Employee benefit obligations
|
3,336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,336
|
|
|||||
Intercompany notes payable
|
—
|
|
|
—
|
|
|
15,321
|
|
|
(15,321
|
)
|
|
—
|
|
|||||
Derivative liabilities
|
773,816
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
773,816
|
|
|||||
Deferred revenue
|
6,417
|
|
|
520
|
|
|
—
|
|
|
—
|
|
|
6,937
|
|
|||||
Debt restructuring fees
|
20,795
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,795
|
|
|||||
Other non-current liabilities
|
2,316
|
|
|
292
|
|
|
12,216
|
|
|
—
|
|
|
14,824
|
|
|||||
Total non-current liabilities
|
1,431,496
|
|
|
812
|
|
|
27,537
|
|
|
(15,321
|
)
|
|
1,444,524
|
|
|||||
Stockholders’ equity
|
(204,454
|
)
|
|
(110,345
|
)
|
|
(88,951
|
)
|
|
199,296
|
|
|
(204,454
|
)
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,752,339
|
|
|
$
|
456,429
|
|
|
$
|
89,515
|
|
|
$
|
(970,925
|
)
|
|
$
|
1,327,358
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Elimination
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
12,935
|
|
|
$
|
676
|
|
|
$
|
3,797
|
|
|
$
|
—
|
|
|
$
|
17,408
|
|
Accounts receivable
|
5,925
|
|
|
5,022
|
|
|
4,602
|
|
|
174
|
|
|
15,723
|
|
|||||
Intercompany receivables
|
651,251
|
|
|
414,508
|
|
|
18,280
|
|
|
(1,084,039
|
)
|
|
—
|
|
|||||
Inventory
|
1,161
|
|
|
14,375
|
|
|
16,281
|
|
|
—
|
|
|
31,817
|
|
|||||
Advances for inventory
|
9,287
|
|
|
28
|
|
|
44
|
|
|
—
|
|
|
9,359
|
|
|||||
Prepaid expenses and other current assets
|
4,316
|
|
|
311
|
|
|
2,432
|
|
|
—
|
|
|
7,059
|
|
|||||
Total current assets
|
684,875
|
|
|
434,920
|
|
|
45,436
|
|
|
(1,083,865
|
)
|
|
81,366
|
|
|||||
Property and equipment, net
|
1,152,734
|
|
|
11,621
|
|
|
6,889
|
|
|
(1,459
|
)
|
|
1,169,785
|
|
|||||
Restricted cash
|
37,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,918
|
|
|||||
Intercompany notes receivable
|
13,629
|
|
|
—
|
|
|
4,285
|
|
|
(17,914
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
(209,592
|
)
|
|
7,242
|
|
|
—
|
|
|
202,350
|
|
|
—
|
|
|||||
Deferred financing costs
|
76,436
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76,436
|
|
|||||
Intangible and other assets, net
|
3,964
|
|
|
1,028
|
|
|
2,125
|
|
|
(14
|
)
|
|
7,103
|
|
|||||
Total assets
|
$
|
1,759,964
|
|
|
$
|
454,811
|
|
|
$
|
58,735
|
|
|
$
|
(900,902
|
)
|
|
$
|
1,372,608
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current portion of long-term debt
|
$
|
4,046
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,046
|
|
Accounts payable
|
9,906
|
|
|
2,041
|
|
|
2,680
|
|
|
—
|
|
|
14,627
|
|
|||||
Accrued contract termination charge
|
24,133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,133
|
|
|||||
Accrued expenses
|
6,160
|
|
|
8,203
|
|
|
8,337
|
|
|
—
|
|
|
22,700
|
|
|||||
Intercompany payables
|
435,707
|
|
|
521,763
|
|
|
128,496
|
|
|
(1,085,966
|
)
|
|
—
|
|
|||||
Payables to affiliates
|
202
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202
|
|
|||||
Derivative liabilities
|
57,048
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,048
|
|
|||||
Deferred revenue
|
1,843
|
|
|
13,094
|
|
|
2,347
|
|
|
—
|
|
|
17,284
|
|
|||||
Total current liabilities
|
539,045
|
|
|
545,101
|
|
|
141,860
|
|
|
(1,085,966
|
)
|
|
140,040
|
|
|||||
Long-term debt, less current portion
|
665,236
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
665,236
|
|
|||||
Employee benefit obligations
|
3,529
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,529
|
|
|||||
Intercompany notes payable
|
—
|
|
|
—
|
|
|
15,772
|
|
|
(15,772
|
)
|
|
—
|
|
|||||
Derivative liabilities
|
405,478
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
405,478
|
|
|||||
Deferred revenue
|
6,583
|
|
|
496
|
|
|
—
|
|
|
—
|
|
|
7,079
|
|
|||||
Debt restructuring fees
|
20,795
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,795
|
|
|||||
Other non-current liabilities
|
2,543
|
|
|
297
|
|
|
10,856
|
|
|
—
|
|
|
13,696
|
|
|||||
Total non-current liabilities
|
1,104,164
|
|
|
793
|
|
|
26,628
|
|
|
(15,772
|
)
|
|
1,115,813
|
|
|||||
Stockholders’ equity
|
116,755
|
|
|
(91,083
|
)
|
|
(109,753
|
)
|
|
200,836
|
|
|
116,755
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,759,964
|
|
|
$
|
454,811
|
|
|
$
|
58,735
|
|
|
$
|
(900,902
|
)
|
|
$
|
1,372,608
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
920
|
|
|
$
|
1,240
|
|
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
2,353
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Second-generation satellites, ground and related launch costs
|
(3,315
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,315
|
)
|
|||||
Property and equipment additions
|
(88
|
)
|
|
(208
|
)
|
|
(1,187
|
)
|
|
—
|
|
|
(1,483
|
)
|
|||||
Net cash used in investing activities
|
(3,403
|
)
|
|
(208
|
)
|
|
(1,187
|
)
|
|
—
|
|
|
(4,798
|
)
|
|||||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of common stock and exercise of warrants
|
8,986
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,986
|
|
|||||
Payment of deferred financing costs
|
(164
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|||||
Net cash used in financing activities
|
8,822
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,822
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
6,339
|
|
|
1,032
|
|
|
(979
|
)
|
|
—
|
|
|
6,392
|
|
|||||
Cash and cash equivalents at beginning of period
|
12,935
|
|
|
676
|
|
|
3,797
|
|
|
—
|
|
|
17,408
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
19,274
|
|
|
$
|
1,708
|
|
|
$
|
2,818
|
|
|
$
|
—
|
|
|
$
|
23,800
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net cash provided used in operating activities
|
$
|
(2,575
|
)
|
|
$
|
58
|
|
|
$
|
691
|
|
|
$
|
—
|
|
|
$
|
(1,826
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Second-generation satellites, ground and related launch costs
|
(27,666
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,666
|
)
|
|||||
Property and equipment additions
|
—
|
|
|
(309
|
)
|
|
(260
|
)
|
|
—
|
|
|
(569
|
)
|
|||||
Investment in businesses
|
(355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(355
|
)
|
|||||
Restricted cash
|
8,625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,625
|
|
|||||
Net cash from investing activities
|
(19,396
|
)
|
|
(309
|
)
|
|
(260
|
)
|
|
—
|
|
|
(19,965
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of common stock and stock options
|
1,206
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,206
|
|
|||||
Payments to reduce principal amount of exchanged 5.75% Notes
|
(13,544
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,544
|
)
|
|||||
Payments to reduce principal amount of 5.75% Notes not exchanged
|
(6,250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,250
|
)
|
|||||
Payments to lenders and other fees associated with exchange
|
(2,482
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,482
|
)
|
|||||
Proceeds from equity issuance to related party
|
39,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,000
|
|
|||||
Payment of deferred financing costs
|
(1,481
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,481
|
)
|
|||||
Net cash used in financing activities
|
16,449
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,449
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(213
|
)
|
|
—
|
|
|
(213
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(5,522
|
)
|
|
(251
|
)
|
|
218
|
|
|
—
|
|
|
(5,555
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
10,220
|
|
|
251
|
|
|
1,321
|
|
|
—
|
|
|
11,792
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
4,698
|
|
|
$
|
—
|
|
|
$
|
1,539
|
|
|
$
|
—
|
|
|
$
|
6,237
|
|
•
|
two-way voice communication and data transmissions, which we call “Duplex,” using mobile or fixed devices; and
|
•
|
one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, which includes certain SPOT and Simplex products.
|
•
|
total revenue, which is an indicator of our overall business growth;
|
•
|
subscriber growth and churn rate, which are both indicators of the satisfaction of our customers;
|
•
|
average monthly revenue per user, or ARPU, which is an indicator of our pricing and ability to obtain effectively long-term, high-value customers. We calculate ARPU separately for each type of our Duplex, Simplex, SPOT and IGO revenue;
|
•
|
operating income and adjusted EBITDA, which are both indicators of our financial performance; and
|
•
|
capital expenditures, which are an indicator of future revenue growth potential and cash requirements.
|
|
Three months ended
June 30, 2014 |
|
Three months ended
June 30, 2013 |
|
Six months ended
June 30, 2014 |
|
Six months ended
June 30, 2013 |
||||||||||||||||||||
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue
|
|
Revenue
|
|
% of Total
Revenue
|
||||||||||||
Service Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Duplex
|
$
|
6,943
|
|
|
29
|
%
|
|
$
|
5,363
|
|
|
27
|
%
|
|
$
|
12,817
|
|
|
29
|
%
|
|
$
|
10,208
|
|
|
26
|
%
|
SPOT
|
7,037
|
|
|
29
|
|
|
6,853
|
|
|
35
|
|
|
14,076
|
|
|
32
|
|
|
13,939
|
|
|
36
|
|
||||
Simplex
|
2,227
|
|
|
9
|
|
|
1,634
|
|
|
8
|
|
|
4,092
|
|
|
9
|
|
|
3,449
|
|
|
9
|
|
||||
IGO
|
301
|
|
|
1
|
|
|
256
|
|
|
1
|
|
|
575
|
|
|
1
|
|
|
488
|
|
|
1
|
|
||||
Other
|
1,379
|
|
|
6
|
|
|
1,303
|
|
|
7
|
|
|
2,576
|
|
|
6
|
|
|
2,715
|
|
|
7
|
|
||||
Total
|
$
|
17,887
|
|
|
74
|
%
|
|
$
|
15,409
|
|
|
78
|
%
|
|
$
|
34,136
|
|
|
77
|
%
|
|
$
|
30,799
|
|
|
79
|
%
|
|
Three months ended
June 30, 2014 |
|
Three months ended
June 30, 2013 |
|
Six months ended
June 30, 2014 |
|
Six months ended
June 30, 2013 |
||||||||||||||||||||
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue
|
|
Revenue
|
|
% of Total
Revenue
|
||||||||||||
Equipment Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Duplex
|
$
|
1,701
|
|
|
7
|
%
|
|
$
|
1,923
|
|
|
9
|
%
|
|
$
|
3,057
|
|
|
7
|
%
|
|
$
|
3,032
|
|
|
8
|
%
|
SPOT
|
1,652
|
|
|
7
|
|
|
938
|
|
|
5
|
|
|
3,080
|
|
|
7
|
|
|
1,864
|
|
|
5
|
|
||||
Simplex
|
2,041
|
|
|
9
|
|
|
1,346
|
|
|
7
|
|
|
3,280
|
|
|
7
|
|
|
2,895
|
|
|
7
|
|
||||
IGO
|
430
|
|
|
2
|
|
|
179
|
|
|
1
|
|
|
610
|
|
|
1
|
|
|
476
|
|
|
1
|
|
||||
Other
|
283
|
|
|
1
|
|
|
40
|
|
|
—
|
|
|
367
|
|
|
1
|
|
|
102
|
|
|
—
|
|
||||
Total
|
$
|
6,107
|
|
|
26
|
%
|
|
$
|
4,426
|
|
|
22
|
%
|
|
$
|
10,394
|
|
|
23
|
%
|
|
$
|
8,369
|
|
|
21
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Average number of subscribers for the period (three and six months ended):
|
|
|
|
|
|
|
|
|
|
||||||
Duplex (1)
|
60,253
|
|
|
83,974
|
|
|
73,033
|
|
|
84,377
|
|
||||
SPOT (2)
|
226,832
|
|
|
213,788
|
|
|
225,737
|
|
|
228,775
|
|
||||
Simplex
|
257,439
|
|
|
201,834
|
|
|
247,754
|
|
|
200,942
|
|
||||
IGO
|
39,258
|
|
|
40,360
|
|
|
39,300
|
|
|
40,652
|
|
||||
ARPU (monthly):
|
|
|
|
|
|
|
|
|
|||||||
Duplex (1)
|
$
|
38.41
|
|
|
$
|
21.29
|
|
|
$
|
29.25
|
|
|
$
|
20.16
|
|
SPOT (2)
|
10.34
|
|
|
10.69
|
|
|
10.39
|
|
|
10.15
|
|
||||
Simplex
|
2.88
|
|
|
2.70
|
|
|
2.75
|
|
|
2.86
|
|
||||
IGO
|
2.56
|
|
|
2.11
|
|
|
2.44
|
|
|
2.00
|
|
||||
Number of subscribers (end of period):
|
|
|
|
|
|
|
|
||||||||
Duplex
|
61,902
|
|
|
84,423
|
|
|
61,902
|
|
|
84,423
|
|
||||
SPOT
|
229,579
|
|
|
216,469
|
|
|
229,579
|
|
|
216,469
|
|
||||
Simplex
|
264,154
|
|
|
213,726
|
|
|
264,154
|
|
|
213,726
|
|
||||
IGO
|
39,248
|
|
|
40,158
|
|
|
39,248
|
|
|
40,158
|
|
||||
Other
|
5,794
|
|
|
6,976
|
|
|
5,794
|
|
|
6,976
|
|
||||
Total
|
600,677
|
|
|
561,752
|
|
|
600,677
|
|
|
561,752
|
|
(1)
|
In 2014 we initiated a process to deactivate certain subscribers in our Duplex subscriber base who were either suspended or non-paying. We deactivated approximately 26,000 subscribers during the first quarter of 2014. For the three and six months ended June 30, 2013, excluding these 26,000 deactivated subscribers from prior period metrics, average subscribers would have been 57,314 and 57,717, respectively, and ARPU would have been $31.18 and $29.48, respectively. For the six months ended June 30, 2014, excluding these 26,000 deactivated subscribers from prior period metrics, average subscribers would have been 59,703 and ARPU would have been $35.78.
|
(2)
|
In 2013 we initiated a process to deactivate certain suspended subscribers in our SPOT subscriber base. We deactivated approximately 36,000 subscribers during the first quarter of 2013. For the six months ended June 30, 2013, excluding these 36,000 deactivated subscribers from prior period metrics, average subscribers would have been 210,725 and ARPU would have been $11.02.
|
|
Six Months Ended
|
||||||
|
June 30,
2014 |
|
June 30,
2013 |
||||
Net cash provided by (used in) operating activities
|
$
|
2,353
|
|
|
$
|
(1,826
|
)
|
Net cash used in investing activities
|
(4,798
|
)
|
|
(19,965
|
)
|
||
Net cash provided by (used in) financing activities
|
8,822
|
|
|
16,449
|
|
||
Effect of exchange rate changes on cash
|
15
|
|
|
(213
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
6,392
|
|
|
$
|
(5,555
|
)
|
•
|
We not exceed maximum capital expenditures of $42.3 million for the full year 2014, $18.8 million for the full year 2015, $13.2 million for the full year 2016 and $15.0 million for each year thereafter. Pursuant to the terms of the Facility Agreement, if, in any relevant period, the capital expenditures are less than the permitted amount for that relevant period, a permitted excess amount may be added to the maximum amount of capital expenditures in the next period;
|
•
|
We maintain at all times a minimum liquidity balance of $4.0 million;
|
•
|
We achieve for each period the following minimum adjusted consolidated EBITDA (as defined in the Facility Agreement):
|
Period
|
|
Minimum Amount
|
||
1/1/14-6/30/14
|
|
$
|
9.9
|
million
|
7/1/14-12/31/14
|
|
$
|
14.1
|
million
|
1/1/15-6/30/15
|
|
$
|
17.0
|
million
|
7/1/15-12/31/15
|
|
$
|
23.5
|
million
|
•
|
Beginning in July 2013, we maintain a minimum debt service coverage ratio of 1.00:1; and
|
•
|
We maintain a maximum net debt to adjusted consolidated EBITDA ratio of 62.00:1, gradually decreasing to 2.50:1 through 2022. For the period July 1, 2013 through June 30, 2014, the maximum net debt to adjusted consolidated EBITDA ratio is 42.00:1.
|
|
|
Payments through
|
|
Estimated Future Payments
|
||||||||||||||||
Capital Expenditures
|
|
June 30,
2014 |
|
Remaining
2014
|
|
2015
|
|
Thereafter
|
|
Total
|
||||||||||
Thales Second-Generation Satellites
|
|
$
|
622,690
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
622,690
|
|
|
Arianespace Launch Services
|
|
216,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
216,000
|
|
|||||
Launch Insurance
|
|
39,903
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,903
|
|
|||||
Other Capital Expenditures and Capitalized Labor
|
|
54,631
|
|
|
5,791
|
|
|
—
|
|
|
—
|
|
|
60,422
|
|
|||||
Total
|
|
$
|
933,224
|
|
|
$
|
5,791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
939,015
|
|
|
|
Payments through
|
|
Estimated Future Payments
|
||||||||||||||||
Capital Expenditures
|
|
June 30,
2014 |
|
Remaining
2014
|
|
2015
|
|
Thereafter
|
|
Total
|
||||||||||
Hughes second-generation ground component (including research and development expense)
|
|
$
|
82,400
|
|
|
$
|
11,401
|
|
|
$
|
11,354
|
|
|
$
|
—
|
|
|
$
|
105,155
|
|
Ericsson ground network
|
|
6,049
|
|
|
6,774
|
|
|
13,676
|
|
|
5,643
|
|
|
32,142
|
|
|||||
Other Capital Expenditures
|
|
1,583
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,583
|
|
|||||
Total
|
|
$
|
90,032
|
|
|
$
|
18,175
|
|
|
$
|
25,030
|
|
|
$
|
5,643
|
|
|
$
|
138,880
|
|
•
|
Updates have been made to the valuation model to correct the identified error.
|
•
|
Additional analysis and review procedures will be performed by the independent valuation firm and discussed with management.
|
Exhibit
Number
|
|
Description
|
|
|
|
10.1†
|
|
Letter Agreement by and between Globalstar, Inc. and Hughes Network Systems, LLC dated as of May 30, 2014
|
|
|
|
10.2
|
|
Letter Agreement regarding equity payment by and between Globalstar, Inc. and Hughes Network Systems, LLC dated as of May 30, 2014
|
|
|
|
31.1
|
|
Section 302 Certification
|
|
|
|
32.1
|
|
Section 906 Certification
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
†
|
Portions of the exhibits have been omitted pursuant to a request for confidential treatment filed with the Commission. The omitted portions have been filed with the Commission.
|
|
|
GLOBALSTAR, INC.
|
|
|
|
|
|
By:
|
|
|
/s/ James Monroe III
|
Date: August 11, 2014
|
|
|
|
|
James Monroe III
|
|
|
Chief Executive Officer (Principal Executive and Financial Officer)
|
Ref:
|
Contract Number GINC-C-08-0390 (“Contract”) between Globalstar, Inc. (“Globalstar”) and Hughes Network Systems, LLC (“Hughes”), as amended
|
Item No.
|
Description
|
Price (USD)
|
1
|
Design modification in the RAN [*]
|
NSP
|
2
|
Build and deliver twenty (20) additional Evaluation Platforms (“EVP”) units. The new EVP units shall include the three (3) d.c. power supplies modification for connection of external antennae.
|
NSP
|
3
|
EVP design modification adding three (3) d.c. power supplies and connections for connection of external antennae
|
NSP
|
4
|
RTDM design modification for inclusion of twenty (20) additional features
|
NSP
|
5
|
RAN design modification for Flexible Beam Boundary
|
NSP
|
6
|
RAN design modification for Call Performance Data
|
NSP
|
|
Firm Fixed-Price
|
3,779,623
|
Payment No.
|
Payment Event
|
Amount (US$)
|
Invoice Date
|
1
|
Effective Date
|
1,511,849
(40% of the Price) |
Effective Date
|
2
|
Completion of the Design Review (est. Effective Date + 3 months)
|
1,133,887
(30% of the Price) |
Upon completion of Design Review
|
3
|
Completion of Packet FAT (ref. Ex. C Payment Milestone 15a)
[*]
|
377,962
(10% of the Price) |
Upon completion of Packet FAT
|
4
|
Completion of IMS FAT (ref. Ex. C Payment Milestone 15b)
[*]
|
377,962
(10% of the Price) |
Upon completion of IMS FAT
|
5
|
Completion of RAN 3 in service date (ref. Ex. C Payment Milestone 17)
[*]
|
377,963
(10% of the Price) |
Upon completion of RAN 3 in service date
|
|
Total
|
3,779,623
|
|
Item No.
|
Description
|
Delivery Date
|
1
|
Design modification in the RAN [*]
|
[*]
|
2
|
Build and deliver twenty (20) additional Evaluation Platforms (“EVP”) units. The new EVP units shall include the three (3) d.c. power supplies modification for connection of the external antenna
|
[*]
|
3
|
EVP design modification adding three (3) d.c. power supplies and connections for connection of external antenna
|
[*]
|
4
|
RTDM design modification for inclusion of twenty (20) additional features
|
[*]
|
5
|
RAN design modification for Flexible Beam Boundary
|
[*]
|
6
|
RAN design modification for Call Performance Data
|
[*]
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Globalstar, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 11, 2014
|
||
|
|
|
By:
|
/s/ James Monroe III
|
|
|
James Monroe III
|
|
|
Chief Executive Officer (Principal Executive and Financial Officer)
|
|
Dated: August 11, 2014
|
|
|
|
|
|
|
By:
|
/s/ James Monroe III
|
|
|
James Monroe III
|
|
|
Chief Executive Officer
|