☒
|
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 ☐
|
|
|
|
Non-accelerated filer ☐
|
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
|
Emerging growth company ☐
|
|
Page
|
|
PART I - F
INANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II - O
THER INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
Exhibits
.
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2017 |
|
June 30,
2016 |
|
June 30,
2017 |
|
June 30,
2016 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
24,301
|
|
|
$
|
20,970
|
|
|
$
|
45,782
|
|
|
$
|
39,719
|
|
Subscriber equipment sales
|
3,822
|
|
|
4,116
|
|
|
6,993
|
|
|
7,203
|
|
||||
Total revenue
|
28,123
|
|
|
25,086
|
|
|
52,775
|
|
|
46,922
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
9,036
|
|
|
7,937
|
|
|
18,010
|
|
|
15,528
|
|
||||
Cost of subscriber equipment sales
|
2,778
|
|
|
2,886
|
|
|
4,874
|
|
|
5,064
|
|
||||
Marketing, general and administrative
|
9,544
|
|
|
11,450
|
|
|
19,034
|
|
|
20,060
|
|
||||
Depreciation, amortization and accretion
|
19,275
|
|
|
19,224
|
|
|
38,569
|
|
|
38,379
|
|
||||
Total operating expenses
|
40,633
|
|
|
41,497
|
|
|
80,487
|
|
|
79,031
|
|
||||
Loss from operations
|
(12,510
|
)
|
|
(16,411
|
)
|
|
(27,712
|
)
|
|
(32,109
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||
Gain (loss) on equity issuance
|
1,964
|
|
|
(2,075
|
)
|
|
2,670
|
|
|
(1,923
|
)
|
||||
Interest income and expense, net of amounts capitalized
|
(8,850
|
)
|
|
(9,049
|
)
|
|
(17,678
|
)
|
|
(18,154
|
)
|
||||
Derivative gain (loss)
|
(77,130
|
)
|
|
40,499
|
|
|
(73,907
|
)
|
|
39,155
|
|
||||
Other
|
(2,102
|
)
|
|
685
|
|
|
(2,126
|
)
|
|
(76
|
)
|
||||
Total other income (expense)
|
(86,118
|
)
|
|
30,060
|
|
|
(91,041
|
)
|
|
19,002
|
|
||||
Income (loss) before income taxes
|
(98,628
|
)
|
|
13,649
|
|
|
(118,753
|
)
|
|
(13,107
|
)
|
||||
Income tax expense (benefit)
|
106
|
|
|
(450
|
)
|
|
142
|
|
|
(259
|
)
|
||||
Net income (loss)
|
$
|
(98,734
|
)
|
|
$
|
14,099
|
|
|
$
|
(118,895
|
)
|
|
$
|
(12,848
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(45
|
)
|
|
(925
|
)
|
|
(865
|
)
|
|
(1,576
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(98,779
|
)
|
|
$
|
13,174
|
|
|
$
|
(119,760
|
)
|
|
$
|
(14,424
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.01
|
)
|
Diluted
|
(0.09
|
)
|
|
0.01
|
|
|
(0.11
|
)
|
|
(0.01
|
)
|
||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
1,128,985
|
|
|
1,049,381
|
|
|
1,121,518
|
|
|
1,045,205
|
|
||||
Diluted
|
1,128,985
|
|
|
1,249,672
|
|
|
1,121,518
|
|
|
1,045,205
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
8,838
|
|
|
$
|
10,230
|
|
Accounts receivable, net of allowance of $4,116 and $3,966, respectively
|
15,369
|
|
|
15,219
|
|
||
Inventory
|
8,814
|
|
|
8,093
|
|
||
Prepaid expenses and other current assets
|
5,189
|
|
|
4,588
|
|
||
Total current assets
|
38,210
|
|
|
38,130
|
|
||
Property and equipment, net
|
1,013,798
|
|
|
1,039,719
|
|
||
Restricted cash
|
37,915
|
|
|
37,983
|
|
||
Intangible and other assets, net of accumulated amortization of $7,137 and $7,021, respectively
|
20,046
|
|
|
16,782
|
|
||
Total assets
|
$
|
1,109,969
|
|
|
$
|
1,132,614
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current portion of long-term debt
|
$
|
108,720
|
|
|
$
|
75,755
|
|
Debt restructuring fees
|
—
|
|
|
20,795
|
|
||
Accounts payable
|
7,624
|
|
|
7,499
|
|
||
Accrued contract termination charge
|
20,026
|
|
|
18,451
|
|
||
Accrued expenses
|
20,664
|
|
|
23,162
|
|
||
Derivative liabilities
|
36,860
|
|
|
—
|
|
||
Payables to affiliates
|
304
|
|
|
309
|
|
||
Deferred revenue
|
29,476
|
|
|
26,479
|
|
||
Total current liabilities
|
223,674
|
|
|
172,450
|
|
||
Long-term debt, less current portion
|
459,966
|
|
|
500,524
|
|
||
Employee benefit obligations
|
4,944
|
|
|
4,883
|
|
||
Derivative liabilities
|
318,215
|
|
|
281,171
|
|
||
Deferred revenue
|
5,866
|
|
|
5,877
|
|
||
Other non-current liabilities
|
5,830
|
|
|
5,890
|
|
||
Total non-current liabilities
|
794,821
|
|
|
798,345
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 6)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
—
|
|
|
—
|
|
||
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
—
|
|
|
—
|
|
||
Voting Common Stock of $0.0001 par value; 1,500,000,000 and 1,200,000,000 shares authorized; 1,025,388,954 and 972,602,824 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
103
|
|
|
97
|
|
||
Nonvoting Common Stock of $0.0001 par value; 400,000,000 shares authorized; 134,008,656 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
13
|
|
|
13
|
|
||
Additional paid-in capital
|
1,698,724
|
|
|
1,649,315
|
|
||
Accumulated other comprehensive loss
|
(6,243
|
)
|
|
(5,378
|
)
|
||
Retained deficit
|
(1,601,123
|
)
|
|
(1,482,228
|
)
|
||
Total stockholders’ equity
|
91,474
|
|
|
161,819
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,109,969
|
|
|
$
|
1,132,614
|
|
|
Six Months Ended
|
|||||||
|
June 30,
2017 |
|
June 30,
2016 |
|||||
Cash flows provided by (used in) operating activities:
|
|
|
|
|
|
|||
Net loss
|
$
|
(118,895
|
)
|
|
$
|
(12,848
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|||
Depreciation, amortization and accretion
|
38,569
|
|
|
38,379
|
|
|||
Change in fair value of derivative assets and liabilities
|
73,907
|
|
|
(39,155
|
)
|
|||
Stock-based compensation expense
|
2,488
|
|
|
1,848
|
|
|||
Amortization of deferred financing costs
|
4,158
|
|
|
4,672
|
|
|||
Provision for bad debts
|
808
|
|
|
396
|
|
|||
Noncash interest and accretion expense
|
5,688
|
|
|
5,487
|
|
|||
Change in fair value related to equity issuance
|
(2,670
|
)
|
|
1,923
|
|
|||
Noncash expense related to legal settlement
|
—
|
|
|
1,094
|
|
|||
Unrealized foreign currency (gain) loss
|
1,571
|
|
|
(77
|
)
|
|||
Other, net
|
660
|
|
|
262
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|||
Accounts receivable
|
(823
|
)
|
|
(2,144
|
)
|
|||
Inventory
|
(622
|
)
|
|
2,924
|
|
|||
Prepaid expenses and other current assets
|
(990
|
)
|
|
(868
|
)
|
|||
Other assets
|
(792
|
)
|
|
104
|
|
|||
Accounts payable and accrued expenses
|
529
|
|
|
(1,474
|
)
|
|||
Payables to affiliates
|
(5
|
)
|
|
(377
|
)
|
|||
Other non-current liabilities
|
24
|
|
|
50
|
|
|||
Deferred revenue
|
2,651
|
|
|
805
|
|
|||
Net cash provided by operating activities
|
6,256
|
|
|
1,001
|
|
|||
Cash flows used in investing activities:
|
|
|
|
|
|
|||
Second-generation network costs (including interest)
|
(6,530
|
)
|
|
(5,307
|
)
|
|||
Property and equipment additions
|
(2,116
|
)
|
|
(6,345
|
)
|
|||
Purchase of intangible assets
|
(2,044
|
)
|
|
(806
|
)
|
|||
Net cash used in investing activities
|
(10,690
|
)
|
|
(12,458
|
)
|
|||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|||
Principal payments of the Facility Agreement
|
(21,695
|
)
|
|
(16,418
|
)
|
|||
Proceeds from Thermo Common Stock Purchase Agreement
|
33,000
|
|
|
—
|
|
|||
Payment of debt restructuring fee
|
(20,795
|
)
|
|
—
|
|
|||
Payment of debt amendment fee
|
(255
|
)
|
|
—
|
|
|||
Proceeds from issuance of stock to Terrapin
|
12,000
|
|
|
28,500
|
|
|||
Proceeds from issuance of common stock and exercise of options and warrants
|
635
|
|
|
3,016
|
|
|||
Net cash provided by financing activities
|
2,890
|
|
|
15,098
|
|
|||
Effect of exchange rate changes on cash
|
84
|
|
|
152
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(1,460
|
)
|
|
3,793
|
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
48,213
|
|
|
45,394
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
46,753
|
|
|
$
|
49,187
|
|
|
|
||||||||
|
As of:
|
|||||||
|
June 30, 2017
|
|
December 31, 2016
|
|||||
Reconciliation of cash, cash equivalents and restricted cash
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
8,838
|
|
|
$
|
10,230
|
|
|
Restricted cash (See Note 3 for further discussion on restrictions)
|
37,915
|
|
|
37,983
|
|
|||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
46,753
|
|
|
$
|
48,213
|
|
|
|
|
|
|
|||||
|
Six Months Ended
|
|||||||
|
June 30,
2017 |
|
June 30,
2016 |
|||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|||
Cash paid for interest
|
$
|
11,659
|
|
|
$
|
10,922
|
|
|
|
|
|
|
|||||
Supplemental disclosure of non-cash financing and investing activities:
|
|
|
|
|
|
|||
Increase in capitalized accrued interest for second-generation network costs
|
$
|
2,003
|
|
|
$
|
1,500
|
|
|
Capitalized accretion of debt discount and amortization of prepaid financing costs
|
2,510
|
|
|
2,099
|
|
|||
Issuance of common stock for legal settlement
|
453
|
|
|
—
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Globalstar System:
|
|
|
|
|
|
||
Space component
|
|
|
|
|
|
||
First and second-generation satellites in service
|
$
|
1,195,180
|
|
|
$
|
1,211,090
|
|
Prepaid long-lead items
|
17,040
|
|
|
17,040
|
|
||
Second-generation satellite, on-ground spare
|
32,481
|
|
|
32,481
|
|
||
Ground component
|
48,562
|
|
|
48,400
|
|
||
Construction in progress:
|
|
|
|
|
|
||
Space component
|
463
|
|
|
81
|
|
||
Ground component
|
217,199
|
|
|
207,127
|
|
||
Next-generation software upgrades
|
11,091
|
|
|
10,223
|
|
||
Other
|
1,917
|
|
|
2,299
|
|
||
Total Globalstar System
|
1,523,933
|
|
|
1,528,741
|
|
||
Internally developed and purchased software
|
16,530
|
|
|
15,005
|
|
||
Equipment
|
10,153
|
|
|
9,875
|
|
||
Land and buildings
|
3,319
|
|
|
3,330
|
|
||
Leasehold improvements
|
1,940
|
|
|
1,893
|
|
||
Total property and equipment
|
1,555,875
|
|
|
1,558,844
|
|
||
Accumulated depreciation
|
(542,077
|
)
|
|
(519,125
|
)
|
||
Total property and equipment, net
|
$
|
1,013,798
|
|
|
$
|
1,039,719
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Principal
Amount
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Carrying
Value
|
|
Principal
Amount
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Carrying
Value
|
||||||||||||
Facility Agreement
|
$
|
521,317
|
|
|
$
|
40,098
|
|
|
$
|
481,219
|
|
|
$
|
543,011
|
|
|
$
|
45,651
|
|
|
$
|
497,360
|
|
Thermo Loan Agreement
|
99,776
|
|
|
28,035
|
|
|
71,741
|
|
|
93,962
|
|
|
29,615
|
|
|
64,347
|
|
||||||
8.00% Convertible Senior Notes Issued in 2013
|
17,319
|
|
|
1,593
|
|
|
15,726
|
|
|
17,126
|
|
|
2,554
|
|
|
14,572
|
|
||||||
Total Debt
|
638,412
|
|
|
69,726
|
|
|
568,686
|
|
|
654,099
|
|
|
77,820
|
|
|
576,279
|
|
||||||
Less: Current Portion
|
110,313
|
|
|
1,593
|
|
|
108,720
|
|
|
75,755
|
|
|
—
|
|
|
75,755
|
|
||||||
Long-Term Debt
|
$
|
528,099
|
|
|
$
|
68,133
|
|
|
$
|
459,966
|
|
|
$
|
578,344
|
|
|
$
|
77,820
|
|
|
$
|
500,524
|
|
•
|
The amendments to the Facility Agreement defer most financial covenants until the measurement period ending December 31, 2018; extend to the measurement period ending December 31, 2019 the date through which Equity Cure Contributions can be made; eliminate the requirement of the Company to redeem in full the 2013
8.00%
Notes (as defined below); defer mandatory prepayments from qualifying equity raises until January 1, 2020; and revise the definition of the debt service reserve account required balance after October 30, 2017 to mean an amount equal to the Debt Service (as defined in the 2017 GARA) amount due on the next payment date.
|
•
|
The Company agreed to raise at least
$159.0 million
in equity, which includes
$12.0 million
previously raised from its common stock purchase agreement with Terrapin Opportunity, L.P. ("Terrapin") in January 2017. The Company was required to raise a portion of the total
$159.0 million
by June 30, 2017 and the remaining amount no later than October 30, 2017. The Company was required to raise approximately
$33.0 million
as of June 30, 2017, which included amounts for the Company's outstanding restructuring fees, insurance premiums to BPIFAE and principal and interest due under the Facility Agreement as of June 30, 2017. If the Company does not raise the remaining funds by October 30, 2017, it would constitute an event of default under the Facility Agreement. The Company is required to deposit
80%
of any equity proceeds raised through December 31, 2019 (including those funds required to be raised in 2017) into a restricted account, separate from the debt service reserve account discussed above, that may only be used to pay obligations under the Facility Agreement.
|
•
|
The 2017 GARA required Thermo to fund or backstop the amounts required to be raised as of June 30, 2017. The total
$33.0 million
was raised pursuant to the Common Stock Purchase Agreement with Thermo, discussed further below.
|
•
|
The Company agreed to limit capital expenditures in connection with its spectrum rights to be the lesser of (1)
$20.0 million
and (2)
20%
of the proceeds of the aggregate of any equity the Company raises from January 1, 2017 through December 31, 2019.
|
•
|
The Company agreed to pay an amendment fee to the agent and lenders in the aggregate amount of
$255,000
and accelerated the payment of the restructuring fee and insurance premium of approximately
$20.8 million
, which was previously due December 31, 2017 and accrued as a current liability on the Company's condensed consolidated balance sheet.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Derivative assets:
|
|
|
|
|
|
||
Interest rate cap
|
$
|
1
|
|
|
$
|
4
|
|
Total derivative assets
|
$
|
1
|
|
|
$
|
4
|
|
Derivative liabilities:
|
|
|
|
|
|
||
Compound embedded derivative with the 2013 8.00% Notes
|
$
|
(36,860
|
)
|
|
$
|
(26,664
|
)
|
Compound embedded derivative with the Thermo Loan Agreement
|
(318,215
|
)
|
|
(254,507
|
)
|
||
Total derivative liabilities
|
$
|
(355,075
|
)
|
|
$
|
(281,171
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Interest rate cap
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
Compound embedded derivative with the 2013 8.00% Notes
|
(11,354
|
)
|
|
5,335
|
|
|
(10,196
|
)
|
|
5,783
|
|
||||
Compound embedded derivative with the Thermo Loan Agreement
|
(65,775
|
)
|
|
35,165
|
|
|
(63,708
|
)
|
|
33,377
|
|
||||
Total derivative gain (loss)
|
$
|
(77,130
|
)
|
|
$
|
40,499
|
|
|
$
|
(73,907
|
)
|
|
$
|
39,155
|
|
|
June 30, 2017
|
||||||||||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Total
Balance
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate cap
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Total assets measured at fair value
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compound embedded derivative with 2013 8.00% Notes
|
—
|
|
|
—
|
|
|
(36,860
|
)
|
|
(36,860
|
)
|
||||
Compound embedded derivative with the Thermo Loan Agreement
|
—
|
|
|
—
|
|
|
(318,215
|
)
|
|
(318,215
|
)
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(355,075
|
)
|
|
$
|
(355,075
|
)
|
|
December 31, 2016
|
||||||||||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Total
Balance
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate cap
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Total assets measured at fair value
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liability for potential stock issuance to Hughes
|
$
|
—
|
|
|
$
|
(2,706
|
)
|
|
$
|
—
|
|
|
$
|
(2,706
|
)
|
Liability for stock issuance due to legal settlement
|
—
|
|
|
(389
|
)
|
|
—
|
|
|
(389
|
)
|
||||
Compound embedded derivative with 2013 8.00% Notes
|
—
|
|
|
—
|
|
|
(26,664
|
)
|
|
(26,664
|
)
|
||||
Compound embedded derivative with the Thermo Loan Agreement
|
—
|
|
|
—
|
|
|
(254,507
|
)
|
|
(254,507
|
)
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
(3,095
|
)
|
|
$
|
(281,171
|
)
|
|
$
|
(284,266
|
)
|
|
June 30, 2017
|
||||||||||||||
|
Stock Price
Volatility
|
|
Risk-Free
Interest
Rate
|
|
Note
Conversion
Price
|
|
Discount Rate
|
|
Market Price of Common Stock
|
||||||
Compound embedded derivative with the 2013 8.00% Notes
|
90%
|
|
1.2
|
%
|
|
$
|
0.73
|
|
|
26
|
%
|
|
$
|
2.13
|
|
Compound embedded derivative with the Thermo Loan Agreement
|
40% - 85%
|
|
2.0
|
%
|
|
$
|
0.73
|
|
|
26
|
%
|
|
$
|
2.13
|
|
|
December 31, 2016
|
||||||||||||||
|
Stock Price
Volatility
|
|
Risk-Free
Interest
Rate
|
|
Note
Conversion
Price
|
|
Discount Rate
|
|
Market Price of Common Stock
|
||||||
Compound embedded derivative with the 2013 8.00% Notes
|
100% - 110%
|
|
1.0
|
%
|
|
$
|
0.73
|
|
|
25
|
%
|
|
$
|
1.58
|
|
Compound embedded derivative with the Thermo Loan Agreement
|
40% - 110%
|
|
2.2
|
%
|
|
$
|
0.73
|
|
|
25
|
%
|
|
$
|
1.58
|
|
|
Three Months Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Balance at beginning of period
|
$
|
(277,946
|
)
|
|
$
|
(240,982
|
)
|
|
$
|
(281,171
|
)
|
|
$
|
(239,642
|
)
|
Unrealized gain (loss), included in derivative gain (loss)
|
(77,129
|
)
|
|
40,500
|
|
|
(73,904
|
)
|
|
39,160
|
|
||||
Balance at end of period
|
$
|
(355,075
|
)
|
|
$
|
(200,482
|
)
|
|
$
|
(355,075
|
)
|
|
$
|
(200,482
|
)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
Thermo Loan Agreement
|
$
|
71,741
|
|
|
$
|
51,045
|
|
|
$
|
64,347
|
|
|
$
|
47,874
|
|
2013 8.00% Notes
|
15,726
|
|
|
15,459
|
|
|
14,572
|
|
|
14,350
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
(98,734
|
)
|
|
$
|
14,099
|
|
|
$
|
(118,895
|
)
|
|
$
|
(12,848
|
)
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
2013 8.00% Notes
|
—
|
|
|
537
|
|
|
—
|
|
|
—
|
|
||||
Thermo Loan Agreement
|
—
|
|
|
2,401
|
|
|
—
|
|
|
—
|
|
||||
Income (loss) to common stockholders plus assumed conversions
|
$
|
(98,734
|
)
|
|
$
|
17,037
|
|
|
$
|
(118,895
|
)
|
|
$
|
(12,848
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic shares outstanding
|
1,128,985
|
|
|
1,049,381
|
|
|
1,121,518
|
|
|
1,045,205
|
|
||||
Incremental shares from assumed exercises, conversions and other issuances:
|
|
|
|
|
|
|
|
||||||||
Stock options, restricted stock, restricted stock units and ESPP
|
—
|
|
|
5,793
|
|
|
—
|
|
|
—
|
|
||||
2013 8.00% Notes
|
—
|
|
|
27,164
|
|
|
—
|
|
|
—
|
|
||||
Thermo Loan Agreement
|
—
|
|
|
139,709
|
|
|
—
|
|
|
—
|
|
||||
Warrants and other
|
—
|
|
|
27,625
|
|
|
—
|
|
|
—
|
|
||||
Diluted shares outstanding
|
1,128,985
|
|
|
1,249,672
|
|
|
1,121,518
|
|
|
1,045,205
|
|
||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
|
(0.11
|
)
|
|
(0.01
|
)
|
||
Diluted
|
(0.09
|
)
|
|
0.01
|
|
|
(0.11
|
)
|
|
(0.01
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenues
|
$
|
18,685
|
|
|
$
|
9,846
|
|
|
$
|
13,096
|
|
|
$
|
(17,326
|
)
|
|
$
|
24,301
|
|
Subscriber equipment sales
|
60
|
|
|
3,702
|
|
|
1,491
|
|
|
(1,431
|
)
|
|
3,822
|
|
|||||
Total revenue
|
18,745
|
|
|
13,548
|
|
|
14,587
|
|
|
(18,757
|
)
|
|
28,123
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
6,415
|
|
|
1,403
|
|
|
1,974
|
|
|
(756
|
)
|
|
9,036
|
|
|||||
Cost of subscriber equipment sales
|
32
|
|
|
3,106
|
|
|
1,525
|
|
|
(1,885
|
)
|
|
2,778
|
|
|||||
Marketing, general and administrative
|
5,312
|
|
|
997
|
|
|
19,357
|
|
|
(16,122
|
)
|
|
9,544
|
|
|||||
Depreciation, amortization and accretion
|
19,101
|
|
|
120
|
|
|
54
|
|
|
—
|
|
|
19,275
|
|
|||||
Total operating expenses
|
30,860
|
|
|
5,626
|
|
|
22,910
|
|
|
(18,763
|
)
|
|
40,633
|
|
|||||
Income (loss) from operations
|
(12,115
|
)
|
|
7,922
|
|
|
(8,323
|
)
|
|
6
|
|
|
(12,510
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain on equity issuance
|
1,964
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,964
|
|
|||||
Interest income and expense, net of amounts capitalized
|
(8,829
|
)
|
|
7
|
|
|
(32
|
)
|
|
4
|
|
|
(8,850
|
)
|
|||||
Derivative loss
|
(77,130
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77,130
|
)
|
|||||
Equity in subsidiary earnings (loss)
|
(1,282
|
)
|
|
(4,076
|
)
|
|
—
|
|
|
5,358
|
|
|
—
|
|
|||||
Other
|
(1,342
|
)
|
|
(337
|
)
|
|
(418
|
)
|
|
(5
|
)
|
|
(2,102
|
)
|
|||||
Total other income (expense)
|
(86,619
|
)
|
|
(4,406
|
)
|
|
(450
|
)
|
|
5,357
|
|
|
(86,118
|
)
|
|||||
Income (loss) before income taxes
|
(98,734
|
)
|
|
3,516
|
|
|
(8,773
|
)
|
|
5,363
|
|
|
(98,628
|
)
|
|||||
Income tax expense
|
—
|
|
|
4
|
|
|
102
|
|
|
—
|
|
|
106
|
|
|||||
Net income (loss)
|
$
|
(98,734
|
)
|
|
$
|
3,512
|
|
|
$
|
(8,875
|
)
|
|
$
|
5,363
|
|
|
$
|
(98,734
|
)
|
Comprehensive income (loss)
|
$
|
(98,734
|
)
|
|
$
|
3,512
|
|
|
$
|
(8,911
|
)
|
|
$
|
5,354
|
|
|
$
|
(98,779
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
10,944
|
|
|
$
|
10,863
|
|
|
$
|
10,689
|
|
|
$
|
(11,526
|
)
|
|
$
|
20,970
|
|
Subscriber equipment sales
|
96
|
|
|
2,774
|
|
|
1,997
|
|
|
(751
|
)
|
|
4,116
|
|
|||||
Total revenue
|
11,040
|
|
|
13,637
|
|
|
12,686
|
|
|
(12,277
|
)
|
|
25,086
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
5,135
|
|
|
1,034
|
|
|
2,702
|
|
|
(934
|
)
|
|
7,937
|
|
|||||
Cost of subscriber equipment sales
|
43
|
|
|
2,112
|
|
|
1,478
|
|
|
(747
|
)
|
|
2,886
|
|
|||||
Marketing, general and administrative
|
5,430
|
|
|
1,322
|
|
|
16,219
|
|
|
(11,521
|
)
|
|
11,450
|
|
|||||
Depreciation, amortization and accretion
|
18,851
|
|
|
206
|
|
|
288
|
|
|
(121
|
)
|
|
19,224
|
|
|||||
Total operating expenses
|
29,459
|
|
|
4,674
|
|
|
20,687
|
|
|
(13,323
|
)
|
|
41,497
|
|
|||||
Income (loss) from operations
|
(18,419
|
)
|
|
8,963
|
|
|
(8,001
|
)
|
|
1,046
|
|
|
(16,411
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on equity issuance
|
(2,075
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,075
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(9,000
|
)
|
|
(3
|
)
|
|
(47
|
)
|
|
1
|
|
|
(9,049
|
)
|
|||||
Derivative gain
|
40,499
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,499
|
|
|||||
Equity in subsidiary earnings (loss)
|
2,924
|
|
|
(968
|
)
|
|
—
|
|
|
(1,956
|
)
|
|
—
|
|
|||||
Other
|
170
|
|
|
92
|
|
|
328
|
|
|
95
|
|
|
685
|
|
|||||
Total other income (expense)
|
32,518
|
|
|
(879
|
)
|
|
281
|
|
|
(1,860
|
)
|
|
30,060
|
|
|||||
Income (loss) before income taxes
|
14,099
|
|
|
8,084
|
|
|
(7,720
|
)
|
|
(814
|
)
|
|
13,649
|
|
|||||
Income tax benefit
|
—
|
|
|
—
|
|
|
(450
|
)
|
|
—
|
|
|
(450
|
)
|
|||||
Net income (loss)
|
$
|
14,099
|
|
|
$
|
8,084
|
|
|
$
|
(7,270
|
)
|
|
$
|
(814
|
)
|
|
$
|
14,099
|
|
Comprehensive income (loss)
|
$
|
14,099
|
|
|
$
|
8,084
|
|
|
$
|
(8,195
|
)
|
|
$
|
(814
|
)
|
|
$
|
13,174
|
|
|
Parent
Company |
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenues
|
$
|
36,297
|
|
|
$
|
19,202
|
|
|
$
|
24,097
|
|
|
$
|
(33,814
|
)
|
|
$
|
45,782
|
|
Subscriber equipment sales
|
127
|
|
|
5,993
|
|
|
2,841
|
|
|
(1,968
|
)
|
|
6,993
|
|
|||||
Total revenue
|
36,424
|
|
|
25,195
|
|
|
26,938
|
|
|
(35,782
|
)
|
|
52,775
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
12,543
|
|
|
2,828
|
|
|
5,147
|
|
|
(2,508
|
)
|
|
18,010
|
|
|||||
Cost of subscriber equipment sales
|
66
|
|
|
4,823
|
|
|
1,952
|
|
|
(1,967
|
)
|
|
4,874
|
|
|||||
Marketing, general and administrative
|
10,971
|
|
|
2,116
|
|
|
37,265
|
|
|
(31,318
|
)
|
|
19,034
|
|
|||||
Depreciation, amortization and accretion
|
38,052
|
|
|
402
|
|
|
115
|
|
|
—
|
|
|
38,569
|
|
|||||
Total operating expenses
|
61,632
|
|
|
10,169
|
|
|
44,479
|
|
|
(35,793
|
)
|
|
80,487
|
|
|||||
Income (loss) from operations
|
(25,208
|
)
|
|
15,026
|
|
|
(17,541
|
)
|
|
11
|
|
|
(27,712
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain (loss) on equity issuance
|
2,706
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
2,670
|
|
|||||
Interest income and expense, net of amounts capitalized
|
(17,584
|
)
|
|
(1
|
)
|
|
(101
|
)
|
|
8
|
|
|
(17,678
|
)
|
|||||
Derivative loss
|
(73,907
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73,907
|
)
|
|||||
Equity in subsidiary earnings (loss)
|
(3,215
|
)
|
|
(7,510
|
)
|
|
—
|
|
|
10,725
|
|
|
—
|
|
|||||
Other
|
(1,687
|
)
|
|
(437
|
)
|
|
5
|
|
|
(7
|
)
|
|
(2,126
|
)
|
|||||
Total other income (expense)
|
(93,687
|
)
|
|
(7,948
|
)
|
|
(132
|
)
|
|
10,726
|
|
|
(91,041
|
)
|
|||||
Income (loss) before income taxes
|
(118,895
|
)
|
|
7,078
|
|
|
(17,673
|
)
|
|
10,737
|
|
|
(118,753
|
)
|
|||||
Income tax expense
|
—
|
|
|
9
|
|
|
133
|
|
|
—
|
|
|
142
|
|
|||||
Net income (loss)
|
$
|
(118,895
|
)
|
|
$
|
7,069
|
|
|
$
|
(17,806
|
)
|
|
$
|
10,737
|
|
|
$
|
(118,895
|
)
|
Comprehensive income (loss)
|
$
|
(118,895
|
)
|
|
$
|
7,069
|
|
|
$
|
(18,662
|
)
|
|
$
|
10,728
|
|
|
$
|
(119,760
|
)
|
|
Parent
Company |
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues
|
$
|
27,882
|
|
|
$
|
18,358
|
|
|
$
|
20,114
|
|
|
$
|
(26,635
|
)
|
|
$
|
39,719
|
|
Subscriber equipment sales
|
424
|
|
|
4,466
|
|
|
3,674
|
|
|
(1,361
|
)
|
|
7,203
|
|
|||||
Total revenue
|
28,306
|
|
|
22,824
|
|
|
23,788
|
|
|
(27,996
|
)
|
|
46,922
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)
|
9,948
|
|
|
2,070
|
|
|
5,597
|
|
|
(2,087
|
)
|
|
15,528
|
|
|||||
Cost of subscriber equipment sales
|
187
|
|
|
3,540
|
|
|
2,693
|
|
|
(1,356
|
)
|
|
5,064
|
|
|||||
Marketing, general and administrative
|
10,604
|
|
|
1,854
|
|
|
33,064
|
|
|
(25,462
|
)
|
|
20,060
|
|
|||||
Depreciation, amortization and accretion
|
37,623
|
|
|
426
|
|
|
569
|
|
|
(239
|
)
|
|
38,379
|
|
|||||
Total operating expenses
|
58,362
|
|
|
7,890
|
|
|
41,923
|
|
|
(29,144
|
)
|
|
79,031
|
|
|||||
Income (loss) from operations
|
(30,056
|
)
|
|
14,934
|
|
|
(18,135
|
)
|
|
1,148
|
|
|
(32,109
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss on equity issuance
|
(1,923
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,923
|
)
|
|||||
Interest income and expense, net of amounts capitalized
|
(17,981
|
)
|
|
(12
|
)
|
|
(152
|
)
|
|
(9
|
)
|
|
(18,154
|
)
|
|||||
Derivative gain
|
39,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,155
|
|
|||||
Equity in subsidiary earnings (loss)
|
(1,427
|
)
|
|
2,079
|
|
|
—
|
|
|
(652
|
)
|
|
—
|
|
|||||
Other
|
(616
|
)
|
|
(112
|
)
|
|
604
|
|
|
48
|
|
|
(76
|
)
|
|||||
Total other income (expense)
|
17,208
|
|
|
1,955
|
|
|
452
|
|
|
(613
|
)
|
|
19,002
|
|
|||||
Income (loss) before income taxes
|
(12,848
|
)
|
|
16,889
|
|
|
(17,683
|
)
|
|
535
|
|
|
(13,107
|
)
|
|||||
Income tax benefit
|
—
|
|
|
—
|
|
|
(259
|
)
|
|
—
|
|
|
(259
|
)
|
|||||
Net income (loss)
|
$
|
(12,848
|
)
|
|
$
|
16,889
|
|
|
$
|
(17,424
|
)
|
|
$
|
535
|
|
|
$
|
(12,848
|
)
|
Comprehensive income (loss)
|
$
|
(12,848
|
)
|
|
$
|
16,889
|
|
|
$
|
(19,000
|
)
|
|
$
|
535
|
|
|
$
|
(14,424
|
)
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
4,538
|
|
|
$
|
1,975
|
|
|
$
|
2,325
|
|
|
$
|
—
|
|
|
$
|
8,838
|
|
Accounts receivable
|
5,806
|
|
|
6,135
|
|
|
3,428
|
|
|
—
|
|
|
15,369
|
|
|||||
Intercompany receivables
|
938,139
|
|
|
717,066
|
|
|
46,098
|
|
|
(1,701,303
|
)
|
|
—
|
|
|||||
Inventory
|
2,208
|
|
|
4,621
|
|
|
1,985
|
|
|
—
|
|
|
8,814
|
|
|||||
Prepaid expenses and other current assets
|
1,738
|
|
|
1,830
|
|
|
1,621
|
|
|
—
|
|
|
5,189
|
|
|||||
Total current assets
|
952,429
|
|
|
731,627
|
|
|
55,457
|
|
|
(1,701,303
|
)
|
|
38,210
|
|
|||||
Property and equipment, net
|
1,005,671
|
|
|
3,751
|
|
|
4,371
|
|
|
5
|
|
|
1,013,798
|
|
|||||
Restricted cash
|
37,915
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,915
|
|
|||||
Intercompany notes receivable
|
7,447
|
|
|
—
|
|
|
6,436
|
|
|
(13,883
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
(282,248
|
)
|
|
78,753
|
|
|
37,502
|
|
|
165,993
|
|
|
—
|
|
|||||
Intangible and other assets, net
|
17,321
|
|
|
87
|
|
|
2,650
|
|
|
(12
|
)
|
|
20,046
|
|
|||||
Total assets
|
$
|
1,738,535
|
|
|
$
|
814,218
|
|
|
$
|
106,416
|
|
|
$
|
(1,549,200
|
)
|
|
$
|
1,109,969
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current portion of long-term debt
|
$
|
108,720
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,720
|
|
Accounts payable
|
2,925
|
|
|
3,487
|
|
|
1,212
|
|
|
—
|
|
|
7,624
|
|
|||||
Accrued contract termination charge
|
20,026
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,026
|
|
|||||
Accrued expenses
|
7,713
|
|
|
6,097
|
|
|
6,854
|
|
|
—
|
|
|
20,664
|
|
|||||
Derivative Liabilities
|
36,860
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,860
|
|
|||||
Intercompany payables
|
673,426
|
|
|
773,216
|
|
|
254,622
|
|
|
(1,701,264
|
)
|
|
—
|
|
|||||
Payables to affiliates
|
304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
304
|
|
|||||
Deferred revenue
|
1,130
|
|
|
21,247
|
|
|
7,099
|
|
|
—
|
|
|
29,476
|
|
|||||
Total current liabilities
|
851,104
|
|
|
804,047
|
|
|
269,787
|
|
|
(1,701,264
|
)
|
|
223,674
|
|
|||||
Long-term debt, less current portion
|
459,966
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
459,966
|
|
|||||
Employee benefit obligations
|
4,944
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,944
|
|
|||||
Intercompany notes payable
|
6,436
|
|
|
—
|
|
|
7,447
|
|
|
(13,883
|
)
|
|
—
|
|
|||||
Derivative liabilities
|
318,215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
318,215
|
|
|||||
Deferred revenue
|
5,468
|
|
|
384
|
|
|
14
|
|
|
—
|
|
|
5,866
|
|
|||||
Other non-current liabilities
|
928
|
|
|
325
|
|
|
4,577
|
|
|
—
|
|
|
5,830
|
|
|||||
Total non-current liabilities
|
795,957
|
|
|
709
|
|
|
12,038
|
|
|
(13,883
|
)
|
|
794,821
|
|
|||||
Stockholders’ equity (deficit)
|
91,474
|
|
|
9,462
|
|
|
(175,409
|
)
|
|
165,947
|
|
|
91,474
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,738,535
|
|
|
$
|
814,218
|
|
|
$
|
106,416
|
|
|
$
|
(1,549,200
|
)
|
|
$
|
1,109,969
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
7,259
|
|
|
$
|
1,327
|
|
|
$
|
1,644
|
|
|
$
|
—
|
|
|
$
|
10,230
|
|
Accounts receivable
|
5,938
|
|
|
6,340
|
|
|
2,941
|
|
|
—
|
|
|
15,219
|
|
|||||
Intercompany receivables
|
897,691
|
|
|
678,707
|
|
|
32,040
|
|
|
(1,608,438
|
)
|
|
—
|
|
|||||
Inventory
|
2,266
|
|
|
4,354
|
|
|
1,473
|
|
|
—
|
|
|
8,093
|
|
|||||
Prepaid expenses and other current assets
|
1,570
|
|
|
955
|
|
|
2,063
|
|
|
—
|
|
|
4,588
|
|
|||||
Total current assets
|
914,724
|
|
|
691,683
|
|
|
40,161
|
|
|
(1,608,438
|
)
|
|
38,130
|
|
|||||
Property and equipment, net
|
1,031,623
|
|
|
3,708
|
|
|
4,384
|
|
|
4
|
|
|
1,039,719
|
|
|||||
Restricted cash
|
37,983
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,983
|
|
|||||
Intercompany notes receivable
|
8,901
|
|
|
—
|
|
|
6,436
|
|
|
(15,337
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
(280,557
|
)
|
|
73,029
|
|
|
36,146
|
|
|
171,382
|
|
|
—
|
|
|||||
Intangible and other assets, net
|
15,259
|
|
|
128
|
|
|
1,407
|
|
|
(12
|
)
|
|
16,782
|
|
|||||
Total assets
|
$
|
1,727,933
|
|
|
$
|
768,548
|
|
|
$
|
88,534
|
|
|
$
|
(1,452,401
|
)
|
|
$
|
1,132,614
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current portion of long-term debt
|
$
|
75,755
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75,755
|
|
Debt restructuring fees
|
20,795
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,795
|
|
|||||
Accounts payable
|
2,624
|
|
|
3,490
|
|
|
1,385
|
|
|
—
|
|
|
7,499
|
|
|||||
Accrued contract termination charge
|
18,451
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,451
|
|
|||||
Accrued expenses
|
10,573
|
|
|
5,884
|
|
|
6,705
|
|
|
—
|
|
|
23,162
|
|
|||||
Intercompany payables
|
636,336
|
|
|
750,084
|
|
|
221,980
|
|
|
(1,608,400
|
)
|
|
—
|
|
|||||
Payables to affiliates
|
309
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309
|
|
|||||
Deferred revenue
|
1,576
|
|
|
19,304
|
|
|
5,599
|
|
|
—
|
|
|
26,479
|
|
|||||
Total current liabilities
|
766,419
|
|
|
778,762
|
|
|
235,669
|
|
|
(1,608,400
|
)
|
|
172,450
|
|
|||||
Long-term debt, less current portion
|
500,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,524
|
|
|||||
Employee benefit obligations
|
4,883
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,883
|
|
|||||
Intercompany notes payable
|
6,435
|
|
|
—
|
|
|
8,901
|
|
|
(15,336
|
)
|
|
—
|
|
|||||
Derivative liabilities
|
281,171
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281,171
|
|
|||||
Deferred revenue
|
5,567
|
|
|
299
|
|
|
11
|
|
|
—
|
|
|
5,877
|
|
|||||
Other non-current liabilities
|
1,115
|
|
|
325
|
|
|
4,450
|
|
|
—
|
|
|
5,890
|
|
|||||
Total non-current liabilities
|
799,695
|
|
|
624
|
|
|
13,362
|
|
|
(15,336
|
)
|
|
798,345
|
|
|||||
Stockholders’ equity (deficit)
|
161,819
|
|
|
(10,838
|
)
|
|
(160,497
|
)
|
|
171,335
|
|
|
161,819
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,727,933
|
|
|
$
|
768,548
|
|
|
$
|
88,534
|
|
|
$
|
(1,452,401
|
)
|
|
$
|
1,132,614
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Cash flows provided by operating activities
|
$
|
4,008
|
|
|
$
|
1,068
|
|
|
$
|
1,180
|
|
|
$
|
—
|
|
|
$
|
6,256
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Second-generation network costs (including interest)
|
(6,498
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(6,530
|
)
|
|||||
Property and equipment additions
|
(1,637
|
)
|
|
(420
|
)
|
|
(59
|
)
|
|
—
|
|
|
(2,116
|
)
|
|||||
Purchase of intangible assets
|
(1,552
|
)
|
|
—
|
|
|
(492
|
)
|
|
—
|
|
|
(2,044
|
)
|
|||||
Net cash used in investing activities
|
(9,687
|
)
|
|
(420
|
)
|
|
(583
|
)
|
|
—
|
|
|
(10,690
|
)
|
|||||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments of the Facility Agreement
|
(21,695
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,695
|
)
|
|||||
Proceeds from Thermo Common Stock Purchase Agreement
|
33,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,000
|
|
|||||
Payment of debt restructuring fee
|
(20,795
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,795
|
)
|
|||||
Payment of debt amendment fee
|
(255
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(255
|
)
|
|||||
Proceeds from issuance of stock to Terrapin
|
12,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,000
|
|
|||||
Proceeds from issuance of common stock and exercise of options and warrants
|
635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|||||
Net cash provided by financing activities
|
2,890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,890
|
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(2,789
|
)
|
|
648
|
|
|
681
|
|
|
—
|
|
|
(1,460
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
45,242
|
|
|
1,327
|
|
|
1,644
|
|
|
—
|
|
|
48,213
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
42,453
|
|
|
$
|
1,975
|
|
|
$
|
2,325
|
|
|
$
|
—
|
|
|
$
|
46,753
|
|
|
Parent
Company
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Cash flows provided by (used in) operating activities
|
$
|
916
|
|
|
$
|
255
|
|
|
$
|
(170
|
)
|
|
$
|
—
|
|
|
$
|
1,001
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Second-generation network costs (including interest)
|
(5,161
|
)
|
|
—
|
|
|
(146
|
)
|
|
—
|
|
|
(5,307
|
)
|
|||||
Property and equipment additions
|
(5,937
|
)
|
|
(167
|
)
|
|
(241
|
)
|
|
—
|
|
|
(6,345
|
)
|
|||||
Purchase of intangible assets
|
(806
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(806
|
)
|
|||||
Net cash used in investing activities
|
(11,904
|
)
|
|
(167
|
)
|
|
(387
|
)
|
|
—
|
|
|
(12,458
|
)
|
|||||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments of the Facility Agreement
|
(16,418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,418
|
)
|
|||||
Proceeds from issuance of stock to Terrapin
|
28,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,500
|
|
|||||
Proceeds from issuance of common stock and exercise of options and warrants
|
3,016
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,016
|
|
|||||
Net cash provided by financing activities
|
15,098
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,098
|
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
152
|
|
|
—
|
|
|
152
|
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
4,110
|
|
|
88
|
|
|
(405
|
)
|
|
—
|
|
|
3,793
|
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
41,448
|
|
|
719
|
|
|
3,227
|
|
|
—
|
|
|
45,394
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
45,558
|
|
|
$
|
807
|
|
|
$
|
2,822
|
|
|
$
|
—
|
|
|
$
|
49,187
|
|
•
|
two-way voice communication and data transmissions using mobile or fixed devices, which we refer to as Duplex; and
|
•
|
one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, including 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, both of which are 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, 2017 |
|
Three Months Ended
June 30, 2016 |
|
Six Months Ended
June 30, 2017 |
|
Six Months Ended
June 30, 2016 |
||||||||||||||||||||
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue
|
|
Revenue
|
|
% of Total
Revenue
|
||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Duplex
|
$
|
9,322
|
|
|
33
|
%
|
|
$
|
8,093
|
|
|
32
|
%
|
|
$
|
16,920
|
|
|
32
|
%
|
|
$
|
14,427
|
|
|
31
|
%
|
SPOT
|
11,193
|
|
|
40
|
|
|
9,489
|
|
|
38
|
|
|
21,590
|
|
|
41
|
|
|
18,590
|
|
|
39
|
|
||||
Simplex
|
2,526
|
|
|
9
|
|
|
2,644
|
|
|
11
|
|
|
4,942
|
|
|
9
|
|
|
5,009
|
|
|
11
|
|
||||
IGO
|
376
|
|
|
1
|
|
|
172
|
|
|
1
|
|
|
587
|
|
|
1
|
|
|
416
|
|
|
1
|
|
||||
Other
|
884
|
|
|
3
|
|
|
572
|
|
|
2
|
|
|
1,743
|
|
|
3
|
|
|
1,277
|
|
|
3
|
|
||||
Total
|
$
|
24,301
|
|
|
86
|
%
|
|
$
|
20,970
|
|
|
84
|
%
|
|
$
|
45,782
|
|
|
86
|
%
|
|
$
|
39,719
|
|
|
85
|
%
|
|
Three Months Ended
June 30, 2017 |
|
Three Months Ended
June 30, 2016 |
|
Six Months Ended
June 30, 2017 |
|
Six Months Ended
June 30, 2016 |
||||||||||||||||||||
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue |
|
Revenue
|
|
% of Total
Revenue
|
|
Revenue
|
|
% of Total
Revenue
|
||||||||||||
Subscriber equipment sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Duplex
|
$
|
612
|
|
|
2
|
%
|
|
$
|
1,171
|
|
|
4
|
%
|
|
$
|
1,511
|
|
|
3
|
%
|
|
$
|
2,019
|
|
|
4
|
%
|
SPOT
|
1,815
|
|
|
7
|
|
|
1,654
|
|
|
7
|
|
|
3,051
|
|
|
6
|
|
|
2,615
|
|
|
6
|
|
||||
Simplex
|
1,072
|
|
|
4
|
|
|
1,072
|
|
|
4
|
|
|
1,979
|
|
|
4
|
|
|
2,006
|
|
|
4
|
|
||||
IGO
|
330
|
|
|
1
|
|
|
229
|
|
|
1
|
|
|
469
|
|
|
1
|
|
|
531
|
|
|
1
|
|
||||
Other
|
(7
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
32
|
|
|
—
|
|
||||
Total
|
$
|
3,822
|
|
|
14
|
%
|
|
$
|
4,116
|
|
|
16
|
%
|
|
$
|
6,993
|
|
|
14
|
%
|
|
$
|
7,203
|
|
|
15
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Average number of subscribers for the period:
|
|
|
|
|
|
|
|
|
|
||||||
Duplex
|
72,290
|
|
|
77,479
|
|
|
73,650
|
|
|
77,154
|
|
||||
SPOT
|
282,826
|
|
|
272,698
|
|
|
282,149
|
|
|
271,073
|
|
||||
Simplex
|
300,459
|
|
|
297,945
|
|
|
301,433
|
|
|
300,529
|
|
||||
IGO
|
37,162
|
|
|
39,091
|
|
|
37,596
|
|
|
39,127
|
|
||||
Other
|
1,483
|
|
|
2,662
|
|
|
1,543
|
|
|
2,703
|
|
||||
Total
|
694,220
|
|
|
689,875
|
|
|
696,371
|
|
|
690,586
|
|
||||
|
|
|
|
|
|
|
|
||||||||
ARPU (monthly):
|
|
|
|
|
|
|
|
|
|||||||
Duplex
|
$
|
42.98
|
|
|
$
|
34.82
|
|
|
$
|
38.29
|
|
|
$
|
31.16
|
|
SPOT
|
13.19
|
|
|
11.60
|
|
|
12.75
|
|
|
11.43
|
|
||||
Simplex
|
2.80
|
|
|
2.96
|
|
|
2.73
|
|
|
2.78
|
|
||||
IGO
|
3.37
|
|
|
1.46
|
|
|
2.60
|
|
|
1.77
|
|
|
Six Months Ended
|
||||||
|
June 30,
2017 |
|
June 30,
2016 |
||||
Net cash provided by operating activities
|
$
|
6,256
|
|
|
$
|
1,001
|
|
Net cash used in investing activities
|
(10,690
|
)
|
|
(12,458
|
)
|
||
Net cash provided by financing activities
|
2,890
|
|
|
15,098
|
|
||
Effect of exchange rate changes on cash
|
84
|
|
|
152
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
(1,460
|
)
|
|
$
|
3,793
|
|
|
|
|
GLOBALSTAR, INC.
|
|
|
|
|
Date:
|
August 3, 2017
|
By:
|
/s/ James Monroe III
|
|
|
|
James Monroe III
|
|
|
|
Chairman and Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Rebecca S. Clary
|
|
|
|
Rebecca S. Clary
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
GLOBALSTAR, INC.
|
HUGHES NETWORK SYSTEMS, LLC
|
BY: /s/ David Milla
|
BY: /s/ Sean P. Fleming
|
Name: David Milla
|
Name: Sean P. Fleming
|
Title: Director - Contracts
|
Title: VP & Associate General Counsel
|
|
|
|
|
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 3, 2017
|
|
|
|
|
By:
|
/s/ James Monroe III
|
|
|
James Monroe III
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
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 3, 2017
|
|
|
|
|
By:
|
/s/ Rebecca S. Clary
|
|
|
Rebecca S. Clary
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
Date:
|
August 3, 2017
|
By:
|
/s/ James Monroe III
|
|
|
|
James Monroe III
|
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
|
|
|
|
Date:
|
August 3, 2017
|
By:
|
/s/ Rebecca S. Clary
|
|
|
|
Rebecca S. Clary
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|