What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 175 added, 77 removed, 437 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Service revenue $ 25,617 $ 27,090 $ 48,703 $ 56,025

4 unchanged sentences

Cost of subscriber equipment sales 2,858 2,940 5,757 5,583

Cost of subscriber equipment sales - reduction in the value of inventory 782 — 782 —

Marketing, general and administrative 9,681 10,253 19,778 21,344

3 unchanged sentences

Other (expense) income:

Gain on extinguishment of debt 2,664 — 2,664 —

Interest income and expense, net of amounts capitalized ( 10,778 ) ( 11,508 ) ( 22,352 ) ( 25,518 )

Derivative loss ( 1,129 ) ( 821 )

Foreign currency loss ( 4,315 ) ( 8,953 )

Derivative (loss) gain ( 1,310 ) 1,160 ( 2,439 ) 339

Foreign currency gain (loss) 4,425 1,314 110 ( 7,639 )

Other ( 88 ) ( 233 ) ( 66 ) ( 566 )

16 unchanged sentences

(In thousands, except par value and share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets:

30 unchanged sentences

Preferred Stock of $ 0.0001 par value;

100,000,000 shares authorized and none issued and outstanding at March 31, 2021 and December 31, 2020, respectively

100,000,000 shares authorized and none issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Series A Preferred Convertible Stock of $ 0.0001 par value;

one share authorized and none issued and outstanding at March 31, 2021 and December 31, 2020, respectively

one share authorized and none issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Voting Common Stock of $ 0.0001 par value;

1,900,000,000 shares authorized;

1,791,702,906 and 1,674,668,617 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

2,150,000,000 and 1,900,000,000 shares authorized at June 30, 2021 and December 31, 2020, respectively;

1,793,063,410 and 1,674,668,617 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Nonvoting Common Stock of $ 0.0001 par value;

no shares authorized and none issued and outstanding at March 31, 2021 and December 31, 2020, respectively

no shares authorized and none issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 2,143,319 2,096,566

Accumulated other comprehensive income (loss) 298 ( 2,944 )

Accumulated other comprehensive loss ( 2,860 ) ( 2,944 )

Retained deficit ( 1,728,506 ) ( 1,670,724 )

18 unchanged sentences

Balances – March 31, 2021 1,791,703 $ 179 $ 2,142,290 $ 298 $ ( 1,707,057 ) $ 435,710

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 173 — 576 — — 576

Contribution of services — — 47 — — 47

Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation 1,187 — 406 — — 406

Other comprehensive loss — — — ( 3,158 ) — ( 3,158 )

Net loss — — — — ( 21,449 ) ( 21,449 )

Balances – June 30, 2021 1,793,063 $ 179 $ 2,143,319 $ ( 2,860 ) $ ( 1,728,506 ) $ 412,132

Shares Common

11 unchanged sentences

Balances – March 31, 2020 1,667,704 $ 167 $ 2,092,410 $ 1,854 $ ( 1,599,308 ) $ 495,123

Net issuance of restricted stock awards and recognition of stock-based compensation 1,354 — 922 — — 922

Contribution of services — — 47 — — 47

Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation 1,188 — 482 — — 482

Common stock issued in connection with conversion of 2013 8.00 % Notes

44 — 16 — — 16

Other comprehensive loss — — — ( 1,368 ) — ( 1,368 )

Net loss — — — ( 24,736 ) ( 24,736 )

Balances – June 30, 2020 1,670,290 $ 167 $ 2,093,877 $ 486 $ ( 1,624,044 ) $ 470,486

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

2021 March 31,

Six Months Ended

2021 June 30,

Cash flows provided by operating activities:

6 unchanged sentences

Provision for credit losses 696 1,419

Reduction in value of inventory 782 —

Noncash interest and accretion expense 16,939 16,029

Unrealized foreign currency loss 4,270 8,942

Gain on extinguishment of debt ( 2,664 ) —

Unrealized foreign currency (gain) loss ( 245 ) 7,619

Noncash reversal of tariff accrual ( 912 ) —

Other, net ( 430 ) 24

12 unchanged sentences

Property and equipment additions ( 2,288 ) ( 2,237 )

Sale of property and equipment 350 —

Purchase of intangible assets ( 1,228 ) ( 1,042 )

Net cash used in investing activities ( 11,998 ) ( 4,879 )

Cash flows provided by (used in) financing activities:

Cash flows (used in ) provided by financing activities:

Principal payments of the First Lien Facility Agreement ( 89,164 ) ( 276 )

1 unchanged sentence

Payments for debt and equity issuance costs ( 133 ) ( 1,074 )

Proceeds from PPP Loan — 4,973

Proceeds from issuance of common stock and exercise of options 391 346

Net cash provided by (used in) financing activities 39,245 ( 421 )

Net cash (used in) provided by financing activities ( 45,228 ) 3,969

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 9 ) ( 148 )

Net increase in cash, cash equivalents and restricted cash 38,717 2,451

Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,315 ) 7,801

Cash, cash equivalents and restricted cash, beginning of period 68,023 59,128

6 unchanged sentences

Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 66,708 $ 68,023

Three Months Ended

2021 March 31,

Six Months Ended

2021 June 30,

Supplemental disclosure of cash flow information:

3 unchanged sentences

Capitalized accretion of debt discount and amortization of prepaid financing costs 251 223

Forgiveness of principal and interest of Paycheck Protection Program loan 5,030 —

Principal amount of Loan Agreement with Thermo converted into common stock — 137,366

25 unchanged sentences

In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, condensed consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year or any future period.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year or any future period.

COVID-19-Risks and Uncertainties

6 unchanged sentences

and the sustainability of supply chains.

During 2021, the Company began to evaluate its eligibility for the Employee Retention Tax Credit program and relief under the American Rescue Plan Act.

The Company has pursued various opportunities to mitigate the risks and uncertainties resulting from COVID-19, including, but not limited to, the receipt of a $ 5.0 million loan under the Paycheck Protection Program ("PPP") and the evaluation of its eligibility for the Employee Retention Tax Credit program and relief under the American Rescue Plan Act.

In June 2021, the Small Business Administration ("SBA") fully approved the Company's request for forgiveness of all amounts outstanding, including accrued interest, under its PPP loan.

Recently Issued Accounting Pronouncements

23 unchanged sentences

The following table discloses revenue disaggregated by type of product and service (amounts in thousands):

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Service revenue:

8 unchanged sentences

Commercial IoT 2,090 939 3,611 2,352

Other 11 15 125 50

Total subscriber equipment sales 4,662 3,274 8,505 6,533

3 unchanged sentences

The following table discloses revenue disaggregated by geographical market (amounts in thousands):

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Service revenue:

14 unchanged sentences

Accounts Receivable

The Company has agreements with certain of its independent gateway operators ("IGOs") whereby the parties net settle outstanding payables and receivables between the respective entities on a periodic basis.

As of March 31, 2021 and December 31, 2020, $ 2.3 million and $ 1.9 million, respectively, related to these agreements was included in accounts receivable on the Company’s condensed consolidated balance sheet.

The Company has agreements with certain customers whereby the parties net settle outstanding payables and receivables between the respective entities on a periodic basis.

As of June 30, 2021 and December 31, 2020, $ 1.8 million and $ 1.9 million, respectively, related to these agreements was included in accounts receivable on the Company’s condensed consolidated balance sheet.

The Company also has agreements whereby it acts as an agent to procure goods and perform services on behalf of the customer.

As of March 31, 2021 and December 31, 2020, the Company recorded $ 10.2 million and $ 4.7 million, respectively, in accounts receivable related to these arrangements.

As of June 30, 2021 and December 31, 2020, the Company recorded $ 10.3 million and $ 4.7 million, respectively, in accounts receivable related to these arrangements.

During 2020, one of the Company's customers filed for Chapter 11 of the United States Bankruptcy Code resulting in the Company reserving all open receivables due from the customer.

3 unchanged sentences

Contract liabilities, which are included in deferred revenue on the Company’s condensed consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom it has previously received consideration.

The amount of revenue recognized during the three months ended March 31, 2021 and 2020 from performance obligations included in the contract liability balance at the beginning of each of the periods was $ 10.5 million and $ 13.3 million, respectively.

In general, the duration of the Company’s contracts is one year or less;

however, from time to time, the Company performs services over multi-year contracts.

As of March 31, 2021, the Company expects to recognize $ 26.0 million, or approximately 82 %, of its remaining performance obligations during the next twelve months .

The amount of revenue recognized during the six months ended June 30, 2021 and 2020 from performance obligations included in the contract liability balance at the beginning of each of the periods was $ 18.8 million and $ 24.4 million, respectively.

In general, the duration of the Company’s subscriber service contracts is one year or less.

As of June 30, 2021, the Company expects to recognize $ 26.8 million, or approximately 33 %, of its remaining performance obligations during the next twelve months .

In June 2021, the Company received an advance payment of $ 37.5 million from a customer pursuant to an agreement related to the Terms Agreement described in its 2020 Annual Report.

The advance payment is expected to be repaid from services provided by the Company under the Terms Agreement.

Accordingly, the Company recorded the advance payment as long-term deferred revenue on its condensed consolidated balance sheet as of June 30, 2021.

The Company has also recorded $ 14.1 million as long-term deferred revenue on its condensed consolidated balance sheet as of June 30, 2021 related to additional advance payments received under this agreement.

The following tables disclose the components of the Company’s finance and operating leases (amounts in thousands):

June 30, 2021 December 31, 2020

Operating leases:

Right-of-use asset, net $ 27,542 $ 14,400

Short-term lease liability (recorded in accrued expenses) 2,490 1,330

Long-term lease liability 25,492 13,726

Total operating lease liabilities $ 27,982 $ 15,056

Finance leases:

Right-of-use asset, net (recorded in intangible and other current assets, net) $ 11 $ 19

Short-term lease liability (recorded in accrued expenses) 7 11

Long-term lease liability (recorded in non-current liabilities) 6 9

Total finance lease liabilities $ 13 $ 20

During 2021, the Company entered into various operating leases predominately for new gateway sites totaling $ 13.6 million.

The components of lease cost are reflected in the table below (amounts in thousands):

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Operating lease cost:

Amortization of right-of-use assets $ 663 $ 458 $ 1,154 $ 922

Interest on lease liabilities 393 333 711 675

Finance lease cost:

Amortization of right-of-use assets 1 17 8 43

Interest on lease liabilities — 1 — 3

Short-term lease cost 41 21 79 25

Total lease cost $ 1,098 $ 830 $ 1,952 $ 1,668

Weighted-Average Remaining Lease Term and Discount Rate

The following table discloses the weighted-average remaining lease term and discount rate for finance and operating leases.

June 30, 2021 December 31, 2020

Weighted-average lease term

Finance leases 2.0 years 1.8 years

Operating Leases 10.2 years 8.3 years

Weighted-average discount rate

Finance leases 6.7 % 7.2 %

Operating leases 8.4 % 8.4 %

Supplemental Cash Flow Information

The below table discloses supplemental cash flow information for finance and operating leases (in thousands):

Six Months Ended

June 30, 2021 June 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 2,080 $ 1,523

Operating cash flows from finance leases — 3

Financing cash flows from finance leases 8 38

Maturity Analysis

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of June 30, 2021 (amounts in thousands):

Operating Leases Finance Leases

2021 (remaining) $ 2,537 $ 4

2022 4,261 $ 7

2023 4,177 $ 3

2024 4,055 $ —

2025 4,094 $ —

Thereafter 21,444 $ —

Total lease payments $ 40,568 $ 14

Imputed interest ( 12,586 ) ( 1 )

Discounted lease liability $ 27,982 $ 13

As of June 30, 2021, the Company executed additional operating leases, primarily for new gateway locations.

These leases had not yet commenced as of June 30, 2021 since the lessors are continuing to ready the sites for use.

Accordingly, these leases are not included on the balance sheet as of June 30, 2021 or in the maturity table above.

The Company is in the process of evaluating these lease obligations and expects them to be approximately $ 8.0 million.

PROPERTY AND EQUIPMENT

19 unchanged sentences

We expect to deploy these gateway assets based on coverage optimization.

During the first quarter of 2021, the Company placed $ 7.4 million of costs into service associated with its new antennas.

Amounts included in the Company’s second-generation satellite, on-ground spare balance as of March 31, 2021, and December 31, 2020, consist primarily of costs related to a spare second-generation satellite that has not been placed in orbit, but is capable of being included in a future launch.

The ground component of construction in progress also includes costs associated with the procurement and production of new gateway antennas.

During the six months ended June 30, 2021, the Company placed $ 9.7 million of costs into service associated with these antennas.

Amounts included in the Company’s second-generation satellite, on-ground spare balance as of June 30, 2021, and December 31, 2020, consist primarily of costs related to a spare second-generation satellite that has not been placed in orbit, but is capable of being included in a future launch.

This satellite has not been placed into service;

2 unchanged sentences

Long-term debt consists of the following (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Amount Unamortized Discount and Deferred Financing Costs Carrying

11 unchanged sentences

The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion.

The current portion of long-term debt represents the scheduled principal repayments under the First Lien Facility Agreement (described below) and the Paycheck Protection Program ("PPP") loan (described below) due within one year of the balance sheet date.

First Lien Facility Agreement

7 unchanged sentences

If the Company violates any financial covenants and is unable to obtain a sufficient Equity Cure Contribution or obtain a waiver, it would be in default under the First Lien Facility Agreement and payment of the indebtedness could be accelerated.

The warrant proceeds received during the first quarter of 2021 (discussed below) would qualify as an Equity Cure Contribution, if needed for compliance with first half 2021 financial covenants.

The Company is in discussions with its senior lenders to evaluate 2021 projected capital expenditures relative to covenant levels set forth in the First Lien Facility Agreement.

As of March 31, 2021, the Company was in compliance with the covenants of the First Lien Facility Agreement.

In anticipation of projected capital expenditures, in August 2021, the Company received a waiver from its senior lenders, increasing permitted capital expenditure limits under the First Lien Facility Agreement.

As of June 30, 2021, the Company was in compliance with the covenants of the First Lien Facility Agreement.

The First Lien Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the First Lien Facility Agreement) on a semi-annual basis.

During 2021, the Company was required to pay $ 4.4 million to its first lien lenders resulting from the Excess Cash Flow calculation as of December 31, 2020.

This payment reduces future principal payment obligations.

The First Lien Facility Agreement also requires the Company to maintain a debt service reserve account, which is pledged to secure all of the Company's obligations under the First Lien Facility Agreement.

The required balance in the debt service reserve account must equal at least $ 50.9 million.

As of March 31, 2021, the balance in the debt service reserve account was $ 51.1 million and is classified as non-current restricted cash on the Company's condensed consolidated balance sheet as it will be used towards the final scheduled payment due upon maturity of the First Lien Facility Agreement in December 2022 of $ 109.5 million.

This payment reduced future principal payment obligations (see table below).

The amended and restated First Lien Facility Agreement includes a requirement that the Company raise no less than $ 45.0 million from the sale of equity prior to March 30, 2021.

1 unchanged sentence

The Company received proceeds totaling $ 47.3 million, of which $ 3.6 million was received in December 2019 and the remaining $ 43.7 million was received during the first quarter of 2021.

In April 2021, these proceeds were used to pay the principal payment due on June 30, 2021 of $ 33.1 million, and then the remaining proceeds were applied to the next principal payment due on December 31, 2021 of $ 20.0 million.

The proceeds are retained in the equity proceeds account under the First Lien Facility Agreement and recorded in current restricted cash on the Company's condensed consolidated balance sheet as of March 31, 2021.

In April 2021, these proceeds were used to pay the remaining principal payments due in each of June 2021 and December 2021 (see table below).

In June 2021, the Company received an advance payment of $ 37.5 million from a customer, which was recorded to deferred revenue as of June 30, 2021 (see further discussion in Note 2:

The Company used these proceeds to pay a portion of the remaining amount due under the First Lien Facility Agreement.

This voluntary prepayment was applied to the payments due in each of December 2021, June 2022 and December 2022, respectively (see table below).

Additionally, the Company wrote off

$ 2.3 million in deferred financing costs, which represents the portion of debt prepaid by the Company in the second quarter of 2021.

Subject to certain conditions, the customer may make additional advances to the Company in the future on the same terms, the proceeds of which would be used by the Company to pay a portion of the remaining principal outstanding.

The required balance in the debt service reserve account must equal at least $ 50.9 million.

As of June 30, 2021, the balance in the debt service reserve account was $ 51.0 million and is classified as non-current restricted cash on the Company's condensed consolidated balance sheet as it will be used towards the final scheduled payment due upon maturity of the First Lien Facility Agreement in December 2022 of $ 97.8 million.

The following table sets forth the scheduled principal payments for the First Lien Facility Agreement, reflecting the application of prepayments made during 2021 (amounts in thousands):

Principal Payment Activity Total

Scheduled Payment Date June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022

Scheduled Principal Payments $ 37,468 $ 20,000 $ 20,000 $ 109,520 $ 186,988

Excess Cash Flow Payment, March 2021 ( 4,357 ) — — — ( 4,357 )

Mandatory Prepayment, April 2021 ( 33,111 ) ( 14,191 ) — — ( 47,302 )

Voluntary Prepayment, June 2021 — ( 5,809 ) ( 20,000 ) ( 11,696 ) ( 37,505 )

Remaining Scheduled Payments $ — $ — $ — $ 97,824 $ 97,824

Second Lien Facility Agreement

4 unchanged sentences

All of these warrants were exercised before their expiration date on March 31, 2021, resulting in proceeds to the Company totaling $ 47.3 million.

As of March 31, 2021, the Company was in compliance with the covenants of the Second Lien Facility Agreement.

As of June 30, 2021, the Company was in compliance with the covenants of the Second Lien Facility Agreement.

Refer to Note 6:

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The Indenture provides for customary events of default.

As of March 31, 2021, the Company was in compliance with respect to the terms of the 2013 8.00 % Notes and the Indenture.

The amount by which the if-converted value of the 2013 8.00 % Notes exceeded the principal amount at March 31, 2021, assuming conversion at the closing price of the Company's common stock on that date of $ 1.35 per share, is approximately $ 1.3 million.

As of June 30, 2021, the Company was in compliance with respect to the terms of the 2013 8.00 % Notes and the Indenture.

The amount by which the if-converted value of the 2013 8.00 % Notes exceeded the principal amount at June 30, 2021, assuming conversion at the closing price of the Company's common stock on that date of $ 1.78 per share, is approximately $ 2.8 million.

Refer to Note 6:

2 unchanged sentences

Paycheck Protection Program Loan

In April 2020, the Company sought relief under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and received a $ 5.0 million loan under the PPP.

This loan (the "PPP Loan") is an unsecured debt obligation and is scheduled to mature in April 2022.

As permitted under the CARES Act, the Company applied for loan forgiveness in December 2020, inclusive of both principal and accrued interest, in accordance with the terms of the CARES Act, based on payroll costs incurred since disbursement of the PPP Loan.

Any amount not forgiven by the Small Business Administration (the "SBA") is subject to an interest rate of 1.00% per annum commencing on the date of the PPP Loan.

Principal and interest payments due under the PPP Loan are generally deferred until the review and approval of any forgiveness is made by the SBA, subject to the PPP rules.

Furthermore, the Company's first and second lien lenders would require the Company to accelerate the repayment of any portion of the loan amount that is not forgiven.

In April 2020, the Company sought relief under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and received a $ 5.0 million loan (the "PPP Loan") under the PPP.

In June 2021, the Small Business Administration ("SBA") approved the Company's request for forgiveness of all amounts outstanding under the PPP Loan, including accrued interest.

Prior to forgiveness, the PPP Loan was an unsecured debt obligation and was scheduled to mature in April 2022.

Any amount not forgiven by the SBA was subject to an interest rate of 1.00% per annum commencing on the date of the PPP Loan.

The Company evaluated the applicable accounting guidance relative to the PPP Loan and accounted for the proceeds of the PPP Loan as debt under ASC 470.

The Company expects the PPP Loan to be forgiven, but cannot provide assurance of such forgiveness until it has been approved by the Company's lender and the SBA.

Any portion of the PPP Loan that is forgiven will be recorded in the Company's condensed consolidated statement of operations as a gain on extinguishment of debt in the period of forgiveness.

As the entire principal balance, including accrued interest, was forgiven in June 2021, the Company recorded a gain on extinguishment of debt totaling $ 5.0 million on its condensed consolidated statements of operations for the period ended June 30, 2021.

The Company has identified various embedded derivatives resulting from certain features in the Company’s existing borrowing arrangements, requiring recognition on its condensed consolidated balance sheets.

1 unchanged sentence

The following table discloses the fair values of the derivative instruments on the Company’s condensed consolidated balance sheets (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Derivative assets:

7 unchanged sentences

The following table discloses the changes in value recorded as derivative gain (loss) in the Company’s condensed consolidated statement of operations (in thousands):

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Compound embedded derivative with the 2013 8.00 % Notes

18 unchanged sentences

The following tables provide a summary of the assets and liabilities measured at fair value on a recurring basis (in thousands):

March 31, 2021

June 30, 2021

(Level 1) (Level 2) (Level 3) Total

13 unchanged sentences

The significant quantitative Level 3 inputs utilized in the valuation models are shown in the tables below:

March 31, 2021

June 30, 2021

Volatility Risk-Free

11 unchanged sentences

As the stock price increases, the value to the holder of the instrument generally increases, thereby increasing the liability on the Company’s condensed consolidated balance sheet.

The Company's stock price increased nearly 300 % from December 31, 2020 to March 31, 2021, driving a significant increase in the liability at March 31, 2021.

The Company's stock price increased over 400 % from December 31, 2020 to June 30, 2021, driving a significant increase in the liability at June 30, 2021.

Stock price volatility is also a significant input used in the fair value measurement of the compound embedded derivative with the 2013 8.00 % Notes.

3 unchanged sentences

The compound embedded derivative with the Second Lien Facility Agreement is valued using a probability weighted discounted cash flow model.

The most significant observable input used in the fair value measurement is the discount yield, which was 12 % and 13 % at March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021 and December 31, 2020, the discount yield utilized in the valuation was lower than the blended interest rate of the underlying debt.

The most significant observable input used in the fair value measurement is the discount yield, which was 11 % and 13 % at June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, the discount yield utilized in the valuation was lower than the blended interest rate of the underlying debt.

As a result, the features embedded in the underlying debt resulted in an asset for the Company.

6 unchanged sentences

Unrealized (loss) gain, included in derivative loss ( 2,439 ) 2,897

Balance at end of period, March 31, 2021 and December 31, 2020, respectively

Balance at end of period, June 30, 2021 and December 31, 2020, respectively

$ ( 2,276 ) $ 163

3 unchanged sentences

The following table sets forth the carrying values and estimated fair values of the Company's other debt instrument classified as a Level 3 financial instrument (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

2 unchanged sentences

RELATED PARTY TRANSACTIONS

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.3 million and $ 0.6 million as of March 31, 2021 and December 31, 2020, respectively.

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.4 million and $ 0.6 million as of June 30, 2021 and December 31, 2020, respectively.

Transactions with Thermo

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The expenses charged are based on actual amounts (with no mark-up) incurred by Thermo or upon allocated employee time.

During each of the three months ended March 31, 2021 and 2020, these expenses charged to the Company were $ 0.2 million, respectively.

During the three months ended June 30, 2021 and 2020, these expenses charged to the Company were $ 0.2 million and $ 0.1 million, respectively.

During the six months ended June 30, 2021 and 2020, these expenses charged to the Company were $ 0.4 million and $ 0.3 million, respectively.

Additionally, during the first quarter of 2021, Thermo invoiced us for certain legal fees incurred totaling approximately $ 0.1 million relating to Thermo's participation in the Second Lien Facility Agreement;

these costs were recorded as debt issuance costs included in long-term debt on the Company's condensed consolidated balance sheet as of March 31, 2021.

these costs were recorded as debt issuance costs included in long-term debt on the Company's condensed consolidated balance sheet as of June 30, 2021.

In February 2019, the Company entered into a lease agreement with Thermo Covington, LLC for the Company's headquarters office.

Annual lease payments started at $ 1.4 million per year, increasing at a rate of 2.5 % per year, for a lease term of ten years .

During each of the three months ended March 31, 2021 and 2020, the Company incurred lease expense of $ 0.4 million, respectively, under this lease agreement.

During each of the three months ended June 30, 2021 and 2020, the Company incurred lease expense of $ 0.4 million, respectively, in each period under this lease agreement.

During each of the six months ended June 30, 2021 and 2020, the Company incurred lease expense of $ 0.8 million, respectively, under this lease agreement.

In November 2019, the Company entered into the Second Lien Facility Agreement.

1 unchanged sentence

This principal balance earns paid-in-kind interest at a rate of 13 % per annum.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the Second Lien Facility Agreement was approximately $ 18.1 million, of which $ 3.6 million was accrued during the three months ended March 31, 2021.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the Second Lien Facility Agreement was approximately $ 21.8 million, of which $ 7.3 million was accrued during the six months ended June 30, 2021.

In connection with the issuance of the Second Lien Facility Agreement, the holders received warrants to purchase shares of voting common stock, of which Thermo received 59.5 million warrants with an exercise price of $ 0.38 per share.

Thermo exercised 9.5 million warrants in 2019 and the remaining warrants, totaling 50.0 million, during the first quarter of 2021 and, accordingly, no warrants were outstanding as of March 31, 2021.

Thermo exercised 9.5 million warrants in 2019 and the remaining warrants, totaling 50.0 million, during the first quarter of 2021 and, accordingly, no warrants were outstanding as of June 30, 2021.

Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt and financing transactions with Thermo.

5 unchanged sentences

Generally, for all other potentially dilutive common shares, the effect is calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted loss per common share as of March 31, 2021 and 2020 (amounts in thousands, except per share data):

Three Months Ended

March 31, 2021 March 31, 2020

The following table sets forth the computation of basic and diluted loss per common share during each of the three and six months ended June 30, 2021 and 2020 (amounts in thousands, except per share data):

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net loss $ ( 21,449 ) $ ( 24,736 ) $ ( 57,782 ) $ ( 62,959 )

1 unchanged sentence

Net loss per common share - basic and diluted $ ( 0.01 ) $ ( 0.01 ) $ ( 0.03 ) $ ( 0.04 )

For the three months ended March 31, 2021 and 2020, 5.5 million shares and 7.2 million shares, respectively, of common stock related to the Company's 2013 8.00 % Notes and 2006 Equity Incentive Plan were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Additionally, at March 31, 2020, 115.0 million warrants issued to the lenders of the Second Lien Facility Agreement were outstanding.

For the three months ended June 30, 2021 and 2020, 7.3 million and 4.4 million shares, respectively, of common stock related to the Company's 2013 8.00 % Notes and Equity Incentive Plan were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

For the six months ended June 30, 2021 and 2020, 7.1 million and 4.4 million shares, respectively, of common stock related to the Company's 2013 8.00 % Notes and 2006 Equity Incentive Plan were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Additionally, at June 30, 2020, 115.0 million warrants issued to the lenders of the Second Lien Facility Agreement were outstanding.

These warrants were exercised in March 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements