What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 129 added, 110 removed, 502 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Service revenue $ 27,848 $ 28,385 $ 76,551 $ 84,410

6 unchanged sentences

Marketing, general and administrative 9,196 10,063 28,974 31,407

Reduction in value of long-lived assets 242 — 242 —

Depreciation, amortization and accretion 24,072 24,717 72,031 72,437

2 unchanged sentences

Other (expense) income:

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

(Loss) gain on extinguishment of debt ( 829 ) — 1,835 —

Interest income and expense, net of amounts capitalized ( 11,406 ) ( 11,398 ) ( 33,758 ) ( 36,916 )

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

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

Derivative gain (loss) 229 1,225 ( 2,210 ) 1,564

Foreign currency (loss) gain ( 4,752 ) 266 ( 4,642 ) ( 7,373 )

Other 473 ( 346 ) 407 ( 912 )

1 unchanged sentence

Loss before income taxes ( 30,999 ) ( 24,888 ) ( 88,350 ) ( 87,736 )

Income tax expense 354 90 431 111

Income tax (benefit) expense ( 114 ) 58 317 169

Net loss $ ( 30,885 ) $ ( 24,946 ) $ ( 88,667 ) $ ( 87,905 )

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments 3,185 ( 91 ) 3,269 3,844

10 unchanged sentences

(In thousands, except par value and share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

18 unchanged sentences

Payables to affiliates 271 581

Recoupment of advance payments 12,500 —

Deferred revenue 26,546 25,977

2 unchanged sentences

Operating lease liabilities 29,756 13,726

Employee benefit obligations 3,507 3,650

Derivative liabilities 2,944 123

Deferred revenue 53,528 3,280

Deferred revenue, net 91,055 3,280

Other non-current liabilities 10,303 7,221

3 unchanged sentences

Preferred Stock of $ 0.0001 par value;

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

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

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

Voting Common Stock of $ 0.0001 par value;

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

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

1,793,306,938 and 1,674,668,617 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Nonvoting Common Stock of $ 0.0001 par value;

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

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

Additional paid-in capital 2,144,012 2,096,566

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

Accumulated other comprehensive income (loss) 325 ( 2,944 )

Retained deficit ( 1,759,391 ) ( 1,670,724 )

10 unchanged sentences

Balances – January 1, 2021 1,674,669 $ 167 $ 2,096,566 $ ( 2,944 ) $ ( 1,670,724 ) $ 423,065

Net issuance of restricted stock awards and recognition of stock-based compensation 1,915 — 1,875 — — 1,875

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 1,998 — 1,932 — — 1,932

Contribution of services — — 47 — — 47

Recognition of stock-based compensation of employee stock purchase plan — — 79 — — 79

Issuance of stock for employee stock option exercises 83 — 57 — — 57

Issuance of stock for warrant exercises 115,036 12 43,666 — — 43,678

8 unchanged sentences

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

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 244 — 544 — — 544

Contribution of services — — 47 — — 47

Recognition of stock-based compensation of employee stock purchase plan — — 102 — — 102

Other comprehensive income — — — 3,185 — 3,185

Net loss — — — — ( 30,885 ) ( 30,885 )

Balances – September 30, 2021 1,793,307 $ 179 $ 2,144,012 $ 325 $ ( 1,759,391 ) $ 385,125

Shares Common

19 unchanged sentences

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

Net issuance of restricted stock awards and recognition of stock-based compensation 14 — 945 945

Contribution of services — — 47 — — 47

Recognition of stock-based compensation of employee stock purchase plan — — 99 99

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

51 — 15 — — 15

Other comprehensive loss — — — ( 91 ) — ( 91 )

Net loss — — — — ( 24,946 ) ( 24,946 )

Balances – September 30, 2020 1,670,355 $ 167 $ 2,094,983 $ 395 $ ( 1,648,990 ) $ 446,555

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

2021 June 30,

Nine Months Ended

September 30,

2021 September 30,

Cash flows provided by operating activities:

6 unchanged sentences

Provision for credit losses 1,029 1,496

Reduction in value of inventory 782 —

Reduction in value of long-lived assets and inventory 1,095 —

Noncash interest and accretion expense 26,537 25,694

Gain on extinguishment of debt ( 1,835 ) —

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

Unrealized foreign currency loss 4,639 7,850

Noncash reversal of tariff accrual ( 912 ) —

5 unchanged sentences

Other assets ( 1,883 ) ( 514 )

Accounts payable and accrued expenses 4,416 ( 3,844 )

Accounts payable, accrued expenses and recoupment of advance payments 15,197 261

Payables to affiliates ( 309 ) 210

11 unchanged sentences

Proceeds from exercise of warrants 43,678 —

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

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

Proceeds from PPP Loan — 4,973

5 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 62,374 $ 74,336

September 30,

2021 December 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 62,374 $ 68,023

Six Months Ended

2021 June 30,

Nine Months Ended

September 30,

2021 September 30,

Supplemental disclosure of cash flow information:

31 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 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.

The results of operations for the three and nine months ended September 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

33 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Service revenue:

14 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Service revenue:

15 unchanged sentences

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.

As of September 30, 2021 and December 31, 2020, $ 2.1 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 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.

As of September 30, 2021 and December 31, 2020, the Company recorded $ 12.1 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.

This customer's plan of reorganization was confirmed by the bankruptcy court and the order was issued in January 2021.

The cure payment, totaling $ 0.3 million, was received in March 2021.

During 2021, the Company received payments from this customer for previously written off balances totaling $ 0.5 million.

Contract Liabilities

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 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.

The amount of revenue recognized during the nine months ended September 30, 2021 and 2020 from performance obligations included in the contract liability balance at the beginning of each of the periods was $ 23.8 million and $ 27.5 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.

As of September 30, 2021, the Company expects to recognize $ 26.5 million, or approximately 23 %, of its remaining performance obligations during the next twelve months .

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

The Company expects $ 62.5 million of these advance payments to be repaid from services provided by the Company under the Terms Agreement;

therefore, the Company has recorded this amount as long-term deferred revenue on its condensed consolidated balance sheet.

The remaining $ 12.5 million of these advance payments is subject to a recoupment provision in the Terms Agreement;

therefore, the Company has recorded this amount as a current liability since it expects this portion of the advance payments to be repaid over the next 12

The Company has also recorded $ 27.8 million as long-term deferred revenue related to additional advance payments in connection with ongoing network upgrades.

The total amount of deferred revenue associated with this customer is reflected net of contract assets of $ 1.2 million on its condensed consolidated balance sheet as of September 30, 2021.

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Operating leases:

8 unchanged sentences

Total finance lease liabilities $ 10 $ 20

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

In connection with the Company's gateway expansion project related to the Terms Agreement described in the 2020 Annual Report, the Company has entered into various operating leases, predominately for new gateway sites, totaling $ 19.5 million during 2021.

The tables in this footnote reflect the relevant terms of these new leases.

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Operating lease cost:

8 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Weighted-average lease term

6 unchanged sentences

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 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

Operating cash flows for operating leases $ 3,420 $ 2,283

Operating cash flows for finance leases 1 4

Financing cash flows for finance leases 9 53

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):

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

Operating Leases Finance Leases

2021 (remaining) $ 2,496 $ 2

2022 4,261 $ 7

2023 4,177 $ 3

2024 4,055 $ —

2025 4,094 $ —

Thereafter 30,995 —

2 unchanged sentences

Discounted lease liability $ 32,986 $ 10

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.

As of September 30, 2021, the Company executed an additional operating lease for a new gateway location.

This lease had not yet commenced as of September 30, 2021 since the lessor is continuing to ready the site for use.

Accordingly, this lease is not included on the balance sheet as of September 30, 2021 or in the maturity table above.

The Company is in the process of evaluating this lease obligation and expects it to be approximately $ 2.5 million.

PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

September 30,

2021 December 31,

5 unchanged sentences

Construction in progress:

Space component 9,426 398

Ground component 34,047 19,327

8 unchanged sentences

Total property and equipment, net $ 682,587 $ 715,909

The ground component of construction in progress includes costs (including capitalized interest) incurred for assets to upgrade the Company's ground infrastructure in certain regions around the world.

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

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;

therefore, the Company has not started to record depreciation expense.

The ground component of construction in progress includes costs (including capitalized interest) incurred for assets to upgrade the Company's ground infrastructure, including costs associated with the procurement and production of new gateway antennas.

During the nine months ended September 30, 2021, the Company placed $ 10.3 million of costs into service associated with these antennas.

Amounts included in the Company’s second-generation satellite, on-ground spare in the table above consist primarily of costs related to a spare second-generation satellite that has not been placed in orbit, but is likely to be capable of being included in a future launch.

The Company has entered into certain contracts for the preparation and launch of the Company's on-ground spare satellite, which is expected to occur in 2022.

Costs to support these efforts are included in the space component of construction in progress in the table above.

The construction in progress activity described above is related the Terms Agreement described in the 2020 Annual Report and Note 2:

LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amount Unamortized Discount and Deferred Financing Costs Carrying

21 unchanged sentences

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.

As of September 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.

5 unchanged sentences

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:

In June and September 2021, the Company received two advance payments of $ 37.5 million each from a customer (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.

These voluntary prepayments were 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 and

$ 0.8 million in deferred financing costs, which represents the portion of debt prepaid by the Company in the second and third quarters of 2021, respectively.

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 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.

As of September 30, 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 consistent with the remaining principal outstanding of $ 60.3 million due in December 2022.

The Company currently intends to fully pay off the remaining principal balance during the fourth quarter of 2021.

In connection with the anticipated early pay off, the Company expects to receive a partial refund of premiums previously paid.

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):

5 unchanged sentences

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

Voluntary Prepayment, September 2021 — — — ( 37,500 ) ( 37,500 )

Remaining Scheduled Payments $ — $ — $ — $ 60,324 $ 60,324

Second Lien Facility Agreement

In November 2019, the Company entered into a $ 199.0 million Second Lien Facility Agreement with Thermo, EchoStar Corporation and certain other unaffiliated lenders.

In November 2019, the Company entered into a $ 199.0 million Second Lien Facility Agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders.

The Second Lien Facility Agreement is scheduled to mature in November 2025.

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

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

Refer to Note 6:

21 unchanged sentences

The Indenture provides for customary events of default.

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.

As of September 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 September 30, 2021, assuming conversion at the closing price of the Company's common stock on that date of $ 1.67 per share, is approximately $ 2.5 million.

Refer to Note 6:

11 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Derivative assets:

5 unchanged sentences

Total derivative liabilities $ ( 2,660 ) $ ( 123 )

The derivative asset recorded for the Compound embedded derivative with the Second Lien Facility Agreement is included in Intangible and other assets, net on the Company's consolidated balance sheets.

The derivative asset recorded for the Compound embedded derivative with the Second Lien Facility Agreement and the derivative liability recorded for the Compound embedded derivative with the 2013 8.00 % Notes are included in Intangible and other assets, net and other non-current liabilities, respectively, on the Company's consolidated balance sheets.

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 Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Compound embedded derivative with the 2013 8.00 % Notes

2 unchanged sentences

Compound embedded derivative with the Second Lien Facility Agreement ( 55 ) 1,128 327 988

Total derivative loss $ ( 1,310 ) $ 1,160 $ ( 2,439 ) $ 339

Total derivative loss (gain) $ 229 $ 1,225 $ ( 2,210 ) $ 1,564

The fair value of each embedded derivative liability is marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in its condensed consolidated statements of operations and its condensed consolidated statements of cash flows as an operating activity.

13 unchanged sentences

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

June 30, 2021

September 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:

June 30, 2021

September 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 over 400 % from December 31, 2020 to June 30, 2021, driving a significant increase in the liability at June 30, 2021.

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

The most significant observable input used in the fair value measurement is the discount yield, which was 12 % and 13 % at September 30, 2021 and December 31, 2020, respectively.

As of September 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.

5 unchanged sentences

Derivative adjustment related to conversions and exercises — 1,058

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

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

Unrealized (loss) gain, included in derivative gain (loss) ( 2,210 ) 2,897

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

$ ( 2,047 ) $ 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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

1 unchanged sentence

$ 1,392 $ 1,241 $ 1,376 $ 1,122

Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt instruments.

Nonrecurring Fair Value Measurements

Long-lived assets and intangible and other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

During the third quarter of 2021, the Company wrote off approximately $ 0.2 million of construction in progress related to unsatisfactory work that did not meet internal testing requirements and could not be used for its intended purpose.

RELATED PARTY TRANSACTIONS

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.

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.3 million and $ 0.6 million as of September 30, 2021 and December 31, 2020, respectively.

Transactions with Thermo

2 unchanged sentences

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

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 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 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.

During each of the three months ended September 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 nine months ended September 30, 2021 and 2020, the Company incurred lease expense of $ 1.2 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 $ 21.8 million, of which $ 7.3 million was accrued during the six months ended June 30, 2021.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the Second Lien Facility Agreement was approximately $ 25.7 million, of which $ 11.2 million was accrued during the nine months ended September 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 June 30, 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 September 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 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

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2021

Net loss $ ( 30,885 ) $ ( 24,946 ) $ ( 88,667 ) $ ( 87,905 )

1 unchanged sentence

Net loss per common share - basic and diluted $ ( 0.02 ) $ ( 0.01 ) $ ( 0.05 ) $ ( 0.05 )

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.

For the three months ended September 30, 2021 and 2020, 11.0 million and 4.3 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 nine months ended September 30, 2021 and 2020, 10.2 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 September 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