Mail Stop 0407
December 20, 2004
Via U.S. Mail and Fax (703) 480-7544
Matthew M. O`Connell
President and Chief Executive Officer
Orbimage Inc.
21700 Atlantic Boulevard
Dulles, Virginia 20166
RE: Orbimage Inc.
Form 10 Amendment No. 1
Filed December 1, 2004
File No. 0-50933
Dear Mr. O`Connell:
We have reviewed your Amendment No. 1 to your Form 10 and
have
the following comments. Please amend the registration statement
in
response to these comments within 15 days from the date of this
letter. We welcome any questions you may have about our comments
or
on any other aspect of our review. Feel free to call us at the
telephone numbers listed at the end of this letter.
Form 10
General
1. Your Form 10 currently discusses the following contracts with
U.S.
Government agencies: (1) the National Geo-Spatial Intelligence
Agency
("NGA") ClearView contract; (2) the NGA Geo-Spatial Intelligence
program; (3) an additional task order under the ClearView
contract;
(4) a contract with the National Aeronautics and Space
Administration
("NASA"); and (5) the NextView Second Vendor Program.
In a conversation on December 15, 2004 between Derek Swanson,
Staff
Attorney, and William P. O`Neill, Mr. O`Neill confirmed that
Orbimage
would file the ClearView contract and NextView contract as
exhibits
to the Second Amendment to the Form 10, that the company must
secure
NGA approval before filing those contracts, and that the company
will
probably request Confidential Treatment for those contracts. Mr.
O`Neill also stated that the NGA Geo-Spatial intelligence program
and
additional task order under the ClearView contract are part of the
ClearView contract, obviating the need to file those contracts
separately as exhibits to Amendment No. 2 to the Form 10. As to
the
NASA contract, please file this contract with your amended Form
10,
as well as material contracts between Orbimage and other
government
agencies, or explain why the NASA contract and other government
contracts do not need to be filed with your amended Form 10.
Please be advised that your applications for confidential
treatment
will be reviewed by the staff of the Division of Corporation
Finance
to ensure compliance with Rule 24b-2 and Division of Corporation
Finance Staff Legal Bulletin 1A. In addition, please be advised
that
the staff is currently reviewing your Confidential Treatment
Request,
dated December 1, 2004, for exhibits filed with the first
Amendment
to your Form 10.
2. Please amend your Form 10 to discuss your ownership and control
of
your satellites and ground stations. For example, in Note 4 to
your
Financial Statements, you outline the various items purchased from
Orbital Sciences under the System Procurement Agreement. Please
disclose this information in your Business Section and include in
that discussion your statement, on page 7 of your response letter,
that "we own all of our satellites and material equipment at each
of
our ground stations, free of any liens or other encumbrances."
3. Your Form 10 should also be amended to include further
discussion
of both your past and current relationships with Orbital Sciences,
affiliates of Orbital Sciences, and affiliates of your
predecessor.
We note your discussion of your past relationship with Orbital
Sciences in Note 4 to your Financial Statements.
4. As currently drafted, your Form 10 does not clarify whether the
NGA or other governmental entities have the right to commandeer
your
satellites in times of national emergency. Because "U.S.
Government
contracts accounted for approximately 50% and 59% of your revenues
for the nine months ended September 30, 2004 and 2003,
respectively,"
disclose whether your satellites and ground stations are subject
to
government command and control if certain circumstances arise. If
the satellites are subject to government control, disclose the
conditions that must arise before this control can be exercised.
We
note your summary of the Department of Commerce license, found in
Appendix A to Exhibit 10.1, Attachment A to Exhibit 10.2, and
Appendix A to Exhibit 10.3.
5. We note your response to prior comment 4. After reading the
amended Form 10, however, we believe that further discussion of
the
limited scope of the market for your products and services is
needed.
Do not simply outline the various markets for your products and
services. Instead, discuss how the U.S. Government is not only
your
largest single customer, but that contracts with the U.S.
Government
made up about 50% of your revenues for the nine months ended
September 30, 2004.
6. The staff believes that the registration of securities on a
Form
10 is tantamount to an Initial Public Offering and is therefore
not
subject to the Safe Harbor. Therefore, please delete your
reference
to the Securities Litigation Reform Act of 1995 on page 12 of your
amended Form 10.
Management`s Discussion and Analysis
Overview, page 19
7. As requested in prior comment 12, disclose the level of
revenues
needed to obtain a positive gross profit and when management
expects
to achieve this. Also, you state that gross profit is near break-
even, but the statement of operations shows a gross loss of $4.3
million for the nine months ended September 30, 2004. Please
revise
your disclosure to address the apparent inconsistency.
Critical Accounting Policies, page 22
8. In your response to prior comment 14 you discuss the provision
for
NGA to reimburse $5 million for infrastructure costs. Tell us how
you will classify these payments in the statement of operations.
If
you expect to characterize these as revenue, discuss the
accounting
literature you considered and how you applied it to this
arrangement.
Liquidity and Cash Flows, page 27
9. We reissue part of prior comment 19. Identify those items that
are the primary underlying drivers in contributing to the
uncertainties or variability in your cash flows from operating
activities. For example, what is the impact of cash receipts for
services provided and payments to vendors?
Capital Structure and Resources, page 28
10. At page 29 you describe the source of funds for future capital
expenditures of $265 million. Expand your disclosure to show the
amount of funds you expect to receive from the sale of units of
common stock and warrants.
11. You state that approximately $45 million of future capital
expenditures will be funded from cash flow generated by Orbimage`s
existing business. Explain how you expect to generate this level
of
cash flow, given the amount of cash used by operations as shown in
the statements of cash flows.
* * * *
Please amend your registration statement in response to
these
comments within 15 days from the date of this letter. You may
wish
to provide us with marked copies of the amendment to expedite our
review. Please furnish a cover letter with your amendment that
keys
your responses to our comments and provides any requested
supplemental information. File the cover letter on EDGAR as
correspondence. Detailed cover letters greatly facilitate our
review. Please understand that we may have additional comments
after
reviewing your amendment and responses to our comments.
You may contact John McIntyre, Staff Accountant, at (202)
942-
2853, or Terry French, Accountant Branch Chief at (202) 942-1998
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Derek Swanson, Staff Attorney, at
(202) 824-5526, or me at (202) 942-1990 with any other questions.
Sincerely,
Larry Spirgel
Assistant Director
cc: William L. Warren
Vice President, General Counsel, and Secretary
Orbimage Inc.
Via Fax (703) 480-7544
??
??
??
??
Orbimage Inc.
December 20, 2004
Page 1 of 4