================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
Commission file number 333-39202
EarthWatch Incorporated
(Exact Name of Registrant as Specified in Its Charter)
Delaware 31-1420852
(State or other jurisdiction of (I.R.S. Employer Identification
Incorporation or organization) Number)
EarthWatch Incorporated
1900 Pike Road
Longmont, Colorado 80501
(Address of principal executive offices, including zip code)
(303) 682-3800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
The registrant had 260,088 shares of common stock outstanding as of June
30, 2001.
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Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements.
Consolidated Balance Sheet. 1
Consolidated Statement of Operations. 2
Consolidated Statement of Cash Flows. 3
Consolidated Statement of Stockholders' Equity (Deficit). 4
Notes to Consolidated Financial Statements. 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations. 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds. 11
Item 4. Submission of Matters to a Vote of Security Holders. 11
Item 6. Exhibits and Reports on Form 8-K. 12
Signatures 14
- -------------------------------------------------------------------------------------------
Reference is made in this document to Digital Globe(R) and Your Planet Online
(R), which are registered trademarks owned by the Company, and Second on
Orbit(TM) , which is a trademark of the Company.
EarthWatch Incorporated
(A Development Stage Company)
Consolidated Balance Sheet
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, June 30,
2000 2001
------------------- --------------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 5,725,779 $ 45,910,626
Accounts receivable 251,408 549,092
Insurance proceeds receivable - restricted 265,000,000 --
Investment securities -- --
Investment securities - restricted 6,295,382 92,416
Other current assets 398,101 505,131
------------- -------------
Total current assets 277,670,670 47,057,265
------------- -------------
Property, plant, and equipment:
Construction in progress 89,716,474 141,061,210
Computer equipment and software 15,365,444 15,448,871
Machinery and equipment 5,770,640 5,770,641
Furniture and fixtures 1,281,911 1,281,474
------------- -------------
Total property, plant, and equipment 112,134,469 163,562,196
Accumulated depreciation and amortization (15,419,714) (16,748,881)
------------- -------------
Net property, plant, and equipment 96,714,755 146,813,315
------------- -------------
Debt issuance costs, net 4,682,127 11,455,706
Other assets 310,664 281,591
------------- -------------
TOTAL ASSETS $ 379,378,216 $ 205,607,877
============= =============
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 11,289,385 $ 676,094
Accounts payable to related parties 982,232 51,618
Accrued expenses 3,988,060 4,140,317
Current portion of long-term debt, net 195,484,650 1,730,000
------------- -------------
Total current liabilities 211,744,327 6,598,029
Long-term debt, net -- 56,274,489
------------- -------------
Total liabilities 211,744,327 62,872,518
------------- -------------
Contingencies
Mandatorily redeemable preferred stock due 2009:
7% Cumulative convertible - Series A; $.001 par value; 10,000,000
and 12,000,000 shares authorized and 8,051,273 and 8,335,533
shares issued and outstanding as of December 31, 2000 and June 30, 2001,
respectively; aggregate liquidation preference of $29,174,366 as of
June 30, 2001 27,473,699 28,511,021
7% Cumulative convertible - Series B; $.001 par value; 10,000,000
and 12,000,000 shares authorized and 8,051,273 and 8,335,533 shares
issued and outstanding as of December 31, 2000 and June 30, 2001,
respectively; aggregate liquidation preference of $29,174,366 as of
June 30, 2001 27,473,699 28,511,021
8.5% Cumulative convertible - Series C; $.001 par value; 25,000,000 and
50,000,000 shares authorized and 25,000,000 and 37,885,823 issued
and outstanding as of December 31, 2000 and June 30, 2001,
respectively; aggregate liquidation preference of $132,600,381 as of
June 30, 2001 86,298,993 96,682,700
------------- -------------
Total mandatorily redeemable preferred stock 141,246,391 153,704,742
------------- -------------
Stockholders' equity (deficit):
Common stock; $.001 par value; 100,000,000 and 150,000,000 shares
authorized and 195,420 and 260,088 shares issued and outstanding
as of December 31, 2000 and June 30, 2001, respectively 195 260
Additional paid-in capital 61,824,829 58,781,242
Deferred stock compensation (534,600) (450,708)
Deficit accumulated during the development stage (34,902,926) (69,300,177)
------------- -------------
Total stockholders' equity (deficit) 26,387,498 (10,969,383)
------------- -------------
TOTAL LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK, AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 379,378,216 $ 205,607,877
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
1
EarthWatch Incorporated
(A Development Stage Company)
Consolidated Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended June 30,
----------------------------------
2000 2001
----------------- --------------
Revenue $ 385,153 $ 1,333,814
Cost of goods sold 210,056 935,151
-------------- --------------
Gross profit 175,097 398,663
-------------- --------------
Expenses:
Selling, general, and administrative 3,403,891 3,253,493
Research and development 3,612,546 2,130,571
Loss from impairment of fixed assets, net of
insurance recoveries - -
Gain from arbitration settlement - -
-------------- --------------
Total expenses 7,016,437 5,384,064
-------------- --------------
Loss from operations (6,841,340) (4,985,401)
Interest expense (1,445,540) -
Interest income 1,204,231 831,805
-------------- --------------
Loss before provision for income taxes (7,082,649) (4,153,596)
Provision for income taxes - -
-------------- --------------
Loss before extraordinary loss on early
extinguishment of debt (7,082,649) (4,153,596)
Extraordinary loss on early extinguishment of debt - (23,038,365)
-------------- --------------
Net loss (7,082,649) (27,191,961)
Mandatorily redeemable preferred stock
dividends and accretion (2,764,608) (131,930)
-------------- --------------
Net loss attributable to common stockholders $ (9,847,257) $ (27,323,891)
============== ==============
Period from
Six Months Ended June 30, January 1, 1995
--------------------------------- (Inception) to
June 30,
2000 2001 2001
-------------------- ----------------- ------------------
Revenue $ 2,404,401 $ 5,151,558 $ 21,539,049
Cost of goods sold 1,553,591 3,905,201 17,045,440
----------------- -------------- ----------------
Gross profit 850,810 1,246,357 4,493,609
----------------- -------------- ----------------
Expenses:
Selling, general, and administrative 6,419,633 6,047,859 56,128,374
Research and development 5,992,170 4,289,028 76,224,810
Loss from impairment of fixed assets, net of
insurance recoveries - - (81,489,890)
Gain from arbitration settlement - - (1,514,776)
----------------- -------------- ----------------
Total expenses 12,411,803 10,336,887 49,348,518
----------------- -------------- ----------------
Loss from operations (11,560,993) (9,090,530) (44,854,909)
Interest expense (3,429,930) (4,726,377) (16,215,287)
Interest income 2,536,628 2,458,021 17,808,384
----------------- -------------- ----------------
Loss before provision for income taxes (12,454,295) (11,358,886) (43,261,812)
Provision for income taxes - - (3,000,000)
----------------- -------------- ----------------
Loss before extraordinary loss on early
extinguishment of debt (12,454,295) (11,358,886) (46,261,812)
Extraordinary loss on early extinguishment of debt, net
of deferred tax benefit - (23,038,365) (23,038,365)
----------------- -------------- ----------------
Net loss (12,454,295) (34,397,251) (69,300,177)
Mandatorily redeemable preferred stock
dividends and accretion (5,573,867) (3,059,685) (21,018,280)
----------------- -------------- ----------------
Net loss attributable to common stockholders $ (18,028,162) $ (37,456,936) $ (90,318,457)
================= ============== ================
The accompanying notes are an integral part of
these consolidated financial statements.
2
EarthWatch Incorporated
(A Development Stage Company)
Consolidated Statement of Cash Flows (unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Period from
January 1, 1995
Six Months Ended June 30, (Inception) to
------------------------------------- June 30,
2000 2001 2001
----------------- ------------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (12,454,295) $ (34,397,251) $ (69,300,177)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation expense 1,851,398 1,329,176 18,330,921
Non-cash interest expense 3,427,791 4,725,976 14,823,356
Non-cash extraordinary loss on early extinquishment of debt -- 3,148,098 3,148,098
Non-cash loss from disposals and impairments of property
plant, and equipment, net of insurance recoveries (125) -- (79,886,959)
Non-cash stock compensation -- 83,892 1,005,292
Changes in assets and liabilities:
Accounts receivable, net 458,199 (297,684) 450,033
Other assets 778,333 (77,956) (564,347)
Accounts payable (4,792,215) (10,613,291) 163,485
Accounts payable - related parties 1,717,389 (930,614) 51,618
Accrued interest payable - related parties -- (38,279,332) (38,279,332)
Accrued expenses (574,632) 153,399 2,014,669
------------- ------------- -------------
Net cash provided (used) by operating activities (9,588,157) (75,155,587) (148,043,343)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities -- (236,760,935) (281,909,267)
Proceeds from maturities of investment securities 2,393,720 242,963,901 281,658,757
Proceeds from sales of property, plant, and equipment 125 -- 4,216,978
Insurance proceeds from loss of satellites -- 265,000,000 294,000,000
Constuction in progress additions (26,322,182) (39,621,131) (305,475,085)
Other property, plant, and equipment additions (2,980,610) (82,991) (15,644,459)
------------- ------------- -------------
Net cash used by investing activities (26,908,947) 231,498,844 (23,153,076)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (payments related to) issuance of long-term notes, net -- (1,462,635) 144,255,739
Proceeds from issuance of preferred and common stock, net 43,545 16,165 191,188,499
Cash acquired in merger -- -- 916,457
Principal payments on debt (49,397) (114,711,940) (119,253,650)
------------- ------------- -------------
Net cash provided (used) by financing activities (5,852) (116,158,410) 217,107,045
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents (36,502,956) 40,184,847 45,910,626
Cash and cash equivalents, beginning of period 82,193,314 5,725,779 --
------------- ------------- -------------
Cash and cash equivalents, end of period $ 45,690,358 $ 45,910,626 $ 45,910,626
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 9,640 $ 38,280,134 $ 50,951,795
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Assets acquired pursuant to capital-lease and financing obligations $ -- $ 5,721,429 $ 10,321,364
Net book value of assets acquired in merger -- -- 4,290,496
Liabilities assumed in merger -- -- 3,738,588
Stockholder advances converted to equity -- -- 1,030,000
Property in-kind contributed by stockholder -- -- 7,521,028
Non-cash interest capitalized in construction in progress 11,128,993 6,002,176 53,542,112
Issuance of mandatorily redeemable preferred stock 5,411,205 11,303,328 62,009,594
The accompanying is an integral part of these consolidated
financial statements.
3
EarthWatch Incorporated
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
- --------------------------------------------------------------------------------
Convertible Convertible
Series A Series B
Preferred Stock Preferred Stock
----------------------------- ----------------------------
Shares Amount Shares Amount
------------ ----------- ----------- -------------
Balance at January 1, 1995 (inception) -- $ -- -- $ --
Issuance of stock in exchange for future
cash contributions and contributions
of property in-kind 8,000,000 14,400,000 -- --
Contribution of net assets in merger 5,362,285 551,908 -- --
Issuance of common stock for services
and for stock options exercised -- -- -- --
Issuance of preferred stock 5,475,001 21,712,635 189,040 1,890,400
Property in-kind, conversion of debt, and
cash contributions from stockholder -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 1995 18,837,286 36,664,543 189,040 1,890,400
Restatement of capital stock and additional
paid-in capital for reincorporation as
of January 1, 1996 -- (36,645,706) -- (1,890,211)
Issuance of stock in exchange for property
in-kind and other, net 513,124 513 22,260 22
Issuance of preferred stock -- -- 100,000 100
Property in-kind contributed by stockholder -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 1996 19,350,410 19,350 311,300 311
Issuance of common stock -- -- -- --
Issuance of common stock for services
and for stock options exercised -- -- -- --
Issuance of preferred stock -- -- -- --
Other -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 1997 19,350,410 19,350 311,300 311
Issuance of preferred and common stock for
stock options exercised 17,916 18 -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 1998 19,368,326 19,368 311,300 311
Issuance of preferred and common stock for
stock options exercised -- -- -- --
Issuance of common stock for warrants
exercised -- -- -- --
Surrender and cancellation of shares from
Ball Technologies Holdings Corp. (2,761,983) (2,762) -- --
Reclassification of preferred and common
stock into Series C 8.5% Cumulative
Convertible Redeemable Preferred Stock
Due 2009 in connection with the
recapitalization (16,606,343) (16,606) (311,300) (311)
Issuance of preferred and common stock
in connection with the recapitalization -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 1999 -- -- -- --
Issuance of preferred and common stock
for stock options exercised -- -- -- --
Deferred stock compensation -- -- -- --
Amortization of deferred stock compensation -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- -------------
Balance at December 31, 2000 -- -- -- --
Issuance of preferred and common stock
for stock options exercised (unaudited) -- -- -- --
Amortization of deferred stock
compensation (unaudited) -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion (unaudited) -- -- -- --
Net and comprehensive income (loss) (unaudited) -- -- -- --
------------ ------------- ------------- -------------
Balance at June 30, 2001 (unaudited) -- $ -- -- $ --
============ ============= ============= =============
Convertible Senior Convertible
Series C Series D
Preferred Stock Preferred Stock
------------------------------ --------------------------------
Shares Amount Shares Amount
------------ -------------- -------------- --------------
Balance at January 1, 1995 (inception) -- $ -- -- $ --
Issuance of stock in exchange for future
cash contributions and contributions
of property in-kind -- -- -- --
Contribution of net assets in merger -- -- -- --
Issuance of common stock for services
and for stock options exercised -- -- -- --
Issuance of preferred stock -- -- -- --
Property in-kind, conversion of debt, and
cash contributions from stockholder -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 1995 -- -- -- --
Restatement of capital stock and additional
paid-in capital for reincorporation as
of January 1, 1996 -- -- -- --
Issuance of stock in exchange for property
in-kind and other, net -- -- -- --
Issuance of preferred stock 7,000,000 7,000 400,000 400
Property in-kind contributed by stockholder -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 1996 7,000,000 7,000 400,000 400
Issuance of common stock -- -- -- --
Issuance of common stock for services
and for stock options exercised -- -- -- --
Issuance of preferred stock -- -- 600,000 600
Other -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 1997 7,000,000 7,000 1,000,000 1,000
Issuance of preferred and common stock for
stock options exercised -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 1998 7,000,000 7,000 1,000,000 1,000
Issuance of preferred and common stock for
stock options exercised -- -- -- --
Issuance of common stock for warrants
exercised -- -- -- --
Surrender and cancellation of shares from
Ball Technologies Holdings Corp. -- -- -- --
Reclassification of preferred and common
stock into Series C 8.5% Cumulative
Convertible Redeemable Preferred Stock
Due 2009 in connection with the
recapitalization (7,000,000) (7,000) (1,000,000) (1,000)
Issuance of preferred and common stock
in connection with the recapitalization -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 1999 -- -- -- --
Issuance of preferred and common stock
for stock options exercised -- -- -- --
Deferred stock compensation -- -- -- --
Amortization of deferred stock compensation -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- -- --
Net and comprehensive income (loss) -- -- -- --
------------ ------------- ------------- --------------
Balance at December 31, 2000 -- -- -- --
Issuance of preferred and common stock
for stock options exercised (unaudited) -- -- -- --
Amortization of deferred stock
compensation (unaudited) -- -- -- --
Mandatorily redeemable preferred stock
dividends and accretion (unaudited) -- -- -- --
Net and comprehensive income (loss) (unaudited) -- -- -- --
------------ ------------- ------------- --------------
Balance at June 30, 2001 (unaudited) -- $ -- -- $ --
============ ============= ============= ==============
Common Stock Additional
------------------------------ Paid-in
Shares Amount Capital Other
-------------- ------------ ------------- -----------
Balance at January 1, 1995 (inception) -- $ -- $ -- $ --
Issuance of stock in exchange for future
cash contributions and contributions
of property in-kind 1 -- -- (14,400,000)
Contribution of net assets in merger -- -- -- --
Issuance of common stock for services
and for stock options exercised 79,500 63,600 -- --
Issuance of preferred stock -- -- -- --
Property in-kind, conversion of debt, and
cash contributions from stockholder -- -- -- 13,381,523
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 1995 79,501 63,600 -- (1,018,477)
Restatement of capital stock and additional
paid-in capital for reincorporation as
of January 1, 1996 -- (63,521) 38,599,438 --
Issuance of stock in exchange for property
in-kind and other, net -- -- 2,288,561 --
Issuance of preferred stock -- -- 69,833,305 --
Property in-kind contributed by stockholder -- -- (25,944) 1,018,477
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 1996 79,501 79 110,695,360 --
Issuance of common stock -- -- 1,229,240 --
Issuance of common stock for services
and for stock options exercised 69,416 70 55,463 --
Issuance of preferred stock -- -- 5,999,400 --
Other -- -- (4,773) --
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 1997 148,917 149 117,974,690 --
Issuance of preferred and common stock for
stock options exercised 54,631 55 50,799 --
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 1998 203,548 204 118,025,489 --
Issuance of preferred and common stock for
stock options exercised 1,000 1 799 --
Issuance of common stock for warrants
exercised 1,556,000 1,556 14,004 --
Surrender and cancellation of shares from
Ball Technologies Holdings Corp. -- -- 2,762 --
Reclassification of preferred and common
stock into Series C 8.5% Cumulative
Convertible Redeemable Preferred Stock
Due 2009 in connection with the
recapitalization (1,760,548) (1,761) (39,765,364) --
Issuance of preferred and common stock
in connection with the recapitalization 1 -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- (6,690,537) --
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 1999 1 -- 71,587,153 --
Issuance of preferred and common stock
for stock options exercised 195,419 195 49,734 --
Deferred stock compensation -- -- 1,456,000 (1,456,000)
Amortization of deferred stock compensation -- -- -- 921,400
Mandatorily redeemable preferred stock
dividends and accretion -- -- (11,268,058) --
Net and comprehensive income (loss) -- -- -- --
-------------- ------------- ------------- -------------
Balance at December 31, 2000 195,420 195 61,824,829 (534,600)
Issuance of preferred and common stock
for stock options exercised (unaudited) 64,668 65 16,098 --
Amortization of deferred stock
compensation (unaudited) -- -- -- 83,892
Mandatorily redeemable preferred stock
dividends and accretion (unaudited) -- -- (3,059,685) --
Net and comprehensive income (loss) (unaudited) -- -- -- --
-------------- ------------- ------------- -------------
Balance at June 30, 2001 (unaudited) 260,088 $ 260 $ 58,781,242 $ (450,708)
============== ============= ============= =============
Accumulated Deficit Accumulated
Other During the Total
Comprehensive Development Stockholders'
Income (Loss) Stage Equity (Deficit)
-------------- ------------------ ----------------
Balance at January 1, 1995 (inception) $ -- $ -- $ --
Issuance of stock in exchange for future
cash contributions and contributions
of property in-kind -- -- --
Contribution of net assets in merger -- -- 551,908
Issuance of common stock for services
and for stock options exercised -- -- 63,600
Issuance of preferred stock -- -- 23,603,035
Property in-kind, conversion of debt, and
cash contributions from stockholder -- -- 13,381,523
Net and comprehensive income (loss) -- (3,909,208) (3,909,208)
------------- ------------- --------------
Balance at December 31, 1995 -- (3,909,208) 33,690,858
Restatement of capital stock and additional
paid-in capital for reincorporation as
of January 1, 1996 -- -- --
Issuance of stock in exchange for property
in-kind and other, net -- -- 2,289,096
Issuance of preferred stock -- -- 69,840,805
Property in-kind contributed by stockholder -- -- 992,533
Net and comprehensive income (loss) -- (23,706,344) (23,706,344)
------------- ------------- -------------
Balance at December 31, 1996 -- (27,615,552) 83,106,948
Issuance of common stock -- -- 1,229,240
Issuance of common stock for services
and for stock options exercised -- -- 55,533
Issuance of preferred stock -- -- 6,000,000
Other -- -- (4,773)
Net and comprehensive income (loss) 80,400 (50,730,985) (50,650,585)
------------- ------------- -------------
Balance at December 31, 1997 80,400 (78,346,537) 39,736,363
Issuance of preferred and common stock for
stock options exercised -- -- 50,872
Net and comprehensive income (loss) (36,971) (12,919,555) (12,956,526)
------------- ------------- -------------
Balance at December 31, 1998 43,429 (91,266,092) 26,830,709
Issuance of preferred and common stock for
stock options exercised -- -- 800
Issuance of common stock for warrants
exercised -- -- 15,560
Surrender and cancellation of shares from
Ball Technologies Holdings Corp. -- -- --
Reclassification of preferred and common
stock into Series C 8.5% Cumulative
Convertible Redeemable Preferred Stock
Due 2009 in connection with the
recapitalization -- -- (39,792,042)
Issuance of preferred and common stock
in connection with the recapitalization -- -- --
Mandatorily redeemable preferred stock
dividends and accretion -- -- (6,690,537)
Net and comprehensive income (loss) (159,382) (20,318,766) (20,478,148)
------------- ------------- -------------
Balance at December 31, 1999 (115,953) (111,584,858) (40,113,658)
Issuance of preferred and common stock
for stock options exercised -- -- 49,929
Deferred stock compensation -- -- --
Amortization of deferred stock compensation -- -- 921,400
Mandatorily redeemable preferred stock
dividends and accretion -- -- (11,268,058)
Net and comprehensive income (loss) 115,953 76,681,932 76,797,885
------------- ------------- -------------
Balance at December 31, 2000 -- (34,902,926) 26,387,498
Issuance of preferred and common stock
for stock options exercised (unaudited) -- -- 16,163
Amortization of deferred stock
compensation (unaudited) -- -- 83,892
Mandatorily redeemable preferred stock
dividends and accretion (unaudited) -- -- (3,059,685)
Net and comprehensive income (loss) (unaudited) -- (34,397,251) (34,397,251)
------------- ------------- -------------
Balance at June 30, 2001 (unaudited) $ -- $ (69,300,177) $ (10,969,383)
============= ============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
EarthWatch Incorporated
(A Development Stage Company)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
1. Basis of Presentation
The consolidated financial statements have been prepared by EarthWatch
Incorporated and its subsidiaries without an audit, except for the December
31, 2000 balance sheet, which has been derived from audited financial
statements. The statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and reflect
all adjustments, consisting of only normal recurring adjustments that are, in
the opinion of management, necessary for a fair presentation of the
consolidated financial statements. We suggest that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto filed in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2000. The results of operations for the three
and six months ended June 30, 2001 are not necessarily indicative of the
results to be expected for the full year ending December 31, 2001.
New Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS
No. 143, "Accounting for Asset Retirement Obligations," were issued in July
2001. The adoption of these standards has not had a material impact on our
consolidated financial position or results of operations.
2. Construction in Progress
Construction in progress consists primarily of satellite construction and
launch costs, ground station construction costs, and third-party developed
software. Construction in progress consisted of the following:
December 31, 2000 June 30, 2001
----------------- -------------
(unaudited)
QuickBird 2 satellite $55,952,495 $104,774,889
Digital Globe software 26,570,191 28,274,900
Ground station equipment 7,193,788 8,011,421
----------- ------------
$89,716,474 $141,061,210
=========== ============
3. Debt
On February 28, 2001, as required by the indentures governing our 12 1/2%
Senior Notes due 2005 and our 13% Senior Discount Notes due 2007,
respectively, we offered to purchase all of our outstanding notes at their
accreted values per their respective indentures on the date of purchase,
using the insurance proceeds relating to the loss of our QuickBird 1
satellite in November 2000. The offer expired on April 2, 2001, and we
repurchased $127.4 million in principal amount at maturity of outstanding
13% notes and all outstanding 12 1/2% notes on April 3, 2001, resulting in
an extraordinary loss on early extinguishment of debt of approximately $23.0
million. The extraordinary loss on early extinguishment of debt was the
result of the write-off of unamortized debt discount and deferred financing
costs associated with the redeemed notes. The combined repurchase price
totaled $172.9 million.
In connection with the offer, we entered into a Recapitalization
Agreement and Consent dated as of April 2, 2001 (the "Recapitalization
Agreement") with certain holders of our 13% notes. Pursuant to the
Recapitalization Agreement, these noteholders agreed to refrain from
tendering their notes in the offer, thus allowing us to have the use of the
funds that would otherwise be used to repurchase their notes. Pursuant to
the Recapitalization Agreement, we also:
. granted registration rights to certain holders of notes and Series C
preferred stock;
. pledged government securities to secure certain repurchase rights of the
noteholders;
5
EarthWatch Incorporated
(A Development Stage Company)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
. obtained the consent of the holders of notes and amended the indenture
governing the notes in certain respects;
. amended our certificate of incorporation to, among other things, (a)
require that we purchase, at each holder's option, that holder's shares
of our Series A and B preferred stock, if an insurable event occurs under
the QuickBird 2 insurance policy, (b) increase the number of authorized
shares of our common stock and each series of our preferred stock, and
(c) extend the time period by one year during which holders of our
preferred stock may convert their shares into shares of our common stock;
. issued 10,843,297 additional shares of our Series C preferred stock to
the holders of the notes that signed the Recapitalization Agreement and
their assignees;
. purchased launch and in-orbit insurance for our QuickBird 2 satellite;
and
. pledged the QuickBird 2 insurance in favor of The Bank of New York, as
collateral agent for (a) the holders of notes and for Ball Aerospace, and
(b) the holders of our Series A preferred stock and Series B preferred
stock.
We have incurred transaction costs associated with the Recapitalization
Agreement of approximately $1.2 million, of which $1.0 million was paid to
Morgan Stanley.
In April 2001, we obtained a $9.0 million borrowing facility with Ball
Aerospace, one of our stockholders, which we are using to fund the
completion of QuickBird 2. This vendor financing facility accrues interest
at an annual rate of 11%, which will become payable seven months following
the launch of QuickBird 2. Beginning with the eighth month and ending with
the eighteenth month following the launch of QuickBird 2, principal, in
equal monthly amounts, and interest are payable in cash each month. In
conjunction with this arrangement, we issued to Ball Aerospace 903,608
shares of Series C preferred stock in June 2001.
Based on our current operating plan, we believe that existing capital
resources will meet our anticipated cash needs through fiscal 2002. If we
face any launch delays, if our satellite system takes longer than expected
to become operational, if technical or regulatory developments require that
we modify the design of our satellite system, if we are unable to achieve
our revenue targets, or if we incur other additional unforeseen costs, we
may require additional capital. We do not have a revolving credit facility
or other source of readily available capital. Therefore, any shortfall in
funds available for our operations or to service our debt would cause us
serious liquidity problems. In such case, we would need to seek additional
financing which we may not be able to obtain on commercially reasonable
terms or at all. Failure to obtain such additional financing may result in a
material adverse effect on our business and would significantly increase
risk of our ability to continue as a going concern.
The book value of our debt, net of unamortized deferred financing costs
and debt discounts, approximates its fair value at June 30, 2001.
Our debt is comprised of the following at: December 31, June 30,
2000 2001
------------- -----------
(unaudited)
13% Senior Discount Notes, net of unamortized discount of
$64,852,862 and $10,178,743, respectively, effective rate of 18.0% $ 134,147,138 $52,896,232
12 1/2% Senior Notes, net of unamortized discount of $10,731,089
and zero, respectively 61,268,911 --
11% Vendor financing facility, net of unamortized discount of zero and
$709,880 , respectively, effective rate of 17.5% -- 5,078,914
Capital-lease obligations 68,601 29,343
------------- -----------
195,484,650 58,004,489
Less: current portion (195,484,650) (1,730,000)
------------- -----------
$ -- $56,274,489
============= ===========
6
EarthWatch Incorporated
(A Development Stage Company)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
4. Commitments
Effective March 2001, we entered into a launch services agreement for our
QuickBird 2 satellite. This agreement increases our remaining noncancelable
contract commitments as of June 30, 2001 to $37.8 million.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the consolidated financial statements and notes
thereto included elsewhere in this Quarterly Report on Form 10-Q. Some of the
statements in this Quarterly Report on Form 10-Q constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry's results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. These factors include, among
others, those listed under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Quarterly Report on
Form 10-Q and in the other documents we file with the Securities and Exchange
Commission, including our Annual Report on Form 10-K for the year ended December
31, 2000. In some cases, you can identify forward-looking statements by
terminology, such as "may," "will," "should," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential," or "continue"
or the negative of these terms or comparable terminology. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, events, levels of activity,
performance, or achievements. Our actual results and the timing of certain
events could differ materially from those anticipated in the forward-looking
statements.
Results of Operations
Three months ended June 30, 2000 compared to three months ended June 30, 2001
Revenue. Our revenue has been generated primarily from the processing and sale
of geographic imagery purchased from third-party suppliers. These sources of
revenue increased from $385,000 for the three-month period ended June 30, 2000
to $1.3 million for the three-month period ended June 30, 2001, due to increased
quantities of images sold. Revenue from the sale of third-party imagery
decreased for the remainder of fiscal 2000 due to diversion of resources in
anticipation of the launch of QuickBird 1. A similar decrease is not expected in
fiscal 2001.
Cost of Goods Sold. Our cost of goods sold includes third party geographic
imagery sold under contract. As a result of our increased revenue, our cost of
goods sold consequently increased from $210,000 for the three-month period ended
June 30, 2000 to $935,000 for the three-month period ended June 30, 2001. Costs
for both periods were primarily the direct costs associated with obtaining
third-party geographic imagery for resale.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses were $3.4 million for the three-month period ended June
30, 2000 and $3.3 million for the three-month period ended June 30, 2001. We
expect these costs to increase in the future as we increase staff levels and
implement new procedures in preparation for full-scale operations and market
entry of our products and services.
Research and Development. Our research and development costs were $3.6 million
for the three-month period ended June 30, 2000 and $2.1 million for the three-
month period ended June 30, 2001. These expenses decreased due to staff
reductions and reduced operating activities following the loss of QuickBird 1.
We expect these costs to increase following the launch of QuickBird 2.
Interest Expense. Interest expense decreased from $1.4 million for the three-
month period ended June 30, 2000 to zero for the three-month period ended June
30, 2001. This decrease was the result of lower average debt balances
outstanding during the three-month period ended June 30, 2001 resulting in the
capitalization of all interest incurred during the period as part of the cost of
our QuickBird 2 satellite.
Interest Income. Interest income decreased from $1.2 million for the three-
month period ended June 30, 2000 to $832,000 for the three-month period ended
June 30, 2001. Higher average investment balances outstanding during the three-
month period ended June 30, 2001 was offset by slightly lower rates of return on
investments.
Net Loss. We had net losses of $7.1 million for the three-month period ended
June 30, 2000 and $27.2 million for the three-month period ended June 30, 2001.
This increase in net loss was primarily the result of the extraordinary
8
loss on early extinguishment of debt incurred in April 2001, as discussed in
Note 3 to our consolidated financial statements.
Six months ended June 30, 2000 compared to six months ended June 30, 2001
Revenue. Our revenue has been generated primarily from the processing and sale
of geographic imagery purchased from third-party suppliers. These sources of
revenue increased from $2.4 million for the six-month period ended June 30, 2000
to $5.2 million for the six-month period ended June 30, 2001, due to increased
quantities of images sold. Revenue from the sale of third-party imagery
decreased for the remainder of fiscal 2000 due to diversion of resources in
anticipation of the launch of QuickBird 1. A similar decrease is not expected in
fiscal 2001.
Cost of Goods Sold. Our cost of goods sold includes third party geographic
imagery sold under contract. As a result of our increased revenue, our cost of
goods sold consequently increased from $1.6 million for the six-month period
ended June 30, 2000 to $3.9 million for the six-month period ended June 30,
2001. Costs for both periods were primarily the direct costs associated with
obtaining third-party geographic imagery for resale.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses were $6.4 million for the six-month period ended June
30, 2000 and $6.0 million for the six-month period ended June 30, 2001. We
expect these costs to increase in the future as we increase staff levels and
implement new procedures in preparation for full-scale operations and market
entry of our products and services.
Research and Development. Our research and development costs were $6.0 million
for the six-month period ended June 30, 2000 and $4.3 million for the six-month
period ended June 30, 2001. These expenses decreased due to staff reductions
and reduced operating activities following the loss of QuickBird 1. We expect
these costs to increase following the launch of QuickBird 2.
Interest Expense. Interest expense increased from $3.4 million for the six-month
period ended June 30, 2000 to $4.7 million for the six-month period ended June
30, 2001. This increase was the result of lower capitalization of interest due
to the completion of QuickBird 1 in 2000.
Interest Income. Interest income for each of the six-month periods ended June
30, 2000 and 2001 was $2.5 million. Higher average investment balances
outstanding during the six-month period ended June 30, 2001 were offset by
slightly lower rates of return on investments.
Net Loss. We had net losses of $12.5 million for the six-month period ended
June 30, 2000 and $34.4 million for the six-month period ended June 30, 2001.
This increase in net loss was primarily the result of the extraordinary loss on
early extinguishment of debt incurred in April 2001, as discussed in Note 3 to
our consolidated financial statements.
Liquidity and Capital Resources
On February 28, 2001, as required by the indentures governing our 12 1/2%
Senior Notes due 2005 and our 13% Senior Discount Notes due 2007, respectively,
we offered to purchase all of our outstanding notes at their accreted values per
their respective indentures on the date of purchase, using the insurance
proceeds relating to the loss of our QuickBird 1 satellite in November 2000.
The offer expired on April 2, 2001, and we repurchased $127.4 million in
principal amount at maturity of outstanding 13% notes and all outstanding 12
1/2% notes on April 3, 2001, resulting in an extraordinary loss on early
extinguishment of debt of approximately $23.0 million. The combined repurchase
price totaled $172.9 million.
In connection with the offer, we entered into a Recapitalization Agreement
and Consent dated as of April 2, 2001 (the "Recapitalization Agreement") with
certain holders of our 13% notes. Pursuant to the Recapitalization Agreement,
these noteholders agreed to refrain from tendering their notes in the offer,
thus allowing us to have the use of the funds that would otherwise be used to
repurchase their notes. Pursuant to the Recapitalization Agreement, we also:
9
. granted registration rights to certain holders of notes and Series C
preferred stock;
. pledged government securities to secure certain repurchase rights of
the noteholders;
. obtained the consent of the holders of notes and amended the indenture
governing the notes in certain respects;
. amended our certificate of incorporation to, among other things, (a)
require that we purchase, at each holder's option, that holder's
shares of our Series A and B preferred stock, if an insurable event
occurs under the QuickBird 2 insurance policy, (b) increase the number
of authorized shares of our common stock and each series of our
preferred stock, and (c) extend the time period by one year during
which holders of our preferred stock may convert their shares into
shares of our common stock;
. issued 10,843,297 additional shares of our Series C preferred stock to
the holders of the notes that signed the Recapitalization Agreement
and their assignees;
. purchased launch and in-orbit insurance for our QuickBird 2 satellite;
and
. pledged the QuickBird 2 insurance in favor of The Bank of New York, as
collateral agent for (a) the holders of notes and for Ball Aerospace,
and (b) the holders of our Series A preferred stock and Series B
preferred stock.
We have incurred transaction costs associated with the
Recapitalization Agreement of approximately $1.2 million, of which $1.0 million
was paid to Morgan Stanley.
In April 2001, we obtained a $9.0 million borrowing facility with Ball
Aerospace, one of our stockholders, which we are using to fund the completion of
QuickBird 2. This vendor financing facility accrues interest at an annual rate
of 11%, which will become payable seven months following the launch of QuickBird
2. Beginning with the eighth month and ending with the eighteenth month
following the launch of QuickBird 2, principal, in equal monthly amounts, and
interest are payable in cash each month. In conjunction with this arrangement,
we issued to Ball Aerospace 903,608 shares of Series C preferred stock in June
2001. As of June 30, 2001, we have drawn approximately $5.7 million under this
facility.
Net cash used by operating activities increased from $9.6 million for
the six-month period ended June 30, 2000 to $75.2 million for the six-month
period ended June 30, 2001. This increase was primarily the result of the
payment of accrued interest and the extraordinary loss incurred in conjunction
with the redemption of notes in 2001 and the reduction in accounts payable that
had built up prior to the receipt of the QuickBird 1 insurance proceeds.
Based on our current operating plan, we believe that existing capital
resources will meet our anticipated cash needs through fiscal 2002. If we face
any launch delays, if our satellite system takes longer than expected to become
operational, if technical or regulatory developments require that we modify the
design of our satellite system, if we are unable to achieve our revenue targets,
or if we incur other additional unforeseen costs, we may require additional
capital. We do not have a revolving credit facility or other source of readily
available capital. Therefore, any shortfall in funds available for our
operations or to service our debt would cause us serious liquidity problems. In
such case, we would need to seek additional financing which we may not be able
to obtain on commercially reasonable terms or at all. Failure to obtain such
additional financing may result in a material adverse effect on our business and
would significantly increase risk of our ability to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We invest our cash and cash equivalents and restricted investments in
short-term, U.S. dollar interest-bearing, investment grade securities with
maturities less than 90 days. As of June 30, 2001, the interest rates on these
investments have not fluctuated more than one percentage point since they were
purchased. We do not currently hold any derivative instruments and do not
engage in hedging activities. Also, we currently do not hold any variable
interest rate debt or lines of credit, and currently do not generally enter into
any transactions denominated in a foreign currency. Therefore, our exposure to
interest rate and foreign exchange fluctuations is minimal.
10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
During the three months ended June 30, 2001, we granted stock options to
purchase 85,524 shares of our common stock with a price of $0.25 per share to
our employees, consultants, directors, and other service providers under our
1999 Equity Incentive Plan. During the period covered by this report, we also
issued and sold an aggregate of 44,650 shares of our common stock for $0.25 per
share to employees, consultants, directors, and other service providers under
direct issuances and exercises of stock options under our 1999 Equity Incentive
Plan and 1995 Stock Option/Stock Issuance Plan. These securities were not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon the exemption provided by Section 4(2) of the Securities Act
and/or Rule 701 promulgated thereunder for transactions by an issuer not
involving a public offering.
In April 2001, pursuant to the Recapitalization Agreement, we entered into
the First Supplemental Indenture to the Indenture, which governs our 13% notes
and required us, among other things, to (i) obtain launch and in-orbit
operations insurance in respect of our anticipated QuickBird 2 satellite and
(ii) within 30 days of receipt by the collateral trustee of any proceeds under
the QuickBird 2 insurance policy, to make an offer to repurchase the 13% notes
at their accreted value on the date of repurchase and to consummate such offer
to repurchase no later than 60 days after the commencement of the offer.
In June 2001, we issued 10,843,297 shares of Series C preferred stock
pursuant to the Recapitalization Agreement to holders of notes in partial
consideration for those holders refraining from tendering their notes in our
previous tender offer. Each of the purchasers in this transaction were
accredited investors. Accordingly, we relied on the exemptions from
registration provided by Regulation D promulgated under the Securities Act or
Section 4(2) of the Securities Act to effect this transaction. Morgan Stanley
served as our financial advisor in connection with these and related
transactions and received $1 million in connection with its advisory role.
In June 2001, we issued 903,608 shares of Series C preferred stock to Ball
Aerospace, an accredited investor, in connection with its provision of vendor
financing. We relied on the exemption from registration provided by Regulation
D promulgated under the Securities Act or Section 4(2) of the Securities Act to
effect this transaction.
Appropriate legends are affixed to the stock certificates issued in the
transactions listed above. Similar legends were imposed in connection with any
subsequent sales of any such securities. Each of the purchasers that are our
employees or directors had access to information through their employment by us.
Each purchaser was given the opportunity to ask questions of and request
information from EarthWatch. Each investor represented and acknowledged to
EarthWatch in writing that it had this opportunity. Some of the purchasers
asked questions and requested information. EarthWatch complied with all
requests that it deemed reasonable.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) In May and June 2001, our stockholders acted by written consent in
lieu of a special meeting.
(b) The matters voted upon pursuant to the written consents did not
include the election of directors.
(c) The matters voted upon pursuant to the written consents are as
follows:
(1) Removal of Alexander S. Lushtak as a director of EarthWatch
-----------------------------------------------------------
Incorporated. In May 2001, our stockholders acted by written consent to remove
- ------------
Mr. Lushtak as a director of our company and to leave his seat vacant until the
next annual meeting of stockholders or until his successor is elected and
qualified.
Number of Votes by Shares as to Which Number of Votes by Shares as to Which
------------------------------------- -------------------------------------
Consents Were Provided Consents Were Not Provided
---------------------- ---------------------------
38,102,559 22,679,827
__________ __________
11
Based upon the consents received, Mr. Lushtak was removed as a
director and his seat was left vacant.
(2) Amendments to Certificate of Incorporation. In May and June 2001,
------------------------------------------
we solicited our stockholders' consent to certain amendments to our certificate
of incorporation. These amendments, among other things, (a) require that we
purchase, at each holder's option, that holder's shares of our Series A and B
preferred stock, if an insurable event occurs under the QuickBird 2 insurance
policy, (b) increase the number of authorized shares of our common stock and
each series of our preferred stock, and (c) extend the time period by one year
during which holders of our preferred stock may convert their shares into shares
of our common stock.
Number of Votes by Shares as to Which Number of Votes by Shares as to Which
------------------------------------- -------------------------------------
Consents Were Provided Consents Were Not Provided
---------------------- ---------------------------
49,486,652 10,981,908
__________ ____________
Based upon the consents received, the amendments were approved.
(3) Ratification of Prior Actions. In May and June 2001, we solicited
-----------------------------
our stockholders' consent to ratify actions taken previously at meetings of
stockholders.
Number of Votes by Shares as to Which Number of Votes by Shares as to Which
------------------------------------- -------------------------------------
Consents Were Provided Consents Were Not Provided
---------------------- ---------------------------
48,835,135 11,633,425
__________ ____________
Based upon the consents received, the prior actions were ratified.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
2.2* Recapitalization Agreement and Consent dated as of
April 2, 2001 by and among EarthWatch Incorporated,
Morgan Stanley & Co. Incorporated, Post Balanced
Fund, Post High Yield LP, Post Total Return Fund,
Opportunity Fund, Dickstein & Co., L.P., Dickstein
International Limited, Hitachi Software Engineering
Co., Ltd., Sun America High Income Fund and Sun
America Series Trust High Yield Portfolio.
3.3** Certificate of Amendment to Amended and Restated
Certificate of Incorporation.
4.10* Notes Registration Rights Agreement dated as of
April 3, 2001 by and among EarthWatch Incorporated,
The Bank of New York and Morgan Stanley & Co.
Incorporated.
4.11* Series C Preferred Registration Rights Agreement
dated as of April 3, 2001 by and among EarthWatch
Incorporated, Morgan Stanley & Co. Incorporated,
Post Balanced Fund, Post High Yield LP, Post Total
Return Fund, Opportunity Fund, Dickstein & Co.,
L.P., Dickstein International Limited, Sun America
High Income Fund, Sun America Series Trust High
Yield Portfolio, Hitachi Software Engineering Co.,
Ltd. and Ball Technologies Holdings Corp.
4.12* Pledge Agreement dated as of April 3, 2001 by and
among EarthWatch Incorporated, The Bank of New York,
as trustee, and The Bank of New
12
York, as securities intermediary.
4.13* First Supplemental Indenture to the Indenture dated
as of April 16, 2001 by and between EarthWatch
Incorporated and The Bank of New York, as trustee.
4.14** Senior Collateral Pledge and Security Agreement,
dated as of June 15, 2001, between EarthWatch
Incorporated and The Bank of New York, as collateral
agent.
4.15** Junior Collateral Pledge and Security Agreement,
dated as of June 15, 2001, between EarthWatch
Incorporated and The Bank of New York, as collateral
agent.
* Incorporated by reference to the exhibits with the corresponding
exhibit numbers in our Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 25, 2001.
** Incorporated by reference to the exhibits with the corresponding
exhibit numbers in our Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 20, 2001.
(b) Reports on Form 8-K
Reports on Form 8-K were filed on April 25, 2001 and June 20, 2001 to
report the closure of our tender offer and the completion of our pending
transactions under the Recapitalization Agreement, respectively.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Longmont, State of
Colorado.
EARTHWATCH INCORPORATED
(Registrant)
Date: August 14, 2001 By: /s/ Henry E. Dubois
--------------------- ------------------------------------
Henry E. Dubois
Chief Financial Officer, Chief
Operating Officer,
Executive Vice President
(Principal Financial and
Accounting Officer)
14