EXHIBIT 99.1
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31,2001
BENNETT THRASHER
[BT LOGO]
A Professional Corporation INDEPENDENT AUDITORS' REPORT
Certified Public Accountants
& Consultants
To the Management Committee and Members of
3330 Cumberland Boulevard Immeon Networks, LLC
Suite 100
Atlanta, Georgia 30339
We have audited the accompanying balance
sheet of Immeon Networks, LLC (a company in
P 770,396.2200 the development stage) as of December
F 770.390.0394 31,2001 and the related statements of
www.Bennett-Thrasher.com operations, members' deficit and cash flows
for the period from inception (January 8,
2001) to December 31, 2001. These financial
statements are the responsibility of the
Company's management. Our responsibility is
to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with
auditing standards generally accepted in
the United States of America. Those
standards require that we plan and perform
the audit to obtain reasonable assurance
about whether the financial statements are
free of material misstatement. An audit
includes examining, on a test basis,
evidence supporting the amounts and
disclosures in the financial statements. An
audit also includes assessing the
accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit
provides a reasonable basis for our
opinion.
In our opinion, the financial statements
referred to above present fairly, in all
material respects, the financial position
of Immeon Networks, LLC as of December 31,
2001 and the results of its operations and
its cash flows for the period from
inception (January 8, 2001) to December 31,
2001 in conformity with accounting
principles generally accepted in the United
States of America.
/s/ Bennett Thrasher PC
March 26,2004
Registered: Public Company
Accounting Oversight Board
Member: AICPA Center for
Public Company Audit Firms
Member: PCPS
AICPA Alliance for CPA Firms
Member: DFK International
Affiliated Offices Worldwide
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2001
ASSETS
Current assets:
Cash $ 72,700
Accounts receivable 54,169
-----------
Total current assets $ 126,869
===========
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 3,109,410
Deferred revenue 4,936
-----------
Total current liabilities 3,114,346
-----------
Commitments
Members' deficit:
Initial capital contribution 2,000
Deficit accumulated during the development stage (2,989,477)
-----------
Total members' deficit (2,987,477)
-----------
$ 126,869
===========
See accompanying notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2001
Revenue $ 99,977
-----------
Costs and expenses:
Cost of services rendered 1,661,868
Selling and other operating expenses 648,534
Administrative expenses 779,052
-----------
Net loss 3,089,454
-----------
$(2,989,477)
===========
See accompanying notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF MEMBERS' DEFICIT
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2001
DEFICIT ACCUMULATED
INITIAL CAPITAL DURING THE
CONTRIBUTION DEVELOPMENT STAGE TOTAL
------------ ----------------- -----
Balance at January 8, 2001 $ - $ - $ -
Initial capital contribution 2,000 - 2,000
Net loss - (2,989,477) (2,989,477)
----------- ----------- -----------
Balance at December 31, 2001 $ 2,000 $(2,989,477) $(2,987,477)
=========== =========== ===========
See accompanying note to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2001
Cash flows from operating activities:
Net loss $(2,989,477)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Changes in assets and liabilities:
Accounts receivable (54,169)
Accounts payable and accrued expenses 3,109,410
Deferred revenue 4,936
-----------
Net cash provided by operating activities 70,700
-----------
Cash flows from financing activities:
Initial capital contribution from members 2,000
-----------
Net cash provided by financing activities 2,000
-----------
Net increase in cash 72,700
Cash at beginning of period -
-----------
Cash at end of period $ 72,700
===========
See accompanying notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE BUSINESS
Immeon Networks, LLC (the Company) was formed on January 8, 2001 as a limited
liability company pursuant to the provisions of the Delaware Limited Liability
Company Act (the Act) to engage in the business of marketing, selling and
providing shared bandwidth-on-demand satellite services and satellite ground
network services. The Company's services are available throughout the United
States and also in portions of Canada and the Caribbean. The Company's corporate
facilities are located in Norcross, Georgia and its network operations and
customer service center are located in Carlsbad, California.
The period from inception (January 8, 2001) to December 31, 2001 is referred to
herein as 2001.
FORMATION OF THE COMPANY
The terms of formation of the Company were specified by an operating agreement.
The Company has two members consisting of ViaSat, Inc. (ViaSat) and Loral
SpaceCom Corporation (Loral). The management committee is comprised of four
representatives, two representatives of ViaSat and two representatives of Loral
(individually, the managers; collectively, the management committee). The
general manager, who is responsible for the day-to-day operations of the
Company, is selected by ViaSat, subject to the approval of Loral.
The operating agreement provides for an initial capital contribution and
additional capital contributions at the discretion of the management committee.
The initial capitalization of the Company consisted of cash totaling $2,000
($1,000 from ViaSat and $1,000 from Loral). As of December 31, 2001, no
additional capital contributions have been made by the members. Operating losses
of the Company are allocated to the members in accordance with each member's
ownership interest in the Company. Once the Company obtains profitability,
contributions previously provided by the members will be reimbursed based on the
allocation of profits. After all contributions have been fully reimbursed to the
members, each member is entitled to 50% of the net income of the Company,
subject to certain adjustments. Pursuant to the terms of a service agreement
between the members (see Note 3), services provided to the Company are
considered additional capital contributions for the purposes of determining the
allocation of net losses. Except as otherwise specifically provided for in the
Act, the liability of the members is generally limited to their initial capital
contributions, additional capital contributions (including contributions in the
form of services) and advances to and financial guarantees that form additional
basis in the Company.
The Company will continue indefinitely unless dissolved by the Act; unanimous
consent of the members; withdrawal, expulsion or bankruptcy of the last
remaining member; sale of substantially all assets of the Company; or bankruptcy
of the Company.
- 2 -
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and highly liquid investments that are
readily convertible into cash and have a maturity of ninety days or less when
purchased. At times, cash and cash equivalent balances may exceed federally
insured amounts. The Company believes it mitigates any risk by depositing cash
and investing in cash equivalents with major financial institutions.
ACCOUNTS RECEIVABLE
In the normal course of business, the Company extends unsecured credit to its
customers. The Company performs ongoing credit evaluations of its customers.
Accounts receivable are generally due under normal trade terms requiring payment
within 30 days from the invoice date. Accounts receivable are stated at the
amount billed to the customer. Management individually reviews all accounts
receivable balances that exceed 90 days from invoice date and, based on an
assessment of current creditworthiness, past payment history and historical loss
experience, estimates the portion, if any, of the balance that will not be
collected. Management believes that all outstanding accounts receivable are
collectible and therefore has not established a valuation allowance.
There may be changes in future economic conditions that might give rise to
results that differ from past experience. Management will continue to assess
creditworthiness of customers and monitor whether a valuation allowance is
necessary.
REVENUE RECOGNITION
Revenue from services is recognized in the period in which the services are
provided.
Commissions are recognized as earned based on the terms of a distributor
agreement with ViaSat (see Note 3).
Deferred revenue represents customer deposits for services to be provided or
commissions to be earned and will be recognized as revenue in the period in
which the services are provided or the commissions are earned.
INCOME TAXES
As a limited liability company, the Company is treated as a partnership for
federal and state income tax purposes. Accordingly, no provision or benefit for
federal and state income taxes has been recorded in the accompanying financial
statements since all income, losses and tax credits from the Company's
operations are reported on the members' income tax returns.
- 3 -
NOTE 2: FACTORS AFFECTING OPERATIONS
The Company is in the development stage as it is in the process of researching,
developing and marketing its services. The Company has incurred accumulated
losses since inception of approximately $3 million as a development stage
company and continued losses are expected until the Company completes the
research, development and marketing stage of its initial services and is able to
market and sell such services.
The continuation of the Company's business as a going concern is contingent
upon, among other things, the ability to achieve and maintain satisfactory
levels of future profitable operations; obtain and maintain satisfactory levels
of debt and/or equity financing; and provide sufficient cash from operations to
meet current and future obligations. Although there are no assurances,
management believes the Company will be able to achieve the objectives and
continue as a going concern. The accompanying financial statements do not
include any adjustments that may result from the outcome of these uncertainties.
NOTE 3: RELATED PARTY TRANSACTIONS
Due to the relationships between the parties involved, these transactions may
not have been consummated on terms which would have been achieved with unrelated
third parties.
The amount due to ViaSat at December 31, 2001 totaled approximately $2.8 million
and the amount due to Loral at December 31, 2001 totaled approximately $320,000.
These amounts are included in accounts payable and accrued expenses in the
accompanying balance sheet.
SERVICE AGREEMENT
The Company entered into a service agreement with Loral and ViaSat. Under the
terms of the agreement, Loral provides satellite capacity, and related services,
to the Company and ViaSat provides communications equipment and hardware (ground
equipment) to be used with the satellites provided by Loral. ViaSat has also
agreed to operate a network operations center, manage sales and marketing and
provide other services, such as general and administrative, engineering and
technical assistance and research and development.
The Company's total cost for these services from ViaSat in 2001 was
approximately $2.8 million. The total cost for satellite capacity from Loral in
2001 was approximately $320,000. These charges from ViaSat and Loral are
referred to in the service agreement as eligible expenses.
In the event the Company has not generated sufficient cash to pay ViaSat and
Loral for their respective eligible expenses, the Company will prorate any
payment to ViaSat and Loral as a ratio of their respective cumulative unpaid
eligible expenses to total cumulative unpaid eligible expenses. During 2001, the
Company did not have sufficient cash to pay any eligible expenses.
DISTRIBUTOR AGREEMENT
The Company has entered into a distributor agreement with ViaSat pursuant to
which the Company is entitled to receive a commission from ViaSat for equipment
ViaSat sells to the Company's customers. During 2001, such commissions totaled
$27,472 and are included in revenue in the accompanying statement of operations.
- 4 -
REFERRAL INCENTIVE PROGRAM
The Company has entered into a referral incentive program with ViaSat and Loral
pursuant to which ViaSat and Loral are entitled to receive a commission from the
Company for customer referrals. During 2001, such commissions were not
significant.
SATELLITE SERVICES AGREEMENT
In November 2001, the Company and ViaSat entered into a five year agreement with
PanAmSat Corporation (PanAmSat) for the Company to offer bandwidth-on-demand
services to customers utilizing PanAmSat's satellite network.
NOTE 4: SUBSEQUENT EVENT
In July 2003, Loral filed for bankruptcy; therefore, its interest in the Company
became a nonvoting interest. In January 2004, in Loral's bankruptcy proceedings,
the bankruptcy court rejected the operating agreement (see Note 1) and the
service agreement (see Note 3).
*****
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(COMPILED)
DECEMBER 31,2002
BENNETT THRASHER
[BT LOGO]
A Professional Corporation
Certified Public Accountants COMPILATION REPORT OF INDEPENDENT PUBLIC
& Consultants ACCOUNTANTS
3330 Cumberland Boulevard To the Management Committee and Members of
suite 100 Immeon Networks, LLC
Atlanta, Georgia 30339
P 770.396.2200 We have compiled the accompanying balance sheet
F 770.390.0394 of Immeon Networks, LLC (a company in the
www.Bennett-Thrasher.com development stage) as of December 31, 2002 and
the related statements of operations and members'
deficit and cash flows for the year then ended
and for the period from inception (January 8,
2001) to December 31, 2002, in accordance with
Statements on Standards for Accounting and Review
Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the
form of financial statements information that is
the representation of management. We have not
audited or reviewed the accompanying financial
statements and, accordingly, do not express an
opinion or any other form of assurance on them.
/s/ Bennett Thrasher PC
May 18,2004
Registered: Public Company
Accounting Oversight Board
Member: AICPA Center for
Public Company Audit Firms
Member: PCPS
AICPA Alliance for CPA Firms
Member: DFK International
Affiliated Offices Worldwide
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2002
ASSETS
Current assets:
Cash $ 271,790
Accounts receivable 160,439
-----------
Total current assets $ 432,229
===========
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 5,922,228
Customer deposits 100,108
-----------
Total current liabilities 6,022,336
-----------
Members' deficit:
Initial capital contribution 2,000
Deficit accumulated during the development stage (5,592,107)
-----------
Total members' deficit (5,590,107)
-----------
$ 432,229
===========
Prepared without audit. See accountants' compilation report and accompanying
notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2002
FROM
2002 INCEPTION
Revenue $ 430,762 $ 530,739
----------- -----------
Costs and expenses:
Cost of services rendered 1,504,197 3,166,065
Selling and other operating expenses 605,785 1,254,319
Administrative expenses 923,410 1,702,462
----------- -----------
3,033,392 6,122,846
----------- -----------
Net loss $(2,602,630) $(5,592,107)
=========== ===========
Prepared without audit. See accountants' compilation report and accompanying
notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF MEMBERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2003
DEFICIT ACCUMULATED
INITIAL CAPITAL DURING THE
CONTRIBUTION DEVELOPMENT STAGE TOTAL
Balance at January 8, 2001 $ - $ - $ -
Initial capital contribution 2,000 - 2,000
Net loss - (2,989,477) (2,989,477)
----------- ----------- -----------
Balance at December 31, 2001 2,000 (2,989,477) (2,987,477)
Net loss - (2,602,630) (2,602,630)
----------- ----------- -----------
Balance at December 31, 2002 $ 2,000 $(5,592,107) $(5,590,107)
=========== =========== ===========
Prepared without audit. See accountants' compilation report and accompanying
notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FOR THE PERIOD FROM INCEPTION (JANUARY 8, 2001) TO DECEMBER 31, 2002
FROM
2002 INCEPTION
Cash flows from operating activities:
Net loss $(2,602,630) $(5,592,107)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Changes in assets and liabilities:
Accounts receivable (106,270) (160,439)
Accounts payable and accrued expenses 2,812,818 5,922,228
Customer deposits 95,172 100,108
----------- -----------
Net cash provided by operating activities 199,090 269,790
----------- -----------
Cash flows from financing activities:
Initial capital contribution from members - 2,000
----------- -----------
Net cash provided by financing activities - 2,000
----------- -----------
Net increase in cash 199,090 271,790
Cash at beginning of year 72,700 -
----------- -----------
Cash at end of year $ 271,790 $ 271,790
=========== ===========
Prepared without audit. See accountants' compilation report and accompanying
notes to financial statements.
IMMEON NETWORKS, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE BUSINESS
Immeon Networks, LLC (the "Company") was formed on January 8, 2001 as a limited
liability company pursuant to the provisions of the Delaware Limited Liability
Company Act (the "Act") to engage in the business of marketing, selling and
providing bandwidth-on-demand satellite communication services. The Company's
services are available throughout the United States and also in portions of
Canada and the Caribbean. The Company's corporate facilities, network operations
center and customer service center are located in Carlsbad, California.
FORMATION OF THE COMPANY
The terms of formation of the Company were specified by an operating agreement.
The Company has two members consisting of ViaSat, Inc. (ViaSat) and Loral
SpaceCom Corporation (Loral). The management committee is comprised of four
representatives, two representatives of ViaSat and two representatives of Loral
(individually, the managers; collectively, the management committee). The
general manager, who is responsible for managing the day-to-day operations of
the Company, is selected by ViaSat, subject to the approval of Loral.
The operating agreement provides for an initial capital contribution and
additional capital contributions at the discretion of the management committee.
The initial capitalization of the Company consisted of cash totaling $2,000
($1,000 from ViaSat and $1,000 from Loral). Operating losses of the Company are
allocated to the members in accordance with each member's ownership interest in
the Company. Once the Company obtains profitability, contributions previously
provided by the members will be reimbursed based on the allocation of profits.
After all contributions have been fully reimbursed to the members, each member
is entitled to 50% of the net income of the Company, subject to certain
adjustments. Pursuant to the terms of a service agreement between the members
(see Note 3), services provided to the Company are considered additional capital
contributions for the purposes of determining the allocation of net losses.
Except as otherwise specifically provided for in the Act, the liability of the
members is generally limited to their initial capital contributions, additional
capital contributions (including contributions in the form of services) and
advances to and financial guarantees that form additional basis in the Company.
The Company will continue indefinitely unless dissolved by the Act; unanimous
consent of the members; withdrawal, expulsion or bankruptcy of the last
remaining member; sale of substantially all assets of the Company; or bankruptcy
of the Company.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
-2-
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and highly liquid investments that are
readily convertible into cash and have a maturity of ninety days or less when
purchased. At times, cash and cash equivalent balances may exceed federally
insured amounts. The Company believes it mitigates any risk by depositing cash
and investing in cash equivalents with major financial institutions.
ACCOUNTS RECEIVABLE
In the normal course of business, the Company extends unsecured credit to its
customers. The Company performs ongoing credit evaluations of its customers.
Accounts receivable are generally due under normal trade terms requiring payment
within 30 days from the invoice date. Accounts receivable are stated at the
amount billed to the customer. Management individually reviews all accounts
receivable balances that exceed 90 days from invoice date and, based on an
assessment of current creditworthiness, past payment history and historical loss
experience, estimates the portion, if any, of the balance that will not be
collected. Management believes that all outstanding accounts receivable are
collectible and therefore has not established a valuation allowance.
There may be changes in future economic conditions that might give rise to
results that differ from past experience. Management will continue to assess
creditworthiness of customers and monitor whether a valuation allowance is
necessary.
REVENUE RECOGNITION
Revenue from services is recognized in the period in which the services are
provided.
Commissions are recognized as earned (see Note 3).
Deferred revenue represents customer deposits for services to be provided or
commissions to be earned and will be recognized as revenue in the period in
which the services are provided or the commissions are earned.
INCOME TAXES
As a limited liability company, the Company is treated as a partnership for
federal and state income tax purposes. Accordingly, no provision or benefit for
federal and state income taxes has been recorded in the accompanying financial
statements since all income, losses and tax credits from the Company's
operations are reported on the members' income tax returns.
NOTE 2: FACTORS AFFECTING OPERATIONS
The Company is in the development stage as it is in the process of marketing its
services. The Company has incurred accumulated losses since inception of
approximately $5.6 million as a development stage company. Continued losses are
expected until the Company completes the marketing stage of its initial services
and is able to obtain and maintain a customer base generating sufficient revenue
to generate a profit.
-3-
The continuation of the Company's business as a going concern is contingent
upon, among other things, the ability to achieve and maintain satisfactory
levels of future profitable operations; obtain and maintain satisfactory levels
of debt and/or equity financing; and provide sufficient cash from operations to
meet current and future obligations. Although there are no assurances,
management believes the Company will be able to achieve the objectives and
continue as a going concern at least through the end of the service agreement.
The accompanying financial statements do not include any adjustments that may
result from the outcome of these uncertainties.
NOTE 3: RELATED PARTY TRANSACTIONS
Due to the relationships between the parties involved, these transactions may
not have been consummated on terms which would have been achieved with unrelated
third parties.
The amount due to ViaSat at December 31, 2002 totaled approximately $5.3 million
and the amount due to Loral at December 31, 2002 totaled approximately $625,000.
These amounts are included in accounts payable and accrued expenses in the
accompanying balance sheet.
SERVICE AGREEMENT
The Company entered into a service agreement with Loral and ViaSat. Under the
terms of the agreement, Loral provides satellite capacity, and related services,
to the Company and ViaSat provides communications equipment and hardware (ground
equipment) to be used with the satellites provided by Loral. ViaSat has also
agreed to operate a network operations center, manage sales and marketing and
provide other services, such as general and administrative, engineering and
technical assistance and research and development.
The Company's total cost for these services from ViaSat was approximately $2.6
million in 2002 and approximately $5.4 million from inception. The total cost
for satellite capacity from Loral in 2002 was approximately $443,743 and
approximately $780,000 from inception. These charges from ViaSat and Loral are
referred to in the service agreement as eligible expenses.
In the event the Company has not generated sufficient cash to pay ViaSat and
Loral for their respective eligible expenses, the Company will prorate any
payment to ViaSat and Loral as a ratio of their respective cumulative unpaid
eligible expenses to total cumulative unpaid eligible expenses. During 2002 and
since inception, the Company did not have sufficient cash to pay any eligible
expenses.
DISTRIBUTOR AGREEMENT
The Company has entered into a distributor agreement with ViaSat pursuant to
which the Company is entitled to receive a commission from ViaSat for equipment
ViaSat sells to the Company's customers. Such commissions totaled $26,612 during
2002 and $54,084 since inception and are included in revenue in the accompanying
statements of operations.
REFERRAL INCENTIVE PROGRAM
The Company has entered into a referral incentive program with ViaSat and Loral
pursuant to which ViaSat and Loral are entitled to receive a commission from the
Company for customer referrals. During 2002 and since inception, such
commissions were not significant.
-4-
SATELLITE SERVICES AGREEMENT
In November 2001, the Company and ViaSat entered into a five year agreement with
PanAmSat Corporation (PanAmSat) for the Company to offer bandwidth-on-demand
services to customers utilizing PanAmSat's satellite network.
NOTE 4: SUBSEQUENT EVENT
In July 2003, Loral filed for bankruptcy; therefore, its interest in the Company
became a nonvoting interest. In January 2004, pursuant to the bankruptcy
proceedings for Loral, the bankruptcy court rejected the operating agreement
(see Note 1) and the service agreement (see Note 3). Accordingly, subsequent to
January 2004, Loral is no longer a member of the Company. ViaSat continues to
operate as the sole member and ViaSat and Loral have executed a new agreement
for Loral to provide bandwidth to the Company at market rates.
*****