1
UNITED STATES
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 March 31, 1997
Commission file number 0-24710
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CD RADIO INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 52-1700207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SIXTH FLOOR, 1001 22ND STREET, N.W., WASHINGTON, D.C.
20037
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(Address of principal executive offices)
(Zip code)
202-296-6192
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, $.001 PAR VALUE 10,313,391
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(Class) (Outstanding as of May 13, 1997)
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CD RADIO INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX
Part I - Financial Information
Page
Consolidated Statements of Operations (unaudited) for the three 1
month periods ended March 31, 1997 and 1996 and for the
period May 17, 1990 (date of inception) to March 31, 1997
Consolidated Balance Sheets (unaudited) as of March 31, 1997 2
and December 31, 1996
Consolidated Statements of Cash Flows (unaudited) for the three 3
month periods ended March 31, 1997 and 1996 and for the
period May 17, 1990 (date of inception) to March 31, 1997
Notes to Consolidated Financial Statements (unaudited) 4
Management's Discussion and Analysis of Financial Condition and 5
Results of Operations
Part II - Other Information 8
Signatures
3
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the period
Three months ended May 17,1990
------------------------------------- (date of inception)
March 31, March 31, to March 31,
1997 1996 1997
------------------ --------------- ---------------------------
Revenue $ - $ - $ -
Expenses:
Legal, consulting and
regulatory fees 307,439 227,674 7,556,403
Other general and administrative 284,877 281,681 7,817,640
Research and development 19,603 27,901 1,935,958
Write-off of investment in
Sky-Highway Radio Corp. - - 2,000,000
----------------- --------------- ---------------------------
Total expenses 611,919 537,256 19,310,001
----------------- --------------- ---------------------------
Other income (expense)
Interest income 59,681 25,290 388,353
Interest expense (4,910) (4,917) (171,360)
----------------- --------------- ---------------------------
54,771 20,373 216,993
----------------- --------------- ---------------------------
Net loss $ (557,148) $ (516,883) $ (19,093,008)
================= =============== ===========================
Net loss per common share $ (0.05) $ (0.06)
================= ===============
Weighted average common shares
and common share equivalents
outstanding 10,301,331 9,357,793
================= ===============
The accompanying notes are an integral part of these consolidated financial
statements
1
4
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
March 31, December 31,
1997 1996
------------------- ----------------------
Current assets:
Cash and cash equivalents $ 1,079,668 $ 4,583,562
Prepaid expense and other 6,558 9,368
------------------- ----------------------
Total current assets 1,086,226 4,592,930
------------------- ----------------------
Property and equipment, at cost:
Technical equipment 254,200 254,200
Office equipment and other 89,220 89,220
Demonstration equipment 38,664 38,664
------------------- ----------------------
382,084 382,084
Less accumulated depreciation (223,915) (213,344)
------------------- ----------------------
158,169 168,740
------------------- ----------------------
Auction deposit 3,000,000 -
------------------- ----------------------
Deposits 303,793 303,793
------------------- ----------------------
Total Assets $ 4,548,188 $ 5,065,463
=================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 157,409 $ 131,118
Other 20,700 20,174
------------------- ----------------------
Total current liabilities 178,109 151,292
Deferred rent and other 10,051 15,795
------------------- ----------------------
Total liabilities 188,160 167,087
------------------- ----------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000,000 shares
authorized; none issued or outstanding - -
Common stock, $0.001 par value; 50,000,000 shares
authorized; 10,309,708 and 10,300,391 shares issued and
outstanding at March 31, 1997 and December 31, 1996,
respectively 10,310 10,300
Additional paid-in capital 23,442,726 23,423,936
Deficit accumulated during the development stage (19,093,008) (18,535,860)
------------------- ----------------------
Total stockholders' equity 4,360,028 4,898,376
------------------- ----------------------
Total liabilities and stockholders' equity $ 4,548,188 $ 5,065,463
=================== ======================
The accompanying notes are an integral part of these consolidated financial
statements
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5
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the period
Three months ended May 17,1990
------------------------------------- (date of inception)
March 31, March 31, to March 31,
1997 1996 1997
------------------ --------------- ---------------
Cash flows from development stage activities:
Net loss $ (557,148) $ (516,883) $ (19,093,008)
Adjustments to reconcile net loss to net
cash used in development stage activities:
Depreciation and amortization 10,571 14,472 234,613
Write off of investment in Sky-Highway Radio Corp. - - 2,000,000
Compensation expense in connection with
issuance of stock options - 80,000 1,715,500
Common stock issued for services rendered - 63,418 901,576
Common stock options granted for services
rendered - - 119,820
Increase (decrease) in cash and cash equivalents
resulting from changes in assets and liabilities:
Prepaid expense and other 2,810 1,659 (6,557)
Due to related party - - 350,531
Deposits - - (303,793)
Accounts payable and accrued expenses 26,291 31,404 232,647
Other liabilities (5,218) (5,155) 30,752
------------------ --------------- --------------
Net cash used in development stage activities (522,694) (331,085) (13,817,919)
------------------ --------------- --------------
Cash flows from investing activities:
Capital expenditures - - (392,783)
Auction deposit (3,000,000) - (3,000,000)
Acquisition of Sky-Highway Radio Corp. - - (2,000,000)
------------------ --------------- --------------
Net cash used in investing activities (3,000,000) - (5,392,783)
------------------ --------------- --------------
Cash flows from financing activities:
Proceeds from issuance of units and common stock - - 14,557,482
Proceeds from exercise of stock warrants - - 4,589,088
Proceeds from issuance of promissory notes - - 200,000
Proceeds from issuance of promissory notes to
related parties - - 2,965,000
Proceeds from exercise of stock options by
Company officers 18,800 80,000 173,800
Repayment of promissory note - - (200,000)
Repayment of promissory notes to related parties - - (2,435,000)
Loan from officer - - 440,000
Deferred offering costs - - -
------------------ --------------- --------------
Net cash provided by financing activities 18,800 - 20,290,370
------------------ --------------- --------------
Net increase (decrease) in cash and cash equivalents (3,503,894) (251,096) 1,079,668
Cash and cash equivalents at the beginning of period 4,583,562 1,799,814 -
------------------ --------------- --------------
Cash and cash equivalents at the end of period $ 1,079,668 $ 1,548,718 $ 1,079,668
================== =============== ==============
Supplemental disclosure of cash information:
Cash paid during the period for interest $ - $ - $ 40,063
================== =============== ==============
Supplemental disclosure of non-cash financing activities:
Common stock issued in satisfaction of notes
payable to related parties, including
accrued interest $ - $ - $ 998,452
================== =============== ==============
Common stock issued in satisfaction of due to
related parties including accrued interest $ - $ - $ 409,390
================== =============== ==============
Common stock issued in satisfaction of
commissions payable $ - $ - $ 20,000
================== =============== ===============
The accompanying notes are an integral part of these consolidated financial
statements
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6
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
GENERAL
The accompanying consolidated financial statements do not include all
of the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles. In the opinion of management, all adjustments (consisting only of
normal, recurring adjustments) considered necessary to fairly reflect the
Company's consolidated financial position and consolidated results of
operations have been included.
SUBSEQUENT EVENTS
In March 1997, the Company extended its satellite construction contract
with Space Systems/Loral ("Loral") and amended the contract to allow Loral to
commence work associated with the first five months of the program schedule.
In April 1997, the FCC held an auction for two national satellite radio
broadcast licenses. The Company was one of the winning bidders in such auction
with a bid price of $83,346,000. Of the total bid price, $16,669,200 has been
deposited with the FCC, with the remainder due within 10 business days
following the public notice by the FCC that it is prepared to award the
license.
In April 1997, the Company completed a private placement of its 5%
Delayed Convertible Preferred Stock (the "5'% Preferred Stock"). The Company
sold a total of 5,400,000 shares of the 5% Preferred Stock for an aggregate
sale price of $135 million. In connection with the private placement, the
Company paid $10,125,000 in fees to its placement agent, Libra Investments,
Inc. ("Libra"), and $2.7 million to Batchelder & Partners, Inc., a financial
advisory firm. In addition, the Company agreed to grant a warrant to Libra to
purchase 486,000 shares of the 5% Preferred Stock with an exercise price of
$25.00 per share. As a result of the private placement, options to purchase
200,000 shares of Common Stock held by Batchelder & Partners, Inc. vest and
become exercisable for three years with an exercise price of $6.25. Reference
is made to the Company's report on Form 8-K filed May 5, 1997 for a description
of the terms of the 5% Preferred Stock.
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CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was organized in May 1990 and is in its development stage.
The Company's principal activities to date have included technology
development, pursuing regulatory approval for CD Radio, market research,
design, development, contract negotiations with satellite and launch vehicle
contractors, technical efforts with respect to standards and specifications,
development of a mobile demonstration program and securing adequate working
capital. The Company has been unprofitable to date and expects to continue to
incur substantial losses through at least the first full year of CD Radio
service. Since its inception, the Company has not derived any revenues from
operations and does not expect to generate any revenues from operations prior
to the commencement of CD Radio, which is not expected to occur before the fall
of 1999 at the earliest. In order to commence CD Radio service, the Company
will require a license from the Federal Communications Commission ("FCC") to
provide Digital Audio Radio Service the ("FCC License") and substantial
additional funds to finance construction of its satellite system, to plan and
implement its service, to provide working capital and to sustain its operations
until it generates positive cash flows from operations.
In April 1997, the FCC held an auction among four existing applicants
to auction two FCC Licenses. The Company was a winning bidder in the auction
with a bid of $83.3 million, of which $16.7 million has been paid as a deposit.
The award of the FCC License is subject to the satisfaction of a number of
requirements, and it remains a possibility that the Company will not receive
the FCC License. The Company completed a private placement in April 1997 of
$135 million of its 5% Delayed Convertible Preferred Stock, of which an
aggregate of $12.8 million was paid in fees to the Company's placement agent
and a financial advisor, and $1.7 million was paid as a commitment fee to the
investors. Assuming the FCC License is received, the Company will
require substantial additional financing to complete the construction and
launch of its satellite system and to fund the first full year of CD Radio
service.
After being a winning bidder in the auction for the FCC License and
competing the 5% Preferred Stock financing, the Company paid $6.5 million
to Space Systems/Loral in order to commence satellite construction, and $3.4
million to Arianespace to secure satellite launch reservations. The Company has
also hired, and intends to continue to hire, additional key employees to
manage the design, development, construction and launch of the CD Radio system
and to plan and implement marketing strategies and to develop key relationships
in the entertainment and consumer electronics industries. These measures will
result in substantial increases in expenses in the three months ending June 30,
1997 and in subsequent periods over expense levels in past periods.
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RESULTS OF OPERATIONS
The Company recorded net losses of $557,000 and $517,000 for the three
months ended March 31, 1997 and 1996, respectively. The Company's total
operating expenses were $612,000 and $537,000 for the three months ended March
31, 1997 and 1996, respectively.
Legal, consulting and regulatory fees increased for the three months
ended March 31, 1997 to $307,000 from $228,000 for the three months ended March
31, 1996. These levels of expenditures are the result of continued regulatory
activity.
Research and development costs were $20,000 and $28,000 for the three
months ended March 31, 1997 and 1996, respectively. This level of research and
development cost is the result of the Company completing the majority of such
activities in 1994.
Other general and administrative expenses increased for the three
months ended March 31, 1997 to $285,000 from $282,000 for the three months
ended March 31, 1996. General and administrative expenses continued to remain
at a low level prior to the Company being the winning bidder for the FCC
License. The Company also incurred a non-cash charge of $80,000 for the three
month period ended March 31, 1996, attributable to the recognition of
compensation expense in connection with stock options issued to officers of the
Company.
The increase of interest income to $60,000 for the three months ended
March 31, 1997, from $25,000 in the three months ended March 31, 1996, was the
result of a higher average cash balance during the first quarter of 1997. The
cash and cash equivalents on hand were primarily obtained from the exercise of
stock warrants in late 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of approximately
$908,000 compared to $4,442,000 at December 31, 1996. The decrease in working
capital was primarily the result of the $3,000,000 deposit made to the FCC to
participate in the license auction and $523,000 in net cash used in development
stage activities for the quarter ended March 31, 1997.
The Company was a winning bidder in the FCC auction for two FCC
Licenses with a winning bid of $83.3 million, of which $16.7 million has been
paid as a deposit. The Company would be required to pay the balance of the
winning bid after the revised license applications are finalized and assuming
petitions to deny the License are dismissed. In order to finance the payment of
the purchase price for the FCC License and for working capital prior to the
completion of subsequent financings, the Company completed a private placement
of $135 million of the 5% Preferred Stock, of which $12.8 million was paid in
commissions and fees to its placement agent and a financial advisor, and $1.7
million was paid in commitment fees to the investors. The Company has also
commenced satellite construction with Space Systems/Loral.
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9
The Company estimates that assuming receipt of the FCC License it will
require cash in the aggregate amount of at least $600 million to fund the
construction and launch of the Company's satellites and the commencement of CD
Radio service and to provide cash reserves for the first year of service. The
amount and timing of cash payments will vary based on payment terms with
satellite and launch contracts.
The Company believes that its working capital is sufficient to maintain
its construction schedule approximately through December 1997 and to fund
operations through the second quarter of 1998. There can be no assurance,
however, that the Company's actual cash requirements will not be greater than
currently anticipated. The Company intends to seek additional financing through
the issuance of debt and equity securities. However, there can be no
assurance that the Company will be able to obtain additional financing on
favorable terms, if at all, or that such financing will be available in a
timely manner. If additional financing were not available on a timely basis,
the Company would be required to delay satellite and/or launch vehicle
construction in order to conserve cash to fund continued operations, which
would cause delays in the commencement of operations and increased costs.
The terms of the 5% Preferred Stock financing require that additional
financings be pari passu or junior to the 5% Preferred Stock in seniority,
structure and maturity until the Company completes a public offering of Common
Stock that meets certain specified criteria.
The Company's estimates of its cash requirements and the adequacy of
its current cash resources to satisfy its cash requirements through December
1997 and the second quarter of 1998 are forward-looking statements that involve
a number of risks and uncertainties that could cause actual events to differ
materially from those anticipated by the Company. The estimates assume that
service will commence in the fall of 1999 and do not include interest costs or
any payments that may be required to holders of the 5% Preferred Stock as the
result of failure to satisfy certain requirements under the terms of the 5%
Preferred Stock financing in a timely manner. The amount and timing of the
Company's actual cash requirements will depend upon numerous factors, including
costs associated with the construction and deployment of its satellite system
and the rate of growth of its business subsequent to commencing service, costs
of financing and the possibility of unanticipated expenses. Additional funds
would be required in the event of delay, cost overruns, launch failure, launch
services or satellite system change orders, or any shortfalls in estimated
levels of operating cash flow, or to meet unanticipated expenses.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities
In March 1997, the Board of Directors authorized for
issuance 8 million shares of 5% Delayed Convertible Preferred
Stock (the "5% Preferred Stock'). For a description of the 5%
Preferred Stock, see "Description of Securities" contained on
the Form 8-K filed by the Company on May 5, 1997, which is
incorporated by reference herein in its entirety. In April 1997,
the Company sold an aggregate of 5,400,000 shares of the 5%
Preferred Stock at $25.00 per share to 51 institutional
investors, each of which the Company believes to be an
"accredited investor"' within the meaning of Rule 502(a) of
Regulation D under the Securities Act. In connection with the
private placement, the Company paid $10,125,000 in fees to its
placement agent, Libra Investments, Inc. ("Libra"), a commitment
fee of $1.7 million to the investors and $2.7 million to
Batchelder & Partners, Inc., a financial advisory firm. In
addition, the Company agreed to grant a warrant to Libra to
purchase 486,000 shares of the 5% Preferred Stock with an
exercise price of $25 .00 per share. As a result of the private
placement, options previously granted to purchase 200,000 shares
of Common Stock held by Batchelder & Partners, Inc. vest and
become exercisable for three years with an exercise price of
$6.25. The sale of the 5% Preferred Stock was exempt from
registration pursuant to Section 4(2) of the Securities Act and
Rule 506 of Regulation D thereunder.
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
*3.1 Amended and Restated Certificate of Incorporation.
*3.2 Amended and Restated By-Laws.
3.3 Certificate of Designations of 5% Delayed Convertible Preferred
Stock (Incorporated by reference to Exhibit 10.24 to the Form 10-K/A
for the year ended December 31, 1996 (the " 1996 Form 10-K")).
*4.1 Description of Capital Stock contained in the Amended and Restated
Certificate of Incorporation and Certificate of Designations (see
Exhibits 3.1 and 3.3).
*4.2 Description of Rights of Security Holders contained in the Amended
and Restated Bylaws (see Exhibit 3.2).
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EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
*4.3 Form of Certificate for Shares of Common Stock.
10.1 Lease Agreement, dated October 20, 1992, between 22nd & K Street
Office Building Limited Partnership and the Company (Incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement
on Form S-1 (File No. 33-74782) (the "Registration Statement")).
10.2 Letter Agreement, dated November 18, 1992, between the Company and
Batchelder & Partners, Inc. (Incorporated by reference to Exhibit
10.4 to the Registration Statement).
10.3.1 Proprietary Information and Non-Competition Agreement, dated
February 9, 1993, for Robert Briskman (Incorporated by reference to
Exhibit 10.9.1 to the Registration Statement).
10.3.2 Amendment No. 1 to Proprietary Information and Non-Competition Agreement
between the Company and Robert Briskman (Incorporated by reference to
Exhibit 10.8.2 to the Registration Statement).
+10.4.1 Satellite Construction Agreement, dated March 2, 1993, between Space
Systems/Loral and the Company (Incorporated by reference to Exhibit
10.9.1 to the Registration Statement).
+10.4.2 Amendment No. 1 to Satellite Construction Agreement, effective
December 28, 1993, between Space Systems/Loral and the Company
(Incorporated by reference to Exhibit 10.9.2 to the Registration
Statement).
+10.4.3 Amendment No. 2 to Satellite Construction Agreement, effective
March 8, 1994, between the Space Systems/Loral and the Company
(Incorporated by reference to Exhibit 10.9.3 to the Registration
Statement).
10.4.4 Amendment No. 3 to Satellite Construction Agreement, effective
February 12, 1996, between the Space System/Loral, Inc. and the
Company (Incorporated by reference to Exhibit 10.9.4 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995
(the "1995 Form 10-K")).
10.4.5 Amendment No. 4 to Satellite Construction Agreement, effective June
18, 1996, between the Space Systems/Loral, Inc. and the Company.
(Incorporated by reference to Exhibit 10.8.5 to the Company's Form 10-Q
for the period ended September 30, 1996.)
10.4.6 Amendment No. 5 to Satellite Construction Agreement, effective August
26, 1996, between the Space Systems/Loral, Inc. and the Company.
(Incorporated by reference to Exhibit 10.8.6 to the Company's Form
10-Q for the period ended September 30, 1996.)
10.4.7 Amendment No. 6 to Satellite Construction Agreement, effective
August 26, 1996, between the Space System/Loral, Inc. and the Company
(Incorporated by reference to Exhibit 10.5.7 to the 1996 Form 10-K.
10.4.8 Amendment No. 8 to Satellite Construction Agreement, effective January 29,
1997, between the Space System/Loral, Inc. and the Company (Incorporated
by reference to Exhibit 10.5.8 to the 1996 Form 10-K.
10.4.9 Amendment No. 9 to Satellite Construction Agreement, effective February 26,
1997, between the Space System/Loral, Inc. and the Company (Incorporated
by reference to Exhibit 10.5.9 to the 1996 Form 10-K
10.4.10 Amendment No. 11 to Satellite Construction Agreement, effective March 24,
1997, between the Space Systems/Loral, Inc., and the Company
(Incorporated by reference to Exhibit 10.5.10 to the 1996 Form 10-K.
10.4.11 Amendment No. 12 to Satellite Construction Agreement, effective
April 25, 1997, between the Space Systems/Loral, Inc. and the Company.
10.5 Assignment of Technology Agreement, dated April 15, 1993, between
Robert Briskman and the Company (Incorporated by reference to
Exhibit 10.10 to the Registration Statement).
10.6 Assignment of Technology Agreement, dated April 15, 1993, between Robert
Briskman and the Company.
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12
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.7.1 Launch Reservation Agreement, dated September 20, 1993, between the
Company and Arianespace (Incorporated by reference to Exhibit
10.15.1 to the Registration Statement.
10.7.2 Modification of Launch Reservation Agreement, dated April 1, 1994,
between Arianespace (Incorporated by reference to Exhibit 10.1 5.2
to the Registration Statement).
10.7.3 Second Modification of Launch Reservation Agreement, dated August
to, 1994, between the Company and Arianespace (Incorporated by
reference to Exhibit 10.,15.3 to the Registration Statement).
10.7.4 Third Modification Launch Reservation Agreement, dated November 8,
1995, between the Company and Arianespace (Incorporated by reference
to Exhibit 10.14.4 to the Company's Form 10Q for the period ended
September 30, 1996).
10.7.5 Fourth Modification of Launch Reservation Agreement, dated August 30,
1996, between the Company and Arianespace (Incorporated by reference
to Exhibit 10.14.5 to the Company's Form 1O-Q for the period ended
September 30. 1995).
10.7.6 Fifth Modification of Launch Reservation Agreement, dated December
10, 1996, between the Company and Arianespace.
10.8.1 Employment and Noncompetition Agreement between the Company and
David Margolese (Incorporated by reference to Exhibit 10.18.1 to
the Registration Statement).
10.8.2 First Amendment to Employment Agreement between the Company and
David Margolese (Incorporated by reference to Exhibit 10.18.2 to
the Registration Statement).
10.9.1 Employment and Noncompetition Agreement between the Company and
Robert Briskman (Incorporated by reference to Exhibit 10.19.1 to
the Registration Statement).
10.9.2 First Amendment to Employment Agreement between the Company and
Robert Briskman (Incorporated by reference to Exhibit 10.19.2 to
the Registration Statement).
10.9.3 Second Amendment to Employment Agreement between the Company
and Robert Briskman (Incorporated by reference to Exhibit 10.12.3
to the 1996 Form 10-K).
10.10 1994 Stock Option Plan (Incorporated by reference to Exhibit 10.21
to the Registration Statement).
10.11 Amended and Restated 1994 Directors' Nonqualified Stock Option
Plan (Incorporated by reference to Exhibit 10.22 to the 1995 Form 10-K).
10.12 Option Agreement, dated as of October 21, 1992, between the Company
and Batchelder & Partners, Inc. (Incorporated by reference to
Exhibit 10.24 to the Registration Statement).
10.13.1 Demand Note, dated April 19, 1994, in favor of David Margolese
(Incorporated by reference to Exhibit 10.28.1 to the Registration
Statement).
10.13.2 Note, dated June 30, 1994, in favor of David Margolese (Incorporated
by reference to Exhibit 10.28.2 to the Registration Statement).
10.14 Demand Note, dated April 19, 1994, between the Company and D.
Friedland (Incorporated by reference to Exhibit 10.29 to the
Registration Statement).
10.15 1995 Stock Compensation Plan (Incorporated by reference to Exhibit
10.37 to the 1995 Form 10-K).
10.16 Preferred Stock Investment Agreement dated October 23, 1996 between
the Company and certain investors (Incorporated by reference to
Exhibit 10.24 to the 1996 Form 10-K).
10.16.1 First Amendment to Preferred Stock Investment Agreement dated March 7,
1997 between the Company and certain investors (Incorporated by
reference to Exhibit 10.24.1 to the 1996 Form 10-K).
10.16.2 Second Agreement to Preferred Stock Investment Agreement dated March
14, 1997 between the Company and certain investors (Incorporated by
reference to Exhibit 10.24.2 to the 1996 Form 10-K).
10.17 Employment and Noncompetition Agreement between the Company and
Joseph Capobianco
10.18 Employment and Noncompetition Agreement between the Company and
Keno Thomas
11.1 Statement Re Computation of Historical Net Loss Per Share.
21.1 List of the Company's subsidiaries (incorporated by reference to
Exhibit 21.1 to the 1994 Form 10-K).
27 Financial Data Schedule
- ----------------
* Incorporated by reference to the same exhibit number of the Company
Registration Statement on Form S-1, Commission File No. 33-74782.
10
13
+ Portions of these exhibits, which are incorporated by reference to
Registration No. 33-74782, have been omitted pursuant to an Application
for Confidential Treatment filed by the Company with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
(b) Reports on Form 8-K
On March 17, 1997, the Company filed a report on Form 8-K
under Item 5 regarding the terms of the FCC auction scheduled
for April 1, 1997.
On March 18, 1997, the Company filed a report on Form 8-K
under Item 5 regarding the extension of the satellite
construction contract with Space Systems/Loral, Inc.
On April 10, 1997 , the Company filed a report on Form 8-K
under Item 5 and Item 7 regarding the private placement of
approximately $86 million of the 5% Preferred Stock.
On May 5, 1997, the Company filed a report on Form 8-K under
Item 5 regarding the completion of the second tranche of the
private placement of the 5% Preferred Stock resulting in an
aggregate sale price for the first and second tranches of $135
million. The Form 8-K also contained a description of the
capital stock of the Company.
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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 hereunto duly authorized.
CD RADIO INC.
Date: May 15, 1997 By /s/ David Margolese
--------------------------
David Margolese
Chairman of the Board and Chief Executive Officer
(Duly authorized officer and principal
financial officer)
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
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*3.1 Amended and Restated Certificate of Incorporation.
*3.2 Amended and Restated By-Laws.
3.3 Certificate of Designations of 5% Delayed Convertible Preferred Stock (Incorporated by reference to
Exhibit 10.24 to the Form 10-K/A for the year ended December 31, 1996 (the "1996 Form 10-K")).
*4.1 Description of Capital Stock contained in the Amended and Restated Certificate of Incorporation and
Certificate of Designations (see Exhibits 3.1 and 3.3).
*4.2 Description of Rights of Security Holders contained in the Amended and Restated Bylaws (see Exhibit
3.2.).
*4.3 Form of Certificate for Shares of Common Stock.
10.1 Lease Agreement, dated October 20, 1992, between 22nd & K Street Office Building Limited Partnership
and the Company (Incorporated by reference to Exhibit 10.3 to the Company's Registration Statement
on Form S-1 (File No. 33-74782) (the "Registration Statement")).
10.2 Letter Agreement, dated November 18, 1992, between the Company and Batchelder & Partners, Inc.
(Incorporated by reference to Exhibit 10.4 to the Registration Statement).
10.3.1 Proprietary Information and Non-Competition Agreement, dated February 9, 1993, for Robert Briskman
(Incorporated by reference to Exhibit 10.8.1 to the Registration Statement).
10.3.2 Amendment No. I to Proprietary Information and Non-Competition Agreement between the Company and
Robert Briskman (Incorporated by reference to Exhibit 10.8.2 to the Registration Statement).
+10.4.1 Satellite Construction Agreement, dated March 2, 1993, between Space Systems/Loral and the Company
(Incorporated by reference to Exhibit 10.9.1 to the Registration Statement).
+10.4.2 Amendment No. I to Satellite Construction Agreement, effective December 28, 1993, between Space
Systems/Loral and the Company (Incorporated by reference to Exhibit 10.9.2 to the Registration
Statement).
+10.4.3 Amendment No. 2 to Satellite Construction Agreement, effective March 8, 1994, between the Space
Systems/Loral and the Company (Incorporated by reference to Exhibit 10.9.3 to the Registration
Statement).
10.4.4 Amendment No. 3 to Satellite Construction Agreement, effective February 12, 1996, between the Space
Systems/Loral, Inc. and the Company (Incorporated by reference to Exhibit 10.9.4 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K"))
10.4.5 Amendment No. 4 to Satellite Construction Agreement, effective June 18, 1996, between the Space
Systems/Loral, Inc. and the Company. (Incorporated by reference to Exhibit 10.8.5 to the Company's
Form 10-Q for the period ended September 30, 1996.)
10.4.6 Amendment No. 5 to Satellite Construction Agreement, effective August 26, 1996, between the Space
Systems/Loral, Inc. and the Company. (Incorporated by reference to Exhibit 10.8.6 to the Company's
Form 10-Q for the period ended September 30, 1996.)
10.4.7 Amendment No. 6 to Satellite Construction Agreement, effective August 26, 1996, between the Space
Systems/Loral, Inc. and the Company (Incorporated by reference to Exhibit 10.5.7 to the 1996 Form
10-K).
10.4.8 Amendment No. 8 to Satellite Construction Agreement, effective January 29, 1997, between the Space
Systems/Loral, Inc. and the Company (Incorporated by reference to Exhibit 10.5.8 to the 1996 Form
10-K).
10.4.9 Amendment No. 9 to Satellite Construction Agreement, effective February 26, 1997, between the Space
Systems/Loral, Inc. and the Company (Incorporated by reference to Exhibit 10.5.9 to the 1996 Form
10-K).
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EXHIBIT DESCRIPTION
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10.4.10 Amendment No. 11 to Satellite Construction Agreement, effective March 24, 1997, between the Space
Systems/Loral, Inc. and the Company (Incorporated by reference to Exhibit 10.5.10 to the 1996 Form
10-K).
10.4.11 Amendment No. 12 to Satellite Construction Agreement, effective April 25, 1997, between the Space
Systems/Loral, Inc. and the Company.
10.5 Assignment of Technology Agreement, dated April 15, 1993, between Robert Briskman and the Company
(Incorporated by reference to Exhibit 10.10 to the Registration Statement).
10.6 Amended and Restated
Option Agreement between the Company and Robert Briskman (Incorporated by reference to Exhibit
10.13 to the Registration Statement).
10.7.1 Launch Reservation Agreement, dated September 20, 1993, between the Company and Arianespace
(Incorporated by reference to Exhibit 10.15.1 to the Registration Statement).
10.7.2 Modification of Launch Reservation Agreement, dated April 1, 1994, between the Company and Arianespace
(Incorporated by reference to Exhibit 10.15.2 to the Registration Statement).
10.7.3 Second Modification of Launch Reservation Agreement, dated August 10, 1994, between the Company and
Arianespace (Incorporated by reference to Exhibit 10.15.3 to the Registration Statement).
10.7.4 Third Modification of Launch Reservation Agreement, dated November 8, 1995, between the Company and
Arianespace (Incorporated by reference to Exhibit 10.14.4 to the Company's Form 10-Q for the period
ended September 30, 1996).
10.7.5 Fourth Modification of Launch Reservation Agreement, dated August 30, 1996, between the Company and
Arianespace (Incorporated by reference to Exhibit 10.14.5 to the Company's Form 10-Q for the period
ended September 30, 1995).
10.7.6 Fifth Modification of Launch Reservation Agreement, dated December 10, 1996, between the Company and
Arianespace.
10.8.1 Employment and Noncompetition Agreement between the Company and David Margolese (Incorporated by
reference to Exhibit 10.18.1 to the Registration Statement).
10.8.2 First Amendment to Employment Agreement between the Company and David Margolese (Incorporated by
reference to Exhibit 10.18.2 to the Registration Statement).
10.9.1 Employment and Noncompetition Agreement between the Company and Robert Briskman (Incorporated by
reference to Exhibit 10.19.1 to the Registration Statement).
10.9.2 First Amendment to Employment Agreement between the Company and Robert Briskman (Incorporated by
reference to Exhibit 10.19.2 to the Registration Statement).
10.9.3 Second Amendment to Employment Agreement between the Company and Robert Briskman (Incorporated by
reference to Exhibit 10.12.3 to the 1996 Form 10-K).
10.10 1994 Stock Option Plan (Incorporated by reference to Exhibit 10.21 to the Registration Statement).
10.11 Amended and Restated 1994 Directors' Nonqualified Stock Option Plan (Incorporated by reference to
Exhibit 10.22 to the 1995 Form 10-K).
10.12 Option Agreement, dated as of October 21, 1992, between the Company and Batchelder & Partners, Inc.
(Incorporated by reference to Exhibit 10.24 to the Registration Statement).
10.13.1 Demand Note, dated April 19, 1994, in favor of David Margolese (Incorporated by reference to Exhibit
10.28.1 to the Registration Statement).
10.13.2 Note, dated June 30, 1994, in favor of David Margolese (Incorporated by reference to Exhibit 10.28.2
to the Registration Statement).
10.14 Demand Note, dated April 19, 1994, between the Company and D. Friedland (Incorporated by reference to
Exhibit 10.29 to the Registration Statement).
10.15 1995 Stock Compensation Plan (Incorporated by reference to Exhibit 10.37 to the 1995 Form 10-K).
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EXHIBIT DESCRIPTION
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10.16 Preferred Stock Investment Agreement dated October 23, 1996 between the Company and certain investors
(Incorporated by reference to Exhibit 10.24 to the 1996 Form 10-K).
10.16.1 First Amendment to Preferred Stock Investment Agreement dated March 7, 1997 between the Company and
certain investors (Incorporated by reference to Exhibit 10.24.1 to the 1996 Form 10-K)..
10.16.2 Second Amendment to Preferred Stock Investment Agreement dated March 14, 1997 between the Company and
certain investors (Incorporated by reference to Exhibit 10.24.2 to the 1996 Form 10-K).
10.17 Employment and Noncompetition Agreement between the Company and Joseph Capobianco
10.18 Employment and Noncompetition Agreement between the Company and Keno Thomas
11.1 Statement Re Computation of Historical Net Loss Per Share.
21.1 List of the Company's Subsidiaries (Incorporated by reference to Exhibit 21.1 to the 1994 Form 10-K).
27 Financial Data Schedule
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* Incorporated by reference to the same exhibit number of the Company
Registration Statement on Form S-1, Commission File No. 33-74782.
+ Portions of these exhibits, which are incorporated by reference to
Registration No. 33-74782, have been omitted pursuant to an Application for
Confidential Treatment filed by the Company with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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