Straight Path Communications Inc. (“SPCI” or “Straight Path”)
(NYSE MKT: STRP), a communications asset company, announced today
operating results for its third quarter of fiscal 2017, the three
months ended April 30, 2017. On May 11, 2017, subsequent to the
April 30th close of FY Q3, Straight Path entered into an agreement
and plan of merger with Verizon Communications Inc. (“Verizon”)
pursuant to which Verizon will acquire Straight Path for $184.00
per share paid in Verizon common stock.
Q3 Fiscal Year 2017 Highlights
(In millions of USD)
Fiscal 2017 – Q3
Fiscal 2016 – Q3 Fiscal 2017
– Q2 Total Revenues $0.2
$0.2 $0.2
Total Costs and Expenses
$4.2 $2.1 $3.8
Civil Penalty
- FCC Consent Decree $0 $0
$15.0
Stockholder Settlement $0
$0 $7.2
Loss from Operations
-$4.0 -$1.9 -$25.8
Interest
expense, including amortization of debt discounts
-$2.2 $0 $0
Net Loss attributable to
SPCI -$6.0 -$1.8
-$25.4
Some items in the table may not foot
correctly due to rounding
- Total Revenues of $0.2 million
unchanged from the prior fiscal quarter and the third quarter
fiscal 2016.
- Loss from Operations of $4.0 million
compared to Loss from Operations of $25.8 million in the prior
fiscal quarter and $1.9 million in third quarter 2016. The current
quarter’s loss includes $144 thousand of R&D expenses and $1.0
million in non-cash compensation related to the issuance and
vesting of equity grants.
- Net Loss attributable to SPCI of $6.0
million in this quarter, compared to $25.4 million in the prior
fiscal quarter and $1.8 million in third quarter fiscal 2016.
- Cash and cash equivalents of $14.6
million at April 30, 2017, up by $6.8 million from the prior
quarter close.
Management Comments
Davidi Jonas, Chief Executive Officer of Straight Path
commented, “I am proud to announce that Straight
Path has delivered on its strategic objectives and
adhered to its mission. We have been able to maximize the value of
our spectrum in a merger with Verizon at a very significant premium
to our market price prior to announcement of the merger:
- We signed a merger agreement under
which Verizon (NASDAQ: VZ) has agreed to acquire Straight Path for
$184.00 per share (reflecting an enterprise value of approximately
$3.1 billion) in an all-stock transaction that is intended to
qualify as a tax-free reorganization.
- We signed a binding term sheet to
settle claims with IDT that includes a payment of $10 million to us
and the sale of our IP group for $6 million, with SPCI stockholders
to maintain a 22% interest in the net proceeds of the IP Group’s
patent enforcement activities.”
Mr. Jonas concluded, “We are energized by this success, and
enthusiastic about the role our spectrum will play in the 5G
ecosystem. We are proud to have helped in this major development in
the wireless telecommunications industry while delivering
significant value for our stockholders.”
Straight Path will not host an investor conference call this
quarter.
About Straight Path Communications Inc. (STRP)
Straight Path Communications Inc. (NYSE MKT: STRP) holds an
extensive portfolio of 39 GHz and 28 GHz wireless spectrum licenses
through its Straight Path Spectrum subsidiary. Straight Path is
developing next generation wireless technology through its Straight
Path Ventures subsidiary. Straight Path holds, licenses, and
conducts other business related to certain patents through its
Straight Path IP Group subsidiary. Additional information is
available on Straight Path’s website: www.straightpath.com.
Safe Harbor
In this press release, all statements that are not purely about
historical facts, including, but not limited to, those in which we
use the words "believe," "anticipate," "expect," "plan," "intend,"
"estimate, "target" and similar expressions, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. While these forward-looking statements
represent our current judgment of what may happen in the future,
actual results may differ materially from the results expressed or
implied by these statements due to numerous important factors,
including, but not limited to, those described in our Annual Report
on Form 10-K for the fiscal year ended July 31, 2016 and our other
periodic filings with the SEC (under the headings "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations"). We are under no obligation, and
expressly disclaim any obligation, to update the forward-looking
statements in this press release, whether as a result of new
information, future events or otherwise.
Important Additional Information will be Filed with the
SEC
Straight Path plans to file with the SEC and mail to its
stockholders a definitive Proxy Statement/Prospectus in connection
with the proposed transaction. THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT
VERIZON, STRAIGHT PATH, THE PROPOSED TRANSACTION AND RELATED
MATTERS. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY BECOME
AVAILABLE. Investors and security holders will be able to obtain
free copies of the definitive Proxy Statement/Prospectus and the
other documents filed with the SEC by Straight Path through the web
site maintained by the SEC at www.sec.gov. In addition, investors
and security holders will be able to obtain free copies of the
definitive Proxy Statement/Prospectus by phone, e-mail or written
request by contacting the investor relations department of Straight
Path at the following:
Straight Path Communications
Inc.
Address:
5300 Hickory Park Dr., Suite
218
Glen Allen, VA 23059
Attention: Investor Relations
Phone:
804-433-1523
E-mail:
yonatan.cantor@straightpath.com
Participants in the Solicitation
Straight Path and its directors and executive officers may be
deemed to be participants in the solicitation of proxies in respect
of the proposed transactions contemplated by the Verizon merger
agreement. Information regarding Straight Path’s directors and
executive officers is contained in Straight Path’s Form 10-K for
the year ended July 31, 2016 and its proxy statement dated November
22, 2016, which are filed with the SEC. A more complete description
will be available in the definitive Proxy Statement/Prospectus.
No Offer or Solicitation
This document does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
STRAIGHT PATH COMMUNICATIONS
INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, except per share
data)
April 30,2017
July 31,2016
(Unaudited) Assets Current assets: Cash and
cash equivalents
$ 14,555 $ 11,361 Trade accounts
receivable, net of allowance for doubtful accounts of $7 and $0,
respectively
68 40 Inventory
1,669 - Assets held for
sale – Intellectual Property Business
33 - Prepaid expenses
and other current assets
183 1,627
Total current assets
16,508 13,028 Prepaid expenses –
related to the sale of Spectrum Business to Verizon
2,856 -
Prepaid expenses – related to the sale of IP Business to IDT
1,054 - Intangible assets
365 365 Other assets
164 104 Total Assets
$
20,947 $ 13,497
Liabilities and
Equity (Deficiency) Current liabilities: Trade accounts payable
$ 5,238 $ 684 Accrued expenses
916 1,042
Liabilities held for sale – Intellectual Property Business
329 - Loans payable, net of debt discount of $2,119 and $0,
respectively
10,256 - FCC consent decree payable
7,000 - Deferred revenue
132 73 Income taxes payable
- 225 Total current liabilities
23,871 2,024 Settlement payable - stockholders
7,200
- Deferred revenue - long-term portion
75
92 Total liabilities
31,146
2,116 Commitments and contingencies Equity
(Deficiency) Straight Path Communications Inc. stockholders’
equity: Preferred stock, $0.01 par value; 3,000 shares authorized;
no shares issued and outstanding
- - Class A common stock,
$0.01 par value; 2,000 shares authorized; 787 shares issued and
outstanding
8 8 Class B common stock, $0.01 par value;
40,000 shares authorized; 11,949 and 11,431 shares issued, 11,909
and 11,391 shares outstanding as of April 30, 2017 and July 31,
2016, respectively
119 114 Additional paid-in capital
36,235 21,589 Accumulated deficit
(43,774 )
(8,225 ) Treasury stock, 40 shares at cost
(428
) (428 ) Total Straight Path Communications Inc.
stockholders’ equity (deficiency)
(7,840 ) 13,058
Noncontrolling interests
(2,359 )
(1,677 ) Total equity (deficiency)
(10,199 )
11,381 Total liabilities and equity (deficiency)
$ 20,947 $ 13,497
STRAIGHT PATH COMMUNICATIONS
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In Thousands, except per share
amounts)
Three Months EndedApril
30,
Nine Months EndedApril
30,
2017 2016
2017 2016 Revenues
$ 167 $ 219
$ 491
$ 2,034 Costs and expenses: Direct cost of revenues
32 88
99 883 Research and development
144 505
433 879 Selling, general and administrative (related party
of $2, $0, $207, and $0)
3,996 1,528
11,827 5,486 Total
costs and expenses
4,172 2,121
12,359 7,248 Loss from
operations before item listed below
(4,005 ) (1,902 )
(11,868 ) (5,214 ) Civil penalty – FCC consent
decree - -
(15,000 ) - Stockholder settlement
- -
(7,200 ) -
Loss from operations
(4,005 )
(1,902 )
(34,068 ) (5,214 )
Other income (expense): Interest expense, including
amortization of debt discounts
(2,195 ) -
(2,195 ) - Interest income
7 10
20 30
Other income
- 3
22 393 Total other income
(expense)
(2,188 ) 13
(2,153 ) 423 Loss before income
tax benefits (income taxes)
(6,193 ) (1,889 )
(36,221 ) (4,791 ) Provision for income tax benefits
(income taxes)
(3 ) 25
(10 ) 19 Net loss
(6,196
) (1,864 )
(36,231 ) (4,772 ) Net loss
attributable to noncontrolling interests
203
19
682 269
Net loss attributable to Straight Path Communications Inc.
$
(5,993 ) $ (1,845 )
$ (35,549 )
$ (4,503 ) Loss per share attributable to Straight Path
Communications Inc. stockholders: Basic and diluted
$
(0.49 ) $ (0.15 )
$ (2.93 ) $
(0.38 ) Weighted-average number of shares used in
calculation of loss per share: Basic and diluted
12,186 11,905
12,117
11,856
STRAIGHT PATH COMMUNICATIONS
INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
(In Thousands)
Nine Months EndedApril
30,
2017 2016 Operating activities: Net loss
$ (36,231 ) $ (4,772 ) Adjustments to
reconcile net loss to net cash used in operating activities: Common
stock issued for compensation
5,188 2,191 Stock-based
compensation
290 - Amortization of debt discounts
2,001 - Allowance for doubtful accounts
7 -
Depreciation
- 38 Changes in assets and liabilities: Trade
accounts receivable, net
(35 ) 43 Due from settlement
- (65 ) Inventory
(1,026 ) - Assets held for
sale – Intellectual Property Business
(33 ) - Prepaid
expenses – related to IP settlements and licensing
- 783
Prepaid expenses and other current assets
801 44 Prepaid
expenses – development agreement
- (300 ) Other assets
(60 ) 9 Trade accounts payable
4,554 (68 )
Accrued expenses
(126 ) (392 ) FCC consent decree
payable
7,000 - Liabilities held for sale – Intellectual
Property Business
329 - Deferred revenue
42 (1,577 )
Income taxes payable
(225 ) - Settlement payable -
stockholders
7,200 - Net cash
used in operating activities
(10,324 )
(4,066 ) Investing activities: Prepaid expenses – related to
sale of Spectrum business to Verizon
(2,856 )
-
Prepaid expenses – related to sale of IP business to IDT
(1,054 )
-
Purchases of property and equipment
-
(1,383 ) Net cash used in investing activities
(3,910
) (1,383 ) Financing activities: Proceeds from
loans payable
17,500 - Costs related to loans payable
(80 ) - Common stock issued upon exercise of stock
options
8 1 Net cash provided by
financing activities
17,428 1
Net increase (decrease) in cash and cash equivalents
3,194 (5,448 ) Cash and cash equivalents at beginning of
period
11,361 18,620 Cash and
cash equivalents at end of period
$ 14,555 $
13,172 Supplemental schedule of noncash activities
Reclassification of prepaid marketing to inventory
$
643 $ - Issuance of warrants with loans
payable
$ 4,040 - Exercises of
warrants reducing loans payable
$ 5,125 $ -
Supplemental cash flow information Cash paid during
the period for interest
$ 139 $ - Cash
paid during the period for income taxes
$ 10 $
8
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Straight Path Communications Inc.Yonatan Cantor,
804-433-1523yonatan.cantor@straightpath.com
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