Anuvu Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Segment Reporting Information, by Segment

Segment revenue, expenses and contribution profit for the three and nine month periods ended September 30, 2015 and 2014 derived from the Company's Content and Connectivity segments were as follows (in thousands):



	Three Months Ended September 30,
	2015							2014
	Content		Connectivity		Consolidated			Content		Connectivity		Consolidated
Revenue:
Licensing and services	$	81,574	$	24,838	$	106,412		$	71,510	$	19,933	$	91,443
Equipment	—		3,702		3,702			—		11,180		11,180
Total revenue	81,574		28,540		110,114			71,510		31,113		102,623
Operating expenses:
Cost of sales
Licensing and services	53,995		14,654		68,649			50,596		13,428		64,024
Equipment	—		2,807		2,807			—		9,594		9,594
Total cost of sales	53,995		17,461		71,456			50,596		23,022		73,618
Contribution profit	27,579		11,079		38,658			20,914		8,091		29,005
Other operating expenses					42,039							37,019
Loss from operations					$	(3,381	)					$	(8,014	)



	Nine Months Ended September 30,
	2015							2014
	Content		Connectivity		Consolidated			Content		Connectivity		Consolidated
Revenue:
Licensing and services	$	227,037	$	71,602	$	298,639		$	206,641	$	53,735	$	260,376
Equipment	—		14,156		14,156			—		26,360		26,360
Total revenue	227,037		85,758		312,795			206,641		80,095		286,736
Operating expenses:
Cost of sales
Licensing and services	152,044		42,730		194,774			149,475		40,933		190,408
Equipment	—		12,191		12,191			—		22,933		22,933
Total cost of sales	152,044		54,921		206,965			149,475		63,866		213,341
Contribution profit	74,993		30,837		105,830			57,166		16,229		73,395
Other operating expenses					112,694							98,339
Loss from operations					$	(6,864	)					$	(24,944	)

Schedule of Earnings Per Share, Basic and Diluted

The computation for basic and diluted EPS was as follows (in thousands, except per share data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss) (numerator):
Net income (loss)	$	(6,872	)	$	(15,530	)	$	2,684		$	(29,683	)
Income allocable to non-controlling interests	—			—			—			194
Net (loss) income for basic EPS	(6,872		)	(15,530		)	2,684			(29,877		)

Less: adjustment for change in fair value on warrants liability for diluted EPS after assumed exercise of warrants liability	—			—			13,866			—
Net loss for dilutive EPS	$	(6,872	)	$	(15,530	)	$	(11,182	)	$	(29,877	)

Shares (denominator):
Weighted-average shares for basic EPS	77,753			72,877			77,249			72,284
Effect of assumed exercise of warrants liability	—			—			1,200			—
Adjusted weighted-average shares for diluted EPS	77,753			72,877			78,449			72,284

Basic (loss) earnings per share	$	(0.09	)	$	(0.21	)	$	0.03		$	(0.41	)
Diluted loss per share	$	(0.09	)	$	(0.21	)	$	(0.14	)	$	(0.41	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Weighted average securities not included in the calculation of diluted loss per share were as follow (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Stock options	3,545	4,434	3,004	1,816
Restricted stock units	190	13	44	—
Non-employees stock options	—	5	2	6
Equity warrants	392	445	475	1,378
Liability warrants	411	154	—	1,958
Convertible notes	4,447	—	3,663	—

Fair Value Measurements, Recurring and Nonrecurring

The following tables summarize the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2015, and December 31, 2014, respectively (in thousands):



	September 30, 2015		Quotes Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Earn-out liability (1)	$	14,132	$	—	$	—	$	14,132
Global Eagle warrants (2)	26,140		26,140		—		—
Total financial liabilities	$	40,272	$	26,140	$	—	$	14,132

(1) Includes $14.1 million earn-out liability for WOI, assets of RMG, NavAero and masFlight assumed in business combinations.

(2) Includes 7,083,978 public warrants at September 30, 2015.



	December 31, 2014		Quotes Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Earn-out liability (1)	$	1,710	$	—	$	—	$	1,710
Global Eagle warrants (2)	52,671		52,671		—		—
Total financial liabilities	$	54,381	$	52,671	$	—	$	1,710

(1) Includes $1.7 million earn-out liability for EIM, a subsidiary of AIA, assumed in the Business Combination.

(2) Includes 10,148,508 public warrants as of December 31, 2014.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents the fair value roll-forward reconciliation of level 3 assets and liabilities measured at fair value basis for the period ended September 30, 2015 (in thousands):



	Earn-Out Liability
Balance, December 31, 2014	$	1,710
Fair value of earn-out liability assumed in 2015 acquisitions	14,132
Payment of 2014 EIM earn-out liability	(1,519		)
Non-cash adjustment to 2014 EIM earn-out liability	(191		)
Balance, September 30, 2015	$	14,132

Fair Value, by Balance Sheet Grouping

The following table shows the carrying amounts, which approximate the fair values, of the Company's financial liabilities in the condensed consolidated financial statements at September 30, 2015 and December 31, 2014, respectively (in thousands):



	September 30, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Convertible senior notes ⁽¹⁾	$	69,836	$	74,267	$	—	$	—
Notes payable	$	2,433	$	2,433	$	3,015	$	3,015

(1) The fair value of the convertible senior notes is inclusive of the conversion feature, which was originally allocated for reporting purposes at $13.0 million, and is included in the condensed consolidated balance sheets within "Additional paid-in capital" (see Note 12).