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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Mark One)
[X] Amendment No. 3 to Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31,
1994 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Act
of 1934 [No Fee Required] for the transition period from _____ to _____
Commission file number 0-17581
GEOTEK COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2358635
(State of Incorporation) (I.R.S. Employer Identification No.)
20 Craig Road, Montvale, New Jersey 07646
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 930-9305
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or amendment
to this Form 10-K. [X}
As of March 29, 1995, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was approximately $349,281,269.
As of March 1, 1995, the number of outstanding shares of the Registrant's
Common Stock was approximately 51,094,677.
The undersigned Registrant hereby amends its Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 as set forth in the pages attached
hereto.
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Page 1 of Pages
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
Reports of Independent Accounts
Consolidated Balance Sheets as of December 31, 1994 and December 31,
1993
Consolidated Statements of Operations for the years ended December 31,
1994, 1993 and 1992
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
(b) Reports on Form 8-K
The following Current Reports on Form 8-K and Amendments to Current
Reports on Form 8-K/A were filed by the Company during the fourth
quarter of 1994.
Current Report, dated December 1, 1994, reporting (i) the issuance of
20 shares of Series I Preferred Stock, stated value $500,000 per
share, to S-C Rig Investments III, L.P., an investment partnership
affiliated with George Soros, which shares are convertible into shares
of common stock of the Company at $11.75 per share and bear dividends
at seven percent (7%) per annum, payable in cash or shares of common
stock, at the option of the Company for up to five (5) years; and (ii)
the announcement by the Company on December 21, 1994 that it had
successfully completed a test of its FHMA(TM) wireless digital voice
and data communications systems and that it had placed an order valued
at approximately $20 million for FHMA(TM) infrastructure equipment.
Amendment to Current Report, dated August 2, 1994 (amended as of
October 12, 1994) amending item 7 of the Current Report reporting the
acquisition of a 49.9% interest in DBF Bundelfunk GmbH for
approximately $8.5 million to file financial statements and pro forma
information in correction with the transaction.
(c) Exhibits
The following documents are filed as a part of this report. (Exhibit
numbers correspond to the exhibits required by Item 601 of Regulation
S-K for an Annual Report on Form 10-K).
Exhibit No.
2.1 Stock Purchase Agreement, dated as of November 1, 1993, by and between
the Company and S-C Rig Investment- III, L.P.(1)
2.2 Stock Purchase Agreement, dated as of December 29, 1993, by and
between the Company and Vanguard Cellular Systems, Inc. and its
affiliates ("Vanguard"), regarding the sale of up to an aggregate of
12.5 million shares of the Company's Common Stock.(2)
2.3 Notarial Deed and Share Purchase Agreement, dated May 26, 1994, by and
between Preussag Mobilfunk GmbH and Geotek Communications GmbH, a
wholly-owned subsidiary of the Company.(3)
<PAGE>
2.4 Notarial Deed and Share Purchase Agreement, dated July 6, 1994, by and
between Quante A.G., on the one hand, and Geotek Communications GmbH
and Geotek Beteilingungs GmbH, wholly-owned subsidiaries of the
Company, on the other hand.(4)
4.1 Restated Certificate of Incorporation of the Company, as amended.(5)
4.2 Certificate of Designation of Series H Participating Cumulative
Convertible Preferred Stock.(2)
4.3 Certificate of Designation of Series I Participating Cumulative
Convertible Preferred Stock.(5)
4.5 1989 Employee Stock Option Plan, as amended, of the Company.(7)
4.6 1994 Employee Stock Option Plan of the Company.(11)
4.7 Certificate of Amendment of the Restated Certificate of Incorporation
of the Company filed February 26, 1993.(9)
4.8 Certificate of Amendment of the Restated Certificate of Incorporation
of the Company filed February 16, 1994.(3)
4.9 Note and Warrant Purchase Agreement, dated as of June 15, 1994, by and
among Geotek Communications, Inc., The SC Fundamental Value Fund, L.P.
and SC Fundamental Value BVI, Ltd.(10)
4.10 Pledge Agreement, dated as of June 15, 1994, by and among Geotek
Communications, Inc., Geotek Acquisition Corp., Geotek Subsidiary
Industries, Inc., Bogen Corporation, U.S.I. Venture Corp. and SC
Fundamental Inc., as agent for The SC Fundamental Value Fund, L.P. and
SC Fundamental Value BVI, Ltd.(10)
4.11 Senior Secured Note, dated June 20, 1994, from the Company in
connection with the Note and Warrant Purchase Agreement referenced in
Exhibit 4.9 hereof.(10)
4.12 Senior Secured Note, dated June 20, 1994, from the Company in
connection with the Note and Warrant Purchase Agreement referenced in
Exhibit 4.9 hereof.(10)
4.13 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.9 hereof.(10)
4.14 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.9 hereof.(10)
4.15 Note and Warrant Purchase Agreement, dated as of March 20, 1995, by
and among the Company, The SC Fundamental Value Fund, L.P. and SC
Fundamental Value BVI, LTD.(11)
4.16 Pledge Agreement, dated as of March 30, 1995, by and among the
Company, certain of its subsidiaries and SC Fundamental Inc., as agent
for and on behalf of The SC Fundamental Value Fund, L.P. and SC
Fundamental Value BVI, LTD.(11)
4.17 Senior Secured Convertible Note, dated March 30, 1995, from the
Company in connection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.15.(11)
4.18 Senior Secured Convertible Note, dated March 30, 1995, from the
Company inconnection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.15.(11)
4.19 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.15, dated March 30,
1995.(11)
4.20 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.15, dated March 30,
1995.(11)
<PAGE>
10.1 Stockholders Voting Agreement, dated as of February 23, 1994, among
the Company, Vanguard Cellular Systems, Inc., S-C Rig Investments III,
L.P., Evergreen Canada-Israel Investment & Co., Ltd., Yaron Eitan and
Winston Churchill.(5)
10.2 Asset Exchange Agreement, dated as of March 24, 1995, by and between
the Company, Metro Net Systems, Inc., Nextel Communications and
certain Nextel subsidiaries.(11)
*23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications, Inc.
Consent of Coopers & Lybrand L.L.P. - Preussag Bundelfunk Gmbh
*23.2 Consent of Shachak & Co. - PowerSpectrum Technology Ltd.
Consent of Shachak & Co. - Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. - Oram Electric Industries, Ltd.
*23.3 Consent of Altenburg & Tewes AG - DBF Bundelfunk GmbH & Co.
*23.4 Consent of Touche Ross & Co - National Band Three Limited
*23.5 Consent of KPMG - National Band Three Limited
- ---------------
* Filed herewith
(1) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K with respect to events whose earliest date was November 1,
1993.
(2) Incorporated by reference to the Exhibits to Amendment No. 1 to the
Company's Registration Statement on Form S-3 (Registration No. 33-72820)
filed with the Commission on January 25, 1994.
(3) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated July 5, 1994.
(4) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated August 2, 1994.
(5) Incorporated by reference to the Exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993.
(7) Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-3 (Registration No. 33- 72820) filed with the
Commission on December 10, 1993.
(9) Incorporated by reference to the Exhibits to Post-Effective Amendment No. 2
to the Company's Registration Statement on Form S-1 (Registration No.
33-42185) filed with the Commission on August 27, 1993.
(10) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated June 1, 1994.
(11) Previously filed.
<PAGE>
SIGNATURE
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.
GEOTEK COMMUNICATIONS, INC.
September 20, 1995
By: /s/ Michael McCoy
---------------------------------
Name: Michael McCoy
Title: Chief Financial Officer
By: /s/ Michael Carus
---------------------------------
Name: Michael Carus
Title: Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Page
2.1 Stock Purchase Agreement, dated as of November 1, 1993, by
and between the Company and S-C Rig Investment-III, L.P.(1)
2.2 Stock Purchase Agreement, dated as of December 29, 1993, by
and between the Company and Vanguard Cellular Systems, Inc.
and its affiliates ("Vanguard"), regarding the sale of up to
an aggregate of 12.5 million shares of the Company's Common
Stock.(2)
2.3 Notarial Deed and Share Purchase Agreement, dated May 26,
1994, by and between Preussag Mobilfunk GmbH and Geotek
Communications GmbH, a wholly-owned subsidiary of the
Company.(3)
2.4 Notarial Deed and Share Purchase Agreement, dated July 6,
1994, by and between Quante A.G., on the one hand, and
Geotek Communications GmbH and Geotek Beteilingungs GmbH,
wholly-owned subsidiaries of the Company, on the other
hand.(4)
4.1 Restated Certificate of Incorporation of the Company, as
amended.(5)
4.2 Certificate of Designation of Series H Participating
Cumulative Convertible Preferred Stock.(2)
4.3 Certificate of Designation of Series I Participating
Cumulative Convertible Preferred Stock.(5)
4.5 1989 Employee Stock Option Plan, as amended, of the
Company.(7)
4.6 1994 Employee Stock Option Plan of the Company.(11)
4.7 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company filed February 26, 1993.(9)
4.8 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company filed February 16, 1994.(3)
4.9 Note and Warrant Purchase Agreement, dated as of June 15,
1994, by and among Geotek Communications, Inc., The SC
Fundamental Value Fund, L.P. and SC Fundamental Value BVI,
Ltd.(10)
4.10 Pledge Agreement, dated as of June 15, 1994, by and among
Geotek Communications, Inc., Geotek Acquisition Corp.,
Geotek Subsidiary Industries, Inc., Bogen Corporation,
U.S.I. Venture Corp. and SC Fundamental Inc., as agent for
The SC Fundamental Value Fund, L.P. and SC Fundamental Value
BVI, Ltd.(10)
4.11 Senior Secured Note, dated June 20, 1994, from the Company
in connection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.9 hereof.(10)
4.12 Senior Secured Note, dated June 20, 1994, from the Company
in connection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.9 hereof.(10)
4.13 Warrant Certificate issued in connection with the Note and
Warrant Purchase Agreement referenced in Exhibit 4.9
hereof.(10)
4.14 Warrant Certificate issued in connection with the Note and
Warrant Purchase Agreement referenced in Exhibit 4.9
hereof.(10)
<PAGE>
Exhibit No. Page
4.15 Note and Warrant Purchase Agreement, dated as of March 20,
1995, by and among the Company, The SC Fundamental Value
Fund, L.P. and SC Fundamental Value BVI, LTD.(11)
4.16 Pledge Agreement, dated as of March 30, 1995, by and among
the Company, certain of its subsidiaries and SC Fundamental
Inc., as agent for and on behalf of The SC Fundamental Value
Fund, L.P. and SC Fundamental Value BVI, LTD.(11)
4.17 Senior Secured Convertible Note, dated March 30, 1995, from
the Company in connection with the Note and Warrant Purchase
Agreement referenced in Exhibit 4.15.(11)
4.18 Senior Secured Convertible Note, dated March 30, 1995, from
the Company inconnection with the Note and Warrant Purchase
Agreement referenced in Exhibit 4.15.(11)
4.19 Warrant Certificate issued in connection with the Note and
Warrant Purchase Agreement referenced in Exhibit 4.15, dated
March 30, 1995.(11)
4.20 Warrant Certificate issued in connection with the Note and
Warrant Purchase Agreement referenced in Exhibit 4.15, dated
March 30, 1995.(11)
10.1 Stockholders Voting Agreement, dated as of February 23,
1994, among the Company, Vanguard Cellular Systems, Inc.,
S-C Rig Investments III, L.P., Evergreen Canada-Israel
Investment & Co., Ltd., Yaron Eitan and Winston
Churchill.(5)
10.2 Asset Exchange Agreement, dated as of March 24, 1995, by and
between the Company, Metro Net Systems, Inc., Nextel
Communications and certain Nextel subsidiaries.(11)
*23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications,
Inc.
Consent of Coopers & Lybrand L.L.P. - Preussag Bundelfunk
GmbH
*23.2 Consent of Shachak & Co. - PowerSpectrum Technology Ltd.
Consent of Shachak & Co. - Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. - Oram Electric Industries, Ltd.
*23.3 Consent of Altenburg & Tewes AG - DBF Bundelfunk GmbH & Co.
*23.4 Consent of Touche Ross & Co. - National Band Three Limited
*23.5 Consent of KPMG - National Band Three Limited
- ---------------
* Filed herewith
(1) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K with respect to events whose earliest date was November 1,
1993.
(2) Incorporated by reference to the Exhibits to Amendment No. 1 to the
Company's Registration Statement on Form S-3 (Registration No. 33-72820)
filed with the Commission on January 25, 1994.
(3) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated July 5, 1994.
<PAGE>
(4) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated August 2, 1994.
(5) Incorporated by reference to the Exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993.
(7) Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-3 (Registration No. 33-72820)
filed with the Commission on December 10, 1993.
(9) Incorporated by reference to the Exhibits to Post-Effective Amendment No. 2
to the Company's Registration Statement on Form S-1 (Registration No.
33-42185) filed with the Commission on August 27, 1993.
(10) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated June 1, 1994.
(11) Previously filed.
<PAGE>
[Letterhead of Coopers & Lybrand]
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------
To the Board of Directors and Shareholders
of Geotek Communications, Inc.:
We have audited the consolidated financial statements and the consolidated
financial statement schedule of Geotek Communications, Inc. and Subsidiaries as
listed in Item 14(a)(1) and (2) of this Form 10-K/A#2. These consolidated
financial statements and the consolidated financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the consolidated
financial statement schedule based on our audits. We did not audit the financial
statements of PowerSpectrum Technologies, Ltd., a consolidated research and
development joint venture, which statements reflect losses from continuing
operations of approximately 26%, 16% and 34% of the corresponding consolidated
totals in 1994, 1993 and 1992, respectively. We also did not audit the financial
statements of Oram Electric Industries Ltd. and Oram Power Supplies (1990) Ltd.,
consolidated subsidiaries at December 31, 1992, which statements reflect
approximately 18% of the consolidated net revenues in 1992. These statements
were audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for PowerSpectrum
Technologies, Ltd. for 1994, 1993 and 1992, and Oram Electric Industries Ltd.,
and Oram Power Supplies (1990) Ltd. for 1992, is based solely on the reports of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that audits, and the
reports of other auditors, provide a reasonable basis for our opinion.
During 1992, the Company had certain significant transactions with related
parties as more fully described in the notes to the consolidated financial
statements.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Geotek Communications,
Inc. and Subsidiaries as of December 31, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted accounting
principles. In addition, in our opinion, based on our audits and the reports of
other auditors, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
March 30, 1995 (August 28, 1995 as
to Note 19)
<PAGE>
[Letterhead of Shachak & Co.]
INDEPENDENT AUDITORS' REPORT
To the Shareholders
of Powerspectrum Technology Ltd.
We have examined the Balance Sheet of Powerspectrum Technology Ltd. (hereinafter
the "Company") as of December 31, 1994 and the related Statement of Loss, the
Statement of Changes in Shareholders' Equity and the Statement of Cash Flows for
the year then ended. Our examination was made in accordance with generally
accepted auditing standards accepted in Israel, including those prescribed by
the Auditors Regulations (Auditor's Mode of Performance), 1973, and in the
United States of America, accordingly, we have applied such auditing procedures
as we deemed necessary under the circumstances.
The financial statements referred to above were prepared on the basis of the
historical cost convention, adjusted for changes in the general purchasing power
of the Israeli currency, as measured by the changes in the exchange rate of the
US Dollar to the Israeli Shekel, in accordance with Statements of the Institute
of Certified Public Accountants in Israel. Condensed nominal financial
statements, on the basis of which the adjusted financial statements were
prepared are presented in Note 20.
In our opinion, the financial statements referred to above present fairly, in
accordance with generally accepted accounting principles in Israel, which are
not materially different from those in the United States of America, the
financial position of the Company as of December 31, 1994 and its results of
operations, and the changes in shareholders' equity and cash flow for the year
then ended.
Pursuant to Section 211 of the Companies Ordinance (New Version) 1983, we state
that we have obtained all the information and explanations we have required and
that our opinion on the above financial statements is given according to the
best of our information and the explanations received by us and as shown by the
books of the Company.
Without qualifying our opinion, we draw your attention to note 1b in reference
to the Company's being in the development stage, as mentioned in the note, the
Company's funds were derived from shareholders' investment and the Chief
Scientist participation. The continuation of the Company's development of the
system is conditioned upon further funding as described in the above-mentioned
note.
The US Dollar financial statements are a translation of the above financial
statements into US Dollars. In our opinion, the US Dollar financial statements
have been translated fairly, in accordance with the basis explained in Note 2A.
Shachak & Co.
Certified Public Accountants (Israel)
Tel-Aviv, February 14, 1995
F-2
<PAGE>
[Letterhead of Shachak & Co.]
AUDITORS' REPORT TO THE BOARD OF
DIRECTORS OF GEOTEK INDUSTRIES, INC.
We have examined the Balance Sheet of Powerspectrum Technology Ltd. (hereinafter
the "Company") as of December 31, 1993, and the related Statement of Loss, the
Statement of Changes on Shareholders' Equity, and the Statement of Cash Flows
for the fifteen month period then ended. Our examination was performed in
accordance with generally accepted auditing standards accepted in Israel,
including those prescribed by the Auditors Regulations (Auditor's Mode of
Performance), 1973, and in the United States of America, accordingly, we have
applied such auditing procedures as we deemed necessary under the circumstances.
The financial statements referred to above were prepared on the basis of the
historical cost convention, adjusted for changes in the general purchasing power
of the Israeli currency, as measured by the changes in the exchange rate of the
US Dollar to the Israeli Shekel, in accordance with Statements of the Institute
of Certified Public Accountants in Israel. Condensed nominal financial
statements, on the basis of which the adjusted financial statements were
prepared are presented in Note 2A.
In our opinion, the financial statements referred to above present fairly, in
accordance with generally accepted accounting principles in Israel, which are
not materially different from those in the United States, the financial position
of the Company as of December 31, 1993, and its results of operations, and the
changes in shareholders' equity and cash flow for the fifteen month period then
ended.
Pursuant to Section 211 of the Companies Ordinance (New Version) 1983, we state
that we have obtained all the information and explanations we have required and
that our opinion on the above financial statements is given according to the
best of our information and the explanations received by us and as shown by
the books of the Company.
The US Dollar financial statements are a translation of the above financial
statements into US Dollars. In our opinion, the US Dollar financial statements
have been translated fairly, in accordance with the basis explained in Note 2A.
Shachak & Co.
Certified Public Accountants (Israel)
Tel-Aviv, February 27, 1994
F-3
<PAGE>
[Letterhead of Shachak & Co.]
INDEPENDENT AUDITORS' REPORT
TO: THE BOARD OF DIRECTORS OF
GEOTEK COMMUNICATIONS, INC.
We have examined the Balance Sheet of Powerspectrum Technology Ltd. (hereinafter
the "Company") as of September 30, 1992, and the related Income Statement, the
Statement of Changes in Shareholders' Equity, and the Statement of Cash Flows
for the three month period then ended. Our examination was performed in
accordance with generally accepted auditing standards accepted in Israel,
including those prescribed by the Auditors Regulations (Auditor's Mode of
Performance), 1973, and in the United States of America, accordingly, we have
applied such auditing procedures as we deemed necessary under the circumstances.
The financial statements referred to above were prepared on the basis of the
historical cost convention, adjusted for changes in the general purchasing power
of the Israeli currency, as measured by the changes in the exchange rate of the
US Dollar to the Israeli Shekel, in accordance with Statements of the Institute
of Certified Public Accountants in Israel. Condensed nominal financial
statements, on the basis of which the adjusted financial statements were
prepared are presented in Note 19.
In our opinion, the financial statements referred to above present fairly, in
accordance with generally accepted accounting principles in Israel, which are
not materially different from those in the United States, the financial position
of the Company as of September 30, 1992, and its results of operations, and the
changes in shareholders' equity and cash flow for the three month period then
ended.
Pursuant to Section 211 of the Companies Ordinance (New Version) 1983, we state
that we have obtained all the information and explanations we have required and
that our opinion on the above financial statements is given according to the
best of our information and the explanations received by us and as shown by the
books of the Company.
The US Dollar financial statements are a translation of the above financial
statements into US Dollars. In our opinion, the US Dollar financial statements
have been translated fairly, in accordance with the basis explained in Note 2A.
Shachak & Co.
Certified Public Accountants (Israel)
Tel-Aviv, January 17, 1993
F-4
<PAGE>
[Letterhead of Shachak & Co.]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Geotek Industries, Inc.
We have audited the Balance Sheet of "Oram" Power Supplies (1990) Ltd.
(hereinafter the "Company") as of December 31, 1992 and 1991, and the related
Statements of Income, Changes of Shareholders' Equity and Cash Flows for the
year then ended. 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 generally accepted auditing standards
accepted in Israel and in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance as to 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 provide 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 "Oram" Power Supplies (1990)
Ltd. as of December 31, 1992 and and 1991, and its results of operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Shachak & Co.
Certified Public Accountants (Isr.)
February 24, 1993
Tel Aviv, Israel
F-5
<PAGE>
[Letterhead of Shachak & Co.]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Geotek Industries, Inc.
We have audited the Balance Sheet of "Oram" Electric Industries Ltd.
(hereinafter the "Company") as of December 31, 1992 and 1991, and the related
Statements of Income, Changes of Shareholders' Equity and Cash Flows for the
years then ended. 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 generally accepted auditing standards
accepted in Israel and in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance as to 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 "Oram " Power Supplies (1990)
Ltd. as of December 31, 1992 and and 1991, and its results of operations, and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
Shachak & Co.
Certified Public Accountants (Isr.)
February 24, 1993
Tel Aviv, Israel
F-6
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
(Dollars in thousands, except per share data)
ASSETS 1994 1993
---- ----
Current assets:
Cash and cash equivalents $ 27,531 $ 51,686
Temporary investments 24,515 7,873
Accounts receivables trade, net of allowance
for doubtful accounts of $503 in 1994
and $458 in 1993 11,371 10,214
Inventories 8,667 6,468
Prepaid expenses and other assets 7,468 3,810
----- -----
Total current assets 79,552 80,051
Investments in affiliates 26,582 1,443
Property, plant and equipment, net 24,446 17,535
Intangible assets, net 46,099 29,741
Other assets 3,165 6,874
------- -------
$ 179,844 $ 135,644
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $12,490 $8,441
Accrued expenses and other 12,315 8,744
Notes payable, banks and other 5,641 2,996
Current maturities, long-term debt 2,056 1,293
------ -----
Total current liabilities 32,502 21,474
------ ------
Long-term debt 29,396 3,961
Other non current liabilities 198 744
Minority interest 392 221
Redeemable preferred stock 40,000 40,000
Commitments and contingent liabilities
Shareholders' equity:
Preferred stocks, $.01 par value: 3
Common stock, $.01 par value:
Authorized 86,000,000 and 58,000,000
respectively; issued 50,869,000 and 45,989,000
shares respectively, outstanding 50,631,000 and
45,751,000 shares, respectively 509 460
Capital in excess of par value 186,651 37,151
Foreign currency translation adjustment 767 (204)
Accumulated deficit (109,185) (66,780)
Treasury stock, at cost (238,000 common shares) (1,386) (1,386)
------- ------
77,356 69,244
------- ------
$ 179,844 $ 135,644
======= =======
See notes to consolidated financial statements.
F - 7
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
1994 1993 1992
---- ---- ----
Revenues:
Net product sales $48,370 $37,501 $27,184
Service income 24,621 11,470 1,362
------ ------ -------
Total revenues 72,991 48,971 28,546
------ ------ ------
Costs and expenses:
Cost of goods sold 31,174 25,653 19,458
Cost of services 16,578 7,958 466
Research and development 19,477 10,570 2,225
Acquisition of minority interest of
a subsidiary assigned to a research
and development project 32,430
Marketing 18,291 8,913 4,276
General and administrative 19,850 12,508 4,527
Interest expense 3,101 2,591 1,099
Interest and other income (3,206) (1,188) (475)
Amortization of intangibles 2,772 919 390
Equity in losses of investees 3,056 34
Other expenses (income) 3,472 479 (1,039)
------- ------- ------
Total Costs and expenses 114,565 100,867 30,927
------- ------- ------
Loss from continuing operations before taxes
on income and minority interest (41,574) (51,896) (2,381)
Taxes on income (660)
Minority interest (171) 1,455
------ ------
Loss from continuing operations (42,405) (50,441) (2,381)
Discontinued operations:
Income from operations 193
Gain on disposal 323 68
------- ------ ------
323 261
------- ------ ------
Loss before extraordinary item and cumulative
effect of accounting change (42,405) (50,118) (2,120)
Extraordinary item - loss from early
extinguishment of debt (2,340)
Cumulative effect of change in fiscal
year of subsidiary (1,207)
Net loss (42,405) (53,665) (2,120)
Preferred dividends (2,066) ( 246) ( 777)
------- ------ -----
Net loss applicable to common stock $(44,471) $(53,911) (2,897)
======= ======= -----
F - 8
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
for the years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
1994 1993 1992
---- ---- ----
Weighted average number of common
shares outstanding 49,687,000 35,579,000 14,232,000
========== ========== ==========
Per common share:
Loss from continuing operations,
after preferred dividends $(0.90) $(1.43) $(0.21)
Discontinued operations:
Income from operations 0.01
Gain on disposal 0.01
------ ------- -------
Loss before extraordinary item and
cumulative effect of
accounting change (0.90) (1.42) (0.20)
Extraordinary item - loss from early
extinguishment of debt (0.07)
Cumulative effect of change in fiscal
year of subsidiary (0.03)
------ ------- -------
Net loss applicable to common shares $(0.90) $( 1.52) $(0.20)
====== ======== =======
See notes to consolidated financial statements.
F - 9
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
as of and for the years ended December 31, 1994, 1993 and 1992
(In Thousands)
<TABLE>
<CAPTION>
Capital in Foreign
Preferred Stock Common Stock Excess of Currency
--------------- ------ ----- Excess of Translation Accumulated Treasury
Shares Amount Shares Amount Par Value Adjustment Deficit Stock
------ ------- ------ ------ --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1992 2,230 $23 9,461 $95 $32,997 $(10,995) $(6,768)
Issuance of common stock and warrants:
Unit offering, net of related costs 6,679 67 13,554
Acquisition of Bogen shares 181 2 351
Conversion of debt 757 7 959
Conversion of Series A,B,C & G
preferred stock (1,134) (12) 3,270 33
Conversion of Series F redeemable
preferred stock 560 6 630
Dividend on preferred 259 3 605
Exercise of warrants 564 6 770
Other 83 65
Accretion of Series F preferred (108)
Preferred dividend (669)
Sale of defense segment to Aryt ( 5,069)
Net loss ( 2,120)
----- ---- ------ ---- ------ ------- --------
Balance, January 1, 1993 1,096 $11 21,814 $219 $49,154 $(13,115) $(11,837)
Issuance of common stock and warrants:
Unit offering, net of related costs 4,952 50 18,286
Exercise of warrants and options 13,343 133 36,674
Acquisition of Speech Design 552 5 3,137
Conversion of preferred stock (484) (5) 1,323 13 (8)
Other 92 1 269
Issuance of options in connection
with the acquisition of GMSI 303
Capital contributed to Metro Net 107
Issuance of warrants in connection
with note payable 3,708
Issuance of shares and options in
connection with the acquisition of
minority interest in PSI 5,113 51 37,589 (1,386)
Retirement of Treasury Stock (267) (3) (1,200) (12) (11,822) 11,837
Translation Adjustments (204)
Preferred dividends (246)
Net loss ( 53,665)
--- --- ------ ---- -------- ------ --------- --------
345 $3 45,989 $460 $137,151 $(204) $(66,780) $(1,386)
</TABLE>
F - 10
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY, Continued
as of and for the years ended December 31, 1994, 1993 and 1992
(in Thousands)
<TABLE>
<CAPTION>
Capital in Foreign
Preferred Stock Common Stock Excess of Currency
--------------- ------ ----- Excess of Translation Accumulated Treasury
Shares Amount Shares Amount Par Value Adjustment Deficit Stock
------ ------- ------ ------ --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 345 $3 45,989 $460 $137,151 $(204) $(66,780) $(1,386)
Issuance of common stock and warrants:
Exercise of warrants and options 1,394 14 3,833
Conversion of Series A preferred stock (345) (3) 345 3
Acquisition of minority interest in Bogen 233 2 3,439
Sale to Vanguard pursuant to
stock purchase agreement 2,500 25 29,225
Issuance of shares to Vanguard pursuant to
management consulting agreement 258 3 2,514
Acquisition of additional interest in GMSI 150 2 1,630
Issuance of warrants in connection with note payable 925
Issuance of Series I Preferred Stock 10,000
Preferred dividends (2,066)
Changes in currency translation adjustment 971
Net Loss (42,405)
- -- ------ ---- -------- ---- --------- -------
Balance, December 31, 1994 0 $0 50,869 $509 $186,651 $767 $(109,185) $(1,386)
= == ====== ==== ======== ==== ========= =======
</TABLE>
See notes to consolidated financial statements.
F - 11
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993* 1992
---- ----- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(42,405) $(53,665) $ (2,120)
Adjustments to reconcile net loss to net cash
used in operating activities:
Cumulative effect on prior year of changing
the fiscal year end of a subsidiary 1,207
Discontinued operations:
Income from operations (193)
Gain on disposal (323) (68)
Minority interest 171 (1,455)
Depreciation and amortization 7,438 2,910 814
Post acquisition adjustment for utilization of acquired
net operating loss carryforward 573
Gain on sale of marketable securities (1,039)
Non cash acquisition of minority interest of a subsidiary,
assigned to a research and development project 32,430
Amortization of discount on senior secured note payable 391 1,545
Equity in losses of investees 3,056 34
Loss on extinguishment, net of cash portion 2,163
Loss on sale of subsidiaries 479
Reserve for impairment of loan 3,500
Issuance of stock for management consulting fee 2,517
Changes in operating assets and liabilities
(net of effects from acquisitions):
Accounts receivable 876 (1,732) 481
Inventories (1,866) 1,083 (1,995)
Prepaid expenses and other assets (5,312) (2,971) (689)
Advances from Aryt 1,079
Accounts payable and accrued expenses 6,900 4,790 349
Other 84 (805) 12
-------- -------- --------
Net cash used in operating activities (24,077) (14,310) (3,369)
-------- -------- --------
Cash flows from investing activities:
Advances to PowerSpectrum subsequent to October 1, 1992 (4,198)
Acquisition of licenses (12,963) (5,281)
Net increase in temporary investments (16,642) (7,872)
</TABLE>
* Opening balance sheet adjusted to reflect cumulative effect of change in
fiscal year of subsidiary.
See notes to consolidated financial statements.
F - 12
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
for the years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993* 1992
---- ----- ----
<S> <C> <C> <C>
Proceeds from sale of subsidiaries shares 6,180 1,170
Proceeds from sale of marketable securities 1,100
Acquisitions of property and equipment (10,458) (2,279) (926)
Collection of notes receivable 37 828
Investment in intangibles (349)
Proceeds from sale of property and equipment 13
Cash invested in acquisition of subsidiaries, net (25,842) (27,903) (368)
Loan to Harris Adacom B.V (3,500)
Other (59) (11)
-------- -------- --------
Net cash used in investing activities $(69,405) $(37,177) $ (2,741)
-------- -------- --------
Cash flows from financing activities:
Net borrowings, (repayments) under
line-of-credit agreements $ 2,390 $ (268) $ (3,409)
Proceeds from debt and warrants 2,674 244
Repayments of debt (1,507) (14,035) (1,740)
Net proceeds from issuance of stock and debentures 18,715
Treasury stock acquired (60)
Proceeds from issuance of redeemable preferred stock 40,000
Proceeds from issuance of preferred stock 10,000
Deferred financing costs (1,200)
Proceeds from issuance of senior
secured note and related warrants 25,000 12,000
Investment by others in stock of subsidiary 2,124
Proceeds from issuance of stock and warrants
to Vanguard 29,250
Proceeds from issuances of common stock 13,621
Proceeds from issuance of options 303
Proceeds from exercise of warrants and options 3,848 36,807 770
Payment of preferred dividends (2,066) (246) (417)
Advances to employees and directors (300)
Other (289) 587 17
-------- -------- --------
Net cash provided by
financing activities 69,300 94,787 8,726
-------- -------- --------
Effect of exchange rate changes on cash 27 (277)
Increase (decrease) in cash and equivalents (24,155) 43,023 2,616
Increase in cash due to a change in the
fiscal year end of a subsidiary 5,638
Cash and equivalents, beginning of year 51,686 3,025 409
-------- -------- --------
Cash and equivalents, end of year $ 27,531 $ 51,686 $ 3,025
======== ======== ========
</TABLE>
* Opening balance sheet adjusted to reflect cumulative effect of change in
fiscal year of subsidiary.
See notes to consolidated financial statements.
F - 13
<PAGE>
GEOTEK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
for the years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
Supplemental cash flow information:
<S> <C> <C> <C>
Interest paid $ 3,142 $ 822 $ 1,163
Supplemental schedule of noncash investing and financing activities:
Summary of acquired subsidiaries:
Fair value of assets acquired 4,217
Liabilities assumed 2,066 2,029
Disposition of investee 185
Stock issued 3,142 2,071
Issuance of common stock and warrants to acquire:
PowerSpectrum, Inc. minority 37,640
Additional interest in GMSI 1,631
Bogen, Inc. remaining minority interest 3,441
Issuance of shares to subsidiary 1,386
Conversion of Preferred Series A 1
Management consulting fee paid in common stock 2,517
Transfer of Jerico and Reshef to Aryt:
Acquisition of debt, debenture and accrued interest 3,425
Treasury stock acquired 10,363
Conversion of preferred stock and redeemable preferred stock 636
Stock for services and bonuses 50
Preferred dividend paid by issuance of common stock 608
Acquisition of technology rights by issuance of debenture 595
Conversion of related party debt into Preferred Series G stock
and common stock 816
Acquisition of Reshef shares 15
Stock issued in lieu of debt payment 150 150
</TABLE>
See notes to consolidated financial statements.
F - 14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
1. Summary of Significant Accounting Policies:
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of Geotek Communications, Inc. ("the
Company") include all wholly-owned, majority-owned and controlled
subsidiaries. The Company accounts for 20%-50% owned entities by the equity
method. All significant intercompany accounts and transactions have been
eliminated. Certain amounts in the 1993 and 1992 financial statements and
notes have been reclassified to conform to the 1994 presentation.
Revenue Recognition
Commercial manufacturing product revenues, net of expected sales returns,
are recognized upon shipment. Revenues relating to contracts for the sale
and installation of wireless dispatch systems are recognized using the
percentage of completion method. Revenues for service income are recognized
when services are provided. Deferred revenues are recognized when the
customer is billed in advance and is recorded in income over the period to
which the advance billing relates.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
Cash and Cash Equivalents
Cash and cash equivalents are highly liquid debt instruments purchased with
a maturity of three months or less, and are considered to be cash
equivalents for cash flow reporting purposes.
Temporary Investments
The Company adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities ("FAS
115") as of January 1, 1994. In accordance with FAS 115, prior years'
financial statements have not been restated to reflect the change in
accounting method. There was no cumulative effect as a result of adopting
FAS 115.
Management determines the appropriate classification of its investments in
debt and equity securities with a maturity of more than three months at the
time of purchase and reevaluates such determination at each balance sheet
date. Debt securities for which the Company has the positive intent and
ability to hold to maturity are classified as held to maturity securities
and reported at amortized cost. At December 31, 1994, the Company had no
investment in equity securities and no debt securities that qualified as
trading or available for sale. At December 31, 1993, debt securities were
carried at amortized cost which approximated market.
F - 15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
1. Summary of Significant Accounting Policies: continued
Concentration of Credit Risk and Off-Balance-Sheet Risks
The Company provides mobile radio services to commercial customers in the
United States and the United Kingdom and designs, manufactures and
distributes electronic communications equipment for commercial customers,
under contractual arrangements. The Company performs ongoing credit
evaluations of its commercial customers and generally does not require
collateral. The Company maintains reserves for potential losses from these
contractual arrangements. Credit risk with respect to accounts receivable
is limited due to the large number of customers and their industry and
geographic dispersion. The Company's Israeli subsidiaries are prohibited
from making certain payments, including loans, to entities outside of
Israel without the Bank of Israel's approval. The subsidiaries are
permitted, however, to distribute dividends, reimburse expenses and make
other specific payments.
Financial Instruments
Forward exchange contracts are entered into from time to time to offset the
effects of exchange rates on transactions denominated in foreign
currencies. Gains and losses on contracts designated as effective hedges of
firm commitments are deferred and included in income as part of those
transactions. Gains and losses on contracts used to hedge anticipated
transactions are recorded to income currently. See Note 15 for the fair
value of these instruments. The company is exposed to certain losses in the
event of non-performance by the counter-parties to these agreements.
However, the Company's exposure is not material.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Property, plant and
equipment acquired through acquisition are recorded at the fair value at
the date of acquisition. Depreciation and amortization are provided
principally by the straight-line method over the estimated useful lives of
the related assets which range between 3 to 10 years. Gains or losses
arising from dispositions are recorded in operations.
Intangible Assets
The excess of cost over the fair value of net assets acquired is amortized
on a straight-line basis over twenty to forty years. At each balance sheet
date management assesses whether there has been a permanent impairment in
the value of goodwill by comparing anticipated undisounted future cash
flows from operating activities with the carrying value of goodwill. The
factors considered by management in performing this assessment include
current operating results, trends and prospects as well as the effects of
obsolescence, demand, competition and other economic factors. FCC and other
private radio licenses are amortized over twenty years.
Foreign Currency Translation
For international operations, assets and liabilities are translated at
year-end exchange rates and income statement items are translated at
average exchange rates for the period. Resulting translation adjustments
are recorded as a separate component of shareholders' equity.
F - 16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
1. Summary of Significant Accounting Policies: continued
Research and Development
Research and Development expenditures are expensed as incurred. All
expenses relating to research and development ventures are recorded, net of
grants (see Note 12) as research and development expense.
Taxes on Income
Effective January 1, 1993 the Company implemented FAS No. 109, "Accounting
for Income Taxes". This pronouncement changed the method of accounting for
income taxes from the deferred method to the liability method, which
includes a requirement for adjustment of deferred tax balances for tax rate
changes. Prior to 1993 taxes on income were determined under Accounting
Principles Board Opinion No. 11, whereby the income tax provision is
calculated under the deferred method. The deferred method recognized income
taxes on financial statement income, and the tax effect of differences
between financial income and taxable income are deferred at tax rates in
effect during the period.
Cumulative Effect on Prior Year of Changing Fiscal Year End of a Subsidiary
In 1993, the Company's PowerSpectrum, Inc. ("PSI") subsidiary changed its
fiscal year end from September 30 to December 31. This change was made in
anticipation of the merger, which occurred on July 30, 1993, of PSI into a
wholly owned subsidiary of the Company (See Note 2). The operating results
of PSI for the period October 1, 1992 to December 31, 1992 are included in
the 1993 statement of operations as a cumulative effect on prior year of
changing the fiscal year end of a subsidiary.
Loss Per Common Share
Net loss per common share is computed by dividing the net loss, after
preferred dividend requirement, by the weighted average number of common
shares outstanding during the year. Common stock equivalents are excluded
since the effect would be anti-dilutive.
2. Acquired, Discontinued and Disposed Operations:
Wireless Networks in Germany
In the third quarter of 1994, in two separate transactions, the Company
acquired an approximate 49% interest in each of two SMR type networks in
Germany. On a combined basis, these networks provide services in eight of
the fourteen major metropolitan areas in Germany.
F - 17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
2. Acquired, Discontinued and Disposed Operations: continued
The Company acquired 49% of Preussag Bundelfunk GmbH ("PBG") in July 1994,
for approximately $14.0 million in cash. The Company does not have a
controlling interest in PBG and accounts for its investment under the
equity method. Under the terms of its investment, the Company has agreed to
fund PBG and, after PBG's existing capital is exhausted, will record 100%
of PBG's losses as its share under the equity method. Due to regulatory
restrictions regarding the transfer of mobile radio licenses, the Company
cannot control PBG at this time. If, and when, regulatory approval is
obtained, the remaining 51% of PBG will be transferred to the Company for
no additional consideration and the Company will consolidate the results of
PBG in its financial statements. The Company has guaranteed the repayment
of certain debt of PBG, due in 1999, to the seller, Preussag Mobilefunk
GmbH ("PMG"), of DM 3.5 million plus interest (approximately $2.4 million).
This guarantee has been secured by a letter of credit. The excess of the
purchase price over the Company's share of the fair value of the net assets
of PBG at the date of acquisition of $12.2 million has been accounted for
as goodwill and is being amortized over 20 years.
The Company acquired 49.9% of DBF Bundelfunk GmbH & Co. ("DBF") in August
1994 for approximately $5.3 million in cash. In addition, the Company and
the seller, Quante A.G., have each committed to contribute DM 5.0 million
(approximately $3.2 million), of which DM 3.0 million (approximately $1.8
million) has been contributed by the Company prior to December 31, 1994.
The Company and Quante were granted call and put options, respectively, for
the remaining 50.1% of DBF held by Quante. In March, 1995 Quante advised
the Company that it will exercise its option to sell its 50.1% interest in
DBF to the Company for DM 9.0 million (approximately $6.3 million) in cash.
The transfer is subject to approval of the German radio licensing authority
which is expected during 1995. The Company does not currently have a
controlling interest in DBF and accounts for its investment under the
equity method. After the purchase of the remaining 50.1% interest in DBF is
consummated, the Company will consolidate the results of DBF in its
financial statements. The excess of the purchase price over the Company's
share of the fair value of the net assets of DBF at the date of acquisition
of $7.3 million has been accounted for as goodwill and is being amortized
over 20 years.
Other Acquisitions
In January 1994 the Company completed a tender offer, whereby its interest
in Bogen increased from 91% to 99% in exchange for 233,442 shares of the
Company's common stock. The shares have been valued at $3.4 million, which
amount has been recorded as additional goodwill. (See Note 18) In February
1993, the Company acquired a 67% interest in Speech Design GmbH, a Munich
based developer, manufacturer and marketer of telephone peripherals in
exchange for $900,000 in cash and notes and 553,000 of the Company's common
shares. (See Note 18)
F - 18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
2. Acquired, Discontinued and Disposed Operations: continued
In May 1993, the Company acquired a 66% interest in GMSI (formerly known as
Gandalf Mobile Systems, Inc.) in consideration for Canadian $2.0 million
and the guarantee by the Company of Canadian $2.0 million in debt (due in
1998) to the seller. In April 1994, upon the exercise by GTI of a put
option granted at the acquisition date, the Company acquired GTI's
remaining 10% interest in GMSI in consideration for 150,000 shares of the
Company's common stock. The shares issued in April 1994 have been valued at
$1.6 million, which amount has been recorded as additional goodwill.
In July 1993, the Company acquired all of the outstanding stock of National
Band Three Ltd. ("NBTL"), the only national provider of private mobile
radio services in Great Britain, for approximately $24.0 million in cash.
In July 1993, the Company acquired the 38% of its U.S. wireless subsidiary,
PSI, that it did not already own, through a merger of PSI into a
wholly-owned subsidiary of the Company (the "Merger"). Under the terms of
the Merger Agreement all outstanding shares of PSI common stock not then
owned by the Company and all options to acquire PSI common stock were
converted into either shares of or options to acquire the Company's common
stock. All employment related and other options to purchase PSI common
stock (including those held by certain members of Geotek management) were
converted into options to purchase shares of the Company's common stock. In
connection with the Merger, the Company issued approximately 5.1 million
shares of common stock and options to acquire an additional 2.0 million
shares of the Company's common stock. In 1992 PSI entered into a joint
venture, PowerSpectrum Technologies, Ltd. ("PST") with an Israeli
government agency, Rafael Armament Development Authority ("Rafael"). PST is
developing the Company's digital wireless communications system based upon
the technology contributed to PST by Rafael. PSI holds a 56% interest in
PST. The excess of consideration paid over the fair value of the net assets
acquired in the merger, of $32.4 million has been attributed to the
incomplete research and development project and was charged to expense at
the time of the Merger.
Each of the acquisitions has been accounted for using the purchase method
of accounting and, accordingly, the purchase price has been allocated to
the underlying assets and liabilities at their esti mated fair values at
the dates of acquisition. The excess of the respective purchase prices over
the fair value of the net assets acquired has been recorded as goodwill for
each of these acquisitions. The results of operations are included from the
respective dates of acquisition.
F - 19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
2. Acquired, Discontinued and Disposed Operations: continued
Pro Forma Information
The following table summarizes the unaudited consolidated pro forma results
of operations, assuming the acquisitions had occurred at the beginning of
each of the periods as follows (in thousands):
1994 1993*
---- ----
Net sales $72,991 $58,190
Loss from continuing operations (46,313) (56,107)
Loss from continuing operations per share ($0.93) ($1.47)
* Includes non cash charge of $32.4 million related to PSI merger.
The unaudited pro forma results of operations are not necessarily
indicative of the actual results of operations that would have occurred had
the acquisitions been made at the beginning of the period, or of results
which may occur in the future.
Merger with Metro Net
In January 1994 the Company acquired, through a merger, all of the
outstanding stock of Metro Net Systems, Inc. ("MetroNet") in consideration
for the issuance of 3,112,500 common shares of the Company. The merger has
been accounted for as a pooling of interests and, accordingly, the
Company's consolidated financial statements have been restated for all
periods prior to the acquisition to include the results of operations,
financial position and cash flows of Metro Net. The effect of the merger on
the results of operations in the period in which the pooling of interests
occurred is immaterial. Metro Net is a provider of wide area SMR services
in the New York City area.
Disposal of Defense Segment
During the second quarter of 1992 the Company transferred its two defense
subsidiaries, Reshef Technologies, Ltd. and J.P. Mfg. Inc. to Aryt
Industries, Ltd. ("Aryt"), a partially owned subsidiary at that time, in
exchange for cash and certain securities of the Company that were owned by
Aryt. In connection with the exchange, the Company will receive up to $1.8
million (of which $1.3 million was advanced in 1992) of volume discounts on
purchases from Aryt during the three year period ending December 31, 1995.
The advance, net of discounts taken, has been recorded as deferred credits
and $570,000 is included in accrued expenses in the December 31, 1993
balance sheet. The December 31, 1994 balance sheet includes $339,000 in
other assets, representing discounts earned in excess of the advance.
Purchases from Aryt for the years ended December 31, 1994, 1993 and 1992
totaled $5.4 million, $3.5 million and $1.1 million, respectively.
F - 20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
2. Acquired, Discontinued and Disposed Operations: continued
During the third quarter of 1992 the Company reached an agreement in
principle to sell its investment in Aryt, representing its entire defense
segment, to Evergreen Canada-Israel Investment Co. Ltd. a related party.
The Company has accounted for the defense segment as a discontinued
operation and accordingly reclassified the 1992 financial statements. The
transaction was completed in June 1993 and resulted in total consideration
of $5.4 million. In 1992, discontinued operations generated operating
revenues of $13.2 million operating income $499,000, related income taxes
of $306,000 and net income from operations of $193,000.
Other Dispositions
In September 1993 the Company sold its interest in Oram Electric
Industries, Ltd. and Oram Power Supplies Ltd. to a company in which a
then-current director of the Company was a principal shareholder. The
Company received $1.0 million in cash at the closing, which resulted in a
gain of $53,000. In December 1993 the Company sold substantially all of the
assets of Geopower, Inc., a wholly owned subsidiary, to an unaffiliated
company for $1.1 million resulting in a loss of $522,000, including
approximately $322,000 attributable to the write off of intangibles. The
results of operations of these entities are included in the Company's
financial statements through the respective dates of sale. These companies
were included in the Company's "other" segment.
3. Temporary Investments:
Temporary Investments include $22.0 million of U.S. Government Agency
securities and $2.5 million of other debt obligations at December 31, 1994.
The amortized cost of marketable securities at December 31, 1994
approximates fair market value. All marketable debt securities classified
as held to maturity at December 31, 1994 are due within one year. Temporary
investments of $2.5 million are pledged as collateral for a letter of
credit.
4. Inventories:
Inventories as of December 31, 1994 and 1993 are as follows (in thousands):
1994 1993
---- ----
Raw materials $ 2,030 $ 1,798
Work-in-process 781 513
Finished goods 5,856 4,157
----- -----
$ 8,667 $ 6,468
===== =====
F - 21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
5. Investments in Affiliates:
During 1994 the Company acquired minority non-controlling equity interests
in two wireless networks in Germany as described in Note 2. As of December
31, 1994 the carrying values of these investments was $14.9 million and
$7.2 million in PBG and DBF, respectively.
In January 1994, the Company acquired a 49% interest in Protocall Ventures,
Inc. ("Protocall") for $3.8 million. Protocall owns minority interests in
licenses in Portugal, Spain, Germany & Romania. In the event Protocall is
not granted permanent licenses for certain temporary licenses (not included
above) it holds, a portion of the purchase price, currently held in escrow,
will be returned to the Company. The excess of the purchase price over the
fair value of the net assets of Protocall at the date of acquisition of
$2.3 million has been recorded as goodwill and is being amortized over 20
years. As of December 31, 1994 the carrying value of this investment was
$3.2 million. As of December 31, 1993, the Company had placed $3 million in
escrow pending completion of the transaction, which amount is included in
other assets. The Company is recording its investment in Protocall on the
equity basis.
Company is recording 100% of Protocall's losses as it funds 100% of PVL's
losses, primarily, through loans to Protocall.
The Company acquired, in August 1993, a 25% interest in Cumulous
Communications Company ("Cumulous") for aggregate consideration of $1.5
million. Cumulus is a provider of SMR services in the San Joaquin Valley of
California. The Company's investment exceeds its share of the underlying
net assets of Cumulous by approximately $940,000 which amount is being
amortized over 20 years. The carrying value of this investment as of
December 31, 1994 and 1993 was $1.3 million and $1.4 million, respectively.
Summarized combined financial information for affiliated companies
accounted for under the equity method is shown below on a 100 percent basis
(in thousands).
Results of Operations for the year ended December 31, 1994:
Gross revenues $ 3,048
Loss from operations and net loss 5,203
Financial position as of December 31, 1994:
Current assets $ 3,564
Non current assets 15,333
Current liabilities 8,642
Non current liabilities 3,695
F - 22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
6. Property, Plant and Equipment (in thousands): 1994 1993
---- ----
Machinery and equipment $ 29,064 $ 19,140
Furniture and fixtures 1,891 1,164
Leasehold improvements 623 358
Construction in progress 719
-------- ---------
32,303 20,662
Less accumulated depreciation
and amortization 7,856 3,127
------ -----
$ 24,446 $ 17,535
====== ======
Depreciation expense was $4,666, $1,914 and $430 in 1994, 1993, and 1992,
respectively.
7. Intangible Assets (in thousands):
1994 1993
---- ----
Excess of cost over fair value
of net assets acquired $ 21,462 $ 16,091
FCC and other private mobile
radio licenses
acquired and related intangibles 27,479 14,518
Other 753 753
------ ------
49,694 31,362
Less accumulated amortization 3,595 1,621
------ ------
$ 46,099 $ 29,741
====== ======
The increase in the excess of cost over fair value of net assets acquired
in 1994 is primarily attributable to the acquisitions of additional
interests in Bogen and GMSI. The increase in FCC and other private mobile
radio licenses is attributable to the cost of licenses acquired in the
United States.
8. Notes Payable:
Notes payable consists of the following (in thousands):
1994 1993
---- ----
$10.0 million line of credit, bank
interest at prime plus 2.5% (a) $ 4,355
$4.5 million line of credit, bank,
interest at prime plus 3% (b) $ 2,564
Line of credit, bank(C) 728 432
Line of credit, bank (d) 558
------ ------
$ 5,641 $ 2,996
===== =====
Prime rate at December 31 8.50% 6.00%
F - 23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
8. Notes Payable: continued
(a) This line of credit (which expires on August 10, 1995) is subject to
available collateral (primarily accounts receivable and inventory).
The assets of a subsidiary, with a book value of $13.8 million at
December 31, 1994, are pledged as collateral for the line, which is
also guaranteed by the Company. As of December 31, 1994 the unutilized
amount available under the line was $269,000.
(b) This line of credit was terminated in February 1994. While in effect
the assets of a subsidiary were pledged as collateral and the Company
had guaranteed the line. It was replaced by the $10.0 million line
discussed above.
(C) The maximum amount available under this line of credit is $1.3 million
including amounts outstanding under the long term portion. Interest
rates vary between 6.5% and 9.5% depending on the length of time the
funds will be used. The assets of a subsidiary, with a book value of
$4.5 million, are pledged as collateral. As of December 31, 1994 the
unutilized amount available under this line of credit was $404,000.
(d) As of December 31, 1994 the line of credit was fully utilized.
Interest on the line is payable at a rate of 6.75%.
9. Long-Term Debt:
<TABLE>
<CAPTION>
1994 1993
---- ----
Long-term debt consists of the following (in thousands):
<S> <C> <C>
Senior secured notes, due September 1995 (a) $24,177
Notes payable, due in various installments
through 1999, interest between 10% and 15% (b) 2,066
Convertible debenture, face value $4.0 million
imputed interest at 10%, due in 2012(c) 755 $ 686
Debenture, interest at 5% due in quarterly payments,
payment of principal due March 31, 1998 1,427 1,453
Notes payable, interest at 7.5% due in quarterly payments
through December 31, 1995, payment of principal
due December 1995 850 850
Notes payable, other, due in various installments
through 1997, bearing interest at rates ranging
between 7.5% and 12% 1,510 1,280
Subordinated notes payable, interest at prime and 9%,
due in installments through 1996 667 985
----- -----
31,452 5,254
Less, current maturities 2,056 1,293
------ -----
$ 29,396 $ 3,961
========= =======
</TABLE>
F - 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
9. Long-Term Debt: continued
(a) In June 1994, the Company issued senior secured notes, due September
1995, in the aggregate principal amount of $25.0 million (the
"Notes"), along with detachable five-year warrants to purchase 300,000
shares of the Company's common stock at an exercise price of $7.875
per share (the "Warrants"). The aggregate net proceeds to the Company
from the issuance and sale of the Notes and Warrants was $24.5
million, of which, $925,000 has been allocated to the Warrants as well
as recorded as a discount on the Notes. The Notes bear interest at the
rate of 14.0% per annum, payable monthly until maturity. The Company
has pledged its shares in, and/or obtained joint and several
guarantees of, certain of the Company's subsidiaries, including
PowerSpectrum Inc., National Band Three Limited, Metro Net Systems
Inc., and Bogen Corporation as collateral. Under the terms of the
Notes, the Company must maintain certain financial ratios, needs
permission of the holder of the Notes to enter certain transactions
and may be required to make prepayments under certain circumstances.
Certain penalties apply in the event the Replacement Notes are
prepaid. The proceeds were used to fund the Company's acquisitions in
Germany (see Note 2). The Notes were originally due in September 1995
but were refinanced (See Note 18) in March 1995 and are presented
herein and in the accompanying financial statements as long-term debt
based upon the terms specified in the refinancing agreements.
(b) These notes were assumed in connection with the purchase of certain
SMR licenses in various cities in the US. Certain analog SMR equipment
as well as revenues generated by the systems is pledged as collateral
for the notes.
(c) This note is convertible into a 38% ownership interest of PST (See
Note 2). PST may demand conversion at any time after July 2, 1996,
provided that PSI has fulfilled its financial obligations to PST.
Minimum annual principal repayments of long-term debt during the next
five years and thereafter, are as follows:
Year In Thousands
---- ------------
1995 $ 2,056
1996 12,849
1997 12,123
1998 2,619
1999 1,050
Thereafter 755
-----
Total $ 31,452
======
F - 25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
9. Long-Term Debt: continued
Extinguishment of Certain Debt
In July 1993, the Company issued a $12.0 million Senior Secured Note, (the
"Note") in connection with the acquisition of National Band Three Ltd. The
Note was due in July 1994 with an interest rate of prime plus 1%. In
connection with the issuance of the Note the Company also issued warrants
to acquire 1.9 million shares of the Company's common stock at $6.00 per
share to the purchaser of the Note. The value of the warrants was recorded
as a discount on the Note and was to be amortized over the life of the
Note.
In December 1993, in separate but related transactions, the Note was
retired and the purchaser of the Note exercised its rights to purchase 2.1
million common shares under warrants issued in connection with the Note and
other warrants it held. In order to induce the purchaser to exercise its
rights in advance of the warrant expiration date, the Company reduced the
exercise price to an aggregate of $8.9 million which represents the present
value of the exercise prices of the various options if exercised just prior
to expiration. At closing, the Company paid $3.2 million of principal,
which, combined with the exercise price, repaid the Note in full. In
connection with the early extinguishment of debt the Company recorded a
pre-tax extraordinary loss of $2.3 million resulting primarily from the
unamortized discount on the Note as of the date of repayment.
The Company's debt agreements restrict dividend payments by the Company and
certain of its subsidiaries.
10. Pension and Severance Plans:
The Company and its subsidiaries provide defined contribution and other
severance plans for certain employees. One of its domestic subsidiaries
participates in multi-employer pension plans which cover all union
employees. The Company also maintains a 401(K) plan covering substantially
all U.S. based employees. Expenses under these plans totaled $319,000,
$356,000 and $237,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
11. Income Taxes:
Effective January 1, 1993, the Company adopted FAS No. 109, "Accounting for
Income Taxes". FAS No. 109 requires recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The impact of adoption of this
standard was immaterial.
F - 26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
11. Income Taxes: continued
Taxes on income in 1994 consists of taxes paid by a foreign subsidiary. The
amount presented includes $573,000 related to the 1994 utilization of
pre-acquisition net operating losses, which had a full valuation allowance
established at the time of acquisition by the Company and has been recorded
in 1994 as a reduction to goodwill.
The Company has domestic net operating loss (NOL) carryforwards for tax
purposes of approximately $36.2 million and $16.5 million in 1994 and 1993,
respectively, which expire between the years 2001 through 2008.
Additionally, the Company has tax deferred balance sheet reserves of
approximately $4.0 million in 1994. An effective tax rate reconciliation
has not been provided as the Company had no domestic tax provision for the
years ended December 31, 1994, 1993 and 1992.
The Company has domestic deferred tax assets of $ 14.0 million and $5.9
million in 1994 and 1993, respectively, related to the NOLs. In accordance
with FAS No. 109, the Company has established a valuation allowance
offsetting the tax benefit of the NOL carryforwards as it is unlikely that
the benefit will be realized. The carryforwards are subject to certain
limitations on their utilization and limitations as a result of various
changes in control which have occurred.
The Company has not provided deferred U.S. income taxes on the
undistributed earnings of foreign subsidiaries which the Company intends to
permanently reinvest in their operations. The Company has foreign NOL
carryforwards for tax purposes of approximately $3.4 million in 1994. The
deferred tax asset related to those NOL carryforwards is approximately $1.5
million. The Company has established a valuation allowance offsetting the
tax benefit of the NOL carryforwards as it is unlikely that the benefit
will be realized.
12. Commitments and Contingent Liabilities:
Leases
The Company leases facilities under noncancellable operating leases, some
of which include escalation clauses. Future minimum rental commitments
under noncancellable operating leases are as follows:
Year In Thousands
---- ------------
1995 $ 6,552
1996 5,060
1997 4,795
1998 4,396
1999 1,699
Thereafter 1,581
-------
$ 24,083
=======
F - 27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
12. Commitments and Contingent Liabilities: continued
Rent expense was $6.4 million, $2.1 million and $0.8 million in 1994, 1993
and 1992, respectively.
Forward Transactions
In order to protect itself from losses which may arise from differences
between obligations to Rafael and other expected expenditures linked to a
foreign Consumer Price Index and dollar denominated assets, PST has entered
into a series of forward (hedging) transactions with a bank. As of December
31, 1994, PST had a single contract outstanding in the amount of $600,000.
In addition, the Company uses forward exchange contracts to hedge against
certain firm commitments. As of December 31, 1994, other contracts with a
value of $1.3 million were outstanding.
Government Participation in Research and Development Project
The Chief Scientist of the Israeli Ministry of Industry and Commerce (Chief
Scientist) has agreed to fund certain eligible expenditures related to the
development of the digital wireless communication system by PST. Funding
received from the Chief Scientist is repayable without interest only from
revenues generated by the product being developed. Through December 31,
1994 such participation amounted to $6.8 million and is reported in the
statement of operations as a reduction of research and development
expenses.
Manufacturing Commitment
The Company has contracted with Mitsubishi Consumer Electronics of America
to manufacture Commercial Subscriber Units on behalf of the Company. An
initial order has been placed with a value of approximately $2.5 million.
Guarantees of Debt of Equity Investees
The Company has guaranteed the repayment of certain debt of PBG, due in
1999, to the former owner of PBG, in the amount of DM 3.5 million plus
interest (approximately $2.5 million). A letter of credit has been issued
as collateral for this obligation.
The Company has guaranteed an obligation of approximately $3.8 million of
DBF pursuant to an equipment leasing arrangement. The other shareholder of
DBF guarantees an equal amount under this arrangement.
F - 28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
12. Commitments and Contingent Liabilities: continued
FCC Waiver
The Company has applied for and received a waiver by the FCC to construct
and activate certain systems it has acquired. In the event the Company
fails to construct or activate such systems in accordance with the dates
set forth in the waiver, the Company could lose the waiver and lose all of
the frequencies covered by such waiver to the extent the systems have not
been constructed or activated.
Litigation
In June 1994 the Company filed a lawsuit against Harris Adacom Corporation
B.V. ("Harris"), a Dutch corporation, to enforce its rights under a loan
agreement between the parties. The Company is seeking repayment of a $3.5
million loan made to Harris in January 1994 in connection with a potential
purchase transaction between the Company and Adacom Technologies Ltd.
("ATL"), an affiliate of Harris and an Israeli publicly traded company. The
loan was collateralized by stock owned by Harris in ATL. At the time of the
loan, the collateral had a market value in excess of $10 million and the
total market value of ATL was in excess of $100 million. The purchase
transaction was not consummated. In May 1994 the market value of ATL
dropped dramatically and ATL became insolvent, thereby reducing the value
of the collateral to practically zero. At or about the same time, creditors
placed Harris into bankruptcy proceedings in the Netherlands. The Company
subsequently received limited information relating to the recoverability of
the loan, and Management does not expect to recover the loan. The Company
is aggressively pursuing its rights under the loan in Dutch bankruptcy
court and is awaiting additional information on the assets and creditors of
Harris. Based upon the information currently available, it cannot be
determined the amount, if any, that will ultimately be recovered;
therefore, the Company has established a reserve against the full amount of
the loan. Accordingly, the 1994 statement of operations includes, in other
expenses, a charge of $3.5 million to establish this reserve.
In response to the Company's lawsuit, Harris and its subsidiaries filed a
lawsuit against the Company in the courts of the State of Israel,
requesting a declaratory judgment that the Company entered into a binding
agreement for the purchase by the Company of a significant interest in
certain wireless communication business assets owned by ATL and
subsequently breached such agreement. The plaintiffs in such action have
stated an intention to file a separate claim for monetary damages and have
estimated their losses to be several million dollars. The Company believes
none of plaintiffs' claims in such action have any merit and are only an
attempt to delay efforts to collect Harris's debt to the Company. The
Company intends to defend such action vigorously.
The Company is subject to various legal proceedings arising in the ordinary
course of business. In the opinion of management, all such matters are
without merit or are of such kind, or involve such amounts, as would not
have a significant adverse effect on the financial position results of
operations or cash flows of the Company, if disposed of unfavorably.
F - 29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
13. Redeemable Preferred Stock:
In December 1993 the Company issued through a private placement, 444,445
shares of Series H Cumulative Redeemable Convertible Preferred Stock at a
price of $90 per share. The shares bear a dividend for five years, at a
rate of five percent per year, payable quarterly. The shares are
redeemable, at stated value, on October 31, 2000 only if the Company's
common stock has not closed at an average price of $18 for any 20
consecutive trading days after the third anniversary of the date of
issuance of the preferred shares. In the event that the shares are
redeemed, the Company may elect to pay the redemption price in shares of
its common stock, provided that the common shares will have an aggregate
market value equal to 150% of the redemption value of the Series H shares
being redeemed. The shares are convertible into common shares at any time
at a ratio (adjusted for splits) of ten common shares for each preferred
share. The holders of the Series H shares are entitled to vote on all
matters voted on by common shareholders as if the Series H shares were
converted to common stock. The Company has paid dividends of $2.0 million
and $0.1 million, respectively, for the years ended December 31, 1994 and
1993.
14. Shareholders' Equity:
Preferred Stock
At December 31, 1994, there were 15 shares of Series E Preferred Stock and
20 shares of Series I Preferred Stock issued and outstanding. At December
31, 1993, there were 345,000 of Series A Preferred Stock and 30 shares of
Series E Preferred Stock issued and outstanding. In February 1994 all of
the Series A Preferred shares then outstanding were converted into an equal
number of common shares.
In December 1994, the Company executed two separate agreements to issue a
total of 40 shares of Series I Convertible Preferred Stock at a price of
$500,000 per share or total consideration of $20.0 million. The Soros Group
(currently holders of 100% of the Company's Series H Cumulative Convertible
Preferred Stock) has agreed to purchase 20 shares, and the Company's
partner in a joint venture attempting to secure a license to provide
wireless services in Korea has agreed to purchase 20 shares. The shares
bear a dividend, payable quarterly in either cash or common shares, for
five years at a rate of 7% per annum and carry a conversion premium. The
Company has the option to retire the shares, in either cash or common
shares if the price of the Company's common stock exceeds 150% of the
conversion price for any 20 days within a period of 30 consecutive days.
The purchase by the Soros Group was consummated in December 1994, in the
amount of $10.0 million, while the closing of the other transaction is
subject to certain regulatory approvals which are yet to be received.
The Series E Preferred Shares were issued to collateralize principal
payments required by certain subordinated debt of which $150,000 was
outstanding as of December 31, 1994 and each share is convertible into
common shares with a market value of $10,000 based upon market price prior
to conversion. Holders of Series E shares are entitled to vote only on
matters affecting the Company's preferred stock.
F - 30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
14. Shareholder's Equity: continued
During 1993, 484,000 Series A and 42 Series G shares were converted into
1,323,000 common shares. During 1992 all of Series B and C, 50,000 Series A
and twenty-one Series G shares were converted into 3,270,000 common shares.
The Company's outstanding preferred shares earn cumulative annual dividends
as follows: Series A (converted into common shares in 1994), $0.25 per
share; Series B (converted into common shares in 1992), $0.50 per share;
Series C (converted into common shares in 1992), $1.00 per share; Series G
(converted into common shares in 1993 and 1992), $2,500 per share. The
Series D preferred shares reacquired by the Company in 1992 were canceled
in 1993.
Common Stock
In February 1994 the Company sold 2.5 million shares of common stock to
Vanguard Cellular Systems Inc. ("Vanguard") for a total of $30 million
(before expenses of $750,000). See below for a description of the options
issued to Vanguard. (Also see Note 16.)
In April 1993 the Company completed a private placement, commenced in
December 1992, of approximately 1 million units consisting of three shares
of common stock and one two year warrant to purchase an additional share of
common stock at an exercise price of $4.98. Net proceeds from the offering
amounted to approximately $9.5 million, of which $5.4 million was received
prior to December 31, 1992. In addition, the Company issued to the selling
agent a two year warrant to acquire 180,723 shares of common stock at an
exercise price of $3.32.
In January 1993, the Company completed a private placement of 408,640
units, each consisting of nine common shares and three separate warrants to
purchase one common share at an exercise price of $4.8125, expiring 18
months, 30 months and 42 months from issuance, respectively. Each unit was
sold in consideration for $37.6876. Net proceeds to the Company amounted to
approximately $14.4 million. 424,000 shares issued to PST in exchange for
the PSI shares then owned In order to finance a portion of the acquisition
of National Band Three, the Company requested in June 1993 that warrant and
option holders immediately exercise their right to purchase the Company's
common stock. To induce the warrant and option holders to exercise early,
the Company offered discounts from the original exercise price. The amount
of the discount varied depending upon the expiration date of the warrant or
option.
The Company issued approximately 9,200,000 shares in connection with the
exercise of options and warrants under this program. Net proceeds were
approximately $23 million. Included in the 5.1 million common shares issued
in connection with the PSI Merger (Note 2) were approximately
F - 31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
14. Shareholder's Equity; continued
by PST. The number of shares issued was determined using the same ratio as
for other PSI shareholders. The Company has recorded the value of its
ultimate ownership interest in these shares as treasury stock.
In 1993 the Company canceled the 1.2 million shares that were held in
treasury at December 31, 1992.
Warrants and Options
A summary of the warrants and options activity during the years ended
December 31, 1994, 1993 and 1992 is as follows (shares in thousands):
<TABLE>
<CAPTION>
1994
---- Exercise
Outstanding Outstanding Price
Name January 1 Granted Exercised Canceled December 31 Per Share
---- ---------- ------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Employee / Director Plan 1,564 1,174 (240) (33) 2,465 $1.00-$16.00
Loan warrants and options 130 300 (49) 381 $1.25-$ 7.88
PSI Merger 1,056 (83) 973 $0.61-$ 5.06
Vanguard Options 10,000 10,000 $15.00-$18.00
Private Placements 1,026 (959) 67 $3.10-$ 4.98
Other warrants and options 1,208 220 (63) 1,365 $1.00-$ 6.00
----- ------ ------- ---- -------
Total Outstanding 4,984 11,694 (1,394) (33) 15,251
===== ====== ======= ==== =======
</TABLE>
<TABLE>
<CAPTION>
1993
---- Exercised
Outstanding Exercised Exercised Outstanding Price
Name January 1 Granted Full Price Discount December 31 Per Share
---- --------- ------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Employee / Director Plan 1,223 737 (136) (260) 1,564 $1.00-$8.50
Loan warrants and options 710 1,900 (330) (2,050) 130 $1.25-$6.00
Preferred stocks 915 (60) (855) $1.00-$1.65
PSI merger 2,056 (1,000) 1,056 $0.61-$5.06
Private Placements 6,730 1,938 (323) (7,311) 1,026 $3.10-$4.98
Debt Conversion 305 (198) (107) $1.00-$2.50
Other warrants and options 1,718 213 (148) (565) 1,208 $0.18-$6.00
------ ------ ----- ------ ------
Total Outstanding 11,601 6,844 (2,195) (11,148) 4,984
====== ====== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
1992
---- Exercise
Outstanding Outstanding Price
Name January 1 Granted Exercised Canceled December 31 Per Share
---- --------------- ------- --------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Employee/Director plan 1,025 320 (63) (59) 1,223 $1.00-$2.25
Loan warrants and options 620 140 (50) 710 $1.25-$2.00
Preferred stocks 1,155 (240) 915 $1.00-$1.65
Private Placements 6,766 (36) 6,730 $3.10-$4.98
Debt Conversion 465 (160) 305 $1.00-$2.50
Other warrants and options 561 1,190 (15) (18) 1,718 $0.18-$4.25
----- ----- --- -- ------
Total Outstanding 3,361 8,881 (564) (77) 11,601
===== ===== === == ======
</TABLE>
F - 32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
14. Shareholder's Equity: continued
All options are vested upon issuance except those issued pursuant to the
Employee / Director plan which are described below. The presentation of
1993 activity includes the cancellation of 100,000 loan warrants and
options, 8,000 private placement options and 10,000 other warrants and
options.
Employee/Director Stock Option Plan
The Company has a non-qualified stock option plan (the "Plan") which
permits the granting to employees and directors of options to purchase up
to 2.75 million shares at not less than fair market value on the date of
grant. The options generally vest over three years and expire 10 years from
the date granted. Of the options granted pursuant to this plan, options to
purchase 1.2 million shares and 0.8 million shares, respectively, were
vested as of December 31, 1994 and 1993.
Vanguard Options
Pursuant to the stock purchase agreement, Vanguard was also granted the
right to invest up to an additional $167.0 million in a series of related
non-transferable options ("Vanguard Options") to purchase up to 10 million
additional shares of common stock. The Vanguard Options provide that in the
event any of the Vanguard Options expire without exercise, the remaining
Vanguard Options terminate immediately. Vanguard has agreed, for a period
of three years after the initial purchase, not to acquire securities of the
Company if such acquisition would result in Vanguard holding in excess of
20.1% of the outstanding voting securities of the Company on a fully
diluted basis, provided, however, that Vanguard may acquire not more than
an additional 5% if all unexpired Vanguard Options are out-of-the-money.
Other Warrants and Options
In exchange for services rendered, the Company granted options to purchase
213,000 and 1.2 million shares of common stock during 1993 and 1992,
respectively. The exercise prices on these option range between $1.00 and
$6.00 per share and the options expire five years from date of grant. In
1992, the Company granted warrants to acquire 464,800 shares of common
stock at exercise prices varying from $1.50 to $1.625 in connection with a
conversion of a loan from a related party and also granted warrants and
options to acquire 1,190,000 shares of common stock at exercise prices
varying between $1.50 to $4.25 per share in exchange for services.
15. Fair Value of Financial Instruments
The recorded amount of cash, cash equivalents, temporary investments and
notes payable banks and other, approximates fair value due to the short
term maturities of these assets and liabilities.
F - 33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
15. Fair Value of Financial Instruments continued
Investments in affiliates are accounted for by the equity method and
pertain to several equity investments in privately held companies for which
fair values are not readily available, but are believed to be at least
equal to carrying amounts.
The fair values (estimated by discounting the cash flows based on currently
available market information) of the Company's long term debt (including
current portion) were $29,948 and $4,729 at December 31, 1994 and 1993,
respectively. The contract prices of the Company's forward contracts
approximate fair market value as of December 31, 1994.
16. Certain Related Party Transactions:
In connection with the issuance of common shares and options to Vanguard in
February 1994, the Company entered into a five-year management consulting
agreement with Vanguard, pursuant to which Vanguard will provide
operational and marketing support to the Company for an aggregate of 1.5
million shares of common stock. Such management consulting agreement will
terminate upon Vanguard's failure to exercise any of the Vanguard Options.
For the period ended December 31, 1994, Vanguard earned approximately
258,000 shares pursuant to this agreement, which has been recorded at
approximately $2.5 million and is included in marketing expenses.
In 1994, the Company incurred expenses of $300,000 pursuant to its
consulting agreement with the Soros Group, who are the holders of the
Company's Series H redeemable Preferred Shares and 20 shares of the Series
I Preferred Shares.
PST has entered into a subcontractor agreement with Rafael under which
Rafael will be paid approximately $14 million in connection with the
development of the digital wireless communications system to be deployed by
the Company in the US. Research and development expense for the years ended
December 31, 1994, 1993 and 1992 includes approximately $11.1 million, $7.0
million and $708,000, respectively, for research performed by Rafael under
this agreement. PST has also entered into agreements with Rafael under
which Rafael will manufacture the infrastructure equipment to be used by
PSI in its US network. Through December 31, 1994 the Company had placed
firm orders for equipment and engineering totaling $12.8 million and had
made an advance payment (recorded in other current assets) of $2.1 million
to Rafael under these orders during the year ended December 31, 1994.
F - 34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
17. Segment Information:
The Company's operations have been classified into three business segments:
wireless communications, communications products and other. The wireless
communications group is engaged in the development of a digital wireless
communication system, preparation for the commercial rollout of its
wireless communications network in the United States, principally through
its PSI and PST subsidiaries, provision of mobile radio services in the
United States (PSI and MetroNet), the United Kingdom (NBTL), Germany (PBG
and DBF) and the development of certain mobile data applications (GMSI).
The development of a digital wireless communication system is primarily
taking place in Israel. GMSI is located in Canada and markets its products
in Canada, the United States and the United Kingdom. The activities in
Germany are conducted through equity investees.
The communications products group is engaged in the development,
manufacturing and marketing of telephone and facsimile peripheral products
and commercial audio and paging equipment in the United States (Bogen) and
Munich Germany (Speech Design). (See Note 18) The other segment primarily
consists of subsidiaries engaged in the manufacturing and marketing of
customized transformers and power supplies and other diversified
operations. The Company disposed of its transformer and power supply
operations in 1993.
Sales between geographic areas and industry segments are not material.
Information about the Company's continuing segments in 1994, 1993 and 1992
follows (in thousands):
1994 1993 1992
---- ---- ----
Revenues:
Communications products $46,075 $30,060 $19,501
Wireless communications 25,668 12,338 1,362
Other 1,248 6,573 7,683
------- ------- -------
$72,991 $48,971 $28,546
======= ======= =======
Operating income (loss):
Communications products $ 45 $296 $(62)
Wireless communications (37,225) (45,584) (1,182)
Other (1,348) (1,542) (760)
Interest and other
income (expense), net 105 (1,403) 415
Corporate ( 3,982) ( 2,208) (792)
------- ------- ------
Loss from continuing operations $(42,405) $(50,441) $(2,381)
======= ======= ======
F - 35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
17. Segment Information: continued
1994 1993 1992
---- ---- ----
Identifiable assets:
Communications products $35,663 $ 28,642 $24,180
Wireless communications 95,222 52,824 2,873
Other 936 509 5,755
Corporate and other assets 48,023 53,669 6,558
-------- -------- --------
$179,844 $135,644 $39,366
======== ======== ========
Depreciation and amortization:
Communications products $1,190 $ 956 $ 492
Wireless communications 6,032 1,792 5
Other 24 127 305
Corporate 192 35 12
-------- -------- --------
$ 7,438 $ 2,910 $ 814
======== ======== ========
Capital expenditures - property and equipment:
Communications products $ 939 $ 1,042 $ 412
Wireless communications 9,386 17,135 169
Other 66 41 327
Corporate 67 8 18
-------- -------- --------
$ 10,458 $18,226 $ 926
======== ======== ========
Capital expenditures - intangibles:
Communications products $ 3,548 $ 3,840 $ 178
Wireless communications 14,785 15,766 944
-------- -------- ---------
$ 18,333 $ 19,606 $1,122
======== ======== ========
Geographic Segments:
Revenues:
United States $ 41,591 $30,616 $23,577
Foreign 31,400 18,355 4,969
-------- -------- --------
$ 72,991 $48,971 $28,546
======== ======== ========
Operating income (loss):
United States $(22,624) $(37,860) $(1,114)
Foreign (15,904) (8,970) (890)
Interest and other
income (expense), net 105 (1,403) 415
Corporate ( 3,982) (2,208) (792)
-------- -------- --------
Loss from continuing operations $(42,405) $(50,441) $ (2,381)
======== ======== ========
F - 36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
17. Segment Information: continued
1994 1993 1992
---- ---- ----
Identifiable assets:
United States $51,511 $38,765 $27,481
Foreign 80,310 43,210 5,327
Corporate and other 48,023 53,669 6,558
-------- -------- -------
$179,844 $135,644 $39,366
======== ======== =======
18. Subsequent Events:
In January 1995, the Company signed an agreement in principle to acquire
900 MHZ radio channels in seven major US markets from Nextel Communications
in exchange for the assets and customers obtained by the Company in its
merger with MetroNet Systems, Inc. Completion of the transaction is subject
to regulatory approvals. The exchange will be accounted for as a
non-monetary transaction and no gain or loss will be recognized thereon.
In March 1995, the Company reached agreement to transfer its interest in
Speech Design GmbH and Bogen Communications, Inc. to European Gateway
Acquisition Corporation ("EGAC") in exchange for $10 million in cash and
approximately 51%-55% of EGAC's common shares. Geotek will also be eligible
to receive a performance payment of up to $17 million (assuming it retains
a 55% interest in EGAC) based on the future earnings of both companies
through July 1997. The transaction is subject to, among other things,
execution of a definitive agreement, regulatory approvals, if any, and
European Gateway shareholder approval.
In March 1995, the Company refinanced the $25.0 million Senior Secured
Notes with $36.0 million of newly issued Senior Secured Notes (the
"Replacement Notes"). At closing, the Company received net proceeds of
$11.0 million and issued warrants to the purchaser to acquire 700,000 of
the Company's common shares at $8.125 per share. The Replacement Notes are
payable in three equal installments fifteen: twenty-four and thirty-six
months after the closing. Interest at 14.75% is payable quarterly through
the term of the Notes. The Notes may be converted into shares of the
Company's common stock beginning six months after the closing and ending 18
months after closing, subject to daily limits and certain other
restrictions, at 87.5% of the average trading price of the Company's common
stock on the respective conversion dates. Substantially all of the
Company's assets not previously pledged have been pledged to collateralize
this debt. Under terms of the Replacement Notes, the Company must maintain
certain financial ratios, needs permission of the holder of the Notes to
enter certain transactions and may be required to make prepayments under
certain circumstances. Certain penalties apply in the event the Replacement
Notes are prepaid.
F - 37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
18. Subsequent Events: continued
In March 1995, the Company and Hughes Network Systems ("HNS"), a unit of GM
Hughes Electronics, announced that they are forming a strategic partnership
to develop a series of subscriber terminals and equipment based on the
Company's proprietary technology. Geotek has placed an initial order of
$1.6 million for units to be delivered beginning in the third quarter of
1995. Under the terms of the agreement, HNS and the Company will share
equally the cost of developing the portable subscriber unit which is
expected to cost $15.0 million.
19. Supplemental Guarantor Financial Information:
In July and August 1995, the Company issued, in a private offering, $227.7
million aggregate principal amount at maturity of 15% Senior Secured
Discount Notes due July 15, 2005 ("the Notes"). Gross proceeds of the Notes
was approximately $110.0 million. The Notes were issued with 6,831,000
detachable warrants ('the Warrants"). Each Warrant entitles the holder to
purchase one share of Company common stock at an exercise price of $9.90
per share. The Warrants have been valued at approximately $32.1 million and
have been recorded as a discount on the Notes. The Notes accrue interest
until maturity at a rate of 15% per annum. Interest on the Notes will be
payable semi-annually, in cash, on July 15 and January 15, commencing
January 15, 2001.
In connection with the Note offering, PowerSpectrum, Inc. and its U.S.
Domestic Subsidiaries as well as MetroNet Systems, Inc. (collectively
referred to as the "Guarantor Subsidiaries") fully and unconditionally
guarantee such Notes jointly and severally. The Guarantor Subsidiaries are
wholly owned by the Company. In addition, the Notes are collateralized by a
pledge of the capital stock owned by the Company in National Band Three
Ltd., PowerSpectrum, Inc. and Subsidiaries, MetroNet Systems, Inc., Geotek
Communications GmbH and EGAC, the entity through which, effective August
1995, the Company owns its interests in Bogen Communications, Inc. and
Speech Design GmbH.
Within 60 days of the issuance of the Notes and Warrants, the Company filed
registration statements to commence the process to register through an
exchange offer, the Notes and Warrants under the Securities Act of 1933, as
amended. It is expected that such registration statements will be effective
within 120 days of the Note offering. The Supplemental Combining Financial
Information of Geotek Communications, Inc. and Subsidiaries has been
presented on pages F-39 through F-47 in order to present the Guarantor
Subsidiaries pursuant to the Guarantor relationship. The Supplemental
Combining Financial Information is presented as management does not believe
that separate financial statements of the Guarantor Subsidiaries would be
meaningful. This supplemental financial information should be read in
conjunction with the Consolidated Financial Statements. The Notes include
covenants that put restrictions on the Company primarily related to making
certain investments and incurring additional debt.
F - 38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
19. Supplemental Guarantor Financial Information: continued
Notes to Supplemental Guarantor Financial Information: continued
Basis of Presentation - To conform with the terms and conditions of
the Notes, the combining financial statements of the Guarantor
Subsidiaries are presented on the following basis:
(1) Geotek Communications, Inc. -Investments in consolidated
(Parent Company) subsidiaries are accounted for by the
Parent Company on the cost basis for
purposes of the supplemental combining
presentation. Operating results of
Subsidiaries are therefore not reflected
in the Parents investment accounts or
earnings.
(2) PSI (Guarantor) -For purposes of the supplemental
combining financial statement
information, PowerSpectrum, Inc. ("PSI")
includes all U.S. wireless subsidiaries
of PSI combined with MetroNet Systems,
Inc. and ANSA Communications, Inc., both
direct wholly owned subsidiaries of the
Parent Company. For purposes of the
supplemental combining financial
statement information, PSI does not
contain the consolidated financial
statements of PST, a subsidiary of PSI,
since PST is not a Guarantor Subsidiary.
Such statements of PST are included with
Non-Guarantor Subsidiaries. The assets
and liabilities of PST are not material
in relation to PSI.
(3) Non-Guarantor Subsidiaries -This includes the Company's
subsidiaries that are not Guarantor
Subsidiaries.
(4) Reclassification and - Certain reclassifications were made to
Eliminations conform all of the financial information
to the financial presentation of the
Company's consolidated financial
statements. The principal elimination
entries eliminate investments in
subsidiaries and intercompany balances
and transactions.
F - 39
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING BALANCE SHEET
As of December 31, 1994
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
--------- --- ------------- ---------- --------------
ASSETS (1) (2) (3) (4)
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 21,222 $ 418 $ 5,891 $ 27,531
Temporary investments 24,515 24,515
Accounts receivables trade, net 79 11,714 $ (422) 11,371
Inventories 116 8,711 (162) 8,667
Prepaid expenses and other assets 939 174 6,387 (32) 7,468
--------- --------- --------- --------- ---------
Total current assets 46,676 787 32,703 (616) 79,552
Inter-company account 64,313 18,359 (82,672)
Investments in affiliates 4,481 22,101 26,582
Property, plant and equipment, net 100 2,245 22,100 24,446
Intangible assets, net 4,885 18,616 22,589 9 46,099
Other assets 412 2,027 3,871 (3,145) 3,165
Investments in Subsidiaries, at cost 73,275 (73,275)
--------- --------- --------- --------- ---------
$ 194,142 $ 42,034 $ 103,364 $(159,699) $ 179,844
========= ========= ========= ========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $496 $414 $ 13,902 $(2,322) $12,490
Accrued expenses and other 436 1,271 10,606 12,315
Notes payable, banks and other 5,641 5,641
Current maturities, long-term debt 2,056 2,056
-------- ------- ------- -------- ---------
Total current liabilities 2,988 1,685 30,149 (2,322) 32,502
-------- ------- ------- -------- ---------
Inter-company account 53,830 28,842 (82,672)
Long-term debt 23,304 2,838 30,005 (26,751) 29,396
Other non current liabilities 49 802 (653) 198
Minority interest 406 (14) 392
Redeemable preferred stock 40,000 40,000
Shareholders' equity:
Preferred stocks, $.01 par value
Common stock, $.01 par value 509 509
Capital in excess of par value 153,414 38,592 41,736 (47,094) 186,651
Foreign currency translation adjustment 767 767
Accumulated deficit (25,142) (54,911) (28,923) (207) (109,185)
Treasury stock, at cost (1,386) (1,386)
-------- ------- ------- -------- ---------
127,395 (16,319) 13,580 (47,301) 77,356
-------- ------- ------- --------- --------
$194,142 $42,034 $103,364 $(159,699) $179,844
======== ======= ======== ========= ========
</TABLE>
F - 40
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING BALANCE SHEET
As of December 31. 1993
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
-------- --- ------------- ---------- --------------
ASSETS (1) (2) (3) (4)
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 42,861 $ 4,637 $ 4,188 $ 51,686
Temporary investments 4,429 3,444 7,873
Accounts receivables trade, net 103 10,111 10,214
Inventories 147 6,345 $ (24) 6,468
Prepaid expenses and other assets 419 176 3,215 3,810
-------- -------- -------- -------- --------
Total current assets 47,709 8,507 23,859 (24) 80,051
Inter-company account 29,918 8,510 (48) (38,380)
Investments in affiliates 1,443 1,443
Property, plant and equipment, net 54 178 17,304 17,535
Intangible assets, net 4,090 6,366 19,285 29,741
Other assets 2,775 314 4,232 (447) 6,874
Investments in Subsidiaries, at cost 42,465 (42,465)
-------- -------- -------- -------- --------
$ 128,454 $ 23,875 $ 64,632 $ (81,316) $ 135,644
======== ======== ======== ======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable - trade 349 403 7,688 8,441
Accrued expenses and other 1,092 432 7,219 8,744
Notes payable, banks and other 2,996 2,996
Current maturities, long-term debt 425 868 1,293
-------- --------- ------ --------- ---------
Total current liabilities 1,866 835 18,771 21,474
-------- --------- ------- --------- ---------
Inter-company account 23,425 14,955 (38,380)
Long-term debt 811 440 4,684 (1,974) 3,961
Other non current liabilities 608 18 118 744
Minority interest 185 36 221
Redeemable preferred stock 40,000 40,000
Shareholders' equity:
Preferred stocks, $.01 par value 3 3
Common stock, $.01 par value 460 460
Capital in excess of par value 101,884 38,591 37,570 (40,892) 137,151
Foreign currency translation adjustment (204) (204)
Accumulated deficit (15,977) (39,434) (11,298) (70) (66,780)
Treasury stock, at cost (1,386) (1,386)
-------- --------- --------- ------- --------
84,984 (843) 26,068 (40,962) 69,244
-------- --------- -------- ------- --------
$ 128,454 $ 23,875 $ 64,632 $ (81,316) $ 135,644
======== ========= ======== ======== ========
</TABLE>
F - 41
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
-------- --- ------------- ---------- --------------
Revenues: (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Net product sales $350 $ 48,968 $(948) $48,370
Service income 2,115 22,506 24,621
------- ------- ---- -------
Total revenues 2,465 71,474 (948) 72,991
------- ------- ---- -------
Costs and expenses:
Cost of goods sold 208 31,777 (811) 31,174
Cost of services 1,358 15,220 16,578
Research and development $256 5,941 13,280 19,477
Acquisition of minority interest of a
subsidiary assigned to a research
and development project
Marketing 5,983 12,308 18,291
General and administrative 4,551 4,294 10,998 7 19,850
Interest expense 2,534 64 2,097 (1,595) 3,101
Interest and other income (3,638) (617) (546) 1,595 (3,206)
Amortization of intangibles 594 711 962 505 2,772
Equity in losses of investees 1,159 2,409 (512) 3,056
Other expenses (income) 3,524 (52) 3,472
------ ------- ------- ---- -------
Total costs and expenses 8,980 17,942 88,453 (811) 114,565
------ ------- ------- ---- -------
Loss from operations before
taxes on income and minority interest (8,980) (15,477) (16,979) (137) (41,574)
Taxes on income (660) (660)
Minority interest (185) 14 (171)
------ ------- ------- ---- -------
Net loss $(9,165) $(15,477) $(17,625) $(137) $(42,405)
====== ======= ======= ==== =======
</TABLE>
F - 42
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
For the Year ended December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
-------- --- ------------- ---------- --------------
Revenues: (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Net product sales $205 $37.798 $ (502) $37,501
Service income 1,773 9,697 11,470
-------- ------- ------ --------
Total revenues 1,978 47,495 (502) 48,971
-------- ------- ------ --------
Costs and expenses:
Cost of goods sold 501 25,596 (444) 25,653
Cost of services 1,143 6,815 7,958
Research and development 766 9,804 10,570
Acquisition of minority interest of a
subsidiary assigned to a research
and development project 32,430 32,430
Marketing 164 8,749 8,913
General and administrative 2,726 4,433 5,416 (67) 12,508
Interest expense 1,984 (42) 1,332 (683) 2,591
Interest and other income (968) (373) (610) 763 (1,188)
Amortization of intangibles 210 118 591 919
Equity in losses of investees 34 34
Other expenses (income) 1,419 (940) 479
------- -------- ------- ------ --------
Total costs and expenses 5,405 39,140 56,753 (431) 100,867
------- -------- ------- ------ --------
Loss from continuing operations before
taxes on income and minority interest (5,405) (37,162) (9,258) (71) (51,896)
Taxes on income
Minority interest 2,215 (724) (36) 1,455
------- -------- ------- ------ --------
Loss from continuing operations (3,190) (37,886) (9,294) (71) (50,441)
Discontinued operations:
Gain on disposal 323 323
------- -------- ------- ------ --------
Loss before extraordinary item and
cumulative effect of accounting change (2,867) (37,886) (9,294) (71) (50,118)
Extraordinary item - loss from early
extinguishment of debt (2,340) (2,340)
Cumulative effect of change in fiscal
year of subsidiary (1,207) (1,207)
------- -------- ------- ------ --------
Net loss $(5,207) $(39,093) $(9,294) $ (71) $(53,665)
======= ======== ======= ====== ========
</TABLE>
F - 43
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
-------- --- ------------- ---------- --------------
Revenues: (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Net product sales $27,466 $(282) $27,184
Service income $1,362 1,362
------- ------- ------- -------
Total revenues 1,362 27,466 (282) 28,546
------- ------ ------- -------
Costs and expenses:
Cost of goods sold 19,740 (282) 19,458
Cost of services 466 466
Research and development 679 1,546 2,225
Marketing 4,276 4,276
General and administrative $802 1,399 2,326 4,527
Interest expense 237 15 1,081 (234) 1,099
Interest and other income (188) (521) 234 (475)
Amortization of intangibles 302 88 390
Other expenses (income) (753) (286) (1,039)
----- ------- ----- ------- -------
Total costs and expenses $400 $2,559 $28,250 $(282) $30,927
----- ------- ------ ------- -------
Loss from continuing operations (400) (1,197) (784) (2,381)
Discontinued operations:
Income from operations 193 193
Gain on disposal 68 68
----- ------- ----- ------- -------
Net loss $(139) $(1,197) $(784) - $(2,120)
===== ======= ===== ======= =======
</TABLE>
F - 44
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassi-
fications Geotek
Geotek Non-Guarantor & Elimin- Comm., Inc.
Comm.Inc. PSI Subsidiaries ations & Subsidiaries
-------- --- ------------- ---------- --------------
Cash Flows From Operating Activities: (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Net loss $(9,165) $(15,477) $(17,625) $(137) $(42,405)
Adjustments to reconcile net loss to
net cash used in operating activities:
Minority interest 185 (14) 171
Depreciation & amortization 615 894 5,418 512 7,438
Post acquisition adjustment for utilization
of acquired net operating loss carryforward 573 573
Amortization of discount on senior secured
note payable 391 391
Equity in losses of investees 1,159 2,409 (512) 3,056
Reserve for impairment of loan 3,500 3,500
Issuance of stock for management consulting
fee 2,517 2,517
Changes in operating assets and liabilities
(net of effect from acquisitions):
Accounts receivable 24 852 876
Inventories 30 (2,033) 137 (1,866)
Prepaid expenses and other assets (553) (51) (4,708) (5,312)
Accounts payable & accrued expenses (509) 850 6,559 6,900
Other 33 53 (2) 84
------- ------ ------ ------ ------
Net cash (used in) provided by
operating activities (4,344) (11,160) (8,571) - (24,077)
------- ------ ------ ------ ------
Cash flows from investing activities:
Acquisition of licenses (12,961) 186 (188) (12,963)
Net increase in temporary investments (20,087) 3,444 (16,642)
Acquisitions of property & equipment (67) (2,250) (8,141) (10,458)
Investment in intangibles (188) 188
Cash invested in acquisition of subsidiaries,
net (1,332) (49,064) 24,554 (25,842)
Loan to Harris Adacom B.V. (3,500) (3,500)
------- ------ ------ ------ ------
Net cash (used in) provided by
investing activities (24,986) (11,767) (57,207) 24,554 (69,405)
------- ------ ------ ------ ------
Cash flows from financing activities:
Net borrowings, (repayments) under
line of credit agreements 2,390 2,390
Proceeds from debt and warrants 2,674 2,674
Repayments of debt (1,053) (454) (1,507)
Proceeds from issuance of preferred stock 10,000 10,000
Proceeds from issuance of senior
secured note & related warrants 25,000 25,000
Proceeds from issuance of stock & warrants
to Vanguard 29,250 29,250
Proceeds from exercise of warrants & options 3,848 3,848
Payment of preferred dividends (2,066) (2,066)
Intercompany financing (59,995) 18,684 65,865 ( 24,554)
Other 33 24 (346) (289)
Net cash provided by (used in) ------- ------ ------ ------ ------
financing activities 7,691 18,708 67,455 ( 24,554) 69,300
------- ------ ------ ------ ------
Effect of exchange rate changes on cash 27 27
Increase (decrease) in cash & equivalents (21,639) (4,219) 1,703 (24,155)
Cash & equivalents, beginning of year 42,861 4,637 4,188 51,686
Cash & equivalents, end of year $21,222 $418 $5,891 - $27,531
======= ===== ====== ====== =======
</TABLE>
F - 45
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Geotek
Geotek Non-Guarantor Reclassifications Comm., Inc.
Comm.Inc. PSI Subsidiaries & Eliminations & Subsidiaries
-------- -------- ------------- ---------------- --------------
(1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss $(5,207) $(39,093) $(9,294) $ (71) $(53,665)
Adjustments to reconcile net
loss to net cash used/provided
in operating activities:
Cumulative effect of changing
the fiscal year end of a subsidiary 1,207 1,207
Discontinued operations: Gain on disposal (323) (323)
Minority interest (2,215) 724 36 (1,455)
Depreciation & amortization 12 142 2,756 2,910
Non cash acquisition of minority
interest of a subsidiary assigned to
a research & development project 32,430 32,430
Amortization of discount on senior
secured note payable 1,545 1,545
Equity in losses of investees 34 34
Loss on extinguishment, net of cash portion 2,163 2,163
Loss on sale of subsidiaries 479 479
Changes in operating assets and
liabilities (net of effect from
acquisitions):
Accounts receivable 273 (76) (1,929) (1,732)
Inventories (147) 1,230 1,083
Prepaid expenses and other assets (149) 82 (2,904) (2,971)
Accounts payable & accrued expenses 692 354 3,744 4,790
Other (269) (92) (516) 71 (805)
------- -------- ------ ------- -------
Net cash (used in) provided
by operating activities (2,965) (4,469) (6,877) - (14,310)
------- -------- ------ ------- -------
Cash flows from investing activities:
Acquisition of licenses (5,540) 259 (5,281)
Net increase in temporary investments (4,428) (3,444) (7,872)
Proceeds from sale of subsidiaries shares 6,180 6,180
Acquisitions of property & equipment (8) (38) (2,233) (2,279)
Collection of notes receivable 37 37
Cash invested in acquisition of
subsidiaries, net (27,903) (27,903)
Other (59) (59)
------- -------- ------ ------- -------
Net cash (used in) provided by
investing activities (26,122) (9,022) (2,033) (37,177)
------- -------- ------ -------
Cash flows from financing activities:
Net under line of credit agreements (268) (268)
Repayments of debt (13,799) (236) (14,035)
Net proceeds from issuances
of stock & debentures 18,715 18,715
Proceeds from issuance
of redeemable preferred stock 40,000 40,000
Deferred financing costs (1,200) (1,200)
Proceeds from issuance of senior
secured note & related warrants 12,000 12,000
Investment by others in stock
of subsidiary 2,124 2,124
Proceeds from issuance of options 303 303
Proceeds from exercise
of warrants & options 36,807 36,807
Payment of preferred dividends (246) (246)
Intercompany financing (24,467) 11,366 13,101
Other 587 587
------- -------- ------ ------- -------
Net cash provided by (used in)
financing activities 70,237 11,366 13,184 - 94,787
------- -------- ------ ------- -------
Effect of exchange rate changes on cash (276) (277)
Increase (decrease) in cash & equivalents 41,150 (2,125) 3,998 43,023
Increase in cash due to a change
in the fiscal year end of a subsidiary 5,638 5,638
Cash & equivalents, beginning of year 1,711 1,124 190 3,025
Cash & equivalents, end of year $42,861 4,637 $4,188 - $51,686
======= ======== ====== ======= =======
</TABLE>
F - 46
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Supplemental Guarantor Financial Information: continued
SUPPLEMENTAL COMBINING STATEMENTS OF CASH FLOWS
For the Year Ended December 31. 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Non- Geotek
Geotek Guarantor Reclassifications Comm., Inc.
Comm. Inc. PSI Subsidiaries & Eliminations & Subsidiaries
---------- --- ------------ ----------------- --------------
(1) (2) (3) (4)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (139) $ (1,197) $ (784) $ (2,120)
Adjustments to reconcile net loss to net
cash used in operating activities:
Income from operations (193) (193)
Gain on disposal (68) (68)
Depreciation & amortization 314 5 495 814
Gain on sale of marketable securities (753) (286) (1,039)
Changes in operating assets and liabilities
(net of effect from acquisitions):
Accounts receivable 161 1 319 481
Inventories (1,995) (1,995)
Prepaid expenses and other assets 31 (165) (555) (689)
Advances from Aryt 1,079 1,079
Accounts payable & accrued expenses (70) 464 (45) 349
Other (563) 33 542 12
-------- -------- -------- ------ ------
Net cash (used in) operating activities (1,280) (859) (1,230) (3,369)
-------- -------- -------- ------ ------
Cash flows from investing activities:
Advances to PowerSpectrum subsequent to
October 1, 1992 (4,198) (4,198)
Acquisition of licenses (286) 286
Proceeds from sale of subsidiaries shares 1,170 1,170
Proceeds from sale of marketable securities 1,100 1,100
Acquisitions of property & equipment (18) (169) (739) (926)
Collection of notes receivable 828 828
Investment in intangibles (63) (286) (349)
Proceeds from sale of property & equipment 13 13
Cash invested in acquisition of subsidiaries, net (368) (368)
Other (523) 512 (11)
-------- -------- -------- ------ ------
Net cash (used in) provided by
investing activities (2,314) (978) 551 -- (2,741)
-------- -------- -------- ------ ------
Cash flows from financing activities:
Net repayments under
line of credit agreements (3,409) (3,409)
Proceeds from debt and warrants 244 244
Repayments of debt (1,333) (407) (1,740)
Treasury stock acquired (60) (60)
Proceeds from issuance of common stock 13,621 13,621
Proceeds from exercise of warrants & options 770 770
Advances to employees and directors (300) (300)
Payment of preferred dividends (417) (417)
Intercompany financing (7,108) 2,925 4,183
Other (283) 300 17
-------- -------- -------- ------ ------
Net cash provided by financing activities 5,134 2,925 667 -- 8,726
-------- -------- -------- ------ ------
Increase (decrease) in cash & equivalents 1,540 1,088 (12) 2,616
Cash & equivalents, beginning of year 171 36 202 409
Cash & equivalents, end of year $ 1,711 $ 1,124 $ 190 -- $ 3,025
======== ======== ======== ====== =======
</TABLE>
F - 47
[Letterhead of Coopers & Lybrand L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Geotek Communications, Inc. on Form S-3 (Nos. 33-5508, 33-49548, 33-57530,
33-61034, 33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on Form S-4 (No.
33-62333) and Form S-8 (No. 33-67144) of our report dated March 30, 1995 (August
28, 1995 as to Note 19), on our audits of the consolidated financial statements
and the consolidated financial statement schedule of Geotek Communications, Inc.
as of December 31, 1994 and 1993, and for the years ended December 31, 1994,
1993, and 1992, which report is included in this Annual Report of Form 10-K/A#2.
Our report contains an emphasis of a matter paragraph related to significant
transactions with related parties in 1992.
COOPERS & LYBRAND L.L.P.
New York, New York
September 21, 1995
<PAGE>
[Letterhead of Coopers & Lybrand]
CONSENT OF INDEPENDENT AUDITORS RELATING TO
PREUSSAG BUNDELFUNK GMBH, SALZGITTER/GERMANY
As independent auditors, we hereby consent to the incorporation by reference
into the previously filed Registration Statements of Geotek Communications, Inc.
(the "Company") on Form S-3 (Nos. 33-5508, 33-49548, 33-57530, 33-61034,
33-72820, 33-78540, 33-85296, 33-62073 and 33-62327) and on Form S-4 (No.
22-62333) and on Form S-8 (No. 33-67144) of our report, dated August 30, 1994,
relating to the balance sheet of Preussag Bundelfunk GmbH as of September 30,
1993 and the related statement of operations, shareholders' equity and cash flow
for the year then ended, which report was included in the Current Report on Form
8-K of the Company, dated July 5, 1994, as amended.
Hannover,
September 18, 1995
Coopers & Lybrand GmbH
Wirtschaftsprufungsgesellschaft
[Letterhead Of Shachak & Co.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into the previously filed registration statement of Geotek
Communications, Inc. (the "Company") on Form S-3 (Nos. 33-5508, 33-49548,
33-57530, 33-61034, 33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on
Form S-4 (No. 33-62333) and on form S-8 (No. 33-67144) of our report, dated
February 24, 1993 with respect to the financial statements of Oram Electric
Industries Ltd. as of December 31, 1992 and for the year then ended, included in
the annual report of the company on Form 10-K/A2 for the fiscal year ended
December 31, 1994.
/s/ Shachak & Co.
Shachak & Co.
Certified Public Accountants(Isr)
September 18, 1995
Te Aviv, Israel
<PAGE>
[Letterhead of Shachak & Co]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into the previously filed registration statement of Geotek
Communications Inc. (the "Company") on Form S-3 (Nos. 33-5508, 33-49548,
33-57530, 33-61034, 33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on
Form S-4 (No. 33-62333) and on Form S-8 (No. 33-67144) of our report, dated
February 24, 1993 with respect to the financial statements of Oram Power
Supplies (1990) Ltd as of December 31, 1992 and for the year then ended,
included in the annual report of the company on form 10-K for the fiscal year
ended December 31, 1994.
/s/ Shachak & Co.
Shachak & Co.
Certified Public Accountants(Isr).
September 18, 1995
Tel Aviv, Israel
<PAGE>
[Letterhead of Shachak & Co.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into the previously filed registration statement of Geotek
Communications Inc. (the "Company") on Form S-3 (Nos. 33-5508, 33-49548,
33-57530, 33-61034, 33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on
Form S-4 (No. 33-62333) and on Form S-8 (No. 33-67144) of our report, dated
February 14, 1995, with respect to the financial statements of Powerspectrum
Technology Ltd. ("PST") as of December 31, 1994 and 1993, and for the year ended
December 31, 1994 and fifteen month period ended December 31, 1993 and of our
report, dated January 17, 1993 with respect to the financial statements of PST
as of September 30, 1992, and for the three month period then ended, which
reports are included in the annual report of the Company on Form 10-K for the
fiscal year ended December 31, 1994.
/s/ Shachak & Co.
Shachak & Co.
Certified Public Accountants(Isr)
September 18, 1995
Tel Aviv, Israel
[Letterhead of Altenburg & Tewes AG]
Consent of Independent Accountants
We consent to the incorporation by reference into the previously filed
registration statements on Form S-3 (Nos. 33-5508, 33-49548, 38-57530, 33-61034,
33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on Form S-4 (No. 33-62333)
and on Form S-8 (No. 33-67144) of Geotek Communications, Inc. (the "Company") of
our report dated September 6, 1994, on our audit of the financial statements of
DBF Bundelfunk GmbH & Co. Betriebs-KG as of December 31, 1993, and for the year
ended December 31, 1993, which report appears in the Company's Current Report on
Form 8-K dated August 2, 1994, as amended.
Dusseldorf, September 18, 1995
Altenburg & Tewes AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
former
DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
STEUERBERATUNGSGESELLSCHAFT
/s/ Gobels /s/ Spielberg
Gobels Spielberg
Wirtschaftsprufer Wirtschaftsprufer
[Letterhead of Touche Ross & Co.]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the previously filed
registration statements on Form S-3(Nos. 33-5508, 33-49548, 33-57530, 33-61034,
33-72820, 33-78540, 33-85296, 33-62073 and 33-62327), on Form S-4 (No. 33-62333)
and on Form S-8 (No. 33-67144) of Geotek Communications, Inc. (The "Company") of
(i) our report dated June 10, 1993 with respect to the financial statements of
National Band Three Limited, (ii) our report dated November 24, 1992 with
respect to the financial statements of GEC - Marconi Communications Networks
Limited and (iii) our report dated January 27, 1993 with respect to the
financial statements of Vodanet Limited, each appearing in the Current Report on
Form 8-K/A of the Company dated June 18, 1993.
TOUCHE ROSS & CO
London, England
September 25, 1995
[Letterhead of KPMG]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Band Three Radio Limited
We consent to the incorporation by reference into the previously filed
registration statements on Form S-3 (Nos. 33-5506, 33-49548, 33-57530, 33-61034,
33-72820, 3378540, 33-85296, 33-62073 and 33-62327), on Form S-4 (No. 33-62333)
and on Form S-8 (No. 33-67144) of Geotek Communications, Inc. (the "Company") of
our report dated 15 July 1991, relating to the Band Three Radio Limited
statements of the net loss and cash flows for the year ended 31 March 1991,
which report was included in the Current Report on Form 8-K/A of the company,
June 18, 1993.
/s/ KPMG
KPMG
LONDON, ENGLAND
18 September, 1995
