Global Eagle Entertainment Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

ent-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						FOR THE TRANSITION PERIOD FROM __________ TO ________

COMMISSION FILE NUMBER 001-35176

GLOBAL EAGLE ENTERTAINMENT INC.

(Exact name of registrant as specified in its charter)

Delaware

27-4757800

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

6080 Center Drive,

Suite 1200

Los Angeles,

California

90045

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (310) 437-6000

Securities Registered pursuant to Section 12(b) of the Act:

Title of each class

Ticker

Name of exchange on which registered

Common Stock, $0.0001 par value

ENT

*On August 4, 2020, the Company’s common stock was suspended from trading on The Nasdaq Stock Market (the “Nasdaq”) because of the Debtors’ (defined below) filing of the Chapter 11 Cases (defined below). Effective August 4, 2020, trades in the Company’s common stock began being quoted on the OTC Pink Marketplace under the symbol “GEENQ.” On August 11, 2020, the Nasdaq filed a Form 25-NSE to delist the Company’s common stock and to remove it from registration under Section 12(b) of the Exchange Act.

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

(Class)

(Outstanding as of August 12, 2020)

COMMON STOCK, $0.0001 PAR VALUE

3,754,482

Table of Contents

GLOBAL EAGLE ENTERTAINMENT INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2020

TABLE OF CONTENTS

Table of Contents

EXPLANATORY NOTES

On July 22, 2020, the Company and 16 of its wholly owned U.S. subsidiaries (together with the Company, the “Debtors”) commenced voluntary Chapter 11 proceedings under Chapter 11 of the United States, (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 proceedings are jointly administered under the caption In re Global Eagle Entertainment Inc., et al. (the “Chapter 11 Cases”), Case No. 20-11835. The Debtors continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. On July 23, 2020, the Debtors sought and the Bankruptcy Court granted on an interim basis, approval of various “first day” motions containing customary relief intended to assure the Debtors’ ability to continue their ordinary course operations.

On August 10, 2020, Nasdaq announced that it will delist the common stock of the Company and that the Company’s common stock was suspended on August 4, 2020 and has not traded on Nasdaq since that time. The trading of the Company’s common stock has transitioned to the OTC Bulletin Board or “pink sheets” market. The transition to over-the-counter markets is not expected to affect the Company’s operations or business. On August 11, 2020, Nasdaq filed a Form 25-NSE with the Securities and Exchange Commission (the “SEC”) to complete the delisting of the Company’s common stock from Nasdaq, which delisting will be effective ten calendar days later, at which time the Company will cease to file current and periodic reports with the SEC.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLOBAL EAGLE ENTERTAINMENT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)


	June 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	31,255	$	23,964
Restricted cash	4,863		498
Short-term investment	3,315		—
Accounts receivable, net	66,385		88,219
Inventories, net	24,972		26,695
Prepaid expenses	5,574		6,753
Other current assets	10,513		12,839
TOTAL CURRENT ASSETS	146,877		158,968
Content library	2,825		3,645
Property and equipment, net	116,996		145,295
Right-of-use assets, net	32,797		39,187
Goodwill	137,400		159,607
Intangible assets, net	43,097		55,483
Equity method investments	62,284		78,886
Other non-current assets	25,705		27,509
TOTAL ASSETS	$	567,981	$	668,580
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	181,679	$	178,930
Deferred revenue	8,359		12,317
Current portion of long-term debt and finance leases	810,887		15,678
Current portion of operating lease liabilities	7,265		8,319
Other current liabilities	9,927		7,081
TOTAL CURRENT LIABILITIES	1,018,117		222,325
Deferred revenue, non-current	86		86
Long-term debt and finance leases	16,138		757,384
Long-term operating lease liabilities	20,856		23,636
Deferred tax liabilities	2,496		5,894
Other non-current liabilities	23,146		34,409
TOTAL LIABILITIES	1,080,839		1,043,734

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized, no shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	—		—
Common stock, $0.0001 par value; 375,000,000 shares authorized, 3,876,801 and 3,837,920 shares issued, 3,754,656 and 3,715,775 shares outstanding, at June 30, 2020 and December 31, 2019, respectively	10		10
Treasury stock, 122,145 shares at June 30, 2020 and December 31, 2019	(30,659)		(30,659)
Additional paid-in capital	821,224		818,961
Subscriptions receivable	(597)		(597)
Accumulated deficit	(1,303,146)		(1,162,901)
Accumulated other comprehensive income	310		32
TOTAL STOCKHOLDERS’ DEFICIT	(512,858)		(375,154)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	567,981	$	668,580

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GLOBAL EAGLE ENTERTAINMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue:
Licensing and services	$	77,457	$	145,129	$	213,102	$	295,607
Equipment	5,584		12,338		14,104		28,479
Total revenue	83,041		157,467		227,206		324,086
Cost of sales:
Licensing and services	67,772		116,308		181,056		239,577
Equipment	4,107		7,909		11,630		18,834
Total cost of sales	71,879		124,217		192,686		258,411
Gross margin	11,162		33,250		34,520		65,675
Operating expenses:
Sales and marketing	4,303		7,365		9,643		15,614
Product development	3,749		6,125		9,712		13,104
General and administrative	24,962		27,161		55,538		55,141
Provision for legal settlements	—		25		—		533
Amortization of intangible assets	6,241		7,800		12,383		15,599
Goodwill and long-lived asset impairment	3,374		—		25,504		—
Total operating expenses	42,629		48,476		112,780		99,991
Loss from operations	(31,467)		(15,226)		(78,260)		(34,316)
Other (expense) income:
Interest expense, net	(22,884)		(22,329)		(45,471)		(43,606)
(Loss) income from equity method investments including impairment losses	(2,015)		2,517		(12,873)		4,646
Change in fair value of derivatives	(18)		—		189		938
Other expense, net	(1,495)		(105)		(1,263)		(284)
Loss before income taxes	(57,879)		(35,143)		(137,678)		(72,622)
Income tax expense	154		3,317		1,280		3,447
Net loss	$	(58,033)	$	(38,460)	$	(138,958)	$	(76,069)

Net loss per share – basic and diluted	$	(15.47)	$	(10.42)	$	(37.24)	$	(20.65)
Weighted average shares outstanding – basic and diluted	3,751		3,690		3,731		3,682

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GLOBAL EAGLE ENTERTAINMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(in thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net loss	$	(58,033)	$	(38,460)	$	(138,958)	$	(76,069)
Other comprehensive income:
Unrealized foreign currency translation adjustments	41		10		278		243
Comprehensive loss	$	(57,992)	$	(38,450)	$	(138,680)	$	(75,826)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GLOBAL EAGLE ENTERTAINMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)

(in thousands)


	Common Stock				Treasury Stock						Additional		Subscriptions		Accumulated		Accumulated Other	Total
	Shares	Amount		Shares	Amount		Paid-in Capital		Receivable		Deficit		Comprehensive Income		Stockholders’ Deficit
Balance at December 31, 2019	3,838	$	10	(122)	$	(30,659)	$	818,961	$	(597)	$	(1,162,901)	$	32	$	(375,154)
Restricted stock units vested and distributed, net of tax	29	—		—	—		(61)		—		—		—		(61)
Stock-based compensation	—	—		—	—		1,339		—		—		—		1,339
Impact of adoption of ASU 2016-02	—	—		—	—		—		—		(1,287)		—		(1,287)
Net loss	—	—		—	—		—		—		(80,925)		—		(80,925)
Unrealized foreign currency translation adjustments	—	—		—	—		—		—		—		237		237
Balance at March 31, 2020	3,867	$	10	(122)	$	(30,659)	$	820,239	$	(597)	$	(1,245,113)	$	269	$	(455,851)
Restricted stock units vested and distributed, net of tax	10	—		—	—		(67)		—		—		—		(67)
Stock-based compensation	—	—		—	—		1,052		—		—		—		1,052
Impact of adoption of ASU 2016-02											—				—
Net loss	—	—		—	—		—		—		(58,033)		—		(58,033)
Unrealized foreign currency translation adjustments	—	—		—	—		—		—		—		41		41
Balance at June 30, 2020	3,877	$	10	(122)	$	(30,659)	$	821,224	$	(597)	$	(1,303,146)	$	310	$	(512,858)

Table of Contents

GLOBAL EAGLE ENTERTAINMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED) (continued)

(In thousands)


	Common Stock				Treasury Stock						Additional		Subscriptions		Accumulated		Accumulated Other	Total
	Shares	Amount		Shares	Amount		Paid-in Capital		Receivable		Deficit		Comprehensive Income (Loss)		Stockholders’ Deficit
Balance at December 31, 2018	3,793	$	10	(122)	$	(30,659)	$	814,488	$	(597)	$	(1,009,458)	$	(119)	$	(226,335)
Restricted stock units vested and distributed, net of tax	13	—		—	—		(117)		—		—		—		(117)
Stock-based compensation	—	—		—	—		2,389		—		—		—		2,389
Tax effect relating to the beneficial conversion feature of Second Lien Notes	—	—		—	—		(2,688)		—		—		—		(2,688)
Net loss	—	—		—	—		—		—		(37,609)		—		(37,609)
Unrealized foreign currency translation adjustments	—	—		—	—		—		—		—		233		233
Balance at March 31, 2019	3,806	10		(122)	(30,659)		814,072		(597)		(1,047,067)		114		(264,127)
Restricted stock units vested and distributed, net of tax	21	—		—	—		(147)		—		—		—		(147)
Stock-based compensation	—	—		—	—		2,194		—		—		—		2,194
Net loss	—	—

Price	0.87	EPS	-2
Shares	93	P/E	-0
MCap	81	P/FCF	-10
Net Debt	805	EBIT	-218
TEV	886	TEV/EBIT	-4
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-14
10-Q	2020-03-31	Filed 2020-07-06
10-K	2019-12-31	Filed 2020-05-15
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-15
10-K	2018-12-31	Filed 2019-03-18
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-15
10-K	2017-12-31	Filed 2018-04-02
10-Q	2017-09-30	Filed 2018-01-31
10-Q	2017-06-30	Filed 2018-01-31
10-Q	2017-03-31	Filed 2018-01-31
10-K	2016-12-31	Filed 2017-11-17
10-Q	2016-09-30	Filed 2016-11-09
10-Q	2016-06-30	Filed 2016-08-09
10-Q	2016-03-31	Filed 2016-05-09
10-K	2015-12-31	Filed 2016-03-17
10-Q	2015-09-30	Filed 2015-11-09
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-17
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-11
10-Q	2014-03-31	Filed 2014-05-12
10-K	2013-12-31	Filed 2014-03-25
10-Q	2013-09-30	Filed 2013-11-12
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-15
10-K	2012-12-31	Filed 2013-03-18
10-Q	2012-09-30	Filed 2012-11-14
10-Q	2012-06-30	Filed 2012-08-07
10-Q	2012-03-31	Filed 2012-05-14
10-K	2011-12-31	Filed 2012-03-28
10-Q	2011-09-30	Filed 2011-11-14
10-Q	2011-06-30	Filed 2011-08-15
10-Q	2011-03-31	Filed 2011-06-27

8-K	2020-08-31
8-K	2020-07-23
8-K	2020-07-20
8-K	2020-07-14
8-K	2020-07-10
8-K	2020-07-09
8-K	2020-05-14
8-K	2020-05-08
8-K	2020-05-01
8-K	2020-04-29
8-K	2020-04-13
8-K	2020-04-07
8-K	2020-03-31
8-K	2020-03-30
8-K	2020-03-19
8-K	2020-03-19
8-K	2020-03-17
8-K	2020-03-04
8-K	2020-02-24
8-K	2020-01-14
8-K	2019-12-16
8-K	2019-11-07
8-K	2019-08-08
8-K	2019-07-19
8-K	2019-06-24
8-K	2019-05-27
8-K	2019-05-15
8-K	2019-05-14
8-K	2019-03-14
8-K	2019-02-20
8-K	2018-12-01
8-K	2018-11-08
8-K	2018-11-07
8-K	2018-08-09
8-K	2018-07-20
8-K	2018-06-25
8-K	2018-05-16
8-K	2018-05-14
8-K	2018-04-02
8-K	2018-03-27
8-K	2018-03-16
8-K	2018-03-08
8-K	2018-02-01
8-K	2018-01-31
8-K	2018-01-18

EX-31.1	ent-ex311ceocertificat.htm
EX-31.2	ent-ex312cfocertificat.htm
EX-32.1	ent-ex321ceoperiodcert.htm
EX-32.2	ent-ex322cfoperiodcert.htm

ENT 10Q Quarterly Report

Global Eagle Entertainment Earnings 2020-06-30