Worldspace’s operating expenses continue to far outweigh its revenue, according to a quarterly summary filed by the satellite company with the U.S. Securities and Exchange Commission.
“The company has incurred an accumulated deficit of approximately $2.4 billion through June 30, 2007 and expects to continue incurring losses for the foreseeable future,” it stated.
Worldspace, based in Silver Spring, Md., said it needs to raise “substantial additional capital during the remaining part of 2007 in order to continue to pursue its business plan.” It believes it has enough cash and expected revenue to meets its cash requirements through the end of the year, and is working on possible public or private equity offerings or debt financings.
“If the company is unable to secure additional capital, it will be required to curtail its operations and if these measures fail, it may not be able to continue its business,” WorldSpace officials wrote.
“Curtailment of operations would cause significant delays in the company’s efforts to introduce its products to market which is critical to the realization of its business plan and the future operations of the company.” It also is attempting to negotiate an extended payment plan with the IRS for an outstanding tax liability of about $15 million due in September.
Worldspace operates in 10 countries; it has one satellite over Africa, another over Asia and a third in storage as a spare or that could be launched to provide DARS in Western Europe. The company is trying to build toward the launch of mobile services in the Middle East and Italy, and continuing operations in India.
Worldspace announced last week that it had lost $51.2 million in the quarter ending June 30, compared to a net loss of $36.6 million in the same period last year. Its revenue in that period was $3.6 million, down 4% from last year.
The company ended the quarter with 190,000 subscribers worldwide, a loss of 1,300 from the close of the prior quarter, “reflecting low net additions in India and a net loss of subscribers in the rest of the world.”
Not long ago it stopped selling new subscriptions to European and other customers within the Northwest beam coverage area of its AfriStar satellite in preparation for testing and launch of its service in Italy.
Worldspace also recently announced the first OEM and aftermarket distribution agreement for satellite radio in Europe through a marketing agreement with Fiat Group Automobiles.
With that deal, Chairman/CEO Noah A. Samara stated, “We have most of the significant pieces in place as we continue to prepare for our business launch in Europe. We have secured authorization to launch our service in Italy, developed EU-compliant terrestrial repeater technology and a receiver reference design with Fraunhofer IIS; and contracted with Telecom Italia for the design and installation of the repeater network.”