Form 8-K ORBCOMM Inc. For: Dec 30

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January 6, 2015 12:11 PM EST

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�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

�

FORM 8-K

�

CURRENT REPORT

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December�30, 2014

�

ORBCOMM Inc.

(Exact Name of Registrant as Specified in Charter)

�

Delaware

�

001-33118

�

41-2118289

(State or Other Jurisdiction

of Incorporation)

�

(Commission

File Number)

�

(IRS Employer

Identification No.)

395 W. Passaic Street

Rochelle Park, New Jersey 07662

(Address of Principal Executive Offices) (Zip Code)

(703) 433-6300

(Registrant�s telephone number, including area code)

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

�

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

�

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

Item�2.01.

Completion of Acquisition or Disposition of Assets.

On January�1, 2015, ORBCOMM, Inc. (the �Company�) completed its previously announced acquisition of SkyWave Mobile Communications Inc. (�SkyWave�), a leading global provider of satellite-based M2M solutions (the �Acquisition�), for a purchase price of $130�million, of which $7.5�million was in the form of a promissory note which was settled by the transfer of assets to Inmarsat Global Limited (�Inmarsat�) pursuant to an agreement with Inmarsat (the �Inmarsat Agreement�) entered into in connection with the Arrangement Agreement dated as of November�1, 2014 (the �Arrangement Agreement�) among the Company, Soar Acquisition Inc., a wholly owned subsidiary of ORBCOMM, SkyWave and Randy Taylor Professional Corporation.

The Company funded the payment of the cash portion of the Purchase Price through a combination of additional borrowings under its credit agreement entered into on September�30, 2014 (the �Credit Agreement�) with Macquarie CAF LLC described below under Item�2.03 and net proceeds from a public offering of 14,785,714 shares of its common stock, which was completed on November�13, 2014.

The foregoing description of the Arrangement Agreement is not complete and is subject to and qualified in its entirety by reference to the full text of the Arrangement Agreement, which was filed as Exhibit 10.1 to the Company�s Current Report on Form�8-K filed on November�6, 2014 (the �November 6, 2014 Form�8-K�).

On January�5, 2015, the Company issued a press release announcing the completion of the Acquisition, a copy of which is furnished as Exhibit 99.4 to this Report and is incorporated herein by reference.

�

Item�2.03.

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.

On December�30, 2014, the Company made borrowings in the principal amount of $70,000,000, under the additional acquisition term loan facility under the Credit Agreement with Macquarie CAF LLC to finance a potential acquisition, the proceeds of which were used to pay a portion of the purchase price for the Acquisition described under Item�2.01.

�

Item�9.01.

Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of SkyWave as of December�31, 2013 and 2012 and for the years ended December�31, 2013, 2012 and 2011 and the unaudited interim condensed consolidated financial statements of SkyWave as of and for the nine months ended September�30, 2014 and 2013, filed as Exhibit 99.4 to the November�6, 2014 Form 8-K and Exhibit�99.2 to this Report, respectively, are incorporated herein by reference.

(b) Pro Forma Financial Information.

The following unaudited pro forma condensed combined financial information of ORBCOMM, filed as Exhibit�99.3 to this Report, is incorporated herein by reference:

�

(i)

Introductory note;

�

(ii)

Unaudited Pro Forma Condensed Combined Balance Sheet as of September�30, 2014;

�

(iii)

Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December�31, 2013;

�

(iv)

Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended September�30, 2014; and

�

(v)

Notes to Unaudited Pro Forma Condensed Combined Financial Information.

(d)�Exhibits.

�


99.1	��	Audited consolidated financial statements of SkyWave as of December�31, 2013 and 2012 and for the years ended December�31, 2013, 2012 and 2011 (in accordance with IFRS, as issued by the IASB) filed as Exhibit 99.4 to the November�6, 2014 Form 8-K, are incorporated herein by reference.

99.2	��	Unaudited interim condensed consolidated financial statements of SkyWave as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013 (in accordance with IFRS, as issued by the IASB).

99.3	��	Unaudited pro forma condensed combined financial information of ORBCOMM Inc. (in U.S. GAAP).

99.4	��	Press Release of the Company dated January 5, 2015.

�

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.

�


	�	�	ORBCOMM INC.

Date: January�6, 2015	�	�	By:	�	/s/ Robert Constantini
	�	�		�	Name: Robert Constantini
	�	�		�	Title:	�	Executive Vice President and Chief Financial Officer

�

EXHIBIT INDEX

�


Exhibit Number	��	Description of Exhibit

99.1	��	Audited consolidated financial statements of SkyWave as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 (in accordance with IFRS, as issued by the IASB) filed as Exhibit 99.4 to the November 6, 2014 Form 8-K, are incorporated herein by reference.

99.2	��	Unaudited interim condensed consolidated financial statements of SkyWave as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013 (in accordance with IFRS, as issued by the IASB).

99.3	��	Unaudited pro forma condensed combined financial information of ORBCOMM Inc. (in U.S. GAAP).

99.4	��	Press Release of the Company dated January 5, 2015.

�

Exhibit 99.2

Unaudited interim condensed consolidated financial statements of

SkyWave Mobile

Communications Inc.

As at September�30, 2014 and for the nine-month-periods ended September�30, 2014 and 2013

SkyWave Mobile Communications Inc.

Nine-month-periods ended September 30, 2014 and 2013

Table of contents

�


Unaudited interim condensed consolidated statement of income and total comprehensive income	��	�	1	��

Unaudited interim condensed consolidated statement of financial position	��	�	2	��

Unaudited interim condensed consolidated statement of changes in shareholders� equity	��	�	3	��

Unaudited interim condensed consolidated statement of cash flows	��	�	4	��

Notes to the unaudited interim condensed consolidated financial statements	��	�	5-10	��

SkyWave Mobile Communications Inc.

Unaudited interim condensed consolidated statement

of income and total comprehensive income

for the nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�


�	��	2014		�	�	2013		�
�	��	$		�	�	$		�
Revenue	��	�	46,763,646	��	�	�	41,138,953	��
Cost of sales	��	�	24,343,484	��	�	�	22,147,232	��
	��	�	�	�	�	�	�	�
Gross margin	��	�	22,420,162	��	�	�	18,991,721	��
	��	�	�	�	�	�	�	�
Expenses	��				�
General and administrative	��	�	1,816,194	��	�	�	1,568,358	��
Sales and marketing	��	�	7,645,517	��	�	�	7,967,498	��
Engineering, research and development	��	�	6,175,671	��	�	�	6,716,615	��
	��	�	�	�	�	�	�	�
	��	�	15,637,382	��	�	�	16,252,471	��
	��	�	�	�	�	�	�	�
Earnings before other income	��	�	6,782,780	��	�	�	2,739,250	��
	��	�	�	�	�	�	�	�
Other income (expense)	��				�
Interest income	��	�	226,124	��	�	�	436,000	��
Interest expense	��	�	(190,761	)�	�	�	(304,904	)�
Adjustment to airtime credits payable	��	�	72,336	��	�	�	202,684	��
Adjustment to fair value of warrants	��	�	(270,070	)�	�	�	44,550	��
Other income	��	�	72,483	��	�	�	��	��
	��	�	�	�	�	�	�	�
	��	�	(89,888	)�	�	�	378,330	��
	��	�	�	�	�	�	�	�
Net income before taxes	��	�	6,692,892	��	�	�	3,117,580	��
Income tax expense (recovery)	��	�	914,746	��	�	�	(189,400	)�
	��	�	�	�	�	�	�	�
Income and total comprehensive income	��	�	5,778,146	��	�	�	3,306,980	��
	��	�	�	�	�	�	�	�

The accompanying notes to the unaudited interim condensed consolidated financial statements are an integral part of

this unaudited interim condensed consolidated financial

statement.

�

Page 1

SkyWave Mobile Communications Inc.

Unaudited interim condensed consolidated statement of financial position

as at September 30, 2014 and December 31, 2013

(U.S. dollars)

�


�	��	September�30, 2014		�	�	December�31, 2013		�
�	��	$		�	�	$		�
Assets	��				�
Current assets	��				�
Cash and cash equivalents	��	�	43,455,074	��	�	�	35,230,392	��
Amounts receivable (Note 6)	��	�	11,594,071	��	�	�	14,724,301	��
Investment tax credits receivable	��	�	486,000	��	�	�	791,000	��
Inventories	��	�	1,883,530	��	�	�	1,674,036	��
Prepaid expenses	��	�	421,841	��	�	�	413,170	��
Current portion of long-term receivable	��	�	��	��	�	�	1,083,273	��
	��	�	�	�	�	�	�	�
	��	�	57,840,516	��	�	�	53,916,172	��

Property and equipment	��	�	4,166,263	��	�	�	4,708,009	��
Intangible assets	��	�	8,432,980	��	�	�	7,991,581	��
Goodwill	��	�	819,522	��	�	�	819,522	��
Long-term receivable	��	�	562,232	��	�	�	463,475	��
Deferred tax asset	��	�	4,575,124	��	�	�	5,488,566	��
Other assets	��	�	752,435	��	�	�	786,287	��
	��	�	�	�	�	�	�	�
	��	�	77,149,072	��	�	�	74,173,612	��
	��	�	�	�	�	�	�	�
Liabilities	��				�
Current liabilities	��				�
Accounts payable and accrued liabilities (Note 6)	��	�	7,274,262	��	�	�	9,590,111	��
Provisions	��	�	599,591	��	�	�	651,110	��
Deferred revenue	��	�	227,162	��	�	�	231,805	��
Airtime credits payable (Note 6)	��	�	389,582	��	�	�	806,710	��
Loan payable (Note 6)	��	�	251,305	��	�	�	264,617	��
	��	�	�	�	�	�	�	�
	��	�	8,741,902	��	�	�	11,544,353	��

Warrants	��	�	946,316	��	�	�	676,247	��
Airtime credits payable	��	�	0	��	�	�	195,951	��
Deferred leasing costs	��	�	1,213,599	��	�	�	1,313,500	��
Loan payable (Note 6)	��	�	2,028,320	��	�	�	2,292,653	��
	��	�	�	�	�	�	�	�
	��	�	12,930,137	��	�	�	16,022,704	��
	��	�	�	�	�	�	�	�
Shareholders' equity	��				�
Share capital (Note 7)	��	�	82,801,257	��	�	�	82,786,884	��
Share-based reserve	��	�	3,627,393	��	�	�	3,351,885	��
Deficit	��	�	(22,209,715	)�	�	�	(27,987,861	)�
	��	�	�	�	�	�	�	�
	��	�	64,218,935	��	�	�	58,150,908	��
	��	�	�	�	�	�	�	�
	��	�	77,149,072	��	�	�	74,173,612	��
	��	�	�	�	�	�	�	�

�


Approved by the Board

/s/ Pui-Ling Chan	�	Director

/s/ Jacques Perrault	�	Director

The accompanying notes to the unaudited interim condensed consolidated financial statements are an integral part of

this unaudited interim condensed consolidated financial

statement.

�

Page 2

SkyWave Mobile Communications Inc.

Unaudited interim condensed consolidated statement of

changes in shareholders' equity

for the nine-month periods ended September 30, 2013 and 2014

(U.S. dollars)

�

��

Share Capital

�

��

Share-
Based
Reserve

�

Deficit

�

Shareholders'
Equity

�

��

�

��

�

Balance, December 31, 2012

��

�

82,764,661

��

�

2,943,121

��

�

(32,954,093

)�

�

52,753,689

��

�

��

�

Income and total comprehensive income

��

�

��

�

��

�

3,306,980

��

�

3,306,980

��

Share-based payments

��

�

��

�

290,047

��

�

��

�

290,047

��

Share options exercised

��

�

17,951

��

�

(6,724

)�

�

��

�

11,227

��

�

��

�

Balance, September 30, 2013

��

�

82,782,612

��

�

3,226,444

��

�

(29,647,113

)�

�

56,361,943

��

�

��

�

��

Share capital

�

��

Share-based
reserve

�

Deficit

�

Total
Shareholders'
equity

�

��

�

��

�

Balance, December 31, 2013

��

�

82,786,884

��

�

3,351,885

��

�

(27,987,861

)�

�

58,150,908

��

�

��

�

Income and total comprehensive income

��

�

��

�

��

�

5,778,146

��

�

5,778,146

��

Share-based payments

��

�

��

�

275,508

��

�

��

�

275,508

��

Share options exercised

��

�

14,373

��

�

��

�

��

�

14,373

��

�

��

�

Balance, September 30, 2014

��

�

82,801,257

��

�

3,627,393

��

�

(22,209,715

)�

�

64,218,935

��

�

��

�

The accompanying notes to the unaudited interim condensed consolidated financial statements are an integral part of

this unaudited interim condensed consolidated financial

statement.

�

Page 3

SkyWave Mobile Communications Inc.

Unaudited interim condensed consolidated statement of cash flows

for the nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�


�	��	2014		�	�	2013		�
�	��	$		�	�	$		�
Operating activities	��				�
Income and total comprehensive income	��	�	5,778,146	��	�	�	3,306,980	��
Items not affecting cash	��				�
Deferred tax expense (recovery)	��	�	914,746	��	�	�	(189,400	)�
Amortization of property and equipment	��	�	935,648	��	�	�	1,135,807	��
Amortization of intangible assets	��	�	1,304,120	��	�	�	1,251,594	��
Loss on disposal of property and equipment	��	�	��	��	�	�	3,732	��
Unrealized foreign exchange gain	��	�	5,325	��	�	�	20,710	��
Valuation adjustment airtime credits payable	��	�	(72,336	)�	�	�	(202,684	)�
Adjustment to fair value of warrants (Note 6)	��	�	270,070	��	�	�	(44,550	)�
Interest expense on airtime credits payable	��	�	85,865	��	�	�	187,581	��
Interest income on long-term receivable	��	�	(16,727	)�	�	�	(150,086	)�
Interest income on term receivables	��	�	(64,800	)�	�	�	(30,046	)�
Interest expense on loan payable	��	�	(20,852	)�	�	�	24,651	��
Lease inducements	��	�	(99,901	)�	�	�	(83,969	)�
Provision for warranty reserve	��	�	(46,557	)�	�	�	45,630	��
Provision for excess and obsolescence	��	�	(304,859	)�	�	�	278,914	��
Share-based payments	��	�	275,508	��	�	�	290,047	��
Changes in non-cash operating working capital items	��	�	1,270,625	��	�	�	(3,232,042	)�
	��	�	�	�	�	�	�	�
	��	�	10,214,021	��	�	�	2,612,869	��
	��	�	�	�	�	�	�	�
Investing activities	��				�
Purchase of property and equipment	��	�	(393,902	)�	�	�	(385,993	)�
Disposal of property and equipment	��	�	��	��	�	�	2,800	��
Disposal of other assets	��	�	33,852	��	�	�	63,373	��
Airtime credits paid	��	�	(626,607	)�	�	�	(697,717	)�
Increase in intangibles net of investment tax credits	��	�	(1,745,519	)�	�	�	(284,466	)�
	��	�	�	�	�	�	�	�
	��	�	(2,732,176	)�	�	�	(1,302,003	)�
	��	�	�	�	�	�	�	�
Financing activities	��				�
Repayment of loan payable	��	�	(256,793	)�	�	�	(279,365	)�
Airtime credits received	��	�	1,100,000	��	�	�	1,100,000	��
Issuance of common shares	��	�	14,373	��	�	�	11,227	��
	��	�	�	�	�	�	�	�
	��	�	857,580	��	�	�	831,862	��
	��	�	�	�	�	�	�	�
Net cash inflow	��	�	8,339,425	��	�	�	2,142,728	��
Effect of foreign exchange gain on cash and cash equivalents held in foreign currency	��	�	(114,743	)�	�	�	(7,251	)�
Cash and cash equivalents, beginning of period	��	�	35,230,392	��	�	�	27,620,283	��
	��	�	�	�	�	�	�	�
Cash and cash equivalents, end of period	��	�	43,455,074	��	�	�	29,755,760	��
	��	�	�	�	�	�	�	�

The accompanying notes to the unaudited interim condensed consolidated financial statements are an integral part of

this unaudited interim condensed consolidated financial

statement.

�

Page 4

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September�30, 2014 and 2013

(U.S. dollars)

�

1.	Description of business

SkyWave Mobile Communications Inc. (the �Company�) was incorporated and is domiciled in Ontario, Canada. The registered office is located at 750 Palladium Drive, Suite 368, Ottawa, Ontario, Canada. The Company manufactures satellite communications transceivers and provides communication infrastructure to service providers worldwide enabling the deployment of satellite communication solutions.

�

2.	Basis of preparation

These unaudited interim condensed consolidated financial statements are expressed in United States dollars and have been prepared in accordance with International Accounting Standard (�IAS�) 34�Interim Financial Reporting, as issued by the International Accounting Standard Board (�IASB�). These unaudited interim condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards as issued by the IASB (�IFRS�) and in accordance with the accounting policies the Company adopted in its annual consolidated financial statements for the year ended December�31, 2013 and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December�31, 2013. These unaudited interim condensed consolidated financial statements do not include all of the information required in annual financial statements.

These unaudited interim condensed consolidated financial statements were authorized for issuance by the Board of Directors on November�17, 2014.

�

3.	Critical Accounting Estimates

The preparation of financial statements in conformity with IFRS requires the Company�s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

There were no significant changes in estimates or approaches to determining estimates in the periods presented.

�

4.	Changes in accounting policies

Amendments to IFRS 2 � Share-based Payments

In the second quarter of 2014, the IASB issued Amendments to IFRS 2, Share-based Payments. The amendments change the definitions of �vesting condition� and �market condition� in the Standard, and add definitions for �performance condition� and �service condition�. They also clarified that any failure to complete a specified service period, even due to the termination of an employee�s employment or a voluntary departure, would result in a failure to satisfy a service condition. This would result in the reversal, in the current period, of compensation expense previously recorded reflecting the fact that the employee failed to complete a specified service condition. These amendments are effective for transactions with a grant date on or after July�1, 2014. The amendment to the standard did not have any impact on the Company�s condensed consolidated interim financial statements.

Amendments to IFRS 3 � Business Combinations (contingent consideration)

In the second quarter of 2014, the IASB issued Amendments to IFRS 3, Business Combinations. The amendments clarify the guidance in respect of the initial classification requirements and subsequent measurement of contingent consideration. This will result in the need to measure the contingent consideration at fair value at each reporting date, irrespective of whether it is a financial instrument or a non-financial asset or liability. Changes in fair value will need to be recognized in profit and loss. These amendments are effective for transactions with acquisition dates on or after July�1, 2014. The amendment to the standard did not have any impact on the Company�s condensed consolidated interim financial statements.

�

Page 5

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�

4.	Changes in accounting policies (continued)

�

The following standards are not yet effective:

IFRS 15 � Revenue from Contracts and Customers

IFRS 15, Revenue from Contracts and Customers (�IFRS 15�) was issued by the IASB on May�28, 2014, and will replace IAS 18, Revenue, IAS 11, Construction Contracts, and related interpretations on revenue. IFRS 15 sets out the requirements for recognizing revenue that apply to all contracts with customers, except for contracts that are within the scope of the Standards on leases, insurance contracts and financial instruments. IFRS 15 uses a control based approach to recognize revenue which is a change from the risk and reward approach under the current standard. Companies can elect to use either a full or modified retrospective approach when adopting this standard and it is effective for annual periods beginning on or after January�1, 2017. The Company is currently evaluating the impact of IFRS 15 on its consolidated financial statements.

IFRS 9 � Financial Instruments

IFRS 9, Financial Instruments (�IFRS 9�) was issued by the IASB on July�24, 2014, and will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Two measurement categories continue to exist to account for financial liabilities in IFRS 9; fair value through profit or loss (�FVTPL�) and amortized cost. Financial liabilities held-for-trading are measured at FVTPL, and all other financial liabilities are measured at amortized cost unless the fair value option is applied. The treatment of embedded derivatives under the new standard is consistent with IAS 39 and is applied to financial liabilities and non-derivative host contracts not within the scope of this standard. The effective date for this standard is for annual periods beginning on or after January�1, 2018. The Company is currently evaluating the impact of IFRS 9 on its consolidated financial statements.

Amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortization

On May�12, 2014, the IASB issued Amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets. In issuing the amendments, the IASB has clarified that the use of revenue-based methods to calculate the depreciation of a tangible asset is not appropriate because revenue generated by an activity that includes the use of a tangible asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption for an intangible asset, however, can be rebutted in certain limited circumstances. The standard is to be applied prospectively for fiscal years beginning on or after January�1, 2016 with early application permitted. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

�

Page 6

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�

5.	Related party transactions

During the nine month period ended September�30, 2014, the Company incurred $1,939,468 (2013 - $2,254,852) in consulting fees to directors and compensation to other key management personnel. Key management personnel are those persons having the authority and responsibility for planning directing and controlling activities of the entity, directly or indirectly. Other compensation provided to key management is as follows:

�


�	��	2014		�	��	2013		�
�	��	$		�	��	$		�
Short-term employee benefits	��	�	114,601	��	��	�	126,499	��
Post-employment benefits	��	�	��	��	��	�	��	��
Other long-term benefits	��	�	��	��	��	�	��	��
Termination benefits	��	�	��	��	��	�	��	��
Share-based payments	��	�	178,188	��	��	�	212,041	��
	��	�	�	�	��	�	�	�
	��	�	292,789	��	��	�	338,540	��
	��	�	�	�	��	�	�	�

These transactions are in the normal course of operations and are measured at the exchange amount of consideration established and agreed by the related parties. At September�30, 2014, $316,547 (December�31, 2013 - $957,353) of the consulting fees are included in accrued liabilities.

�

6.	Financial instruments

Foreign currency risk

There is a risk to the Company�s earnings that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company�s financial results are measured and reported in U.S. dollars. The Company�s exposure to foreign currency risk is primarily related to fluctuations in the value of the Canadian dollar relative to that of the U.S. dollar since the Company�s directly associated costs generally occur in Canadian dollars. The Company uses forward exchange contracts in its management of foreign currency exposures. These contracts require the Company to sell U.S. dollars for Canadian dollars at contractual rates. As of September�30, 2014, the Company has forward exchange contracts outstanding of $5,100,000 (December�31, 2013 - $15,300,000). The Company recorded a loss of $135,617 (December 31, 2013 $130,289 gain) representing the fair value of the forward exchange contracts as at September�30, 2014. This amount is included in amounts receivable on the consolidated Statement of Financial Position. During the nine-month periods ended September�30, 2014 and 2013 the foreign exchange gain (loss) recognized in the Statement of Income and Total Comprehensive Income was ($291,771) (2013- ($57,661)).

Credit risk

The Company is exposed to credit risk in the event of non-performance by counterparties but mitigates this risk by dealing only with financially sound counterparties and, accordingly, does not anticipate loss for non-performance.

�

Page 7

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�

6.	Financial instruments (continued)

�

The Company�s diverse customer base includes certain large end-user customers who may dominate the Company�s revenue in a given period, which can result in a concentration of credit risk at the end of a reporting period. The Company has credit evaluation, approval and monitoring processes to mitigate potential credit risks. Anticipated bad debt loss has been provided for in the allowance for doubtful accounts which is based on historical trends, amounts past due, and other information indicating a customer has collection risk. The aging of accounts receivable at the reporting date was as follows:

�


�	��	September 2014		�	�	December 2013		�
�	��	$		�	�	$		�
Current	��	�	7,321,348	��	�	�	7,624,652	��
Past due (1-30 days)	��	�	2,558,547	��	�	�	2,999,701	��
Past due (31-60 days)	��	�	1,115,226	��	�	�	1,583,941	��
Past due (>60 days)	��	�	478,804	��	�	�	2,098,467	��
	��	�	�	�	�	�	�	�
	��	�	11,473,925	��	�	�	14,306,761	��
Allowance	��	�	(321,105	)�	�	�	(321,105	)�
	��	�	�	�	�	�	�	�
	��	�	11,152,820	��	�	�	13,985,656	��
	��	�	�	�	�	�	�	�

The Company�s maximum exposure to credit risk is the sum of the cash and cash equivalents, amounts receivable and long-term receivable which as at September�30, 2014 was $55,611,377 (December 31, 2013�$51,501,441).

Concentration risk

Management determines concentration risk through regular review of areas such as customer, vendor and geographic characteristics within all financial instruments.

As at September�30, 2014, three companies with greater than 10% concentration in accounts receivable accounted for 50% of the Company�s total accounts receivable (December 31, 2013�one company accounted for 30%).

The Company is obligated to make payments in respect of the following contractual maturities representing undiscounted cash flows:

�

��

�

��

�

��

Years

�

��

Carrying
amount

�

��

Contractual
cashflows

�

��

One

�

��

Two to
three

�

��

Four to
five

�

��

After five

�

��

�

��

�

��

�

��

�

��

�

��

�

Accounts payable and accrued liabilities

��

�

7,274,262

��

�

7,274,262

��

�

7,274,262

��

�

��

�

��

�

��

Airtime credits payable

��

�

389,582

��

�

390,561

��

�

390,561

��

�

��

�

��

�

��

Loan payable

��

�

2,279,625

��

�

3,267,438

��

�

251,305

��

�

502,610

��

�

502,610

��

�

2,010,913

��

�

��

�

��

�

��

�

��

�

��

�

��

�

9,943,469

��

�

10,932,261

��

�

7,916,128

��

�

502,610

��

�

502,610

��

�

2,010,913

��

�

��

�

��

�

��

�

��

�

��

�

The Company has manufacturing commitments for any components that it secures based on lead time, minimum order quantities and/or minimum lot sizes to meet forecast requirements that the Company updates on a monthly basis.

Fair value

The carrying values of amounts receivable and accounts payable approximate their fair values due to the relatively short-term to maturity.

�

Page 8

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�

6.	Financial instruments (continued)

�

Fair value (continued)

�

Financial instruments recorded at fair value in the consolidated Statement of Financial Position are classified using a hierarchy that reflects the significance of the inputs used in making the measurements. Cash and cash equivalents are designated as Level 1. Fair value of forward exchange contracts reflects the cash flows due to or from the Company as if the settlement had taken place on September�30, 2014 and is estimated by using quoted rates in an active market (Level 2).

Fair value of the warrant liability is determined using Black-Scholes using inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). During the nine-month period ended September�30, 2014 the liability increased (decreased) by $270,070 (2013 - ($44,550)) due to the revaluation of the warrants. This change is recorded in other income/expense in the Statement of Income and Total Comprehensive Income. The fair value of the warrants was based on an estimate of the fair value of the common shares and the following assumptions:

�


�	��	2014		�	�	2013		�
Expected warrant life	��	�	7.25�years	��	�	�	8.5�years	��
Volatility	��	�	45	%�	�	�	48	%�
Risk free interest rate	��	�	2.00	%�	�	�	2.50	%�
Dividend yield	��	�	NIL	��	�	�	NIL	��

�

7.	Share capital

Stock option plan

The Company�s 2009 Employee Stock Option Plan (the �Plan�) provides for the granting of options to employees, directors and consultants to acquire common shares of the Company. The Plan, as of September�30, 2014 provides for the issuance of 10,280,000 (December�31, 2013 - 10,280,000) common shares. Options granted under the Plan vest in equal annual amounts over a four-year period beginning one year after the date of issue. Certain grants under the Plan have been exempt from the four-year vesting provisions and have received board approval for immediate vesting. Options issued under the Plan expire seven years after issue.

During the nine month period ended September�30, 2014, 186,000 options were granted to employees with an estimated grant date fair value of $1.19 and 230,000 with an estimated grant date fair value of $1.03 (2013 - 135,256 options at $0.74, 67,000 options at $0.79).

�

8.	Guarantee and commitments

The Company has committed to operating leases for office space in Canada for a term of 10 years commencing in 2012 and Hong Kong for a term of two years. Rent expense for the nine month period ended September�30, 2014 was $877,854 (September�30, 2013 - $914,534).

The Company is committed to a third party developer for a amount of $722,000 million relating to phase two of the chipset development project.

�

9.	Subsequent event

On October�30, 2014, the Company repaid the Strategic Aerospace�& Defence Initiative (SADI) loan in full. The accreted carrying amount of the loan on October�30, 2014 was $2,298,186 and the amount repaid represented the contractual value of $3,277,611. The difference between the amount repaid and the carrying amount of $979,425 will be recorded as interest expense in the Statement of Income and Total Comprehensive Income.

�

Page 9

SkyWave Mobile Communications Inc.

Notes to the unaudited interim condensed consolidated financial statements

Nine-month periods ended September 30, 2014 and 2013

(U.S. dollars)

�

9.	Subsequent event (continued)

�

November�1, 2014, ORBCOMM Inc. and a subsidiary of ORBCOMM Inc. entered into an arrangement agreement with the Company to acquire 100% of the outstanding shares of the Company for a total consideration of $130 million, subject to certain adjustments, on a cash-free debt-free basis. Of the $130 million consideration, $7.5 million is payable to Inmarsat in the form of a promissory note in exchange for a portion of its interest in the Company. The arrangement agreement is binding but closing is subject to approvals as required under federal, state, provincial and telecommunication laws. Prior to the closing of the acquisition, all options will become fully vested and exercisable and any options not exercised will be cancelled. In addition, the warrants shall be exercised or otherwise cancelled upon payment of an amount from the Company�s available funds such that there are no warrants outstanding at the time of the acquisition. There is a management Incentive Plan (the �Plan�) which is triggered by a change of control and payable to certain employees and contractors (�Participants�) six months after closing (�Payment Date�). The amounts under the Plan will be put into escrow upon closing by the Company and are payable only if Participants are employed by the Company at the Payment Date. The payments under this Plan are contingent on the closing and therefore no amount has been accrued in the accompanying financial statements.

�

Page 10

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information gives effect to an Arrangement Agreement and Plan of Arrangement dated as of November�1, 2014 (the �Arrangement Agreement�) pursuant to which Soar Acquisition Inc. (�ORBCOMM Sub�), a wholly-owned subsidiary of ORBCOMM Inc. (�ORBCOMM� or the �Company�), acquired all of the outstanding common shares of SkyWave Mobile Communications Inc. (�SkyWave�) by way of a plan of arrangement under the Business Corporations Act (Ontario) (the �Acquisition�).

ORBCOMM financed a portion of the $130 million purchase price for the Acquisition by borrowing $70 million under its existing credit facility with Macquarie CAF LLC and the proceeds of an underwritten registered public offering of the Company�s common stock (the �Related Financing Transactions�).

In connection with the Acquisition and the entry into the Arrangement Agreement, ORBCOMM and Inmarsat Global Limited (�Inmarsat�) have entered into an Asset Purchase and Cooperation Agreement with respect to Inmarsat�s services to SkyWave post- Acquisition as well as the purchase, upon consummation of the Acquisition, of certain assets of SkyWave by affiliates of Inmarsat (the �Inmarsat Agreement�).

The unaudited pro forma condensed combined balance sheet information is presented as if the Acquisition, the Related Financing Transactions and the Inmarsat Agreement had occurred on September�30, 2014. The unaudited pro forma condensed combined statement of operations information is presented as if the Acquisition, the Related Financing Transactions and the Inmarsat Agreement had occurred on January�1, 2013.

The unaudited pro forma condensed combined financial information set forth below has been prepared by (i)�aggregating (a)�our historical consolidated financial data and (b)�the historical financial data for SkyWave, presented in accordance with International Financial Reporting Standards (�IFRS�), as issued by the International Accounting Standards Board (�IASB�), (ii)�adjusting certain SkyWave financial information to provide a consistent presentation with ORBCOMM�s financial statements and accounting principles generally accepted in the United States of America (�U.S. GAAP�) and (iii)�making certain pro forma adjustments thereto. The pro forma adjustments used in the preparation of the unaudited pro forma condensed combined financial information are based upon available information and assumptions that we believe are reasonable; however, we can provide no assurance that the assumptions are correct.

While we intend to have a third-party appraisal of the assets acquired and liabilities assumed, this appraisal has not yet begun. This financial information is very preliminary in nature, and is provided herein solely for the purposes of the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined statements of operations do not include costs that we expect to incur in connection with the Acquisition or any cost savings or other synergies that may result from the combination of the operations of ORBCOMM and SkyWave (or the costs necessary to achieve those cost savings and other synergies).

The unaudited pro forma condensed combined financial information has been provided for comparative purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial position that ORBCOMM would have reported had the Acquisition, the Related Financing Transactions and the Inmarsat Agreement occurred on the dates set forth above and should not be taken as a representation of ORBCOMM�s future consolidated results of operations or financial position.

Pursuant to the requirements of Article 11 of Regulation S-X, the historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (i)�directly attributable to the acquisition, (ii)�factually supportable, and (iii)�with respect to the statements of operations, expected to have a continuing impact on the combined results of the businesses.

SkyWave�s financial statements were prepared in U.S. dollars and in accordance with IFRS, as issued by the IASB, which differs in certain respects from U.S. GAAP. Adjustments have been made to conform SkyWave�s historical IFRS financial statements to U.S. GAAP for the purposes of the pro forma presentation, which are reflected in the SkyWave Adjustments column.

The unaudited pro forma condensed combined financial information should be read in conjunction with the:

�

Audited consolidated financial statements and notes thereto of ORBCOMM as of December�31, 2013 and for the year ended December�31, 2013, included in ORBCOMM�s Annual Report on Form 10-K for the year ended December�31, 2013 filed with the Securities and Exchange Commission (�SEC�) on March�17, 2014;

�

Unaudited condensed consolidated financial statements and notes thereto of ORBCOMM as of September�30, 2014 and for the quarter ended September�30, 2014, included in ORBCOMM�s Quarterly Report on Form 10-Q for the quarter ended September�30, 2014 filed with the SEC on November�10, 2014; and

�

Audited consolidated financial statements and notes thereto of SkyWave as of December�31, 2013 and 2012 and for the years ended December�31, 2013, 2012 and 2011 included as Exhibit 99.4 to ORBCOMM�s Current Report on Form 8-K as filed with the SEC on November�6, 2014, and unaudited interim condensed consolidated financial statements and notes thereto of SkyWave as of September�30, 2014 and for the nine months ended September�30, 2014 and 2013 included in Exhibit 99.2 to this Report.

�

Unaudited Pro Forma Condensed Combined Balance Sheet

As of September�30, 2014

�

($ in thousands)

��

ORBCOMM
As Reported

�

SkyWave
As
Reported*

�

SkyWave
Adjustments
(Note 2)

�

Pro Forma
Adjustments
(Note 4)

�

��

Pro
Forma
Combined

�

ASSETS

��

�

��

Current assets:

��

�

��

Cash and cash equivalents

��

40,554

��

�

43,455

��

�

(23,920

)�

�

(B)

��

60,089

��

Accounts receivable, net

��

�

16,679

��

�

11,594

��

�

(227

)�

�

(C)

��

�

28,046

��

Investment tax credits receivable

��

�

��

�

486

��

�

(486

)�

�

��

�

��

Inventories

��

�

12,013

��

�

1,884

��

�

��

�

13,897

��

Prepaid expenses and other current assets

��

�

3,702

��

�

422

��

�

486

��

�

5,685

��

�

(B)

��

�

10,129

��

�

(166

)�

�

(C)

��

Deferred tax assets

��

�

623

��

�

��

�

322

��

�

��

�

945

��

�

��

�

Total current assets

��

�

73,571

��

�

57,841

��

�

322

��

�

(18,628

)�

�

��

�

113,106

��

Satellite network and other equipment, net

��

�

179,241

��

�

��

�

11,396

��

�

(7,500

)�

�

(D)

��

�

183,137

��

Property and equipment

��

�

��

�

4,166

��

�

(4,166

)�

�

��

�

��

Goodwill

��

�

39,929

��

�

820

��

�

63,694

��

�

(E)

��

�

104,443

��

Intangible assets, net

��

�

27,012

��

�

8,433

��

�

(7,230

)�

�

50,797

��

�

(E)

��

�

79,012

��

Restricted cash

��

�

1,195

��

�

��

�

��

�

1,195

��

Long-term receivable

��

�

��

�

562

��

�

(562

)�

�

��

�

��

Other assets

��

�

4,336

��

�

752

��

�

562

��

�

1,540

��

�

(B)

��

�

7,190

��

Deferred tax assets

��

�

��

�

4,575

��

�

(322

)�

�

��

�

4,253

��

Deferred income taxes

��

�

1,253

��

�

��

�

��

�

1,253

��

�

��

�

Total assets

��

326,537

��

�

77,149

��

�

��

�

89,903

��

�

��

493,589

��

�

��

�

LIABILITIES AND EQUITY

��

�

��

Current liabilities:

��

�

��

Accounts payable

��

7,169

��

�

��

�

3,187

��

�

(227

)�

�

(C)

��

10,129

��

Accrued expenses

��

�

18,407

��

�

��

�

5,077

��

�

��

�

23,484

��

Accounts payable and accrued liabilities

��

�

��

�

7,274

��

�

(7,274

)�

�

��

�

��

Provisions

��

�

��

�

600

��

�

(600

)�

�

��

�

��

Current portion of deferred revenue

��

�

3,782

��

�

227

��

�

(166

)�

�

(C)

��

�

3,843

��

Airtime credits payable

��

�

��

�

390

��

�

(390

)�

�

��

�

��

Current portion loan payable

��

�

��

�

251

��

�

(251

)�

�

(B)

��

�

��

�

��

�

Total current liabilities

��

�

29,358

��

�

8,742

��

�

��

�

(644

)�

�

��

�

37,456

��

Note payable � related party

��

�

1,446

��

�

��

�

��

�

1,446

��

Warrants

��

�

��

�

946

��

�

(946

)�

�

��

�

��

Airtime credits payable

��

�

��

�

��

�

��

�

��

�

��

Deferred leasing costs

��

�

��

�

1,214

��

�

(1,214

)�

�

��

�

��

Note payable

��

�

45,000

��

�

2,028

��

�

67,972

��

�

(B)

��

�

115,000

��

Deferred revenue, net of current portion

��

�

2,347

��

�

��

�

��

�

��

�

2,347

��

Deferred tax liabilities

��

�

7,331

��

�

��

�

13,780

��

�

(F)

��

�

21,111

��

Other liabilities

��

�

5,783

��

�

��

�

2,160

��

�

(946

)�

�

(G)

��

�

6,997

��

�

��

�

Total liabilities

��

�

91,265

��

�

12,930

��

�

��

�

80,162

��

�

��

�

184,357

��

�

��

�

Commitments and contingencies Equity:

��

�

��

ORBCOMM Inc. stockholders' equity

��

�

��

Preferred Stock Series A

��

�

891

��

�

��

�

��

�

891

��

Common stock

��

�

��

�

82,801

��

�

(82,786

)�

�

(H)

��

�

��

Additional paid-in capital

��

�

297,203

��

�

3,627

��

�

74,318

��

�

(H)

��

�

375,148

��

Accumulated other comprehensive income

��

�

(253

)�

�

��

�

��

�

(253

)�

Accumulated deficit

��

�

(62,496

)�

�

(22,209

)�

�

18,209

��

�

(H)

��

�

(66,496

)�

Less treasury stock, at cost

��

�

(96

)�

�

��

�

��

�

(96

)�

��

�

��

�

Total ORBCOMM, Inc. stockholders' equity

��

�

235,304

��

�

64,219

��

�

��

�

9,741

��

�

��

�

309,264

��

Noncontrolling interest

��

�

(32

)�

�

��

�

��

�

(32

)�

��

�

��

�

Total equity

��

�

235,272

��

�

64,219

��

�

��

�

9,741

��

�

��

�

309,232

��

�

��

�

Total liabilities and equity

��

326,537

��

�

77,149

��

�

��

�

89,903

��

�

��

493,589

��

�

��

�

(*)	In accordance with IFRS, as issued by the IASB.

See Notes to Unaudited Pro Forma Condensed Combined Financial Information.

�

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December�31, 2013

�

($ in thousands)

��

ORBCOMM
As
Reported*

�

SkyWave
As
Reported**

�

SkyWave
Adjustments
(Note 2)

�

Pro Forma
Adjustments
(Note 4)

�

��

Pro
Forma
Combined

�

Revenues:

��

�

��

Service revenues

��

55,957

��

�

��

�

31,015

��

�

(1,313

)�

�

(I)

��

85,659

��

Product sales

��

�

18,255

��

�

��

�

26,949

��

�

(240

)�

�

(I)

��

�

44,964

��

Revenues

��

�

��

�

57,964

��

�

(57,964

)�

�

��

�

��

�

��

�

Total revenues

��

�

74,212

��

�

57,964

��

�

��

�

(1,553

)�

�

��

�

130,623

��

�

��

�

Cost of revenues, exclusive of depreciation and amortization shown below:

��

�

��

Cost of services

��

�

19,806

��

�

��

�

13,419

��

�

(1,313

)�

�

(I)

��

�

31,645

��

�

(267

)�

�

(I)

��

Cost of product sales

��

�

13,736

��

�

��

�

19,755

��

�

(240

)�

�

(I)

��

�

33,251

��

Cost of sales

��

�

��

�

31,123

��

�

(31,123

)�

�

��

�

��

�

��

�

Gross profit

��

�

40,670

��

�

26,841

��

�

(2,051

)�

�

267

��

�

��

�

65,727

��

�

��

�

Operating expenses:

��

�

��

Selling, general and administrative

��

�

24,551

��

�

��

�

13,135

��

�

��

�

37,686

��

General and administrative

��

�

2,276

��

�

(2,276

)�

�

��

�

��

Sales and marketing

��

�

10,780

��

�

(10,780

)�

�

��

�

��

Product development

��

�

2,759

��

�

��

�

2,810

��

�

1,200

��

�

(K)

��

�

6,769

��

Depreciation and amortization

��

�

6,001

��

�

��

�

3,272

��

�

2,761

��

�

(L)

��

�

12,034

��

Acquisition-related costs

��

�

1,658

��

�

��

�

��

�

1,658

��

Engineering, research and development

��

�

��

�

8,699

��

�

(8,699

)�

�

��

�

��

�

��

�

Income from operations

��

�

5,701

��

�

5,086

��

�

487

��

�

(3,694

)�

�

��

�

7,580

��

�

��

�

Other income (expense):

��

�

��

Interest income

��

�

��

�

573

��

�

��

�

611

��

Other income (expense)

��

�

373

��

�

��

�

(273

)�

�

��

�

115

��

Interest expense

��

�

(58

)�

�

(396

)�

�

(4,255

)�

�

(M)

��

�

(4,709

)�

Adjustment to airtime credits payable

��

�

��

�

172

��

�

(172

)�

�

��

�

��

Adjustment to fair value of warrants

��

�

��

�

��

�

(42

)�

�

��

�

��

�

��

�

Total other income (expense)

��

�

353

��

�

406

��

�

(487

)�

�

(4,255

)�

�

��

�

(3,983

)�

��

�

��

�

Income before income taxes

��

�

6,054

��

�

5,492

��

�

)�

�

(7,949

)�

�

��

�

3,597

��

Income taxes

��

�

1,295

��

�

526

��

�

(1,540

)�

�

(N)

��

�

281

��

�

��

�

Net income

��

�

4,759

��

�

4,966

��

�

)�

�

(6,409

)�

�

��

�

3,316

��

Less: Net income attributable to the noncontrolling interests

��

�

160

��

�

��

�

��

�

160

��

�

��

�

Net income attributable to parent company

��

4,599

��

�

4,966

��

�

)�

�

(6,409

)�

�

��

3,156

��

�

��

�

Net income attributable to parent company common stockholders

��

4,540

��

�

4,966

��

�

)�

�

(6,409

)�

�

��

3,097

��

�

��

�

Per share information-basic:

��

�

��

Net income attributable to parent company common stockholders

��

0.10

��

�

��

0.05

��

�

��

�

Per share information-diluted:

��

�

��

Net income attributable to parent company common stockholders

��

0.09

��

�

��

0.05

��

�

��

�

Weighted average common shares outstanding:

��

�

��

Basic

��

�

47,420

��

�

��

�

62,206

��

�

��

�

Diluted

��

�

48,770

��

�

��

�

63,556

��

�

��

�

(*)	See Note 1 � �Basis of Presentation� for a discussion regarding certain reclassifications ORBCOMM made to prior period information.

(**)	In accordance with IFRS, as issued by the IASB.

See Notes to Unaudited Pro Forma Condensed Combined Financial Information.

�

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September�30, 2014

�

($ in thousands)

��

ORBCOMM
As Reported

�

SkyWave
As
Reported*

�

SkyWave
Adjustments
(Note 2)

�

Pro Forma
Adjustments
(Note 4)

�

��

Pro
Forma
Combined

�

Revenues:

��

�

��

Service revenues

��

44,512

��

�

��

�

25,544

��

�

(970

)�

�

(I)

��

69,086

��

Product sales

��

�

22,262

��

�

��

�

21,220

��

�

��

�

��

�

43,482

��

Revenues

��

�

��

�

46,764

��

�

(46,764

)�

�

��

�

��

�

��

�

Total revenues

��

�

66,774

��

�

46,764

��

�

��

�

(970

)�

�

��

�

112,568

��

�

��

�

Cost of revenues, exclusive of depreciation and amortization shown below:

��

�

��

Cost of services

��

�

14,991

��

�

��

�

11,256

��

�

(970

)�

�

(I)

��

�

24,838

��

�

(439

)�

�

(I)

��

Cost of product sales

��

�

16,098

��

�

��

�

14,660

��

�

��

�

��

�

30,758

��

Cost of sales

��

�

��

�

24,342

��

�

(24,342

)�

�

��

�

��

�

Gross profit

��

�

35,685

��

�

22,422

��

�

(1,574

)�

�

439

��

�

��

�

56,972

��

�

��

�

Operating expenses:

��

�

��

Selling, general and administrative

��

�

23,840

��

�

��

�

9,572

��

�

(382

)�

�

(J)

��

�

33,030

��

General and administrative

��

�

1,816

��

�

(1,816

)�

�

��

Sales and marketing

��

�

7,646

��

�

(7,646

)�

�

��

Product development

��

�

2,108

��

�

��

�

2,151

��

�

814

��

�

(K)

��

�

5,073

��

Depreciation and amortization

��

�

6,470

��

�

��

�

2,240

��

�

2,008

��

�

(L)

��

�

10,718

��

Acquisition-related costs

��

�

1,613

��

�

��

�

��

�

��

�

��

�

1,613

��

Engineering, research and development

��

�

��

�

6,176

��

�

(6,176

)�

�

��

�

��

�

��

�

Income from operations

��

�

1,654

��

�

6,784

��

�

101

��

�

(2,001

)�

�

��

�

6,538

��

�

��

�

Other income (expense):

��

�

��

Interest income

��

�

��

�

226

��

�

��

�

��

�

��

�

257

��

Other income (expense)

��

�

107

��

�

��

�

(299

)�

�

��

�

��

�

(120

)�

Interest expense

��

�

)�

�

(191

)�

�

��

�

(3,117

)�

�

(M)

��

�

(3,311

)�

Adjustment to airtime credits payable

��

�

��

�

��

�

(72

)�

�

��

�

��

�

��

Adjustment to fair value of warrants

��

�

��

�

(270

)�

�

270

��

�

��

�

��

�

��

�

��

�

Total other income (expense)

��

�

135

��

�

(91

)�

�

(101

)�

�

(3,117

)�

�

��

�

(3,174

)�

��

�

��

�

Income before income taxes

��

�

1,789

��

�

6,693

��

�

)�

�

(5,118

)�

�

��

�

3,364

��

Income taxes

��

�

745

��

�

915

��

�

)�

�

(780

)�

�

(N)

��

�

880

��

�

��

�

Net income

��

�

1,044

��

�

5,778

��

�

��

�

(4,338

)�

�

��

�

2,484

��

Less: Net income attributable to the noncontrolling interests

��

�

105

��

�

��

�

��

�

��

�

��

�

105

��

�

��

�

Net income attributable to parent company

��

939

��

�

5,778

��

�

��

�

(4,338

)�

�

��

2,379

��

�

��

�

Net income attributable to parent company common stockholders

��

920

��

�

5,778

��

�

��

�

(4,338

)�

�

��

2,360

��

�

��

�

Per share information-basic:

��

�

��

Net income attributable to parent company common stockholders

��

0.02

��

�

��

0.03

��

�

��

�

Per share information-diluted:

��

�

��

Net income attributable to parent company common stockholders

��

0.02

��

�

��

0.03

��

�

��

�

Weighted average common shares outstanding:

��

�

��

Basic

��

�

54,561

��

�

��

�

69,347

��

�

��

�

Diluted

��

�

56,275

��

�

��

�

71,061

��

�

��

�

(*)	In accordance with IFRS, as issued by the IASB.

See Notes to Unaudited Pro Forma Condensed Combined Financial Information.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

Note 1 � Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and was based on the historical financial statements of ORBCOMM and SkyWave.

ORBCOMM has made certain reclassifications to prior period information to conform to the current period presentation, including (i)�the reclassification of depreciation and amortization from cost of services, cost of product sales, product development and selling, general and administrative (�SG&A�) expenses into its own caption in the condensed consolidated statements of operations and (ii)�the inclusion of a gross profit subtotal caption on the condensed consolidated statements of operations. These reclassifications had no effect on previously reported net income. For consistent presentation in the unaudited pro forma condensed combined statement of operations, the consolidated statement of operations for the year ended December�31, 2013 has been adjusted to reflect these reclassifications.

The acquisition method of accounting is based on authoritative guidance for business combinations and uses the fair value concepts in accordance with U.S. GAAP. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (i)�directly attributable to the Acquisition, (ii)�factually supportable and (iii)�with respect to the unaudited pro forma condensed combined statements of operations, are expected to have a continuing impact on the results of operations.

The authoritative guidance for fair value defines the term �fair value,� sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of inputs used to develop the fair value measures. Fair value is defined in the guidance as �the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.� This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, ORBCOMM may be required to record assets that it does not intend to use or sell (defensive assets) and/or to value assets at fair value measurements that do not reflect its intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

The authoritative guidance for business combinations requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date if fair value can reasonably be estimated. If the fair value of an asset or liability that arises from a contingency cannot be determined, the asset or liability is recognized if it is probable that an asset existed or a liability has been incurred at the acquisition date and the amount of such asset or liability can be reasonably determined. ORBCOMM has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the SkyWave assets to be acquired and the liabilities to be assumed and the related allocation of purchase price. A final determination of the fair value of SkyWave�s assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of SkyWave that exist as of the date of completion of the Acquisition and, therefore, cannot be made prior to that date. Accordingly, the accompanying unaudited pro forma purchase price allocation is preliminary and is subject to further adjustments as additional information becomes available and as additional analyses are performed.

Certain IFRS to U.S. GAAP adjustments have been made to the historical financial statements of SkyWave. Although we believe these adjustments represent the known material adjustments necessary to present SkyWave�s financial statements in conformity with U.S. GAAP, the accompanying unaudited pro forma IFRS to U.S. GAAP adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

ORBCOMM performed a preliminary review of SkyWave�s accounting policies, based primarily on available information during diligence, to determine whether any adjustments were necessary to ensure comparability in the pro forma condensed combined financial statements. At this time, ORBCOMM is not aware of any unadjusted differences that would have a material impact on the pro forma condensed combined financial statements. As more information becomes available, ORBCOMM will perform a more detailed review of SkyWave�s accounting policies. As a result of that review, differences may be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

Note 2 � Reclassification and U.S. GAAP Adjustments to SkyWave Financial Statements

The following reclassifications and U.S. GAAP adjustments have been made to the historical balance sheet and statements of operations of SkyWave to conform to ORBCOMM�s presentation as follows:

Reclassification and U.S. GAAP adjustments included in the unaudited adjusted historical balance sheet as of September�30, 2014:

�

��

As
Reported

�

��

Adjustments

�

As
Adjusted

�

Investment tax credits receivable

��

486

��

(486

)��(i)�

�

��

Prepaid expenses and other current assets

��

�

422

��

�

486

��(i)�

�

908

��

Long-term receivable

��

�

562

��

�

(562

)��(ii)�

�

��

Other assets

��

�

752

��

�

562

��(ii)�

�

1,314

��

Deferred tax assets � current

��

�

��

�

322

��(iii)�

�

322

��

Satellite network and other equipment

��

�

��

�

11,396

��(iv)�

�

11,396

��

Property and equipment

��

�

4,166

��

�

(4,166

)��(iv)�

�

��

Intangible assets, net

��

�

8,433

��

�

(7,230

)��(iv)�

�

1,203

��

Deferred tax assets � non current

��

�

4,949

��

�

(322

)��(iii)�

�

4,627

��

Accounts payable

��

�

��

�

3,187

��(v)�

�

3,187

��

Accrued expenses

��

�

��

�

5,077

��(v)�

�

5,077

��

Accounts payable and accrued liabilities

��

�

7,274

��

�

(7,274

)��(v)�

�

��

Provisions

��

�

600

��

�

(600

)��(v)�

�

��

Airtime credit payable

��

�

390

��

�

(390

)��(v)�

�

��

Warrants

��

�

946

��

�

(946

)��(vi)�

�

��

Deferred leasing costs

��

�

1,214

��

�

(1,214

)��(vi)�

�

��

Other liabilities

��

�

��

�

2,160

��(vi)�

�

2,160

��

�

(i)

Investment tax credits receivable represents refundable amounts from the Canada Scientific Research & Experimental Development program for R&D expenditures and has been reclassified to prepaid expenses and other current assets for consistent presentation in the unaudited pro forma condensed combined balance sheet.

(ii)	Long-term receivables represents receivables on hardware sales and have been reclassified to other assets for consistent presentation in the unaudited pro forma condensed combined balance sheet.

(iii)

Adjustment represents a reclassification between current deferred tax assets and non-current deferred tax assets to conform the historical SkyWave financials, prepared in accordance with IFRS, as issued by the IASB, to U.S. GAAP.

(iv)	Software components and gateway earth stations, classified by SkyWave as intangible assets, as well as tangible property and equipment, have been reclassified to satellite network and other equipment, net for consistent presentation in the unaudited pro forma condensed combined balance sheet.

(v)	Accounts payable and accrued liabilities, airtime credits payable, current and provisions have been reclassified to conform to ORBCOMM's presentation of accounts payable.

(vi)	Warrants and deferred leasing costs have been reclassified to other liabilities, non-current.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

Reclassification included in the unaudited adjusted historical statement of operations for the year ended December�31, 2013:

�

��

As
Reported

�

��

Reclassification

�

As
Adjusted

�

Service revenues

��

31,015

��(i)�

�

31,015

��

Product sales

��

�

��

�

26,949

��(i)�

�

26,949

��

Revenues

��

�

57,964

��

�

(57,964

)��(i)�

�

��

Cost of services

��

�

��

�

13,419

��(ii)�

�

13,419

��

Cost of product sales

��

�

��

�

19,755

��(ii)�

�

19,755

��

Cost of sales

��

�

31,123

��

�

(31,123

)��(ii)�

�

��

Selling, general and administrative

��

�

��

�

13,135

��(ii)�

�

13,135

��

General and administrative

��

�

2,276

��

�

(2,276

)��(ii)�

�

��

Sales and marketing

��

�

10,780

��

�

(10,780

)��(ii)�

�

��

Product development

��

�

��

�

2,810

��(ii)�

�

2,810

��

Depreciation and amortization

��

�

��

�

3,272

��(ii)�

�

3,272

��

Engineering, research and development

��

�

8,699

��

�

(8,699

)��(ii)�

�

��

Other income (expense)

��

�

��

�

(273

)��(ii)�

�

(258

)�

Adjustment to airtime credits payable

��

�

172

��

�

(172

)��(ii)�

�

��

Adjustment to fair value of warrants

��

�

��

�

(42

)��(ii)�

�

��

�

(i)	Revenues have been reclassified to service revenues and product sales for consistent presentation in the pro forma condensed combined statement of operations.

(ii)	SkyWave costs and expenses have been reclassified to conform to ORBCOMM�s presentation.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

Reclassification included in the unaudited adjusted historical statement of operations for the nine months ended September�30, 2014:

�

��

As
Reported

�

Reclassification

�

As
Adjusted

�

Service revenues

��

�

25,544

��(i)�

�

25,544

��

Product sales

��

�

��

�

21,220

��(i)�

�

21,220

��

Revenues

��

�

46,764

��

�

(46,764

)��(i)�

�

��

Cost of services

��

�

��

�

11,256

��(ii)�

�

11,256

��

Cost of product sales

��

�

��

�

14,660

��(ii)�

�

14,660

��

Cost of sales

��

�

24,342

��

�

(24,342

)��(ii)�

�

��

Selling, general and administrative

��

�

��

�

9,572

��(ii)�

�

9,572

��

General and administrative

��

�

1,816

��

�

(1,816

)��(ii)�

�

��

Sales and marketing

��

�

7,646

��

�

(7,646

)��(ii)�

�

��

Product development

��

�

��

�

2,151

��(ii)�

�

2,151

��

Depreciation and amortization

��

�

��

�

2,240

��(ii)�

�

2,240

��

Engineering, research and development

��

�

6,176

��

�

(6,176

)��(ii)�

�

��

Other income (expense)

��

�

��

�

(299

)��(ii)�

�

(227

)�

Adjustment to airtime credits payable

��

�

��

�

(72

)��(ii)�

�

��

Adjustment to fair value of warrants

��

�

(270

)�

�

270

��(ii)�

�

��

�

(i)	Revenues have been reclassified to service revenues and product sales for consistent presentation in the unaudited pro forma condensed combined statement of operations.

(ii)	SkyWave costs and expenses have been reclassified to conform to ORBCOMM�s presentation.

The unaudited pro forma condensed combined statements of operations for the year ended December�31, 2013 and the nine months ended September�30, 2014 give effect to the Acquisition, the Related Financing Transactions and the Inmarsat Agreement as if they had occurred on January�1, 2013. The unaudited condensed combined balance sheet as of September�30, 2014 gives effect to the Acquisition, the Related Financing Transactions and the Inmarsat Agreement as if they had occurred on September�30, 2014.

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined company would have been had the Acquisition, the Related Financing Transactions and the Inmarsat Agreement occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or financial position.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

Note 3 � Preliminary Purchase Price Allocation

The total consideration for the transaction is $130,000 in cash and a promissory note, in a debt-free cash-free transaction. The combined company will allocate the purchase price paid by ORBCOMM to the fair value of the SkyWave assets acquired and liabilities assumed. The pro forma purchase price allocation below has been developed based on preliminary estimates of fair value using the historical financial statements of SkyWave as of September�30, 2014. In addition, the allocation of the purchase price to acquired intangible assets is based on preliminary fair value estimates and is subject to final management analysis. Once ORBCOMM completes this analysis, additional insight may be gained that could impact: (i)�the estimated total value assigned to intangible assets, (ii)�the estimated allocation of value between finite-lived and indefinite-lived intangible assets and/or (iii)�the estimated weighted- average useful life of each category of intangible assets. The estimated intangible asset values and their useful lives could be impacted by a variety of factors.

The estimated intangible assets are comprised of customer contracts with an estimated useful life of 11 years, technology with an estimated useful life of 10 years, and trade names with an estimated useful life of 9 years, which is consistent with the estimated benefit period. Since ORBCOMM has limited information at this time to value all of the intangible assets, the estimated fair values were based primarily on current estimates of SkyWave�s expected future cash flows for all customer contracts and projected revenue for all trade names and technology. ORBCOMM expects that the estimated value assigned to SkyWave�s customer contracts is likely to change as ORBCOMM analyzes the specifics of SkyWave�s customer contracts and as life and renewal assumptions are refined. Additional intangible asset classes may be identified as the valuation process continues, however such items are currently not expected to be material to the overall purchase price allocation. A 10% change in the amount allocated to identifiable intangible assets would increase or decrease annual amortization expense by approximately $628. The residual amount of the purchase price after preliminary allocation to identifiable intangibles has been allocated to goodwill. The actual amounts recorded when the final valuation is complete may differ materially from the pro forma amounts presented below:

�


Assets acquired:	��
Current assets	��	$	27,508	��
Satellite network and other equipment, net	��	�	3,896	��
Other non-current assets	��	�	5,567	��
	��	�	�	�
Total tangible assets acquired	��	�	36,971	��
Intangible assets acquired	��	�	52,000	��
Liabilities assumed	��	�	(9,705	)�
Deferred tax liability	��	�	(13,780	)�
	��	�	�	�
Total assets acquired in excess of liabilities assumed	��	�	65,486	��
Goodwill	��	�	64,514	��
	��	�	�	�
Total purchase price	��	$	130,000	��
	��	�	�	�

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

Note 4 � Unaudited Pro Forma Adjustments

Unaudited Pro Forma Condensed Combined Balance Sheet

(A) Sources and Uses

�


Sources of funds (1):	��
Credit Facility	��	$	70,000	��
Proceeds from November 2014 Equity Offering	��	�	82,800	��
	��	�	�	�
Total sources of funds	��	$	152,800	��
	��	�	�	�
Use of funds:	��
Cash payments to SkyWave stockholders	��	$	122,500	��
Equity offering issuance costs	��	�	4,840	��
ORBCOMM transaction costs (2)	��	�	4,000	��
New credit facility issuance costs (3)	��	�	1,925	��
Cash available for general working capital	��	�	19,535	��
	��	�	�	�
Total use of funds	��	$	152,800	��
	��	�	�	�

�

(1)

ORBCOMM funded the Acquisition by drawing $70,000 under the Term B3 Facility (as defined below) and from the proceeds of an underwritten registered public offering of ORBCOMM common stock (the �November 2014 Equity Offering�), in which the Company raised gross proceeds of $82,800, before deducting discounts, commissions, fees and expenses. For more information regarding the November 2014 Equity Offering, see ORBCOMM�s prospectus supplement as filed with the SEC on November�10, 2014.

(2)	In accordance with applicable accounting guidance, the transaction costs are expensed as they are incurred.

(3)	See Note (B)�below for more information on debt financing fees.

In connection with the Inmarsat Agreement, Inmarsat settled the $7,500 promissory note on the closing date of the Acquisition for the value of the assets to be transferred to Inmarsat.

On September�30, 2014, ORBCOMM entered into a credit agreement (the �Credit Agreement�) with Macquarie CAF LLC (�Macquarie� or the �Lender�) in order to refinance the Company�s $45,000 9.5% Senior Secured Notes due January�4, 2018 (the �Senior Notes�). Pursuant to the Credit Agreement, the Lender provided secured credit facilities (the �Secured Credit Facilities�) in an aggregate amount up to $160,000 comprised of (i)�a term loan facility in an aggregate principal amount of up to $70,000 (the �Initial Term Loan Facility�); (ii)�a $10,000 revolving credit facility (the �Revolving Credit Facility�); (iii)�a term loan facility in an aggregate principal amount of up to $10,000 (the �Term B2 Facility�), the proceeds of which, if drawn, may be used to finance a potential acquisition; and (iv)�a term loan facility in an aggregate principal amount of up to $70,000 (the �Term B3 Facility�), the proceeds of which may be used to partially finance the Acquisition. For more information, see ORBCOMM�s Current Report on Form 8-K as filed with the SEC on October�6, 2014.

Prior to the consummation of the Acquisition, ORBCOMM borrowed $70,000 under the Term B3 Facility, the proceeds of which will be used to fund in part the Acquisition.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

(B) Cash and Debt

Pro forma Cash

The Acquisition was agreed to on a cash-free debt-free basis. Upon closing of the Acquisition, SkyWave agreed to settle all outstanding debt and distribute the remaining cash to its shareholders. The adjustment to cash is comprised of the following items:

�


Proceeds from Credit Facility	��	$	70,000	��
Proceeds from November 2014 Equity Offering	��	�	82,800	��
Cash payments to SkyWave stockholders	��	�	(122,500	)�
Equity offering issuance costs	��	�	(4,840	)�
ORBCOMM transaction costs	��	�	(4,000	)�
New credit facility issuance costs	��	�	(1,925	)�
SkyWave cash and cash equivalents distributed to shareholders prior to closing	��	�	(38,155	)�
SkyWave cash and cash equivalents distributed to escrow account in connection with the Incentive Plan	��	�	(5,300	)�
	��	�	�	�
Net cash adjustment	��	$	(23,920	)�
	��	�	�	�

Pro forma Debt

As described above, ORBCOMM borrowed $70,000 under the Term B3 Facility, which was used to fund the Acquisition. Additionally, deferred financing fees of $385 and $1,540 were added to prepaid expenses and other current assets and other assets, respectively, in connection with the borrowing under the Term B3 Facility. The adjustments to debt is comprised of the following:

�


ORBCOMM notes payable as of September 30, 2014	��	$	45,000	��
SkyWave current notes payable as of September 30, 2014	��	�	251	��
SkyWave noncurrent notes payable as of September 30, 2014	��	�	2,028	��
	��	�	�	�
Total debt as of September 30, 2014	��	�	47,279	��
	��	�	�	�
Settlement of SkyWave non-current notes payable upon closing	��	�	(2,028	)�
ORBCOMM credit facility to finance Acquisition	��	�	70,000	��
	��	�	�	�
Non-current debt adjustments	��	�	67,972	��
Settlement of SkyWave current notes payable upon closing	��	�	(251	)�
	��	�	�	�
Total pro-forma debt	��	$	115,000	��
	��	�	�	�

Prepaid SkyWave Management Incentive Plan

SkyWave�s Management Incentive Plan (the �Incentive Plan�) is triggered by a change of control and payable to certain employees and contractors six months after closing (the �Payment Date�). The amounts under the Incentive Plan were put into escrow upon closing by SkyWave and are payable only to participants employed by the Company at the Payment Date. In relation to the Incentive Plan, $5,300 was added to prepaid expenses and other current assets which represents the funding of the Incentive Plan upon change of control. This will be expensed to the statement of operations of the combined company over the six month period after the closing of the Acquisition. This was not included as an adjustment in the pro forma statement of operations due to the non-recurring nature of this agreement.

(C) Intercompany transactions between ORBCOMM and SkyWave

Adjustments have been included in the unaudited pro forma condensed combined balance sheet to eliminate intercompany transactions between ORBCOMM and SkyWave. SkyWave provides products and services to ORBCOMM for resale to ORBCOMM customers. A portion of the service is prepaid by ORBCOMM to SkyWave.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

(D) Satellite network and other equipment, net

Based on the preliminary fair value assessment, the carrying value of SkyWave�s property and equipment at September�30, 2014 approximates fair value. As such, the carrying value of SkyWave�s property and equipment was used in the preliminary purchase price allocation, and no fair value adjustments were made to the unaudited pro forma condensed combined balance sheet. Adjustments may be required when additional information is obtained and a more detailed review is performed over the fair value of property and equipment. The actual amounts recorded when valuation procedures are completed may differ materially from the current book value of property and equipment.

Adjustments have been included in the unaudited pro forma condensed combined balance sheet with respect to the transfer of assets to Inmarsat for settlement of the $7,500 promissory note under the terms of the Inmarsat Agreement.

(E) Goodwill and other intangible assets

The net adjustment to goodwill includes the elimination of SkyWave pre-Acquisition goodwill balances and is calculated as follows (in thousands):

�


Purchase price allocation to goodwill (Note 3)	��	$	64,514	��
Elimination of pre-Acquision Skywave goodwill	��	�	(820	)�
	��	�	�	�
Total adjustment to goodwill	��	$	63,694	��
	��	�	�	�

The net adjustment to other intangible assets, net, is calculated as follows:

�


New intangibles recorded:	��
Value assigned to intangible assets acquired (1)	��	$	52,000	��
Elimination of Skywave pre-Acquisition other intangibles	��	�	(1,203	)�
	��	�	�	�
Total adjustment to intangible assets, net	��	$	50,797	��
	��	�	�	�

�

(1)	Based on the preliminary valuation, intangible assets acquired is comprised of $36,000 of customer contracts, $13,000 of technology and $3,000 of trade names.

See Note 3 � �Preliminary Purchase Price and Allocation� for the estimated purchase price allocation. The final valuation could differ significantly from the current estimate. The pro forma purchase price allocation is preliminary as final valuation procedures have not yet been performed. The pro forma presentation assumes that the historical values of SkyWave�s tangible assets and liabilities approximate fair value. Additionally, the allocation of the purchase price to acquired intangible assets is preliminary and subject to the final outcome of management�s analysis to be conducted, with the assistance of valuation advisors. The residual amount of the purchase price has been allocated to goodwill. The actual amounts recorded when the valuation is finalized may differ materially from the pro forma amounts presented herein.

(F) Deferred taxes

The adjustment to deferred tax liabilities reflects an increase of $13,780 associated with the recording of new identifiable intangible assets for the combined company. This amount was calculated using a tax rate of 26.5%, which represents the effective tax rate which would have been in effect for the year ended December�31, 2013. The actual amounts recorded for deferred taxes may differ materially from the pro forma amounts presented herein.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

(G) Other liabilities

Included in other liabilities is a $946 warrant liability. The warrant liability relates to an option for employees of SkyWave to purchase common stock of SkyWave at an exercise price of CDN$0.79. These warrants will be settled by SkyWave prior to the Acquisition.

(H) Equity

The historical stockholders� equity of SkyWave will be eliminated upon the completion of the Acquisition. The total stockholders� equity of the combined company was increased over the pre-Acquisition ORBCOMM amounts by the value of the common stock issued in connection with the November 2014 Equity Offering. The table below summarizes the change in stockholders� equity as a result of the Acquisition:

�

��

Common
Stock

�

Additional
Paid-In
Capital

�

Accumulated
Deficit

�

Elimination of pre-Acquisition Skywave equity balances

��

(82,801

)�

�

(3,627

)�

�

22,209

��

Impact of November 2014 equity offering, net of fees

��

�

��

�

77,945

��

�

��

Estimated transaction fees

��

�

��

�

��

�

(4,000

)�

��

�

Total pro-forma adjustments

��

(82,786

)�

�

74,318

��

�

18,209

��

�

Unaudited Pro Forma Condensed Combined Statements of Operations

(I) Revenues and Cost of revenues

Adjustments have been included in the unaudited pro forma condensed combined statement of operations to eliminate revenues and cost of revenues from transactions between ORBCOMM and SkyWave. SkyWave provides products and services to ORBCOMM for resale to ORBCOMM customers.

In addition, adjustments of $267 for the year ended December�31, 2013 and $439 for the nine months ended September�30, 2014 have been included to reflect an estimated reduction in SkyWave cost of services related to the amended Inmarsat IsatData Pro airtime pricing under the Inmarsat Agreement.

(J) Selling, general and administrative

Adjustments have been included in the unaudited pro forma condensed combined statement of operations for the nine months ended September�30, 2014 to eliminate $382 of costs incurred by SkyWave in connection with the Acquisition.

(K) Product development

Adjustments have been included in the unaudited pro forma condensed combined statements of operations for the year ended December�31, 2013 and the nine months ended September�30, 2014 to eliminate $1,200 and $814, respectively, of investment tax credits to product development that would not be available to SkyWave after the Acquisition.

(L) Depreciation and amortization

Adjustments have been included in the unaudited pro forma condensed combined statements of operations for the year ended December�31, 2013 and the nine months ended September�30, 2014 to eliminate historical amortization expenses of $760 and $570, respectively, related to historical values of SkyWave intangible assets, and to record estimated amortization expenses of $4,769 and $3,577, respectively, based on estimated preliminary values of the acquired intangible assets. The estimated preliminary values of the acquired intangible assets have a weighted average useful life of 10.95 years.

�

Notes to Unaudited Pro Forma Condensed Combined Financial Information

($ in thousands, except per share data)

�

In addition, adjustments of $1,248 for the year ended December�31, 2013 and $999 for the nine months ended September�30, 2014 have been included to reflect a reduction in the SkyWave depreciation related to SkyWave�s right, title and interest in all earth station- related assets currently installed in Inmarsat�s earth stations to be transferred to Inmarsat under the Inmarsat Agreement.

(M) Interest expense

Under the Credit Agreement, each tranche of the Secured Credit Facilities bears interest, at the election of ORBCOMM, at a per annum rate equal to either (a)�a base rate plus 3.75% or (b)�LIBOR plus 4.75%, with a LIBOR floor of 1.00%. For the purposes of the unaudited pro forma condensed combined financial statements, an interest rate of 5.75% is assumed.

The adjustment to interest expense reflects the following:

�


�	��	Nine months ended September�30, 2014		�	�	Year ended December�31, 2013		�
Interest expense on Term B3 at LIBOR plus 4.75%	��	$	(3,019	)�	�	$	(4,025	)�
Amortization of fees associated with Term B3 facility	��	�	(288	)�	�	�	(385	)�
Elimination of historical Skywave interest expense	��	�	191	��	�	�	155	��
	��	�	�	�	�	�	�	�
Total adjustments to interest expense	��	$	(3,117	)�	�	$	(4,255	)�
	��	�	�	�	�	�	�	�

(N) Income taxes

The pro forma condensed combined income tax provision has been adjusted for the tax effect of adjustments to income before income taxes at the estimated blended effective rate for the periods presented as the effective rate approximates the statutory rate for the periods presented. The effective tax rate of the combined company could be significantly different depending on post- acquisition activities.

�

Exhibit 99.4

�

LOGO

ORBCOMM COMPLETES ACQUISITION OF SKYWAVE

Combined company offers the M2M industry�s broadest set of solutions,

connectivity options and global country authorizations

Solidifies market leadership in satellite-based M2M with over 1.2�million subscribers

Rochelle Park, NJ, January�5, 2015 � ORBCOMM Inc. (Nasdaq: ORBC), a leading global provider of Machine-to-Machine (M2M) solutions, today announced that it has completed the acquisition of SkyWave Mobile Communications (SkyWave), the largest M2M service provider on the Inmarsat (LSE: ISAT.L) global L-band satellite network, on January�1. Based in Ottawa, Canada, SkyWave adds more than 250,000 subscribers, 400 channel partners, annualized revenues of over $60 million and Adjusted EBITDA of over $12 million.

The acquisition of SkyWave furthers ORBCOMM�s strategy to provide the most complete set of options and capabilities in the industry, while adding multiple synergies to strengthen its M2M solutions portfolio. With the addition of SkyWave, ORBCOMM now has one of the largest combined engineering teams in the M2M industry and gains significant economies of scale in operations and manufacturing. SkyWave�s robust distribution channels in South America, Asia and the Middle East, along with Inmarsat�s support, provide ORBCOMM with even broader global distribution. ORBCOMM gains access to new geographies in Eastern Europe and Asia while adding diverse vertical markets such as security and marine. The addition of SkyWave�s higher bandwidth, low-latency satellite products and services that leverage the IsatDataPro (IDP) technology, which is now jointly owned by ORBCOMM and Inmarsat, also further expands the breadth of ORBCOMM�s solutions portfolio.

�This transformative acquisition creates the largest space-based global M2M company with unparalleled capabilities, established go-to-market channels and global network coverage,� said Marc Eisenberg, ORBCOMM�s Chief Executive Officer. �With our expanded scope and scale, we are well-positioned to provide the industry�s most diverse portfolio of M2M solutions and connectivity options that leverage both the ORBCOMM and Inmarsat networks.�

Raymond James served as financial advisor to ORBCOMM on this transaction, and William Blair�& Company served as financial advisor to SkyWave. For additional information on this transaction, please refer to ORBCOMM�s SEC filing on Form 8-K regarding this transaction.

About ORBCOMM Inc.

ORBCOMM is a global provider of Machine-to-Machine (M2M) solutions. Its customers include Caterpillar Inc., Doosan Infracore America, Hitachi Construction Machinery, Hyundai Heavy Industries, I.D. Systems, Inc., Komatsu Ltd., Cartrack (Pty.) Ltd., and Volvo Construction Equipment, among other industry leaders. By means of a global network of low-earth orbit (LEO) satellites and accompanying ground infrastructure as well as our Tier One cellular partners, ORBCOMM�s low-cost and reliable two-way data communication services track, monitor and control mobile and fixed assets in our core markets: commercial transportation; heavy equipment; industrial fixed assets; marine; and homeland security.

LOGO

�

ORBCOMM is an innovator and leading provider of tracking, monitoring and control services for the transportation market. Under its ReeferTrak^�, GenTrak^�, GlobalTrak^�, and CargoWatch^� brands, the company provides customers with the ability to proactively monitor, manage and remotely control their cold chain and dry transport assets. Additionally, ORBCOMM provides Automatic Identification System (AIS) data services for vessel tracking and to improve maritime safety to government and commercial customers worldwide. ORBCOMM is headquartered in Rochelle Park, New Jersey and has its Innovation�& Network Control Center in Sterling, Virginia. For more information, visit www.orbcomm.com.

Forward-Looking Statements

Certain statements discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to our plans, objectives and expectations for future events and include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Such forward-looking statements, including those concerning the Company�s expectations, are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from the results, projected, expected or implied by the forward-looking statements, some of which are beyond the Company�s control, that may cause the Company�s actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In addition, specific consideration should be given to various factors described in Part I, Item�1A. �Risk Factors� and Part II, Item�7. �Management�s Discussion and Analysis of Financial Condition and Results of Operations,� and elsewhere in our Annual Report on Form 10-K for the year ended December�31, 2013, Item�8.01 of our Current Report on Form 8-K dated November�6, 2014, and other documents, on file with the Securities and Exchange Commission. The Company undertakes no obligation to publicly revise any forward-looking statements or cautionary factors, except as required by law.

�


Contacts	�		�
*Investor Inquiries:*	�	*Financial Media:*	�	*Trade Media:*
Robert Costantini	�	Chuck Burgess	�	Barry Bucklin
Chief Financial Officer	�	President	�	Account Manager
ORBCOMM Inc.	�	The Abernathy MacGregor Group	�	Hardman Group
703-433-6305	�	212-371-5999	�	330-687-4545
[email protected]	�	[email protected]	�	[email protected]

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