##### Table of Contents



United States Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period endedMarch 31, 2007
 OR
 o
    
    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 001-33118
 ORBCOMM INC.
  Delaware
    
    41-2118289(State or other jurisdiction 
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 2115 Linwood Avenue, Fort Lee, New Jersey 07024
 (201) 363-4900
  (Former name, former address and formal fiscal year, if changed since last report)
 þ o
  o o þ
 o þ




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##### 



ORBCOMM Inc.
Index
 Part I  Financial InformationItem 1.
    
    Condensed Consolidated Financial Statements (Unaudited):
    1Condensed Consolidated Balance Sheets
    2Condensed Consolidated Statements of Operations
    3Condensed Consolidated Statements of Cash Flows
    4Notes to Condensed Consolidated Financial Statements
    5-14Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risks
    21Item 4.
    
    Controls and Procedures
    21Part II  Other InformationItem 1.
    
    Legal Proceedings
    21Item 1A.
    
    Risk Factors
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    21Item 3.
    
    Defaults Upon Senior Securities
    21Item 4.
    
    Submission of Matters to a Vote of Security Holders
    21Item 5.
    
    Other Information
    21Item 6.
    
    Exhibits
    22EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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##### Table of Contents



Part I. Financial Information
 Item 1. Financial Statements
 ORBCOMM Inc.
 
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 (Unaudited)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    47,012
    
    
    $
    62,139Marketable securities
    
    
    51,100
    
    
    
    38,850Accounts receivable, net of allowances for doubtful accounts of $295 and $297
as of March 31, 2007 and December 31, 2006
    
    
    5,045
    
    
    
    5,185Inventories
    
    
    2,128
    
    
    
    3,528Advances to contract manufacturer
    
    
    150
    
    
    
    177Prepaid expenses and other current assets
    
    
    1,861
    
    
    
    1,354Total current assets
    
    
    107,296
    
    
    
    111,233Long-term receivable
    
    
    372
    
    
    
    372Satellite network and other equipment, net
    
    
    37,598
    
    
    
    29,131Intangible assets, net
    
    
    6,686
    
    
    
    7,058Other assets
    
    
    306
    
    
    
    299Total assets
    
    $
    152,258
    
    
    $
    148,093LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,038
    
    
    $
    3,438Accrued liabilities
    
    
    10,451
    
    
    
    4,915Current portion of deferred revenue
    
    
    2,223
    
    
    
    2,083Total current liabilities
    
    
    15,712
    
    
    
    10,436Note payable  related party
    
    
    930
    
    
    
    879Deferred revenue, net of current portion
    
    
    7,939
    
    
    
    8,066Total liabilities
    
    
    24,581
    
    
    
    19,381Commitments and contingenciesStockholders equity:Common stock, par value $0.001; 250,000,000 shares authorized;
37,187,134 and 36,923,715 shares issued and outstanding as of
March 31, 2007 and December 31, 2006
    
    
    37
    
    
    
    37Additional paid-in capital
    
    
    190,845
    
    
    
    188,917Accumulated other comprehensive loss
    
    
    (419
    )
    
    
    (395
    )Accumulated deficit
    
    
    (62,786
    )
    
    
    (59,847
    )Total stockholders equity
    
    
    127,677
    
    
    
    128,712Total liabilities and stockholders equity
    
    $
    152,258
    
    
    $
    148,093
 See notes to condensed consolidated financial statements.
 2




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##### Table of Contents



ORBCOMM Inc.
 
 Condensed Consolidated Statements of Operations
 (in thousands, except share and per share data)
 (Unaudited)
 Three months endedMarch 31,2007
    
    
    2006Revenues:Service revenues
    
    $
    3,950
    
    
    $
    2,321Product sales
    
    
    2,011
    
    
    
    4,059Total revenues
    
    
    5,961
    
    
    
    6,380Costs and expenses(1):Costs of services
    
    
    2,353
    
    
    
    2,057Costs of product sales
    
    
    2,106
    
    
    
    4,076Selling, general and administrative
    
    
    5,311
    
    
    
    3,328Product development
    
    
    360
    
    
    
    498Total costs and expenses
    
    
    10,130
    
    
    
    9,959Loss from operations
    
    
    (4,169
    )
    
    
    (3,579
    )Other income (expense):Interest income
    
    
    1,279
    
    
    
    455Other income
    
    
    3
    
    
    
    Interest expense
    
    
    (52
    )
    
    
    (17
    )Total other income
    
    
    1,230
    
    
    
    438Net loss
    
    $
    (2,939
    )
    
    $
    (3,141
    )Net loss applicable to common shares (Note 5)
    
    $
    (2,939
    )
    
    $
    (5,448
    )Net loss per common share:Basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.96
    )Weighted average common shares outstanding:Basic and diluted
    
    
    37,036
    
    
    
    5,690(1) Stock-based compensation included in costs and expenses:Costs of services
    
    $
    220
    
    
    $
    8Costs of product sales
    
    
    29
    
    
    
    Selling, general and administrative
    
    
    1,637
    
    
    
    328Product development
    
    
    42
    
    
    
    5$
    1,928
    
    
    $
    341
 See notes to condensed consolidated financial statements.
 3




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ORBCOMM Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (in thousands)
 (Unaudited)
 Three months endedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (2,939
    )
    
    $
    (3,141
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Change in allowance for doubtful accounts
    
    
    (2
    )
    
    
    (258
    )Inventory impairments
    
    
    
    
    
    
    336Depreciation and amortization
    
    
    542
    
    
    
    656Accretion on note payable  related party
    
    
    33
    
    
    
    33Stock-based compensation
    
    
    1,928
    
    
    
    341Changes in operating assets and liabilities:Accounts receivable
    
    
    142
    
    
    
    (2,982
    )Inventories
    
    
    1,400
    
    
    
    (505
    )Advances to contract manufacturer
    
    
    27
    
    
    
    276Prepaid expenses and other current assets
    
    
    (514
    )
    
    
    (186
    )Accounts payable and accrued liabilities
    
    
    105
    
    
    
    (1,918
    )Deferred revenue
    
    
    13
    
    
    
    679Net cash provided by (used in) operating activities
    
    
    735
    
    
    
    (6,669
    )Cash flows from investing activities:Capital expenditures
    
    
    (3,007
    )
    
    
    (754
    )Purchases of marketable securities
    
    
    (19,050
    )
    
    
    Sales of marketable securities
    
    
    6,800
    
    
    
    Net cash used in investing activities
    
    
    (15,257
    )
    
    
    (754
    )Cash flows from financing activities:Payment of offering costs in connection with initial public offering
    
    
    (599
    )
    
    
    Proceeds from issuance of Series B preferred stock,
net of issuance costs of $113
    
    
    
    
    
    
    1,465Payment of Series A preferred stock dividends
    
    
    
    
    
    
    (8,027
    )Net cash used in financing activities
    
    
    (599
    )
    
    
    (6,562
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (6
    )
    
    
    (26
    )Net decrease in cash and cash equivalents
    
    
    (15,127
    )
    
    
    (14,011
    )Cash and cash equivalents:Beginning of period
    
    
    62,139
    
    
    
    68,663End of period
    
    $
    47,012
    
    
    $
    54,652Supplemental cash flow disclosures:Non cash financing activities -
Preferred stock dividends accrued
    
    $
    
    
    
    $
    2,179
 See notes to condensed consolidated financial statements.
 4




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##### Table of Contents



ORBCOMM
Inc.
 
  (in thousands, except share and per share amounts)
 1. Business
  2. Basis of Presentation
     Marketable securities
  Concentration of credit risk
   Inventories
  5




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Income taxes
 Accounting for Uncertainty in
Income Taxes Accounting for Income
Taxes
   Proposed
Underwritten sale of shares of the Companys common stock.
  Recent accounting pronouncements
 Fair Value Measurements
  3. Comprehensive Loss
  Three months endedMarch 31,2007
    
    2006Net loss
    
    $
    (2,939
    )
    
    $
    (3,141
    )Foreign currency translation adjustment
    
    
    (24
    )
    
    
    (60
    )Comprehensive loss
    
    $
    (2,963
    )
    
    $
    (3,201
    )
 4. Stock-based Compensation
   Three months endedMarch 31,2007
    
    2006Stock options
    
    $
    57
    
    
    $
    341Restricted stock units
    
    
    1,520
    
    
    
    Stock appreciation rights
    
    
    351
    
    
    
    Total
    
    $
    1,928
    
    
    $
    341
  6




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##### Table of Contents



RSUs
 Performance-based RSUs
   Weighted-AverageRSUs
    
    
    Grant Date Fair ValueBalance at January 1, 2007
    
    
    257,484
    
    
    $
    11.00Granted
    
    
    128,949
    
    
    
    13.00Vested
    
    
    (8,403
    )
    
    
    11.00Forfeited or expired
    
    
    (37,099
    )
    
    
    11.00Balance at March 31, 2007
    
    
    340,931
    
    
    $
    11.76
  Time-based RSUs
   Weighted-AverageRSUs
    
    
    Grant Date Fair ValueBalance at January 1, 2007
    
    
    528,087
    
    
    $
    11.00Granted
    
    
    11,000
    
    
    
    13.00Vested
    
    
    (120,129
    )
    
    
    11.00Forfeited or expired
    
    
    
    
    
    
    Balance at March 31, 2007
    
    
    418,958
    
    
    $
    11.05
   SARs
 Performance-based SARs
   Number of
    
    
    Weighted-Average
    
    
    Contractual
    
    
    Intrinsic ValueShares
    
    
    Exercise Price
    
    
    Term (years)
    
    
    (In thousands)Oustanding at January 1, 2007
    
    
    115,556
    
    
    $
    11.00Granted
    
    
    115,556
    
    
    
    11.00Forfeited or expired
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    231,112
    
    
    $
    11.00
    
    
    
    9.71
    
    
    $
    404Exercisable at March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Vested and expected to vest at March 31, 2007
    
    
    217,287
    
    
    
    
    
    
    
    
    
    
    $
    380
   7




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##### Table of Contents



Time-based SARs
  Weighted-AverageRemaining
    
    
    AggregateNumber of
    
    
    Weighted-Average
    
    
    Contractural
    
    
    intrinsic valueShares
    
    
    Exercise Price
    
    
    Term (years)
    
    
    (in thousands)Outstanding at January 1, 2007
    
    
    66,667
    
    
    $
    11.00Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    66,667
    
    
    $
    11.00
    
    
    
    9.50
    
    
    $
    117Exercisable at March 31, 2007
    
    
    22,222
    
    
    
    
    
    
    
    
    
    
    $
    38Vested and expected to vest at March 31, 2007
    
    
    66,667
    
    
    
    
    
    
    
    
    
    
    $
    117
   Three months endedMarch 31,2007
    
    
    2006(1)Risk-free interest rate
    
    
    4.93
    %
    
    
    Expected life (years)
    
    
    5.50
    
    
    
    Estimated volatility factor
    
    
    43.93
    %
    
    
    Expected dividends
    
    None
    
    
    
    
 (1) There were no SARs granted during the three months ended March 31, 2006.
 2004 Stock Option Plan
  Three months endedMarch 31,2007(1)
    
    
    2006Risk-free interest rate
    
    
    
    
    
    
    4.64
    %Expected life (years)
    
    
    
    
    
    
    4.00Estimated volatility factor
    
    
    
    
    
    
    44.50
    %Expected dividends
    
    
    
    
    
    None
 (1) There were no options granted during the three months ended March 31,
2007.
 8




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##### Table of Contents





Weighted-AverageRemaining
    
    
    AggregateNumber of
    
    
    Weighted- Average
    
    
    Contractual
    
    
    Intrinsic ValueShares
    
    
    Exercise price
    
    
    Term (years)
    
    
    (In thousands)Outstanding at January 1, 2007
    
    
    1,464,420
    
    
    $
    3.09Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    1,464,420
    
    
    $
    3.09
    
    
    
    6.52
    
    
    $
    14,143Exercisable at March 31, 2007
    
    
    1,389,084
    
    
    $
    3.02
    
    
    
    6.58
    
    
    $
    13,514Vested and expected to vest at March 31, 2007
    
    
    1,461,951
    
    
    $
    3.09
    
    
    
    6.62
    
    
    $
    14,123
  Weighted-averageShares
    
    
    Grant Date Fair ValueBalance at January 1, 2007
    
    
    92,805
    
    
    $
    4.03Granted
    
    
    
    
    
    
    Vested
    
    
    (17,469
    )
    
    
    3.24Forfeited
    
    
    
    
    
    
    Balance at March 31, 2007
    
    
    75,336
    
    
    $
    4.22
  5. Net Loss per Common Share
   Three months endedMarch 31,2007
    
    
    2006Common stock warrants
    
    
    1,443,985
    
    
    
    1,917,998Stock options
    
    
    1,464,420
    
    
    
    1,481,207RSUs
    
    
    759,889
    
    
    
    SARs
    
    
    297,779
    
    
    
    Series A convertible preferred stock
    
    
    
    
    
    
    9,369,074Series B convertible preferred stock
    
    
    
    
    
    
    12,014,227Preferred stock warrants
    
    
    
    
    
    
    318,9283,966,073
    
    
    
    25,101,434
  Three months endedMarch 31,2007
    
    
    2006Net loss
    
    $
    (2,939
    )
    
    $
    (3,141
    )Add: Preferred stock dividends and accretion of preferred stock carrying value
    
    
    
    
    
    
    (2,307
    )Net loss applicable to common shares
    
    $
    (2,939
    )
    
    $
    (5,448
    )
 9




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##### Table of Contents



6. Satellite Network and Other Equipment
  Useful life
    
    
    March 31,
    
    
    December 31,(years)
    
    
    2007
    
    
    2006Land
    
    
    
    
    
    $
    381
    
    
    $
    379Satellite network
    
    
    5-7
    
    
    
    9,319
    
    
    
    7,373Capitalized software
    
    
    3-5
    
    
    
    636
    
    
    
    516Computer hardware
    
    
    5
    
    
    
    914
    
    
    
    867Other
    
    
    5-7
    
    
    
    411
    
    
    
    411Assets under construction
    
    
    
    
    
    
    33,427
    
    
    
    26,90545,088
    
    
    
    36,451Less: accumulated depreciation and amortization
    
    
    
    
    
    
    (7,490
    )
    
    
    (7,320
    )$
    37,598
    
    
    $
    29,131
   7. Intangible Assets
  Useful life(years)
    
    
    March 31, 2007
    
    
    December 31, 2006Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    amortization
    
    
    Net
    
    

Cost
    
    
    amortization
    
    
    NetAcquired licenses
    
    
    6
    
    
    $
    8,115
    
    
    $
    (1,429
    )
    
    $
    6,686
    
    
    $
    8,115
    
    
    $
    (1,057
    )
    
    $
    7,058
   Years ending
December 31,Remainder of 2007
    
    $
    1,1142008
    
    
    1,4862009
    
    
    1,4862010
    
    
    1,4862011
    
    
    1,114$
    6,686
 10




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8. Accrued Liabilities
  March 31,
    
    
    December 31,2007
    
    

2006Gateway
settlement obligation (see Note 13)
    
    $
    644
    
    
    $
    945Accrued compensation and benefits
    
    
    1,966
    
    
    
    2,094Accrued
milestone obligations in connection with quick-launch satellites (see Note 13)
    
    
    5,000
    
    
    
    Accrued warranty obligations
    
    
    15
    
    
    
    45Accrued interest
    
    
    666
    
    
    
    622Accrued professional services
    
    
    591
    
    
    
    361Other accrued expenses
    
    
    1,569
    
    
    
    848$
    10,451
    
    
    $
    4,915
  9. Deferred Revenues
  March 31,
    
    
    December 31,2007
    
    
    2006Professional services
    
    $
    7,228
    
    
    $
    7,236Service activation fees
    
    
    1,366
    
    
    
    1,326Manufacturing license fees
    
    
    86
    
    
    
    89Prepaid services
    
    
    1,482
    
    
    
    1,49810,162
    
    
    
    10,149Less current portion
    
    
    (2,223
    )
    
    
    (2,083
    )Long-term portion
    
    $
    7,939
    
    
    $
    8,066
   10. Note Payable
  
 11




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##### Table of Contents



11. Stockholders Equity
  Exercise
price
    
    Shares subject
toWarrants$2.33
    
    
    937,137$3.38
    
    
    120,275$4.26
    
    
    386,5731,443,985
   SharesEmployee stock compensation plans
    
    
    6,122,627Warrants to purchase common stock
    
    
    1,443,9857,566,612
 12. Geographic Information
  Three months endedMarch 31,2007
    
    
    2006United States
    
    
    89
    %
    
    
    92
    %Other(1)
    
    
    11
    %
    
    
    8
    %100
    %
    
    
    100
    %
 (1) No other single geographic areas are more than 10% of revenues for the three months ended
March 31, 2007.
 13. Commitments and Contingencies
 Procurement agreements in connection with quick-launch satellites
   12




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Procurement agreements in connection with U.S. Coast Guard contract
   Gateway settlement obligation
  Airtime credits
  Litigation
 Quake.
   13




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##### Table of Contents



14. Subsequent Events
  14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Safe Harbor Statement Under the Private Securities Litigation Reform of Act 1995.
  Overview
      15




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##### Table of Contents



i.e.
 Critical Accounting Policies
  Accounting for Uncertainty in
Income Taxes
  EBITDA
   16




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##### Table of Contents



The following table (in thousands) reconciles our net loss to EBITDA for the periods shown:
 Three months ended March 31,2007
    
    
    2006Net loss
    
    $
    (2,939
    )
    
    $
    (3,141
    )Interest income
    
    
    (1,279
    )
    
    
    (455
    )Interest expense
    
    
    52
    
    
    
    17Depreciation and amortization
    
    
    542
    
    
    
    656EBITDA
    
    $
    (3,624
    )
    
    $
    (2,923
    )
  Results of Operations
 Revenues
   Three
months ended March 31,2007
    
    

2006% of
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    TotalService revenues
    
    $
    3,950
    
    
    
    66.3
    %
    
    $
    2,321
    
    
    
    36.4
    %Product sales
    
    
    2,011
    
    
    
    33.7
    %
    
    
    4,059
    
    
    
    63.6
    %$
    5,961
    
    
    
    100.0
    %
    
    $
    6,380
    
    
    
    100.0
    %
  Service revenues
   17




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##### Table of Contents



Product sales
  Costs of services
   Costs of product sales
   Selling, general and administrative expenses
     Product development expenses
   18




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Other income (expense)
   Net loss and net loss applicable to common shares
  Liquidity and Capital Resources
 Overview
  Operating activities
   19




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Investing activities
   Financing activities
   Future Liquidity and Capital Resource Requirements
  Contractual Obligations
  Off- Balance Sheet Arrangements
  Recent accounting pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities
 20




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##### Table of Contents








Item 3. Quantitative and Qualitative Disclosures about Market Risks







Concentration
of credit risk




Item 4. Disclosure Controls and Procedures


Evaluation of the Companys disclosure controls and procedures.


Internal Control over Financial Reporting.





PART II  OTHER INFORMATION





Item 1. Legal Proceedings


Quake Global,
Inc.


















and/or Complaint-In-Intervention Complaint-In-Intervention







Item 1A. Risk Factors




We rely on a limited number of manufacturers for our
subscriber communicators. If we are unable to, or cannot find
third parties to, manufacture a sufficient quantity of
subscriber communicators at a reasonable price, the prospects for our business will be negatively impacted.















Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


Use of Proceeds from Initial Public Offering




Exercise of Warrants







Item 3. Defaults Upon Senior Securities







Item 4. Submission of Matters to a Vote of Security Holders







Item 5. Other Information




21



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##### Table of Contents



Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(a).32.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(b)
and 18 U.S.C. Section 1350 (furnished herewith).32.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(b)
and 18 U.S.C. Section 1350 (furnished herewith).




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##### Table of Contents



SIGNATURES
  ORBCOMM Inc.(Registrant)Date:
May 14, 2007
    
    /s/ Jerome B. Eisenberg

Jerome B. Eisenberg,Chairman of the Board and Chief Executive Officer(Principal Executive Officer)Date:
May 14, 2007
    
    /s/ Robert G. Costantini

Robert G. Costantini,Executive Vice President and Chief Financial Officer(Principal Financial Officer)