Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2017
or
☐
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: 000-55419
Voltari Corporation
(Exact name of registrant as specified in its charter)
Delaware
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90-0933943
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(State of incorporation)
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(I.R.S. Employer
Identification Number)
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767 Fifth Avenue, Suite 4700
New York, NY 10153
(212) 388-5500
(Address, including zip code, and telephone number, including area
code, of registrant’s principal executive
offices)
Indicate by check
mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒ Yes ☐ No
Indicate by check
mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files). ☒ Yes ☐ No
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer”, “accelerated
filer”, “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller reporting company
|
☑
|
(Do not check if a
smaller reporting company)
|
Emerging growth
company
|
☐
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). ☐ Yes
☒
No
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). ☐ Yes
☒
No
As of
May 9, 2017, there were 8,994,814 shares of the registrant's common
stock, par value of $0.001 per share, outstanding.
TABLE OF CONTENTS
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Page
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PART
I
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Item 1.
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Condensed
Consolidated Financial Statements
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3
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Condensed
Consolidated Balance Sheets as of March 31, 2017 and December 31,
2016
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3
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Condensed
Consolidated Statements of Operations for the three months ended
March 31, 2017 and 2016
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4
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Condensed
Consolidated Statements of Comprehensive Loss for the three months
ended March 31, 2017 and 2016
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5
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Condensed
Consolidated Statements of Changes in Stockholders' Deficit for the
three months ended March 31, 2017
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6
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Condensed
Consolidated Statements of Cash Flows for the three months ended
March 31, 2017 and 2016
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7
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Notes
to Condensed Consolidated Financial Statements
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8
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Item 2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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15
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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21
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Item 4.
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Controls
and Procedures
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22
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PART
II
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Item 1.
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Legal
Proceedings
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23
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Item 1A.
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Risk
Factors
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23
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Item
6.
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Exhibits
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23
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Signatures
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24
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PART I
Item 1. Condensed Consolidated Financial
Statements.
Voltari Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
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|
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Assets
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Real estate
investments, net
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$6,160
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$6,215
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Cash and cash
equivalents
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613
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414
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Prepaid
expenses
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421
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520
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Other
assets
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105
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101
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Total
assets
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$7,299
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$7,250
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Liabilities,
redeemable preferred stock and stockholders’
deficit
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|
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Accounts payable
and accrued expenses
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$590
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$508
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Accrued
compensation
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-
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17
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Deferred rent
income
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17
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17
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Revolving
note
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5,000
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4,500
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Interest
payable
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194
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141
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Deferred rent
expense
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24
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25
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Accrued preferred
stock dividends
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1,614
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1,598
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Other
liabilities
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117
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116
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Total
liabilities
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7,556
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6,922
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Commitments
and contingencies
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—
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—
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Redeemable
preferred stock, $0.001 par value; 1,170,327 shares issued and
outstanding at March 31, 2017 and December 31, 2016. Redemption
value: $51,969 and $50,355 at March 31, 2017 and December 31, 2016,
respectively.
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$49,855
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$48,024
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Stockholders’
deficit
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Common stock,
$0.001 par value; 25,000,000 shares authorized at March 31, 2017
and December 31, 2016; 8,994,814 shares issued and outstanding at
March 31, 2017 and December 31, 2016.
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9
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9
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Additional paid-in
capital
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553,437
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555,286
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Accumulated
deficit
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(603,613)
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(603,049)
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Accumulated other
comprehensive income
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55
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58
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Total
stockholders’ deficit
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(50,112)
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(47,696)
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Total
liabilities, redeemable preferred stock and stockholders’
deficit
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$7,299
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$7,250
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The
accompanying notes are an integral part of these condensed
consolidated financial statements.
Voltari Corporation
Condensed Consolidated Statements of Operations
(in thousands, except share data and per share
amounts)
(unaudited)
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Revenue
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$81
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$41
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Operating
expenses
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General and
administrative, excluding depreciation
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538
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1,045
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Depreciation and
amortization
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44
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69
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Acquisition and
transaction related
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9
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16
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Total
operating expenses
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591
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1,130
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Operating
loss
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$(510)
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$(1,089)
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Interest expense
& Revolving note fees
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(54)
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(6)
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Net
loss from continuing operations
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(564)
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(1,095)
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Net loss from
discontinued operations
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-
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(45
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Net
loss
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$(564)
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$(1,140)
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Accretion of
redeemable preferred stock
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(235)
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(199)
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Series J redeemable
preferred stock dividends
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(1,614)
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(1,436)
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Net
loss attributable to common stockholders
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$(2,413)
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$(2,775)
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Net
loss per share attributable to common stockholders - basic and
diluted
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Continuing
operations
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$(0.27)
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$(0.30)
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Discontinued
operations
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-
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(0.01)
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Total
net loss per share attributable to common stockholders
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$(0.27)
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$(0.31)
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Weighted-average
common shares outstanding – basic and diluted
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8,994,814
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8,994,814
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The
accompanying notes are an integral part of these condensed
consolidated financial statements.
Voltari Corporation
Condensed Consolidated Statements of Comprehensive
Loss
(in thousands)
(unaudited)
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|
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Net
loss
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$(564)
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$(1,140)
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Other comprehensive
income:
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Foreign currency
translation adjustment
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(3)
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(5)
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Comprehensive
loss
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$(567)
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$(1,145)
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The
accompanying notes are an integral part of these condensed
consolidated financial statements.
Voltari Corporation
Condensed Consolidated Statements of Changes in Stockholders’
Deficit
(in thousands, except share data)
(unaudited)
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Additional
Paid-in
Capital
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Accumulated
Other
Comprehensive
Income
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Balance
as of December 31, 2016
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8,994,814
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$9
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$555,286
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$(603,049)
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$58
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$(47,696)
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Net
loss
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—
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—
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—
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(564)
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—
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(564)
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Other comprehensive
income
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—
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—
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—
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—
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(3)
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(3)
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Redeemable
preferred stock dividends
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—
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—
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(1,614)
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—
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—
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(1,614)
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Accretion of
redeemable preferred stock
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—
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—
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(235)
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—
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—
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(235)
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Balance
as of March 31, 2017
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8,994,814
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$9
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$553,437
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$(603,613)
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$55
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$(50,112)
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The
accompanying notes are an integral part of these condensed
consolidated financial statements.
Voltari Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Cash
flows from operating activities:
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Net
loss
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$(564)
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$(1,140)
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Loss from
discontinued operations
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-
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45
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Adjustments to
reconcile net loss to net cash used in operating
activities:
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Depreciation and
amortization
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44
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69
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Amortization of
lease intangible
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10
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10
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Non-cash interest
expense
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53
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6
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Other non-cash
adjustments
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(3)
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(5)
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Changes in
operating assets and liabilities:
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Prepaid expenses
and other current assets
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99
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40
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Other
assets
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(4)
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-
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Accounts payable
and accrued expenses
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63
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66
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Deferred
revenue
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(2)
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-
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Net
cash used in operating activities - continuing
operations
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(301)
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(904)
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Net
cash used in operating activities - discontinued
operations
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-
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(17)
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Net
cash used in operating activities
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(301)
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(921)
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Cash
flows from investing activities:
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Proceeds provided
by the sale of fixed assets
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-
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3
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Net
cash provided by investing activities - discontinued
operations
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-
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3
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Net
cash provided by investing activities
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-
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3
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Cash
flows from financing activities:
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Proceeds from
borrowing
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500
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-
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Net
cash provided by financing activities
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500
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-
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Effect of exchange
rate changes on cash and cash equivalents
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—
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-
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Net
increase in cash and cash equivalents
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199
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918
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Cash
and cash equivalents at beginning of period
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414
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1180
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Cash
and cash equivalents at end of period
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$613
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$262
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Supplemental
disclosure for non-cash financing
activities:
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Series J redeemable preferred stock dividends
paid-in-kind
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1,598
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1,405
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The
accompanying notes are an integral part of these condensed
consolidated financial statements.
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Business Description and Basis of Presentation
Business Description
Voltari
Corporation (“Voltari” or the “Company”) is
in the business of acquiring, financing and leasing commercial real
properties. The Company had previously been engaged in the business
of providing mobile marketing and advertising solutions to brands,
marketers and advertising agencies. In August 2015, we began
implementing a transformation plan pursuant to which, among other
things, we exited our mobile marketing and advertising business. It
is anticipated that the majority of the costs related to the
transformation plan were incurred during 2015 and 2016. Additional
amounts to be incurred during the balance of 2017, if any, cannot
be reasonably estimated. While we continue to experience losses
from continuing operations we have been reducing those losses as
compared to prior periods. We have been funding our
operations with borrowings under our Amended Note (as defined
herein) as described in Note 5. We expect to continue to rely on
borrowings to provide working capital in the near
term.
Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q
for interim financial reporting pursuant to the rules and
regulations of the Securities and Exchange Commission
(“SEC”). Accordingly, they do not include all the
information and footnotes required by U.S. generally accepted
accounting principles (“U.S. GAAP”) for complete
financial statements. The condensed consolidated balance sheet as
of December 31, 2016 included herein was derived from the
audited financial statements as of that date, but does not include
all disclosures required by U.S. GAAP.
The
unaudited condensed consolidated financial statements have been
prepared on the same basis as the audited consolidated financial
statements and, in the opinion of management, reflect all normal
recurring adjustments which are necessary for a fair statement of
the results of the interim period. These unaudited condensed
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and accompanying
notes for the fiscal year ended December 31, 2016 included in
our Annual Report on Form 10-K for the year ended December 31,
2016. The results of operations for the three months ended March
31, 2017 are not necessarily indicative of the results to be
expected for the full year or for any other period. Certain amounts
from prior periods related to discontinued operations have been
reclassified to conform with the presentation in the current
period.
The
preparation of condensed consolidated financial statements in
conformity with U.S. GAAP requires management to make estimates and
assumptions in certain circumstances that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the condensed consolidated
financial statements and the reported amounts of revenues and
expenses during the reporting period. The more significant
estimates include those involved in the valuation of long lived
assets, valuation allowance on the deferred tax asset, redeemable
preferred stock, litigation and other loss contingencies. Actual
results could differ from those estimates.
2. Summary of Significant Accounting Policies
Our
significant accounting policies are those that we believe are both
important to the portrayal of our financial condition and results
of operations.
Significant Accounting Policies - Real Estate
Investments
As a
result of our entry into the business of acquiring, financing and
leasing commercial real properties, we have adopted the following
significant accounting policies. Management believes there have
been no other material changes to our significant accounting
policies discussed in Note 2 of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2016, except for the
standards adopted this period.
Investments
in real estate will be recorded at cost. Improvements and
replacements will be capitalized when they extend the useful life
of the asset. Costs of repairs and maintenance will be expensed as
incurred. The fair value of the tangible assets of an acquired
property with an in-place operating lease will be determined by
valuing the property as if it were vacant, and the
“as-if-vacant” value will then be allocated to the
tangible assets based on the fair value of the tangible assets. The
fair value of in-place leases will be determined by considering
current market conditions, as well as costs to execute similar
leases. The fair value of above- or below-market leases will be
recorded based on the present value of the difference between the
contractual amount to be paid pursuant to the in-place lease and
the Company's estimate of the fair market lease rate for the
corresponding in-place lease, measured over the remaining term of
the lease, including any below-market fixed-rate renewal options
for below-market leases.
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
Depreciation
will be computed using the straight-line method over the estimated
useful lives of up to 43 years for buildings, 13 years
for land improvements, five years for fixtures and
improvements and the shorter of the useful life or the remaining
lease term for tenant improvements and leasehold interests.
Capitalized above-market lease values will be amortized as a
reduction of rental income over the remaining terms of the
respective leases. Capitalized below-market lease values will be
amortized as an increase to rental income over the remaining terms
of the respective leases and expected below-market renewal option
periods. The value of in-place leases, exclusive of the value of
above-market and below-market in-place leases, will be amortized to
expense over the remaining periods of the respective
leases.
Recently Adopted Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2016-09, "Compensation - Stock
Compensation." ASU 2016-09
simplifies the accounting for share-based payment transactions,
including a policy election option with respect to accounting for
forfeitures either as they occur or estimating forfeitures (as is
currently required), as well as increasing the amount an employer
can withhold to cover income taxes on equity awards. Additionally,
ASU 2016-09 requires the cash paid to a taxing authority when
shares are withheld to pay employee taxes to be classified as a
"financing activity" rather than an "operating activity," as was
done previously on the Statement of Cash Flows. We adopted this
standard effective January 1, 2017, and, as a result, we will be
accounting for future forfeitures as they
occur.
Recently Issued Accounting Pronouncements
In May
2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.
The guidance in this ASU supersedes nearly all existing revenue
recognition guidance under U.S. GAAP and creates a single,
principle-based revenue recognition framework that is codified in a
new FASB ASC Topic 606. The core principle of this guidance is for
the recognition of revenue to depict the transfer of goods or
services to customers at an amount that reflects the consideration
to which the company expects to be entitled in exchange for those
goods or services. The ASU also requires additional disclosure
about the nature, amount, timing and uncertainty of revenue and
cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs
incurred to obtain or fulfill a contract. The new revenue standard
is effective for annual reporting periods beginning after December
15, 2017, and interim periods within those years. Earlier
application is permitted only as of annual reporting periods
beginning after December 15, 2016, including interim reporting
periods within that reporting period. The new standard allows for
either full retrospective or modified retrospective adoption.
Currently, all revenues are derived from lease contracts which are
not within the scope of this guidance.
In
January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic
805), Clarifying the Definition of a Business.”
The amendments in this ASU provide a
more robust framework to use in determining when a set of assets
and activities is a business. The amendments provide more
consistency in applying the guidance, reduce the costs of
application, and make the definition of a business more
operable. The guidance changes the definition of a business
to exclude acquisitions where substantially all the fair value of
the assets acquired are concentrated in a single identifiable asset
or a group of similar identifiable assets. Given this change in
definition, we believe most of our real estate acquisitions will be
considered asset acquisitions. The new guidance will be
applied prospectively to any transactions occurring in the period
of adoption. ASU 2017-01 is effective for financial statements
issued for annual periods
beginning after December 15, 2017 including interim periods within
those periods. Under the new
standard, transaction costs would be capitalized under asset
acquisitions and expensed for business combinations. We are
currently assessing the impact of this standard to our consolidated
financial statements.
In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and
Losses from the Derecognition of Nonfinancial Assets.
Clarifying the Scope of Asset
Derecognition Guidance and Accounting for Partial Sales of
Nonfinancial Assets." ASU 2017-05 clarifies that ASC 610-20 applies
to all nonfinancial assets (including real estate) for which the
counterparty is not a customer and clarifies that all businesses
are derecognized using the deconsolidation guidance. Additionally,
it defines an in substance nonfinancial asset as a financial asset
that is promised to a counterparty in a contract in which
substantially all the fair value of the assets promised in the
contract is concentrated in nonfinancial assets, which excludes
cash or cash equivalents and liabilities. The new guidance is
expected to impact the gain recognized when a real estate asset is
sold to a non-customer and a noncontrolling interest is retained.
Under the current guidance, a partial sale is recognized and
carryover basis is used for the retained interest, however, the new
guidance eliminates the use of carryover basis and generally
requires a full gain to be recognized. ASU 2017-05 is effective for
us in the first quarter of 2018, and we are currently assessing the
impact of this standard to our consolidated financial
statements.
3. Real Estate Investments
During
2015 and 2016 we acquired two real estate properties, one located
in Long Branch, NJ and the other in Flanders, NY.
Information
related to major categories of real estate investments, net, is as
follows (dollars in thousands):
|
|
|
|
Useful
life
|
|
|
Real Estate
Investments, at cost:
|
|
|
|
Land
|
|
$2,345
|
$2,345
|
Building,
fixtures and improvements
|
10 - 43
yrs.
|
3,494
|
3,494
|
Total
tangible assets
|
|
5,839
|
5,839
|
Acquired
Intangibles - In-place leases
|
5 to 13
yrs.
|
607
|
607
|
Total cost of Real
Estate Investments
|
|
6,446
|
6,446
|
Less: Accumulated
depreciation and amortization
|
|
(286)
|
(231)
|
Total cost of Real
Estate Investments, net
|
|
$6,160
|
6,215
|
Depreciation
expense for the three months ended March 31, 2017 and 2016 amounted
to $29 thousand and $16 thousand respectively.
Intangible
amortization expense for the three months ended March 31, 2017 and
2016 amounted to $26 thousand and $22 thousand respectively, of
which $11 thousand and $11 thousand of favorable lease amortization
were reflected as a reduction in revenue,
respectively.
Expected
in-place lease and favorable lease amortization for each of the
next five years, and thereafter, is as follows (dollars in
thousands):
Years
Ending December 31,
|
|
Balance of
2017
|
$74
|
2018
|
99
|
2019
|
99
|
2020
|
57
|
2021
|
16
|
Thereafter
|
124
|
Total
|
$469
|
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
The
following table presents future minimum base rental receipts due to
us over the next five years (dollars in thousands):
Year
Ending December 31,
|
|
Balance of
2017
|
$261
|
2018
|
348
|
2019
|
348
|
2020
|
239
|
2021
|
160
|
Thereafter
|
1,356
|
Total
|
$2,712
|
4. Discontinued Operations
There
were no discontinued operations expenses for the three months ended
March 31, 2017. The effect of discontinued operations on the
condensed consolidated statements of operations for the three
months ended March 31, 2016 were as follows (in
thousands):
|
Three Months Ended March 31,
2016
|
|
Mobile Marketing
& Advertising
|
|
|
Revenue
|
$—
|
$—
|
$—
|
Operating
loss
|
(48)
|
|
(48)
|
Other
income
|
3
|
|
3
|
Pre-tax
loss
|
(45)
|
—
|
(45)
|
Net loss from
discontinued operations
|
$(45)
|
$—
|
(45)
|
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
5. Revolving Note
On
August 7, 2015, we, as borrower, and Koala Holding LP
(“Koala”), as lender, an affiliate of Carl C. Icahn,
our controlling stockholder, entered into a revolving note (the
“Prior Note”). Pursuant to the Prior Note, Koala made
available to us a revolving loan facility of up to $10 million in
aggregate principal amount. Borrowings under the Prior Note bore
interest at a rate equal to the greater of the LIBOR rate plus 350
basis points, per annum, and 3.75%, per annum. The Prior Note also
included a fee of 0.25%, per annum, on undrawn amounts and matured
on the earliest of (i) December 31, 2017, (ii) the date on which
any financing transaction, whether debt or equity, was consummated
by us (or our successors and assigns) with net proceeds in an
amount equal to or greater than $10 million, and (iii) at our
option, a date selected by us that was earlier than December 31,
2017. Subject to the terms and conditions of the Prior Note, we
could repay all or any portion of the amounts outstanding under the
Prior Note at any time without premium or penalty, and any amounts
so repaid would, until the maturity date, be available for
re-borrowing. As collateral for the Prior Note, we pledged and
granted to Koala a lien on our limited liability company interest
in Voltari Real Estate Holding LLC (“Voltari Holding”)
As of March 29, 2017, borrowings on this facility totaled $5.0
million.
On
March 29, 2017, we and Koala, amended and restated the Prior Note
(the “Amended Note”). Pursuant to the Amended Note,
Koala made available to the Company a revolving loan facility of up
to $30 million in aggregate principal amount (the
“Commitment”). The Company may, by written notice to
Koala, request that the Commitment be increased (the
“Increased Commitment”), provided that the aggregate
amount of all borrowings, plus availability under the aggregate
Increased Commitment, shall not exceed $80 million. Koala has no
obligation to provide any Increased Commitment and may refuse to do
so in its sole discretion. The Amended Note provides that the net
proceeds thereunder in excess of $10 million will be used by the
Company for the acquisition, improvement, development,
modification, alteration, repair, maintenance, financing or leasing
of real property, including any fees and expenses associated with
such activities. Borrowings under the Amended Note will bear
interest at a rate equal to the LIBOR Rate (as defined in the
Amended Note) plus 200 basis points, per annum, subject to a
maximum rate of interest of 3.75%, per annum. The Amended Note
matures on the earliest of (i) December 31, 2020, (ii) the date on
which any financing transaction, whether debt or equity, is
consummated by the Company (or its successors and assigns) with net
proceeds in an amount equal to or greater than $30 million, and
(iii) at the Company’s option, a date selected by the Company
that is earlier than December 31, 2020 (the “Maturity
Date”). The Amended Note also allows the Company to, upon
written notice to Koala not more than 60 days and not less than 30
days prior to the Maturity Date, request that Koala extend the
Maturity Date to December 31, 2022. Koala may, in its sole
discretion, agree to extend the Maturity Date by providing written
notice to the Company on or before the date that is 20 days prior
to the Maturity Date.
If an
event of default (as defined in the Amended Note) exists, the
Amended Note will bear interest at a default rate equal to the
greater of the LIBOR Rate plus 300 basis points, per annum, or
4.5%, per annum. Subject to the terms and conditions of the Amended
Note, the Company may repay all or any portion of the amounts
outstanding under the Amended Note at any time without premium or
penalty. The amounts available under the Commitment or Increased
Commitment, as the case may be, will increase and decrease in
direct proportion to repayments and reborrowings under the Amended
Note, respectively, from time to time. As collateral for the
Amended Note, the Company has pledged and granted to Koala a lien
on the Company’s limited liability company interest in
Voltari Holding.
As of
March 31, 2017, borrowings under the Amended Note equaled $5.0
million. The outstanding balance, including interest of $0.2
million, totaled $5.2 million.
6. Redeemable Preferred Stock
Upon
completion of our rights offering in October 2012, we issued
1,199,643 shares of Series J preferred stock and warrants to
acquire 1,014,982 common shares in exchange for approximately $30
million in cash proceeds. Net proceeds from the rights offering of
approximately $27.8 million were allocated between Series J
preferred stock and common stock warrants based on their estimated
relative fair market values at the date of issuance as determined
by management with the assistance of a third party valuation
specialist. The portion of the net proceeds from the rights
offering attributable to the Series J preferred stock was
determined to be approximately $26.4 million and is included in
Redeemable preferred stock on our consolidated balance sheets at
December 31, 2016 and 2015.
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
Our
Series J preferred stock contains certain redemption features and
is classified as mezzanine equity at March 31, 2017, and
December 31, 2016 since the shares are (i) redeemable at the option
of the holder upon the occurrence of certain events and (ii) have
conditions for redemption which are not solely within our control.
Our Series J preferred stock is redeemable at the option of the
holder if the Company undergoes a change in control, which includes
a person becoming a beneficial owner of securities representing at
least 50% of the voting power of our company, a sale of
substantially all of our assets, and certain business combinations
and mergers which cause a change in 20% or more of the voting power
of our company, and if we experience an ownership change (within
the meaning of Section 382 of the Internal Revenue Code of 1986, as
amended), which results in a substantial limitation on our ability
to use our net operating losses and related tax benefits. In the
event that a redemption event were to occur, currently the Company
would be precluded, under the terms of the Series J preferred stock
and applicable Delaware law, from making any material
redemptions.
The
difference between the carrying value of the Series J preferred
stock and its liquidation value is being accreted over an
anticipated redemption period of five years using the effective
interest method. The shares of Series J preferred stock have
limited voting rights and are not convertible into shares of our
common stock or any other series or class of our capital
stock.
Holders
of the Series J preferred stock are entitled to an annual dividend
of 13% (adjusting to 14% on October 12, 2017), which is payable
in-cash or in-kind at our discretion, on a quarterly basis. To
date, we have elected to pay all quarterly dividend payments on our
Series J preferred stock, in the cumulative amount of $21.1
million, in-kind rather than in-cash. Accordingly, we have
increased the carrying value of our redeemable preferred stock for
the amount of the paid-in-kind dividend payments. Dividends on the
Series J preferred stock and the accretion increase the amount of
net loss that is attributable to common stockholders and are
presented as separate amounts on the consolidated statements of
operations.
Our
Series J preferred stock has a preference upon dissolution,
liquidation or winding up of the Company in respect of assets
available for distribution to stockholders. The liquidation
preference of the Series J preferred stock is initially $25 per
share. If the dividend on the Series J preferred stock is paid
in-kind, which has been the case to date, the liquidation
preference is adjusted and increased quarterly (i) until October
11, 2017, by an amount equal to 3.25% of the liquidation preference
per share, as in effect at such time and (ii) thereafter by an
amount equal to 3.5% of the liquidation preference per share, as in
effect at such time. The quarterly accretion will continue until
the shares are redeemed, or until the Company's affairs are
liquidated, dissolved or wound-up.
As of
March 31, 2017, our Series J preferred stock had an aggregate
redemption value of approximately $52.0 million, including
paid-in-kind dividends of $21.1 million and accrued dividends of
$1.6 million. We recorded accretion associated with our Series J
preferred stock of $0.2 million and $0.2 million for the three
months ended March 31, 2017 and 2016, respectively.
In
connection with the closing of our rights offering on March 30,
2015 (See Note 7 - Rights
Offering), entities affiliated with Mr. Carl C. Icahn, our
largest shareholder, became the owner of approximately 52.3% of our
common stock, which resulted in a change of control of the Company.
This constituted a redemption event pursuant to the terms and
conditions of the Series J preferred stock, and as a result each
holder of shares of Series J preferred stock had the right to
require the Company to redeem all or a portion of such
holder’s shares of Series J preferred stock. Entities
affiliated with Mr. Carl C. Icahn waived their option to redeem
Series J preferred stock in connection with the change in control
resulting from the completion of the rights offering that closed on
March 30, 2015. On April 13, 2015, we redeemed 29,316 shares
of Series J preferred stock for approximately $1.0 million in cash
from holders not affiliated with Mr. Carl C. Icahn. Following the
April 13, 2015 redemption of Series J preferred stock, entities
affiliated with Mr. Carl C. Icahn became the owner of approximately
97.9% of our Series J preferred stock.
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
7. Liquidity and Capital
Resources
Our
principal needs for liquidity since we began executing our
transformation plan in August, 2015, have been to fund operating
losses, working capital requirements, capital expenditures,
restructuring expenses, acquisitions and integration and debt
service. Our principal sources of liquidity as of March 31,
2017 consisted of cash and cash equivalents of $0.6 million, and
our ability to borrow on our Amended
Note. See Note 5, Revolving
Note.
In
light of the above, the consolidated financial statements were
prepared on the basis that the Company will continue as a going
concern. Therefore, the accompanying consolidated financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets and
liabilities or any other adjustments that might result in the event
the Company is unable to continue as a going concern.
8. Net Loss Per Share Attributable to Common
Stockholders
The
following table sets forth the computation of basic and diluted net
loss per share attributable to common stockholders for the period
indicated (dollars in thousands):
|
|
|
|
|
|
|
Net loss
attributable to common stockholders
|
$(2,413)
|
$(2,775)
|
|
|
|
Weighted-average
common shares outstanding - basic and diluted
|
8,994,814
|
8,994,814
|
|
|
|
Net loss per share
attributable to common stockholders - basic and
diluted
|
$(0.27)
|
(0.31)
|
Basic
net loss per share attributable to common stockholders is computed
by dividing net loss attributable to common stockholders by the
weighted-average number of common shares outstanding during the
applicable period. Diluted net loss per share attributable to
common stockholders includes the effects of any warrants, options
and other potentially dilutive securities outstanding during the
period. For the periods presented, there were no potentially
dilutive securities outstanding, therefore basic and diluted net
loss per share attributable to common stockholders are equal. The
following table presents the outstanding antidilutive securities
excluded from the calculation of net loss per share attributable to
common stockholders:
|
|
|
|
|
Common stock
issuable upon exercise of Warrants
|
1,014,958
|
1,014,958
|
Options to purchase
common stock
|
-
|
41,150
|
Total securities
excluded from net loss per share attributable to common
stockholders
|
1,014,958
|
1,056,108
|
Voltari Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
9. Legal Proceedings
From
time to time, we are subject to claims in legal proceedings arising
in the normal course of business. We do not believe that we are
currently party to any pending legal action that could reasonably
be expected to have a material adverse effect on our business,
financial condition, results of operations or cash
flows.
Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
The following discussion should be read in conjunction with our
condensed consolidated financial statements included elsewhere
herein.
Forward-Looking Statements
Some of
the statements contained in this Quarterly Report on Form 10-Q,
including this Management’s Discussion and Analysis of
Financial Condition and Results of Operations, contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 12E of the
Securities Exchange Act of 1934, as amended, regarding our plans,
objectives, expectations and intentions. Such statements include,
without limitation, any statements regarding our transformation
plan, our exit from the mobile marketing and advertising business
and our entry into the real estate investment business, our plans
to acquire additional real estate properties, any statements
regarding our ability to generate profits, any statements regarding
various estimates we have made in preparing our financial
statements, statements that refer to projections of our future
operating performance, statements regarding any pro forma financial
information we present, the sufficiency of our capital resources to
meet our cash needs, the exit from or disposition of certain of our
businesses, and the potential costs associated therewith, and the
anticipated growth and trends in our businesses. These
forward-looking statements are subject to known and unknown risks
and uncertainties that could cause actual results to differ
materially from those anticipated.
Risks
and uncertainties that could adversely affect our business and
prospects include without limitation:
●
|
any
financial or other information included herein based upon or
otherwise incorporating judgments or estimates based upon future
performance or events;
|
●
|
our
ability to raise additional capital or generate the cash necessary
to continue and expand our operations or to fund the liquidation
preference on, or redeem, our Series J preferred stock if required
to do so;
|
●
|
our
ability to protect and make use of our substantial net operating
loss carryforwards;
|
●
|
our
ability to implement our transformation plan;
|
●
|
our
ability to compete in the highly competitive real estate investment
industry;
|
●
|
the
impact of government regulation, legal requirements or industry
standards relating to commercial real estate;
|
●
|
our
limited experience acquiring and managing commercial real
properties;
|
●
|
our
ability to execute real estate acquisitions;
|
●
|
risks
generally associated with the commercial real estate investment
business, including the credit risk associated with our
tenants;
|
●
|
our
ability to meet the criteria required to remain quoted on the OTCQB
Marketplace;
|
●
|
the
ongoing benefits and risks related to our relationship with Mr.
Carl C. Icahn, our principal beneficial stockholder and principal
lender, through certain of his affiliates;
|
●
|
the
impact and costs and expenses of any litigation we may be subject
to now or in the future; and
|
●
|
our
leadership transition.
|
In some
cases, you can identify forward-looking statements by terms such as
“may,” “will,” “should,”
“could,” “would,” “expects,”
“plans,” “anticipates,”
“believes,” “estimates,”
“projects,” “predicts,”
“potential” and similar expressions intended to
identify forward-looking statements. Our actual results could be
different from the results described in or anticipated by our
forward-looking statements due to the inherent uncertainty of
estimates, forecasts, projections and pro forma financial
information, and may be materially better or worse than
anticipated. Given these uncertainties, you should not place undue
reliance on these forward-looking statements. Forward-looking
statements represent our estimates and assumptions only as of the
date of this report. We expressly disclaim any duty to provide
updates to forward-looking statements, and the estimates and
assumptions associated with them, after the date of this report, in
order to reflect changes in circumstances or expectations or the
occurrence of unanticipated events except to the extent required by
applicable securities laws. All of the forward-looking statements
are qualified in their entirety by reference to the factors
discussed above, as well as the risks and uncertainties discussed
in Item 1A - Risk Factors
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016. We qualify all of our forward-looking statements
by these cautionary statements. We caution you that these risks are
not exhaustive. We operate in a continually changing business
environment and new risks emerge from time to time.
References
in this Quarterly Report on Form 10-Q to “Voltari,”
“the Company,” “we,” “us” and
“our” are to Voltari Corporation and its
subsidiaries.
Transformation Plan
In
August 2015, we committed to and began implementing a
transformation plan pursuant to which, among other things, we
exited our mobile marketing and advertising business and entered
into the business of acquiring, financing and leasing commercial
real estate properties. The Company leases and intends to
continue to lease such properties pursuant to so-called
“double net” or “triple net” leases.
The Company has significantly reduced its workforce in connection
with its transformation plan. Further, in order to continue to grow
our real estate portfolio in a manner designed to, over time, help
us generate profits, we may pursue higher valued properties than
the properties we currently own. We anticipate that any such higher
valued properties would likely generate relatively higher rental
income, and would likely involve higher acquisition costs and may
involve higher costs of maintenance. There can be no assurance that
we will invest in additional real estate properties, including any
such higher valued properties, on commercially reasonable terms, if
at all.
Any
future acquisitions are intended to be initially financed through
borrowings available under our Amended Note (as defined herein)
with Koala Holding LP (“Koala”) which, among other
things, allows us increased borrowing capacity that we believe will
provide us with the flexibility to acquire such higher valued
properties.
Real Property Acquisitions—In connection with the
execution of our transformation plan, on September 17, 2015,
we acquired a real estate parcel in Long Branch, New Jersey. The
property is subject to a triple net lease with JPMorgan Chase Bank,
N.A. ("Chase"), the original term of which expires in June, 2020
(with two, five-year renewal options), pursuant to which Chase is
responsible for the payment of basic rent as well as the payment of
real estate taxes, maintenance costs, utilities, tenant's insurance
and other property related costs. Refer to
http://investor.shareholder.com/jpmorganchase/sec.cfm for the
financial statements of the tenant.
The
purchase price was approximately $3.63 million and average annual
rental income for the property over the remaining term of the
original lease is approximately $203,000.
On May
18, 2016, we acquired a real estate parcel in Flanders, New York.
The property is subject to a lease with 7-Eleven, Inc.
(“7-Eleven”), the original term (the “Original
Term”) of which expires in December 2029 (with four,
five-year renewal options (the “Renewal Term,” and
together with the Original Term, the “Term”)). During
the Term, 7-Eleven is responsible for the payment of basic rent, as
well as the payment of, subject to certain exceptions, real estate
taxes, utilities, tenant’s insurance and other property
related costs. The landlord is responsible for certain maintenance
and repair costs. The purchase price was approximately $2.82
million and the average annual rental income for the property over
the remaining Original Term is approximately $162,000.
Recent Developments
OTCQB Marketplace— On December 14, 2016, we received
written notification from The NASDAQ Stock Market, LLC
indicating that our common stock would be
suspended from trading on The NASDAQ Capital Market
effective with the opening of business on December
23, 2016. Since December 23, 2016, our common stock has been quoted
on the OTCQB Marketplace under the symbol
“VLTC.”
Results of Operations
Our
continuing operations for the three months ended March 31, 2017 and
2016 consist of revenues and expense related to commercial real
estate operations which commenced in August 2015, as well as
general and administrative costs. Continuing operations includes
all personnel and facilities costs related to executive management,
finance and accounting, human resources and other general corporate
staff, as well as all legal and other professional fees, insurance
and other costs not directly attributable to the mobile marketing
and advertising business or our other discontinued
operations.
Total revenue
We
commenced commercial real estate operations in August 2015. Revenue
from continuing operations for the three months
ended
March 31, 2017 consists of rental income from properties acquired
on September 17, 2015 and May 18, 2016. Revenue from continuing operations
for the three months ended March 31, 2016 consists of rental income
from property acquired on September 17, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$81
|
$41
|
$40
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative, excluding depreciation
|
$538
|
$1,045
|
$(507)
|
Depreciation and
amortization
|
44
|
69
|
(25)
|
Acquisition
transaction and integration costs
|
9
|
$16
|
(7)
|
Total
operating expenses
|
$591
|
$1,130
|
$(539)
|
General and administrative, excluding depreciation
For the
three months ended March 31, 2017, general and administrative
expense, excluding depreciation, declined by approximately $0.5
million from the three months ended March 31, 2016, due
to:
●
$0.2 million
decrease in personnel costs due to continued staff reductions and
our management structure;
●
$0.2 million
decrease in accounting and legal professional fees;
and
●
$0.1 reduction in
consulting fees, public relations fees, stock related listing fees
and various other cost reductions.
Depreciation and amortization
Depreciation
and amortization decreased by $0.25 thousand for the three months
ended March 31, 2017 compared to the three months ended March 31,
2016 due to:
●
$0.15
thousand increase in real estate related depreciation and
amortization; offset by
●
$0.40
thousand decrease in depreciation and amortization related to
office furniture, equipment, capitalized software development costs
and leasehold improvements related to the Company’s New York
City office.
Net loss from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from discontinued operations
|
$-
|
$(45)
|
$45
|
Results
of operations for our mobile marketing and advertising business,
which terminated in August 2015, are included in discontinued
operations for all periods presented. Results from discontinued
operations for the three months ended March 31, 2016 also reflect
residual charges related to operations discontinued in 2014 and
prior years. See Note 4 -
Discontinued Operations to our condensed consolidated
financial statements for more information.
For the
three months ended March 31, 2017, discontinued operations
reflected no net loss compared to a net loss of $45 thousand for
the three months ended March 31, 2016. This change in results from
discontinued operations is due primarily to a $45 thousand decrease
in network operations expense, resulting from closing our Seattle
datacenter in the first quarter of 2015.
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$(564)
|
$(1,140)
|
$(576)
|
The
$0.6 million improvement in net loss is primarily due to the
reduction in general and administrative expenses described
above.
Liquidity and Capital Resources
General
Our
principal needs for liquidity since we began executing our
transformation plan in August, 2015, have been to fund operating
losses, working capital requirements, capital expenditures,
restructuring expenses, acquisitions and integration. Our principal
sources of liquidity as of March 31, 2017 consists of cash and
cash equivalents of approximately $0.6 million and our ability to
borrow on our Koala loan.
On
August 7, 2015, we, as borrower, and Koala Holding LP
(“Koala”), as lender, an affiliate of Carl C. Icahn,
our controlling stockholder, entered into a revolving note (the
“Prior Note”). Pursuant to the Prior Note, Koala made
available to us a revolving loan facility of up to $10 million in
aggregate principal amount. Borrowings under the Prior Note bore
interest at a rate equal to the greater of the LIBOR rate plus 350
basis points, per annum, and 3.75%, per annum. The Prior Note also
included a fee of 0.25%, per annum, on undrawn amounts and matured
on the earliest of (i) December 31, 2017, (ii) the date on which
any financing transaction, whether debt or equity, was consummated
by us (or our successors and assigns) with net proceeds in an
amount equal to or greater than $10 million, and (iii) at our
option, a date selected by us that was earlier than December 31,
2017. Subject to the terms and conditions of the Prior Note, we
could repay all or any portion of the amounts outstanding under the
Prior Note at any time without premium or penalty, and any amounts
so repaid would, until the maturity date, be available for
re-borrowing. As collateral for the Prior Note, we pledged and
granted to Koala a lien on our limited liability company interest
in Voltari Real Estate Holding LLC (“Voltari
Holding”).
As of
March 29, 2017, borrowings from this facility totaled $5.0 million
due to borrowings in connection with our second real estate
acquisition as well as for working capital
requirements.
On
March 29, 2017, we and Koala, amended and restated the Prior Note
(the “Amended Note”). Pursuant to the Amended Note,
Koala made available to the Company a revolving loan facility of up
to $30 million in aggregate principal amount (the
“Commitment”). The Company may, by written notice to
Koala, request that the Commitment be increased (the
“Increased Commitment”), provided that the aggregate
amount of all borrowings, plus availability under the aggregate
Increased Commitment, shall not exceed $80 million. Koala has no
obligation to provide any Increased Commitment and may refuse to do
so in its sole discretion. The Amended Note provides that the net
proceeds thereunder in excess of $10 million will be used by
the
Company for the acquisition, improvement, development,
modification, alteration, repair, maintenance, financing or leasing
of real property,
including any fees and expenses associated with such activities.
Borrowings under the Amended Note will bear interest at a rate
equal to the LIBOR Rate (as defined in the Amended Note) plus 200
basis points, per annum, subject to a maximum rate of interest of
3.75%, per annum. The Amended Note matures on the earliest of (i)
December 31, 2020, (ii) the date on which any financing
transaction, whether debt or equity, is consummated by the Company
(or its successors and assigns) with net proceeds in an amount
equal to or greater than $30 million, and (iii) at the
Company’s option, a date selected by the Company that is
earlier than December 31, 2020 (the “Maturity Date”).
The Amended Note also allows the Company to, upon written notice to
Koala not more than 60 days and not less than 30 days prior to the
Maturity Date, request that Koala extend the Maturity Date to
December 31, 2022. Koala may, in its sole discretion, agree to
extend the Maturity Date by providing written notice to the Company
on or before the date that is 20 days prior to the Maturity Date.
If an event of default (as defined in the Amended Note) exists, the
Amended Note will bear interest at a default rate equal to the
greater of the LIBOR Rate plus 300 basis points, per annum, or
4.5%, per annum. Subject to the terms and conditions of the Amended
Note, the Company may repay all or any portion of the amounts
outstanding under the Amended Note at any time without premium or
penalty. The amounts available under the Commitment or Increased
Commitment, as the case may be, will increase and decrease in
direct proportion to repayments and reborrowings under the Amended
Note, respectively, from time to time. As collateral for the
Amended Note, the Company has pledged and granted to Koala a lien
on the Company’s limited liability company interest in
Voltari Holding.
As of
March 31, 2017, borrowings from this facility totaled $5.0 million
due to borrowings in connection with our second real
estate
acquisition as well as for working capital
requirements.
To the
extent we are unable to replace or refinance the Amended Note prior
to its maturity we may not have sufficient capital resources to
repay any amounts borrowed thereunder. There can be no assurance
that we will be able to replace or refinance the Amended Note on
commercially reasonable terms, if at all.
In
August, 2015, we began implementing a transformation plan pursuant
to which, among other things, we exited our mobile marketing and
advertising business and entered into the business of acquiring,
financing and leasing commercial real properties. We expect that
the acquisition of commercial real properties, the cost of
operations and working capital requirements will be our principal
need for liquidity in the future. Our cash flows may be affected by
many factors including the economic environment, competitive
conditions in the commercial real estate industry and the success
of our transformation plan. We believe we will have adequate
resources to fund our operations, capital expenditures and working
capital needs for the next 12 months using borrowings available
under the Amended Note and our cash and cash equivalents on hand.
We currently intend to leverage real properties that we may
acquire, but cannot assure that we will be able to do so on
commercially reasonable terms, if at all.
Our
liquidity may be adversely affected if, and to the extent that, our
remaining Series J preferred stock becomes redeemable. The Company
believes that, if a redemption event were to occur, limited, if
any, funds would be available for such redemption under the terms
of the Series J preferred stock and applicable Delaware law.
As a result, in the event that a redemption event were to occur,
the Company currently expects that it would be precluded, under the
terms of the Series J preferred stock and applicable Delaware law,
from making any material redemptions.
Our
ability to achieve our business and cash flow plans is based on a
number of assumptions which involve significant judgments and
estimates of future performance, borrowing capacity and credit and
equity finance availability, which cannot at all times be assured.
Accordingly, we cannot assure that cash flows from operations and
other internal and external sources of liquidity will at all times
be sufficient for our cash requirements. If necessary, we may need
to consider actions and steps to improve our cash position and
mitigate any potential liquidity shortfall, such as modifying our
business plan, pursuing additional financing to the extent
available, pursuing and evaluating other alternatives and
opportunities to obtain additional sources of liquidity and other
potential actions to reduce costs. We cannot assure that any of
these actions would be successful, sufficient or available on
favorable terms. Any inability to generate or obtain sufficient
levels of liquidity to meet our cash requirements at the level and
times needed could have a material adverse impact on our business
and financial position.
Our
ability to obtain any additional financing depends upon many
factors, including our then existing level of indebtedness (if any)
and restrictions in any debt facilities we may establish in the
future, historical business performance, financial projections,
prospects and creditworthiness and external economic conditions and
general liquidity in the credit and capital markets. Any financing
(or subsequent refinancing) could also be extended only at costs
and require us to satisfy restrictive covenants, which could
further limit or restrict our business and results of operations,
or be dilutive to our stockholders.
Cash flows
As of
March 31, 2017, and December 31, 2016, we had cash and
cash equivalents of $0.6 million and $0.4 million, respectively.
The increase reflects cash provided by financing activities of $0.5
million, offset by cash used in operating activities.
Net cash used in operating activities
The
change in our operating assets and liabilities was driven by a
decrease in prepaid expenses of $99 thousand, an increase in other
assets of $4 thousand, and an increase in accounts payable and
accrued expenses of $63 thousand, and a decrease in deferred rent
expense of $2 thousand.
Net cash from investing activities
For the
three months ended March 31, 2017, no net cash was used in
investing activities. Net cash provided by investing activities -
discontinued operations consisted of proceeds from disposition of
fixed assets of less than $3 thousand.
Net cash from financing activities
For the
three months ended March 31, 2017, cash in the amount of $0.5
million was provided by borrowings on the Amended
Note.
Off-Balance Sheet Arrangements
As of
March 31, 2017, and December 31, 2016, we do not have any
off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our
condensed consolidated financial statements are prepared in
accordance with U.S. GAAP. The preparation of our financial
statements and related disclosures requires us to make estimates,
assumptions and judgments that affect the reported amount of
assets, liabilities, revenue, costs and expenses, and related
disclosures. We base our estimates and assumptions on historical
experience and other factors that we believe to be reasonable under
the circumstances. We evaluate our estimates and assumptions on an
ongoing basis. Our actual results may differ from these estimates
under different assumptions and conditions and in certain cases the
difference may be material. Our critical accounting policies and
estimates include those involved in recognition of revenue,
valuation of long-lived assets, valuation allowance on the deferred
tax asset, accounting for our redeemable preferred stock,
litigation and other loss contingencies. Estimates related to the
allocated cost of investments in real estate among land, other
tangible and intangible assets affect future depreciation and
amortization expense as well as the amount of reported
assets.
As a
result of our entry into the business of acquiring, financing and
leasing commercial real properties, we have adopted the significant
accounting policies described in Note 2 - Summary of Significant Accounting
Policies in our Condensed Consolidated Financial Statements
in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
See
discussion of recent accounting pronouncements in Note 2 - Summary of Significant Accounting
Policies in our condensed consolidated financial statements
in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk.
We are
not required to provide qualitative and quantitative disclosures
about market risk because we are a smaller reporting
company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our
management evaluated, with the participation of our Chief
Administrative and Accounting Officer, who as of the date of this
report is performing the functions of our acting principal
executive officer and acting principal financial officer, the
effectiveness of our disclosure controls and procedures as of the
end of the period covered by this Quarterly Report on Form 10-Q.
Based on this evaluation, our Chief Administrative and Accounting
Officer has concluded that our disclosure controls and procedures
are effective to ensure that information we are required to
disclose in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules
and forms and that such information is accumulated and communicated
to our management, including our Chief Administrative and
Accounting Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting
that occurred during the period covered by this Quarterly Report on
Form 10-Q that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
Item 5. Other Information.
Executive Officer Bonus
On May
12, 2017, the Board of Directors approved an award of a cash bonus
to Mr. Goldmann in the amount of $40,000, payable as soon as
reasonably practicable in accordance with the Company’s
normal payroll practices.
PART II
Item 1. Legal Proceedings.
There
have been no material changes to the legal proceedings previously
disclosed in Part 1, Item 3
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016.
Item 1A. Risk Factors.
In
addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, Item 1A in our Annual Report on
Form 10-K, for the year ended December 31, 2016, which could
materially affect our business, financial position and results of
operations. There have been no material changes to the risk factors
disclosed in Part I, Item
1A in our Annual Report on Form 10-K for the year ended
December 31, 2016.
Item 6. Exhibits.
Exhibit Number
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Exhibit Description
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Certification
pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 – Chief Administrative and Accounting
Officer.
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 – Chief Administrative
and Accounting Officer.
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101.INS
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XBRL
Instance Document.*
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101.SCH
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XBRL
Taxonomy Extension Schema Document.*
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101.CAL
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XBRL
Taxonomy Extension Calculation Linkbase Document.*
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101.LAB
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XBRL
Taxonomy Extension Label Linkbase Document.*
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101.PRE
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XBRL
Taxonomy Extension Presentation Linkbase Document.*
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101.DEF
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XBRL
Taxonomy Extension Definition Linkbase Document.*
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SIGNATURES
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 thereunto duly authorized.
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VOLTARI
CORPORATION
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Date:
May 15, 2017
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By:
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/s/
Kenneth
Goldmann
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Kenneth
Goldmann |
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Chief
Administrative and Accounting Officer (Principal Executive and
Principal Financial Officer)
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