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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Further, if the Proposed Merger fails to close for any reason or the closing takes longer than we expect, we will need to raise substantial
additional capital and to secure commitments from additional wholesale partners with significant data capacity needs that generate substantial
revenues for us in a timely manner to fully implement our business plans and to be able to meet our financial obligations and continue to operate
beyond the next twelve months. The amount of additional capital needed by us if the Proposed Merger fails to close will depend on a number of
factors, many of which are outside of our control and subject to a number of uncertainties.
Whether we would be able to successfully fulfill our additional capital needs in a timely manner is uncertain. If the Merger Agreement terminates,
we will likely pursue various alternatives for securing additional capital. These alternatives include, among other things, obtaining additional equity
and debt financing from a number of possible sources such as new and existing strategic investors, private or public offerings and vendors. However,
we face a number of challenges. Our recent equity financings were dilutive to our shareholders and, with the current trading price of our Class A
Common Stock, any additional equity financings could result in significant additional dilution for our stockholders and may not generate the proceeds
we need. Further, unless we are able to secure the required shareholder approvals to increase the number of authorized shares under our Certificate of
Incorporation, we may not have enough authorized, but unissued shares available to raise sufficient additional capital through an equity financing.
With our existing level of indebtedness, including the amount of any financing drawn by us under the Note Purchase Agreement, if any, and our
inability to issue additional secured indebtedness under our existing indentures, additional debt financings may not be available on acceptable terms
or at all. Even if additional debt financings are available, they could increase our future financial commitments, including aggregate interest payments
on our existing and new indebtedness, to levels that we find difficult to support. Other sources of additional capital could include, among other things,
a sale of certain of our assets that we believe are not essential for our business, such as excess spectrum. However, our ability to consummate a sale of
assets that would generate sufficient proceeds to meet our capital needs on acceptable terms in a timely manner or at all is uncertain.
If the Merger Agreement terminates and we are unable to raise sufficient additional capital to fulfill our funding needs in a timely manner, or we
fail to generate sufficient additional revenue from our wholesale and retail businesses to meet our obligations beyond the next twelve months, our
business prospects, financial condition and results of operations will likely be materially and adversely affected, substantial doubt may arise about our
ability to continue as a going concern and we will be forced to consider all available alternatives, including a financial restructuring, which could
include seeking protection under the provisions of the United States Bankruptcy Code.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America, which we refer to as U.S. GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, which we refer to as
the SEC. The following is a summary of our significant accounting policies:
Principles of Consolidation
— The consolidated financial statements include all of the assets, liabilities and results of operations of our wholly -
owned subsidiaries, and subsidiaries we control or in which we have a controlling financial interest. Investments in entities that we do not control and
are not the primary beneficiary, but for which we have the ability to exercise significant influence over operating and financial policies, are accounted
for under the equity method. All intercompany transactions are eliminated in consolidation.
Non
- controlling interests on the consolidated balance sheets include third - party investments in entities that we consolidate, but do not wholly
own. We classify our non - controlling interests as part of equity and we allocate net loss, other comprehensive income (loss) and other equity
transactions to our non
- controlling interests in accordance with their applicable ownership percentages. We also continue to attribute our non -
controlling interests their share of losses even if that attribution results in a deficit non - controlling interest balance. See Note 15, Stockholders' Equity,
for further information.
Financial Statement Presentation
—
We have reclassified certain prior period amounts to conform with the current period presentation.
Information about operating segments is based on our internal organization and reporting of revenue and operating loss based upon internal
accounting methods. Operating segments are defined as components of an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision making group, in
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2.
Summary of Significant Accounting Policies