Exhibit 1005
`
`
`
`UNITED STATES OF AMERICA
`
`SECURITIES AND EXCHANGE COMMISSION
`
`ATTESTATION
`
`
`
`I HEREBY A'I'I'EST
`
`that:
`
`Attached is a copy ofan annual report on Form 1 0-K, for the
`
`fiscal year ended December 3], 1989, received in this
`
`Commission on April 16, 1990, under the name of Geostar
`
`Corp, File No. 0-] 6868, pursuant to the provisions ofthe
`
`Securities Exchange Act of I 93 4.
`
`
`(Date) Curtis Francisco
`
`
`
`on file in this Commission
`
`
`
`September 18, 2012
`
`sec 334 (10/07)
`
`Records Ofiicer
`It is hereby certified that the Secretary ofthe U.S. Securities and Exchange
`Commission, Washington, D.C., which Commission was created by the
`Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is official
`custodian ofthe records and files of said Commission, and all records and
`files created or established by the Federal Trade Commission pursuant to
`the provisions of the Securities Act of 1933 and transferred to this
`Commission in accordance with Section 210 of the Securities Exchange
`Act of 1934, and was such official custodian at the time of executing the
`above attestation, and that helshe, and persons holding the positions of
`Deputy Secretary, Assistant Director, Records Officer, Branch Chief of
`Records Management, and the Program Analyst for the Records Officer,
`or any one of them, are authorized to execute the above attestation.
`
`For the Commission
`
`W:
`
`Secretary
`
`772. WW
`Exhibit 1005
`
`Liberty Mutual
`
`Page 000001
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`Page 000001
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` FORM lO-K
`
` SECURITIES AND EXCHANGE COMMISSION
`
`Washington, D.C.
`
`20549
`
`
`
`[x1
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15
`ACT or 1931.
`
`(d) OF THE SECURITIES EXCHANGE
`
`HEUI’EJEO.
`
`For the fiscal year ended December 31,or
`APR 18 1990
`ANT TO SECTION 13 OR 15(d) OF THE SE URITIES
`
`FEE 108
`]
`TRANSITION REPORT PURSU
`EXCHANGE ACT OF 1934
`
`1989
`
`For the transition period from
`
`Commission File No. O-léséfi
`
`to
`
`GEOSTAR CORPORATION
`(Exact name of registrant as specified in its charter)
`22-2h78651
`
`(I.R.S. Employer Identification No.)
`
`_
`
`_
`
`'
`
`Delaware
`(State or other jurisdiction of
`incorporation or organization)
`20037
`1001 22nd Street, N.fl., Washington, 9.8.
`(Zip code)
`(Address of principal executive offices)
`rant's telephone number,
`including area code: {2021 887—0870
`Em)
`Name of each exchangq}:j
`APR191990
`on yhich registeredgj?
`itle of each class
`[:23
`E5:
`None
`:3
`None
`Eb
`Securities registered pursuant to Section 12(g) of the Act:
`Common Stock, par value 5. .01 per share a
`(Title of Class)
`
`Regist
`
`Securities registered pursuant to Sect
`
`ion 12(b) of the Act:
`
`m.
`
`T
`
`“
`ig駧
`V
`
`Indicate by check mark whether the registrant (1) has filed all
`he Securities Exchange
`reports required to be filed by Section 13 or 15(d) of t
`Act of 193h 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_x_ No___
`lic trading market for the Common Stock
`value of the Common Stock held by
`be accurately estimated.
`
`There is no established pub
`and accordingly, no aggregate market
`non-affiliates of the registrant can
`The number of shares of Common Stock outstanding as of March 1, 1990 was
`11,490,068.
`
`73m. Now 0; fees-150 aWWM 94‘ V”- 74
`
`I
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`Page 000002
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`Beams!MommationServices
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`
`
`Gflflmbmg,Marylanq
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`Page 000002
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`2369-90-20204
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`PART I
`
`Item 1 - Business
`
`a,
`
`Geostar Corporation (the "Company") operates a nation—
`wide mobile positioning and two-way digital message satellite
`communications system which was being used as of March 1, 1990 by
`approximately seventy-five trucking companies and government
`agencies. As of that date,
`these customers transmitted approxi-
`mately 65,000 messages per day through the Company's satellite
`transponders and computer-communications network. User terminals
`for the Company's current system are produced by Sony Corporation
`of America ("Sony"), Hughes Network Systems, Inc., a subsidiary
`of General Motors Corporation ("Hughes") and Kenwood Corporation
`("Kenwood") and marketed principally by Sony and Hughes.
`The
`Company was incorporated in Delaware on February 18, 1983 to de-
`velop and operate a system (referred to herein as the "GEOSTAR
`System" or the "System")
`to provide radio determination satellite
`service ("RDSS").
`RDSS means the determination of the position,
`velocity or other characteristics of an object, or the obtaining
`of information relating to these parameters, by means of the
`propagation properties of radio waves,
`including ancillary data
`communications.
`The Federal Communications Commission ("FCC")
`has permitted the Company to provide other-data communications
`services as well so long as the primary purpose of the Company's
`satellites is RDSS.
`The GEOSTAR RDSS System will employ satel-
`lites in geostationary orbit, a ground station known as GEOSTAR
`Central and user terminals to determine and transmit the location
`and other data from a user terminal, which may be stationary or
`on a car,
`truck, boat, aircraft or railcar, or hand carried, and
`to provide two-way communications between user terminals or be-
`tween a user terminal and a user's central control site.
`
`the Company signed an Exclusive Patent
`In May 1989,
`_
`License and Technology Transfer Agreement with a European company
`to establish a compatible RDSS system covering Europe,
`the Med-
`iterranean,
`the Middle East and Africa.
`The shareholders of the
`European company approved an increase in its capitalization in
`March 1990 to enable that company to begin the development of its
`3355 program.
`The Company currently has a 7.5% percent ownership
`interest in the EurOpean company and has the right to share in
`its revenues and designate a member of its Board of Directors.
`
`In June 1989, a United States patent was issued to the
`C
`aggpany covering a vehicle navigation system using two satellites
`a digital terrain map.
`See "Patents."
`
`ti
`
`the Company began commercial opera-
`In September 1989,
`_
`on Of its two-way System 2C mobile positioning and satellite
`
`_
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`:L
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`Page000003
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`g‘
`~
`
`System 2C permits position determination
`communications service.
`and fully integrated two-way communications between mobile users
`and central control sites.
`See "Products and Services -- GEOSTAR
`systems 2.0 and 2C (Phase 1)."
`In October 1989,
`the GTE satellite carrying the Com-
`pany's two L-band transponders, which was launched in September
`1988,
`reached its proper orbital location.
`The satellite is
`operational and is estimated to have a life of up to five years.
`One transponder will provide coverage for the Caribbean basin,
`including Central America and northern South America, while the
`second transponder will provide back-up coverage for the conti-
`nental United States.
`
`the Company amended its satellite
`In December 1989,
`construction contract with General Electric Corporation, Astro
`Space Division ("GE Astro") to include the construction and
`delivery of two single beam satellites to precede the construc-
`tion and delivery of the three multiple beam satellites original-
`ly contracted for. Once operational,
`these two single beam
`satellites and a digital terrain map will permit commencement of
`the Company's RDSS service.
`Subsequent to the signing of this
`agreement,
`the Company decided to defer construction of the
`satellites for at least one year.
`See "Products and Services --
`GEOSTAR RDSS (Phase 2)."
`
`;
`
`‘
`
`h exploring and evaluating financing alternatives for operations
`
`The Company believes it can meet its financing require-
`ments through the end of the second quarter of 1990 from revenues
`from operations and existing funds (assuming no repayment of
`existing indebtedness payable on demand) and is in the process of
`
`subsequent to that date. There can be no assurance that the
`Company will be successful in obtaining such financing.
`See
`"Management's Discussion and Analysis of Financial Condition and
`Results of Operations."
`
`The Company's operations are currently in one industry:
`position determination and mobile satellite communications.
`
`Products and Services
`
`The Company's revenues are generated from (i) contracts
`with agencies of the United States government; (ii) the licensing
`of the Company‘s technology to foreign entities when approved by
`the appropriate government agencies for export; (iii) the sale of
`software and hardware for use in connection with GEOSTAR System
`services;
`(iv) the provision of GEOSTAR System services; and (V)
`the provision of related technical services and equipment.
`The
`following are descriptions of systems currently being operated by
`
`3 P
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`2369-90—20204
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`the Company and the status of systems being developed by the Com—
`pany.
`The services provided by each system being developed or
`operated by the Company generally represent or will represent
`progressive enhancements to position determination capabilities,
`message transfer or other capabilities or capacity over services
`currently being offered.
`
`In March 1988,
`GEOSTAR Systems 2.0 and 2C (Phase 1).
`the Company's primary and back-up L—band transponders for its
`system 2.0 were successfully placed in orbit aboard the GTE
`satellite, Spacenet 3R.
`System 2.0, which commenced commercial
`operation in July 1988, provides position information and one-way
`messaging consisting of up to 100 characters per transmission
`from mobile users located anywhere in the continental United
`States through one of the Company's L—band transponders to the
`Company's central computer facility ("GEOSTAR Central") (inbound)
`for transmission to the user's central control site.
`
`GEOSTAR System 2C service, which is the Company's
`anationwide satellite-based, positioning and two—way message ser-
`vice, commenced operations in September 1989. As in System 2.0,
`positioning and message data are transmitted to GEOSTAR Central
`through one of the L-band transponders (inbound).
`In contrast to
`System 2.0,
`the System 2C terminals,
`through an additional omni-
`directional antenna connected to a receiver unit, receive digital
`messages from GEOSTAR Central
`(outbound) which have been trans-
`mitted through a relay station and a C-band transponder on board
`an existing satellite. Those messages, which are addressed to
`each user individually through a unique identification code, can
`be communicated to the mobile user and can be printed or shown on
`a liquid crystal display unit.
`The primary L-band and C-band
`transponders being used by the Company are both located on the
`Spacenet 3R satellite.
`The Company owns the C-band transponder
`on Spacenet 3R.
`The Company also leases a back-up C-band tran-
`sponder aboard another satellite.
`
`Position information in Systems 2.0 and 2C is obtained
`through the use of Loran-C units which provide position informa-
`tion to an accuracy that varies from one-sixteenth of a mile to
`one mile. Position information could also be obtained through
`Global Positioning System ("GPS") units, which the Company's li-
`censed manufacturers may offer for sale when the GPS System is
`Operational, which is expected to occur by the end of 1991.
`See
`"Competition." Processed information can be sent from GEOSTAR
`Central to the users' central control sites by conventional dial—
`up telephones, very small aperture terminals ("VSAT") satellite
`dishes or public data networks. Personnel at the customer's cen-
`tral control sites, using personal computers or an integrated
`computer system and software developed by third parties in
`éssociation with the Company or its vendors,
`locate their veh-
`lcles on maps which provide various levels of detail (nationwide,
`
`4.
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`2369-90-20204
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`quadrant or local) that may be selected by the user, and read
`messages from each vehicle on the computer screen.
`
`Although System 2.0 one-way service remains available
`for customers of the Company, most existing accounts are being
`a converted to, and new orders are generally for,
`the two-way capa-
`bility of System 2C.
`The Company has licensed Sony, Hughes and
`Kenwood to manufacture user terminals for GEOSTAR System 2C.
`Systems 2.0 and ZC service, hardware and software revenues ac-
`counted for approximately 34% and 22% of the Company's revenues
`in 1989 and 1988, respectively.
`
`The Company's second and third L-band transponders, one
`of which will provide coverage for the Caribbean basin,
`including
`Central America and northern South America, were launched on
`September 8, 1988 aboard another GTE satellite. When the satel-
`lite failed to reach its proper orbit as a result of a malfunc-
`tion,
`the on-board fuel normally used to keep a satellite in its
`proper orbit was used to boost the satellite into geosynchronous
`orbit. Although the useful life of the satellite was reduced
`from the normal life of ten years to approximately five years by
`this procedure,
`the satellite was placed in geosynchronous orbit,
`and the transponders are operational. Because of the launch mal-
`function and the resulting reduced satellite life,
`the Company
`filed a constructive total loss insurance claim relating to the
`two transponders and,
`in March 1989,
`receiVed insurance proceeds
`of $5 million, $1.75 million of which was used to repay certain
`obligations. As a result,
`the insurance carriers are entitled to
`50% of any revenues (net of all costs associated with the oper-
`ation of such transponders) generated by the Company from the use
`of the transponders.
`The Company is not currently providing com-
`mercial service through the transponders, but is using them for
`testing and back-up.
`The Company expects to provide commercial
`service through one of the transponders to the Caribbean basin in
`1990.
`
`Elements of risk related to the GEOSTAR System, as well
`as other satellite-based systems,
`include the possibility of sig-
`nificant delays in the launch of satellites,
`the possibility that
`the launch of a satellite may fail and the possibility that one
`or more transponders or satellites may cease to operate or may
`not cperate according to specifications once in orbit, with no
`possibility of repair.
`
`mation will be determined through triangulation (or
`
`GEOSTAR RDSS (also known as
`GEOSTAR RDSS (Phase 2).
`System 3.0) will be a complete two-way service capable of provid-
`ing precise position information and two-way transfer of messages
`(consisting of up to 110 characters per transmission) between low
`cost, miniaturized, portable user terminals. Rather than relying
`on external sources such as Loran-C or GPS, RDSS position infor-
`
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`2369—90—20204
`
`bilaterization with a digital terrain map) calculations utilizing
`the times of arrival of radio signals received from the Company‘s
`satellites and satellite transponders.
`System 3.0 can operate
`utilizing at least one satellite operated entirely by the Company
`(a "dedicated satellite") and the Company's existing trans-
`ponders.
`System 3.0 would provide more precise positioning,
`higher transmission speeds, miniaturization of user terminals and
`greater system capacity than Systems 2.0 and 2C. One single beam
`satellite has the capacity to serve 500,000 user terminals, pro-
`vided that GEOSTAR Central has sufficient capacity.
`The Company
`plans to increase the capacity of GEOSTAR Central as required to
`meet customer demand.
`
`the Company amended its satellite
`In December 1989,
`construction contract with GE Astro to provide for the construc-
`tion and delivery of two single beam dedicated satellites by GE
`Astro at an aggregate cost of $86,575,000.
`The construction of
`the single beam satellites would precede that of the three mul-
`tiple beam satellites originally contracted for.
`The amended
`agreement calls for monthly progress payments in varying amounts
`to be paid during the construction period.
`The amended agreement
`also calls for a decrease in the cost of the multi-beam satel-
`lites from $161,575,000 to $155,000,000.
`If the delivery of the
`satellites by GE Astro or the launch of the satellites is de-
`layed,
`the Company can postpone for specified periods certain
`payments to CE Astro, depending on the reason for and the length
`of the delay.
`The Company is currently negotiating an
`arrangement with GE Astro which would allow the Company to defer
`construction of the satellites for at least one year.
`See
`"Regulatory and Governmental Matters."
`
`The Company's contract with the National Aeronautics
`and Space Administration ("NASA") for the launch of dedicated
`satellites provides for the deferral of payment of the launch
`costs of those satellites.
`Such payments will be made over a
`five year period beginning two years after launch with the final
`payment being made in the sixth year after launch.
`The contract
`provides that such deferred launch costs shall have that priority
`equal to at least the highest priority among unsecured creditors.
`The amount of such launch costs will equal NASA's price at the
`date of launch (the Company estimates that NASA's current price
`is approximately $36 million per launch).
`In addition to these
`costs,
`the Company would be required to purchase an upper stage
`vehicle to boost the satellite into geosynchronous orbit,
`the
`cost of which is currently estimated at $13 million. That amount
`is not included in the NASA financing.
`
`The Company is presently negotiating with NASA to sub-
`stitute a dual
`launch, consisting of two single beam satellites,
`in place of the first of the three single launches of multiple
`beam satellites provided for in the original contract.
`The
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`2369-90-20204
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`Company is negotiating a similar substitution for the second
`launch.
`The Company is also currently negotiating with NASA to
`reschedule the launches for the last quarter of 1993, 1994 and
`1995.
`
`‘
`
`There can be no assurance that the Company will be able
`to reschedule its launches or that the launches will occur on
`their scheduled dates.
`Launch failures, satellite operation
`failures, or significant delays in the construction or launches
`of the Company's satellites or satellite capacity would have a
`material adverse impact on the Company's revenues from GEOSTAR
`RDSS.
`
`The Company has licensed Sony and a joint venture con-
`sisting of Hughes and Kenwood to develop, manufacture and sell
`user terminals for GEOSTAR RDSS.
`The Company has entered into a
`contract with the United States Government for the development of
`miniaturized user terminals for GEOSTAR RDSS. That work has been
`subcontracted principally to another manufacturer. That subcon-
`tractor is developing a hand-held RDSS user terminal which would
`be less than 6 inches long and weigh approximately 22 ounces.
`Portions of the communications capabilities of a prototype of
`that user terminal have been successfully tested through the Com-
`pany's satellite transponders. Additional testing is scheduled.
`
`The Company has had discussions
`International RDSS.
`with various entities and countries throughout the world concern-
`ing future implementation on a global basis of RDSS with GEOSTAR-
`compatible technology.
`The Company intends to coordinate the
`operation of a network of compatible regional RDSS systems, owned
`
`that would require a minimum of six
`
`*
`
`".
`
`3 or licensed by the Company,
`
`orbital transponders or satellites and three central ground sta—
`tions. During 1988,
`the Company and various governmental and
`commercial entities from Western Europe formed a European com-
`pany, Locstar, S.A.
`("Locstar"),
`to establish a compatible RDSS
`system covering the area consisting of Europe,
`the Mediterranean,
`the Middle East and Africa.
`The Company acquired an initial
`11.5% ownership interest in Locstar for approximately $1,176,000
`entitling it to a share in Locstar's gross RDSS revenues, re-
`ceived a preemptive right as to subsequent stock offerings to
`increase its ownership interest to up to 15% and nominated one
`“
`director to serve on the Board of Directors of Locstar.
`In
`December 1989,
`the shareholders of Locstar approved a proposal to
`double its contributed capital.
`The Company participated in this
`offering and reached agreement with Locstar to maintain the Com-
`Pany's share in Locstar's‘RDSS revenues and the Company's Board
`seat with a 7.5% ownership interest. Locstar and the Company
`Signed an Exclusive Patent License and Technology Transfer Agree-
`ment and a Technical Services Agreement in May 1989 which pro—
`vides for payments to the Company in the amount of 6.745 million
`European Currency Units (equal to approximately $8,070,000 at
`
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`March 1, 1990) payable over several years upon the occurrence of
`certain events or the achievement of certain GEOSTAR System per-
`formance milestones.
`In 1989,
`the Company accrued revenues of
`approximately $3,350,000 pursuant to these agreements which ac-
`counted for approximately 31% of the Company's total revenues for
`the year.
`
`The Company and the Australian Telecommunications Com-
`mission ("Telecom") executed a Memorandum of Understanding in
`March 1989 for the license of the Company's RDSS technology and
`the assignment of the Company's Australian patent rights to Tele—
`com. As part of the proposed agreement,
`the Company and Telecom
`would form a joint venture to pursue further RDSS technology
`agreements in Australia and Asia, excluding Japan.
`The Company
`has also entered into discussions with a major Japanese company,
`with the goal of creating a Geostar Japan and with a major
`Spanish company, with the goal of creating a Geostar Latin
`America.
`
`The Company's wholly-owned
`GEOSTAR DLMSS (Phase 3).
`subsidiary Geostar Messaging Corporation ("GMC") has requested
`the FCC to allocate frequencies for a Digital Land Mobile Satel-
`lite Service (“DLMSS”), which would include voice, facsimile and
`volume data transmission capabilities.
`In February 1990,
`the FCC
`issued a notice of proposed rulemaking for the allocation of fre-
`quencies for mobile satellite service (of which DLMSS is a sub-
`set).
`If the FCC allocates those frequencies, CMC would seek a
`license to launch and operate satellites providing DLMSS.
`A
`DLMSS system would provide two—way digital communications ser-
`vices to a wide variety of users who would be equipped with mo-
`bile or portable (brief case type) terminals which would communi-
`cate Via the satellite with their home office, a host computer,
`or another mobile terminal.
`
`The Company expects that the user terminals
`Products.
`for the GEOSTAR System will be sold principally by its licensed
`manufacturers. However,
`the Company has, subject to the
`satisfaction of certain production and performance conditions,
`guaranteed the sale of 5,000 user terminals for use in connection
`with System 2C by December 30, 1990 by one manufacturer and the
`sale of 5,000 System 2C receiver units by December 31, 1991 by
`another manufacturer.
`As of January 1990,
`the Company and its
`licensed manufacturers have installed approximately 1,500 user
`terminals. As of January 31, 1990,
`the Company and its manufac-
`turers have contracts for the installation of approximately 7,000
`additional user terminals.
`The Company believes that the major—
`ity of this backlog of orders for user terminals will be filled
`during 1990. Although this unit backlog represents future users
`of GEOSTAR System services, no dollar amount of service revenues
`for the Company can be attributed to those units since they are
`being sold by the Company's licensed manufacturers.
`The Company
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`3
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`2369-90-20204
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`testing of the terminals.
`
`believed that the backlog of orders as of January 31, 1989 was
`not firm because the orders were subject to successful two-way
`
`The Company licenses software that has been developed
`for it by independent software writers specifically for use in
`connection with current GEOSTAR System services.
`The software
`consists of a United States Highway System map and communications
`and database software.
`The Company will also license similar
`software for System 3.0 service.
`'
`
`the Company entered into
`In 1986,
`Government Contract.
`a contract with the United States Customs Service (the "Customs
`service") to develop and sell to the government miniaturized
`electronic tag devices (user terminals) which would determine and
`report position and provide two—way communications in the western
`hemisphere through GEOSTAR RDSS.
`The total contract price is
`approximately $21 million, of which approximately $19.2 million
`has been allocated for expenditure. As of March 1, 1990,
`the
`Company had billed the Customs Service $15.9 million pursuant to
`that contract.
`The government has the right to terminate the
`contract at any time, subject to payment of all costs incurred to
`the date of termination plus profits, and the program remains at
`all times subject to the current availability of government fund-
`ing.
`The Company's contract with the Customs Service is not sub-
`ject to renegotiation of profits except with the consent of the
`Company. Revenues from this contract accounted for 34% of the
`Company's revenues in 1989, 78% of the Company's revenues in 1988
`and 96% of its revenues in 1987. Under the contract,
`the govern-
`ment has an option to purchase up to 20,000 of the tag devices at
`a price to be negotiated.
`The Company, as prime contractor, has
`subcontracted the development of these devices, which are pro-
`posedlto be manufactured in a hand-held size.
`See "GEOSTAR
`RDSS.'
`
`Markets
`
`The primary market for GEOSTAR System 2C service is in
`the management of mobile assets.
`System 2C (Phase 1) service is
`targeted for the "heavy" commercial transportation markets, such
`as the trucking, aviation, rail and maritime markets.
`The Com-
`pany believes that GEOSTAR RDSS (Phase 2) will be useful in addi«
`tional transportation markets, such as private fleets, rental and
`"light" trucking, specialized and conventional trailers, and spa-
`cialized railcars.
`In addition,
`the Company believes that addi~
`tional markets for GEOSTAR RDSS include:
`control of field opera-
`tions;
`transaction services; fixed site and mobile remote moni-
`toring and control of equipment; business communications; and
`goVernment communications, command and control services.
`
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`2369-90-20204
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`The Company believes that the GEOSTAR System enables
`commercial fleet owners to increaSe asset utilization,
`reduce
`deadhead miles, shorten billing cycles,
`improve just-in—time de-
`liveries, enhance security,
`lower insurance premiums,
`reduce com-
`munications costs, perform real-time operations and maintenance
`monitoring, scheduling, and controlling to achieve more efficient
`operations and reduce operating costs. Most of the Company's
`current customers are long distance trucking companies.
`
`The Company believes a market exists in the construc-
`tion, civil engineering, utility, agriculture and natural re-
`sources industries for GEOSTAR System services because its real-
`time location and status reporting, operations monitoring and
`control, scheduling, emergency assistance and data base queries
`will result in more efficient field operations.
`
`The Company believes a market exists in the insurance,
`financial and retail industries for GEOSTAR System services be-
`cause its real-time nationwide mobile processing of insurance
`claims, point-of-sales, credit verification, and funds transfer
`transactions will reduce financial and information float decision
`delays.
`
`The Company believes that a market exists in the oil
`and gas, utility, terrestrial communications, security, weather,
`environmental and traffic control industries for the GEOSTAR Sy-
`stem as the core of nationwide mobile and remote fixed site com-
`munications, command and control networks.
`It will allow for
`economic increases in equipment population, monitoring and con—
`trol,
`reduce operations and maintenance costs and achieve im-
`proved equipment and system reliability and performance.
`
`The Company believes that a market exists for profes-
`sional people and industries with nationwide mobile marketing,
`sales or field service staff.
`In these situations,
`the GEOSTAR
`System could be used as a nationwide support for electronic data
`interchange (EDI) central data base queries, ordering, schedul-
`ing, status reporting and invoicing.
`The GEOSTAR System can re-
`duce information float decision delays resulting from unavailable
`data.
`It will also provide mobile business professionals and
`staff access to central mainframe computing power and data bases
`much in the same way that office local area networks tie individ-
`ual offices into a company's central computer facility. More
`efficient business communications will cut operating.costs,
`im-
`prove customer service and offer users a competitive edge.
`
`The Company believes that an application exists for
`GEOSTAR RDSS for precision navigation, collision avoidance, pre-
`cision landing approach and operational communications services
`for aircraft.
`For the past several years,
`the Company has been
`working with the Radio Technical Committee for Aeronautics, which
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`stablished a special committee to set the standards for the
`:viation applications of radio determination satellite service.
`
`”'_________
`Distribution
`
`the Company implemented a system inte-
`In July 1989,
`gration marketing program whereby Sony, Hughes and value-added
`resellers sell hardware, software and GEOSTAR System services,
`and provide installation and repair support, direct y to end user
`customers.
`Sony and Hughes have established sales,
`installation
`and service centers across the United States. This marketing
`strategy does not preclude the Company from selling directly to
`end user customers through the sales efforts of its own staff.
`The Company has agreements with Railstar Control Technology In-
`corporated ("Railstar"), a subsidiary of the New England-based
`railroad, Guilford Transportation Industries, Inc., which grant
`Railstar the exclusive right to develop and market applications
`of the GEOSTAR System to the fixed route transportation ("FRT")
`market
`(which consists primarily of rail transportation).
`In
`addition, Railstar has the right to distribute GEOSTAR System
`services on a non-exclusive basis outside the FRT market.
`The
`Company and Railstar are currently negotiating a distribution
`agreement in connection with‘the non-FRT market.
`See "Legal
`Proceedings."
`-
`
`In general, a customer must pay for products or ser-
`vices provided by the Company within 30 days of the date of in—
`voice.
`
`//
`
`The Company, which is primarily responsible for sales
`to government agencies, plans to meet the unique requirements of
`the various government submarkets with tailored systems installed
`and maintained under contract between the Company or its licensed
`manufacturers and the government agency involved.
`The standard
`GEOSTAR System will be sold to government agencies through the
`Company's licensed manufacturers or distributors.
`The Company
`plans to bid for future government contracts as the prime con-
`tractor using as subcontractors the aerospace and telecommunica—
`tions firms currently working on the GEOSTAR System.
`
`Competition
`
`The competition which the Company believes it faces or
`will face for the services provided by the GEOSTAR System can be
`divided into three major categories -- combined communications
`and positioning systems; communication systems; and mobile
`
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`2369-90-20204
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`
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`Some of the Company's existing and poten-
`positioning systems.
`tial competitors are substantially larger and have far greater
`financial, marketing and technological resources than the
`Company.
`
`Combined Systems. One competitor is operating commer-
`cially a positioning and two-way communications system which re—
`ceived FCC approval on a secondary, non—interference basis (the
`competitor's system must stop operations if it interferes with
`VSAT users) in February 1989. That system uses leased satellite
`transponders on existing satellites to provide two-way communica-
`tion between mobile users utilizing rotating antennas. That sys-
`tem determines the position of the mobile user by using Loran-C,
`but recently proposed to determine position information by relay-
`ing signals to and from transponders on two satellites and multi-
`ple fixed sites on the ground. While the user terminals and
`other hardware for the GEOSTAR and this competitor's system are
`similarly priced,
`the Company believes that its charges for
`similar message transmissions are lower than the competitor's and
`that the Company's omnidirectional antenna affords less
`transmission delay than the competitor's rotating antenna which
`must first locate and fix onto the satellite.
`In addition,
`the
`Company believes that, as a result of a much higher bit rate,
`customers of System ZC can send more data in a given time period
`from mobile