UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________________________

FORM 8-K

_______________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of ~~the~~Report ~~Securities~~(Date ~~Exchange~~Earliest ~~Act~~Event ofReported): ~~1934~~February 3, 2020

~~Date of Report (Date of earliest event reported): December 18, 2019~~ __________________________________________________________

APX ~~Group~~GROUP ~~Holdings~~HOLDINGS, ~~Inc~~INC.

(Exact name of registrant as specified in its charter)

~~Delaware~~ __________________________________________________________

(State or other jurisdiction of incorporation)



Delaware	333-191132-02	46-1304852
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

333-191132-02		46-1304852
(Commission File Number)		(IRS Employer Identification No.)

4931 North 300 West

Provo, UT 84604

(Address of Principal Executive Offices) (Zip Code)

(801) 377-9111

(Registrant's telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

4931 North 300 West Provo, UT		84604
(Address of principal executive offices)		(Zip Code)

__________________________________________________________

~~(801)~~Check ~~377-9111~~the appropriate box below if the Form 8–K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):



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

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

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

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

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class ~~Trading Symbol~~TradingSymbol(s) Name of each exchange on which registered

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition.

In connection with a proposed financing transaction by APX Group Holdings, Inc. (the “Company” or “Vivint”) and certain of its subsidiaries, the following preliminary unaudited financial results for the quarter and fiscal year ended December 31, 2019 will be provided to potential investors.

For the quarter ended December 31, 2019, the Company’s total revenues are estimated to be between $299 million and $314 million, net loss is estimated to be between $80 million and $95 million, and Covenant Adjusted EBITDA is estimated to be between $158 million and $173 million.

For the year ended December 31, 2019, the Company’s total revenues are estimated to be between $1,148 million and $1,163 million, net loss is estimated to be between $387 million and $402 million, and Covenant Adjusted EBITDA is estimated to be between $632 million and $647 million.

The selected preliminary financial data in this Current Report on Form 8-K has been prepared by, and is the responsibility of, the management of the Company. The information and estimates have not been compiled or examined by the Company’s independent auditors and are subject to revision as the Company prepares its financial statements as of and for the quarter and year ended December 31, 2019. Because the Company has not completed its normal quarterly closing and review procedures for the quarter and year ended December 31, 2019, and subsequent events may occur that require adjustments to these results, there can be no assurance that the final results for the quarter and year ended December 31, 2019 will not differ materially from these estimates. These estimates should not be viewed as a substitute for financial statements prepared in accordance with U.S. GAAP or as a measure of performance. In addition, these estimated results for the quarter and year ended December 31, 2019 are not necessarily indicative of the results to be achieved for any future period.

The information in this Current Report on Form 8-K is being furnished pursuant to Items 2.02 and 7.01 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Forward-Looking Statements

This Current Report on Form 8-K includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements with respect to certain preliminary unaudited financial results for the Company’s quarter and year ended December 31, 2019, which are subject to finalization and contingencies associated with the Company’s quarterly financial and accounting procedures. These statements are based on the beliefs and assumptions of management. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning the Company’s possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could affect the Company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the Company’s forward-looking statements:


•	the risk that the recently consummated merger with Mosaic Acquisition Corp. (the “Merger”) disrupts the Company’s plans and operations;


•	the ability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably;


•	costs related to the Merger;


•	risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process;


•	the highly competitive nature of the smart home and security industry and product introductions and promotional activity by the Company’s competitors;


•	litigation, complaints, product liability claims and/or adverse publicity;


•	the impact of changes in consumer spending patterns, consumer preferences, local, regional, and national economic conditions, crime, weather, demographic trends and employee availability;


•	increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements;


•	cost increases or shortages in smart home and security technology products or components;


•	the introduction of unsuccessful new Smart Home Services;


•	privacy and data protection laws, privacy or data breaches, or the loss of data;


•	the impact to the Company’s business, results of operations, financial condition, regulatory compliance and customer experience of the Vivint Flex Pay plan and the Company’s ability to successfully compete in retail sales channels; and


•	risks related to the Company’s exposure to variable rates of interest with respect to the Company’s revolving credit facility and term loan facility.

In addition, the origination and retention of new subscribers will depend on various factors, including, but not limited to, market availability, subscriber interest, the availability of suitable components, the negotiation of acceptable contract terms with subscribers, local permitting, licensing and regulatory compliance, and the Company’s ability to manage anticipated expansion and to hire, train and retain personnel, the financial viability of subscribers and general economic conditions.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Current Report on Form 8-K are more fully described in the “Risk Factors” section in the Company’s annual report on form 10-K for the year ended December 31, 2018, filed with the Securities Exchange Commission (SEC), as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are available on the SEC’s website at www.sec.gov. The risks described in “Risk Factors” are not exhaustive. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

Covenant Adjusted EBITDA is a supplemental measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”).

“Covenant Adjusted EBITDA” is defined as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization (including amortization of capitalized subscriber acquisition costs), further adjusted to exclude the effects of certain contract sales to third parties, non-capitalized subscriber acquisition costs, stock based compensation and certain unusual, non-cash, nonrecurring and other items permitted in certain covenant calculations under the debt agreements governing the Company’s existing indebtedness.

The Company believes that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants under the agreements governing the Company’s existing indebtedness. The Company cautions investors that amounts presented in accordance with the Company’s definition of Covenant Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Covenant Adjusted EBITDA in the same manner.

Covenant Adjusted EBITDA is not a measurement of the Company’s financial performance under GAAP and should not be considered as an alternative to net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity.

See the following table for a quantitative reconciliation of Covenant Adjusted EBITDA to Net Loss, which the Company believes is the most comparable financial measure calculated in accordance with GAAP.



	Three Months Ended December 31, 2019						Twelve Months Ended December 31, 2019
	Low Range			High Range			Low Range			High Range
	($ in millions)
Net loss	$	(95	)	$	(80	)	$	(402	)	$	(387	)
Interest expense, net	66			64			261			259
Other expense (income), net	3			(2		)	(6		)	(11		)
Income tax expense	4			1			3			—
Depreciation and amortization (1)	27			25			107			105
Amortization of capitalized contract costs	115			113			438			436
Non-capitalized contract costs (2)	66			60			276			270
Non-cash compensation (3)	3			—			6			3
Other adjustments (4)	5			20			44			59
Adjustment for a change in accounting principle (Topic 606) (5)	(36		)	(28		)	(95		)	(87		)
Covenant Adjusted EBITDA	$	158		$	173		$	632		$	647

____________________


(1)	Excludes loan amortization costs that are included in interest expense.

(2)

Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to the Company’s organic generation of new subscribers, which requires the Company to expense a portion of its subscriber acquisition costs under GAAP.


(3)	Reflects non-cash compensation costs related to employee and director stock option plans. Excludes non-cash compensation costs included in non-capitalized subscriber acquisition costs.


(4)	Other adjustments including items such as product development costs, consumer financing fees, hiring, retention and termination payments, certain legal and professional fees, monitoring fee and other adjustments.


(5)	Reflects adjustments to eliminate the impact of the Company’s adoption of Topic 606.

Item 7.01 Regulation FD Disclosure.

~~Amendment~~The toinformation ~~Merger~~included ~~Agreement~~in Item 2.02 above is incorporated herein by reference.

On December 18, 2019, Mosaic Acquisition Corp. (“Mosaic”) entered into an amendment (the “Amendment”) to the previously announced Agreement and Plan of Merger, dated as of September 15, 2019 (the “merger agreement”), by and among Mosaic, Maiden Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Mosaic and Vivint Smart Home, Inc. (“Vivint Smart Home”, the indirect parent of APX Group Holdings, Inc.), pursuant to which Vivint Smart Home will merge with and into Merger Sub with Vivint Smart Home as the surviving entity, on the terms and conditions of the Merger Agreement (the “merger”). The Amendment amends the Merger Agreement to, among other things, (i) reduce the exchange ratio and VGI exchange ratio from 209.6849221312 and 0.2076986176 to 84.5320916792 and 0.0864152412, respectively, to reflect a reduced transaction enterprise valuation of $4.1 billion, (ii) provide for an additional 12.5 million of Class A common shares to be issued to Vivint Smart Home’s holders upon achievement of a $17.50 earnout threshold, (iii) provide for the additional investment by a forward purchaser and the additional investment by an affiliate of Fortress Investment Group LLC (each as described under “Additional Forward Purchaser Subscription” and “Fortress Subscription and Backstop Agreement”, respectively), (iv) decrease the termination fee to $32.4 million and (v) agree to adjourn the special meeting to approve the merger to January 14, 2020. SIGNATURES

Additional Forward Purchaser Subscription

In connection with the execution of the Amendment, Mosaic has also entered into an additional subscription agreement (the “Additional Forward Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”) that had committed at the time of Mosaic’s initial public offering to purchase newly-issued shares of Mosaic Class A common stock upon the consummation of a business combination, which includes the merger. Pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the effective time of the merger, Mosaic will sell, and the Forward Purchaser will purchase from Mosaic, 5,000,000 shares of Mosaic Class A common stock at $10.00 per share. As consideration for the additional investment, 25% of Mosaic Sponsor LLC’s shares of Mosaic Class F common stock and private placement warrants will be forfeited to Mosaic and Mosaic will issue to the Forward Purchaser an equal number of shares of Mosaic Class A common stock and warrants concurrently with the consummation of the merger.

In connection with the Additional Forward Purchaser Subscription Agreement, Mosaic has entered into a lockup agreement with the Forward Purchaser, pursuant to which the shares purchased by the Forward Purchaser under the Additional Forward Purchaser Subscription Agreement will be subject to a six-month lockup.

Fortress Subscription and Backstop Agreement

In connection with the execution of the Amendment, Mosaic has also entered into a Subscription and Backstop Agreement (the “Fortress Subscription and Backstop Agreement”) with an affiliate of Fortress Investment Group LLC (the “Fortress Subscriber”), pursuant to which the Fortress Subscriber committed to purchase up to $50,000,000 in aggregate purchase price of shares of Mosaic Class A common stock as follows: the Fortress Subscriber (i) intends to purchase up to $50,000,000 in aggregate purchase price of shares of Mosaic Class A common stock in the open market, subject to applicable law, (ii) agreed to backstop redemptions by subscribing for a number of shares of newly-issued shares of Mosaic Class A common stock at a purchase price per share equal to the per-share value of the Mosaic’s Trust Account at the time of any such redemptions (the “Trust Value”) to be issued at the closing of the merger with an aggregate value equal to the lesser of (x) $50,000,000 (less the aggregate purchase price of the shares purchased by it in the open market) and (y) the aggregate value of the number of shares of Mosaic Class A common stock that elect to redeem in the redemption offer (based on the Trust Value), and (iii) agreed to subscribe for up to $50,000,000 (less the aggregate purchase price of the shares purchased by it in the open market and to backstop redemptions) in aggregate purchase price of newly-issued shares of Mosaic Class A common stock at $10.00 per share to be issued at the election of Vivint Smart Home at the closing of the merger. The obligations to consummate the subscriptions contemplated by the Fortress Subscription and Backstop Agreement are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the merger agreement. All the shares purchased by the Fortress Subscriber under the Fortress Subscription and Backstop Agreement will also be subject to the restrictions of the Confidentiality and Lockup Agreement, dated September 15, 2019, to which it is party.

Amendments to Forward Purchase Agreements

In connection with the execution of the Amendment, Mosaic has also entered into amendments with each of the forward purchasers that had committed at the time of Mosaic’s initial public offering to purchase newly-issued shares of Mosaic Class A common stock upon the consummation of a business combination. These amendments provide, among other things, for waivers by the forward purchasers of certain rights of first offer with respect to the investments to be made pursuant to the Additional Forward Purchaser Subscription Agreement and the Fortress Subscription and Backstop Agreement.

Press Release

On December 18, 2019, Vivint Smart Home and Mosaic issued a joint press release announcing the execution of the Amendment and certain other information relating to the related transactions, including Mosaic’s intent to hold and adjourn its special meeting scheduled for December 18, 2019 to January 14, 2019. The press release is included as Exhibit 99.2 hereto.

The information set forth under this Item 7.01, including the exhibits attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit		Description
99.1		Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and among Mosaic, Merger Sub and Vivint Smart Home.
99.2		Press release issued by Vivint Smart Home and Mosaic on December 18, 2019.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



APX GROUP HOLDINGS, INC.

By:		/s/ Dale R. Gerard
		Name: Dale R. Gerard
		Title: Interim Chief Financial Officer

Date: February 3, 2020

APX GROUP HOLDINGS, INC.

Date: December 19, 2019

/s/ Shawn J. Lindquist

Shawn J. Lindquist

Chief Legal Officer

Filing Compare · APX Group Holdings, Inc.