Guarantor and Non-Guarantor Supplemental Financial Information

The Notes were issued by APX and are fully and unconditionally guaranteed, jointly and severally by Holdings and each of APX’s existing and future material wholly-owned U.S. restricted subsidiaries. APX’s existing and future foreign subsidiaries are not expected to guarantee the Notes.

Presented below is the condensed consolidating financial information of APX, subsidiaries of APX that are guarantors (the “Guarantor Subsidiaries”), and APX’s subsidiaries that are not guarantors (the “Non-Guarantor Subsidiaries”) as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018. The unaudited condensed consolidating financial information reflects the investments of APX in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries using the equity method of accounting.

Supplemental Condensed Consolidating Balance Sheet

June 30, 2019

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets	$	—		$	2,713		$	408,215	$	135,703	$	(315,770	)	$	230,861
Property, plant and equipment, net	—			—			61,215		385		—			61,600
Capitalized contract costs, net	—			—			1,101,598		69,089		—			1,170,687
Deferred financing costs, net	—			1,572			—		—		—			1,572
Investment in subsidiaries	—			1,595,121			—		—		(1,595,121		)	—
Intercompany receivable	—			—			6,303		—		(6,303		)	—
Intangible assets, net	—			—			201,538		16,240		—			217,778
Goodwill	—			—			810,129		26,160		—			836,289
Operating lease right-of-use assets	—			—			71,345		212		—			71,557
Long-term notes receivables and other assets	—			106			101,695		20,936		(106		)	122,631
Total Assets	$	—		$	1,599,512		$	2,762,038	$	268,725	$	(1,917,300	)	$	2,712,975
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities	$	—		$	33,866		$	662,048	$	209,672	$	(315,770	)	$	589,816
Intercompany payable	—			—			—		6,303		(6,303		)	—
Notes payable and revolving credit facility, net of current portion	—			3,164,749			—		—		—			3,164,749
Finance lease obligations, net of current portion	—			—			3,397		—		—			3,397
Deferred revenue, net of current portion	—			—			363,958		19,308		—			383,266
Operating lease liabilities	—			—			69,894		81		—			69,975
Other long-term obligations	—			—			98,859		877		—			99,736
Accumulated losses of investee, net	1,599,103										(1,599,103		)	—
Deferred income tax liability	—			—			106		1,139		(106		)	1,139
Total (deficit) equity	(1,599,103		)	(1,599,103		)	1,563,776		31,345		3,982			(1,599,103		)
Total liabilities and stockholders’ (deficit) equity	$	—		$	1,599,512		$	2,762,038	$	268,725	$	(1,917,300	)	$	2,712,975

Supplemental Condensed Consolidating Balance Sheet

December 31, 2018

(in thousands)



	Parent			APX Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets	$	—		$	12,951		$	269,770	$	103,451	$	(262,674	)	$	123,498
Property, plant and equipment, net	—			—			72,937		464		—			73,401
Capitalized contract costs, net	—			—			1,047,532		68,243		—			1,115,775
Deferred financing costs, net	—			2,058			—		—		—			2,058
Investment in subsidiaries	—			1,662,367			—		—		(1,662,367		)	—
Intercompany receivable	—			—			6,303		—		(6,303		)	—
Intangible assets, net	—			—			236,677		18,408		—			255,085
Goodwill	—			—			809,678		25,177		—			834,855
Long-term notes receivables and other assets	—			106			102,695		17,124		(106		)	119,819
Total Assets	$	—		$	1,677,482		$	2,545,592	$	232,867	$	(1,931,450	)	$	2,524,491
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities	$	—		$	36,988		$	507,063	$	182,159	$	(262,674	)	$	463,536
Intercompany payable	—			—			—		6,303		(6,303		)	—
Notes payable and revolving credit facility, net of current portion	—			3,037,095			—		—		—			3,037,095
Capital lease obligations, net of current portion	—			—			5,570		1		—			5,571
Deferred revenue, net of current portion	—			—			306,653		16,932		—			323,585
Accumulated Losses of Investee, net	1,396,601										(1,396,601		)	—
Other long-term obligations	—			—			90,209		—		—			90,209
Deferred income tax liability	—			—			106		1,096		(106		)	1,096
Total (deficit) equity	(1,396,601		)	(1,396,601		)	1,635,991		26,376		(265,766		)	(1,396,601		)
Total liabilities and stockholders’ (deficit) equity	$	—		$	1,677,482		$	2,545,592	$	232,867	$	(1,931,450	)	$	2,524,491

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss

For the Three Months Ended June 30, 2019

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	268,055		$	13,590		$	(592	)	$	281,053
Costs and expenses	—			—			319,266			13,208			(592		)	331,882
(Loss) income from operations	—			—			(51,211		)	382			—			(50,829		)
Loss from subsidiaries	(115,896		)	(49,954		)	—			—			165,850			—
Other expense (income), net	—			65,942			807			(1,130		)	—			65,619
(Loss) income before income tax expenses	(115,896		)	(115,896		)	(52,018		)	1,512			165,850			(116,448		)
Income tax benefit	—			—			(288		)	(264		)	—			(552		)
Net (loss) income	(115,896		)	(115,896		)	(51,730		)	1,776			165,850			(115,896		)
Other comprehensive loss, net of tax effects:
Net (loss) income	(115,896		)	(115,896		)	(51,730		)	1,776			165,850			(115,896		)
Other comprehensive income from subsidiaries	504			504			—			—			(1,008		)	—
Foreign currency translation adjustment	—			—			—			504			—			504
Total other comprehensive income	504			504			—			504			(1,008		)	504
Comprehensive (loss) income	$	(115,392	)	$	(115,392	)	$	(51,730	)	$	2,280		$	164,842		$	(115,392	)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss

For the Three Months Ended June 30, 2018

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	244,000		$	11,613		$	(646	)	$	254,967
Costs and expenses	—			—			321,835			14,011			(646		)	335,200
Loss from operations	—			—			(77,835		)	(2,398		)	—			(80,233		)
Loss from subsidiaries	(144,385		)	(84,923		)	—			—			229,308			—
Other expense, net	—			59,462			4,006			1,590			—			65,058
Loss before income tax expenses	(144,385		)	(144,385		)	(81,841		)	(3,988		)	229,308			(145,291		)
Income tax benefit	—			—			(70		)	(836		)	—			(906		)
Net loss	(144,385		)	(144,385		)	(81,771		)	(3,152		)	229,308			(144,385		)
Other comprehensive loss, net of tax effects:
Net loss	(144,385		)	(144,385		)	(81,771		)	(3,152		)	229,308			(144,385		)
Other comprehensive loss from subsidiaries	(417		)	(417		)	—			—			834			—
Foreign currency translation adjustment	—			—			—			(417		)	—			(417		)
Total other comprehensive loss	(417		)	(417		)	—			(417		)	834			(417		)
Comprehensive loss	$	(144,802	)	$	(144,802	)	$	(81,771	)	$	(3,569	)	$	230,142		$	(144,802	)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss

For the Six Months Ended June 30, 2019

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	531,594		$	26,502		$	(794	)	$	557,302
Costs and expenses	—			—			610,775			26,128			(794		)	636,109
(Loss) income from operations	—			—			(79,181		)	374			—			(78,807		)
Loss from subsidiaries	(205,052		)	(75,935		)	—			—			280,987			—
Other expense (income), net	—			129,117			755			(2,774		)	—			127,098
(Loss) income before income tax expenses	(205,052		)	(205,052		)	(79,936		)	3,148			280,987			(205,905		)
Income tax benefit	—			—			(106		)	(747		)	—			(853		)
Net (loss) income	(205,052		)	(205,052		)	(79,830		)	3,895			280,987			(205,052		)
Other comprehensive loss, net of tax effects:
Net (loss) income	(205,052		)	(205,052		)	(79,830		)	3,895			280,987			(205,052		)
Other comprehensive income from subsidiaries	1,074			1,074			—			—			(2,148		)	—
Foreign currency translation adjustment	—			—			—			1,074			—			1,074
Total other comprehensive income	1,074			1,074			—			1,074			(2,148		)	1,074
Comprehensive (loss) income	$	(203,978	)	$	(203,978	)	$	(79,830	)	$	4,969		$	278,839		$	(203,978	)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss

For the Six Months Ended June 30, 2018

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	477,788		$	25,078		$	(1,302	)	$	501,564
Costs and expenses	—			—			627,056			27,674			(1,302		)	653,428
Loss from operations	—			—			(149,268		)	(2,596		)	—			(151,864		)
Loss from subsidiaries	(229,102		)	(111,243		)	—			—			340,345			—
Other expense (income), net	—			117,859			(42,964		)	3,682			—			78,577
Loss before income tax expenses	(229,102		)	(229,102		)	(106,304		)	(6,278		)	340,345			(230,441		)
Income tax expense (benefit)	—			—			102			(1,441		)	—			(1,339		)
Net loss	(229,102		)	(229,102		)	(106,406		)	(4,837		)	340,345			(229,102		)
Other comprehensive loss, net of tax effects:
Net loss	(229,102		)	(229,102		)	(106,406		)	(4,837		)	340,345			(229,102		)
Other comprehensive loss from subsidiaries	(1,076		)	(1,076		)	—			—			2,152			—
Foreign currency translation adjustment	—			—			—			(1,076		)	—			(1,076		)
Total other comprehensive income	—			—			—			(1,076		)	—			(1,076		)
Comprehensive loss	$	(229,102	)	$	(229,102	)	$	(106,406	)	$	(5,913	)	$	340,345		$	(230,178	)

Supplemental Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2019

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net cash used in operating activities	$	—		$	—		$	(130,577	)	$	(413	)	$	—		$	(130,990	)
Cash flows from investing activities:
Capital expenditures	—			—			(4,653		)	—			—			(4,653		)
Proceeds from sale of capital assets	—			—			19			—			—			19
Proceeds from sales of equity securities	—			—			5,430			—			—			5,430
Investment in subsidiary	(441		)	(135,039		)	—			—			135,480			—
Acquisition of intangible assets	—			—			(668		)	—			—			(668		)
Net cash (used in) provided by investing activities	(441		)	(135,039		)	128			—			135,480			128
Cash flows from financing activities:
Proceeds from notes payable	—			225,000			—			—			—			225,000
Repayment on notes payable	—			(229,050		)	—			—			—			(229,050		)
Borrowings from revolving credit facility	—			160,000			—			—			—			160,000
Repayments on revolving credit facility	—			(26,000		)	—			—			—			(26,000		)
Proceeds from capital contribution	—			—			134,598			—			(134,598		)	—
Repayments of finance lease obligations	—			—			(4,119		)	(144		)	—			(4,263		)
Deferred financing costs	—			(4,036		)	—			—			—			(4,036		)
Return of capital	441			441			(441		)	—			(882		)	(441		)
Net cash provided by (used in) financing activities	441			126,355			130,038			(144		)	(135,480		)	121,210
Effect of exchange rate changes on cash	—			—			—			12			—			12
Net decrease in cash and cash equivalents	—			(8,684		)	(411		)	(545		)	—			(9,640		)
Cash and cash equivalents:
Beginning of period	—			11,130			682			961			—			12,773
End of period	$	—		$	2,446		$	271		$	416		$	—		$	3,133

Supplemental Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2018

(in thousands)

(unaudited)



	Parent			APX Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net cash used in operating activities	$	—		$	—		$	(130,919	)	$	(70	)	$	—		$	(130,989	)
Cash flows from investing activities:
Capital expenditures	—			—			(12,193		)	—			—			(12,193		)
Investment in subsidiary	2,049			(98,251		)	—			—			96,202			—
Acquisition of intangible assets	—			—			(1,022		)	—			—			(1,022		)
Proceeds from sale of intangibles	—			—			53,693			—			—			53,693
Proceeds from sale of capital assets	—			—			225			—			—			225
Net cash provided by (used in) investing activities	2,049			(98,251		)	40,703			—			96,202			40,703
Cash flows from financing activities:
Borrowings from revolving credit facility	—			179,000			—			—			—			179,000
Repayments on revolving credit facility	—			(79,000		)	—			—			—			(79,000		)
Proceeds from capital contributions	—			—			100,300			—			(100,300		)	—
Repayments of capital lease obligations	—			—			(6,768		)	(187		)	—			(6,955		)
Return of capital	(2,049		)	(2,049		)	(2,049		)	—			4,098			(2,049		)
Net cash (used in) provided by financing activities	(2,049		)	97,951			91,483			(187		)	(96,202		)	90,996
Effect of exchange rate changes on cash	—			—			—			(62		)	—			(62		)
Net (decrease) increase in cash and cash equivalents	—			(300		)	1,267			(319		)	—			648
Cash and cash equivalents:
Beginning of period	—			3,661			(572		)	783			—			3,872
End of period	$	—		$	3,361		$	695		$	464		$	—		$	4,520