AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 2007
REGISTRATION NO. 333-139440
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT #3
TO
FORM S-1
ON FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NEXTWAVE WIRELESS INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 3663 20-5361360
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification
Incorporation or Classification Code No.)
Organization) Number)
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12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
(858) 480-3100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FRANK A. CASSOU
EXECUTIVE VICE PRESIDENT - CORPORATE DEVELOPMENT AND CHIEF LEGAL COUNSEL
NEXTWAVE WIRELESS INC.
12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
(858) 480-3100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to:
Marita Makinen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post effective amendment filed pursuant to Rule 462(d)
under the Securities Act. check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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EXPLANATORY NOTE
On December 18, 2006, NextWave filed a registration statement on Form S-1
(Registration No. 333-139440) to register the resale of up to an aggregate of
4,110,382 shares of common stock by the selling stockholders identified in the
accompanying prospectus. This Post-Effective Amendment #3 to Form S-1 on Form
S-3 is being filed to convert this registration statement into a registration
statement on Form S-3.
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The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission relating to these
securities is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED JULY 27, 2007
PROSPECTUS
4,109,470 SHARES
NextWave Wireless Inc.
Common Stock
par value $0.001 per share
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This prospectus relates solely to the resale of up to an aggregate of
4,109,470 shares of common stock of NextWave Wireless Inc. ("NextWave" or the
"Company") by the selling stockholders identified in this prospectus. These
shares include the shares of our common stock issued, or issuable upon the
exercise of warrants that were sold, to the investors identified in this
prospectus.
The selling stockholders identified in this prospectus (which term as used
herein includes their pledgees, donees, transferees or other
successors-in-interest) may offer the shares from time to time as they may
determine through public or private transactions or through other means
described in the section entitled "Plan of Distribution" beginning on page 27 at
prevailing market prices, at prices different than prevailing market prices or
at privately negotiated prices. The prices at which the selling stockholders may
sell the shares may be determined by the prevailing market price for the shares
at the time of sale, may be different than such prevailing market prices or may
be determined through negotiated transactions with third parties.
We will not receive any of the proceeds from the sale of these shares by
the selling stockholders. If the warrants are exercised by the payment of cash,
however, we would receive the exercise price of the warrants, which is $0.01 per
share subject to certain adjustments as set forth in the warrant agreement.
However, all the warrants covered by the registration statement of which this
prospectus is a part have a cashless exercise provision that allows the holder
to receive a reduced number of shares of our common stock, without paying the
exercise price in cash. To the extent any of the warrants are exercised in this
manner, we will not receive any additional proceeds from such exercise. We have
agreed to pay all expenses relating to registering the securities. The selling
stockholders will pay any brokerage commissions and/or similar charges incurred
for the sale of these shares of our common stock.
Our shares are listed on The Nasdaq Global Market under the ticker symbol
"WAVE".
Investing in our common stock involves significant risks. See "Risk
Factors" beginning on page 5 to read about factors you should consider before
buying shares of our common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OF ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS DATED JULY , 2007
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission, or the SEC, using a "shelf"
registration or continuous offering process. Under this shelf process, certain
selling stockholders may from time to time sell the shares of common stock
described in this prospectus in one or more offerings.
You should rely only on the information contained or incorporated by
reference in this prospectus. Neither we nor the selling shareholders have
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. The
selling shareholders are not making an offer to sell these securities in any
jurisdiction where the offer or sale of these securities is not permitted. You
should assume that the information appearing in this prospectus is accurate only
as of the date on the front cover of this prospectus and that any information we
have incorporated by reference is accurate only as of the date of the document
incorporated by reference. Our business, financial condition, results of
operations and prospects may have changed since these dates.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY...........................................................1
THE OFFERING.................................................................4
RISK FACTORS.................................................................5
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS...........................19
USE OF PROCEEDS.............................................................20
SELLING STOCKHOLDERS........................................................21
DESCRIPTION OF CAPITAL STOCK................................................24
PLAN OF DISTRIBUTION........................................................27
LEGAL MATTERS...............................................................29
EXPERTS.....................................................................29
WHERE YOU CAN FIND MORE INFORMATION.........................................29
INCORPORATION BY REFERENCE..................................................30
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PROSPECTUS SUMMARY
This summary highlights key aspects of our business that are described in
more detail elsewhere in this registration statement. This summary does not
contain all of the information that you should consider before making a future
investment decision with respect to our securities. You should read this entire
registration statement carefully, including the "Risk Factors," the combined
audited financial statements and the notes thereto and the other documents we
have filed with the Securities and Exchange Commission that are incorporated by
reference herein.
Unless the context indicates otherwise, all references in this
registration statement to "NextWave," "the Company," "we," "us" and "our" refer
to NextWave Wireless Inc. and its direct and indirect subsidiaries. References
to Old NextWave Wireless refer to our existence as a company conducting a
separate line of business prior to April 13, 2005, when we emerged from Chapter
11 as a new wireless technology company.
OUR COMPANY
BUSINESS OVERVIEW
We are a wireless technology company that develops and markets
next-generation mobile broadband and wireless multimedia products and
technologies. Our products and technologies are designed to make wireless
broadband faster, more reliable, more accessible and more affordable. At
present, our customers include many of the largest mobile handset and wireless
service providers in the world.
We believe that mobile broadband represents the next logical step in the
evolution of the Internet and that consumer demand for fully-mobile, wireless
broadband service will transform the global wireless communications industry
from one driven primarily by circuit-switched voice to one driven by IP-based
broadband connectivity. In addition, we believe that wireless will play a major
role in facilitating digital media convergence and provide people the ability to
easily access and share multimedia content across multiple types of mobile
device and consumer electronics platforms. Our business activities are focused
on developing products, technologies and network solutions to enable affordable,
fully-mobile broadband access and seamless digital media convergence solutions
that will allow individuals to access the information and multimedia content
they want, where they want, when they want, on virtually any type of digital
communications device.
Our wireless broadband products and technologies are developed and
marketed through our operating subsidiaries. While, on a stand-alone basis, each
subsidiary is focused on providing customers with competitive products and
technologies targeted at a specific aspect of the mobile broadband ecosystem, we
expect that the combined offerings of our operating companies will form a
complete, end-to-end, next-generation wireless broadband solution. The following
is a summary of each of our major subsidiary's products and capabilities:
NextWave Broadband Inc. - Mobile broadband semiconductors and network
components based on WiMAX and Wi-Fi technologies, terminal device
reference designs and network implementation services;
PacketVideo Corporation - Multimedia software applications for wireless
handsets and digital media convergence software solutions;
GO Networks, Inc. - Carrier-class, wide-area, mobile Wi-Fi
systems; and
IPWireless - Commercial and public service mobile broadband systems,
access devices, and mobile broadcast systems based on TD-CDMA technology.
NEXTWAVE BROADBAND INC. Through its Advanced Technology Group, NextWave
Broadband, is developing a family of mobile broadband semiconductor products
based on WiMAX and Wi-Fi technologies including multi-band RF chips and
high-performance, digital baseband WiMAX chips. Our chipsets are intended to
provide wireless device and network equipment manufacturers with an advanced
platform to develop next-generation WiMAX mobile terminal and infrastructure
products. Samples of our first-generation, NW1000 chipset family which includes
a WiMAX baseband system-on-a-chip (SOC) and matched multi-band RFIC will be
available in the third quarter of 2007. Initial availability of our
second-generation, NW2000 chipset family, the company's first chipset family
designed for high-volume commercial production, is planned for the first half of
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2008. In addition, the Advanced Technology Group is developing wireless network
components and a family of handset and media player reference designs to
highlight the features of its subscriber station semiconductor products.
The primary design objectives of the Advanced Technology Group's products
and technologies, which are intended to be sold or licensed to network
infrastructure vendors, device manufacturers and service providers worldwide,
are to:
o Improve the performance, service quality and economics of WiMAX networks
and enhance their ability to cost-effectively handle the large volume of
network traffic associated with bandwidth-intensive, multimedia
applications such as mobile television, video-on-demand, streaming audio,
two-way video telephony and real-time gaming;
o Improve the performance, power consumption and cost characteristics of
WiMAX subscriber terminals;
o Improve the degree of interoperability and integration between Wi-Fi and
WiMAX systems for both Local Area Networks (LANs) and Wide Area Networks
(WANs); and
o Improve service provider economics and roaming capabilities by enabling
WiMAX networks and WiMAX enabled devices to seamlessly operate across
multiple frequency bands including certain unlicensed bands.
Through its Network Solutions Group, NextWave Broadband intends to offer a
full array of network services, including RF and core network design services,
network implementation and management services, and back-office service
solutions to service providers who deploy our WiMAX, Wi-Fi, and TD-CDMA network
solutions. To demonstrate the capabilities of our network service capabilities
and our wireless broadband products, the Network Solutions Group is implementing
a mobile WiMAX/Wi-Fi/TD-CDMA test site in Henderson, Nevada.
PACKETVIDEO CORPORATION. Through our PacketVideo subsidiary, we supply
device-embedded multimedia software to many of the world's largest wireless
carriers and wireless handset manufacturers, who use it to transform a mobile
phone into a feature-rich multimedia device that provides people with the
ability to stream, download and play video and music, receive live TV
broadcasts, and engage in two-way video telephony. PacketVideo's software is
compatible with virtually all network technologies, including WiMAX, CDMA,
WCDMA, and GSM. PacketVideo has been contracted by some of the world's largest
carriers, such as Verizon Wireless, Vodafone, NTT DoCoMo, Orange and T-Mobile to
design and implement the embedded multimedia software capabilities contained in
their handsets. To date, over 138 million PacketVideo-powered handsets have been
shipped by PacketVideo's service provider and device OEM customers.
To further enhance its market position, PacketVideo has invested in the
development and acquisition of a wide range of technologies and capabilities to
provide its customers with software solutions to enable home/office digital
media convergence using communication protocols standardized by the Digital
Living Network Alliance(TM) (DLNA(TM)). An example is PacketVideo's
network-based PacketVideo Experience(TM) platform that provides fOr content
search, discovery, organization and content delivery/sharing between mobile
devices and consumer electronics products connected to an IP-based network.
This innovative platform is designed to provide an enhanced user experience by
intelligently responding to user preferences based on content type, day-part and
content storage location. In addition, PacketVideo's patented Digital Rights
Management (DRM) solutions, already in use by many carriers globally, represents
a key enabler of digital media convergence by preventing the unauthorized access
or duplication of multimedia content used or shared by PacketVideo-enabled
devices.
We believe that the continued growth in global shipments of high-end
handsets with multimedia capabilities, increasing demand for home/office digital
media convergence solutions, and the acceleration of global deployments of
mobile broadband enabled networks will substantially expand the opportunity for
PacketVideo to license its suite of multimedia software solutions to service
providers and to handset and consumer electronic device manufacturers.
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GO NETWORKS, INC. Through our GO Networks subsidiary we offer
carrier-class mobile Wi-Fi network systems to commercial and municipal service
providers worldwide. GO Networks' family of micro, pico and femto Wi-Fi base
stations utilize advanced xRFTM adaptive beamforming smart-antenna technology
and a cellular-mesh Wi-Fi architecture to deliver superior Wi-Fi coverage,
performance, and economics and provide service providers with a cost-effective
solution to support bandwidth-intensive mobile broadband services such as video
streaming, real-time gaming, web browsing, and other types of multimedia
applications on a wide-area basis.
IPWIRELESS. IPWireless, which was acquired in May 2007, played a leading
role in the development of 3GPP TDD Universal Mobile Telecommunications Systems
(UMTS) standards and currently provides customers with an assortment of TD-CDMA
mobile broadband products and technologies. Mobile broadband networks that
utilize IPWireless' TD-CDMA technology, one of the first standards-based mobile
broadband technologies in the world, have been commercially deployed in more
than a dozen countries, including the Czech Republic, New Zealand, Germany,
South Africa, Sweden, and the United Kingdom.
The IPWireless TDtv solution, based on 3GPP Multimedia Broadcast Multicast
Service (MBMS), allows UMTS operators to deliver mobile television and other
multimedia services using their existing 3G spectrum and networks, with little
impact on their current voice and data services. A trial of TDtv technology,
recently conducted in the UK by several of the largest mobile operators in
Europe, successfully demonstrated its ability to deliver high-quality,
multi-channel broadcast services using the trial participants' existing
spectrum. TDtv supports key consumer requirements including fast channel change
times, operation at high travel speeds, and seamless integration into small
profile handsets.
In September 2006, IPWireless' TD-CDMA mobile broadband wireless
technology was selected by New York City's Department of Information Technology
and Telecommunications as part of a five-year contract awarded to Northrop
Grumman for the deployment of a citywide, public safety, mobile wireless
network. IPWireless has received an initial purchase order to deliver network
equipment through November 2007 for the initial phase of network deployment. We
believe that IPWireless' technology, as optimized for public safety
applications, can be utilized to deliver cost-effective and reliable public
safety network solutions in the 700MHz spectrum band plan currently under
consideration by the FCC for public safety purposes.
We believe the breadth of products, technologies, spectrum assets and
services offered by our various subsidiaries represents a unique platform to
provide advanced wireless broadband solutions to the market. While our
subsidiaries are intended to be operated as stand-alone businesses, we also
believe that they will provide synergistic value to each other and collectively
drive accelerated market penetration and share of the wireless broadband market
for us.
To help accelerate global market adoption of our mobile broadband
products, we intend to make our significant spectrum holdings available, under a
variety of business arrangements, to customers of our wireless broadband
products and technologies. Our spectrum footprint in the U.S. covers over 248
million people and includes many of the largest metropolitan areas in the
country. In addition, we have acquired nationwide spectrum in numerous
international markets including Germany, Switzerland, Austria, Slovakia, Croatia
and Canada.
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THE OFFERING
Common stock outstanding prior to this 92,560,146 shares
offering, excluding the shares
underlying the unexercised warrants(1)
Common stock being offered for resale 4,109,470 shares
to the public by the selling
stockholders
Common stock to be outstanding after 94,496,136 shares
this offering
Total proceeds raised by offering We will not receive any proceeds
from the resale of our common
stock pursuant to this offering.
We may receive proceeds upon the
exercise of the warrants to the
extent such warrants are
exercised for cash.
Use of proceeds Any proceeds we may receive will
be used to meet our working
capital needs and general
corporate purposes.
Nasdaq Global Market symbol WAVE
Risk factors See "Risk Factors" and the other
information included in this
prospectus for a discussion of
risk factors you should
carefully consider before
deciding to invest in our common
stock.
(1) The number of shares of our common stock outstanding prior to this
offering is based on the number of shares of our common stock outstanding
as of June 30, 2007, and includes 2,173,480 shares previously issued upon
the exercise of the warrants. This number does not include, as of June 30,
2007:
o 20,452,477 shares of our common stock issuable upon exercise of
options and warrants outstanding, at a weighted average exercise
price of $6.63 per share;
o 16,225,687 shares of our common stock reserved for issuance under
our NextWave Wireless Inc. 2005 Stock Incentive Plan, NextWave
Wireless Inc. 2007 Stock Incentive Plan, the CYGNUS Communications,
Inc. 2004 Stock Option Plan and the PacketVideo Corporation 2005
Equity Incentive Plan;
o up to $142 million of our common stock that may be issued as
additional consideration to former IPWireless shareholders and under
the IPWireless Employee Stock Bonus Plan upon the achievement of
certain revenue milestones relating to IPWireless' public safety
business and TDtv business and up to $30.7 million of our common
stock that may be issued as additional consideration to former GO
Network shareholders and under the GO Networks Employee Stock Bonus
Plan upon the achievement of certain revenue milestones relating to
the sales of GO Network's Wi-Fi base station products;
o 500,000 shares of our common stock issuable upon exercise of
warrants at an exercise price of $6.00 per share, plus an additional
1,935,990 shares of our common stock issuable upon the exercise of
warrants at an exercise price of $0.01 per share; and
o 43,476,673 shares of our common stock issuable upon the conversion
of our Series A Preferred Stock.
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RISK FACTORS
Our business involves a high degree of risk. You should carefully consider
the following risks together with all of the other information contained in or
incorporated by reference into this registration statement before making a
future investment decision with respect to our securities. If any of the
following risks actually occurs, our business, financial condition and results
of operations could be materially adversely affected, and the value of our
securities could decline.
RISKS RELATING TO OUR BUSINESS
WE HAVE LIMITED RELEVANT OPERATING HISTORY AND A HISTORY OF LOSSES.
We emerged from our reorganization in April 2005 with a new business plan
and have made several significant acquisitions and investments. As a result, we
are at an early stage of our development and have had a limited relevant
operating history and, consequently, limited historical financial information.
Other than through our PacketVideo subsidiary, which we acquired in July 2005,
and our IPWireless subsidiary, which we acquired in May 2007,we have never
generated any material revenues and have limited commercial operations. While
certain of our businesses are currently generating revenues, the revenues are
not yet adequate to cover our operating expenses. In particular, the wireless
broadband products and technologies being developed by NextWave Broadband are
not expected to be commercially deployed or generate significant revenue prior
to fiscal 2008. We, along with the companies we have acquired, have a history of
losses. We will continue to incur significant expenses in advance of achieving
broader commercial distribution of our IPWireless and GO Networks products and
generating revenues from our NextWave Broadband businesses, particularly from
our WiMAX/Wi-Fi semiconductor and network component products. We are expected to
realize significant operating losses for the next few years. We are therefore
subject to risks typically associated with a start-up entity.
If we are not able to successfully implement all key aspects of our
business plan, including selling and/or licensing high volumes of our products
to network operators and to device and network equipment manufacturers, we may
not be able to develop a customer base sufficient to generate adequate revenues.
If we are unable to successfully implement our business plan and grow our
business, either as a result of the risks identified in this section or for any
other reason, we may never achieve profitability, in which event our business
would fail.
WE HAVE IDENTIFIED A MATERIAL WEAKNESS IN OUR INTERNAL CONTROL OVER FINANCIAL
REPORTING, AND THE IDENTIFICATION OF ANY SIGNIFICANT DEFICIENCIES OR MATERIAL
WEAKNESSES IN THE FUTURE COULD AFFECT OUR ABILITY TO ENSURE TIMELY AND RELIABLE
FINANCIAL REPORTS.
In connection with our close process and the audit of the consolidated
financial statements for the year ended December 30, 2006, our management
concluded that a material weakness existed relating to revenue recognition
pursuant to software contracts of PacketVideo. The Company's failure to
correctly apply software revenue recognition principles resulted from a lack of
a sufficient number of employees with appropriate levels of knowledge, expertise
and training in the application of generally accepted accounting principles
relevant to software revenue recognition. As a public company, our systems of
internal controls over financial reporting are required to comply with the
standards adopted by the SEC and the Public Company Accounting Oversight Board
(the "PCAOB"). Both regulators currently define a material weakness as a single
deficiency, or combination of deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. We believe we have taken measures
to remedy the material weakness, some of which are still in progress. For a
discussion of our internal control over financial reporting and a description of
the identified material weakness and the related remedial measures, see Item 9A
in our Annual Report on Form 10-K, filed with the SEC on March 30, 2007.
We will be required to make our first annual certification on our internal
controls over financial reporting in our Annual Report for the fiscal year ended
December 29, 2007. In preparing for such certification, we are presently
evaluating our internal controls for compliance with applicable SEC and PCAOB
requirements. We have identified that a material weakness exists related to
revenue recognition in our PacketVideo subsidiary. We also may identify
additional areas requiring improvement and may be required to design enhanced
processes and controls to address issues identified through this review. This
could result in significant delays and cost to us and require us to divert
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substantial resources, including management time, from other activities. We have
commenced a review of our existing internal control structure and plan to hire
additional personnel. Although our review is not complete, we have taken steps
to improve our internal control structure by hiring dedicated, internal
compliance personnel to analyze and improve our internal controls, to be
supplemented periodically with outside consultants as needed. However, if we
fail to achieve and maintain the adequacy of our internal controls, we may not
be able to conclude that we have effective internal controls over financial
reporting as of the end of our fiscal year 2007. Moreover, although our
management will continue to review and evaluate the effectiveness of our
internal controls, we can give you no assurance that there will be no material
weaknesses in our internal control over financial reporting. We may in the
future have material weaknesses or other control deficiencies in our internal
control over financial reporting as a result of our controls becoming inadequate
due to changes in conditions, the degree of compliance with our internal control
policies and procedures deteriorating, or for other reasons. If we have
significant deficiencies or material weaknesses or other control deficiencies in
our internal control over financial reporting, our ability to record, process,
summarize and report financial information within the time periods specified in
the rules and forms of the SEC will be adversely affected. This failure could
materially and adversely impact our business, our financial condition and the
market value of our securities.
IF WE FAIL TO EFFECTIVELY MANAGE GROWTH IN OUR BUSINESS, OUR ABILITY TO DEVELOP
AND COMMERCIALIZE OUR PRODUCTS WILL BE ADVERSELY AFFECTED.
Our business and operations have expanded rapidly since the completion of
our reorganization in April 2005. For example, from April 13, 2005 through March
28, 2007, the number of our employees has increased from 50 to 662 as a result
of organic growth and acquisitions. We acquired IPWireless in May 2007, GO
Networks in February 2007, CYGNUS Communications in February 2006 and
PacketVideo in July 2005 and we are still in the process of integrating
IPWireless and GO Networks. In addition, our PacketVideo subsidiary acquired SDC
Secure Digital Container AG in January 2007 and consummated two other
acquisitions in 2006.
To support our expanded research and development activities for our
NextWave Broadband business and the anticipated growth in our IPWireless,
PacketVideo and GO Networks businesses, we must continue to successfully hire,
train, motivate and retain our employees. We expect that further expansion of
our operations and employee base will be necessary. Our recent acquisitions have
also expanded the geographic reach of our operations to countries including
Israel, Germany, Switzerland, the United Kingdom, Finland, Japan and, with our
announced acquisition of a majority interest in WiMAX Telecom, Slovakia and
Croatia. In order to manage the increased complexity of our expanded operations,
we will need to continue to expand our management, operational and financial
controls and strengthen our reporting systems and procedures. All of these
measures will require significant expenditures and will demand the attention of
management. Failure to fulfill any of the foregoing requirements could result in
our failure to successfully manage our intended growth and development, and
successfully integrate our acquired businesses, which would adversely affect our
ability to develop and commercialize our products and achieve profitability.
WE OPERATE IN AN EXTREMELY COMPETITIVE ENVIRONMENT WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR ABILITY TO WIN MARKET ACCEPTANCE OF OUR PRODUCTS AND
ACHIEVE PROFITABILITY.
We operate in an extremely competitive market and we expect such
competition to increase in the future. Our businesses are developing and selling
products and technologies based on WiMAX, Wi-Fi and UMTS standards. We will be
competing with well established, international companies that are engaged in the
development, manufacture and sale of products and technologies that support the
same technologies, as well as alternative wireless standards such as GSM and
CDMA2000. Companies that support these wireless technologies include well
established industry leaders such as Alcatel, Cisco, Ericsson, Huawei, LGE,
Lucent, Motorola, Nokia, Nortel, QUALCOMM, Samsung and Siemens. In addition, we
also compete with small and medium size companies such as Alvarion, Tropos
Networks, Strix Systems, and Belair Networks.
We also will be competing with numerous companies that are currently
developing or marketing WiMAX products and technologies including Airspan,
Beceem, Fujitsu, Intel, Motorola, Nortel, RunCom, Samsung, Sequans and WaveSat.
Some of these companies have significantly greater financial, technical
development, and marketing resources than we do, are already marketing
commercial WiMAX semiconductor products, and have established a significant time
to market advantage. These companies are also our potential customers and
partners and may not be available to us if they develop competing products. In
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addition, we expect additional competition to emerge in the WiMAX semiconductor
and components market including well-established companies such as Samsung and
Broadcom.
In addition, our PacketVideo multimedia software products compete
primarily with the internal multimedia design teams at the OEM handset
manufacturers to whom PacketVideo markets its products and services.
Importantly, these OEMs represent some of PacketVideo's largest customers. In
addition several companies, including Flextronics/Emuzed, Hantro, Nextreaming,
Philips Software, Sasken and Thin Multimedia also currently provide software
products and services that directly or indirectly compete with our PacketVideo
products and our IPWireless TDtv solution. As the market for embedded multimedia
software evolves, we anticipate that additional competitors may emerge including
Apple Computer, Real Networks and OpenWave.
Some of our competitors have significantly greater financial,
technological development, marketing and other resources than we do, are already
marketing commercial products and technologies and have established a
significant time to market advantage. Our ability to generate earnings will
depend, in part, upon our ability to effectively compete with these competitors.
THE SUCCESS OF OUR BUSINESSES DEPENDS ON THE ADOPTION OF DEVELOPING WIRELESS
BROADBAND 4G TECHNOLOGIES, INCLUDING WIMAX AND TD-CDMA.
The success of our businesses depends on the deployment and market
acceptance of fourth generation (4G) wireless broadband technologies, including
WiMAX and TD-CDMA. We plan to generate most of our revenue from the sale of 4G
products and the licensing of 4G technologies. The market for 4G networks and
compatible products and technologies, as well as the technologies themselves,
are in an early stage of development and are continuing to evolve. In
particular, there are currently no mobile WiMAX networks in commercial operation
and there can be no assurance that commercial mobile WiMAX networks will prove
to be commercially viable. In order for 4G technologies to gain significant
market acceptance among customers, network operators and telecommunications
service providers will need to deploy 4G networks. However, many of the largest
wireless telecommunications providers have made significant expenditures in
incumbent technologies and may choose to develop these technologies rather than
utlitize 4G technologies. Certification standards for 4G technologies are
controlled by industry groups. Accordingly, standard setting for 4G technologies
is beyond our control. If standards for 4G technologies such as WiMAX and
TD-CDMA, for example, change, the commercial viability of these technologies may
be delayed or impaired and our development efforts may also be delayed or
impaired or become more costly. If our 4G technologies and products do not
receive industry certification, we may not be able to successfully market,
license or sell our products or technologies. The development of 4G networks is
also dependent on the availability of spectrum. Access to spectrum suitable for
4G networks is highly competitive. Future 4G networks may utilize multiple
frequencies and this multi-spectrum approach is technologically challenging and
will require the development of new software, integrated circuits and equipment,
which will be time consuming and expensive and may not be successful. In order
for our business to continue to grow and to become profitable, 4G technology and
related services must gain acceptance among consumers, who tend to be less
technically knowledgeable and more resistant to new technology or unfamiliar
services. If consumers choose not to adopt 4G technology, we will not be
successful in selling 4G products and technologies and our ability to grow our
business will be limited.
OUR NEXTWAVE BROADBAND WIRELESS BROADBAND PRODUCTS AND TECHNOLOGIES ARE IN THE
EARLY STAGES OF DEVELOPMENT AND WILL REQUIRE A SUBSTANTIAL INVESTMENT BEFORE
THEY MAY BECOME COMMERCIALLY VIABLE.
Many of our wireless broadband products and technologies are in the early
stages of development and will require a substantial investment before they may
become commercially viable. While we have announced the initial availability of
our first generation WiMAX baseband chip-on-a-chip and matched multiband RFIC,
these products are not expected to be commercially distributed or generate
significant revenue. We currently anticipate that our second generation NextWave
Broadband WiMAX technologies designed for high volume commercial production will
initially be available in the first quarter of 2008. However, we may not able to
meet this timeframe and therefore the commercial deployment of these products
could be delayed, which could adversely affect our competitive position as well
as our future profitability. In addition, unexpected expenses and delays in
development could adversely affect our liquidity. Some of our other planned
wireless broadband products and technologies have not been tested, even on a
7
pre-commercial basis. Even if our new products and technologies function when
tested, they may not produce sufficient performance and economic benefits to
justify full commercial development efforts, or to ultimately attract customers.
Failure to achieve high volume sales of our NextWave Broadband semiconductors
and other wireless broadband products and technologies would adversely affect
our ability to achieve profitability.
OUR CUSTOMER AGREEMENTS DO NOT CONTAIN MINIMUM PURCHASE REQUIREMENTS AND CAN BE
CANCELLED ON TERMS THAT ARE NOT BENEFICIALLY TO US.
Our customer agreements with network providers and mobile phone and device
manufacturers are not exclusive and many contain no minimum purchase
requirements or flexible pricing terms. Accordingly, mobile phone and device
manufacturers may effectively terminate these agreements by no longer purchasing
our products or reducing the economic benefits of those arrangements. In many
circumstances, we have indemnified these customers from certain claims that our
products and technologies infringes third-party intellectual property rights.
Our customer agreements are generally not exclusive and have a limited term of
one to five years, in some cases with evergreen, or automatic renewal,
provisions upon expiration of the initial term. These agreements set out the
terms of our distribution relationships with the customers but generally do not
obligate the customers to market or distribute any of our products or
applications. In addition, in some cases customers can terminate these
agreements early or at any time, without cause.
WE MAY EXPERIENCE DIFFICULTIES IN THE INTRODUCTION OF NEW OR ENHANCED PRODUCTS,
WHICH COULD RESULT IN REDUCED SALES, UNEXPECTED EXPENSES OR DELAYS IN THE LAUNCH
OF NEW OR ENHANCED PRODUCTS AND IN CERTAIN CASES, PENALTIES UNDER CUSTOMER
AGREEMENTS.
The development of new or enhanced wireless products and technologies is a
complex and uncertain process. We may experience design, manufacturing,
marketing and other difficulties that could delay or prevent our development,
introduction, commercialization or marketing of new products or product
enhancements. The difficulties could result in reduced sales, unexpected
expenses or delays in the launch of new or enhanced products, which may
adversely affect our results or operations. In addition, in some cases we are
required to provide liquidated damages and other penalty clauses in our customer
contracts (for, e.g., late delivered product, failure to comply with service
level agreements or defective products). If we are unable to perform in a timely
manner under such customer agreements, we would face financial penalities.
8
WE DO NOT HAVE ANY MANUFACTURING CAPABILITIES AND DEPEND ON THIRD-PARTY
MANUFACTURERS AND SUPPLIERS TO MANUFACTURE, ASSEMBLE AND PACKAGE OUR PRODUCTS.
NextWave Broadband is currently designing and developing semiconductor
products including digital baseband ASICs and multi-band RFICs. If we are
successful in our design and development activities and a market for these
products develops, these products will need to be manufactured. Due to the
expense and complexity associated with the manufacturer of digital baseband
ASICs and multi-band RFICs, we intend to depend on third-party manufacturers to
manufacture these products. In addition, GO Networks and IPWireless have each
engaged third-party manufacturers to develop and manufacture their products and
technologies, including ASICs, infrastructure equipment and end-user devices.
The dependence on third-parties to manufacture, assemble and package these
products involves a number of risks, including:
o a potential lack of capacity to meet demand;
o reduced control over quality and delivery schedules;
o risks of inadequate manufacturing yield or excessive costs;
o difficulties in selecting and integrating subcontractors;
o limited warranties in products supplied to us;
o price increases; and
o potential misappropriation of our intellectual property.
We may not be able to establish manufacturing relationships on reasonable
terms or at all. The failure to establish these relationships on a timely basis
and on attractive terms could delay our ability to launch these products or
reduce our revenues and profitability.
DEFECTS OR ERRORS IN OUR PRODUCTS AND SERVICES OR IN PRODUCTS MADE BY OUR
SUPPLIERS COULD HARM OUR RELATIONS WITH OUR CUSTOMERS AND EXPOSE US TO
LIABILITY. SIMILAR PROBLEMS RELATED TO THE PRODUCTS OF OUR CUSTOMERS OR
LICENSEES COULD HARM OUR BUSINESS.
Our mobile broadband products and technologies are inherently complex and
may contain defects and errors that are detected only when the products are in
use. Further, because our products and technologies serve as critical functions
in our customers' products and/or networks, such defects or errors could have a
serious impact on our customers, which could damage our reputation, harm our
customer relationships and expose us to liability. Defects in our products and
technologies or those used by our customers or licensees, equipment failures or
other difficulties could adversely affect our ability and that of our customers
and licensees to ship products on a timely basis as well as customer or licensee
demand for our products. Any such shipment delays or declines in demand could
reduce our revenues and harm our ability to achieve or sustain desired levels of
profitability. We and our customers or licensees may also experience component
or software failures or defects which could require significant product recalls,
reworks and/or repairs which are not covered by warranty reserves and which
could consume a substantial portion of the capacity of our third-party
manufacturers or those of our customers or licensees. Resolving any defect or
failure related issues could consume financial and/or engineering resources that
could affect future product release schedules. Additionally, a defect or failure
in our products and technologies or the products of our customers or licensees
could harm our reputation and/or adversely affect the growth of the market for
mobile WiMAX, Wi-Fi, TD-CDMA, and other mobile broadband technologies.
WE MAY BE UNABLE TO PROTECT OUR OWN INTELLECTUAL PROPERTY AND COULD BECOME
SUBJECT TO CLAIMS OF INFRINGEMENT, WHICH COULD ADVERSELY AFFECT THE VALUE OF OUR
PRODUCTS AND TECHNOLOGIES AND HARM OUR REPUTATION.
As a technology company, we expect to incur expenditures to create and
protect our intellectual property and, possibly, to assert infringement by
others of our intellectual property. Other companies or entities also may
9
commence actions or respond to an infringement action that we initiate by
seeking to establish the invalidity or unenforceability of one or more of our
patents or to dispute the patentability of one or more of our pending patent
applications. In the event that one or more of our patents or applications are
challenged, a court may invalidate the patent or determine that the patent is
not enforceable or deny issuance of the application, which could harm our
competitive position. If any of our patent claims are invalidated or deemed
unenforceable, or if the scope of the claims in any of these patents is limited
by court decision, we could be prevented from licensing such patent claims. Even
if such a patent challenge is not successful, it could be expensive and time
consuming to address, divert management attention from our business and harm our
reputation. Effective intellectual property protection may be unavailable or
limited in certain foreign jurisdictions.
We also expect to incur expenditures to defend against claims by other
persons asserting that the technology that is used and sold by our Company
infringes upon the right of such other persons. From time to time we have
received, and expect to continue to receive, notices from our competitors and
others claiming that their proprietary technology is essential to our products
and seeking the payment of a license fee. Any claims, with or without merit,
could be time consuming to address, result in costly litigation and/or the
payment of license fees, divert the efforts of our technical and management
personnel or cause product release or shipment delays, any of which could have a
material adverse effect upon our ability to commercially launch our products and
technologies and on our ability to achieve profitability. If any of our products
were found to infringe on another company's intellectual property rights or if
we were found to have misappropriated technology, we could be required to
redesign our products or license such rights and/or pay damages or other
compensation to such other company. If we were unable to redesign our products
or license such intellectual property rights used in our products, we could be
prohibited from making and selling such products. In any potential dispute
involving other companies' patents or other intellectual property, our customers
and partners could also become the targets of litigation. Any such litigation
could severely disrupt the business of our customers and partners, which in turn
could hurt our relations with them and cause our revenues to decrease.
BECAUSE MOBILE WIMAX AND UMTS BASED TECHNOLOGIES SUCH AS TD-CDMA ARE EMERGING
WIRELESS TECHNOLOGIES THAT ARE NOT FULLY DEVELOPED, THERE IS A RISK THAT STILL
UNKNOWN PERSONS OR COMPANIES MAY ASSERT PROPRIETARY RIGHTS TO THE VARIOUS
TECHNOLOGY COMPONENTS THAT WILL BE NECESSARY TO OPERATE A WIMAX OR UMTS-BASED
WIRELESS BROADBAND NETWORK.
Because mobile WiMAX and UMTS based technologies such as TD-CDMA are
emerging wireless technologies that are not fully developed, there may be a
greater risk that persons or entities unknown to us will assert proprietary
rights to technology components that are necessary to operate WiMAX or
UMTS-based wireless broadband networks or products. Numerous companies have
submitted letters of assurance related to IEEE 802.16 and amendments or various
UMTS based technologies, including TD-CDMA, stating that they may hold or
control patents or patent applications, the use of which would be unavoidable to
create a compliant implementation of either mandatory or optional portions of
the standard. In such letters, the patent holder typically asserts that it is
prepared to grant a license to its essential IP to an unrestricted number of
applicants on a worldwide, non-discriminatory basis and on reasonable terms and
conditions. If any companies asserting that they hold or control patents or
patent applications necessary to implement the relevant technologies do not
submit letters of assurance, or state in such letters that they do not expect to
grant licenses, this could have an adverse effect on the implementation of
mobile broadband networks utilizing such technologies as well as the sale of our
mobile WiMAX or UMTS based products and technologies. In addition, we can not be
certain of the validity of the patents or patent applications asserted in the
letters of assurance submitted to date, or the terms of any licenses which may
be demanded by the holders of such patents or patent applications. If we were
required to pay substantial license fees to implement our mobile WiMAX or
UMTS-based products and technologies, this could adversely affect the
profitability of these products and technologies.
We anticipate that we will develop a patent portfolio related to our WiMAX
and UMTS based products and technologies. However, there is no assurance that we
will be able to obtain patents covering WiMAX or UMTS based products. Litigation
may be required to enforce or protect our intellectual property rights. As a
result of any such litigation, we could lose our proprietary rights or incur
substantial unexpected operating costs. Any action we take to license, protect
or enforce our intellectual property rights could be costly and could absorb
significant management time and attention, which, in turn, could negatively
impact our operating results. In addition, failure to protect our trademark
rights could impair our brand identity.
10
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS.
We operate or hold spectrum through various subsidiaries and joint
ventures in Canada, Germany and Switzerland and have additional operations
located in Finland, Germany, Israel, Japan, South Korea, Switzerland and the
United Kingdom. We expect to continue to expand our international operations and
potentially enter new international markets through acquisitions, joint ventures
and strategic alliances. Our announced acquisition of a majority interest in WT
Telecom will provide us with additional operations in Switzerland, as well as
Croatia and Slovakia. In addition, we recently launched business operations in
Latin America, where a new business unit headquartered in Sao Paulo, Brazil will
deliver our mobile broadband and wireless technology solutions to customers
throughout the Latin American region. Our activities outside the United States
operate in different competitive and regulatory environments than we face in the
United States, with many of our competitors having a dominant incumbent market
position and/or greater operating experience in the specific geographic market.
In addition, in some international markets, foreign governmental authorities may
own or control the incumbent telecommunications companies operating under their
jurisdiction. Established relationships between government-owned or
government-controlled telecommunications companies and their traditional local
telecommunications providers often limit access of third parties to these
markets. In addition, owning and operating wireless spectrum in overseas
jurisdictions may be subject to a changing regulatory environment. We can not
assure you that changes in foreign regulatory guidelines for the issuance of
wireless licenses, foreign ownership of spectrum licenses, the adoption of
wireless standards or the enforcement and licensing of intellectual property
rights will not adversely impact our operating results. Due to these competitive
and regulatory challenges, our activities outside the United States may require
a disproportionate amount of our management and financial resources, which could
disrupt our operations and adversely affect our business.
THE BUSINESS PLAN OF OUR NETWORK SOLUTIONS GROUP IS DEPENDENT ON ENTERING INTO
OR MAINTAINING NETWORK PARTNER RELATIONSHIPS.
Our Network Solutions Group intends to build and operate WiMAX/Wi-Fi
networks for wireless service providers, cable operators, multimedia content
distributors, applications service providers and Internet service providers. At
present, NSG has not entered into any such arrangements and may not be able to
negotiate such arrangements on acceptable terms, or at all. If we are unable to
establish and maintain these service arrangements, we may have to modify our
plans for the Network Solutions Group.
OUR BUSINESSES WHICH CURRENTLY GENERATE REVENUE ARE DEPENDENT ON A LIMITED
NUMBER OF CUSTOMERS.
Our PacketVideo, GO Networks and IPWireless businesses currently generate
revenue but are dependent on a limited number of customers. For the period from
December 31, 2006 through March 30, 2007, PacketVideo's revenues from Verizon
Wireless accounted for 75% of our revenues. We expect that our PacketVideo
subsidiary will continue to generate a significant portion of its revenues
through a limited number of mobile phone and device manufacturers and wireless
carriers for the foreseeable future, although these amounts may vary from
period-to-period. If any of these customers terminate their relationships with
us, our revenues and results of operations could be materially adversely
affected.
WE ARE DEPENDENT ON A SMALL NUMBER OF INDIVIDUALS, AND IF WE LOSE KEY PERSONNEL
UPON WHOM WE ARE DEPENDENT, OUR BUSINESS WILL BE ADVERSELY AFFECTED.
Our future success depends largely upon the continued service of our board
members, executive officers and other key management and technical personnel,
particularly Allen Salmasi, our Chairman and Chief Executive Officer. Mr.
Salmasi has been a prominent executive and investor in the technology industry
for over 20 years, and the Company has benefited from his industry relationships
in attracting key personnel and in implementing acquisitions and strategic
plans. In addition, in order to develop and achieve commercial deployment of our
mobile broadband products and technologies in competition with well-established
companies such as Intel, QUALCOMM and others, we must rely on highly specialized
engineering and other talent. Our key employees represent a significant asset,
and the competition for these employees is intense in the wireless
communications industry. We continue to anticipate significant increases in
human resources, particularly in engineering resources, through 2008. If we are
unable to attract and retain the qualified employees that we need, our business
may be harmed.
11
As a company without a significant operating history, we may have
particular difficulty attracting and retaining key personnel in periods of poor
operating performance given the significant use of incentive compensation by
well-established competitors. We do not maintain key person life insurance on
any of our personnel. We also have no covenants against competition or
nonsolicitation agreements with certain of our key employees. The loss of one or
more of our key employees or our inability to attract, retain and motivate
qualified personnel could negatively impact our ability to design, develop and
commercialize our products and technology.
WE INTEND TO EXPAND OUR BUSINESS THROUGH ADDITIONAL ACQUISITIONS AND INVESTMENTS
FOR WHICH WE MAY REQUIRE SIGNIFICANT ADDITIONAL CAPITAL, BUT WE MAY NOT BE ABLE
TO OBTAIN ADDITIONAL FINANCING ON FAVORABLE TERMS OR AT ALL.
Part of our strategy is to pursue acquisitions of and investments in
businesses and technologies to expand our business and enhance our technology
development capabilities. In addition to our IPWireless, CYGNUS, GO Networks and
PacketVideo acquisitions, we have made investments in a number of companies
including Hughes Systique and Inquam Broadband, and anticipate future
investments in other companies or other technologies, businesses or spectrum
licenses. For instance, we recently announced our acquisition of a majority
interest in WiMAX Telecom.
Our recent and future acquisitions could result in substantial cash
expenditures, potentially dilutive issuances of equity securities, the
incurrence of debt and contingent liabilities, a decrease in our profit margins
and amortization of intangibles and potential impairment of goodwill. In
addition, our investments could result in substantial cash expenditures,
fluctuations in our results of operations resulting from changes in the value of
the investments and diversion of management's time and attention. While we
estimate that our working capital will be sufficient to fund our research and
development activities and our operating losses at least through 2008, we may
need to secure significant additional capital in the future to implement changes
to, or expansions of, our business plan and to become cash flow positive.
Sources of additional capital may include public or private debt and equity
financings. To the extent that other attractive opportunities to acquire
complimentary businesses or additional spectrum arise, we may need to raise
additional funds to capitalize on such opportunities.
Covenants in the indenture governing our senior secured notes impose
operating and financial restrictions on us. These restrictions prohibit or limit
our ability, and the ability of our subsidiaries, to, among other things:
o pay dividends to our stockholders;
o incur, or cause certain of our subsidiaries to incur, additional
indebtedness;
o permit liens on or conduct sales of any assets pledged as collateral;
o sell all or substantially all of our assets or consolidate or merge
with or into other companies;
o repay existing indebtedness; and
o engage in transactions with affiliates.
A breach of any of these covenants could result in a default under our
senior secured notes. If we are unable to repay or refinance those amounts, the
holders of our senior secured notes could proceed against the assets pledged to
secure these obligations, which include a substantial portion of our spectrum
assets and substantially all of our other assets.
These restrictions may limit our ability to obtain additional financing,
withstand downturns in our business and take advantage of business
opportunities. Moreover, we may seek additional debt financing on terms that
include more restrictive covenants, may require repayment on an accelerated
schedule or may impose other obligations that limit our ability to grow our
business, acquire needed assets, or take other actions we might otherwise
consider appropriate or desirable.
WE MAY BE LIABLE FOR CERTAIN INDEMNIFICATION PAYMENTS PURSUANT TO THE PLAN OF
REORGANIZATION.
In connection with the sale of NTI and its subsidiaries other than Old
NextWave Wireless to Verizon Wireless, we agreed to indemnify NTI and its
subsidiaries against all pre-closing liabilities of NTI and its subsidiaries and
against any violation of the Bankruptcy Court injunction against persons having
claims against NTI and its subsidiaries, with no limit on the amount of such
indemnity. We are not currently aware of any such liabilities that remain
following the plan of reorganization and Verizon Wireless has not made any
indemnity claims. We have received a decree of final judgment closing the
Chapter 11 case, and all claims made in connection with the Chapter 11 case have
been resolved. Nonetheless, to the extent that we are required to fund amounts
under the indemnification, our results of operations and our liquidity and
capital resources could be materially adversely affected. In addition, we may
not have sufficient cash reserves to pay the amounts required under the
indemnification if any amounts were to become due.
12
RISKS RELATING TO GOVERNMENT REGULATION
GOVERNMENT REGULATION COULD ADVERSELY IMPACT OUR DEVELOPMENT OF WIRELESS
BROADBAND PRODUCTS AND SERVICES, OUR OFFERING OF PRODUCTS AND SERVICES TO
CONSUMERS, AND OUR BUSINESS PROSPECTS.
The regulatory environment in which we operate is subject to significant
change, the results and timing of which are uncertain. The FCC has jurisdiction
over the grant, renewal, lease, assignment and sale of our wireless licenses,
the use of wireless spectrum to provide communications services, and the
resolution of interference between users of various spectrum bands. Other
aspects of our business, including construction and operation of our wireless
systems, and the offering of communications services, are regulated by the FCC
and other federal, state and local governmental authorities. States may exercise
authority over such things as billing practices and consumer-related issues.
Various governmental authorities could adopt regulations or take other
actions that would adversely affect the value of our assets, increase our costs
of doing business, and impact our business prospects. Changes in the regulation
of our activities, including changes in how wireless, mobile, IP enabled
services are regulated, changes in the allocation of available spectrum by the
United States and/or exclusion or limitation of our technology or products by a
government or standards body, could have a material adverse effect on our
business, operating results, liquidity and financial position.
CHANGES IN LEGISLATION OR REGULATIONS MAY AFFECT OUR ABILITY TO CONDUCT OUR
BUSINESS OR REDUCE OUR PROFITABILITY.
Future legislative, judicial or other regulatory actions could have a
negative effect on our business. Some legislation and regulations applicable to
the wireless broadband business, including how IP-enabled services are
regulated, are the subject of ongoing judicial proceedings, legislative hearings
and administrative proceedings that could change the manner in which our
industry is regulated and the manner in which we operate. We cannot predict the
outcome of any of these proceedings or their potential impact on our business.
If, as a result of regulatory changes, we become subject to the rules and
regulations applicable to telecommunications providers, commercial mobile
service providers or common carriers at the federal level or in individual
states, we may incur significant administrative, litigation and compliance
costs, or we may have to restructure our service offerings, exit certain markets
or raise the price of our services, any of which could cause our services to be
less attractive to customers. In addition, future regulatory developments could
increase our cost of doing business and limit our growth.
WE MAY NOT HAVE COMPLETE CONTROL OVER OUR TRANSITION OF EBS AND BRS SPECTRUM,
WHICH COULD IMPACT COMPLIANCE WITH FCC RULES.
The FCC's rules require transition of EBS and BRS spectrum to the new band
plan on a Basic Trading Area ("BTA") basis. See "Government Regulation-BRS-EBS
License Conditions." We do not hold all of the EBS and BRS spectrum in the BTAs
in which we hold spectrum. Consequently, we will need to coordinate with other
EBS and BRS licensees in order to transition spectrum we hold or lease.
Disagreements with other EBS or BRS licensees about how the spectrum should be
transitioned may delay our efforts to transition spectrum, could result in
increased costs to transition the spectrum, and could impact our efforts to
comply with applicable FCC rules. On April 27, 2006, the FCC implemented new,
amended rules related to transition of the spectrum, and it adopted rules that
will permit us to self-transition to the reconfigured band plan if other
spectrum holders in our BTAs do not timely transition their spectrum.
OUR USE OF EBS SPECTRUM IS SUBJECT TO PRIVATELY NEGOTIATED LEASE AGREEMENTS.
CHANGES IN FCC RULES GOVERNING SUCH LEASE AGREEMENTS, CONTRACTUAL DISPUTES WITH
EBS LICENSEES, OR FAILURES BY EBS LICENSEES TO COMPLY WITH FCC RULES COULD
IMPACT OUR USE OF THE SPECTRUM.
All commercial enterprises are restricted from holding licenses for EBS
spectrum. Eligibility for EBS spectrum is limited to accredited educational
institutions, governmental organizations engaged in the formal education of
enrolled students (e.g., school districts), and nonprofit organizations whose
purposes are educational. Access to EBS spectrum can only be gained by
commercial enterprises through privately-negotiated EBS lease agreements. FCC
regulation of EBS leases, private interpretation of EBS lease terms, private
contractual disputes, and failure of an EBS licensee to comply with FCC
regulations all could impact our use of EBS spectrum and the value of our leased
EBS spectrum. On April 27, 2006, the FCC released new rules governing EBS lease
13
terms. EBS licensees are now permitted to enter into lease agreements with a
maximum term of 30 years; lease agreements with terms longer than 15 years must
contain a "right of review" by the EBS licensee every five years beginning in
year 15. The right of review must afford the EBS licensee with an opportunity to
review its educational use requirements in light of changes in educational
needs, technology, and other relevant factors and to obtain access to such
additional services, capacity, support, and/or equipment as the parties shall
agree upon in the spectrum leasing arrangement to advance the EBS licensee's
educational mission. A spectrum leasing arrangement may include any mutually
agreeable terms designed to accommodate changes in the EBS licensee's
educational use requirements and the commercial lessee's wireless broadband
operations. In addition, the terms of EBS lease agreements are subject to
contract interpretation and disputes could arise with EBS licensees. There can
be no assurance that EBS leases will continue for the full lease term, or be
renewed, or be extended beyond the current term, on terms that are satisfactory
to us. Similarly, since we are not eligible to hold EBS licenses, we must rely
on EBS licensees with whom we contract to comply with FCC rules. The failure of
an EBS licensee from whom we lease spectrum to comply with the terms of their
FCC authorization or FCC rules could result in termination, forfeiture or
non-renewal of their authorization, which would negatively impact the amount of
spectrum available for our use.
IF WE DO NOT COMPLY WITH FCC BUILD-OUT REQUIREMENTS RELATING TO OUR SPECTRUM
LICENSES, SUCH LICENSES COULD BE SUBJECT TO FORFEITURE.
Certain build-out or "substantial service" requirements apply to our
licensed wireless spectrum, which generally must be satisfied as a condition of
license renewal. In particular, the renewal deadline and the substantial service
build-out deadline for our WCS spectrum is July 21, 2010; for our BRS and EBS
spectrum, the substantial service build-out deadline is May 1, 2011; and for our
AWS spectrum, the substantial service build-out deadline is December 18, 2021.
Failure to make the substantial service demonstration, without seeking and
obtaining an extension from the FCC, would result in license forfeiture.
WE HAVE NO GUARANTEE THAT THE LICENSES WE HOLD OR LEASE WILL BE RENEWED.
The FCC generally grants wireless licenses for terms of ten or fifteen
years, which are subject to renewal and revocation. FCC rules require all
wireless licensees to comply with applicable FCC rules and policies and the
Communications Act of 1934 in order to retain their licenses. For example,
licensees must meet certain construction requirements, including making
substantial service demonstrations, in order to retain and renew FCC licenses.
Failure to comply with FCC requirements with respect to any license could result
in revocation or non-renewal of a license. There is no guarantee that licenses
we hold or lease will remain in full force and effect or be renewed.
NEW FCC CONCEPTS IMPACTING SPECTRUM USE COULD AFFECT OUR USE OF WIRELESS
SPECTRUM.
The FCC has initiated a number of proceedings to evaluate its rules and
policies regarding spectrum licensing and usage. For example, it is considering
new concepts that might permit unlicensed users to "share" our licensed spectrum
to the extent the FCC believes harmful interference will not occur. These new
uses could adversely impact our utilization of our licensed spectrum and our
operational costs.
INTERFERENCE COULD NEGATIVELY IMPACT OUR USE OF WIRELESS SPECTRUM WE HOLD, LEASE
OR USE.
Under applicable FCC rules, users of wireless spectrum must comply with
technical rules that are intended to eliminate or diminish harmful
radiofrequency interference between wireless users. Licensed spectrum is
generally entitled to interference protection, subject to technical rules
applicable to the radio service, while unlicensed spectrum has no interference
protection rights and must accept interference caused by other users.
WIRELESS DEVICES UTILIZING WCS, BRS AND EBS SPECTRUM MAY BE SUSCEPTIBLE TO
INTERFERENCE FROM SATELLITE DIGITAL AUDIO RADIO SERVICES ("SDARS").
Since 1997, the FCC has considered a proposal to permanently authorize
terrestrial repeaters for SDARS operations adjacent to the C and D blocks of the
WCS band. The FCC has permitted a large number of these SDARS terrestrial
repeaters to operate on a special temporary authorization since 2001.
Permanently authorizing SDARS repeaters adjacent to the WCS band could cause
interference to WCS, BRS and EBS receivers. The extent of the interference from
SDARS repeaters is unclear and is subject to the FCC's final resolution of
pending proceedings. Because WCS C and D block licenses are adjacent to the
SDARS spectrum, the potential for interference to this spectrum is of greatest
concern. There is a lesser magnitude concern regarding interference from SDARS
to WCS A and B block licenses, and EBS and BRS licenses. Central to the FCC's
evaluation of this proposal has been the technical specification for the
operation of such repeaters. SDARS licensees are seeking rule changes that would
both unfavorably alter WCS technical operating requirements and permit all
existing SDARS repeaters to continue to operate at their current operating
parameters. Final technical rules will determine the potential interference
conditions and requirements for mitigation. If SDARS repeaters result in
interference to our WCS, BRS or WBS spectrum, our ability to realize value from
this spectrum may be impaired.
14
INCREASING REGULATION OF THE TOWER INDUSTRY MAY MAKE IT DIFFICULT TO DEPLOY NEW
TOWERS AND ANTENNA FACILITIES.
The FCC, together with the FAA, regulates tower marking and lighting. In
addition, tower construction and deployment of antenna facilities is impacted by
federal, state and local statutes addressing zoning, environmental protection
and historic preservation. The FCC adopted significant changes to its rules
governing historic preservation review of new tower projects, which makes it
more difficult and expensive to deploy towers and antenna facilities. The FCC
also is considering changes to its rules regarding when routine environmental
evaluations will be required to determine compliance of antenna facilities with
its RF radiation exposure limits. If adopted, these regulations could make it
more difficult to deploy facilities. In addition, the FAA has proposed
modifications to its rules that would impose certain notification requirements
upon entities seeking to (i) construct or modify any tower or transmitting
structure located within certain proximity parameters of any airport or
heliport, and/or (ii) construct or modify transmission facilities using the
2500-2700 MHz radio frequency band, which encompasses virtually all of the
BRS/EBS frequency band. If adopted, these requirements could impose new
administrative burdens upon use of BRS/EBS spectrum.
RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK
OUR DERIVATIVE SECURITIES AND CONTINGENT EARN-OUT PAYMENTS HAVE THE POTENTIAL TO
DILUTE SHAREHOLDER VALUE AND CAUSE THE TRADING PRICE OF OUR COMMON STOCK TO
DECLINE
On June 30, 2007, 92.6 million shares of our common stock were
outstanding. Up to 36.52 million additional shares of our common stock may be
issued upon the exercise or conversion of warrants, options, and shares of our
Series A Senior Convertible Preferred Stock that have been issued or granted. In
addition, up to $142 million of our common stock may be issued as additional
consideration to former IPWireless shareholders and under the IPWireless
Employee Stock Bonus Plan upon the achievement of certain revenue milestones
relating to IPWireless' public safety business and TDtv business and up to $30.7
million of our common stock may be issued as additional consideration to former
GO Network shareholders and under the GO Networks Employee Stock Bonus Plan upon
the achievement of certain revenue milestones relating to the sales of GO
Network's Wi-Fi base station products. On June 30, 2007, we had options
outstanding to purchase 18,011,487 shares of our common stock at a weighted
average exercise price of $6.63 per share and warrants outstanding to purchase
500,000 shares of our common stock at an exercise price of $6.00 per share. We
also had warrants outstanding at June 30, 2007, to purchase 1,935,990 shares of
our common stock for $0.01 per share pursuant to the Warrant Agreement, dated
July 17, 2006, among the Company and the initial purchasers of our senior notes.
In addition, in March 2007, we issued 355,000 shares of Series A Senior
Convertible Preferred Stock at a price of $1,000 per share of convertible
preferred stock in a private offering to investment funds and other
institutional investors, as well as shareholders of the Company, including
NextWave Wireless Chairman and CEO, Allen Salmasi, and from Douglas Manchester,
a member of the NextWave Wireless Board of Directors and Avenue Capital Group,
of which Robert T. Symington, a member of the NextWave Board, is a portfolio
manager. The Series A Senior Convertible Preferred Stock is convertible into
shares of our common stock upon election of the holders at any time and at our
election under certain circumstances. If all shares of Series A Senior
Convertible Preferred Stock were converted, we would be obligated to issue 43.5
million shares of our common stock.
The exercise or conversion of these derivative securities into shares of
common stock or the issuance of common stock pursuant to earn-outs may result in
significant dilution to our current stockholders. While the milestones giving
rise our contingent earn-out payments may never be met or met only in part,
these obligations to issue additional shares of common stock may result in a
significant dilution to our current stockholders. In addition, sales of large
amounts of common stock in the public market upon exercise or conversion of
derivative securities or upon achievement of earn-outs could materially
adversely affect the share price. We have agreed to register the resale of
shares of common stock issuable upon exercise or conversion of our warrants and
Series A Preferred Stock and upon achievement of earn-outs in connection with
the IPWireless and GO Networks transactions. The registration of such resales
could facilitate the sale of such shares into the market.
In addition, we may need to raise additional funds to fund our operations,
to pay for an acquisition or to enter into a strategic alliance, and we might
use equity securities, debt, cash, or a combination of the foregoing to finance
such activities. If we use equity securities, our stockholders may experience
dilution. A significant amount of our common stock coming on the market at any
given time could result in a decline in the price of our common stock or
increased volatility.
15
OUR COMMON STOCK IS THINLY TRADED AND THUS THE MARKET PRICE OF OUR COMMON STOCK
IS PARTICULARLY SENSITIVE TO TRADING VOLUME.
Our low trading volume has historically resulted in substantial volatility
in the market price of our common stock, and may make it more difficult for us
to sell equity or equity-related securities in the future at a time and price
that we deem appropriate. In addition, due to the relatively low volume of
trading in our common stock, stockholders may not be able to purchase or sell
shares, particularly large blocks of shares, as quickly and as inexpensively as
if the trading volume were higher. The sale of a significant position in common
stock by a large shareholder also may lead the price of our stock to decline.
More generally, the market for technology stocks has been extremely volatile,
and has from time to time experienced significant price and volume fluctuations
that bear little relationship or are not proportionate to the past or present
operating performance of those companies.
OUR OPERATING RESULTS ARE SUBJECT TO SUBSTANTIAL QUARTERLY AND ANNUAL
FLUCTUATIONS AND TO MARKET DOWNTURNS.
We believe that our future operating results over both the short- and
long-term will be subject to annual and quarterly fluctuations due to several
factors, some of which are outside management's control. These factors include:
o significant research and development costs:
o research and development issues and delays;
o the ability of our businesses to generate revenue adequate to cover
their expenses;
o spectrum acquisition costs;
o manufacturing issues and delays;
o fluctuating market demand for WiMAX services:
o impact of competitive products, services and technologies;
o changes in the regulatory environment;
o the cost and availability of network infrastructure; and
o general economic conditions.
These factors affecting our future operating results are difficult to
forecast and could harm our quarterly or annual operating results and the
prevailing market price of our securities. If our operating results fail to meet
the financial guidance we provide to investors or the expectations of investment
analysts or investors in any period, securities class action litigation could be
brought against us and/or the market price of our securities could decline.
IF THE OWNERSHIP OF OUR COMMON STOCK CONTINUES TO BE HIGHLY CONCENTRATED, IT MAY
PREVENT YOU AND OTHER STOCKHOLDERS FROM INFLUENCING SIGNIFICANT CORPORATE
DECISIONS AND MAY RESULT IN CONFLICTS OF INTEREST THAT COULD CAUSE THE PRICE OF
OUR COMMON STOCK TO DECLINE.
Allen Salmasi, our executive officers and other members of our Board of
Directors beneficially own or control shares of common stock representing
approximately 40.0% of the voting power of our capital stock as of June 30,
2007. Accordingly, Mr. Salmasi and the other members of the Board of Directors
will be able to significantly influence matters that require stockholder
approval, including the election of directors, any merger, consolidation or sale
of all or substantially all of our assets or other significant corporate
transactions. Our controlling stockholders may have interests that differ from
your interests and may vote in a way with which you may disagree and which may
16
be adverse to your interests. Corporate action may be taken even if other
stockholders oppose them. These stockholders may also delay or prevent a change
of control of us, even if that change of control would benefit our other
stockholders, which could deprive our stockholders of the opportunity to receive
a premium for their shares. The significant concentration of ownership of our
common stock and Series A Preferred Stock may adversely affect the trading price
of our common stock due to investors' perception that conflicts of interest may
exist or arise.
IF SECURITIES OR INDUSTRY ANALYSTS DO NOT PUBLISH RESEARCH OR REPORTS ABOUT OUR
BUSINESS, IF THEY CHANGE THEIR RECOMMENDATIONS REGARDING OUR SHARES ADVERSELY OR
IF OUR OPERATING RESULTS TO NOT MEET THEIR EXPECTATIONS, THE PRICE OF OUR COMMON
STOCK COULD DECLINE.
The trading market for our common stock will be influenced by the research
and reports that industry and securities analysts publish about us or our
business. If these analysts fail to publish reports about us or if one or more
of these analysts cease coverage of our company or fail to publish reports on us
regularly, we could lose visibility in the financial markets, which in turn
could cause the price of our common stock to decline. Moreover, if one or more
analysts who cover us downgrade our common stock or if our operating results do
not meet their expectations, the price of our common stock could decline.
The market price for our common stock may be volatile, which could cause
the value of your investment to decline.
The stock market in general, and the stock prices of technology and
wireless communications companies in particular, have experienced volatility
that often has been unrelated to the operating performance of any specific
public company. Factors that may have a significant impact on the market price
of our common stock include:
o announcements concerning us or our competitors, including the selection
of mobile WiMAX wireless communications technology by
telecommunications providers and the timing of the roll-out of those
systems;
o receipt of substantial orders or order cancellations for integrated
circuits and system software products for mobile WiMAX networks by us
or our competitors;
o quality deficiencies in technologies, products or services;
o announcements regarding financial developments or technological
innovations;
o our ability to remediate the material weakness in internal controls
over financial reporting identified in connection with our restatement
of revenues of our PacketVideo subsidiary;
o international developments, such as technology mandates, political
developments or changes in economic policies;
o lack of capital to invest in WiMAX networks;
o new commercial products;
o changes in recommendations of securities analysts;
o government regulations, including FCC regulations governing spectrum
licenses;
o earnings announcements;
o proprietary rights or product or patent litigation;
o strategic transactions, such as acquisitions and divestitures; or
o rumors or allegations regarding our financial disclosures or practices.
17
Our share price may be subject to volatility, particularly on a quarterly
basis. Shortfalls in our revenues or earnings in any given period relative to
the levels expected by securities analysts could immediately, significantly and
adversely affect the trading price of our common stock.
From time to time, we may repurchase our common stock at prices that may
later be higher than the market value of the share on the repurchase date. This
could result in a loss of value for stockholders if new shares are issued at
lower prices.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. Due to changes in the volatility of the price of our common stock,
we may be the target of securities litigation in the future. Securities
litigation could result in substantial costs and divert management's attention
and resources.
PROVISIONS OF OUR CHARTER DOCUMENTS COULD DELAY OR PREVENT AN ACQUISITION OF OUR
COMPANY, EVEN IF THE ACQUISITION WOULD BE BENEFICIAL TO HOLDERS OF OUR COMMON
STOCK, AND COULD MAKE IT MORE DIFFICULT FOR YOU TO CHANGE MANAGEMENT.
Our Certificate of Incorporation and Bylaws contain provisions that could
depress the trading price of our common stock by acting to discourage, delay or
prevent a change of control of our company or changes in management that holders
of our common stock might deem advantageous. Specific provisions in our
Certificate of Incorporation and Bylaws include:
o our directors serve staggered, three-year terms and accordingly,
pursuant to Delaware law, can only be removed with cause;
o no action can be taken by stockholders except at an annual or special
meeting of the stockholders called in accordance with our bylaws, and
stockholders may not act by written consent;
o our board of directors will be expressly authorized to make, alter or
repeal our bylaws, and our stockholders will be able to make, alter or
repeal our bylaws by a vote of 66-2/3% of the issued and outstanding
voting shares;
o any vacancies on the board of directors would be filled by a majority
vote of the board;
o our board of directors will be authorized to issue preferred stock
without stockholder approval; and
o we will indemnify officers and directors against losses that they may
incur in investigations and legal proceedings resulting from their
services to us, which may include services in connection with takeover
defense measures.
As a result of the provisions of our Certificate of Incorporation and
Bylaws, the price investors may be willing to pay in the future for our common
stock may be limited.
18
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This registration statement and other reports, documents and materials we
will file with the Securities and Exchange Commission (the "SEC") contain, or
will contain, disclosures that are forward-looking statements that are subject
to risks and uncertainties. All statements other than statements of historical
facts are forward-looking statements. These statements, which represent our
expectations or beliefs concerning various future events, may contain words such
as "may," "will," "expects," "anticipates," "intends," "plans," "believes,"
"estimates," or other words of similar meaning in connection with any discussion
of the timing and value of future results or future performance. These
forward-looking statements are based on the current plans and expectations of
our management and are subject to certain risks, uncertainties (some of which
are beyond our control) and assumptions that could cause actual results to
differ materially from historical results or those anticipated. These risks
include, but are not limited to:
o our limited relevant operating history;
o our ability to remediate the material weakness in internal controls
over financial reporting identified in connection with our restatement
of revenues of our PacketVideo subsidiary;
o our ability to manage growth or integrate recent or future
acquisitions;
o competition from alternative wireless technologies and other technology
companies;
o our ability to develop and commercialize mobile broadband products and
technologies;
o the ability of vendors to manufacture commercial WiMAX equipment and
devices;
o consumer acceptance of WiMAX technology;
o changes in government regulations;
o changes in capital requirements;
o any loss of our key executive officers; and
o the other risks described under "Risk Factors" and elsewhere in the
information contained or incorporated into this registration statement.
There may also be other factors that cause our actual results to differ
materially from the forward looking statements.
Because of these factors, we caution you that you should not place any
undue reliance on any of our forward-looking statements. These forward-looking
statements speak only as of the date of this registration statement and you
should understand that those statements are not guarantees of future performance
or results. New risks and uncertainties arise from time to time, and it is
impossible for us to predict those events or how they may affect us. Except as
required by law, we have no duty to, and do not intend to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
19
USE OF PROCEEDS
We are registering these shares pursuant to the registration rights
granted to the selling stockholders in our recent private placement. We will not
receive any proceeds from the resale of our common stock under this offering. We
have, however, received gross proceeds of approximately $297.5 million from the
issuances of the senior secured notes and the warrants in the July 2006 private
placement. Net proceeds were $295.0 million after deducting all fees and
expenses of the July 2006 private placement and this offering, which totaled
$2.5 million. The entire proceeds were used for the acquisition of WCS Wireless,
Inc. for $160.5 million, the acquisition of two new EBS leases for $22.1
million, and for the majority of our acquisition of 154 AWS licenses for $115.6
million.
We may receive proceeds from the issuance of shares of common stock upon
exercise of warrants if any of the warrants are exercised for cash. We estimate
that we may receive up to an additional $41,103.82. We intend to use any
proceeds that we may receive from the issuance of shares of our common stock
upon exercise of warrants to meet our working capital needs and for general
corporate purposes.
If the warrants issued in connection with the July 2006 private placement
are exercised pursuant to their cashless exercise provision, we will not receive
any additional proceeds from such exercise.
20
SELLING STOCKHOLDERS
The selling stockholders may from time to time offer and sell any or all
of the shares of our common stock set forth below pursuant to this prospectus.
When we refer to "selling stockholders" in this prospectus, we mean the persons
listed in the table below, and the pledges, donees, permitted transferees,
assignees, successors and others who later come to hold any of the selling
stockholders' interests in shares of our common stock other than through a
public sale.
The following table sets forth, as of the date of this prospectus, the
name of the selling stockholders for whom we are registering shares for resale
to the public, and the number of shares of common stock that each selling
stockholder may offer pursuant to this prospectus. Unless otherwise noted, the
purchase warrants exercisable for common stock held by the selling stockholders
were acquired from us in the private placement that was completed on July 17,
2006. The shares of common stock offered by the selling stockholders were issued
pursuant to exemptions from the registration requirements of the Securities Act.
The selling stockholders represented to us that they were accredited investors
and were acquiring our warrants exercisable for our common stock, for investment
and had no present intention of distributing the common stock. We have agreed to
file a registration statement covering the common stock received by the selling
stockholders. We filed with the Securities and Exchange Commission, under the
Securities Act, a Registration Statement on Form S-1 with respect to the resale
of the common stock from time to time by the selling stockholders. We have filed
a Post-Effective Amendment to Registration Statement in order to convert the
Registration Statement into a Registration Statement on Form S-3. The purchasers
were investment funds and other institutional investors, including affiliates of
Avenue Capital Group, among others. Robert T. Symington, a member of our Board
of Directors, is a Portfolio Manager at Avenue Capital Group. Neither Mr.
Symington nor Avenue Capital Group or its affiliates received any compensation
in connection with the financing.
Based on the information provided to us by the selling stockholders and as
of the date the same was provided to us, assuming that the selling stockholders
sell all of the shares of our common stock beneficially owned by them that have
been registered by us and do not acquire any additional shares during the
offering, the selling stockholders will not own any shares other than those
appearing in the column entitled "Number of Shares of Common Stock Owned After
the Offering." We cannot advise you as to whether the selling stockholders will
in fact sell any or all of such shares of common stock. In addition, the selling
stockholders may have sold, transferred or otherwise disposed of, or may sell,
transfer or otherwise dispose of, at any time and from time to time, the shares
of our common stock in transactions exempt from the registration requirements of
the Securities Act after the date on which it provided the information set forth
on the table below.
21
NUMBER OF
SHARES OF PERCENTAGE
NUMBER OF COMMON TOTAL NUMBER OF OF
SHARES OF STOCK ISSUED TOTAL NUMBER OF SHARES OF COMMON
COMMON OR ISSUABLE NUMBER OF SECURITIES COMMON STOCK
STOCK OWNED UPON THE SECURITIES OWNED STOCK OWNED OWNED
PRIOR TO THE EXERCISE OF OWNED PRIOR TO BEING AFTER THE AFTER THE
NAME OF SELLING STOCKHOLDER OFFERING WARRANTS (1) THE OFFERING REGISTERED OFFERING OFFERING(2)
--------------------------- -------- ------------ ------------ ---------- -------- -----------
Davidson Kempner Institutional 4,590,373 822,076 5,412,449 822,076 4,590,373 5.4%
Partners, LP
Davidson Kempner Partners
DK Acquisition Partners, LP
M.H. Davidson & Co.
Serena Limited
c/o M.H. Davidson & Co.
65 East 55th Street
New York, NY 10022
------------------------------------------------------------------------------------------------------------------------------------
Investcorp Interlachen Multi- 0 69,818 69,818 69,818 0 *
Strategy Master Fund
Limited (3)
800 Nicollet Mall, Ste. 2500
Minneapolis, MN 55402
------------------------------------------------------------------------------------------------------------------------------------
Silver Oak Capital, LLC (4) 0 681,685 681,685 681,685 0 *
245 Park Avenue,
26th Floor
New York, NY 10167
------------------------------------------------------------------------------------------------------------------------------------
Avenue Investments, L.P. (5) 9,106,270 1 ,935,990 11,042,260 1,935,990 9,106,270 9.7%
Avenue Special Situations
Fund IV, L.P.
c/o Avenue Capital Group
535 Madison Avenue,
14th Floor
New York, NY 10022
------------------------------------------------------------------------------------------------------------------------------------
Highbridge International LLC 10,000 353,493 363,493 353,493 10,000 *
c/o Highbridge Capital
Management, LLC
9 West 57th Street,
27th Floor
New York, NY 10019
------------------------------------------------------------------------------------------------------------------------------------
Kings Road Investments Ltd. (6) 0 246,408 246,408 246,408 0 *
c/o Polygon Investment
Partners LP
598 Madison Avenue,
14th Floor
New York, NY 10022
------------------------------------------------------------------------------------------------------------------------------------
* Represents beneficial ownership of less than 1%
-------------------
(1) Unless otherwise indicated, the warrants represented are exerciseable at
$0.01 per share of our common stock.
(2) Unless otherwise indicated, assumes that each selling stockholder will
resell all of the shares of our common stock offered hereunder. Applicable
percentage of ownership is based on 84,470,013 shares of our common stock
outstanding as of March 28, 2007, together with securities exerciseable
for, or convertible into, shares of common stock within 60 days of March
28, 2007.
22
(3) Investcorp Interlachen Multi-Strategy Master Fund Limited exercised its
69,877 warrants by means of cashless exercise.
(4) Silver Oak Capital, LLC exercised its 682,323 warrants by means of cashless
exercise.
(5) Includes 9,049,771 shares of common stock issuable upon conversion of
Series A Convertible Preferred Stock, and 56,499 shares issuable pursuant
to options that are exercisable within 60 days.
(6) King Road Investments Ltd. exercised its 246,623 warrants by means of
cashless exercise.
23
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of June 30, 2007, we have 92,560,146 shares of our common stock
outstanding held by approximately 1,142 holders of record. Our authorized
capital stock consists of 400,000,000 shares of common stock, par value $0.001
per share and 25,000,000 shares of preferred stock, par value $0.001 per share,
of which 355,000 shares have been designated as Series A Senior Convertible
Preferred Stock. As of June 30, 2007, we have 355,000 shares of our Series A
Preferred Stock outstanding held by approximately 21 holders of record. The
outstanding shares of our common stock and Series A Preferred Stock are fully
paid and non-assessable. As of June 30, 2007, there are 36,673,164 shares
reserved for future issuance, of which 20,447,477 will be reserved for issuance
upon the exercise of granted and outstanding options and warrants and 16,225,687
will be available for future option grants, plus up to $5.0 million of stock may
be issued under the GO Networks Employee Stock Bonus Plan upon the achievement
of specified milestones. In addition, shares of our common stock have become
issuable pursuant to the CYGNUS Plan and the PacketVideo Corporation 2005 Equity
Incentive Plan (the "PacketVideo Plan").
A description of our common stock and Series A Preferred Stock appears
below.
COMMON STOCK
Dividend Rights. Holders of outstanding shares of our common stock are
entitled to receive dividends out of assets legally available at the times and
in the amounts that our board of directors may determine from time to time.
Voting Rights. Each holder of common stock is entitled to one vote for
each share of common stock held on all matters submitted to a vote of
stockholders. We have not provided for cumulative voting for the election of
directors in our certificate of incorporation. This means that the holders of a
majority of the shares voted can elect all of the directors then standing for
election.
No Preemptive, Conversion or Redemption Rights. Our common stock is not
entitled to preemptive rights and is not subject to conversion or redemption.
Right to Receive Liquidation Distributions. Upon our liquidation,
dissolution or winding-up, the holders of our common stock are entitled to share
in all assets remaining after payment of all liabilities and the liquidation
preferences of any outstanding preferred stock. Each outstanding share of common
stock is fully paid and nonassessable.
SERIES A PREFERRED STOCK
Dividend Rights. The Series A Preferred Stock is entitled to receive
quarterly dividends on the liquidation preference at a rate of 7.5% per annum.
Until the fourth anniversary of issuance, we can elect whether to declare
dividends in cash or to not declare and pay dividends, in which case the per
share dividend amount will be added to the liquidation preference. From and
after the fourth anniversary of issuance, we must declare dividends in cash each
quarter, subject to applicable law. The dividend rate is subject to adjustment
to 10% per annum if we default in our dividend payment obligations, fail to file
a shelf registration statement with the Securities and Exchange Commission on or
prior to July 31, 2007 or fail to cause the shelf registration statement to be
declared effective on or prior to November 30, 2007. The dividend rate is also
subject to adjustment to 15% per annum if we fail to comply with the protective
covenants of the Series A Preferred Stock described below and to 18% per annum
if we fail to convert or redeem the Series A Preferred Stock when required to do
so, as described below. In addition to the aforementioned dividend, our Series A
Preferred Stock has the right to participate, over and above its preference
amount, in any dividends or liquidation proceeds along with the Common Stock, on
an as-if converted basis. If we were to pay a dividend in cash or any other
property on our common stock, the holders of our Series A Preferred Stock will
be entitled to participate in such dividend on an as-converted basis.
Voting Rights. Pursuant to the terms of the Series A Preferred Stock, so
long as at least 25% of the issued shares of Series A Preferred Stock remain
outstanding, and until the date on which we elect to redeem all shares of Series
A Preferred Stock in connection with an asset sale, as described below, we must
receive the approval of the holders of shares representing at least 75% of the
Series A Preferred Stock then outstanding to (i) incur indebtedness in excess of
$500 million, subject to certain adjustments and exceptions, (ii) create any
capital stock that is senior to or on a parity with the Series A Preferred Stock
24
in terms of dividends, distributions or other rights, or (iii) consummate asset
sales involving the receipt of gross proceeds of, or the disposition of assets
worth, $500 million or more based on their fair market value. In addition, so
long as at least 25% of the issued shares of Series A Preferred Stock remain
outstanding, we may not distribute rights or warrants to all holders of our
common stock entitling them to purchase shares of our common stock, or
consummate any sale of our common stock, for an amount less than the fair market
value on the date of issuance, with certain exceptions. With respect to other
matters requiring stockholder approval, the shares of Series A Preferred Stock
will be entitled to vote as one class with the common stock on an as-converted
basis.
Conversion Rights and Redemption Rights. Each share of Series A Preferred
Stock is convertible into a number of shares of our common stock equal to the
liquidation preference then in effect divided by $11.05. If all shares of Series
A Preferred Stock were to be converted, we would be obligated to issue
32,126,696 shares of our common stock. The Series A Preferred Stock is
convertible at any time at the option of the holder, or at our election after
the 18-month anniversary of issuance, subject to the trading price of our common
stock reaching $22.10 for a specified period of time, except that such threshold
price will be reduced to $16.575 on the earlier of the third anniversary of
issuance or our consummation of a qualified public offering. We will not be
entitled to convert the Series A Preferred Stock at our election unless a shelf
registration statement covering the shares of common stock issued upon
conversion is then effective or the shares are no longer considered restricted
securities under the Securities Act.
We will be required to redeem all outstanding shares of Series A Preferred
Stock, if any, on March 28, 2017, at a price equal to the liquidation preference
plus unpaid dividends. If we elect to convert the Series A Preferred Stock after
our common stock price has reached the qualifying threshold, we must redeem the
shares of holders of Series A Preferred Stock who elect not to convert into
common stock at a price equal to 130% of the liquidation preference. However, we
are not required to redeem more than 50% of the shares of Series A Preferred
Stock subject to any particular conversion notice. In the event that we fail to
obtain approval of the holders of Series A Preferred Stock to an asset sale
transaction, we must either not consummate such asset sale or elect to redeem
all shares of Series A Preferred Stock at a redemption price equal to 120% of
the liquidation preference. Holders will be entitled to opt-out of such a
redemption.
Right to Receive Liquidation Distributions. The Series A Preferred Stock
has an initial liquidation preference of $1,000 per share, subject to increase
for accrued dividends as described above. The liquidation preference would
become payable upon redemption, as described above, upon a liquidation or
dissolution of our company, or upon deemed liquidation events including a change
in control, merger or sale of all or substantially all our assets, unless the
holders of Series A Preferred Stock provide a 75% vote to not treat a covered
event as a deemed liquidation. Upon a deemed liquidation event, the Series A
Preferred Stock will be entitled to receive an amount per share equal to the
greater of 120% of the liquidation preference or the amount that would have been
received if such share had converted into common stock in connection with such
event.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND THE CERTIFICATE OF INCORPORATION AND
BYLAWS OF NEXTWAVE WIRELESS INC.
The provisions of Delaware law, as well as our certificate of
incorporation and bylaws described below may have the effect of delaying,
deferring or discouraging another party from acquiring control of our company.
Delaware Law
Effective upon the listing of our common stock on The Nasdaq Global
Market, our company became subject to the provisions of Section 203 of the
Delaware General Corporation Law regulating corporate takeovers. In general,
those provisions prohibit a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the date that the stockholder became an interested stockholder,
unless: the transaction is approved by the board of directors before the date
the interested stockholder attained that status; upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced; or on or after
25
the date the business combination is approved by the board of directors and
authorized at a meeting of stockholders by at least two-thirds of the
outstanding voting stock that is not owned by the interested stockholder.
Section 203 defines business combination to include the following: any
merger or consolidation involving the corporation and the interested
stockholder; any sale, transfer, pledge or other disposition of 10% or more of
the assets of the corporation involving the interested stockholder; subject to
certain exceptions, any transaction that results in the issuance or transfer by
the corporation of any stock of the corporation to the interested stockholder;
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation.
In general, Section 203 defines an interested stockholder as any entity
or person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by any of these entities or persons. A Delaware corporation may opt
out of this provision either with an express provision in its original
certificate of incorporation or in an amendment to its certificate of
incorporation or bylaws approved by its stockholders. However, we have not opted
out, and do not currently intend to opt out of this provision. The statute could
prohibit or delay mergers or other takeover or change in control attempts and,
accordingly, may discourage attempts to acquire us.
Certificate of Incorporation and Bylaws
Our certificate of incorporation and bylaws provide that:
o our directors serve staggered, three-year terms and accordingly,
pursuant to Delaware law, can only be removed with cause;
o no action can be taken by stockholders except at an annual or special
meeting of the stockholders called in accordance with our bylaws, and
stockholders may not act by written consent;
o our board of directors will be expressly authorized to make, alter or
repeal our bylaws, and our stockholders will be able to make, alter or
repeal our bylaws by a vote of 66-2/3% of the issued and outstanding
voting shares;
o any vacancies on the board of directors would be filled by a majority
vote of the board;
o our board of directors will be authorized to issue preferred stock
without stockholder approval; and
o we will indemnify officers and directors against losses that they may
incur in investigations and legal proceedings resulting from their
services to us, which may include services in connection with takeover
defense measures.
NASDAQ GLOBAL MARKET LISTING
Our common stock is listed on The Nasdaq Global Market under the ticker
symbol "WAVE".
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Computershare
Trust Company, N.A.
26
PLAN OF DISTRIBUTION
The Selling Stockholders (the "Selling Stockholders") of the common stock
and any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of common stock on the Nasdaq Global
Market or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchases;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the common stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
27
commissions or discounts under the Securities Act. The Selling Stockholders have
informed the Company that they do not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the common
stock. In no event shall any broker-dealer receive fees, commissions and markups
that, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the
Company incidental to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because a Selling Stockholder may be deemed to be an "underwriter" within
the meaning of the Securities Act, it will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder. In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
28
LEGAL MATTERS
The validity of the shares of NextWave Wireless Inc. common stock offered
hereby has been passed upon for NextWave Wireless Inc. by Weil, Gotshal & Manges
LLP, New York, NY.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has
audited NextWave Wireless Inc.'s consolidated financial statements and schedule
at December 30, 2006 and December 31, 2005, and for the fiscal year ended
December 30, 2006 and the period from April 13, 2005 (inception) to December 31,
2005, as set forth in their report. We have incorporated by reference NextWave
Wireless Inc.'s consolidated financial statements and schedule in the prospectus
and elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the Securities and Exchange
Commission. On November 13, 2006, we became a SEC reporting company as a
successor to NextWave Wireless LLC. Copies of NextWave Wireless LLC's and our
reports and other information may be inspected and copied at the public
reference facilities maintained by the SEC at SEC Headquarters, Public Reference
Section, 100 F Street, N.E., Washington D.C. 20549. The public may obtain
information on the operation of the SEC's public reference facilities by calling
the SEC at 1-800-SEC-0330.
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC at SEC Headquarters or by calling
the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports and
other information regarding NextWave Wireless LLC. The address of the SEC
website is http://www.sec.gov.
You should rely only on the information contained in this prospectus or on
information to which NextWave has referred you. We have not authorized anyone
else to provide you with any information.
29
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" in this prospectus certain
of the information we file with the SEC. This means we can disclose important
information to you by referring you to another document that has been filed
separately with the SEC. The information incorporated by reference is considered
to be part of this prospectus, and will modify and supersede the information
included in this prospectus to the extent that the information included as
incorporated by reference modifies or supersedes the existing information.
The following documents filed by us with the SEC are hereby incorporated
by reference:
o Annual Report on Form 10-K for the fiscal year ended December 30, 2006;
o Quarterly Report on Form 10-Q filed May 10, 2007;
o Amended Quarterly Report on Form 10-Q/A filed April 20, 2007;
o Current Reports on Form 8-K filed on January 3, 2007, April 12, 2007,
May 8, 2007, May 17, 2007 and May 23, 2007;
o Amendment No. 1 to the Current Report on Form 8-K, filed on July 25,
2007, relating to the Current Report on Form 8-K, filed on May 17,
2007;
o Definitive Proxy Statement on Schedule 14A dated April 19, 2007, o
relating to our annual meeting of stockholders held on May 17, 2007;
and
o all documents we have filed with the Commission pursuant to Sections o
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after
the date of the initial registration statement and prior to the
effectiveness of the registration statement, as well as subsequent to
the date of this prospectus and prior to the termination of this
offering, shall be deemed to be incorporated by reference into this
prospectus and to be part of this prospectus from the date of the
filing of the documents
Copies of these filings are available free of charge by writing to
NextWave Wireless Inc., 12670 High Bluff Drive, San Diego, California 92130,
Attention: Investor Relations, or by telephoning us at (858) 480-3100.
Any statement made in this prospectus concerning the contents of any
contract, agreement or other document is only a summary of the actual document.
You may obtain a copy of any document summarized in this prospectus at no cost
by writing to or telephoning us at the address and telephone number given above.
Each statement regarding a contract, agreement or other document is qualified in
its entirety by reference to the actual document.
30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses (except for
the Securities and Exchange Commission registration fee, the National
Association of Securities Dealers, Inc. filing fee and The Nasdaq Global Market
listing fee) payable by the registrant in connection with the registration of
the common stock:
Securities and Exchange Commission registration fee $ 4,838
Printer expenses $ 4,217
Legal fees and expenses $ 250,000
Accounting fees and expenses $ 75,000
----------
Total $ 334,055
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits our board of
directors to indemnify any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any threatened, pending, or completed
action, suit, or proceeding in which such person is made a party by reason of
his or her being or having been a director, officer, employee, or agent of us,
or serving or having served, at our request, as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. The statute provides that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise.
We have adopted provisions in our certificate of incorporation and bylaws
that limit the liability of our directors and officers for any loss, claim or
damage incurred by reason of any act or omission performed or omitted by such
person on our behalf and in good faith and in a manner reasonably believed to be
within the scope of the authority conferred on such person by our bylaws.
However, a director or officer will be liable for any act or omission (i) not
performed or omitted in good faith or which such person did not reasonably
believe to be in our best interests or which involved intentional misconduct or
knowing violation of the law or (ii) from which such person received an improper
personal benefit.
We will advance the costs incurred by or on behalf of any director or
officer in connection with any indemnified loss within 20 days after we receive
a detailed statement providing reasonable documentation of such costs and
providing a written undertaking stating that such person will repay all advanced
costs if it is later determined that such individual was entitled to
indemnification by us. We believe that the limitation of liability provision in
our by-laws will facilitate our ability to continue to attract and retain
qualified individuals to serve as directors and officers.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
II-1
INDEX TO EXHIBITS
NUMBER DESCRIPTION
------------ --------------------------------------------------------------
2.1 Third Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of NextWave Personal Communications Inc.,
NextWave Power Partners Inc., NextWave Partners Inc., NextWave
Wireless Inc. and NextWave Telecom Inc., dated January 21,
2005 (incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form 10 of NextWave Wireless LLC
filed May 1, 2006 (the "Form 10"))***
2.2 Agreement and Plan of Merger, dated as of May 25, 2005, by and
among NextWave Wireless LLC, PVC Acquisition Corp.,
PacketVideo Corporation and William D. Cvengros, as the
Stockholder Representative (incorporated by reference to
Exhibit 2.2 to Amendment #1 to the Registration Statement on
Form 10 of NextWave Wireless LLC filed June 29, 2006
("Amendment #1 to the Form 10"))***
2.3 Agreement and Plan of Merger, dated November 7, 2006, by and
among NextWave Wireless Inc., NextWave Wireless LLC and
NextWave Merger LLC (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K of NextWave Wireless Inc.
filed November 7, 2006)***
2.4 Agreement and Plan of Merger, dated as of December 31, 2006,
by and among NextWave Wireless Inc., Go Acquisition Corp., GO
Networks, Inc. and Nechemia J. Peres, as Stockholder
Representative (incorporated by reference to Exhibit 2.1 to
the Current Report on Form 8-K of NextWave Wireless Inc. filed
January 3, 2007)***
2.5 Agreement and Plan of Merger, dated as of April 6, 2007, by
and among NextWave Wireless Inc., IPW, LLC, IPWireless, Inc.
and J. Taylor Crandall, as Stockholder Representative
(incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K of NextWave Wireless Inc. filed April 12,
2007)***
3.1 Amended and Restated Certificate of Incorporation of NextWave
Wireless Inc. (incorporated by reference to Exhibit 3.1 to
Amendment #2 to the Company's Registration Statement on Form
S-4 filed November 17, 2006 ("Amendment #2 to the Form
S-4"))***
3.2 Amended and Restated Bylaws of NextWave Wireless Inc.
(incorporated by reference to Exhibit 3.2 to Amendment #2 to
the Company's Registration Statement on Form S-4 filed
November 17, 2006 ("Amendment #2 to the Form S-4"))***
4.1 Specimen common stock certificate (incorporated by reference
to Exhibit 4.1 to Amendment #2 to the Form S-4)***
4.2 Form of Station 4, LLC Warrant (incorporated by reference to
Exhibit 4.2 to the Form 10)***
4.3 Indenture, dated April 13, 2005, by and between NextWave
Wireless LLC and JPMorgan Chase Bank, N.A., as trustee (with
respect to $149,000,000 Non-Recourse Secured Notes)
(incorporated by reference to Exhibit 4.2 to the Form 10)***
4.4 Purchase Agreement, dated as of July 17, 2006, among NextWave
Wireless LLC, as issuer, NextWave Broadband Inc., NW Spectrum
Co., AWS Wireless Inc., and PacketVideo Corporation, as
subsidiary guarantors, the note purchasers party thereto and
The Bank of New York, as collateral agent (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K/A
of NextWave Wireless LLC filed September 8, 2006)***
4.5 Warrant Agreement, dated as of July 17, 2006, among NextWave
Wireless Inc. and the Holders listed on Schedule I thereto
(incorporated by reference to Exhibit 4.2 to the Current
Report on Form 8-K of NextWave Wireless LLC filed July 21,
2006 (the "July 21, 2006 Form 8-K"))***
4.6 Registration Rights Agreement, dated as of July 17, 2006,
among NextWave Wireless Inc. and the Purchasers listed on
Schedule I thereto (incorporated by reference to Exhibit 4.3
to the July 21, 2006 Form 8-K)***
4.7 Certificate of Designations for NextWave Wireless Inc.'s
Series A Senior Convertible Preferred Stock (incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on
Form 10-K filed March 30, 2007 (the "2006 10-K"))***
II-2
4.8 Securities Purchase Agreement, dated March 28, 2007, by and
among NextWave Wireless Inc. and the Purchasers listed on
Schedule I (the "Purchasers") thereto (incorporated by
reference to Exhibit 10.19 to the 2006 10-K)***
4.9 Registration Rights Agreement, dated March 28, 2007, among
NextWave Wireless Inc. and the Purchasers (incorporated by
reference to Exhibit 10.20 to the 2006 10-K)***
10.1 NextWave Wireless Inc. 2005 Stock Incentive Plan (incorporated
by reference to Exhibit 99.1 to the Company's Post-Effective
Amendment #1 on Form S-8 filed January 19, 2007)***
10.2 PacketVideo Corporation 2005 Equity Incentive Plan
(incorporated by reference to Exhibit 10.2 to the Form 10)***
10.3 CYGNUS Communications, Inc. 2004 Stock Option Plan
(incorporated by reference to Exhibit 10.3 to the Form 10)***
10.4 Acquisition Agreement by and among NextWave Telecom Inc.,
Cellco Partnership D/B/A Verizon Wireless and VZW Corp., dated
as of November 4, 2004 (incorporated by reference to Exhibit
10.4 to the Form 10)***
10.5 Option Agreement between NextWave Wireless LLC and Manchester
Financial Group LP (incorporated by reference to Exhibit 10.5
to the Form 10)***
10.6 NextWave Wireless Inc. 2005 Stock Incentive Plan Option Award
Agreement (incorporated by reference to Exhibit 99.3 to the
Company's Registration Statement on Form S-8 filed December
7, 2006)***
10.7 Acquisition Agreement, dated as of May 9, 2006, by and among
(i) NextWave Wireless LLC, (ii) NW Spectrum Co., (iii) WCS
Wireless, Inc., (iv) Columbia WCS III, Inc., (v) TKH Corp.,
(vi) Columbia Capital Equity Partners III (Cayman), L.P., the
sole stockholder of Columbia WCS III, Inc., (vii) each of the
stockholders of TKH Corp., namely, Aspen Partners Series A,
Series of Aspen Capital Partners, L.P., Oak Foundation USA,
Inc., Enteraspen Limited, and The Reed Institute dba Reed
College and (viii) Columbia Capital, LLC, as the Stockholder
Representative (incorporated by reference to Exhibit 10.7 to
Amendment #1 of the Form 10)***
10.8 Spectrum Acquisition Agreement, dated as of October 13, 2005,
between NextWave Broadband Inc. and Bal-Rivgam, LLC
(incorporated by reference to Exhibit 10.8 to Amendment #1 of
the Form 10)***
10.9 Guaranty, dated as of July 17, 2006, by and among NextWave
Broadband, Inc., NW Spectrum Co., AWS Wireless Inc.,
PacketVideo Corporation and The Bank of New York, as
Collateral Agent (incorporated by reference to Exhibit 10.1 to
the July 21, 2006 Form 8-K)***
10.10 Parent Guaranty, dated as of July 17, 2006, between NextWave
Wireless Inc. and The Bank of New York, as Collateral Agent
(incorporated by reference to Exhibit 10.2 to the July 21,
2006 Form 8-K)***
10.11 Pledge and Security Agreement, dated as of July 17, 2006, by
and among NextWave Wireless LLC, the undersigned direct and
indirect subsidiaries of NextWave Wireless LLC, each
additional Grantor that may become a party thereto and The
Bank of New York, as Collateral Agent (incorporated by
reference to Exhibit 10.3 to the July 21, 2006 Form 8-K)***
10.12 NextWave Wireless Inc. 2007 New Employee Stock Incentive Plan
(incorporated by reference to Exhibit 10.17 to the 2006
10-K)***
10.13 GO Networks, Inc. Stock Bonus Plan (incorporated by reference
to Exhibit 10.18 to the 2006 10-K)***
10.14 NextWave Wireless, Inc. 2007 New Employee Stock Incentive Plan
(incorporated by reference to Exhibit 99.5 to the Registration
Statement on Form S-8 of NextWave Wireless Inc. filed May 2,
2007 (the "May 2, 2007 Form S-8")***
II-3
10.15 NextWave Wireless Inc. 2007 New Employee Stock Incentive Plan
Option Award Agreement (incorporated by reference to Exhibit
99.6 to the May 2, 2007 Form S-8)***
10.16 Amendment to NextWave Wireless Inc. 2007 New Employee Stock
Incentive Plan (incorporated by reference to Exhibit 99.2 to
the Registration Statement on Form S-8 of NextWave Wireless
Inc. filed July 13, 2007)***
10.17 IPWireless, Inc. Employee Stock Bonus Plan (incorporated by
reference to Exhibit 99.1 to the Registration Statement on
Form S-8 of NextWave Wireless Inc. filed July 13, 2007)***
11.1 Statement of Computation of Earnings Per Share (required
information contained in this Registration Statement)
21.1 Subsidiaries of the registrant (incorporated by reference to
Exhibit 21.1 to Amendment #1 of the Form 10)***
23.1 Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm**
* To be filed by amendment.
** Filed herewith.
*** Incorporated by reference.
ITEM 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
posteffective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that:
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the Registration Statement is on Form S-3 (ss.239.13 of this
chapter) or Form F-3 (ss.239.33 of this chapter) and the information
required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) (ss.230.424(b) of this chapter) that is part of
the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
II-4
(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on July 27, 2007.
NextWave Wireless Inc.
By: /s/ Frank A. Cassou
------------------------------------------
Frank A. Cassou
Executive Vice President -
Corporate Development
and Chief Legal Counsel, Secretary
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes
and appoints each of Frank A. Cassou, George C. Alex and Roseann Rustici, or any
of them, each acting alone, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in his name,
place and stead, in any and all capacities, to sign this Registration Statement
on Form S-3 (including all pre-effective and post-effective amendments and
registration statements filed pursuant to Rule 462 under the Securities Act of
1933), and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming that any such
attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on July 27, 2006.
NAME TITLE
--------------------------- ---------------------------------------------------
/s/ Allen Salmasi Chairman of the Board of Directors, Chief Executive
------------------------- Officer and President
Allen Salmasi (Principal Executive Officer)
/s/ George C. Alex Executive Vice President - Chief Financial Officer
------------------------- (Principal Financial Officer)
George C. Alex
/s/ Francis J. Harding Executive Vice President - Chief Accounting Officer
------------------------- (Principal Accounting Officer)
Francis J. Harding
/s/ James C. Brailean Director
-------------------------
James C. Brailean
/s/ William Jones Director
-------------------------
William Jones
/s/ Douglas F. Manchester Director
-------------------------
Douglas F. Manchester
II-6
Director
-------------------------
Jack Rosen
/s/ Robert T. Symington Director
-------------------------
Robert T. Symington
/s/ William H. Webster Director
-------------------------
William H. Webster
II-7
INDEX TO EXHIBITS
NUMBER DESCRIPTION
------------ --------------------------------------------------------------
2.1 Third Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of NextWave Personal Communications Inc.,
NextWave Power Partners Inc., NextWave Partners Inc., NextWave
Wireless Inc. and NextWave Telecom Inc., dated January 21,
2005 (incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form 10 of NextWave Wireless LLC
filed May 1, 2006 (the "Form 10"))***
2.2 Agreement and Plan of Merger, dated as of May 25, 2005, by and
among NextWave Wireless LLC, PVC Acquisition Corp.,
PacketVideo Corporation and William D. Cvengros, as the
Stockholder Representative (incorporated by reference to
Exhibit 2.2 to Amendment #1 to the Registration Statement on
Form 10 of NextWave Wireless LLC filed June 29, 2006
("Amendment #1 to the Form 10"))***
2.3 Agreement and Plan of Merger, dated November 7, 2006, by and
among NextWave Wireless Inc., NextWave Wireless LLC and
NextWave Merger LLC (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K of NextWave Wireless Inc.
filed November 7, 2006)***
2.4 Agreement and Plan of Merger, dated as of December 31, 2006,
by and among NextWave Wireless Inc., Go Acquisition Corp., GO
Networks, Inc. and Nechemia J. Peres, as Stockholder
Representative (incorporated by reference to Exhibit 2.1 to
the Current Report on Form 8-K of NextWave Wireless Inc. filed
January 3, 2007)***
2.5 Agreement and Plan of Merger, dated as of April 6, 2007, by
and among NextWave Wireless Inc., IPW, LLC, IPWireless, Inc.
and J. Taylor Crandall, as Stockholder Representative
(incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K of NextWave Wireless Inc. filed April 12,
2007)***
3.1 Amended and Restated Certificate of Incorporation of NextWave
Wireless Inc. (incorporated by reference to Exhibit 3.1 to
Amendment #2 to the Company's Registration Statement on Form
S-4 filed November 17, 2006 ("Amendment #2 to the Form
S-4"))***
3.2 Amended and Restated Bylaws of NextWave Wireless Inc.
(incorporated by reference to Exhibit 3.2 to Amendment #2 to
the Company's Registration Statement on Form S-4 filed
November 17, 2006 ("Amendment #2 to the Form S-4"))***
4.1 Specimen common stock certificate (incorporated by reference
to Exhibit 4.1 to Amendment #2 to the Form S-4)***
4.2 Form of Station 4, LLC Warrant (incorporated by reference to
Exhibit 4.2 to the Form 10)***
4.3 Indenture, dated April 13, 2005, by and between NextWave
Wireless LLC and JPMorgan Chase Bank, N.A., as trustee (with
respect to $149,000,000 Non-Recourse Secured Notes)
(incorporated by reference to Exhibit 4.2 to the Form 10)***
4.4 Purchase Agreement, dated as of July 17, 2006, among NextWave
Wireless LLC, as issuer, NextWave Broadband Inc., NW Spectrum
Co., AWS Wireless Inc., and PacketVideo Corporation, as
subsidiary guarantors, the note purchasers party thereto and
The Bank of New York, as collateral agent (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K/A
of NextWave Wireless LLC filed September 8, 2006)***
4.5 Warrant Agreement, dated as of July 17, 2006, among NextWave
Wireless Inc. and the Holders listed on Schedule I thereto
(incorporated by reference to Exhibit 4.2 to the Current
Report on Form 8-K of NextWave Wireless LLC filed July 21,
2006 (the "July 21, 2006 Form 8-K"))***
4.6 Registration Rights Agreement, dated as of July 17, 2006,
among NextWave Wireless Inc. and the Purchasers listed on
Schedule I thereto (incorporated by reference to Exhibit 4.3
to the July 21, 2006 Form 8-K)***
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4.7 Certificate of Designations for NextWave Wireless Inc.'s
Series A Senior Convertible Preferred Stock (incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on
Form 10-K filed March 30, 2007 (the "2006 10-K"))***
4.8 Securities Purchase Agreement, dated March 28, 2007, by and
among NextWave Wireless Inc. and the Purchasers listed on
Schedule I (the "Purchasers") thereto (incorporated by
reference to Exhibit 10.19 to the 2006 10-K)***
4.9 Registration Rights Agreement, dated March 28, 2007, among
NextWave Wireless Inc. and the Purchasers (incorporated by
reference to Exhibit 10.20 to the 2006 10-K)***
10.1 NextWave Wireless Inc. 2005 Stock Incentive Plan (incorporated
by reference to Exhibit 99.1 to the Company's Post-Effective
Amendment #1 on Form S-8 filed January 19, 2007)***
10.2 PacketVideo Corporation 2005 Equity Incentive Plan
(incorporated by reference to Exhibit 10.2 to the Form 10)***
10.3 CYGNUS Communications, Inc. 2004 Stock Option Plan
(incorporated by reference to Exhibit 10.3 to the Form 10)***
10.4 Acquisition Agreement by and among NextWave Telecom Inc.,
Cellco Partnership D/B/A Verizon Wireless and VZW Corp., dated
as of November 4, 2004 (incorporated by reference to Exhibit
10.4 to the Form 10)***
10.5 Option Agreement between NextWave Wireless LLC and Manchester
Financial Group LP (incorporated by reference to Exhibit 10.5
to the Form 10)***
10.6 NextWave Wireless Inc. 2005 Stock Incentive Plan Option Award
Agreement (incorporated by reference to Exhibit 99.3 to the
Company's Registration Statement on Form S-8 filed December
7, 2006)***
10.7 Acquisition Agreement, dated as of May 9, 2006, by and among
(i) NextWave Wireless LLC, (ii) NW Spectrum Co., (iii) WCS
Wireless, Inc., (iv) Columbia WCS III, Inc., (v) TKH Corp.,
(vi) Columbia Capital Equity Partners III (Cayman), L.P., the
sole stockholder of Columbia WCS III, Inc., (vii) each of the
stockholders of TKH Corp., namely, Aspen Partners Series A,
Series of Aspen Capital Partners, L.P., Oak Foundation USA,
Inc., Enteraspen Limited, and The Reed Institute dba Reed
College and (viii) Columbia Capital, LLC, as the Stockholder
Representative (incorporated by reference to Exhibit 10.7 to
Amendment #1 of the Form 10)***
10.8 Spectrum Acquisition Agreement, dated as of October 13, 2005,
between NextWave Broadband Inc. and Bal-Rivgam, LLC
(incorporated by reference to Exhibit 10.8 to Amendment #1 of
the Form 10)***
10.9 Guaranty, dated as of July 17, 2006, by and among NextWave
Broadband, Inc., NW Spectrum Co., AWS Wireless Inc.,
PacketVideo Corporation and The Bank of New York, as
Collateral Agent (incorporated by reference to Exhibit 10.1 to
the July 21, 2006 Form 8-K)***
10.10 Parent Guaranty, dated as of July 17, 2006, between NextWave
Wireless Inc. and The Bank of New York, as Collateral Agent
(incorporated by reference to Exhibit 10.2 to the July 21,
2006 Form 8-K)***
10.11 Pledge and Security Agreement, dated as of July 17, 2006, by
and among NextWave Wireless LLC, the undersigned direct and
indirect subsidiaries of NextWave Wireless LLC, each
additional Grantor that may become a party thereto and The
Bank of New York, as Collateral Agent (incorporated by
reference to Exhibit 10.3 to the July 21, 2006 Form 8-K)***
10.12 NextWave Wireless Inc. 2007 New Employee Stock Incentive Plan
(incorporated by reference to Exhibit 10.17 to the 2006
10-K)***
10.13 GO Networks, Inc. Stock Bonus Plan (incorporated by reference
to Exhibit 10.18 to the 2006 10-K)***
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10.14 NextWave Wireless, Inc. 2007 New Employee Stock Incentive Plan
(incorporated by reference to Exhibit 99.5 to the Registration
Statement on Form S-8 of NextWave Wireless Inc. filed May 2,
2007 (the "May 2, 2007 Form S-8")***
10.15 NextWave Wireless Inc. 2007 New Employee Stock Incentive Plan
Option Award Agreement (incorporated by reference to Exhibit
99.6 to the May 2, 2007 Form S-8)***
10.16 Amendment to NextWave Wireless Inc. 2007 New Employee Stock
Incentive Plan (incorporated by reference to Exhibit 99.2 to
the Registration Statement on Form S-8 of NextWave Wireless
Inc. filed July 13, 2007)***
10.17 IPWireless, Inc. Employee Stock Bonus Plan (incorporated by
reference to Exhibit 99.1 to the Registration Statement on
Form S-8 of NextWave Wireless Inc. filed July 13, 2007)***
11.1 Statement of Computation of Earnings Per Share (required
information contained in this Registration Statement)
21.1 Subsidiaries of the registrant (incorporated by reference to
Exhibit 21.1 to Amendment #1 of the Form 10)***
23.1 Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm**
* To be filed by amendment.
** Filed herewith.
*** Incorporated by reference.
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