AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 2007
REGISTRATION NO. 333-146861
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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 Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Identification No.)
Organization) Classification Code 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.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities using this prospectus 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.
SUBJECT TO COMPLETION, DATED NOVEMBER 26, 2007
PROSPECTUS
4,265,500 SHARES
NextWave Wireless [Logo]
Common Stock
par value $0.001 per share
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This prospectus relates solely to the sale of up to an aggregate of
4,265,500 shares of common stock of NextWave Wireless Inc. ("NextWave" or the
"Company") by the selling stockholders identified in this prospectus. We
acquired GO Networks, Inc. ("GO Networks" or "GO") in February 2007 and agreed
to issue shares of our common stock to the former stockholders of GO Networks,
who are the selling stockholders named in this prospectus. The issuance of our
shares to the selling stockholders is contingent upon GO Networks' achievement
of certain performance milestones specified in the acquisition agreement.
The number of shares offered for sale by this prospectus is a good
faith estimate of the maximum number of shares to be issued to the selling
stockholders pursuant to the acquisition agreement, based upon the assumption
that GO Networks fully achieves each of the performance milestones specified
therein and that our 20-day average stock price calculated pursuant to the
acquisition agreement will be $5.99, based on the average closing price of our
common stock for the 20 trading days ending on October 17, 2007. There can be no
assurance as to the trading price of our common stock at any future date and you
are encouraged to obtain current market quotations for our common stock. The
number of shares that will be ultimately issued to the selling shareholders
could be materially more or less than the number provided in this prospectus,
based on the extent to which GO Networks achieves each of the performance
milestones and the actual average closing price of our common stock calculated
pursuant to the acquisition agreement at the time such milestone is achieved.
The selling stockholders identified in this prospectus 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. We have agreed to pay all expenses relating to
registering the resale of these shares. 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 _____ , 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 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 in our reports filed with the Securities and Exchange Commission.
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 subsidiaries 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
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a WiMAX baseband system-on-a-chip (SOC) and matched multi-band RFIC were made
available during 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
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 Las Vegas, 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, represent
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, which was
acquired in February 2007, 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. Our IPWireless subsidiary, 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 in connection with this 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 also acquired nationwide spectrum in numerous
international markets including Austria, Canada, Croatia, Germany, Slovakia and
Switzerland.
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THE OFFERING
Common stock outstanding prior to this 92,665,556 shares
offering, excluding the shares being
offered for resale to the public by
the selling stockholders(1)
Common stock being offered for resale 4,265,500 shares
to the public by the selling
stockholders(2)
Common stock to be outstanding after 96,931,056
this offering
Total proceeds raised by offering We will not receive any proceeds
from the resale of our common
stock pursuant to this offering.
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 September 29, 2007. This number does not include, as of September
29, 2007:
o 22,362,471 shares of our common stock issuable upon exercise of
options and warrants outstanding, at a weighted average exercise
price of $6.56 per share;
o 13,959,097 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 $5 million of our common stock
may be issued 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 33,376,841 shares of our common stock issuable upon the conversion
of our Series A Preferred Stock; and
o 833,333 shares of common stock issuable under an advisory contract.
(2) The number of shares of our common stock being offered for resale is based
upon the achievement of certain performance milestones specified in the
agreement pursuant to which we acquired GO Networks. Upon achievement of
these milestones, we are obligated to issue shares with an aggregate
maximum value of $25.6 million to the selling stockholders. The actual
number of shares issued will be based on the extent to which GO achieves
each of the performance milestones and the 20-day average closing price of
our common stock calculated pursuant to the acquisition agreement at the
time such milestone is achieved.
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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, although we
currently anticipate that our second generation NextWave Broadband WiMAX
technologies designed for high volume commercial production will initially be
available in the first half of 2008, we are currently unable to project when our
chipsets, network components and related technology licensing agreements based
on WiMAX and Wi-Fi technologies will be commercially deployed and generating
significant revenue. 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 our 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 at our PacketVideo subsidiary. Our 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 Securities and Exchange Commission ("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, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely basis. 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 of our Annual Report on Form 10-K, for the year
ended December 30, 2006, 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 on Form 10-K for
the 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. In addition to the material weakness related to revenue
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recognition at our PacketVideo subsidiary, we may identify other internal
control processes and procedures that are deficient and, as a result, we may be
required to design enhanced processes and controls to address the control
deficiencies identified. This could result in significant delays and cost to us
and require us to divert 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
September 29, 2007, the number of our employees increased from 50 to 991 as a
result of organic growth and acquisitions. In addition to various immaterial
acquisitions in 2007 and 2006, we acquired Websky Argentina S.A. in October
2007, a 65% interest in WiMax Telecom AG in July 2007, IPWireless, Inc. in May
2007, GO Networks, Inc. in February 2007, SDC Secure Digital Container AG in
January 2007, CYGNUS Communications, Inc. in February 2006 and PacketVideo
Corporation in July 2005 and we are still in the process of integrating WiMax
Telecom, IPWireless and GO Networks.
To support our expanded research and development activities for our
NextWave Broadband business and the anticipated growth in our WiMax Telecom,
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 Argentina, Austria, Croatia, Denmark, Finland, Germany,
Israel, Slovakia, South Korea, Switzerland, and the United Kingdom. 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.
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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
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
utilize 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 technologies, 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
7
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 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 BENEFICIAL 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 penalties.
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;
8
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
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
9
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.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS.
We operate or hold spectrum through various subsidiaries and joint
ventures in Argentina, Austria, Canada, Croatia, Germany, Slovakia and
Switzerland and have additional operations located in Brazil, Denmark, Finland,
Germany, Israel, 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. For example, 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. In
particular, our ownership of wireless broadband spectrum in Argentina remains
subject to obtaining governmental approval. 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
10
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
nine months ended September 29, 2007, revenues from Verizon Wireless
Communications and T-Mobile International accounted for 44% and 24%,
respectively, of our total 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.
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 WILL NEED TO SECURE SIGNIFICANT ADDITIONAL CAPITAL IN THE FUTURE TO IMPLEMENT
CHANGES TO, OR EXPANSIONS OF, OUR BUSINESS PLAN AND TO CONTINUE TO FUND OUR
RESEARCH AND DEVELOPMENT ACTIVITIES AND OUR OPERATING LOSSES UNTIL WE BECOME
CASH FLOW POSITIVE AND GENERATE EARNINGS.
We will need to secure significant additional capital in the future to
implement changes to, or expansions of, our business plan and to continue to
fund our research and development activities and our operating losses until we
become cash flow positive and generate earnings. 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 be 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 ability to become cash flow
positive and show future profitability. Unexpected expenses and delays in
development, or delays in the adoption of WiMAX and other 4G technologies by
11
national telecommunications carriers and equipment manufacturers, could
adversely affect our liquidity.
In addition, 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, PacketVideo and WiMAX Telecom 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. 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.
To augment our existing working capital resources in order to satisfy
our cash requirements, we may seek to sell debt securities or additional equity
securities or to obtain a credit facility. Our Senior Secured Notes and our
Series A Senior Convertible Preferred Stock prohibit our incurrence of
additional indebtedness, subject to certain exceptions. The sale of equity
securities or convertible debt securities could result in additional dilution to
our stockholders. The incurrence of additional indebtedness would also result in
additional debt service obligations and the requirement that we comply with
operating and financial covenants that would restrict our operations. In
addition, there can be no assurance that any additional financing will be
available on acceptable terms, if at all.
COVENANTS IN THE INDENTURE GOVERNING OUR SENIOR SECURED NOTES AND THE TERMS OF
OUR SERIES A PREFERRED STOCK IMPOSE OPERATING AND FINANCIAL RESTRICTIONS ON US.
Covenants in the indenture governing our senior secured notes and the
terms of our Series A Preferred Stock 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 significant amounts of our assets or consolidate or merge with or
into other companies;
o issue shares of our common stock at less than fair market value;
o repay existing indebtedness; and
o engage in transactions with affiliates.
A breach of any covenants contained in the indenture 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.
12
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.
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 general
common carrier rules and regulations applicable to telecommunications service
providers, commercial mobile radio service providers offering certain switched
services on a common carrier basis, and/or enhanced service providers, including
providers of interconnected Voice Over the Internet service, 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
13
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
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. In general, most wireless licensees
who meet their construction and/or substantial service requirements are afforded
a "renewal expectancy," however, all FCC license renewals can be challenged in
various ways, irrespective of whether such challenges have any legal merit. Such
challenges, while uncommon, may impact the timing of renewal grants and may
impose legal costs. Accordingly, there is no guarantee that licenses we hold or
lease will remain in full force and effect or be renewed.
14
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 specifications 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. Through their representative association, the WCS Coalition, the
majority of affected WCS licensees, including NextWave, also have proposed
technical rules for SDARS terrestrial repeaters and WCS operations to the FCC.
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.
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 OUR PREFERRED STOCK AND COMMON STOCK
OUR DERIVATIVE SECURITIES AND CONTINGENT EARN-OUT PAYMENTS HAVE THE POTENTIAL TO
DILUTE SHAREHOLDER VALUE AND CAUSE OUR STOCK PRICE TO DECLINE
As of September 29, 2007, 92,665,556 shares of our common stock were
outstanding. In addition, as of September 29, 2007, there were 70,531,742 shares
reserved for future issuance, of which 33,376,841 shares are reserved for
issuance upon the conversion of the Series A Senior Convertible Preferred Stock,
22,362,471 shares are reserved for issuance upon the exercise of granted and
outstanding options and warrants, 13,959,097 shares are reserved for future
option grants under our existing stock incentive plans and 833,333 shares are
issuable under an advisory contract. In addition, we may issue shares of our
common stock with a value of up to $135.0 million as additional purchase
consideration to former IPWireless shareholders and up to $7.0 million under the
IPWireless Employee Stock Bonus Plan upon the achievement of certain revenue
milestones related to IPWireless's public safety business and TDtv Business. We
may also issue shares of our common stock with a value of up to $25.6 million as
additional purchase consideration to former GO Networks shareholders and up to
$5.0 million under the GO Networks Employee Stock Bonus Plan upon the
15
achievement of certain milestones relating to customer acceptance of GO
Network's Wi-Fi base station products and the continued employment of certain
key management employees.
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 existing shareholders, including NextWave Wireless Chairman and CEO,
Allen Salmasi, 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.
Assuming that we do not elect to pay dividends in cash prior to March 2011 and
if all shares of Series A Senior Convertible Preferred Stock were converted at
such time, we would be obligated to issue 43,476,673 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 to 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.
OUR COMMON STOCK IS THINLY TRADED AND THUS THE MARKET PRICE OF OUR COMMON STOCK
IS PARTICULARLY SENSITIVE TO TRADING VOLUME AND THE TRADING PRICE OF OUR SERIES
A PREFERRED STOCK MAY BE ADVERSELY AFFECTED.
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. Because our Series A Preferred Stock is convertible into our
common stock, volatility or depressed prices for our common stock could have a
similar effect on the trading prices of our Series A Preferred Stock. 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.
AN ACTIVE TRADING MARKET FOR OUR SERIES A PREFERRED STOCK MAY NOT DEVELOP, AND
YOU MAY BE UNABLE TO RESELL YOUR SHARES OF SERIES A PREFERRED STOCK AT OR ABOVE
THE PURCHASE PRICE.
We do not intend to list the Series A Preferred Stock on any national
securities exchange or to take any action to make it eligible for any automated
quotation system other than the PortalSM Market. The Series A Preferred Stock is
not currently eligible to trade on the PortalSM Market. Consequently, a liquid
trading market for the Series A Preferred Stock may not develop and the market
price of the Series A Preferred Stock may be volatile. As a result, you may be
unable to sell your shares of Series A Preferred Stock at a price equal to or
greater than that which you paid, if at all.
THE SERIES A PREFERRED STOCK RANKS JUNIOR TO ALL OF OUR LIABILITIES.
16
The Series A Preferred Stock ranks junior to all of our liabilities and
all liabilities of our subsidiaries and any capital stock of our subsidiaries
held by others. In the event of any bankruptcy, liquidation, dissolution or
winding-up, our assets will be available to pay obligations on the Series A
Preferred Stock, including the liquidation preference of your shares of the
Series A Preferred Stock payable upon liquidation event or deemed liquidation
event, only after all our indebtedness and other liabilities have been paid.
WE MAY NOT HAVE SUFFICIENT EARNINGS AND PROFITS IN ORDER FOR DISTRIBUTIONS ON
THE PREFERRED STOCK TO BE TREATED AS DIVIDENDS.
The dividends paid by us may exceed our current and accumulated
earnings and profits, as calculated for U.S. federal income tax purposes. This
would result in the amount of the dividends that exceeds such earnings and
profits being treated first as a return of capital to the extent of the holder's
adjusted tax basis in the preferred stock, and the excess as capital gain. Such
treatment will generally be unfavorable for corporate holders and may also be
unfavorable for certain other holders.
A HOLDER OF SERIES A PREFERRED STOCK MAY BE TREATED AS RECEIVING DEEMED
DISTRIBUTIONS THAT MAY BE INCLUDIBLE IN INCOME.
If the Series A Preferred Stock is not respected as participating
preferred stock, in accordance with certain provisions of the Internal Revenue
Code and the Treasury Regulations, a holder of such preferred stock, despite the
absence of any actual payment of cash to the holder, may be treated as receiving
constructive distributions over the term of the Series A Preferred Stock or at
the time of any conversion into our common stock. In either such case, the
holder may be required to pay taxes on such constructive distributions in the
same manner as an actual distribution.
WE MAY NOT BE ABLE TO PAY THE LIQUIDATION PREFERENCE PREMIUM OF THE PREFERRED
STOCK UPON A DEEMED LIQUIDATION EVENT OR A MANDATORY REDEMPTION AND WE MAY NOT
BE ABLE TO PAY CASH DIVIDENDS ON THE PREFERRED STOCK WHEN REQUIRED.
In the event of a deemed liquidation event, including events such as a
merger, sale of assets or change in control, you will have the right to receive
an amount per share of Series A Preferred Stock equal to the greater of 120% of
the liquidation preference or the amount that would have been received if such
share was converted into our common stock, unless the holders of shares
representing 75% of the shares of Series A Preferred Stock then outstanding
elect to waive such deemed liquidation event, in which case the Series A
Preferred Stock would remain outstanding or be converted into shares of a
successor entity. We must redeem all outstanding shares of the Series A
Preferred Stock for an amount equal to the liquidation preference on March 28,
2017, up to 50% of all outstanding shares of Series A Preferred Stock for an
amount equal to 130% of the liquidation preference if we elect to convert the
Series A Preferred Stock into shares of our common stock, and up to all
outstanding shares of the Series A Preferred Stock for an amount equal to 120%
of the liquidation preference if we elect to consummate certain asset sales
without the requisite consent of the holders of the Series A Preferred Stock. We
may not have sufficient cash to purchase your shares of preferred stock upon a
deemed liquidation or a redemption event. Also, the terms of our Senior Notes
contain limitations on our ability to pay the liquidation preference in cash
while the Senior Notes remain outstanding.
Pursuant to the terms of our Senior Notes, which are due July 14, 2010,
we are not permitted to pay cash dividends on the shares of the Series A
Preferred Stock. The terms of the Series A Preferred Stock permit us to add the
per share dividend amount to the liquidation preference of the Series A
Preferred Stock until March 28, 2011, in lieu of paying cash dividends, thereby
increasing the amount of the liquidation preference and the number of shares of
our common stock issuable upon conversion of each share of the Series A
Preferred Stock. From and after March 28, 2011, the Company is obligated to pay
quarterly cash dividends on the Series A Preferred Stock. Terms of our future
indebtedness could restrict the payment of dividends and other obligations
relating to our capital stock in cash. Even if the terms of the instruments
governing our indebtedness at such time allow us to pay cash dividends and to
redeem the preferred stock in cash, we can only make such payments when, as and
if declared by our board of directors from legally available funds. Adequate
funds may not be available to pay cash dividends to you or to redeem your shares
of preferred stock.
17
Further, because we are a holding company, our ability to pay the
liquidation preference of the preferred stock for cash or to pay dividends on
the preferred stock may be limited by restrictions on our ability to obtain
funds through dividends from our subsidiaries.
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 the status of plans for the adoption of WiMAX and other 4G technologies
by national telecommunications carriers and equipment manufacturers;
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 approximately 36.0% of our common stock as
of September 29, 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 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 may adversely affect the trading price of our
common stock due to investors' perception that conflicts of interest may exist
or arise.
18
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. Currently, we have no significant analyst coverage. If 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 IN OUR COMMON STOCK OR SERIES A PREFERRED
STOCK 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.
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.
19
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 SERIES A PREFERRED 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 and Series A Preferred 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 or Series A Preferred Stock may be limited.
20
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This registration statement and other reports, documents and materials
we will file with 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 or delays in our ability to become cash
flow positive;
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.
21
USE OF PROCEEDS
We are registering these shares pursuant to the registration rights
granted to the selling stockholders in connection with our acquisition of GO
Networks, Inc. We will not receive any proceeds from the resale of our common
stock in this offering.
22
SELLING STOCKHOLDERS
This prospectus relates solely to the sale of up to an aggregate of
4,265,500 shares of common stock of NextWave Wireless Inc. ("NextWave" or the
"Company") by the selling stockholders identified in this prospectus. We
acquired GO Networks, Inc. ("GO") in February 2007 and agreed to issue shares of
our common stock to the former stockholders of GO, who are the selling
stockholders named in this prospectus. The issuance of our shares is contingent
upon GO's achievement of certain performance milestones specified in the
acquisition agreement. We agreed to file a registration statement covering the
resale of the common stock that may be received by the selling stockholders and
filed with the SEC, under the Securities Act, a Registration Statement on Form
S-3 with respect to such resale. This prospectus forms a part of that
registration statement.
The selling stockholders listed in the table below may from time to
time offer and sell to the public any or all of the shares of our common stock
set forth below pursuant to this prospectus. The following table sets forth, as
of the date of this prospectus, the name of the selling stockholders and the
number of shares of common stock that each selling stockholder may offer
pursuant to this prospectus. 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 who reside in the
United States have represented to us that they were accredited investors and
were acquiring our common stock for investment and had no present intention of
distributing the common stock. The remaining selling stockholders are not "U.S.
persons," as that term is defined under Regulation S of the Securities Act, and
represented that they are not acquiring the shares for the account or benefit of
a U.S. person.
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 as disclosed in the column entitled
"Percentage of Common Stock Owned After Completion of this Offering Assuming all
Shares Offered Are Sold." 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.
--------------------------------- ------------- --------------- -------------
PERCENTAGE
OF
COMMON
STOCK
OWNED
AFTER
COMPLETION
NUMBER OF NUMBER OF OF THIS
SHARES OF SHARES OF OFFERING
COMMON STOCK COMMON ASSUMING ALL
OWNED STOCK ISSUED SHARES
PRIOR TO THE PURSUANT TO OFFERED ARE
NAME OF SELLING STOCKHOLDER OFFERING THE OFFERING SOLD
--------------------------------- ------------- --------------- -------------
Accel Internet Fund IV L.P. 0 81,646 *%
--------------------------------- ------------- --------------- -------------
Accel Investors 2004 L.L.C. 0 45,771 *%
--------------------------------- ------------- --------------- -------------
Accel VIII L.P. 0 367,406 *%
--------------------------------- ------------- --------------- -------------
Apax WW Nominees - A/C AE5 0 759,907 *%
--------------------------------- ------------- --------------- -------------
Eric Benhamou 0 112,395 *%
--------------------------------- ------------- --------------- -------------
23
--------------------------------- ------------- --------------- -------------
PERCENTAGE
OF
COMMON
STOCK
OWNED
AFTER
COMPLETION
NUMBER OF NUMBER OF OF THIS
SHARES OF SHARES OF OFFERING
COMMON STOCK COMMON ASSUMING ALL
OWNED STOCK ISSUED SHARES
PRIOR TO THE PURSUANT TO OFFERED ARE
NAME OF SELLING STOCKHOLDER OFFERING THE OFFERING SOLD
--------------------------------- ------------- --------------- -------------
Blumberg Capital I, L.P. 0 138,378 *%
--------------------------------- ------------- --------------- -------------
Blumberg Capital Affiliates I, 0 3,000 *%
L.P.
--------------------------------- ------------- --------------- -------------
J. Scott Case 0 9 *%
--------------------------------- ------------- --------------- -------------
Ephraim Gildor 0 14,138 *%
--------------------------------- ------------- --------------- -------------
Greenpark Step GmbH & Co KG 0 212,067 *%
--------------------------------- ------------- --------------- -------------
Hans Hoelsken 0 23,518 *%
--------------------------------- ------------- --------------- -------------
Christina Holst 0 282 *%
--------------------------------- ------------- --------------- -------------
The Gideon and Bina Ben-Efraim
Family Trust dated 7/29/94 0 489,180
--------------------------------- ------------- --------------- -------------
Jun Li 212
--------------------------------- ------------- --------------- -------------
McPharlin, Sprinkles & Thomas 0 3,534 *%
LLP
--------------------------------- ------------- --------------- -------------
Israel Seed IV, L.P. 0 424,132 *%
--------------------------------- ------------- --------------- -------------
Oz Leave 0 263,404 *%
--------------------------------- ------------- --------------- -------------
Pitango Venture Capital Fund
III Trusts 2000 Ltd. 0 36,431 *%
--------------------------------- ------------- --------------- -------------
Pitango Venture Capital Fund
III (USA) Non-Q L.P. 0 47,761 *%
--------------------------------- ------------- --------------- -------------
Pitango Venture Capital Fund
III (USA) L.P. 0 516,648 *%
--------------------------------- ------------- --------------- -------------
Pitango Venture Capital Fund
III (Israel Investors) L.P. 0 140,837 *%
--------------------------------- ------------- --------------- -------------
Pitango Principals Fund III
(USA) L.P. 0 18,215 *%
--------------------------------- ------------- --------------- -------------
Wolfgang Schmitz 0 941 *%
--------------------------------- ------------- --------------- -------------
Rolf Sennlaub 0 941 *%
--------------------------------- ------------- --------------- -------------
Yun Shi 0 1,627 *%
--------------------------------- ------------- --------------- -------------
Wei Tang 0 1,372 *%
--------------------------------- ------------- --------------- -------------
Bernard Walke 0 3,575 *%
--------------------------------- ------------- --------------- -------------
Pingan Wang 0 141 *%
--------------------------------- ------------- --------------- -------------
WS Investment Company, LLC 0 8,477 *%
--------------------------------- ------------- --------------- -------------
WS Investment Company, LLC 0 3,975 *%
(2003A)
--------------------------------- ------------- --------------- -------------
WS Investment Company, LLC 0 2,828 *%
(2004A)
--------------------------------- ------------- --------------- -------------
Amir Adler 0 23,518 *%
--------------------------------- ------------- --------------- -------------
Ronen Akerman 0 19,285 *%
--------------------------------- ------------- --------------- -------------
Sharon Ashkenazi 0 3,763 *%
--------------------------------- ------------- --------------- -------------
24
--------------------------------- ------------- --------------- -------------
PERCENTAGE
OF
COMMON
STOCK
OWNED
AFTER
COMPLETION
NUMBER OF NUMBER OF OF THIS
SHARES OF SHARES OF OFFERING
COMMON STOCK COMMON ASSUMING ALL
OWNED STOCK ISSUED SHARES
PRIOR TO THE PURSUANT TO OFFERED ARE
NAME OF SELLING STOCKHOLDER OFFERING THE OFFERING SOLD
--------------------------------- ------------- --------------- -------------
Shlomi Atias 0 12,700 *%
--------------------------------- ------------- --------------- -------------
Helit Bauberg 0 3,763 *%
--------------------------------- ------------- --------------- -------------
Sigal Ben Eliyahu 0 10,583 *%
--------------------------------- ------------- --------------- -------------
Abby Chen 0 2,070 *%
--------------------------------- ------------- --------------- -------------
Alexander Chiskis 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Shani Dichter 0 7,808 *%
--------------------------------- ------------- --------------- -------------
Yaron Fein 0 82,784 *%
--------------------------------- ------------- --------------- -------------
Mike Foster 0 78,081 *%
--------------------------------- ------------- --------------- -------------
Lilach Givati 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Ari Glaser 0 3,528 *%
--------------------------------- ------------- --------------- -------------
Yaniv Golan 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Nir Goren 0 6,538 *%
--------------------------------- ------------- --------------- -------------
Hadas Harel 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Bill Jarvis 0 16,933 *%
--------------------------------- ------------- --------------- -------------
Roni Kanfer 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Roy Kinamon 0 28,692 *%
--------------------------------- ------------- --------------- -------------
George Lazar 0 12,700 *%
--------------------------------- ------------- --------------- -------------
Adir Levi 0 3,763 *%
--------------------------------- ------------- --------------- -------------
Zohar Lotan 0 14,111 *%
--------------------------------- ------------- --------------- -------------
Heikki Makijarvi 0 941 *%
--------------------------------- ------------- --------------- -------------
Dadi Matza 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Yuval Mor 0 68,673 *%
--------------------------------- ------------- --------------- -------------
Lior Mozel 0 4,421 *%
--------------------------------- ------------- --------------- -------------
Zeevik Neuman 0 4,704 *%
--------------------------------- ------------- --------------- -------------
John Ng 0 282 *%
--------------------------------- ------------- --------------- -------------
Yael Ohayon 0 3,293 *%
--------------------------------- ------------- --------------- -------------
Yaron Peleg 0 23,048 *%
--------------------------------- ------------- --------------- -------------
Anat Raziel 0 3,763 *%
--------------------------------- ------------- --------------- -------------
Bill Rossi 0 941 *%
--------------------------------- ------------- --------------- -------------
Kevin Ryan 0 470 *%
--------------------------------- ------------- --------------- -------------
Moshe Salhov 0 6,256 *%
--------------------------------- ------------- --------------- -------------
Yaniv Sazman 0 3,151 *%
--------------------------------- ------------- --------------- -------------
Boaz Sharon 0 2,822 *%
--------------------------------- ------------- --------------- -------------
Dadi Sharon 0 11,853 *%
--------------------------------- ------------- --------------- -------------
Jixin Shi 0 470 *%
--------------------------------- ------------- --------------- -------------
Junde Song 0 941 *%
--------------------------------- ------------- --------------- -------------
Gabby Tal 0 6,115 *%
--------------------------------- ------------- --------------- -------------
Fouad Tobagi 0 941 *%
--------------------------------- ------------- --------------- -------------
Lior Uziel 0 5,174 *%
--------------------------------- ------------- --------------- -------------
Barbara Velline 0 7,055 *%
--------------------------------- ------------- --------------- -------------
Wade Vesey 0 376 *%
--------------------------------- ------------- --------------- -------------
Esme Vos 0 470 *%
--------------------------------- ------------- --------------- -------------
25
--------------------------------- ------------- --------------- -------------
PERCENTAGE
OF
COMMON
STOCK
OWNED
AFTER
COMPLETION
NUMBER OF NUMBER OF OF THIS
SHARES OF SHARES OF OFFERING
COMMON STOCK COMMON ASSUMING ALL
OWNED STOCK ISSUED SHARES
PRIOR TO THE PURSUANT TO OFFERED ARE
NAME OF SELLING STOCKHOLDER OFFERING THE OFFERING SOLD
--------------------------------- ------------- --------------- -------------
Yaniv Yosef 0 3,763 *%
--------------------------------- ------------- --------------- -------------
--------------------------------- ------------- --------------- -------------
Yoni Yosef 0 6,585 *%
--------------------------------- ------------- --------------- -------------
--------------------------------- ------------- --------------- -------------
Gal Zuckerman 0 28,692 *%
--------------------------------------------------------------------------------
* Represents beneficial ownership of less than 1%
--------------------------------------------------------------------------------
(1) The number of shares offered for sale by this prospectus is a good
faith estimate of the maximum number of shares to be issued to the selling
stockholders pursuant to the acquisition agreement, based upon the assumption
that GO Networks fully achieves each of the performance milestones specified
therein and that our 20-day average stock price calculated pursuant to the
acquisition agreement will be $5.99, based on the average closing price of our
common stock for the 20 trading days ending on October 17, 2007. There can be no
assurance as to the trading price of our common stock at any future date and you
are encouraged to obtain current market quotations for our common stock. The
number of shares that will be ultimately issued to the selling shareholders
could be materially more or less than the number provided in this prospectus
based on the extent to which GO Networks achieves each of the performance
milestones and the actual average closing price of our common stock calculated
pursuant to the acquisition agreement at the time such milestone is achieved.
26
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of September 29, 2007, we have 92,665,556 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 September 29, 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 September 29, 2007, there are 70,531,742 shares
reserved for future issuance, of which 33,376,841 shares are reserved for
issuance upon the conversion of the Series A Preferred Stock, 22,362,471 shares
are reserved for issuance upon the exercise of granted and outstanding options
and warrants, 13,959,097 shares will be available for future option grants and
833,333 shares are reserved for issuance under an advisory contract. In
addition, up to $142.0 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
related to IPWireless' public safety business and TDtv Business and up to $30.6
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.
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,
subject to increase if certain defaults occur. 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. However, the terms of our Senior Notes currently do
not permit us to pay cash dividends on the Series A Preferred Stock. As a
result, we expect that the per share dividend amount will be added to the
liquidation preference of the Series A Preferred Stock until March 28, 2011.
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,
or fail to cause a shelf registration statement for resales 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
27
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
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 at September 29, 2007, we would be
obligated to issue 33,376,841 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. The conversion price of the
Series A Preferred Stock will be adjusted from time to time upon the occurrence
of stock dividend, stock split or combination of shares. Upon such an event, the
conversion price will be adjusted by multiplying the current conversion price by
a fraction, the numerator of which is the number of shares of common stock
outstanding immediately prior to such event and the denominator of which is the
number of shares or common stock outstanding immediately after such event.
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. The Series A Preferred Stock has an initial
liquidation preference of $1,000 per share, subject to increase for accrued
dividends as described above. 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 - including a
change in control, merger or sale of all or substantially all our assets - 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.
28
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
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
29
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.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERENCE DIVIDENDS
--------------------------------------------------------------------------------
NINE INCEPTION
ENDED YEAR (APRIL 13,
MONTHS ENDED 2005) TO
SEPTEMBER DECEMBER DECEMBER
IN THOUSANDS 30, 2007 30, 2006 31, 2005
--------- --------- ---------
FIXED CHARGES:
Interest expensed and
capitalized 18,9725 11,144 67
Amortized premiums,
discounts and capitalized
expenses related to
indebtedness 15,647 9,503 939
Estimated interest within
rental expense 1,364 1,168 797
Preference securities
dividend requirements of
consolidated subsidiaries 13,814 -- --
--------- --------- ---------
Total Fixed Charges $ 49,797 $ 21,815 $ 1,803
EARNINGS:
Pretax loss before
minority interest $(215,808) $(106,663) $ (45,662)
Add: Fixed charges 49,797 21,815 1,803
--------- --------- ---------
Subtotal (166,011) (84,848) (43,859)
Less:
Preference security
dividend requirements of
consolidated subsidiaries 13,814 -- --
Minority interest in
pre-tax loss of subs that
have not incurred fixed
charges (1,048) (1,608) (127)
--------- --------- ---------
Total Earnings $(178,777) $ (83,240) $ (43,732)
Ratio of earnings to fixed
charges (1) -- -- --
--------------------------------------------------------------------------------
30
(1) Due to the Company's reported pretax loss before minority
interest, the ratio of earnings to fixed charges was less than 1:1 and earnings
were insufficient to cover fixed charges by $228.6 million, $105.1 million and
$45.5 million for the nine months ended September 30, 2007, the year ended
December 31, 2006 and the period from inception (April 13, 2005) to December 31,
2005, respectively.
31
PLAN OF DISTRIBUTION
The Selling Stockholders (the "Selling Stockholders") of the common
stock 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
commissions or discounts under the Securities Act. The Selling Stockholders have
32
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)
two years following the last date of original issuance of shares of common stock
in connection with certain performance milestones specified in the acquisition
agreement, (ii) the date on which the shares may be resold by the Selling
Stockholders without restrictions pursuant to Rule 144(k) under the Securities
Act or any successor rule thereto, (iii) when all of the shares issued in
connection with the performance milestones specified in the acquisition
agreement cease to be outstanding and (iv) 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.
33
LEGAL MATTERS
The validity of our common stock offered hereby will be passed upon 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.
The consolidated financial statements of IPWireless, Inc. as of
December 31, 2006 and 2005, and for each of the years in the two -year period
ended December 31, 2006, have been incorporated by reference herein in reliance
upon the reports of KPMG LLP, independent registered public accounting firm and
upon the authority of said firm as experts in accounting and auditing.
The audit report covering the December 31, 2006, consolidated financial
statements of IP Wireless contains an explanatory paragraph that states that IP
Wireless's recurring losses from operations and net capital deficiency raise
substantial doubt about the entity's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
The audit report covering the December 31, 2006 financial statements of
IP Wireless refers to the adoption of Statement of Financial Accounting
Standards No 123 ( R) Share-Based Payment, and Financial Accounting Standards
Board Statements of Position 150-5, Issuers Accounting under FASB Statement No.
150 for Freestanding Warrants and Other Similar Instruments on Shares that are
Redeemable.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the SEC. 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 our company. 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.
34
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 Reports on Form 10-Q for the quarter ended March 31, 2007,
the quarter ended June 30, 2007 and the quarter ended September 29,
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 18, 2007 May 23, 2007, November 2, 2007 and November
16, 2007; 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,
relating to our annual meeting of stockholders held on May 17, 2007;
and
o all documents we have filed with the SEC pursuant to Sections 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.
35
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 $ 773.05
Printer expenses N/A
Legal fees and expenses $ 40,000.00
Accounting fees and expenses $ 60,000.00
-----------
Total $100,773.05
===========
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 the Current
Report on Form 8-K of NextWave Wireless Inc. filed November 2,
2007)***
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)***
5.1 Opinion of Weil, Gotshal & Manges LLP*
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 11, 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 11, 2007)***
11.1 Statement of Computation of Earnings Per Share (required
information contained in this Registration Statement)
12.1 Statement of Computation of Ration to Earnings to Fixed
Charges and Preference Dividends***
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**
23.2 Consent of KPMG LLP, Independent Registered Public Accounting
Firm**
23.3 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1) *
Previously filed.
** 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 SEC 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 SEC
by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
II-4
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.
(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 November 26, 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 November 26, 2007.
NAME TITLE
------------------------------ ------------------------------------------
Chairman of the Board of Directors,
* Chief Executive Officer and President
--------------------------- (Principal Executive Officer)
Allen Salmasi
Executive Vice President -
* Chief Financial Officer
--------------------------- (Principal Financial Officer)
George C. Alex
Executive Vice President -
* Chief Accounting Officer
--------------------------- (Principal Accounting Officer)
Francis J. Harding
Director
---------------------------
James C. Brailean
* Director
---------------------------
William Jones
* Director
---------------------------
Douglas F. Manchester
II-6
* Director
---------------------------
Jack Rosen
* Director
---------------------------
Robert T. Symington
* Director
---------------------------
William H. Webster
*By: /s/ Frank A. Cassou
---------------------------
Frank A. Cassou
As Attorney-in-Fact
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 the Current
Report on Form 8-K of NextWave Wireless Inc. filed November 2,
2007)***
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)***
II-8
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)***
5.1 Opinion of Weil, Gotshal & Manges LLP*
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)***
II-9
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 11, 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 11, 2007)***
11.1 Statement of Computation of Earnings Per Share (required
information contained in this Registration Statement)
12.1 Statement of Computation of Ration to Earnings to Fixed
Charges and Preference Dividends***
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**
23.2 Consent of KPMG LLP, Independent Registered Public Accounting
Firm**
23.3 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1) *
* Previously filed.
** Filed herewith.
*** Incorporated by reference.