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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 1, 1997
CELLULARVISION USA, INC.
(Exact name of registrant as specified in charter)
Delaware 000-27582 13-3853788
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
505 Park Avenue 10022
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 751-0900
Not Applicable
(Former name or former address, if changed from last report)
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Item 5. Other Events
Logimetrics Transaction
On December 1, 1997, CellularVision of New York, L.P. ("CVNY"), a
wholly owned subsidiary of CellularVision USA, Inc. (the "Company"), entered
into an agreement (the "Logimetrics Agreement") with Logimetrics, Inc.
("Logimetrics") pursuant to which CVNY assumed financial responsibility for
certain equipment purchased through its affiliate, CellularVision Technology &
Telecommunications, L.P. In exchange, Logimetrics agreed to continue servicing
CVNY's equipment so long as CVNY continues to meet its obligations under the
Logimetrics Agreement. Pursuant to the Logimetrics Agreement, CVNY issued and
delivered a $2,621,694.81 Secured Promissory Note to Logimetrics having a final
maturity date of July 27, 1998. Principal under such Note is amortized and also
subject to partial mandatory prepayment upon the occurrence of certain events.
Fleet National Bank
On October 21, 1997, the Company announced that CVNY had engaged Fleet
National Bank ("Fleet") to form a syndicate of senior lenders to provide a $40
million senior secured facility. Fleet committed, subject to certain conditions,
to fund more than one-third of the facility.
In late December 1997, Fleet advised the Company that the syndication
effort was on hold and would be revisited as the FCC LMDS Auction occurs.
Subordinated Exchange Notes; Certain Financial Data
On January 21, 1998, the Company issued new Subordinated Exchange
Notes, in the aggregate principal amount of $1,191,147 (the "New Notes"), to the
holders (the "Holders") of the Company's Subordinated Exchange Notes (the
"Original Notes") in exchange for $1 million in cash and as payment of $191,147
in respect of an interest payment due on December 28, 1997. Also in connection
with the issuance of the New Notes, the Holders waived certain defaults under
the Original Notes.
As of the date of the issuance of the New Notes, the Company's cash
position was approximately $1 million and its net working capital deficit was
approximately $6 million. Also as of the date of issuance of the New Notes,
property, plant and equipment was estimated at $21 million with debt under $9
million, and stockholders' equity was estimated to be approximately $12 million.
On January 22, 1998, the Company issued a press release announcing the
receipt of $1 million of cash as a result of the issuance of the New Notes and
providing the foregoing financial data; such press release is included herewith
as Exhibit 99.1 and is incorporated by reference herein.
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Intensified Focus on High-Speed Internet Access Service
At year-end 1997, the Company elected to focus its immediate efforts on
bringing its high-speed Internet access service to market. Due to the increased
focus on such service, the Company de-emphasized its marketing efforts related
to selling subscription television service in the immediate future. In
conjunction with this action, on December 31, 1997, the Company reduced its
workforce by 43 people, most of whom worked in subscription television sales,
marketing and operations.
On January 26, 1998, the Company issued a press release announcing the
Company's intensified focus on high-speed Internet access service and the
commercial availability of a new high-speed access feature, SuperChargeSM; such
press release is included herewith as Exhibit 99.2 and is incorporated by
reference herein.
Internet Service Marketing; Chief Marketing Officer
Gary MacGregor, vice-president of sales and marketing for CVNY, has
taken on the additional responsibility of marketing the Company's high-speed
Internet access service. Previously, Mr. MacGregor shared Internet marketing
responsibilities with Bruce Judson, the former chief marketing officer, who has
left the Company.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
99.1 Press Release issued by the Company, dated January 22, 1998.
99.2 Press Release issued by the Company, dated January 26, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CELLULARVISION USA, INC.
By:/s/ Shant S. Hovnanian
Name: Shant S. Hovnanian
Title: Chief Executive Officer
January 30, 1998
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EXHIBIT INDEX
Exhibit
99.1 Press Release issued by the Company, dated January 22, 1998.
99.2 Press Release issued by the Company, dated January 26, 1998.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Gretchen Roede
Meghan O'Shea
215.732.4100
CELLULARVISION USA RECEIVES ADDITIONAL
CAPITAL FROM J.P. MORGAN INVESTMENT MANAGEMENT
JANUARY 22, 1998 (New York) - CellularVision USA (Nasdaq: CVUS) today announced
that it has received approximately $1 million of new financing from J.P. Morgan
Investment Management.
The financing represents one of a number of infusions CellularVision USA is
currently negotiating in order to finance its ongoing high-speed Internet
service offering to homes and businesses in New York City. CellularVision of New
York (CVNY), a wholly-owned subsidiary of CellularVision USA, continues to work
with Fleet National Bank to complete a syndication effort for a $40 million
senior debt facility.
"We are delighted that J.P. Morgan has strengthened its support of CVUS with
this financing," said Shant Hovnanian, chief executive officer of CellularVision
USA. "We are confident that this and the other financing alternatives we are
currently discussing will see us through to the LMDS auctions, which we believe
will help establish the value of our license, and highlight our unique
operational expertise."
The financing is an extension of an existing note from J.P. Morgan that will be
put toward ongoing operations. Terms of the financing are similar to the
previous note.
Following are selected approximate financial data for CellularVision USA as of
the closing of this financing. The company's cash position as of the closing of
this note is approximately $1 million. CVUS net working capital deficit is
approximately $6 million. Property plant and equipment is estimated at $21
million with debt under $9 million. Stockholders' equity is currently estimated
to be approximately $12 million.
In addition, the company owns the LMDS spectrum license for the New York Primary
Metropolitan Statistical Area, or PMSA. This area includes about 8.6 million
people, making it the largest media market in the country. An independent
research firm has estimated the value of this license to be approximately $28.80
per pop (unit of population) or about $250 million.
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CellularVision USA, Inc. is the first Local Multipoint Distribution Service
(LMDS) provider licensed by the FCC. This license grants CVUS 1,150 MHz of
spectrum throughout the 1,100 square mile New York Primary Metropolitan
Statistical Area, which encompasses approximately 8.6 million people. This
equates to 98,900,000 channel pops, or the greatest regional delivery capacity
of any broadband wireless carrier in the country. CVUS service is not currently
available in all parts of its licensed service territory. CVUS provides
Super-Wireless high-speed Internet access and multichannel subscription
television service to its customer base, and is authorized to provide local loop
telephony and other telecommunications services in the state of New York. For
more information about CVUS, please visit the company's Web site at
www.cellularvision.com.
###
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to risks and uncertainties, including, but not limited to the possibility that
technological or other factors may cause the timing and/or capacity of new
products to differ materially from those projected in the forward-looking
statements.
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE CONTACT: Gretchen Roede
Meghan O'Shea
215.732.4100
CELLULARVISION USA INTENSIFIES INTERNET FOCUS IN 1998
SuperCharge(SM) Feature Added to SPEED(SM) Service
JANUARY 22, 1998 (New York) - CellularVision USA (Nasdaq: CVUS) announced today
it will be focusing its near-term growth strategy on bringing its unique, super
high-SPEED Internet access services to market. As part of this strategic focus,
the company also announced that it is now marketing SuperCharge(SM), a new
feature that will be offered in conjunction with its previously introduced
Internet access product, SPEED(SM).
CVUS' SuperCharge(SM) service allows residential and business Internet users to
"supercharge" their existing Internet access service by integrating SPEED(SM), a
48,000 Kbps wireless modem, with their existing Internet access service.
SuperCharge(SM) customers can use any Internet Service Provider (ISP) they
select, and ISPs can team with CVUS to enhance the services they offer to
clients without upgrading their own systems.
The SuperCharge(SM) service will be offered at a fraction of the cost of other
Internet delivery services offering comparable speeds. Additionally, the
wireless nature of CVUS offerings means fast installation.
"This revolutionary service will be incredibly attractive to businesses and
individuals who are looking for high-speed Internet access at an affordable
price," added Shant Hovnanian, chief executive officer of CVUS.
As part of the intensified focus on its Internet business, CVUS has shifted
sales and marketing resources from its wireless multi-channel television
operations to the Internet product and service offerings. In addition, the
subscription television sales, marketing and operations forces have been reduced
by 43 people. This action will allow the company to concentrate its immediate
resources on bringing its Internet access services to market.
Gary MacGregor, vice-president of sales and marketing for CellularVision of New
York (CVNY), since 1995, has taken on the additional responsibility of marketing
the company's Internet service. Previously, MacGregor shared marketing
responsibilities
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with Bruce Judson who has left the company. MacGregor has over 23 years of
marketing experience in the cable television and broadband wireless industries.
"Over the past six months, CVUS' Internet team has worked to perfect our suite
of Internet products and market positioning. It is now time to focus on our
sales efforts by aggressively targeting customers on a building-by-building
basis within our service area," said MacGregor.
"We have a 'first-to-market' opportunity to get our Internet product into
customers' homes and offices. While multi-channel television service is still
important to CVUS, we feel this is the time to concentrate our marketing efforts
on selling Internet services in New York. This is where we believe the best
growth and largest profit margins can be achieved," added Hovnanian.
"Additionally, while growing our Internet access service, we will have the
opportunity to monitor the economics of digital video applications over this
high-speed Internet platform."
CellularVision USA stated clearly that the announced resource shift would in no
way impact the company's relationship with its existing multi-channel television
service customers. The company will continue to support its existing television
subscribers with excellent channel packages priced 20 to 30 percent below
competitive cable offerings.
CellularVision USA, Inc. is the first Local Multipoint Distribution Service
(LMDS) provider licensed by the FCC. This license grants CVUS 1,150 MHz of
spectrum throughout the 1,100 square mile New York Primary Metropolitan
Statistical Area, which encompasses approximately 8.6 million people. This
equates to 98.9 million channel pops, or the greatest regional delivery capacity
of any broadband wireless carrier in the country. CVUS service is not currently
available in all parts of its licensed service territory. CVUS provides
Super-Wireless high-SPEED Internet access and multichannel subscription
television service to its customer base, and is authorized to provide local loop
telephony and other telecommunications services in the state of New York. For
more information about CVUS, please visit the company's Web site at
www.cellularvision.com.
###
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to risks and uncertainties, including, but not limited to the possibility that
technological or other factors may cause the timing and/or capacity of new
products to differ materially from those projected in the forward-looking
statements.
