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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1998.
REGISTRATION NO. 333-31453
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO FORM S-1 ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ADVANCED RADIO TELECOM CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4812 52-1869023
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(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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500 108TH AVENUE NE, SUITE 2600, BELLEVUE, WASHINGTON 98004 (425) 688-8700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THOMAS M. WALKER, ESQ.
GENERAL COUNSEL
500 108TH AVENUE NE, SUITE 2600
BELLEVUE, WASHINGTON 98004
(425) 688-8700 / (425) 990-1642 (FAX)
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
MARY E. WEBER, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2624
(617) 951-7000 / (617) 951-7050 (FAX)
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
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, 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 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 the delivery of the prospectus is expected to be made pursuant to Rule 434,
please 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
----------
2,731,725 SHARES
ISSUABLE UPON EXERCISE OF WARRANTS
ADVANCED RADIO TELECOM CORP.
___________________
COMMON STOCK
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus covers 2,731,725 shares (the "Shares") of common stock,
$.001 par value, and Junior Preferred Stock Purchase Rights associated with the
Shares pursuant to a Rights Agreement dated as of June 20, 1997 (the "Common
Stock"), of Advanced Radio Telecom Corp. ("ART" or the "Company") to be issued
and sold by the Company upon exercise of the 2,025,000 warrants (the "Warrants")
issued in conjunction with the Company's 14% Senior Notes due 2007 (the "Senior
Notes"). Each Warrant entitles the holder to purchase 1.349 shares of Common
Stock for $.01 per share, subject to adjustment under certain circumstances,
payable in cash or by surrender of additional Warrants. The Warrants are
exercisable until 5:00 p.m. on February 15, 2007.
The Common Stock is listed on the Nasdaq National Market under the symbol
"ARTT." The last reported sale price of the Common Stock on the Nasdaq National
Market on April 13, 1998 was $14.875.
All expenses of the offering of the Shares made hereby will be paid by the
Company.
FOR A DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON
PAGE 2.
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Price to Underwriting Discounts Proceeds to
Public and Commissions Company
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Per Share.............. $ .01(1) $0 $ .01
- --------------------------------------------------------------------------------
Total (3) $27,317.25 $0 $27,317.25 (2)
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(1) Calculated using the initial exercise price of $.01 per Share, which is
subject to adjustment under certain circumstances as provided in the
Warrant Agreement.
(2) Before deducting expenses payable by the Company, estimated to be
$65,000.
(3) Based on 2,025,000 outstanding Warrants.
The date of this Prospectus is April 14, 1998
<PAGE>
No person has been authorized to give information or make any
representation not contained in this Prospectus in connection with any offer
made hereby. If given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder, under any circumstances, shall create
any implication that there has been no change in the affairs of the Company
since the date hereof.
TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION........................................ 1
RISK FACTORS................................................. 2
THE COMPANY.................................................. 7
DETERMINATION OF OFFERING PRICE.............................. 7
PLAN OF DISTRIBUTION........................................ 7
USE OF PROCEEDS.............................................. 7
LEGAL MATTERS................................................ 7
EXPERTS...................................................... 8
ADDITIONAL INFORMATION....................................... 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............. 8
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies may be obtained at the prescribed rates from the
Public Reference Section of the Commission at its principal office in
Washington, D.C. In addition, the Commission maintains a site on the World Wide
Web that contains reports, proxy and information statements, and other
information regarding registrants such as the Company that file electronically
with the Commission. The address of the Commission web site is
http://www.sec.gov.
<PAGE>
RISK FACTORS
An investment in the Common Stock involves a high degree of risk. The
following risk factors, together with the other information set forth in this
prospectus, should be considered when evaluating a purchase of the Common Stock.
Limited Operations; History of Net Losses. The Company has limited
operating history. It commenced full scale commercial operations in the fourth
quarter of 1996 as a provider of wireless broadband access to carriers and in
the first quarter of 1998 adopted a new business strategy of providing wireless
broadband data services to retail customers. The Company has generated only
nominal revenues from operations to date, has generated operating and net losses
since its inception and expects to generate significant operating and net losses
for at least the next several years. The Company had a 1997 net loss of $61.7
million and an accumulated deficit of $95.8 million at the end of 1997. The
Company anticipates its operating losses will continue for at least the next
several years.
Based on the Company's brief operating history and change of strategy,
there is limited data about the Company upon which to evaluate the Company's
future performance. There can be no assurance that the Company will develop a
successful business or achieve or sustain profitability in the future. The
Company's ability to provide commercial service on a widespread basis and to
generate positive operating cash flow will depend on its ability to, among other
things, develop its operational and support systems, attract experienced and
talented personnel, acquire further roof rights and building access for its
networks, construct, implement and commercialize its networks, raise additional
capital, and attract and retain an adequate customer base.
Significant Capital Requirements; Need for Additional Financing. The
Company will require substantial additional capital prior to the end of 1998 and
in the future to implement its business plan, including, among other things,
development and expansion of its networks, funding of operating losses,
repayment of debt, and possible acquisition of additional licenses, other assets
or other businesses. In addition, the Company's expected financing from Lucent
is contingent, among other things, on raising additional substantial capital.
Failure to access capital when needed could have a material adverse effect on
the Company, its ability to implement its business plan, and its financial
condition and results.
There can be no assurance that the Company will be able to obtain any
financing when required, or, if such financing is available, that the Company
will be able to obtain it on acceptable terms. In the event that the Company
fails to obtain additional financing when required, such failure could result in
the modification, delay or abandonment of some or all of the Company's business
plan. Any such modification, delay or abandonment is likely to have a material
adverse effect on the Company.
Leverage; Ability to Service Indebtedness. The Company is highly
leveraged. It will be further leveraged upon consummation of the financing
pursuant to the letter of intent with Lucent (which will be secured by certain
assets of the Company). The Company expects to incur substantial additional
debt to finance its business plan. Accordingly, (i) a substantial portion of
the Company's cash flow from operations will be required to pay interest with
respect to its outstanding 14% Senior Notes due 2007, commencing in 2000, and
may be required to pay interest with respect to any additional indebtedness
incurred by the Company, including the Lucent indebtedness, (ii) the Company's
flexibility may be limited in responding to changes in the industry and economic
conditions generally; (iii) the failure to comply with the numerous financial
and other restrictive covenants of such debt may result in an event of default,
which, if not cured or waived, could have a material adverse effect on the
Company; (iv) the ability of the Company to satisfy its obligations pursuant to
such indebtedness is dependent upon its future performance which, in turn, is
subject to management, financial, business and other factors affecting the
business and operations of the Company; (v) the Company's ability to obtain any
necessary financing in the future may be limited; (vi) the Company may be more
highly leveraged than many of its competitors, which may put it at a competitive
disadvantage; and (vii) the Company's leverage may make it more vulnerable in
the event of an economic downturn. The Company's ability to make principal and
interest payments on its indebtedness, will be dependent upon, among other
things, the Company's future operating performance and anticipated cash flow and
its ability to obtain additional debt or equity financing on acceptable terms,
which are themselves dependent on a number of factors, many of which are out of
the Company's control. These factors include prevailing economic, financial,
competitive and regulatory conditions and other factors affecting the Company's
business and operations, including the ability of the Company to implement its
network on a timely and cost effective basis. There can be no assurance that
these factors will not have a material adverse effect
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<PAGE>
on the Company or that the Company will be able to generate sufficient cash flow
to meet required interest and principal payments associated with its
indebtedness. If the Company is unable to generate sufficient cash flow to meet
its debt obligations, the Company may be required to renegotiate the payment
terms or to refinance all or a portion of its indebtedness, to sell assets or to
obtain additional financing. There is no assurance that the Company would be
able to do so.
Uncertain Acceptance of Services. The Company and other providers have
only recently begun to market fixed wireless services, and the Company believes
it is currently the only entity marketing exclusively a fixed wireless broadband
data service. The provision of such services represents an emerging sector of
the telecommunications industry, and the demand for such services is uncertain.
The demand may be adversely affected by various factors including historical
perceptions of the unreliability of previous wireless technologies, concerns
about the security of transmissions over wireless networks and the lack of
market history of operational fixed wireless services. The Company anticipates
that a substantial investment in sales and marketing will be required to reach
the target group of businesses, and to create demand for the Company's wireless
data services. There can be no assurance that a substantial market will develop
for fixed wireless broadband data services, that sufficient customers will be
willing to acquire such services separate from voice telephony, or, if such
market were to develop, that the Company will be able to attract and maintain a
sufficient revenue-generating customer base, generate sufficient cash flow to
service its indebtedness, or operate profitably.
Acceptance of the Company's services may be affected by various factors
beyond the Company's control, including the availability and pricing of
alternative broadband data services and the availability and performance of
networks and narrowband data services, general and local economic conditions,
changes in products and technology, and the potential impact of government
regulation on the Company's services. In addition, the extent of the potential
demand for the Company's broadband wireless data services cannot be estimated
with certainty. Poor acceptance of the Company's services due to one or more
of these factors, or from other factors, could have a negative impact on the
Company's results and its financial condition.
Moreover, the Company has incurred and will continue to incur significant
operating expenses, has made and will continue to make significant capital
investments, has entered into and plans to enter into financing agreements,
leases, equipment supply contracts and service arrangements, in each case based
upon certain expectations as to the anticipated market acceptance of, and
customer demand for, the Company's services. Lack of acceptance of these
services in the market would have a material adverse effect on the Company's
business and financial condition.
Competition. The industry and markets in which the Company plans to
provide services are highly competitive. The Company competes with other
providers of telecommunications services using a variety of telecommunications
technologies, now existing and under development, including copper, fiber,
cable, mobile and fixed wireless and satellite networks and expects to compete
with technologies not yet introduced. These other technologies may offer
advantages over the Company's services. In addition, many of the other wireline
and wireless services providers have longer operating histories, longer standing
relationships with customers and suppliers, greater name recognition, better
geographic footprints and greater financial, technical and marketing resources
than the Company. As a result, these competitors, among other things, may be
able to develop and exploit new technologies, adapt to changes in customer
requirements more quickly, devote greater resources to the marketing and sale of
their services or more rapidly deploy and build out a network than the Company.
While the Company does not believe that any other competitor is exclusively
offering wireless broadband, packet-switched data services to off-fiber
business, ART faces significant competition from other entities and technologies
that currently, or could in the future, deliver data services to ART's potential
customers over copper wire, fiber, wireless or other technologies. These
current or potential competitors include local exchange carriers ("LECs"), fiber
and wireless service providers and cable television operators. The Company's
competitors also include providers of services to end users which are in
competition with the Company's product offerings, such as Internet services.
Moreover, the recent and pending auctions of spectrum capable of supporting
comparable services may facilitate the introduction or expansion of competition
from other competitors. There can be no assurance that the Company will be able
to compete effectively with these other technologies and service providers in
any of its markets.
The Company has only recently begun to introduce its data services and has
only recently begun to pursue
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customers with the goal of becoming the leading provider of broadband data
services to businesses without fiber connectivity. The Company is currently
working to roll out its services in Seattle, WA and Washington, DC, its two
initial markets. To date, the Company does not have significant market share in
any of the markets in which it holds licenses or offers services. Given the
intense competition in the market for broadband data services, there can be no
assurance that the Company will achieve significant market share.
Management of Growth. The Company is pursuing a business plan that, if
successfully implemented, will result in rapid growth, expansion of its
operations and the provision of broadband data services on a widespread basis
over the next two to five years. Rapid expansion of the Company's operations may
place a significant strain on the Company's management, financial and other
resources. If this growth is achieved, the Company's success will depend on its
ability to manage this growth effectively, enhance its operational and financial
controls and information systems, and attract, assimilate and retain qualified
and key personnel. In addition, if the Company expands its business, it will
require additional facilities for its growing operation. There can be no
assurance that the Company will successfully implement and maintain such
operational and financial systems or successfully obtain, integrate and utilize
the employees and management, operational and financial resources necessary to
manage a developing and expanding business in the evolving, increasingly
competitive broadband data communications market. If the Company fails to
successfully manage expansion, customers could experience delays and inferior
service, which could have a material adverse effect on the Company's business,
financial condition and results.
Need for Technological Development. Although the Company intends to
commence the build-out of its broadband metropolitan area networks ("BMANs")
utilizing fixed wireless point-to-point technology, which has been commercially
deployed for a period of time, the Company plans to adopt point-to-multipoint
technology for the expansion of its build-out. The principal advantages of
point-to-multipoint architecture over traditional point-to-point installation
include lower costs per customer installation and higher flexibility in how
bandwidth is allocated. Point-to-multipoint also makes it possible to support
many more subscribers than otherwise would be possible in a point-to-point
environment. This technology has not been deployed on a commercial basis, and
it is unclear whether the technology will perform as expected, integrate as
expected with the Asynchronous Transfer Mode ("ATM") switching gear and other
components of the BMANs or provide the advantages expected by the Company.
Failure to employ point-to-multipoint technology could adversely effect the
Company's network costs, profitability and results of operations.
The billing, provisioning, customer service, network management and other
"back office" systems which will be required to operate the Company's business
do not currently exist in a form which can be readily adopted by the Company.
Significant development work by the Company or a third-party provider will be
required to develop such systems for the Company. Delays in procuring such
systems may have a negative impact on the Company's ability to bill and manage
its networks and accordingly on the implementation of its business plan.
Radio Frequency Limitations. The Company's wireless broadband services
require a direct line of sight between two transceivers and are subject to
distance and rain attenuation. In certain markets which experience heavy
rainfall, transmission links must be engineered for shorter distances and
greater power to maintain transmission quality. Such reduction may increase the
cost of providing service.
The Company primarily installs its transceivers and antennas on rooftops of
buildings and on other tall structures. The Company generally must secure
building access rights, access to conduits and wiring from building owners, and
may require construction, zoning, franchises or other governmental permits.
There can be no assurance that the Company will succeed in obtaining roof access
and other rights necessary to provide wireless broadband services to potential
customers in its market areas on favorable terms, if at all, or that delays in
obtaining such rights will not have a material adverse effect on the Company's
development and results of operations. Moreover, there may be a limited number
of available buildings which provide a clear line of sight to targeted off-fiber
businesses, and therefore there may be some circumstances where installation is
impracticable or uneconomical. In such cases, the Company may decide to provide
services that are uneconomical in the short term and seek alternative methods of
transmission to provide services on a more economical basis, or decide not to
provide services to potential customers in locations with such limitations.
There can be no assurance that line of sight limitations will not have a
material adverse effect on the Company's future development and results of
operations.
Reliance on One Principal Supplier. The Company has entered into letters of
intent with Lucent to provide infrastructure equipment for the build out of its
wireless broadband data network. As a result, the Company expects
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to rely on Lucent exclusively to co-develop, procure, manufacture and supply the
equipment necessary to construct its networks and perform systems integration
for these networks. Any failure or inability by Lucent to perform these
functions could cause delays or additional costs in providing services to target
customers and building out the Company's network in specific markets. Such a
failure could adversely effect the Company's business and results of operations.
Dependence on Key Employees; Need to Attract and Retain Qualified
Personnel. The success of the Company will be dependent, in large part, on its
ability to attract and retain qualified technical, marketing, sales and
management personnel. The loss of the services of key people could have a
material adverse effect upon the business, financial condition and results of
operations of the Company. The Company's ability to implement its business plan
will require the addition of significant number of qualified personnel.
Competition for such personnel is intense, particularly those experienced in
information technology, and there can be no assurance of the Company's ability
to attract and retain additional key employees and retain its current key
employees. The failure to attract and retain such personnel could have a
material adverse effect on the business.
Importance of Third-Party Relationships. The Company intends to enter into
relationships with third parties to assist it in providing services, extending
its network and penetrating markets. There can be no assurance that the Company
will be able to enter into such relationships on a time line that is consistent
with the Company's strategy, if at all. Failure to enter into such
relationships, the failure of third parties to perform once such relationships
are entered into, or the loss of third party relationships once entered into
could cause delays in providing services, limit the Company's reach in marketing
its product, increase costs for the Company to extend its reach and penetrate
markets, and/or impede the Company's ability to offer certain service packages
to certain customers. Such failures could have a material adverse effect on the
Company's development and results of operations.
Government Regulation. The telecommunications services offered by the
Company are subject to regulation by federal, state and local government
agencies. Changes in existing laws and regulations applicable to the provisions
of wireless data services via the Company's licenses or to the regulations
governing competitive or potentially competitive providers, or any failure or
significant delay in obtaining or maintaining any regulatory approvals which may
be required, could have a material adverse effect on the Company.
Risk of Forfeiture, Non-Renewal and Fluctuation in Value of FCC Licenses.
The Company must comply with FCC rules relating, among other things, to its
licenses. Failure to comply with FCC rules could subject licenses to automatic
forfeiture or, depending on the violation, to other FCC sanctions, including
automatic forfeitures.
The Company will be entitled to a renewal expectancy if it can demonstrate
at renewal that it is providing substantial service within its authorized area
covered by that authorization. There can be no assurance that the Company will
be able to make this showing for any or all of its licenses. In the event that
the FCC does not renew one or more of the licenses, the Company's business and
results of operations could be materially adversely affected.
The value of licenses held or acquired hereafter by the Company will
depend, among other things, upon the success of the Company's wireless broadband
operations, fluctuations in the level of supply and demand for such licenses and
comparable spectrum and the commercial response to the availability and efficacy
of wireless broadband systems. In addition, federal and state regulations may
limit the ability of licensees to sell their licenses. Assignment of licenses
and changes of control involving entities holding licenses require prior consent
of the FCC and, in some instances, state regulatory approval and are subject to
restrictions and limitations on the identity, background, legal and financial
qualifications, among other things, of the assignee or successor. These
regulatory restrictions on transfer of licenses may adversely affect the ability
of the Company to acquire or dispose of further licenses or the value of the
Company's licenses.
Licenses Pending Approval for Transfer. The Company has entered into
agreements to acquire licenses from other parties to enter new markets or
strengthen the Company's position in existing markets. Failure to consummate
the transfer of these licenses could affect the Company's ability to offer
broadband data services in certain markets where the Company intends to
commercialize its services. The acquisition of these licenses is subject, among
other conditions, to the approval of the FCC to the assignment or change of
control of the entity holding the licenses, as the case may be. There can be no
certainty that the Company will receive the requisite approval to acquire these
licenses and thereby be able to implement its strategy with respect to the
markets covered by such licenses.
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Acquisition of Additional Bandwidth in Selected Areas. Although the Company
believes the licenses it owns, manages, or has the right to acquire are
sufficient in each of its markets to implement its current business strategy,
the Company may seek to acquire or lease additional licenses to expand its
geographic footprint or to enhance its ability to provide service to its current
target market or customers it may target in the future. There can be no
assurance that the Company will be able to acquire additional radio spectrum on
favorable terms or at all.
Foreign Licenses. Entities owned by the Company have obtained licenses to
provide broadband services in certain Western European countries and entities
owned by the Company or in which the Company has a substantial interest have
applied or may apply for such licenses in various other foreign countries. There
can be no assurance that such licenses will be granted or exploited in any way.
Changes in Technology, Services and Industry Standards. The
telecommunications industry and market for data services has been characterized
by rapid technological advances, changes in end user requirements, frequent new
service introductions, evolving industry standards and decreases in the cost of
equipment. The Company expects these changes to continue, and believes that its
long-term success will increasingly depend on its ability to offer value-added
data services that exploit advanced technologies and anticipate or adapt to
evolving industry standards. The Company believes that to remain competitive,
retain the customer base it establishes and maintain the margins of the retail
market it is pursuing, its integrated package of high-speed, broadband data
services must continue to evolve to keep pace with developments in the market.
There can be no assurance that (i) the Company will be able to arrange to offer
the new services required by its customers, (ii) the Company's services will not
be economically or technically outmoded by current or future technologies which
may compete in the data market, (iii) the Company will have sufficient resources
to develop or acquire new technologies or introduce new services capable of
competing with future technologies or service offerings (iv) the Company's
inventory of equipment will not be rendered obsolete, or (v) the cost of the
Company's equipment and network will decline as rapidly as that of competitive
alternatives. Moreover, there can be no assurance that the Company's ability to
offer the broadband wireless data access with which it will deliver its value-
added services will not become technically or economically outmoded as new
equipment, technologies and advances in competing alternatives become available.
Radio Frequency Emission Concerns. The use of wireless equipment may pose
health risks to humans due to radio frequency emissions ("Emissions") from the
radio/antenna unit. Any allegation of health risks, if proven, could result in
liability on the part of the Company. If the Company were held liable in any
product liability suit, such liability could have a material adverse effect on
the financial condition of the Company. Moreover, allegations of health risks,
if not proven, could still have a material adverse effect on the Company.
Concerns over Emissions may have the effect of discouraging the use of wireless
communications devices, such as the radio/antenna units to be used in building
out the Company's BMANs. These concerns could have a material adverse effect on
the Company's business, financial condition and results of operations. The FCC
recently adopted new guidelines and methods for evaluating the environmental
effects of Emissions from FCC-regulated transmitters, including wireless
antennas. The updated guidelines and methods generally are more stringent than
those previously in effect. The Company expects that the wireless equipment to
be provided by its vendors will comply with applicable FCC guidelines. The FCC
also incorporated into its rules provisions of the Telecommunications Act which
preempt state or local government regulation of personal wireless services
facilities based on radio frequency environmental effects, to the extent such
facilities comply with the FCC's rules concerning such Emissions.
Possible Volatility of Stock Price. The stock market historically has
experienced volatility which has affected the market price of securities of many
companies and which has sometimes been unrelated to the operating performance of
such companies. In addition, factors such as announcements of developments
related to the Company's business, or that of its competitors, its industry
group or its customers, fluctuations in the Company's results of operations, a
shortfall in revenues or earnings compared to analysts' expectations and changes
in analysts' recommendations or projections, sales of substantial amounts of
securities of the Company into the marketplace, regulatory developments
affecting the telecommunications industry or data services or general conditions
in the telecommunications industry or the worldwide economy, could cause the
market price of the Common Stock to fluctuate substantially.
Significant Influence of Voting by Officers, Directors and Related
Entities. Common Stock held by the Company's officers and directors and
entities which may be considered affiliates of, or related to, such officers and
directors hold a significant number of the shares of Common Stock voted on an
independent basis. Thus, these stockholders will have the ability to exercise
significant influence over the Company and the election of its directors
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and the approval of any action requiring the approval of the holders of the
Company's voting stock, including adopting certain amendments to the Company's
Certificate of Incorporation and approving mergers or sales of substantially all
of the Company's assets.
Absence of Dividends. The Company has not paid and does not anticipate
paying any cash dividends on its Common Stock in the foreseeable future. The
Company intends to retain its earnings, if any, for use in the Company's growth
and ongoing operations. In addition, the terms of the indenture relating to the
Senior Notes restrict the ability of the Company to pay dividends on the Common
Stock.
Potential Effect of Anti-Takeover Provisions and Issuances of Preferred
Stock. Certain provisions of the Company's Certificate of Incorporation and
Bylaws, the Delaware General Corporation Law and the Company's Shareholder
Rights Plan may have the effect of delaying, deterring or preventing a change in
control of the Company or preventing the removal of incumbent directors. The
existence of these provisions and this Plan may have a negative impact on the
price of the Common Stock and may discourage third party bidders from making a
bid for the Company or may reduce any premiums paid to stockholders for their
Common Stock. In addition, the Company's Board of Directors has the authority
without action by the Company's stockholders to issue shares of the Company's
Preferred Stock and to fix the rights, privileges and preferences of such stock,
which may have the effect of delaying, deterring or preventing a change in
control.
THE COMPANY
The Company's executive offices are located at 500 108th Avenue NE, Suite
2600, Bellevue, Washington 98004, and its telephone number is (425) 688-8700.
DETERMINATION OF OFFERING PRICE
The terms, conditions and exercise price per Share for the Warrants were
determined by the Company and the underwriters at the time of the offering of
the Senior Notes and Warrants.
PLAN OF DISTRIBUTION
The Shares issuable upon exercise of Warrants are offered solely by the
Company. No underwriters are participating in this offering. It is anticipated
that the Shares issued upon exercise of the Warrants will be authorized but
unissued shares. Warrants may be exercised by giving written notice and paying
the exercise price to the Company in cash or by surrender of additional Warrants
as provided by the Warrant Agreement.
USE OF PROCEEDS
Gross proceeds of approximately $27,000 would be realized if all of the
Warrants were exercised for cash at the initial exercise price of $.01 per
Share. Net proceeds, if any, will be used for general corporate purposes. It
is anticipated that Warrants will be exercised from time to time based upon
decisions of the individual Warrant holders and that the Company will receive
any net proceeds gradually through February 15, 2007, when the Warrants expire.
To the extent Warrants are not exercised for cash, the net proceeds to the
Company will be reduced. There is no assurance that all Warrants will be
exercised or that the Company will receive the net proceeds which would be
available if all Warrants had been exercised.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Ropes & Gray, Boston, Massachusetts.
7
<PAGE>
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 1997, 1996 and 1995, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to the
Common Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of the
Commission thereunder. The Registration Statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, DC 20549, and at the Commission's regional offices
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
may be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office in Washington, D.C. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. In
addition, the Commission maintains a site on the World Wide Web that contains
reports, proxy and information statements, and other information regarding
registrants such as the Company that file electronically with the Commission.
The address of the Commission web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The information in the following documents filed with the Commission by the
Company pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
2) The Company's Current Reports on Form 8-K filed with the Commission on
March 5, 1998.
3) The description of the Company's Common Stock and Junior Preferred
Stock Purchase Rights contained in the Company's Registration
Statements on Forms 8-A and 8-A/A (File No. 000-21091) filed under
Section 12 of the Exchange Act.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing of such reports. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available without charge to any person to whom the Prospectus is delivered, upon
written or oral request, directed to Advanced Radio Telecom Corp., 500 108th
Avenue NE, Suite 2600, Bellevue, Washington 98004, telephone (425) 688-8700.
8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission registration fee........... $ 828
Printing...................................................... 2,000*
Legal fees and expenses....................................... 35,000*
Nasdaq National Market Additional Listing Fee................. 17,500*
Accounting fees and expenses.................................. 5,000*
Miscellaneous................................................. 4,672*
--------
Total.................................................... $65,000
========
_____________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amount paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had not reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
such other court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Certificate of Incorporation provides that the liability
of the directors shall be eliminated to the fullest extent permissible by
Section 102(b)(7) of the DGCL, as amended. The Certificate of Incorporation
further provides that the Registrant shall indemnify its directors and officers
to the fullest extent permitted by Section 145 of the DGCL, as amended.
Reference is made to the form of Indemnification Agreement incorporated by
reference as Exhibit 10 to this Registration Statement for information regarding
indemnification of directors and officers under certain circumstances.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibits
Exhibit
Number Description
- ------ -----------
3.1 --Amended and Restated Certificate of Incorporation.(1)
3.2 --Restated and Amended Bylaws of Registrant.(1)
4.1 --Specimen of Common Stock Certificate.(2)
4.2 --Form of Warrant Agreement.(3)
4.3 --Specimen of Warrant Certificate.(included in Exhibit 4.2).(3)
4.4 --Shareholders' Rights Agreement.(4)
4.5 --Form of Rights Certificate.(4)
5.1 --Opinion of Ropes & Gray.(5)
10 --Form of Director Indemnification Agreement(2)
23.1 --Consent of Independent Accountants.
23.2 --Consent of Ropes & Gray (Included in Exhibit 5.1).(5)
(1) Previously filed with the Company's Registration Statement on Form S-1,
filed July 17, 1997 (Reg. No. 333-31453) and incorporated by reference herein.
(2) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (S.E.C. Reg. No. 333-04388) and
incorporated by reference herein.
(3) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective February 3, 1997 (S.E.C. Reg. No. 333-19295) and
incorporated by reference herein.
(4) Previously filed with the Company's Registration Statement on Form 8-A,
filed July 10, 1997 (S.E.C. Reg. No. 000-21091) and incorporated by reference
herein.
(5) Previously filed with the Company's Registration Statement on Form S-4,
filed on August 15, 1997 (S.E.C. Reg. No. 333-33689) and incorporated by
reference herein.
ITEM 17. UNDERTAKINGS
The undersigned Company 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 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.
(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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
securities being registered which remain unsold at the termination of the
offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 14, or otherwise,
the
II-2
<PAGE>
registrant has been advised that in the opinion of the 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.
(5) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company has duly
caused this Registration Statement on Form S-3 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Bellevue, State of
Washington on the 14th day of April, 1998.
Advanced Radio Telecom Corp.
By: /s/ Henry C. Hirsch
-------------------------
Title: Chairman, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on the 14th day of April, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Henry C. Hirsch Chairman, Chief Executive Officer April 14, 1998
- ------------------------- and Director
Henry C. Hirsch
/s/ Thomas A. Grina Executive Vice President and April 14, 1998
- ------------------------- Chief Financial Officer
Thomas A. Grina
* Vice-Chairman and Director
- -------------------------
Vernon L. Fotheringham
* Director
- -------------------------
James C. Cook
* Director
- -------------------------
Mark C. Demetree
* Director
- -------------------------
Andrew I. Fillat
* Director
- -------------------------
James B. Murray
* Director
- -------------------------
Alan Z. Senter
</TABLE>
* Appointed Thomas A. Grina to act as attorney-in-fact and agent with respect
to any post-effective amendment relating to the Company's Registration Statement
on Form S-1, Registration No. 333-31453.
II-4
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Advanced Radio Telecom Corp. on Post-Effective Amendment No. 1 to Form S-1 on
Form S-3 (File No. 333-31453) of our report dated March 10, 1998 on our audits
of the consolidated financial statements of Advanced Radio Telecom Corp. and
Subsidiaries as of December 31, 1997 and 1996 and for the years ended December
31, 1997, 1996 and 1995, appearing in the Annual Report on Form 10-K of Advanced
Radio Telecom Corp. filed with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934. We also consent to the reference to our
firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Seattle, Washington
April 10, 1998
