WILDBLUE COMMUNICATIONS INC, S-1, 2000-10-06

WILDBLUE COMMUNICATIONS INC
S-1, 2000-10-06

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 6, 2000

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WILDBLUE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 4899 54-1781002
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>

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4600 SOUTH SYRACUSE STREET
SUITE 500
DENVER, CO 80237
720-554-7400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------

THOMAS E. MOORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WILDBLUE COMMUNICATIONS, INC.
4600 SOUTH SYRACUSE STREET
SUITE 500
DENVER, CO 80237
720-554-7400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies To:

<TABLE>
<S> <C>
JAMES C.T. LINFIELD, ESQ. WILLIAM F. SCHWITTER, ESQ.
STEVEN E. SEGAL, ESQ. MARIE CENSOPLANO, ESQ.
COOLEY GODWARD LLP PAUL, HASTINGS, JANOFSKY & WALKER
2595 CANYON BOULEVARD, SUITE 250 LLP
BOULDER, CO 80302 399 PARK AVENUE, 31ST FLOOR
(303) 546-4000 NEW YORK, NY 10022
(212) 318-6000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

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. [ ]

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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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<CAPTION>
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PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE
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<S> <C> <C>
Common Stock, par value $0.001 per share.................. $200,000,000 $52,800
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</TABLE>

(1) Includes shares that the underwriters have the option to purchase solely to
cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o).

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH
WE ARE PERMITTED BY U.S. FEDERAL SECURITIES LAWS TO OFFER THESE
SECURITIES USING THIS PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR
OFFER TO BUY THEM UNTIL THE DOCUMENTATION FILED WITH THE SEC RELATING TO
THESE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SEC. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR SOLICITATION OF YOUR
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THAT WOULD NOT BE
PERMITTED OR LEGAL.

SUBJECT TO COMPLETION -- OCTOBER 6, 2000
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PROSPECTUS
, 2000

[WILDBLUE COMMUNICATIONS, INC. LOGO]

WILDBLUE COMMUNICATIONS, INC.

SHARES OF COMMON STOCK

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WILDBLUE COMMUNICATIONS, INC.:

- We are developing the first Ka-band geostationary satellite system capable of
providing two-way, "always on," high-speed, or broadband, Internet access
directly to residential and small office/home office consumers.

- Wildblue Communications, Inc.
4600 South Syracuse Street, Suite 500
Denver, Colorado 80237
(720) 554-7400

PROPOSED SYMBOL & MARKET:

- WBLU/Nasdaq National Market

THE OFFERING:

- We are offering shares of our common stock.

- The underwriters have an option to purchase an additional shares from us
to cover over-allotments.

- This is our initial public offering, and no public market currently exists for
our shares.

- We anticipate that the initial public offering price for our shares will be
between $
and $ per share.

- Closing: , 2000.

<TABLE>
<CAPTION>
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Per Share Total
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<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds, before expenses, to WildBlue:
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</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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DONALDSON, LUFKIN & JENRETTE
<PAGE> 3

Description of artwork to be provided.
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
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PAGE
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 6
Forward-Looking Statements............. 19
Use of Proceeds........................ 20
Dividend Policy........................ 20
Capitalization......................... 21
Dilution............................... 23
Selected Consolidated Financial Data... 24
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 25
Business............................... 31
</TABLE>

<TABLE>
<CAPTION>
PAGE
<S> <C>
Management............................. 45
Principal Shareholders................. 55
Related-Party Transactions............. 57
Description of Capital Stock........... 59
Shares Eligible for Future Sale........ 63
Material U.S. Tax Considerations for
Non-U.S. Holders..................... 65
Underwriting........................... 68
Legal Matters.......................... 70
Experts................................ 70
Where You Can Find More Information.... 70
Index to Consolidated Financial
Statements........................... F-1
</TABLE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY SHARES OF OUR COMMON STOCK ONLY
IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR
COMMON STOCK. IN THIS PROSPECTUS, REFERENCES TO "WILDBLUE," "WE," "US" AND "OUR"
REFER TO WILDBLUE COMMUNICATIONS, INC., A DELAWARE CORPORATION, OUR TWO
SUBSIDIARIES, KASTAR 73 ACQUISITION, LLC, A COLORADO LIMITED LIABILITY COMPANY,
AND KASTAR 109.2 ACQUISITION, LLC, A COLORADO LIMITED LIABILITY COMPANY, THAT
HOLD OUR FCC LICENSES, AND OUR PREDECESSOR KASTAR SATELLITE COMMUNICATIONS
CORP., A COLORADO CORPORATION.

The industry data presented in this prospectus have been compiled from
selected satellite broadband services industry reports. We have relied on market
research firms specializing in the satellite broadband services industry for
these reports. This information is commonly relied upon as an information source
in the satellite broadband services industry. Although we have not independently
verified any of this data, we believe that the information provided by these
market research firms in this prospectus is reliable. In addition, some data
presented in this prospectus have been compiled by us from publicly-available
data which, while we believe to be reliable, have not been verified by any
independent sources.

In connection with the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of our
common stock. For a description of these transactions, see "Underwriting."

i
<PAGE> 5

PROSPECTUS SUMMARY

You should read this summary together with the more detailed information
regarding us and the common stock being sold in this offering and our historical
consolidated financial statements and notes to the historical consolidated
financial statements appearing elsewhere in this prospectus, especially the
risks of investing in our common stock discussed under "Risk Factors," before
you decide to buy our common stock.

WILDBLUE COMMUNICATIONS, INC.

OVERVIEW

We are developing the first Ka-band geostationary, or GEO, satellite system
capable of providing two-way, "always on," high-speed, or broadband, Internet
access directly to residential and small office/home office, or SOHO, consumers.
We expect to launch our first satellite, WildBlue I, in the first quarter of
2002. Shortly thereafter, we will be able to offer our WildBlue(TM) service
throughout the contiguous United States as well as to portions of Canada.
Subsequent satellites will augment our capacity in the United States and Canada
and allow us to offer our WildBlue service in most Latin American countries. We
expect to offer our residential customers affordable Internet access at speeds
of up to 1.5 megabits per second, or Mbps, which is over 25 times faster than a
56 kilobits per second, or Kbps, dial-up Internet access connection. We expect
to generate revenue primarily from subscription fees for our WildBlue service at
rates competitive with existing terrestrial and proposed satellite-based
broadband services.

Our primary target market will be the approximately 32 million U.S.
households that, according to the Yankee Group, will not have access to
terrestrial broadband services, such as digital subscriber line, or DSL, and
cable modem services, when we commence our WildBlue service. We also believe
that our WildBlue service will provide a competitive alternative to terrestrial
broadband services where those services are available. Our strategic orbital
locations should allow U.S. consumers to receive over a single WildBlue dish
both our WildBlue service and a satellite-based television service, known as
DBS, from either of the two U.S. DBS service providers. We have entered into an
agreement with EchoStar Communications Corporation, or EchoStar, that allows
each of us to market and distribute bundled WildBlue and DISH Network(TM)
services.

MARKET OPPORTUNITY

International Data Corporation, or IDC, projects that the number of
Internet users in the United States will grow from approximately 123 million at
the end of 2000 to approximately 197 million by the end of 2003, a compound
annual growth rate of 17%. According to the Yankee Group, the number of U.S.
broadband subscribers will grow from 1.8 million at the end of 1999 to over 20
million by the end of 2004, a compound annual growth rate of 62%. The Yankee
Group also forecasts that there will be 4.1 million U.S. residential satellite
broadband customers by the end of 2004. Existing terrestrial broadband Internet
access solutions, such as DSL and cable modem services, are not widely available
to residential and SOHO consumers in non-urban and many urban areas due to
economic and technological constraints, and many of these consumers may not have
access to either of these broadband options for the foreseeable future, if ever.
We believe the success of U.S.-based DBS service providers demonstrates mass
market acceptance of satellite-delivered communications services. DBS service
providers currently serve approximately 13 million U.S. households, and this
number is expected to grow to over 26 million households by the end of 2004,
according to Paul Kagan Associates, Inc.

1
<PAGE> 6

OUR STRATEGY

Our objective is to become the leading provider of satellite broadband
Internet access to residential and SOHO consumers in the United States, Canada
and Latin America. Our strategy to achieve this objective includes the following
key elements:

- Construct a low-cost, high capacity satellite broadband system using
proven technology. Our Ka-band GEO satellite system architecture is
designed to minimize cost and technological risk, and maximize capacity
through frequency reuse. Our consumer premises equipment, or CPE, design
is based on low-cost, standardized components widely used in terrestrial
broadband and DBS systems today.

- Capitalize on relationships with our strategic investors. Our financing
strategy to date has focused on attracting investors who are strategic to
our business. To that end, we have assembled a strong and diverse
shareholder base, which includes affiliates of EchoStar, Gemstar-TV Guide
International, Inc., Kleiner Perkins Caufield & Byers, Liberty Media
Corporation, Telesat Canada and TRW Inc.

- Offer a nationwide, branded broadband solution. Unlike terrestrial
broadband alternatives, such as DSL and cable modem services, our
WildBlue system is designed to offer broadband Internet access throughout
the contiguous United States at the time we launch our WildBlue service.
This will provide significant economies of scale in our branding and
advertising initiatives.

- Leverage our orbital slots to penetrate broadband markets in Canada and
Latin America. Following the launch of WildBlue II, which currently is
planned for late 2002, we intend to market our WildBlue service
throughout Canada. WildBlue II is a Ka-band payload on the Anik F2
satellite which will be owned and operated by Telesat Canada, an
affiliate of BCE, Inc., or Telesat, and on which we will have an
exclusive license to use 90% of the Ka-band capacity. We plan to procure
a third satellite, WildBlue III, and anticipate launching it in late
2003. After the launch of WildBlue III, we expect to offer our service to
selected regions in Latin America through local and pan-regional
communications service providers, who we expect will market and
distribute our service.

BENEFITS TO CONSUMERS

Our solution is designed to offer consumers the following benefits:

- High-speed access. Our system is designed to provide Internet access to
residential customers at speeds of up to 1.5 Mbps. This rate is
approximately four times faster than the 400 Kbps connection speed
expected to be offered by Ku-band satellite broadband providers, and
equivalent to the speeds currently provided by most DSL and cable modem
services.

- Dedicated, "always on" connection to the Internet. Unlike many dial-up
services today, our WildBlue service is designed to provide a continuous
connection to the Internet, obviating the need for customers to use a
phone line for any aspect of their Internet connection and avoiding slow
log-on routines and potential busy signals.

2
<PAGE> 7

- Tiered service packages. Our WildBlue service is designed to allow
consumers to choose between different speed and price packages based on
their individual preferences.

- Complete Internet access solution. Unlike many DSL packages, our WildBlue
service is designed to include important Internet service provider, or
ISP, features, such as e-mail accounts and web-page hosting capabilities,
eliminating the cost and inconvenience of acquiring these features
separately. We also plan to offer our customers compelling broadband
portals that will take full advantage of our high-speed WildBlue service
through graphic-rich and streaming content, and will facilitate access to
other broadband content on the Internet.

PROGRESS TO DATE

We have achieved a number of important milestones toward commencing our
WildBlue service. We have obtained licenses from the U.S. Federal Communications
Commission, or FCC, to construct, launch and operate Ka-band GEO satellites from
orbital locations, which locations we believe will enable us to provide
satellite broadband Internet access to consumers located throughout the
contiguous United States and most of Canada and Latin America. Space
Systems/Loral, Inc., or Loral, is constructing, and we have contracted with
Arianespace to launch, WildBlue I. Hughes Space and Communications, Inc., or
Hughes, is constructing, and Telesat has contracted with Arianespace to launch,
WildBlue II. We have completed the preliminary design of our CPE and gateways.
In addition, we have entered into an agreement with EchoStar that allows each of
us to market and distribute bundled WildBlue and DISH Network services. The
agreement also provides that we will work together to develop a single set-top
box that will serve as both a satellite modem for our WildBlue service and a
set-top box for the DISH Network. In addition, we have raised approximately $239
million from private sales of our equity securities, including equity issued for
services rendered, and have secured approximately $146 million of vendor
financing for the development of our system.

3
<PAGE> 8

THE OFFERING

Common stock offered....... shares

Common stock to be
outstanding after this
offering................. shares (1)

Use of proceeds............ We intend to use the net proceeds from the offering
for the following purposes: (1) capital
expenditures, including satellites and ground
infrastructure, (2) development of our CPE and (3)
working capital and other general corporate
purposes. See "Use of Proceeds."

Dividend policy............ We currently intend to retain any future earnings
to fund the development of our business. Therefore,
we do not currently anticipate paying cash
dividends in the foreseeable future.

Risk Factors............... See "Risk Factors" and other information included
in this prospectus for a discussion of factors you
should carefully consider before deciding to invest
in our common stock.

Proposed Nasdaq National
Market Symbol............ WBLU

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(1) Based on the number of shares outstanding on September 1, 2000. Includes
38,689,447 shares of common stock to be issued upon conversion of our
preferred stock and 3,394,327 shares of common stock to be issued upon the
cash exercise of outstanding warrants at an exercise price of $17.00 per
share upon the closing of this offering. Excludes 4,963,896 shares of common
stock issuable upon the exercise of stock options outstanding as of
September 1, 2000, with a weighted average exercise price of $7.15 per
share, 2,770,908 of which are exercisable, a portion of which are subject to
repurchase, and warrants to purchase 2,709,090 shares of common stock that
will be outstanding after the offering, with a weighted average exercise
price of $18.68 per share, that become exercisable upon the achievement of
certain milestones. See "Capitalization."

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OTHER INFORMATION

We were incorporated in Colorado in April 1995 under the name KaSTAR
Satellite Communications Corp. In May 1999 we reincorporated in Delaware. We
recently changed our name from iSKY, Inc. to Wildblue Communications, Inc. Our
principal executive office is located at 4600 South Syracuse Street, Suite 500,
Denver, Colorado 80237 and our telephone number is (720) 554-7400. Our website
address is on the world wide web at "wildblue.com." We do not incorporate the
information on our website into this prospectus, and you should not consider it
part of this prospectus.

We own applications for federal registration and claim rights in the
following service marks and trademarks: WILDBLUE COMMUNICATIONS and WILDBLUE. We
also claim rights in the following service marks and trademarks: a stylized W
and the phrase BROADBAND. WITHIN YOUR REACH. This prospectus also refers to
trade names and trademarks of other companies.

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Except as otherwise indicated, all information in this prospectus:

- gives effect to a one for four reverse stock split to become effective
prior to the closing of the offering;

- assumes the exercise of outstanding warrants for 3,394,327 shares of
preferred stock at an exercise price of $17.00 per share, which will
expire if not exercised prior to the closing of this offering;

- gives effect to the automatic conversion of all outstanding shares of
preferred stock into common stock upon the closing of the offering; and

- assumes no exercise of the underwriters' over-allotment option.

4
<PAGE> 9

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

In considering the following selected consolidated financial data, you
should also read our consolidated financial statements and notes and the section
captioned "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The consolidated statements of operations data for the
three-year period ended December 31, 1999 and the consolidated balance sheets
data as of December 31, 1999 and 1998, are derived from our consolidated
financial statements. These statements have been audited by KPMG LLP,
independent certified public accountants. The unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements and, in the opinion of our management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the information. You should not assume that our results of
operations for the six months ended June 30, 2000 and 1999 indicate what our
results will be for the full year.

<TABLE>
<CAPTION>
SIX-MONTH PERIODS APRIL 21, 1995
ENDED JUNE 30, YEARS ENDED DECEMBER 31, (INCEPTION) TO
---------------------- ------------------------------------- JUNE 30,
2000 1999 1999 1998 1997 2000(C)
-------- ----------- ----------- ---------- ---------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue (a)........... $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses.... 3,693 3,006 4,604 949 594 10,019
Interest expense
(income), net....... (1,312) 95 402 270 72 (568)
Net loss.............. $ (2,540) $ (3,090) $ (4,859) $ (1,219) $ (666) $ (9,462)
======== =========== =========== ========== ========== ========
Net loss per
share(b)............ $(141.26) $(16,438.44) $(51,694.91) $(4,876.52) $(2,662.62)
======== =========== =========== ========== ==========
Unaudited pro forma
net loss per
share(b)............ (.08) (.40)
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash, cash equivalents
and marketable
securities.......... $103,988 $ 7,198 $ 27,947 $ 1,534 $ -- $103,988
Working capital
(deficit)........... 103,833 7,104 (1,955) (3,732) (953) 103,833
Property, equipment
and assets under
construction, net... 120,263 735 9,598 460 -- 120,263
Total assets.......... 251,358 8,621 38,614 2,952 341 251,358
Vendor financing...... 20,000 -- -- -- -- 20,000
Total stockholders'
equity (deficit).... 231,125 8,455 8,635 (2,393) (612) 231,125
</TABLE>

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(a) WildBlue is a development stage enterprise and has not generated any
revenue.

(b) See Note 1 of the Notes to Consolidated Financial Statements for an
explanation of the determination of the number of shares used in per share
calculations.

5
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RISK FACTORS

Before you invest in our common stock, you should understand the high
degree of risk involved. You should consider carefully the following risks and
other information in this prospectus, including our historical consolidated
financial statements and related notes, before you decide to purchase shares of
our common stock. The following risks and uncertainties are not the only ones we
face. However, these are the risks our management believes are material. If any
of the following risks actually occur, our business, financial condition and
operating results could be adversely affected. As a result, the trading price of
our common stock could decline and you could lose part or all of your
investment.

RISKS RELATED TO OUR LIMITED HISTORY AND OUR FINANCIAL CONDITION

YOU COULD LOSE MONEY ON YOUR INVESTMENT BECAUSE WE HAVE NOT STARTED OPERATIONS
OR GENERATED ANY CUSTOMER REVENUE.

We are a development-stage company and still need to develop our WildBlue
service significantly before we can offer it to consumers. We have not yet
generated any customer revenue and we will not do so until we develop our
network, successfully construct and launch WildBlue I and obtain customers for
our WildBlue service. We currently expect to launch WildBlue I in the first
quarter of 2002 and begin commercial service shortly thereafter, although we
might not be able to launch and commence service by that time, or at all. Unless
we generate significant revenue, we will not become profitable, and you could
lose money on your investment.

OUR EXPENDITURES AND LOSSES HAVE BEEN SIGNIFICANT AND WE EXPECT THEM TO GROW,
AND WE MIGHT NOT BECOME PROFITABLE.

As of June 30, 2000, we had incurred significant capital expenditures and
cash operating losses of approximately $114 million in connection with the
development of our WildBlue system. We have incurred and expect to continue
incurring significant operating losses and might not achieve, sustain or
increase profitability. Our operating plan requires substantial capital and
operating expenditures before we can begin to realize any significant revenue.
We expect our net losses and negative cash flow to grow as we continue to
develop and build our WildBlue system, make payments under our various contracts
and begin to incur marketing costs. If we do not achieve or sustain
profitability, we might not be able to continue our operations. We had an
accumulated deficit of $7.3 million at December 31, 1999, and $11.1 million at
June 30, 2000. We are likely to continue experiencing operating losses and
negative cash flow from operations for several years.

TO FUND OUR ANTICIPATED CAPITAL EXPENDITURES AND OPERATIONS, WE NEED SIGNIFICANT
ADDITIONAL CAPITAL WHICH MIGHT NOT BE AVAILABLE. WE MIGHT NOT BE ABLE TO
CONTINUE OUR OPERATIONS IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL ON
REASONABLE TERMS.

We estimate that we will need approximately $ million, after giving
effect to the net proceeds from this offering and currently available vendor
financing, to meet our needs until we launch our WildBlue service, and we will
require significant additional funds after introducing our service. If we are
unable to obtain required funds when needed and on commercially reasonable
terms, we might not be able to continue our operations and we could default on
our financing obligations. In addition, our actual financing requirements could
vary significantly from our projections. We might have to raise more funds than
we expect, or raise them sooner than we expect, to remain in business and to
continue to develop and market our WildBlue service. If we fail to obtain any
necessary financing on reasonable terms or a timely basis:

- our satellite construction, launch, or other milestones necessary to
commence our WildBlue service could be substantially delayed, or their
costs could significantly increase;

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<PAGE> 11

- we could default on our commitments to our satellite construction or
launch contractors, or other creditors, potentially leading to delay or
termination of construction, incurrence of material cash penalties, or an
inability to launch our satellites or perform other services critical to
our business; and

- we might not be able to launch our WildBlue service as planned and might
have to discontinue operations or attempt to sell our assets.

OUR FUTURE FINANCING ACTIVITIES COULD CAUSE US TO BECOME HIGHLY LEVERAGED, WHICH
COULD RESULT IN AN INABILITY TO MEET OUR FINANCING OBLIGATIONS AND COULD
RESTRICT OUR ABILITY TO OBTAIN ADDITIONAL DEBT FINANCING.

A significant portion of our future financing requirements might be met
through the sale of debt securities. As a result, we could become highly
leveraged and might not be able to meet our financing obligations. The financing
terms of any of these debt securities could also contain restrictive covenants
or require us to pledge our assets as collateral, which could limit our ability
to obtain additional debt financing. We might not generate sufficient cash flow
to make required payments on any of our indebtedness, which could limit our
ability to develop our business.

RISKS RELATING TO OUR PLANNED SATELLITE LAUNCH AND OPERATIONS

OUR SATELLITES COULD BE DAMAGED OR DESTROYED DURING LAUNCH, WHICH COULD PREVENT
US FROM COMMENCING OPERATIONS OR FURTHER EXPANDING OUR BUSINESS.

If we fail to launch one or more of our satellites, we might not be able to
offer our WildBlue service or expand our business. A significant percentage of
satellites never become operational because of launch failure, satellite
destruction or damage during launch, or improper orbital placement. We have
contracted with Arianespace to launch WildBlue I and WildBlue III, and we are
relying on Telesat to procure launch services for WildBlue II, but they might
not be able to successfully launch these satellites, and our contractual
remedies will not adequately compensate us for lost revenue. We will not be able
to offer any service and generate any revenue until we launch WildBlue I, and we
might not be able to generate significant additional revenue and expand our
business if we fail to launch subsequent satellites.

DELAYS IN THE CONSTRUCTION AND LAUNCH OF SATELLITES ARE COMMON, AND PERFORMANCE
FAILURE BY OUR SATELLITE AND LAUNCH CONTRACTORS, OR MANUFACTURERS OF OTHER
COMPONENTS OF OUR WILDBLUE SYSTEM, COULD DELAY THE INTRODUCTION OR EXPANSION OF
OUR WILDBLUE SERVICE AND ABILITY TO MEET OUR REVENUE PROJECTIONS.

We might not be able to timely introduce and expand our WildBlue service
and meet our revenue expectations if there is a delay in manufacturing or
launching our satellites or other critical components or services of our
WildBlue system. Delays in the construction and launch of satellites are common,
and there are limited suppliers of these services. Satellite manufacturers, in
particular, often fall behind schedule, and once a manufacturer has begun to
build a satellite for us, it is impractical to hire another company to finish
it. We have contracted with Loral to manufacture WildBlue I, and we expect to
contract with Loral or other satellite manufacturers to build additional
satellites. Loral relies on subcontractors to deliver parts which are essential
to the construction of our satellites. If any of these subcontractors is delayed
in delivering the necessary parts, Loral may be delayed in its construction of
our satellites. For example, a subcontractor for Loral has a production backlog
of traveling wave tubes, a critical component of WildBlue I. Any significant
delay in the delivery of the traveling wave tubes to Loral could delay the
construction and launch of WildBlue I. We have contracted with Arianespace to
launch WildBlue I and WildBlue III. WildBlue II will be owned and operated by
Telesat, and therefore we must rely on Telesat to construct and launch WildBlue
II. If any of these suppliers becomes insolvent or fails to perform their
obligations for us in a timely manner, the introduction, operation or expansion
of our WildBlue service could be delayed. If any of these suppliers default on
their contracts, our contractual remedies will not adequately compensate us for
our lost revenue and our anticipated competitive advantage of being the first
company to offer broadband Internet access through a Ka-band GEO satellite
system.

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FAILURE TO DEVELOP KEY VENDOR AND SERVICE-PROVIDER RELATIONSHIPS FOR ESSENTIAL
COMPONENTS OF OUR BUSINESS ON ACCEPTABLE TERMS OR IN A TIMELY MANNER COULD DELAY
THE INTRODUCTION OF OUR WILDBLUE SERVICE AND RESULT IN GREATER EXPENSES THAN WE
EXPECT.

We will depend on third parties to provide us with many services that will
be essential for the conduct of our business. If we fail to establish key
service-provider relationships on acceptable terms or in a timely manner, the
commencement of our WildBlue service could be delayed and our costs could
significantly increase. We are in various stages of discussions with third
parties to provide these essential services, which include:

- developing, manufacturing and distributing our CPE, which consists
primarily of a satellite dish and a modem;

- identifying and acquiring sites for our satellite gateway facilities;

- manufacturing and installing our satellite gateway facilities;

- marketing, distributing and installing our WildBlue service through
retail and wholesale channels;

- routing our customer traffic between the Internet and our gateways; and

- providing billing, technical, customer support and order processing
services.

These relationships will be vital to our ability to provide our WildBlue
service, to grow and add customers and to efficiently operate our business. We
might not be able to enter into these relationships or do so on commercially
reasonable terms or within the time necessary to launch our WildBlue service. If
we do enter into these relationships, our service providers and vendors might
not be sufficiently responsive to our needs or meet our performance standards,
which could increase our expenses, delay the introduction of our WildBlue
service or impair the quality of our WildBlue service.

OUR WILDBLUE SERVICE DEPENDS ON THE DEVELOPMENT AND INTEGRATION OF COMPLEX
TECHNOLOGIES IN A NOVEL CONFIGURATION THAT MIGHT NOT FUNCTION AS DESIGNED, WHICH
MIGHT PREVENT US FROM OFFERING OUR WILDBLUE SERVICE AS PLANNED, OR AT ALL.

Our WildBlue service will require new applications of existing technology
and the complex integration of different technologies, which might not operate
as designed. Components of our satellite, gateway and CPE technologies are still
being developed and have not yet been tested in actual operations. Hardware or
software errors in space or on the ground could increase costs, delay our
ability to offer our WildBlue service, cause us to lose customers or prevent us
from offering our WildBlue service at all, each of which could limit our ability
to generate revenue and become profitable. We will have to integrate for the
first time many sophisticated satellite and Internet communications technologies
before we can begin offering our WildBlue service. We will not know definitively
if our satellite network system will properly function until we have deployed
and tested a substantial portion of our WildBlue system.

PREMATURE FAILURE OF OUR SATELLITES COULD HURT OUR BUSINESS REPUTATION AND
PROJECTED REVENUE AND EARNINGS.

Satellites have limited useful lives, and if one of our satellites were to
prematurely fail, it could adversely affect the quality of our WildBlue service,
our business reputation, and our projected revenue and earnings. If WildBlue I
fails before we have launched any other satellites, we could be unable to
provide our WildBlue service for at least one year after we currently expect. We
expect WildBlue I to have a useful life of approximately 12 years and each of
our subsequent satellites to have a useful life of approximately 15 years. Any
of our satellites could fail before the end of their useful lives, and repairing
GEO satellites

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such as ours while they are in orbit is not feasible. There are many causes for
the in-orbit failure of satellites, including:

- component failure;

- loss of power or fuel;

- construction defects;

- unexpected degradation of solar panels;

- mistakes in issuing commands to the satellite;

- inability to control the position, altitude, or orientation of the
satellite;

- disruptive military actions or acts of war; and

- damage or destruction due to solar storms or other astronomical events,
or collisions with space debris.

Any premature failure could hurt market acceptance of our WildBlue service and
our competitive position.

IF THE FAILURE RATE OF SATELLITE LAUNCHES OR SATELLITE OPERATIONS INCREASES, THE
COST OF INSURANCE FOR OUR SATELLITES COULD INCREASE SIGNIFICANTLY, WHICH COULD
HARM OUR EARNINGS.

We have not yet obtained launch insurance or in-orbit insurance for
WildBlue I, and we may not obtain this insurance until shortly before its
launch. We do not intend to purchase third-party insurance for WildBlue II
because Telesat has agreed to insure us for launch failure and for failures
during WildBlue II's first five years of operation up to an amount not to exceed
the total cash amount we will pay Telesat under our license agreement. We expect
that any insurance we do obtain for any of our satellites will only cover the
first few years of each satellite's operation, after which we may not be able to
obtain further insurance on commercially reasonable terms, if at all. If the
cost of obtaining insurance increases beyond what we anticipate, our ability to
achieve profitability could be harmed, the amount and type of coverage that we
can obtain could be limited, or we might not be able to obtain insurance at all.
The cost of insurance for a particular satellite is based on many factors,
including failure rates of similar launch vehicles or satellite components.
Current costs of insurance could increase significantly if there is an adverse
change in insurance market conditions, an unusual number of launch or
operational failures in the industry, or the failure of a single satellite using
components or a launch vehicle similar to ours. In recent years, there have been
several commercial satellite launch failures. Additionally, there have been
numerous government launch failures which were not insured.

WE COULD SUFFER A LOSS THAT IS NOT COVERED BY OUR INSURANCE, WHICH COULD RESULT
IN A SIGNIFICANT INCREASE IN OUR COSTS AND DELAY OR PROHIBIT OUR ABILITY TO
BECOME PROFITABLE.

Even if we obtain launch and in-orbit insurance, certain losses will not be
covered by our insurance, which could increase our costs or prohibit our ability
to become profitable. We expect that our insurance will contain customary
exclusions for losses caused by anti-satellite devices, nuclear radiation,
radioactive contamination or certain intentional acts designed to cause damage
to a satellite. Insurance also might not cover failures due to terrorism, war or
force majeure events such as natural catastrophes like electrostatic storms or
collisions with space debris. In addition, insurance will not reimburse us for
business interruption, loss of business, harm to our business reputation and
similar losses that might arise from a delay in the delivery of our WildBlue
service.

OUR SATELLITE TECHNOLOGY HAS INHERENT LIMITATIONS THAT COULD ADVERSELY AFFECT
THE QUALITY OF OUR SERVICE, CUSTOMER RETENTION, REVENUE GROWTH AND
PROFITABILITY.

Each of our GEO satellites will operate in the Ka-band portion of the
radio-frequency spectrum. Satellites of this type have inherent technological
limitations, the most significant being latency and an

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<PAGE> 14

occurrence known as rain fade. In addition, two-way communications satellites
generally have a fixed capacity limitation. Each of these limitations could
cause us to lose customers and could adversely affect the quality of our
service, revenue and ability to achieve or sustain profitability.

Latency. Latency is the delay caused by the time it takes for data
traveling in our network to travel up to one of our satellites and back to
earth. GEO satellites have a relatively high round-trip latency compared to
satellite systems closer to the earth or broadband systems located on the earth.
While the latency of low-orbit satellite and terrestrial-based broadband signals
is approximately 30 to 70 milliseconds, the latency of GEO satellite signals is
approximately 250 milliseconds, or one-quarter of a second. This relatively high
latency will prevent our satellite system from supporting, in a high-quality
fashion, time-sensitive services such as toll-quality voice calls and highly
interactive games, or similar products and services that may be developed and
introduced over broadband networks in the future. This limitation could affect
our ability to compete with other broadband Internet services, such as
terrestrial broadband services, that do not experience similar latency.

Rain Fade. Rainfall affects Ka-band signals more severely than signals in
the lower frequency satellite communication bands currently in use, such as
Ku-band. This occurrence is known as rain fade. Although we have designed our
system to mitigate the effects of rain fade through the use of multiple gateway
sites and advanced technologies, our service could slow down or even stop during
periods of heavy rain. This limitation could adversely impact the quality and
market acceptance of our WildBlue service.

Fixed Capacity. Our satellites have a fixed amount of capacity to handle
two-way data traffic. As a result, we might not be able to meet our customers'
transmission speed expectations. The transmission speeds we can deliver to our
customers at any particular time depend on several factors that we cannot
predict, such as the number of customers online at any one time, the connection
speeds used by these customers, their usage patterns, the types and quantity of
content accessed over our system and the geographic location of our customers.
Although we have designed our system to account for anticipated usage patterns,
we might not be able to provide a satisfactory broadband experience for our
customers at all times due to capacity constraints. If we do not have sufficient
capacity on a particular satellite or in a specific geographic region to meet
the peak demand levels, some of our customers will experience service
degradation, such as slower than expected access speeds, which could damage our
business reputation, cause customer dissatisfaction and result in a loss of
customers. Installing additional capacity or reallocating existing capacity
could be expensive and time consuming. As a result, our fixed-capacity
limitation could negatively affect our revenue.

RISKS RELATED TO THE MARKET FOR OUR SERVICES

WE WILL FACE INTENSE COMPETITION FROM PROVIDERS OF TERRESTRIAL BROADBAND
SERVICES AND OTHER SATELLITE SYSTEM OPERATORS, AND IF WE CANNOT EFFECTIVELY
COMPETE, WE MIGHT BE UNABLE TO EXPAND OUR BUSINESS AND ACHIEVE PROFITABILITY.

We will face competition from companies providing a wide variety of
wireless and wireline Internet access services, some of which could have
distinct advantages over our service. We might not be able to effectively
compete with these companies, which could limit our revenue and our ability to
achieve, sustain or grow profitability. Unlike our WildBlue service, some of
these services require little or no start-up costs for consumers, and they do
not require consumers to install a satellite dish. Other satellite operators
hold FCC licenses that allow them to provide satellite broadband Internet
access. At least two satellite operators, not yet operating, have announced
plans to begin offering two-way satellite Internet access using existing Ku-band
satellites later this year, and several other companies have announced that they
will begin to offer satellite broadband Internet access between now and 2005.

We could also experience increased competition from new terrestrial
wireless technologies, such as local multi-point distribution services and
multi-channel multi-point distribution services. Mergers, joint ventures and
alliances among franchise, wireless or private cable television operators,
regional Bell operating companies and others could result in providers offering
bundled telecommunications services in competition

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with us. Increased competition might result in our inability to obtain
significant market share or compel us to reduce prices to remain competitive,
which could result in lower gross margins.

Many of our competitors and potential competitors have widespread brand
recognition, existing partnerships with industry participants and greater
financial, marketing, distribution, technical and other resources than we do. As
a result, they might be able to respond more quickly than we can to new
opportunities and technologies. In addition, many of these competitors already
offer, or will offer, Internet access packages integrated with other
communications services. Our ability to compete with these companies will depend
on our ability to provide substantially similar or better service at prices that
are competitive with those offered by these companies and to effectively market
our WildBlue service.

IF WE ARE NOT ABLE TO PROVIDE OUR WILDBLUE SERVICE AT COMPETITIVE PRICES, OUR
SALES WILL SUFFER.

We might not be able to offer our WildBlue service at prices competitive
with other broadband service providers, which could limit our sales and revenue
growth. The manufacturing and distribution costs of our WildBlue system could be
more expensive than we anticipate, making it difficult for us to offer our
WildBlue service to customers at prices that will induce them to purchase our
WildBlue service and allow us to become profitable. Pricing of services to
consumers in the telecommunications and Internet access industries, both of
which have similarities to the broadband service industry, have historically
fallen, and we expect this to happen in the broadband Internet access industry
as well. We initially intend to subsidize the cost of acquiring and installing
our CPE to encourage customers to make an initial investment in our WildBlue
service. As competition to provide broadband Internet access services increases,
we could be forced to lower prices for our WildBlue service if our competitors
engage in volume-based pricing and other forms of price competition. As a
result, we might not be able to compete successfully with existing or potential
competitors in the broadband Internet access market.

OUR REVENUE GROWTH DEPENDS ON OUR ABILITY TO IMPLEMENT A SUCCESSFUL DISTRIBUTION
STRATEGY FOR OUR WILDBLUE SERVICE.

We intend to sell our WildBlue service primarily through local satellite
television dealers, DBS service providers, national electronics and department
store chains and through wholesale channels such as communications service
providers. We might not be able to establish or maintain these relationships,
which could decrease our revenue. We have limited experience in developing
distribution relationships of this type and to date have entered into only one.
This agreement with EchoStar does not prevent EchoStar from also entering into
similar distribution agreements with our competitors, and EchoStar has entered
into a distribution agreement with a Ku-band satellite competitor. If we are
unsuccessful in developing additional distribution relationships, or if parties
with which we develop relationships do not perform as expected, our WildBlue
service might not achieve broad market acceptance and our ability to grow our
business could be significantly harmed.

DEMAND FOR OUR WILDBLUE SERVICE MIGHT BE INSUFFICIENT FOR US TO BECOME
PROFITABLE.

There is currently no two-way consumer-targeted satellite broadband service
in commercial operation in the United States. As a result, we cannot predict
with certainty the potential consumer demand for our WildBlue service or the
degree to which we will meet that demand. If demand for our WildBlue service
does not develop as expected and achieve consumer market acceptance, we might
not be able to generate enough revenue to become profitable or to sustain our
operations. Among other things, we believe that consumer acceptance of our
WildBlue service will depend upon our ability to:

- provide a competitively priced, high-quality satellite broadband service;

- successfully brand, market and sell our WildBlue service on a nationwide
basis;

- efficiently use established DBS distribution channels; and

- capitalize on our strategic distribution relationship with EchoStar and
enter into and capitalize on additional strategic distribution
relationships.
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We will initially focus our sales and marketing efforts to target the U.S.
households that will not have access to terrestrial broadband services, such as
DSL or cable modem service, at the time we commence our WildBlue service. We
have based our strategy to target these consumers on a number of assumptions,
some or all of which could prove to be incorrect. Even if markets for our
service develop, we could achieve a smaller share of these markets than we
currently anticipate.

RAPID TECHNOLOGICAL AND INDUSTRY CHANGES COULD MAKE OUR WILDBLUE SERVICE
OBSOLETE OR OUTDATED, WHICH COULD CAUSE OUR SALES TO SUFFER.

The broadband communications industry is characterized by rapid
technological change, frequent product innovations, changes in customer
requirements and expectations, and evolving industry standards. If we are unable
to keep pace with these changes, our sales will suffer. Competitors could have
access to technologies not available to us, which might enable them to build a
system that is more appealing to consumers. Products and services using new
technologies, or emerging industry standards, could make our technologies
obsolete. Our success will depend in part on our ability to bring our WildBlue
service to our target markets before competing technologies become widely
accepted, as well as our ability to adapt and implement new technologies and
services.

IF WE DO NOT EXPAND INTO INTERNATIONAL MARKETS OR COMPETE EFFECTIVELY IN THOSE
MARKETS, WE MIGHT NOT BE ABLE TO ACHIEVE REVENUE GROWTH CONSISTENT WITH OUR
BUSINESS PLAN.

We expect to derive a significant portion of our revenue from Canadian, and
over time, from Latin American markets. We do not anticipate providing
significant service in Canada until the first quarter of 2003 and in Latin
America until early 2004. If we are unable to successfully expand into Canadian
and Latin American markets, or are significantly delayed in our expansion
efforts, we might not be able to grow our long-term revenue. Our ability to
effectively expand into international markets is subject to a number of
challenges, some of which are outside our control, including:

- market growth for Internet services in other countries;

- business practices unfamiliar to us;

- difficulties in assessing, penetrating and maintaining each market;

- difficulties in establishing strategic relationships;

- disparate demographics that make our service too expensive for a
significant portion of the population in a particular market;

- currency exchange rate fluctuations;

- political and economic instability;

- potentially adverse tax consequences, including restrictions on the
repatriation of earnings;

- government regulations, tariffs and other trade barriers; and

- uncertain protection of intellectual property in other countries.

Any of these factors and others could adversely affect our revenue from
international operations and increase our cost structure.

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RISKS RELATED TO GOVERNMENT REGULATION OF OUR INDUSTRY AND
OUR LICENSE AGREEMENT TO USE CAPACITY

OUR LICENSES ISSUED BY THE FCC COULD EXPIRE, BE REVOKED OR BE MODIFIED, OR OUR
LICENSE TO USE CAPACITY ON A CANADIAN-AUTHORIZED SATELLITE COULD BE TERMINATED,
WHICH COULD SIGNIFICANTLY RESTRICT OUR OPERATIONS.

The FCC has granted us licenses to operate satellites at the 109.2 DEGREES
West Longitude, or W.L., and 73 DEGREES W.L. orbital positions, and we have
contractually licensed from Telesat Ka-band capacity on its satellite, which
will be located at 111.1 DEGREES W.L. Each of our FCC licenses requires us to
meet certain terms and conditions and comply with FCC regulations, including
operational parameters. If we do not meet the FCC terms and conditions, our FCC
licenses could expire and not be renewed, be revoked or be modified. If any
Canadian regulatory body determines that Telesat may not provide us access to
the Ka-band capacity on its satellite, our license with Telesat could be
terminated. Either of these occurrences could result in an inability to offer
our WildBlue service as planned and jeopardize our ability to continue our
operations. Each of our FCC licenses expires ten years after the satellite is
placed into orbit, or earlier if our operations do not conform to the terms and
conditions of the licenses.

Our failure to comply with these conditions or with FCC regulations could
result in fines, additional license conditions, failure to renew our license,
failure to grant applications for new authorizations, or license revocation or
modification. The FCC recently canceled seven licenses it issued in the Ka-band
because the licensees failed to meet construction milestones. If similar
milestones are imposed on us, our failure to comply with the milestones could
result in our licenses being revoked.

FAILURE TO COMPLY WITH EXISTING, CHANGING OR NEW REGULATORY REQUIREMENTS COULD
PREVENT OR DELAY OUR ABILITY TO IMPLEMENT OUR CURRENT BUSINESS PLAN.

We are subject to the regulatory authority of the FCC, the frequency
coordination process of the International Telecommunication Union, or ITU, and
the regulatory requirements of other countries in which we plan to offer our
WildBlue service. Failure to comply with existing, changing or new regulations
could prevent us from implementing our current business plan. Regulatory changes
could significantly impact our operations by, among other things:

- adding terms and conditions to the continuing effectiveness of our
licenses;

- changing blanket licensing requirements for our CPE;

- imposing fees or other charges, thereby raising our compliance costs;

- requiring that we relocate one or more of our satellites to a different
orbital location;

- allocating remaining Ka-band spectrum favorably to our competitors; and

- making current products obsolete.

We might need to modify our services or operations to comply with new or changed
regulations. These modifications could be expensive and time consuming, and
could adversely affect our ability to provide our WildBlue service cost
effectively or at all.

WE MUST OBTAIN ADDITIONAL AUTHORIZATIONS IN A TIMELY MANNER FROM THE FCC AND
NON-U.S. GOVERNMENTS BEFORE WE CAN OFFER OUR WILDBLUE SERVICE TO CONSUMERS AND
GENERATE SIGNIFICANT REVENUE.

Our existing FCC licenses require that we will obtain additional
authorizations necessary for the operation of our WildBlue system. In addition,
we have not yet applied for, or obtained, any necessary regulatory
authorizations from countries outside the United States in which we plan to
offer our WildBlue service. If we are unable to obtain these authorizations in a
timely manner or without adverse conditions, and maintain such authorizations we
might not be able to commence our operations and generate revenue as

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<PAGE> 18

planned. We must still obtain the following additional FCC and non-U.S.
government licenses and authorizations:

- specific spectrum for our downlink transmissions;

- spectrum for satellite telemetry, tracking and control, or TT&C,
operations;

- a blanket license that will permit our customers to transmit and receive
satellite signals from their homes and offices;

- authority to transmit signals to the United States from the Ka-band
capacity we have licensed on WildBlue II; and

- non-U.S. authorizations necessary to provide service in countries outside
the U.S.

FCC rules anticipate that a satellite operator will use spectrum at the
edges of its authorized band to conduct TT&C operations. However, because very
few Ka-band satellites have yet been launched, many parts of the world have no
facilities capable of communicating with a satellite in the Ka-band. This
presents a particular problem during the launch and initial transfer orbit
stages of our satellites' deployment, during which we will need to perform TT&C
over a wide portion of the international orbital arc, and in case of an
emergency, when we may need to draw upon TT&C capabilities from many locations
in order to establish contact with our satellite. Accordingly, we intend to
conduct these satellite TT&C operations in the much more established C-band
frequencies. However, because this would be a non-conforming use of spectrum
under the FCC's rules, we are not yet authorized to use these frequencies for
this purpose. In order to receive the necessary authorization, we must
demonstrate either that our TT&C operations will not interfere with other
conforming operations in the band or that we have successfully coordinated our
TT&C operations with all affected operators in the band. We have not yet begun
coordination nor filed the required application. Although the FCC has granted
authorization for similar non-conforming uses in the past, we may not be able to
make an appropriate demonstration and secure the required license modification.
Failure to obtain this authorization for the launch and transfer orbit phase
would preclude us from launching our satellites, while failure to obtain it for
emergency operations would leave us vulnerable in case of a catastrophic failure
of our satellites' normal TT&C subsystems.

Moreover, because use of the Ka-band for satellite services is just now
emerging, existing satellite TT&C facilities generally do not operate in the
band. Accordingly, we are exploring the options for using other bands for
ongoing TT&C operations as well. We may not obtain FCC authorization to use an
alternative band for this purpose. If we are unable to obtain authorization to
use alternative spectrum, we will have to use some of our Ka-band spectrum for
TT&C operations, which could increase the cost of these operations due to the
general lack of Ka-band facilities.

WE MUST OBTAIN AUTHORIZATION TO SERVE THE UNITED STATES MARKET FROM A
CANADIAN-AUTHORIZED SATELLITE BEFORE WE CAN PROVIDE SERVICES IN THE UNITED
STATES FROM WILDBLUE II.

Although Telesat holds a Canadian authorization for WildBlue II, we must
request and obtain FCC authorization before we provide our WildBlue service in
the United States from the 111.1 DEGREES W.L. orbital slot. No one has attempted
to provide broadband Internet service to the United States from a satellite not
licensed in the United States. Therefore, it is uncertain whether this or any
other regulatory approvals will be obtained. If we are unable to obtain this
authorization in a timely manner, or maintain this authorization, we will be
unable to offer our WildBlue service to the United States from WildBlue II.

WE MUST COORDINATE THE OPERATION OF OUR SATELLITES, AND TELESAT MUST COORDINATE
THE OPERATION OF WILDBLUE II, TO ENSURE THAT THEY DO NOT INTERFERE WITH
NEIGHBORING SATELLITES. IF WE DO NOT SUCCESSFULLY COORDINATE OUR OPERATIONS, OR
TELESAT DOES NOT SUCCESSFULLY COORDINATE THE OPERATIONS OF WILDBLUE II, OUR
ABILITY TO OFFER OUR WILDBLUE SERVICE COULD BE SIGNIFICANTLY HARMED.

Our FCC licenses, and Telesat's Canadian licenses, require that before each
of us begin operating our satellites, each of us must comply with the ITU
registration and coordination processes. If either of us fail to
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comply with the ITU coordination processes in a timely manner, we could be
delayed or prevented from offering our WildBlue service as planned and from
achieving or sustaining profitability. These processes require each of us to
coordinate with U.S. and non-U.S. governments and other Ka-band satellite
operators to ensure that our operations, including TT&C, and the operations of
international Ka-band satellite operators using neighboring orbital slots will
not interfere with each other. Some of these neighboring Ka-band satellite
operators have ITU priority over us, which means that we must ensure that our
operations do not interfere with theirs. In addition, either of us may be
required to comply with additional terms and conditions to operate satellites at
our orbital locations. These coordination negotiations can be costly and
protracted, and if they are not successful we could suffer a loss in the useable
capacity of WildBlue II or one or more of our satellites. For example, we may
have to operate our satellites at a lower power or limit the extent to which our
satellites may be used for commercial operations.

WE MUST OBTAIN U.S. GOVERNMENTAL APPROVAL BEFORE WE CAN LAUNCH OUR SATELLITES
FROM LOCATIONS OUTSIDE THE UNITED STATES. FAILURE TO OBTAIN APPROVAL COULD
SIGNIFICANTLY INCREASE OUR LAUNCH COSTS.

We expect WildBlue I, WildBlue II and WildBlue III will be launched from
Arianespace's facility in French Guiana. The required U.S. governmental
approvals have not yet been obtained for the launch of WildBlue II and III.
Failure to receive these approvals might require us to secure alternative launch
sites, which could result in a significant delay in our launch program and a
significant increase in the cost of our launches. International launches have
been politically sensitive because of the relationship between launch technology
and missile technology. For example, U.S. government policy has limited, and is
likely in the future to limit, launches from the former Soviet Union and China.
In deciding whether to grant an export license the U.S. government can consider,
among other things, national security and international policy factors.
Therefore, adverse changes in the international political climate, international
policy or political leadership could affect the availability of export licenses
for launches from particular countries. We are relying on the satellite
manufacturers, launch services provider and other third parties to obtain any
required export licenses for satellites launched outside the United States.

RISKS RELATING TO OUR PERSONNEL AND OUR INTELLECTUAL PROPERTY

OUR SUCCESS DEPENDS ON RETAINING OUR CURRENT KEY PERSONNEL, AND IF ANY OF THEM
LEAVE, IT COULD BE COSTLY TO REPLACE THEM.

Our success depends on the continued services of our senior management and
other key personnel, in particular Thomas E. Moore, our President and Chief
Executive Officer. We do not currently carry, and do not intend to obtain, key
person life insurance. Competition for qualified executives in our industry is
intense, and there are a limited number of persons with comparable experience.
Our industry is characterized by a high level of employee mobility and
aggressive recruiting of skilled personnel. If we lose the services of one or
more of our key personnel, it could be costly and time-consuming to replace them
and our revenue and ability to achieve, maintain or grow our profitability could
suffer.

FAILURE TO MANAGE OUR ANTICIPATED GROWTH AND EXPANSION COULD HARM OUR OPERATING
EFFICIENCY AND PREVENT US FROM CAPITALIZING ON ANY NEW OR EXISTING MARKET
OPPORTUNITIES.

We anticipate experiencing periods of rapid growth and expansion. If we
fail to effectively manage our growth and expansion, we could lose productivity
and not be able to capitalize on any new or existing market opportunities. Our
future performance depends on our ability to identify, hire, integrate and
retain highly skilled technical, managerial, sales and marketing personnel. We
plan to hire a significant number of employees in the next six to 18 months in
preparation for commencing our WildBlue service. New employees frequently
require extensive training before they achieve desired levels of productivity,
which is costly and time consuming to provide. Also, we must effectively execute
our operational and administrative procedures and control processes to manage
our anticipated growth and expansion. This projected growth and expansion is
expected to place a significant strain on our managerial, operational and
financial resources. Our management might be required to divert a
disproportionate amount of its attention away from day-to-day
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activities and to devote a substantial amount of time to managing our
anticipated growth and expansion. This diversion could adversely affect our
ability to adequately provide our WildBlue service to customers or manage our
relationships with suppliers, distributors and other third parties, which could
negatively impact our ability to achieve or maintain profitability.

OUR INTELLECTUAL PROPERTY PROTECTION COULD BE INADEQUATE, AND CLAIMS OF
INTELLECTUAL PROPERTY INFRINGEMENT COULD EXPOSE US OR OUR SUPPLIERS TO COSTS AND
POTENTIAL LOSSES.

If the intellectual property that we develop or license to use is not
adequately protected, third parties could duplicate our WildBlue system without
liability. In addition, third parties could challenge, invalidate or circumvent
our intellectual property rights or existing sublicenses. We rely on a
combination of patent, trademark, trade secret and copyright laws and
contractual restrictions to protect the proprietary aspects of our technology.
These legal protections afford only limited protection for our technology. We
are currently filing patent applications with the U.S. Patent and Trademark
Office, which may not be issued or their claims may be substantially narrowed.

Other parties could have patents or pending patent applications that later
mature into patents or inventions that block our ability to operate our system
or license our technology. We might have to resort to litigation to enforce our
rights under license agreements or to determine the scope and validity of other
parties' proprietary rights in the subject matter of those licenses. This could
be expensive and we might not succeed in any such litigation.

Third parties could bring suit against us for patent or other infringement
of intellectual property rights. Any such litigation could result in substantial
cost to us, and a diversion of efforts by our management. Adverse findings in
any proceeding could:

- subject us to significant liabilities to third parties;

- require us to seek licenses from third parties;

- block our ability to operate our WildBlue system or license its
technology; or

- otherwise adversely affect our ability to successfully develop and market
our WildBlue service.

RISKS RELATED TO THIS OFFERING

WE COULD FAIL TO MEET MARKET EXPECTATIONS BECAUSE OF FLUCTUATIONS IN OUR
QUARTERLY OPERATING RESULTS, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

Fluctuations in quarterly and annual results could cause our results of
operations in future periods to be below the expectations of public market
analysts and investors, which could cause the price of our common stock to
abruptly and significantly fall. If we fail to meet the milestones specified in
our FCC licenses, we might not be able to offer our WildBlue service as planned,
which could decrease the revenue growth rate we expect to achieve. If revenue
declines in a quarter, our earnings will decline because many of our expenses
are relatively fixed. In particular, research and development, depreciation,
insurance, system operations, marketing and general and administrative expenses
are not affected directly by variations in revenue.

IF OUR MANAGEMENT DOES NOT EFFECTIVELY APPLY THE NET PROCEEDS FROM THIS
OFFERING, OUR ABILITY TO GROW OUR BUSINESS WILL SUFFER.

Our management has broad discretion to allocate the net proceeds of the
offering. If our management's allocation of the net proceeds does not result in
efficient development of our WildBlue system, our ability to commence our
WildBlue service could require more capital than we currently anticipate and
might be

16
<PAGE> 21

delayed, thereby delaying our ability to generate revenue. The timing and amount
of our actual expenditures are subject to change and will be based on many
factors, including:

- progress in and scope of our product development activities and strategic
alliances;

- the contractual terms of the construction and launch of WildBlue III and
subsequent satellites;

- success of our sales and marketing efforts; and

- competitive market developments.

CONCENTRATION OF OWNERSHIP AMONG OUR EXISTING EXECUTIVE OFFICERS, DIRECTORS AND
PRINCIPAL SHAREHOLDERS COULD PREVENT NEW INVESTORS FROM INFLUENCING SIGNIFICANT
CORPORATE DECISIONS, WHICH COULD NEGATIVELY AFFECT YOUR INVESTMENT.

Our existing executive officers, directors and principal shareholders will
own, in the aggregate, based on their holdings as of September 1, 2000,
approximately % of our outstanding shares after the offering. As a result,
these parties acting together will be able to substantially influence the
outcome of all matters requiring approval by our shareholders, including the
election of directors and approval of significant corporate transactions. This
ability may delay or prevent a change in control if opposed by these parties
irrespective of whether the proposed transaction is beneficial to our
shareholders as a whole.

SOME OF OUR PRINCIPAL SHAREHOLDERS, INCLUDING THOSE WITH WHOM WE HAVE ENTERED
INTO MATERIAL CONTRACTS, HAVE INVESTED IN OUR COMPETITORS, AND THEY MAY COMPETE
DIRECTLY WITH US IN THE FUTURE. THEIR INTERESTS COULD CONFLICT WITH OUR BEST
INTERESTS OR THE BEST INTERESTS OF OUR OTHER SHAREHOLDERS.

Following the offering, our current principal shareholders will own
approximately % of our common stock on a fully diluted basis with total
voting power of approximately %. Some of our principal shareholders and
their affiliates are also our strategic partners with whom we have material
contracts, and we might enter into additional contracts with these or other
principal shareholders in the future. In addition to their investments in us,
some of these shareholders have investments, and may in the future make
investments, in other satellite, Internet, data and communications companies and
ventures, including our competitors. Some of our shareholders may also in the
future compete directly with us. For example, EchoStar is an investor in
Starband Communications, formerly known as Gilat-to-Home, and also has the right
to market and distribute the StarBand(SM) service, which will compete directly
with our WildBlue service. In addition, EchoStar has obtained FCC licenses to
operate Ka-band GEO satellites, which could in the future offer satellite
broadband Internet service that competes with our WildBlue service. Our
shareholders have no obligation to bring to us any investment or business
opportunities of which they become aware, even if the opportunities are within
our scope or objectives, and they may assist our competitors or compete with us
directly. These shareholders could also use their position as principal
shareholders and their management control to cause us to take actions that might
not be in our best interests or the best interests of our other shareholders.

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK, AND OUR STOCK PRICE
COULD DECLINE BELOW THE INITIAL PUBLIC OFFERING PRICE AND BE HIGHLY VOLATILE.

There has been no public market for our common stock and an active public
market for our common stock might not develop or be sustained after this
offering. If an active public market for our stock does not develop, you might
be unable to sell any shares of common stock that you purchase in this offering,
and the price of our stock could decrease below the initial public offering
price. The initial public offering price will be determined through negotiations
between us and our underwriters.

The stock market in general, and the stock prices of technology and
Internet-related companies in particular, have experienced extreme price and
volume fluctuations. This volatility is often unrelated or disproportionate to
the operating performance of these companies. Because we are in the
satellite-based Internet communications industry and do not currently have
revenue, we expect our stock price to be

17
<PAGE> 22

similarly volatile. Broad market and industry factors could reduce, or cause
volatility in, our stock price, regardless of our operating performance. Some of
these factors include:

- changes in financial estimates by securities analysts;

- changes in the performance or market valuations of other Internet,
telecommunications or satellite companies; and

- announcements by us of our failure to timely achieve significant
milestones, or announcements by us or our competitors of significant
milestone achievements, acquisitions, strategic partnerships, joint
ventures or capital commitments.

In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against that company. The institution of securities class action
litigation against us could result in substantial costs to us and a diversion of
our management's attention and resources even if the claims against us are
meritless.

FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD CAUSE OUR STOCK
PRICE TO FALL.

Sales of a substantial number of shares in the public market after this
offering, or the perception that these sales might occur, could depress the
market price of our common stock and could impair our ability to raise capital
through the sale of additional equity securities. After this offering, we will
have shares of common stock outstanding. Restrictions under the
securities laws and lock-up agreements limit the number of shares of common
stock that can be sold immediately following the public offering. Donaldson,
Lufkin & Jenrette Securities Corporation, in its sole discretion, could release
all or some portion of the shares subject to lock-up agreements. All of the
shares of common stock sold in this offering will be freely tradeable without
restrictions or further registration under the Securities Act of 1933, as
amended, except for any shares purchased by our affiliates as defined in Rule
144 under the Securities Act. The remaining 42,191,649 shares of common stock
outstanding after this offering plus an additional 2,770,908 shares issuable
upon the exercise of outstanding options, will be available for sale after the
expiration of their initial 180 day lock-up period.

THE VALUE OF YOUR INVESTMENT WILL BE DILUTED UPON CONSUMMATION OF THIS OFFERING.

The initial public offering price is substantially higher than the book
value per share of our common stock. Investors purchasing common stock in the
offering will incur immediate dilution of $ in net tangible book value
per share of common stock, based on the initial public offering price of $
per share. Investors will incur additional dilution upon the exercise of
outstanding stock options and warrants.

SOME PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY HAVE ANTI-TAKEOVER
EFFECTS THAT COULD DISCOURAGE AN ACQUISITION OF US BY OTHERS, EVEN IF AN
ACQUISITION WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.

Provisions in our certificate of incorporation and bylaws, as well as
provisions of Delaware law, could make it more difficult for a third party to
acquire us, even if doing so would benefit our shareholders. These provisions
include:

- authorizing the issuance of blank check preferred stock by a two-thirds
vote of our board of directors;

- limiting the removal of directors by the shareholders to removal for
cause unless such removal is approved by holders of at least two-thirds
of our outstanding common stock;

- prohibiting shareholder action by written consent, thereby requiring all
shareholder actions to be taken at a meeting of our shareholders;

18
<PAGE> 23

- eliminating the ability of shareholders to call a special meeting of
shareholders; and

- establishing advance notice requirements for nominations for election to
the Board of Directors or for proposing matters that can be acted upon at
shareholder meetings.

In addition, the provisions of Section 203 of the Delaware General Corporation
Law may discourage, delay or prevent a third party from acquiring us.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our business and our
industry that involve risks and uncertainties. These forward-looking statements
are usually accompanied by words like "will," "should," "plan," "expect,"
"believe," "anticipate," "seek," "intend" and similar expressions. Our actual
results may differ materially from the results expressed or implied by these
forward-looking statements because of the risk factors and other factors
disclosed in this prospectus. We undertake no obligation to update any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.

19
<PAGE> 24

USE OF PROCEEDS

We estimate that we will receive approximately $ million in net
proceeds from this offering, or $ if the underwriters' over-allotment option
is exercised in full, based upon an assumed initial public offering of $ per
share.

We expect to use our net proceeds from this offering:

- to fund our capital expenditures, which we expect will consist primarily
of the construction of our satellites and associated launch services, and
the construction of our gateway facilities;

- to fund development of our CPE, gateway technology and our WildBlue
service; and

- for working capital and other general corporate purposes.

The amounts we actually expend in these areas may vary significantly from our
expectations and will depend on a number of factors, including the progress and
scope of our WildBlue system development activities and strategic alliances.
Accordingly, management will retain broad discretion in the allocation of the
net proceeds of this offering. You will not have the opportunity to evaluate the
economic, financial or other information on which we base our decisions on how
to use the proceeds. A portion of the net proceeds may also be used to acquire
or invest in complementary businesses, technologies, services or products. We
have no current plans, agreements or commitments with respect to any such
acquisition or investment, and we are not currently engaged in any negotiations
with respect to any such transaction.

Pending such uses, the net proceeds of this offering will be invested in
short term, interest bearing, investment grade securities. We expect to require
additional financing to fund our capital expenditures and operating losses in
the future.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings to finance the growth and
development of our business and therefore do not anticipate paying any cash
dividends in the foreseeable future. Any future determination to pay cash
dividends will be at the discretion of our board of directors and will depend
upon our financial condition, operating results, capital requirements, covenants
in our debt instruments and other financing arrangements, and such other factors
as the board of directors deems relevant.

20
<PAGE> 25

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000. Our
capitalization is presented:

- on an actual basis;

- on a pro forma basis to reflect the exercise of warrants to purchase
3,394,327 shares of Series F preferred stock at an exercise price of
$17.00 per share; and

- on a pro forma basis as adjusted to reflect, in addition, the automatic
conversion of all of the outstanding shares of our preferred stock upon
the closing of this offering and the receipt of the estimated net
proceeds from the sale of common stock in this offering, after deducting
estimated underwriting discounts and estimated offering expenses payable
by us.

This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and the related notes included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
(UNAUDITED)
AS OF JUNE 30, 2000
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 65,836 $123,540 $
======== ======== ========
Marketable Securities....................................... $ 38,151 $ 38,151 $
======== ======== ========
Vendor financing............................................ $ 20,000 $ 20,000 $
======== ======== ========
STOCKHOLDERS' EQUITY:
Series A preferred stock, $0.001 par value, 26,494,627
shares authorized actual and pro forma and no shares
authorized pro forma as adjusted; 24,076,985 shares issued
and outstanding actual and pro forma and no shares issued
and outstanding pro forma as adjusted..................... $ 24 $ 24
Series B preferred stock, $0.001 par value, 601,748 shares
authorized actual and pro forma and no shares authorized
pro forma as adjusted; 546,837 shares issued and
outstanding actual and pro forma and no shares issued and
outstanding pro forma as adjusted......................... 1 1
Series C preferred stock, $0.001 par value, 7,740,757 shares
authorized actual and pro forma and no shares authorized
pro forma as adjusted; 5,983,892 shares issued and
outstanding actual and no shares issued and outstanding
pro forma as adjusted..................................... 6 6
Series D nonvoting preferred stock, $0.001 par value,
3,571,428 shares authorized actual and pro forma and no
shares authorized pro forma as adjusted; no shares issued
and outstanding actual and pro forma and no shares issued
and outstanding pro forma as adjusted..................... -- --
Series E preferred stock, $0.001 par value, 8,893,244 shares
authorized actual and pro forma and no shares authorized
pro forma as adjusted; 8,081,733 shares issued and
outstanding actual and pro forma and no shares issued and
outstanding pro forma as adjusted......................... 8 8
</TABLE>

21
<PAGE> 26

<TABLE>
<CAPTION>
(UNAUDITED)
AS OF JUNE 30, 2000
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Series F preferred stock, $0.001 par value, 5,535,162 shares
authorized actual and pro forma and no shares authorized
pro forma as adjusted; no shares issued and outstanding
actual and 3,394,327 pro forma and no shares issued and
outstanding pro forma as adjusted......................... -- 3
Common stock, $0.001 par value, 52,896,902 shares authorized
actual and 450,000,000 shares authorized pro forma and pro
forma as adjusted; 107,875 shares issued and outstanding
actual and pro forma and shares issued and outstanding pro
forma as adjusted......................................... --
Additional paid-in capital.................................. 247,523 305,224
Unearned compensation....................................... (5,534) (5,534)
Accumulated other comprehensive income...................... 149 149
Deficit accumulated during development stage................ (11,052) (11,052)
-------- -------- --------
Total stockholders' equity........................ 231,125 288,829
-------- -------- --------
Total capitalization.............................. $251,125 $308,829 $
======== ======== ========
</TABLE>

The number of shares of common stock referenced above, excludes as of June
30, 2000:

- 2,709,090 shares of common stock subject to issuance upon exercise of
outstanding warrants; and

- 4,963,896 shares of common stock issuable upon exercise of options
outstanding under our 1998 and 1999 management option plans.

22
<PAGE> 27

DILUTION

Our pro forma net tangible book value as of June 30, 2000 was $ per
share. Pro forma net tangible book value represents the amount of total tangible
assets less total liabilities, divided by the number of shares of common stock
outstanding after giving effect to the issuance of 3,394,327 shares of common
stock upon the cash exercise of warrants to purchase Series F preferred stock at
an exercise price of $17.00 per share and conversion of all outstanding shares
of preferred stock into common stock upon the closing of this offering. Without
taking into account any other changes in the net tangible book value after June
30, 2000, other than to give effect to our receipt of the net proceeds from the
sale of the shares of common stock in this offering at an assumed initial
public offering price of $ per share, our pro forma net tangible book value
as of June 30, 2000 would have been approximately $ , or $ per share.
This represents an immediate increase in net tangible book value of $ per
share to existing shareholders and an immediate dilution of $ per share to
new investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share at June 30,
2000...................................................... $
Increase per share attributable to new investors............ $
--------
Pro forma net tangible book value per share after this
offering..................................................
--------
Dilution per share to new investors (1)..................... $
========
</TABLE>

------------------------------

(1) If the underwriters' overallotment option is exercised in full, dilution per
share to new investors would be $ .

The following table summarizes, on a pro forma basis as of June 30, 2000,
the differences between existing shareholders and the new investors with respect
to:

- the number of shares of common stock purchased from us in the offering,
and conversion of all outstanding shares of preferred stock into common
stock;

- the total consideration paid to us; and

- the average price per share investors pay when they buy common stock in
this offering before deduction of estimated underwriting discounts and
offering expenses.

The calculation in this table with respect to shares to be purchased by new
investors in this offering reflect an assumed initial public offering price of
$ per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders........... 42,191,649 % $ % $
New investors...................
----------- ----- -------- ----- --------
Total................. 100.0% $ 100.0% $
=========== ===== ======== ===== ========
</TABLE>

The foregoing discussion and tables assume no exercise of the underwriters'
over-allotment option or of any outstanding stock options or warrants after June
30, 2000, other than warrants to acquire 3,394,327 shares of Series F preferred
stock which expire upon the closing of this offering. As of June 30, 2000, there
were outstanding options to purchase an aggregate of 4,963,896 shares of common
stock at a weighted average exercise price of $7.15 per share and outstanding
warrants to purchase 2,709,090 shares of common stock, with a weighted average
exercise price of $18.68 per share. There will be further dilution to new
investors to the extent any of these options or warrants are exercised.

23
<PAGE> 28

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR SIX-MONTH PERIODS
ENDED APRIL 21, 1995
JUNE 30, YEARS ENDED DECEMBER 31, (INCEPTION) TO
---------------------- ------------------------------------- JUNE 30,
2000 1999 1999 1998 1997 2000(C)
-------- ----------- ----------- ---------- ---------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue(a)............ $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses.... 3,693 3,006 4,604 949 594 10,019
Interest expense
(income),
net................. (1,312) 95 402 270 72 (568)
Net loss.............. $ (2,540) $ (3,090) $ (4,859) $ (1,219) $ (666) $ (9,462)
======== =========== =========== ========== ========== ========
Net loss per
share(b)............ $(141.26) $(16,438.44) $(51,694.91) $(4,876.52) $(2,662.62)
======== =========== =========== ========== ==========
Unaudited pro forma
net loss per
share(b)............ (.08) (.40)

BALANCE SHEET DATA (AT
END OF PERIOD):
Cash, cash equivalents
and marketable
securities.......... $103,988 $ 7,198 $ 27,947 $ 1,534 $ -- $103,988
Working capital
(deficit)........... 103,833 7,104 (1,955) (3,732) (953) 103,833
Property, equipment
and assets under
construction, net... 120,263 735 9,598 460 -- 120,263
Total assets.......... 251,358 8,621 38,614 2,952 341 251,358
Vendor financing...... 20,000 -- -- -- -- 20,000
Total stockholders'
equity (deficit).... 231,125 8,455 8,635 (2,393) (612) 231,125
</TABLE>

------------------------------

(a) WildBlue is a development stage enterprise and has not generated any
revenue.

(b) See Note 1 of the Notes to Consolidated Financial Statements for an
explanation of the determination of the number of shares used in per share
calculations.

24
<PAGE> 29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our financial statements
and related notes included elsewhere in this prospectus. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of a number of factors,
including, but not limited to those set forth under "Risk Factors" and elsewhere
in this prospectus.

OVERVIEW

We are in the development stage. Since our inception in April 1995, we have
devoted our efforts to designing and developing our Ka-band GEO satellite
system. Our development activities were limited until 1997, when the FCC
assigned us Ka-band fixed satellite service licenses at the 109.2 DEGREES W.L.
and 73 DEGREES W.L. and orbital locations. Our principal activities to date have
included recruiting our core management team, designing and developing our
WildBlue system architecture, contracting for the manufacture of elements of our
WildBlue system, establishing other commercial relationships and securing
financing.

We will not generate any revenue from operations until we launch our first
satellite and commence offering our WildBlue service, which we currently expect
to do in the second quarter of 2002. As a development-stage company, we have
incurred losses to date and expect to continue to incur significant losses for
the foreseeable future as we continue to design, develop and deploy our
satellite system and market our WildBlue service.

We are capitalizing the costs related to constructing and obtaining our
system assets, including satellites, gateways, FCC licenses and interest during
construction. We will depreciate these capitalized costs over the estimated
useful lives of these assets. Depreciation of our satellites will commence upon
in-orbit acceptance. Depreciation of our gateways and the amortization of FCC
licenses will commence upon achieving operational status.

After we begin commercial operations, we expect our primary source of
revenue to be monthly subscription fees from our customers. We currently
anticipate that our monthly subscription fee will depend on the level of
WildBlue service and type of customer, and we expect it to be competitive with
other broadband services. Also, we expect to derive additional revenue from
advertising sales and e-commerce opportunities associated with our WildBlue
portal, which we intend to develop ourselves or in partnership with an existing
portal service provider. To the extent we enter into any wholesale arrangements
with communications partners to resell our service, we will receive revenue from
these partners based on either a capacity charge or subscriber-based fee. In
addition, we expect to derive revenue from the sale of unused satellite capacity
to capacity resellers, communications and media companies, and other business
users. We believe our unused satellite capacity can be used for a variety of
data and file transfer applications.

We expect that the operating expenses associated with our commercial
operations will primarily consist of marketing, sales, ISP, customer service and
billing, system operations, insurance and general and administrative costs. We
expect our marketing and sales costs to primarily consist of CPE and
installation subsidies, sales commissions, and advertising and promotional
costs. We expect to purchase our CPE directly from manufacturers for resale to
our customers or, possibly, wholesale partners. We project that these CPE costs
will be higher than corresponding revenue from the sale of our CPE. We
anticipate ISP costs to include Internet transit and peering costs, and the
provision of electronic mail and Web hosting services for our

25
<PAGE> 30

customers. Our system operations costs will include the cost of monitoring and
managing our terrestrial network and satellites, and maintaining our terrestrial
infrastructure.

We have issued performance-based warrants to purchase up to 1,800,000
shares of Series F preferred stock at a purchase price of $17.00 per share and
909,090 shares of Series C preferred stock at a purchase price of $22.00 per
share. These warrants become exercisable upon the achievement or occurrence of
performance milestones. We will recognize the fair value of the warrants, as
calculated using the Black-Scholes option pricing model, if and when these
warrants become exercisable. The fair value and volatility of our common stock
are critical components of the Black-Scholes option pricing model and we cannot
predict what those components might be in the future. If these warrants become
exercisable, we will incur non-cash charges, which are currently not
determinable and may be substantial. As of June 30, 2000, none of these warrants
are exercisable.

Amortization of Unearned Stock Compensation. We have granted stock options
to employees and consultants at prices subsequently deemed to be below the fair
value of the underlying stock on the date of grant or issuance. During the
period from April 25, 1995 through June 30, 2000, we recorded aggregate unearned
compensation of $6,675,619, of which $957,024 was expensed during the six-months
ended June 30, 2000 and $184,621 was expensed during the year ended December 31,
1999. While this expense has increased our net loss, it has had no impact on our
cash flows. With respect to employee stock-based compensation, we are amortizing
the deferred compensation expense ratably over the vesting period. Non-employee
grants are accounted for in accordance with Statement of Financial Accounting
Standards, or SFAS, No. 123 and Emerging Issues Task Force, or EITF, 96-18 and
valued using the Black-Scholes model. These grants are amortized ratably over
the vesting period.

RESULTS OF OPERATIONS

Since we are a development stage enterprise our historical results of
operations are not indicative of, and should not be relied upon as an indicator
of, our future performance.

SIX MONTHS ENDED JUNE 30, 2000 AND 1999

Operating Expenses. Operating expenses increased to $3.7 million for the
six months ended June 30, 2000 from $3.0 million for the six months ended June
30, 1999. This increase is due primarily to higher compensation expenses
including non-cash compensation expenses due to an increase in our personnel,
recruiting costs, travel costs, business development costs, office rent and
depreciation. In addition, legal fees increased substantially due to the larger
number of commercial transactions entered into by us. Operating expenses for the
six months ended June 30, 1999, included a $1.8 million one-time settlement
payment.

Interest Expense. Interest expense decreased to $163,000 for the six months
ended June 30, 2000 from $178,000 for the six months ended June 30, 1999. The
interest expense in 1999 was related to a convertible note which was
subsequently converted to preferred stock, whereas in 2000 the interest expense
was related to commitment fees associated with our vendor financing.

Interest Income. Interest income increased to $1.5 million for the six
months ended June 30, 2000 from $83,000 for the six months ended June 30, 1999.
This increase reflects an increase in cash available to invest in 2000.

Realized Gains on Sales of Marketable Securities. Realized gains on sales
of marketable securities increased to $134,000 for the six months ended June 30,
2000 from $11,000 for the six months ended June 30, 1999. This increase reflects
an increase in cash available to invest in 2000.

Net Loss. Net loss decreased to $2.5 million for the six-month period ended
June 30, 2000 from $3.1 million for the six-month period ended June 30, 1999.
After removing the effect of the settlement payment incurred in the prior
period, the net loss increased by $1.2 million which reflects an increase in
operating expenses and our share of losses in U.S. Monolithics, LLC, or USM,
offset by an increase in interest income.

26
<PAGE> 31

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

Operating Expenses. Operating expenses increased to $4.6 million in 1999
from $949,000 in 1998 and $594,000 in 1997. These increases were due primarily
to higher compensation expense due to an increase in our personnel to manage the
continued development of our satellite system and marketing plans, and also
reflects higher travel costs, office rent, business development costs, and a
$1.8 million one-time settlement payment.

Interest Expense. Interest expense increased to $768,000 in 1999 from
$298,000 in 1998 and $72,000 in 1997. These increases primarily reflect
increases in convertible notes outstanding in both 1999 and 1998.

Interest Income. Interest income increased to $366,000 in 1999 from $29,000
in 1998 and $0 in 1997. This reflects an increase in cash available to invest in
both 1999 and 1998.

Realized Gains on Sales of Marketable Securities. Realized gains on sales
of marketable securities increased to $147,000 in 1999 from $0 in 1998 and 1997.
The increase reflects an increase in cash available to invest in 1999.

Net Loss. Net loss increased to $4.9 million in 1999, from $1.2 million in
1998 and $666,000 in 1997. These increases primarily reflect increases in
operating expenses and net interest expense.

LIQUIDITY AND CAPITAL RESOURCES

FUNDS REQUIRED THROUGH SERVICE LAUNCH

We estimate that we will require at least $700 million to develop and
implement our WildBlue system from our inception through launch of our WildBlue
service, which we expect to occur in the second quarter of 2002. After taking
into account the net proceeds from this offering, we will have raised or have
committed financing of $ million, net of associated expenses. We will
require additional cash of approximately $ to provide working capital and
fund our capital program until we launch our WildBlue service. Following this
offering, we expect to have sufficient cash to meet our needs through the
quarter of 200[ ].

We intend to satisfy our funding requirements by issuing debt and equity
securities and by obtaining loans and other credit facilities from banks and
other financial institutions. We also expect to obtain additional amounts of
vendor financing from our satellite manufacturers, ground segment contractors
and equipment suppliers.

We intend to meet a significant portion of our future funding requirements
through the sale of debt securities. We may issue registered or unregistered
debt securities shortly after this offering or at any time in the future. If we
issue warrants to purchase common stock as part of any debt instrument, the
amount of common stock and purchase price of this stock would depend on market
conditions at the time we issue these warrants. We may not be able to obtain
required funds when needed or in commercially reasonable terms.

Our expected sources and uses of funds through launch of our WildBlue
service are as follows:

INCEPTION THROUGH SERVICE LAUNCH
(IN MILLIONS)

<TABLE>
<S> <C>
SOURCES OF FUNDS
Total net equity raised to
date........................ $239
Total committed vendor
financing................... 125
Anticipated proceeds from the
exercise of Series F
warrants.................... 58
Net proceeds from this
offering....................
Future capital requirements...
----
Total............... $700
====
USES OF FUNDS
Space segment (satellites,
launch and insurance)....... $510
Ground segment................ 100
Operating expenses and working
capital requirements........ 90
----
Total............... $700
====
</TABLE>

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<PAGE> 32

The sources and uses chart for the period from inception through service
launch assumes that we will commence commercial operations in the second quarter
of 2002 and does not take into account any interest income or interest expense
of any future offerings or financings. We will need additional capital after the
launch of our WildBlue service to continue financing our capital program and to
cover operating expenses before we generate positive cash flow from operations.
Our ability to generate positive cash flow depends upon many factors, including
our ability to generate significant revenue.

SOURCES OF FUNDS

To date, we have raised or have commitments for approximately $385 million
of capital, net of expenses and share repurchases. We have used this capital to
make payments under our satellite and launch services contracts, to develop our
CPE, make strategic investments and for working capital and operating expenses.
The $385 million raised to date includes $239 million raised through the
issuance of equity securities to our current shareholders, including equity for
services rendered, and $146 million committed in the form of vendor financing
arrangements from our contractors, of which we expect to use $125 million by our
service launch.

The $239 million in equity securities we issued was raised in the following
transactions:

- In August 1998, we raised $5 million through the issuance of a
convertible promissory note, which was later converted into preferred
stock, to TV Guide, a subsidiary of Gemstar-TV Guide International, Inc.

- In January 1999, we raised $5.2 million from the sale of preferred stock
to TRW.

- In May 1999, we raised $6.6 million from the sale of preferred stock to
an affiliate of Kleiner Perkins Caufield & Byers, or Kleiner Perkins, TV
Guide and other investors. We used a portion of the cash proceeds to
repurchase shares of stock from a shareholder for a total purchase price
of $3.4 million.

- In October 1999, we raised $29 million from the sale of convertible notes
to Liberty KASTR Corp., TV Guide, Kleiner Perkins and Televerde
Communications, L.P. In February 2000, these notes were converted into
shares of our preferred stock, and the same investors purchased
additional shares of our preferred stock for additional cash
consideration of $19.5 million. Liberty KASTR Corp. subsequently
transferred its shares to Liberty Satellite LLC, or Liberty Media.

- In December 1999, we raised $1.7 million from the sale of preferred stock
to Kleiner Perkins.

- In February 2000, we issued shares of preferred stock to an affiliate of
Arianespace to discharge an upfront fee of $1.8 million associated with a
vendor financing arrangement.

- In March 2000, we raised $50 million from the sale of non-voting
preferred stock and warrants to EchoStar. We also issued shares of
preferred stock to Telesat for goods and services valued at $37.1
million.

- In May 2000, we issued preferred stock and warrants to Kleiner Perkins,
Liberty Media, TV Guide, TRW, and our founders and their affiliates for
cash consideration of $86.6 million.

As part of our satellite contract with Loral, we can defer approximately
$20 million of payments under the contract. The interest rate on the deferred
payments is fixed, with repayment of principal beginning on the third
anniversary of WildBlue I achieving in-orbit commercial acceptance and ending on
the fifth anniversary. As of June 30, 2000, the Company had not yet deferred any
payments.

As part of our launch services agreement with Arianespace, an affiliate of
Arianespace has agreed to provide us with an aggregate of approximately $126
million of financing which, assuming certain conditions are met, we may convert
into long-term financing when we launch WildBlue I. The amount of financing is
allocated approximately evenly between the launches of WildBlue I and WildBlue
III. Through June 30, 2000, we have borrowed $20 million for the launch of
WildBlue I pursuant to this financing agreement. We

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<PAGE> 33

may convert each construction-period loan to a term loan with a term of
approximately seven years from launch, assuming certain conditions are met.

USES OF FUNDS

We expect to use approximately $700 million of funds through commercial
launch of our WildBlue service. Of this amount, we expect to use $510 million in
the space segment, $110 million in the ground segment and $80 million for
operating expenses and working capital.

Space Segment. We have contracted with Loral and Arianespace to design,
build and launch WildBlue I. Loral is also providing certain ground equipment,
software and launch support services for WildBlue I. Prior to the launch of
WildBlue I, we will purchase insurance covering its launch and in-orbit
operation. We also have entered into an agreement with Telesat, under which we
licensed 90% of the Ka-band capacity in WildBlue II, which will be owned and
operated by Telesat. Telesat has insured us against risk of loss during launch
and the first five years of operation. Under these agreements we are committed
to make aggregate payments of approximately $423 million. We expect that by the
time we launch our WildBlue service in the second quarter of 2002, we will have
paid an aggregate of $373 million under these contracts and will have paid an
additional $30 million for launch insurance for WildBlue I and other
miscellaneous items. As of June 30, 2000, we had paid approximately $138 million
under these agreements.

We expect to contract for the construction of WildBlue III by the second
quarter of 2001, and anticipate that by the time we launch our WildBlue service,
we will have paid an aggregate of $107 million under the WildBlue III satellite
construction and launch services contracts.

At the time we expect to launch our WildBlue service, we will require
significant additional costs to complete our WildBlue II and WildBlue III
capital programs. We estimate that in the aggregate these additional costs will
be approximately $260 million.

Ground Segment. Based on the design of the WildBlue system and preliminary
bids from various suppliers, we estimate that through service launch, we will
incur aggregate costs of approximately $100 million for our ground segment. We
expect these costs will cover the design, development, land and building costs,
and installation of the first six gateways associated with WildBlue I, our
network operation center, and development of our CPE. This amount also includes
our $6.5 million investment in USM. As of June 30, 2000, we had incurred
approximately $6 million of expenditures associated with our ground segment.

Operating Expenses and Working Capital. We estimate that we will require
cash for operating expenses and working capital of approximately $90 million
through service launch. From our inception through June 30, 2000, we have
incurred operating expenses of $10.0 million. Total cash used in operating
activities was $7.1 million. The difference between the loss incurred to date
and cash used in operating activities is due principally to depreciation and
amortization, our share of USM's losses and options compensation expense.

FUNDING REQUIRED FOLLOWING SERVICE LAUNCH

After we launch our WildBlue service, we will need significant additional
funds to cover our cash requirements before we generate sufficient cash flow
from operations. We cannot accurately predict the amount of additional funds
needed, since it will depend on business decisions to be made in the future,
revenue received from operations and capital and operating expenses required to
competitively offer our WildBlue service. We will need cash to cover capital
expenditures, including those associated with WildBlue II and WildBlue III,
operating expenses, marketing and promotional expenses, including an extensive
initial marketing campaign in connection with the launch of our WildBlue
service, upfront sales commissions and other residual commissions, subsidization
of our CPE, and other expenses that we cannot yet identify.

We intend to satisfy our funding requirements for the period following
service launch through a combination of debt, equity and vendor financings and,
if available, cash flow from operations. We may not be able to obtain required
funds when needed or on commercially reasonable terms.
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<PAGE> 34

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Substantially all of our cash equivalents and marketable securities are at
fixed rates, and therefore the fair value of these instruments is affected by
changes in market interest rates. However, as of June 30, 2000, all of our cash
equivalents mature within three months and all of our marketable securities
mature within five months. Due to the short-term nature of these investments, we
believe that we have no material exposure to changes in interest rates arising
from our investments. Therefore, we have included no quantitative tabular
disclosure in this prospectus.

As of June 30, 2000, $20 million was outstanding under one of our vendor
finance arrangements. Interest on this loan is tied to the British Bankers
Association Settlement Rates for deposits in U.S. Dollars and, therefore, we are
exposed to market risk resulting from changes in interest rates.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2000, the Financial Accounting Standards Board, or FASB, issued
interpretation No. 44 Accounting for Certain Transactions involving Stock
Compensation - and Interpretation of APB Opinion No. 25, or FIN 44. This
interpretation provides guidance on the accounting for certain stock option
transactions and subsequent amendments to stock option transactions. FIN 44 is
effective July 1, 2000, but certain conclusions cover specific events that occur
after either December 15, 1998 or January 12, 2000. The accompanying financial
statements reflect the provisions of FIN 44.

During 1998 the FASB issued Statement of Financial Accounting Standards, or
SFAS, No. 133 Accounting for Derivative Instruments and Hedging Activities,
which is effective for all fiscal years beginning after June 15, 2000. SFAS No.
133 establishes accounting and reporting standards for derivative instruments
and hedging activities by requiring that all derivative instruments be reported
as assets or liabilities and measured at their fair values. Under SFAS No. 133,
changes in the fair values of derivative instruments are recognized immediately
in earnings unless those instruments qualify as hedges of the:

- fair values of existing assets, liabilities or firm commitments;

- variability of cash flows of forecasted transactions; or

- foreign currency exposures of net investments in foreign operations.

Although we have not completed our assessment of the impact of SFAS No. 133
on our consolidated results of operations and financial position, we do not
expect that the impact of SFAS No. 133 will be significant, although it may be
significant.

In December 1999, the SEC released Staff Accounting Bulletin, or SAB, No.
101, Revenue Recognition in Financial Statements, which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. Subsequently, the SEC released SAB 101B, which delayed the
implementation date of SAB 101 for registrants with fiscal years that begin
between December 16, 1999 and March 15, 2000. We are required to be in
conformity with the provisions of SAB 101, as amended by SAB 101B, on October 1,
2000, and do not expect a material effect on our financial position, results of
operations or cash flows as a result of SAB 101.

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<PAGE> 35

BUSINESS

OVERVIEW

We are developing the first Ka-band GEO satellite system capable of
providing two-way, "always on," broadband Internet access directly to
residential and SOHO consumers. After we launch WildBlue I, we will be able to
offer our WildBlue service throughout the contiguous United States as well as to
portions of Canada. Subsequent satellites will augment our capacity in the
United States and Canada and allow us to offer our WildBlue service in most
Latin American countries. We expect to offer our residential customers
affordable Internet access at speeds of up to 1.5 Mbps, which is over 25 times
faster than a 56 Kbps dial-up Internet access connection. We expect to generate
revenue primarily from subscription fees for our WildBlue service at rates
competitive with existing terrestrial and proposed satellite-based broadband
services. Our primary target market will be the approximately 32 million U.S.
households that, according to the Yankee Group, will not have access to
terrestrial broadband services, such as DSL or cable modem services, at the time
we expect to commence our WildBlue service. We also believe that our WildBlue
service will provide a competitive alternative to terrestrial broadband services
where these services are available. The Yankee Group estimates that there will
be approximately 4.1 million U.S. residential satellite broadband customers in
2004. Our strategic orbital locations should allow U.S. consumers to receive
over a single WildBlue dish both our WildBlue service and either of the two U.S.
DBS services, EchoStar's DISH Network or Hughes Electronics Corporation's
DirecTV(R).

We expect to begin offering our WildBlue service in the United States in
the second quarter of 2002. Our milestones to date include the following:

- We have obtained licenses from the FCC to construct, launch and operate
Ka-band GEO satellites from orbital locations of 109.2 DEGREES W.L. and
73 DEGREES W.L. We believe these satellites will enable us to provide
satellite broadband Internet access to consumers located throughout the
contiguous United States and most of Canada and Latin America.

- We have contracted with Loral to construct, and Arianespace to launch,
WildBlue I. Arianespace has had 55 consecutive successful launches using
its Ariane-4 rocket, the launch vehicle for WildBlue I.

- We have an exclusive license with Telesat to use 90% of the Ka-band
capacity on Telesat's Anik F2 Satellite, or WildBlue II, which we expect
to be launched for Telesat in late 2002. WildBlue II will be located at
111.1 DEGREES W.L., which would, upon applicable regulatory approval,
increase our capacity to provide satellite broadband Internet access to
consumers in the contiguous United States and Canada.

- We have entered into an agreement with EchoStar that allows each of us to
market and distribute bundled WildBlue and DISH Network services in the
United States. The agreement also provides that we will work together to
develop a single set-top box that will serve as both a satellite modem
for our WildBlue service and a set-top box for the DISH Network.

- We have contracted with USM, of which we own approximately 35%, to
develop the transceiver unit for our dish. USM has completed the initial
design of the transceiver, and the microwave chip components of the
transceiver are currently undergoing pre-production fabrication.

- We have raised approximately $239 million from private sales of our
equity securities, including equity issued for services rendered, for the
development of our system. Our investors include entities strategic to
our business, such as EchoStar, Kleiner Perkins, Liberty Media, Telesat,
TRW and TV Guide.

MARKET OPPORTUNITY

We believe that the following factors demonstrate the market opportunity
for providing broadband Internet access through our Ka-band GEO satellite
system:

- Growing demand for broadband Internet access. The Internet is an
established global medium for communications and commerce. IDC projects
that the number of Internet users in the United States
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<PAGE> 36

will grow from approximately 123 million at the end of 2000 to
approximately 197 million by the end of 2003, a compound annual growth
rate of 17%. We believe consumer demand for high bandwidth applications
such as e-commerce, telecommuting and increased interactive content is
driving the demand for high-speed Internet access. Pioneer Consulting
estimates that aggregate Internet bandwidth demand at peak hours in the
United States will grow from 5.5 gigabits per second, or Gbps, in 1999 to
108 Gbps in 2008. We believe that increased development of and demand for
high-bandwidth applications will foster an increasing demand for
broadband Internet access. According to the Yankee Group, the number of
U.S. broadband subscribers will grow from 1.8 million at the end of 1999
to over 20 million by the end of 2004, an annual growth rate of 62%. The
Yankee Group also forecasts that there will be approximately 4.1 million
U.S. residential satellite broadband customers by the end of 2004.

- Underserved residential and SOHO markets. Existing terrestrial broadband
Internet access solutions, such as DSL and cable modem services, are not
currently available to many residential and SOHO consumers in urban areas
due to economic and technological constraints, and are generally
unavailable in less densely populated areas. The Yankee Group estimates
that at the time we expect to commence our WildBlue service in 2002,
approximately 32 million U.S. households will not have access to
terrestrial broadband services, such as DSL or cable modem services, and
we believe that many of these households may not have access to
terrestrial broadband options for the foreseeable future, if ever.

- Large and growing base of DBS subscribers. We believe the success of
U.S.-based DBS service providers demonstrates mass market acceptance of
satellite-delivered communications services. We estimate that since 1996
the number of DBS subscribers has grown at a compound annual rate of
39.8%, from approximately 4.2 million at the end of 1996 to approximately
11.5 million at the end of 1999. DBS service providers currently serve
approximately 13 million U.S. households, which is expected to grow to
over 26 million subscribers by the end of 2004, according to Paul Kagan
Associates, Inc.

- Underserved Latin American market. The Latin American market is comprised
of 23 countries with a total population of approximately 500 million
people. Because of the generally poor quality and limited availability of
the terrestrial communications infrastructure in Latin America, we
believe satellite-delivered broadband Internet access will have a
material competitive advantage over terrestrial alternatives. Internet
use in Latin America is relatively small, but rapidly growing. For
example, the Yankee Group projects that in Brazil, the largest country in
Latin America, the number of broadband subscribers will grow from 172,000
by the end of 2000 to 3.1 million by the end of 2004. Despite this
growth, however, wireline Internet access will only reach approximately
12% of the population of Latin America by 2004, according to Jupiter
Communications.

OUR STRATEGY

- Construct a low-cost, high capacity satellite broadband system using
proven technology. Our Ka-band satellite system architecture includes the
following elements to help minimize cost and technological risk, and
maximize capacity:

- our GEO satellite system allows us to offer our service throughout the
contiguous United States after the successful launch of our first
satellite, as compared to lower orbital satellite systems that require
multiple satellites to provide similar service;

- we will use "spot-beam" technology to maximize the aggregate capacity of
each satellite through frequency reuse, which will allow each of our
satellites to serve significantly more customers than existing Ku-band
satellites;

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<PAGE> 37

- we will use proven "bent-pipe" satellite technology, which does not use
any on-board digital signal processing or data switching capabilities.
Instead, equipment performing these functions will be located on the
ground in our gateways, significantly reducing development time,
technology risk and manufacturing cost, and enabling us to modify and
upgrade our system over time; and

- our CPE is based primarily on low-cost, standardized cable modem and DBS
technologies, which we believe will minimize development time,
technology risk and manufacturing cost.

- Aggressively target the large and growing DBS customer base. We will
aggressively target DBS subscribers, who have demonstrated their
willingness to purchase satellite-delivered communications services. Our
strategic orbital locations should allow U.S. consumers to receive both
our WildBlue service and either of the DBS services over a single
WildBlue dish. Paul Kagan Associates, Inc. projects that the number of
U.S. DBS subscribers will grow from approximately 18 million at the end
of 2001 to over 26 million by the end of 2004. We have entered into an
agreement with EchoStar, which, among other things, allows EchoStar to
market and distribute bundled WildBlue and DISH Network services through
its 23,000-store retail distribution network. As part of this agreement,
we also have the right to market and distribute this bundled offering
through our own distribution channels.

- Utilize established distribution channels. We intend to distribute our
WildBlue service through channels similar to those used by DBS service
providers, such as local satellite television dealers and national
electronics and department store retail chains. This will enable us to
take advantage of the distributors' existing customer relationships as
well as their years of experience selling, marketing and installing
satellite-based systems to consumers. Because our WildBlue service should
be available nationwide, we believe we will be able to enter into
national distribution agreements with large electronics and department
store chains. In addition to retail distribution channels, we may
distribute our service wholesale to one or more large communications
providers, who would market, install and provide customer support for our
service.

- Capitalize on relationships with our strategic investors. Our financing
strategy to date has focused on attracting investors who are strategic to
our business. To that end, we have assembled a strong and diverse
shareholder base, which includes EchoStar, Kleiner Perkins, Liberty
Media, Telesat, TRW and TV Guide. These investors can provide expertise
and support in the following areas:

- satellite design, construction, launch and operation;

- gateway design and implementation;

- retail distribution of consumer satellite communications services and
products;

- managing high-growth technology companies;

- recruiting key personnel;

- consumer-oriented broadband content; and

- Internet technology.

- Offer a nationwide, branded broadband solution. Unlike terrestrial
broadband alternatives, such as DSL and cable modem services, our
WildBlue system is designed to offer service throughout the contiguous
United States at the time we launch our service. We believe this will
provide significant economies of scale in our branding and advertising
initiatives. Shortly before we launch our first satellite, we intend to
commence a national advertising campaign introducing our WildBlue
service.

- Leverage our orbital slots to penetrate broadband markets in Canada and
Latin America. Following the launch of WildBlue II, we intend to market
and distribute our WildBlue service throughout Canada using methods
similar to those we will use in the United States. After we launch
WildBlue III, which is currently planned for late 2003, we expect to
offer our service to selected regions in Latin America

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<PAGE> 38

through local and pan-regional communications service providers, who will
market and distribute our service.

BENEFITS TO CONSUMERS

Our WildBlue service is designed to offer consumers the following benefits:

- High-speed access. Our system is designed to provide Internet access to
our residential customers at speeds of up to 1.5 Mbps. This rate is over
25 times faster than a 56 Kbps dial-up Internet access connection,
approximately four times faster than the 400 Kbps connection speed
expected to be offered by Ku-band satellite broadband providers, and
equivalent to the speeds currently provided by most DSL and cable modem
services.

- Tiered service packages. Our WildBlue service is designed to allow
consumers to choose between different speed and price packages based on
their individual preferences. For example, in addition to our standard
connection of up to 1.5 Mbps, we expect to offer a premium connection of
up to 3.0 Mbps for SOHO and other bandwidth-intensive consumers and a
value-priced connection of up to 500 Kbps for the most price-sensitive
consumers.

- Complete Internet access solution. Unlike many DSL packages, our WildBlue
service is designed to include important ISP features, such as e-mail
accounts and web-page hosting capabilities, eliminating the cost and
inconvenience of acquiring these features separately. We also plan to
offer our customers compelling broadband portals that will take full
advantage of our high-speed WildBlue service through graphic-rich and
streaming content, and will facilitate access to other broadband content
on the Internet. We intend to design distinct portals for each of our
residential and SOHO customer groups, which our customers can further
customize based on their personal preferences and needs. In addition, we
plan to offer on-line customer support functions through these portals.

SALES AND MARKETING

CONSUMER TARGETS

We will focus our sales and marketing efforts to target the following
consumer segments:

- Non-urban households. We will aggressively target non-urban households
through our planned nationwide advertising campaign and through other
focused marketing initiatives such as local television advertising, event
marketing and direct marketing. We expect that our advertising strategy
for these consumers will emphasize our flexible speed and pricing
packages and our higher speeds as compared with dial-up and Ku-band
Internet access.

- DBS households. Through direct marketing programs and satellite
television dealers, and by marketing our WildBlue service jointly with
DISH Network, we will aggressively target existing and prospective DBS
customers. We expect that our advertising strategy for these consumers
will emphasize their ability to receive both our WildBlue service and
either DBS service through a single WildBlue dish, the appealing image of
satellite services, our tiered speed and price packages, and our higher
speeds as compared with dial-up and Ku-band Internet services.

- Small offices/home offices. The International Telework Association
estimates that 19.6 million people telecommuted in the U.S. in 1999. We
intend to attract these consumers through targeted media buying, direct
marketing, and establishing relationships with other small business
service providers. We expect that our advertising strategy will emphasize
packages tailored to the needs of SOHO users, which may include higher
upstream and downstream speeds of up to 3.0 Mbps, additional e-mail

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<PAGE> 39

addresses, security software, and other value-added small business
services such as website design, website hosting and security services.

- Urban households. We will offer our WildBlue service to urban households
as a competitive alternative to DSL, cable modem and other broadband
services. We intend to reach these consumers through our national
advertising campaigns and other national marketing strategies. We expect
that our advertising strategy for these consumers will emphasize our
high-quality customer service, our always-on feature and our tiered speed
and price packages.

- Latin American consumers. Our primary target market in Latin America is
the SOHO market and the approximately 100 million people who, according
to Strategy Corporation, control 60% of the overall buying power in Latin
America. We expect to distribute our broadband capacity wholesale to
communications service providers or other strategic partners, and we
expect that these partners will be responsible for marketing and
distributing our broadband service to consumers.

PRICING

The price to consumers for our WildBlue service will consist of an initial
payment for the purchase and installation of the CPE and recurring monthly
subscription fees. We are targeting a range for the initial payment that we
believe will be attractive to consumers. We expect this initial payment will
decrease over time after our service is introduced. We plan to price our monthly
subscription fees to be competitive with other satellite and terrestrial
broadband Internet access services.

DISTRIBUTION

We intend to sell our service and CPE, branded with the WildBlue name,
primarily through local satellite television dealers and national electronics
and department store chains. These retailers or other third-party installation
specialists will install the CPE. This approach is similar to the approach
currently used by DBS service providers. We expect that our strategy will
include distribution through the following key channels:

- Local satellite television dealers. We expect to offer our WildBlue
service through local satellite television dealers, who have tended to
concentrate their sales activities in non-urban areas where many of our
target consumers live and work.

- National retail chains. We plan to offer our WildBlue service through
national consumer electronics stores, office superstores, department
stores and other national mass merchandisers. Because our WildBlue
service will be available nationwide, we believe we will be able to
negotiate national distribution agreements with these types of retailers.

- DBS service providers. By bundling our WildBlue service together with a
DBS service, we can share advertising, sales, installation and equipment
costs. For example, under our agreement with EchoStar, we will jointly
develop an integrated set-top box that will allow customers to receive
both our WildBlue service and DISH Network service through a single set
of equipment. In addition, the agreement gives each company the right to
market and sell this bundled equipment and service to consumers through
their respective distribution channels. Under the agreement, we and
EchoStar are entitled to commissions based on monthly subscription fees
generated by each customer who subscribes to the bundled service.
EchoStar has over 23,000 retail distribution outlets in the United
States, including Sears, Sam's Warehouse, Costco, Target and PC
Richard's.

- Wholesale channels in the United States and Canada. In addition to our
core retail business in the United States and Canada, we may offer
limited wholesale broadband capacity to one or more communications
service providers. Potential wholesale buyers of capacity may include
ISPs, telephone service providers, cable television operators, wireless
communications service providers, or other communications service
providers. We expect that these buyers of wholesale broadband capacity
will be responsible for marketing the broadband service to consumers and
performing installation, billing and customer service functions.
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<PAGE> 40

- Wholesale channels in Latin America. We plan to distribute our satellite
broadband Internet service in Latin America primarily through one or more
local and pan-regional communications service providers, who will
distribute our service directly to end users. We anticipate that these
distributors will be responsible for marketing the broadband service to
consumers and performing installation, billing and customer service
functions.

We plan to augment our distribution strategy with other channels such as
selling our service through Internet websites and other strategic partners. We
also intend to offer our WildBlue service through other non-traditional
channels, including new home builders, Realtors, apartment buildings, home
security companies, application service providers and other organizations that
have relationships with our target consumers.

MARKETING

We expect to promote WildBlue as a national brand with an exciting image.
We plan to commence a national marketing campaign to introduce the WildBlue
brand, which may include national and local television, online, print, radio and
billboard advertising, shortly before we begin offering our WildBlue service.

Ongoing marketing efforts will focus on increasing consumers' awareness of
our WildBlue brand and key service benefits. We also intend to implement
marketing strategies proven successful in generating sales in the DBS business,
such as:

- direct marketing campaigns targeting non-urban households and offices;

- promotional campaigns offering discounted installation or discounted
service for an introductory period with the purchase of WildBlue
equipment;

- incentive programs for retailer sales forces;

- in-store promotional campaigns, including displays located in electronics
and mass merchandise retail stores and new model homes;

- local advertising campaigns jointly funded with retailers; and

- local event marketing.

INSTALLATION AND CUSTOMER SERVICE

Installation. We plan to use third-party installers to install our CPE in
customers' homes and offices. We plan to use independent satellite television
dealers, national retailers that sell our services and national installation
firms that currently serve DBS service providers, to provide installation
services. We intend to require all third-party installers to pass a strict
initial WildBlue certification process and to comply with our quality assurance
procedures on an on-going basis.

Customer Service. To serve our WildBlue customers most effectively, we plan
to develop our own customer management system, based on software modules
currently used by other subscriber-based service companies, such as ISPs, cable
television and other communications service providers. We also plan to allow
potential and existing customers to call a single phone number to receive
assistance with equipment, content services, installation or other services. We
may initially outsource the customer service function to an experienced call
center operator until our customer base reaches a level that would allow us
efficiently to provide these services internally. We also intend to outsource
billing and remittance services to experienced providers.

OUR SYSTEM

SPACE SEGMENT

Geostationary Satellites. The orbit of a GEO satellite keeps it directly
over a given geographic location approximately 22,300 miles above the equator.
Because GEO satellites can transmit data over a very wide geographic area, our
system will require only one satellite to provide service virtually anywhere in
the

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contiguous United States. In addition, GEO satellites require less complex CPE
because the direction of the dish remains fixed and does not need to be able to
track moving or multiple satellites. Therefore, we believe that our system will
require lower capital costs and operational costs as compared with a non-GEO
satellite system offering similar service.

We have obtained FCC licenses to construct, launch and operate Ka-band
satellites from GEO orbital slots located at 109.2 DEGREES W.L. and 73 DEGREES
W.L. We plan to launch WildBlue I to our orbital slot at 109.2 DEGREES W.L. We
also have a license with Telesat for the exclusive right to use 90% of the
Ka-band capacity on WildBlue II, which we expect will be launched to the orbital
slot located at 111.1 DEGREES W.L. Our 109.2 DEGREES W.L. and 111.1 DEGREES W.L.
orbital locations should allow U.S. consumers to receive both our WildBlue
service and either of the DBS services over a single WildBlue dish.

The following table summarizes the peak aggregate capacity that WildBlue I
and WildBlue II are expected to provide for our WildBlue system:

<TABLE>
<CAPTION>
WILDBLUE I WILDBLUE II
---------- -----------
<S> <C> <C>
Orbital Slot Location..................... 109.2 DEGREES W.L. 111.1 DEGREES W.L.
Peak Aggregate Upstream and Downstream
Capacity (Gbps)......................... 7.3 6.2
Anticipated Launch Date................... First quarter of 2002 Fourth quarter of 2002
Expected Useful Life of Satellite......... 12 years 15 years
</TABLE>

Through our existing orbital slots and agreement with Telesat, we believe
we can increase our capacity by operating from up to four satellites. We expect
to construct and launch satellites designated as WildBlue III and WildBlue IV to
our orbital slots at 73 DEGREES and 109.2 DEGREES W.L., although we have not yet
determined the order of these launches. Upon our launch of either WildBlue III
or WildBlue IV to 109.2 DEGREES W.L., we intend to relocate WildBlue I to 111.1
DEGREES W.L., where we will co-locate it with WildBlue II, subject to regulatory
approval.

Ka-band and Spot-beam Technology. Ka-band satellites broadcast in a higher
frequency range than those operating in the Ku-band. Because of the higher
frequency in which they operate, Ka-band satellites can more effectively utilize
narrow, high-bandwidth spot beams than Ku-band satellites. Narrow spot beams put
a large concentration of bandwidth into a relatively small area, which allows us
to increase our capacity through a technique known as frequency reuse. With
frequency reuse, WildBlue I is designed to have an aggregate upstream and
downstream bandwidth of 6.0 gigahertz, or GHz, which is approximately four times
the aggregate bandwidth that existing Ku-band satellites can provide using the
same amount of radio spectrum.

Although Ka-band spot-beam satellites are relatively new, Ka-band
technology has been successfully tested by NASA's Advanced Communications
Technology Satellite, or ACTS, program, which launched a Ka-band satellite in
September 1993. We believe the ACTS program, which ended earlier this year, has
proven the viability of a two-way spot-beam system using Ka-band frequencies,
and it has provided a large public database of Ka-band signal propagation
information over North America. In addition, two private satellite operators
currently have Ka-band satellite capacity in operation in orbital locations over
Europe and Asia.

Satellite Design. We have designed our WildBlue satellites to operate in
what we refer to as a bent pipe configuration, in which the satellite relays
signals between our land-based gateways and our customers. Our satellites will
not contain on-board digital signal processing. Instead, they will simply
receive, retune, amplify, and redirect signals between gateways and our
customers' CPE. All of our digital signal processing operations will be on the
ground in our gateways, where we can more easily upgrade and maintain them. This
approach reduces the complexity and associated technological risk of our
satellite system. The expected useful lives of our satellites will be
approximately 12 years for WildBlue I and 15 years for WildBlue II and
subsequent satellites.

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<PAGE> 42

Loral is manufacturing WildBlue I, which is based on Loral's FS-1300
satellite bus, or orbit vehicle. The Loral FS-1300 family of satellite buses has
a history of reliability, with 27 such satellites currently in operation.
WildBlue I is designed to provide 35 subscriber beams and six gateway beams of
between 90 watts and 120 watts of power each. Loral has provided vendor
financing for the construction of WildBlue I.

WildBlue II will be owned and operated by Telesat. We have licensed from
Telesat the exclusive right to use up to 90% of the Ka-band capacity on the
satellite, and we are participating in the final design of WildBlue II's Ka-band
payload. Hughes is manufacturing WildBlue II, which is based on Hughes' HS 702
satellite bus. WildBlue II is designed to provide 45 Ka-band subscriber beams
and six Ka-band gateway beams of 90 watts of power each. We expect WildBlue II
will be launched in the fourth quarter of 2002 on an Ariane-5 launch vehicle.

We currently expect that WildBlue III will be a dedicated Ka-band satellite
based on a satellite bus comparable in size to WildBlue II. We currently
envision the satellite will provide 66 subscriber beams and 10 gateway beams of
up to 150 watts of power each. We expect to select a satellite manufacturer for
WildBlue III in the first half of 2001, and we expect to launch it on an
Ariane-5 launch vehicle in the second half of 2003. We have not yet decided on a
specific design for WildBlue IV, and, therefore, we have not yet begun to
solicit bids from satellite manufacturers. We currently expect to launch
WildBlue IV in 2004 or 2005.

Satellite Launch Services. In February 2000, we contracted with Arianespace
to launch WildBlue I and WildBlue III. Arianespace has successfully launched 55
consecutive satellites using our selected launch vehicle for WildBlue I, the
Ariane-4 launch vehicle. Arianespace has agreed to provide us with vendor
financing in connection with the launches of WildBlue I and WildBlue III.

Insurance. We intend to purchase insurance to cover the launch and first
five years of operation for each of the satellites we will own. Satellite
launches have significant risks, including destruction or damage of the
satellite during launch. Faulty launches can also result in failure to achieve
the proper orbital placement or improper operations. Approximately 15% of all
commercial GEO satellite launches have resulted in a total or constructive total
loss, although launch failure rates vary by launch vehicle and satellite
manufacturer. Satellite launch insurance typically covers both partial loss and
total loss of satellites for the period from intentional ignition through a
specified operating period of up to five years after the satellite is first
placed into service. We expect our coverage to include the cost of the
satellite, the cost of launch services, the insurance premium itself, and an
additional amount to cover a portion of our fixed costs. Insurance will not,
however, cover risks such as loss of revenue or other losses caused by business
interruption or damage due to force majeure or acts of war. We do not intend to
purchase third-party insurance for WildBlue II because Telesat has agreed to
insure us for launch failures and for failures during WildBlue II's first five
years of operation up to an amount not to exceed the total cash amount we will
pay Telesat under our license agreement.

GROUND SEGMENT

Satellite Control. Once we successfully place a satellite in orbit, we will
control it from ground stations. We are currently negotiating with select
vendors to provide these tracking, telemetry and control, or TT&C, services for
WildBlue I. Telesat will provide TT&C services for WildBlue II. Telesat provides
TT&C services for five satellites currently in orbit and has a history spanning
28 years of successfully controlling in-flight satellites.

Proprietary Gateway Technology. We intend to connect our satellite network
to the Internet using our proprietary gateway technology. Our gateways are
designed to connect our customers to the Internet, receive data from and
transmit data to our satellites, provide content caching and allow our customers
to access centralized services such as e-mail, web hosting, and support
functions. We are designing our proprietary Satellite Modem Termination Systems,
or SMTS, to incorporate intelligent processing much like a Cable Modem
Termination System, or CMTS, which manages shared bandwidth and converts radio
frequency signals to and from Internet protocol packet switching. This
processing should allow our customers to access a burst of bandwidth from the
shared network to download a requested file or web page and then release that
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<PAGE> 43

resource for allocation to other customers. This method is a more efficient use
of bandwidth than traditional circuit switched approaches, which designate a
dedicated connection with a host computer until it is terminated at the
customer's discretion by, for example, hanging up. We intend to install six
gateways each to support WildBlue I and WildBlue II. We have identified
preliminary locations for the WildBlue I gateways, which will be located near
Internet backbone access points. We expect our subsequent satellites to require
additional gateways.

Network Operating Center. We are designing our network operating center, or
NOC, to be a full-time monitoring and management center, where all components of
our gateways, backbone, and each satellite modem will be monitored remotely for
performance and service problems. We are designing our NOC to quickly and
accurately detect the status of any of our network components, including
satellite modems, and to remotely diagnose and in many cases correct many common
problems before they affect our service. The NOC does not monitor or manage the
satellites. This is done by the provider of TT&C services at a separate
satellite operations center, or SOC, although the NOC and SOC will be connected
over a secure network to provide real-time feedback between our terrestrial
components and space components. We have not yet determined whether we will
build our own NOC or obtain this service from an experienced service provider.

CONSUMER PREMISES EQUIPMENT

Our system will require customers to have a satellite dish approximately 26
inches in diameter mounted outside the house or building in which they are
receiving service. In addition to the dish, our CPE will include a satellite
modem, which is a device similar in size to an external cable modem. As part of
our agreement with EchoStar, we are jointly developing a single set-top box that
will contain the combined functionality of our satellite modem and EchoStar's
DBS set-top box. We believe this integrated equipment will lower the overall
cost of CPE and installation for customers subscribing to a bundled WildBlue and
DISH Network service offering.

In order to minimize the development time and manufacturing cost of our
CPE, we are incorporating standardized, high-volume, terrestrial-based
technologies wherever appropriate. In this way, we can benefit from the fact
that these technologies are standardized, proven and broadly manufactured. Most
significantly, we are using cable modem and DBS technologies as the foundation
of our CPE platform. We have selected these standardized technologies because
they locate most of the network control intelligence software in the gateway at
the SMTS. This design allows the SMTS to control and remotely program any of our
customers' satellite modems. If new applications or traffic patterns require us
to change the protocol of our ground segment, we can implement those changes by
changing the software in the SMTS rather than modifying each satellite modem. We
believe that the selection of this technology, which is already well-documented
and well-understood by communications industry participants, is a critical
component of our competitive advantage.

We have contracted with USM of which we own approximately 35%, to develop
the transceiver unit for our dish. USM has completed the initial design of the
transceiver, and the microwave chip components of the transceiver are currently
undergoing pre-production fabrication. USM is also beginning to design and test
the mechanical components of the transceiver.

COMPETITION

We will face competition from companies providing Internet access through a
variety of services, including satellite, traditional dial-up, DSL, cable modem,
ISP and terrestrial wireless connections. Many of our competitors and potential
competitors have established customer bases, widespread brand recognition and
existing partnerships with other industry participants, as well as substantially
greater financial, technical and marketing resources than we do. In addition, we
believe the FCC will grant new licenses that will enable additional competitors
to deliver broadband data services via satellite.

Our ability to compete could be affected by two inherent drawbacks of GEO
Ka-band satellite systems. First, the orbital position of a GEO satellite is
22,300 miles above the earth's surface, and signals take a quarter of a second
to travel up to our satellites and back to earth. This relatively high delay
time, or latency, will prevent our satellite system from supporting, in a
high-quality fashion, time-sensitive services such as
39
<PAGE> 44

toll-quality voice calls and highly interactive games. Second, rainfall affects
Ka-band signals more severely than signals in the lower frequency satellite
communications bands, an occurrence known as rain fade. Although we have
designed our system to mitigate the effects of rain fade through the use of
multiple gateway sites and advanced technologies, our service at times may slow
down or even stop during periods of heavy rain.

We expect significant competitive factors to include: price, service
reliability, ease of access and use, transmission speeds, breadth of service
offerings, customer support, brand recognition, operating experience, and the
ability to bundle complementary services. We expect to face competition from
three types of Internet access providers: Ka-band satellite broadband providers,
Ku-band satellite broadband providers and terrestrial Internet access providers.

Ka-Band Satellite Competitors. Four other companies are licensed and have
announced plans to provide Ka-band satellite broadband services:

- Hughes Electronics Corporation, through its Spaceway project, plans to
build a global, broadband communications system for high-speed corporate
and enterprise communications applications and consumer Internet access
services. The first phase of the project is expected to cost $1.4 billion
and will provide North American coverage using two GEO satellites. The
satellites will utilize on-board digital signal processing, packet
switching and spot-beam technology, and will provide transmission speeds
of between 16 Kbps and 6 Mbps. Commercial service is expected to commence
in early 2003.

- Astrolink Technologies Inc. is developing a global, broadband
communications system for high-speed corporate and governmental
communications services, and eventually consumer Internet access
services. The first phase of the project is expected to cost $3.6 billion
and will consist of four GEO satellites. The satellites will utilize
on-board digital signal processing, packet switching and spot-beam
technology, and will provide transmission speeds of up to 20 Mbps.
Commercial service is expected to commence in 2003.

- Teledesic LLC is developing a global, broadband communications system for
high-speed corporate, governmental, small business and community
communications services. The project is expected to cost $9 billion and
consist of a constellation of 288 low earth orbit, or LEO, satellites.
The satellites will utilize on-board digital signal processing and packet
switching, and will allow transmission speeds of up to 64 Mbps.
Commercial service is expected to commence in 2005.

- CyberStar L.P., an affiliate of Loral Space & Communications Ltd., has
announced plans to construct a satellite-based broadband delivery system
that, among other things, would provide consumer Internet access
services. The project is expected to cost $3 billion and would consist of
four Ka-band GEO satellites. The satellites would utilize spot beam
technology and allow transmission speeds averaging approximately 1.5
Mbps. Commercial service is expected to commence in 2003.

Ku-Band Satellite Competitors. Two companies are licensed and have
announced plans to provide two-way satellite broadband Internet access over
existing GEO Ku-band satellites:

- Gilat Satellite Networks Ltd., through an affiliate, Starband
Communications Inc., formerly known as Gilat-To-Home, plans to provide
Ku-band satellite broadband Internet access by the end of 2000 at average
downstream access speeds of between 300 and 400 Kbps. The StarBand dish
size is an elliptical 36 inches by 26 inches and, according to Starband
Communications, can be equipped to receive EchoStar's DISH Network
service. EchoStar is an investor in Starband Communications and also has
the right to market and distribute the StarBand service. Starband
Communications has stated its intention to develop a Ka-band Internet
access service, however, details have not yet been made public.

- Hughes Network Systems, or HNS, a unit of Hughes Electronics Corporation,
which through its DirecPC(R) product currently has a one-way satellite
Internet access offering utilizing a telephone line return path, has
announced plans to provide two-way satellite broadband Internet access in
early 2001. This new DirecPC service will provide downstream speeds of up
to 400 Kbps. DIRECTV, Inc., an
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<PAGE> 45

affiliate of HNS, will market a bundled DirecPC and DirecTV service,
which will be capable of being received over a single dish. HNS has
stated its intention to eventually migrate DirecPC customers to Hughes
Electronics' Ka-band Spaceway platform.

- SkyBridge GP, Inc., another potential Ku-band competitor, has announced
plans to develop a $6.1 billion global broadband communications system
consisting of an 80 LEO satellite constellation and 200 gateway stations.
The satellites will utilize spot beam technology, but will not have any
on-board digital signal processing or switching. Commercial operation is
expected to commence in 2003.

TERRESTRIAL COMPETITORS

We also will compete with a variety of terrestrial data communications
services, including traditional narrowband services, DSL and cable modem
broadband services, and emerging terrestrial wireless broadband services. We
expect to encounter a number of challenges in competing with companies already
providing terrestrial Internet access. Many of these companies have an
entrenched position in the marketplace and lower upfront installation charges
than ours. We also expect that their monthly subscription fees may be lower than
ours.

Narrowband Access. Many large telephone carriers offer Internet access over
traditional phone lines. Traditional telephone access to the Internet is slower
than broadband access, but is the most widely available and least expensive
means of Internet access. Some of these providers can bundle Internet access
with their existing voice services. The market for these services is highly
competitive.

Digital Subscriber Lines. DSL broadband access is now available from all
regional Bell operating companies, competitive communications carriers, such as
Covad Communications Group, Inc., NorthPoint Communications Group, Inc. and
Rhythms NetConnections Inc., as well as some ISPs, such as America Online, Inc.,
and EarthLink, Inc. Many communications service providers have established brand
names in their service areas and can bundle DSL access with their existing voice
services.

Cable Modem Service Providers. Many of the major cable companies, including
AT&T Corp., with its Excite@Home cable modem service, and Time Warner
Communications, with its Road Runner cable modem service, are deploying or plan
to deploy broadband Internet access over their cable networks, often bundled
with cable television access.

Wireless Communications Companies. Other terrestrial wireless companies
have also announced plans to offer broadband Internet access using multi-channel
multi-point distribution service, or MMDS, or local multi-point distribution
service technologies. For example, WorldCom, Inc. and Sprint Corporation have
acquired several MMDS operators and have announced their intention to use this
spectrum to provide broadband Internet access. In addition, other operators,
such as WinStar Communications Inc. and Advanced Radio Telecom Corp., intend to
offer broadband Internet access to business consumers. The FCC is also
considering allocating and licensing additional spectrum for use by fixed
broadband systems and next-generation mobile systems with increased data
capabilities.

As the demand for high-speed Internet access and other broadband services
increases, so will competition. Increased competition may come in the form of
new market entrants, greater cooperation among our competitors, whether in the
form of alliances or vertical or horizontal integration, or changes in the
capabilities of other companies arising from technological innovations that we
cannot foresee. In addition, competitors that are currently targeting high-end
or business consumers could shift their focus to the residential and SOHO
consumers that comprise our target market.

GOVERNMENT REGULATION

The satellite industry is highly regulated both in the United States and
internationally. As an operator of a privately owned satellite system, we are
subject to the regulatory authority of the U.S. government, primarily through
the FCC. We are also subject to both the frequency coordination process of the
International Telecommunication Union, or ITU, and the applicable laws and
regulations of any other country in which we operate. These laws and regulations
are subject to change without notice to us.
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<PAGE> 46

U.S. REGULATION

The FCC is the government agency with primary authority in the United
States to regulate and license commercial satellite systems, including ours. FCC
rules require that our satellite system avoids interfering with other authorized
users of radio spectrum, and that we comply with FCC rules governing
U.S.-licensed satellite systems in general and Ka-band geostationary satellite
systems in particular. If we violate these rules, the FCC could impose various
sanctions including fines, loss or modification of authorizations, or the denial
of applications for new authorizations or renewal of existing authorizations.

Licenses for Ka-band satellites are issued for an initial ten-year term
commencing once the satellite is successfully placed into orbit and its
operations fully conform to the terms and conditions of the license. Upon the
expiration of the license for each satellite, we must apply for renewal of the
license. In addition, the FCC reserves the right to require that a satellite be
relocated to a different orbital location if it determines that such a change is
in the public interest, but the FCC has very rarely exercised this authority.

In May 1997, the FCC licensed us to construct, launch and operate GEO
satellites operating at the 109.2 degrees W.L. and 73 degrees W.L. orbital
locations, each using 500 MHz of Ka-band spectrum for each of the uplink and
downlink transmission paths. In December 1999, the FCC's International Bureau
granted us authority to transfer control of the company from its majority
shareholder to all of its shareholders. One party has requested the FCC to
review this decision. We believe that this request for review is without merit,
although we cannot predict the likelihood of any adverse action by the FCC as a
result of this request.

Before we begin operating our service, our license requires that we make
additional applications and obtain additional authorizations to resolve certain
operating parameters, including the following:

- Our authorization does not specify which 500 MHz we may use for our
downlink transmissions. We have filed a modification application to
designate the frequencies in which we wish to operate. That application
is pending with the FCC.

- We must apply for a modification to our license to allow us to use a
portion of the C-band spectrum for TT&C functions during launch, transfer
orbit and emergencies. Before the FCC will grant us these modifications,
we must demonstrate either that our operations will not interfere with
other conforming operations in those bands or that we have successfully
coordinated our use of the band with all affected operators. We have not
yet requested these modifications.

Under FCC regulations, every device that transmits radio signals, including
our CPE, must be licensed to do so. On June 22, 2000, the FCC decided to accept
applications for "blanket" licensing of satellite CPEs in certain bands of
spectrum. In order to qualify for this blanket licensing, our CPE must comply
with technical parameters specified in the order. Our CPE is being designed to
comply with these parameters and we believe that we will receive this blanket
license upon completing the design of our CPE.

In addition, although Telesat holds a Canadian authorization for WildBlue
II, the FCC has not yet authorized us to provide our WildBlue service in the
United States from the 111.1 degrees W.L. orbital slot. Prior to providing our
service from WildBlue II as proposed, we must request and obtain authorization
from the FCC. In February 1997, 69 national administrations including the United
States signed an Agreement on Basic Telecommunications, or the WTO Agreement,
under the auspices of the World Trade Organization. Two of the most significant
obligations arising from the WTO Agreement are market access commitments and
"national treatment" obligations, also commonly known as "most-favored-nation"
obligations. These most-favored-nation obligations require each WTO member to
treat services and service suppliers of any other WTO member no less favorably
than they treat domestic services and service suppliers. In 1997, the FCC
adopted rules implementing the United States' obligations under the WTO
Agreement. Under these rules, a satellite licensed by another WTO member
administration is entitled to a presumption in favor of entry into the U.S.
market, assuming no spectrum incompatibility or overriding public interest
concern. Canada is a WTO member, and we expect that the presumption in favor of
entry will apply when we seek market access for our WildBlue service into the
United States from WildBlue II.

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<PAGE> 47

Prior to launching our satellites, an export permit must be obtained from
the U.S. State Department. Loral has obtained this permit for WildBlue I.

The U.S. Congress has enacted the Communications Assistance for Law
Enforcement Act of 1994, or CALEA, which requires that any equipment,
facilities, and services deployed by telecommunications carriers meet certain
electronic surveillance requirements identified in the statute. The statute
specifically exempts providers of information services, such as Internet service
providers. We believe that the services we intend to offer will not be covered
by CALEA. However, the convergence of technology continues to blur the line
between exempt information services and covered telecommunications services. If
we were held to be subject to the requirements of CALEA, we may have to deploy
additional equipment in order to comply with the statutory obligations, and we
could be subject to monetary civil penalties for failure to comply with the
statute or implementing regulations.

FOREIGN REGULATION

We have not yet sought or obtained any authorization to provide service in
any country other than the United States. While the authorization granted to us
by the FCC does not prohibit us from providing satellite services outside the
United States, it also does not give us the right to operate in other countries.
We must have authority from each country into which we provide services. Foreign
laws and regulatory practices governing the provision of satellite services vary
significantly, and regulatory schemes in other countries in which we intend to
operate may impose impediments to our operations.

ITU PROCESSES

The ITU, which is a specialized agency of the United Nations, governs the
international registration and coordination of orbital slots and satellite
transmissions. Our FCC licenses require that before we begin operating our
satellites, we must comply with ITU registration and coordination processes.
These processes require us to coordinate with the FCC, foreign governments and
foreign Ka-band satellite operators to ensure that our operations and the
operations of foreign Ka-band satellite operators using neighboring orbital
slots will not interfere with each other. Some of these neighboring Ka-band
satellite operators may have international priority over us. International
priority among satellite systems in the ITU is generally determined according to
the order in which governmental administrations file coordination materials with
the ITU, and earlier-filed systems are entitled to protection against harmful
interference that might be caused by later-filed systems operating in the same
frequency band from coinciding or neighboring orbital locations. Although no
foreign administration has ITU date priority over the United States at either of
our orbital locations, we must coordinate with operators at neighboring orbital
locations who enjoy superior international priority to us. We are currently
working with the FCC to complete the process of technical coordination
consultations with the relevant responding countries and others through various
channels at an international and national level.

In addition, advance publication is generally required to be made not less
than two years and not more than six years before the start of operation date of
the system in order to give all parties a reasonable period of time for
frequency coordination. A satellite must be brought into use within six years
after the ITU publishes the advance publication materials, but this period may
be extended for an additional three years upon request of the sponsoring
administration. The advance publication materials filed by the FCC with the ITU
were published in October 1997 with respect to the 73 degrees W.L. slot and June
1996 with respect to the 109.2 degrees W.L. slot. Failure to launch our
satellites in accordance with the ITU timetable could result in the loss of our
international priority under ITU rules.

PROPRIETARY RIGHTS AND LICENSING

Our success and ability to compete depend on our ability to develop and
maintain the proprietary aspects of our technology and operate without
infringing on the intellectual property rights of others. We rely on a
combination of patent, trademark, trade secret and copyright laws and
contractual restrictions to protect our proprietary technology. These legal
protections afford only limited protection for our proprietary technology. We
have no issued patents but have filed two patent applications with the U.S.
Patent and Trademark Office with respect to certain aspects of our proprietary
technology. We seek to limit disclosure of our intellectual property by
requiring employees and consultants with access to our proprietary information
to execute confidentiality agreements with us and by restricting access to our
proprietary technology.

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Despite our efforts to protect our intellectual property rights,
unauthorized parties may attempt to copy aspects of our technology or service
offerings or to obtain and use information or technology that we regard as
proprietary. The laws of many countries do not protect our proprietary rights to
as great an extent as do the laws of the United States. Litigation may be
necessary in the future to enforce our intellectual property rights, to
determine the validity and scope of the intellectual property rights of others,
or to defend against claims of infringement or attempts to invalidate our
intellectual property rights. Any resulting litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on our business, operating results and financial condition.

Because we expect to contract for a significant portion of our
infrastructure, it is likely that suppliers will grant us licenses to use their
intellectual property embodied in the hardware and software supplied and
indemnification for any infringement of intellectual property rights in
connection with this use. It is also possible that our suppliers and third party
manufacturers of CPE, particularly those utilizing standards-based technology in
their set top boxes and modems, may not have licenses for all aspects of the
intellectual property they intend to utilize in their CPE. Notwithstanding any
indemnification, we or any of our suppliers or CPE manufacturers may be subject
to claims alleging infringement by us or any such supplier or CPE manufacturer
of third party proprietary rights. Any claim of infringement could cause us or
any of the affected suppliers or CPE manufacturers to incur substantial costs
defending against the claim, even if the claim is without merit. Finally, a
party making such a claim could secure a judgment that requires us or any of the
affected suppliers or CPE manufacturers to pay substantial damages or that
prevents us or any such supplier or CPE manufacturer from using or selling our
or its products and services. Further, we may in the future initiate claims or
litigation against third parties for infringing our proprietary rights. Any of
these claims, with or without merit, may be time-consuming, result in costly
litigation and diversion of technical and management personnel or require us or
any such supplier or CPE manufacturer to cease using infringing technology,
develop noninfringing technology or enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on
commercially reasonable terms, if at all. A successful claim of infringement
against us or any such supplier or CPE manufacturer and the inability to develop
noninfringing technology or license the infringed or similar technology on a
timely basis could have a material adverse effect on our business, operation
results and financial condition or on the ability of the affected supplier or
suppliers to deliver the goods and services we need to operate our business or
on the ability of the affected CPE manufacturer or manufacturers to produce
critical CPE components which our customers will need to access our service
offerings.

PERSONNEL

As of September 1, 2000, we had 24 full-time employees, two part-time
employees and 10 independent contractors. None of our employees is represented
by a labor union or is a member of a collective bargaining unit. We believe that
our relationship with our employees is good.

FACILITIES

Our principal executive offices are located in Denver, Colorado, where we
lease approximately 25,000 square feet under a lease that expires in May 2005,
subject to our option to renew for an additional five years. We believe our
leased facilities are adequate to meet our needs through the end of 2001 and
that additional facilities in the area are available to meet our future needs.

LEGAL PROCEEDINGS

Other than the FCC proceedings described above, there are no pending legal
proceedings, nor are we aware of any threatened proceedings, in which we are
involved or against us that, individually or in the aggregate, would have a
material adverse effect on our business, results of operations or financial
condition. We may in the future be party to litigation arising in the course of
our business, including claims that we allegedly infringe third-party trademarks
and other intellectual property rights. These claims, even if without merit,
could result in the expenditure of significant financial and managerial
resources.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth, as of September 1, 2000, certain
information concerning our executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
David M. Drucker....................... 53 Chairman of the Board of Directors
Thomas E. Moore........................ 39 Chief Executive Officer, President and
Director
Paul M. Froelich....................... 38 Vice President of Finance and Treasurer
David M. Brown......................... 39 Vice President, General Counsel and
Secretary
Bradley J. Greenwald................... 36 Vice President of Marketing and
Business Development
Jeffrey C. Weaver...................... 33 Vice President of Architecture
Erwin C. Hudson........................ 44 Vice President of Space Technology
David E. Bukovinsky.................... 33 Vice President of Program Management
Peter C. Boylan, III(1)(2)............. 36 Director
Kenneth G. Carroll(2).................. 45 Director
Markus W. Jackson...................... 39 Director
Peter M. Segaloff(1)................... 39 Director
Russell L. Siegelman(1)(2)............. 38 Director
</TABLE>

------------------------------

(1) Member of the compensation committee.

(2) Member of the audit committee.

David M. Drucker has served as our Chairman of the Board since our
formation in 1995. From 1987 to 1993, Mr. Drucker served as Vice President and
General Counsel of EchoStar Satellite Corp. Since 1997, he has served as Chief
Executive Officer of @Contact LLC, an applicant for a license to construct,
launch and operate a constellation of middle earth orbit Ka-band satellites. Mr.
Drucker has been involved in successfully building out numerous FCC licenses,
including television and radio licenses in Colorado, Alaska and Florida.

Thomas E. Moore has served as our President and Chief Executive Officer
since October 1998 and as a member of our board of directors since November
1998. From 1995 to 1998, Mr. Moore served in several positions, including most
recently as Vice President of Integrated Services Architecture, at Cable
Television Laboratories, a research and development consortium of cable
television system operators, where he directed technical development in various
areas, including enhancements to the industry standard cable modem specification
known as DOCSIS. From 1990 to 1993, Mr. Moore served as President and Chief
Executive Officer of Natural Fuels Company, LLC, an alternative automotive fuel
and equipment provider and start-up subsidiary of Xcel Energy Inc.

Paul M. Froelich has served as our Vice President of Finance and Treasurer
since May 1999. From 1997 to February 1999, Mr. Froelich served as Executive
Director, and from February 1999 to April 1999 as Chief Financial Officer, of
International Water Limited, an infrastructure development, finance and
investment company owned by Bechtel Enterprises, Inc. and United Utilities PLC.
From 1994 to 1997, Mr. Froelich served as Vice President of Bechtel Financing
Services, Inc., the financial services subsidiary of Bechtel Enterprises, Inc.

David M. Brown has served as our Vice President, General Counsel and
Secretary since October 1998. From 1993 to 1998, Mr. Brown was an associate with
the law firm of Brownstein, Hyatt & Farber, P.C., where he specialized in
corporate finance, securities and mergers and acquisitions. Mr. Brown was
engaged in the private practice of law from 1990 until 1998.

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<PAGE> 50

Bradley J. Greenwald has served as our Vice President of Marketing and
Business Development since August 1999. From 1996 to 1999, Mr. Greenwald served
as Vice President of Sales, Marketing and Operations at Time Warner Cable
Houston, a division of Time Warner Cable, a media and entertainment company,
where he was responsible for customer acquisition and retention activities for
their cable television and high-speed Internet businesses. From 1993 to 1996,
Mr. Greenwald served as Vice President of Marketing at Time Warner Satellite
Services/PRIMESTAR, a direct-to-home broadcast satellite company.

Jeffrey C. Weaver has served as our Vice President of Architecture since
November 1999. From March 1999 to November 1999 he served as our Executive
Director of System Architecture. From 1998 to 1999, Mr. Weaver served as a
manager of consulting services for MIL3, Inc., a simulation company that
develops and sells OPNET simulation tools. From 1995 to 1998, Mr. Weaver served
in various positions, and most recently as a Senior Engineer, at Bay Networks, a
provider of networking products that serve corporate enterprises, service
providers and telecommunications carriers.

Erwin C. Hudson has served as our Vice President of Space Technology since
April 2000. From 1998 to 2000, Mr. Hudson served as Vice President of Mission
Engineering at Space Systems/Loral. From 1995 to 1998, Mr. Hudson served as
Director, and from 1980 to 1995 in various other positions, at Satellite
Communications at TRW Space & Electronics Group, a provider of advanced
technologies and services.

David E. Bukovinsky has served as our Vice President of Program Management
since May 2000. From 1998 to May 2000, Mr. Bukovinsky served in several
positions at Cable Television Laboratories, most recently Vice President of
Broadband Services. From 1996 to 1998, Mr. Bukovinsky served as Manager of
Technology Planning with Americast, a joint venture of The Walt Disney Company,
Ameritech, BellSouth, GTE Corporation, SBC Communications, Inc. and The Southern
New England Telephone Company, designed to develop next generation digital cable
technology, services, and content for deployment across their hybrid fiber coax
and wireless video networks. From 1990 to 1996, Mr. Bukovinsky served as a
Project Manager with Motorola Inc.'s Cellular Infrastructure Group.

Peter C. Boylan III has served as a member of our board of directors since
May 1999. Since July 2000, Mr. Boylan has served as a director, Co-President and
Co-Chief Operating Officer and a member of the Office of the Chief Executive of
Gemstar - TV Guide International, Inc. Since 1999, Mr. Boylan has served as
President and Chief Operating Officer of TV Guide, Inc. and a Director since
1995. Mr. Boylan served as Executive Vice President and member of the Office of
the Chairman of TV Guide, Inc. in 1999. From 1997 to 1999, Mr. Boylan served as
President of TV Guide, Inc. From 1996 to 1999, Mr. Boylan served as Chief
Operating Officer of TV Guide, Inc. From 1994 to 1996, Mr. Boylan served as
Executive Vice President and Chief Financial Officer of TV Guide, Inc. Mr.
Boylan is also a director of BOK Financial Corporation.

Kenneth G. Carroll has served as a member of our board of directors since
May 2000. Since 1995, Mr. Carroll has served as Senior Vice President and Chief
Financial Officer, and since 1999 as Treasurer, of Liberty Satellite &
Technology, Inc., a company with interests in businesses engaged in the
distribution of Internet data and other content via satellite and related
technologies. Since 1998, Mr. Carroll has served as Senior Vice President and
Chief Financial Officer of PRIMESTAR, Inc., now known as Phoenixstar, Inc., a
former direct-to-home broadcast satellite company. From 1994 to 1995, Mr.
Carroll served as Vice President of Business Operations and Chief Financial
Officer of Netlink USA, a C-band satellite programming distribution company.

Markus W. Jackson has served as a member of our board of directors since
April 2000. Since June 2000, Mr. Jackson has served as Senior Vice President of
EchoStar Technologies Corporation, a DBS CPE engineering company, and since 1998
has served as Senior Vice President of EchoStar Communications Corporation. From
1993 to 1997, Mr. Jackson served as Director of Satellite Services at EchoStar
Communications Corporation.

Peter M. Segaloff has served as a member of our board of directors since
May 1999. Since 1997, Mr. Segaloff has served as President of Newcastle
Development, a real estate development firm. From 1993 to 1997, Mr. Segaloff
served as Vice President of Warwick Group Limited, a real estate development
firm.

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<PAGE> 51

Russell L. Siegelman has served as one of our directors since May 1999.
Since 1996, Mr. Siegelman has served as a Senior Vice President of KPCB
Holdings, Inc., an investment firm and affiliate of Kleiner Perkins Caufield &
Byers. From 1989 to 1996, Mr. Siegelman served in a variety of positions at
Microsoft Corp., most recently serving as Vice President of the Microsoft
Network, Microsoft's on-line service. Since 1997, Mr. Siegelman has served as a
director of Resonate Inc., and also serves as a director of several private
companies.

BOARD COMPOSITION

We currently have seven directors on our board and two vacant seats. The
number of authorized directors is determined by a two-thirds vote of the board
of directors. Our directors are elected by the shareholders at each annual
meeting of shareholders to serve until the next annual meeting of shareholders
or until their successors are duly elected and qualified.

COMMITTEES OF THE BOARD OF DIRECTORS

Our audit committee consists of Messrs. Boylan, Carroll and Siegelman. The
audit committee reviews the selection of independent auditors, the results and
scope of the audit and other services provided by our independent auditors and
evaluates our internal accounting procedures.

Our compensation committee consists of Messrs. Boylan, Segaloff, and
Siegelman. The compensation committee reviews and approves compensation and
benefits for our executive officers. The compensation committee also administers
our compensation and stock plans and makes recommendations to the board of
directors regarding such matters.

DIRECTOR COMPENSATION

Our directors do not currently receive compensation for services on the
board of directors or any committee thereof, but directors may be reimbursed for
certain expenses in connection with attendance at board and committee meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2000, Messrs. Boylan, Segaloff, and Siegelman served as members of
our compensation committee. None of our executive officers serve as a member of
the board of directors or compensation committee of any other entity that has
one or more executive officers serving as a member of our board of directors or
compensation committee.

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<PAGE> 52

EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by or
paid to our chief executive officer and our four other most highly compensated
executive officers whose total salary and bonus exceeded $100,000 for services
rendered in all capacities to us during 1999. We refer to these executive
officers as our "named executive officers" in other parts of this prospectus.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
--------------------------------- ---------------------
ALL OTHER SECURITIES UNDERLYING
SALARY BONUS COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION -------- ------- ------------ ---------------------
<S> <C> <C> <C> <C>
David M. Drucker,
Chairman of the Board................... $222,849 $ -- $ -- --
Thomas E. Moore
Chief Executive Officer, President and
Director................................ 222,849 -- -- 773,212
Paul M. Froelich(2)
Vice President of Finance and
Treasurer............................... 95,293 28,317 -- 136,272
David M. Brown
Vice President, General Counsel and
Secretary............................... 135,542 1,185 -- 82,845
Jeffrey C. Weaver(3)
Vice President of Architecture.......... 97,353 26,587 4,427(4) 86,886
</TABLE>

------------------------------

(1) We have omitted perquisites and other personal benefits that do not exceed
the lesser of $50,000 or 10% of the executive officer's annual salary and
bonus disclosed in this table. We have also omitted information regarding
group life and health insurance benefits that do not discriminate in favor
of our directors or executive officers and are generally available to all
salaried employees.

(2) Mr. Froelich became a WildBlue employee on May 1, 1999. His annual base
salary as of December 31, 1999, was $145,000.

(3) Mr. Weaver became a WildBlue employee on March 15, 1999. His annual base
salary as of December 31, 1999 was $140,000.

(4) Represents a non-taxable moving expense reimbursement.

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<PAGE> 53

1999 OPTION GRANTS

The following table sets forth information regarding options granted to
each of our named executive officers during 1999.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
GRANTED 1999 SHARE DATE 5% 10%
NAME ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David M. Drucker........... -- -- -- -- -- --
Thomas E. Moore(1)......... 4,574 0.3% $ 0.40 10/01/08 $ $
531 * 0.84 10/01/08
4,043 0.3 1.40 10/01/08
161,623 12.0 3.52 10/01/08
558,411 41.4 4.00 10/01/08
20,383 1.5 8.38 10/01/08
23,647 1.7 14.00 10/01/08
Paul M. Froelich(2)........ 327 * 0.40 05/01/09
38 * 0.84 05/01/09
289 * 1.40 05/01/09
92,587 6.9 3.52 05/01/09
39,886 2.9 4.00 05/01/09
1,456 0.1 8.38 05/01/09
1,689 0.1 14.00 05/01/09
David M. Brown(3).......... 490 * 0.40 10/19/08
57 * 0.84 10/19/08
433 * 1.40 10/19/08
17,317 1.3 3.52 10/19/08
59,830 4.4 4.00 10/19/08
2,184 0.2 8.38 10/19/08
2,534 0.2 14.00 10/19/08
Jeffrey C. Weaver.......... 163(4) * 0.40 03/15/09
9,375(5) 0.7 0.40 11/14/09
19(4) * 0.84 03/15/09
1,088(5) 0.1 0.84 11/14/09
144(4) * 1.40 03/15/09
8,288(5) 0.6 1.40 11/14/09
46,293(4) 3.4 3.52 03/15/09
19,943(4) 1.5 4.00 03/15/09
728(4) * 8.38 03/15/09
845(4) * 14.00 03/15/09
</TABLE>

------------------------------

* Represents less than 0.1% of the total options granted to employees in 1999.

(1) 25% of the options vested on each of May 26, 1999, October 1, 1999 and
October 1, 2000. The remaining 25% vest on October 1, 2001.

(2) 25% of the options vested on each of May 26, 1999 and May 1, 2000. The
remaining 50% vest annually thereafter in two equal installments commencing
on May 1, 2001.

(3) 25% of the options vested on each of May 26, 1999 and October 19, 1999. The
remaining 50% vest annually thereafter in two equal installments commencing
on October 19, 2000.

(4) 25% of the options vested on each of May 26, 1999 and March 15, 2000. The
remaining 50% vest annually thereafter in two equal installments commencing
on March 15, 2001.

(5) 25% of the options vest on November 15, 2000, with the remaining 75% vesting
in three equal installments annually thereafter.

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<PAGE> 54

The percent of total options granted to employees in the above table is
based on 1,349,552 total options granted in 1999. Our board of directors may
reprice options under the terms of our stock plans. The options are subject to
termination prior to the expiration date in the event of the optionee's death,
disability, voluntary termination of employment, or termination by WildBlue with
cause, as set forth in the option plan.

The potential realizable value is calculated based on the term of the
option at the time of grant. Stock price appreciation of 5% and 10% is assumed
pursuant to rules promulgated by the Securities and Exchange Commission and does
not represent our prediction of our stock price performance or our opinion as to
the current value of the options. In addition, the potential realizable value
computation does not take into account federal or state income tax consequences
of option exercises or sales of appreciated stock. The potential realizable
values at 5% and 10% appreciation are calculated by:

- multiplying the number of shares of common stock under the option by an
assumed initial public offering price of $ per share;

- assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table until the
expiration of the options; and

- subtracting from that result the aggregate option exercise price.

1999 OPTION VALUES

The following table sets forth information concerning the number and value
of exercisable and unexercisable options held by each of the named executive
officers as of December 31, 1999. The value of unexercised in-the-money options
at December 31, 1999 represents an amount equal to the difference between the
assumed initial public offering price of $ per share and the option exercise
price, multiplied by the number of unexercised in-the-money options. An option
is in-the-money if the fair market value of the underlying shares exceeds the
exercise price of the option.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David M. Drucker......... -- -- -- -- -- --
Thomas E. Moore.......... -- -- 953,900 953,900
Paul M. Froelich......... -- -- 34,064 102,208
David M. Brown........... -- -- 102,204 102,204
Jeffrey C. Weaver(1)..... -- -- 35,779 51,107
</TABLE>

------------------------------

(1) 18,749 of the options granted to Mr. Weaver allow for immediate exercise,
subject to repurchase by us at the exercise price under an annual vesting
schedule. 25% of the options vest on November 15, 2000, with the remaining
75% vesting annually thereafter in three equal installments.

EMPLOYMENT AGREEMENTS

We have employment agreements with Mr. Drucker, Mr. Moore and Mr. Brown,
each of whom has also executed a non-compete agreement with us. We do not have
an employment agreement with any of our other executive officers.

David M. Drucker. We entered into an original employment agreement on July
30, 1998, and a subsequent agreement on May 20, 1999, with Mr. Drucker, our
Chairman. The agreement provides for an annual base salary of $225,000, with a
year-end cash bonus at the discretion of the board of directors. Our agreement
with Mr. Drucker provides that if we terminate his employment, he shall be
entitled to receive 12 months of base salary.

Thomas E. Moore. We entered into an employment agreement on September 9,
1998, as amended, with Mr. Moore, our President and Chief Executive Officer. Mr.
Moore has been granted an annual base salary of

50
<PAGE> 55

$236,250 as of June 1, 2000, with a year-end cash bonus at the discretion of the
board of directors. In addition, the agreement grants to Mr. Moore the option to
purchase a percentage of the total equity of any entity that pursues development
of a Ka-band satellite opportunity using our FCC licenses and in which we obtain
an interest. Our agreement with Mr. Moore provides that if we terminate his
employment without cause, he shall be entitled to receive 12 months of base
salary. In addition, Mr. Moore has entered into a letter agreement with
Televerde Communications, L.P., a former shareholder of ours that has since
dissolved and distributed its assets, including shares in us, to its partners.
These shares were distributed with the continuing obligation to the shareholders
to vote together to elect Mr. Moore to our board, as long as Mr. Moore is
employed by us.

David M. Brown. We entered into an employment agreement on September 14,
1998, as amended, with Mr. Brown, our Vice President, Secretary and General
Counsel. Mr. Brown has been granted an annual base salary of $156,660 as of June
1, 2000, with a year-end cash bonus at the discretion of the board of directors.
In addition, the agreement grants to Mr. Brown the option to purchase a
percentage of the total equity of any entity that pursues development of a
Ka-band satellite opportunity using our FCC licenses and in which we obtain an
interest. Our agreement with Mr. Brown provides that if we terminate his
employment without cause, he shall be entitled to receive 12 months of base
salary.

SPECIAL STOCK OPTION AGREEMENTS

In November 1998, we adopted the 1998 Stock Option Plan. Under the 1998
Stock Option Plan, upon each issuance of any common stock or securities
convertible into common stock, we are required to simultaneously grant to
certain employees options to purchase a number of the newly issued securities
sufficient to maintain each optionee's specified percentage ownership of
WildBlue, which aggregated 9.125%. The exercise price for each option is the
fair market value of the newly issued security.

25% of all outstanding options under the plan vested in May 1999. The
remaining options vest in three equal annual installments beginning on the first
anniversary of employment. The shares of stock acquired upon the exercise of
these options are entitled to the same registration rights granted to our other
shareholders during the term of the option.

If we dissolve, liquidate, sell substantially all of our assets, enter into
a merger or consolidation in which we are not the surviving corporation, or if
any person acquires 35% or more of our stock or voting power, all outstanding
options under the 1998 Stock Option Plan may, at our option or the option of the
surviving entity, be assumed, substituted, or replaced with new options by the
surviving entity on terms comparable with our outstanding options. Subject to
certain conditions, if the surviving entity does not assume the options, the
options will fully vest and the optionees may exercise their options prior to
the triggering transaction. If our stock is not publicly traded at the time of
such event, we have the right to cancel each option and pay each optionee an
amount equal to the difference between the option price for such shares covered
by the option and the fair market value of such shares.

The right to receive additional grants under the 1998 Stock Option Plan
applies to the offering and will result in the issuance of additional
options, with an exercise price equal to the offering price. The right to
receive additional grants will terminate immediately after the closing of the
offering.

EMPLOYEE BENEFIT PLANS

401(k) PLAN

Our employees are eligible to participate in our 401(k) Plan. The 401(k)
Plan allows employees to contribute an amount equal to the lesser of 20% of
eligible compensation or the statutorily prescribed annual limit, which was
$10,500 in 1999. Employees direct the investment of the assets of the 401(k)
Plan in up to eight different investment funds. The 401(k) Plan is intended to
qualify under Section 401 of the Internal Revenue Code so that contributions by
employees to the 401(k) Plan, and income earned on plan contributions, are not
taxable to employees until withdrawn, and so that the contributions by employees
will be deductible when made. We make a contribution under the 401(k) Plan equal
to 3% of each employee's

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<PAGE> 56

eligible compensation. Each contributing participant under the 401(k) Plan also
receives a matching contribution equal to 0.25% for the first 1% pretax
contribution, which increases by an additional 0.25% for each additional 1%
pretax contribution, up to a maximum of a 1% matching contribution from WildBlue
in addition to our standard 3% contribution. Additionally, we may make annual
discretionary profit sharing contributions in amounts to be determined annually
by the board of directors. From January 1, 2000 through September 1, 2000, we
have made $44,676 matching or profit sharing contributions.

1999 STOCK OPTION/STOCK ISSUANCE PLAN

We adopted our 1999 Stock Option/Stock Issuance Plan in October 1999. The
plan authorizes issuance of an aggregate of 2,500,000 shares of common stock.
The stock plan will terminate on October 17, 2009 unless sooner terminated by
the board. As of September 1, 2000:

- we have issued 685,874 shares pursuant to stock awards under the stock
plan, none of which have been repurchased or lapsed and 107,875 shares of
which have been exercised;

- awards of or options to purchase 577,999 shares at a weighted average
price of $1.44 were outstanding; and

- 1,814,126 shares remained available for future stock awards under the
stock plan.

The stock plan provides for the grant of incentive stock options to
employees, officers and employee-directors, and nonstatutory stock options,
restricted stock purchase awards and stock bonuses to these employees as well as
directors and consultants of WildBlue and its affiliates. The stock plan is
administered by the board or a committee appointed by the board which determines
recipients and types of awards to be granted, including the exercise price,
number of shares subject to the award and the exercisability thereof.

The term of options granted under the stock plan may not exceed ten years.
The board or authorized committee determines the exercise price of options
granted under the stock plan. However, the exercise price for an incentive stock
option cannot be less than 100% of the fair market value of the common stock on
the date of the option grant, and the exercise price for a nonstatutory stock
option generally cannot be less than 85% of the fair market value of the common
stock on the date of the option grant. Options granted under the stock plan are
immediately exercisable, subject to repurchase, and vest at the rate specified
in the option agreement; however, the vesting schedule may not result in fewer
than 20% of the options vesting each year. The optionee may not transfer a stock
option other than by will or the laws of descent or distribution. However, an
optionee may designate a beneficiary who may exercise the option following the
optionee's death. An optionee whose service relationship with WildBlue or any
affiliate ceases for any reason may exercise vested options for the term
provided in the option agreement, which is generally three months.

No incentive stock option may be granted to any person who, at the time of
the grant, owns or is deemed to own stock possessing more than 10% of the total
combined voting power of WildBlue or any affiliate of WildBlue, unless the
option exercise price is at least 110% of the fair market value of the stock
subject to the option on the date of grant and the term of the option does not
exceed five years from the date of grant. In addition, the aggregate fair market
value, determined at the time of grant, of the shares of common stock with
respect to which incentive stock options are exercisable for the first time by
an optionee during any calendar year, under the stock plan and all other stock
plans of WildBlue and its affiliates, may not exceed $100,000.

Shares subject to stock awards that have expired or otherwise terminated
without having been exercised in full again become available for the grant of
awards under the stock plan. Under its general authority to grant and to amend
options, the board or authorized committee has the implicit authority to reprice
outstanding options or to offer optionees the opportunity to replace outstanding
options with new options for the same or a different number of shares.

Restricted stock purchase awards granted under the stock plan may be
granted pursuant to a repurchase option in favor of us in accordance with a
vesting schedule determined by the board (or authorized committee). The price of
a restricted stock purchase award under the stock plan generally cannot be less
than

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<PAGE> 57

85% of the fair market value of the stock subject to the award on the date of
grant. Stock bonuses may be awarded in consideration of past services without a
purchase payment. Unless otherwise specified, rights under a stock bonus or
restricted stock bonus agreement generally may not be transferred other than by
will or the laws of descent and distribution during such period as the stock
awarded pursuant to such an agreement remains subject to the agreement.

Transactions not involving our receipt of consideration, including a
merger, consolidation, reorganization, stock dividend or stock split, may change
the class and number of shares subject to the option plan and to outstanding
awards. In that event, the board (or authorized committee) will appropriately
adjust the option plan as to the class and the maximum number of shares subject
to the option plan. The board (or authorized committee) will also adjust
outstanding awards as to the class, number of shares and price per share subject
to options under the stock plan.

If we dissolve or liquidate, or if there is any sale of substantially all
of our assets, any merger or any consolidation in which we are not the surviving
corporation, or any acquisition by persons, entities or groups of 50% or more of
our stock, all outstanding awards under the stock plan may, at our option or the
option of the surviving entity, be assumed, substituted, or replaced with a cash
incentive program by any surviving entity, and 100% of such awards will vest if
the optionee's compensation is reduced following such corporate transaction. If
the surviving entity determines not to assume or substitute for such awards, the
vesting provisions of unvested stock awards will be accelerated in full, stock
options not exercised prior to such transaction will terminate, and other stock
awards will terminate or continue as provided in the applicable stock award
agreement.

2000 EMPLOYEE STOCK PURCHASE PLAN

Adoption. We adopted our 2000 Employee Stock Purchase Plan in September
2000. This plan authorizes the issuance of 1,750,000 shares of our common stock
pursuant to purchase rights granted to eligible employees under the purchase
plan. The purchase plan will not be effective until the closing of this
offering. Therefore, as of the date hereof, no shares of common stock had been
purchased under the purchase plan.

On January 1 of each year for ten years, beginning on January 1, 2002, the
number of shares in the reserve automatically will be increased by the lesser of
3% of:

- our outstanding shares; or

- the total number of shares of our common stock outstanding as of the
closing date of the offering.

However, the board of directors may provide for a lesser increase each
year. The automatic share reserve increase in the aggregate may not exceed
17,500,000 shares over the ten-year period.

The purchase plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code. The purchase
plan allows eligible employees to purchase our common stock through payroll
deductions. We implement the purchase plan by offerings of purchase rights to
eligible employees. Generally, all of our employees and the employees of our
affiliates incorporated in the United States may participate in offerings under
the purchase plan. However, no employee may participate in the purchase plan if
immediately after we grant the employee a purchase right, the employee has
voting power over 5% or more of our outstanding capital stock.

The board of directors has the authority to set the terms of an offering.
It may specify offerings of up to 27 months where common stock is purchased for
accounts of participating employees at a price per share equal to the lower of:

- 85% of the fair market value of one share of our common stock on the
first day of the offering; and

- 85% of the fair market value of one share of our common stock on the
purchase date.

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<PAGE> 58

For the first offering, which will begin on the effective date of this
offering, we will offer shares registered on a Form S-8 registration statement.
The fair market value of the shares on the first date of this offering will be
the price per share at which our shares are first sold to the public as
specified in the final prospectus with respect to this offering. Otherwise, fair
market value generally means the closing sales price (rounded up where necessary
to the nearest whole cent) for such shares (or the closing bid, if no sales were
reported) as quoted on the Nasdaq National Market on the trading day prior to
the relevant determination date, as reported in The Wall Street Journal.

The board of directors may permit employees who become eligible to
participate after the beginning of the first offering period to enroll. These
employees will purchase our stock at the lower of:

- 85% of the fair market value of one share of our common stock on the day
they began participating in the purchase plan; and

- 85% of the fair market value of one share of our common stock on the
purchase date.

The board of directors has determined that participants may authorize
payroll deductions of up to 15% of their base compensation for the purchase of
stock under the purchase plan. A participant's right to purchase our stock under
the purchase plan, plus any other purchase plans established by us or by our
affiliates, is limited. It may accrue at a rate of no more than $25,000 of the
fair market value of our stock for each calendar year in which the purchase
right is outstanding. We determine the fair market value of our stock, for the
purpose of this limitation, as of the first day of the offering. Employees may
end their participation in the offering at any time up to ten days before a
purchase date. Their participation ends automatically on termination of their
employment.

Upon a change in control, the board of directors may provide that the
successor corporation will assume or substitute for outstanding purchase rights.
Alternatively, the board of directors may shorten the offering period and
provide that our stock will be purchased from the participants immediately
before the change in control.

The purchase plan has no set termination date. The board of directors may
terminate the purchase plan at any time after the end of an offering.

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<PAGE> 59

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to beneficial
ownership of our common stock as of September 1, 2000 for:

- each person or group of affiliated persons known to us to beneficially
own more than 5% of the common stock;

- each of our directors;

- each of our named executive officers; and

- all of our directors and executive officers as a group.

Beneficial ownership is determined according to the rules of the Securities
and Exchange Commission and generally means that a person has beneficial
ownership of a security and warrants if he or she possesses sole or shared
voting or investment power of that security, and includes options and warrants
that are currently exercisable or exercisable within 60 days. Information with
respect to beneficial ownership has been furnished to us by each director,
executive officer or 5% or more shareholder, as the case may be. Except as
otherwise indicated, we believe that the beneficial owners of the common stock
listed below, based on the information each of them has given to us, have sole
investment and voting power with respect to their shares, except where community
property laws may apply.

This table lists applicable percentage ownership based on 38,797,322 shares
of common stock outstanding as of September 1, 2000, including shares of
preferred stock on an as-converted basis, and also lists applicable percentage
ownership based on shares of common stock outstanding after completion of
the offering. Options and warrants to purchase shares of our common stock that
are exercisable within 60 days of September 1, 2000, are deemed to be
beneficially owned by the persons holding these options and warrants for the
purpose of computing percentage ownership of that person, but are not treated as
outstanding for the purpose of computing any other person's ownership
percentage. Shares underlying options and warrants that are deemed beneficially
owned are listed in this table separately in the column labeled "Shares Subject
to Options and Warrants." These shares are included in the number of shares
listed in the column labeled "Total Number."

Unless otherwise indicated, the address of each person or entity named
below is care of Wildblue Communications, Inc., 4600 South Syracuse Street,
Suite 500, Denver, CO 80237.

<TABLE>
<CAPTION>
TOTAL SHARES PERCENTAGE OF SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------ ---------------------
OPTIONS AND BEFORE AFTER
NAME OF BENEFICIAL OWNER SHARES WARRANTS OFFERING OFFERING
------------------------ ---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
DirectCom Networks Inc.(1)............................. 7,974,494 678,507 21.9% %
Liberty Satellite LLC(2)............................... 7,119,303 605,743 19.6
Kenneth G. Carroll(2).................................. -- -- --
KPCB Holdings, Inc.(3)................................. 6,124,140 360,000 16.6
Russell L. Siegelman(4)................................ 6,124,140 360,000 16.6
EchoStar Communications Corporation(5)................. 3,571,428 1,500,000 12.6
Walter S. Segaloff(6).................................. 3,428,129 15,414 8.9
Peter M. Segaloff...................................... -- -- --
David M. and Penny S. Drucker(7)....................... 3,429,141 22,648 8.9
Telesat Canada(8)...................................... 2,648,750 -- 6.8
TRW Inc.(9)............................................ 1,920,758 163,427 5.3
Peter C. Boylan, III(1)................................ -- -- --
Markus W. Jackson(5)................................... -- -- --
Thomas E. Moore........................................ -- 2,523,384 6.1
David M. Brown......................................... -- 270,364 *
Paul M. Froelich....................................... -- 120,162 *
Jeffrey C. Weaver...................................... -- 110,081 *
Executive officers and directors as a group
(15 persons)(10)..................................... 9,553,281 3,700,389 31.2% %
</TABLE>

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<PAGE> 60

------------------------------

* Represents beneficial ownership of less than 1%.

(1) Includes 678,507 shares of common stock issuable upon exercise of preferred
stock warrants. The address of DirectCom Networks, Inc. is 7140 South Lewis
Avenue, Tulsa, Oklahoma 74136. Peter C. Boylan, III, one of our directors,
is the President and Chief Operating Officer of Gemstar-TV Guide
International, Inc., the parent of DirectCom Networks, Inc. Mr. Boylan
disclaims beneficial ownership of such shares.

(2) Includes 605,743 shares of common stock issuable upon exercise of preferred
stock warrants. The address of Liberty Satellite LLC is 7600 E. Orchard
Road, Suite 330S, Englewood, Colorado 80111. Kenneth G. Carroll, one of our
directors, is the President of TSAT Holding I, Inc., the managing member of
Liberty Satellite, LLC. Mr. Carroll disclaims beneficial ownership of such
shares.

(3) Includes 360,000 shares of common stock issuable upon exercise of preferred
stock warrants. The address of KPCB Holdings, Inc. is 2750 Sand Hill Road,
Menlo Park, California 94025. Russell L. Siegelman, one of our directors,
is a Senior Vice President of KPCB Holdings, Inc. Mr. Siegelman disclaims
beneficial ownership of such shares.

(4) Mr. Siegelman, one of our directors, is a Senior Vice President of KPCB
Holdings, Inc. and acts as Voting Trustee over 1,337,364 of the shares held
by each of Segaloff Family LP, Segaloff Group, LLC, Segaloff and Sons Joint
Venture, Hashem Provides, LLC, Peter M. Segaloff Family Trust, David S.
Segaloff Family Trust, J. William David Trust, Joshua M. David Trust and
Gregory B. David Trust and has voting power over 1,297,475 shares held by
David and Penny Drucker pursuant to a Voting Trust Agreement dated May 26,
1999, which terminates upon the closing of the offering. Mr. Siegelman
disclaims beneficial ownership of all shares held by either KPCB Holdings,
Inc. and the Segaloff Entities.

(5) Includes 1,500,000 shares of common stock issuable upon exercise of
preferred stock warrants. The address of EchoStar Communications
Corporation is 5701 South Santa Fe Drive, Littleton, Colorado 80120. Markus
W. Jackson, one of our directors, is the Senior Vice President of EchoStar
Technology and EchoStar Communications Corporation. Mr. Jackson disclaims
beneficial ownership of such shares.

(6) Includes an aggregate of 3,428,129 shares of common stock and 15,414 shares
of common stock issuable upon exercise of preferred stock warrants held by
Segaloff Family L.P., Segaloff Group LLC, Segaloff & Sons Joint Venture and
Walter S. Segaloff Revocable Trust (collectively, Segaloff Entities).
Walter Segaloff disclaims beneficial ownership of such shares, except to
the extent of his pecuniary interest arising therein. The address of the
Segaloff Entities' is 301 Hiden Blvd., Newport News, Virginia 23606.
Russell L. Siegelman, one of our directors, is Voting Trustee of 1,337,364
of such shares pursuant to a Voting Trust Agreement dated May 26, 1999,
which terminates upon the closing of this offering. Mr. Siegelman disclaims
beneficial ownership of such shares.

(7) Includes 2,201,203 shares of common stock held by Penny S. Drucker, the
spouse of David M. Drucker. Includes 1,227,938 shares of common stock and
22,648 shares of common stock issuable upon exercise of preferred stock
warrants held by Mr. Drucker. Russell L. Siegelman, one of our directors,
is Voting Trustee of 1,297,475 of such shares pursuant to a Voting Trust
Agreement dated May 26, 1999, which terminates upon the closing of this
offering.

(8) The address of Telesat Canada is 1601 Telesat Court, Gloucester, Ontario,
Canada K1B 5P4.

(9) Consists of 163,427 shares of common stock issuable upon exercise of
preferred stock warrants. The address of TRW Inc. is One Space Park,
Redondo Beach, California 90728.

(10) Includes shares, options and warrants described in the notes above, as
applicable to our directors and named executive officers. Includes an
aggregate of 293,750 additional shares subject to options exercisable
within 60 days of September 1, 2000 held by our executive officers.

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<PAGE> 61

RELATED-PARTY TRANSACTIONS

The following is a description of transactions since our last fiscal year
end to which we have been a party, in which the amount involved exceeds $60,000
and in which any director, executive officer or holder of more than 5% of our
capital stock had or will have a direct or indirect material interest, other
than compensation arrangements which are described under "Management."

FINANCINGS

The following persons or entities purchased securities in the amounts set
forth, on an as converted to common basis, in the chart below. We sold shares of
our Series A preferred stock in January 1999, May 1999 and February 2000. We
sold shares of our Series B preferred stock in December 1999 and February 2000.
We sold shares of our Series C preferred stock between February 2000 and May
2000. We sold shares of our Series D nonvoting preferred stock in March 2000. We
sold shares of our Series E preferred stock and warrants on our Series F
preferred stock in May 2000.

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C SERIES E
PURCHASER FINANCING FINANCING FINANCING FINANCING WARRANTS(A)
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
PRINCIPAL SHAREHOLDERS:
KPCB Holdings, Inc. .................... 4,750,000 246,614 252,385 857,142 360,000
Liberty Satellite LLC................... 3,750,000 208,906 1,718,151 1,442,246 605,743
David M. Drucker........................ 1,135,502 6,963 31,548 53,925 22,648
Penny S. Drucker........................ 2,201,203 -- -- -- --
Walter S. Segaloff...................... 3,391,429 -- -- 36,700 15,414
TRW Inc. ............................... 1,492,187 -- 34,459 389,112 163,427
EchoStar Communications -- -- -- 3,571,428 3,300,000
Corporation(b)........................
DirectCom Networks, Inc. ............... 5,186,500 55,708 1,116,793 1,615,493 678,507
Telesat Canada.......................... -- -- 2,648,750 -- --
OTHER TRANSACTION INFORMATION:
Price per share......................... (c) $ 8.38 $ 14.00 (d) $ 17.00
</TABLE>

------------------------------

(a) These warrants represent the right to purchase shares of Series F preferred
stock, and the exercise price for these warrants is $17.00 per share.
Except for a warrant issued to EchoStar to purchase 1.8 million shares,
each of these warrants expires upon the closing of this offering.

(b) Shares of Series D nonvoting preferred stock originally issued in March
2000 were converted into shares of Series E preferred stock in April 2000.

(c) On May 20, 1999, we reincorporated as a Delaware corporation following the
exchange of the shares of our predecessor Colorado corporation, we issued
additional shares at a price of $4.00 per share.

(d) Unit price of $14.00 per share. Each Unit consists of one share of Series E
preferred stock and a warrant to purchase 0.42 shares of Series F preferred
stock at an exercise price of $17.00 per share.

REGISTRATION RIGHTS

We have entered into an Amended and Restated Investors Rights' Agreement
with some purchasers of our preferred stock pursuant to which these and other
shareholders will have registration rights following this offering with respect
to their shares of common stock issued upon conversion of their preferred stock
and the exercise of their outstanding warrants. In addition, certain optionees
under the Amended and Restated Stock Option Agreements pursuant to the 1998
Stock Option Plan are entitled to registration rights with respect to the stock
acquired upon the exercise of their options. See "Description of Capital
Stock - Registration Rights" for a description of these registration rights.

STRATEGIC INVESTMENTS AND RELATIONSHIPS

TRW Inc. In February 2000, we entered into an agreement with TRW by and
through its Space Electronics Group whereby TRW was granted an opportunity to
bid on the production of one or more satellites and the procurement of network
and support services related thereto.

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<PAGE> 62

EchoStar Communications Corporation and EchoStar Satellite Corporation. In
March 2000, we entered into a Marketing, Joint Box Production and Warrants
Agreement with EchoStar Communications and EchoStar Satellite Corporation that
allows each of us to market and distribute bundled WildBlue and DISH Network
services in the United States, its territories and possessions. The agreement
also provides that we will work together to develop a single set-top box that
will serve as both a satellite modem for the WildBlue service and a set-top box
for the DISH Network. Each party is entitled to residual commissions from the
other party for customers using the services of the other party through the
set-top box. In connection with this relationship, we granted EchoStar
Communications a warrant which represents the right to purchase 1,800,000 shares
of our common stock at a price of $17.00 per share, subject to the exercise
provisions contained in the agreement. This agreement expires on the earlier to
occur of September 30, 2007 or five years from the successful launch of our
first satellite.

Telesat Canada. In March 2000, we entered into a strategic alliance with
Telesat granting us an exclusive license to access and use 90% of the Ka-band
communications subsystem on a satellite to be owned and operated by Telesat at
111.1 DEGREES W.L. in exchange for 2,648,750 shares of our Series C Preferred
Stock and cash to be paid between March 17, 2000 and the date on which WildBlue
II is successfully placed in orbit. The agreement grants us options to
repurchase the shares and receive a cash reimbursement upon certain termination
events.

U.S. Monolithics, LLC. In March 2000, we entered into a Development and
License Agreement with USM to develop the transceiver unit for our dish. In
connection with this relationship, we entered into an Investment Agreement
whereby we purchased a $6.5 million membership interest in USM. Thomas E. Moore,
one of our directors and an executive officer, and David M. Brown, one of our
executive officers, currently serve as Managers of USM.

KaStarCom.World Satellite, LLC. We provide regulatory consulting services
to this limited liability company, of which David Drucker is the President of
its corporate manager.

EMPLOYMENT AGREEMENTS

We entered into employment agreements with certain of our executive
officers. See "Management - Employment Agreements." In addition, we entered into
stock option agreements separate from our employee benefit plans with a number
of our executive officers. See "Management - Special Stock Option Agreements."

We entered into an employment agreement and non-compete agreement on July
30, 1998, as amended, with Walter S. Segaloff to provide us consulting services
over a period of five years. The employment agreement was terminated effective
October 1, 2000. Under the terms of the termination agreement, we are required
to pay him 12 months of base salary, equal to $112,500.

SUBSIDIARIES

We have two wholly-owned subsidiaries that hold our FCC licenses, KaSTAR 73
Acquisition, LLC, a Colorado limited liability company formed on June 19, 1998
and KaSTAR 109.2 Acquisition, LLC, a Colorado limited liability company formed
on June 19, 1998.

OTHER TRANSACTIONS

We have entered into indemnity agreements with our directors and certain of
our executive officers for the indemnification and advancement of expenses to
these persons to the fullest extent permitted by law. See "Description of
Capital Stock - Limitation of Liability and Indemnification" for a description
of these indemnification provisions. We also intend to enter into these
agreements with our future directors and certain of our executive officers.

We believe that each of the transactions described above was carried out on
terms that were no less favorable to us than those that would have been obtained
from unaffiliated third parties. Any future transactions between us and any of
our directors, officers or principal shareholders will be on terms no less
favorable to us than could be obtained from unaffiliated third parties and will
be approved by a majority of the independent and disinterested members of the
board of directors.

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<PAGE> 63

DESCRIPTION OF CAPITAL STOCK

GENERAL

Immediately following the closing of the offering, our authorized capital
stock will consist of 135,000,000 shares of common stock, par value $0.001 per
share, and 15,000,000 shares of preferred stock, par value $0.001 per share.

This summary does not purport to be complete and is subject to, and
qualified in its entirety by: the provisions of our certificate of
incorporation, as amended and restated; various documents and agreements
evidencing warrants and registration rights, all of which are included as
exhibits to the registration statement which this prospectus is a part; and
applicable provisions of Delaware law.

COMMON STOCK

As of September 1, 2000, and assuming conversion of all outstanding
preferred stock into common stock upon the closing of the offering, there were
outstanding 42,191,649 shares of common stock held of record by 44 shareholders.
The holders of common stock are entitled to one vote per share on all matters to
be voted on by the shareholders. Subject to preferences that may be applicable
to any outstanding shares of preferred stock, holders of common stock are
entitled to receive ratably such dividends as may be declared by the board of
directors out of funds legally available therefor. In the event of our
liquidation, dissolution or winding up, holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders of
common stock have no preemptive, conversion, subscription or other rights. There
are no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are, and all shares of common stock to be
outstanding upon completion of this offering will be, fully paid and
nonassessable.

PREFERRED STOCK

As of September 1, 2000, assuming the closing of the offering, all
outstanding shares of preferred stock would have been converted into 42,083,774
shares of common stock. See Note 7 to our consolidated financial statements for
the years ended December 31, 1999 and 1998 a description of our currently
outstanding preferred stock. Following the conversion, our restated certificate
of incorporation will be amended and restated to delete all references to such
shares of preferred stock. The restated certificate of incorporation, as
restated, gives to the board of directors the authority, without further action
by shareholders, to issue up to 50,000,000 shares of preferred stock in one or
more series and to fix the rights, preferences, privileges, qualifications and
restrictions granted to or imposed upon such preferred stock, including dividend
rights, conversion rights, voting rights, rights and terms of redemption,
liquidation preference and sinking fund terms, any or all of which may be
greater than the rights of the common stock. The issuance of preferred stock
could:

- adversely affect the voting power of holders of common stock and reduce
the likelihood that such holders will receive dividend payments and
payments upon liquidation;

- decrease the market price of our common stock; or

- delay, deter or prevent a change in our control.

We have no present plans to issue any shares of preferred stock.

WARRANTS

In connection with the private placement of our Series C, D and E preferred
stock, we issued the following warrants:

- a warrant to purchase up to 909,090 shares of Series C preferred stock at
an exercise price of $22.00 per share to Arianespace Investment Limited,
which expires on the earlier of the first

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<PAGE> 64

anniversary of the launch of WildBlue I or pursuant to the terms of the
loan agreement with Arianespace Finance S.A.;

- a warrant to purchase up to 1,800,000 shares of Series F preferred stock
at an exercise price of $17.00 per share to EchoStar, of which 250,000
shares become exercisable upon delivery of an integrated set-top box for
our bundled WildBlue and DISH Network service and expire one year after
service launch and 1,550,000 shares become exercisable upon achievement
of certain milestones and expire one year after becoming exercisable;

- a warrant to purchase up to 1,500,000 shares of Series F preferred stock
at an exercise price of $17.00 per share to EchoStar, which expires
following the closing of this offering;

- a warrant to purchase up to 678,507 shares of Series F preferred stock at
an exercise price of $17.00 per share to TV Guide, which expires
following the closing of this offering;

- a warrant to purchase up to 605,743 shares of Series F preferred stock at
an exercise price of $17.00 per share to Liberty Media, which expires
following the closing of this offering;

- a warrant to purchase up to 360,000 shares of Series F preferred stock at
an exercise price of $17.00 per share to Kleiner Perkins, which expires
following the closing of this offering;

- a warrant to purchase up to 163,427 shares of Series F preferred stock at
an exercise price of $17.00 per share to TRW, which expires following the
closing of this offering;

- a warrant to purchase up to 48,588 shares of Series F preferred stock at
an exercise price of $17.00 per share to Hashem Provides, LLC, which
expires following the closing of this offering;

- a warrant to purchase up to 22,648 shares of Series F preferred stock at
an exercise price of $17.00 per share to David M. Drucker, which expires
following the closing of this offering; and

- a warrant to purchase up to 15,414 shares of Series F preferred stock at
an exercise price of $17.00 per share to the Segaloff Group, LLC, which
expires following the closing of this offering.

The exercise price of each of our outstanding warrants is subject to
customary adjustments upon stock splits, stock dividends or subdivisions.
Additionally, the warrants are subject to customary adjustments upon a sale of
all or substantially all of our assets or upon our reorganization,
reclassification, consolidation or merger. None of our warrants confer upon the
holder any voting or any other rights of our shareholders, and the shares
issuable upon exercise of the majority of the warrants carry registration
rights. See "Description of Capital Stock - Registration Rights."

REGISTRATION RIGHTS

Pursuant to the Amended and Restated Investors' Rights Agreement dated as
of March 16, 2000, as amended, between WildBlue and some of our investors,
investors holding an aggregate of 43,540,332 shares of our common stock issued
or issuable upon conversion of our outstanding preferred stock and upon exercise
of outstanding warrants to purchase preferred and common stock, have
registration rights pertaining to the securities they hold. After 180 days
following the effective date of the registration statement, we may be required
to prepare and file a registration statement under the Securities Act at our
expense if requested to do so by the holders of at least a majority of the
registrable securities, so long as the aggregate offering price to the public is
at least $5 million. We are required to use our best efforts to effect this
registration. We are not obligated to effect more than two shareholder-initiated
registrations. If we propose to register any of our securities under the
Securities Act for our own account or the account of any of our shareholders
other than these holders of registrable securities, the holders of those
registrable securities are entitled to piggyback registration rights which allow
them to include their registrable securities in the registration. The
underwriters of any of these offerings have the right to limit the number of
shares included in the registration, provided the amount of securities of these
registered holders shall not be reduced below 30% of the total amount of
securities proposed to be included in the registration. Further, holders of
registrable securities may require us to file additional registration statements
on Form S-3 if the aggregate offering price to the public is not less
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<PAGE> 65

than $5.0 million. We are not obligated to effect more than two
shareholder-initiated registrations on Form S-3 within any twelve-month period.
The registration rights are subject to our right to delay the filing of a
registration statement for a period not to exceed 90 days, provided we cannot
delay more than once in any twelve-month period after receiving the registration
demand.

We are required to bear all costs incurred in connection with the first two
demand registrations and all piggyback registrations and registrations on Form
S-3. The foregoing registration rights could result in substantial future
expenses for us and adversely affect any future equity offerings.

Subject to certain limitations, the registration rights described above
will terminate three years after the date of our initial public offering.
Following the closing of this offering, the registration rights of each holder
terminate when all of the registerable securities held by the holder may be sold
under Rule 144 of the Securities Act during any 90-day period.

Under the Amended and Restated Stock Option Agreements dated May 26, 1999,
pursuant to the 1998 Stock Option Plan certain optionees are entitled to
registration rights with respect to the stock acquired upon the exercise of
their options that are no less favorable than the registration rights provided
to our other shareholders during the term of such options.

ANTI-TAKEOVER PROVISIONS

Delaware Law. We are governed by the provisions of Section 203 of the
Delaware General Corporation Law. In general, Section 203 prohibits a public
Delaware corporation from engaging in a "business combination" with an
"interested shareholder" for a period of three years after the date of the
transaction in which the person became an interested shareholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales or other transactions resulting in a
financial benefit to the shareholder. An "interested shareholder" is a person
who, together with affiliates and associates, owns, or within three years, did
own, 15% or more of the corporation's voting stock. The statute could have the
effect of delaying, deferring or preventing a change in our control.

Certificate of Incorporation and Bylaw Provisions. Certain provisions of
our certificate of incorporation and bylaws, which will become effective upon
the closing of this offering, may have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire, control of us. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of our common stock.
Our certificate of incorporation and bylaws provide that any action required or
permitted to be taken by our shareholders must be effected at a duly called
annual or special meeting of shareholders and may not be effected by any consent
in writing. In addition, our bylaws provide that special meetings of our
shareholders may be called only by our chief executive officer or by the board
of directors pursuant to a resolution adopted by a majority of the total number
of authorized directors.

Our certificate of incorporation also specifies that the authorized number
of directors may be changed only by resolution of the board of directors and
does not include a provision for cumulative voting for directors. Our bylaws
require a two-thirds vote of the board to change the authorized number of
directors. Under cumulative voting, a minority shareholder holding a sufficient
percentage of a class of shares may be able to ensure the election of one or
more directors. Certain amendments to our certificate of incorporation and
amendments to our bylaws require the approval of holders of at least two-thirds
of the voting power of all outstanding stock. The authorization of undesignated
preferred stock makes it possible for the board of directors to issue preferred
stock with voting or other rights or preferences that could impede the success
of any attempt to change control of us. These and other provisions contained in
our certificate of incorporation and bylaws could delay or discourage certain
types of transactions involving an actual or potential change in our control or
change in our management, including transactions in which shareholders might
otherwise receive a premium for their shares over then current prices, and may
limit the ability of shareholders to remove current management or directors or
approve transactions that shareholders may deem to be in their best interests
and, therefore, could adversely affect the price of our common stock.

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<PAGE> 66

LIMITATION OF LIABILITY AND INDEMNIFICATION

Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. In addition, our bylaws require us to
indemnify our directors and executive officers, and allow us to indemnify our
other employees and agents, to the fullest extent permitted by law.

We have entered into indemnity agreements with our directors and certain of
our executive officers for the indemnification and advancement of expenses to
these persons. We believe that these provisions and agreements are necessary to
attract and retain qualified directors and executive officers. We also intend to
enter into these agreements with our future directors and certain of our
executive officers.

At present, there is no pending litigation or proceeding involving any
director, executive officer, employee or agent where indemnification will be
required or permitted. We are not aware of any threatened litigation or
proceeding that might result in a claim for such indemnification. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, executive officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.

TRANSFER AGENT AND REGISTRAR

We have appointed to serve as the transfer agent and registrar
for the common stock.

LISTING

We have applied for listing of the common stock on the Nasdaq National
Market under the trading symbol "WBLU".

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SHARES ELIGIBLE FOR FUTURE SALE

When the offering is completed, we will have a total of shares of
common stock outstanding. The shares offered by this prospectus will
be freely tradeable unless they are purchased by our "affiliates," as defined in
Rule 144 under the Securities Act. Shares purchased by affiliates may generally
only be sold pursuant to an effective registration statement under the
Securities Act or in compliance with Rule 144. The remaining 42,191,649 shares,
including shares of our common stock issuable upon exercise of warrants which
will expire prior to the closing of this offering, are "restricted," which means
they were originally sold in offerings that were not subject to a registration
statement filed with the Securities and Exchange Commission. These restricted
shares may be resold only through registration under the Securities Act or under
an available exemption from registration, such as an exemption provided through
Rule 144 or Rule 701 and subject to the lock-up agreements described below.

Before this offering, there has been no public market for our common stock,
and we cannot predict what effect, if any, that market sales of shares of our
common stock or the availability of shares of our common stock for sale will
have on the market price of our common stock prevailing from time to time. Sales
of substantial amounts of our common stock in the public market could adversely
affect prevailing market prices and could impair our future ability to raise
capital through the sale of our equity securities.

RULE 144

Generally, Rule 144 as currently in effect provides that, beginning 90 days
after the first date of this prospectus, a person who has beneficially owned
shares of our common stock for at least one year would be entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of:

- one percent of the number of shares of common stock then outstanding,
which based on the shares outstanding as of , 2000, will equal
approximately shares, or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of
the notice on Form 144 with respect to the sale.

Rule 144 provides limitations as the manner of sales and imposes
requirements as to notice and the availability of current public information
about us.

Under Rule 144(k), a person who has not been one of our affiliates at any
time during the 90 days preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least two years, may sell his or her shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144. Therefore, unless otherwise restricted,
including by a lock-up agreement, a person who has been a non-affiliate for at
least two years may sell his or her shares in the open market.

One hundred eighty days after the date of this prospectus, shares
of our common stock will be eligible for sale under Rule 144, including
shares under Rule 144(k), and will be eligible for sale
under Rule 701.

RULE 701

Rule 701 permits any of our employees, officers, directors or consultants
who purchased their shares under a compensatory stock or option plan or other
written agreement prior to the effective date of this offering to sell such
shares under Rule 144 without complying with the holding period, public
information, volume limitation or notice requirement of Rule 144. All holders of
Rule 701 shares may not sell their 701 shares until 90 days after the date of
this prospectus. However, substantially all shares of our common stock issued
under Rule 701 are subject to lock-up agreements described below.

REGISTRATION RIGHTS

The holders of 38,346,005 shares of common stock issued upon conversion of
their preferred stock and of options and warrants exercisable for 9,580,223
shares of common stock (plus the additional shares issued

63
<PAGE> 68

in connection with the offering to the holders of options under the 1998 Stock
Option Plan) will be entitled to certain rights with respect to the registration
of these shares under the Securities Act. After these shares are registered,
they will be freely tradable.

LOCK-UP AGREEMENTS

All of our shareholders have entered into lock-up agreements with the
underwriter prohibiting them from offering, selling, pledging or otherwise
disposing of their shares for a period of 180 days after the date of this
prospectus. This generally means that the shareholders cannot sell these shares
during the 180 days following the date of this prospectus unless permitted by
the underwriter.

Following the closing of this offering, we intend to file a registration
statement to register for resale shares of common stock available for issuance
under our stock plans. Accordingly, shares issuable under those plans will
become eligible for resale in the public market from time to time, subject to
the lock-up agreements described above and, in the case of our affiliates, the
volume limitations of Rule 144 described above.

64
<PAGE> 69

MATERIAL U.S. TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

GENERAL

We expect to offer a portion of the offering outside of the United States.
This section summarizes the material U.S. federal tax consequences to holders of
common stock that are non-U.S. holders. In general, you are a non-U.S. holder if
you are:

- an individual who is a nonresident alien of U.S.;

- a corporation organized or created under non-U.S. law; or

- an estate or trust that is not taxable in the U.S. on its worldwide
income.

If a partnership holds common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding common stock, we
suggest that you consult your tax advisor.

This discussion does not address all aspects of U.S. federal taxation, and
in particular is limited in the following ways:

- the discussion assumes that you hold your common stock as a capital
asset, that is, for investment purposes, and that you do not have a
special tax status;

- the discussion does not consider tax consequence that depend upon your
particular tax situation in addition to your ownership of the common
stock;

- the discussion does not consider special tax provisions that may be
applicable to you if you have relinquished U.S. citizenship or residence;

- the discussion is based on current law, and changes in the law may change
the tax treatment of the common stock; and

- the discussion does not cover state, local or foreign law.

We have not requested a ruling from the Internal Revenue Service, or IRS,
on the tax consequences of owning the common stock. As a result, the IRS could
disagree with portions of this discussion.

We suggest that you consult your tax advisors about the tax consequences of
holding and disposing of the common stock in your particular situation.

DIVIDENDS

We do not anticipate paying cash dividends on the common stock in the
foreseeable future. See "Dividend Policy." If we pay you dividends, such
dividends generally will be subject to U.S. withholding tax at a 30% rate or, if
a tax treaty applies, a lower rate specified by the treaty.

Under current U.S. Treasury regulations, dividends paid before January 1,
2001 to an address outside the U.S. are presumed to be paid to a resident of the
country of address, unless the payer has knowledge to the contrary, for purposes
of withholding and determining the applicability of a tax treaty rate. Under
U.S. Treasury regulations applicable to dividends paid after December 31, 2000,
however, you will be required to satisfy certain certification requirements in
order to establish your entitlement to a lower applicable treaty withholding
rate.

You may claim an exemption from withholding on the ground that the
dividends are effectively connected with a U.S. trade or business. To claim this
exemption, you must satisfy certain certification requirements. However,
dividends exempt from U.S. withholding because they are effectively connected
generally are subject to U.S. federal income tax on a net income basis at the
regular graduated tax rates. These rules might be altered by an applicable tax
treaty. If you are a corporation, any effectively connected

65
<PAGE> 70

dividends received by you may, under certain circumstances, be subject to an
additional branch profits tax at a 30% rate, or a lower rate specified by an
applicable income tax treaty.

You should consult your own tax advisor concerning the effect, if any, of
the rules affecting post-December 31, 2000 dividends on your possible investment
in common stock.

You may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund along with the required information with the IRS.

GAIN ON DISPOSITION OF COMMON STOCK

You generally will not be subject to U.S. federal income tax on a sale or
other disposition of the common stock unless one of the following applies:

- the gain is effectively connected with a trade or business you conduct in
the U.S. or, under a treaty, the gain is attributable to a permanent
establishment you have in the U.S. In this case, you generally will be
taxed on your net gain on the sale under the regular graduated U.S.
federal income tax rates. If you are a foreign corporation, you may be
subject to an additional branch profits tax at a 30% rate, unless an
applicable income tax treaty provides for a lower rate;

- you are an individual and are present in the U.S. for 183 or more days in
the taxable year of the disposition and certain other conditions are met.
In this case, you generally will be subject to a flat 30% tax on your
gain from the sale; or

- we are or have been a U.S. real property holding corporation for U.S.
federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the disposition or the period
during which you held the common stock, and certain other conditions
apply. We believe that we never have been, are not currently, and are not
likely in the future to become, a U.S. real property holding corporation
for U.S. federal income tax purposes.

FEDERAL ESTATE TAX

If you are an individual who owns or is treated as owning common stock at
the time of your death, you will be required to include the value of common
stock in your gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

We must report annually to the IRS the amount of dividends paid to you and
the tax withheld with respect to the dividends. These requirements apply even if
withholding was not required on payments to you. Pursuant to an applicable tax
treaty, that information may also be made available to the tax authorities in
your country of residence.

Backup withholding tax generally may be imposed at the rate of 31% on
certain payments to persons that fail to furnish certain required information.
Backup withholding generally will not apply to dividends paid before January 1,
2001 to non-U.S. holders. Final U.S. Treasury regulations, which generally will
apply to dividends paid after December 31, 2000, will affect the procedures to
be followed by a non-U.S. holder in establishing its foreign status.

As a general matter, information reporting and backup withholding will not
apply to a payment to you by or through a foreign office of a foreign broker of
the proceeds of a sale of common stock effected outside the U.S. However,
information reporting requirements, but not backup withholding, will apply to
such a payment if the broker:

- is a U.S. person;

- is a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the U.S.;

66
<PAGE> 71

- is a controlled foreign corporation as defined in the Internal Revenue
Code; or

- is a foreign partnership with certain U.S. connections, for payments made
after December 31, 2000.

Information reporting requirements will apply in the above cases if the
broker has documentary evidence in its records that you are a non-U.S. holder
and certain conditions are met or you otherwise establish an exemption.

Payment of the proceeds of a sale of common stock by or through a U.S.
office of a broker is subject to both backup withholding and information
reporting unless you certify to the payer in the manner required as to your
non-U.S. status under penalties of perjury or otherwise establish an exemption.

Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, any amounts withheld under the backup
withholding rules will be refunded or allowed as a credit against your U.S.
federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the IRS.

The foregoing discussion is only a summary of certain U.S. federal income
and estate tax consequences of the ownership, sale or other disposition of
common stock by non-U.S. holders. You are urged to consult your own tax advisor
with respect to the particular tax consequences to you of ownership and
disposition of the common stock, including the effect of any state, local,
foreign or other tax laws and any applicable income or estate tax treaties.

67
<PAGE> 72

UNDERWRITING

Subject to the terms and conditions of an underwriting agreement, dated
, 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, have severally agreed to
purchase from WildBlue the number of shares of common stock shown opposite their
names below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
----------

Total.............................................
==========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of common stock
offered by this prospectus are subject to the approval by their counsel of legal
matters and other conditions. The underwriters must purchase and accept delivery
of all of the shares of common stock offered by this prospectus, other than
those shares covered by the over-allotment option described below, if any are
purchased.

The underwriters initially propose to offer some of the shares of common
stock directly to the public at the public offering price on the cover page of
this prospectus and some of these shares of common stock to dealers, including
the underwriters, at the public offering price less a concession not in excess
of $ per share. The underwriters may allow, and these dealers may re-allow,
a concession not in excess of $ per share on sales to other dealers. After
the initial offering of the common stock to the public, the representative of
the underwriters may change the public offering price and other selling terms.

We have granted to the underwriters an option, exercisable within 30 days
after the date of this prospectus, to purchase up to additional shares
of common stock at the initial public offering price less underwriting discounts
and commissions. The underwriters may exercise this option solely to cover over-
allotments, if any, made in connection with the offering. To the extent that the
underwriters exercise this option, each underwriter will become obligated, under
conditions specified in the underwriting agreement, to purchase its pro rata
portion of the additional shares based on that underwriter's percentage
underwriting commitment as indicated in the preceding table.

The following table shows the underwriting fees to be paid by us in this
offering. These amounts are shown assuming both no exercise and full exercise of
the underwriters' option to purchase additional shares of common stock.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per Share................................................... $ $
Total....................................................... $ $
</TABLE>

We will pay the offering expenses, estimated to be $ .

We, our officers and directors and all of our stockholders have agreed, for
a period of 180 days after the date of this prospectus, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation, not to:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer
directly or indirectly any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences of ownership of the common stock, whether
any such transaction described above is to be settled by delivery of
common stock or other securities, in cash or otherwise.

68
<PAGE> 73

In addition, during this 180-day period, we have also agreed not to file
any registration statement for, and each of our executive officers, directors
and stockholders have agreed not to make any demand for, or exercise any right
for, the registration of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.

We have agreed to indemnify the underwriters against specified civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the underwriters may be required to make because of these
liabilities.

We expect that our common stock will be approved for quotation on the
Nasdaq National Market under the symbol "WBLU" upon official notification of
issuance.

At our request, certain of the underwriters have reserved for sale at the
initial public offering price up to shares of common stock offered by this
prospectus for sale to our employees, directors and other persons designated by
us. The number of shares available for sale to the general public will be
reduced to the extent that any reserved shares are purchased. Any reserved
shares not so purchased will be offered by the underwriters on the same basis as
the other shares offered through this prospectus.

In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may over-allot the offering by
making short sales. Short sales involve the sales by the underwriters of a
greater number of shares than they are required to purchase. There are two types
of short sales. "Covered" short sales are sales made in an amount not greater
than the amount of shares the underwriters can purchase pursuant to their
over-allotment option. "Naked" short sales are sales in excess of their
over-allotment opinion. A naked short position is more likely to be created if
the underwriters are concerned that there may be downward pressure on the
trading price of shares in the open market that could affect investors who
purchase shares in the offering. The underwriters may reduce or close out their
covered short position either by exercising the over-allotment option or by
purchasing shares in the open market. In determining which of these alternatives
to pursue, the underwriters will consider, among other things, the price at
which shares are available for purchase in the open market as compared to the
price at which they may purchase shares by exercising their over-allotment
option. Any "naked" short position however, will be closed out by purchasing
shares in the open market. Purchases to cover a short position may have the
effect of preventing or retarding a decline in the market price of the stock
following this offering. As a result, the price of the stock may be higher than
the price that might otherwise exist in the open market. The underwriters may
also bid for and purchase shares of common stock in the open market to stabilize
the price of the common stock. In addition, the underwriting syndicate may
reclaim selling concessions if the syndicate repurchases previously distributed
common stock in syndicate covering transactions, in stabilization transactions
or in some other way or if Donaldson, Lufkin & Jenrette Securities Corporation
receives a report that indicates clients of such syndicate members have
"flipped" the common stock. These activities may stabilize or maintain the
market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities, and may end any of
these activities at any time.

Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
offered by this prospectus in any jurisdiction where action for that purpose is
required. The shares of common stock offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other
offering material or advertisements associated with the offer and sale of any
the shares of common stock offered through this prospectus be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that jurisdiction. You
should inform yourself and observe any restrictions relating to the offering of
the common stock and the distribution of this prospectus. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any shares
of common stock offered in this prospectus in any jurisdiction in which an offer
or a solicitation is unlawful.

69
<PAGE> 74

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the
shares of common stock offered by this prospectus will be passed upon for us by
Cooley Godward LLP, Boulder, Colorado. Certain legal matters will be passed upon
for the underwriters by Paul, Hastings, Janofsky & Walker LLP.

EXPERTS

The financial statements of Wildblue Communications, Inc. and its
subsidiaries as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999 have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission in connection with the offering. In addition, upon
completion of the offering, we will be required to file annual, quarterly and
current reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy the registration statement or any
other documents filed by us at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
Our Securities and Exchange Commission filings are also available to the public
at the Securities and Exchange Commission's Internet site at
"http://www.sec.gov."

This prospectus is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus to any contract or other document of
WildBlue, the reference may not be complete and you should refer to the exhibits
that are a part of the registration statement for a copy of the contract or
document.

After the offering, we expect to provide annual reports to our shareholders
that include financial information examined and reported on by our independent
auditors.

70
<PAGE> 75

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of KPMG LLP, Independent Auditors.................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations and Comprehensive
Loss...................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit)... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
Unaudited Consolidated Balance Sheets....................... F-16
Unaudited Consolidated Statements of Operations and
Comprehensive Loss........................................ F-17
Unaudited Consolidated Statements of Stockholders' Equity... F-18
Unaudited Consolidated Statements of Cash Flows............. F-19
Notes to Unaudited Consolidated Financial Statements........ F-20
</TABLE>

F-1
<PAGE> 76

When the stock split described in Note 1 to the consolidated financial
statements becomes effective, we expect to be in a position to render the
following audit report.

/s/ KPMG LLP

Denver, Colorado
October 5, 2000

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Wildblue Communications, Inc.:

We have audited the accompanying consolidated balance sheets of Wildblue
Communications, Inc. and subsidiaries (a development stage company) as of
December 31, 1999 and 1998, and the related consolidated statements of
operations and comprehensive loss, stockholders' equity (deficit) and cash flows
for each of the years in the three-year period ended December 31, 1999 and for
the period from April 21, 1995 (inception) to December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wildblue
Communications, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 and for the period from April 21, 1995
(inception) to December 31, 1999 in conformity with generally accepted
accounting principles.

Denver, Colorado
March 29, 2000, except as to Note 1
which is as of , 2000

F-2
<PAGE> 77

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents................................. $21,929,007 $ 323,805
Marketable securities..................................... 6,017,864 1,210,656
Due from related parties.................................. 73,534 58,308
Other current assets...................................... 3,989 20,213
----------- -----------
Total current assets............................... 28,024,394 1,612,982
Property, equipment and assets under construction, at cost:
Office furniture and equipment............................ 244,761 62,010
Payments on assets under construction..................... 9,384,428 400,000
----------- -----------
9,629,189 462,010
Accumulated depreciation.................................. (31,170) (1,553)
----------- -----------
9,598,019 460,457
Deferred satellite license costs............................ 693,430 586,419
Deferred finance fees, net of accumulated amortization of
$34,949 and $65,599, respectively......................... 291,154 287,950
Other assets................................................ 6,807 3,900
----------- -----------
Total assets....................................... $38,613,804 $ 2,951,708
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses..................... $ 386,871 $ 164,308
Accrued interest payable.................................. 563,181 180,821
Convertible notes payable................................. 29,028,943 5,000,000
----------- -----------
Total current liabilities.......................... 29,978,995 5,345,129
Stockholders' equity (deficit):
Preferred stock:
Series A preferred stock, $0.001 par value; 27,374,958
shares authorized; 18,010,867 shares (aggregate
liquidation preference $72,043,468) and no shares
issued and outstanding at December 31, 1999 and 1998,
respectively........................................... 18,011 --
Series B preferred stock, $0.001 par value; 601,749
shares authorized; 208,904 shares (aggregate
liquidation preference $1,749,779) and no shares issued
and outstanding at December 31, 1999 and 1998,
respectively........................................... 209 --
Series C preferred stock, $0.001 par value; 1,684,728
shares authorized; no shares issued at December 31,
1999 and 1998.......................................... -- --
Common stock, $0.001 par value; 32,171,478 shares
authorized; no shares issued at December 31, 1999 and
1998...................................................... -- --
Common stock, no par value:
Class A, authorized 225,000 shares, no and 250 shares
issued and outstanding at December 31, 1999 and 1998,
respectively............................................ -- --
Class B non-voting, authorized 25,000 shares, no shares
issued and outstanding at December 31, 1999 and 1998.... -- --
Additional paid-in capital.................................. 16,756,815 --
Unearned compensation....................................... (956,562) --
Accumulated other comprehensive income (loss)............... 67,401 (1,678)
Deficit accumulated during the development stage............ (7,251,065) (2,391,743)
----------- -----------
Total stockholders' equity (deficit)............... 8,634,809 (2,393,421)
Commitments and contingencies (notes 8, 9 and 10)
----------- -----------
Total liabilities and stockholders' equity
(deficit)........................................ $38,613,804 $ 2,951,708
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 78

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND FOR
THE PERIOD FROM APRIL 21, 1995 (INCEPTION) TO DECEMBER 31, 1999

<TABLE>
<CAPTION>
APRIL 21, 1995
(INCEPTION) TO
DECEMBER 31,
1999 1998 1997 1999
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Operating expenses....................... $(4,604,422) $ (949,361) $ (593,976) $(6,326,169)
Other income (expense):
Interest expense....................... (767,944) (298,332) (71,678) (1,137,954)
Interest income........................ 365,640 28,562 -- 394,202
Realized gains on sales of marketable
securities.......................... 147,107 -- -- 147,107
Other.................................. 297 -- -- 297
----------- ----------- ----------- -----------
(254,900) (269,770) (71,678) (596,348)
----------- ----------- ----------- -----------
Net loss....................... (4,859,322) (1,219,131) (665,654) (6,922,517)
Other comprehensive income (loss)........ 69,079 (1,678) -- 67,401
----------- ----------- ----------- -----------
Comprehensive loss............. $(4,790,243) $(1,220,809) $ (665,654) $(6,855,116)
=========== =========== =========== ===========
Net loss per share:
Basic and diluted................... $(51,694.91) $ (4,876.52) $ (2,662.62)
=========== =========== ===========
Shares used in computing net loss per
share:
Basic and diluted...................... 94 250 250
=========== =========== ===========
Pro forma net loss per share:
Basic and diluted -- unaudited......... (.40)
===========
Pro forma shares used in computing net
loss per share:
Basic and diluted -- unaudited......... 12,024,753
===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 79

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND FOR
THE PERIOD FROM APRIL 21, 1995 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------------------------------
COMMON SERIES A SERIES B ADDITIONAL
STOCK -------------------- ---------------- PAID-IN UNEARNED
DATE NO PAR SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION
-------------- ------ ---------- ------- ------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception (April 21, 1995)........ -- -- $ -- -- $ -- $ -- $ --
Issuance of 250 shares no par
common stock.................... Various 250 -- -- -- -- 232,500 --
Net loss for the year ended
December 31, 1996............... -- -- -- -- -- -- --
----- ---------- ------- ------- ---- ----------- ---------
Balance at December 31, 1996...... 250 -- -- -- -- 232,500 --
Net loss for the year ended
December 31, 1997............... -- -- -- -- -- -- --
----- ---------- ------- ------- ---- ----------- ---------
Balance at December 31, 1997...... 250 -- -- -- -- 232,500 --
Distribution to shareholder....... August, 1998 -- -- -- -- -- -- --
Return of capital................. August, 1998 -- -- -- -- -- (232,500) --
Changes in other comprehensive
losses.......................... -- -- -- -- -- -- --
Net loss for the year ended
December 31, 1998............... -- -- -- -- -- -- --
----- ---------- ------- ------- ---- ----------- ---------
Balance at December 31, 1998...... 250 -- -- -- -- -- --
Issuance of 31 shares no par
common stock.................... January, 1999 31 -- -- -- -- 5,250,000 --
Conversion of note payable and
accrued interest to no par
common stock, net of unamortized
debt issuance costs of
$224,419........................ May, 1999 73 -- -- -- -- 5,134,384 --
Exchange of no par common stock
for 17,116,180 shares of Series
A preferred stock............... May, 1999 (354) 17,116,180 17,116 -- -- (17,116) --
Stock repurchase.................. May, 1999 -- (835,625) (836) -- -- (3,340,395) --
Issuance of 1,667,812 shares,
Series A preferred stock, net of
offering costs of $76,989....... May, 1999 -- 1,667,812 1,668 -- -- 6,592,593 --
Issuance of 62,500 shares, Series
A preferred stock............... May, 1999 -- 62,500 63 -- -- 249,937 --
Issuance of 208,904 shares, Series
B preferred stock, net of
offering costs of $1,003........ December, 1999 -- -- -- 208,904 209 1,746,229 --
Change in accumulated other
comprehensive income............ -- -- -- -- -- -- --
Net loss for the year ended
December 31, 1999............... -- -- -- -- -- -- --
Option awards..................... -- -- -- -- -- 1,141,183 (956,562)
----- ---------- ------- ------- ---- ----------- ---------
Balance at December 31, 1999...... -- 18,010,867 $18,011 208,904 $209 $16,756,815 $(956,562)
===== ========== ======= ======= ==== =========== =========

<CAPTION>
ACCUMULATED DEFICIT
OTHER ACCUMULATED TOTAL
COMPREHENSIVE DURING STOCKHOLDERS'
INCOME DEVELOPMENT EQUITY
(LOSSES) STAGE (DEFICIT)
------------- ------------ -------------
<S> <C> <C> <C>
Inception (April 21, 1995)........ $ -- $ -- $ --
Issuance of 250 shares no par
common stock.................... -- -- 232,500
Net loss for the year ended
December 31, 1996............... -- (178,410) (178,410)
------- ----------- -----------
Balance at December 31, 1996...... -- (178,410) 54,090
Net loss for the year ended
December 31, 1997............... -- (665,654) (665,654)
------- ----------- -----------
Balance at December 31, 1997...... -- (844,064) (611,564)
Distribution to shareholder....... -- (328,548) (328,548)
Return of capital................. -- -- (232,500)
Changes in other comprehensive
losses.......................... (1,678) -- (1,678)
Net loss for the year ended
December 31, 1998............... -- (1,219,131) (1,219,131)
------- ----------- -----------
Balance at December 31, 1998...... (1,678) (2,391,743) (2,393,421)
Issuance of 31 shares no par
common stock.................... -- -- 5,250,000
Conversion of note payable and
accrued interest to no par
common stock, net of unamortized
debt issuance costs of
$224,419........................ -- -- 5,134,384
Exchange of no par common stock
for 17,116,180 shares of Series
A preferred stock............... -- -- --
Stock repurchase.................. -- -- (3,341,231)
Issuance of 1,667,812 shares,
Series A preferred stock, net of
offering costs of $76,989....... -- -- 6,594,261
Issuance of 62,500 shares, Series
A preferred stock............... -- -- 250,000
Issuance of 208,904 shares, Series
B preferred stock, net of
offering costs of $1,003........ -- -- 1,746,438
Change in accumulated other
comprehensive income............ 69,079 -- 69,079
Net loss for the year ended
December 31, 1999............... -- (4,859,322) (4,859,322)
Option awards..................... -- -- 184,621
------- ----------- -----------
Balance at December 31, 1999...... $67,401 $(7,251,065) $ 8,634,809
======= =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 80

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND FOR
THE PERIOD FROM APRIL 21, 1995 (INCEPTION) TO DECEMBER 31, 1999

<TABLE>
<CAPTION>
APRIL 21, 1995
(INCEPTION) TO
DECEMBER 31,
1999 1998 1997 1999
------------ ----------- --------- --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (4,859,322) $(1,219,131) $(665,654) $ (6,922,517)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation............................................ 29,617 1,553 -- 31,170
Amortization of deferred finance fees................... 98,480 65,599 -- 164,079
Realized gains on sales of marketable securities........ (147,107) -- -- (147,107)
Options compensation expense............................ 184,621 -- -- 184,621
Changes in operating assets and liabilities:
Increase (decrease) in due to related parties......... (15,226) (503,325) 396,574 (73,534)
Increase (decrease) in other current assets........... 16,224 (20,213) -- (3,989)
Increase in other assets.............................. (2,907) (3,900) -- (6,807)
Increase (decrease) in accounts payable and accrued
expenses........................................... 222,563 (343,283) 357,591 386,871
Increase in accrued interest payable.................. 669,464 180,821 -- 850,285
------------ ----------- --------- ------------
Net cash provided by (used in) operating
activities....................................... (3,803,593) (1,841,879) 88,511 (5,536,928)
------------ ----------- --------- ------------
Cash flows from investing activities:
Capital expenditures for property, equipment and assets
under construction...................................... (9,095,480) (462,010) -- (9,557,490)
Increase in deferred satellite license costs.............. (107,011) (245,452) (88,434) (693,430)
Purchases of marketable securities........................ (12,058,449) (1,212,334) -- (13,270,783)
Sales and maturities of marketable securities............. 7,467,427 -- -- 7,467,427
------------ ----------- --------- ------------
Net cash used in investing activities.............. (13,793,513) (1,919,796) (88,434) (16,054,276)
------------ ----------- --------- ------------
Cash flows from financing activities:
Proceeds from issuance of convertible note................ 29,028,943 5,000,000 -- 34,028,943
Proceeds from issuance of no par common stock............. 5,250,000 -- -- 5,482,500
Repurchase of preferred stock............................. (3,341,231) -- -- (3,341,231)
Proceeds from issuance of preferred stock................. 8,590,699 -- -- 8,590,699
Payments made as return of capital........................ -- (232,500) -- (232,500)
Distribution to shareholder............................... -- (328,548) -- (328,548)
Deferred finance fees paid................................ (326,103) (353,549) -- (679,652)
------------ ----------- --------- ------------
Net cash provided by financing activities.......... 39,202,308 4,085,403 -- 43,520,211
------------ ----------- --------- ------------
Net increase in cash and cash equivalents.......... 21,605,202 323,728 77 21,929,007
Net cash and cash equivalents at the beginning of period.... 323,805 77 -- --
------------ ----------- --------- ------------
Net cash and cash equivalents at the end of period.......... $ 21,929,007 $ 323,805 $ 77 $ 21,929,007
============ =========== ========= ============
No cash has been paid for interest and taxes
Non-cash activity --
Conversion of note payable and accrued interest, net of
unamortized debt issuance costs......................... $ 5,134,384 $ -- $ -- $ 5,134,384
============ =========== ========= ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 81

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

(1) NATURE OF BUSINESS AND BASIS OF PRESENTATION

Wildblue Communications, Inc. (the Company or Wildblue), formerly iSKY,
Inc., is a closely held corporation which was incorporated under the laws of the
State of Delaware in May 1999. KaSTAR Satellite Communications Corp. (KaStar),
the name under which the Company formerly operated, was incorporated under the
laws of the State of Colorado on April 21, 1995 (Inception). In May 1999, KaStar
formed KaStar Satellite Communications Corp. (KaStar Delaware) as a wholly owned
subsidiary incorporated under the laws of the State of Delaware. KaStar then
merged with and into KaStar Delaware (the Reorganization). Pursuant to the
Reorganization, each share of the outstanding, no par value, common stock of
KaStar was exchanged for 11,937 shares of Series A Preferred Stock, $0.001 par
value, of KaStar Delaware. In August 2000, the Company changed its name to
Wildblue Communications, Inc.

As of June 30, 2000, the Company is a development stage company which has
not yet commenced its principal operations. Since inception, the Company has
devoted substantially all of its efforts to those activities necessary to
organize its business and obtain Federal Communications Commission (FCC)
licenses and authorizations necessary for the construction, launch and operation
of geostationary (GEO) satellite systems to provide fixed-satellite service
(FSS) communications using Ka-band frequencies. The Company has also focused on
recruiting its core management team, designing and developing the satellite and
ground system architecture, contracting for the manufacture of elements of the
system, establishing commercial relationships and securing financing. In May
1997, the Company received FCC authorizations to construct, launch and operate
Ka-band GEO satellites in two orbital locations. Upon assignment and technical
specification of inter-satellite links, the FCC may specify a satellite
construction and launch schedule. Additional authorizations, frequency
assignments and technical specifications must be provided by the FCC before the
Company can commence operations.

The Company's board of directors has approved a one for four reverse stock
split, which will become effective prior to the closing of the Company's initial
public offering. All share amounts have been adjusted to retroactively reflect a
one for four reverse stock split.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of
the Company, and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

(b) CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly-liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.

The Company invests the majority of its cash generated by financing
activities in government and government agency debt securities which are
classified as cash and cash equivalents or marketable securities, based on
maturity dates when acquired. Management determines the appropriate
classification of its marketable securities at the time of purchase and
re-evaluates such designation as of each balance sheet date. Debt securities
which the Company does not intend or have the ability to hold to maturity are
classified as available-for-sale. Available-for-sale securities are carried at
fair market value with the unrealized gains and losses, net of tax, reported as
a component of stockholders' equity. At December 31, 1999 and 1998, the Company
classified all of its marketable debt securities as available-for-sale.

F-7
<PAGE> 82
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(d) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the periods.
Actual results could differ from these estimates making it reasonably possible
that a change in these estimates could occur in the near term.

(e) PROPERTY, EQUIPMENT AND ASSETS UNDER CONSTRUCTION

Property, equipment and assets under construction, including payments on
assets under construction, are recorded at cost. Costs incurred for the
construction and design of the Company's first satellite have been recorded as
payments on assets under construction in the accompanying consolidated financial
statements. Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the respective assets, which range
from three to ten years. Depreciation on payments on assets under construction
will not commence until the assets are placed in operation. Interest capitalized
during the year ended December 31, 1999 was $71,699. No interest was capitalized
prior to 1999.

(f) DEFERRED SATELLITE LICENSE COSTS

Deferred satellite license costs represent the cost of obtaining and
maintaining the FCC licenses and authorizations to provide FSS communications.
Amortization of these costs will commence when the satellites become
operational.

(g) INCOME TAXES

The Company uses the asset and liability method of accounting for deferred
income taxes as prescribed by Statement of Financial Accounting Standard No.
109, Accounting for Income Taxes. Deferred tax assets and liabilities are
recognized for tax consequences attributable to the differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be in effect when such amounts are realized or settled.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. The resulting deferred tax assets
and liabilities are adjusted to reflect changes in tax laws or rates in the
period of enactment.

(h) RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are charged to operations as incurred.

(i) IMPAIRMENT OF LONG-LIVED ASSETS AND ASSETS TO BE DISPOSED OF

In accordance with SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
reviews long-lived assets and certain identifiable intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If an impairment adjustment is deemed necessary
such loss is measured by the amount that the carrying value of such assets
exceeds their fair value. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.

F-8
<PAGE> 83
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(j) STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation arrangements in
accordance with the provisions of Accounting Principle Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees (APB 25), and related
interpretations, and complies with the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Under APB 25, compensation expense is
based upon the difference, if any, on the date of grant, between the fair value
of the Company's stock and the exercise price. All stock-based awards to
non-employees are accounted for at their fair value in accordance with SFAS No.
123. Unearned compensation is recorded in stockholders' equity at the
measurement date of the award and is recognized in the income statement ratably
over the vesting period.

(k) NET LOSS PER SHARE AND UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE

Net loss per common share is calculated in accordance with SFAS No. 128,
Earnings per Share ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, the Company
computes net income (loss) per share by dividing the net income (loss) available
to common stockholders (after deducting preferred stock accretion) for the
period by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) available per share is computed by dividing
the net income (loss) available to common stockholders for the period by the
weighted average number of common and dilutive common equivalent shares
outstanding during the period. Potential common shares consist of shares subject
to repurchase by the Company, incremental common shares issuable upon the
exercise of stock options, common shares issuable upon conversion of the
preferred stock and common shares issuable upon conversion of the preferred
stock which is issuable upon the exercise of the preferred stock options or
warrants.

The Company has computed unaudited pro forma basic net loss per common
share in accordance with the methodology in SFAS No. 128. The Company's
historical capital structure is not indicative of its prospective structure due
to the automatic conversion of all shares of preferred stock into common stock
concurrent with the closing of the Company's anticipated IPO. Accordingly,
historical basic net loss per common share should not be used as an indicator of
future earnings per common share.

Unaudited pro forma basic net loss per common share is computed using the
weighted-average number of common shares outstanding during the period. The
Company has assumed the conversion of all outstanding preferred stock issued
into common stock as of the date issued on a weighted average basis.

The following table sets forth the computation of the numerators and
denominators in the basic, diluted and pro forma net loss per common share
calculations for the period indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Numerator:
Net loss............................. $ (4,859,322) $ (1,219,131) $ (665,654)
------------ ------------ ----------
Denominator:
Weighted average common shares (basic
and diluted)....................... 94 250 250
Weighted average effect of pro forma
securities:
Convertible preferred stock.......... 12,024,659
------------
Pro forma weighted average common shares
(basic and diluted) -- unaudited........ 12,024,753
============
</TABLE>

F-9
<PAGE> 84
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

No potential dilutive securities for each of the years ended December 31,
1999, 1998 and 1997, were included in historical basic and diluted loss per
common share because of their anti-dilutive effect. Such potential dilutive
securities were 26,608,758, 4,942,653 and -0- for the years ended December 31,
1999, 1998 and 1997, respectively.

(3) MARKETABLE SECURITIES

The Company's marketable securities, which are all classified as
available-for-sale, as of December 31, 1999 are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Government and government agency debt securities:
Cost...................................................... $5,950,463 $1,212,334
Unrealized holding gains (losses)......................... 67,401 (1,678)
---------- ----------
Estimated fair value.............................. $6,017,864 $1,210,656
========== ==========
</TABLE>

Fair values for available-for-sale securities are based on quoted market
prices. The carrying amounts reported in the consolidated balance sheets for all
other financial instruments approximate those instruments' fair values.

During the year ended December 31, 1999, realized gains from the sale of
marketable securities were $147,107. Unrealized holding gains and losses on
available-for-sale securities is reflected as a separate component of
stockholders' equity.

(4) CONVERTIBLE NOTES

On October 18, 1999, the Company entered into a convertible note agreement
with a syndicate of investors (the Investors) for a total of $29,028,943. Each
note has a one-year term, with both principal and interest due at maturity. The
notes bear interest at 12% and, upon authorization of the change of control by
the FCC, the Investors have the option to convert the notes into an aggregate of
6,066,118 shares of Series A Preferred Stock, 55,708 shares of Series B
Preferred Stock and 306,990 shares of Series C Preferred Stock.

If the Investors elect to convert the notes into equity, they are then
obligated to invest an additional $19,500,005 in the Company for 282,225 shares
of Series B Preferred Stock and 1,224,007 shares of Series C Preferred Stock.
The note conversion and the additional investment occurred simultaneously on
February 1, 2000.

(5) STOCK OPTION PLAN

The Company maintains a stock option plan (Plan I) pursuant to which the
Company may grant stock options to employees and consultants. Plan I requires
grants of options to purchase up to 9.125% of the fully diluted equity of the
Company. All stock options have a 10-year term. Pursuant to the Reorganization,
options granted under Plan I became 25% vested. Additional vesting of options
under Plan I occur ratably over a three-year period commencing on the date of
employment. In the event that the Company issues common stock and/or preferred
stock or issues equity instruments which are readily convertible into common
stock and preferred stock, such as stock options and warrants to purchase common
stock or preferred stock, under the provisions of Plan I, the Company grants
additional options to employees covered under Plan I so that the number of
options outstanding is equal to 9.125% of the Company calculated on a fully
diluted basis.

F-10
<PAGE> 85
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1999, the Company adopted another stock option plan (Plan II) pursuant
to which the Company may grant common stock options to employees and
consultants. Plan II authorizes the Company to grant options to purchase up to
2,500,000 shares of common stock of the Company. Plan II also grants optionees
with an exercise price equal to the fair market value of the Company's stock at
the date of grant. Options granted under Plan II have a ten-year term and are
exercisable immediately, however, the Company has a repurchase right which
generally decreases ratably over the applicable vesting period. As of December
31, 1999 there were 2,381,250 options to purchase common stock available for
grant under Plan II.

The Company recorded compensation expense of $184,621 for the year ended
December 31, 1999 for Plan I and Plan II. No compensation expense was recorded
prior to 1999, as options granted during this period were granted at an exercise
price that equaled the fair value of the underlying stock. Had the Company
determined compensation cost, in accordance with SFAS No. 123, on the fair value
of its stock options at the date of grant the Company's 1999 and 1998 net loss
would have increased by approximately $1,500,000 and $80,000, respectively. The
Company used the Black-Scholes option-pricing model with the following
assumptions: risk-free interest rate of 6.1%; expected life of 3.5 years; no
dividend yield; and 50% volatility.

Stock option activity during the years ended December 31, 1999 and 1998 (no
options were issued prior to 1998), is as follows (reflecting the exchange of no
par common shares to Series A preferred stock):

<TABLE>
<CAPTION>
PREFERRED STOCK
----------------------------------------------------
SERIES A SERIES B SERIES C COMMON STOCK
----------------- -------------- --------------- ---------------
SHARES WAEP* SHARES WAEP* SHARES WAEP* SHARES WAEP*
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Options granted in October
1998....................... 1,256,153 $1.68 -- $ -- -- $ -- -- $ --
--------- ------ ------ -------
Outstanding at December 31,
1998....................... 1,256,153 1.68 -- -- -- -- -- --
Options granted during
1999....................... 1,161,481 3.36 26,571 8.38 30,826 14.00 130,674 0.76
--------- ------ ------ -------
Options outstanding at
December 31, 1999.......... 2,417,634 2.20 26,571 8.38 30,826 14.00 130,674 0.76
========= ====== ====== =======
Exercisable and not subject
to repurchase at
December 31, 1999....... 1,117,742 12,285 14,252 5,513
========= ====== ====== =======
</TABLE>

------------------------------

* Represents weighted average exercise price.

At December 31, 1999, the weighted-average remaining contractual life of
outstanding options was 8.5 years.

(6) INCOME TAXES

Income tax benefit relating to losses incurred differs from the amounts
that would result from applying the federal statutory rate of 35% as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected tax benefit.............................. $(1,700,763) $(426,696) $(232,979)
State income taxes, net of federal benefit........ (155,498) (39,622) (21,634)
Change in valuation allowance for deferred tax
assets.......................................... 1,170,779 466,182 254,613
Non-deductible settlement......................... 640,507 -- --
Other, net........................................ 44,975 136 --
----------- --------- ---------
Actual income tax benefit............... $ -- $ -- $ --
=========== ========= =========
</TABLE>

F-11
<PAGE> 86
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Temporary differences that give rise to the components of deferred tax
assets as of December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net operating loss carryforwards............................ $1,782,374 $741,783
Other, net.................................................. 243,803 84,466
---------- --------
Gross deferred tax asset.................................... 2,026,177 826,249
Valuation allowance......................................... 1,996,568 825,793
---------- --------
Net deferred tax asset............................ 29,609 456
Gross deferred tax liability -- other....................... 29,609 456
---------- --------
Net deferred tax asset (liability)................ $ -- $ --
========== ========
</TABLE>

At December 31, 1999, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $5,092,000, which are available to
offset future federal taxable income, if any, through 2019. The utilization of
the carryforwards has been limited by Internal Revenue Code Section 382 relating
to changes in ownership during the year ended December 31, 1999.

Due to the uncertainty regarding the realization of the deferred tax assets
relating to the net operating loss carryforwards and other temporary
differences, a valuation allowance has been recorded for the entire amount of
the Company's net deferred tax assets at December 31, 1999 and 1998.

(7) STOCKHOLDERS' EQUITY (DEFICIT)

(a) GENERAL

From inception to December 31, 1998, the Company was funded in part by one
of its two existing shareholders. From these advances, $232,500 was allocated to
common stock and all other amounts were considered advances which accrued
interest at 9% per annum. During 1998, the Company repaid its shareholder a
total of $838,748 which included repayments of all advances plus accrued
interest and $232,500 which represented 100% of the originally contributed
capital. The Company also paid $328,548 for loan costs on behalf of one of its
shareholders. This amount has been reflected as a distribution to shareholder in
stockholders' equity in the accompanying consolidated financial statements.

In January 1999, the Company sold 31 shares of no par common stock of the
Company pursuant to a Stock Purchase Agreement dated December 18, 1998. The
total proceeds from this offering were $5,250,000.

In May 1999, DirectCom Networks, Inc. (DirectCom) exercised its option to
convert its $5,000,000 convertible note (plus accrued interest of $358,904) into
shares of no par value common stock of the Company. In accordance with the
original terms of the agreement, the DirectCom note converted into 18.6% of the
company's equity interest on a fully diluted basis. Pursuant to the
Reorganization, all of the outstanding shares of no par value common stock were
exchanged for shares of Series A Preferred Stock. After the conversion and
Reorganization, DirectCom held 3,686,500 shares of Series A preferred stock.

In May 1999, the Company repurchased 835,625 shares of its Series A
Preferred Stock from a shareholder for a total of $5,171,250 in cash.

In May 1999, KPCB Holdings, Inc. (Kleiner) purchased 1,667,812 shares of
Series A Preferred Stock for $6,594,261, after issuance costs. Also on that
date, other investors purchased 62,500 shares of Series A Preferred Stock for
$250,000.

In December 1999, the Company sold to Kleiner an additional 208,906 shares
of its Series B Preferred Stock for $1,746,438, after issuance costs.

F-12
<PAGE> 87
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(b) CONVERTIBLE PREFERRED STOCK

The Company has three series of preferred stock (Series A, Series B and
Series C). Each series of preferred stock has voting rights on an as-converted
basis of one vote for each common stock equivalent.

Each share of preferred stock automatically converts into common stock at
the time of an initial public offering, provided certain offering parameters are
met. Each holder of preferred stock is entitled to cash dividends, when and if
declared by the Board of Directors. In the event dividends are paid on any share
of common stock, an additional dividend shall be paid with respect to all
outstanding shares of preferred stock in an equal amount per share (on an
as-converted basis) to the amount paid or set aside for each share of common
stock.

Upon liquidation, each holder of preferred stock shall be entitled to
receive, prior and in preference to any distribution of any assets of the
Company to the holders of common stock an amount per share equal to $4.00, $8.38
or $14.00 per share plus all declared and unpaid dividends, for Series A, Series
B and Series C preferred shares, respectively.

(8) COMMITMENTS AND CONTINGENCIES

The Company is required to meet system implementation milestones
established by the FCC in order to retain its licenses. At December 31, 1999,
because of ongoing international negotiations and unresolved technical issues,
the FCC had indefinitely delayed imposition of such milestones. Pending issuance
of final technical specifications by the FCC, any design or construction efforts
undertaken by the Company are at its own risk. The FCC has stated it will hold
licensees to a strict milestone schedule once inter-satellite frequencies are
authorized.

On November 2, 1999, the Company entered into an amended agreement with
Space Systems/Loral, Inc. to design and build an advanced Ka-band spot-beam
satellite. The satellite is expected to be delivered on orbit in 2001. Per terms
of the agreement, $8,555,000 was paid during the year ended December 31, 1999
and the remaining amounts are due over the next two years as Space
Systems/Loral, Inc. completes certain spacecraft milestones. Refer to Note 10
regarding commitments on contracts.

The Company expects to incur significant costs in the future to construct
and launch its satellites and operate its intended network. The Company expects
to obtain commercial launch and operating-period insurance, however, any launch
or in-orbit failure could have a significant adverse impact on the Company.

The Company leases office facilities under operating lease agreements which
expire in 2001. Future minimum lease payments under this lease as of December
31, 1999 are as follows:

<TABLE>
<S> <C>
Years ended December 31:
2000.................................................... $ 71,556
2001.................................................... 61,004
--------
Total future minimum lease payments............. $132,560
========
</TABLE>

Rent expense for operating leases for the year ended December 31, 1999 and
1998 was not significant.

(9) LIQUIDITY AND CAPITAL COMMITMENTS

The Company is a development stage enterprise and is devoting its efforts
to develop, construct and deploy a satellite based broadband Internet service.
This effort involves substantial risk and future operating results will be
subject to significant business, economic, regulatory, technical, and
competitive uncertainties and contingencies. These factors individually or in
the aggregate could have an adverse effect on the Company's financial condition
and future operating results and might create an uncertainty as to the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary should the Company be unable to continue
as a going concern.

F-13
<PAGE> 88
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Uncertainties exist regarding the Company's ability to obtain additional
debt and equity funding and to achieve profitable operations. The Company will
require substantial funds to develop and construct the WildBlue system, develop
and launch Ka-band satellites and to sustain operations until it generates
positive cash flow. Failure to obtain this funding will prevent the Company from
realizing its objective of providing a satellite-delivered broadband internet
service. Management's plan to fund operations and capital expansion includes the
additional sale of debt and equity securities through public and private
sources. There are no assurances, however, that such financing will be obtained.

(10) SUBSEQUENT EVENTS

As described in note 4, the convertible note outstanding as of December 31,
1999 was converted into Preferred Stock of the Company on February 2, 2000 and
additional shares of Preferred Stock were issued for $19,500,005.

On March 17, 2000, the Company entered into an agreement with Telesat
Canada (Telesat) whereby the Company acquired the exclusive use of 90% of the
Ka-band payload on Telesat's ANIK F2 satellite (Wildblue II) to be launched at
the end of 2002. Consideration to Telesat included the issuance of 2,648,750
shares of Series C Preferred Stock valued at $37,082,500 and cash consideration
to be paid in 5 installments between March 20, 2000, and commercial acceptance
of Wildblue II. Use of the capacity in the United States will require the
approval of the FCC. The agreement grants us options to repurchase the shares
and receive cash reimbursement upon certain termination events. The contract
covers certain operating services, including telemetry, tracking and control,
and insurance coverage. The term of the agreement is for the life of Wildblue
II, expected to be approximately 15 years. The consideration, when paid, will be
allocated between deposits on capital lease and prepaid operating services.

At December 31, 1999, Wildblue's future cash commitments under these
contracts are as following (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
2003 AND
2000 2001 2002 THEREAFTER
-------- -------- ------- ----------
<S> <C> <C> <C>
$169,880 $147,000 $50,000 --
</TABLE>

On March 16, 2000, the Company entered into investment and distribution
agreements with EchoStar Communications Corporation (EchoStar). Under the
investment agreement, the Company issued 3,571,428 Units to EchoStar for
$50,000,000. Each Unit consists of 1 share of Series D Nonvoting Preferred Stock
and a warrant to purchase 0.42 share of Series F Preferred Stock. The Series D
Nonvoting Preferred Stock is convertible on a 1:1 basis into Series E Preferred
Stock after the Company and EchoStar receive from the FTC early termination of
the pre-merger notification waiting period for the transaction. The exercise
price of the warrant is $17.00 per share of Series F Preferred Stock and the
warrant expires upon the

F-14
<PAGE> 89
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

consummation of a public equity offering. If HSR Approval is not received by
July 17, 2000, EchoStar has the option to sell its Units back to the Company at
the purchase price plus accrued interest.

The distribution agreement provides each party with the non-exclusive right
to sell the other party's service in a bundled offering through their respective
distribution channels and receive revenue sharing on a per subscriber basis. The
parties will develop a single, integrated indoor unit for the provision of the
bundled service. As part of the agreement, the Company issued performance
warrants to EchoStar which allow the purchase of up to 1,800,000 shares of
Series F Preferred Stock at a price of $17.00 per share. The performance
warrants become exercisable as certain subscriber thresholds are reached or
other milestones achieved and generally expire one year after becoming
exercisable. The agreement expires the earlier of 5 years from commercial
acceptance of the Company's first satellite or September 30, 2007.

On March 24, 2000, the Company entered into an investment agreement and a
development and license agreement with U.S. Monolithics LLC (USM). Under the
investment agreement, the Company agreed to invest $6,500,000 for a 35% interest
in USM. Of the $6,500,000, $4,550,000 was invested upon signing of the
investment agreement and the remainder will be invested on July 1, 2000 and
October 1, 2000. Until certain milestones are met, the Company will have the
ability to designate two of the five managers (equivalent of two board of
director seats) of USM. The investment will be accounted for by the Company
under the equity method.

The development and license agreement with USM provides for the development
of a production-ready prototype for a Ka-band transceiver, including all
applicable power and low noise millimeter integrated circuit components
(Transceiver), as well as the manufacture of the Transceiver by USM. The Company
also has the option, at its sole discretion, to license the Transceiver
technology for a royalty and have it manufactured by an entity of its choice.

F-15
<PAGE> 90

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
(unaudited)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents................................. $ 65,836,407 $21,929,007
Marketable securities..................................... 38,151,100 6,017,864
Due from related parties.................................. 78,044 73,534
Other current assets...................................... -- 3,989
------------ -----------
Total current assets................................ 104,065,551 28,024,394
Property, equipment and assets under construction, at
cost:.....................................................
Office furniture and equipment............................ 982,148 244,761
Deposits under capital lease.............................. 58,417,798 --
Payments on assets under construction..................... 60,949,933 9,384,428
------------ -----------
120,349,879 9,629,189
Accumulated depreciation.................................. (86,907) (31,170)
------------ -----------
120,262,972 9,598,019
Deferred satellite license costs............................ 700,717 693,430
Deferred finance fees, net of accumulated amortization of
$87,445 and $34,949, respectively......................... 2,103,309 291,154
Investment in U.S. Monolithics.............................. 5,496,853 --
Prepaid services............................................ 18,694,625 --
Other assets................................................ 33,665 6,807
------------ -----------
Total assets........................................ $251,357,692 $38,613,804
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses..................... $ 232,358 $ 386,871
Accrued interest payable.................................. -- 563,181
Convertible notes payable................................. -- 29,028,943
------------ -----------
Total current liabilities........................... 232,358 29,978,995
Vendor financing............................................ 20,000,000 --
------------ -----------
Total liabilities................................... 20,232,358 29,978,995
Stockholders' equity:
Preferred stock:
Series A preferred stock, $0.001 par value; 26,494,627
shares authorized; 24,076,985 shares and 18,010,867
shares (aggregate liquidation preference of $96,307,940
and $72,043,468, respectively) issued and outstanding
at June 30, 2000 and December 31, 1999, respectively... 24,077 18,011
Series B preferred stock, $0.001 par value; 601,748
shares authorized; 546,837 shares and 208,904 shares
(aggregate liquidation preference of $4,580,307 and
$1,749,779, respectively) issued and outstanding at
June 30, 2000 and December 31, 1999, respectively...... 547 209
Series C preferred stock, $0.001 par value; 7,740,757
shares authorized; 5,983,892 shares (aggregate
liquidation preference of $83,774,488) and no shares
issued and outstanding at June 30, 2000 and December
31, 1999, respectively................................. 5,984 --
Series E preferred stock, $0.001 par value; 8,893,244
shares authorized; 8,081,733 shares (aggregate
liquidation preference of $113,144,262) and no shares
issued and outstanding at June 30, 2000................ 8,082 --
Common stock, $0.001 par value; 52,896,902 shares
authorized; 107,875 and no shares issued at June 30,
2000 and December 31, 1999, respectively................ 108 --
Additional paid-in capital................................ 247,523,436 16,756,815
Unearned compensation..................................... (5,533,974) (956,562)
Accumulated other comprehensive income.................... 149,087 67,401
Deficit accumulated during the development stage.......... (11,052,013) (7,251,065)
------------ -----------
Total stockholders' equity.......................... 231,125,334 8,634,809
Commitments and contingencies (notes 6, 7, 8, 11 and 12)
------------ -----------
Total liabilities and stockholders' equity.......... $251,357,692 $38,613,804
============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-16
<PAGE> 91

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)

<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
JUNE 30, APRIL 25, 1995
------------------------- (INCEPTION) TO
2000 1999 JUNE 30, 2000
----------- ----------- --------------
<S> <C> <C> <C>
Operating expenses.................................... $(3,693,054) $(3,005,972) $(10,019,223)
Other income (expense):
Interest expense.................................... (162,526) (178,082) (1,300,480)
Interest income..................................... 1,474,633 83,099 1,868,835
Realized gains on sales of marketable securities.... 133,536 10,529 280,643
Share of losses in U.S. Monolithics................. (512,423) -- (512,423)
Other............................................... 220,127 -- 220,424
----------- ----------- ------------
1,153,347 (84,454) 556,999
----------- ----------- ------------
Net loss.................................... (2,539,707) (3,090,426) (9,462,224)
Accretion of discount on preferred stock.............. (1,261,241) -- (1,261,241)
----------- ----------- ------------
Net loss available to common stock.......... (3,800,948) (3,090,426) (10,723,465)
Other comprehensive income............................ 81,686 -- 149,087
----------- ----------- ------------
Comprehensive loss.......................... $(3,719,262) $(3,090,426) $(10,574,378)
=========== =========== ============
Net loss per common share:
Basic and diluted................................... $ (141.26) $(16,438.44)
=========== ===========
Shares used in computing net loss per share:
Basic and diluted................................... 17,979 188
=========== ===========
Pro forma net loss per common share:
Basic and diluted -- unaudited...................... $ (.08)
===========
Pro forma shares used in computing net loss per share:
Basic and diluted -- unaudited...................... 30,506,662
===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-17
<PAGE> 92

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
SIX-MONTH PERIOD ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
PREFERRED STOCK
------------------------------------------------------------
SERIES A SERIES B SERIES C
COMMON -------------------- ---------------- ------------------
DATE STOCK SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------- ------ ---------- ------- ------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1999..................... $ -- 18,010,867 $18,011 208,904 $209 -- $ --
Conversion of notes
payable and accrued
interest to preferred
stock, net of unamortized
issuance costs and
issuance of Series B and
Series C preferred
stock.................... February, 2000 -- 6,066,118 6,066 337,933 338 1,530,996 1,531
Issuance of Series C
preferred stock.......... March, 2000 -- -- -- -- -- 2,648,750 2,649
Issuance of Series E
preferred stock.......... April, 2000 -- -- -- -- -- -- --
Issuance of warrants to
purchase Series F
preferred stock.......... April, 2000 -- -- -- -- -- -- --
Issuance of Series C
preferred stock.......... May, 2000 -- -- -- -- -- 128,571 129
Issuance of Series C and
Series E preferred stock,
respectively............. May, 2000 -- -- -- -- -- 1,675,575 1,675
Issuance of warrants to
purchase Series F
preferred stock.......... May, 2000 -- -- -- -- -- -- --
Issuance of 107,875
shares, common stock..... May, 2000 108 -- -- -- -- -- --
Change in accumulated
other comprehensive
income................... -- -- -- -- -- -- --
Net loss for the period
ended June 30, 2000...... -- -- -- -- -- -- --
Accretion of discount on
preferred stock.......... -- -- -- -- -- -- --
Option awards............. -- -- -- -- -- -- --
---- ---------- ------- ------- ---- --------- ------
Balance at June 30,
2000..................... $108 24,076,985 $24,077 546,837 $547 5,983,892 $5,984
==== ========== ======= ======= ==== ========= ======

<CAPTION>
PREFERRED STOCK DEFICIT
------------------ ACCUMULATED ACCUMULATED
SERIES E OTHER DURING TOTAL
------------------ ADDITIONAL UNEARNED COMPREHENSIVE DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT PAID-IN CAPITAL COMPENSATION INCOME STAGE EQUITY
--------- ------ --------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1999..................... -- $ -- $ 16,756,815 $ (956,562) $ 67,401 $ (7,251,065) $ 8,634,809
Conversion of notes
payable and accrued
interest to preferred
stock, net of unamortized
issuance costs and
issuance of Series B and
Series C preferred
stock.................... -- -- 48,345,466 -- -- -- 48,353,401
Issuance of Series C
preferred stock.......... -- -- 37,079,851 -- -- -- 37,082,500
Issuance of Series E
preferred stock.......... 3,571,428 3,572 48,324,228 -- -- -- 48,327,800
Issuance of warrants to
purchase Series F
preferred stock.......... -- -- 1,672,200 -- -- -- 1,672,200
Issuance of Series C
preferred stock.......... -- -- 1,799,871 -- -- -- 1,800,000
Issuance of Series C and
Series E preferred stock,
respectively............. 4,510,305 4,510 84,484,654 -- -- -- 84,490,839
Issuance of warrants to
purchase Series F
preferred stock.......... -- -- 2,111,523 -- -- -- 2,111,523
Issuance of 107,875
shares, common stock..... -- -- 153,151 -- -- -- 153,259
Change in accumulated
other comprehensive
income................... -- -- -- -- 81,686 -- 81,686
Net loss for the period
ended June 30, 2000...... -- -- -- -- -- (2,539,707) (2,539,707)
Accretion of discount on
preferred stock.......... -- -- 1,261,241 -- -- (1,261,241) --
Option awards............. -- -- 5,534,436 (4,577,412) -- -- 957,024
--------- ------ ------------ ----------- -------- ------------ ------------
Balance at June 30,
2000..................... 8,081,733 $8,082 $247,523,436 $(5,533,974) $149,087 $(11,052,013) $231,125,334
========= ====== ============ =========== ======== ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-18
<PAGE> 93

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
JUNE 30, APRIL 25, 1995
--------------------------- (INCEPTION) TO
2000 1999 JUNE 30, 2000
------------- ----------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $ (2,539,707) $(3,090,426) $ (9,462,224)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation................................... 55,737 11,018 86,907
Amortization of deferred finance fees.......... 102,423 -- 266,502
Realized gains on sales of marketable
securities................................... (133,536) (10,529) (280,643)
Share of losses in U.S. Monolithics............ 512,423 -- 512,423
Options compensation expense................... 957,024 -- 1,141,645
Changes in operating assets and liabilities:
Increase in due from related parties......... (4,510) (7,224) (78,044)
Decrease in other current assets............. 3,989 14,340 --
Increase in other assets..................... (26,858) -- (33,665)
Increase in accounts payable, accrued
expenses and other liabilities............ 36,729 1,107 423,600
Increase (decrease) in accrued interest
payable................................... (563,181) 178,083 287,104
------------- ----------- -------------
Net cash used in operating activities..... (1,599,467) (2,903,631) (7,136,395)
------------- ----------- -------------
Cash flows from investing activities:
Capital expenditures for property, equipment and
assets under construction...................... (92,302,892) (285,591) (101,860,382)
Increase in deferred satellite license costs...... (7,287) (25,560) (700,717)
Purchases of marketable securities................ (38,002,014) (4,922,577) (51,272,797)
Sales and maturities of marketable securities..... 6,084,000 1,147,628 13,551,427
Investment in U.S. Monolithics.................... (5,850,000) -- (5,850,000)
Other investing activities........................ (126,553) -- (126,553)
------------- ----------- -------------
Net cash used in investing activities..... (130,204,746) (4,086,100) (146,259,022)
------------- ----------- -------------
Cash flows from financing activities:
Proceeds from issuance of convertible note........ -- -- 34,028,943
Proceeds from issuance of no par common stock..... -- 5,250,000 5,482,500
Repurchase of preferred stock..................... -- (3,341,231) (3,341,231)
Proceeds from issuance of preferred stock......... 156,102,367 6,919,992 164,693,066
Payments made as return of capital stock.......... -- -- (232,500)
Distribution to shareholder....................... -- -- (328,548)
Proceeds from vendor financing.................... 20,000,000 -- 20,000,000
Deferred finance fees paid........................ (390,754) -- (1,070,406)
------------- ----------- -------------
Net cash provided by financing
activities.............................. 175,711,613 8,828,761 219,231,824
------------- ----------- -------------
Net increase in cash and cash
equivalents............................. 43,907,400 1,839,030 65,836,407
Net cash and cash equivalents at the beginning of
period............................................ 21,929,007 323,805 --
------------- ----------- -------------
Net cash and cash equivalents at the end of
period............................................ $ 65,836,407 $ 2,162,835 $ 65,836,407
============= =========== =============
</TABLE>

See accompanying notes to consolidated financial statements.

F-19
<PAGE> 94

WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(unaudited)

(1) NATURE OF BUSINESS AND BASIS OF PRESENTATION

Wildblue Communications, Inc. (the Company or Wildblue), formerly iSKY,
Inc., is a closely held corporation which was incorporated under the laws of the
State of Delaware in May 1999. KaSTAR Satellite Communications Corp. (KaStar),
the name under which the Company formerly operated, was incorporated under the
laws of the State of Colorado on April 21, 1995 (Inception). In May 1999, KaStar
formed KaStar Satellite Communications Corp. (KaStar Delaware) as a wholly owned
subsidiary incorporated under the laws of the State of Delaware. KaStar then
merged with and into KaStar Delaware (the Reorganization). Pursuant to the
Reorganization, each share of the outstanding no par value common stock of
KaStar was exchanged for 11,937 shares of Series A Preferred Stock, $0.001 par
value of KaStar Delaware. In August 2000, the Company changed its name to
Wildblue Communications, Inc.

As of June 30, 2000, the Company is a development stage company which has
not yet commenced its principal operations. Since Inception, the Company has
devoted substantially all of its efforts to those activities necessary to
organize its business and obtain Federal Communications Commission (FCC)
licenses and authorizations necessary for the construction, launch and operation
of geostationary (GEO) satellite systems to provide fixed-satellite service
communications using Ka-band frequencies. The Company has also focused on
recruiting its core management team, designing and developing the satellite and
ground system architecture, contracting for the manufacture of elements of the
system, establishing commercial relationships and securing financing. In May
1997, the Company received FCC authorizations to construct, launch and operate
Ka-band GEO satellites in two orbital locations. Upon assignment and technical
specification of inter-satellite links, the FCC may specify a satellite
construction and launch schedule. Additional authorizations, frequency
assignments and technical specifications must be provided by the FCC before the
Company can commence operations.

All share amounts have been adjusted to retroactively reflect a one for
four reverse stock split.

(2) UNAUDITED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to reflect a fair
presentation of the financial position and results of operations of Wildblue for
the interim periods presented. All adjustments, in the opinion of management,
are of a normal and recurring nature. Some adjustments involve estimates, which
may require revision in subsequent interim periods or at year-end. The financial
statements have been presented in accordance with generally accepted accounting
principles. Refer to notes of the December 31, 1999 and 1998 audited
consolidated financial statements for the Company's accounting policies, which
are pertinent to these statements.

(3) NET LOSS PER SHARE AND UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE

F-20
<PAGE> 95
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

upon the exercise of stock options, common shares issuable upon conversion of
the preferred stock and common shares issuable upon conversion of the preferred
stock which is issuable upon the exercise of the preferred stock options or
warrants.

Unaudited pro forma basic net loss per common share is computed using the
weighted-average number of common shares outstanding during the period. The
Company has assumed the conversion of all outstanding preferred stock issued
into voting and non-voting common stock as of the date issued on a weighted
average basis.

The following table sets forth the computation of the numerators and
denominators in the basic, diluted and pro forma net loss per common share
calculations for the period indicated:

<TABLE>
<CAPTION>
SIX-MONTHS
ENDED JUNE 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Numerator:
Net loss......................................... $ (2,539,707) $ (3,090,426)
Accretion of convertible preferred stock......... (1,261,241) --
------------ ------------
Net loss available to common stockholders............. (3,800,948) (3,090,426)
Effect of pro forma conversion of securities:
Accretion of convertible preferred stock............ 1,261,241 --
------------ ------------
Pro forma net loss available to common stockholders --
unaudited........................................... $ (2,539,707) $ (3,090,426)
============ ============
Denominator:
Weighted average common shares (basic and
diluted)....................................... 17,979 188
Weighted average effect of pro forma securities:
Convertible preferred stock...................... 30,488,683
------------
Pro forma weighted average common shares (basic and
diluted) -- unaudited............................... 30,506,662
============
</TABLE>

No potential dilutive securities for the six-month periods ended June 30,
2000 and 1999, were included in historical basic and diluted loss per common
share because of their anti-dilutive effect. Such potential dilutive securities
were 49,756,761 and 19,819,380 for the six-month periods ended June 30, 2000 and
1999, respectively.

F-21
<PAGE> 96
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash paid for interest was $574,031 for the six months ended June 30, 2000
and was zero for the six months ended June 30, 1999. Significant noncash
investing and financing activities are as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
2000 1999
------------ -----------
<S> <C> <C>
Conversion of note payable and accrued interest net of
unamortized debt issuance costs........................... $28,827,795 $5,134,384
=========== ==========
Issuance of Series C preferred stock as partial
consideration on contract................................. $37,082,500 $ --
=========== ==========
Issuance of Series C preferred stock for financing fees..... $ 1,800,000 $ --
=========== ==========
</TABLE>

(5) MARKETABLE SECURITIES

The Company's marketable securities, which are all classified as
available-for-sale, as of June 30, 2000 and December 31, 1999 are summarized as
follows:

<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Government and government agency debt securities:
Cost................................................. $38,002,013 $5,950,463
Unrealized holding gains............................. 149,087 67,401
----------- ----------
Estimated fair value......................... $38,151,100 $6,017,864
=========== ==========
</TABLE>

During the six months ended June 30, 2000 and June 30, 1999, realized gains
from the sale of marketable securities were $133,536 and $10,529, respectively.
Unrealized holding gains and losses on available-for-sale securities is
reflected as a separate component of stockholders' equity.

(6) INVESTMENT IN U.S. MONOLITHICS LLC

On March 24, 2000, the Company entered into an investment agreement and a
development and license agreement with U.S. Monolithics LLC (USM). Under the
investment agreement, the Company agreed to acquire a 35% interest in USM. Until
certain milestones are met, the Company will have the ability to designate two
of the five managers of USM. The investment is being accounted for by the
Company under the equity method. As of June 30, 2000, the Company has a 33%
ownership interest in USM. The Company has recorded its share of losses of
$512,423 for the six months ended June 30, 2000. The difference between the
carrying amount of the investment and the Company's share of underlying equity
is equal to $4,057,401, which is being amortized over a three-year period into
its share of losses. The Company also issued 75,000 common stock options to
employees of USM. The expense associated with these options is recorded as an
increase to share of losses over the vesting period of the options.

F-22
<PAGE> 97
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Summarized unaudited financial information for the investee company for the
period from April 6, 2000 to June 30, 2000 follows:

<TABLE>
<S> <C>
Revenue................................................... $123,057
Operating expenses........................................ 628,018
Net loss.................................................. $462,495
</TABLE>

(7) SATELLITE AND LAUNCH VEHICLE CONTRACTS

On February 17, 2000, the Company entered into a launch services agreement
(LSA) with Arianespace to launch two satellites (Wildblue I and Wildblue III).
In addition, Arianespace Finance S.A. (AFE), an affiliate of Arianespace,
committed to provide financing for approximately $126,000,000 during the
construction periods and for a seven year period after each launch, assuming
certain conditions are met. At June 30, 2000, the Company has amounts
outstanding under the financing agreement of $20,000,000. The financing bears
interest at the British Bankers Association Settlement Rate plus 3.5% and is
payable quarterly. The Company must also pay commitment fees on the unused
portion of the committed construction period financing. The Company also paid an
upfront fee associated with the financing in the form of 128,571 shares of
Series C Preferred Stock at a price of $14.00 per share. As part of the overall
transaction, an affiliate of Arianespace received a warrant to purchase 909,090
shares of the Company's Series C Preferred Stock at a price of $22.00 per share.
The warrant becomes exercisable upon conversion of the first construction loan
to a term loan or at the launch of Wildblue I, assuming certain conditions are
met, and expires one year from such date. In certain other limited
circumstances, the warrant becomes exercisable even if the loan conversion does
not take place. The fair value of these warrants will be recorded in the future
when these warrants become exercisable.

On March 17, 2000, the Company entered into an agreement with Telesat
Canada (Telesat) whereby the Company acquired the exclusive use of 90% of the
Ka-band payload on Telesat's ANIK F2 satellite (Wildblue II) to be launched at
the end of 2002. Consideration to Telesat included the issuance of 2,648,750
shares of Series C Preferred Stock valued at $37,082,500 and five cash
installments to be paid between March 20, 2000, and commercial acceptance of
Wildblue II. Use of the capacity in the United States will require the approval
of the FCC. Upon certain termination events, the agreement gives Wildblue the
right to repurchase its shares and receive cash reimbursement. The agreement
also covers certain operating services, including telemetry, tracking and
control, and insurance coverage. The term of the agreement is for the life of
Wildblue II, expected to be approximately 15 years. The total consideration paid
to date has been allocated between deposit on capital lease and prepaid
operating services.

On November 2, 1999, Wildblue entered into an amended agreement with Space
Systems/Loral, Inc. to design and build an advanced Ka-band spot-beam satellite.
In September 2000, the Company and Space Systems/Loral amended the agreement to
change the aggregate amount and timing of payments. These changes are reflected
below in the future cash commitments. The satellite is expected to be delivered
in orbit in early 2002. Cash payments are due over the next two years as Space
Systems/Loral, Inc. completes certain spacecraft milestones.

Under the above contracts, cash payments of $101 million have been made as
of June 30, 2000. At June 30, 2000, Wildblue's future cash commitments under
these contracts are as following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(IN THOUSANDS)
SIX MONTHS ENDED -------------------------------
DECEMBER 31, 2000 2003 AND
(IN THOUSANDS) 2001 2002 THEREAFTER
----------------- -------- ------- ----------
<S> <C> <C> <C>
$72,920 $150,946 $60,900 --
</TABLE>

F-23
<PAGE> 98
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(8) ECHOSTAR CONTRACT

On March 16, 2000, the Company entered into an investment and distribution
agreement with EchoStar Communications Corporation (EchoStar). Under the
investment agreement, the Company issued 3,571,428 Units to EchoStar for
$50,000,000. Each Unit consisted of 1 share of Series D Nonvoting Preferred
Stock and a warrant to purchase 0.42 shares of Series F Preferred Stock. The
Series D Nonvoting Preferred Stock was converted on a 1:1 basis into Series E
Preferred Stock after the Company and EchoStar received from the FTC early
termination of the pre-merger notification waiting period for the transaction.
The exercise price of the warrant is $17.00 per share of Series F Preferred
Stock and the warrant expires upon the consummation of a public equity offering.
The fair value of the warrants is $1,672,000 and is recorded in additional
paid-in capital with a corresponding discount recognized on the preferred shares
issued. This discount is being accreted over the expected term of the preferred
stock.

The distribution agreement provides each party with the non-exclusive
rights to sell the other party's service in a bundled offering through their
respective distribution channels and receive residual commissions on a per
subscriber basis. The parties will develop a single, integrated indoor unit for
the provision of the bundled service. As part of the agreement, the Company
issued performance warrants to EchoStar which allow the purchase of up to
1,800,000 shares of Series F Preferred Stock at a price of $17.00 per share. The
performance warrants become exercisable as certain subscriber thresholds are
reached or other milestones achieved and generally expire one year after
becoming exercisable. The agreement expires the earlier of 5 years from
commercial acceptance of WildBlue I or September 30, 2007. No performance
threshold has yet been reached. The fair value of the performance warrants will
be recorded if and when performance thresholds are satisfied.

(9) STOCK OPTION PLAN

The Company maintains a stock option plan (Plan I) pursuant to which the
Company may grant stock options to employees and consultants. Plan I requires
grants of options to purchase up to 9.125% of the fully diluted equity of the
Company. All stock options have a 10-year term. Pursuant to the Reorganization,
options granted under Plan I became 25% vested as of May 26, 1999. Additional
vesting of options under Plan I occur ratably over a three-year period
commencing on the date of employment. In the event that the Company issues
common stock and/or preferred stock or issues equity instruments which are
readily convertible into common stock and preferred stock, such as stock options
and warrants to purchase common stock or preferred stock, under the provisions
of Plan I, the Company grants additional options to employees covered under Plan
I to acquire the relevant equity security at the issuance price so that the
number of options issued is equal to 9.125% of the Company calculated on a fully
diluted basis. For the six month ended June 30, 2000, the Company recognized
compensation expense of $508,476 associated with Plan I. Issuance of additional
options under Plan I cease after an initial public offering of the Company's
stock.

In 1999, the Company adopted another stock option plan (Plan II) pursuant
to which the Company may grant common stock options to employees and
consultants. Plan II authorizes the Company to grant options to purchase up to
2,500,000 shares of common stock of the Company. Options granted under Plan II
have a ten-year term and are exercisable immediately, however, the Company has a
repurchase right which generally decreases ratably over the applicable vesting
period. As of June 30, 2000, there were 1,911,750 options to purchase common
stock available for grant under Plan II. For the six months ended June 30, 2000,
the Company recognized compensation expense of $448,548 associated with Plan II.

F-24
<PAGE> 99
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(10) STOCKHOLDERS' EQUITY (DEFICIT)

(a) CONVERTIBLE NOTE CONVERSION

On October 18, 1999, the Company entered into a convertible note agreement
with a syndicate of investors (the Investors) for a total of $29,028,943. Upon
authorization of the change of control by the FCC, the Investors had the option
to convert the notes into an aggregate of 6,066,118 shares of Series A Preferred
Stock, 55,708 shares of Series B Preferred Stock and 306,990 shares of Series C
Preferred Stock. When the Investors converted the notes into equity, they became
obligated to invest an additional $19,500,005 in the Company for 282,225 shares
of Series B Preferred Stock and 1,224,007 shares of Series C Preferred Stock.
The note conversions and the additional investment occurred simultaneously on
February 1, 2000.

(b) CONVERTIBLE PREFERRED STOCK

The Company has six series of preferred stock (Series A, Series B, Series
C, Series D, Series E and Series F). Each series of preferred stock, other than
Series D, has voting rights on an as-converted basis of one vote for each share
of common stock issuable upon conversion.

Each share of preferred stock is automatically converted into common stock
at the time of an initial public offering, provided certain offering parameters
are met. Each holder of preferred stock is entitled to cash dividends, when and
if declared by the Board of Directors. In the event dividends are paid on any
share of common stock, an additional dividend shall be paid with respect to all
outstanding shares of preferred stock in an equal amount per share (on an
as-converted basis) to the amount paid or set aside for each share of common
stock.

Upon liquidation, each holder of preferred stock shall be entitled to
receive, prior and in preference to any distribution of any assets of the
Company to the holders of common stock an amount per share equal to $4.00 and
$8.38 per share for Series A and Series B Preferred Shares, respectively, $14.00
per share for Series C, Series D and Series E and $17.00 per share for Series F
preferred shares plus all declared and unpaid dividends.

In May 2000, certain shareholders exercised their preemptive rights to
purchase their pro-rata share of units in conjunction with the EchoStar
investment discussed in note 8. This resulted in the issuance of 4,510,305
shares of Series E Preferred Stock and 1,894,327 warrants to purchase Series F
Preferred Stock at an exercise price of $17.00 for total proceeds of
$63,144,298. The warrants expire upon consummation of a public equity offering.
The fair value of the warrants is $2,111,523 and is recorded in additional
paid-in capital with a corresponding discount was recognized on the preferred
shares issued. This discount is being accreted over the expected term of the
preferred stock.

Also in May, 2000 certain shareholders invested an additional $23,458,064
in the Company for 1,675,575 shares of Series C preferred stock.

(11) LIQUIDITY AND CAPITAL COMMITMENTS

F-25
<PAGE> 100
WILDBLUE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

WildBlue system, develop and launch Ka-band satellites and to sustain operations
until it generates positive cash flow. Failure to obtain this funding will
prevent the Company from realizing its objective of providing a
satellite-delivered broadband internet service. Management's plan to fund
operations and capital expansion includes the additional sale of debt and equity
securities through public and private sources. There are no assurances, however,
that such financing will be obtained.

(12) COMMITMENTS AND CONTINGENCIES

F-26
<PAGE> 101

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
, 2000

[LOGO]

WILDBLUE COMMUNICATIONS, INC.

SHARES OF COMMON STOCK

--------------------------------

PROSPECTUS
--------------------------------

DONALDSON, LUFKIN & JENRETTE

--------------------------------------------------------------------------------

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU
WRITTEN INFORMATION OTHER THAN THIS PROSPECTUS OR TO MAKE REPRESENTATIONS AS TO
MATERS NOT STATED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR
SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THAT WOULD NOT BE PERMITTED OR LEGAL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALES MADE HEREUNDER AFTER THE DATE OF THIS PROSPECTUS SHALL CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THE AFFAIRS OF WILDBLUE
COMMUNICATIONS, INC. HAVE NOT CHANGED SINCE THE DATE HEREOF.

UNTIL , 2000 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SHARES OF COMMON STOCK MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER IN THIS OFFERING AND WHEN
SEEKING PREVIOUSLY UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

--------------------------------------------------------------------------------
<PAGE> 102

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than the
underwriting discount and commissions, payable by the registrant in connection
with the sale of the common stock being registered hereby. All amounts shown are
estimates, except the Securities and Exchange Commission registration fee, the
NASD filing fee and the Nasdaq National Market listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $52,800
NASD filing fee............................................. 20,500
Nasdaq National Market listing application fee.............. 5,000
Blue Sky fees and expenses..................................
Printing and engraving expenses.............................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Transfer agent and registrar fees...........................
Miscellaneous expenses......................................
-------
Total.............................................
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Section 145 of the General Corporation Law of Delaware (the "Delaware
Law"), we have broad powers to indemnify our directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").

Our certificate of incorporation and bylaws include provisions to (i)
eliminate the personal liability of our directors for monetary damages resulting
from breaches of their fiduciary duty to the extent permitted by Section
102(b)(7) of the Delaware Law and (ii) require us to indemnify our directors and
executive officers to the fullest extent permitted by Section 145 of the
Delaware Law, including circumstances in which indemnification is otherwise
discretionary. Pursuant to Section 145 of the Delaware Law, a corporation
generally has the power to indemnify its present and former directors, officers,
employees and agents against expenses incurred by them in connection with any
suit to which they are, or are threatened to be made, a party by reason of their
serving in such positions so long as they acted in good faith and in a manner
they reasonably believed to be in or not opposed to, the best interests of the
corporation and, with respect to any criminal action, had no reasonable cause to
believe their conduct was unlawful. We believe that these provisions are
necessary to attract and retain qualified persons as directors and executive
officers. These provisions do not eliminate the directors' duty of care, and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware Law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to us, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for acts or
omissions that the director believes to be contrary to our best interests or the
best interests of our shareholders, for any transaction from which the director
derived an improper personal benefit, for acts or omissions involving a reckless
disregard for the director's duty to us or our shareholders when the director
was aware or should have been aware of a risk of serious injury to us or its
shareholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to us or our
shareholders, for improper transactions between the director and us and for
improper distributions to shareholders and loans to directors and officers. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities law or state or federal environmental laws.

We have entered into indemnity agreements with our directors and certain of
our executive officers that require us to indemnify such persons against
expenses, judgments, fines, settlements and other amounts incurred (including
expenses of a derivative action) in connection with any proceeding, whether
actual or

II-1
<PAGE> 103

threatened, to which any such person may be made a party by reason of the fact
that such person is or was one of our directors or executive officers, provided
that such person's conduct was not knowingly fraudulent or deliberately
dishonest or constituted willful misconduct. The indemnification agreements also
set forth certain procedures that will apply in the event of a claim for
indemnification thereunder.

At present, there is no pending litigation or proceeding involving any of
our directors or executive officers as to which indemnification is being sought
nor are we aware of any threatened litigation that may result in claims for
indemnification by any executive officer or director.

We intend to obtain an insurance policy covering our officers and directors
with respect to certain liabilities, including liabilities arising under the
Securities Act or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Described below is information regarding all securities that have been
issued by WildBlue during the past three years.

Between May 1999 and September 2000, WildBlue authorized the grant of stock
options to employees and consultants to purchase an aggregate of 5,071,773
shares of our capital stock at exercise prices ranging from $0.40 to $22.00 per
share. 132,875 shares were issued upon exercise of options at an exercise price
of $1.38 per share. WildBlue relied on the exemption provided by Rule 701 of the
Securities Act.

On August 21, 1998, WildBlue issued to one accredited investor a promissory
note convertible into 18.6% of its fully diluted shares on the date of
conversion for cash proceeds of $5,000,000. WildBlue relied on the exemptions
provided by Section 4(2) and Section 4(6) of the Securities Act.

On January 19, 1999, WildBlue issued 1,492,187 shares of Series A preferred
stock to one accredited investor at a price of $3.52 per share for cash proceeds
in the amount of $5,250,000. WildBlue relied on the exemptions provided by Rule
506 of Regulation D as promulgated under Section 4(2) and 4(6) of the Securities
Act.

On May 20, 1999, WildBlue reincorporated as a Delaware corporation and
issued an aggregate of 17,116,180 shares of Series A preferred stock, including
3,686,500 shares of our Series A preferred stock issued upon conversion of a
promissory note, to four accredited investors in exchange for their shares of
WildBlue. On May 26, 1999, 835,625 of such shares were returned to WildBlue in
connection with its purchase of 50.1% in interest of one of the holders.
WildBlue relied on the exemption provided by Section 4(2) and 4(6) of the
Securities Act.

On May 26, 1999, WildBlue issued an aggregate of 1,730,312 shares of our
Series A preferred stock to two accredited investors at a price of $4.00 per
share for cash proceeds in the amount of $6,921,250. WildBlue relied on the
exemptions provided by Rule 506 of Regulation D as promulgated under Section
4(2) and 4(6) of the Securities Act.

On October 19, 1999, WildBlue issued promissory notes for an aggregate
principal amount of $29,028,942 convertible into shares of our Series A
preferred stock, Series B preferred stock and Series C preferred stock. WildBlue
relied on the exemptions provided by Rule 506 of Regulation D as promulgated
under Section 4(2) and 4(6) of Securities Act.

On December 23, 1999, WildBlue issued 208,904 shares of our Series B
preferred stock to one accredited investor at a price of $8.378 per share for
cash proceeds in the amount of $1,749,799. WildBlue relied on the exemptions
provided by Rule 506 of Regulation D as promulgated under Section 4(2) and 4(6)
of the Securities Act.

On February 1, 2000, Wildblue issued 6,066,118 shares of our Series A
preferred stock, 55,708 shares of our Series B preferred stock and 306,990
shares of our Series C preferred stock to four accredited investors upon the
conversion of the October 1999 convertible promissory notes. WildBlue relied on
exemptions provided by Rule 506 of Regulation D as promulgated under Section
4(2) and 4(6) of the Securities Act.

II-2
<PAGE> 104

On February 1, 2000, WildBlue issued 282,224 shares of our Series B
preferred stock and 1,224,007 shares of our Series C preferred stock to four
accredited investors for cash proceeds in the amounts of $19,500,005. WildBlue
relied on exemptions provided by Rule 506 of Regulation D as promulgated under
Section 4(2) and 4(6) of the Securities Act.

On February 17, 2000, WildBlue issued a warrant to one accredited investor
to purchase 909,090 shares of its Series C preferred stock at an exercise price
of $22.00 per share in connection with procurement and financing of two
satellite launches. WildBlue relied on the exemption provided by Rule 506 of
Regulation D as promulgated under Section 4(2) of the Securities Act.

On March 16, 2000, WildBlue issued warrants to one accredited investor to
purchase an aggregate of 1,800,000 shares of its Series F preferred stock at an
exercise price of $17.00 per share in connection with a marketing and
distribution agreement entered into with such investor. WildBlue relied on the
exemption provided by Rule 506 of Regulation D as promulgated under Section 4(2)
of the Securities Act.

On March 16, 2000, WildBlue issued to one accredited investor 3,571,428
units, each unit consisting of one share of its Series D nonvoting preferred
stock at a price of $17.00 per share and a warrant to acquire 0.42 shares of
Series F preferred stock, for a total of 1,500,000 shares, at an exercise price
of $17.00 per share, for aggregate cash proceeds in the amount of $50,000,000.
The Series D shares were subsequently converted into 3,571,428 shares of Series
E preferred stock on April 17, 2000. WildBlue relied on the exemptions provided
by Rule 506 of Regulation D as promulgated under Section 4(2) and 4(6) of the
Securities Act.

On March 17, 2000, WildBlue issued 2,648,750 shares of its Series C
preferred stock to one accredited investor at a price of $14.00 per share for
cash proceeds in the amount of $37,082,500. WildBlue relied on the exemptions
provided by Rule 506 of Regulation D as promulgated under Section 4(2) and 4(6)
of the Securities Act.

On May 8, 2000, WildBlue issued 128,571 shares of our Series C preferred
stock to one accredited investor at a price of $14.00 per share in consideration
of a loan agreement between WildBlue and such purchaser. WildBlue relied on the
exemptions provided by Rule 506 of Regulation D as promulgated under Section
4(2) and 4(6) of the Securities Act.

On May 10, 2000, WildBlue issued to seven accredited investors 4,510,305
units, each unit consisting of one share of its Series E preferred stock at a
price of $14.00 per share and a warrant to acquire 0.42 shares of Series F
preferred stock, for a total of 1,894,329 shares, at an exercise price of $17.00
per share, for aggregate cash proceeds in the amount of $86,500,000. WildBlue
relied on the exemptions provided by Rule 506 of Regulation D as promulgated
under Section 4(2) and 4(6) of the Securities Act.

On May 10, 2000, WildBlue issued 1,675,575 shares of its Series C preferred
stock to three accredited investors for cash proceeds in the amount of
$23,458,064. WildBlue relied on the exemptions provided by Rule 506 of
Regulation D as promulgated under Section 4(2) and 4(6) of the Securities Act.

The recipients of the above-described securities represented their
intention to acquire the securities for investment only and not with a view for
distribution thereof. Appropriate legends were affixed to the stock certificates
issued in such transactions. All recipients had adequate access, through
employment or other relationships, to information about WildBlue.

II-3
<PAGE> 105

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
1.1* -- Form of Underwriting Agreement.
2.1 -- Certificate of Ownership and Merger effective May 20,
1999.
3.1 -- Second Amended and Restated Certificate of Incorporation,
as amended, currently in effect.
3.2 -- Bylaws, as amended, currently in effect.
3.3 -- Form of Restated Certificate of Incorporation, to be
filed and become effective upon the closing of this
offering.
3.4 -- Amended and Restated Bylaws, to become effective upon the
closing of this offering.
4.1 -- Reference is made to Exhibits 3.1 through 3.4.
4.2* -- Specimen Stock Certificate.
5.1* -- Form of Opinion of Cooley Godward LLP regarding legality
of securities being issued.
10.1 -- Amended and Restated Investor Rights Agreement, dated
October 19, 1999, as amended.
10.2*+ -- Stock Purchase Agreement, dated December 18, 1998.
10.3 -- Series A and B Preferred Stock Purchase Agreement, dated
May 26, 1999.
10.4 -- Securities Purchase Agreement, dated October 19, 1999.
10.5 -- Securities Purchase Agreement, dated March 16, 2000.
10.6*+ -- Share Purchase Agreement, dated March 17, 2000.
10.7*+ -- Equity Purchase Agreement, dated May 8, 2000.
10.8 -- Employment Agreement, dated May 20, 1999 between WildBlue
and David M. Drucker.
10.9 -- Employment Agreement, dated September 9, 1998, as
amended, between WildBlue and Thomas E. Moore.
10.10 -- Employment Agreement, dated September 14, 1998, as
amended, between WildBlue and David M. Brown.
10.11 -- Letter agreement dated September 9, 1998.
10.12 -- Form of Indemnification Agreement entered into between
WildBlue, and its directors and certain of its executive
officers.
10.13*+ -- QuickStart Satellite Program Agreement, dated November 2,
1999, as amended.
10.14*+ -- Customer Loan Agreement, dated February 17, 2000.
10.15*+ -- Launch Services Agreement, dated February 17, 2000.
10.16*+ -- Multi-Party Agreement, dated February 17, 2000.
10.17*+ -- Marketing, Joint Box Production and Warrants Agreement,
dated March 16, 2000 between WildBlue and the party named
therein.
10.18*+ -- Ka-Band Payload License Agreement, dated March 17, 2000,
as amended.
10.19 -- Investment Agreement, dated March 24, 2000.
10.20*+ -- Development and License Agreement, dated March 24, 2000.
10.21 -- Warrant to purchase shares of Series C Preferred Stock
issued on May 8, 2000.
</TABLE>

II-4
<PAGE> 106

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
10.22 -- Warrant to purchase shares of Series F Preferred Stock
issued on March 16, 2000.
10.23 -- Stock Option Plan, effective September 1, 1998 and form
of agreements thereunder.
10.24 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and David M. Brown.
10.25 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Paul Froelich.
10.26 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Thomas E. Moore.
10.27 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Jeffrey Weaver.
10.28 -- 1999 Stock Option/Stock Issuance Plan and form of
agreements thereunder.
10.29 -- 2000 Employee Stock Purchase Plan.
10.30 -- Office Lease Agreement, dated March 13, 2000.
10.31*+ -- Agreement dated February 14, 2000.
21.1 -- List of Subsidiaries.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Cooley Godward LLP, Reference is made to
Exhibit 5.1.
24.1 -- Powers of Attorney. Reference is made to Page II-9.
27.0 -- Financial Data Schedule.
</TABLE>

------------------------------

* To be filed by amendment.

+ WildBlue is applying for confidential treatment with respect to portions of
this agreement.

(b) FINANCIAL STATEMENT SCHEDULES.

No financial statement schedules are provided, because the information
called for is not required or is shown either in the financial statements or the
notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

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 provisions described in Item 14 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
<PAGE> 107

The undersigned registrant hereby undertakes:

(1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, 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.

II-6
<PAGE> 108

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Denver,
County of Denver, State of Colorado, on October 6, 2000.

WILDBLUE COMMUNICATIONS, INC.

By: /s/ THOMAS E. MOORE
----------------------------------
Thomas E. Moore
President and Chief Executive
Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas E. Moore and Paul M. Froelich and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this Registration Statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, which relates to this Registration Statement, 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, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C> <C>
/s/ DAVID M. DRUCKER Chairman of the Board October 6, 2000
----------------------------------------------------- of Directors
David M. Drucker

/s/ THOMAS E. MOORE President, Chief October 6, 2000
----------------------------------------------------- Executive Officer and
Thomas E. Moore Director (Principal
Executive Officer)

/s/ PAUL M. FROELICH Vice President of October 6, 2000
----------------------------------------------------- Finance and Treasurer
Paul M. Froelich (Principal Financial
and Accounting
Officer)

/s/ PETER M. SEGALOFF Director October 6, 2000
-----------------------------------------------------
Peter M. Segaloff

/s/ RUSSELL L. SIEGELMAN Director October 6, 2000
-----------------------------------------------------
Russell L. Siegelman
</TABLE>

II-7
<PAGE> 109

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C> <C>

/s/ PETER C. BOYLAN, III Director October 6, 2000
-----------------------------------------------------
Peter C. Boylan, III

/s/ KENNETH G. CARROLL Director October 6, 2000
-----------------------------------------------------
Kenneth G. Carroll

/s/ MARKUS W. JACKSON Director October 6, 2000
-----------------------------------------------------
Markus W. Jackson
</TABLE>

II-8
<PAGE> 110

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
10.23 -- Stock Option Plan, effective September 1, 1998 and form
of agreements thereunder.
10.24 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and David M. Brown.
10.25 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Paul Froelich.
10.26 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Thomas E. Moore.
10.27 -- Amended and Restated Stock Option Agreement, dated May
26, 1999 between WildBlue and Jeffrey Weaver.
10.28 -- 1999 Stock Option/Stock Issuance Plan and form of
agreements thereunder.
10.29 -- 2000 Employee Stock Purchase Plan.
10.30 -- Office Lease Agreement, dated March 13, 2000.
10.31*+ -- Agreement dated February 14, 2000.
21.1 -- List of Subsidiaries.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Cooley Godward LLP, Reference is made to
Exhibit 5.1.
24.1 -- Powers of Attorney. Reference is made to Page II-9.
27.0 -- Financial Data Schedule.
</TABLE>

------------------------------

* To be filed by amendment

+ WildBlue is applying for confidential treatment with respect to portions of
this agreement