INTERDIGITAL COMMUNICATIONS CORP, S-3/A, 1995-10-20

INTERDIGITAL COMMUNICATIONS CORP
S-3/A, 1995-10-20
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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As Filed with the Securities and Exchange Commission on October 20, 1995
Registration No. 33-60711

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------

AMENDMENT NO. 1
TO
FORM S-3

REGISTRATION STATEMENT

Under
THE SECURITIES ACT OF 1933
---------------

INTERDIGITAL COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in Charter)

PENNSYLVANIA 23-1882087
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)

Suite 105
2200 Renaissance Boulevard
King of Prussia, Pennsylvania 19406
(610) 278-7800
(Address, including zip code, and telephone
number, including area code, of Registrant's principal
executive offices)

William A. Doyle, President
InterDigital Communications Corporation
Suite 105, 2200 Renaissance Boulevard
King of Prussia, Pennsylvania 19406
(610) 278-7800
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
---------------

Approximate date of commencement of proposed sale to public: As soon as
practicable after the effectiveness of this Registration Statement.
---------------

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.

If any of the securities registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X

<PAGE>

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 number of the earlier effective
registration 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.

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.

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 20, 1995

PROSPECTUS

INTERDIGITAL COMMUNICATIONS CORPORATION

This Prospectus relates to the resale by the Selling Shareholders
of a total of 2,866,409 shares of Common Stock, $.01 par value per share (the
"Common Stock") of InterDigital Communications Corporation (the "Company"),
including:

(1) 2,760,091 shares of Common Stock which may be issued by the Company
upon the exercise of outstanding warrants (the "Warrants") to purchase shares of
Common Stock at per share exercise prices ranging from $2.50 to $10.00. See
"Selling Shareholders."

(2) 106,318 additional shares of Common Stock held by Selling
Shareholders. See "Selling Shareholders."

There is no assurance that any of the Warrants will be exercised, and
therefore there are no assurances that the Company will receive any proceeds
hereunder. The Company will not receive any proceeds from the sale of shares of
Common Stock by Selling Shareholders. See "Selling Shareholders."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PROSPECTIVE PURCHASERS SHOULD CONSIDER THE RISKS SET FORTH UNDER "RISK
FACTORS" COMMENCING ON PAGE 6.

The shares offered by the Selling Shareholders hereby will be sold at
market prices on the American Stock Exchange ("AMEX") or in private sales at
prevailing market prices or negotiated prices. Selling Shareholders may pay
commissions or other compensation to broker-dealers in connection with such
sales, which may be in excess of customary commissions charged for AMEX
transactions. See "Selling Shareholders."

The Common Stock is traded on the AMEX under the symbol IDC.
On October 18, 1995, the closing sales price of the Common Stock, as reported by
the AMEX, was $7 1/4.

The date of this Prospectus is _________, 1995

<PAGE>

RISK FACTORS

In analyzing this offering, prospective purchasers should carefully
consider the following risks.

Accumulated Deficit and History of Operating Losses. The Company has
experienced losses from its inception in 1972 through the third quarter of 1994
and, as of June 30, 1995, the Company's accumulated deficit was $144 million. In
recent years, the Company has incurred significant increases in expenses
associated with its UltraPhone business activities, the development of related
product enhancements, the acquisition and development, as applicable, of its
Time Division Multiple Access ("TDMA") and broadband Code Division Multiple
Access ("B-CDMA") digital wireless technologies, and the enforcement of its
patents. There can be no assurance that the Company will realize revenues and
gross profits sufficient to achieve or sustain profitability on a quarterly or
annual basis in the future. In the event it fails to do so, the Company's
operations could be adversely affected and investors in the Common Stock could
face the loss of part or all of their investment.

Need for Expansion of UltraPhone Sales. Prior to 1994, sales of the
UltraPhone system historically accounted for a substantial majority of the
Company's revenues. During 1994 and the first half of 1995, licensing revenues
constituted the majority of the total revenues of the Company, respectively. The
Company's future profitability may, in the event of any significant decline in
licensing revenues, depend significantly on the expansion of UltraPhone sales by
increasing sales to its existing customers, broadening the Company's customer
base, or both. Since 1993, the Company has experienced negative gross profit
margins in its UltraPhone operations as a result of insufficient production
volumes and higher than desired variable costs in such operations. There can be
no assurance that the Company will be able to increase UltraPhone sales and
decrease UltraPhone variable operating costs sufficiently to achieve
profitability in its UltraPhone operations. In such event, investors in the
Common Stock could lose part or all of their investment.

Dependence on a Limited Number of Customers and Licensees. A
substantial majority of UltraPhone sales have historically been concentrated
among only a few major customers, and it is anticipated that such concentration
will continue for the foreseeable future. Customers engaged in multi-year
telecommunications infrastructure programs traditionally purchase different
types of telephone equipment in the various phases of a program and therefore
typically would not purchase a consistent number of UltraPhone systems in each
year of the program. Transitions to different phases of acquisition programs by
significant customers, other reductions in purchases from those customers
(unless replaced by other new orders), or the loss of such customers could have
a material adverse effect on the Company.

Similarly, the Company's licensing revenues have been generated from
only a few licensees. There can be no assurance that InterDigital Technology
Company ("ITC"), an indirect approximately 94% owned subsidiary of the Company,
will enter into patent license agreements with any additional entities or that
additional licensing revenue will be generated from ITC's existing patent
license agreements. The failure of ITC to enter into additional license
agreements would have a material adverse effect on the Company.

In either of such cases, the Company's operations could be adversely
affected and investors in the Common Stock could lose part or all of their
investment.

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Quarterly Fluctuations in Financial Results. Historically, the
concentration of UltraPhone sales to a few major customers and the signing of
patent license agreements providing for up-front license fees with a few
licensees has been a factor in the significant fluctuations in the Company's
revenues and operating results from quarter to quarter. UltraPhone sales are
expected to continue to be concentrated among only a few major customers who
purchase UltraPhone systems at sometimes unpredictable levels and intervals.
Likewise, new license agreements are not entered into on a regular, predictable
basis and there can be no assurance that the Company's licensing activities will
not diminish or cease during any relevant time interval. The Company's
UltraPhone sales and patent and technology licensing revenues may also fluctuate
as a result of other factors, including increased competition from other
products or technologies, announcements of new products or technologies by the
Company or its competitors, equipment acquisition and replacement patterns of
the Company's customers, general domestic and global economic and political
conditions, and perception of the strength and enforceability of the Company's
patent portfolio. As a result, the value of a Common Stock purchaser's
investment could be adversely affected.

Competition in the Communications Industry. Competition in the
communications industry is intense. Generally, a number of entities, many of
which are substantially larger and have substantially greater financial,
technical, marketing and other resources than the Company, sell or may introduce
products which compete both domestically and internationally with the
UltraPhone. Further, certain competing wireless telecommunications technologies
(principally analog cellular) offer a lower-cost product as compared to the
UltraPhone system as currently configured. There can be no assurance that the
Company's competitors will not market competitive wireless communications
systems in an increasingly aggressive manner, which could materially and
adversely continue to affect the Company's UltraPhone business in the future. If
this were to happen, the Company's assets could diminish and the Company could
experience an increase in accumulated deficit. Either of such results could
adversely affect the value of a Common Stock purchaser's investment.

Need for UltraPhone Engineering Modifications. The Company is
increasingly marketing the UltraPhone System in urban and near-urban
applications which typically necessitate engineering modifications to the
UltraPhone System. There can be no assurance that the costs of making such
engineering modifications will not be substantial or that such engineering
modifications will be successfully designed or implemented on a timely basis for
any particular application. The failure of any such engineering modifications to
be successfully and timely designed or implemented could have a material adverse
effect upon the Company's financial condition and results of operations. Such a
result could adversely affect the value of a Common Stock purchaser's
investment.

Dependence on Alliance Program. The Company has entered into an
alliance program designed, among other things, to enhance its UltraPhone
marketing efforts and to promote its Code Division Multiple Access ("CDMA")
efforts. For example, in December 1994, the Company entered into an alliance
agreement with Siemens, which has begun to market the UltraPhone product. The
Company does not currently expect that the Siemens relationship will generate
significant UltraPhone shipments and revenues at least until 1996. The elements
of the alliance strategy are interdependent and the failure successfully to
achieve any of the objectives would adversely affect the success of the overall
strategy and could have a material adverse effect upon the Company's financial
position and results of operations. This, in turn, could adversely affect the
value of a Common Stock purchaser's investment.

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Reliance on Sole Source Suppliers. The Company currently
obtains certain critical components for the UltraPhone system from sole source
suppliers. The failure of the Company to develop and enter into acceptable
contracts with alternative sources for other critical components, or to obtain
sufficient sole or limited source components of acceptable quality, as required,
could result in delays or reductions in product shipments which could adversely
affect the Company's business prospects and relations with its customers. This,
in turn, could adversely affect the value of a Common Stock purchaser's
investment.

Dependence on Patented and Proprietary Technology. The Company's
UltraPhone business depends substantially upon its proprietary technology,
including technology covered by patents owned by ITC. ITC's licensing
opportunities depend upon its ability to enforce its patents against third
parties. In high technology fields, the validity and enforceability of patents
are often subject to complex legal and factual challenges and other
uncertainties. There can be no assurance that ITC's other existing patents or
any patents that may be issued in the future will not be declared invalid, or
that ITC's patents will afford the Company the required protection against
competitors with similar technology; nor can there be any assurance that patents
issued to ITC will not be infringed upon, or circumvented through design
changes, by others. See "Motorola Trial" below. In addition, in the normal
course of business, third parties have asserted, and may assert in the future,
that the Company is engaged in the infringing use of such third party's patents
or proprietary technology. If any such third party successfully asserts that the
Company is engaged in any such infringing use, the Company may be required to
contest the validity of such patents or proprietary technology, to acquire
licenses to use such patented or proprietary technology and/or to redesign the
Company's products to avoid further infringement. There can be no assurance that
such licenses can be obtained or that the Company would prevail in any such
contests. Furthermore, the Company relies upon non-competition and
non-disclosure agreements for the protection of certain other proprietary
technology. There can be no assurance that these agreements will prove adequate
to enforce the Company's proprietary rights in such technology. If the Company's
patents were declared invalid or the Company's proprietary technology were
otherwise used by third parties without licensing such patents and technologies
from the Company, the Company's financial position and results of operations
would be materially adversely affected. This could substantially affect the
Company's prospects for realizing future income and, thereby, investors in the
Common Stock could lose part or all of their investment.

Adverse Results in Motorola Trial. In March 1995, a trial involving ITC
and Motorola, Inc., ended with the jury's verdict, which is subject to varying
interpretation, but which is interpreted by the Company to mean that ITC's
patent claims at issue in the case, involving four of ITC's patents, are not
infringed by Motorola and, if construed to be infringed, are invalid. Motorola
has filed a motion with the District Court requesting an order for the Company
to pay Motorola's legal fees and costs aggregating between $6 and $7 million.
The Court has not yet ruled on this motion. In the short term, the jury verdict
may adversely affect the Company's efforts to generate further revenue and cash
flow from ITC's patent portfolio and may impair generally the Company's ability
to raise additional funds for general corporate purposes. This, in turn, could
adversely affect the value of a Common Stock purchaser's investment. The outcome
of the jury trial may also temporarily or permanently adversely affect ITC's
pending U.S. patent infringement litigation against Ericsson GE Mobile
Communications, Inc. and certain of its affiliates (collectively, "Ericsson")
and its ability to realize running royalties under certain of its license
agreements. An adverse ruling on Motorola's motion for legal fees could
adversely affect the Company's cash position. In the event that the Motorola
verdict is not overturned or reversed or Motorola's motion for legal

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fees is not denied, the Company's future prospects could be materially adversely
affected and investors in the Common Stock could lose part or all of their
investments.

Protecting Patents and Proprietary Technology. Litigation and other
costs of protecting a patent portfolio can be significant. ITC is currently in
litigation or involved in administrative proceedings, both in the United States
and abroad, over certain of its patents. In the event any of these proceedings
were to have unfavorable results, or if any of ITC's patents were to be declared
invalid, it could have a material adverse effect on ITC's patent licensing
opportunities. This could adversely affect the Company's ability to realize
additional licensing revenues.

Dependence on Foreign Sales. The Company expects that sales of
UltraPhone systems to foreign customers will continue to account for a
substantial portion of the Company's total product revenues. Sales of UltraPhone
systems to foreign customers accounted for 65%, 79% and 88%, respectively, of
the Company's product revenues for 1993, 1994 and the first half of 1995. As the
Company's foreign sales are typically made to a foreign government or a foreign
country's nationally-owned or -controlled telephone company, foreign sales of
UltraPhone systems are also subject to political factors which may result in
delays in completing sales or the inability to complete sales. Foreign sales of
UltraPhone systems may be affected by changes in demand resulting from
fluctuations in currency exchange rates, as well as by risks such as tariff and
quota regulations and difficulties in obtaining export or import licenses, among
other things. The Company's UltraPhone sales usually depend upon a customer's
ability to obtain financing for the purchase, and there can be no assurance that
the Company's existing or prospective customers will be able to qualify for or
obtain the financing necessary to purchase UltraPhone systems. Failure to do so
could adversely affect the Company's cash flow and profitability. This, in turn,
could adversely affect the value of a Common Stock purchaser's investment.

Risks of International Operations. The Company's ability to conduct
business in certain areas outside the United States and its revenues derived
from foreign licensees may be adversely affected by certain risks inherent in
international operations. In conducting business in foreign jurisdictions the
Company may be subject, in addition to the effects of government regulation, to
the effects of tariffs and any other applicable trade barriers, currency control
regulations, political instability, potential adverse tax consequences, and
general delays in remittance and difficulties of collection of foreign payments,
among other things. Also, currency conversion gains and losses could contribute
to fluctuations in the Company's operating results. If for any reason exchange
or price controls or other restrictions on the conversion or repatriation of
foreign currencies were imposed, the Company's revenues derived from foreign
customers or licensees could be adversely effected. In such event, the value of
a Common Stock purchaser's investment could be adversely affected.

Lack of Technological Change and Product Development. The
telecommunications industry is characterized by rapid technological change,
frequent product introductions and evolving domestic and international industry
standards. The Company believes that its potential for future success will
depend on, among other things, whether it will be able to (i) meet evolving
customer and country-specific requirements through continued refinements to the
UltraPhone (including frequency modifications), and (ii) reduce product costs to
allow for more aggressive UltraPhone product pricing and increased gross profit
margins. Such efforts will necessitate continued significant investment by the
Company in research and development and in sales and marketing. There can be no
assurance that the Company will have sufficient resources to make such
investments or that the Company will be able to make the technological advances
necessary to achieve these goals and thereby capture a

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level of UltraPhone sales sufficient to achieve its future success. There can be
no assurance that the Company's products will not be rendered obsolete or
non-competitive by new industry standards or changing technology or that the
Company will be able successfully to increase UltraPhone sales or to develop and
market new products. In such event, the Company's operations could be
jeopardized and investors in the Common Stock could lose part or all of their
investment.

Regulatory and Standards Compliance. In general, the telecommunications
industry is subject to continued regulation on the federal, state and
international levels and, in many cases, domestic, regional and international
organizations, including financing agencies, impose standards for acceptance or
type certification of telecommunications products. Changes in these regulations
or standards may adversely impact the Company's ability to sell UltraPhone
systems or impose additional costs and/or time delays with respect to such
sales. In such event, the value of a Common Stock purchaser's investment could
be adversely affected.

Changes to Government Regulations. The commercial potential for the
Company's proprietary technologies may be materially affected by regulations and
actions of the Federal Communications Commission ("FCC"), state public service
and utility commissions, the United States Congress and the courts relating to
the regulation of competition, rate tariffs and/or frequency use, which could
affect the market, demand and availability of communications systems. These
restrictions, and those imposed by counterpart agencies in foreign
jurisdictions, may be important factors in decisions by telephone companies,
cellular system operators and other authorized service providers concerning
utilization of the Company's proprietary technologies. Such restrictions could
adversely affect the Company's sales and, in turn, could adversely affect the
value of a Common Stock purchaser's investment.

Effect of Litigation on Cash Position. The Company is currently in
patent, securities and other litigation, both as a plaintiff and a defendant, in
the United States and abroad, and is involved in administrative proceedings
abroad, over certain of its patents. The legal fees and costs associated with
such litigation will be substantial. A judicial determination of liability
requiring the Company to pay substantial amounts could adversely affect the
Company's cash position. See "- Motorola Trial." In addition, an adverse or
inconclusive result in the Company's pending patent-related litigation against
Ericsson could adversely affect the Company's efforts to generate further
revenue and cash flow from its patent portfolio and could impair generally the
Company's ability to raise additional funds. Either of these results, in turn,
could adversely affect the value of a Common Stock purchaser's investment.

Need for Additional Financing. The Company's operations to date have
required substantial amounts of working capital, and the Company expects to
spend substantial funds to support its UltraPhone operations, to develop
improvements and enhancements to the UltraPhone system, to further expand its
research and development activities relating to its proprietary technologies and
to fund its patent enforcement activities. The Company's working capital
requirements will depend on numerous factors, including but not limited to the
level of demand for the UltraPhone system, the progress of the Company's
research and development programs, the ability to generate patent license fees
and royalties and the need to expend funds in connection with its patent
protection activities. To the extent that cash on hand and funds generated from
operations are insufficient, the Company will have to raise additional funds to
meet its working capital requirements. Continued availability of working capital
will be dependent on the financial condition of the Company, and there is no
assurance

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that additional financing will be available or, if available, that it will be
available on acceptable terms. In the event sufficient working capital is not
obtained or maintained, the Company's operations could be substantially and
adversely disrupted. This, in turn, could adversely affect the value of a Common
Stock purchaser's investment.

Dependence on Key Personnel. The Company's business will continue to
depend upon certain key personnel, none of whom currently are parties to
employment agreements with the Company. The Company believes that to succeed in
the future it will be required to continue to attract, retain and motivate
talented and qualified management, sales and technical personnel. There can be
no assurance that the Company will be able to retain its key employees, or that
the Company will be able to continue to attract, assimilate and retain other
skilled management, sales and technical personnel. The loss of any of its
existing key personnel or the inability to attract and retain such key employees
in the future could have a material adverse effect on the Company. This, in
turn, could adversely affect the value of a Common Stock purchaser's investment.

Adverse Effects to Common Stock Upon Issuance of Additional Preferred
Stock. The Company is authorized to issue 14,398,600 shares of its preferred
stock, par value $.10 per share ("Preferred Stock"), of which approximately
106,000 shares were issued and outstanding as of June 30, 1995. The Company's
Board of Directors (the "Board"), without any further action by the Company's
shareholders, may issue from time to time the authorized and unissued shares of
Preferred Stock in one or more series, and may determine as to each series the
designation and number of shares to be issued and the relative rights,
preferences and limitations of the shares of each series, including provisions
with respect to voting powers, redemption, conversion, dividend rights and
liquidation preferences. The issuance of Preferred Stock could adversely affect
the voting power of the holders of Common Stock, deny holders of Common Stock
the receipt of a premium on their Common Stock and have a depressive effect on
the market price of the Common Stock. The issuance of Preferred Stock could also
have the effect of deterring or delaying any attempt by a person or group to
obtain control of the Company.

Volatility of Securities Prices. Historically, market prices for
securities of companies involved in the wireless telecommunications industry
have been volatile. In addition, market prices for the Common Stock have
historically been particularly volatile due, in part, to the Company's history
of quarterly fluctuations of revenues and operating results. Announcements of,
among other things, technological innovations or new commercial products by the
Company or its competitors, developments concerning proprietary technologies,
results of patent enforcement activities, regulatory developments in both the
United States and other countries, and global and national economic and
political factors, as well as period-to-period fluctuations in financial
results, may have a significant impact on the market price of the Common Stock.
See " - Adverse Effects to Common Stock Upon Issuance of Additional Preferred
Stock."

Lack of Dividends on Common Stock. The Company has not declared or paid
cash dividends on the Common Stock since its inception. It is anticipated that
in the foreseeable future, no cash dividends will be declared or paid on the
Common Stock and any cash otherwise available for such dividends will be
reinvested in the Company's business.

Anti-Takeover Provisions. Unsolicited changes in control of the Company
could be deterred, delayed or made more expensive as a result of applicable
statutory protections (relating to transactions with certain "interested
persons" and "controlling persons"), the statutory authorization for the Board
to consider the interests of constituent groups (other

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than the Company's shareholders) when determining whether a particular action is
in the best interests of the Company, provisions of the Company's Bylaws
establishing a classified Board, and certain provisions in the Company's
Articles of Incorporation. Accordingly, these provisions and protections may
have a depressive effect on the price of the Company's securities.

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-3 with the
Securities and Exchange Commission (the "Commission") relating to the shares of
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Commission. Proxy
statements concerning the Company, reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices in New York (7 World Trade Center,
Suite 1300, New York, New York 10048) and Chicago (Citicorp Center, 500 W.
Madison St., Suite 1400, Chicago, Illinois 60661-2511). Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.

The Company will furnish, without charge, to any person to whom a copy
of this Prospectus is delivered, upon such person's written or oral request, a
copy of any and all of the documents that have been incorporated by reference in
the Registration Statement and herein (not including exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents). Any such request should be directed to the Corporate Secretary,
InterDigital Communications Corporation, Suite 105, 2200 Renaissance Boulevard,
King of Prussia, Pennsylvania 19406, phone number: (610) 278-7800.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:

(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994.

(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, as amended, and June 30, 1995.

(d) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated April 28, 1987, including
any amendments or reports filed for the purpose of updating such
description.

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(e) In addition, all documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of the offering shall be deemed to be
incorporated by reference herein from their respective dates of
filing.

Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

THE COMPANY

The Company develops and markets advanced digital wireless
communications systems using proprietary technologies for voice and data
communications and has developed an extensive patent portfolio related to those
technologies. The Company offers its customers, licensees and alliance partners
what it believes is unique access to both TDMA and B-CDMA proprietary digital
wireless technology.

The Company's principal product is the UltraPhone(R), a radio telephone
system providing businesses and households access to basic telephone service
through a wireless local loop. The UltraPhone offers greater flexibility and
ease of installation than conventional wireline-based systems and is designed to
provide higher transmission quality, capacity and spectrum efficiency. The
UltraPhone, which incorporates the Company's TDMA technology, is sold primarily
to foreign and domestic telephone companies to provide basic telephone service
to their customers, primarily in rural and near-urban areas, where the cost of,
or time required for, installing, upgrading or maintaining conventional wireline
telephone service supports selection of an UltraPhone System. Sales of
UltraPhone accounted for approximately 86%, 88% and 40%, respectively, of the
total revenues of the Company during 1992, 1993 and 1994. Through June 30, 1995,
the Company has sold over 230 UltraPhone systems worldwide, with aggregate
Ultraphone sales totaling over $130 million.

The Company's objective is to become a significant global supplier of
digital wireless communications technology and systems through a program of
product development and marketing and patent and technology licensing which
leverages the Company's direct efforts through business alliances based on the
TDMA and B-CDMA technologies.

The Company's alliance program, if fully and successfully concluded, is
designed to improve its UltraPhone business by (i) making the Company a more
credible competitor in large scale telecommunications infrastructure programs,
(ii) expanding the depth and coverage of UltraPhone marketing efforts around the
world, (iii) facilitating greater focus in the Company's direct sale activities,
and (iv) funding and facilitating engineering changes and alternative supply and
production sources to attempt to significantly reduce costs and expand product
capabilities.

The alliance program is also designed to bolster its on-going efforts
to develop its B-CDMA open air interface technology and to spread the
commercialization of a wireless local loop application, and extend the scope of
such programs, if the alliance partners so decide, to develop wireless personal
communication service ("PCS") applications. The successful commercial
development and deployment of such products is dependent upon technological
achievement, including the continued validation of the theories upon which the
new technology is being designed, the

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continued availability of sufficient debt, equity or partner funding sufficient
to maintain a high level of sustained efforts over several years and,
ultimately, market acceptance of the resultant product.

In December 1994, the Company completed the initial implementation of
the alliance program by entering into an integrated series of agreements with
Siemens Aktiengesellschaft ("Siemens") covering UltraPhone marketing and product
development, B-CDMA development, patent licensing and other areas of
cooperation.

ITC and the Company, respectively, offer non-exclusive, royalty bearing
patent, technology and know-how licenses to telecommunications manufacturers
that manufacture or intend to manufacture equipment that utilizes ITC's
extensive TDMA and CDMA patented technologies. The Company believes that,
through ITC's patent portfolio, and the Company's TDMA and B-CDMA research and
development capabilities, both it and ITC are positioned to take advantage of
the present evolution in wireless telecommunications to digital technology from
the currently predominant analog technology. ITC implemented a strategy during
1993 of negotiation and litigation with certain entities which it believed were
representative of the broader number of entities infringing the Company's
patents. These efforts have resulted in the recognition of $28.7 million of
licensing revenue in 1994 and $62.1 million during the first half of 1995, the
initiation of litigation with major telecommunications companies, and license
agreements with AT&T Corp., Matsushita Electric Industrial Co., Ltd., OKI
Electric Industry Company, Ltd. and OKI America, Qualcomm Incorporated, Pacific
Communication Sciences, Inc. (a subsidiary of Cirrus Logic, Inc.), NEC
Corporation, Mitsubishi, Hitachi, Ltd. and Sanyo Electric Company, Ltd, Hughes
Network Systems, Inc. and Siemens. Many of these agreements contain advance
payment obligations pursuant to which, as of the date of this Prospectus, ITC
has received or is entitled to receive cash in the aggregate of approximately
$89.1 million in 1995. See "Risk Factors - Motorola Trial."

As an adjunct to its primary business, the Company had provided
advanced digital wireless research and development services to government and
business organizations, and it also directly provided telecommunications
services to businesses and households through the ownership and operation of
telephone operating companies ("TELCOs") in certain rural areas of the United
States. The Company began to withdraw from the contract services marketing
during 1994 and it sold the TELCO operations during 1994.

Since its inception, the Company has expended substantial sums to
develop its proprietary and patented technology and establish and upgrade the
patent portfolio presently owned by ITC, to develop and commercialize products
delivering the advantages afforded by its technology, and for its activities to
establish a market for those products. The Company had an accumulated deficit of
$144 million as of June 30, 1995.

The Company was incorporated in Pennsylvania in 1972 and its principal
executive offices are located at Suite 105, 2200 Renaissance Boulevard, King of
Prussia, Pennsylvania 19406- 2755. The Company's telephone number is (610)
278-7800. As used herein and unless otherwise required by the context, the
"Company" shall mean InterDigital Communications Corporation and its direct and
indirect majority-owned subsidiaries.

1995 DEVELOPMENTS

Philippine UltraPhone Order. In April 1995, the Company received an
order valued at approximately $17.6 million for UltraPhone equipment and related
services from the Philippine Long Distance Telephone Company. The order includes
a new generation of base stations, 64-line

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<PAGE>

cluster units and a new generation of subscriber units expected to be released
in 1996. Installation is expected to commence in metropolitan Manila in 1996.

Patent Licensing Activities.

Hitachi. On March 30, 1995, subsequent to the announcement of the jury
verdict in the Motorola trial, ITC entered into royalty-bearing license
agreements with Hitachi and its affiliate, covering the manufacture, use and
sale of TDMA-based subscriber units and infrastructure equipment. Under the
agreements, Hitachi has paid ITC a royalty advance of approximately $3.5 million
and has agreed, under specified conditions, to pay additional royalties on
various types of digital wireless telephones, including those built in
accordance with the TDMA based IS-54, IS-136, GSM, DCS-1800/1900, PDC and PHS
standards and PHS infrastructure equipment.

NEC. On May 9, 1995, the Company announced that ITC entered into a
royalty bearing license agreement with NEC Corporation covering the manufacture,
use and sale of TDMA-based subscriber units and infrastructure equipment. Under
the agreement, ITC has received a non-refundable royalty advance in excess of
$20 million and ITC has the right, under specified conditions, to receive
potential additional royalties on digital wireless telephones and infrastructure
equipment built in accordance with the TDMA based IS-54, IS-136, GSM,
DCS-1800/1900, PDC and PHS standards.

Litigation.

Motorola. In March 1995, a jury trial held in the United States
District Court for the District of Delaware (Civil Action No. 94-73 (D. Del.))
in a case involving Motorola, Inc. and ITC ended with the jury's verdict, which
is subject to varying interpretation, but which is interpreted by the Company to
mean that ITC's patent claims at issue in the case, involving four of ITC's
patents, are not infringed by Motorola and, if construed to be infringed, are
invalid. Motorola has filed a motion with the District Court requesting an order
for the Company to pay Motorola's legal fees and costs aggregating between $6
and $7 million. The Company has filed a motion with the District Court
requesting that the Court overturn and/or clarify all or part of the jury
verdict and, if that motion is unsuccessful, the Company intends to appeal the
jury verdict to the U.S. Court of Appeals for the Federal Circuit. The Company
believes that there are substantial grounds for reversal of the jury's verdict
and that the motion for attorney's fees and costs is without merit. The Court
has not yet ruled on either motion.

While the adverse verdict in the case should not affect the Company's
current alliance with Siemens, its ongoing B-CDMA development efforts, its
ability to market and sell the UltraPhone(R) system worldwide or the obligation
of licensors to pay non-refundable advances or paid-up license fees under ITC's
existing patent license agreements, the Company believes that in the short term,
the verdict may adversely affect the Company's efforts to generate further
revenue and cash flow from ITC's patent portfolio and may impair generally the
Company's ability to raise additional funds for general corporate purposes. The
outcome of the jury trial may also temporarily or permanently adversely affect
ITC's pending U.S. litigation against Ericsson as well as ITC's ability to
realize running royalties under certain of its license agreements. An adverse
ruling on Motorola's motion for legal fees could adversely affect the Company's
cash position. See "Risk Factors - Dependence on Patented and Proprietary
Technology and "- Motorola Trial."

Hughes Network Systems. Effective June 2, 1995, the Company entered
into a Settlement Agreement and Mutual Release (the "Settlement Agreement") with
Hughes Network System, Inc. ("HNS") in connection with the lawsuit filed against
the Company by HNS in February 1993. In the lawsuit, HNS alleged the Company
breached certain agreements which were entered into

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<PAGE>

between HNS and the Company relating to the termination of certain prior
agreements between the parties. Under the terms of the Settlement Agreement, the
Company has paid HNS $7,500,000, which amount had been substantially previously
reserved by the Company, and HNS has been granted credits aggregating $900,000
against royalty and other payment obligations relating to the Company's
proprietary Time Division Multiple Access Technology ("Credits"). The Credits
may be applied to any royalties becoming due to the Company or its affiliates
from HNS after the date of the Settlement Agreement pursuant to the 1990 License
Agreement dated October 23, 1990, the 1992 License Agreement, dated February 29,
1992 and any other agreement between HNS and the Company or its affiliates
relating to intellectual property rights.

SELLING SHAREHOLDERS

The following table sets forth the names of the Selling Shareholders
and certain information regarding the beneficial ownership of the Company's
Common Stock by the Selling Shareholders as of March 31, 1995 (except as
indicated below), and as adjusted to reflect the sale of the shares offered by
this Prospectus:

Beneficial Ownership
After Offering
--------------------

Number of
Shares Percent of
Beneficially Number of Class (if
Owned Prior to Shares Number of greater
Name Offering Offered Shares than 1%)
- ---- -------------- ------- ------ --------
<S> <C> <C> <C> <C>

Anthony Albright 3,500(1) 3,500(1) -- --

Steven Altman 62,500(2) 62,500(3) 27,973 --

George Anderson 77,500(4) 65,000(4) 12,500 --

Argon Electric 29,401(5) 3,750(6) 25,651 --

Argus Consulting 10,000(7) 10,000(7) -- --

John Bambach 7,500(8) 7,500(8) -- --

Richard Bergfeld 1,000(9) 1,000(9) -- --

Carmelo Blacconeri 576,435(10) 90,835(11) 485,600 1.1%

Blacconeri Agency 21,751(12) 6,751(13) 15,000 --

Nancy Blacconeri 576,435(10) 1,875(14) 467,785 1.1%

Ridgely Bolgiano 254,305(15) 107,250(15) 144,255 --

Margaret S. Bracknell 420(16) 420(16) -- --

Phyllis M. Buffardi 43,202(17) 17,250(18) 25,952 --

A.G. Bunker 13,333(19) 13,333(19) -- --

David A. Burns
Jeffrey S. Burns
Michael A. Burns 357,893(20) 116,813(21) 241,080 --

David A. Burns 663,827(22) 53,208(23) 610,619 1.4%

</TABLE>

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<PAGE>

Beneficial Ownership
After Offering
--------------------

William Burns 505,905(25) 1,000(26) 504,905 1.1%

Burns Fry, Inc. 14,107(27) 14,107(27) -- --

Madeleine K. Butcher 118,167(28) 10,650(29) 107,517 --

W.W. Keen Butcher 118,167(28) 35,500(30) 82,667 --

BWR Investments 6,666(31) 6,666(31) -- --

Barney Cacioppo 138,047(32) 41,197(33) 96,850 --

Joan P. Cacioppo 138,047(32) 11,250(34) 126,797 --

Dr. George M. Calhoun 112,700(35) 5,500(36) 107,200 --

Harry G. Campagna 156,725(37) 15,000(38) 141,725 --

Joseph Cannarrozzo 31,025(39) 21,775(39) 9,250 --

Cerberus International Ltd. 5,200(40) 5,200(40) -- --

James Chmura 58,067(41) 26,067(42) 32,000 --

George Chrachol 69,121(43) 4,875(43) 64,246 --

John S. Dean 13,332(44) 13,332(44) -- --

Warren Diederich 13,333(45) 13,333(45) -- --

Noel Fedje 13,333(46) 13,333(46) -- --

Linda F. Foster 13,520(47) 1,000(47) 12,520 --

John T. Gregorio, Jr. 59,902(48) 26,100(49) 33,802 --

Josephine Gregorio 19,750(50) 3,750(50) 16,000 --

Ronald J. Gregorio 239,249(51) 85,626(52) 153,623 --

Adiwibawa Halim 100,000(53) 100,000(53) -- --

Jefferson B. Hill 24,833(54) 20,833(54) 4,000 --

Joseph J. Hill 192,419(55) 20,834(56) 171,585 --

William J. Hilsman 220,250(57) 17,900(58) 202,350 --

JMG Capital Partners,
L.P. 57,050(59) 57,050(59) -- --

Joseph LaRocca
Augustus LaRocca 352,921(60) 125,000(61) 227,921 --

</TABLE>

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<PAGE>

Beneficial Ownership
After Offering
--------------------

Dean Ledger 53,550(62) 25,000(63) 28,550 --

Robert B. Liepold 36,857(64) 5,500(65) 31,357 --

James Lurgio 28,375(66) 1,875(67) 26,500 --

James A. Maisano 5,033(68) 1,000(69) 4,033 --

Robert Masterson 262,000(70) 93,750(70) 168,250 --

V. Louise McCarren 10,100(71) 10,100(71) -- --

Jacqueline I. McGehee 1,000(73) 1,000(73) -- --

Scott B. Mexic 32,000(74) 32,000(74) -- --

Mid-Co Mortgage Service 25,235(75) 15,001(76) 10,234 --

Claire Mindock 1,000(77) 1,000(77) -- --

Thomas C. Moss, Jr. 12,500(78) 12,500(78) -- --

Nomura Securities
International, Inc. 125,000(72) 125,000(72)

Oppenheimer & Co., Inc. 125,000(79) 125,000(79) -- --

Paloma Securities 83,567(80) 83,567(80) -- --

Paresco, Inc. 213,946(81) 213,946(82) -- --

Janie P. Pinney 1,000(83) 1,000(83) -- --

Piscopo Investment
Partnership 62,500(84) 62,500(84) -- --

Dorothy J. Purpura 72,777(85) 19,626(86) 53,151 --

Rose Romanelli 1,100(87) 1,000(87) 100 --

Ray Rosato 12,800(88) 6,800(88) 6,000 --

Orhan Sadik-Khan 116,100(89) 37,500(90) 78,600 --

Vernon E. Sanders 100,000(91) 50,000(92) 50,000 --

Frank Sclafani 3,400(93) 3,400(93) -- --

Sherwin Seligsohn 468,731(94) 5,000(95) 463,731 --

Sims & Sims 307,900(96) 20,000(96) 286,900 --

Robert Spolum 6,666(97) 6,666(97) -- --

</TABLE>

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<PAGE>

Beneficial Ownership
After Offering
--------------------

Louisa C.H. Spottswood 20,833(98) 20,833(98) -- --

Sunrise Partners Ltd. 8,000(99) 8,000(99) -- --

Rocco Suspenzi 35,000(100) 17,500(100) 17,500 --

Taft Securities 437,500(101) 437,500(101) -- --

Lloyd Thompson 6,666(102) 6,666(102) -- --

Edmund R. Tyson 6,666(103) 6,666(103) -- --

UltraCerberus Ltd. 3,000(104) 3,000(104) -- --

Valley Forge, Inc. 125,000(105) 125,000(105) -- --

Robert C. Wolf 48,837(106) 8,000(107) 40,837 --

Joseph Zizzo 18,750(108) 18,750(108) -- --
</TABLE>

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

1. Consists of 3,500 shares issuable upon the exercise of warrants to
purchase such shares at $4.9375 per share which expire on May 18, 2004.

2. Consists of shares issuable upon the exercise of warrants.

3. Consists of 62,500 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

4. Includes 40,000 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on May 19, 2004.

5. Consists of shares issuable upon the exercise of warrants.

6. Consists of 3,750 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 per share which expire on December 31,
1997.

7. Consists of 10,000 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on August 11,
2007.

8. Consists of 7,500 shares issuable upon the exercise of warrants to
purchase such shares at $3.00 per share which expire on January 1,
2005.

9. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $4.935 per share which expire on May 18, 2004.

-15-

<PAGE>

10. Includes 515,909 shares (including 455,909 shares issuable upon the
exercise of warrants) owned by Carmelo Blacconeri and 13,500 shares
(including 7,500 shares issuable upon the exercise of warrants) owned
by Nancy Blacconeri. Also includes 21,751 shares (including 6,751
shares issuable upon the exercise of warrants) beneficially owned by
Blacconeri Agency, as well as 25,235 shares issuable upon the exercise
of warrants owned by Mid-Co Mortgage Service (with respect to which
Mid-Co Mortgage Service disclaims beneficial ownership of 10,234
shares). Carmelo Blacconeri and Nancy Blacconeri are husband and wife,
and Carmelo Blacconeri is a co-owner of the Blacconeri Agency and
Mid-Co Mortgage Service, which are also Selling Shareholders.

11. Consists of 90,835 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $5.875
per share which expire on dates ranging from December 5, 1997 and May
19, 2004.

12. Consists of shares issuable upon the exercise of warrants.

13. Consists of 6,751 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 per share which expire on December 31,
1997.

14. Consists of 1,875 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 per share which expire on December 31,
1997.

15. Consists of 107,250 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $5.00 to $9.25 per
share which expire on dates ranging from March 9, 1997 and December 21,
2002. Mr. Bolgiano is a member of the Board of Directors of the
Company.

16. Consists of 420 shares issuable upon the exercise of warrants to
purchase such shares at $6.53 per share which expire on March 9, 1997.

17. Includes 38,202 shares issuable upon the exercise of warrants.

18. Includes 12,250 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $5.875
per share which expire on dates ranging from December 31, 1997 and May
19, 2004.

19. Consists of 13,333 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on June 6, 2004.

20. Includes 356,393 shares issuable upon the exercise of warrants owned by
the named Selling Shareholders. Also includes 1,500 shares issuable
upon the exercise of warrants owned by Southern Illinois, a company
owned by the named Selling Shareholders. The named Selling Shareholders
jointly own the shares indicated and are the sons of William J. Burns,
the Chief Executive Officer of the Company and Chairman of the Board of
the Company.

21. Consists of 116,813 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $4.39 to $5.875
per share which expire on dates ranging from December 5, 1997 and April
24, 2002.

22. Includes 1,500 shares issuable upon the exercise of warrants owned by
Southern Illinois, a company co-owned by David A. Burns, as well as
305,934 shares issuable upon the exercise of warrants owned by David A.
Burns. Also includes 356,393 shares issuable upon the

-16-

<PAGE>

exercise of warrants owned jointly by David A. Burns, Jeffrey S. Burns
and Michael A. Burns, who are Selling Shareholders.

23. Consists of 53,208 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $5.875
per share which expire on dates ranging from December 5, 1997 to May
19, 2004.

24. Consists of 98,538 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 per share which expire on dates ranging
from December 5, 1997 to December 31, 1997.

25. Includes 335,000 shares issuable upon the exercise of options and
warrants owned by Mr. Burns. Also includes 1,500 shares issuable upon
the exercise of warrants owned by E.C. Development Corporation. Mr.
Burns is the Chief Executive Officer of the Company and Chairman of the
Board of Directors of the Company. Mr. Burns is a controlling
shareholder and an officer and director of E.C. Development
Corporation. Investment and voting power over certain of the listed
shares is shared with Mr. Burns' wife.

26. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $8.10 per share which expire on December 1,
1999.

27. Consists of 14,107 shares issuable upon the exercise of options to
purchase such shares at $7.875 per share which expire on December 18,
1997.

28. Includes 106,517 shares (including 93,017 shares issuable upon the
exercise of options and warrants and 8,500 shares issuable upon the
conversion of convertible preferred stock) owned by W.W. Keen Butcher
or by trusts of which Mr. Butcher is a trustee and 11,650 shares
(including 10,650 shares issuable upon the exercise of warrants and
1,000 shares issuable upon the conversion of convertible preferred
stock) owned by Madeleine Butcher. W.W. Keen Butcher and Madeleine
Butcher are husband and wife.

29. Consists of 10,650 shares issuable upon exercise of warrants to
purchase such shares at exercise prices ranging from $7.125 to $10.00
per share which expire on dates ranging from December 1, 1999 to March
6, 2002.

30. Consists of 35,500 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $6.25 to $8.10 per
share which expire on dates ranging from December 11, 1999 to September
21, 2003.

31. Consists of 6,666 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on June 3, 2004.

32. As of May 5, 1995, includes 126,797 shares (including 65,797 shares
issuable upon the exercise of warrants) owned by Barney Cacioppo and
11,250 shares issuable upon the exercise of warrants owned by Joan P.
Cacioppo. Barney Cacioppo and Joan Cacioppo are husband and wife.

33. Consists of 41,197 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $8.10 per
share which expire on dates ranging form December 31, 1997 to May 19,
2004.

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<PAGE>

34. Consists of 11,250 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranting from $2.50 to $5.875
per share which expire on dates ranging from December 31, 1997 to May
19, 2004.

35. Consists of shares issuable upon the exercise of options and warrants.

36. Consists of 5,500 shares issuable upon the exercise of warrants to
purchase such shares at an exercise price of $8.10 per share which
expire on September 30, 2000.

37. As of May 5, 1995, includes 75,000 shares issuable upon the exercise of
warrants to purchase such shares at exercise prices ranging from $2.50
to $5.875 per share which expire on dates ranging from December 5, 1997
and May 19, 2004. Mr. Campagna is a member of the Board of Directors of
the Company.

38. Consists of 15,000 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on May 19, 2004.

39. As of May 5, 1995, consists of 21,775 issuable upon the exercise of
warrants to purchase such shares at exercise prices ranging from $3.75
to $5.875 per share which expire on dates ranging from December 5, 1997
and May 19, 2004, and with respect to which Joseph Cannarrozzo shares
investment and voting power with his son Frank Cannarrozzo.

40. As of May 5, 1995, consists of 5,200 shares issuable upon the exercise
of warrants to purchase such shares at an exercise price of $5.50 per
share which expire on December 21, 2002.

41. Includes 25,000 shares issuable upon the exercise of warrants.

42. Includes 5,000 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on May 19, 2004.

43. Includes 43,875 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $4.39 to $5.875
which expire on dates ranging from December 31, 1997 to May 19, 2004.

44. Consists of 13,332 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on dates ranging
from June 10, 2004 to July 3, 2004.

45. Consists of 13,333 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on dates ranging
from June 10, 2004 to June 3, 2004.

46. Consists of 13,333 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on June 3, 2004.

47. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire on September 30,
2000. Investment and voting power over certain of the listed shares is
shared with Ms. Foster's husband.

48. Includes 49,902 shares issuable upon the exercise of warrants.

49. As of May 5, 1995, includes 16,100 shares issuable upon the exercise
of warrants to purchase such shares at exercise prices ranging from
$2.50 to $5.875 per share which expire on dates ranging from December
31, 1997 and May 19, 2004.

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<PAGE>

50. As of May 5, 1995, consists of 3,750 shares issuable upon the exercise
of warrants to purchase such shares at $5.875 per share which expire on
December 31, 1997. Josephine Gregorio is the mother of John T.
Gregorio, Jr. and Ronald J. Gregorio, who are also Selling
Shareholders.

51. Includes 194,014 shares issuable upon the exercise of options and
warrants. Also includes 25,235 shares issuable upon the exercise of
warrants owned by Mid-Co Mortgage Service (with respect to which Mid-Co
Mortgage Service disclaims beneficial ownership of 10,234 shares). Mr.
Gregorio is a co-owner of Mid-Co Mortgage Service.

52. Includes 65,626 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $5.875
which expire on dates ranging from December 5, 1997 to May 19, 2004.

53. Consists of 100,000 shares issuable upon the exercise of warrants to
purchase such shares at $7.50 per share which expire on May 29, 1997.

54. Includes 20,833 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

55. Consists of 20,834 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002, and 146,785 shares held as trustee or in discretionary accounts
over which Mr. Hill has voting and investment power.

56. Consists of 20,834 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

57. Consists of shares issuable upon the exercise of options and warrants.

58. Consists of 17,900 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $6.53 to $8.10 per
share which expire on dates ranging from November 24, 1999 to March 1,
2002.

59. As of May 5, 1995, consists of 57,050 shares issuable upon the exercise
of warrants to purchase such shares at $5.50 which expire on December
21, 2002.

60. Consists of shares issuable upon the exercise of warrants.

61. Consists of 125,000 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

62. Includes 50,000 shares issuable upon the exercise of options and
warrants. Also includes 50 shares held as custodian for Mr. Ledger's
children.

63. Consists of 25,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire September 30,
2000.

64. Includes 34,440 shares issuable upon the exercise of options and
warrants. Mr. Liepold is a former director of the Company.

65. Consists of 5,500 shares issuable upon the exercise of warrants to
purchase such shares at $8.10 per share which expire on November 24,
1999.

-19-

<PAGE>

66. Includes 17,375 shares issuable upon the exercise of warrants to
purchase such shares, and 8,000 shares held by (or jointly with) Mr.
Lurgio's wife.

67. Consists of 1,875 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 which expire on December 31, 1997.

68. Includes 1,185 held by members of Mr. Maisano's family and includes
1,000 shares issuable upon the exercise of warrants.

69. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire September 30,
2000.

70. Consists of 93,750 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

71. Consists of 10,100 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $5.875 to $8.10
per share which expire on dates ranging from November 24, 1999 to May
16, 2000.

72. Consists of 125,000 shares issuable upon the exercise of warrants to
purchase such shares at $4.9375 per share which expire on July 19,
1998.

73. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire on September 30,
2000.

74. Includes 7,000 shares issuable upon the exercise of warrants to
purchase such shares at $3.25 per share which expire May 19, 2004.

75. As of May 5, 1995, consists of shares issuable upon the exercise of
warrants, with respect to which Mid-Co Mortgage Service disclaims
beneficial ownership of 10,234 shares.

76. Consists of 15,001 shares issuable upon the exercise of warrants to
purchase such shares at $5.875 per share which expire on December 5,
1997.

77. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire on September 30,
2000.

78. Consists of 12,500 shares issuable upon exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

79. Consists of 125,000 shares issuable upon the exercise of warrants to
purchase such shares at $7.875 which expire on December 18, 1997.

80. As of May 5, 1995 consists of 83,567 shares issuable upon the exercise
of warrants to purchase such shares at exercise prices ranging from
$4.47 to $5.50 per share which expire on dates ranging from April 15,
2002 to April 21, 2002.

81. As of May 5, 1995, consists of shares issuable upon the exercise of
warrants.

82. As of May 5, 1995, consists of 213,946 shares issuable upon the
exercise of warrants to purchase such shares at exercise prices ranging
from $4.75 to $5.50 per share which expire on dates ranging from April
14, 2002 and December 21, 2002.

-20-

<PAGE>

83. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $6.00 per share which expire September 30,
2000.

84. Consists of 62,500 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

85. Includes 62,526 shares issuable upon the exercise of warrants.

86. Consists of 9,375 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $5.875 to $8.625
per share which expire on dates ranging from December 5, 1997 and
December 38, 1997.

87. Consists of 1,000 shares issuable upon the exercise of warrants to
purchase such shares at $9.25 per share which expire on March 6, 2002.

88. Consists of 6,800 shares issuable upon the exercise of warrants to
purchase such shares at $3.75 per share which expire on May 19, 2004.

89. Consists of shares issuable upon the exercise of warrants.

90. Consists of 37,500 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $5.50 to $9.50 per
share which expire on dates ranging from March 5, 2002 to December 21,
2002.

91. Includes 50,000 shares issuable upon the exercise of warrants. Also
includes 50,000 shares held as trustee for Children's World PSP.

92. Consists of 50,000 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

93. Consists of 3,400 shares issuable upon the exercise of warrants to
purchase such shares at $3.75 per share which expire on May 19, 2004.

94. Includes 83,051 shares issuable upon the exercise of options and
warrants.

95. Consists of 5,000 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

96. Consists of 20,000 shares issuable upon the exercise of warrants to
purchase such shares at $9.65 per share which expire on March 5, 2002.
Sims & Sims is controlled by Harley L.
Sims, a member of the Board of Directors of the Company.

97. Consists of 6,666 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire June 3, 2004.

98. Consists of 20,833 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

99. As of May 5, 1995, consists of 8,000 shares issuable upon the exercise
of warrants to purchase such shares at an exercise price of $5.50 per
share which expire on December 21, 2002.

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<PAGE>

100. Consists of 17,500 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire May 19, 2004.

101. Consists of 437,500 shares issuable upon the exercise of warrants to
purchase such shares at $5.50 per share which expire on December 21,
2002.

102. Consists of 6,666 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on June 10, 2004.

103. Consists of 6,666 shares issuable upon the exercise of warrants to
purchase such shares at $2.50 per share which expire on June 6, 2004.

104. As of May 5, 1995, consists of 3,000 shares issuable upon the exercise
of warrants to purchase such shares at an exercise price of $5.50 per
share which expire on December 21, 2002.

105. As of May 5, consists of 125,000 shares issuable upon the exercise of
warrants to purchase such shares at $5.50 per share which expire on
December 21, 2002.

106. Includes 23,602 shares issuable upon the exercise of warrants. Also
includes 25,235 shares issuable upon the exercise of warrants owned by
Mid-Co Mortgage Service (with respect to which Mid-Co Mortgage Service
disclaims beneficial ownership of 10,234 shares). Mr. Wolf is a
co-owner of Mid-Co Mortgage Service.

107. Consists of 8,000 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 per share to
$5.875 per share which expire on dates ranging from December 5, 1997
and May 19, 2004.

108. Consists of 18,750 shares issuable upon the exercise of warrants to
purchase such shares at exercise prices ranging from $2.50 to $5.875
per share which expire on dates ranging from December 31, 1997 and May
19, 2004.

The Selling Shareholders or their pledgees, donees, transferees or
other successors in interest, may sell all, a portion or none of the securities
offered by them hereby from time to time. Any such sales may be in one or more
transactions on the AMEX at prices prevailing at the times of such sales or in
private sales of the securities at prices related to the prevailing market
prices or negotiated prices. The sales may involve (a) a block transaction in
which the broker or dealer so engaged will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction, (b) a purchase by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus, (c) ordinary
brokerage transactions in which the broker solicits purchasers, or (d) short
sales of Common Stock which may be deemed to be sales of the shares offered
hereby. Broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions (which compensation may be in excess of
customary commissions). The Selling Shareholders and any broker-dealers that
participate in the distribution of the shares may be deemed to be underwriters
and any commissions received by them and any profit on the resale positioned by
them might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.

There can be no assurance that the Selling Shareholders will
sell any or all of their shares of Common Stock offered hereby. There can be no
assurance that short sales of the Common Stock by Selling Shareholders hereunder
will not have an adverse market impact on the current market

-22-

<PAGE>

price of the Common Stock. The Company will receive no proceeds from any sales
of Common Stock hereunder by the Selling Shareholders.

In connection with their acquisition of their shares of Common
Stock and the Warrants, the Company granted to certain of the Selling
Shareholders certain registration rights and agreed to certain indemnification
and payment obligations as discussed below. The Registration Statement of which
this Prospectus is a part has been filed with the Commission pursuant to the
exercise by those Selling Shareholders of such registration rights. The Company
has agreed to pay the filing fees, costs and expenses associated with such
Registration Statement, including compliance with any state blue sky
requirements. The Company has also agreed to indemnify certain Selling
Shareholders, and to the extent applicable, their officers, directors and
controlling persons, and any underwriters, for certain civil liabilities in
connection with such Registration Statement and the securities offered thereby
and hereby, including liabilities under the Securities Act of 1933.

LEGAL MATTERS

The validity of the Common Stock offered hereby has been
passed upon for the Company by Jane S. Schultz, Esq., Suite 105, 2200
Renaissance Boulevard, King of Prussia, Pennsylvania 19406. Ms. Shultz is
Associate General Counsel of the Company and owns options to purchase 833
shares of Common Stock which are vested and exercisable.

EXPERTS

The consolidated financial statements and schedules of the
Company for each of the three years in the period ended December 31, 1994
incorporated in this Prospectus by reference have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.

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<PAGE>

No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this Prospectus in
connection with the offer made hereby, and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, the securities offered hereby to any person in any state or
other jurisdiction in which such offer or solicitation is unlawful. The delivery
of this Prospectus at any time does not imply that information contained herein
is correct as of any time subsequent to its date.

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

TABLE OF CONTENTS

Page
<S> <C>
Risk Factors.......................................... 2
Available Information................................. 8
Incorporation of Certain
Documents by Reference............................ 8
The Company........................................... 9
1995 Developments..................................... 10
Selling Shareholders.................................. 12
Legal Matters......................................... 23
Experts............................................... 23
</TABLE>

<PAGE>

INTERDIGITAL
COMMUNICATIONS
CORPORATION

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

___________________, 1995

<PAGE>

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
SEC registration fee.......................... $ 6,560 *
Accounting fees and expenses.................. $ 1,500 **
Legal fees and expenses....................... $ 25,000 **
Miscellaneous................................. $ 6,940 **

Total.................................... $ 40,000 **

</TABLE>

* Actual
** Estimated for the 12-month period commencing June 29, 1995.

Item 15. Indemnification of Directors and Officers

Sections 1741-1750 of the Pennsylvania Business Corporation
Law of 1988 (the "BCL"), Section 8365 of Title 42 of the Pennsylvania
Consolidated Statutes ("Section 8365") and the Company's By-Laws provide for
indemnification of the Company's directors and officers and certain other
persons. Under Sections 1741-1750 of the BCL, directors and officers of the
Company may be indemnified by the Company against all expenses incurred in
connection with actions (including, under certain circumstances, derivative
actions) brought against such director or officer by reason of his or her status
as a representative of the Company, or by reason of the fact that such director
or officer serves or served as a representative of another entity at the
Company's request, so long as the director or officer acted in good faith and in
a manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company. As permitted under Section 1741-1750 of the BCL and
Section 8365, the Company's By-Laws provide that the Company shall indemnify
directors and officers against all expenses incurred in connection with actions
(including derivative actions) brought against such director or officer by
reason of the fact that he or she is or was a director or officer of the
Company, or by reason of the fact that such director or officer serves or served
as an employee or agent of any entity at the Company's request, unless the act
or failure to act on the part of the director or officer giving rise to the
claim for indemnification is determined by a court in a final, binding
adjudication to have constituted willful misconduct or recklessness.

Reference is made to Item 17 of this Registration Statement
for additional information regarding indemnification of directors and officers.

Item 16. Exhibits
<TABLE>
<S> <C>

5 Opinion of Jane S. Schultz, Esq.

24.1 Consent of Arthur Andersen LLP. (see "Consent of Independent Public Accountants"
on page II-3).

</TABLE>

II-1

<PAGE>

24.3 Consent of Jane S. Schultz, Esq. (included in Exhibit 5).

25 Power of Attorney (see pages II-4 and II-5).
</TABLE>

Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions discussed in Item
15 of this Registration Statement, or otherwise, the Company 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 Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person with the securities being registered,
the Company 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.

The undersigned registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement: (i) to include any prospectus required
by Section 10(a)(3) of the Act; (ii) to reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that clauses (i) and (ii) above do not apply if
the information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement; (2) that, for the
purpose of determining any liability under the Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.

The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

II-2

<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to Form S-3 Registration Statement of our
reports dated March 22, 1995, included in InterDigital Communications
Corporation's Form 10-K for the year ended December 31, 1994, and to all
references to our Firm included in this Form S-3 Registration Statement.

ARTHUR ANDERSEN LLP

Philadelphia, Pennsylvania
October 19, 1995

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in King of Prussia, Pennsylvania, on
October 12, 1995.

INTERDIGITAL COMMUNICATIONS
CORPORATION

By: /S/ WILLIAM J. BURNS
---------------------------------------------
William J. Burns, Chief Executive Officer and
Chairman of the Board, the principal executive
officer

By: /S/ JAMES W. GARRISON
---------------------------------------------
James W. Garrison, Vice President, Chief
Financial Officer and Treasurer, the principal
financial officer and principal accounting
officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on October 12,
1995 in the capacities indicated.

/S/ WILLIAM J. BURNS
---------------------------------------------
William J. Burns, Chief Executive Officer and
Chairman of the Board, the principal executive
officer

/S/ JAMES W. GARRISON
---------------------------------------------
James W. Garrison, Vice President, Chief
Financial Officer and Treasurer, the principal
financial officer and principal accounting
officer

*
-------------------------------------------
Barney J. Cacioppo, Director

[EXECUTIONS CONTINUED]

II-4

<PAGE>

*
-------------------------------------------
D. Ridgely Bolgiano, Director

*
-------------------------------------------
Harry G. Campagna, Director

*
-------------------------------------------
Harley L. Sims, Director

* By: /S/ WILLIAM J. BURNS
-------------------------------------------
William J. Burns
Attorney-in-Fact

II-5
<PAGE>

October 20, 1995

InterDigital Communications Corporation
2200 Renaissance Boulevard
Suite 105
King of Prussia, Pennsylvania 19406

Re: Registration Statement on Form S-3

Ladies and Gentlemen:

Reference is made to a Registration Statement on Form S-3 of
InterDigital Communications Corporation (the "Company") to which this opinion is
attached as an exhibit (the "Registration Statement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Registration Statement. The Registration Statement covers the following
securities of the Company:

1. 2,760,091 shares of Common Stock (the "Warrant
Shares") which are issuable upon the exercise of warrants (the
"Warrants") which may be sold by the Selling Shareholders; and

2. 106,318 shares of Common Stock (the "Outstanding
Shares") which are currently outstanding and which may be sold by
the Selling Shareholders.

I have examined the Registration Statement, including the
exhibits thereto, the Company's Articles of Incorporation, as amended, the
Company's By-laws and such other documents as I have deemed appropriate. In the
foregoing examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals and the authenticity
of all documents submitted to me as copies of originals.

Based upon such examination, I am of the opinion that when
there has been compliance with the Act and applicable state securities laws:

1. The Warrant Shares, when issued and paid for upon
exercise of the Warrants, will be validly issued, fully paid and
nonassessable.

2. The Outstanding Shares are validly issued, fully
paid and nonassessable.

I hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to me under the caption
"Legal Opinions" in the Prospectus. On giving this consent, I do not thereby
admit that I am within the

<PAGE>

InterDigital Communications Corporation
Page 2
October 20, 1995

category of persons whose consent is required under Section 7 of the Act or
rules and regulations of the Commission thereunder.

Very truly yours,

/S/ JANE S. SCHULTZ
--------------------------
Jane S. Schultz
Associate General Counsel

<PAGE>