As filed with the Securities and Exchange Commission on September __, 1999
Registration No. 333-70403
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT No. 3
to
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
RADYNE COMSTREAM INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 3665 11-2569467
(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization Code Number)
--------------
3138 East Elwood Street
Phoenix, Arizona 85034
(602) 437-9620
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
--------------
Robert C. Fitting, Chief Executive Officer
Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, Arizona 85034
(602) 437-9620
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
Copy to:
John B. Wade, III, Esq.
Dorsey & Whitney LLP
250 Park Avenue
New York, NY 10177
(212) 415-9311/(212) 953-7201 (Telecopy)
<PAGE>
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 the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to item 11(a)(1)
of this form, check the following box. |_|
If this Form is filed to register additional securities pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
--------------
Calculation of registration fee
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum Amount of
Title of each class of Amount to offering aggregate registration
securities to be registered be price per offering price fee
registered unit
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value 4,745,076 $3.73 $17,699,133 $4,921
$.002 Shares(1)
=============================================================================================
Subscription rights to 4,745,076
purchase common stock Subscription $0.00 $0.00 $0.00
rights
- ---------------------------------------------------------------------------------------------
TOTAL $17,699,133 $4,921(2)
</TABLE>
(1) Issuable upon exercise of rights which are being distributed to
shareholders of Radyne ComStream Inc.
(2) Previously paid.
- --------------
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 Section 8(a), may
determine.
<PAGE>
Radyne ComStream Inc.
Cross Reference Sheet
(Pursuant to Item 501(b) of Regulation S-K)
<TABLE>
<CAPTION>
S-2 Item Number and Caption Location or Caption in Prospectus
- --------------------------- ---------------------------------
<S> <C>
1. Forepart of the Registration Statement and
outside front cover page of prospectus ............ Outside front cover page
2. Inside front and outside back cover pages of
Prospectus ........................................ Inside front and outside back cover page
3. Summary information, risk factors and ratio of
earnings to fixed charges ......................... Prospectus summary; risk factors
4. Use of proceeds ................................... Prospectus summary; purpose of the
rights offering and use of proceeds
5. Determination of offering price ................... Purpose of the rights offering and use
of proceeds
6. Dilution .......................................... Dilution
7. Selling security holders .......................... Not applicable
8. Plan of distribution .............................. Outside front cover page; the rights
offering
9. Description of securities to be registered
description of capital stock ...................... Outside front cover page; the rights
offering
10. Interest of named experts and counsel ............. Not applicable
11. Information with respect to the registrant ........ Outside front cover page; prospectus
summary; risk factors; purpose of
rights offering and use of proceeds;
price range of common stock; shares
eligible for future sale; description of
capital stock
12. Incorporation of certain information
by reference ...................................... Where you can find more information
13. Disclosure of commission position on
indemnification for securities act liabilities .... Not applicable
</TABLE>
<PAGE>
Prospectus
Radyne ComStream Inc.
4,745,076 shares
of common stock, par value $.002 per share
and
4,745,076 subscription rights
================================================================================
Per share Total
--------- -----
Subscription price $3.73 $17,699,133
Underlying discount N/A N/A
----- -----------
Total proceeds to Radyne $3.73 $17,699,133
================================================================================
The subscription rights
o Each Radyne ComStream shareholder of record on April 16, 1999
will be entitled to purchase four shares of common stock for
every five shares currently owned.
o The purchase price per share is $3.73.
o The subscription rights expire at 5:00 p.m. New York time on
October 25, 1999, unless extended.
The common stock
o One share is issuable upon the exercise of one subscription
right.
o Voting rights for the new shares will be equal to the voting
rights of shares currently outstanding.
The offering
o You cannot revoke a decision to exercise.
Radyne ComStream's common stock is currently traded over the counter and is
not listed on any securities exchange or quoted on Nasdaq.
--------------
The information contained in this document is subject to completion and
amendment.
You should carefully consider the risk factors on page 8 before purchasing any
of the common stock. These securities have not been approved or disapproved by
the Securities and Exchange Commission or any state securities commission, nor
has the Securities and Exchange Commission or any state securities commission
passed upon the accuracy or adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
--------------
The date of this prospectus is September __, 1999
<PAGE>
Where you can find more information
Radyne ComStream Inc. is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and files
reports and other information with the Securities and Exchange Commission. You
may read and copy any reports or other information concerning Radyne ComStream
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. You may also request copies of these documents upon payment
of a duplicating fee, by writing to the SEC's Public Reference Section. Please
call the SEC at l-800-SEC-0330 for further information on the public reference
rooms. Radyne ComStream's SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov." Information concerning Radyne ComStream is not
available from any securities exchange as our common stock is not traded on any
securities exchange.
Radyne ComStream filed a registration statement with respect to the shares
of common stock and rights to purchase the common stock we are offering.
Pursuant to SEC rules and regulations, this prospectus does not contain all of
the information that you can find in such registration statement. You may read
and copy this information in the same way as any other information that Radyne
ComStream files with the SEC.
Statements in this document concerning any document filed as an exhibit to
the registration statement summarize all material provisions. Each of those
statements is qualified in its entirety by reference to the complete document.
For more detailed information, you should refer to the copy of the complete
document filed as an exhibit to the registration statement. These documents,
filed with the SEC, may be inspected and copied, and obtained by mail, from the
SEC as set forth above and will be available for inspection and copying at the
principal executive offices of Radyne ComStream at 3138 East Elwood Street,
Phoenix, AZ 85034 during regular business hours by any interested securityholder
of Radyne ComStream or his or her representative who has been so designated in
writing.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC, including
Radyne ComStream's annual, quarterly and current reports. The information
incorporated by reference is deemed to be part of this document, except for any
information superseded by information in this document. The information
incorporated by reference is an important part of this prospectus.
This document incorporates by reference the documents set forth below which
Radyne ComStream previously filed with the SEC. These documents contain
important information about Radyne ComStream and its finances.
<PAGE>
Radyne ComStream incorporates by reference into this Prospectus:
o its Annual Report on Form 10-K/A for the Fiscal Year Ended
December 31, 1998, which contains audited consolidated financial
statements for Radyne ComStream's latest fiscal year;
o its quarterly report on Form 10-Q for the quarter ended June 30,
1999;
o its quarterly report on Form 10-Q/A for the quarter ended March
31, 1999;
o its quarterly report on Form 10-Q/A for the quarter ended June
30, 1998;
o its report on Form 8-K/A filed on May 5, 1999, which contains
audited financial statements of ComStream Holdings, Inc. for its
fiscal years ended December 31, 1995, 1996 and 1997, unaudited
financial statements of ComStream Holdings, Inc. for the nine
months ended September 30, 1998, and pro forma financial
information for the year ended December 31, 1997 and the nine
months ended September 30, 1998 as if the acquisition of
ComStream Holdings, Inc. took place effective January 1, 1997;
and
o the description of Radyne ComStream's common stock, $.002 par
value, as contained in its registration statement on Form 8-A,
filed with the SEC on March 8, 1984, as amended on July 25, 1988.
Copies of our Annual Report on Form 10-K/A for the year ended December 31,
1998 and our quarterly report on Form 10-Q for the quarter ended June 30, 1999
accompany this prospectus. Other documents incorporated by reference may be
obtained through the SEC and are available from Radyne ComStream without charge,
other than exhibits, unless we have specifically incorporated by reference an
exhibit in this document. You may obtain documents incorporated by reference in
this document by making a request to Radyne ComStream by telephone at (602)
437-9620 or in writing at the following address:
Director of Administration
Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, AZ 85034.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that differs from such information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of those documents.
2
<PAGE>
Summary
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements and notes thereto appearing
elsewhere in this prospectus.
Radyne ComStream Inc.
Radyne ComStream Inc. and its subsidiaries design, manufacture and sell
equipment used to receive data from, and transmit data to, satellites. We have
engaged in the advanced design and production of digital data communications
equipment for satellite telecommunications systems for over seventeen years.
Singapore Technologies Pte Ltd through its wholly owned subsidiary, Stetsys
Pte Ltd, and the latter's wholly owned subsidiary, Stetsys US, Inc.,
collectively, ST, owns approximately 91% of Radyne ComStream's common stock.
Recent developments
Consistent with our new growth strategy, on October 15, 1998 we acquired
ComStream Holdings, Inc. from Spar Aerospace Limited, a Canadian company.
ComStream is an international provider of digital transmission solutions for
voice, data, audio and video applications with offices in the United States,
Singapore, Indonesia, China and the United Kingdom. We acquired ComStream in an
effort to expand our core business, supplement our product lines and take
advantage of ComStream's trademark and distribution channels, and based on our
belief that the combined companies could realize certain synergies. - -
The integration of ComStream into our ongoing operations has proceeded
essentially as planned, resulting in revenues of $25,000,000 and an operating
profit of $1,203,000 for the six months ended June 30, 1999. After interest
expense of $1,098,000, net income for the six-month period was $105,000. Our
results for the quarter ended June 30, 1999 were even better: income from
operations of $965,000 and net income of $422,000. We will apply the proceeds of
this offering to reduce our debt and, thus, our interest expense in subsequent
periods. Of course, there is no assurance that our operating results will
continue to improve.
Our Compensation Committee and Board of Directors recently determined to
recognize the significant achievements of our senior management in effecting the
ComStream integration by awarding bonuses of $203,900 to Robert C. Fitting,
Chief Executive Officer, $98,900 to Steven Eymann, Chief Technical Officer and
$46,700 to Garry Kline, Chief Financial Officer. In addition, to further the
goal of providing senior management an equity stake in the company, the
Compensation Committee and the Board adopted a plan which will permit them to
borrow funds from the company for the purpose of exercising stock options.
Messrs. Fitting, Eymann and Kline will be able to borrow up to $200,000, $100,00
or $50,000, respectively. If the borrower continues to be employed by Radyne
ComStream, we will forgive one-half of each loan (including interest at 5% per
annum) on the first and second anniversaries of the loan and provide sufficient
bonus compensation at those times to enable the employee to satisfy the
resulting income tax obligation.
3
<PAGE>
Purpose of the rights offering and use of proceeds
We intend to raise approximately $17,700,000 in gross proceeds from the
rights offering to repay ST for the $10,000,000 of financing which it provided
in connection with the ComStream acquisition and approximately $5,618,000 in
principal amount from earlier working capital loans, plus interest. We expect to
receive approximately $16 million of the aggregate $17,700,000 gross proceeds of
the offering from ST upon the exercise of its rights.
If we complete the rights offering, the maximum gross proceeds to Radyne
ComStream would be approximately $17,700,000 before payment of related fees and
expenses estimated to be $300,000. However, although ST informed us that it
intends to fully exercise its rights, we do not know the extent to which others
will exercise the rights that they receive. We will not reoffer shares
underlying any unexercised rights to the public or otherwise reissue them.
Therefore, the actual proceeds from the rights offering could be somewhat less.
The Board of Directors has established the subscription price at $3.73 per
share, which the Board determined to be the fair market value of the common
stock based on the negotiated conversion price of the convertible note issued to
Spar in connection with the ComStream acquisition. See "Purpose of the Rights
Offering and Use of Proceeds."
4
<PAGE>
Summary of the rights offering
The rights ........................ Radyne ComStream will issue to you four
rights for every five shares of common stock
that you held on the record date. We will
distribute an aggregate of approximately
4,745,076 rights. Holders of the rights may
purchase one share of common stock for each
right that they exercise at the subscription
price. We will not issue any fractional
rights. Each right will entitle a
shareholder to purchase one share of common
stock at $3.73 per share.
Subscription price ................ $3.73 per share of common stock.
Record date ....................... April 16, 1999
Transferability of shareholder
rights ............................ The rights will be transferable, but we do
not anticipate that there will be a market
in the rights or that any exchange will list
them for trading.
Expiration date ................... 5:00 p.m., New York time, on October 25,
1999 unless the Board of Directors
determines that a material event has
occurred that necessitates one or more
extensions of the expiration date to permit
adequate disclosure of information
concerning such event.
5
<PAGE>
Procedure for
exercising rights ................. You may exercise rights by properly
completing the subscription certificate
evidencing your rights and forwarding the
subscription certificate to the subscription
agent or Radyne ComStream on or prior to the
expiration date, together with payment in
full of the subscription price with respect
to your rights. In the alternative, you may
use the guaranteed delivery procedures
described below. If you use the mail to
forward subscription certificates, we
recommended that you use insured, registered
mail. If time does not permit a holder of a
right to deliver a subscription certificate
to the subscription agent or Radyne
ComStream on or before the expiration date,
such person should make use of the
guaranteed delivery procedures described
under "Purpose of the Rights Offering and
Use of Proceeds--Exercise of rights."
The exercise of rights is irrevocable once
made. Radyne ComStream will not pay interest
on the money delivered in payment of the
subscription price. If paying by uncertified
personal check, please note that the funds
paid thereby may take at least five business
days to clear. Accordingly, we urge persons
who wish to pay the subscription price by
means of uncertified personal check to make
payment sufficiently in advance of the
expiration date to ensure that such payment
reaches the subscription agent or Radyne
ComStream and clears by such date. We urge
you to consider payment by means of
certified or cashier's check or money order.
You may not exercise a right in part, and
Radyne ComStream will not issue any
fractional shares.
Persons holding shares, or
wishing to exercise rights,
through others .................... Persons who hold their Radyne ComStream Inc.
shares and rights with a broker, dealer,
commercial bank, trust company or other
nominee should contact the appropriate
institution or nominee and request it to
effect the transactions for them.
Issuance of common stock .......... Radyne ComStream will cause the delivery of
certificates representing shares of common
stock issuable upon exercise of rights to
the holder of such rights as soon as
practicable after valid exercise of such
rights. The subscription agent will hold
funds received thereby until the issuance of
the related shares.
6
<PAGE>
Subscription agent ................ Continental Stock Transfer & Trust Company
Information ....................... Please direct any questions regarding this
offering, including the procedure for
exercising rights, and requests for
additional copies of this prospectus, the
subscription certificate or the notice of
guaranteed delivery to Radyne ComStream Inc.
at 3138 East Elwood Street, Phoenix, Arizona
85034, Attention: Director of
Administration. Telephone: (602) 437-9620.
Maximum Shares of common
stock outstanding after the
rights offering ................... 10,704,954 shares based on 5,959,878 shares
outstanding on June 30, 1999. Does not give
effect to the 2,040,461 shares reserved for
issuance upon the exercise of options
previously granted or available for grant
from time to time under our 1996 Incentive
Stock Option Plan, 1,000,000 shares reserved
for issuance under our 1999 Employee Stock
Purchase Plan or the possible conversion of
an outstanding convertible note into an
additional 968,843 shares.
For more information regarding this offering, including the procedure for
exercising rights, see "The Rights Offering."
7
<PAGE>
Federal income tax consequences
The holders of common stock will not recognize taxable income for federal
income tax purposes upon receipt of the rights and holders of the rights will
not recognize any gain or loss upon exercise of the rights. See "Federal Income
Tax Consequences" for a discussion of tax consequences that investors should
consider in connection with this offering.
Risk factors
The purchase of common stock in the rights offering or the purchase of
rights in the secondary market involves investment risks relating to Radyne
ComStream, to the satellite data communications equipment industry in general
and to this offering. Investors should read and consider carefully the
information set forth under the heading "Risk Factors".
Exercise of rights
The Board of Directors of Radyne ComStream makes no recommendation to
holders as to whether a holder should exercise rights to purchase shares of
common stock in the rights offering. In addition, the Board makes no
recommendation as to whether you should purchase rights.
8
<PAGE>
Risk Factors
An investment in the common stock or rights is highly speculative and
involves a high degree of risk. You should invest in these securities only if
you can afford the loss of your entire investment. Prior to making an investment
decision, you should carefully consider, together with the other matters
referred to in this prospectus, or incorporated by reference, the following risk
factors.
We have a history of operating losses and we may never become profitable
Radyne ComStream incurred losses from operations of $13,362,000 during the
year ended December 31, 1998, $1,080,000 during the year ended December 31,
1997, $1,814,000 during the six months ended December 31, 1996 and $2,368,000
during the twelve months ended June 30, 1996. The Company's predecessor, Radyne
Corp., had emerged from Chapter 11 protection in December 1994. Radyne ComStream
has been largely dependent upon loans from controlling shareholders to satisfy
its working capital requirements. Accordingly, one must consider the likelihood
of Radyne ComStream's future success in light of Radyne Corp.'s bankruptcy in
1994 and the possibility of future operating losses, as well as the problems,
expenses, difficulties, risks and complications frequently encountered in
connection with similarly situated companies. In addition, our future plans for
Radyne ComStream are subject to known and unknown risks and uncertainties that
may cause Radyne ComStream's actual results in future periods to differ
materially from any future performance implied in this Prospectus or in our
Annual Report.
Our dependence on ST for capital and the fact that some of our loans are
callable could adversely affect our financial health and our ability to react to
changes in our business
Radyne ComStream has been largely dependent on a succession of short-term
loans and guarantees from its controlling shareholder, ST, and affiliates of ST
since it emerged from Chapter 11 protection on December 16, 1994. Prior to its
acquisition by us, ComStream had been dependent on borrowings facilitated by
Spar. At present, Radyne ComStream has short-term indebtedness to ST of
$15,618,272, plus interest, payable on March 31, 2000, and has a $20,500,000
bank line of credit on which it owes approximately $9,420,000. In addition,
Radyne ComStream owes Spar up to $3,614,000 plus interest in connection with the
ComStream acquisition. We will use the proceeds from this offering to repay the
loans from ST. Although Radyne ComStream's indebtedness to the bank or Spar is
not supported by a guarantee or any other form of binding agreement, ST has
provided the bank with a letter of awareness. All loans pursuant to the bank
line of credit are demand loans. The bank could demand repayment at an
inopportune time for Radyne ComStream and ST may not continue indefinitely to
assist Radyne ComStream in maintaining such financing. Moreover, pending receipt
of the proceeds of this rights offering, Radyne ComStream is in violation of a
covenant under its bank line requiring Radyne ComStream to limit its
indebtedness to twice its tangible net worth. Failure to realize substantially
the anticipated net proceeds of this offering, could materially adversely affect
Radyne ComStream's ability to repay its overall indebtedness, including its
indebtedness to ST, and its financial condition. See "Purpose of the Rights
Offering and Use of Proceeds."
9
<PAGE>
If necessary additional financing is not available, our competitiveness may
suffer and our plans for future growth may not be realized
Based on our operating plan, we believe that in addition to the net
proceeds of this offering, Radyne ComStream will require substantial additional
financing in the next year. Specifically, we will need to pay up to $3,614,000
plus interest to Spar in connection with the ComStream acquisition. Accordingly,
there can be no assurance that our resources will be sufficient to satisfy our
capital requirements for such period. In addition to repaying debt, we
anticipate that we may require additional financing in order to meet our current
plans for expansion. Such financing may take the form of the issuance of common
or preferred equity securities or debt securities, or may involve additional
bank financing. We may be unable to obtain such additional capital on a timely
basis, on favorable terms, or at all.
Our heavy dependence on international sales entails potential volatility in our
operating results
Radyne ComStream has dedicated substantial resources to penetrating markets
in Europe, the Middle East, Canada, Latin America and Asia. While this activity
fits with Radyne ComStream's long-term strategy, recent market volatility in
Latin America and Asia may cause short-term problems which may have longer term
negative effects. Export sales, as a percentage of net sales, were approximately
50% for the year ended December 31, 1998. As a result, the possibility of
substantial future disruptions and the impact of events to date could have a
material adverse effect on our business, financial condition and results of
operations.
If we should be unable to recruit or retain key personnel, our ability to manage
our business and keep our products competitive would be adversely affected
Our future performance is significantly dependent on the continued active
participation of Robert C. Fitting, President and Chief Executive Officer, and
Steve Eymann, Executive Vice President and Chief Technical Officer. Should
either of these key employees leave or otherwise become unavailable to us,
Radyne ComStream's business and results of operations could suffer. Our
continued ability to attract and retain highly skilled personnel is critical to
the operations and expansion of Radyne ComStream. To date, we have been able to
attract and retain the personnel necessary for our operations. However, we may
not be able to do so in the future, particularly as we expand the business. Any
inability to attract and retain personnel with the necessary skills when needed
could materially adversely affect our business and expansion plans.
The risk of obsolescence of our products from rapid technological change
requires substantial expenditures on product improvements
The technology used in modems, converters and related equipment changes
rapidly. Radyne ComStream's competitors may succeed in developing or marketing
products or technologies that are more effective and/or less costly and which
render our products obsolete or non-competitive. In addition, new technologies
could emerge that replace or reduce the value of our products. For example, as
more fiber cables come into service, the use of satellites for
10
<PAGE>
international telephony is slowing. Our success will depend in part on our
ability to respond quickly to technological changes through the development and
improvement of our products. Accordingly, we believe that we will need to
allocate a substantial amount of capital to research and development activities
in the future. There can be no assurance that Radyne ComStream's product
development efforts will be successful. Failure to improve our existing products
and develop new products could have a material adverse effect on our business,
financial condition and results of operations.
The high cost of research and development reduces our profitability
ComStream's future growth depends on increasing the market share for its
new products, adapting existing satellite communications products to new
applications and introducing new communications products that will find market
acceptance and benefit from Radyne ComStream's established international
distribution channels. Accordingly, we are actively applying our communications
expertise to design and develop new hardware and software products and enhance
existing products. We expended $4,296,000 in the year ended December 31, 1998,
on research and development activities. However, Radyne ComStream may not
continue to have access to sufficient capital to fund the necessary research and
development and such efforts, even if adequately funded, may not prove
successful.
Competition in our industry is intense and can lead to reduced sales and market
share
We have a number of major competitors in the satellite communications
field. These include large companies, such as Hughes Network Systems, NEC and
California Microwave which have significantly larger and more diversified
operations and greater financial, marketing, human and other resources than
Radyne ComStream. We believe that we have been able to compete by concentrating
our sales efforts in the international market and by emphasizing product
features and quality. However, most of our competitors offer products which have
one or more features or functions similar to those offered by Radyne ComStream.
We believe that the quality, performance and capabilities of our products, our
ability to customize certain network functions and the relatively lower overall
cost of our products, as compared to the costs generally offered by Radyne
ComStream's major competitors, have contributed to Radyne ComStream's ability to
compete successfully. However, our major competitors have the resources
available to develop products with features and functions competitive with or
superior to those offered by us. Such competitors may successfully develop such
products, which may prevent us from maintaining a lower cost advantage for our
products. Moreover, we may experience increased competition in the future from
these, other currently unknown competitors or future entrants to the business.
Our products could infringe on others' technology or vice versa, which could be
costly
Because patents often provide only narrow protection which may not provide
a competitive advantage in areas of rapid technological change and because
patent applications require public disclosure of information which may otherwise
be subject to trade secret protection, Radyne ComStream has been cautious in
obtaining patents on existing products. We
11
<PAGE>
have a number of patents, copyrights and other intellectual property rights in
the form of software and integrated circuit designs. However, if our technology
impermissibly utilizes the intellectual property of others, Radyne could
experience material restrictions or prohibitions on the use of the technology.
In such event, we might need to obtain licenses from third parties to utilize
the patents or proprietary rights of others. We might be unable to obtain such
licenses on acceptable terms or at all. In addition, in such event, we could
incur substantial costs in defending against infringement claims made by third
parties or in enforcing our own intellectual property rights. It should also be
noted that some foreign countries in which Radyne ComStream's products are sold
provide less protection to intellectual property than do the laws of the United
States. Any misappropriation of Radyne ComStream's products could adversely
affect our business.
Integrating a new corporate entity, such as ComStream, can be expensive and
disruptive
In pursuit of our business strategy, we recently acquired ComStream. The
successful integration of ComStream is subject to risks commonly encountered in
making acquisitions of companies or their services and technologies. Such risks
include, among other things:
o the difficulty associated with assimilating the operations and
personnel of ComStream
o the potential disruption of our ongoing business,
o the inability of management to maximize our financial and strategic
position through the successful integration of acquired customers,
network facilities, technology and distribution networks,
o additional expenses associated with the amortization of acquired
intangible assets,
o the inability to maintain uniform standards, controls, procedures and
policies, and
o the impairment of relationships with employees as a result of the
integration of new management personnel.
ST's control of Radyne ComStream may make our stock less attractive
Upon the closing of this offering, ST, which currently owns approximately
91% of Radyne ComStream's outstanding common stock, will continue to maintain a
substantially similar level of control. ST will, therefore, continue to have the
ability to elect all of Radyne ComStream's directors and to control the outcome
of all issues submitted to a vote of Radyne ComStream's stockholders. As a
result of ST's substantial ownership interest in the common stock, it may be
more difficult for a third party to acquire Radyne ComStream. A potential buyer
would likely be deterred from any effort to acquire Radyne ComStream absent the
consent of ST or its participation in the transaction.
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<PAGE>
We are subject to Section 912 of the New York Business Corporation Law, which
restricts certain business combinations that are not approved by a corporation's
board of directors.
You will experience immediate and substantial dilution in light of our net
tangible book value deficiency
Upon the closing of this offering, investors will incur immediate and
substantial dilution in the per share net tangible book value of their common
stock. At December 31, 1998, after giving effect to the receipt by Radyne
ComStream of the maximum net proceeds of the rights offering, Radyne ComStream,
would have had a pro forma net tangible book value (deficit) of approximately
($0.24) per share. Net tangible book value is the amount of Radyne ComStream's
total assets minus intangible assets and liabilities. See "Dilution."
To the extent that other shareholders exercise their rights, those
shareholders who do not exercise their rights in full will realize a dilution in
their percentage voting interest and ownership interest in future net earnings,
if any, of Radyne ComStream. Radyne ComStream cannot predict the effect, if any,
this offering will have on the market price of the common stock.
Radyne ComStream currently has outstanding under the 1996 Incentive Stock
Option Plan options exercisable to purchase an aggregate of 736,976 shares of
common stock at an exercise price of $2.50 per share (in the case of 626,476 of
such options, the optionee/employee would be entitled to a bonus of $1.72 per
share upon exercise), 86,500 shares at $3.125 per share, 50,000 shares at $3.25
per share and 147,375 shares at $3.75 per share. Options on an additional
779,125 shares will become exercisable at between $2.50 and $3.75 per share over
the next three years, assuming that the grantees' employment does not terminate
prematurely. An additional 240,485 shares are available for options yet to be
granted under the Plan. Exercise of the options granted under the 1996 Incentive
Stock Option Plan would further reduce a shareholder's percentage voting and
ownership interest. Moreover, up to 1,000,000 shares may be sold to employees at
85% of fair market value, pursuant to our 1999 Employee Stock Purchase Plan.
The large number of shares eligible for future sale may adversely affect our
market price
The sale, or availability for sale, of a substantial number of shares of
common stock in the public market subsequent to this offering pursuant to Rule
144 under the Securities Act ("Rule 144") or otherwise could materially
adversely affect the market price of the common stock and could impair Radyne
ComStream's ability to raise additional capital through the sale of its equity
securities or debt financing. Upon completion of this offering, if all rights
are fully exercised, there would be approximately 10,704,954 shares of common
stock issued and outstanding. Of these shares, Radyne ComStream believes that
approximately 1,028,154 would be freely transferable. The remaining 9,676,800
shares would be held by ST and would be eligible for resale subject to the
volume and manner of sale limitations of Rule 144 under the Securities Act.
13
<PAGE>
Disclosures relating to low priced stocks may negatively affect liquidity
Radyne ComStream's securities are subject to Rule 15g-9 under the Exchange
Act which imposes additional sales practice requirements for broker-dealers
which sell penny stocks to persons other than established customers and
accredited investors as defined in Regulation D under the Securities Act. For
transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale.
The SEC regulations define a "penny stock" to be any equity security not
registered on a national securities exchange or for which quotation information
is disseminated on Nasdaq that has a market price (as therein defined) of less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exceptions. Unless exempt, the rules require delivery, prior to a
transaction in a penny stock, of a disclosure schedule prescribed by the SEC
relating to the penny stock market. There are disclosure requirements relating
to commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, there is a
requirement for monthly statements disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. Consequently, such rule may adversely affect the ability of
broker-dealers to sell Radyne ComStream's securities and may adversely affect
the ability of purchasers in this offering to sell any of the securities
acquired hereby in the secondary market.
The market price of our shares has been volatile
Radyne ComStream cannot predict the effect that this offering will have on
the trading price of the common stock. There can be no assurance that the market
price of the common stock will not remain below the subscription price or that,
following the exercise of rights, a rights holder will be able to sell shares
acquired in this offering at a price equal to or greater than the subscription
price. Since Radyne ComStream emerged from bankruptcy, the price of the common
stock, which trades in the over-the-counter market under the OTC Bulletin Board
symbol "RADN", has varied widely and the price of the common stock or the
shareholder rights may be subject to significant fluctuation in the future.
There has been no prior market for the rights.
Parties on which we rely may have year 2000 technology problems that disrupt our
business
The Year 2000 issue concerns the fact that certain computer systems and
processors may recognize the designation "00" as the year 1900 when it is
intended to mean the Year 2000, resulting in system failure or miscalculations.
Other potential date related errors may result from computer systems' inability
to recognize the year 2000 as a "leap year", and such dates as 9 September 1999
(9-9-99), 1 January 2001 (1-1-01) may cause errors. All of these "date related
issues" are commonly referred to as the "Year 2000" issue or "Y2K problem".
Commencing in 1997, we began a comprehensive review of our information
technology systems, upon which our day to day business operations depend, in
order to determine the adequacy of those systems in light of future business
requirements. Year 2000 readiness was one of the factors considered in
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<PAGE>
the review process. We have completed that review and we believe that all
mission critical systems at our Phoenix facility are Year 2000 compliant,
whereas certain systems used at our San Diego facility require upgrading. We
purchased and expensed the upgrades in 1998 and expect their installation to be
completed in the third quarter of this year.
Our Year 2000 readiness plan also involves the review of our
non-information technology systems, a review which we consider to be complete.
The only noncompliance which we discovered relates to certain date functions in
diagnostic equipment, which functions we do not employ. However, it is possible
that the scope of the Year 2000 problem could be greater than originally
believed and that our efforts could prove inadequate.
As part of our comprehensive review, we are continuing to verify the Year
2000 readiness of third parties (vendors and customers) with whom Radyne
ComStream has material relationships. This is a particular concern in light of
our reliance on overseas assembly operations. A Year 2000 readiness survey was
sent to all of our material vendors and customers. We have received acceptable
responses from all of our mission critical vendors. We expect to receive
responses from 70% to 80% of our non-critical vendors. Efforts continue to
obtain as many responses as possible. In any event, we may increase some
inventory levels to mitigate any risk of inventory supply problems. We have also
created a database to track responses, problems and follow-up plans. While our
assessments of the readiness of our vendors are necessarily dependent upon their
survey responses, we intend to test their stated compliance where we determine
that to be a necessary and feasible step.
In evaluating the potential impact of vendor Y2K noncompliance, we believe
that the two worst case scenarios would likely be as follows. First, if the
electric utility at either of our principal facilities were to black out,
operations at that facility could essentially cease for the duration of the
problem. At this point those utilities have provided reasonable assurances of
their own Y2K compliance, although they are not in a position to rule out
potentially relevant problems elsewhere on the power grid. Second, if one of our
major circuit board suppliers were to report Y2K compliance, but then surprise
us with a shut-down, our delivery schedule would be adversely affected. However,
since our contingency plan includes maintenance of a three-month inventory of
critical parts, we would expect to be able to replace the noncompliant vendor in
a timely enough manner to avoid a product delivery delay of more than 30 days.
However, we are not able to precisely determine the effect on results of
operations, liquidity and financial condition in the event our material vendors
and customers are not Year 2000 compliant. Our inability to accurately forecast
such effects may prevent Radyne ComStream from taking necessary steps to rectify
any Year 2000 problems in advance. Moreover it is impossible to predict the
extent, if any, to which customers may allocate funds to the solution of their
own Year 2000 problems instead of purchasing our products. We will continue to
monitor the progress of our material vendors and customers and formulate a
contingency plan if and when we conclude that a material vendor or customer may
not be compliant.
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<PAGE>
We have completed a review of our products and determined that all but one
older ComStream product are Year 2000 ready. We are notifying purchasers and
potential purchasers of this product, relatively few of which have been sold.
While we believe our efforts to date are adequate to prevent any Year 2000
problem from having a material adverse effect on Radyne ComStream, our
assessment may turn out to be inaccurate.
Year 2000 Readiness Costs
Project Statistics:
Cost to date (labor) $ 80,000
Estimated cost to completion $75,000 to $125,000
<TABLE>
<CAPTION>
====================================================================================================
Inventory Assessment Remediation Unit Testing System Testing
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Percentage 100% 100% 90% 50% 50%
Completed
Completion Date 4/30/99 6/30/99 7/31/99 8/31/99 9/30/99
====================================================================================================
</TABLE>
Purpose of the Rights Offering and Use of Proceeds
Establishment of subscription price
The Board of Directors independently established the subscription price at
$3.73 per share, which the Board determined to be the fair market value of the
common stock at the time of its determination to conduct the rights offering.
The Board made this determination based on the conversion price fixed in the
convertible note issued to Spar in connection with the ComStream acquisition.
Through arms length negotiations, the parties set this price at fifty cents
below the average trading price of the common stock for the five trading days
following the announcement of the ComStream acquisition and this offering.
Use of proceeds
The maximum net proceeds we will receive from the sale of the rights, net
of estimated expenses payable by Radyne ComStream, are estimated to be
approximately $17,400,000. We intend to use substantially all of the net
proceeds of this offering to repay indebtedness to ST.
The indebtedness to ST which we intend to repay with the proceeds of this
offering equals $15,618,272 in principal amount, with interest and maturities as
follows:
Date of Note Principal Interest Rate Maturity
January 5, 1998 $ 500,000 6.84375% March 31, 2000
January 15, 1998 $ 4,618,272 6.84375% March 31, 2000
April 14, 1998 $ 250,000 6.625% March 31, 2000
August 13, 1998 $ 250,000 6.75% March 31, 2000
August 28, 1998 $10,000,000 6.375% March 31, 2000
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<PAGE>
Of this indebtedness, we borrowed $10,000,000 for the ComStream acquisition
and the balance for short-term working capital purposes or to repay other
indebtedness incurred for such purposes.
Dilution
The net tangible book value (deficit) of Radyne ComStream at December 31,
1998, was approximately $(19,910,000), or $(3.36) per share of common stock. Net
tangible book value per share of common stock represents the tangible assets
(total assets less intangible assets) less total liabilities, divided by the
number of shares of common stock outstanding. After giving effect to the sale of
the rights and the common stock issuable pursuant to the rights, and the
application of the net proceeds from such transactions, the net tangible book
value (deficit) of the common stock at December 31, 1998 on a pro forma basis
would have been approximately $(2,510,000) or $(0.24) per share. This represents
an immediate increase in net tangible book value of $3.12 per share to existing
shareholders and an immediate dilution to purchasers of common stock through the
exercise of rights of $3.97 (106%) per share.
<TABLE>
<CAPTION>
Per share
-----------------
<S> <C> <C>
Rights offering price $ 3.73
Net tangible book value (deficit) at December 31, 1998 $(3.36)
Increase attributable to sale of common stock pursuant to rights $ 3.12
Pro forma net tangible book value after this offering(1) $(0.24)
------
Dilution to new investors $ 3.97
======
</TABLE>
(1) After deducting offering expenses of approximately $300,000 payable by
Radyne ComStream.
The foregoing computations exclude (i) 825,476 shares of common stock
issuable upon exercise of outstanding stock options at an exercise price of
$2.50 per share, 50,000 shares under options with an exercise price of $3.25 per
share, another 335,000 shares under options with an exercise price of $3.125 per
share and another 589,500 shares under options with an exercise price of $3.75
per share, as well as (ii) 1,240,485 shares reserved for future grants under
Radyne ComStream's 1996 Incentive Stock Option Plan and 1999 Employee Stock
Purchase Plan.
The Rights Offering
Subscription rights
Shareholders will receive four rights for every five shares of common stock
held on the record date, an aggregate of approximately 4,745,076 rights. Holders
may purchase at the subscription price one share of common stock for each right
held. The rights will expire on the expiration date. The rights will be
transferable. Radyne ComStream will not issue any fractional rights.
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<PAGE>
Expiration date
The rights will expire at 5:00 p.m., New York time, on October 25, 1999,
except that Radyne ComStream reserves the right to extend the exercise period on
one or more occasions if the Board of Directors determines that the occurrence
of a material event necessitates an amendment of the Registration Statement or
recirculation of this Prospectus in order to permit time for the distribution of
such information. After the expiration date, unexercised rights will be null and
void. Radyne ComStream will have no obligation to honor any purported exercise
of such rights received by the subscription agent or Radyne ComStream after the
expiration date, regardless of the mailing date of the documents relating to
such exercise, except pursuant to the guaranteed delivery procedures described
below.
If Radyne ComStream elects to extend the expiration date, it will issue a
press release to such effect not later than the first business day following the
most recently announced expiration date. In the event that Radyne ComStream
elects to extend the expiration date by more than 14 calendar days, we will, in
addition, provide prompt written notice of such extension to all rights holders
of record.
Exercise of rights
You may exercise rights by delivering to the subscription agent or Radyne
ComStream at or prior to 5:00 p.m., New York time, on the expiration date:
o the properly completed and executed subscription certificate
evidencing such rights with any required signatures guaranteed, and
o payment in full of the subscription price for each right exercised.
Such payment in full must be by check drawn upon a U.S. bank or postal,
telegraphic or express money order payable to Continental Stock Transfer & Trust
Company, as subscription agent; provided, however, that checks or money orders
that you send directly to Radyne ComStream should be payable to Radyne ComStream
Inc. Payment of the subscription price will be complete only upon
o clearance of any uncertified check, or
o receipt by the subscription agent or Radyne ComStream, as the case may
be, of any certified check drawn upon a United States bank or of any
postal, telegraphic or express money order.
If paying by uncertified personal check, please note that such funds may
take at least five business days to clear. Accordingly, holders of rights who
wish to pay the subscription price by
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<PAGE>
means of uncertified personal check should make payment sufficiently in advance
of the expiration date to ensure that such payment arrives and clears by such
date and should consider payment by means of certified or cashier's check or
money order.
The address for delivery of subscription certificates and payment of the
subscription price with respect to rights to the subscription agent is set forth
below under "Subscription agent."
If a holder of rights wishes to exercise rights, but cannot deliver the
subscription certificate(s) to the subscription agent or Radyne ComStream prior
to the expiration date, such holder may nevertheless exercise the rights if all
of the following conditions (the "Guaranteed Delivery Procedures") are met:
o the subscription agent receives payment in full of the subscription
price for each rights share being subscribed for (in the manner set
forth above) on or prior to the expiration date;
o the subscription agent receives, on or prior to the expiration date, a
Notice of Guaranteed Delivery from a member firm of a registered
national securities exchange or a member of the National Association
of Securities Dealers, Inc., or from a commercial bank or trust
company having an office or correspondent in the United States (each,
an "Eligible Institution"), substantially in the form available upon
request from the subscription agent whose address and telephone
numbers appear under "Subscription agent" below. The Notice of
Guaranteed Delivery must provide:
o the name of the exercising holder of rights,
o the number of rights represented by the subscription
certificate(s) held by such exercising holder of rights,
o the number of shares of common stock for which the holder
subscribes, and
o a guarantee of the delivery to the subscription agent of any
subscription certificate(s) evidencing such rights within three
business days following the date of the Notice of Guaranteed
Delivery; and
o the subscription agent receives the properly completed subscription
certificate(s), with any required signatures guaranteed, within three
business days following the date of the Notice of Guaranteed Delivery
relating thereto. Holders may deliver the Notice of Guaranteed
Delivery to the subscription agent in the same manner as subscription
certificates at the address set forth under "Subscription
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<PAGE>
agent" below, or transmit it to the subscription agent by facsimile
transmission (telecopy no. (212) 616-7610).
A holder of rights who holds shares of common stock for the account of
others, such as a broker, a trustee or a depository for securities, should
notify the respective beneficial owners of such shares as soon as possible to
ascertain such beneficial owners' intentions and to obtain instructions with
respect to the rights. If the beneficial owner so instructs, the record holder
of such rights should complete the subscription certificate and submit it to the
subscription agent with the proper payment. In addition, the beneficial owner of
common stock or rights held through such a holder of record should contact the
rights holder and request the rights holder to effect transactions in accordance
with the beneficial owner's instructions.
Signatures on the subscription certificate must be guaranteed by an
Eligible Institution, unless the subscription certificate:
o provides for delivery of the shares of common stock issuable upon
exercise of the rights represented thereby to the holder, or
o is submitted for the account of an Eligible Institution.
If the subscription certificate does not specify the number of shares of
common stock being subscribed for, or the funds delivered are not enough to pay
the subscription price for the number of shares specified, we will assume that
the number of shares of common stock subscribed for is the maximum number that
could be purchased with such funds.
Holders should read these instructions carefully and follow them in detail.
The method of delivery of subscription certificates and payment of the
subscription price to the subscription agent or Radyne ComStream will be at the
election and risk of the rights holder. We recommend that those who elect to
mail such certificates and payments use registered mail, properly insured, with
return receipt requested, with a sufficient number of days allowed to ensure
delivery to the subscription agent or Radyne ComStream and clearance of payment
prior to 5:00 p.m., New York time, on the expiration date. Because uncertified
personal checks may take at least five business days to clear, rights holders
should pay, or arrange for payment, by means of certified or cashier's check or
money order.
We will determine all questions concerning the timeliness, validity, form
and eligibility of any exercise of rights, and our determinations will be final
and binding. Radyne ComStream, in its reasonable discretion, may waive any
defect or irregularity, or permit the correction of a defect or irregularity
within such time as it may determine, or reject the purported exercise of any
right. Subscriptions will not be acceptable until all irregularities have been
waived or cured within such time as Radyne ComStream determines. Neither Radyne
ComStream nor the subscription agent will be under any duty to give notification
of any defect or irregularity in connection with the submission of subscription
certificates or incur any liability for failure to give such notification.
20
<PAGE>
Please direct any questions or requests for assistance concerning the
method of exercising rights or requests for additional copies of this prospectus
or the Notice of Guaranteed Delivery to Radyne ComStream at 3138 East Elwood
Street, Phoenix, Arizona 85034, Attention: Director of Administration,
telephone: (602) 437-9620.
No revocation
A holder of rights who has exercised those rights may not revoke such
exercise.
Fractional shares
Radyne ComStream will not distribute fractional rights, and a holder may
not exercise a right in part.
Method of transferring rights
You may transfer all rights evidenced by a single subscription certificate
by endorsing the subscription certificate for transfer in accordance with the
accompanying instructions. You may transfer a portion of the rights evidenced by
a single subscription certificate (but only in units to purchase whole shares)
by delivering to the subscription agent a subscription certificate properly
endorsed for transfer, with instructions to register such portion of the rights
in the name of the transferee (and to issue a new subscription certificate to
the transferee evidencing such transferred rights). In such event, we will issue
a new subscription certificate evidencing the balance of the rights to the
holder of the rights or, if the holder of the rights so instructs, to an
additional transferee.
Holders of rights wishing to transfer all or a portion of their rights (but
only in units to purchase whole shares) should allow a sufficient amount of time
prior to the expiration date for:
o receipt of the transfer instructions and processing by the
subscription agent,
o issuance of a new subscription certificate and transmittal to the
transferee or transferees with respect to transferred rights, and to
the transferor with respect to retained rights, if any, and
21
<PAGE>
o exercise or sale of the rights evidenced by such new subscription
certificates by the recipients of such rights.
If time does not permit a transferee of a right who wishes to exercise its
right to deliver its subscription certificate to the subscription agent on or
before the expiration date, such transferee should make use of the Guaranteed
Delivery Procedure described under "Exercise of rights" above. Neither Radyne
ComStream nor the subscription agent shall have any liability to a transferee or
transferor of rights who does not receive subscription certificates or new
subscription certificates in time for exercise or sale prior to the expiration
date.
Radyne ComStream does not anticipate that anyone will make a market in the
rights or that they will trade on any exchange. There is no assurance that any
market will develop for the rights. In any event, trading in the rights will
cease at the close of business on the business day preceding the expiration
date.
Fees and expenses
Except for the fees charged by the subscription agent (which Radyne
ComStream will pay as described below), all commissions, fees and other expenses
(including brokerage commissions and transfer taxes) incurred in connection with
the purchase or sale of rights will be for the account of the transferor of the
rights, and neither Radyne ComStream nor the subscription agent will pay any of
such commissions, fees or expenses.
All fees and other expenses incurred in connection with the exercise of
rights will be for the account of the holder of such rights, neither Radyne
ComStream nor the subscription agent will pay any of such fees or expenses.
Subscription agent
Radyne ComStream has appointed Continental Stock Transfer & Trust Company
as subscription agent for this offering. The subscription agent's address, which
is its address for delivery of subscription certificates and payment of the
subscription price, as well as the address for delivery of any Notice of
Guaranteed Delivery, is:
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
(212) 509-4000
The subscription agent will hold subscription price payments pending the
application or return of such payments in accordance with the terms of this
offering.
22
<PAGE>
Radyne ComStream will pay the subscription agent reasonable and customary
compensation for its services in connection with this offering and will
reimburse it for its reasonable out-of-pocket expenses.
The Board of Directors of Radyne ComStream makes no recommendation to
holders of rights with respect to whether a holder of rights should exercise
rights to purchase shares of common stock or to investors with respect to
whether an investor should purchase shares of common stock, or to persons with
respect to whether a person should purchase rights.
Federal Income Tax Consequences
In the opinion of Dorsey & Whitney LLP, counsel to Radyne ComStream, the
following are the material federal income tax consequences of the rights
offering to the holders of the rights (other than certain holders of the rights
described in the following paragraph) upon the issuance, exercise, transfer and
lapse of the rights.
The following is based on the Internal Revenue Code of 1986, as amended,
the Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practice, all of which are subject to change on a
prospective or retroactive basis, and on the accuracy of certain representations
of Radyne ComStream. The following does not address tax consequences of this
offering under state, local and foreign law. Moreover, special considerations
not described herein may apply to certain taxpayers, such as financial
institutions, broker-dealers, life insurance companies, regulated investment
companies, foreign entities, individuals who are not citizens or residents of
the United States for federal income tax purposes, tax-exempt organizations or
accounts and corporations affiliated with Radyne ComStream. The following is
limited to those who have held the common stock, and will hold the rights and
any common stock acquired upon the exercise of rights as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code. Capital assets held for longer than one year may give
rise to long-term capital gain or loss.
Issuance of the rights. Holders of common stock will not recognize taxable
income for federal income tax purposes in connection with the receipt of the
rights.
Basis and holding period of the rights. Except as described below, the
basis of the rights received by a shareholder as a distribution with respect to
such shareholder's common stock will be zero. If either:
o the fair market value of the rights on the date of distribution is
equal to 15% or more of the fair market value on such date of the
common stock with respect to which the rights are received, or
o the shareholder properly elects, in the shareholder's federal income
tax return for the taxable year in which the shareholder receives the
rights, to allocate part of the basis of such common stock to the
rights,
then upon exercise or transfer of the rights, the shareholder will allocate the
basis in such common stock between the common stock and the rights exercised or
transferred in proportion
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<PAGE>
to the fair market values of each on the date of distribution. For example, a
holder of 100 shares of common stock would receive rights to purchase 80 shares.
If the shares were trading at $5.00 on the distribution date and the rights were
trading at $1.00, the rights would have a fair market value of $80, which would
be 16% of the shares' $500 fair market value. In this case, the holder would
allocate the basis in the shares between the rights and the shares in proportion
to such fair market value, i.e. 80/580 to the rights and 500/580 to the shares.
The holding period of a shareholder with respect to rights received as a
distribution on such shareholder's common stock will include the shareholder's
holding period for that common stock in addition to the actual holding period of
the rights.
In the case of a purchaser of rights, the tax basis of such rights will be
equal to the purchase price paid therefor, and the holding period for such
rights will commence on the day following the date of the purchase.
Transfer of the rights. A shareholder who sells the rights prior to
exercise will recognize gain equal to any excess of the amount realized from the
sale over such shareholder's basis (if any) in the rights sold. Conversely, if
the shareholder's basis in the rights sold exceeds the amount realized on the
sale, the shareholder will recognize a loss equal to that excess. Such gain or
loss will be capital gain or loss if gain or loss from a sale of the underlying
shares would be characterized as capital gain or loss at the time of such sale.
Any gain or loss recognized on a sale of rights acquired by purchase will be
capital gain or loss if the underlying shares would be a capital asset in the
hands of the seller.
Lapse of the rights. Shareholders who allow the rights received by them to
lapse will not recognize any gain or loss, and no adjustment will be made to the
basis of the common stock, if any, owned by such shareholders.
Purchasers of the rights will be entitled to a loss equal to their tax
basis in the rights, if such rights expire unexercised. Any loss recognized on
the expiration of the rights acquired by purchase will be a capital loss if the
underlying rights shares would be a capital asset in the hands of the purchaser.
Exercise of the rights; basis and holding period of common stock. Holders
of rights will not recognize any gain or loss upon the exercise of rights. The
basis of the common stock acquired through exercise of the rights will be equal
to the sum of the subscription price paid therefor and the holder's basis in
such rights (if any).
The holding period for the common stock acquired through exercise of the
rights will begin on the date the rights are exercised.
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<PAGE>
Information reporting and withholding. Under the backup withholding rules
of the Internal Revenue Code, a holder of the rights may be subject to backup
withholding at the rate of 31 percent with respect to payments made pursuant to
this offering, unless such rights holder
o is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or
o provides a correct taxpayer identification number and certifies under
penalties of perjury that the taxpayer identification number is
correct and that the holder of rights is not subject to backup
withholding because of a failure to report all dividends and interest
income.
Any amount withheld under these rules will be a credit against such
person's federal income tax liability. Radyne ComStream may require holders of
the rights to establish exemption from backup withholding or to make
arrangements satisfactory to Radyne ComStream with respect to the payment of
backup withholding.
The foregoing is for general information only. Accordingly, each holder is
urged to consult with his or her own tax advisor with respect to the tax
consequences of the rights offering applicable to his or her own particular tax
situation, including the application and effect of federal, state and local
income and other tax laws.
Price Range of Common Stock
Radyne ComStream's common stock trades in the over-the-counter market under
the OTC Bulletin Board symbol "RADN". However, there is no established trading
market as actual transactions are infrequent. The following table sets forth the
range of high and low trading prices as reported by the National Quotation
Bureau, Inc. for the periods indicated. At April 16, 1999, Radyne ComStream had
approximately 443 shareholders of record. Radyne ComStream believes that the
number of beneficial owners is actually in excess of 1,600, due to the fact that
a large number of shares are held in street name.
High Low
---- ---
1997:
First Quarter 6 3-1/8
Second Quarter 3-1/4 3
Third Quarter 10-3/4 5
Fourth Quarter 10-1/2 4
High Low
---- ---
1998:
First Quarter 5-1/4 2-7/64
25
<PAGE>
Second Quarter 5 3
Fourth Quarter 5 2-1/2
1999:
First Quarter 4-1/4 2-1/4
Second Quarter 3-3/4 2-1/2
On September 10, 1999 the last sale price of the common stock as reported by the
OTC Bulletin Board was $2-3/4 per share.
Description of Capital Stock
Common stock
The following summary description of the common stock is qualified in its
entirety by reference to Radyne ComStream's Certificate of Incorporation.
Radyne ComStream is authorized to issue up to 20,000,000 shares of common
stock, par value $.002 per share, of which 5,959,878 shares are outstanding as
of the date hereof. Holders of common stock are entitled to one vote for each
share held of record on each matter submitted to a vote of stockholders. There
is no cumulative voting for election of directors. Holders of common stock are
entitled to receive dividends ratably when, as and if declared by the Board of
Directors out of funds legally available therefor and, upon the liquidation,
dissolution or winding up of Radyne ComStream, are entitled to share ratably in
all assets remaining after payment of liabilities. Holders of common stock have
no preemptive rights and have no rights to convert their common stock into any
other securities. The outstanding common stock is validly authorized and issued,
fully paid and nonassessable.
Transfer agent
Radyne ComStream has appointed Continental Stock Transfer & Trust Company
as transfer agent for the common stock.
26
<PAGE>
Shares Eligible for Future Sale
The sale, or availability for sale, of a substantial number of shares of
common stock in the public market subsequent to this offering pursuant to Rule
144 under the Securities Act ("Rule 144") or otherwise could materially
adversely affect the market price of the common stock and could impair Radyne
ComStream's ability to raise additional capital through the sale of its equity
securities or debt financing. Upon completion of the rights offering, if all
rights are fully exercised, there would be approximately 10,704,954 shares of
common stock issued and outstanding. Of these shares, Radyne ComStream believes
that approximately 1,028,154 would be freely transferable immediately. ST would
hold the remaining approximately 9,676,800 shares, which would be eligible for
resale, subject to the volume and manner of sale limitations of Rule 144 under
the Securities Act.
The holders of options outstanding under our 1996 Incentive Stock Option
Plan may purchase up to an aggregate of 1,799,976 shares of common stock. All of
the shares issuable upon exercise of such options are covered by a currently
effective registration statement on Form S-8. Of these options, 1,020,851 are
presently exercisable and the remaining 779,125 will become exercisable over the
next three years. In addition, up to 968,900 shares would be issuable in the
event of conversion of the note held by Spar, and Spar would be entitled to
certain registration rights which would require Radyne ComStream to file a
registration statement for such shares. If Radyne ComStream were to register all
of the shares underlying the Spar note and all of the optionees under our 1996
Incentive Stock Option Plan were to fully exercise their options, an additional
2,768,876 shares would be freely tradeable.
Prior to this offering, there has been no established public market for
Radyne ComStream's securities as trading in the common stock has been
infrequent. Following this offering, Radyne ComStream cannot predict the effect,
if any, that sales of shares of common stock pursuant to Rule 144 or otherwise,
or the availability of such shares for sale, will have on the market price from
time to time. Nevertheless, sales by the current stockholders of a substantial
number of shares of common stock in the public market could materially adversely
affect market prices for the common stock. In addition, the availability for
sale of a substantial number of shares of common stock acquired through the
exercise of rights or outstanding options under the Plan could materially
adversely affect market prices for the common stock.
27
<PAGE>
Legal Matters
Dorsey & Whitney LLP, New York, New York will pass upon certain legal
matters for Radyne ComStream.
Experts
The restated consolidated financial statements for Radyne ComStream Inc. at
December 31, 1998 and for the year then ended have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, which is incorporated
herein by reference, and upon the authority of said firm as experts in
accounting and auditing. The financial statements of Radyne ComStream Inc. at
December 31, 1997, for the year then ended, for the six months ended December
31, 1996 and for the year ended June 30, 1996, incorporated by reference in this
Prospectus from our Report on Form 10-K for the year ended December 31, 1998,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing. Ernst & Young LLP, independent auditors,
have audited the consolidated financial statements of ComStream Holdings, Inc.
at December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, included in our Report on Form 8-K/A filed with the
Securities and Exchange Commission on May 5, 1999, as set forth in their report,
which is included and incorporated by reference in this prospectus. The
consolidated financial statements of ComStream Holdings, Inc. are included and
incorporated by reference in reliance on the report of Ernst & Young LLP, given
on their authority as experts in accounting and auditing.
Special Note Regarding Forward-looking Statements
Certain statements in the Prospectus Summary and under the captions "Risk
Factors," "Purpose of the Rights Offering and Use of Proceeds", and elsewhere in
this Prospectus constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or achievements
of Radyne ComStream, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following
general economic and business conditions: the loss of, or the failure to
replace, any significant customers; changes in business strategy or development
plans; the timing and success of new product introductions; the quality of
management; the availability, terms and deployment of capital; the business
abilities and judgments of personnel; the availability of qualified personnel;
and other factors referenced in this Prospectus. These forward-looking
statements speak only as of the date of this Prospectus. Radyne ComStream
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained herein to
reflect any change in Radyne ComStream's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
28
<PAGE>
================================================================================
No dealer, salesman, or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with this offering. If given or made, you should not rely upon such
information or representation as having been authorized by Radyne ComStream Inc.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such an offer or solicitation in such
jurisdiction. You should not assume based on the delivery of this Prospectus or
the execution of sales under this Prospectus that the information in this
document remains current.
-----------
TABLE OF CONTENTS
Where You Can Find More Information .........
Summary......................................
Risk Factors ................................
Purpose of the Rights Offering and Use of
Proceeds .................................
Dilution ...................................
The Rights Offering ........................
Federal Income Tax Consequences.............
Price Range of Common Stock ................
Description of Capital Stock ...............
Shares Eligible for Future Sale ............
Legal Matters ..............................
Experts ....................................
Special Note Regarding Forward-looking
Statements ...............................
4,745,076 Shares
RADYNE COMSTREAM INC.
common stock
-----------
PROSPECTUS
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by Radyne ComStream Inc. in
connection with the issuance and distribution of the securities being offered
hereby (items marked with an asterisk (*) represent estimated expenses):
SEC Registration Fee ................................ $ 4,921
Legal Fees and Expenses ............................. 150,000*
Blue Sky Fees (including counsel fees) .............. 20,000*
Accounting Fees and Expenses ........................ 55,000*
Transfer Agent and Registrar Fees ................... 7,500*
Printing and Engraving Expenses ..................... 50,000*
Miscellaneous ....................................... 12,579*
--------
Total ............................................... $300,000
========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
New York Business Corporation Law, Article 7, enables a corporation in its
original certificate of incorporation, or an amendment thereto validly approved
by stockholders, to eliminate or limit personal liability of members of its
Board of Directors for violations of a director's fiduciary duty of care.
However, the elimination or limitation shall not apply where there has been bad
faith, intentional misconduct or a knowing violation of law, the payment of a
dividend or approval of a stock repurchase which is deemed illegal, any other
violation of Section 719 of the New York Business Corporation Law, or a
financial profit or other advantage to which the director was not legally
entitled. Radyne Corp's Certificate of Incorporation includes the following
language:
"SEVENTH: A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for damages for any breach of
duty as a director; provided that, except as hereinafter provided,
this Article SEVENTH shall neither eliminate nor limit liability: (a)
if a judgment or final adjudication adverse to the director
establishes that (i) the director's acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of
law, (ii) the director personally gained in fact a financial profit or
other advantage to which the director was not legally entitled, or
(iii) the director's acts violated Section 719 of the New York
Business Corporation Law; or (b) for any act or omission prior to the
effectiveness of this Article SEVENTH. If the Corporation hereafter
may by law be permitted to further eliminate or limit the personal
liability of directors, then pursuant hereto the liability of a
director of the Corporation shall, at such time,
II-2
<PAGE>
automatically be further eliminated or limited to the fullest extent
permitted by law. Any repeal of or modification to the provisions of
this Article SEVENTH shall not adversely affect any right or
protection of a director of the Corporation existing pursuant to this
Article SEVENTH immediately prior to such repeal or modification.
EIGHTH: The Corporation may, to the fullest extent permitted by
Section 721 through 726 of the Business Corporation Law of New York,
indemnify any and all directors and officers whom it shall have power
to indemnify under the said sections from and against any and all of
the expenses, liabilities or other matters referred to in or covered
by such section of the Business Corporation Law, and the
indemnification provided for herein shall not be deemed exclusive of
any other rights to which the persons so indemnified may be entitled
under any By-Law, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his/her official capacity
and as to action in another capacity by holding such office, and shall
continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators
of such a person."
ITEM 16. EXHIBITS
(a) The following exhibits are filed herewith:
EXHIBIT NO.
2.1* Stock Purchase Agreement dated August 28, 1998 between
Spar Aerospace Limited and Radyne ComStream Inc.
5.1 Opinion of Dorsey & Whitney LLP
8.1 Opinion of Dorsey & Whitney LLP
10.1** 1996 Incentive Stock Option Plan
10.2*** Employment Agreement with Robert C. Fitting (Radyne
Termsheet)
10.3**** Lease for facility in Phoenix, Arizona
10.4***** Amendment to 1996 Incentive Stock Option Plan
10.5+ Lease between ADI Communication Partners, L.P. and
ComStream dated April 23, 1997
10.6+ First Amendment to lease between ADI Communication
Partners L.P. and ComStream dated July 16, 1997
10.7+ Second Amendment to Lease between Kilroy Realty, L.P.
and ComStream dated November 18, 1998
10.8+ Indemnity Agreement between Pacific Bell Corporation
and ComStream dated November 18, 1998
10.9+ Letter Agreement between Spar and Radyne ComStream Inc.
dated November 18, 1998
13.1+ Annual Report on Form 10-K/A for the year ended
December 31, 1998
13.2+ Report on Form 10-Q for the quarter ended June 30, 1999
23.1 Consent of KPMG LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Dorsey & Whitney LLP (contained in the
opinion filed as Exhibit 5.1)
II-3
<PAGE>
23.5 Consent of Dorsey & Whitney LLP (contained in the
opinion filed as Exhibit 8.1)
24.1+ Power of Attorney
- ------------------
* Incorporated by reference from Registrant's Form 8-K filed on August 28,
1998.
** Incorporated by reference from Registrant's Registration Statement on
Form S-8, dated and declared effective on March 12, 1997 (File No.
333-23159).
*** Incorporated by reference from Registrant's amended Registrant Statement
on Form S-1, dated May 8, 1997 and declared effective on May 12, 1997
(File No. 333-18811).
**** Incorporated by reference from Registrant's Annual Report on Form 10-K
for the year Ended December 31, 1997.
***** Incorporated by reference from Registrant's Registration Statement on
Form S-8, dated and declared effective on November 18, 1998 (File No.
333-67469).
+ Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers of sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(30) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration
statement;"
II-4
<PAGE>
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statements.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of the
subscription offer and the terms of any subsequent reoffering thereof.
(5) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(6) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Phoenix,
Arizona on September 13, 1999.
RADYNE COMSTREAM INC.
By: /s/ Robert C. Fitting
----------------------------------------------
Robert C. Fitting, President and Chief
Executive Officer
By: /s/ Garry Kline
----------------------------------------------
Garry Kline, Vice President-Finance (Principal
Financial and Accounting Officer)
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Robert C. Fitting Chief Executive Officer, President September 13, 1999
- ------------------------------
Robert C. Fitting
/s/ Garry D. Kline Vice President-Finance September 13, 1999
- ------------------------------
Garry D. Kline
/s/ Robert A. Grimes* Director September 13, 1999
- ------------------------------
Robert A. Grimes
/s/ Lim Ming Seong* Chairman of the Board of Directors September 13, 1999
- ------------------------------
Lim Ming Seong
/s/ Lee Yip Loi* Director September 13, 1999
- ------------------------------
Lee Yip Loi
/s/ Dennis Elliot* Director September 13, 1999
- ------------------------------
Dennis Elliot
</TABLE>
* By: /s/ Robert C. Fitting
- ------------------------------
Robert C. Fitting
Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
5.1 Opinion of Dorsey & Whitney LLP
8.1 Opinion of Dorsey & Whitney LLP
23.1 Consent of KPMG LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Dorsey & Whitney LLP (contained in the Opinion
filed as Exhibit 5.1)
23.5 Consent of Dorsey & Whitney LLP (contained in the Opinion
filed as Exhibit 8.1)
II-8
Exhibit 5.1
Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, AZ 85034
September 13, 1999
Ladies and Gentlemen:
We have acted as special counsel to Radyne ComStream Inc. (the "Company"),
a New York corporation, in connection with the preparation and filing of the
Company's Registration Statement on Form S-2 (the "Registration Statement")
under the Securities Act of 1933, as amended, relating to the proposed offering
by the Company of up to 4,745,076 shares of its Radyne common stock, par value
$.002 per share (the "Common Stock") issuable upon exercise of 4,745,076 rights
(the "Rights") to purchase Common Stock of the Company. We have made such
investigation and examined such documents and records (including certificates of
certain public officials and certificates furnished by officers of the Company)
as we have deemed necessary, and on that basis we are of the following opinion:
The shares of the Company's Common Stock issuable upon exercise of the
Rights which will be offered by the Company to the public pursuant to the
Registration Statement have been duly authorized and, when issued and paid for
in the manner described in the Registration Statement, will be validly issued
and fully paid and nonassessable. The Rights, when issued and distributed in the
manner described in the Registration Statement, will be validly issued and will
be binding obligations of the Company.
We consent to the use of our name under the caption "Legal Matters" in the
prospectus constituting a part of the Registration Statement and to the use of
this opinion for filing as exhibit 5.1 to the Registration Statement. In giving
this consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Dorsey & Whitney LLP
DORSEY & WHITNEY LLP
Exhibit 8.1
Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, AZ 85034
September 13, 1999
Dear Sir or Madam:
We have acted as counsel for Radyne ComStream Inc, (the "Company") in
connection with the preparation and filing under the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations promulgated
thereunder (the "Rules"), of a Registration Statement on Form S-2 (the
"Registration Statement"), filed with the Securities and Exchange Commission in
connection with a proposed rights offering of the Company's common stock. You
have asked us to render our opinion as to matters hereinafter set forth.
We have examined originals and copies, certified or otherwise identified to
our satisfaction, of all such agreements, certificates and other documents as we
have deemed necessary as a basis for this opinion. In such examination we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as copies. We have, when relevant facts material to
our opinion were not independently established by us, relied to the extent we
deemed such reliance proper upon written or oral statements of officers and
other representatives of the Company. Based on and subject to the foregoing, the
opinion attributed to us in the section entitled "Certain Federal Income Tax
Consequences" in the prospectus constituting Part I to the Registration
Statement (the "Prospectus") accurately states our opinion with respect to the
matters discussed.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to our name under the captions "Certain Federal
Income Tax Consequences" and "Legal Matters" in the Prospectus. In giving this
consent, we do not hereby admit that we come within the category of persons
whose consent is required by the Securities Act or the Rules.
Very truly yours,
/s/ Dorsey & Whitney LLP
DORSEY & WHITNEY LLP
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors and Stockholders
Radyne ComStream Inc.:
We consent to the incorporation by reference in the registration statement (No.
333-70403) on Amendment No. 3 to Form S-2 of Radyne ComStream Inc. of our report
dated March 19, 1999, except for Note 4, which is as of August 4, 1999, relating
to the restated consolidated balance sheet of Radyne ComStream Inc. and
subsidiaries as of December 31, 1998 and the related restated consolidated
statements of operations, stockholders' capital deficiency and cash flows for
the year then ended, which report appears in the December 31, 1998, annual
report on Form 10-K/A of Radyne ComStream Inc. and to the reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG LLP
KPMG LLP
Phoenix, Arizona
September 10, 1999
Exhibit 23.2
Independent Auditors Consent
We consent to the incorporation by reference in this Amendment No. 3 to the
Registration Statement No. 333-70403 of Radyne ComStream Inc. (formerly Radyne
Corp.) on Form S-2 of our report dated February 4, 1998, appearing in the Annual
Report on Form 10-K/A of Radyne ComStream Inc. (formerly Radyne Corp.) for the
year ended December 31, 1998, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
September 10, 1999
Exhibit 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 3 to the Registration Statement (Form S-2 No. 333-70403) and related
Prospectus of Radyne ComStream Inc. for the registration of 4,745,076 shares of
its common stock and to the use and incorporation by reference therein of our
report dated February 16, 1998 (except for Note 11, as to which the date is
April 16, 1998), with respect to the consolidated financial statements of
ComStream Holdings, Inc. included in Radyne ComStream Inc.'s Report on Form
8-K/A filed with the Securities and Exchange Commission on May 5, 1999.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
September 14, 1999
