<PAGE>
As Filed With the Securities and Exchange Commission on December 2, 1998
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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STM WIRELESS, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3758983
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Mauchly, Irvine, California 92718
(714) 753-7864
(Address, including zip code, and telephone number, including
area code of registrant's principal executive offices)
-------------------------
Joseph Wallace
Chief Financial Officer
STM Wireless, Inc.
One Mauchly, Irvine, California 92718
(714) 753-7864
(Name, address, including zip code, and telephone number,
including area code of agent for service)
Copy to:
K.C. Schaaf, Esq.
Stradling Yocca Carlson & Rauth,
A Professional Corporation
660 Newport Center Drive
Newport Beach, California 92660
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed maximum Proposed maximum
Title of securities Amount to be offering price per aggregate offering Amount of
to be registered registered share (1) price (1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, 1,221,294 $5.75 $7,022,441 $2,072
$.001 par value shares
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</TABLE>
(1) The offering price is estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) using the average of the
high and low price reported by the Nasdaq National Market for the Common
Stock on November 30, 1998, which was approximately $5.75 per share.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
DATED DECEMBER 2, 1998
STM WIRELESS, INC.
ONE MAUCHLY
IRVINE, CALIFORNIA 92718
(714) 753-7864
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1,221,294 SHARES OF COMMON STOCK
($.001 PAR VALUE)
-------------------
Our Common Stock is listed on the Nasdaq National Market System under
the symbol "STMI." The last reported sale price of our Common Stock on the
Nasdaq National Market System on November 30, 1998, was $5.4375 per share.
The 1,221,294 shares of Common Stock that are covered by this
prospectus are to be sold by Berjaya Group (Cayman), Ltd. ("BGC" or the "Selling
Stockholder"). We will not receive any part of the proceeds from any of such
sales.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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This Prospectus is dated , 1998.
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<PAGE>
RISK FACTORS
HISTORY OF LOSSES AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
Our historical revenues and net income have fluctuated significantly
due to a combination of factors. These factors include:
- The competitive environment in which we operate;
- Complexities and resultant delays that arise when operating in an
international environment;
- Long lead times and extended sales effort required to secure large
orders;
- Continued need to invest in product development; and
- Inventory obsolescence.
We had operating losses in both 1997 and 1996. Although we have been
profitable during the 9 month period ending September 30, 1998, we may incur
losses in current and future quarters.
Our quarterly revenues and net income fluctuate primarily due to the timing
of product sales. Sales of our products are generally consummated through large
orders which require a long lead-time and an extended sales effort. as a result,
the precise timing of the recognition of revenue from an order can have a
significant impact on our revenues and net income for a particular period. If an
order is cancelled or rescheduled by customers or cannot be shipped in time to
recognize revenue during that period, our revenues and net income for such
period could be adversely affected. This could result from any of a number of
occurrences, including unanticipated manufacturing, testing, shipping or product
acceptance delays. In addition, certain of our expenses are based, in large
part, on our expectations as to the level of revenues in the future. Such
expenses are, therefore, relatively fixed in the short term. If revenues fall
below expectations, net income will be disproportionately and adversely
affected. The impact of these and other factors on our revenues and net income
in any future period cannot be forecast with any degree of certainty.
Accordingly, STM believes that period to period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as an
indication of future performance. Nonetheless, adverse changes in our operating
performance in future periods may have an adverse effect on the market price of
our Common Stock.
DEPENDENCE ON VSAT MARKET
A significant part of our product revenues are derived from sales of VSAT
(very small aperture terminal) communications networks. While the market for
VSAT communications networks and services has grown steadily since its inception
in the mid-1980s, this market may not continue to grow or VSAT technology may be
replaced by an alternative technology. A significant decline in this market or
the replacement of the existing VSAT technology by an alternative technology
could adversely affect our business, operating results and financial condition.
DEPENDENCE ON ASIAN MARKETS
In 1997, we generated 68% of our revenues in Asia. in 1996, we generated
53% of our revenues in Asia. In 1995, we generated 40% of our revenues in Asia.
Furthermore, in 1997, 59% of our revenues resulted from sales to one Asian
customer and in 1996, 33% of our revenues resulted from sales to one Asian
customer. The Asian crisis has significantly contributed to the decline in
revenues for the nine month period ended September 30, 1998, compared with the
corresponding period in 1997. We have currently redirected our sales efforts to
Latin America, Africa and the Middle East. However, the lack of future revenues
in Asia, without an offsetting increase in revenues elsewhere, could adversely
affect our business, operating results and financial condition.
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RURAL TELEPHONY MARKET
Our strategy includes focusing on establishing rural telephony networking
infrastructure for developing countries through strategic alliances with
regional and local service providers. A substantial market for rural telephony
equipment in developing countries may never develop. Even if such a market does
develop, fixed-site, VSAT-based equipment may not capture a significant portion
of that market. Our ability to penetrate this market will depend on our ability
to develop equipment and software which can be utilized by regional and local
service providers to market and sell the use of such systems. Additionally,
regional and local service providers may not be able to successfully market such
services to rural subscribers. Our failure to penetrate the market for rural
telephony networking could have a material adverse effect on our business,
operating results and financial condition.
SALES TO FOREIGN CUSTOMERS
Our success is dependent upon our ability to successfully market voice and
data VSAT communication networks in the international market. During the nine
month period ending September 30, 1998, approximately 97% of our revenues were
generated from export sales. In 1997, 96% of our revenues were generated from
export sales. In 1996, 91% of our revenues were generated from export sales. In
1995, 95% of our revenues were generated from export sales. Export sales have
certain unique risks, including:
- Foreign currency fluctuations;
- Increased administrative requirements;
- Compliance with multiple regulatory regimes;
- Import requirements, tariffs and other trade barriers and restrictions;
- Varying levels of intellectual property protection;
- Difficulties in staffing and managing foreign operations
- Longer accounts receivable cycles;
- Delays in resolving customer disputes;
- Difficulties in repatriating earnings
- Export control restrictions;
- Overlapping and differing tax structures; and
- Political and economic instability.
If any of these risks materializes, it could adversely affect our business,
operating results and financial condition. In addition, the satellite network
service industries in our target markets are highly regulated. This may limit
the number and identity of potential service providers to which we can sell our
products. Additionally, our target markets are primarily developing countries,
which involve greater political and economic instability. Given these facts, our
products may not be able to continue to gain general market acceptance in our
target markets. Our foreign sales are generally invoiced in U.S. dollars.
However, as we expand our international operations, we may agree to be paid in
foreign currencies. This may expose us to losses in foreign currency
transactions. In addition, if the relative value of the U.S. dollar in
comparison to our foreign customers' currency should increase, the effective
prices of our products increase. This could result in decreased sales which
could adversely affect our business, operating results and financial condition.
DEPENDENCE ON SUCCESS OF DTPI
Under the terms of its existing contract in Venezuela, Direc-to-Phone
International, Inc., a subsidiary of STM ("DTPI"), is required to finance a
portion of the build-out of the rural telephony network for its long-term
service contract in Venezuela. This will require substantial capital
expenditures by DTPI. Furthermore, DTPI is investing in establishing a senior
management team, whose responsibilities will be to grow the DTPI business and to
secure new contracts in other countries. These efforts will require significant
additional capital. In March 1998, STM and DTPI completed a $10 million private
placement. If we cannot secure additional financing, we may not be able to meet
our business objectives for DTPI which could have a significant adverse impact
on our revenues and profitability in future periods. Additionally, DTPI's
revenues are derived principally from large, long-term contracts. Our business,
operating results and financial condition could be materially and adversely
affected if DTPI's customers encounter financial difficulty or contractual
disputes arise.
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COMPETITION
The markets in which our business operates are very competitive. We believe
that this competition is based principally on price, product performance,
customer service and brand recognition. Many of the companies that market
products that are competitive with ours, such as Hughes Network Systems and
Scientific Atlanta, have significantly greater financial, technical and
marketing resources than we do. In addition, our competitors in rural telephony
markets generally have substantially greater resources available to them to
develop their products and to establish strategic relationships in developing
countries. We also compete against various companies that offer communications
network systems based on technologies that are alternatives to VSAT (e.g.,
terrestrial lines and frame relay or radio and microwave transmission). These
alternate technologies may, in certain circumstances, be competitive in price
and performance with our products. Competition could cause us to lose market
share, reduce prices or increase marketing expenses. Any of these reasons could
adversely affect our business, operating results and financial condition.
RAPID TECHNOLOGICAL CHANGE
The technology on which our products and services are based can change
rapidly. Our success will depend in part upon our continuing ability to respond
quickly and successfully to technological advances by developing and introducing
new products. Most of our competitors have substantially greater financial and
technical resources than do we. If one or more of our competitors were to
introduce competing products with superior technological features, such
introduction could adversely affect demand for our products. This could, in
turn, adversely affect our business, operating results and financial condition.
DEPENDENCE ON PROPRIETARY RIGHTS; RISK OF INFRINGEMENT CLAIMS
We rely on a combination of trade secrets, copyrights, trademarks, service
marks and contractual rights to protect our technology and software. We attempt
to protect our trade secrets and other proprietary information through
agreements with customers, suppliers, employees and consultants. Except for
terrestrial and low cost telephony products, we do not have patent protection on
any aspect of our technology or software. We believe that the improvement of
existing products, reliance upon trade secrets, copyrights and unpatented
proprietary know-how and the development of new products are generally as
important as patent protection in establishing and maintaining a competitive
advantage. This is because patents often provide only narrow protection which
may not provide a competitive advantage in areas of rapid technological change,
among other reasons. Our use of trade secrets and copyrights will not
necessarily protect us from other's use of our technology or software, or
technology or software that is similar to that which is embodied in our trade
secrets or copyrights. Others may be able to duplicate our technology or
software in whole or in part. In addition, the laws of certain countries in
which our products are or may be developed, manufactured or sold may not protect
our products and intellectual property rights to the same extent as do the laws
of the United States. Our inability to protect our intellectual property and
proprietary technology could have a material adverse effect on our business,
operating results and financial condition. With respect to our entry into new
fields such as terrestrial and low cost telephony products, we believe that
some patent protection may be necessary. Accordingly, we have applied for three
patents and are in the process of seeking additional patent protection with
respect to these applications. In addition, as the number of patents, copyrights
and other intellectual property rights in our industry increases, and as the
coverage of these rights and the functionality of the products of new markets
further overlap, we believe that our products may increasingly become the
subject of infringement claims. Although we have not received any such
notification to date, and there are no pending or threatened intellectual
property lawsuits against us, such litigation or infringement claims may occur
in the future. Any such litigation or claims could result in substantial costs
and diversion of resources and could have a material adverse effect on our
business, operating results and financial condition.
DEPENDENCE ON KEY PERSONNEL
STM believes that our future performance is significantly dependent on the
continued active participation of Emil Youssefzadeh, our founder, Chief
Executive Officer and President. If Mr. Youssefzadeh became unable or unwilling
to continue in his present role, our business, operating results and financial
condition may be materially and adversely affected. STM has obtained a "key man"
life insurance policy on the life of Mr. Youssefzadeh in the amount of
$5,000,000. In addition to Mr. Youssefzadeh, our future success depends upon our
ability to attract and retain additional highly qualified managerial and
technical personnel. The market for qualified personnel is very competitive. We
may not be able to attract and retain such personnel in the future. Any such
failure could have a material adverse effect on our business, operating results
and financial condition.
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ABILITY TO MANAGE GROWTH AND EXPANSION
We have experienced growth over the past few years and plan to continue to
expand our operations in the future. This expansion will be in our traditional,
core manufacturing business and through DTPI, in the rural telephony service
business. Our growth, if achieved, will require continued expansion of our
operational and financial control systems, and a significant increase in our
manufacturing, testing, quality control, delivery and service operations. If we
are unable to meet our manufacturing and delivery commitments in a timely manner
(whether as a result of its expansion or otherwise), we could lose sales, be
exposed to contractual penalties, costs or expenses and damage our reputation in
the marketplace. Any inability to manage growth effectively could have a
material adverse effect on our business, operating results and financial
condition. In addition, our operating expenses have increased due to expansion
and our operating results will be adversely affected if sales do not increase as
anticipated.
DEPENDENCE ON KEY SUPPLIERS AND MANUFACTURERS
We maintain an inventory of components and believe that alternative
suppliers and manufacturers for all such components are currently available on
reasonable terms. However, an interruption in the delivery of these components
may have a material adverse effect on STM. We cannot be certain that we would
be able to locate alternative suppliers in a timely manner. We also may
encounter future component shortages or other disruptions in the supply of
materials. Delays associated with raw materials or component shortages could
have a material adverse effect on our business, operating results and financial
condition.
POTENTIAL PRODUCT LIABILITY CLAIMS
Although, to date, we have not experienced any product liability
claims, our sale and support of our products involves the risk of such claims.
We maintain product liability insurance in amounts we believe to be customary
for similar businesses in the industry. Nonetheless, a successful product
liability claim which exceeds the amount of our coverage or for which we do not
have coverage could have a material adverse effect upon our business, operating
results and financial condition.
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATED ENTITIES
As of June 30, 1998, the officers, directors, principal stockholders
and their affiliates owned approximately 54% of the outstanding Common Stock.
Such stockholders could, therefore, control substantially all matters requiring
approval by stockholders, including the election of directors. This
concentration of ownership could discourage or prevent a change in control of
STM.
POSSIBLE VOLATILITY OF STOCK PRICES
The market prices for the stock of technology companies, including
STM, have been volatile. We believe the price of our Common Stock has been
impacted by:
- Quarter-to-quarter variations in operating results;
- Changes in earnings estimates by analysts;
- Announcements of technological innovations or new product
introductions; and
- Major contract awards by STM or its competitors.
In addition, the securities of many technology companies have experienced
extreme price and volume fluctuation which have often been unrelated to the
companies' operating performance. These conditions may adversely affect the
market price of our Common Stock.
ANTI-TAKEOVER PROVISIONS
Certain provisions of our Certificate of Incorporation, Bylaws and
Delaware law could make it more difficult for a third party to acquire control
of STM, even if such change in control would be beneficial to stockholders.
Such provisions include:
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- Our Certificate of Incorporation allows STM to issue preferred stock
without stockholder approval;
- Our Certificate of Incorporation and Bylaws prescribe procedures for
the nomination and election of directors and limit the ability of stockholders
to take actions by written consent;
- Our Bylaws include a "fair price provision" requiring that two-thirds
of the outstanding shares of voting stock approve certain business combinations;
- Our stock option plan provides for the acceleration of vesting of
options granted under such plan in the event of certain transactions which
result in a change of control of STM; and
- Section 203 of the General Corporation Law of Delaware prohibits STM
from engaging in certain business combinations with interested stockholders.
Each of these provisions may delay or prevent a change in control of STM
without action by the stockholders. This could have an adverse effect on the
price of our Common Stock.
CONCENTRATION OF CREDIT RISK
Large portions of our revenues are derived from large sales, frequently to
international customers in developing countries. These sales may be on an open
account basis or secured through a letter of credit or similar arrangement.
Generally, we only extend credit on an open account basis to our customers with
substantial financial resources or to public utilities that are governmental
entities. Nonetheless, these customers may encounter liquidity problems. This
could result in delays in payment or, in extreme cases, in uncollectible
accounts receivable. Such an occurrence could have a material adverse effect on
our business, operating results and financial condition.
YEAR 2000 COMPLIANCE
Many computer programs have been written using two digits rather than four to
define the applicable year. This poses a problem at the end of the century
because such computer programs would not properly recognize a year that begins
with "20" instead of "19". This, in turn, could result in major system failures
or miscalculations, and is generally referred to as the "Year 2000 issue." The
company has formulated a Year 2000 Plan to address the Company's Year 2000
issues and has created a Year 2000 Task Force to implement the Year 2000 Plan.
The Company's Year 2000 Plan has seven phases, which are as follows: 1) Phase
1--organizational awareness, which entails educating employees, senior
management and the board of directors about the Y2k problem and how to deal with
it; 2) Phase 2--Inventory and Supply Management, which entails taking a complete
inventory of systems and their relative priority to continuing operation and
implementing a supply management process for top vendors and critical
components; 3) Phase 3--Assessment, which entails assessing systems and their
Y2k compliance status; Phase 4--Planning, which entails preparing a ROM estimate
of cost and identifying potential solutions and their cost in dollars, schedule
and ripple effect; Phase 5--Renovation, which entails implementation of fixes;
Phase 6--Validation, which entails testing the fixes for compliance; and Phase
7--Contingency Planning, which entails preparing for rollover staffing,
inventory adjustment and other actions which would mitigate the effect of a Y2k
failure.
The Company's Year 2000 Plan will be applied in five different areas of
coverage: a) internal systems; b) current products; c) vendors; d) existing
customers; and e) key business partners.
Internal Systems
The Company's internal business systems and PC applications will be a primary
area of focus. The Company is currently evaluating its software applications,
including, but not limited to, its business systems software, personal
computers, computerized manufacturing equipment and embedded chips to identify
any Year 2000 issues that could significantly disrupt the Company's operations.
The Company plans to have completed the Inventory and Assessment phase of
substantially all critical systems by December 31, 1998, with the Planning phase
to be completed by February 28, 1999 and the Renovation and Validation phases to
be completed by September 1, 1999. The Company expects to be Year 2000
compliant on all critical systems which rely on the calendar year before
December 31, 1999. Some non-critical systems may not be addressed until after
January 2000, however, the Company believes such systems will not disrupt the
Company's operations significantly.
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Current Products
The Company's certification group has conducted evaluations of its current
products to determine if they are Year 2000 compliant. The Company does not
currently believe that there are any material Year 2000 defects in its products.
With respect to components in the Company's products that are manufactured by
third parties, the Company has completed the Inventory Phase and created a list
of potential problem components. The vendors of these components are in the
process of being contacted for assurances regarding their Year 2000 compliance
status.
Vendors
The Company has recently completed the Inventory phase and is currently in the
Assessment Phase with respect to the Year 2000 status of critical suppliers, and
anticipates initiating more extensive inquiries with significant suppliers
during the fourth quarter of 1998 to determine the extent to which the Company
is vulnerable to those third parties' failure to remedy their own Year 2000
issues. The Company does not currently believe that any Year 2000 compliance
issues related to its suppliers will result in a material adverse effect on the
business operations or financial performance of the Company.
Existing Customers
With respect to past products that have been shipped to existing customers, the
Company is still in the Assessment Phase but has already identified certain
problems which will require upgrades to operational networks to make them Year
2000 compliant. The Company is in the process of contacting its customers to
notify them of such problems and expects to complete all necessary upgrades by
September 30, 1999. The Company currently estimates that the total cost of
implementing such upgrades will not exceed $1.0 million and will likely be
offset by service fees charged in connection with completing such upgrades. The
Company believes that a small portion of the upgrades will be provided free of
charge as part of the warranty coverage on the products being upgraded.
Key Business Partners
The Company anticipates shortly completing the Inventory phase with respect to
its key business partners, and plans to initiate inquiries with such key
business partners during the fourth quarter of 1998 to determine the extent to
which the Company is vulnerable to those third parties' failure to remedy their
own Year 2000 issues.
Contingency Plan
The Company has not formulated a contingency plan at this time but expects to
have a contingency plan in place prior to January 1, 2000.
The Company currently estimates that the cost of implementing its Year 2000 Plan
will not exceed $1.0 million (including the cost of upgrading the operational
networks of current customers).
The Company anticipates that the Year 2000 issue will not have a material
adverse effect on the financial position or results of operations of the
Company. There can be no assurances, however, that the systems of other
companies or governmental entities, on which the Company relies for supplies,
cash payments, and future business, will be timely converted, or that a failure
to convert by another company or the governmental entities, would not have a
material adverse effect on the financial position or results of operations of
the Company. If third party service providers and vendors, due to the Year 2000
issue, fail to provide the Company with components or materials which are
necessary to manufacture its products, with sufficient electrical power and
other utilities to sustain its manufacturing process, or with adequate, reliable
means of transporting its products to its customers worldwide, then any such
failure could have a material adverse effect on the Company's ability to conduct
business, as well as the Company's financial position and results of operations.
The foregoing risk factors (including the discussion of the Year 2000 issue)
contain forward-looking statements and should be read in conjunction with the
Company's disclosures under the caption "Forward Looking Statements."
FORWARD LOOKING STATEMENTS
FORWARD LOOKING STATEMENTS. THIS DOCUMENT CONTAINS CERTAIN FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND
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SECTION 21E OF THE EXCHANGE ACT THAT INVOLVE RISKS AND UNCERTAINTIES. IN
ADDITION, THE COMPANY MAY FROM TIME TO TIME MAKE FORWARD LOOKING STATEMENTS
ORALLY OR IN WRITING. THE WORDS "ESTIMATE," "PROJECT," "POTENTIAL," "INTENDED,"
"EXPECT," "BELIEVE" AND SIMILAR EXPRESSIONS OR WORDS ARE INTENDED TO IDENTIFY
FORWARD LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED OR SUGGESTED IN ANY FORWARD LOOKING STATEMENTS AS A RESULT OF A WIDE
VARIETY OF FACTORS AND CONDITIONS, INCLUDING, AMONG OTHERS, LONG TERM CYCLES
INVOLVED IN COMPLETING MAJOR CONTRACTS, PARTICULARLY IN FOREIGN MARKETS,
INCREASING COMPETITIVE PRESSURES, GENERAL ECONOMIC CONDITIONS, TECHNOLOGICAL
ADVANCES, THE TIMING OF NEW PRODUCT INTRODUCTIONS, FINANCING RISKS, POLITICAL
AND ECONOMIC RISKS INVOLVED IN FOREIGN MARKETS AND FOREIGN CURRENCIES AND THE
TIMING OF OPERATING AND OTHER EXPENDITURES.
BECAUSE OF THESE AND OTHER FACTORS THAT MAY AFFECT THE COMPANY'S
OPERATING RESULTS, PAST FINANCIAL PERFORMANCE SHOULD NOT BE CONSIDERED AN
INDICATOR OF FUTURE PERFORMANCE, AND INVESTORS SHOULD NOT USE HISTORICAL TRENDS
TO ANTICIPATE RESULTS OR TRENDS IN FUTURE PERIODS.
THE COMPANY
The Company is a developer, manufacturer and provider of wireless-
based satellite communications infrastructure and user terminal products
utilized in public and private telecommunications networks. These networks
support date, fax, voice and video communication and are used to either bypass
or extend terrestrial networks or provide a communications infrastructure where
a network does not currently exist. The Company's product line is based on
proprietary hardware and software and primarily consists of two-way earth
stations, sometimes referred to as VSATs, associated infrastructure equipment
and software, transceivers, modems and other networking equipment. The Company
currently focuses its sales efforts on the international marketplace,
particularly developing countries because management believes that these areas
offer greater applications for the Company's technology, a higher growth
potential and more favorable competitive dynamics. The Company's proprietary
equipment and software are utilized by businesses, government agencies and
telephone companies in Europe, the Americas, Africa and Asia.
The Company was incorporated in California in January 1982 as Services
Via Satellite and in December 1982 changed its name to Satellite Technology
Management, Inc. In January 1995, the Company registered in California to do
business as STM Wireless, Inc. In December 1995, the Company reorganized as a
Delaware corporation via a merger into a wholly-owned subsidiary with the name
STM Wireless, Inc.
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WHERE TO FIND
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
This Prospectus is part of a registration statement on Form S-3 that we
filed with the SEC to register the shares for sale by the Selling Stockholder.
It does not repeat important information that you can find in our registration
statement, reports and other documents that we file with the SEC. The SEC allows
us to "incorporate by reference", which means that we can disclose important
information to you by referring you to other documents which are legally
considered to be a part of this Prospectus. These documents are as follows:
1. Our Annual Report on Form 10-K for the year ended December 31, 1997.
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998.
3. Our Proxy Statement dated August 17, 1998.
4. All documents we file under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934 after the date of this Prospectus
and prior to the termination of this offering.
As you read the above documents, you may find some differences in
information from one document to another. If you find inconsistencies between
the documents and this Prospectus, you should rely on the statements made in the
most recent document.
You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning us at the phone number indicated below:
Shareholder Services
STM Wireless, Inc.
One Mauchly, Irvine, California 92718
(714) 753-7864
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The Selling Stockholder will
not make an offer of these shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
USE OF PROCEEDS
The proceeds from the sale of each Selling Stockholder's Common Stock will
belong to such Selling Stockholder. The Company will not receive any proceeds
from such sales of the Common Stock.
-9-
<PAGE>
SELLING STOCKHOLDER
Pursuant to a Stock Purchase Agreement, dated April 1, 1994 by and among
the Company, BGC, Emil Youssefzadeh and Albert Youssefzadeh (the "BGC
Agreement"), the Company agreed to file a registration statement with the
Commission to register shares of the Common Stock owned by BCG for resale by
BCG, and to keep the registration statement effective until the earlier of (i)
the date by which BGC has concluded the sale of the shares of Common Stock
registered hereunder and (ii) the one year anniversary of the date the
registration statement is declared effective. The Registration Statement of
which this Prospectus is a part was filed with the Commission pursuant to the
BGC Agreement. An employee of Berjaya Group Berhad, the parent of BGC, Kien
Sing Chan, has been serving as a member of the Board of Directors of the Company
since March, 1998. From April, 1994 to January, 1998, another employee of
Berjaya Group Berhad, Kim Poh Tan, served as a member of the Board of Directors
of the Company. The following table sets forth (i) the name of the Selling
Stockholder; (ii) the number of shares of Common Stock owned by the Selling
Stockholder prior to the offering, and (iii) the number of shares and (if one
percent or more) the percentage of the class to be owned by the Selling
Stockholder after the offering.
<TABLE>
<CAPTION>
Shares Owned After Offering
---------------------------
Name Shares Prior to Offering Shares Offered Number Percent
- ---------------------------- ------------------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Berjaya Group (Cayman), Ltd. 1,221,294 1,221,294 0 0
</TABLE>
PLAN OF DISTRIBUTION
All or a portion of the shares of Common Stock offered hereby may be
offered for sale, from time to time, on the Nasdaq NM or on one or more
exchanges, or otherwise, at prices and terms then obtainable, or in negotiated
transactions. In addition, the shares of Common Stock offered hereby may be
sold by one or more of the following: (a) a block trade in which the broker or
dealer so engaged will attempt to sell the shares of Common Stock as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus; (c) an exchange
distribution in accordance with the rules of such exchange; and (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
In effecting sales, brokers or dealers engaged by the Selling Stockholder may
arrange for other brokers or dealers to participate. All brokers' commissions,
concessions or discounts will be paid by the Selling Stockholder. The Company
will receive none of the proceeds from such sales.
The Company is presently aware of no arrangements or understandings, formal
or informal, pertaining to the distribution of the shares of Common Stock
described herein. Upon the Company being notified by a Selling Stockholder that
any material arrangement has been entered into with a broker-dealer for the sale
of shares of Common Stock bought through a block trade, special offering,
exchange distribution or secondary distribution, a supplemented Prospectus will
be filed, pursuant to Rule 424(b) under the Securities Act, setting forth (i)
the name of each Selling Stockholder and the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at which the shares were
sold, (iv) the commissions paid or the discounts allowed to such broker-
dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out in this Prospectus and (vi)
other facts material to the transaction.
The Selling Stockholder and any broker executing selling orders on behalf
of the Selling Stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act, in which event commissions received by such
broker may be deemed to be underwriting commissions under the Securities Act.
The Company has agreed to indemnify each Selling Stockholder under the
Securities Act against certain liabilities, including liabilities arising under
the Securities Act. Each Selling Stockholder may indemnify any broker-dealer
that participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Jacques Youssefmir, the Company's General Counsel.
-10-
<PAGE>
EXPERTS
The consolidated financial statements and schedule of STM Wireless, Inc. as
of December 31, 1997 and 1996, and for each of the years in the three-year
period ended December 31, 1997, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation provides that to the
fullest extent permitted by Delaware law, a director will not be liable for
monetary damages for breach of the director's fiduciary duty of care to the
Company and its stockholders. This provision in the Restated Certificate of
Incorporation does not eliminate a director's fiduciary duty of care, and, in
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under Delaware law. Each
director will continue to be subject to liability for (i) breach of the
director's duty of loyalty to the Company or its stockholders for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, (ii) acts or omissions that the director believes to be
contrary to the best interests of the Company or its stockholders, (iii) any
transaction from which the director derives an improper personal benefit, (iv)
acts or omissions involving reckless disregard for the director's duty to the
Company or its stockholders when the director was aware or should have been
aware of the risk of serious injury to the Company or its stockholders, (v) acts
or omissions that constitute an unexpected pattern of inattention that amounts
to an abdication of the director's duty to the Company or its stockholders, (vi)
improper transactions between a director and the Company, and (vii) improper
distributions and loans to directors and officers. This provision does not
affect a director's responsibilities under any laws, such as the federal
securities laws or state or federal environmental laws.
In addition, the Company's Bylaws provide that the Company will indemnify
its directors and executive officers and may indemnify its other officers,
employees and other agents to the fullest extent permitted by Delaware law. The
Company is also empowered under its Bylaws to enter into indemnification
contracts with its directors and officers and to purchase insurance on behalf of
any person whom the Company is required or permitted to indemnify. The Company
has entered into agreements with its directors and executive officers, which
requires the Company to indemnify them to the fullest extent permitted by law
against certain losses they may incur in legal proceedings arising in connection
with their services to the Company.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
-11-
<PAGE>
Table of Contents
-----------------
Risk Factors............................................................... 2
The Company................................................................ 8
Where You Can Find More Information........................................ 9
Use of Proceeds............................................................ 9
Selling Stockholder........................................................ 10
Plan of Distribution....................................................... 10
Legal Matters.............................................................. 10
Experts.................................................................... 11
Indemnification of Directors and Officers.................................. 11
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy to any
person in any jurisdiction in which such offer or solicitation would be unlawful
or to any person to whom it is unlawful. Neither the delivery of this
Prospectus nor any offer or sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company or that information contained herein is correct as of any time
subsequent to the date hereof.
1,221,294 Shares
STM WIRELESS, INC.
Common Stock
_________________________
PROSPECTUS
_________________________
, 1998
------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution
- -----------------------------------------------------
The following sets forth the costs and expenses, all of which shall be
borne by the Company, in connection with the offering of the shares of Common
Stock pursuant to this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee........... $2,072
Accounting Fees and Expenses*.................... $3,000
Legal Fees and Expenses*......................... $2,000
Miscellaneous Expenses*.......................... $2,000
------
Total....................................... $9,072
======
</TABLE>
* Estimated
Item 15. Indemnification of Directors and Officers.
- ---------------------------------------------------
(a) As permitted by the Delaware General Corporation Law (the "DGCL"),
the Restated Certificate of Incorporation eliminates the liability of directors
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent otherwise required by the DGCL.
(b) The Restated Certificate of Incorporation provides that the Company
will indemnify each person who was or is made a party to any proceeding by
reason of the fact that such person is or was a director or officer of the
Company against all expense, liability and loss reasonably incurred or suffered
by such person in connection therewith to the fullest extent authorized by the
DGCL. The Company's Restated Bylaws provide for a similar indemnity to directors
and officers of the Company to the fullest extent authorized by the DGCL.
(c) The Restated Certificate of Incorporation also gives the Company the
ability to enter into indemnification agreements with each of its officers and
directors. The Company has entered into indemnification agreements with each of
its directors and officers. The indemnification agreements provide for the
indemnification of directors and officers of the Company against any and all
expenses, judgments, fines, penalties and amounts paid in settlement, to the
fullest extent permitted by laws.
Item 16. Exhibits.
- ------------------
5.1 Opinion of Jacques Youssefmir, General Counsel.
23.1 Consent of Jacques Youssefmir (included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included on the signature page to the
Registration Statement - see page II-4.)
Item 17. Undertakings.
- ----------------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the
II-1
<PAGE>
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.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the Registration Statement is on Form S-3 or S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed 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
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(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.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities 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 Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 2nd day of
December, 1998.
STM WIRELESS, INC.
BY: /s/ EMIL YOUSSEFZADEH
--------------------------------
Emil Youssefzadeh
Chief Executive Officer and
Chairman of the Board
BY: /s/ JOSEPH WALLACE
--------------------------------
Joseph Wallace
Chief Financial Officer and
Principal Accounting Officer
II-3
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of STM Wireless, Inc., do hereby
constitute and appoint Emil Youssefzadeh and Joseph Wallace, or either of them,
our true and lawful attorneys-in-fact and agents, each with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, or any related Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and to file the same, with exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ EMIL YOUSSEFZADEH Chief Executive Officer and December 2, 1998
- ------------------------------- Chairman of the Board
Emil Youssefzadeh
/s/ CHAN KIEN SING Director December 2, 1998
- -------------------------------
Chan Kien Sing
/s/ JOSEPH WALLACE Vice President, Finance December 2, 1998
- ------------------------------- Chief Financial Officer and
Joseph Wallace Principal Accounting Officer
/s/ FRANK T. CONNORS Vice Chairman of the December 2, 1998
- ------------------------------- Board
Frank T. Connors
/s/ LAWRENCE D. LENIHAN, JR. Director December 2, 1998
- -------------------------------
Lawrence D. Lenihan, Jr.
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
- ------- ----------- -----------
<C> <S> <C>
5.1 Opinion of Jacques Youssefmir, General Counsel. --
23.1 Consent of Jacques Youssefmir, General Counsel (included --
in the Opinion filed as Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP. --
24.1 Power of Attorney (included on signature page to the --
Registration Statement at page II-4).
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
December 2, 1998
STM Wireless, Inc.
One Mauchly
Irvine, California 92718
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I have examined the Registration Statement on Form S-3 of STM Wireless,
Inc., a Delaware corporation (the "Company'), which will be filed with the
Securities and Exchange Commission on or about December 2, 1998 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 1,221,294 shares of Common Stock, $0.001
par value (the "Shares") of the Company, all of which will be sold by certain
stockholders of the Company (the "Selling Stockholder"). As corporate counsel to
the Company, I have also examined the proceedings proposed to be taken in
connection with the issuance of the Shares to the Selling Stockholder and said
proposed sale of the Shares.
Based on such review, it is my opinion that the Shares are legally and
validly issued, fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of my name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
/s/ Jacques Youssefmir
-------------------------------
General Counsel
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
STM Wireless, Inc.
We consent to the use of our reports dated March 26, 1998, incorporated herein
by reference in the Registration Statement on Form S-3 of STM Wireless, Inc.,
relating to the consolidated balance sheets of STM Wireless, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1997, and the related
schedule, and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG PEAT MARWICK LLP
Orange County, California
November 30, 1998
