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As Filed With the Securities and Exchange Commission on August 20, 1999
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
(949) 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
(949) 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.
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, $.001 1,221,294 $2.69 $3,285,281 $913
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 August 16, 1999, which was approximately $2.69 per share.
The Registrant amends this registration statement on the 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 the date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.
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PROSPECTUS SUBJECT TO COMPLETION
DATED AUGUST 20, 1999
STM WIRELESS, INC.
One Mauchly
Irvine, California 92718
(949) 753-7864
_______________
1,221,294 Shares of Common Stock
________________
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 August 16, 1999, was $2.75 per share.
The 1,221,294 shares of common stock that are covered by this
prospectus are to be sold by Berjaya Group (Cayman), Limited ("Berjaya"). We
will not receive any part of the proceeds from any of these 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.
____________________
This Prospectus is dated , 1999.
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The Company
STM Wireless, Inc. ("STM") is a developer, manufacturer and provider
of wireless-based satellite communications infrastructure and user terminal
products utilized in public and private telecommunications networks. Our
networks support data, 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. Our product line is based on
proprietary hardware and software and primarily consists of two-way earth
stations, sometimes referred to as VSATs (very small aperture terminals),
associated infrastructure equipment and software, transceivers, modems and other
networking equipment. We currently focus our sales efforts on the international
marketplace, particularly developing countries because we believe that these
areas offer greater applications for our technology, a higher growth potential
and more favorable competitive dynamics. Our proprietary equipment and software
are utilized by businesses, government agencies and telephone companies in
Europe, the Americas, Africa and Asia.
We were 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, we registered in California to do business as
STM Wireless, Inc. In December 1995, we reorganized as a Delaware corporation
via a merger into a wholly-owned subsidiary with the name STM Wireless, Inc.
Risk Factors
We Have a History of Losses
We had operating losses in 1998, 1997 and 1996. In addition, we had an
operating loss for the first and second quarters of 1999. There can be no
assurance that we will be profitable in future periods.
We Have Liquidity Pressures and Have Substantial Future Capital Requirements
We used net cash in operations of approximately $19.4 million in the year
ended December 31, 1998 and approximately $6.4 million in the six months ended
June 30, 1999. There can be no assurance that we will generate positive cash
flow from operations in 1999 or thereafter. Our ability to fund our capital
requirements out of available cash, traditional sources of financing and cash
generated from operations will depend on numerous factors, including but not
limited to the commercial success of our products and services, our ability to
renew our line of credit, which expired as of April 1, 1999, and our ability to
collect payments for certain sales commitments. To increase our short-term cash
resources, in June 1999, we completed a financing package which made funds of
approximately $9.6 million available to us. We also expect to receive a
commitment letter for a new line of credit, to replace our existing line of
credit; however, there can be no assurance that this financing will be
consummated. In addition, we estimate that we have in excess of $4,000,000 of
equity in our corporate headquarters, and we plan to enter into a sale and
leaseback arrangement in the near future to liquidate this equity; however,
there can be no assurance that this will be consummated. We will be required to
seek additional funds through debt or equity financings, sale of real estate,
product licensing or distribution transactions or some other source of financing
in order to provide sufficient working capital. We may be required to seek
additional funds through debt or
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equity financings, product licensing or distribution transactions or some other
source of financing in order to provide sufficient working capital. The issuance
of additional equity securities by us would likely result in substantial
dilution to stockholders. If we are required to raise additional working
capital, there can be no assurance that we will be able to raise additional
working capital on acceptable terms, if at all. We are currently implementing a
plan to reduce our operating expenses. However, in the event that we are unable
to raise additional working capital, further cost reduction measures would be
necessary including, without limitation, the sale or consolidation of certain
operations, the delay, cancellation or scale back of product development and
marketing programs and other actions. No assurance can be given that these
measures would not materially adversely affect our ability to manufacture and
sell commercially viable products and services, or that these measures will be
sufficient to generate operating profits. Some of these measures may require
third party approvals, including from our financial institution, and there can
be no assurance that these consents or approvals can be obtained.
Our Bank Financing Expires Soon
In connection with our short-term borrowings under a secured line of credit
with Wells Fargo HSBC Trade Bank N.A. guaranteed by the Export-Import Bank of
the United States ("EXIM") under its Working Capital Guarantee Program
(collectively, the "Bank"), we were not in compliance with certain covenants at
December 31, 1998. In addition, the line of credit expired on April 1, 1999 with
the current borrowings at $9,050,000. In June of 1999, we entered into a
Forbearance Agreement with the Bank, under which the Bank agreed to extend the
loan balance (currently at approximately $6,800,000) through August 31, 1999. In
connection with the Forbearance Agreement, we gave the Bank additional
collateral including a second deed of trust on our corporate headquarters,
guarantees from all our domestic and foreign subsidiaries (except Direc-To-Phone
International, Inc. ("DTPI")), a pledge of the note receivable from DTPI and an
assignment of our patents and trademarks. The Forbearance Agreement also reduced
the advance rates against inventory and accounts receivable balances and will
require a permanent paydown of the line of credit should we sell our corporate
headquarters or should DTPI repay the note to us out of the proceeds of future
financings.
There can be no assurance that there will not be another event of default
during the forbearance period. Additionally, there can be no assurance that we
will have sufficient eligible foreign orders, inventory and accounts receivable
balances to enable us to continue to borrow at our current level. We expect to
receive a commitment letter for a new line of credit, to replace our existing
line of credit; however, there can be no assurance that this financing will be
consummated. Upon expiration of the forbearance period, should we not reach
agreement with the Bank on a further extension or have a replacement line of
credit in place, we may be required to paydown either all or a portion of the
line of credit and dispose of certain assets to satisfy obligations to the Bank.
Our Quarterly Operating Results Fluctuate
Our historical revenues and net income have fluctuated significantly due to a
combination of factors. These factors include:
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. The competitive environment in which we operate;
. Complexities and resultant delays that arise when operating in an
international environment;
. Long lead times of up to 18 months and extended sales effort required to
secure large orders;
. Continued need to invest in product development; and
. Inventory obsolescence.
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 in that 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 of 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, we believe
that period to period comparisons of our 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.
We Depend on the 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.
We Depend on Latin and South America and Asian Markets
In 1998, we generated 50% of our revenues in Latin and South America and
17% of our revenues in Asia. In 1997, we generated 14% of our revenues in Latin
and South America and 68% of our revenues in Asia. In 1996, we generated 14% of
our revenues in Latin and South
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America and 53% of our revenues in Asia. In 1998, we had two customers, one in
Latin America which represented approximately 23% of our consolidated revenues
for 1998, and one in Asia which represented approximately 10% of our
consolidated revenues for 1998. The customer in Latin America is experiencing
financial difficulties at this time and it is uncertain if any revenues will be
generated from this customer in future years. In addition, another Asian
customer accounted for 2% of our revenues in 1998, 59% of our revenues in 1997
and 33% of our revenues in 1996. The deterioration of the Asian economies is
impacting the level of revenues that we are earning from this customer. 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, has adversely affected our business, operating
results and financial condition.
We Depend on Sales to Foreign Customers
Our success is dependent upon our ability to successfully market voice and data
VSAT communication networks in international markets. In 1998, approximately 90%
of our revenues were generated from export sales. In 1997, approximately 96% of
our revenues were generated from export sales. In 1996, approximately 91% 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, we have
generated, and expect to continue generating, a significant portion of our
Brazilian revenue in the local currency of Brazil. While the contracts relating
to these arrangements generally contain provisions that call for payments to be
adjusted to take into account fluctuations in foreign currency exchange rates,
our customers in Brazil have expressed an unwillingness to adjust contract
amounts to fully reflect some of the exchange rate fluctuations. Brazilian
counsel has
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advised us that there is uncertainty as to the enforceability of provisions
which tie payments to foreign currency rates. We, therefore, have reached a
settlement with two of our customers. Our currency exposure in Brazil is also
exacerbated by the Brazilian exchange control rules, which limit our ability to
repatriate our Brazilian currency.
Even though our foreign sales are generally invoiced in U.S. dollars, 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.
We Have a Limited Number of Customers and Depend on DTPI
A significant portion of our revenues is derived from a limited number of
customers. Our future success depends, in part, on our ability to establish and
maintain relationships with these customers. Revenues attributable to our top
two customers in 1998 constituted approximately 33% of our revenues. As a
result, a decrease in revenues generated from either of these customers could
have a material adverse effect on our business, results of operation and
financial condition. In addition, in June of 1999, we reduced our ownership
interest in our formerly majority owned subsidiary, Direc-To-Phone International
("DTPI") from 75% to approximately 45%, which will result in us deconsolidating
the results of DTPI. As a result of our deconsolidation of DTPI, we will begin
recognizing revenue on sales to DTPI but will no longer consolidate the sales
made by DTPI. Our ability to generate sales to DTPI will, in turn, depend on the
success of DTPI. For DTPI to succeed, it will have to attract substantial debt
or equity financings. In 1998, sales by DTPI accounted for approximately $13.6
million of our consolidated revenues of $42.0 million.
Our Markets are Extremely Competitive
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.
Our Products Are Subject to 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
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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, this introduction could adversely affect demand
for our products. This could, in turn, adversely affect our business, operating
results and financial condition.
We Rely on Proprietary Rights and Have a 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 two 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 notifications to date,
and there are no pending or threatened intellectual property lawsuits against
us, these types of litigation or infringement claims may occur in the future.
Any of these types of 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.
We Depend on Key Personnel
We believe that our future performance is significantly dependent on the
continued active participation of Emil Youssefzadeh, our founder and Chief
Executive Officer. 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 these personnel
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in the future. Any such failure could have a material adverse effect on our
business, operating results and financial condition.
We Rely on Key Suppliers and Manufacturers
We maintain an inventory of components and believe that alternative
suppliers and manufacturers for all these components are currently available on
reasonable terms. However, an interruption in the delivery of these components
may have a material adverse effect on us. 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.
We Have a Risk of 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 these claims. We
maintain product liability insurance in amounts we believe are 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.
We Are Controlled by Directors, Executive Officers and Affiliated Entities
As of June 30, 1999, the officers, directors, principal stockholders and
their affiliates owned approximately 35% of the outstanding common stock. Such
stockholders potentially could 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
us.
Possible Volatility of Stock Prices
The market prices for the stock of technology companies, including ours,
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 received by us or our 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.
We Have a Concentration of Credit Risk
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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. This type of occurrence could have a material adverse
effect on our business, operating results and financial condition.
Year 2000 Risks
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 these 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." We
have formulated a Year 2000 Plan to address STM's Year 2000 issues and have
created a Year 2000 Task Force to implement the Year 2000 Plan.
Our Year 2000 Plan has seven phases, which are as follows:
. 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;
. 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;
. Phase 3--Assessment, which entails assessing systems and their Y2K
compliance status;
. Phase 4--Planning, which entails preparing an 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.
Our 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. Our internal business systems and PC applications will be
a primary area of focus. We currently are evaluating our software applications,
including, but not limited to, our business systems software, personal
computers, computerized manufacturing equipment and embedded chips to identify
any Year 2000 issues that could significantly disrupt our operations.
We have completed the Inventory and Assessment phase of substantially all
critical systems. The Planning, Renovation and Validation phases are scheduled
to be completed by October 31, 1999. With the exception of a scheduled upgrade
to our Infoflow business management software system, upgrades primarily consist
of implementing free bug patches or planned software upgrades to current
versions. We expect 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
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addressed until after January 2000, however, we believe these systems will not
disrupt our operations significantly.
Current Products. Our certification group has conducted evaluations of our
current products to determine if they are Year 2000 compliant. We do not
currently believe that there are any material Year 2000 defects in our products.
With respect to components in our products that are manufactured by third
parties, we have completed the Inventory and Assessment phase and do not
currently believe that there are any material Year 2000 defects.
Vendors. We have completed the Inventory phase and are currently in the
Assessment phase with respect to the Year 2000 status of critical suppliers. We
have contacted the top 99% of critical suppliers, and have completed over 75% of
the Assessment phase with no serious risks discovered. We do not currently
believe that any Year 2000 compliance issues related to our suppliers will
result in a material adverse effect on our business operations or financial
performance.
Existing Customers. With respect to products that have been shipped to
existing customers, we have identified certain problems that will require
upgrades to operational networks to make them Year 2000 compliant. We have
contacted substantially all of our customers to notify them of these problems
and expect to complete currently requested upgrades by December 31, 1999. We
currently estimate that the total cost of implementing these upgrades will not
be material and will likely be offset by service fees charged in connection with
completing these upgrades. A small portion of the upgrades will be provided free
of charge as part of the warranty coverage or software maintenance agreements on
the products being upgraded.
Key Business Partners. We have completed the Inventory phase with respect to
our key business partners, and currently are in the Assessment phase with over
approximately 75% completion to date. We have not identified any areas where we
are vulnerable to those third parties' failure to remedy their own Year 2000
issues.
Contingency Plan. A contingency plan has not yet been developed for dealing
with the most reasonably likely worst case scenario with respect to our Year
2000 compliance, and this scenario has not yet been clearly identified. It is
impossible to fully assess potential consequences in the event service
interruptions from suppliers occur or in the event that there are disruptions in
such infrastructure areas as utilities, communications, transportation, banking
and government. Assuming no major public infrastructure service disruption
occurs, we believe that we will be able to manage our Year 2000 transition
without a material effect on our results of operations or financial condition.
We have not completed contingency plans in the event that a disruption in the
public infrastructure does occur.
We currently estimate that the cost of implementing our Year 2000 Plan will
not exceed $1.0 million (including the cost of upgrading the operational
networks of current customers).
We anticipate that the Year 2000 issue will not have a material adverse effect
on our financial position or results of operations. There can be no assurances,
however, that the systems of other companies or governmental entities, on which
we rely for supplies, cash payments, and future business, will be timely
converted, or that a failure to convert by another company or the
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governmental entities, would not have a material adverse effect on our financial
position or results of operations. If third party service providers and vendors,
due to the Year 2000 issue, fail to provide us with components or materials
which are necessary to manufacture our products, with sufficient electrical
power and other utilities to sustain our manufacturing process, or with
adequate, reliable means of transporting our products to our customers
worldwide, then any such failure could have a material adverse effect on our
ability to conduct business, as well as our financial position and results of
operations.
Forward Looking Statements
This document contains certain forward looking statements within the meaning
of section 27a of the securities act and section 21e of the exchange act that
involve risks and uncertainties. In addition, we 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 our 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.
Where to Find
Additional Information
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC" or the
"Commission"). 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 Berjaya. 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, 1998.
-11-
<PAGE>
2. Our Quarterly Reports on Form 10-Q for each of the quarters ended
March 31, 1999 and June 30, 1999.
3. 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
(949) 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. Berjaya 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 Berjaya's common stock will belong to Berjaya.
We will not receive any proceeds from these sales of common stock.
Selling Stockholder
Under a Stock Purchase Agreement, dated April 1, 1994 by and among us,
Berjaya, Emil Youssefzadeh and Albert Youssefzadeh (the "Berjaya Agreement"), we
agreed to file a registration statement with the Commission to register shares
of the common stock owned by Berjaya for resale by Berjaya, and to keep the
registration statement effective until the earlier of (a) the date by which
Berjaya has concluded the sale of the shares of common stock registered
hereunder and (b) 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 under the Berjaya Agreement.
An employee of Berjaya Group Berhad, the parent of Berjaya, Kien Sing Chan,
served as a member of our board of directors from March 1998 until January 1999.
From April, 1994 to January, 1998, another employee of Berjaya Group Berhad, Kim
Poh Tan, served as a member of our board of directors.
-12-
<PAGE>
The following table sets forth (a) the full name of Berjaya; (b) the number
of shares of common stock owned by Berjaya prior to the offering, and (c) the
number of shares and the percentage of the class to be owned by Berjaya after
the offering.
<TABLE>
<CAPTION>
Shares Owned After Offering
-------------------------------------
Name Shares Prior to Shares Offered Number Percent
Offering
- -------------------------------- --------------------- ------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Berjaya Group (Cayman), Limited 1,221,294 1,221,294 0 0
</TABLE>
Plan of Distribution
All or a portion of the shares of common stock offered under this
prospectus may be offered for sale, from time to time, on the Nasdaq National
Market 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 under this prospectus may be sold by one or more of the following:
. 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;
. purchases by a broker or dealer as principal and resale by the broker
or dealer for its account under this Prospectus;
. an exchange distribution in accordance with the rules of an exchange;
and ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
In effecting sales, brokers or dealers engaged by Berjaya may arrange for
other brokers or dealers to participate. All brokers' commissions, concessions
or discounts will be paid by Berjaya. We will receive none of the proceeds from
the sales.
We presently are not aware of any arrangements or understandings, formal or
informal, pertaining to the distribution of the shares of common stock described
herein. Upon our being notified by Berjaya 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, under Rule
424(b) under the Securities Act, setting forth:
. the name of each selling stockholder and the participating
broker-dealer(s);
. the number of shares involved;
. the price at which the shares were sold;
the commissions paid or the discounts allowed to the broker-dealer(s),
where applicable;
. that the broker-dealer(s) did not conduct any investigation to verify
the information set out in this Prospectus; and
. other facts material to the transaction.
-13-
<PAGE>
Berjaya and any broker executing selling orders on behalf of Berjaya may be
deemed to be an "underwriter" within the meaning of the Securities Act, in which
event commissions received by the broker may be deemed to be underwriting
commissions under the Securities Act.
We have agreed to indemnify Berjaya under the Securities Act against certain
liabilities, including liabilities arising under the Securities Act. Berjaya may
indemnify any broker-dealer that participates in transactions involving sales of
the shares against certain liabilities, including liabilities arising under the
Securities Act.
Description of Securities
Our authorized capital stock consists of 25,000,000 shares, of which
20,000,000 are designated as common stock, $.001 par value and 5,000,000 are
designated as preferred stock, $.001 par value. As of June 30, 1999, 7,042,204
shares of our common stock, including the shares offered under this prospectus,
were outstanding and no shares of our preferred stock were outstanding. The
holders of our shares of common stock are entitled to cumulate their votes in
the election of directors. Each stockholder voting for the election of
directors may cumulate his or her votes and give one candidate the number of
votes equal to the number of directors to be elected multiplied by the number of
votes to which the stockholders shares are entitled, or distribute his or her
votes on the same principle among as many candidates as the stockholder may
select, provided that votes cannot be cast for more than the number of director
positions subject to the election. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably dividends, if any, as may be declared from time to
time by the board of directors out of funds legally available therefor. In the
event of our liquidation, dissolution or winding up, the holders of common stock
are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior distribution rights of preferred stock, if any,
then outstanding. The common stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are
fully paid and nonassessable.
The board of directors has the authority to issue preferred stock in one or
more series, and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights and rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of these series, without
any further vote or action by the holders of common stock.
Certain provisions of our certificate of incorporation, bylaws and Delaware
law could make it more difficult for a third party to acquire control of us,
even if a change in control would be beneficial to stockholders. These
provisions include:
. Our certificate of incorporation allows us 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 the plan in the event of some transactions which
result in a change of control of us; and
-14-
<PAGE>
. Section 203 of the General Corporation Law of Delaware prohibits us
from engaging in certain business combinations with interested
stockholders.
Legal Matters
The validity of the shares of common stock offered under this prospectus
will be passed upon for us by Jacques Youssefmir, Esq., our General Counsel.
Experts
Our consolidated financial statements and schedule as of December 31, 1998
and 1997, and for each of the years in the three-year period ended December 31,
1998, have been incorporated by reference in this prospectus and in the
registration statement in reliance upon the report of KPMG 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
Our 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 us and our stockholders.
This provision in the 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:
. breach of the director's duty of loyalty to us or our stockholders for
acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law;
. any transaction from which the director derives an improper personal
benefit; and
. improper distributions or redemptions.
This provision does not affect a director's responsibilities under any
laws, such as the federal and state securities laws or state or federal
environmental laws.
In addition, our bylaws provide that we will indemnify our directors and
executive officers and may indemnify our other officers, employees and other
agents to the fullest extent permitted by Delaware law. We also are empowered
under our bylaws to enter into indemnification contracts with our directors and
officers and to purchase insurance on behalf of any person whom we are required
or permitted to indemnify. We have entered into agreements with our directors
and executive officers, which requires us 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 us.
Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers or persons controlling us under the
foregoing provisions, we have 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.
-15-
<PAGE>
Table of Contents
-----------------
The Company.................................2
Risk Factors................................2
Where You Can Find More Information........11
Use of Proceeds............................12
Selling Stockholder........................12
Plan of Distribution.......................13
Description of Securities..................14
Legal Matters..............................15
Experts....................................15
Indemnification of Directors and Officers..15
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
---------------
__________________________, 1999
<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 STM, in connection with the offering of the shares of common stock
under this registration statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee.. $ 913
Accounting Fees and Expenses*........... $10,000
Legal Fees and Expenses*................ $ 5,000
Miscellaneous Expenses*................. $ 2,000
-------
Total.............................. $17,913
=======
* Estimated
</TABLE>
Item 15. Indemnification of Directors and Officers.
- ---------------------------------------------------
(a) As permitted by the Delaware General Corporation Law (the
"DGCL"), the certificate of incorporation eliminates the liability of directors
to STM 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 certificate of incorporation provides that STM will
indemnify each person who was or is made a party to any proceeding by reason of
the fact that this person is or was a director or officer of STM against all
expense, liability and loss reasonably incurred or suffered by this person in
connection therewith to the fullest extent authorized by the DGCL. STM's
Restated bylaws provide for a similar indemnity to directors and officers of STM
to the fullest extent authorized by the DGCL.
(c) The certificate of incorporation also gives STM the ability to
enter into indemnification agreements with each of its officers and directors.
STM has entered into indemnification agreements with each of its directors and
officers. The indemnification agreements provide for the indemnification of
directors and officers of STM 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 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 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 information set forth in the
registration statement. Notwithstanding the foregoing, any
II-1
<PAGE>
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
under 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 the
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 under 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 post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of the 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 undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report under 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 under 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 the 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 under 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 20/th/ day of
August, 1999.
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 under 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 Chairman August 20, 1999
- ---------------------------------------- of the Board
Emil Youssefzadeh
/s/ Dr. Ernest U. Gambaro Director August 20, 1999
- ----------------------------------------
Dr. Ernest U. Gambaro
/s/ Guy Numann Director August 20, 1999
- ----------------------------------------
Guy Numann
/s/ Joseph Wallace Vice President, Finance August 20, 1999
- ----------------------------------------
Joseph Wallace Chief Financial Officer and
Principal Accounting Officer
/s/ Frank T. Connors Vice Chairman of the Board August 20, 1999
- ----------------------------------------
Frank T. Connors
/s/ Lawrence D. Lenihan, Jr. Director August 20, 1999
- ----------------------------------------
Lawrence D. Lenihan, Jr.
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
- ------ ----------- -----------
<S> <C> <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 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
August 20, 1999
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 August 20, 1999 (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 report dated March 26, 1999, except for the second
paragraph of note 8, which is as of April 13, 1999, 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, 1998 and 1997, 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, 1998, and the related
schedule, and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG LLP
Orange County, California
August 20, 1999
