<PAGE>
As filed with the Securities and Exchange Commission on April 20, 1998
Registration No. 333-48131
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GEOTEK COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
22-2358635
(I.R.S. Employer Identification Number)
102 Chestnut Ridge Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Robert Vecsler, Esq.
General Counsel and Secretary
Geotek Communications, Inc.
102 Chestnut Ridge Road
Montvale, New Jersey 07645
(201) 930-9305
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
With a copy to:
Stephen T. Burdumy, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6060
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, 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
investment 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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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
Proposed Maximum Proposed Maximum Amount Of
Title Of Shares To Be Amount To Be Aggregate Price Aggregate Offering Registration
Registered Registered Per Share Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 57,137,786(1) $1.47(2) $83,992,545 $24,777.80
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Common Stock, par value
$.01 per share 977,425(3) $1.62(4) $ 1,583,429(4) $ 467.11
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share 1,507,500(5) $4.00(4) $ 6,030,000(4) $ 1,778.85
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share 292,500(6) $8.00(4) $ 2,340,000(4) $ 690.30
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share 350,000(7) $2.00(4) $ 700,000(4) $ 206.50
- ---------------------------------------------------------------------------------------------------------------------------
Total $27,920.56(8)
===========================================================================================================================
</TABLE>
(1) Consists of shares of the Registrant's common stock (the "Common Stock")
which may be issued to the Selling Stockholders named herein (a) upon
conversion of Shares of the registrant's Series O Convertible Preferred
Stock, Series P Convertible Preferred Stock, Series Q Convertible Preferred
Stock, Series R Convertible Preferred Stock and Series S Convertible
Preferred Stock (collectively, the "Preferred Stock"); (b) in satisfaction
of dividends payable with respect to the Preferred Stock; (c) upon
conversion of a $2,000,000 unsecured promissory note held by Decision
Systems Israel Ltd.; (d) upon conversion of a $24,500,000 convertible note
held by Hughes Network Systems, Inc.; (e) upon conversion of a Canadian
$2,000,000 promissory note held by Gandalf Technologies, Inc.; and (f) in
connection with the Company's settlement agreement with Morgen, Evan &
Company, Inc. Pursuant to Rule 416 of the Securities Act of 1933, as
amended (the "Securities Act"), this registration statement also registers
such additional number of shares of the Common Stock as may become issuable
upon conversion of the Preferred Stock or exercise of the Warrants (as
defined herein) as a result of stock splits, stock dividends and
anti-dilution provisions (including, by reason of any reduction in the
conversion price of the Preferred Stock or the exercise price of the
Warrants in accordance with the terms thereof if the market price of the
Common Stock declines).
(2) Based on the closing sale price of the Common Stock as reported on The
Nasdaq Stock Market on March 13, 1998. Estimated solely for the purpose of
calculating the registration fee in accordance with Rule 457(c) of the
Securities Act.
(3) Consists of shares of the Common Stock issuable upon exercise of certain
warrants issuable pursuant to the terms of the Preferred Stock (the
"Redemption Warrants").
(4) Represents the current exercise price of the Warrants in accordance with
Rule 457(g) of the Securities Act.
(5) Consists of shares of the Common Stock issuable upon the exercise of
certain warrants issued in connection with the purchase of shares of the
Company's Series Q Convertible Preferred Stock.
(6) Consists of shares of the Common Stock issuable upon the exercise of
certain warrants issued in connection with the purchase of shares of the
Company's Series Q Convertible Preferred Stock.
(7) Consists of shares of the Common Stock issuable upon the exercise of a
warrant held by Arnhold and S. Bleichroeder, Inc.
(8) The filing fee was previously paid at the time of the original filing of
this Registration Statement.
<PAGE>
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 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>
GEOTEK COMMUNICATIONS, INC.
60,265,211 Shares of Common Stock
PROSPECTUS
This Prospectus concerns:
(i) The offer and sale by certain selling stockholders (the "O&P
Investors"), from time to time, of up to an aggregate of 17,335,710 shares
of Common Stock, par value $.01 per share (the "Common Stock") of Geotek
Communications, Inc. a Delaware corporation ("Geotek" or the "Company"), issued
or issuable upon conversion of the Company's Series O Convertible Preferred
Stock, par value $.01 per share (the "Series O Preferred Stock"), and the
Company's Series P Convertible Preferred Stock, par value $.01 per share (the
"Series P Preferred Stock" and, collectively with the Series O Preferred Stock,
the "O&P Preferred Stock") and which have been or may be issued in payment of
dividends on the O&P Preferred Stock. The shares of Common Stock issued or
issuable by the Company to the O&P Investors upon conversion of the O&P
Preferred Stock, in satisfaction of dividends on the O&P Preferred Stock are
hereinafter referred to as the "O&P Conversion Shares", and the "O&P Dividend
Shares," and the "Series P Warrant Shares," respectively.
(ii) The offer and sale by certain selling stockholders (the "Series Q
Investors"), from time to time, of (a) up to 10,606,012 shares of Common Stock
issued or issuable upon conversion of the Company's Series Q Convertible
Preferred Stock, par value $.01 per share (the "Series Q Preferred Stock"), and
which have been or may be issued in payment of dividends on the Series Q
Preferred Stock, and (b) 1,800,000 shares of Common Stock issuable upon exercise
of warrants issued to such stockholders (the "Series Q Warrants") in connection
with their investment in the Series Q Preferred Stock. The shares of Common
Stock issued or issuable by the Company to the Series Q Investors upon
conversion of the Series Q Preferred Stock, in satisfaction of dividends on the
Series Q Preferred Stock and upon exercise of the Series Q Warrants are
hereinafter referred to as the "Series Q Conversion Shares," the "Series Q
Dividend Shares" and the "Series Q Warrant Shares," respectively.
(iii) The offer and sale by certain selling stockholders (the "Series R
Investors"), from time to time, of up to 9,829,342 shares of Common Stock
issuable upon conversion of the Company's Series R Convertible Preferred Stock,
par value $.01 per share (the "Series R Preferred Stock"), and which may be
issued in payment of dividends on the Series R Preferred Stock. The shares of
Common Stock issuable by the Company to the Series R Investors upon conversion
of the Series R Preferred Stock and in satisfaction of dividends on the Series R
Preferred Stock are hereinafter referred to as the "Series R Conversion Shares"
and the "Series R Dividend Shares," respectively.
(iv) The offer and sale by certain selling stockholders (the "Series S
Investors"), from time to time, of up to 2,055,611 shares of Common Stock
issuable upon conversion of the Company's Series S Convertible Preferred Stock,
par value $.01 per share (the "Series S Preferred Stock"), and which may be
issued in payment of dividends on the Series S Preferred Stock. The shares of
Common Stock issuable by the Company to the Series S Investors upon conversion
of the Series S Preferred Stock and in satisfaction of dividends on the Series S
Preferred Stock are hereinafter referred to as the "Series S Conversion Shares
and the "Series S Dividend Shares," respectively. The Series O&P Preferred
Stock, Series Q Preferred Stock, Series R Preferred Stock and Series S Preferred
Stock are hereinafter collectively referred to as the "Preferred Stock." The O&P
Conversion Shares, Series Q Conversion Shares, Series R Conversion Shares and
Series S Conversion Shares are hereinafter collectively referred to as the
"Conversion Shares." The O&P Investors, Series Q Investors, Series R Investors
and the Series S Investors are hereinafter collectively referred to as the
"Preferred Stock Investors."
-1-
<PAGE>
(v) The offer and sale by the Preferred Stock Investors of 977,625
shares of Common Stock (the "Redemption Shares") which may be issued upon
exercise of warrants (the "Redemption Warrants") issuable by the Company upon
the redemption of the Preferred Stock by the Company as provided in the
respective certificates of designation for the Preferred Stock.
(vi) The offer and sale of 3,000,000 shares of Common Stock ("DSI
Shares") issuable upon conversion of a $2,000,000 unsecured Promissory Note held
by Decision Systems Israel Ltd. (the "DSI Note").
(vii) The offer and sale of 350,000 shares of Common Stock ("ASB
Shares") issuable upon exercise of a warrant held by Arnhold and S. Bleichroeder
("ASB Warrant").
(viii) The offer and sale of 11,111,111 shares of Common Stock (the
"HNS Shares") issuable upon conversion of a $24,500,000 Convertible Note held by
Hughes Network Systems, Inc. (the "HNS Note").
(ix) The offer and sale of 2,200,000 shares of Common Stock (the
"GTI Shares") issuable upon conversion of a Canadian $2,000,000 promissory note
held by Gandalf Technologies, Inc. (the "GTI Note").
(x) The offer and sale of 1,000,000 shares of Common Stock (the "MEC
Shares") issuable in connection with the Company's settlement agreement with
Morgen, Evan & Company, Inc.
Pursuant to Rule 416 of the Securities Act of 1933, as amended (the
"Securities Act"), this Prospectus also concerns such additional number of
shares of Common Stock as may become issuable upon conversion of the Preferred
Stock or exercise of the Series Q Warrants and the ASB Warrant (collectively,
the "Warrants") as a result of stock splits, stock dividends and anti-dilution
provisions (including, by reason of any reduction in the conversion price of the
Preferred Stock or exercise price of the Warrants in accordance with the terms
thereof if the market price of the Common Stock declines). The shares of Common
Stock issuable by the Company upon exercise of the Warrants are hereinafter
referred to as the "Warrant Shares."
The Conversion Shares, Warrant Shares, Dividend Shares, Redemption
Shares, DSI Shares, ASB Shares, HNS Shares, GTI Shares and MEC Shares are
sometimes collectively referred to herein as the "Offered Shares." The Preferred
Stock Investors, Decision Systems Israel Ltd., Arnhold and S. Bleichroeder,
Hughes Network Systems, Inc., Gandalf Technologies, Inc. and Morgen, Evan &
Company, Inc. are sometimes collectively referred to herein as the "Selling
Stockholders."
The Company's Common Stock is listed on The Nasdaq Stock Market
("Nasdaq") under the symbol "GOTK" and on the Pacific Stock Exchange ("PSE")
under the symbol "GEO." On April 17, 1998, the closing sale price for the Common
Stock, as quoted on the Nasdaq, was $0.781 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 21, 1998.
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<PAGE>
Pursuant to this Prospectus, the Offered Shares may be sold by the
Selling Stockholders, from time to time while the Registration Statement to
which this Prospectus relates is effective, on the PSE, Nasdaq or otherwise at
prices and terms prevailing at the time of sale, at prices and terms related to
such prevailing prices and terms, in negotiated transactions or at fixed prices.
The Selling Stockholders have advised the Company that they currently intend to
sell all or a portion of the Offered Shares pursuant to this Registration
Statement from time to time in any manner described under "Plan of
Distribution." Notwithstanding the registration of the offer and sale of the
Offered Shares to subsequent purchasers, the Selling Stockholders (whether or
not affiliates of the Company) that hold the DSI Note or the HNS Note, or to
whom the Preferred Stock and Warrants were initially issued by the Company, and
that acquire Offered Shares will be required to deliver this Prospectus in
accordance with the Securities Act in connection with any transaction involving
the resale of such securities.
<TABLE>
<CAPTION>
======================================================================================================================
Underwriting
Price Discounts and Proceeds to Proceeds to the
to Public Commissions the Company Selling Stockholders
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........... (1)(2) (1)(2) (3) (1)(4)
- ----------------------------------------------------------------------------------------------------------------------
Total................. (1)(2) (1)(2) (3) (1)(4)
======================================================================================================================
</TABLE>
(1) It is anticipated that the Offered Shares registered for resale hereunder
will be sold by the Selling Stockholders in market or private transactions
at prevailing prices, from time to time.
(2) In connection with the sale of the Offered Shares by the Selling
Stockholders pursuant to this Prospectus, the Selling Stockholders may pay
underwriting or broker-dealer discounts or commissions. The amounts of such
discounts and commissions, if any, cannot be determined by the Company at
this time.
(3) The Company will not receive any proceeds from the resale of the Offered
Shares by the Selling Stockholders.
(4) The Company will pay all expenses of the offering of the Offered Shares,
which are estimated to be $62,789.82. The Selling Stockholders will pay
any brokerage fees or commissions in connection with their sale of the
Offered Shares.
-3-
<PAGE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-3 (together
with any amendments thereto, the "Registration Statement") with the Commission
under the Securities Act with respect to the securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement and the exhibits and schedules thereto for
further information with respect to the Company and the securities offered
hereby. Statements contained in this Prospectus as to the contents of certain
documents filed with, or incorporated by reference in, the Registration
Statement are not necessarily complete, and in each instance reference is made
to such document, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, New York, NY 10048, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material also can be
obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. The Common Stock is listed on both the
Nasdaq and the PSE and such reports, proxy statements and other information
filed with the Commission also should be available for inspection at the offices
of the National Association of Securities Dealers, Inc., Report Section, 1735 K
Street, N.W., Washington, D.C. 20006, and at the PSE facilities located at 115
Sansome Street, San Francisco, California. Such reports and other information
can also be reviewed through the Commission's Electronic Data Gathering Analysis
and Retrieval System, which is publicly available through the Commission's web
site (http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus the
documents listed below:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(2) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, dated December 15, 1992.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus, and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained herein or
in any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each
person to whom a copy of this Prospectus has been delivered, upon the written or
oral request of such person, a copy of all documents incorporated by reference
in this Prospectus, other than exhibits to such documents unless such exhibits
are specifically incorporated by reference herein. Requests for such copies
should be directed to Corporate Secretary, Geotek Communications, Inc., 102
Chestnut Ridge Road, Montvale, New Jersey 07645; telephone number (201)
930-9305.
The Company will furnish its stockholders with annual reports
containing audited financial statements and a report by the Company's
independent accountants.
-4-
<PAGE>
ADDRESS AND TELEPHONE NUMBER
The mailing address and telephone number of the Company's principal
executive offices are as follows:
Geotek Communications, Inc.
102 Chestnut Ridge Road
Montvale, New Jersey 07645
Telephone Number: (201) 930-9305
-5-
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The securities offered hereby involve a substantial degree of risk. The
following factors, in addition to those discussed elsewhere in the Prospectus or
incorporated herein by reference, should be carefully considered in evaluating
the Company and its business prospects before purchasing any of such securities.
This Prospectus contains and incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Securities Reform Act"). The Company desires to take advantage of the
"safe harbor" provisions of the Securities Reform Act and is including this
statement for the express purpose of availing itself of the protections of such
safe harbor with respect to all of such forward-looking statements. When used in
this document, the words, "anticipate," "plan," "intend," "believe," "estimate"
and similar expressions are intended to identify forward-looking statements.
Such statements reflect the current view of the Company with respect to future
events. Such forward-looking statements relate to, among other things, (i) the
development and commercial implementation of the Driver Logistics(TM) System and
the FHMA(R) Network (as hereinafter defined) in the Company's target market in
the United States, (ii) the procurement of radio spectrum and transmission
sites, (iii) the Company's ability to compete for customers successfully, (ii)
the Company's ability to obtain the necessary financing, (v) the Company's
ability to renegotiate certain terms and conditions of debt obligations, (vi)
the risk of international business, and (vii) the effect of certain legislation
and governmental regulation on the Company. The prediction of future results is
inherently subject to various risks and uncertainties including those discussed
under "Risk Factors" and elsewhere in this Prospectus. Accordingly, actual
results may differ materially from those expressed or implied by the
forward-looking statements included in and incorporated by reference into this
Prospectus. The Company wishes to caution each reader of this Prospectus to
consider carefully the specific factors discussed with such forward-looking
statements as such factors in some cases have affected, and in the future
(together with other factors) could affect, the ability of the Company to
achieve its projected results and may cause actual results to differ materially
from those expressed herein.
BUSINESS
The Company is a provider of mobile logistics systems operating over
the Company's proprietary network, a spectrum-efficient, high quality, 900 MHz
integrated digital voice and data wireless communication network which is based
on frequency hopping, multiple access technology (the "FHMA(R) Network"). The
Company's core product line is the Driver Logistics(TM) System, a motor
vehicle-based intelligence system designed to improve the productivity of the
fleet driver.
Geotek markets Driver Logistics(TM) Systems in the eleven markets in
which it operates the FHMA(R) Networks. The Company maintains specialized mobile
radio licenses ("SMR") in over 40 metropolitan trading areas throughout the
United States. During 1997, the Company devoted, and expects to continue to
devote, substantial financial and management resources to continue marketing and
developing its Driver Logistics(TM) Systems and network technology.
The Driver Logistics(TM) System integrates voice and data
communications, hardware and specialized software products with the Company's
proprietary digital voice and packet data network. The system allows users to
organize work schedules, assign jobs to mobile workers, track work status and
completion, send and receive directions, locate stolen and lost vehicles, verify
transactions and communicate among mobile work groups. The Company believes that
mobile fleets, with their complex decision-making and high operational
interdependence, stand to benefit the most from the use of the Driver
Logistics(TM) System.
Based on the Company's current business plan, the Company estimates
that it will need approximately $85 million of additional financing through the
end of fiscal 1998, with a portion needed beginning in the second quarter of
1998, to execute its short term business plan (fiscal 1998) and significant
additional financing thereafter to implement its long term business plan. The
amount of additional financing required will increase if the Company
experiences: delays in the commercial implementation of its U.S. Network (which
have occurred in the past); cost overruns; or other unanticipated cash needs.
The Company does not intend to construct additional U.S. markets or to expand
into new international digital wireless networks until such time as it obtains
sufficient financing to do so. The Company believes that its market by market
roll-out plan of the FHMA(R) Network will permit the Company to control its cash
expenditures to a limited extent by focusing its activities in certain markets
while reducing or delaying its activities in other markets. Additonally, the
Company intends and hopes to renegotiate certain existing cash obligations. The
Company will
<PAGE>
attempt to obtain additional financing from one or more sources, including, but
not limited to, public or private equity or debt offerings, bank loans,
strategic partners, joint ventures, vendor financing, leasing arrangements, or a
combination thereof. There can be no assurance that the Company will be able to
obtain any such financing or renegotiate existing obligations on acceptable
terms or at all. Any additional equity financing may involve substantial
dilution to the interest of holders of the Company's equity securities. The
failure to obtain the requisite additional capital would prevent the Company
from executing its short and long term business plan, would result in the
Company violating certain contractual and debt covenants, and would affect and
raise substantial doubt about the Company's ability to continue as a going
concern. The Company also expects to improve cash flow through stringent cost
control and expenditure reduction. The consolidated financial statements have
been prepared on a going concern basis which contemplates the realization of
assets and liquidation of liabilities in the ordinary course of business. They
do not include any adjustments to the carrying value of assets and liabilities
that might result from the aforementioned uncertainty.
RISK FACTORS
An investment in the Offered Shares involves a high degree of risk.
Prospective investors should consider carefully the following risk factors, in
addition to the other information contained in this Prospectus, in connection
with an investment in the Offered Shares.
Negative Cash Flow; Anticipated Future Losses; Significant Future Capital
Requirements; Need For Additional Cash; Dilution
The Company has never been profitable, has never generated positive
cash flow from consolidated operations and, since its inception, has incurred
significant net operating losses and negative cash flow. The Company had
consolidated net losses from continuing operations of $225.7 million, $140.5
million and $83.1 million for the years ended December 31, 1997, 1996 and 1995
respectively. In addition, the Company had a deficiency of earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $161.5 million,
$96.6 million and $62.4 million for such periods, respectively. The Company
anticipates that its net losses from operations and its EBITDA deficiency will
continue during the commercialization and continued development of the Driver
LogisticsTM System and the implementation of the FHMA(R) Network. There can be
no assurance that the Company's Driver LogisticsTM System and FHMA(R) Network
will ever provide a revenue base adequate to achieve or sustain profitability or
generate positive cash flow.
The Company will be required to raise substantial financing, a portion
of which must be raised during the second quarter of 1998, in order to continue
to fund its ongoing working capital needs and to implement its business plan.
The Company's short-term business plan is to increase the number of customers
and customer revenues and to offer new services in the 11 markets in which it is
currently operating and its long-term business plan is to roll out the Driver
LogisticsTM System utilizing the FHMA(R) Network in over 40 markets and to
enhance its network operations and to take advantage of international
opportunities. The Company estimates that through the end of 1998, approximately
$85 million will be required in order to fund working capital needs and debt
service, affecting the Company's ability to significantly increase the number of
customers subscribing to the Driver LogisticsTM System in the 11 markets in
which it is currently operating. At December 31, 1997, the Company had
approximately $13.4 million of cash and cash equivalents and a $89.6 million
vendor credit facility available, the last $50 million of which is subject to
satisfaction of certain conditions can only be used for the purchase of
infrastructure equipment from Hughes Network Systems, Inc. ("HNS"). The $13.4
million cash and cash equivalents may be used for working capital and general
corporate purposes. In addition, the Company had $9.1 million in restricted cash
from the sale of BCI which was released in the first quarter of 1998, and, in
February 1998, upon completion of the sale of its European analog networks
received an additional $85 million in restricted cash. In accordance with
amendments under the indenture governing its Senior Secured Discount Notes due
2005 ("15% Discount Notes"), the Company can use the proceeds from the sale of
-6-
<PAGE>
European assets as follows: 40% for qualifying capital expenditures; 40% for
working capital; and, 20% for the repayment of the pro-rata portion of the
accreted value of the Discount Notes. The Company does not intend to construct
additional U.S. markets until such time as it obtains sufficient financing to do
so. In addition, the Company does not intend to expand existing or to deploy new
international FHMA(R) networks until additional capital is obtained. Further,
the Company may require financing for certain of its debt obligations, including
potential redemption obligations with respect to certain series of the Company's
preferred stock. (See "-- Substantial Leverage; Future Repayment Obligations.")
To meet its additional capital requirements and to successfully
implement its strategy, the Company plans to seek additional financing, to the
extent available, from one or more sources, including, but not limited to,
public or private equity or debt financing, bank loans, strategic partners,
joint ventures, vendor financing, leasing arrangements, asset sales or a
combination of these sources. The Company has obtained the consent of a majority
of the holders of certain of the Company's debt securities to utilize up to
approximately $40 million of the proceeds from debt financings and/or additional
asset sales for working capital purposes. There can be no assurance that the
Company will be able to obtain the additional financing or the consent of the
debt holders, in a timely manner, necessary to satisfy its cash requirements or
to implement its strategy successfully. The failure to obtain the requisite
additional capital in the short term, fiscal 1998, would prevent the Company
from executing its short and long term business plan, would result in the
Company violating certain debt and contractual covenants, and would raise
substantial doubts about the Company's ability to continue as a going concern.
The issuance of additional equity securities or securities convertible
into equity securities, in addition to the possible conversion of existing
convertible preferred stock, and convertible notes, the redemption of redeemable
preferred stock, the exercise of warrants and options or the possible repayment
of other similar obligations in Company stock, will result in the dilution of
the Company's stockholders. Further, under the applicable conversion formulae
for certain series of the Company's preferred stock, the number of shares of
Common Stock issuable upon conversion will increase if the market price of the
Common Stock decreases. Moreover, the Company cannot determine accurately the
number of dividend shares which may be issued to the holders of the Company's
Series N through Series S Convertible Preferred Stock, as such number is based
upon the market price of the Common Stock prior to the payment of such dividend.
Substantial Leverage; Future Repayment Obligations
As of December 31, 1997, the Company's consolidated long-term debt,
including current portion and redeemable preferred stock, was approximately
$326.1 million. During 1997, the Company's annual cash payments for debt service
and preferred stock dividends were $18.2 million and will increase to
approximately $20 million in 1998 and to at least $55 million beginning in 2001.
The Company's obligations to pay principal on its currently outstanding
indebtedness will commence in October 1998 (except that the Company is required
to use 20% of the proceeds from the sale of NB3 and Terrafon to make a tender
offer to the holders of the Company's 15% Senior Secured Discount Notes due 2005
(the "15% Discount Notes"), on a pro rata basis according to the accreted value
of the 15% Discount Notes, within 30 days after the consummation of such sales)
when principal and interest payments on indebtedness to HNS in the original
principal amount of $24.5 million will become due and payable to the extent this
indebtedness has not then been converted into Common Stock or renegotiated by
the Company.
Interest payments on borrowings under the Company's vendor financing
agreement with HNS are semi-annual and will commence on July 15, 1999 (unless an
event of default occurs earlier), and principal payments will commence in 1999.
The Company's obligations will increase significantly starting in 2001, when
interest payments will commence on the 15% Discount Notes and the principal
amount of any of the Company's 12% Senior Subordinated Convertible Notes due
2001 (the "12% Notes") then outstanding will become due and payable. The Company
also is required to repay $40 million in November 2002 pursuant to a Senior Loan
Facility (the "Senior Loan Facility") to entities affiliated with S-C Rig (as
defined below). In October 2000, the Company's Series H Cumulative Redeemable
Convertible Preferred Stock ("Series H Preferred Stock") is redeemable at the
option of the holders for an aggregate price of $40 million. The Company may
elect to pay the redemption price in shares of Common Stock having an aggregate
market value equal to 150% of the redemption value of the Series H Preferred
Stock being redeemed. If the Company's cash flow from operations is insufficient
to make such payments, the Company would be required
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to refinance or renegotiate the terms of some or all of such indebtedness in
order to avoid a default. There can be no assurance that the Company would be
able to refinance such indebtedness on acceptable terms or in a timely manner. A
default under the 15% Discount Notes or the 12% Notes would have a material
adverse effect on the Company's financial position. (See footnote 1 to the
Company's 1997 Consolidated Financial Statements).
The Company's substantial indebtedness may have important adverse
consequences, including (i) possible impairment of the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures and general corporate purposes; (ii) direction of a substantial
portion of the Company's cash flow from operations to the payment of principal
and interest, reducing funds available for other purposes, including the
successful and timely development and marketing of the Driver LogisticsTM
System; (iii) the Company becoming more highly leveraged than other competing
companies; and (iv) an increased vulnerability to a downturn in its business or
the economy in general. In addition, the instruments governing the Company's
outstanding indebtedness impose significant operating and financial
restrictions, which limit, among other things, the Company's ability to incur
indebtedness, utilize proceeds of debt financings and/or asset sales for working
capital purposes, repay new indebtedness, pay dividends, make investments,
engage in transactions with stockholders and affiliates, issue capital stock of
its subsidiaries, create liens, sell assets and engage in mergers and
acquisitions. Although these instruments contain exceptions to these
restrictions that are designed to allow the Company to operate its business
without undue restraint, such restrictions, together with the Company's high
degree of leverage, could limit its ability to effect future financings and
respond to changing market conditions.
Risk of Nasdaq National Market Delisting
The Nasdaq Stock Market, Inc. ("Nasdaq") has advised the Company that
it is reviewing the Company's eligibility for continued listing on Nasdaq
National Market because the Company does not currently meet certain of the
requirements for continued listing of its Common Stock on The Nasdaq National
Market. As part of Nasdaq's review, the Company submited to Nasdaq a response
demonstrating the Company's plans to achieve compliance with the listing
maintenance standards. There can be no assurance that the plans will be
acceptable to Nasdaq or that the Company will continue to be listed on The
Nasdaq National Market. The inability to maintain the listing could adversely
affect the liquidity of the Common Stock. Although the Common Stock continues to
be listed on the Pacific Stock Exchange, in the event the Company does not
maintain the listing of the Common Stock on The Nasdaq National Market, it will
seek approval for listing on the Nasdaq Small Cap Market or another national
securities exchange or market. There, however, can be no assurance that the
Common Stock will be listed on any such other exchanges.
Dependence Upon Commercial Implementation of the Driver LogisticsTM System and
FHMA(R) Network
The Company's success will depend to a significant extent on its
ability to successfully market its Driver LogisticsTM System in its target
United States markets. The successful and timely commercialization of the Driver
LogisticsTM System will depend on various factors, many of which are beyond the
Company's control. These factors include, among others, the timely and
cost-effective manufacture, construction, testing, and integration of the
FHMA(R) Network infrastructure and software sufficient to provide adequate
coverage, stability and capacity, the procurement and preparation of base
station and remote sites, the receipt of necessary regulatory approvals, the
availability of substantial additional financing in the short term and long
term, recruitment and successful training of the Company's sales staff and
dealer network, increasing competition, and market acceptance of the Driver
LogisticsTM System.
Dependence Upon Integration of New Services and Software
<PAGE>
The Company's current and proposed services involve a complex
integration of sophisticated voice and data applications that utilize newly
developed hardware and specialized software products. The development and
implementation of the Driver LogisticsTM System and FHMA(R) Network to date have
raised, and continue to raise, technical difficulties, which have, and may
continue to, adversely affect service to customers in certain markets.
Additional technical difficulties may arise from time to time as the Company
continues to make hardware and software modifications, add new services and
increase the number of customers in a particular market. The introduction of
additional services is expected to require testing and hardware and software
modifications in order to integrate such services with the existing services,
which may present technical problems. During the fourth quarter of 1997, the
Company began introducing new operating system software in its current United
States markets. Integration of such software requires significant modification
to the network and the hardware utilized by the Company's customers, as well as
testing. The success and timing of the integration of new services and new
software and/or the negative impact, if any, to the Company's customers from an
interruption of service cannot be predicted. In addition, new software may be
required to solve technical difficulties that may arise in the operation and
performance of the Driver LogisticsTM System and FHMA(R) Network as additional
customers are added in a particular market or as the coverage area in any market
is increased. Furthermore, each of the Company's U.S. target markets could
present unique technical issues due to differences in geography and topography,
which may also require new software. Delays in the integration of new services
and new software, or an adverse reaction from the Company's customers, could
have a material adverse effect on the Company's ability to successfully market
the Driver LogisticsTM System, and accordingly upon other financial results,
such as revenues, cash flow and results of operations.
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Dependence On Customer Receipts; Need to Lower Cost of Manufacturing
Customer Equipment Units
To date, the Company's operating expenditures incurred with respect to
its existing and planned offerings in each of its commercial markets have
significantly exceeded customer receipts. The Company attributes this
performance to two factors. Currently, customer equipment is provided to
customers for substantially less than the cost to manufacture such equipment.
Second, as a result of the Company's early promotional efforts and technical
difficulties, the Company has no significant amounts of anticipated revenue from
its U.S. customers. The Company's goal is to decrease such losses as it
continues to add customers and eliminate technical difficulties. Additionally,
the Company hopes to be able to lower the manufacturing cost of customer
equipment as customers volume increases and additional vendors manufacture the
equipment. However, there can be no assurance regarding the amount, if any, that
the Company's customers will pay for the Driver LogisticsTM System or for
service or that the Company will be able to reduce the manufacturing cost of
customer equipment sufficiently to make manufacturing cost-effective; nor can
there be any assurance that the Company will be able to improve its collection
of revenues. More generally, there can be no assurance that the Driver
LogisticsTM System will achieve market acceptance in the Company's targeted
markets. The inability of the Company to increase the price paid by customers,
reduce sufficiently its costs for its equipment, or establish an adequate
customer base in each of its markets could have a material adverse effect on the
Company's cash flow from operations and financial position and the Company's
ability to compete in the marketplace. (See footnote 1 to the Company's 1997
Consolidated Financial Statements).
Dependence Upon the Driver LogisticsTM Portable
The Company recently introduced the Driver LogisticsTM Portable (the
"Portable"). This may create additional technical challenges specific to those
customers using the Portable, including being able to provide a commercially
acceptable level of system coverage to those customers. In order to provide
proper network support for the Portable, the Company may be required to
construct additional sectors and acquire additional frequencies, which could
materially impact cost structure. The Company's ability to successfully
integrate the Portable and the costs required for such integration cannot be
accurately determined until the completion of additional analysis and testing.
The Company's inability to adequately integrate the Portable into its network or
to successfully market the Portable to its customers could adversely effect the
Company's ability to successfully market the Driver LogisticsTM Portable.
Limited Operating History
The Company has limited experience in marketing Driver LogisticsTM
Systems and in developing, establishing and operating wireless communications
networks. Further, a significant portion of the Company's operating experience
to date has occurred in foreign markets, primarily the United Kingdom, and has
involved technology different from the Company's proprietary technology. The
Company's experience to date in the United States has been limited to providing
primarily voice and data dispatch services during 1996 to a relatively few
number of customers in seven of its 11 current markets. During 1997, the Company
provided voice and data services in 11 markets. Therefore, there is limited
historical financial and operating information to evaluate the Company's ability
to operate successfully as a provider of integrated digital voice and data
wireless communications services.
Need to Manage Growth; Dependence On Key Personnel
Successful development and marketing of the Driver LogisticsTM System
in the Company's target markets will require expansion of the Company's
operating, financial and management systems, which, in turn, will require
additional senior management and a substantial number of additional technical
and sales personnel. The Company's success will depend in part on its ability to
attract, retain, motivate, train and manage additional individuals as well as
existing personnel. The substantial growth in the wireless communications
industry in recent years has created a strong need for talented and experienced
individuals and, accordingly, the market for such individuals is very
competitive. There can be no assurance that the Company will be able to attract
and retain such individuals necessary to support the proposed expansion of its
operations.
The success of the Company will depend greatly upon the experience and
active participation of its management. The Company has entered into employment
agreements with certain members of senior
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management, including those employees who oversee the operations of the
Company's main operating units. The loss of members of its senior management
could adversely affect the Company's business. In addition, the successful
further development and successful marketing of the Driver LogisticsTM System
will depend, to a large extent, upon the ability of the Company's engineers and
scientific technical personnel to perfect and improve existing and proposed
products. The loss of some or all of such personnel, the inability of the
Company to attract additional personnel, or the inability of such persons to
design products or to continue product enhancement in response to customers'
demands or competitive pressures would inhibit the Company's ability to sell its
products and services and to operate profitably.
Need for Additional Spectrum and Transmission Sites
The Company may require additional spectrum to add capacity and
services in certain of its existing markets as well as any future markets in the
U.S. The Company anticipates that it may eventually need more spectrum in
certain of its more populated markets. Because spectrum is a finite resource,
there can be no assurance that the Company will be able to obtain additional
spectrum to meet its possible needs. Additionally, acquisition of additional
spectrum may require significant capital resources. The inability of the Company
to obtain additional spectrum that it may require could limit its ability to
expand its services and to increase the number of customers able to utilize the
Company's proprietary FHMA(R) digital wireless network and Driver LogisticsTM
System in certain markets.
There are only a limited number of existing communications towers
capable of providing the Company with sufficient coverage for its radio
transmissions and supporting its transmission equipment. If the Company cannot
obtain leases for existing towers, it may be required to purchase sites, obtain
necessary permits and build such towers, which could take up to one year for
each tower. If the Company is required to build new towers, the implementation
of the FHMA(R) Network and Driver LogisticsTM System in one or more of its
target U.S. markets could be delayed.
Impact of Government Regulation
The licensing, construction and operation of SMR systems in the United
States is regulated by the FCC under the Communications Act of 1934, as amended
(the "Communications Act"). The FCC currently regulates two types of 900 MHz SMR
licenses, both authorizing ten channels of 12.5 KHz in width from base station
to mobile. The Company holds both types. The first type is the Designated Filing
Areas ("DFAs") licenses, which were issued by the FCC in the 1980's in 50 urban
markets, on a site-specific basis. The second type is the Major Trading Areas
("MTA") license, issued pursuant to the FCC's 900 MHz specialized mobile radio
("SMR") spectrum auctions, which were concluded in 1996. MTA licenses authorize
much larger territory in 51 markets. At December 31, 1997, the Company held
authorizations for 185 MTA licenses and 98 DFA licenses. The MTA licenses are
non-site-specific and have an extended construction period of 3-5 years. Where
the MTA licenses overlap coverage with a DFA license, the MTA licensee must
ensure non-interference protection for the incumbent DFA licensee. Where the MTA
licensee itself holds the incumbent DFA license, the DFA license may be canceled
or subsumed into the MTA license, thereby assuming the regulatory/ construction
advantages of an MTA license. The Company has subsumed virtually all of its DFA
licenses that are surrounded by its MTA licenses, in order to take advantage of
regulatory/construction advantages.
In accordance with the Indenture (the "Indenture") governing the 15%
Discount Notes, the Company pledged an interest in certain of its subsidiaries
that hold a majority of the Company's DFA Licenses. In addition, on December 21,
1995, the Company, through its subsidiaries, entered into the Loan Agreement and
on September 27, 1996 entered into a Vendor Credit Financing Agreement (the
"Credit Agreement") with HNS pursuant to which the assets of the Company's
subsidiary, Geotek License Holdings, Inc., consisting of all MTA licenses
obtained by the Company during 900 MHz SMR spectrum auctions were pledged to HNS
as security. In December 1997, the trustee under the Indenture and HNS agreed to
reallocate the MTA licenses among subsidiaries of the Company all of whose stock
is pledged either to the Indenture trustee or to HNS.
As permitted by the FCC, the Company subsumed its DFA licenses which
were acquired prior to the 1996 auctions with the Company's MTA licenses so
that, together, they are regulated as a single MTA license. Under the terms of
the MTA licenses the Company acquired during the auctions, a MTA will be
"constructed" if one-third of the market's population is served within three
years
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of the grant, August 12, 1999, and two-thirds of the population are served
within five years of the grant, August 12, 2001. As an alternative, the Company
may elect for the FCC to waive the requirements for August 12, 1999 and agree
that the construction requirements, that the Company provide substantial service
to the MTA, be met by August 12, 2001. At December 31, 1997, approximately $39.4
million (cost basis) of the Company's $72.7 million of licenses were being
utilized for commercial services.
Most of the equipment utilizing the Company's technology that is used
to send signals must satisfy certain technical standards and receive FCC type
acceptance approval. In addition, the Company's equipment and transmitter sites
must comply with the FCC's guidelines for human exposure to radio frequency
("RF") radiation. These guidelines apply to all MTA-based 900 MHz SMR licenses.
Although the Company's base stations and current customer equipment have
received such type acceptance approval from the FCC, there can be no assurance
that future generations of customer units or other equipment will meet such
standards.
Dependence Upon Third Party Providers
The Company is dependent upon a relatively small number of
manufacturers for its products. Rafael Armament Development Authority
("Rafael"), a related party and a division of the Israeli Ministry of Defense,
is subcontracted for manufacturing and enhancing the base station and remote
sites. The terms of the Company's license of FHMA(R) technology from Rafael and
the Company's receipt of certain capital grants provided by the State of Israel
impose limitations on the Company's ability to transfer the manufacture and
enhancement of certain aspects of its FHMA(R) infrastructure absent the approval
of Rafael and the State of Israel.
Rafael has developed the base station equipment for the Company. In
September 1996, the Company and a wholly-owned subsidiary of the Company, Geotek
Financing Corporation ("GFC"), entered into an agreement with HNS pursuant to
which HNS agreed to manufacture certain of the components required for the
construction of 900 MHz FHMA(R) base station equipment in order to expand the
Company's manufacturing supply sources. In addition, HNS is providing up to $100
million of financing (the last $50.0 million of which is subject to the
satisfaction by the Company of certain operating criteria) for up to 90% of the
purchase price of equipment scheduled for delivery by HNS to the Company prior
to June 30, 1999. As of December 31, 1997, the Company has drawn down $10.4
million of the $100 million. Rafael and HNS are currently producing base station
equipment for the Company's U.S. wireless network.
The Company procures all other components utilized in connection with
its digital wireless system from third parties. Farbell Electronics manufactures
large and small screen vehicle-mounted customer units and HNS manufactures the
portable unit. In 1997, Mitsubishi Consumer Electronics of America manufactured
the mobile car radio, but will no longer do so. The Company does not believe
this will have a material impact on the Company's business because going
forward, the mobile car radio will be manufactured by GTI-Israel, a subsidiary
of the Company. In June 1997, the Company also entered into a development and
purchasing agreement with IBM to develop and produce an enhanced telephone and
dispatch switch, in order to upgrade its existing switches for high customer
capacity.
There can be no assurance that such third parties will deliver such
equipment on a timely basis. Although the Company believes that it can obtain
all components necessary to build the digital wireless system from other
sources, it may encounter delays in the event of a component shortage due to the
time needed to identify alternative sources and manufacture substitute
components. With the exception of Rafael and HNS, none of the Company's
suppliers has previously manufactured FHMA(R) system equipment. Failure to
obtain hardware components on a timely basis or at satisfactory prices could
result in delays or cost overruns in the implementation of the U.S. network and
Driver Logistics(TM) System.
The Company has agreements with several parties, including IBM to
manage the construction of the U.S. Wireless Network base stations and remote
sector sites. The Company also has engaged, and intends to engage, other third
party contractors to manage all or certain aspects of such construction or
installation in certain of its U.S. target markets. A failure by IBM or such
other contractors to manage properly the preparation and construction of the
Company's base stations and remote sector sites could delay the enhancement and
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continued roll-out of the FHMA(R) Network thereby jeopardizing the Company's FCC
licenses and generally adversely affecting the Company's business.
Risks of International Business
Certain of the Company's products and components are manufactured
outside of the U.S. and its engineering and development activities are dependent
upon foreign providers. See "--Dependence on Third Party Providers." Further,
the Company currently sells its products and services in various countries, and
may pursue opportunities in other countries. Accordingly, the Company is
subject, but not limited, to the risks inherent in conducting business across
national boundaries, including currency exchange rate fluctuations,
international incidents, military outbreaks, economic downturns, government
instability, nationalization of foreign assets, government protectionism and
changes in governmental policy, any of which could adversely affect the
Company's business in one or more of its international markets or in the U.S.
For instance, the November devaluation of the Korean Won may have an adverse
impact on the Company's investments in Korea, the Company's ability to collect
receivables in dollars, or the Company's ability to successfully market its
products in that country in the future.
The Company and entities in which the Company has an interest currently
hold licenses to operate communication networks in Korea and Argentina. The
licensing and other operational risks attendant upon commencing and maintaining
wireless communications networks in foreign countries are similar to those in
the U.S., including availability of spectrum capacity and transmission sites,
competition and government regulation.
In July 1997, the Company entered into a joint venture agreement with
two Canadian partners for the purpose of deploying FHMA(R) Networks in the
provinces of Ontario, Quebec and British Columbia utilizing 900 MHz licenses
previously awarded to Geotek Communications Canada, Inc., a wholly owned
subsidiary of Geotek Communications Canada, Inc. by Industry Canada, the
regulatory agency responsible for spectrum allocation in Canada.
The Company's joint venture partners withdrew from the joint venture in
the first quarter of 1998. The Company has the option to reapply to Industry
Canada for licenses at such time that the Company obtains financing sufficient
to pursue its business in Canada.
In Korea, the network is based upon the implementation of the FHMA(R)
Network on the 800 MHz frequency. There can be no assurance that the Company
will be able to successfully adapt its FHMA(R) Network to another frequency or
standard on a timely or cost-effective basis, if at all. Further, the roll-out
of products and services in each of these countries will be subject to the same
risks attendant to the marketing and development of the Company's Driver
LogisticsTM System and FHMA(R) Network in the U.S. Moreover, certain foreign
regulatory authorities may limit the Company's ownership interest in licenses or
the operating entity which it owns and operates under such licenses. There can
be no assurance that the Company will be successful in developing its business
in any of these markets.
Certain international regulations may limit the Company's interest in
entities which hold licenses or operate wireless networks in various countries.
Thus, the Company's ability to expand its interest in international markets may
be limited.
Year 2000 Issues
The Company's software and hardware were developed relatively recently
and, therefore, do not require any significant modifications for the Year 2000.
However, the Company may face Year 2000 issues as it seeks to coordinate with
other entities with which it interacts electronically, including suppliers,
customers and distribution partners. Although the Company is not currently aware
of any material problems, an assessment has not been made of the anticipated
costs, problems and uncertainties associated with the Year 2000 consequences.
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Competition
Competition in the logistic wireless communications industry is intense
and is expected to increase. The Company faces significant competition in each
of the U.S. markets that it currently serves, and expects to face significant
competition in its planned United States markets as well. The Company competes
with established, new and planned SMR, cellular, paging, satellite, personal
communications services ("PCS") and public data service providers. In addition,
the Company competes with manufacturers of private mobile radio ("PMR")
equipment, which target private network operators and SMR customers. Many of the
Company's competitors have substantially greater technical, marketing, sales and
distribution resources, access to capital, and experience providing wireless
communications services than the Company.
The Company competes for customers primarily on the basis of services
offered, the technical quality of its system, capacity, coverage and price. Many
of the target customers for the Company currently use other wireless
communications services. In order to compete effectively, the Company must
attract a portion of its target customers from their existing providers. The
Company's marketing strategy emphasizes its integrated package of voice and data
services, which the Company believes differentiates it from other wireless
communications providers. However, there can be no assurance that potential
customers will perceive the Company's services to be superior to those offered
by other wireless communications providers.
Risk of Rapid Technology Changes
The telecommunications industry is subject to rapid and significant
technological changes, which could result in new product and/or service
offerings. The Company believes that such new offerings could compete directly
with those currently offered by the Company or could lower the cost of currently
competing offerings such that the Company would be required to reduce the prices
for its offerings. Any such reduction would ultimately affect the Company's cash
flow from operations. While the Company is unaware of any proposed changes that
are expected to materially diminish the attractiveness of its products and
services, the nature or timing of technological changes or the effect of such
changes on the Company's business cannot be predicted. In the future, the
Company expects to encounter competition from new technologies, including but
not limited to ESMR networks, PCS and possibly satellite technology, as well as
from advances in existing technologies such as cellular, paging and mobile data
transmission. (See "Competition" above).
Proprietary Information and Patent Issues
The Company protects its proprietary information by way of
confidentiality and non-disclosure agreements with employees and third parties
who may have access to such information. The Company continually reviews its
technology developments in order to file patent applications and has filed
patent applications with respect to certain aspects of its FHMA(R) technology in
Israel, the U.S. and other countries and expects to file additional patent
applications in Israel and the U.S. Generally, the Company intends to file all
patent applications in the United States and Israel and such other countries as
it deems appropriate. There can be no assurance that such applications will be
granted. There can be no assurance that any patents issued will afford
meaningful protection against competitors with similar technology, or that any
patents issued will not be challenged by third parties. There also can be no
assurance that others will not independently develop similar technologies,
duplicate the Company's technologies, or design around the patented aspects of
any technologies developed by the Company. Many patents and patent applications
have been filed by third parties with respect to wireless communications
technology. The Company does not believe that its technology infringes on the
patent rights of third parties. However, there can be no assurance that certain
aspects of the Company's technology will not be challenged by the holders of
such patents or that the Company will not be required to license from or
otherwise acquire from third parties the right to use certain technology. The
failure to overcome such challenges or obtain such licenses or rights could have
a material adverse effect on the Company's operations.
Influence by Significant Stockholders; Preemptive Rights
As of February 28, 1998, approximately 36.2% of the total voting
power of the Common Stock (on a fully-diluted basis) was beneficially owned by
the directors and executive officers of the Company and their affiliates.
Consequently, the Company's directors and executive officers will be able to
exert significant influence with respect to all matters upon which stockholder
approval is required.
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Pursuant to certain agreements among them, certain of the principal
stockholders of the Company have the right to require certain other stockholders
to cause (to the extent permitted by law and to the extent within such other
stockholders' control) the directors of the Company to vote, or refrain from
voting, in accordance with such stockholders' direction with respect to the
election of directors. In addition, S-C Rig Investments-III, L.P. and Vanguard
Cellular Systems, Inc. have preemptive rights with respect to certain issuances
of voting securities by the Company which permit them to purchase voting
securities of the Company, at the same price and on the same terms as the
Company may offer to third parties, in an amount sufficient to maintain their
respective percentage interests in the voting securities of the Company on a
fully-diluted basis. The Company also has granted to the holders of the Series H
Preferred Stock, Series I Cumulative Convertible Preferred Stock, Series K
Cumulative Convertible Preferred Stock and Series N Cumulative Convertible
Preferred Stock the right to elect additional directors to the Board of
Directors of the Company upon the occurrence of certain events of default. The
operation of such provisions could result in such stockholders exerting
significant influence over the Board of Directors of the Company.
Shares of Common Stock Reserved for Issuance; Shares of Common Stock Eligible
for Sale
As of December 31, 1997, the Company had an aggregate of approximately
73.6 million issued and outstanding shares of Common Stock. In addition, as of
such date, the Company had reserved for issuance an aggregate of approximately
124.9 million shares of Common Stock issuable pursuant to (i) outstanding vested
and non-vested options, warrants and similar rights; (ii) conversion of other
outstanding convertible securities of the Company (including shares issuable
upon conversion of the Company's preferred stock); (iii) dividends on the
Company's preferred stock; and (iv) contingent obligations to issue additional
shares. Pursuant to the Company's Restated Certificate of Incorporation, the
Company currently has 200,000,000 authorized shares of Common Stock. Subject to
certain limitations, the persons holding such options, warrants and convertible
securities may obtain the shares of Common Stock underlying such options,
warrants and convertible securities at any time. The issuance of a large number
of shares of Common Stock would dilute the percentage interest of other existing
stockholders of the Company.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Offered Shares by the Selling Stockholders. Upon an exercise of the Warrants by
any of the Selling Stockholders, the Company will receive the exercise price of
such Warrants. To the extent such Warrants are exercised, the Company will use
the proceeds thereof for general corporate purposes. There can be no assurance
that any of the Warrants will be exercised.
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SELLING STOCKHOLDERS
On May 28, 1993, Gandalf Mobile Systems, Inc., a subsidiary of the
Company, issued a Canadian $2,000,000 promissory note (the "GTI Note") to
Gandalf Technologies, Inc. ("GTI"). Pursuant to an agreement entered into in
April 1998 by and between the Company and GTI (the "GTI Agreement"), the
principal amount outstanding on the GTI Note and all accrued and unpaid interest
thereon will be converted into shares of Common Stock of the Company. Under the
GTI Agreement, GTI is entitled to receive in the conversion such number of
shares of Common Stock equal to 115% of the principal amount outstanding on the
GTI Note and all accrued and unpaid interest thereon being converted divided by
the closing bid price on the Common Stock on the principal market on which
shares of Common Stock are traded on the conversion dates.
On December 21, 1995, Geotek Financing Corporation ("GFC"), a
subsidiary of the Company, entered into a loan agreement (the "HNS Loan
Agreement") with Hughes Network Systems, Inc. ("HNS") pursuant to which HNS
agreed to provide up to $24,500,000 of financing, in the form of a convertible
note bearing interest at a rate of 12% per annum (the "HNS Note") for use in
connection with the purchase of additional 900 MHz licenses to be utilized in
the commercial implementation of GEONET(TM). The HNS Note is convertible, at the
option of HNS, into shares of Common Stock (the "HNS Shares") at an exercise
price equal to the lesser of (i) ninety percent (90%) of the weighted average
sales price per share of Common Stock on the trading day next preceding the date
of conversion (or over the ten trading days immediately preceding the date of
conversion to the extent (and only to the extent) the conversion relates to less
than $300,000 of loans drawn down under the HNS Loan Agreement (provided,
however, that HNS may convert the entire remaining principal balance on the
trading day next preceding the maturity date) as reported by Bloomberg Financial
Services or similar reporting service, and (ii) $9.75 per share.
In July 1996, the Company issued a $2,000,000 promissory note (the "DSI
Note") to Decision Systems Israel Ltd. ("DSI"). The DSI Note accrues interest at
a per annum rate equal to 8.25% and all outstanding principal and any accrued
interest thereon becomes due and payable on July 1, 1998. On February 28, 1998,
the Company and DSI entered into an agreement (the "DSI Agreement") whereby the
parties agreed that the principal amount outstanding on the DSI Note and all
accrued and unpaid interest thereon shall be converted into shares of Common
Stock of the Company. Under the DSI Agreement, DSI is entitled to receive in the
conversion of such number of shares of Common Stock equal to the principal
amount outstanding on the DSI Note and all accrued and unpaid interest therein
divided by the closing bid price on the Common Stock on the principal market on
which shares of Common Stock are traded as of the date of this Prospectus.
In September 1996, the Company and GFC entered into a financing
agreement (the "HNS Financing Agreement") with HNS pursuant to which HNS agreed
to manufacture certain of the components required for the construction of the
FHMA(TM) Network equipment and to provide up to $100 million of financing to the
Company for up to 90% of the purchase price of such portion of these components
which are scheduled for delivery to the Company prior to June 30, 1999. All
borrowings under the HNS Financing Agreement accrue interest at a rate of 11%
per annum. Repayment of principal under the HNS Financing Agreement shall be
made in ten equal semi-annual payments beginning on July 10, 1999. HNS will be
granted a security interest in the components manufactured by HNS pursuant to
the manufacturing agreement executed in connection with the HNS Financing
Agreement. Additionally, GFC has pledged to HNS the intercompany note of License
Holdings entered into in connection with the HNS Loan Agreement as well as the
capital stock of License Holdings as security under the HNS Financing Agreement.
In connection with the execution of the HNS Financing Agreement, the Company
issued to HNS certain warrants (the "HNS Warrants") to purchase in the aggregate
2,500,000 shares of the Company's Common Stock at exercise prices ranging from
$8.6250 to $12.9375. The HNS Warrants are exercisable at any time on or after
September 27, 1997, and unless exercised, will automatically expire on September
27, 2003.
<PAGE>
In March 1997, Morgen, Evan & Company, Inc. ("MEC") filed a complaint
against the Company alleging that the Company failed to comply with the terms
of certain agreements between MEC and the Company, wherein MEC agreed to act as
the Company's financial advisor in connection with, among other things, locating
a suitable partner to manufacture certain telecommunications equipment on the
Company's behalf and brokering the sale of the Company's subsidiary, Geotest,
Inc. MEC has alleged that the Company owes MEC approximately $3 million for
"success fees" resulting out of the Company's Supply Agreement with Mitsubishi
Consumer Electronics America, Inc. and in excess of $200,000 arising out of the
sale of Geotest, Inc. to Marvin Engineering Co., Inc. On April 2, 1998, the
Company and MEC agreed to settle MEC's claims for the amount of $800,000 payable
by the Company in shares of Common Stock.
On December 31, 1996, the Company completed a private transaction
pursuant to which it issued and sold to certain investors, for an aggregate
purchase price of $50,000,000, 1,000 shares of Series O Preferred Stock and
warrants to purchase an aggregate of 1,700,000 shares of Common Stock. On
January 23, 1997, the Company completed a private transaction pursuant to which
it issued and sold to certain investors, for an aggregate purchase price of
$25,000,000, 500 shares of Series P Preferred Stock and warrants to purchase an
aggregate of 850,000 shares of Common Stock. Each share of the O&P Preferred
Stock is convertible into the number of shares of Common Stock determined by
dividing (i) the sum of $50,000 stated value per share of the O&P Preferred
Stock plus all unpaid dividends accrued and deemed to have accrued, if any, with
respect to such shares of the O&P Preferred Stock through the last dividend
payment date by (ii) the lowest daily volume-weighted average price of the
Common Stock during the four business days immediately preceding conversion
multiplied by a conversion factor of (i) 100% for conversions prior to June 29,
1997, (ii) 95% for conversions after June 29, 1997 but prior to December 31,
1997, (iii) 90% for conversions after December 31, 1997 but prior to June 29,
1998, and (iv) 88% for conversions after June 29, 1998. The O&P Preferred Stock
provides for a dividend at a rate of 10% per annum (12% per annum after a
dividend payment failure) of the stated value of preferred stock on a
-15-
<PAGE>
cumulative basis. The O&P Preferred Stock becomes convertible into Common Stock
in stages during the one-year period beginning July 1997 and remains convertible
until December 31, 2001. Dividends accrue from the date of issuance and are
payable quarterly, at the Company's option, in either shares of Common Stock or
cash. In connection with the issuance of the Series O Preferred Stock, 1,700,000
warrants were granted to CIBC Wood Gundy Security Corp., as placement agent for
the transaction. The warrants are exercisable at a per share price of $9.2625
and may be exercised, from time to time, at any time prior to June 30, 2000. As
of March 17, 1998, 40 shares of Series O Preferred Stock and 100 shares of
Series P Preferred Stock were outstanding.
On August 6, 1997, the Company completed a private transaction pursuant
to which it issued and sold to the Series Q Investors, for an aggregate purchase
price of $30,000,000, 600 shares of Series Q Preferred Stock and Series Q
Warrants to purchase an aggregate of 1,800,000 shares of Common Stock. The
Series Q Preferred Stock provides for a dividend at a rate of 10% per annum (12%
per annum after a dividend payment failure) of the stated value of the Series Q
Preferred Stock on a cumulative basis. Dividends accrue from the date of
issuance and are payable quarterly, at the Company's option, in either shares of
Common Stock or cash. Each share of Series Q Preferred Stock is convertible by
the holder thereof into such number of shares of Common Stock as is obtained by
dividing (i) the sum of $50,000 stated value per share of the Series Q Preferred
Stock plus all unpaid dividends accrued and deemed to have accrued, if any, with
respect to such shares of Series Q Preferred Stock through the last dividend
payment date by (ii) the lowest daily volume-weighted average price of the
Common Stock during the four business days immediately preceding conversion
multiplied by a conversion factor of (i) 100% for conversions prior to January
2, 1998, (ii) 95% for conversions after January 2, 1998 but prior to April 1,
1998, and (iii) 90% for conversions after April 1, 1998. The Series Q Preferred
Stock becomes convertible into Common Stock in stages during the period
beginning October 10, 1997 and ending July 1, 1998 and remains convertible until
December 31, 2001. As of March 17, 1998, 133 shares of Series Q Preferred Stock
were outstanding.
On February 18, 1998, the Company consummated a series of transactions
with certain holders of the Series O Preferred Stock and the Series Q Preferred
Stock (the "Participating Preferred Holders") whereby the Participating
Preferred Holders (i) converted an aggregate of approximately $11.8 million in
face amount of Series O Preferred Stock and Series Q Preferred Stock into shares
of the Company's Common Stock at a conversion price of $1.00 per share; (ii)
exchanged an aggregate of approximately $15.9 million in face amount of Series O
Preferred Stock and Series Q Preferred Stock for shares of Series R Preferred
Stock, at a ratio of 1.1111 shares of Series R Preferred Stock for each share of
Series O Preferred Stock or Series Q Preferred Stock and (iii) exchanged an
aggregate of approximately $6.5 million in face amount of Series O Preferred
Stock and Series Q Preferred Stock for shares of Series S Preferred Stock, at a
ratio of one share of Series S Preferred Stock for each share of Series O
Preferred Stock or Series Q Preferred Stock.
The terms of the Series R Preferred Stock are substantially similar to
the terms of the Series Q Preferred Stock, except that (i) the Series R
Preferred Stock is convertible into shares of Common Stock of the Company, at
any time, at a fixed conversion price of $2.00 per share, (ii) the Series R
Preferred Stock automatically converts into shares of Common Stock on February
18, 2003 at the then applicable conversion price and (iii) the dividends payable
to holders of the Series R Preferred Stock at the rate of 10% per annum will be
payable in shares of Common Stock. In addition, the terms of the Series R
Preferred Stock provide the Company with limited rights to restrict conversions
in connection with an underwritten public offering of Common Stock. As of March
17, 1998, 318 shares of Series R Preferred Stock were outstanding.
The terms of the Series S Preferred Stock are substantially similar to
the terms of the Series Q Preferred Stock, except that (i) the Series S
Preferred Stock is convertible into shares of Common Stock of the Company, at
any time, at a fixed conversion price of $4.00 per share, provided that the
conversion price will be reduced to $3.00 per share if the average of the
closing bid prices for the Common Stock for the ten trading day period
immediately preceding August 18, 1998 is less than $4.00 and, further, if the
conversion price on February 18, 1999 is greater than 110% of the closing bid
price of the Common Stock on such date, the conversion price shall be 110% of
the closing bid price on such date (provided that in certain circumstances the
holders of Series R Preferred Stock may elect to have a variable conversion
price), (ii) the Series S Preferred Stock will automatically convert into shares
of Common Stock on February 18, 2003 at the then applicable conversion price,
and (iii) the dividends payable to holders of the Series S Preferred Stock at
the rate of 10% per annum will be payable in shares of Common Stock. As of March
17, 1998, 130 shares of Series S Preferred Stock were outstanding.
Holders of all shares of Series R Preferred Stock and Series S
Preferred Stock have notified the Company that they have made an election to
have the conversion price of such preferred stock amended so that each share of
Series R Preferred Stock and Series S Preferred Stock, as the case may be, shall
be convertible into a number of shares of Common Stock equal to (i) the sum of
$50,000 stated value per share plus all unpaid dividends accrued or deemed to be
accrued, if any, with respect to such shares, divided by (ii) the lowest daily
volume-weighted average price of the Common Stock during the four business days
immediately preceding conversion multiplied by .90. The Company is disputing the
effectiveness of this notice and has notified the holders of the Company's
intention not to recognize this election.
-16-
<PAGE>
The exercise price of the warrants issued to the Participating
Preferred Holders in connection the issuance of the Series O Preferred Stock and
the Series Q Preferred Stock has been amended to be $4.00 per share of Common
Stock purchasable thereunder; provided that the exercise price will be $3.00 per
share of Common Stock purchasable thereunder if the average of the closing bid
prices for the Common Stock for the ten trading day period immediately preceding
August 18, 1998 is less than $4.00 and provided, further that if the exercise
price on February 18, 1999 is greater than 110% of the closing bid price of the
Common Stock on such date, the exercise price shall be 110% of the closing bid
price of the Common Stock on such date.
Holders of Series R Preferred Stock or Series S Preferred Stock also
have the right, exercisable for ten days after consummation of certain financing
transactions by the Company to (i) exchange shares of preferred stock held by
such party for an equivalent amount of securities issued in such financing
transaction and/or (ii) purchase securities on the same terms and conditions as
such financing transaction in an amount equal to the face amount of Series R
Preferred Stock or Series S Preferred Stock, as the case may be, then held by
such holder.
Under the applicable conversion formulae for the Preferred Stock, the
number of shares of Common Stock issuable upon conversion of such Preferred
Stock will increase if the market price of the Common Stock declines. The
Company cannot determine accurately the number of Dividend Shares payable with
respect to the Preferred Stock because such number is based upon the market
price of the Common Stock prior to the payment of such dividends. In order to
ensure that a sufficient number of shares of Common Stock are registered
hereunder to cover all of the Conversion Shares and Dividend Shares, the Company
has registered (i) a number of shares of Common Stock which it believes is
sufficient to cover the payment of all Dividend Shares and (ii) pursuant to Rule
416 under the Securities Act, an indeterminate number of additional shares of
Common Stock which may become issuable upon conversion of the Preferred Stock as
a result of reductions in the market price of the Company's Common Stock.
However, there is no limit on the number of shares of Common Stock that may be
issued upon conversion of, or as dividends on, the Preferred Stock. Therefore,
the amount of Conversion Shares and Dividend Shares which may actually be issued
and offered by the Selling Stockholders that are holders of such Preferred Stock
may be greater than the numbers set forth below. The Company will continue to
monitor the number of Conversion Shares and Dividend Shares issued and issuable
to the Preferred Stock holders and may be required to file new registration
statements from time to time to cover additional Conversion Shares and Dividend
Shares.
To the extent Dividend Shares are issued, such Dividend Shares are
being offered by the O&P Preferred Stock holders pursuant to this Prospectus.
Further, certain of the Offered Shares registered pursuant to the Registration
Statement of which this Prospectus is a party may be issued upon exercise of
securities issued by the Company upon the redemption of the Preferred Stock by
the Company as provided for in the respective terms of the Preferred Stock.
In February 1998, in connection with various advisory services rendered
to the Company by Arnhold and S. Bleichroeder, Inc. ("ASB"), including the
Company's European asset sales which were completed in February 1998, the
Company issued to ASB a warrant (the "ASB Warrant") to purchase in the aggregate
of 350,000 shares of the Company's Common Stock at an exercise price of $2.00
per share. The ASB Warrant is exercisable at any time after the date of issuance
thereof, and unless exercised, will expire on February 18, 2003.
-17-
<PAGE>
Set forth below is a table showing the total number of shares of Common
Stock beneficially owned by each Selling Stockholder, the number of Offered
Shares subject to sale hereunder, and the resulting amount and percentage of the
outstanding Common Stock if all Offered Shares which are beneficially owned by
such person are sold. All of such information has been provided by the Selling
Stockholders.
None of the Selling Stockholders has, or within the past three years
has had, any position, office or other material relationship with the Company or
any of its predecessors or affiliates, except as noted in the discussion above
or in the footnotes to the following table.
<TABLE>
<CAPTION>
Pre-Offering Post-Offering(1)
- -----------------------------------------------------------------------------------------------------------------------------
Amount of Shares Amount of Shares Amount of Shares Percentage
Selling Stockholder Beneficially Owned Being Offered Beneficially Owned of Class (2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nelson Partners (3) 2,708,763 2,768,685(4) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Olympus Securities, Ltd. (3) 2,708,763 2,768,685(5) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Halifax Fund, L.P. (6) 2,008,983 2,292,177(7) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Gleneagles Fund, Ltd. (6) 1,140,624 1,140,624(8) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Ramius Halifax Partners L.P. (6) 514,148 514,148(9) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Ramius Fund, Ltd. (6) 896,252 896,252(11) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
A.G. Super Fund, L.P. (10) 147,559 147,559(12) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Michaelangelo, L.P. (10) 2,822 2,822(13) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Angelo, Gordon & Co., L.P. (10) 2,822 2,822(13) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Raphael, L.P. (10) 453,651 461,356(14) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Leonardo, L.P.(10) 2,249,494 2,288,020(15) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
A.G. Super Fund International Partners, 131,257 135,823(16)
L.P. (10) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
GAM Arbitrage Investments, Inc. (10) 360,301 366,579(17) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Promethean Investment Group, L.L.C. (18) 97,500 97,500(19) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Heracles Fund (18) 1,785,340 1,817,305(20) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Themis Partners (18) 446,124 454,115(21) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
S-C Rig Investments - III, L.P. (22) 20,541,506 6,641,655(23) 13,983,906 *
- -----------------------------------------------------------------------------------------------------------------------------
Winston Partners II, LDC (22) 2,192,232 1,475,927(24) 734,984 *
- -----------------------------------------------------------------------------------------------------------------------------
Winston Partners II, LLC (22) 1,096,097 737,962(25) 367,474 *
- -----------------------------------------------------------------------------------------------------------------------------
Winston Partners L.P. (22) 3,098,734 2,213,887(26) 912,265 *
- -----------------------------------------------------------------------------------------------------------------------------
RGC International Investors, LDC 3,847,531 3,918,591(27) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
CIBC Wood Gundy Security Corp. 1,930,694 2,028,518(28) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Elliot Associates, L.P. 7,344,186 7,512,567(29) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Pallidin Fund I 390,897 390,897(30) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Decision Systems Israel Ltd. 3,000,000 3,000,000(31) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Arnhold and S. Bleichroeder, Inc. 653,306 350,000(32) 303,306 *
- -----------------------------------------------------------------------------------------------------------------------------
Hughes Network Systems, Inc. 11,111,111 11,111,111(33) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Gandalf Technologies, Inc. 2,200,000 2,200,000(34) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Morgan, Evan & Company, Inc. 1,000,000 1,000,000(35) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Ramius Halifax Overseas Fund Ltd. (6) 485,018 485,018(36) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Hick Investment Ltd. (10) 487,838 487,838(37) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
Colonial Penn Life Insurance (6) 556,768 556,768(38) 0 *
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* Less than 1%.
(1) Assumes the sale of Common Stock offered by this Prospectus by the Selling
Stockholders to third parties unaffiliated with such Selling Stockholders.
The Selling Stockholders may, but are not required to, sell all shares of
Common Stock offered hereby.
(2) All percentages are calculated in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder, without giving effect to
the 60 day limitation regarding conversion of convertible securities. Based
upon 102,555,000 shares of Common Stock issued and outstanding as of
March 17, 1998.
-18-
<PAGE>
(3) Nelson Partners and Olympus Securities, Ltd. ("Olympus Securities") are
affiliates. Citadel Limited Partnership ("Citadel") is the managing general
partner of Nelson Partners and the trading manager of Olympus Securities.
Citadel holds voting control and investment discretion with respect to
shares held by Nelson Partners and Olympus Securities.
(4) Includes 1,287,220 shares of Common Stock issued or issuable upon
conversion of, and as dividends on, the Series O Preferred Stock, 22,724
shares of Common Stock issued or issuable upon conversion of, and as
dividends on, the Series Q Preferred Stock, 90,000 shares of Common Stock
issuable upon exercise of the Series Q Warrants, 1,308,819 shares of Common
Stock issuable upon conversion, of the Series R Preferred Stock, and up to
an aggregate of 59,922 shares of Common Stock issuable upon exercise of
certain redemption warrants issuable pursuant to the terms of the Series R
Preferred Stock. Does not include shares held by Olympus Securities.
(5) Includes 1,287,220 shares of Common Stock issuable upon conversion of, and
as dividends on, the Series O Preferred Stock, 22,724 shares of Common
Stock issuable upon conversion of, and as dividends on, the Series Q
Preferred Stock, and 90,000 shares of Common Stock issuable upon exercise
of the Series Q Warrants and 1,308,819 shares of Common Stock issuable upon
conversion of the Series R Preferred Stock, and up to an aggregate of
59,922 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series R Preferred Stock.
Does not include shares held by Nelson Partners.
(6) Halifax Fund, L.P., Gleneagles Fund, Ltd., Ramius Halifax Partners, L.P.,
Ramius Fund, Ltd., Ramius Halifax Overseas Fund Ltd. Colonial Penn Life
Insurance and Hick Investments Ltd. are affiliates.
(7) Includes 89,069 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 71,052 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 300,000 shares of Common Stock issuable upon exercise of the Series
Q Warrants, 1,063,095 shares of Common Stock issuable upon conversion of
the Series R Preferred Stock, 485,767 shares of Common Stock issuable
upon conversion of the Series S Preferred Stock and up to an aggregate of
283,194 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series R Preferred Stock and
the Series S Preferred Stock.
(8) Includes 27,675 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 28,539 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 120,000 shares of Common Stock issuable upon exercise of the Series
Q Warrants, 639,506 shares of Common Stock issuable upon conversion of, and
as dividends on, Series R Preferred Stock and 324,904 shares of Common
Stock issuable upon conversion of, and as dividends on, the Series S
Preferred Stock.
(9) Includes 352,807 shares of Common Stock issuable upon conversion of the
Series R Preferred Stock, and 161,341 shares of Common Stock issuable upon
conversion of the Series S Preferred Stock.
(10) A.G. Super Fund, L.P., Michaelangelo, L.P., Angelo, Gordon & Co., L.P.,
Raphael, L.P., Leonardo, L.P., A.G. Super Fund International Partners,
L.P., and GAM Arbitrage Investments, Inc. are affiliates.
(11) Includes 4,546 shares of Common Stock issuable upon conversion of, and as
dividends on, Series O Preferred Stock, 813,706 Series Q Preferred Stock,
and 78,000 shares of Common Stock issuable upon exercise of the Series Q
Warrants.
(12) Consists of 147,559 shares of Common Stock issuable upon conversion of, and
as dividends on, the Series Q Preferred Stock.
(13) Consists of 2,822 shares of Common Stock issuable upon conversion of, and
as dividends on, the Series O Preferred Stock.
(14) Includes 3,752 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 313,932 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 30,000 shares of Common Stock issuable upon exercise of the Series Q
Warrants, 105,967 shares of Common Stock issuable upon conversion of
Series R Stock and up to an aggregate of 7,705 shares of Common Stock
issuable upon exercise of certain redemption warrants issuable pursuant to
the terms of the Series O Preferred Stock and Series Q Preferred Stock,
Series R Preferred Stock.
(15) Includes 1,569,661 shares of Common Stock issued or issuable upon
conversion of, and as dividends on, the Series Q Preferred Stock and
150,000 shares of Common Stock issuable upon exercise of the Series Q
Warrants, 529,833 shares of Common Stock issuable upon conversion of
the Series R Preferred Stock and up to an aggregate of 38,526 shares of
Common Stock issuable upon exercise of certain redemption warrants issuable
pursuant to the terms of the Series Q Preferred Stock and Series R
Preferred Stock.
-19-
<PAGE>
(16) Includes 2,843 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 48,081 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 18,000 shares of Common Stock issuable upon exercise of the Series Q
Warrants, 62,333 shares of Common Stock issuable upon conversion of Series
R Stock and up to an aggregate of 4,566 shares of Common Stock issuable
upon exercise of certain redemption warrants issuable pursuant to the terms
of the Series O Preferred Stock, Series Q Preferred Stock and Series R
Preferred Stock.
(17) Includes 1,940 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 247,094 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 24,000 shares of Common Stock issuable upon exercise of the Series Q
Warrants, 87,267 shares of Common Stock issuable upon conversion of Series
R Stock and up to an aggregate of 6,278 shares of Common Stock issuable
upon exercise of certain redemption warrants issuable pursuant to the terms
of the Series O Preferred Stock, Series Q Preferred Stock and Series R
Preferred Stock.
(18) Promethean Investment Group, L.L.C., Heracles Fund and Themis Partners are
affiliates.
(19) Consists of 97,500 shares of Common Stock issuable upon exercise of the
Series Q Warrants.
(20) Includes 1,166,673 shares of Common Stock issued or issuable upon
conversion of, and as dividends on, the Series Q Preferred Stock, 120,000
shares of Common Stock issuable upon exercise of the Series Q Warrants,
498,667 shares of Common Stock issuable upon conversion of the Series R
Preferred Stock and up to an aggregate of 31,965 shares of Common Stock
issuable upon exercise of certain redemption warrants issuable pursuant to
the terms of the Series Q Preferred Stock and Series R Preferred Stock.
(21) Includes 291,457 shares of Common Stock issued or issuable upon conversion
of, and as dividends on, the Series Q Preferred Stock a2nd 30,000 shares of
Common Stock issuable upon exercise of the Series Q Warrants, 124,667
shares of Common Stock issuable upon conversion by the Series R Preferred
Stock and up to an aggregate of 7,991 shares of Common Stock issuable upon
exercise of certain redemption warrants issuable pursuant to the terms of
the Series Q Preferred Stock and Series R Preferred Stock.
(22) S-C Rig Investments-III, L.P., Winston Partners II, LDC, Winston Partners
II, LLC and Winston Partners L.P. are affiliates.
(23) Includes only 6,557,600 shares of Common Stock issuable upon conversion of,
and as dividends on, the Series P Preferred Stock and up to an aggregate of
84,055 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series P Preferred Stock.
S-C Rig also holds 444,445 shares of Series H Preferred Stock, which it
purchased from the Company in a private placement in December 1993 for
$40,000,000. The Series H Preferred Stock is, under certain circumstances,
convertible into Common Stock by dividing (i) the sum of the $90.00 per
share stated value and any dividend arrearage by (ii) $9.00 per share (as
adjusted from time to time for certain events of dilution). Assuming there
are no accrued and unpaid dividends on the Series H Preferred Stock at the
time of conversion, the Series H Preferred Stock is convertible into an
aggregate of 4,444,450 shares of Common Stock. S-C Rig also holds 20 shares
of Series I Preferred Stock, which it purchased from the Company in a
private placement in December 1994 for $10,000,000. The Series I Preferred
Stock is, under certain circumstances, convertible into Common Stock by
dividing (x) the sum of $500,000 per share stated value and any dividend
arrearage by (y) $11.75 per share (as adjusted from time to time for
certain events of dilution). Assuming there are no accrued and unpaid
dividends on the Series I Preferred Stock at the time of conversion, the
Series I Preferred Stock is convertible into an aggregate of 851,060 shares
of Common Stock. In addition, S-C Rig holds warrants to purchase 621,000
shares of Common Stock (which warrants are exercisable at an exercise price
of $9.90 per share and may be exercised, from time to time, at any time
beginning on January 6, 1996 and ending on July 15, 2005) and warrants to
purchase 4,210,526 shares of Common Stock (which warrants are exercisable
at an exercise price of $6.00 per share and may be exercised, from time to
time, at any time on or before April 4, 2003). S-C Rig also holds 3,750
shares of Series N Preferred Stock and warrants to purchase 112,500 shares
of Common Stock that it purchased from the Company in June 1996. The
Series N Preferred Stock is convertible into Common Stock by dividing
(i) the sum of $1,000 per share stated value and any dividend arrearage by
(ii) $11.00 per share (as adjusted from time to time for certain events of
-20-
<PAGE>
dilution). The Series N Preferred Stock is convertible into 340,909 shares
of Common Stock and 81,807 shares of Common Stock have been paid as
dividends thereon to date. To the extent more shares of Common Stock are
issued in payment of dividends payable with respect to the Preferred Stock
held by S-C Rig, the number of shares beneficially owned by S-C Rig may be
higher. Purnendu Chatterjee, an affiliate of S-C Rig, is a director of the
Company. Dr. Chatterjee holds options which are currently exercisable to
purchase 40,000 shares of Common Stock. Dr. Chatterjee is also deemed to
beneficially own options to purchase 400,000 shares of Common Stock held by
one of his affiliates, XTEC International, Inc.
(24) Includes only 1,457,248 shares of Common Stock issuable upon conversion of,
and as dividends on, the Series P Preferred Stock and up to an aggregate of
18,679 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series P Preferred Stock.
Such Selling Stockholder also holds 834 shares of Series N Preferred Stock
and warrants to purchase 25,020 shares of Common Stock that it purchased
from the Company in June 1996. The Series N Preferred Stock is convertible
into Common Stock by dividing (i) the sum of $1,000 per share stated value
and any dividend arrearage by (ii) $11.00 per share (as adjusted from time
to time for certain events of dilution). The Series N Preferred Stock is
convertible into 75,818 shares of Common Stock and 17,836 shares of Common
Stock have been paid as dividends thereon to date.
(25) Includes only 728,623 shares of Common Stock issuable upon conversion of,
and as dividends on, the Series P Preferred Stock and up to an aggregate of
9,339 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series P Preferred Stock.
Such Selling Stockholder also holds 416 shares of Series N Preferred Stock
and warrants to purchase 12,480 shares of Common Stock that it purchased
from the Company in June 1996. The Series N Preferred Stock is convertible
into Common Stock by dividing (i) the sum of $1,000 per share stated value
and any dividend arrearage by (ii) $11.00 per share (as adjusted from time
to time for certain events of dilution). The Series N Preferred Stock is
convertible into 37,818 shares of Common Stock and 8,904 shares of Common
Stock have been paid as dividends thereon to date.
(26) Consists of 2,185,869 shares of Common Stock issuable upon conversion of,
and as dividends on, the Series P Preferred Stock and up to an aggregate
28,018 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series P Preferred Stock.
(27) Includes 2,135,300 shares of Common Stock issued or issuable upon
conversion of, and as dividends on, the Series O Preferred Stock, 10,131
shares of Common Stock issuable upon conversion of, and as dividends on,
the Series Q Preferred Stock, and 150,000 shares of Common Stock issuable
upon exercise of the Series Q Warrants, 1,552,100 shares of Common Stock
issuable upon conversion of the Series R Preferred Stock and up to an
aggregate of 71,060 shares of Common Stock issuable upon exercise of
certain redemption warrants issuable pursuant to the terms of the Series R
Preferred Stock.
(28) Includes 33,225 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series O Preferred Stock, 312,202 shares of Common Stock
issuable upon conversion of, and as dividends on, the Series Q Preferred
Stock, 150,000 shares of Common Stock issuable upon exercise of the Series
Q Warrants, 951,755 shares of Common Stock issuable upon conversion of, and
as dividends on, the Series R Preferred Stock, 483,512 shares of Common
Stock issuable upon conversion of the Series S Preferred Stock and up to
97,824 shares of Common Stock issuable upon exercise of certain redemption
warrants issuable pursuant to the terms of the Series O Preferred Stock,
Series R Preferred Stock and Series S Preferred Stock.
(29) Includes 1,525,772 shares of Common Stock issuable upon conversion of, and
as dividends on, the Series O Preferred Stock, 5,525,914 shares of Common
Stock issuable upon conversion of, and as dividends on, the Series Q
Preferred Stock, 292,500 shares of Common Stock issuable upon exercise of
the Series Q Warrants and up to an aggregate of 168,381 shares of Common
Stock issuable upon exercise of certain redemption warrants pursuant to the
terms of the Series O Preferred Stock.
(30) Includes 2,164 shares of Common Stock issuable upon conversion of Series O
Preferred Stock, 256,364 shares of Common Stock issuable upon conversion of
Series R Preferred Stock, and 132,369 shares of Common Stock issuable upon
conversion of Series S Preferred Stock.
(31) Includes 3,000,000 shares of Common Stock issuable upon conversion of a
$2,000,000 unsecured promissory note held by Decision Systems Israel Ltd.
-21-
<PAGE>
(32) Includes only 350,000 shares of Common Stock issuable upon exercise of a
warrant held by Arnhold and S. Bleichroeder, Inc. ("ASB") ASB also are
holders of 1,450 shares of the Company's Series N Preferred Stock and
warrants to purchase 43,500 shares of Common Stock that it purchased from
the Company in June 1996. The Series N Preferred Stock is convertible into
Common Stock by dividing (i) the sum of $1,000 per share stated value and
any dividend average by (ii) $11.00 per share (as adjusted from time to
time for certain events of dilution). The Series N Preferred Stock is
convertible into 131,818 shares of Common Stock.
(33) Includes 11,111,111 shares of Common Stock issuable upon conversion of a
$24,500,000 convertible note held by Hughes Network Systems, Inc.
(34) Includes 2,200,000 shares of Common Stock issuable upon conversion of a
Canadian $2,000,000 promissory note held by Gandalf Technologies, Inc.
(35) Includes 1,000,000 shares of Common Stock issuable in connection with a
settlement between the Company and Morgan, Evan & Company, Inc.
(36) Includes 332,860 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series R Preferred Stock, and 152,158 shares of Common
Stock issuable upon conversion of, and as dividends on, the Series S
Preferred Stock.
(37) Includes 334,730 shares of Common Stock issuable upon conversion of, and as
dividends on, the Series R Preferred Stock, and 153,108 shares of Common
Stock issuable upon conversion of, and as dividends on, the Series S
Preferred Stock.
(38) Includes 60,000 shares of Common Stock issuable upon exercise of Series Q
Warrants, 14,563 shares of Common Stock issuable upon conversion of, and
as dividends on, Series Q Preferred Stock, 319,753 shares of Common Stock,
issuable upon conversion of, and as dividends on, Series R Preferred Stock,
and 162,452 shares of Common Stock issuable upon conversion of, and as
dividends for, Series S Preferred Stock.
PLAN OF DISTRIBUTION
Pursuant to this Prospectus, the Offered Shares may be sold by the
Selling Stockholders from time to time while the Registration Statement to which
this Prospectus relates is effective, on the PSE, Nasdaq or otherwise at prices
and terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices. The
Selling Stockholders have advised the Company that they currently intend to sell
all or a portion of the Offered Shares from time to time in any manner described
herein. The methods by which the Offered Shares may be sold by the Selling
Stockholders include, without limitation: (i) ordinary brokerage transactions,
which may include long or short sales, (ii) transactions which involve cross or
block trades or any other transactions permitted by the PSE or Nasdaq, (iii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus, (iv) "at the market" to or through
market makers or into an existing market for the Common Stock, (v) in other ways
not involving market makers or established trading markets, including direct
sales to purchasers or sales effected through agents, (vi) through transactions
in options or swaps or other derivatives (whether exchange-listed or otherwise),
or (vii) any combinations of any such methods of sale. In addition, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
Common Stock in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell Common Stock short and
deliver the shares of Common Stock registered hereby at any time to close out
such short positions, provided such short sales were effected pursuant to this
Prospectus. The Selling Stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to such
broker-dealers of the Common Stock offered hereby, which Common Stock such
broker-dealers may resell pursuant to this Prospectus.
<PAGE>
In effecting sales, brokers and dealers engaged by any of the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Stockholders to
sell a specified number of Offered Shares at a stipulated price per Share, and,
to the extent such a broker or dealer is unable to do so acting as agent for the
Selling Stockholders, may purchase as principal any unsold Offered Shares at the
price required to fulfill such broker's or dealer's commitment to the Selling
Stockholders. Brokers or dealers who acquire Offered Shares as principals may
thereafter resell such Offered Shares from time to time in transactions (which
may involve cross and block transactions and which may involve sales to and
through other brokers or dealers, including transactions, of the nature
described above) in the over-the-counter market, in negotiated transactions or
otherwise, at market prices and terms prevailing at the time of sale, at prices
and terms related to such prevailing prices and terms, in negotiated
transactions or at fixed prices, and in connection with the methods as described
above. The Offered Shares held by the Selling Stockholders may also be sold
hereunder by brokers, dealers, banks or other persons or entities who receive
such Offered Shares as a pledgee of the Selling Stockholders. The Selling
Stockholders and brokers and dealers through whom sales of Offered Shares may be
effected may be deemed to be "underwriters," as defined under the Securities
Act, and any profits realized by them in connection with the sale of the Offered
Shares may be considered to be underwriting compensation. Notwithstanding the
registration of the offer and sale of the Offered Shares to subsequent
purchasers, the Selling Stockholders, whether or not affiliates of the Company,
shall be required to deliver this Prospectus in accordance with the Securities
Act in connection with any transaction involving the resale of such securities.
The Company has entered into registration rights agreements with the
Selling Stockholders pursuant to which the Company has agreed to indemnify any
person deemed an underwriter and the Selling Stockholders against certain
liabilities, including civil liabilities under the Securities Act, or to
contribute to payments such underwriters or Selling Stockholders may be required
to make with respect to the sale by such Selling Stockholders of the Offered
Shares. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the Company
pursuant to the foregoing provisions, its certificate of incorporation or
by-laws, the Company has been informed that in the
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<PAGE>
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the Offered Shares will be passed upon by Robert
Vecsler, Esquire, General Counsel of the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997
and 1996 and the consolidated statements of operations, stockholders' equity,
and cash flows for the years ended December 31, 1997, 1996 and 1995,
incorporated by reference in this Prospectus have been incorporated by reference
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, which includes an explanatory paragraph as to the Company's ability
to continue as a going concern, given on the authority of that firm as experts
in accounting and auditing. In such report, Coopers & Lybrand L.L.P. states
that, with respect to a certain affiliated company, its opinion is based upon
the reports of other independent accountants.
-23-
<PAGE>
============================================================================
No person is authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus,
and, if given or made, such information or representation 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 any securities
other than the securities to which it relates or an offer to sell or a
solicitation of an offer to buy such securities in any circumstances or in any
jurisdiction to any person in which and to whom such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that there has not been
any change in the affairs of the Company since the date as of which information
is given or that the information contained herein is correct as of any time
subsequent to such date.
--------
TABLE OF CONTENTS
Page
Available Information.................................................4
Incorporation of Certain Information
by Reference........................................................4
Address and Telephone Number..........................................5
Cautionary Statement Regarding
Forward-Looking Statements .........................................6
Business..............................................................6
Risk Factors..........................................................7
Use of Proceeds......................................................14
Selling Stockholders.................................................15
Plan of Distribution.................................................22
Legal Matters........................................................23
Experts..............................................................23
===========================================================================
<PAGE>
GEOTEK
COMMUNICATIONS,
INC.
60,265,211 Shares of Common Stock
PROSPECTUS
April 21, 1998
============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses payable by the registrant in connection with the registration of the
Offered Shares, other than underwriting discounts and commissions:
Registration Fee--Securities and Exchange Commission ... $ 24,289.82
*Blue Sky fees and expenses.............................. $ 1,000.00
*Accountants' fees and expenses ......................... $ 10,000.00
*Legal fees and expenses ................................ $ 20,000.00
*Printing and engraving expenses ........................ $ 5,000.00
*Miscellaneous .......................................... $ 2,500.00
-----------
Total .......................................... $ 62,789.82*
============
- ------------------
* Estimated
(1) Registration fees of $27,891.88 were paid in connection with the earlier
registration statement which registered 14,726,913 shares of Common Stock
(Reg. No. 333-21199).
Item 15. Indemnification of Directors and Officers.
A. The Delaware General Corporation Law provides that, to the extent
that any director, officer, employee or agent of the Company has been successful
on the merits or otherwise in defense of any action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action by or in
the right of the Company) to which such person was a party by reason of the fact
that such person is or was a director, officer, employee or agent of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, the Company shall indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
B. In addition, the Company has the power to indemnify any of the
persons referred to above against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any such action, suit or proceeding, if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Company and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful.
Notwithstanding the foregoing, in connection with any action or suit by
or in the right of the Company to procure a judgment in its favor, the Company
shall not make any indemnification as described above in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless, and only to the extent that, the Court of Chancery (in the
State of Delaware) or the court in which such action or suit was brought shall
determine, upon application, that despite adjudication of liability, but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
C. The Company also has the power, under the Delaware General
Corporation Law, to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against any other liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as such,
whether or not the Company would have the power to indemnify such person against
such liability under the foregoing provisions.
II-1
<PAGE>
D. The indemnification provided by or allowable pursuant to the
Delaware General Corporation Law shall or may, as applicable, continue as to a
person who has ceased to be a director, officer, employee or agent of the
Company and shall inure to the benefit of the heirs, executors and
administrators of such person.
Item 16. Exhibits and Financial Statement Schedules.
(a) Schedule of Exhibits.
Exhibit
Number Exhibit
------ -------
*4.1 Certificate of Designation of Series O Convertible Preferred
Stock.
*4.2 Form of Letter Agreement by and between the Company and each
Series O Investor.
*4.3 Form of Warrant issued in connection with Series O
Convertible Preferred Stock.
*4.4 Form of Registration Rights Agreement by and among the
Company and the Series O Investors.
**4.5 Certificate of Correction filed to correct an error in the
Certificate of Designation of Series O Convertible Preferred
Stock.
**4.6 Certificate of Correction filed to correct an error in the
Certificate of Designation of Series O Convertible Preferred
Stock.
**4.7 Certificate of Designation of Series P Convertible Preferred
Stock.
***4.8 Certificate of Designation of Series Q Convertible Preferred
Stock
***4.9 Form of warrant issued in connection with Series Q Preferred
Stock
****4.10 Certificate of Designation of Series R Convertible Preferred
Stock.
****4.11 Certificate of Correction filed to correct an error in the
Certificate of Designation of Series R Convertible Preferred
Stock.
****4.12 Certificate of Designation of Series S Convertible Preferred
Stock.
****4.13 Conversion and Exchange Agreement by and between the Company
and certain other parties dated February 13, 1998
****4.14 Registration Rights Agreement by and between the Company and
certain other parties, dated February 18, 1998.
5 Opinion and Consent of Robert Vecsler, Esquire.
23.1 Consent of Coopers & Lybrand L.L.P. -- Geotek
Communications, Inc.
23.2 Consent of Coopers & Lybrand -- National Band Three Limited.
23.3 Consent of Shachak Peer Reznick & Co. -- Geotek Technologies
Israel (1992) Ltd.
II-2
<PAGE>
23.4 Consent of Robert Vecsler, Esquire (included in Exhibit 5)
24 The Powers of Attorney contained on the signature pages of
the Registration Statement as originally filed on March 17,
1998 are hereby incorporated by reference.
* Incorporated by reference to the Company's Current Report on Form 8-K
dated December 31, 1996.
** Incorporated by reference to the Company's Current Report on Form 8-K
dated January 23, 1997.
*** Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.
**** Incorporated by reference to the Company's Current Report on Form 8-K
dated February 24, 1998.
II-3
<PAGE>
Item 17. Undertakings.
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;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and 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 (1)(i) and (1)(ii) do not apply if
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 Section 15(d) of the Exchange Act 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.
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.
For purposes of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment No. 1 to the Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in Montvale, New Jersey, on April 20, 1998.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
---------------------------------------
Yaron I. Eitan
Chief Executive Officer and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Yaron Eitan, Chief
Executive Officer and Anne E. Eisele, Chief Financial Officer, and each of them,
his and her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the above
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents of either of them or his or her substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on April 20, 1998.
Signatures Title
- ---------- -----
/s/ Yaron I. Eitan
- ------------------------------- Chief Executive Officer (Principal
Yaron I. Eitan Executive Officer) and Director
*
- ------------------------------- Chairman of the Board
William Spier
*
- ------------------------------- Director
Walter E. Auch
*
- ------------------------------- Director
George Calhoun
*
- ------------------------------- Director
Purnendu Chatterjee
*
- ------------------------------- Director
Winston J. Churchill
*
- ------------------------------- Director
Haynes G. Griffin
<PAGE>
Signatures Title
- ---------- -----
*
- ------------------------------- Director
Richard Krants
*
- ------------------------------- Director
Richard T. Liebhaber
/s/ Anne E. Eisele
- ------------------------------- Chief Financial Officer
Anne E. Eisele (Principal Financial Officer)
/s/ Valerie E. DePiro
- ------------------------------- Chief Accounting Officer and
Valerie E. DePiro Corporate Controller
(Principal Accounting Officer)
* An original Power of Attorney authorizing Yaron I. Eitan and Anne E. Eisele
to sign any amendment to the Registration Statement on behalf of certain
officers and directors of the Registrant was included with the signature pages
to the originally filed Registration Statement to which this Amendment No. 1
relates.
By: /s/ Yaron I. Eitan
----------------------------------
Yaron I. Eitan, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ -------
5 Opinion and Consent of Robert Vecsler, Esquire.
23.1 Consent of Coopers & Lybrand L.L.P. -- Geotek Communications, Inc.
23.2 Consent of Coopers & Lybrand -- National Band Three Limited.
23.3 Consent of Shachak Peer Reznick & Co. -- Geotek Technologies
Israel (1992) Ltd.
<PAGE>
Exhibit 5
GEOTEK COMMUNICATIONS, INC.
102 Chestnut Ridge Road
Montvale, New Jersey 07645
April 20, 1998
Geotek Communications, Inc.
102 Chestnut Ridge Road
Montvale, New Jersey 07645
Gentlemen:
I am general counsel to Geotek Communications, Inc., a Delaware
corporation (the "Company"), and have served in such capacity in connection with
the preparation of Amendment No. 1 to the Company's Registration Statement on
Form S-3, which Registration Statement was originally filed with the Securities
and Exchange Commission (the "SEC") on or about March 16, 1998 under the
Securities Act of 1933, as amended (the Registration Statement as amended at the
time it becomes effective being referred to herein as the "Registration
Statement"). The Registration Statement relates to:
(i) the offer and sale by certain Selling Stockholders (as defined in
the Registration Statement) of up to 17,335,710 shares of Common Stock, par
value $.01 per share (the "Common Stock") issued or issuable upon the conversion
of the Company's Series O Convertible Preferred Stock (the "Series O Conversion
Shares") and Series P Convertible Preferred Stock (the "Series P Conversion
Shares") and which may have been or may be issued in payment of dividends on the
Series O Convertible Preferred Stock (the "Series O Dividend Shares") and the
Series P Convertible Preferred Stock (the "Series P Dividend Shares");
(ii) the offer and sale by certain Selling Stockholders of up to (x)
10,606,012 shares of Common Stock issuable upon the conversion of the Company's
Series Q Convertible Preferred Stock (the "Series Q Conversion Shares") and
which may have been or may be issued in payment of dividends on the Series Q
Convertible Preferred Stock (the "Series Q Dividend Shares") and (y) 1,800,000
shares of Common Stock (the "Series Q Warrant Shares") issuable upon the
exercise of certain warrants (the "Series Q Warrants") issued by the Company in
connection with the issuance of the Series Q Convertible Preferred Stock;
(iii) the offer and sale by certain Selling Stockholders of up to
9,829,342 shares of Common Stock issuable upon conversion of the Company's
Series R Convertible Preferred Stock (the "Series R Conversion Shares") and
which may be issued in payment of dividends on the Series R Convertible
Preferred Stock (the "Series R Dividend Shares");
(iv) the offer and sale by certain Selling Stockholders of up to
2,055,611 shares of Common Stock issuable upon conversion of the Company's
Series S Convertible Preferred Stock (the "Series S Convertible Shares") and
which may be issued in payment of dividends on the Series S Convertible
Preferred Stock (the "Series S Dividend Shares");
(v) the offer and sale by certain Selling Stockholders of certain
shares of Common Stock issuable upon exercise of warrants issuable by the
Company upon redemption of the Series O Convertible Preferred Stock, the Series
P Convertible Preferred Stock, the Series Q Convertible Preferred Stock, the
Series R Convertible Preferred Stock and the Series S
<PAGE>
Convertible Preferred Stock (the "Redemption Shares");
(vi) the offer and sale of 3,000,000 shares of Common Stock (the "DSI
Shares") by Decision Systems Israel Ltd. issuable upon conversion of a
$2,000,000 unsecured Promissory Note;
(vii) the offer and sale of 350,000 shares of Common Stock (the "ASB
Shares") by Arnhold and S. Bleichroeder, Inc. in connection with the exercise of
a warrant;
(viii) the offer and sale of 11,111,111 certain shares of Common Stock
(the "HNS Shares") issuable upon conversion of a $24,500,000 convertible note;
(ix) the offer and sale of 2,200,000 certain shares of Common Stock
(the "GTI Shares"), by Gandalf Technologies, Inc. issuable upon conversion of a
$2,000,000 promissory note; and
(x) the offer and sale of 1,000,000 certain shares of Common Stock (the
"MEC Shares") issuable in connection with a settlement between the Company and
Morgen, Evan & Company, Inc.
I have examined, among other things, (i) the Amended and Restated
Certificate of Incorporation (including all Certificates of Designation filed in
connection therewith) and the Bylaws of the Company, as amended; (ii) the
minutes and records of the corporate proceedings of the Company with respect to
the issuance of the shares of Common Stock described above; and (iii) other
instruments and documents and statutory and other materials as I have deemed
necessary as a basis for the opinions hereinafter expressed.
In rendering the opinions below, I have assumed, without any
independent investigation or verification of any kind, the genuineness of all
signatures on, and the authenticity and completeness of, all documents submitted
to me as originals and the conformity to original documents and completeness of
all documents submitted to me as certified, conformed or photostatic copies.
Based on and subject to the foregoing and subject to the
qualifications, limitations and exceptions contained below, I am of the opinion
that:
(i) Upon conversion of the Series O Convertible Preferred
Stock in accordance with the terms thereof, the Series O Conversion Shares will
be legally issued, fully paid and non-assessable;
(ii) Upon the issuance of the Series O Dividend Shares in
accordance with the terms of the Series O Convertible Preferred Stock, the
Series O Dividend Shares will be legally issued, fully paid and non-assessable;
(iii) Upon conversion of the Series P Convertible Preferred
Stock in accordance with the terms thereof, the Series P Conversion Shares will
be legally issued, fully paid and non-assessable;
(iv) Upon the issuance of the Series P Dividend Shares in
accordance with the terms of the Series P Convertible Preferred Stock, the
Series P Dividend Shares will be legally issued, fully paid and non-assessable;
(v) Upon conversion of the Series Q Convertible Preferred
Stock in accordance with the terms thereof, the Series Q Conversion Shares will
be legally issued, fully paid and non-assessable;
(vi) Upon exercise of the Series Q Warrants in accordance
with the terms thereof, the Series Q Warrant Shares will be legally issued,
fully paid and non-assessable;
<PAGE>
(vii) Upon the issuance of the Series Q Dividend Shares in
accordance with the terms of the Series Q Convertible Preferred Stock, the
Series Q Dividend Shares will be legally issued, fully paid and non-assessable;
(viii) Upon conversion of the Series R Convertible Preferred
Stock in accordance with the terms thereof, the Series R Conversion Shares will
be legally issued, fully paid and non-assessable;
(ix) Upon the issuance of the Series R Dividend Shares in
accordance with the terms of the Series R Convertible Preferred Stock, the
Series R Dividend Shares will be legally issued, fully paid and non-assessable;
(x) Upon conversion of the Series S Convertible Preferred
Stock in accordance with the terms thereof, the Series S Conversion Shares will
be legally issued, fully paid and non-assessable;
(xi) Upon the issuance of the Series S Dividend Shares in
accordance with the terms of the Series S Convertible Preferred Stock, the
Series S Dividend Shares will be legally issued, fully paid and non-assessable;
(xii) Upon exercise of the securities exercisable for the
Redemption Shares in accordance with the terms of such securities, the
Redemption Shares will be legally issued, fully paid and non-assessable;
(xiii) Upon the issuance of the DSI Shares in accordance with
the terms of certain agreement by and between the Company and DSI, the DSI
Shares will be legally issued, fully paid and non-assessable;
(xiv) Upon the issuance of the ASB Shares, the ASB Shares will
be legally issued, fully paid and non-assessable;
(xv) Upon the issuance of the HNS Shares, the HNS Shares
will be legally issued, fully paid and non-assessable;
(xvi) Upon the issuance of the GTI Shares, the GTI Shares will
be legally issued, fully paid and non-assessable; and
(xvii) Upon the issuance of the MEC Shares, the MEC Shares
will be legally issued, fully paid and non-assessable.
The opinions expressed herein are limited to the laws of the State of
New York and the General Corporation Law of the State of Delaware. No opinion is
expressed on any matters other than those expressly referred to herein. The
opinions set forth herein are as of the date of this letter and I do not render
any opinion as to the effect of any matter which may occur subsequent to the
date hereof.
<PAGE>
I hereby consent to the filing of this opinion as an exhibit to
Amendment No. 1 the Registration Statement and to the reference to me under
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
In giving such consent, I do not admit hereby that I come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Robert Vecsler
--------------------------------------------
Robert Vecsler
General Counsel and Corporate Secretary
<PAGE>
Exhibit 23.1
[LETTERHEAD OF COOPERS & LYBRAND L.L.P]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Geotek Communications, Inc. (the "Company") on Form
S-3 of our report, which includes a reference to the report of other auditors
and explanatory paragraph as to the Company's ability to continue as a going
concern, dated March 16, 1998 on our audits of the consolidated financial
statements and consolidated financial statement schedule of Geotek
Communications, Inc. and Subsidiaries as of December 31, 1997 and 1996, and for
each of the years in the three year period ended December 31, 1997, which report
is included in the Company's Annual Report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts" in this Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
New York, New York
April 20, 1998
<PAGE>
Exhibit 23.2
[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Amendment No. 1 to the Registration
Statement on Form S-3 of Geotek Communications, Inc. of our report dated March
13, 1998 on our audits of the financial statements of National Band Three
Limited as of 31 December 1997 and 1996, and for the years ended 31 December
1997 and 1996, which report is included in the Company's Annual Report on Form
10-K for the fiscal year ended 31 December 1997.
/s/ Coopers & Lybrand
London, United Kingdom
April 20, 1998
<PAGE>
Exhibit 23.3
[LETTERHEAD OF
SHACHAK PEER REZNICK & CO.]
Consent of Independent Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of
Geotek Communications, Inc. of our report and explanatory paragraph as to Geotek
Technologies Israel (1992) Ltd.'s ability to continue as a going concern dated
March 16, 1998 on our audits of the financial statements of Geotek Technologies
Israel (1992) Ltd. (f/k/a PowerSpectrum Technology Ltd.) as of December 31, 1997
and 1996, and for each of the years in the three year period ended December 31,
1997, which report appears in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
/s/ SHACHAK PEER REZNICK & CO.
Certified Public Accountants (Isr.)
April 20, 1998
Ramat - Gan, Israel
