<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For the quarterly period ended September 27, 1996 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For the transition period from to
----------- ----------------
Commission file number 0-19903
METRICOM, INC.
(A Delaware Corporation)
I.R.S. Employer Identification #77-0294597
980 University Avenue
Los Gatos, CA 95030-2375
(408) 399-8200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of common stock outstanding as of November 6, 1996
was 13,490,091 .
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations 8
Liquidity and Capital Resources 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE PAGE 15
EXHIBIT INDEX 16
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
METRICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Sept. 27, Dec. 31,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents ................................... $ 33,543 $ 5,201
Short-term investments ................................. 33,803 40,090
Accounts receivable .................................... 733 439
Inventories ............................................ 3,408 4,467
Prepaid expenses and other ............................. 1,805 1,666
--------- ---------
Total current assets ............................... 73,292 51,863
PROPERTY AND EQUIPMENT, net .............................. 21,209 14,923
LONG-TERM INVESTMENTS .................................... 13,129 19,124
OTHER ASSETS ............................................. 3,604 166
--------- ---------
Total assets ....................................... $ 111,234 $ 86,076
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ....................................... $ 5,083 $ 3,296
Accrued liabilities .................................... 3,917 1,796
--------- ---------
Total current liabilities .......................... 9,000 5,092
--------- ---------
DEFERRED RENT ............................................ 479 510
--------- ---------
LONG-TERM DEBT ........................................... 45,000 --
--------- ---------
MINORITY INTEREST ........................................ 1,205 100
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock ........................................... 13 13
Additional capital ..................................... 132,553 130,831
Unrealized holding gain (loss) on investments .......... (60) 155
Accumulated deficit .................................... (79,956) (50,625)
--------- ---------
Total stockholders' equity ......................... 55,550 80,374
--------- ---------
Total liabilities and stockholders' equity ......... $ 111,234 $ 86,076
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
3
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METRICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPT. 27, 1996 SEPT. 29, 1995 SEPT. 27, 1996 SEPT. 29, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Product revenues ........................ $ 644 $ 1,628 $ 4,362 $ 3,982
Service revenues ........................ 704 192 1,243 542
-------- -------- -------- --------
Total revenues ...................... 1,348 1,820 5,605 4,524
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of product revenues ................ 312 919 2,258 2,446
Cost of service revenues ................ 4,572 2,323 11,479 6,328
Research and development ................ 2,295 2,629 6,910 7,050
Selling, general and
administrative ....................... 5,350 3,089 13,202 8,892
-------- -------- -------- --------
Total costs and expenses .............. 12,529 8,960 33,849 24,716
-------- -------- -------- --------
Loss from operations .................. (11,181) (7,140) (28,244) (20,192)
INTEREST EXPENSE .......................... (349) -- (349) --
INTEREST INCOME, net ...................... 776 1,100 2,262 3,371
-------- -------- -------- --------
Net loss .............................. $(10,754) $ (6,040) $(26,331) $(16,821)
======== ======== ======== ========
NET LOSS PER SHARE......................... $ (0.80) $ (0.46) $ (1.97) $ (1.29)
======== ======== ======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING ................... 13,462 13,166 13,382 13,047
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
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METRICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Sept. 27, Sept. 29,
--------- ---------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................. $(26,331) $(16,821)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation and amortization ........................................ 2,745 1,048
(Increase) decrease in accounts receivable,
prepaid expenses and other current assets .......................... (433) 318
(Increase) decrease in inventories ................................... 1,059 (672)
Increase in accounts payable, accrued liabilities,
customer deposits and other ........................................ 3,877 2,139
-------- --------
Net cash used in operating activities ............................ (19,083) (13,988)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ....................................... (9,012) (5,144)
(Increase) decrease in other assets ...................................... (1,191) 9
(Purchases) sales of short-term and long-term
investments ........................................................... 12,067 (10,656)
-------- --------
Net cash provided by (used in ) investing activities ............. 1,864 (15,791)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock ................................... 1,106 1,309
Proceeds from issuance of long-term debt, net ............................ 43,350 --
Contributions from minority interest ..................................... 1,105 100
-------- --------
Net cash provided by financing activities ........................ 45,561 1,409
-------- --------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS .............................................................. 28,342 (28,370)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD .................................. 5,201 35,460
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD ........................................ $ 33,543 $ 7,090
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
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METRICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Metricom, Inc. (the
"Company") presented in this Form 10-Q are unaudited. In the opinion of
management, the accompanying condensed consolidated financial statements reflect
all normal recurring adjustments necessary for a fair presentation of operations
for the three- and nine-month periods ended September 27, 1996 and September 29,
1995. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and the notes thereto incorporated by reference in the
Company's Annual Report on Form 10-K, as amended, for the year ended December
31, 1995, as filed with the Securities and Exchange Commission.
Certain amounts have been restated from the previously reported
balances to conform to the 1996 presentation. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
The results of operations for the three- and nine-month periods ended
September 27, 1996 and September 29, 1995 are not necessarily indicative of the
results expected for the full fiscal year or for any other fiscal period.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market and include purchased parts, labor and manufacturing overhead.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 27, DECEMBER 31,
1996 1995
------ ------
<S> <C> <C>
Raw materials $2,101 $1,786
Work-in-progress 619 1,459
Finished goods 688 1,222
------ ------
Total $3,408 $4,467
====== ======
</TABLE>
6
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NOTE 3. NET LOSS PER SHARE
Net loss per share has been computed using the weighted average number
of shares of common stock outstanding. Common equivalent shares from options and
warrants to purchase common stock and common stock issuable upon conversion of
the Company's 8% Convertible Subordinated Notes have been excluded from the
calculation as their effect would be anti-dilutive.
NOTE 4. LONG-TERM DEBT
On August 28, 1996, the Company issued $45 million principal amount of
unsecured, 8% Convertible Subordinated Notes (the "Notes") due September 15,
2003. Interest is payable semi-annually on March 15 and September 15, commencing
March 15, 1997. The Notes are convertible into shares of the Company's Common
Stock, unless previously redeemed or repurchased, at a conversion price of
$14.55 per share, subject to adjustment in certain events. The Notes are
redeemable, in whole or in part, at the option of the Company at any time on or
after September 15, 1999, at the following redemption prices if redeemed during
the 12-month period commencing September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
1999 104.0
2000 102.7
2001 101.3
2002 100.0
</TABLE>
In the event of a Change of Control, as defined in the indenture, each
holder of the Notes will have the right to require the Company to purchase all
or any part of such holder's Notes at 101% of the principal amount, plus accrued
and unpaid interest and liquidated damages, if any.
NOTE 5. OPTION TO ACQUIRE OVERALL WIRELESS COMMUNICATIONS CORPORATION
In February 1996, the Company purchased an option to acquire Overall
Wireless Communications Corporation ("Overall Wireless"), a corporation that
holds a nationwide, wireless communications license issued by the Federal
Communications Commission (the "FCC") with respect to 50 kHz of radio spectrum
in the 220 to 222 MHz frequency band. The Company paid $700,000 for the option
and agreed to loan to Overall Wireless up to $2 million for the construction of
a system utilizing the license, of which approximately $500,000 had been loaned
as of September 27, 1996. The option, which terminates in January 1997, may be
extended until July 1997 upon payment by the Company of an additional $500,000.
The additional consideration payable upon exercise of the option includes a
combination of cash and stock valued at $7.3 million in the aggregate. The
Company's ability to exercise the option is conditioned upon the occurrence of a
number of events, including Overall Wireless' completion of 40% of the system
prior to July
7
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29, 1997 and approval by the FCC of the transfer of the license. There can be no
assurance that these conditions will be met prior to expiration of the option.
If the option expires unexercised under certain circumstances, the Company may
be required to pay a termination fee of up to $2 million, which may be paid
through cancellation of the indebtedness of Overall Wireless.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Except for historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, uncertainty of market acceptance of the Company's products and
services, availability of sufficient financial, management, technical and
marketing resources, technological feasibility and availability of the Company's
Ricochet radios and modems, the ability of the Company to lease or acquire sites
for its network infrastructure and those discussed in the section entitled "Risk
Factors" and elsewhere in the Company's Form 10-K, as amended, for the year
ended December 31, 1995, as well as those elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
Revenues
Total revenues decreased to $1.3 million in the third quarter of 1996
and increased to $5.6 million for the first nine months of 1996 from $1.8
million in the third quarter of 1995 and $4.5 million for the first nine months
of 1995. Product revenues decreased to $644,000 in the third quarter of 1996 and
increased to $4.4 million for the first nine months of 1996 compared to $1.6
million in the third quarter of 1995 and $4.0 million for the first nine months
of 1995. The decrease in product revenues in the third quarter of 1996 was due
to an expected decline in shipments of UtiliNet(R) products to the Company's
largest electric utility customer. UtiliNet is Metricom's customer-owned
wireless data communications system for industrial control and monitoring.
Service revenues increased to $704,000 in the third quarter of 1996 and to $1.2
million for the first nine months of 1996 from $192,000 in the third quarter of
1995 and $542,000 for the first nine months of 1995. The increase in service
revenues is primarily due to increased subscriber fees and modem rentals for the
Company's Ricochet(TM) service. Ricochet service provides subscriber-based,
wireless data communications and Internet access for users of portable and
desktop computers.
8
<PAGE> 9
A broad market for wide area wireless data communications has not yet
developed. As a result, the extent of the potential demand for the Ricochet
service cannot be reliably estimated, and there can be no assurance that the
Company will be able to achieve or sustain profitability. Additionally, the
Company's revenues have historically fluctuated from quarter to quarter based on
such factors as the timing of significant customer orders, the timing of product
shipments and customer buying patterns.
Cost of Revenues
Cost of product revenues decreased to $312,000 in the third quarter of
1996 from $919,000 in the third quarter of 1995 and decreased to $2.3 million
for the first nine months of 1996 from $2.4 million in the comparable period of
1995. The cost of product revenues as a percent of product revenues decreased to
48% in the third quarter of 1996 and to 52% for the first nine months of 1996
from 56% in the third quarter of 1995 and 61% for the first nine months of 1995.
The increase on a dollar basis was primarily due to increased product sales
during 1996. The decrease on a percentage basis was primarily due to a more
favorable mix of the Company's UtiliNet products.
Cost of service revenues increased to $4.6 million in the third quarter
of 1996 from $2.3 million in the third quarter of 1995 and increased to $11.5
million for the first nine months of 1996 from $6.3 million in the comparable
period of 1995. Cost of service revenues are primarily costs incurred to deploy
and operate Ricochet networks, the cost to obtain site agreements for the
Company's network infrastructure and certain costs associated with manufacturing
the Company's network components. The increase in 1996 is due to a higher level
of Ricochet network deployment and activity to obtain necessary site agreements
in 1996 as compared to 1995. These costs are expected to increase significantly
as a result of the continued deployment of Ricochet networks. Revenues from the
sale of Ricochet services are not expected to be sufficient to cover the cost of
revenues for the foreseeable future.
Research and Development
Research and development expenses decreased slightly to $2.3 million in
the third quarter of 1996 and to $6.9 million for the first nine months of 1996
from $2.6 million in the third quarter of 1995 and from $7.0 million for the
first nine months of 1995. Research and development activities include
enhancements to the technology employed by the Company's networks and
development of Ricochet modems. The Company plans to continue a high level of
investment in research and development for the foreseeable future.
9
<PAGE> 10
Selling, General and Administrative
Selling, general and administrative expenses increased to $5.3 million
in the third quarter of 1996 and to $13.2 million for the first nine months of
1996 from $3.1 million in the third quarter of 1995 and from $8.9 million for
the first nine months of 1995. These increases were primarily due to increased
selling and customer support expense as a result of personnel additions and
increased marketing and promotion activity for Ricochet. In addition,
administrative expenses increased primarily due to increases in personnel
throughout the first nine months and due to higher professional fees associated
with addressing regulatory matters and developing strategic relationships in the
third quarter. Selling, general and administrative expense is expected to
increase in the foreseeable future as a result of the continued
commercialization of Ricochet.
LIQUIDITY AND CAPITAL RESOURCES
As of September 27, 1996, the Company had cash and equivalents and
short-term and long-term investments of $80.5 million and working capital of
$64.3 million. On August 28, 1996, the Company issued $45 million principal
amount of unsecured, 8% Convertible Subordinated Notes (the "Notes") due
September 15, 2003. Interest is payable semi-annually on March 15 and September
15, commencing March 15, 1997. The Notes are convertible into shares of the
Company's Common Stock, unless previously redeemed or repurchased, at a
conversion price of $14.55 per share, subject to adjustment in certain events.
Accounts receivable increased to $733,000 as of September 27, 1996,
from $439,000 as of December 31, 1995, due to increased shipments of UtiliNet
products at the end of the third quarter of 1996 as compared to the fourth
quarter of 1995 and increased Ricochet sales. Inventories decreased to $3.4
million as of September 27, 1996, from $4.5 million as of December 31, 1995,
primarily as a result of improved inventory management. The Company believes
that both accounts receivable and inventories will increase in the future in
order to support the commercialization of Ricochet.
Capital expenditures were $9.0 million and $5.1 million in the
nine-month periods ended September 27, 1996 and September 29, 1995,
respectively. Capital spending was primarily due to capital expenditures for
Ricochet network equipment, Ricochet modems rented to subscribers and computer
and office equipment. The Company expects to continue to make significant
capital expenditures in connection with the development, deployment and
commercialization of its Ricochet networks. The Company also expects that, to
the extent the Ricochet subscriber base grows, significant capital expenditures
will be required to fund the cost of Ricochet modems rented to subscribers. The
timing and amount of such expenditures, however, may vary significantly
depending on numerous factors including market acceptance, availability and
financial terms of site agreements for the Company's network infrastructure,
availability of radios and portable radio modems and availability of sufficient
management, technical, marketing and financial resources.
10
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The Company has agreed to loan up to $2 million to Overall Wireless, of
which approximately $500,000 had been loaned as of September 27, 1996, in
connection with the construction of a wireless communication system in the 220
to 222 MHz frequency band. The Company has also purchased an option to acquire
Overall Wireless. The option, which terminates in January 1997, may be extended
until July 1997 upon payment by the Company of an additional $500,000. The
additional consideration payable upon exercise of the option includes a
combination of cash and stock valued at $7.3 million in the aggregate.
The Company believes that significant additional capital will be
required in the future to fund further development, deployment and
commercialization of its Ricochet networks. There can be no assurance that such
additional funds will be available on commercially reasonable terms or at all.
The Company believes that its existing available cash and interest income from
cash investments will be adequate to satisfy its working capital and capital
expenditure requirements at least through the third quarter of 1997. The amount
and timing of such expenditures, however, may vary significantly depending on
the factors listed above.
11
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PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
In connection with its acquisition of an option to acquire
Overall Wireless, the Company was named as a defendant in US
MobilComm Inc., et al. ("US MobilComm") v. Warren, et al., an
action filed in the United States District Court for the
Western District of Oklahoma in September 1994. US MobilComm
alleged that Overall Wireless breached an oral agreement to
transfer an interest in its national FCC license. In May 1996,
US MobilComm filed an amended complaint naming the Company as
a defendant, alleging that the Company tortiously interfered
with its oral agreement with Overall Wireless. US MobilComm
seeks specific performance, including transfer of the license
to them, subject to the approval of the FCC, and alleges
damages for, among other things, lost revenues, profits and
business opportunities in excess of $100 million. Although the
Company is entitled to indemnification with respect to the
litigation by the sole stockholder of Overall Wireless, it is
possible that the indemnitor will not have sufficient assets
to reimburse the Company for any damages awarded. While
management believes that the allegations are without merit and
that the resolution of this matter will not have a material
adverse effect on the Company's business, financial condition
or operating results, there can be no assurance to that
effect. In September 1996, the Company was dismissed from the
action for lack of jurisdiction.
ITEM 2: CHANGES IN SECURITIES
On August 28, 1996, the Company issued $45 million aggregate
principal amount of 8% Convertible Subordinated Notes due 2003
(the "Notes") in a private placement without registration
under the Securities Act of 1933, as amended (the "Act"), in
reliance on Section 4(2) of the Act, or Regulation D
promulgated thereunder, and Regulation S under the Act. The
Notes were sold only to qualified institutional buyers and a
limited number of other accredited investors that represented
to the Company their intention to acquire the securities for
investment only and not with a view to or for sale in
connection with any distribution thereof and to certain
non-U.S. persons in sales outside the United States within the
meaning of Regulation S under the Act. Furman Selz LLC and
Feshbach Brothers Investor Services Inc. acted as placement
agents and received a 3% placement fee with respect the
original issuance of the Notes.
12
<PAGE> 13
The Notes are convertible into Common Stock of the Company at any time
on or after November 26, 1996 and prior to the close of business on
September 15, 2003, unless previously redeemed or repurchased, at a
conversion price of $14.55 per share, subject to adjustment in certain
events.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) A Special Meeting of Stockholders of Metricom, Inc. was held
on August 7, 1996.
b) The matters voted upon at the meeting and the voting of
stockholders with respect thereto are as follows:
1) Approve an amendment to the Company's Restated Certificate of
Incorporation to increase the authorized number of shares of
Common Stock from 20,000,000 to 50,000,000.
For: 9,323,499 Against: 939,576 Abstain: 17,331
2) Approve an amendment to the Company's 1993 Non-Employee
Directors' Stock Option Plan, as amended, to permit additional
non-discretionary grants of options to non-employee directors.
For: 9,351,112 Against: 722,452 Abstain: 38,183
No Vote: 168,659
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation, as amended
4.6(1) Form of Notes
4.7(1) Indenture dated as of August 15, 1996 between the
Company and U.S. Trust Company of California, N.A.
10.15 1993 Non-Employee Directors' Plan, as amended
10.29(1) Registration Rights Agreement dated August 28, 1996, among
the Company, Furman Selz LLC and Fesbach Brothers Investor
Services, Inc.
10.30(1) Placement Agreement dated August 20, 1996, among
the Company, Furman Selz LLC and Fesbach Brothers Investor
Services, Inc.
27.0 Financial Data Schedules
(1) Incorporated by reference from the Company's current
report on Form 8-K filed September 11, 1996.
13
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(b) Reports on Form 8-K
1. Form 8-K filed on September 11, 1996, regarding the private
placement of $45,000,000 of 8% convertible subordinated
notes due 2003.
2. Form 8-K filed on August 26, 1996, regarding the Company's
announcement of a private placement of 8% convertible
subordinated notes due 2003.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METRICOM, INC.
(Registrant)
/s/ William D. Swain
Date: November 7, 1996 --------------------------------------
By: William D. Swain
Chief Financial Officer, Secretary
and Duly Authorized Officer
15
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Exhibit Index
3.1 Restated Certificate of Incorporation, as amended
4.6(1) Form of Notes
4.7(1) Indenture dated as of August 15, 1996 between the Company and U.S.
Trust Company of California, N.A.
10.15 1993 Non-Employee Directors' Plan, as amended
10.29(1) Registration Rights Agreement dated August 28, 1996, among the
Company, Furman Selz and Fesbach Brothers Investor Services Inc.
10.30(1) Placement Agreement dated August 20, 1996, among the Company, Furman
Selz and Fesbach Brothers Investor Services Inc.
27.0 Financial Data Schedules
(1) Incorporated by reference from the Company's current report on Form 8-K
filed September 11, 1996
16
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Exhibit 3.1
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
METRICOM, INC.
METRICOM, INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify that:
1. The name of the corporation is Metricom, Inc.
2. The date on which the Amended and Restated Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware was
May 8, 1992.
3. The Board of Directors of the Corporation adopted the following
resolutions as required by Section 151 of the General Corporation Law of the
State of Delaware at a meeting duly called and held on May 17, 1996:
RESOLVED, that upon the effective date of this Amendment of
the Amended and Restated Certificate of Incorporation, Paragraph A of Article IV
of the Amended and Restated Certificate of Incorporation shall read as follows:
"A. This Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common
Stock" and "Preferred Stock." The total number of shares which
the corporation is authorized to issue is Fifty-two million
(52,000,000) shares. Fifty million (50,000,000) shares shall
be designated Common Stock, each having a par value of one
tenth of one cent ($0.001). Two million (2,000,000) shares
shall be Preferred Stock, each having a par value of one-tenth
of one cent ($0.001)."
4. Thereafter pursuant to a resolution of the Board of Directors this
Certificate of Amendment was submitted to the stockholders of the corporation
for their approval in accordance with the provisions of Sections 222 and 242 of
the General Corporation Law of the State of Delaware at a meeting duly called
and held on August 7, 1996.
5. The above Amendment has been duly adopted in accordance with the
provisions of Sections 222 and 242 of the General Corporation Law of the State
of Delaware.
6. All other provisions of the Amended and Restated Certificate of
Incorporation shall remain in full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, Metricom, Inc. has caused this certificate to be
signed by its President and Chief Executive Officer, Robert P. Dilworth, and
attested to by its Secretary, William D. Swain, this 13th day of August 1996.
METRICOM, INC.
/s/ Robert P. Dilworth
----------------------------------------
Robert P. Dilworth
President and Chief Executive Officer
ATTEST:
/s/ William D. Swain
- -----------------------------
William D. Swain
Secretary
2.
<PAGE> 3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
METRICOM, INC.
ROBERT P. DILWORTH and WILLIAM D. SWAIN hereby certify that:
1. They are the President and Secretary, respectively, of METRICOM,
INC., a Delaware corporation.
2. The date of filing of the corporation's original Certificate of
Incorporation was October 24, 1991.
3. The Amended and Restated Certificate of Incorporation of said
corporation as provided in Exhibit A hereto was duly adopted in accordance with
the provisions of Section 242 and Section 245 of the General Corporation Law of
the State of Delaware by the Board of Directors of the corporation.
4. Pursuant to Section 245 of the Delaware General Corporation Law,
approval of the stockholders of the corporation has been obtained.
5. The Amended and Restated Certificate of Incorporation so adopted
reads in full as set forth in Exhibit A attached hereto and hereby incorporated
by reference.
IN WITNESS WHEREOF, the undersigned have signed this certificate this
8th day of May 1992 and hereby affirm and acknowledge under penalty of perjury
that the filing of this Restated Certificate of Incorporation is the act and
deed of Metricom, Inc.
METRICOM, INC.
/s/ Robert P. Dilworth
----------------------------------------
Robert P. Dilworth
President and Chief Executive Officer
ATTEST:
/s/ William D. Swain
- -------------------------
William D. Swain
Secretary
<PAGE> 4
AMENDED AND RESTATED EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
METRICOM, INC.
I.
The name of this corporation is Metricom, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 32 Loockermen Square, Suite L-100, City of Dover, County of Kent,
and the name of the registered agent of the corporation in the State of Delaware
at such address is The Prentice-Hall Corporation System, Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
A. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under Delaware
law.
B. The Corporation is authorized to provide indemnification of agents
(as defined in Section 145 of the Delaware General Corporation Law) for breach
of duty to the Corporation and its stockholders through bylaw provisions,
through agreements with the agents, and/or through stockholder resolutions, or
otherwise, in excess of the indemnification otherwise permitted by Section 145
of the Delaware General Corporation Law.
C. Any repeal or modification of this Article III shall be prospective
and shall not affect the rights under this Article III in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is twenty-two million
(22,000,000) shares. Twenty million (20,000,000) shares shall be Common Stock,
each having a par value of one tenth of one cent ($.001). Two million
(2,000,000) shares shall be Preferred Stock, each having a par value of one
tenth of one cent ($.001).
1.
<PAGE> 5
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
pursuant to the Delaware General Corporation Law, to fix or alter from time to
time the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof, including
without limitation the dividend rights, dividend rate, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions),
redemption price or prices, and the liquidation preferences of any wholly
unissued series of Preferred Stock, and to establish from time to time the
number of shares constituting any such series and the designation thereof, or
any of them (a "Preferred Stock Designation"); and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding. In
case the number of shares of any series shall be decreased in accordance with
the foregoing sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
C. No share or shares of any series of Preferred Stock acquired by the
Corporation by reason of redemption, purchase, conversion or otherwise shall be
reissued as part of such series, and the Board of Directors is authorized,
pursuant to Section 243 of the Delaware General Corporation Law, to retire any
such share or shares. The retirement of any such share or shares shall not
reduce the total authorized number of shares of Preferred Stock.
V.
For the management of the business and for the conduct of the affairs
of the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted from time to time by the Board of Directors.
The directors shall be divided into three classes designated as Class
I, Class II and Class III, respectively. Directors shall be assigned to each
class in accordance with a resolution or resolutions adopted by the Board of
Directors. At the first annual meeting of stockholders following the closing of
the Initial Public Offering, the term of office of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class III directors shall expire and Class
III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
2.
<PAGE> 6
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes shall be filled by either
(i) the affirmative vote of the holders of a majority of the voting power of the
then-outstanding shares of voting stock of the corporation entitled to vote
generally in the election of directors (the "Voting Stock") voting together as a
single class; or (ii) by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum of the Board of
Directors. Newly created directorships resulting from any increase in the number
of directors shall, unless the Board of Directors determines by resolution that
any such newly created directorship shall be filled by the stockholders, be
filled only by the affirmative vote of the directors then in office, even though
less than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been elected and
qualified.
B. The Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. In
furtherance and not in limitation of the power conferred by statute, the Board
of Directors is expressly authorized to adopt, amend, supplement or repeal the
Bylaws.
C. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
D. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.
E. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
F. Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause by the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
3.
<PAGE> 7
VI.
Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Article V or
Article VIII.
VII.
The corporation is to have perpetual existence.
VIII.
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in Article VI of this
Certificate, and all rights conferred upon the stockholders herein are granted
subject to this right.
4.
<PAGE> 1
Exhibit 10.15
METRICOM, INC.
1993 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED FEBRUARY 9, 1993
AMENDED NOVEMBER 1, 1993
APPROVED DECEMBER 23, 1993
AMENDED JANUARY 1995
APPROVED MAY 16, 1995
AMENDED JUNE 6, 1996
APPROVED AUGUST 7, 1996
1. PURPOSE
(a) The purpose of the 1993 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of Metricom, Inc. (the
"Company") who is not otherwise an employee of the Company or of any Affiliate
of the Company (each such person being hereafter referred to as a "Non-Employee
Director") will be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
1.
<PAGE> 2
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate three hundred thousand
(300,000) shares of the Company's common stock. If any option granted under the
Plan shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY
Options shall be granted only to Non-Employee Directors of the Company.
2.
<PAGE> 3
5. NON-DISCRETIONARY GRANTS
(a) Each person who is first elected or appointed as a Non-Employee
Director on or after June 6, 1996 shall, upon such date of initial election or
appointment, be granted an option to purchase seven thousand (7,000) shares of
common stock of the Company on the terms and conditions set forth herein.
(b) On January 1 of each calendar year thereafter, each person who is
serving as a Non-Employee Director shall be granted an option to purchase seven
thousand (7,000) shares of common stock of the Company on the terms and
conditions set forth herein, provided such person has continuously served as a
Non-Employee Director for at least three (3) months prior to the January 1 grant
date.
6. OPTION PROVISIONS
Each option shall contain the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the date of grant. If the optionee's service as a
Non-Employee Director of the Company terminates for any reason or for no reason,
the option shall terminate on the earlier of the Expiration Date or the date
three (3) months following the date of termination of service; provided,
however, that if such termination of service is due to the optionee's death, the
option shall terminate on the earlier of the Expiration Date or eighteen (18)
months following the date of the optionee's death. In any and all circumstances,
an option may be exercised following termination of the optionee's service as a
Non-Employee Director of the Company only as to that number of shares as to
which it was exercisable on the date of termination of such service under the
provisions of subparagraph 6(e).
3.
<PAGE> 4
(b) Subject to subparagraph 4(b), the exercise price of each option
shall be one hundred percent (100%) of the fair market value of the stock
subject to such option on the date such option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his guardian or
legal representative.
(e) The option shall become exercisable in three (3) equal annual
installments commencing on the date one (1) year after the date of grant of the
option, provided that the optionee has, during the twelve (12)-month period
prior to such annual vesting date, continuously served as a Non-Employee
Director or as an employee of or consultant to the Company or any Affiliate of
the Company, whereupon such option shall become exercisable with respect to that
portion of the shares represented by such installment.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then- currently-effective
registration statement under the Securities Act of 1933, as amended (the
4.
<PAGE> 5
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
5.
<PAGE> 6
9. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the stockholders of the
Company provided for in the Bylaws of the Company and such other information
regarding the Company as the holder of such option may reasonably request.
(c) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(d) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(e) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other
6.
<PAGE> 7
withholding tax required to be withheld with respect to such sale or transfer,
or such removal or lapse, is made available to the Company for timely payment of
such tax.
10. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and all
outstanding options thereunder will be appropriately adjusted in the class(es)
and maximum number of shares subject to the Plan and the class(es) and number of
shares and price per share of stock subject to outstanding options.
(b) In the event of: (1) a merger or consolidation in which the Company
is not the surviving corporation; (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (3) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged, then,
to the extent permitted by applicable law, the time during which such option may
be exercised shall be accelerated and the options terminated if not exercised
prior to such event.
11. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan,
provided, however, that the Board shall not amend the Plan more than once every
six (6) months, with respect to the provisions of the Plan which relate to the
amount, price and timing of grants, other than to comport with changes in the
Code, the Employee Retirement Income Security Act,
7.
<PAGE> 8
or the rules thereunder. Except as provided in paragraph 10 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:
(i) Increase the number of shares which may be issued
under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to comply with the requirements of Rule 16b-3);
or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to comply with
the requirements of Rule 16b-3.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be altered or impaired by such amendment unless
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on February 8, 2003. No options may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
8.
<PAGE> 9
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE
(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
stockholders of the Company.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
9.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS CONTAINED IN
THE COMPANY'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 27,1996.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMETS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-27-1996
<CASH> 33,543
<SECURITIES> 33,803
<RECEIVABLES> 733
<ALLOWANCES> 0
<INVENTORY> 3,408
<CURRENT-ASSETS> 73,292
<PP&E> 26,708
<DEPRECIATION> 5,499
<TOTAL-ASSETS> 111,234
<CURRENT-LIABILITIES> 9,000
<BONDS> 45,000
0
0
<COMMON> 13
<OTHER-SE> 55,537
<TOTAL-LIABILITY-AND-EQUITY> 111,234
<SALES> 4,362
<TOTAL-REVENUES> 5,605
<CGS> 2,258
<TOTAL-COSTS> 13,737
<OTHER-EXPENSES> 20,112
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 349
<INCOME-PRETAX> (26,331)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,331)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,331)
<EPS-PRIMARY> (1.97)
<EPS-DILUTED> (1.97)
</TABLE>
