As filed with the Securities and Exchange Commission on July 24, 2000.
Registration No. 333-
-----
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
MOTIENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
(703) 758-6000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------
Randy S. Segal
Senior Vice President, General
Counsel and Secretary
Motient Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
(703) 758-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (as defined below), other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
----------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
-------------------------------- ------------------- ---------------------- ---------------------- ------------------
Proposed Maximum Proposed Maximum
Offering Price Aggregate Offering Amount of
Title of Each Class of Amount Being Per Unit(1) Price(1) Registration Fee
Securities to be Registered Registered
-------------------------------- ------------------- ---------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value
per share $600,000,000(2) $600,000,000(2)(3) $600,000,000(2)(3) $158,400
Preferred Stock, $.01 par
value per share
Warrants
-------------------------------- ------------------- ---------------------- ---------------------- ------------------
</TABLE>
(1) Estimated in accordance with Rule 457 under the Securities Act solely
for the purpose of computing the amount of the registration fee.
(2) Not specified as to each class of security to be registered pursuant to
General Instruction II.D. of Form S-3. An indeterminate number of
shares of common stock, preferred stock and warrants as may be issued
from time to time at indeterminate prices.
(3) In no event will the aggregate initial public offering price of all
securities issued from time to time by the Registrant pursuant to this
registration statement exceed $600,000,000. The aggregate amount of
common stock registered hereunder is further limited to that which is
permissible under Rule 415(a)(4) of the Securities Act. The securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
---------------
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 this registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
Subject to Completion, Dated July 24, 2000
PRELIMINARY PROSPECTUS
[MOTIENT LOGO OMITTED]
MOTIENT CORPORATION
---------------
$600,000,000
Common Stock, Preferred Stock and Warrants
---------------
We may offer from time to time in one or more offerings an aggregate of
up to $600,000,000 of our common stock, preferred stock, and warrants to
purchase our common stock or preferred stock. We may offer the common stock,
preferred stock, and warrants (collectively, the "securities") separately or
together, in separate series in amounts, at prices and on terms to be set forth
in one or more supplements to this prospectus (each, a "prospectus supplement").
When we decide to issue securities, we will provide you with the specific terms
and the public offering price of the securities in prospectus supplements. You
should read this prospectus and the prospectus supplements carefully before you
invest. This prospectus may not be used by us to offer or sell securities unless
accompanied by a prospectus supplement.
Our common stock is listed on the Nasdaq National Market under the
symbol "MTNT." On July 21, 2000, the last reported sale price of our common
stock on the Nasdaq National Market was $14.06 per share.
See "Risk Factors" beginning on page 5 of this prospectus to read about
certain risks that you should consider before buying shares of our common stock.
---------------
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
---------------
The date of this prospectus is , 2000.
-------
<PAGE>
-ii-
TABLE OF CONTENTS
PAGE
About This Prospectus........................................................iii
About Motient..................................................................1
Recent Developments............................................................3
Risk Factors...................................................................5
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends..............17
Use of Proceeds...............................................................17
Plan of Distribution..........................................................17
Description of Capital Stock..................................................19
Incorporation of Certain Documents by Reference...............................22
Where You Can Find More Information...........................................23
Experts.......................................................................24
Pro Forma Financial Information..............................................P-1
This prospectus contains and incorporates forward-looking statements. All
statements regarding our expected financial position and operating results, our
business strategy and our financing plans are forward-looking statements. These
statements can sometimes be identified by our use of forward-looking words such
as "may," "will," "anticipate," "estimate," "expect," "project," or "intend."
These forward-looking statements reflect our plans, expectations and beliefs
and, accordingly, are subject to certain risks and uncertainties. We cannot
guarantee that any of such forward-looking statements will be realized.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
factors discussed in the Risk Factors section of this prospectus, as well as
other reports that we file with the Securities and Exchange Commission. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Our forward-looking statements are based on information available to us
today, and we will not update these statements. Our actual results may differ
significantly from the results discussed.
<PAGE>
--iii-
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf process, we may from time to time sell any number of the shares
of common stock and preferred stock described in this prospectus and an
indeterminate number of warrants to purchase such shares of common stock and
preferred stock in one or more offerings up to a total amount of $600,000,000.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information described
below under the heading "Where You Can Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement and the information incorporated by
reference, contains additional information about the securities offered under
this prospectus. That registration statement can be read at the Securities and
Exchange Commission, or SEC, web site or at the SEC offices mentioned below
under the heading "Where You Can Find More Information."
You should rely only on the information provided in this prospectus and
in any prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. You should not assume that the information in this prospectus, or
any supplement to this prospectus, is accurate at any date other than the date
indicated on the cover page of these documents.
<PAGE>
ABOUT MOTIENT
-------------
We are a nationwide provider of two-way, wireless mobile data services
and mobile Internet services, principally for business-to-business uses. Our
customers use our networks and applications for email messaging and dispatch and
voice communications services, enabling businesses and mobile workers to
transfer electronic information and messages and access corporate databases and
the Internet. We have developed a versatile array of services targeted at
customers in four primary market segments: (1) mobile email and other
Internet-based content services, (2) telemetry, which refers to device to device
communications for database access or remote monitoring, (3) transportation and
package delivery, and (4) field services. Our network is designed to offer a
broad array of wireless data services such as:
o two-way mobile Internet services, including our eLink(SM) wireless
email service, that provide business-to-business users integrated
wireless access to a broad range of corporate and Internet email
and Net-based information;
o telemetry systems that connect remote equipment, such as wireless
point-of-sale terminals, with a central monitoring facility;
o mobile data and call dispatch fleet management systems, used by
large transportation companies and field service organizations;
o global position tracking systems that permit businesses to manage
mobile assets; and
o point-to-multi-point voice communications systems used by natural
resource companies, utilities, government agencies and other
entities with mobile fleets and field workers.
We have been providing terrestrial wireless services to customers for
several years, using a network which possesses four key design attributes: (1)
two-way communication, (2) deep in-building penetration, (3) user mobility, and
(4) broad nationwide coverage. We offer our customers the nation's largest, most
fully-deployed terrestrial wireless two-way data network, comprising nearly
2,000 base stations that provide service to 427 of the nation's largest cities
and towns, including virtually all metropolitan areas. In 1999, we significantly
improved terrestrial network performance and coverage, adding approximately 300
new base stations. Our satellite in geosynchronous orbit overlays our
terrestrial network, thereby extending the service area coverage of our network
for certain of our service offerings throughout all 50 states and the Caribbean.
The satellite also provides nationwide voice and dispatch services. As of March
31, 2000, there were approximately 151,033 end users on our networks, of which
131,949 were using data services and 19,084 were using voice services.
We believe that our network's rapid message response time, extensive
nationwide coverage and deep in-building penetration are key competitive
advantages. Our business-to-business customers enjoy the advantages of wireless
integrated network applications and mobile Internet services for mission
critical applications, built on a fully redundant network architecture. We are
the only mobile data network to offer guaranteed message delivery to our
customers.
-1-
Our Investment in XM Radio
--------------------------
In addition to our core wireless business, we have a significant
investment in XM Satellite Radio Holdings Inc. ("XM Radio"), a development stage
company. XM Radio is seeking to become a nationwide provider of digital quality
audio entertainment and information programming transmitted directly by
satellites to vehicle, home and portable radios. XM Radio owns one of two FCC
licenses to provide a satellite digital audio radio service for the United
States. XM Radio is developing its service, which it will call "XM Radio," to
provide a wide variety of music, news, talk, sports and other programming
offering up to 100 distinctive channels. XM Radio completed its initial public
offering in October 1999.
* * *
Our principal executive offices are located at 10802 Parkridge
Boulevard, Reston, Virginia 20191-5416, and our telephone number is (703)
758-6000. We also maintain an Internet site on the World Wide Web at
www.motient.com. Information contained at our web site is not, and should not be
deemed to be, a part of this prospectus. For further information about our
business and operations, reference is made to our reports incorporated herein by
reference. See "Incorporation of Certain Information by Reference" below.
-2-
<PAGE>
RECENT DEVELOPMENTS
-------------------
On June 29, 2000, we entered into a series of transactions, with a
group of investors, relating to our satellite communications business. These
transactions are described below.
We have formed a new joint venture subsidiary, Motient Satellite
Ventures LLC ("Satellite Ventures"), in which we own 80% of the membership
interests. The remaining 20% interest in Satellite Ventures is owned by three
investors controlled by Columbia Capital, Spectrum Equity Investors LP and
Telcom Ventures, L.L.C. (collectively, the "Investors"). The Investors paid $50
million (in the aggregate) to Satellite Ventures in exchange for their 20%
interest, pursuant to an Investment Agreement, dated June 29, 2000, by and among
Motient, Satellite Ventures, and the Investors.
Of the $50 million payment received by Satellite Ventures, $6 million
is being retained by Satellite Ventures and will be used to fund certain
research and development activities, with the remaining $44 million to be paid
to Motient Services Inc. (which owns our satellite and related assets), as
described below. Motient is not required to provide additional financing to
Satellite Ventures.
Satellite Ventures will conduct research and development activities to
explore the technical, strategic, and market potential of new wireless data
communications services making use of our existing satellite network. Satellite
Ventures has signed a Research & Development, Marketing and Service Agreement,
dated June 29, 2000 (the "R&D Agreement"), with Motient Services, under which
Motient Services will provide technical, engineering, and similar assistance to
Satellite Ventures. Motient Services will also provide Satellite Ventures with
dedicated bandwidth on its satellite network, for the purpose of Satellite
Ventures' testing and R&D activities. In exchange for these access rights and
services, Satellite Ventures has paid Motient Services a one-time, up-front fee
of $20 million. The R&D Agreement has a three-year term, but would terminate
upon any consummation of the Asset Sale Agreement described below.
At any time during the next two years, the Investors have the right to
elect to purchase up to an additional 40% stake in Satellite Ventures, for an
extra payment of $120 million (which amount will increase by a specified daily
amount, after one year) (such payment is referred to as the "Additional
Payment"). Upon such exercise, Satellite Ventures will consummate the purchase
of all of the assets owned by Motient Services that relate to the satellite
business, pursuant to the terms of an Asset Sale Agreement, dated June 29, 2000,
between Satellite Ventures and Motient Services. The purchase price for such
assets will be equal to the sum of $24 million (paid as a down payment in
connection with the signing of the Asset Sale Agreement), and the Additional
-3-
<PAGE>
Payment received by Satellite Ventures from the Investors (i.e., for a total
price of $144 million, increasing after the first year). The consummation of any
such transfer of assets to Satellite Ventures pursuant to the Asset Sale
Agreement would be subject to receipt of all necessary governmental approvals
and consents, including, for example, FCC approval with respect to the transfer
of our FCC licenses with respect to our satellite communications business, and
any necessary approvals under the Hart-Scott-Rodino Antitrust Improvements Act,
as well as customary conditions relating to due diligence review and similar
matters.
Also at any time during the next two years, if the Investors decide
that they do not wish to acquire control of Satellite Ventures and acquire the
satellite assets of Motient Services as described above, they may convert their
existing minority position in Satellite Ventures into shares of our common
stock, at a conversion price which will be set at the time of exercise, between
$12 and $20 per share, as specified in the Investment Agreement. The Investors
may not exercise this right, however, until after December 29, 2000, except
under certain limited circumstances.
Under the terms of the bank facility waivers we received in connection with
these transactions, $2.75 million of the initial $44 million payment we received
was used to repay outstanding amounts, and permanently reduce commitments, under
our revolving credit facility, with the remainder of the initial $44 million
payment retained by us. If the Investors elect to acquire control of Satellite
Ventures and the Additional Payment is made as described above, then we will be
required to use 50% of such proceeds to pay down outstanding balances and/or
reduce commitments, under our revolving credit facility.
-4-
<PAGE>
RISK FACTORS
------------
You should carefully consider the risks described below together with all
of the other information provided and incorporated by reference in this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline, and you may lose
all or part of your investment.
We have substantial and continuing operating losses
---------------------------------------------------
We have incurred significant operating losses and negative cash flows
in each year since we began operations. These losses are due primarily to the
costs of developing and building our networks, and the cost of developing,
selling and providing our products and services. For the year ended December 31,
1999 and the quarter ended March 31, 2000, excluding the impact of consolidating
XM Radio, we reported operating losses of $202.7 million and $21.7 million,
respectively. For the year ended December 31, 1998, on a pro forma basis for our
acquisition of Motient Communications Company (formerly known as ARDIS Company),
we reported operating losses of approximately $93.4 million. For historical
periods prior to our acquisition of Motient Communications, we reported
operating losses of approximately $97.4 million and $120.0 million in 1997 and
1996, respectively. During these same periods, Motient Communications reported
operating losses of approximately $17.4 million and $29.2 million. In addition,
XM Radio incurred aggregate net losses of approximately $1.7 million from its
inception through December 31, 1997, and an additional $53.0 million in the
24-month period ended December 31, 1999. We expect XM Radio's net losses and
negative cash flow to continue. We expect to continue to make significant
capital outlays to fund interest expense, capital expenditures and working
capital before we begin to generate positive cash flow from operations. These
outlays are expected to continue for the foreseeable future. We expect to have
significant operating losses and will record significant net cash outflow in the
near term. We cannot guarantee that we will have sufficient resources to
complete the expenditures required to operate our business or to achieve
positive free cash flow within the time frame contemplated by our current
projections.
Since our inception, we have been engaged in developing our business,
recruiting key management and technical personnel, raising capital to fund our
operations, and developing our network. We have introduced a variety of new
products and services, some of which have not achieved widespread market
acceptance. We expect to continue to launch new products and services, some of
which will be introduced in new market segments, in order to capitalize on
emerging trends in our industry. The launch of such new products or the entry
into new market segments may require us to spend additional capital, which could
cause us to continue to incur significant operating losses. Our ability to
generate positive free cash flow will depend upon, among other factors, the
successful marketing of our services, including recently-launched services such
as our eLink wireless email service. We may not be successful in marketing and
selling such services.
-5-
<PAGE>
Our extension into new wireless markets involves risks
------------------------------------------------------
In October 1999, we launched our eLink wireless email service, which
uses a palm-sized device that combines two-way wireless email and personal
information management software. We believe that this service represents a
significant growth opportunity for us. However, the market for this type of
service is relatively untested and, therefore, there is a risk that demand for
this service will not be as substantial as we hope. The failure of this service
to gain market acceptance in a timely manner or at all or the failure to achieve
significant market penetration could harm our business. Our eLink service
competes with a variety of services that offer two-way messaging and Personal
Digital Assistant (PDA) functionality on small, portable devices. Most of these
competing services are better-established in the marketplace and many of our
competitors have substantially greater financial, technical, marketing, sales,
distribution and other resources than ours. Although we compete primarily with
Research in Motion's BlackBerry email service, we recently signed an agreement
with Research in Motion permitting us to market the BlackBerry service in the
United States for use on our network. Our primary distribution strategy for
eLink makes us substantially dependent on the efforts of third party partners
and resellers, and if such resellers fail to adequately promote our service or
otherwise perform their obligations to us, sales of the eLink service may be
less than expected. In addition, we have spent, and expect to continue to spend,
significant operating expenses and capital expenditures on the development,
testing, marketing, and distribution of the eLink service. As of March 31, 2000,
we were contractually committed to purchase approximately $6.1 million of
additional eLink devices from the manufacturer. If the service does not achieve
acceptable levels of market acceptance, these expenditures and commitments could
depress our operating results. If the service achieves market acceptance, its
success will depend, in part, on our ability to maintain an adequate supply of
devices, which are supplied by Research in Motion, a competitor in the wireless
email market over whom we have no control. The success of the eLink service will
also depend on our ability to continue to use, promote and protect the eLink
service name and the other intellectual property associated with the service.
We have substantial indebtedness, which may make our business more vulnerable
-----------------------------------------------------------------------------
As of March 31, 2000, our total indebtedness (excluding debt of XM
Radio) was approximately $470.3 million, and $463.1 million net of debt
discount. As of March 31, 2000, we had $21.0 million available under our
revolving credit facility and $1.1 million available under an equipment
financing facility from Motorola. For the quarter ended March 31, 2000 and the
year ended December 31, 1999, our earnings would have been insufficient to cover
fixed charges by approximately $4.0 million and $328.2 million, respectively,
and, on a pro forma basis after giving effect to the acquisition of Motient
Communications and the related financing as if these transactions had been
consummated on January 1 of the period presented, our earnings would have been
insufficient to cover our fixed charges by approximately $120.7 million for the
year ended December 31, 1997 and $160.0 million for the year ended December 31,
1998. At March 31, 2000, our stockholders' equity was approximately $48.2
million. We and our subsidiaries will be permitted to incur additional
indebtedness in the future.
-6-
<PAGE>
Beginning October 1, 2001, Motient Holdings Inc., our wholly-owned
subsidiary, will be required to make semi-annual interest payments of
approximately $20.5 million on our 12 1/4% senior secured notes due 2008. Prior
to October 1, 2001, these interest payments will be funded by a portion of the
interest reserve of approximately $112.3 million of restricted investments
purchased at the time the senior secured notes were issued. Historically, we
have not generated sufficient earnings or cash flow from operations to make such
interest payments.
The degree to which we are leveraged could have important consequences
to the success of our business including, but not limited to:
o increasing our vulnerability to general adverse economic and
industry conditions;
o limiting our ability to obtain additional financing to fund future
working capital, capital expenditures, research and development
and other general corporate requirements;
o requiring the dedication of a substantial portion of our cash flow
from operations to the payment of principal of, and interest on,
our indebtedness, thereby reducing the availability of such cash
flow to fund working capital, capital expenditures, research and
development or for other general corporate purposes;
o limiting our flexibility in planning for, or reacting to, changes
in our business and the industry; and
o placing us at a competitive disadvantage as compared to less
leveraged competitors.
We may need additional capital but it might not be available
------------------------------------------------------------
We expect to continue to make significant outlays to fund debt service,
capital expenditures and working capital, both before and after we become cash
flow positive. While we believe that the net proceeds from this offering,
together with existing available borrowings, proceeds from option and warrant
exercises, and proceeds from the sale of inventory relating to new
services-eLink and MobileMAX2, will be sufficient to fund operating losses,
capital expenditures, working capital, and debt service through the time when we
expect to generate positive free cash flow sufficient to fund these items, it is
possible that our cash flows from operations will be less than projected or will
not occur when projected. In such event, we will require additional debt or
equity financing in amounts that could be substantial. The type, timing and
terms of financing we may select will depend upon our cash needs, the
availability of other financing sources and the prevailing conditions in the
financial markets. We cannot guarantee that we will be able to find any such
sources at any given time on favorable terms.
-7-
<PAGE>
We cannot guarantee that our current projections will be accurate. Our
projections will depend upon numerous future factors and conditions, many of
which are outside of our control. Our projections are merely estimates of future
events and you should expect actual events to vary from current estimates,
possibly materially. In addition, if customer demand exceeds our current
expectations and we can accommodate such demand without adversely affecting the
quality of our service, we are likely to attempt to accelerate our expansion. If
we elect to introduce new products or services, our funding needs will increase,
possibly to a significant degree. If there is a rapid increase in customer
demand for recently launched services, such as our eLink wireless email service,
we may need to order substantial quantities of inventory, which will require
significant working capital which we may need to finance. In addition, we are
contractually committed to purchase significant additional quantities of the
eLink device and MobileMAX2(TM), our second generation terminal to be used with
our multi-mode messaging service. If customer demand for these devices does not
meet our expectations or if the rollout of new services is slower than
anticipated, we may need to finance significant amounts of inventory purchases.
We cannot guarantee that we will be able to secure any additional financing on
commercially reasonable terms or at all. Our cost of expanding our network and
operating our business, as well as our revenues, will depend on a variety of
factors including:
o our ability to meet our expansion schedules;
o the number of customers and the services for which they subscribe;
o the nature and penetration of new services that we and our competitors
may offer;
o regulatory changes; and
o changes in technology.
As a result, our actual costs and revenues may vary from expected amounts,
possibly to a material degree. Such variations are likely to affect our future
capital requirements. Accordingly, it is possible that we will be required to
raise substantial additional capital in the future or that our current
projections will prove to be inaccurate.
Our business could suffer if we cannot keep pace with the rapidly changing
--------------------------------------------------------------------------------
markets for wireless communications
-----------------------------------
The markets for wireless communications services change rapidly. Our
success depends, in part, on our ability to respond and adapt to such changes.
We cannot guarantee that we will be able to compete effectively under, or adjust
our contemplated plan of development to meet, changing market conditions. We
cannot guarantee that we will be able to implement our strategy or that our
strategy will be successful in these rapidly evolving markets.
The markets for wireless communications services are also marked by the
continuous introduction of new products and services and increased capacity for
services similar to those we provide. Future technological advances in the
-8-
<PAGE>
wireless communications industry may result in the availability of new products
or services. Advances may increase the efficiency of existing products or
services. If a technology becomes available that is more cost-effective or
creates a superior product, we may be unable to access such technology or
finance the necessary substantial capital expenditures that may be required. Our
technology may be rendered less profitable or less viable by existing, proposed
or as yet undeveloped technologies. We cannot guarantee that we will have the
financial and other resources available to compete effectively against companies
possessing such technologies. We are unable to predict which of the many
possible future products and services will meet evolving industry standards and
consumer demands. We cannot guarantee that we can adapt to such technological
changes or offer such products or services on a timely basis to establish or
maintain a competitive position.
Our wireless business depends on market acceptance
--------------------------------------------------
The success of our wireless communications business is subject to a
number of business, economic, regulatory and competitive factors, many of which
are beyond our control, including the extent to which prospective customers will
purchase our services. The vitality of our business depends on the successful
implementation of our growth strategy, which, in turn, depends, among other
things, on our expectation that demand for our services will increase
significantly in the markets we serve. We have not yet commercially introduced
some of our services and we cannot guarantee that any of them will achieve
market acceptance or generate operating cash flow. If we cannot gain market
acceptance for current or planned products and services then our business will
be harmed.
Based upon our expectations as to the customer demand for our services,
we have made, and will continue to make, significant capital investments. Based
on similar expectations, our subsidiaries have entered into operating leases,
equipment supply contracts and service arrangements, and are attempting to
secure financing of future equipment purchases. Accordingly, any material
miscalculation with respect to our operating strategy or business plan would
harm our business.
Our future success depends on third party distribution relationships
--------------------------------------------------------------------
A key element of our strategy is to develop and capitalize on
distribution relationships with leading companies who can provide access to
significant numbers of potential customers in our target markets. For example,
we have reseller agreements with SkyTel, Metrocall and TSR Wireless, leading
national paging companies, and we have recently signed distribution agreements
with Internet Service Providers, such as GoAmerica. We also have an important
marketing and distribution agreement with Critical Path, an email outsourcer,
and we recently announced strategic alliances with IBM and Computer Associates,
under which we will jointly develop and market wireless enterprise-wide email
and other e-business solutions to corporate customers. Because we are relying on
these distribution partners to enable us to acquire subscribers, our success in
penetrating our targeted markets will depend, to a large extent, on the efforts
of these distribution partners, as well as future distribution partners.
SkyTel's commencement of its promotional efforts for our eLink service offering
was delayed by several months from our original announced launch date. The
rollout of sales efforts by our other distribution partners may also be subject
to delays, some of which may be outside of our control. Our inability to fully
capitalize on our third party distribution agreements, the termination of or
failure to renew any of these agreements, or our inability to enter into similar
distribution relationships with other leading companies could significantly harm
our results and prospects.
-9-
<PAGE>
We depend upon our suppliers and have sole and limited sources of supply for
--------------------------------------------------------------------------------
certain products and services
-----------------------------
We depend on independent vendors to develop and manufacture wireless
communications devices for our networks, which are significant elements of our
business plan because most of our services require such devices. Certain of our
important service offering initiatives are dependent on the timely delivery of a
sufficient quantity of user devices, including the palm-sized device used with
our eLink wireless email service, which is manufactured by Research in Motion,
and MobileMAX2, the second generation terminal to be used with our multi-mode
messaging service, which is manufactured by SCI Systems, Inc. as subcontractor
to Vistar Telecommunications Inc. These suppliers do not sell such devices to us
on an exclusive basis. We carry a limited inventory of certain of these devices
and generally have no guaranteed supply arrangements. Some of our suppliers and
vendors are relatively small companies and have limited resources and production
capacity. In addition, some of our sole-source suppliers themselves rely on
sole- or limited-sources of supply for components included in their devices.
Failure of our suppliers to meet increasing demand for our services may prevent
them from continuing to supply components and devices in the quantities and
quality, and at the times required by us, or at all. In addition, from time to
time, we have experienced interruptions and/or delays of supply. We cannot
guarantee that we will not experience further interruptions or delays. In
addition, we have short-term contracts with the majority of our suppliers. We
cannot guarantee that our suppliers will continue to provide products to us at
attractive prices, or at all, or that we will be able to obtain such products in
the future from these or other providers on the scale and within the time frames
we require. Some or all of our suppliers could enter into exclusive arrangements
with our competitors, or cease selling these components to us at commercially
reasonable prices, or at all. Research in Motion, which is our current sole
supplier of devices for our eLink wireless email service, also markets and sells
BlackBerry, our primary competitor in the two-way wireless email market.
However, we recently signed an agreement with Research in Motion permitting us
to market the BlackBerry service in the United States for use on our network. If
we fail to obtain products on a timely basis at an affordable cost, or
experience any significant delays or interruptions of supply, our business will
be harmed.
Part of our growth is predicated on our suppliers reducing the cost of
wireless communications devices approved and available for use on our network.
We believe that reductions in the cost of wireless communications devices will
result in increased sales of devices, additional subscribers for our services
and a corresponding increase in our service revenues. If we fail to obtain such
cost reductions on a timely basis, or experience any significant delays of such
reductions, our revenues could be diminished.
-10-
<PAGE>
We may be unable to achieve our operating and financial objectives if we cannot
-------------------------------------------------------------------------------
manage our growth effectively
-----------------------------
We may experience periods of rapid expansion in our continuing efforts
to respond to changing market conditions. We will need to maintain and improve
our operating and financial systems and expand, train and manage our employees
in order to manage growth effectively in the complex environment in which we
operate. We must expand the capacity of our sales, distribution and installation
networks in order to achieve continued growth in our existing and future
markets. There may also be additional demands on our customer support, sales and
marketing resources as we grow our business. We will also need to quickly
develop, test, and incorporate new technology, designs, software, and systems
into existing products and services, as well as new services and applications,
in order to respond to customer demand and market conditions. Our inability to
develop and incorporate new technology quickly could harm our ability to
introduce new services. For example, delivery of the MobileMAX2 terminals was
delayed from its original target delivery date, due primarily to the need for
software enhancements. If we fail to manage our growth effectively, there could
be a material adverse effect on our business, financial condition and results of
operations.
We may be unable to achieve our business and financial objectives because the
--------------------------------------------------------------------------------
wireless communications industry is highly competitive
------------------------------------------------------
The wireless communications industry is highly competitive and is
characterized by frequent technological innovation. The industry includes major
domestic and international companies, many of which have financial, technical,
marketing, sales, distribution and other resources substantially greater than
ours and which provide, or plan to provide, a wider range of services than we
will provide. Our products and services compete with a number of communications
services, including existing satellite services, terrestrial air-to-ground
services, and terrestrial land-mobile and fixed services, and may compete with
new technologies in the future. In addition, the FCC has recently allocated
large amounts of additional spectrum for communications uses or potential uses
that could compete with us. In November 1999 the FCC granted two applications to
use a Canadian competitor's system to provide mobile messaging services in the
United States. This represents the first instance in which the FCC has
authorized competitors to provide satellite-based mobile messaging service in
the United States. The U.S. Court of Appeals affirmed the FCC's decision and we
are seeking a rehearing. Additional assignments of spectrum for such uses may
occur in the future and could make it easier for new competitors to enter the
market. In addition, increased competition has resulted in downward pressure on
pricing for certain of our products and services.
Our wireless business depends on proprietary information
--------------------------------------------------------
Our wireless communications business depends on technical knowledge,
and we believe that our future success is based, in part, on our ability to keep
up with new technological developments and incorporate them in our products and
services. We own or have the right to use certain of our work products,
inventions, designs, software, systems and similar know-how. We must diligently
protect that information, and while we have taken steps to protect such
information, we cannot guarantee that the information will not be disclosed to
-11-
<PAGE>
others or that others will not independently develop similar information,
systems and know-how. We also rely on some technologies licensed from third
parties. We cannot be sure that these licenses will remain available to us on
commercially reasonable terms or at all. The loss of such technologies could
require us to obtain substitute technology of lower quality or performance
standards or at a greater cost, which could harm our business.
Our customers are highly concentrated and our business could suffer if we lost
--------------------------------------------------------------------------------
key customers
-------------
Five customers (including IBM) accounted for an aggregate of 33% of our
service revenue for the year ended December 31, 1999, and four customers
accounted for 32% of our service revenue for the quarter ended March 31, 2000.
The loss of one or more of these customers, or any event, occurrence or
development which adversely affects our relationship with one or more of these
customers, could harm our business.
Our business could suffer if we do not meet the required service levels under
--------------------------------------------------------------------------------
our large customer contracts
----------------------------
Many of our large customer contracts include significant warranties
related to the performance of our network. In most cases, if network
availability drops below a specified percentage we could be subject to
penalties, which may be substantial.
Our future success will depend on our ability to obtain sufficient network
--------------------------------------------------------------------------------
capacity
--------
If we are successful in penetrating our targeted markets for wireless
email and telemetry, we will need, in the future, to enhance our terrestrial
network in order to have sufficient capacity to meet customer demand. This may
require that we acquire additional frequency spectrum for our network, which may
not be available to us on a timely basis and at a commercially reasonable cost,
or at all. Acquisition of more spectrum could require substantial additional
resources, which we may not have available when needed. In addition to spectrum
acquisition, expansion of our terrestrial network will require substantial
financial, operational and management resources. We may not be able to expand
our network to meet additional demand or customer requirements on a timely basis
and at a commercially reasonable cost, or at all.
Our inability to obtain access to tower and building roof rights on favorable
--------------------------------------------------------------------------------
terms could slow the expansion of our terrestrial network
---------------------------------------------------------
As we seek to expand our terrestrial network, we will need to identify
and obtain access to buildings and towers to install additional base stations,
which will require us to secure tower and roof and other building access rights.
We may also need to obtain local zoning, construction, franchises or other
governmental permits. Obtaining such permits and necessary consents, and
entering into leases with landlords or property owners on acceptable terms, may
prove to be time consuming and/or difficult. We may not be able to identify
suitable locations, or obtain necessary permits or enter into acceptable lease
-12-
<PAGE>
agreements on a timely basis or at a commercially reasonable cost, or at all.
These factors could limit our ability to expand our terrestrial network as
quickly as we might desire, which could, in turn, harm our future results and
prospects.
Our competitive position may be harmed if our wireless terrestrial network
--------------------------------------------------------------------------------
technology is licensed to others
--------------------------------
The terrestrial network, and certain of its competitive strengths, such
as deep in-building penetration, is based upon a single frequency reuse
technology. Motorola holds the patent for this technology and we hold a
non-exclusive license to use this technology. We also rely on support agreements
with Motorola for support of the operations of certain portions of the
terrestrial network. However, Motorola could enter into arrangements with our
competitors and it is possible that such agreements could harm our ability to
compete.
There are risks associated with satellite technology
----------------------------------------------------
We have an agreement with TMI Communications and Company, Limited
Partnership, a Canadian mobile satellite owner and operator, for backup,
restoral and additional capacity if our MSAT-2 satellite fails or we need
additional capacity. TMI owns and operates a satellite called MSAT-1. In return,
we have agreed to provide TMI with similar backup service on our MSAT-2
satellite. Each of the MSAT-1 and MSAT-2 satellites has in the past experienced
some malfunctions. Recent MSAT-2 malfunctions have involved either components
backed up by spare parts or did not have a material impact on current
operations. However, either or both satellites could experience future
malfunctions at any time, which could damage our ability to serve our customers
and harm our reputation in the marketplace.
MSAT-2 has an expected end of service date of 2006, subject to
potential malfunctions and other factors. For example, random failure of
satellite components could result in damage to or loss of MSAT-2. It is also
possible that electromagnetic storms or collisions with other objects could
damage the satellite, although such occurrences are rare. Although the actual
end of service date of the satellite may exceed its expected end of service
date, we cannot guarantee that the expected end of service date of the satellite
will be achieved or exceeded. Although we have in-orbit insurance for a failure
of MSAT-2, it is unlikely that any recovery under such insurance would fully
compensate us for losses we would sustain from such a failure. In addition, the
in-orbit insurance policy is subject to annual or biannual renewal, and we
cannot guarantee that insurance will remain available for coverage of MSAT-2 on
favorable terms or at commercially reasonable rates.
Our disaster recovery system for the satellite network ground segment is limited
--------------------------------------------------------------------------------
Presently, our disaster recovery systems focus on internal redundancy
and diverse routing within each of the facilities operated by or for us. For
example, the terrestrial network has access to a remote communications backup
complex that would enable us to continue to provide our terrestrial network
services in the event of a natural disaster affecting one geographic site.
-13-
<PAGE>
However, we do not currently have access to a remote backup satellite ground
communications facility that would enable us to continue to provide mobile
satellite communications services for customers in the event of a natural
disaster or other occurrence that rendered the system unavailable. Our business
is subject to the risk that such a disaster or other occurrence could hinder or
prevent us from continuing to provide some services to some or all of our
customers.
Our wireless business is subject to domestic and international regulation which
--------------------------------------------------------------------------------
could impose significant costs or otherwise harm our business
-------------------------------------------------------------
The ownership and operations of our wireless communication systems are
subject to significant regulation by the FCC under authority granted by the
Communications Act of 1934, as amended, and related federal laws. We cannot
guarantee that the rules and regulations of the FCC will continue to support our
operations as we presently conduct them and plan to conduct them in the future.
A number of our licenses are subject to renewal by the FCC. Also, our satellite
operations are subject to international frequency coordination, which requires
us to negotiate access to spectrum with other nearby satellite systems. We
cannot guarantee that all existing licenses will be renewed and requisite
frequencies coordinated. Current FCC regulations also generally limit the
ownership and control of our company by citizens or entities of certain foreign
countries to no more than 25%, which could limit your opportunity to receive a
takeover premium for your shares of common stock. In addition, despite our
efforts to monitor our foreign ownership, there can be no assurance that
non-U.S. persons or entities will not own in the aggregate more than 25% of our
common stock. If this limit is exceeded, the FCC could potentially take a range
of actions which could harm our business.
In addition, the FCC's grant in November 1999 of domestic authority to
two competitors to use a Canadian system to provide mobile messaging service in
the United States may increase the demand by these systems for spectrum in the
international coordination process and restrain our ability to coordinate our
spectrum access. The FCC is currently considering applications to use the
Inmarsat satellite system to provide mobile messaging service in the United
States. The grant of any of these applications also may further adversely impact
our ability to coordinate our spectrum access.
XM Radio's business involves significant risks and these risks may impair the
--------------------------------------------------------------------------------
value of our investment in XM Radio
-----------------------------------
In addition to our core wireless business, we have a significant
investment in XM Radio, a development stage company. There are significant risks
associated with our investment in XM Radio. XM Radio is a development stage
company with no revenues and significant future funding requirements. XM Radio's
business is subject to a number of significant risks and uncertainties. These
risks and uncertainties may impair the value of our investment in XM Radio. The
value of our investment in XM Radio represents a significant portion of our
total assets, and such value fluctuates with the market price of XM Radio's
stock.
-14-
<PAGE>
A small number of principal stockholders own over 49% of our stock and their
--------------------------------------------------------------------------------
interests may conflict with yours as a stockholder
--------------------------------------------------
Our principal stockholders are Hughes Electronics, Motorola, Baron
Capital, Inc., AT&T Wireless and XM Ventures. These stockholders collectively
hold in aggregate approximately 49.5% of our common stock on a fully diluted
basis. We have entered into material contracts and transactions with our
principal stockholders and their affiliates and we may enter into additional
contracts in the future. These contracts include the guarantee of our debt
obligations. Certain of these stockholders have other interests in the
communications industry that may conflict with our interests. Certain of these
stockholders, or their affiliates, have contracts or other relationships with XM
Radio, which has a different business plan than ours. For example, Hughes is
constructing XM Radio's satellites, and General Motors, which owns Hughes, owns
a significant equity stake in XM Radio and has entered into a long-term
distribution agreement with XM Radio. DIRECTV, a division of Hughes, also owns a
significant equity stake in XM Radio and has entered into an operational
assistance agreement with XM Radio. It is possible that these stockholders'
interests in XM Radio could conflict with their interests in Motient, and, as a
result, these stockholders could take actions that might not be in our interests
or your interests as a stockholder. Also, there can be no assurance that these
stockholders will continue to retain their current ownership position in our
company.
Our business would be harmed if we cannot attract and retain our key personnel
------------------------------------------------------------------------------
We are dependent on the efforts of a group of employees with
specialized technical and business knowledge regarding our systems. If we lose
the services of one or more of these individuals it could harm our business and
our future prospects. Our future success will also depend on our ability to
attract and retain additional management and technical personnel required in
connection with the growth and development of our business. If we fail to retain
or attract such key personnel our business would suffer. We do not maintain key
man life insurance on any of our officers or employees.
Our charter and bylaws contain anti-takeover provisions that could adversely
affect the price of our common stock
Our certificate of incorporation and bylaws and the Delaware General
Corporation Law contain provisions that may have the following effects:
o discouraging, delaying or making more difficult a change in control; and
o preventing the removal of incumbent directors.
The existence of these provisions may negatively impact the price of
our common stock and may discourage third-party bids. These provisions may
reduce any premiums paid to stockholders for their common stock. Furthermore, we
are subject to Section 203 of the Delaware General Corporation Law, which
governs business combinations with interested stockholders and could have the
effect of delaying or preventing a change in control.
Our certificate of incorporation also allows our board of directors to
issue up to 200,000 shares of preferred stock and to fix the rights, privileges
and preferences of such shares without any further vote or action by the
stockholders. If this preferred stock is issued in the future, the rights of the
holders may adversely affect the rights of the holders of common stock. While we
have no present intention to issue shares of preferred stock, any such issuance
could be used to discourage, delay or make more difficult a change in control.
-15-
<PAGE>
We do not intend to pay dividends
---------------------------------
We have not declared or paid any dividends on our common stock since
our date of inception. We intend to retain any earnings to support the growth
and development of our business and we have no present intention of paying
dividends in the foreseeable future. In addition, our ability to pay dividends
is restricted by agreements we have made with several banks in connection with
our loans and credit facility arrangements.
The price of our common stock is volatile
-----------------------------------------
Historically, the market prices for securities of emerging companies in
the telecommunications industry have been highly volatile. Future announcements
concerning our business or the business of our competitors, including results of
technological innovations, new commercial products, or government regulations
may have a significant impact on the market price of our common stock. Our
common stock has been thinly traded since our initial public offering and its
price has been highly volatile in recent periods.
Future sales of our stock could adversely affect its price
----------------------------------------------------------
Future sales of substantial amounts of our common stock, or the
perception that such sales may occur, could adversely affect the value of our
common stock and could impair our ability to raise additional capital in the
future through the sale of equity securities. As of June 30, 2000, we had
49,506,308 shares of common stock outstanding. Of these shares, approximately
33.2 million shares (including 5,322,600 shares owned by Baron) are freely
tradable in the open market without further registration under the Securities
Act. Also, all of the 2,470,532 shares owned by Motorola are registered pursuant
to an effective shelf registration statement, and all of the 4,094,244 shares
owned by XM Ventures are registered pursuant to an effective shelf registration
statement. In addition, we have provided certain registration rights to other
stockholders and owners of warrants to purchase our common stock. These
registration rights cover 6,666,622 shares of stock and warrants to purchase an
aggregate of 5,823,455 additional shares. We also have approximately 4.8 million
shares of common stock reserved for issuance under employee and director stock
option plans and other employee benefit plans, all of which shares, when issued,
are registered for resale.
-16-
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------
The following table sets forth our ratio of earnings to combined fixed
charges and preferred stock dividends on a historical basis for the periods
indicated. For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs, preferred stock dividends and the component
of rental expense believed by management to be representative of the interest
factor on those amounts.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
Three Months
Ended
1995 1996 1997 1998 1999 March 31, 2000
---- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)... --- --- --- --- --- ---
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends (2)......... --- --- --- --- --- ---
Coverage Deficiency..................... $(71,601) $(134,638) $(120,727) $(160,025) $(328,230) $(3,994)
</TABLE>
------------------------
(1) The ratio of earnings to fixed charges is computed by dividing net income
(loss) before income taxes and extraordinary items and fixed charges
(excluding interest capitalized during the period), by fixed charges.
(2) The ratio of earnings to fixed charges and preferred stock dividends is
computed by dividing net income (loss) before income taxes and
extraordinary items and fixed charges (excluding interest capitalized
during the period), by fixed charges and preferred stock dividend
requirements. The preferred stock dividend requirements represent the
pretax earnings which would have been required to cover the dividend
requirements on any preferred stock outstanding. We did not have any
preferred stock outstanding during the periods presented above and
accordingly there were no preferred stock dividend requirements during
these periods. Although we have not issued any preferred stock during the
periods presented, XM Radio issued 2.0 million shares of 8.25% Series B
convertible redeemable preferred stock in the quarter ended March 31,
2000.
USE OF PROCEEDS
---------------
We will use the net proceeds received from the sale of the securities
to fund expansion of our wireless business, principally in new markets such as
wireless internet email and telemetry applications, to pay down debt and for
working capital and general corporate purposes, at the discretion of management.
PLAN OF DISTRIBUTION
--------------------
We may sell the securities being offered by this prospectus separately
or together:
-17-
<PAGE>
o through agents;
o to or through underwriters;
o through dealers;
o through a block trade in which the broker or dealer engaged to handle
the block trade will attempt to sell the securities as agent, but
may position and resell a portion of the block as principal to
facilitate the transaction;
o directly to purchasers, through a specific bidding, auction or other
process; or
o through a combination of any of these methods of sale.
We may effect the distribution of the securities from time to time in
one or more transactions at a fixed price or prices, which may be changed from
time to time:
o at market prices prevailing at the times of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
We will describe the method of distribution of the securities in the
prospectus supplement.
Agents designated by us from time to time may solicit offers to
purchase the securities. We will name any agent involved in the offer or sale of
the securities and set forth any commissions payable by us to an agent in the
prospectus supplement. Unless otherwise indicated in the prospectus supplement,
any agent will be acting on a best efforts basis for the period of its
appointment. Any agent may be deemed to be an "underwriter" of the securities as
that term is defined in the Securities Act.
If we use an underwriter or underwriters in the sale of securities, we
will execute an underwriting agreement with the underwriter or underwriters at
the time we reach an agreement for sale. We will set forth in the prospectus
supplement the names of the specific managing underwriter or underwriters, as
well as any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers. This compensation may be in the
form of discounts, concessions or commissions. Underwriters and others
participating in any offering of securities may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities. We will
describe any of these activities in the prospectus supplement.
If a dealer is used in the sale of the securities, we or an underwriter
will sell securities to the dealer, as principal. The dealer may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale. The prospectus supplement will set forth the name of the dealer
and the terms of the transactions.
-18-
<PAGE>
We may directly solicit offers to purchase the securities, and we may
sell directly to institutional investors or others. These persons may be deemed
to be underwriters within the meaning of the Securities Act with respect to any
resale of the securities. The prospectus supplement will describe the terms of
any direct sales, including the terms of any bidding or auction process.
Agreements we enter into with agents, underwriters and dealers may
entitle them to indemnification by us against specified liabilities, including
liabilities under the Securities Act, or to contribution by us to payments they
may be required to make in respect of these liabilities. The prospectus
supplement will describe the terms and conditions of indemnification or
contribution.
No securities may be sold by us under this prospectus without delivery,
in paper format, in electronic format on the internet, or both, of the
applicable prospectus supplement describing the method and terms of the
offering.
DESCRIPTION OF CAPITAL STOCK
----------------------------
Our authorized capital stock consists of 150,000,000 shares of common
stock, par value $0.01 per share and 200,000 shares of preferred stock, par
value $0.01 per share.
Common Stock
------------
On June 30, 2000, there were 49,506,308 shares of common stock
outstanding, held of record by 320 stockholders.
The holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders.
Cumulative voting applies to the election of directors. Subject to preferences
that may be applicable to any then-outstanding preferred stock, holders of
common stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of legally available funds. In the event of a
liquidation, dissolution or winding-up of the Company, holders of the common
stock are entitled to share ratably in all assets remaining after we pay our
liabilities and the liquidation preference of any then-outstanding preferred
stock. With two exceptions, there are no preemptive, subscription, redemption or
sinking fund provisions applicable to the common stock. The two exceptions are:
(1) provisions of the preferred stock described below and (2) provisions of an
existing stockholders agreement as to redemption if alien ownership issues
arise. All outstanding shares of common stock are, and all shares of common
stock to be outstanding upon completion of the offering will be, fully-paid and
nonassessable.
Our Certificate of Incorporation requires cumulative voting for the
election of directors. Under cumulative voting, each stockholder is entitled to
cast as many votes in the election as equals the product of the number of
directors to be elected and the aggregate number of shares of common stock held
by such stockholder. The stockholder may cumulate such votes for one or more
directors as the stockholder determines. Under cumulative voting, assuming 6
directors were to be elected and 49,506,308 shares of common stock were
outstanding, a stockholder would have to hold at least 7,072,330 shares of
common stock to be certain of electing one director.
-19-
Preferred Stock
---------------
We may issue preferred stock in one or more series and may fix the
designations, preferences, powers and relative, participating, optional and
other rights, qualifications, limitations and restrictions on the preferred
stock, including the dividend rate, conversion rights, voting rights, redemption
price and liquidation preference, and may fix the number of shares to be
included in any such series. Any preferred stock may rank senior to the common
stock for the payment of dividends or amounts upon liquidation, dissolution or
winding-up, or both. In addition, any shares of preferred stock may have class
or series voting rights. We do not have any shares of preferred stock
outstanding. Issuances of preferred stock, while providing us with flexibility
in connection with general corporate purposes, may, among other things, have an
adverse effect on the rights of holders of common stock. A prospectus supplement
will describe the terms of any preferred stock that we issue. Preferred stock
may be convertible into or exchangeable or redeemable for our common stock or
other preferred stock. These terms will include provisions as to whether
conversion, exchange or redemption is mandatory, at the option of the holder or
at our option. These provisions may allow or require the number of shares of our
common stock or other securities to be received by the holders of preferred
stock to be adjusted.
Our Board of Directors, without stockholder approval, can issue
preferred stock with voting and conversion rights that could adversely affect
the voting power and other rights of holders of common stock. Preferred stock
could thus be issued quickly with terms calculated to delay or prevent a change
of control of the Company or to make the removal of management more difficult.
In certain circumstances, this could have the effect of decreasing the market
price of the common stock.
Warrants
--------
We may issue warrants for the purchase of shares of the common stock
and the preferred stock. Warrants may be issued independently or together with
the shares of common stock and the preferred stock offered by any prospectus
supplement to this prospectus and may be attached to or separate from such
shares. As of June 30, 2000, there were a total of 7,069,674 warrants
outstanding to purchase shares of our common stock. Of these warrants, 63,714
have a nominal exercise price, 1,207,991 have an exercise price of $12.28 per
share, and the remainder have an exercise price of $6.25 per share. Further
terms of the warrants will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of the
warrants in respect of which this prospectus is being delivered, including,
where applicable, the following:
o the title of such warrants;
o the aggregate number of such warrants;
-20-
<PAGE>
o the price or prices at which such warrants will be issued;
o the designation, terms and number of shares of common stock and
preferred stock purchasable upon exercise of such warrants;
o the designation and terms of the shares of commons stock and preferred
stock with which such warrants are issued and the number of such
warrants issued with such shares;
o the date on and after which such warrants and the related common stock
and preferred stock will be separately transferable, including any
limitations on ownership and transfer of such warrants;
o the price at which each share of common stock or preferred stock
purchasable upon exercise of such warrants may be purchased;
o the date on which the right to exercise such warrants shall commence
and the date on which such right shall expire;
o the minimum or maximum amount of such warrants which may be exercised
at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of certain federal income tax consequences; and
o any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
Certain Provisions of our Certificate of Incorporation and Bylaws
-----------------------------------------------------------------
Certificate of Incorporation
-------------- -------------
As currently in effect, our Certificate of Incorporation may not be
amended, modified, rendered ineffective or repealed except by the vote of the
holders of a majority of the issued and outstanding shares of common stock.
Except as required by law, other classes or series of stock will not be entitled
to vote on any such amendment, modification or other change, unless and to the
extent required by any applicable law. Our Certificate of Incorporation
currently requires the affirmative vote of the holders of two-thirds of the
issued and outstanding shares of common stock to approve:
o our merger or consolidation with or into any other entity;
o our dissolution or liquidation; or
o the sale, exchange or lease of all or substantially all of our property
and assets.
Our Certificate of Incorporation also requires that at each election of
directors by the holders of common stock, all directors must be elected.
Bylaws
------
As currently in effect, our Bylaws require that there be 6 directors on
our Board of Directors. The Bylaws provide that special meetings of the
stockholders generally may be called by the president and shall be called at the
request of the holders of at least one-third of the common stock then issued and
-21-
<PAGE>
outstanding. A special meeting solely to elect all directors of the Company
shall be called at the written request of a holder or holders of sufficient
shares of common stock to then elect at least one director under principles of
cumulative voting. Our Bylaws also provide that except as provided in our
Certificate of Incorporation or Bylaws, the Bylaws may be altered, amended or
repealed or new Bylaws may be adopted only upon the vote of either:
o three-fourths of the members of the Board of Directors then in office; or
o the holders of two-thirds of the issued and outstanding shares of common
stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The SEC allows us to incorporate by reference the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to part of this prospectus. These documents may include periodic
reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as Proxy Statements. Any documents that we
subsequently file with the SEC will automatically update and replace the
information previously filed with the SEC. Thus, for example, in the case of a
conflict or inconsistency between information set forth in this prospectus and
information incorporated by reference into this prospectus, you should rely on
the information contained in the document that was filed later.
This prospectus incorporates by reference the documents listed below
that we previously have filed with the SEC and any additional documents that we
may file with the SEC (File No. 0-23044) under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 between the date of this prospectus
and the termination of the offering of the securities. These documents contain
important information about us.
1. Our Annual Report on Form 10-K for the year ended December 31,
1999, filed with the Commission on March 30, 2000;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000, filed with the commission on May 12, 2000;
3. Our current report on Form 8-K dated April 24, 2000 and filed
with the Commission on April 24, 2000;
4. Our current report on Form 8-K dated June 29, 2000 and filed with
the Commission on June 29, 2000; and
5. The description of our common stock and preferred stock contained
in the our Registration Statement on Form 8-A, dated December 9,
1993, and on Form 8-A/A, dated December 13, 1993, each as filed
under the Exchange Act, including any amendment or report filed
for the purpose of updating such description.
-22-
You can obtain a copy of any or all of the documents incorporated by
reference in this prospectus (other than an exhibit to a documents unless that
exhibit is specifically incorporated by reference into that document) from the
SEC on its web site at http://www.sec.gov. You also can obtain these documents
from us without charge by visiting our internet web site at www.motient.com or
by requesting them in writing, by email or by telephone at the following
address:
Randy Segal
Senior Vice President, General
Counsel and Secretary
Motient Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
(703) 758-6130
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed with the SEC a registration statement under the
Securities Act of 1933 that registers the distribution of the securities offered
under this prospectus. The registration statement, including the attached
exhibits and schedules and the information incorporated by reference, contains
additional relevant information about us and the securities. The rules and
regulations of the SEC allow us to omit from this prospectus certain information
included in the registration statement.
In addition, we file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy this
information and the registration statement at the following locations of the
SEC:
o Public Reference Room, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20459;
o Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and
o New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048.
You may also read and copy this information at the SEC's Public
Reference Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20459, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet World Wide Web site that
contains reports, proxy statements and other information about issuers of
securities, like us, who file such material electronically with the SEC. The
address of that web site is http://www.sec.gov. You also can inspect such
reports, proxy statements and other information about us at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. Our common stock is traded on The Nasdaq National Market
under the symbol "MTNT."
-23-
<PAGE>
EXPERTS
-------
The financial statements and schedules of Motient Corporation
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as set forth in their reports. In
those reports, that firm states that with respect to XM Satellite Radio
Holdings, Inc., a subsidiary of Motient Corporation, its opinion is based on the
report of other independent public accountants. The financial statements and
schedules referred to above have been included herein in reliance upon the
authority of those firms as experts in giving said reports.
The consolidated financial statements of XM Satellite Radio Holdings
Inc. and subsidiaries (a development stage company) (XM Radio) as of December
31, 1998 and 1999, and for each of the years in the three-year period ended
December 31, 1999, and for the period from December 15, 1992 (date of inception)
to December 31, 1999, have been incorporated by reference in the Annual Report
on Form 10-K of Motient Corporation and in this registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG LLP contains an explanatory paragraph that states that XM Radio
has not commenced operations and is dependent upon additional debt or equity
financing, which raises substantial doubt about its ability to continue as a
going concern. The consolidated financial statements of XM Radio do not include
any adjustments that might result from the outcome of that uncertainty.
-24-
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial information gives effect to the
following, as if such transactions had been consummated on March 31, 2000, in
the case of the Unaudited Pro Forma Consolidated Condensed Balance Sheet, and on
January 1 of each of the periods presented in the case of the Unaudited Pro
Forma Consolidated Condensed Statement of Operations:
o our acquisition in July 1999 of all of the then remaining outstanding shares
of common stock of XM Radio;
o the issuance of 7.0 million shares of our common stock in a public offering
in August 1999 and the application of the net proceeds of such offering to
repay $59 million of indebtedness outstanding under our bank financings;
o XM Radio's issuance of 10.2 million shares of its common stock in an
initial public offering in October 1999, and the application of the net
proceeds therefrom;
o XM Radio's issuance of 4.4 million shares of its common stock in January
2000, and XM Radio's concurrent issuance of 2 million shares of its 8.25%
Series B convertible redeemable preferred stock due 2012, and the
application of the net proceeds therefrom;
o XM Radio's issuance in March 2000 of 325,000 units, each unit consisting of
$1,000 principal amount of 14% Senior Secured Notes due 2010 and one
warrant to purchase 8.024815 shares of Class A Common Stock, and the
application of the net proceeds therefrom;
o our receipt of $44 million in connection with the R&D Agreement and Asset
Sale Agreement we entered into in June 2000, as described in "Recent
Developments," and the concurrent repayment of $2.75 million of
indebtedness outstanding under our bank financings.
The pro forma consolidated condensed financial information is presented
for illustrative purposes only and is not necessarily indicative of what our
actual financial position and results of operations would have been had the
foregoing transactions been consummated as of the above-referenced dates or of
our financial position or results of operations that we may report in the
future.
The following data should be read in conjunction with our Consolidated
Financial Statements and related notes and XM Radio's Consolidated Financial
Statements and related notes incorporated by reference herein.
P-1
<PAGE>
Motient Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Balance Sheet
<TABLE>
<CAPTION>
As of March 31, 2000
Pro Forma Motient
Motient Adjustments Pro Forma
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $448,631 $41,250 (1) $489,881
Short term investments
Inventory 36,040 36,040
Prepaid in-orbit insurance 2,045 2,045
Accounts receivable, net of allowance for 17,073 17,073
doubtful accounts
Restricted short-term investments 41,038 41,038
Restricted short-term investments of XM Radio 58,817 58,817
Other current assets 11,910 11,910
------ ------
Total current assets 615,554 656,804
PROPERTY & EQUIPMENT IN SERVICE, net 123,915 123,915
SYSTEM UNDER CONSTRUCTION 432,194 432,194
GOODWILL & OTHER INTANGIBLES, net 61,346 61,346
DEFERRED CHARGES & OTHER ASSETS, net 31,872 (86) (2) 31,786
RESTRICTED INVESTMENTS 35,115 35,115
RESTRICTED INVESTMENTS OF XM RADIO 79,599 79,599
---------- ----------
Total assets $1,379,595 $1,420,759
========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-P2-
<PAGE>
Motient Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Balance Sheet
<TABLE>
<CAPTION>
As of March 31, 2000
Pro Forma Motient
Motient Adjustments Pro Forma
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C> <C>
Accounts payable and accrued expenses $86,586 $86,586
Current portion of obligations under capital 4,700 4,700
leases
Current portion of vendor due to related party 3,619 3,619
Current portion of long-term debt 2,141 2,141
Other current liabilities 1,869 1,869
------- -------
Total current liabilities 98,915 98,915
LONG-TERM LIABILITIES:
Obligations under bank financing 120,000 (2,750) (1) 117,250
Obligations under notes, net of discount 327,800 327,800
Obligations under Senior Secured Notes of XM 259,528 259,528
Radio, net
Capital lease obligations 846 846
Fair value of assets acquired in excess of 1,159 1,159
purchase price
Vendor financing commitment due to related party 4,339 4,339
Other long-term liabilities 5,087 23,174 (1) 28,261
------- -------
Total long-term debt 718,759 739,183
Total liabilities 817,674 838,098
MINORITY INTEREST 513,732 513,732
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred Stock, par value $0.01; authorized -- --
200,000 shares; no shares issued
Common stock, voting 552 552
Additional paid-in capital 919,127 919,127
Deferred compensation (6,507) (6,507)
Common stock purchase warrants 56,243 20,826 (1) 78,421
1,352 (2)
Unamortized guarantee warrants (16,970) (1,022)(2) (17,992)
Retained loss (904,256) (416)(2) (904,672)
--------- ---------
Total stockholders' equity 48,189 68,929
Total liabilities, stockholders' (deficit) equity, $1,379,595 $1,420,759
and minority interest ========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-P3-
<PAGE>
Motient Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
<TABLE>
<CAPTION>
For the Quarter Ended March 31, 2000
-------------------------------------
XM Radio Motient/XM Motient/XM Motient
XM Pro Forma Radio Radio Pro Motient
Radio Adjustments Eliminations adjusted Forma Pro Forma
Motient (3) Adjustments
Revenues
<S> <C> <C> <C> <C> <C> <C> <C>
Service $17,152 $ -- $17,152 $17,152
Sales of equipment 5,018 -- 5,018 5,018
------- ------- -------
Total Revenue 22,170 -- 22,170 22,170
Cost of service and operations
Cost of service and operations 18,018 -- 18,018 18,018
Cost of equipment sold 5,256 -- 5,256 5,256
Sales & advertising 6,226 -- 6,226 6,226
General & administrative 5,526 16,386 21,912 21,912
Depreciation & amortization 8,831 502 (239)(9) 9,094 9,094
------- ------- ------- ------
Operating loss (21,687) (16,888) (38,336) (38,336)
Interest & other income (expense) 1,052 4,150 1,281(5) 6,483 6,483
Gain on conversion of note payable
to related party 32,854 -- 32,854 32,854
Unrealized gain on note payable to
related party 3,925 -- 3,925 3,925
Minority interest -- -- 7,360(11) 7,360 7,360
Equity in loss of XM Radio (5,398) -- 5,398(12) -- --
Interest expense (14,979) (2) --(6) (14,981) (13) (14) (14,994)
-------- -------- --(7) -------- --------
--(8)
Net loss before extraordinary item $(4,233) $(12,740) $(2,695) $(2,708)
======== ========= ======== ========
Loss per share of common stock
before extraordinary item $(.09) $(.06)
Weighted-average common shares 49,094 49,094
outstanding during the period
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
<PAGE>
Motient Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31, 1999
XM Radio Motient/XM Motient/XM Motient
XM Pro Forma Radio Radio Pro Forma Motient
Motient (3) Radio Adjustments Eliminations adjusted Adjustments Pro Forma
----------- ----- ----------- ------------ -------- ----------- ---------
Revenues
<S> <C> <C> <C> <C> <C> <C>
Service $67,653 $ -- $67,653 $67,653
Sales of equipment 23,418 -- 23,418 23,418
Sales of equipment 91,071 -- 91,071 91,071
Total Revenue
Cost of service and operations
Cost of service and operations 69,258 -- 69,258 69,258
Cost of equipment sold 29,527 --- 29,527 29,527
Sales & advertising 23,125 --- 23,125 23,125
General & administrative 19,475 28,704 48,179 48,179
Satellite & related assets 97,419 --- 97,419 97,419
impairment
Depreciation & amortization 54,923 1,987 396 (4) (975) (9) 56,331 56,331
------- ------ ------- ------
Operating loss (202,656) (30,691) (232,768) (232,768)
Interest & other income (expense) 9,469 2,916 6,150 (5) (3,842)(10) 14,693 14,693
Unrealized loss on note
receivable from XM Radio (9,919) (9,919) (9,919)
Unrealized loss on note payable
to related party (27,399) (27,399) (27,399)
Minority interest -- 10,385 (11) 10,385 10,385
Equity in loss of XM Radio (25,181) 25,181 (12) -- ---
Interest expense (63,228) (9,121) (24,157)(6) 6,419 (10) (94,146) 3,910 (13) (90,042)
-------- ------- -------- --------
(3,491)(7) 194 (14)
(568)(8)
Net loss before extraordinary item $(318,914) $(36,896) $(339,154) $(335,050)
========== ======== ========== ==========
Loss per share of common stock
before extraordinary item $(8.03) $(6.94)
Weighted-average common shares
outstanding during the period 39,704 4,472(15) 4,083(16) 48,259
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
<PAGE>
Notes to Pro Forma Financial Information
The Pro Forma Financial Information is based on the following assumptions
and adjustments:
(1) Reflects the cash to be received and the relative fair market value
allocation of the aggregate $44 million received in connection with the R&D
Agreement and Asset Sale Agreement, as described in "Recent Developments,"
and the concurrent required repayment and permanent reduction of our
revolving credit facility. The allocation based on the relative fair market
value has been reflected on a preliminary basis based on management's
preliminary estimate and is subject to modification based on the results of
an independent assessment.
(2) Reflects (i) the impact of repricing certain outstanding warrants to
purchase our common stock in connection with the consummation of the June
2000 transactions described in "Recent Developments," and (ii) the write
off of a pro rata share of the financing fees and guarantee warrants
associated with the placement of the bank loans, as a result of the
required repayment and permanent reduction of $2.75 million of the revolver
loan from the proceeds received from the R&D Agreement and Asset Sale
Agreement.
(3) Reflects the results of Motient on a stand alone basis prior to our
consolidation of XM Radio.
(4) Reflects the additional amortization of goodwill and other intangibles of
XM Radio to reflect a full year of amortization.
(5) Reflects interest earned, at 5% annually, on the restricted securities
required to be purchased by XM Radio in accordance with the terms of XM
Radio's 14% senior secured notes due 2010.
(6) Reflects interest at 14% on the $325 million of XM Radio's 14% senior
secured notes due 2010, net of the amount that would have been capitalized.
(7) Reflects the amortization, as additional interest expense, of warrants
issued in connection with the $325 million of XM Radio's 14% senior secured
notes due 2010, net of the amount that would have been capitalized.
(8) Reflects the amortization, as additional interest expense, of financing
costs incurred in connection with XM Radio's issuance of $325 million of
its 14% senior secured notes due 2010, net of the amount that would have
been capitalized.
(9) Reflects the adjustment of goodwill and other intangible amortization to
reflect the difference in goodwill recorded by us and XM Radio.
(10) Eliminates interest earned by us and the related expense incurred by XM
Radio on notes due from XM Radio.
(11) Reflects 65.6% minority interest in XM Radio, effective as of the date of
XM Radio's initial public offering in October 1999, in accordance with our
equity interest.
(12) Eliminates losses previously recorded by us under the equity method.
(13) Reflects the elimination of interest expense on the bank loans and
amortization of related financing costs and guarantee warrants, associated
with the placement of the bank loans, as a result of the repayment of $59
million of the outstanding debt with the net proceeds from the August 1999
issuance of 7.0 million shares of our common stock at $17.75 per share.
(14) Reflects the elimination of interest expense on the bank loans and
amortization of related financing costs and guarantee warrants, associated
with the placement of the bank loans, as a result of the repayment of $2.75
million of the outstanding debt with the proceeds from the R&D Agreement
and Asset Sale Agreement entered into in June 2000.
(15) Reflects the adjustment for the issuance, in July 1999, of 8.6 million
shares of our common stock for the purchase of all remaining outstanding
shares of common stock of XM Radio in July 1999.
(16) Reflects the adjustment for the issuance, in August 1999, of 7.0 million
shares of our common stock in a public offering.
In addition, in July 2000, XM Radio entered into a transaction to issue
approximately 8.9 million shares of its 8.25% convertible preferred stock with a
value of approximately $235 million. XM Radio expects to record a $123 million
beneficial conversion charge that will reduce earnings available to common
shareholders as a result of this transaction. As the closing of the transaction
is contingent upon certain regulatory approvals and final funding, this
transaction is not reflected in these pro forma financial statements.
<PAGE>
II-4
Part II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following are the estimated expenses to be incurred in connection with
the issuance and distribution of the securities being registered.
<TABLE>
<S> <C>
SEC registration fee........................... $158,400
Printing and engraving expenses................ *
Legal fees and expenses........................ *
Blue Sky fees and expenses..................... *
NASD listing and filing fees................... *
Accounting fees and expenses................... *
Transfer agent fees............................ *
Total.......................................... $ *
</TABLE>
-------
*To be completed by amendment.
Item 15. Indemnification of Directors and Officers.
The Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted by Delaware law. The Company may be
required to advance litigation expenses in the case of stockholder derivative
actions or other actions, against an undertaking by the indemnified party to
repay such advances if it is ultimately determined that the indemnified party is
not entitled to indemnification.
In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty of care to the corporation and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws.
At present, there is no pending litigation or proceeding involving an
officer or director of the Company as to which indemnification is being sought,
nor is the Company aware of any threatened litigation that may result in claims
for indemnification by any officer or director.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1 The form of equity underwriting agreement will be filed as an
exhibit to a Current Report of the Company on Form 8-K and
incorporated herein by reference.
3.1 Restated Certificate of Incorporation of the Company (as restated
effective May 23, 2000)
3.2 Amended and Restated Bylaws of the Company (effective as of May
23, 2000)
4.1 The form of any certificate of designation with respect to any
preferred stock issued hereunder and the related form of
preferred stock certificate will be filed as exhibits to a
Current Report of the Company on Form 8-K and incorporated herein
by reference.
4.2 The form of any warrant or warrant agreement will be filed as an
exhibit to a Current Report of the Company on Form 8-K and
incorporated herein by reference.
5 Opinion of Randy S. Segal, Esq.
12.1 Statement regarding computation of ratio of earnings to fixed
charges and any preferred stock dividends.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG LLP
23.3 Consent of Randy S. Segal, Esq. (included in Exhibit 5 to this
registration statement).
24 Powers of Attorney of directors and officers of the Company
(included in the signature page).
Item 17. Undertakings.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the
Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the General Corporation Law of the State of Delaware,
the Restated Certificate of Incorporation, as amended, or the Amended and
Restated Bylaws of registrant, indemnification agreements entered into between
registrant and its officers and directors, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the County of Fairfax, Commonwealth of Virginia, on the 24th day
of July, 2000.
MOTIENT CORPORATION
By: /s/ Randy S. Segal
------------------
Name: Randy S. Segal
Title: Senior Vice President
and General Counsel
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gary M. Parsons, Walter V.
Purnell, Jr. and Randy S. Segal, his 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 and all amendments to
this registration statement, and to file the same, with exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, ratifying and confirming all that said attorney-in-fact and agent or
either of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Walter V. Purnell, Jr. President and Chief Executive July 24, 2000
----------------------
Walter V. Purnell, Jr. Officer, and
Director (Principal
Executive Officer)
/s/ W. Bartlett Snell Senior Vice President and Chief July 24, 2000
----------------------
W. Bartlett Snell Financial Officer
(Principal Financial and
and Accounting Officer)
/s/ Gary M. Parsons Chairman of the Board of July 24, 2000
----------------------
Gary M. Parsons Directors
Director
----------------------
Douglas I. Brandon
/s/ Billy J. Parrott Director July 24, 2000
----------------------
Billy J. Parrott
/s/ Andrew A. Quartner Director July 24, 2000
----------------------
Andrew A. Quartner
/s/ Jack A. Shaw Director July 24, 2000
----------------------
Jack A. Shaw
<PAGE>
Index to Exhibits
3.1 Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
5 Legal Opinion of Randy S. Segal, Esq.
12.1 Statement regarding computation of ratio of earnings to fixed charges
and any preferred stock dividends.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG LLP
23.3 Consent of Randy S. Segal, Esq. (included in Exhibit 5)
24 Powers of Attorney of directors and officers of the Company (included
in the signature page).
<PAGE>
