AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER <^> 20, 1996
REGISTRATION NO. 333-12133
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAI WIRELESS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06- 1324691
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
18 CORPORATE WOODS BLVD., 3RD FLOOR
ALBANY, NEW YORK 12211
(515) 462-2632
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
JARED E. ABBRUZZESE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CAI WIRELESS SYSTEMS, INC.
18 CORPORATE WOODS BLVD., 3RD FLOOR
ALBANY, NEW YORK 12211
(518) 462-2632
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
M. Louise Turilli
Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103-3499
(203) 275-0178
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement when
warranted by market conditions and other factors.
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, 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>
|Title of Shares to be |Amount to be Registered |Proposed Maximum |Proposed Maximum |Amount of Registration|
|Registered | |Aggregate Price Per |Aggregate Offering |Fee** |
| | |Unit |Price* | |
<S> <C> <C> <C> <C>
|Common Stock, no par | 1,267,685 shares | $7.3125 | $9,269,946.50 | $3,196.53 |
|value | | | | |
</TABLE>
*Estimated solely for purposes of calculating the registration fee
under Rule 457(c).
**Previously paid
(con't next page)
<PAGE>
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included herein also relates to the Company's Registration Statement on
Form S-3 (No. 33-99770) registering 7,567,897 shares of Common Stock,
no par value, of the Company and Registration Statement on Form S-3
(No. 333-3334).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
(SUBJECT TO COMPLETION, DATED SEPTEMBER <^> 20, 1996)
5,650,839 SHARES
CAI WIRELESS SYSTEMS, INC.
COMMON STOCK
(NO PAR VALUE)
This Prospectus relates to 5,650,839 shares (the "Shares") of common
stock, no par value (the "Common Stock"), of CAI Wireless Systems, Inc., a
Connecticut corporation ("CAI" or the "Company"). All of the Shares being
offered hereby are outstanding shares or shares issuable upon exercise of
outstanding warrants or conversion of outstanding Series A Redeemable
Convertible Preferred Stock (the "Series A Preferred Stock").
The Shares may be offered by certain Shareholders of the Company named
herein (the "Selling Shareholders") from time to time in transactions on the
Nasdaq National Market, in negotiated transactions, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices. The Selling Shareholders
may effect such transactions by selling the Shares to or through broker-
dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Shareholders, and any agents or broker-dealers that participate with the
Selling Shareholders in the distribution of the Shares, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions received by them and any profit on
their resale of the Shares may be deemed to be underwriting commissions or
discounts under the Securities Act. See "The Selling Shareholders" and "Plan
of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear
certain expenses (other than selling commissions) in connection with the
registration of the Shares.
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "CAWS." On September 10, 1996, the per share closing price of
the Common Stock as reported on the Nasdaq National Market was $7.375.
SEE "RISK FACTORS" FOR A DESCRIPTION OF CERTAIN RISKS TO BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September __, 1996.
AVAILABLE INFORMATION
CAI has filed a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with the Securities and Exchange Commission (the "Commission"),
Washington, D.C., with respect to the Shares of Common Stock offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement on file with
the Commission. The information omitted can be inspected at the office
of the Commission, 450 Fifth Street, N.W., Washington, D.C., and copies can be
obtained from the Commission at prescribed rates by writing to it at 450 Fifth
Street, N.W., Washington, D.C. 20549. For further information pertaining to
CAI and the Shares of Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits filed as a part thereof.
CAI is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by CAI with
the Commission can be inspected and copied at the Commission's Public Reference
Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
the Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the Commission. The address of such
site is (http://www.sec.gov).
CAI Common Stock is quoted on the Nasdaq National Market (the "Nasdaq
NM"). Reports, proxy and information statements, and other information
concerning CAI may be inspected at the office of the National Association of
Securities Dealers, Inc., 33 Whitehall Street, 10th Floor, New York, NY 10004.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by CAI with the Commission
(File No. 0-22888) pursuant to the Exchange Act and are incorporated herein by
reference:
(1) Annual Report on Form 10-K for the fiscal year ended March 31,
1996;
(2) Annual Report on Form 10-K/A for the fiscal year ended March 31,
1996;
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1996;
(4) Current Reports on Form 8-K dated April 25, 1996, May 23, 1996,
June 27, 1996 <^>, August 13, 1996 and September 20, 1996; and
(5) The description of the Company's Common Stock contained in its
Registration Statement filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose
of updating any such description.
All documents filed by CAI pursuant to Section 13(a), 13(c), or 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of the above documents (excluding exhibits to such documents,
unless such exhibits are specifically incorporated by reference therein) may be
obtained upon written or oral request without charge by each person, including
beneficial owners, to whom this Prospectus is delivered from George M.
Williams, CAI's Corporate Secretary, 18 Corporate Woods Blvd., 3rd Floor,
Albany, New York 12211 (telephone number (518) 462-2632).
<PAGE>
THE COMPANY
CAI Wireless Systems, Inc. ("CAI") is a leading developer, owner and
operator of wireless cable television systems in terms of the number of
subscribers, the number of line-of-sight ("LOS") households and total
capitalization, and is the first wireless cable company to enter into a
strategic partnership with any of the Regional Bell Operating Companies
("RBOCs"). CAI's markets are concentrated in the mid-Atlantic and northeast
regions of the United States which are situated within the operating regions of
Bell Atlantic Corporation and NYNEX Corporation, respectively. Bell Atlantic
Corporation and NYNEX Corporation have together invested $100.0 million in CAI
by purchasing Term Notes, Senior Preferred Stock and Warrants to purchase
Voting Preferred Stock (as defined herein). In addition, Bell Atlantic
Corporation and NYNEX Corporation have the option to invest a total of
approximately $302 million (including the consideration paid for the Term
Notes, the Senior Preferred Stock and the Warrants) for an approximate 45%
ownership interest in CAI. CAI is the largest wireless cable television
company in the United States in terms of television households and LOS
households. CAI's <^> 14 markets encompass approximately <^> 18.7% (17.8
million) of all U.S. television households, approximately <^> 13.1 million of
which are line-of-sight households as estimated by CAI ("LOS households"). CAI
had approximately <^> 83,800 subscribers as of <^> June 30, 1996.
CAI is a Connecticut corporation. Its principal executive offices are
located at 18 Corporate Woods Boulevard, 3rd Floor, Albany, New York 12211.
CAI's telephone number is (518) 462-2632.
STRATEGIC INVESTMENT FROM BELL ATLANTIC AND NYNEX
In March 1995, CAI entered into a strategic business relationship with
BANX Partnership, a Delaware general partnership ("BANX"). This relationship
consisted of (i) the signing of the Business Relationship Agreement, as amended
(the "BR Agreement") with MMDS Holdings, Inc. ("MMDS Holdings") and NYNEX MMDS
Company ("NYNEX MMDS") each a Delaware corporation, (ii) the purchase by the
BANX Affiliates (as defined herein) of $30 million of Term Notes due May 9,
2005 ("Term Notes") and Warrants to purchase convertible preferred stock
("Voting Preferred Stock"), no par value (the "Warrants"), and (iii) the
purchase by the BANX Affiliates of $70 million of 14% Senior Convertible
Preferred Stock, par value $10,000 per share ("Senior Preferred Stock") and
Warrants. The general partners of BANX are MMDS Holdings II, Inc., a Delaware
corporation ("MMDS Holdings II"), and NYNEX MMDS Holding Company ("NYNEX MMDS
Holding"). MMDS Holding and MMDS Holdings II are indirect subsidiaries of Bell
Atlantic Corporation. NYNEX MMDS and NYNX MMDS Holding are subsidiaries of
NYNEX Corporation. In this Prospectus, Bell Atlantic, MMDS Holding and MMDS
Holdings II are sometimes referred to as "Bell Atlantic," NYNEX Corporation,
NYNEX MMDS and NYNEX MMDS Holding are sometimes referred to as "NYNEX," and
Bell Atlantic and NYNEX are sometimes referred to as the BANX Affiliates.
CAI believes that there are significant advantages to its strategic
relationship with the BANX Affiliates since each of the parties is committed to
building a leading video services business and Bell Atlantic and NYNEX have
substantial financial, engineering and marketing resources not otherwise
available to CAI. The BANX Affiliates have indicated that they have invested
in CAI, in large part, because its systems are cost-efficient and have the
potential to deploy rapidly a delivery system for quality, digital video
signals in their respective markets. CAI views the BANX Affiliates' investment
as an endorsement of CAI's business strategy and wireless cable technology, and
CAI believes that this investment significantly improves its access to
additional capital, state-of-the-art technologies and other operating
synergies.
An important component of CAI's strategic relationships with the BANX
Affiliates is the BR Agreement. CAI entered into the BR Agreement as a means
of realizing revenue in certain of its markets without incurring substantial
capital expenditures required for subscriber equipment and installation as well
as eliminating most operating costs, other than channel license fees. Pursuant
to the BR Agreement, CAI has granted to each BANX Affiliate the ability, on a
market by market basis, to elect to become the marketer and provider of
wireless cable services using CAI's transmission systems in each market in
their respective service areas. In such case, CAI will receive contractual
monthly service revenues based on the number of serviceable households and
subscribers in each market. <^> The passage of the Telecommunications Act of
1996, enacted after the parties entered into the BR Agreement, may impact the
decision of the BANX Affiliates to exercise their option to implement the BR
Agreement<^>. CAI has substantially completed the construction of digital video
delivery systems in Boston, Massachusetts and Hampton Roads, Virginia, as
contemplated by the BR Agreement. As a result of the construction experience
in these markets both CAI and the BANX Affiliates have proposed amendments to
the BR Agreement, including, but not limited to, the length of option exercise
period, the length of time within which CAI must build a digital video delivery
system, and the waiver of certain technical defaults by CAI under the BR
Agreement, as well as proposed amendments concerning other aspects of the
relationship. The parties have not yet reached a definitive agreement with
respect to the proposed amendments. See "Risk Factors -- Impact of Recently
Enacted Legislation," "-- Failure to Implement BR Agreement" and "-- Digital
Compression Technology Not Commercially Available."
CERTAIN ACQUISITIONS
On September 29, 1995, CAI acquired ACS Enterprises, Inc., a
Pennsylvania corporation ("ACS"), in a merger transaction (the "ACS Merger").
ACS is a wireless cable company that serves the Philadelphia, Pennsylvania;
Cleveland, Ohio; and Bakersfield, California areas and that has wireless
channel rights for Stockton/Modesto, California. ACS's four markets encompass
2.7 million LOS households. Concurrently, CAI also acquired wireless cable
companies and other wireless cable channel rights in Washington D.C.;
Baltimore, Maryland; and Pittsburgh, Pennsylvania.
On December 12, 1995, CAI and Heartland Wireless Communications, Inc.
("Heartland") entered into a Participation Agreement calling for the
combination of certain wireless cable assets, including related operating
liabilities, principally in the Midwestern and Southwestern regions of the
country. The transactions contemplated by the Participation Agreement closed
on February 23, 1996. The combination of these assets into CS Wireless
Systems, Inc. ("CS Wireless") created a company with approximately 5.7
million LOS households and 55,800 subscribers. CS Wireless is currently one of
the largest wireless cable company in the United States in terms of subscribers
and LOS households.
CS Wireless, the operator of a wireless cable system in Cleveland,
Ohio, acquired, under the terms of the Participation Agreement, operating
wireless cable systems or wireless channel rights held by CAI in Bakersfield,
California, Charlotte, North Carolina, and Stockton/Modesto, California and
held by Heartland in Dallas, Fort Worth and San Antonio, Texas, Dayton, Ohio,
Maysville and Sweet Springs, Missouri, Minneapolis, Minnesota, Grand
Rapids/Moline, Michigan, Bloom Center (Napoleon), Indiana and Salt Lake City,
Utah. CAI owns approximately 54% of CS Wireless and Heartland approximately
35%. Heartland also received from CS Wireless approximately $28.3 million of
cash, a $25 million note due in nine months and a $15 million note due in ten
years from the closing date. <^> Affiliates of BANX own 10% of CS Wireless, and
1% is <^> held by <^> bondholders.
The CAI assets that were contributed to CS Wireless in the transactions
consist of four of its properties located outside the operating territories of
Bell Atlantic and NYNEX. The majority of the Heartland contributed assets were
acquired in certain acquisitions that also closed on February 23, 1996,
Heartland has previously announced divestiture plans in connection with these
major market acquisitions.
OPERATING AND PLANNED MARKETS
The table below outlines as of <^>June 30, 1996 (except as
indicated in the footnote below) the characteristics of the markets in which
CAI operates or where it expects to launch systems.
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED NEW MONTHLY
TOTAL ESTIMATED NUMBER OF CHANNELS APPROXIMATE REVENUE
DMA SERVICE AREA LOS CHANNELS APPLIED SYSTEM NUMBER OF PER PREMIUM
MARKET RANK{1} HOUSEHOLDS{2} HOUSEHOLDS{2} AVAILABLE{3} FOR{4} STATUS SUBSCRIBERS SUBSCRIBER PENETRATION{5}
MID-ATLANTIC MARKETS (MARKETS LOCATED IN BELL ATLANTIC REGION)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Philadelphia 4 2,333,000 1,750,000 40 2 Operational 48,500 $34.51 148%
Washington, D.C. 7 1,547,000 1,160,000 29 4 Operational 5,200 19.48 56%
Pittsburgh 17 1,033,000 775,000 22 10 Planned -- -- --
Baltimore 23 988,000 741,000 31 2 Planned -- -- --
Norfolk/Virginia
Beach 40 574,000 431,000 27 6 Operational 3,200 30.07 121%
NORTHEAST MARKETS (MARKETS LOCATED IN NYNEX REGION)
New York City 1 5,563,000 4,173,000 36 0 Operational 15,500 45.86 134%
Boston 6 1,710,000 1,283,000 30 3 Planned -- -- --
Long Island{(6)} N/A 619,000 464,000 20 13 Planned -- -- --
Buffalo 36 544,000 408,000 27 6 Planned -- -- --
Providence 46 671,000 503,000 23 10 Planned -- -- --
Albany 52 442,000 332,000 32 0 Operational 9,200 27.73 135%
Syracuse 67 371,000 278,000 17 8 Planned -- -- --
OTHER MARKETS:
Hartford 26 1,012,000 525,000 19 4 Planned -- -- --
Rochester 71 388,000 323,000 27 6 Operational 2,300 26.52 80%
__________ _______
Totals 17,795,000 13,146,000 83,800
</TABLE>
_________________________
{(1)}DMA is the Designated Market Area as determined by A.C. Nielsen Company as
of December 1994.
{(2)}The Estimated Total Service Area Households for each market represents
CAI's estimate of the number of households within the service area of
the primary transmitter in each market based on 1990 Census Data. The
Estimated LOS Households for each market represent the approximate
number of Estimated Total Service Area Households within the service area
of the primary transmitter that can receive an unobstructed signal, as
estimated by CAI, based on a topographical analysis of each individual
market. The service area for a market varies from 25 to 40 miles based on
transmitter height, transmitter power, and the proximity of adjacent
wireless systems. Estimated Total Service Area Households and Estimated
LOS Households for Boston, Providence, Hartford, New York City, Long
Island, Washington, D.C. and Baltimore have been adjusted to eliminate
overlapping regions.
{(3)}The Number of Channels Available comprises wireless cable channels and
local broadcast channels that can be received by subscribers. Channels
are either licensed to CAI or leased to CAI from other license holders.
Wireless cable channels are either licensed to CAI or leased to CAI from
other license holders. The Number of Channels Available includes 10 off-
air channels in Boston and 11 in New York City. The Number of Channels
Available includes certain channels that are subject to FCC approvals or
third party interference agreements. CAI has pending FCC applications
concerning co-location of transmission sites and/or an increase in
broadcast power with respect to 4 channels in Philadelphia, 5 channels in
Hartford, 4 channels in New York City, 16 channels in Washington, D.C., 4
channels in Pittsburgh, 24 channels in Rochester, 16 channels in Syracuse,
23 channels in Providence, 3 channels in Buffalo and substantially all
channels in Boston and Long Island. The Number of Channels Available
includes ITFS channels that may not be available for commercial programming
by CAI.
{(4)}Beginning in November 1995 and ending on March 28, 1996, the FCC held the
FCC Auction. CAI was the successful bidder in 32 markets, seven of which
will be transferred to CS Wireless at cost. As the successful bidder in
such markets, CAI is applying to the FCC for 127 channel licenses. In
addition, CAI has pending FCC applications concerning issuances of licenses
for 2 channels in Boston, 6 channels in Long Island, 8 channels in
Pittsburgh, 8 channels in Providence, 6 channels in Syracuse, and 4
channels in Washington, D.C. Although there is no assurance that
the FCC will grant these applications, many have been accepted for filing
by the FCC and posted on Public Notice. CAI is also completing
negotiations for the lease of 4 channels in Norfolk, Virginia.
{(5)}Premium penetration is the ratio of the total number of premium channels
received by subscribers in a market divided by the number of subscribers in
that market. In most markets, the basic subscription service includes one
premium channel.
{(6)}The Long Island market includes Nassau and Suffolk counties in New York
State.
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK INVOLVES SUBSTANTIAL RISK. THE
FOLLOWING RISK FACTORS, TOGETHER WITH ALL THE OTHER INFORMATION APPEARING IN
THIS PROSPECTUS, SHOULD BE CONSIDERED CAREFULLY BY POTENTIAL INVESTORS.
LIMITED BUSINESS HISTORY; LACK OF PROFITABLE OPERATIONS
CAI's wireless cable operations commenced in August 1991. Prospective
investors, therefore, have limited historical financial information about
CAI upon which to base an evaluation of their respective performances and an
investment in the Shares offered hereby. Given CAI's limited operating
history, there is no assurance that it will be able to achieve positive cash
flow from operating activities and to compete successfully in the subscription
television industry.
CAI has incurred net losses since inception of approximately $80 million
through June 30, 1996 and expects to realize additional net losses on a
consolidated basis while it develops and expands its wireless cable systems.
There can be no assurance that CAI will be able to develop or expand its
wireless cable systems or that it or its individual subsidiaries will achieve
profitability in future years.
HIGHLY COMPETITIVE INDUSTRY
The subscription television industry is highly competitive. CAI's
principal subscription television competitors in each market are traditional
hard-wire cable, direct broadcast satellite ("DBS") and private cable
operators. Hard-wire cable companies generally are well established and known
to potential customers and have significantly greater financial and other
resources than CAI. Premium movie services offered by the cable television
systems have encountered significant competition from the home video cassette
recorder ("VCR") industry. In areas where several local off-air VHF/UHF
broadcast channels can be received without the benefit of subscription
television, cable television systems also have faced competition from
the availability of broadcast signals generally and have found market
penetration to be more difficult. Legislative, regulatory and technological
developments may result in additional and significant competition, including
competition from local telephone companies and from a proposed new wireless
service known as Local Multipoint Distribution Service ("LMDS").
In addition, within each market, the Company initially must compete with
others to acquire, from the limited number of wireless cable channels
issued or issuable, rights to a minimum number of wireless cable channels
needed to establish a commercially viable system. Aggressive price competition
or the passing of a substantial number of presently unpassed households by any
existing or new subscription television service could have a material adverse
effect on the Company's results of operation and financial condition.
New and advanced technologies for the subscription television industry,
such as digital compression, fiber optic networks, DBS transmission,
video dialtone and LMDS, are in various stages of development. These
technologies are being developed and supported by entities, such as hard-wire
cable companies and regional telephone companies, that have significantly
greater financial and other resources than CAI. These new technologies
could have a material adverse effect on the demand for wireless cable services.
There can be no assurance that CAI will be able to compete successfully with
existing competitors or new entrants in the market for subscription television
services.
NEED FOR ADDITIONAL FINANCING FOR OPERATIONS
CAI's business requires substantial investment to finance capital
expenditures and operating expenses for subscriber growth and system
development. These activities may be financed in whole or in part by CAI
through debt or equity financings, subscriber equipment lease financings,
joint ventures or other arrangements and the receipt of the proceeds from the
exercise by Bell Atlantic and NYNEX of the Warrants. There is no assurance
that any additional financing necessary to expand the build-out of CAI's
wireless cable systems or to acquire new systems will be available on
satisfactory terms and conditions, if at all. In the event that Bell Atlantic
and NYNEX do not elect to exercise the Warrants, CAI would be required to
seek additional capital from other sources. Moreover, to the extent that
future financing requirements are satisfied through the issuance of equity
securities, investors may experience significant dilution. Additional debts
could result in a substantial portion of CAI's cash flow from operations being
dedicated to the payment of principal and interest on such indebtedness and may
render CAI more vulnerable to competitive pressures and economic downturns.
Certain of CAI's financing documents restrict the issuance of debt and the
contractual arrangements with BANX also contain restrictions on the issuance by
CAI of equity securities. Failure to obtain additional financing could
adversely affect the growth of CAI and its ability to compete successfully in
the subscription television industry.
EFFECT OF SUBSTANTIAL INDEBTEDNESS AND PREFERRED STOCK ON FUTURE OPERATIONS
CAI has substantial indebtedness, and beginning in 1999, will have
significant debt service requirements. As of June 30, 1996, CAI had
outstanding consolidated long-term debt of approximately $316 million and
shareholders' equity of approximately $190 million. In addition to the
foregoing indebtedness, CAI has $78 million of mandatorily redeemable preferred
stock outstanding having a priority as to dividends and a liquidation
preference over the Shares of Common Stock.
CAI's debt instruments and preferred stock impose restrictions on the
ability of CAI to incur additional debt, acquire or dispose of assets, incur
debt or liens, make certain investments and take certain other material
actions. Such debt instruments and preferred stock and the restrictions
contained therein will have several important consequences on CAI's future
operations, including, but not limited to the following; (i) CAI will incur
significant interest expense and principal repayment obligations; (ii) CAI's
ability to obtain additional financing in the future, as needed, may be
limited; (iii) CAI's leveraged position and the covenants contained in such
debt instruments and preferred stock could limit CAI's ability to compete as
well as its ability to expand and make capital improvements; and (iv) CAI's
substantial leverage may make it more vulnerable to expand and make capital
improvements; and (iv) CAI's substantial leverage may make it more vulnerable
to economic downturns, limit its ability to withstand competitive pressures and
reduce its flexibility in responding to changing business and economic
conditions. In addition, such debt instruments and the terms of such preferred
stock contain provisions that obligate CAI to redeem or offer to purchase such
securities for specified premiums in the event of a change of control of CAI
and certain similar events.
COMPETITIVE PRESSURES OF RAPID CHANGES IN TECHNOLOGY
The wireless cable industry and the subscription television industry in
general are subject to rapid and significant changes in technology which may
increase competitive pressures on CAI or require capital investment to remain
competitive that are beyond CAI's resources at the time. Because of the
rapid and high level of technological change in the industry in which CAI
competes, the effect of technological changes on the businesses of CAI cannot
be predicted.
DIGITAL COMPRESSION TECHNOLOGY NOT COMMERCIALLY AVAILABLE
Currently, wireless cable companies can offer up to 33 analog channels of
programming. The ability to offer substantially more programming utilizing
existing wireless channel capacity is dependent on effectively applying digital
technology. It is expected that wireless cable digital compression technology
will be commercially available in 1996. There can be no assurance, however,
that digital converter boxes and other equipment necessary to implement digital
compression will be available on this timetable or that digital technology can
be successfully deployed. Conversion from current analog technology to a
digital technology may not take place in all markets simultaneously. If
digital compression technology for wireless cable systems is not commercially
available in a timely fashion, Bell Atlantic and/or NYNEX may not elect to
implement the BR Agreement in any market. There can be no assurance that
either Bell Atlantic or NYNEX will elect to implement the BR Agreement even if
digital compression technology for wireless cable systems becomes commercially
available.
IMPACT OF RECENTLY ENACTED LEGISLATION
The recently enacted Telecommunications Act of 1996 (the "1996 Act") could
have a material impact on the wireless cable industry and the competitive
environment in which the Company operates. The 1996 Act will result in
comprehensive changes to the regulatory environment for the telecommunications
industry as a whole. The legislation will, among other things, substantially
reduce regulatory authority over cable rates. Another provision of the 1996
Act will afford hard-wire cable operators greater flexibility to offer lower
rates to certain of its subscribers, and would thereby permit cable operators
to offer discounts on hard-wire cable service to the Company's subscribers of
prospective subscribers. The legislation will permit telephone companies to
enter the video distribution business, subject to certain conditions. The
entry of telephone companies into the video distribution business, with greater
access to capital and other resources, could provide significant competition to
the wireless cable industry, including the Company. In addition, the
legislation will afford relief to DBS providers by exempting such providers
from local restrictions on reception antennas and preempting the authority of
local governments to impose certain taxes. The Company cannot predict the
substance of rules and policies to be adopted by the FCC in implementing the
provisions of the legislation.
FAILURE TO IMPLEMENT BR AGREEMENT
The option of Bell Atlantic and NYNEX to implement the BR Agreement in each
market is within the sole discretion of Bell Atlantic and NYNEX, as applicable.
Each of the BANX Affiliates (as defined herein) has until September 1997 to
make the election for any market in its operating territory specified in the BR
Agreement. If neither elects to implement the BR Agreement in any market, no
service revenues thereunder will be payable to CAI, and the additional service
revenues anticipated from this source that would have been used to expand into
additional markets may need to be obtained from other sources. Revenues also
may be adversely affected to the extent channel spectrum goals and/or initial
servable homes parameters are not satisfied by prescribed dates, which might
result in CAI incurring penalties in the form of reduced fees being imposed in
markets where the BR Agreement is implemented.
The BANX Affiliates have not yet formally implemented the BR Agreement in
any market; however, CAI has substantially completed construction of digital
video delivery systems in Boston, Massachusetts and Hampton Roads, Virginia in
anticipation of the implementation of the BR Agreement in such markets, and
Bell Atlantic has recently announced its intention to begin providing video
programming services in Hampton Roads using CAI's delivery system in early
1997. As a result of the construction experience in these markets both CAI and
the BANX Affiliates have proposed amendments to the BR Agreement, including,
but not limited to, the length of the option exercise period, the length of
time within which CAI must build a digital video delivery system, and the
waiver of certain technical defaults under the BR Agreement, as well as
proposed amendments concerning other aspects of the relationship. The parties
have not yet reached a definitive agreement with respect to the proposed
amendments, and there can be no assurance that such agreement will be reached.
In any market in which the BR Agreement is implemented, Bell Atlantic or
NYNEX, as the case may be, will succeed to CAI's subscribers in such market,
becoming fully responsible for subscriber installation and related capital
expenditures. CAI will become a wholesale supplier of wireless transmission
services in consideration of service revenues payable to CAI based on the
number of LOS households and subscribers in that market. The BR Agreement has
an initial term of five years, which initial term is extendable to six or seven
years at the option of the applicable BANX Affiliate upon notice not later than
the fourth year. The initial term begins on the date transmission services
commence pursuant to an election in the market and is renewable for successive
five-year renewal terms by each BANX Affiliate on one year's prior notice if
(i) service revenues paid to CAI have exceeded certain specified minimum
service revenues in the applicable market and (ii) the applicable BANX
Affiliate has converted its Senior Preferred Stock or Voting Preferred Stock or
exercised Warrants for Voting Preferred Stock in aggregate amount of at least
12.5% of the aggregate number of shares of Voting Preferred Stock issuable upon
such conversion or exercise to that BANX Affiliate or the BANX Affiliates have
converted Senior Preferred Stock to Voting Preferred Stock or exercised
Warrants for Voting Preferred Stock in an aggregate amount of at least 25% of
the aggregate number of shares of Voting Preferred Stock issuable upon
conversion or exercise.
In addition, the BANX Affiliates have the right to transfer subscribers to
an alternative delivery system during the term and upon termination of
the BR Agreement and CAI would receive no payment for any former CAI subscriber
so transferred. In addition, upon termination of the BR Agreement, the BANX
Affiliates have the right to transfer subscribers to CAI and require CAI to
purchase subscriber equipment and receivables. The BANX Affiliates have agreed
to provide CAI with financing for such purchases on commercially reasonable
market-based terms.
POTENTIAL TRANSFER OF SUBSCRIBERS
Under the BR Agreement, the BANX Affiliates have the right to transfer
subscribers to an alternative delivery system during the term and upon
termination of the BR Agreement and CAI would receive no payment for any former
CAI subscriber so transferred. In addition, upon termination of the BR
Agreement, the BANX Affiliates have the right to require CAI to purchase
subscriber equipment and receivables.
OPERATIONAL DEMANDS RESULTING FROM GROWTH
The rapid growth CAI has experienced prior to, and as a result of, the ACS
Merger in the number of employees, the scope of its operating and financial
systems and the geographic area of its operations, will increase the operating
complexity of CAI, as well as increase the level of responsibility for both
existing and new management personnel. In managing this growth, CAI will be
required to continue to improve its operating and financial systems to expand,
train and manage its employees. There can be no assurance that CAI will be
able to attract and retain qualified employees. Any inability to attract and
retain qualified employees may impede CAI's growth and its ability to compete
with other subscription television providers.
INTERESTS OF BANX AFFILIATES
Although the contractual arrangements among CAI, Bell Atlantic and NYNEX
are designed to be mutually beneficial to the parties, Bell Atlantic's
and NYNEX's interests may diverge from those of CAI's other shareholders. Bell
Atlantic and NYNEX have announced plans to develop video dialtone delivery
platforms in their respective operating territories and may become competitors
of CAI in any of CAI's markets. Bell Atlantic and NYNEX are substantial
creditors of CAI under the Term Note. The Warrants and shares of preferred
stock of CAI issued to the BANX Affiliates are subject to antidilution
provisions that are not available to other shareholders and that are designed
to maintain the right of the BANX Affiliates to acquire 45% of the shares of
Common Stock on a fully diluted basis. The Voting Preferred Stock to be issued
to Bell Atlantic and NYNEX upon exercise of the Warrants and Term Notes will be
entitled to vote on certain matters, which voting rights increase after Bell
Atlantic and NYNEX have exercised a percentage of their conversion rights for
Voting Preferred Stock, including the right to elect directors in proportion to
their stock ownership. There is a substantial likelihood that in exercising
all or a portion of their conversion rights, Bell Atlantic and NYNEX would
become the single largest shareholders of CAI and would have the power to
control or influence the control of CAI.
DILUTION
The average exercise prices of the Warrants held by the BANX Affiliates are
below the current market value of the Shares of Common Stock, and accordingly,
the issuance of Shares of Common Stock upon exercise of such Warrants may
result in significant dilution to CAI shareholders. In addition, in the event
of any additional share (or share equivalent) issuances by CAI during the next
five years, the Warrants and Senior Preferred Stock will be adjusted so that
Bell Atlantic and NYNEX will be permitted to acquire additional Shares of
Common Stock, in order to maintain the ability to acquire 45% of the fully
diluted Shares of Common Stock, for the same per share consideration. The
Warrants also contain other significant anti-dilution provisions.
POSSIBLE FUTURE SALES OF SHARES OF COMMON STOCK
CAI has as of August 1, 1996, 40,384,787 shares of Common Stock outstanding
and 8,153,753 shares are or will be deemed to be "Restricted Shares" issued and
sold by CAI in private transactions not involving a public offering and are
therefore not freely transferable in the public market without restriction or
limitation under the Securities Act. The Warrants and shares of preferred
stock of CAI issued to BANX entitle the holder to acquire 45% of the shares of
Common Stock outstanding from time to time on a fully diluted basis and require
CAI to register such securities, or the shares of Common Stock issuable upon
conversion or exercise thereof, under the Securities Act. In addition, holders
of outstanding CAI warrants to purchase 486,879 shares of Common Stock have the
right to cause CAI to register such shares issuable upon exercise of such
warrants under the Securities Act.
No prediction can be made of the effect, if any, that the sales of such
shares in the public market would have on the market price of shares of
Common Stock available from time to time. Nevertheless, sales of substantial
amounts of shares of Common Stock in the public market could adversely affect
prevailing market prices.
RESTRICTIONS IMPOSED BY GOVERNMENT AND COMMUNITY REGULATION
The wireless cable industry is regulated by the FCC. The FCC governs,
among other things, the issuance, renewal, assignment, transfer and
modification of licenses necessary for wireless cable systems to operate and
the time afforded to licensees to construct facilities. The FCC requires fees
for certain applications and licenses, and mandates that certain amounts of
educational, instructional or cultural programming be transmitted over
certain of the channels used by CAI's existing and proposed wireless cable
systems. In the top fifty markets, the FCC has authorized up to 33 channels
(constituting a spectrum bandwidth of 198 MHZ) primarily for wireless cable
transmission of video programming. In markets below the top fifty markets, the
FCC has authorized up to 32 channels (constituting a spectrum bandwidth of 192
MHZ). Between 5 and 13 Multichannel Distribution Service and Multichannel
Multipoint Distribution Service ("MMDS") channels can be licensed by the FCC to
commercial operators for full-time usage without programming restrictions. The
remaining Instructional Television Fixed Services ("ITFS") channels typically
are authorized for educational purposes, although excess capacity can be leased
to wireless cable operators, subject to certain programming restrictions.
Licenses for both MMDS and ITFS channels are granted based upon applications
filed with the FCC. FCC approval also is required for assignment of existing
licenses or transfer of control of license holders. The FCC imposes
restrictions and conditions upon the use, control and operation of channels.
FCC licenses are limited in duration and subject to renewal procedures. While
current FCC rules are intended to promote development of a competitive
subscription television industry, the statutes, rules and regulations affecting
the subscription television industry could change, and any future changes in
FCC rules, regulations, policies or procedures could have a negative impact on
the industry as a whole, CAI in particular and BANX's ability to implement the
BR Agreement.
In addition, wireless cable operators are subject to regulations by the
Federal Aviation Administration ("FAA") with respect to construction of
transmission towers and to certain local zoning regulations affecting
construction of towers and other facilities. There also may be restrictions
imposed by local authorities, neighborhood associations and other similar
organizations limiting the use of certain types of reception equipment used by
CAI. Future changes in the foregoing regulations or any other regulations
applicable to CAI could have a material adverse effect on CAI's results of
operations and financial condition.
Certain states have legislated that each resident of a Multiple Dwelling
Unit ("MDU") should not be denied access to programming provided by franchised
cable systems, notwithstanding the fact that the MDU entered into an exclusive
agreement with a non-franchised video program distributor. States with such
"mandatory access" laws where CAI provides wireless cable service include
Connecticut, Delaware, District of Columbia, New Jersey, New York, Pennsylvania
and Rhode Island. In several district courts, mandatory access laws have been
held unconstitutional. Such laws could increase the competition for
subscribers in MDUs.
DIFFICULTIES AND UNCERTAINTIES OF A NEW INDUSTRY
While wireless cable television is not a new technology, it is a new
industry with a short operating history. Potential investors should be aware
of the difficulties and uncertainties that are normally associated with new
industries, such as lack of consumer acceptance, difficulty in obtaining
financing, increasing competition, advances in technology and changes in laws
and regulations. There can be no assurance that the wireless cable industry
will develop or continue as a viable or profitable industry.
DEPENDENCE ON CHANNEL LEASES AND LICENSES; NEED FOR LICENSE EXTENSIONS
For most of its channel rights, CAI is dependent upon leases of
transmission capacity with various third-party license holders. ITFS licenses
generally are granted for a term of ten years and are subject to renewal by the
FCC. MDS licenses generally will expire on May 1, 2001 unless renewed. FCC
licenses also specify construction deadlines which, if not met, could result in
the loss of the license. Requests for additional time to construct a channel
may be filed and are subject to review pursuant to FCC rules. Certain of CAI's
ITFS channel rights are subject to pending extension requests and it is
anticipated that additional extensions will be required. There can be no
assurance that the FCC will grant any particular extension request or license
renewal request. CAI's channel leases typically cover four ITFs channels
and/or one to four MDS channels each. Under the rules of the FCC, the term of
leases for ITFS channels, which constitute up to 20 of the 33 available
wireless channels within any major wireless cable market, may not exceed ten
years. There is no such restriction on MMDS leases. Following the expiration
of the initial term of a lease for ITFS channels, the leases under which CAI
operates generally provide that the ITFS license holders may negotiate for the
lease of channel capacity for one or more additional renewal terms with only
CAI or its sublessor. In addition, if a renewal agreement is not reached
within a specified time frame during which only CAI or its sublessor has the
use of the channel capacity, CAI will thereafter typically have a right of
first refusal to match any competing offers from one or more third parties.
Because the ITFS license holders have generally received their FCC licenses
within the last ten years, CAI and other similarly situated entities in the
industry have had little or no experience negotiating renewals of ITFS channel
lease agreements. CAI anticipates, however, that it will be able to negotiate
additional renewals with either the incumbent license holder, or with successor
license holders, although there is no assurance that it will be successful in
doing so. The MMDS channel leases held by CAI generally grant CAI the right to
renew the channel lease. All ITFS and MMDS channel leases are dependent upon
the continued validity of the corresponding FCC license. CAI anticipates that
upon the expiration of the current license terms, all such FCC licenses will be
renewed following completion of the FCC review process, although there is no
assurance that such renewal applications will be granted. The termination of
or failure to renew a channel license or lease (due to a breach by CAI, or
its lessor, cancellation of the license held by a third party lessor for
failure to timely construct and/or perfect the wireless cable facility or
otherwise) or the failure to grant an application for an extension of time to
construct an authorized station, would result in CAI being unable to deliver
programming on such channel(s) unless it were able to lease excess capacity
from a successor license holder. Such a termination or failure in a market
which CAI actively serves could have a material adverse effect on CAI.
DEPENDENCE ON KEY INDIVIDUALS
CAI is dependent in large part on the experience and knowledge of Jared E.
Abbruzzese, Chairman and Chief Executive Officer of CAI and John Prisco, who
became President of CAI on February 23, 1996. The loss of the services of one
or both of Mr. Abbruzzese or Mr. Prisco could have a material adverse effect
upon CAI. CAI has an aggregate of $2.0 million of key man life insurance on
the life of Mr. Abbruzzese for the benefit of CAI.
PHYSICAL LIMITATIONS OF WIRELESS CABLE TRANSMISSION
Wireless cable programming is transmitted through the air via microwave
frequencies from a transmission facility to a small receiving antenna at
each subscriber's location and requires line-of-sight transmission. Therefore,
in communities with tall trees, hilly terrain, tall buildings or other
obstructions in the transmission path, wireless cable transmission can be
difficult or impossible to receive at certain locations without the use of low
power signal repeaters (known as "beambenders"), which retransmit an otherwise
blocked signal over a limited area. The use of beambenders increases the costs
per subscriber. In addition, in limited circumstances, extreme adverse weather
could damage the transmission and receiving antennas as well as transmission
site equipment.
CABLE SUBSCRIBER CONVERSION
In each of the principal markets served by CAI there is or will be
significant competition for households that are presently subscribers of a
hard-wire cable service. There can be no assurance that CAI will be able to
attract to its services existing cable customers, who for a variety of reasons
may be reluctant to shift from their present cable service.
DIVIDENDS UNLIKELY
CAI has never declared or paid any cash dividends on the Shares of Common
Stock and does not expect to declare any such dividends in the foreseeable
future. Payment of any future dividends will depend upon earnings and capital
requirements of CAI, and will be subject to restrictions contained in CAI's
debt instruments and the terms of CAI's preferred stock and other factors the
Board of Directors considers appropriate. CAI currently intends to retain
earnings, if any, to support growth and expansion.
SAFE HARBOR UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
The statements contained in this Prospectus, including those incorporated
herein by reference, which are not historical fact are "forward-looking
statements" that involve various important assumptions, risks and other factors
which could cause the Company's actual results for fiscal 1997 and beyond to
differ materially from those expressed in such forward looking statements.
These important factors include, without limitation, the assumptions, risks and
uncertainties set forth above under "Risk Factors" as well as other
assumptions, risks, uncertainties and factors disclosed in the documents
incorporated herein by reference and the Company's other securities filings.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Shareholders, except for amounts received from the exercise
of warrants. Such amounts will be used by the Company for general corporate
purposes.
<PAGE>
THE SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
ownership by the Selling Shareholders of Common Stock at August 1, 1996, and
as adjusted for the sale of the Shares offered hereby. At September 1, 1996,
there were 40,384,787 shares of Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering Shares Being After Offering
Shares Percent Offered Hereby Shares Percent
SELLING SHAREHOLDERS
<S> <C> <C> <C> <C> <C>
Sherrie Abbruzzese{1} 176,000 * 51,000 125,000 *
Leslie L. Alexander 910,507{2} 2.25% 910,507 -- --
Leslie L. Alexander (IRA) 36,000 * 36,000 -- --
James P. Ashman{3} 172,594 * 73,315 99,279 *
William M. Barnard 48,928 * 48,928 -- --
Stephen W. Burke 61,726 * 61,726 -- --
Commonwealth Life Insurance
Co. - Stock TRAC 20,500 * 20,500 -- --
(Teamsters I)
CTM Financial Corporation1 5,000 * 15,000 -- --
The Corotoman Company,
L.L.C.(4) 5,960,900 14.76% 750,000 5,210,900 12.90%
Richard J. Davis 40,630 * 40,630 -- --
Thomas J. Dougherty, Jr. 16,327 * 16,327 -- --
Eastern Cable
Networks Corp. 1,582,630 3.92% 1,582,630 -- --
Mark D. Ein 7,129 * 7,129 -- --
Gerard Klauer Mattison &
Co., LLC(5) 533,722 1.32% 533,722 -- --
Grosvenor Fund L.P. 31,446{2} * 31,446 -- --
Handtman Family Trust 7,000 * 7,000 -- --
Philip Hempleman 176,704{2} * 176,704 -- --
Robert E. Hoffman 20,989 * 20,989 -- --
JMG Capital Partners, L.P. 22,090 * 22,090 -- --
Bradley T. Johnson 35,232 * 35,232 -- --
F. Gray Kiger, Jr. 85,720 * 85,720 -- --
Lagunitas Partners, L.P. 10,000 * 10,000 -- --
Audrey E. Loving, Jr. 85,720 * 85,720 -- --
James A. Lowe 46,330 * 46,330 -- --
Charles A. McFadden 70,671 * 70,671 -- --
Richard McKenzie 35,000{2} * 35,000 -- --
Melco Development Ltd. 147,793{2} * 147,793 -- --
Eugene Myers 5,000 * 5,000 -- --
NBH & BJB Associates, 46,330 * 46,330 -- --
L.C.
New York Life Insurance
and Annuity Corporation 67,022 * 67,022 -- --
New York Life Insurance
Company 255,180 * 255,180 -- --
Olton Holdings Ltd. 9,433{2} * 9,433 -- --
Michael Powers 3,000 * 3,000 -- --
Ronald Howard Reede 5,000 * 5,000 -- --
SBC Warburg Inc. 82,500{5} * 82,500{5} -- --
Telcom - CAI Investors,
L.L.C. 149,545{2} * 149,545 -- --
John A. Trinder 85,720 * 85,720 -- --
Trust for the Benefit of
Carter G. Hempleman 10,000 * 10,000 -- --
Trust for the Benefit of
Spencer J. Hempleman 10,000 * 10,000 -- --
</TABLE>
____________________________
* less than 1%
1 Sherrie Abbruzzese is the spouse of Jared E. Abbruzzese, Chairman and
Chief Executive Officer of CAI.
2 Such shares are issuable upon exercise of outstanding warrants.
3 James P. Ashman is the Company's Executive Vice President and Chief
Financial Officer and a Director.
4 Jared E. Abbruzzese and Joseph Abbruzzese and Hope Carter, the brother
and aunt of Jared E. Abbruzzese, respectively, own 46.5%, 4.0%
and 46.5% <^>, respectively, of The Corotoman Company, L.L.C.
("Corotoman").
Those individuals are the sole directors of Corotoman.
5 Such shares are issuable upon exercise of the Company's Series A
Preferred Stock. The Series A Preferred Stock is convertible into
Common Stock at a conversion price equal to the lesser of $11.00 per
share and the trailing ten-day average market price, and accordingly,
the number of shares of Common Stock issuable at any time depends upon
the then-prevailing market price. The numbers of shares offered for
resale was computed assuming a conversion price of $7.00.
6 Gerard Klauer Mattison & Co., LLC has acted as underwriter in
connection with offerings of the Company's securities and has provided
other investment banking services to the Company.
To the best of the Company's knowledge, the Selling Shareholders have
not within the past three years held any position or office or had any other
material relationship with the Company, except as noted above.
<PAGE>
PLAN OF DISTRIBUTION
The Shares registered for sale hereby may be sold from time to time by
the respective Selling Shareholders named herein. Such sales may be effected
(i) in transactions on the Nasdaq NM, or (ii) in privately negotiated
transactions or in a combination of any such transactions. Such transactions
may be effected by the Selling Shareholders at market prices and on terms
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The discussion herein assumes
that the Selling Stockholders named herein holding warrants or Series A
Preferred Stock have exercised their warrants and converted their Series A
Preferred Stock prior to effecting sales of Shares pursuant to this
Registration Statement or any of the transactions described.
The Shares may be sold by one or more of the following: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the Shares
as agent but may position and resell a portion of the block as principal to
facilitate the transactions; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
prospectus; and (c) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, brokers or
dealers engaged by the Selling Shareholders may arrange for other brokers
or dealers to participate in the resales.
In connection with distributions of the Shares or otherwise, certain of
the Selling Shareholders may enter into hedging transactions, where feasible,
with broker-dealers with respect to the Shares. In connection with such
transactions, broker-dealers may engage in short sales of the Shares registered
hereunder in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell Shares short and
redeliver the Shares to close out such short positions. The Selling
Shareholders may also enter into option or other transactions with broker-
dealers which require the delivery to the broker-dealer of the Shares
registered hereunder. The Selling Shareholder may also pledge the Shares
registered hereunder to a broker or dealer and upon a default the broker or
dealer may effect sales of the pledged shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
discounts, commissions or concessions from the Selling Shareholders in amounts
to be negotiated in connection with the sale and may receive commissions from
the purchasers of Shares for whom they may act as agent. Such brokers or
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any such commission discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition,
any securities covered by this Prospectus which qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus.
If an underwriter or underwriters are utilized in a firm commitment
public offering, the Selling Shareholders will execute a firm commitment
underwriting agreement with such underwriters.
Sales of the Shares "at the market" and not at a fixed price into an
existing trading market for the Shares, on the Nasdaq NM or otherwise, may be
made to or through one or more underwriters, acting as principal or agent, as
may be specified in an accompanying Prospectus Supplement. Other sales may be
made, directly or through agents, to purchasers outside existing trading
markets.
The Selling Shareholders are acting independently of the Company in
making decisions with respect to the timing manner and size of each sale. The
place and time of delivery for a particular offer of the Shares will be set
forth in an accompanying Prospectus Supplement, if required.
All costs, expenses and fees in connection with the registration of the
Shares will be borne by the Company. Commissions and discounts, if any,
attributable to the sales of the Shares will be borne by the Selling
Shareholders. The Selling Shareholders may agree to indemnify any agent,
dealer or broker that participates in transactions involving sales of the
Shares against certain liabilities, including liabilities arising under the
Securities Act. The Company has agreed to indemnify certain of the Selling
Shareholders against all losses, claims, damages and controversies arising out
of the registrations pursuant to the Registration Statement, including without
limitation, all liabilities of the underwriters related thereto and all
liabilities as to the sales of any shares of the Company's stock pursuant
thereto.
LEGAL OPINION
The validity of the Shares of Common Stock offered hereby has been
passed on by Day, Berry & Howard, CityPlace I, Hartford, Connecticut 06103-
3499.
EXPERTS
The consolidated financial statements of CAI Wireless Systems, Inc. and
Subsidiaries as of March 31, 1996 and 1995 and for the years ended March 31,
1996 and 1995, and the seven-month period ended March 31, 1994 incorporated by
reference in this Prospectus and the Registration Statement on Form S-3 of
which it is part, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
<PAGE
No dealer, salesperson or any other
person has been authorized to give any 5,650,839 SHARES
information or to make any representations
in connection with the Offerings other than
those contained in this Prospectus, and, if
given or made, such information or
representations must not be relied upon as
having been authorized by the ompany,
the Selling Shareholders or any of the
Underwriters. This Prospectus does not CAI WIRELESS
constitute an offer to sell, or a SYSTEMS, INC.
solicitation of an offer to buy, any
securities other than the registered
securities to which it relates or an offer
to, or solicitation of, any person
in any jurisdiction where such an
offer or solicitation would be unlawful.
Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any
circumstances, create any implication that
there has been no change in the affairs of
the Company since the date hereof or that
the information contained herein is correct
as of any time subsequent to the date
hereof.
TABLE OF CONTENTS
Page COMMON STOCK
Available Information 2
Incorporation of Certain Documents By
Reference 2
The Company 3
Risk Factors 6
Use of Proceeds 10
The Selling Shareholders11
Plan of Distribution 13
Legal Opinion 13
Experts 13
September ___, 1996
<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, has duly caused this Amendment
No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Albany, State of New York on September <^>19, 1996.
CAI WIRELESS SYSTEMS, INC.
By: /s/ James P. Ashman
James P. Ashman
Executive Vice President
Pursuant to the requirements of the Securities Act, this <^>Amendment
No. 1 has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
<^>Name Title Date
<S> <C> <C>
* Chairman, Chief Executive September 19, 1996
Jared E. Abbruzzese Officer and Director
(Principal Executive Officer)
* President, Chief Operating Officer September 19, 1996
John Prisco and Director
* Chief Administrative Officer and September 19, 1996
George M. Williams Corporate Analyst, Secretary,
Treasurer and Director
/s/ James P. Ashman Executive Vice President, Chief September 19, 1996
James P. Ashman Financial Officer and Director
(Principal Financial Officer)
* Vice President and September 19, 1996
Craig J. Kessler Corporate Controller
(Principal Accounting Officer)
* Director September 19, 1996
Alan Sonnenberg
__________________ Director September , 1996
Harold A. Bouton
__________________ Director September , 1996
Arthur C. Belanger
* Director September 19, 1996
David M. Tallcott
__________________ Director September , 1996
Robert D. Happ
</TABLE>
(a majority of the Board of Directors)
<^>By* /s/ James P. Ashman
James P. Ashman
Attorney-in-Fact
<PAGE>
