<PAGE> 1
As filed with the Securities and Exchange Commission on April 8, 1996
Registration No. 333-
-------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
HEARTLAND WIRELESS COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 73-1435149
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
903 N. BOWSER, SUITE 140
RICHARDSON, TEXAS 75081
(214) 479-9244
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
JOHN R. BAILEY COPY TO:
SENIOR VICE PRESIDENT - FINANCE VICTOR B. ZANETTI, ESQ.
CHIEF FINANCIAL OFFICER, ARTER & HADDEN
TREASURER AND SECRETARY 1717 MAIN STREET, SUITE 4100
HEARTLAND WIRELESS COMMUNICATIONS, INC. DALLAS, TEXAS 75201-4605
903 N. BOWSER, SUITE 140 (214) 761-4475
RICHARDSON, TEXAS 75081
(214) 479-9244
(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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.
[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) (1) FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value(2) . . . . . . . . . . . . . . . . 1,613,893
Shares $26.88 $43,381,443 $14,959
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee based
upon the average of the high and low prices of the Common Stock on the
Nasdaq Stock Market's National Market on April 3, 1996, in accordance with
Rule 457(c).
(2) Includes 210,000 shares of Common Stock issuable upon the exercise of
warrants held by Gerard Klauer Mattison & Co., LLC.
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
HEARTLAND WIRELESS COMMUNICATIONS, INC.
CROSS REFERENCE SHEET
<TABLE>
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ITEM OF FORM S-3 PROSPECTUS CAPTION OR LOCATION
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<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus . . . . . . . . . . . . . . . . . . . Cover of the Registration Statement; Facing Page; Cross
Reference Sheet; Outside Front Cover Page of Prospectus
- -----------------------------------------------------------------------------------------------------------------------------
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . . Inside Front and Outside Back Cover Pages of Prospectus
- -----------------------------------------------------------------------------------------------------------------------------
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Risk Factors; The Company
- -----------------------------------------------------------------------------------------------------------------------------
4. Use of Proceeds . . . . . . . . . . . . . . . . . . Use of Proceeds
- -----------------------------------------------------------------------------------------------------------------------------
5. Determination of Offering Price Not Applicable
- -----------------------------------------------------------------------------------------------------------------------------
6. Dilution . . . . . . . . . . . . . . . . . . . . . Dilution
- -----------------------------------------------------------------------------------------------------------------------------
7. Selling Security Holders . . . . . . . . . . . . . Selling Stockholders; Plan of Distribution
- -----------------------------------------------------------------------------------------------------------------------------
8. Plan of Distribution . . . . . . . . . . . . . . . Outside Front Cover Page of Prospectus; Plan of
Distribution
- -----------------------------------------------------------------------------------------------------------------------------
9. Description of Securities to be Registered . . . . Not Applicable
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10. Interests of Named Experts and Counsel . . . . . . . Not Applicable
- -----------------------------------------------------------------------------------------------------------------------------
11. Material Changes . . . . . . . . . . . . . . . . . . Recent Events
- -----------------------------------------------------------------------------------------------------------------------------
12. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
- -----------------------------------------------------------------------------------------------------------------------------
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . . . . . . . . Not Applicable
=============================================================================================================================
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION - DATED APRIL 8, 1996
PROSPECTUS
- --------------------------------------------------------------------------------
1,613,893 SHARES
HEARTLAND WIRELESS COMMUNICATIONS, INC.
COMMON STOCK
The 1,613,893 shares of common stock, par value $.001 per share (the
"Common Stock"), of Heartland Wireless Communications, Inc. (the "Company") to
which this Prospectus relates (the "Shares") are being offered on behalf of and
for the account of (i) Charter Wireless Cable Holdings, L.L.C., a Delaware
limited liability company ("CWCH"), (ii) Ron Jones, Neil Straub, J. A.
McWhorter, Kenneth Christie, Charles Calhoun and Paul McCully (the "Other
Stockholders"), and (iii) Gerard Klauer Mattison & Co., LLC ("GKM"). CWCH, the
Other Stockholders and GKM are collectively referred to as the "Selling
Stockholders." The Company anticipates that the Shares will be offered for
sale until the earlier of (i) the sale of all of the Shares offered by CWCH,
subject to extension of the option of the Company, or (ii) 180 days after the
effectiveness of this Registration Statement. The Company has agreed to pay
all expenses of registration in connection with this offering but will not
receive any of the proceeds from the sale of the Shares being offered hereby.
All fees and disbursements of counsel for each of the Selling Stockholders, and
all brokerage commissions and other similar expenses incurred by such Selling
Stockholders will be borne by such Selling Stockholders. The aggregate
proceeds to the Selling Stockholders from the sale of the Shares will be the
purchase price of the Shares sold, less the aggregate brokerage commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. See "Use of Proceeds," "Plan of
Distribution" and "Selling Stockholders."
The Common Stock is included in the Nasdaq Stock Market's National
Market (the "Nasdaq National Market") under the symbol "HART." On April 4,
1996, the last reported sales price for the Common Stock was $27.25 per share.
This offering is currently not being underwritten. However, the
Selling Stockholders, brokers, dealers or underwriters that participate with
the Selling Stockholders in the distribution of the Shares may be deemed
"underwriters," as that term is defined in the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions received by broker-dealers,
agents or underwriters and any profit on the resale of the Shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. Although neither the Company nor the Selling Stockholders have
entered into any arrangement or underwriting agreement with any broker-dealer
or agent, the Shares being offered hereby, when sales thereof are made, may be
made in one or more transactions (which may involve one or more block
transactions) through customary brokerage channels, either through brokers
acting as brokers or agents for the sellers, or through dealers or underwriters
acting as principals who may resell the Shares in the Nasdaq National Market or
in privately negotiated sales, or otherwise, or by a combination of such
methods of offering. Each sale may be made either at market prices prevailing
at the time of the sales or at negotiated prices.
To the extent required, the specific number of Shares to be sold, the
purchase price, the public offering price, the names of any such agents,
dealers or underwriters and any applicable commissions or discounts with
respect to a particular offer will be set forth in an accompanying Prospectus
Supplement.
SEE "RISK FACTORS" ON PAGE 6 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SHARES OF COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
APRIL 8, 1996
<PAGE> 4
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. These 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 laws of any such State.
<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the informational reporting 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 Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by the Company with the Commission
may be inspected and copied at the public reference facilities maintained by
the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following Regional Offices of the Commission:
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60621; and New York Regional Office, Seven World
Trade Center, New York, New York 10048.
The Common Stock is listed on the Nasdaq National Market, and reports
and other information concerning the Company may be inspected and copied at the
offices of the Nasdaq National Market at 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act with respect to the Shares of Common Stock
offered hereby. This Prospectus omits certain information contained in that
Registration Statement. For further information with respect to the Company
and the Shares offered hereby, reference is hereby made to the Registration
Statement and its exhibits and schedules. The Registration Statement may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies may be obtained therefrom at
prescribed rates. Statements contained herein concerning provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are hereby incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995; and
(2) the Company's Current Reports on Form 8-K dated February 23,
1996, as amended by Form 8-K/A dated February 23, 1996 (filed
with the Commission on April 8, 1996).
All reports and other documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Shares made hereby shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such reports and
documents. Any statement contained in a document incorporated by reference
herein shall be
2
<PAGE> 6
deemed to be modified or superseded for purposes of this Prospectus and the
Registration Statement of which it is a part to the extent that a statement
contained herein or in a subsequently filed document modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
the Registration Statement.
Upon written or oral request, the Company will provide without charge
to each person to whom a copy of this Prospectus is delivered a copy of any and
all of the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to Heartland Wireless
Communications, Inc., 903 N. Bowser, Suite 140, Richardson, Texas 75081,
Attention: Mr. John R. Bailey, Senior Vice President-Finance, telephone (214)
479-9244.
3
<PAGE> 7
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE.
THE COMPANY
Heartland Wireless Communications, Inc. (the "Company") develops, owns
and operates wireless cable television systems primarily in small to mid-size
markets located in the central United States. As of March 1, 1996, the Company
had wireless cable channel rights in 81 markets, including 38 markets in which
the Company has systems in operation serving approximately 132,000 subscribers
(the "Existing Systems"), representing approximately 8.6 million households,
approximately 7.1 million of which the Company believes can be served by
line-of-site ("LOS") transmissions (which generally require a direct,
unobstructed transmission path from the central transmitting antenna to the
antenna located on the subscriber's premises).
Certain of the wireless cable assets presently held by the Company are
not included in the discussion of the Company's business because such assets
are not a part of the Company's current long-term business plan. These assets
include wireless cable channel rights and related assets associated with the
Los Angeles, California, Memphis, Tennessee and Flippin, Tennessee markets
("Disposition Assets"). The Company is currently a party to an agreement
relating to the disposition of the Memphis and Flippin, Tennessee markets,
pursuant to which the markets would be conveyed to TruVision Cable, Inc.
("TruVision") for an aggregate consideration of approximately $5.4 million
(collectively, the "Memphis Transaction"). The Company currently anticipates
that the Memphis Transaction will close on or before April 30, 1996, after
which the Company will not retain any direct or indirect interest in such
markets.
The executive offices of the Company are located at 903 N. Bowser,
Suite 140, Richardson, Texas 75081 and its telephone number is (214) 479-9244.
See "The Company."
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Selling Stockholders. . . . 1,613,893 shares
Percent of Outstanding Common Stock of the Company
Company held by the Selling Stockholders . . . . . . . . . . . . 8.25%(1)
Nasdaq National Market Symbol . . . . . . . . . . . . . . . .HART
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . The Company will
not receive any
of the proceeds
from the sale of
the Shares being
offered hereby
</TABLE>
4
<PAGE> 8
(1) Percentage indicated is based upon 19,568,021 shares of Common Stock
outstanding as of March 29, 1996, including 210,000 shares of Common
Stock being registered hereby issuable upon the exercise of the
warrants held by GKM (the "GKM Warrant").
5
<PAGE> 9
RISK FACTORS
Prospective investors should carefully consider the following
information, in addition to the other information contained in this Prospectus
and any Prospectus Supplement, before purchasing the Shares of Common Stock
offered hereby.
LIMITED OPERATING HISTORY; NET LOSSES SINCE INCEPTION
Although the Company's business commenced in 1990, it did not generate
any revenues until April 1992. Potential investors, therefore, have limited
historical information about the Company upon which to base an evaluation of
the Company's performance and a decision to invest in the Company. As of
December 31, 1995, the Company has recorded net losses of approximately $19.5
million since inception, due primarily to interest expense and charges for
depreciation and amortization of capital expenditures to develop its wireless
cable systems. Until such time as the Company substantially increases its
subscriber base, resulting in higher subscription fee revenues, it will
continue to experience losses. Because of the costs associated with launching
a wireless cable television system and expanding its subscriber base, continued
growth by the Company will tend to reduce net income, if any, or increase net
losses. As a result, the Company expects to continue to experience net losses
while it develops and expands its wireless cable systems even if mature
individual systems of the Company are profitable.
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY; INSUFFICIENCY OF EARNINGS TO COVER
FIXED CHARGES
As of December 31, 1995, on a pro forma basis after giving effect to
the consummation of the Transactions (as defined herein, see "Recent Events-The
Transactions"), the Company had approximately $140.2 million of indebtedness
and the Company's consolidated subsidiaries would have had approximately $18.8
million of total liabilities. For the years ended December 31, 1993, 1994 and
1995, the Company's earnings were insufficient to cover fixed charges by
$406,000, $4,638,000 and $20,187,000, respectively. The ability of the Company
to make payments of principal and interest on its indebtedness will be largely
dependent upon its future financial performance. Many factors, some of which
will be beyond the Company's control (such as prevailing economic conditions),
will affect its financial performance. There can be no assurance that the
Company will be able to generate sufficient cash flow to cover required
interest and principal payments. If the Company is unable to meet interest and
principal payments in the future, it may, depending upon the circumstances
which then exist, seek additional equity or debt financing, attempt to
refinance its existing indebtedness or sell all or part of its business or
assets to raise funds to repay its indebtedness. There can be no assurance
that sufficient equity or debt financing will be available, or, if available,
that it will be on terms acceptable to the Company, that the Company will be
able to refinance its existing indebtedness or that sufficient funds could be
raised through asset sales. The Company's high level of indebtedness has
several important consequences, including, but not limited to: (i) significant
interest expense and principal repayment obligations resulting in substantial
annual fixed charges; (ii) significant limitations on the Company's ability to
obtain financing, make capital expenditures and acquisitions and take advantage
of other business opportunities that may
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<PAGE> 10
arise; and (iii) increased vulnerability to adverse general economic and
industry conditions. There can be no assurance that the Company will be
profitable in the future.
MANAGEMENT OF GROWTH; INTEGRATION OF ACQUIRED BUSINESSES
The Company has experienced rapid growth in the number of its
employees and the scope of its operating and financial systems. This growth
has resulted in an increased level of responsibility for both existing and new
management personnel. The recent consummation of the Transactions has resulted
in additional significant growth of the Company's operations. To manage its
growth effectively, the Company will be required to implement and improve its
operating and financial systems and controls and to expand, train and manage
its employee base. Although the Company has retained the services of certain
persons formerly employed by other parties to the Transactions, the Company is
primarily dependent upon the existing management of the Company to perform the
management functions formerly performed by management of each of the parties to
the Transactions. To the extent that the Company's existing management is
unable to assume or perform these combined duties, the Company could be
adversely affected. There can be no assurance that the management, systems and
controls currently in place or any steps taken to improve such management,
systems and controls will be adequate in the future.
In addition, in light of the Transactions, management of the Company
must make and implement a number of strategic and operational decisions
regarding the integration of its various operations and the exploitation of its
assets and businesses. The timing and manner of the implementation of
decisions made with respect to the ongoing business of the Company will
materially affect the operations of the Company. Given the range of potential
outcomes arising from such decisions, and the interrelationships among the
decisions to be made, it is difficult to quantify with precision the
composition of the Company. There can also be no assurance that any acquired
businesses will be integrated successfully into the Company's business.
NEED FOR ADDITIONAL FINANCING FOR GROWTH
The growth of the Company's business requires substantial investment
on a continuing basis to finance capital expenditures and expenses related to
subscriber growth and system development. Although the Company believes that
its cash and cash equivalent assets will be sufficient to fund the Company's
operations and expansion through at least the end of 1996, there is no
assurance that additional funds will not be necessary to complete the launch,
build-out and expansion of all of the Company's wireless cable systems and to
bring such systems to a mature state or that any such required additional funds
would be available on satisfactory terms and conditions, if at all. In
addition, the Company's capital needs will depend in part upon the success of
the Company's efforts to sell or otherwise dispose of the Disposition Assets
and the nature of any consideration received as a result of such dispositions.
To the extent assets and markets designated for disposition are not sold, or
are not sold for cash, the Company's requirements for additional funds will be
increased. There is also no assurance that the Company will not pursue, from
time to time, other opportunities to acquire additional wireless cable channel
rights and businesses that may utilize the capital currently expected to be
available
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<PAGE> 11
for its current markets. The amount and timing of the Company's future capital
requirements, if any, will depend upon a number of factors, including
programming costs, equipment costs, marketing expenses, staffing levels,
subscriber growth and competitive conditions, and any purchases or dispositions
of assets, many of which are not within the Company's control. Failure to
obtain any required additional financing could materially adversely affect the
growth, cash flow or earnings of the Company.
POTENTIAL SIGNIFICANT INDUSTRY TRANSACTIONS
Significant industry transactions such as acquisitions and
dispositions of channel rights, joint ventures and other business transactions
between and among participants in the wireless cable television industry have
occurred with some frequency in the past, and the Company's management expects
this trend to continue in the foreseeable future. Although the Company
regularly engages in discussions concerning such industry transactions with
other industry participants, the Company is not currently subject to any
material definitive agreements in such regard except as disclosed herein or in
those documents incorporated herein by reference. Whether the Company proceeds
with any of these discussions and whether the Company ultimately negotiates
and/or consummates any additional significant industry transactions will
depend, among other things, upon the business and prospects of the Company,
industry conditions, investment and growth opportunities available to the
Company, stock market conditions, availability and suitability of financing for
such transactions, regulatory and legal considerations, and other plans and
requirements of the Company. No assurance can be given that, if consummated,
any such significant industry transactions could be successfully integrated
into the Company's business.
DEPENDENCE ON EXISTING MANAGEMENT; KEY EMPLOYEES
The Company is dependent in large part on the experience and knowledge
of existing management. The Company has not entered into any employment
agreements with, or obtained key-man life insurance for, any of its executive
officers and there can be no assurance that any of such persons will remain in
the Company's employ in the future. Thomas W. Dixon, the Company's Senior
Vice President-Operations, resigned as an executive officer upon consummation
of the CS Transaction (as defined herein, See "Recent Events-The CS Wireless
Transaction") to join CS Wireless Systems, Inc. ("CS Wireless") as its Senior
Vice President-Operations. In addition, John R. Bailey, the Senior Vice
President-Finance, Chief Financial Officer, Treasurer and Secretary of the
Company, serves as Acting Chief Financial Officer of CS Wireless until CS
Wireless names a full-time Chief Financial Officer in addition to performing
his duties as an officer and employee of the Company. The Company's success is
also dependent upon its ability to attract and retain qualified employees to
develop and operate its wireless cable systems.
8
<PAGE> 12
COMPETITION
The pay television industry is highly competitive. Wireless cable
television systems face or may face competition from several sources, such as
traditional hard-wire cable companies, satellite master antenna television
systems, direct broadcast satellites and other alternative methods of
distributing and receiving television transmissions. Further, premium movie
services offered by cable television systems have encountered significant
competition from the home video cassette recorder industry. In areas where
several local off-air VHF/UHF broadcast signals can be received without the
benefit of subscription television, cable television systems also have
experienced competition from the availability of broadcast signals generally
and have found market penetration to be more difficult. In addition, within
each market, the Company initially must compete with others to acquire, from
the limited number of channel licenses issued, rights to a minimum number of
channels needed to establish a viable system. Legislative, regulatory and
technological developments may result in additional and significant
competition, including competition from local telephone companies, from a
proposed new wireless service known as local multi-point distribution and from
emerging trends and technologies. In the Existing Systems, the Company has
targeted its marketing to households that are unpassed by traditional hard-wire
cable and that have limited access to local off-air VHF/UHF broadcast channels.
Accordingly, to date the Company has not encountered significant direct
competition from traditional hard-wire cable companies. It is likely, however,
given the markets acquired in the Transactions, that the Company will face
significant direct competition from traditional hard-wire cable companies in
the future. In addition, as the telecommunications industry continues to
evolve, the Company may face additional competition from new providers of
entertainment and data services. In particular, there are a rapidly growing
number of information and data service providers serving consumers via informal
communications networks, such as the Internet and World Wide Web. Although the
Company is unaware of any such provider delivering programming like that
available over wireless cable television, there can be no assurance that
continuing advances in technology will not make such delivery possible. Even
if such direct competition does not exist in the future, however, the Company's
services will compete, indirectly, with entertainment services generally,
including those provided by operators using evolving technology. Many actual
and potential competitors have greater financial, marketing and other resources
than the Company. No assurance can be given that the Company will compete
successfully in any or all of its markets.
GOVERNMENT REGULATION
The right to transmit on wireless cable channels is regulated by the
Federal Communications Commission (the "FCC") and the copyright for the
retransmission of local off-air VHF/UHF broadcasts is regulated by the United
States Copyright Office pursuant to the Copyright Act of 1976, as amended (the
"Copyright Act").
Cable Act. Pursuant to the Cable Television Consumer Protection and
Competition Act of 1992, as amended (the "Cable Act"), the FCC adopted rate
regulations exclusively for traditional hard-wire cable systems. Pursuant to
the Telecommunications Act of 1996, which
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<PAGE> 13
was enacted in February 1996, all cable rate regulation will be eliminated
after three years, and for "small systems" as defined in such Act, and under
certain other circumstances, rate regulation will be eliminated immediately.
The Company cannot predict precisely what effect these regulations or other
governmental regulations may have on traditional hard-wire cable operators as
to price and service. While current FCC regulations are intended to promote
the development of a competitive pay television industry, the rules and
regulations affecting the wireless cable industry may change, and any future
changes in FCC rules, regulations, policies and procedures could have an
adverse effect on the industry as a whole and on the Company in particular.
Copyright Act. Secondary transmission of a broadcast signal is
permissible only if approved by the copyright holder or if subject to
compulsory licensing under the Copyright Act. The United States Congress
adopted legislation extending the compulsory copyright licensing system to
include wireless cable systems. As a result of this action, wireless cable
operators may engage in secondary transmissions of distant programming without
the copyright holder's approval, provided that such operators file certain
reports and pay certain fees set by the Copyright Royalty Tribunal.
Regulation of Retransmission. Effective October 6, 1993, pursuant to
the Cable Act, local broadcasters may require that cable operators obtain their
consent before retransmitting local off-air VHF/UHF broadcasts. The FCC has
exempted wireless cable operators from the retransmission consent rules if the
receive-site antenna is either owned by the subscriber or within the
subscriber's control and available for purchase by the subscriber upon the
termination of service. In all other cases, wireless cable operators must
obtain consent to retransmit local broadcast signals. The Company has obtained
such consents in each of its Existing Systems where the Company is
retransmitting on a wireless cable channel. Such consents will be required in
the Company's other markets. There can be no assurance that the Company will
be able to obtain such consents on terms satisfactory to the Company.
Other Regulations. Wireless cable operators are also subject to
regulation by the Federal Aviation Administration (the "FAA") with respect to
the construction of transmission towers and to certain local zoning regulations
affecting construction of towers and other facilities. There may also be
restrictions imposed by local authorities. There can be no assurance that the
Company will not be required to incur additional costs in complying with such
regulations and restrictions. No assurance can be given that new regulations
will not be imposed or that existing regulations will not be changed. Any such
new or modified regulations could have a material adverse effect on the
wireless cable industry as a whole and on the Company in particular.
DEPENDENCE ON CHANNEL LEASES; LOSS OF LICENSES BY LESSORS
The Company is dependent on leases with unaffiliated third parties for
most of its wireless cable channel rights. The Company has entered into leases
for substantially all of its wireless cable channel rights with channel license
holders, applicants for channel licenses and applicants that have had
previously-filed applications returned without prejudice by the FCC and which
will be refiled. The Company's channel leases typically cover four
instructional television
10
<PAGE> 14
fixed service ("ITFS") and/or one to four multi-point distribution service
("MDS") wireless cable channels each. Generally, ITFS channels may only be
owned by qualified non-profit educational organizations and in general must use
a minimum of 20 hours per week per channel for educational programming. The
remaining excess ITFS channel air time may be leased to wireless cable
operators for commercial use without further restriction. MDS channels may be
owned by commercial entities and allow full-time usage without programming
restrictions. Under the rules of the FCC, the term of an ITFS channel lease
cannot exceed ten years. There is no such restriction for MDS channel leases.
ITFS licenses generally are granted for a term of ten years and are subject to
the renewal by the FCC. MDS licenses generally will expire on May 1, 2001
unless renewed. The use of such channels by the license holders is subject to
regulation by the FCC and the Company's ability to continue to enjoy the
benefits of its leases with channel license holders is dependent upon the
continuing compliance by the channel license holders with applicable
regulations including the requirement that ITFS license holders must meet
certain educational use requirements in order to lease transmission capacity to
wireless cable operators. The remaining initial terms of most of the Company's
channel leases are approximately 5 to 10 years, although certain of the
Company's channel leases have initial terms expiring during the next several
years. Most of the Company's leases grant the Company a right of first refusal
to purchase the channels after the expiration of the lease if FCC rules and
regulations so permit, provide for automatic renewal of the lease term upon FCC
renewal of the license and/or require the parties to negotiate lease renewals
in good faith. The termination of or failure to renew a channel lease or
termination of the channel license, or the failure to grant an application for
an extension of time to construct an authorized station, would result in the
Company being unable to deliver television programming on such channel(s).
Although the Company does not believe that the termination of or failure to
renew a single channel lease or license would adversely affect the Company,
several of such terminations or failures in one or more markets that the
Company actively serves could have a material adverse effect on the Company.
Additionally, FCC licenses also specify construction deadlines, which, if not
met, could result in the loss of the license. Requests for additional time to
construct may be filed and are subject to review pursuant to FCC rules.
Certain of the Company's 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.
UNCERTAINTY OF GRANT OF PENDING APPLICATIONS
Applications for wireless cable licenses are subject to approval by
the FCC. Applicants with whom the Company has entered into leases have filed a
series of applications with the FCC for a number of wireless cable channels and
the Company has entered into leases for additional channels with applicants
that have had previously-filed applications returned without prejudice by the
FCC and which have been refiled. The vast majority of such leases are in the
form of lease agreements with qualified non-profit educational organizations
for ITFS channels. These ITFS applications are expected to undergo review by
the FCC's engineers and staff attorneys over the next several months. There is
no limit on the time that may elapse between filing the application with the
FCC for a modification or new license and action thereon by the FCC. Once the
FCC staff determines that the applications meet certain basic technical and
legal
11
<PAGE> 15
qualifications, the staff will then determine whether each application is
proximate to the transmit and receive-site locations of other applications.
Those applications that would result in signal interference to other pending
applications ("Competing Applications") must then undergo a comparative
selection process. The FCC's ITFS application selection process is based on a
set of objective criteria that includes whether an applicant is located in the
community to be served and the number of students that will receive the
applicant's educational programming. Thus, the outcome of the selection
process when two or more qualified applicants are competing for the same
channels lends itself to a degree of predictability that varies according to
the circumstances. Most of the Company's lease agreements with applicants for
channel licenses involve channel licenses for which Competing Applications have
been filed. In each market, the Company has carefully considered the FCC's
selection criteria in choosing the educational entities with which it has
entered into lease agreements. However, because the FCC's application review
process does not lend itself to complete certainty, and given the considerable
number of applications involved, no assurance can be given as to the precise
number of applications that will be granted. A number of competing applicants
for channel licenses have filed with the FCC petitions to deny the applications
in which the Company has acquired channel rights, based upon alleged
substantive defects in the applicant or in technical or other aspects of the
application. The Company anticipates that the FCC will deny most of the
current petitions to deny the applications in which the Company has acquired
channel rights. However, no assurance can be given as to the precise number of
such petitions that will be denied. Although the Company does not believe that
any single award of a channel license to an applicant that has filed a
Competing Application or the granting of any single petition to deny an
application in which the Company has acquired channel rights would adversely
affect the Company, several of such awards or grants could have a material
adverse effect on the Company.
UNCERTAINTY OF ABILITY TO OBTAIN FCC AUTHORIZATIONS
Wireless cable systems transmit programming over wireless cable
channels that are licensed by the FCC. Generally, the Company believes that a
minimum of 12 wireless cable channels are necessary to offer a commercially
viable wireless cable system in most rural markets and that more channels are
required in more competitive markets, such as those well served by traditional
cable television systems. In some of its long-term launch markets, the Company
does not currently have the right to operate 12 channels from the same
transmitter site. In those markets, the Company is dependent upon (i) the
grant of pending applications for modification of existing licenses for unbuilt
ITFS stations, (ii) the grant of such license modification applications which
have not been filed and/or (iii) the grant of applications for new ITFS
licenses, some of which have not been filed. There can be no assurance that
any or all of the modification applications and new license applications
actually made or anticipated to be made by the Company will be granted by the
FCC. Although the Company does not believe that the denial of any single
modification or new license application will adversely affect it, the denial of
several such applications, particularly if concentrated in one or a few of the
Company's markets, could have a material adverse effect on its growth.
12
<PAGE> 16
INTERFERENCE ISSUES
Under current FCC regulations, a wireless cable operator may install
receive-site equipment and serve any point where its signal can be received,
subject to the interference protection rights of certain other wireless cable
systems. Interference from other wireless cable systems can limit the ability
of a wireless cable system to serve particular points, in the same manner that
interference from one television station limits the ability of a viewer to
receive another television station broadcasting on the same frequency. In
licensing ITFS and MDS stations, a primary concern of the FCC is avoiding
situations where proposed stations are predicted to cause interference to the
reception of existing station signals. Pursuant to current FCC regulations, a
wireless cable license holder is generally protected from interference within
35 miles of the transmission site. The Company's business plan involves moving
the authorized transmitter site of various of its MDS and ITFS licensed
stations and obtaining the grant of licenses to new stations that the Company
will use in its wireless cable systems. The FCC interference protection
standards may make one or more of those proposed relocations or new grants
unavailable. In any such event, it may be necessary to negotiate interference
agreements with the licensees of stations which would otherwise block such
relocations or new grants. There can be no assurance that the Company will be
able to negotiate any required interference agreements on terms acceptable to
it. In the event that the Company cannot obtain interference agreements
required to implement its plans for a given market, the Company may have to
curtail or modify operations in that market. Any substantial modification or
curtailment of the Company's operations in its markets could have a material
adverse effect on its growth or financial performance. In addition, while the
Company's leases with MDS and ITFS licensees require their cooperation, it is
possible that one or more of the Company's channel lessors may hinder or delay
the Company's efforts to use the channels in accordance with its plans for a
particular market.
AUCTION OF BASIC TRADING AREAS
As a result of legislation authorizing the FCC to utilize competitive
bidding (auctions) for the award of initial licenses or construction permits
for certain commercial services when mutually exclusive applications have been
filed, on June 15, 1995 the FCC adopted new rules replacing lottery procedures
with auctions for the awarding of commercial licenses where two or more parties
have filed applications for the same frequencies. Auctions under the new rules
began November 13, 1995 for the award of initial commercial licenses for "Basic
Trading Areas" or "BTAs" (as defined by Rand McNally) and ended March 28, 1996;
however, the new auction rules do not apply when a license is to be renewed.
The new rules are effective although pleadings have been filed which might
result in changes in the rules, and any auctions conducted pursuant thereto.
BTA license holders that obtain an MDS license via an auction must provide
interference protection to the 35-mile protected service area of existing
license holders. Under the statutory auction authority enacted in 1993, ITFS
licenses are exempt from the auction process and applications for ITFS licenses
are expected to continue to be awarded according to the FCC's objective
criteria. The Company must file a long-form application (FCC Form 304) or a
Statement of Intention with the FCC by May 10, 1996 for each of the 93 BTAs for
which it was the winning bidder.
13
<PAGE> 17
DEPENDENCE ON PROGRAM MATERIAL AGREEMENTS
In connection with its distribution of television programming, the
Company is dependent on fixed-term contracts with various program suppliers.
Generally, the terms of such contracts are for periods of one to five years and
began to expire in 1995. Although the Company has no reason to believe that
any such contracts will be cancelled or will not be renewed upon expiration, if
such contracts are cancelled or not renewed, the Company will have to seek
program material from other sources. There is no assurance that other program
material will be available to the Company on acceptable terms or at all or, if
so available, that such material will be acceptable to the Company's
subscribers. The likelihood that program material will be unavailable to the
Company is significantly mitigated by the Cable Act and various FCC regulations
issued thereunder, which, among other things, impose limits on exclusive
programming contracts and generally prohibit cable programmers in which a cable
operator has an attributable interest from discriminating against cable
competitors with respect to the price and terms and conditions of sale of
programming. Only a few of the major cable television programming services
carried by the Company are not currently directly owned by a vertically
integrated cable operator, and the Company historically has not had difficulty
in arranging satisfactory contracts for these services. The Cable Act is the
subject of various legal challenges and if it were found to be
unconstitutional, program suppliers might raise their prices or make their
program material unavailable to the Company.
PHYSICAL LIMITATIONS OF WIRELESS CABLE TRANSMISSION
Wireless cable programming is transmitted via microwave frequencies
from a transmission facility to a small receiving antenna at each subscriber's
location, which generally requires a direct, unobstructed line-of-sight from
the transmission facility to the subscriber's receiving antenna. 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
signal boosters. Consequently, the Company may not be able to supply services
to certain potential subscribers. In addition, in limited circumstances,
extremely adverse weather can damage transmission and receiving antennas as
well as transmit site equipment.
POSSIBLE ADDITIONAL CAPITAL EXPENDITURES FOR DISPOSITION ASSETS
No assurance can be given that the planned disposition of the
Disposition Assets will be consummated. Accordingly, the Company may be
required to expend additional capital to maintain certain assets and/or fund
lease payments attributable to the Disposition Assets. Further, no assurance
can be given that the disposition of the Disposition Assets will have the
desired impact on the Company's business or financial affairs.
14
<PAGE> 18
POSSIBLE ADVERSE TAX CONSEQUENCES ATTRIBUTABLE TO THE MEMPHIS TRANSACTION AND
THE CS TRANSACTION
The cash and promissory note portion of the consideration received by
the Company and/or its subsidiaries from consummation of the Memphis
Transaction and CS Transaction will result in the recognition of gain for
Federal income tax purposes. The amount of any tax liability attributable
thereto will depend upon numerous factors, including the tax basis of the
assets conveyed, the net operating losses available to the Company and other
factors. Certain of these factors will depend upon the tax attributes of CMAX,
AWS and TSC (each as defined herein, see "Recent Events - The Transactions") as
of the closing of the Transactions. There can be no assurance that sufficient
tax bases and net operating losses will exist to defray a material amount of
any such gain, thereby requiring the Company to pay certain tax liabilities to
Federal and/or state authorities. Any such payments would negatively impact
the Company's cash flow.
DIFFICULTIES AND UNCERTAINTIES OF A NEW INDUSTRY
While wireless cable television is not a new technology, it is a
relatively 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.
CERTAIN SUBSIDIARIES NOT WHOLLY OWNED
The Company generally conducts its business through subsidiaries. The
Company's subsidiaries include non-operating subsidiaries that hold interests
in channels, subsidiaries that operate systems and subsidiaries that do both.
The Company also has an operating subsidiary that installs wireless cable
systems in various markets served by the Company and its subsidiaries. Certain
of the Company's subsidiaries are not wholly owned and most subsidiaries are
indirectly owned by the Company as a result of its majority ownership of other
entities. Although the Company has a sufficient interest in its subsidiaries
to be able to exercise control over them, the Company may owe a fiduciary duty
to the holders of various minority interests in its subsidiaries. Accordingly,
the Company may not exercise unfettered control over such subsidiaries and may
be required to deal with such subsidiaries on terms no less favorable to such
subsidiaries than could be obtained from unaffiliated third parties. The
Company believes that all of its dealings with its subsidiaries have been on
such terms. In addition, dividends or other distributions paid or made by such
subsidiaries must be paid or made on a pro rata basis to all stockholders.
WIRELESS ONE AND CS WIRELESS MINORITY INVESTMENTS
The Company owns approximately 26% of the outstanding common stock of
Wireless One, Inc., a Delaware corporation ("Wireless One"). Although David E.
Webb and J.
15
<PAGE> 19
R. Holland, Jr., Directors of the Company, serve as Directors of Wireless One,
the Company cannot exercise unfettered control over this substantial
investment. The Company does not control the management of Wireless One, and
is dependent upon the skill, expertise and managerial efforts of the management
of Wireless One to achieve a return on the Company's substantial investment in
Wireless One. To the extent Wireless One proves unsuccessful in its business,
the value of the Company's investment therein will be adversely affected.
Similarly, the Company owns approximately 35% of the outstanding common stock
of CS Wireless. Although David E. Webb and J.R. Holland, Jr., Directors of
the Company, serve as Directors of CS Wireless, the Company cannot exercise
unfettered control over this substantial investment. The Company does not
control the management of CS Wireless, and is dependent upon the skill,
expertise and managerial efforts of the management of CS Wireless to achieve a
return on the Company's substantial investment in CS Wireless. To the extent
CS Wireless proves unsuccessful in its business, the value of the Company's
investment therein will be adversely affected.
AGREEMENT TO VOTE FOR BOARD DESIGNEE OF JUPITER; CO-SALE RIGHT
David E. Webb, the President and Chief Executive Officer of the
Company, L. Allen Wheeler, Vice Chairman and a member of the Board of Directors
of the Company and Hunt Capital Group, L.L.C. ("Hunt Capital"), a principal
stockholder of the Company and affiliate of J. R. Holland, Jr., the Chairman of
the Board of the Company, collectively own approximately 40.8% of the
outstanding Company Common Stock. Pursuant to the terms of a Stockholders'
Agreement (the "Stockholders' Agreement"), entered into in connection with the
private placement of $40.2 million of 9% Convertible Subordinated Discount
Notes due 2004 (the "Convertible Notes"), each of Hunt Capital, David E. Webb
and L. Allen Wheeler, have agreed to vote their shares of the Company Common
Stock (i) in favor of the election to the Company's Board of Directors of one
designee of Jupiter Partners, L.P.,the purchaser of $40 million of the
Convertible Notes ("Jupiter"), and (ii) in favor of the Company's Board of
Directors consisting of at least three and not more than seven members, for so
long as Jupiter retains a 25% interest in the Convertible Notes originally
purchased by it and/or the shares of the Company Common Stock issued or
issuable upon conversion thereof (the "Conversion Shares") originally issuable
to it. The agreement of such stockholders to elect Jupiter's designee to the
Board of Directors may restrict the ability of such stockholders to elect their
preferred slate of directors to manage the Company, which may result in a
member of the Board of Directors having interests that conflict with those of
the other stockholders of the Company. In addition, under the terms of the
Stockholders' Agreement, each of Hunt Capital, David E. Webb and L. Allen
Wheeler have agreed that, for so long as Jupiter holds such 25% interest, in
the event of any proposed sale or series of sales of the Company Common Stock
by any such stockholder to a non-affiliate for aggregate consideration greater
than $15 million or representing in excess of 5% of the then outstanding shares
of Company Common Stock, such stockholder shall not effect such sale unless
Jupiter is permitted to participate in such sale on a pro rata basis with such
stockholder. The co-sale right may reduce the likelihood of a change in
control of the Company because any potential purchaser of stock held by the
controlling stockholders may also be required to purchase shares owned by
Jupiter.
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<PAGE> 20
LIMITED TRADING VOLUME AND POSSIBLE VOLATILITY OF THE COMPANY COMMON STOCK
During 1994 and 1995, the average trading volume of shares of the
Company Common Stock on Nasdaq National Market was approximately 22,800 and
33,600 shares per day, respectively. Prior to the consummation of the
Transactions on February 23, 1996, approximately 12,611,131 shares of the
Company's Common Stock were issued and outstanding, including 8,141,801 shares
(of which 225,400 shares were subject to exercisable options) held by executive
officers, directors and their affiliates. As a result of the Transactions, the
Company issued approximately 6,757,141 additional shares of Common Stock (of
which 10,252 shares are held by the Company as treasury shares), resulting in
substantial increases both in the number of outstanding shares of Company
Common Stock held by persons other than executive officers, directors and their
affiliates, and in the average daily trading volume of the Company's Common
Stock on Nasdaq National Market. The market price of the Company Common Stock
could fluctuate substantially in the future for a variety of reasons, including
the anticipated increased trading volume and anticipated dispositions resulting
from the Transactions, the performance of the Company, investor expectations
for the Company and the wireless cable television industry, general economic
conditions and fluctuations in the overall stock market.
NO COMPANY COMMON STOCK DIVIDENDS
The Company has not paid dividends on the Company Common Stock since
its inception and does not anticipate paying any dividends in the foreseeable
future. In addition, provisions relating to the Company's indebtedness
prohibit the payment or accrual of dividends or any other distribution with
respect to the Company's Common Stock until such debt is paid in full.
POSSIBLE FUTURE ACQUISITIONS
The Company has in the past made a number of acquisitions and may in
the future make additional acquisitions. The Company can be expected to seek
to acquire additional channel rights, both in its existing markets and in other
markets, both directly and indirectly by acquiring other wireless cable
television providers. Such acquisitions may be in geographic areas or markets
outside of the Company's traditional focus of small to mid-size markets in the
central United States. In addition, it is possible that the Company might make
one or more acquisitions outside of the business of providing wireless cable
television services. Any such acquisitions may be made for cash, securities,
including the Company Common Stock, or combinations thereof. Under applicable
law and regulations, in many circumstances, approval by the Company's
stockholders of any such acquisitions may not be required. The Company may pay
for such acquisitions in cash or by issuing equity or debt securities. The
issuance of equity to effect or finance such acquisitions would have the effect
of reducing the percentage ownership of the Company held by each
pre-acquisition stockholder and the incurrence of indebtedness in connection
with such acquisitions could adversely affect the liquidity, results of
operations and financial condition of the Company.
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<PAGE> 21
CERTAIN RESCISSION RIGHTS
On February 23, 1996, American Wireless Systems, Inc. ("AWS") became a
wholly owned subsidiary of the Company. See "Recent Events - The
Transactions." Prior to February 23, 1996, a predecessor of AWS, through an
affiliate, participated in the offer and sale of approximately $29 million of
general partnership interests in three general partnerships without
registration under any federal or state securities laws. Following an
investigation by the Commission, AWS, Steven G. Johnson, then a director and
officer of AWS, Jeffrey D. Howes, formerly a director and officer of AWS, and
Dexter S. Cohen and Kevin C. King, each of whom then owned greater than five
percent of AWS common stock, without admitting or denying any wrongdoing,
consented to an SEC order to cease and desist from committing or causing any
violation and any future violations of the securities registration provisions
of the Securities Act and the broker-dealer registration provisions of the
Exchange Act. In addition, securities administrators in 22 states also have
investigated or are presently investigating the activities related to the
unregistered sale of the general partnership interests described above. The
actions taken by the various state securities administrators range from no
action taken to the issuance of 15 cease and desist orders and consent orders
pursuant to which AWS, the issuing general partnerships and Messrs. Johnson and
Howes, as officers of AWS, were required to cease selling general partnership
interests without registration, to offer rescission to individuals who
purchased general partnership interests and, in certain cases, to pay
administrative penalties. In certain cases, such parties have entered into
consent decrees with state regulatory authorities, including an order in
Arizona requiring AWS to offer to purchase such general partnership interests
sold to residents of Arizona or to pay the Arizona Corporation Commission an
amount equal to the amount of the investment made by all general partners who
are Arizona residents, or approximately $566,000, plus interest from the time
of investment. AWS has advised the Arizona Corporation Commission that it does
not intend to make such offer to purchase.
On September 29, 1995, AWS and one of the general partnerships in
which interests were sold (the "Pittsburgh Partnership") jointly sold (the
"Pittsburgh Sale") their respective interest in the joint venture operating the
wireless cable television system in Pittsburgh, Pennsylvania to CAI Wireless
Systems, Inc. ("CAI"). General partners holding approximately 72% of the
general partnership interests of the Pittsburgh Partnership (the "Pittsburgh
Partners") executed and delivered written consents to such sale, each of which
included a release of certain contingent claims including claims arising from
the offer and sale of the general partnership interests to the Pittsburgh
Partners. On February 23, 1996, in connection with the consummation of the
Transactions, Fort Worth Wireless Cable T.V. Associates, another of the general
partnerships in which interests were sold (the "FTW Partnership") sold (the
"FTW Transaction") its interest in the joint venture operating the wireless
cable television system in Fort Worth, Texas to the Company. General partners
holding in excess of 78% of the general partnership interests of the FTW
Partnership (the "FTW Partners") executed and delivered written consents to
such sale, each of which included a release of certain contingent claims
including claims arising from the offer and sale of the general partnership
interests to the FTW Partners. On February 23, 1996, in connection with the
consummation of the Transactions, Wireless Cable TV Associates #38, another of
the general partnerships in which interests were sold (the "Minneapolis
Partnership"), sold (the "Minneapolis Transaction") its interest in the
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<PAGE> 22
limited liability company operating the wireless cable television system in
Minneapolis, Minnesota to the Company. General partners holding in excess of
88% of the general partnership interests of the Minneapolis Partnership (the
"Minneapolis Partners") executed and delivered written consents to such sale,
each of which included an assignment to the Company of certain related parties
from certain contingent claims against AWS and certain related parties,
including claims arising from the offer and sale of the general partnership
interests to the Minneapolis Partners.
There can be no assurance that the Minneapolis Partners, the FTW
Partners or the Pittsburgh Partners who did not vote in favor of the
Minneapolis Transaction, the FTW Transaction, the Pittsburgh Sale,
respectively, or any governmental agency will not institute proceedings against
AWS or the Company, as the successor to AWS, based on a failure to register the
general partnership interests in connection with a public offering or for
damages based on alleged omissions or misrepresentations of material
information in connection with the sale of such interests. No assurance can be
given that a successful claim against the predecessors of AWS could not be
asserted against the Company based on a number of theories involving successor
liability. The institution of legal action against the Company arising out of
the offer and sale of general partnership interests by AWS' predecessors could
result in substantial defense costs to the Company and the diversion of efforts
by the Company's management, and the imposition of liabilities against the
Company could have an adverse effect on the Company.
THE COMPANY
The Company develops, owns and operates wireless cable television
systems, primarily in small to mid-size markets located in the central United
States. As of March 1, 1996, the Company had wireless cable channel rights in
81 markets, representing approximately 8.6 million households, approximately
7.1 million of which the Company believes can be serviced by line-of-sight
("LOS") transmissions (which generally require a direct, unobstructed
transmission path from the central transmitting antenna to the antenna located
on the subscriber's premises).
The Company further estimates that within these markets, approximately
2.6 million LOS households, or approximately 36% of the Company's total LOS
households, are currently unpassed by traditional hard-wire cable systems. As
of March 1, 1996, the Company's 81 markets included (i) 38 markets in which the
Company has wireless cable television systems in operation (the "Existing
Systems"), (ii) nine markets in which the Company has wireless cable television
systems under construction, and (iii) 34 future launch markets, including 30 in
which the Company has aggregated sufficient wireless cable channel rights to
commence construction of a system and four in which the Company has leases with
or options from applicants for channel licenses that the Company expects to be
granted by the FCC. As of March 1, 1996, the 38 Existing Systems were
providing wireless cable service to approximately 132,000 subscribers.
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<PAGE> 23
Certain of the wireless cable assets presently held by the Company are
not included in the discussion of the Company's business because such assets
are not a part of the Company's current long-term business plan. These assets
include wireless cable channel rights and related assets associated with the
Los Angeles, California, Memphis, Tennessee and Flippin, Tennessee markets
("Disposition Assets"). The Company is currently a party to an agreement
relating to the disposition of the Memphis and Flippin, Tennessee markets,
pursuant to which the markets would be conveyed to TruVision Cable, Inc.
("TruVision") for an aggregate consideration of approximately $5.4 million
(collectively, the "Memphis Transaction"). The Company currently anticipates
that the Memphis Transaction will close on or before April 30, 1996, after
which the Company will not retain any direct or indirect interest in such
markets.
The table below provides information regarding the 81 markets in which
Heartland has wireless cable channel rights that it currently intends to retain
and develop as of March 1, 1996.
<TABLE>
<CAPTION>
NUMBER OF
ESTIMATED ESTIMATED SUBSCRIBERS AT
TOTAL LINE-OF-SIGHT CURRENT MARCH 1,
MARKET HOUSEHOLDS HOUSEHOLDS CHANNELS(1) 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EXISTING SYSTEMS
Ada, OK 27,950 20,693 32 5,680
Wichita Falls, TX 78,290 74,376 28 5,956
Midland, TX 120,037 114,035 26 4,865
Abilene, TX 86,676 82,344 23 3,674
Lawton, OK 97,023 92,172 27 7,260
Laredo, TX 313,406(2) 297,736(2) 27 6,126
Enid, OK 76,602 72,772 21 4,142
Lindsay, OK 52,266 42,646 32 3,453
Ardmore, OK 61,416 52,976 20 3,353
Mt. Pleasant, TX 33,589 26,871 16 2,110
Lufkin, TX 117,534 88,150 12 --(3)
Shaw, KS 47,223 42,763 30 3,881
Texarkana, TX 118,204 94,563 20 2,033
Stillwater, OK 54,562 40,922 20 6,365
Lubbock, TX 123,934 105,323 34 5,665
McLeansboro, IL 80,136 60,102 18 1,266
Vandalia, IL 73,593 55,195 20 1,899
Olney, IL 67,812 50,859 20 1,728
Lykens, OH 210,800 168,640 24 697
Paragould, AR 77,523 58,500 21 2,557
Sikeston, MO 69,837 52,378 24 3,008
Taylorville, IL 159,596 119,697 20 1,836
Peoria, IL 276,446 248,801 22 1,046
Manhattan, KS 56,473 42,355 20 1,336
O'Donnell, TX 68,940 65,493 20 1,568
</TABLE>
20
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
Olton, TX 32,548 30,921 20 1,380
Monroe City/Lakenan, MO 46,376 34,782 27 1,674
Paris, TX 55,445 41,584 20 1,200
Sherman/Denison, TX 100,000 90,000 31 4,478
Harper/Freeport, IL 125,269 93,952 20 504
Corsicana/Athens, TX 69,161 62,245 23 165
Strawn/Ranger, TX 34,488 25,866 20 239
Hamilton, TX 28,551 21,413 20 --(4)
Champaign, IL 164,992 148,493 23 2,061
Austin, TX 360,000 250,000 31 12,453
Temple/Killeen, TX 110,000 80,000 35 6,737
Waco, TX 100,000 80,000 35 4,289
Corpus Christi, TX 135,000 108,000 31 15,392
------------------------ -------
Total--Existing Systems 3,911,698 3,237,618 132,076
--------- --------- -------
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED EXPECTED
TOTAL LINE-OF-SIGHT CHANNELS AT
MARKET HOUSEHOLDS HOUSEHOLDS LAUNCH(1)(5)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
SYSTEMS UNDER CONSTRUCTION(6)
Anthony, KS 15,798 11,845 16
Forrest City, AR 55,642 41,732 21
Marion, KS 53,881 40,411 19
Peaksville, MO 48,157 36,118 15
Purdin, MO 25,001 18,751 20
Sterling, KS 45,213 38,431 24
Stromsburg, NE 34,813 29,591 20
Tulsa, OK 321,922 273,634 16
Walnut Grove, IL 84,226 63,170 20
-------------------------
Total--Systems Under Construction 684,653 553,683
-------------------------
FUTURE LAUNCH MARKETS(7)
Adairsville, GA 205,662 154,247 16
Altus, OK 30,653 29,120 16
Amarillo, TX 106,670 101,337 26
Bellflower, MO 63,384 57,046 20
Bluffs, IL 46,389 34,792 20
Burnet, TX 24,917 18,688 16
Charlotte, TX 32,771 24,578 16
Columbia, MO 149,622 127,179 18
Crow, TX 71,421 57,137 12
Des Moines, LA 267,279 240,551 16
El Dorado, AR 54,727 38,310 16
El Paso, TX 200,000 180,000 27
Elk City, OK 26,379 21,103 16
Fischer, TX 317,039 237,779 20
Henryetta, OK 31,968 25,574 16
Holdenville, OK 50,637 45,573 20
Ingram, TX 26,235 19,679 20
Kossuth, TX 52,490 39,368 20
Lenapah, OK 51,921 38,941 12
Mayfield, KY 175,948 155,972 21
McAlester, OK 36,475 25,533 20
Miami, OK 70,820 60,197 15
Muskogee, OK 66,510 53,208 20
Portsmouth, NH 384,389 288,292 27
Powers Crossroads, GA 135,037 101,278 20
Rutledge, GA 141,370 106,028 16
Sabinal, TX 15,795 11,846 20
Seminole, OK 42,204 35,873 19
</TABLE>
22
<PAGE> 26
<TABLE>
<S> <C> <C> <C>
Shreveport, LA 214,315 182,168 24
Springfield, MO 139,706 118,750 16
Topeka, KS 211,762 190,586 16
Tyler, TX 233,416 186,734 14
Weatherford, OK 31,445 29,873 16
Wick, OH 336,098 268,878 20
-------------------------
Total--Future Launch Markets 4,045,454 3,306,215
-------------------------
Total--All Company Markets 8,641,805 7,097,516
=========================
</TABLE>
- ---------------
(1) Includes local off-air VHF/UHF channels, some of which are
retransmitted by the Company over wireless cable channels.
(2) Includes households located in Mexico, to which the Company would be
permitted to provide service in conjunction with a Mexican-owned
company.
(3) Construction of the Lufkin System was completed in December 1994. The
Company is not actively marketing its service in the Lufkin System
because it is awaiting action by the FCC to grant licenses, which
would increase the number of wireless cable channels available to the
Company.
(4) The Hamilton System was launched on February 27, 1996.
(5) The Company's business strategy is generally to launch a market with
approximately 12 wireless cable channels. Although the Company has no
current intention to launch any market with less than 12 channels, the
Company will launch certain markets with more than 12 channels and
may, at some point in the future, launch one or more markets with less
than 12 channels due to FCC construction deadlines or competitive
considerations in such markets. Expected channels at launch includes
channels with respect to which the Company has a lease with or an
option from a channel license holder, an applicant for a channel
license or an entity that has had an application for a channel license
returned without prejudice by the FCC and which will be refiled. In
certain markets, the Company has rights to additional wireless cable
channels but does not expect to utilize such channels upon system
launch.
(6) Systems in which the system head-end is under construction. Expected
channels at launch for such systems include channels with respect to
which the Company has a lease with or an option from a channel license
holder or an applicant for a channel license.
(7) Such markets include 30 markets with respect to which the Company has
aggregated sufficient wireless cable channel rights to commence
construction of a system and four markets with respect to which the
Company has a lease with or an option from an applicant for a channel
license or an entity that has had an application for a channel license
returned without prejudice by the FCC and which will be refiled. The
Company expects a substantial number of such licenses to be granted by
the FCC.
The executive offices of the Company are located at 903 N. Bowser,
Suite 140, Richardson, Texas 75081, and the telephone number of the executive
offices is (214) 479-9244. The Company's operations are based in Durant,
Oklahoma.
23
<PAGE> 27
RECENT EVENTS
EXCHANGE OFFER OF SENIOR NOTES
Pursuant to a Prospectus dated February 12, 1996, forming a part of a
Registration Statement on Form S-4 declared effective by the Commission on
February 12, 1996, the Company offered to exchange $1,000 principal amount of
exchange notes which have terms identical in all material respects to the
Senior Notes (as defined below), except that the exchange notes do not contain
terms with respect to transfer restrictions, for each $1,000 principal amount
of 13% Senior Notes due 2003 (the "Senior Notes") outstanding. Since the
Company did not comply with its obligations to cause such Registration
Statement to become effective on or before August 24, 1995, it was required to
pay additional interest (in addition to the scheduled payment of interest)
during the first 90-day period of such default in an amount equal to 0.50% per
annum at the end of such 90-day period and additional interest of 1% per annum
during the subsequent period ending February 12, 1996.
THE TRANSACTIONS
Effective February 23, 1996, the Company, directly or through one or
more subsidiaries acquired all the assets and liabilities and succeeded to the
businesses of American Wireless Systems, Inc. ("AWS") and CableMaxx, Inc.
("CMAX") and acquired substantially all of the assets and certain of the
liabilities and succeeded to all of the businesses of the FTW Partnership, the
Minneapolis Partnership, and Three Sixty Corp. ("TSC"), the successor to
Technivision, Inc. ("Technivision") (the aforementioned five transactions
collectively referred to herein as the "Transactions"). The Transactions are
discussed below:
AWS Merger. On February 23, 1996, the Company consummated the merger
of Heartland Merger Sub, Inc., a wholly owned subsidiary of the Company
("Merger Sub"), with and into AWS pursuant to the Amended and Restated
Agreement and Plan of Merger dated as of September 11, 1995 ("AWS Merger
Agreement") by and among the Company, Merger Sub and AWS. Pursuant to the
terms of the AWS Merger Agreement, Merger Sub was merged with and into AWS
whereupon AWS became a wholly owned subsidiary of the Company. Under the terms
of the AWS Merger Agreement, stockholders of AWS are entitled to receive, in
the aggregate, approximately 1,310,000 shares of the Company's Common Stock
having an aggregate value of as of February 23, 1996 of approximately $35
million, of which approximately 125,000 shares having an aggregate value as of
February 23, 1996 of approximately $3.3 million are being held in an escrow
established pursuant to the AWS Merger Agreement to satisfy certain
indemnification obligations of AWS to the Company. As of March 1, 1996,
options and warrants to purchase approximately 574,566 shares of AWS Common
Stock were outstanding that convert by their terms into the right to purchase
shares of the Company's common stock, subject to certain adjustments. The
assets previously held by AWS included minority interests in the wireless cable
television systems of Minneapolis, Minnesota, and Fort Worth, Texas (the
remaining interests being held by the Minneapolis Partnership and the FTW
Partnership, respectively) and certain additional rights and properties held in
connection with wireless cable television markets located in Dallas, Texas, Los
Angeles,
24
<PAGE> 28
California and Memphis, Tennessee (collectively, the "AWS Assets"). The
Company will seek to sell directly to a third party the Los Angeles, California
market. The Memphis, Tennessee market is subject to a pending contract of sale
to TruVision. The Dallas, Texas market, and AWS' interest in the Fort Worth,
Texas and Minneapolis, Minnesota markets were contributed by the Company to CS
Wireless effective February 23, 1996 pursuant to the terms of a Participation
Agreement, dated December 12, 1995, as amended by Amendment No. 1 to
Participation Agreement dated February 22, 1996 (as amended, the "Participation
Agreement"), by and among the Company, CAI Wireless Systems, Inc. ("CAI") and
CS Wireless. See "Recent Events - The CS Wireless Transaction."
The FTW Transaction. On February 23, 1996, the Company consummated
the acquisition of substantially all of the assets of FTW Partnership pursuant
to the Amended and Restated Asset Purchase Agreement dated as of October 4,
1995 ("FTW Agreement") by and between the Company and FTW Partnership.
Pursuant to the terms of the FTW Agreement, the Company acquired from the FTW
Partnership substantially all of the assets of the FTW Partnership, consisting
of an approximate 80% interest in a joint venture that owned and operated the
wireless cable television system in Fort Worth, Texas (the "FTW Venture
Interest"). Under the terms of the FTW Agreement, the Company issued
approximately 580,000 shares of Company Common Stock having an aggregate value
as of February 23, 1996 of approximately $15.5 million to the FTW Partnership.
As the owner of the FTW Venture Interest, the Company caused the contribution,
together with AWS, of the Fort Worth, Texas market to CS Wireless pursuant to
the terms of the Participation Agreement. See "Recent Events - The CS Wireless
Transaction."
The Minneapolis Transaction. On February 23, 1996, the Company
consummated the acquisition of substantially all of the assets of the
Minneapolis Partnership pursuant to the Amended and Restated Asset Purchase
Agreement dated as of October 4, 1995 ("Minneapolis Agreement") by and between
the Company and Minneapolis Partnership. Pursuant to the terms of the
Minneapolis Agreement, the Company acquired from the Minneapolis Partnership
substantially all of the assets of the Minneapolis Partnership, consisting of a
75% membership interest in and to American Wireless Systems of Minneapolis,
L.L.C., a limited liability company that owned and operated the wireless cable
television system in Minneapolis, Minnesota (the "LLC Interest"). Under the
terms of the Minneapolis Agreement, the Company issued approximately 810,000
shares of Company Common Stock having an aggregate value as of February 23,
1996 of approximately $21.6 million to the Minneapolis Partnership. As the
owner of the LLC Interest, the Company caused the contribution, together with
AWS, of the Minneapolis, Minnesota market to CS Wireless pursuant to the terms
of the Participation Agreement. See "Recent Events - The CS Wireless
Transaction."
The CMAX Merger. On February 23, 1996, the Company consummated the
merger of Heartland Merger Sub 2, Inc., a wholly owned subsidiary of the
Company ("Merger Sub 2"), with and into CMAX pursuant to the Amended and
Restated Agreement and Plan of Merger dated as of September 11, 1995 ("CMAX
Merger Agreement") by and among the Company, Merger Sub 2 and CMAX. Pursuant
to the terms of the CMAX Merger Agreement, Merger Sub 2 was merged with and
into CMAX whereupon CMAX became a wholly owned subsidiary
25
<PAGE> 29
of the Company. Under the terms of the CMAX Merger Agreement, the stockholders
of CMAX are entitled to receive, in the aggregate, approximately 2.88 million
shares of Company Common Stock having an aggregate exchange value as of
February 23, 1996 of approximately $80.8 million. The assets previously held
by CMAX included certain rights and properties held in connection with certain
wireless cable television markets throughout Texas and in Salt Lake City, Utah
(collectively, the "CMAX Assets"). With the exception of the San Antonio,
Texas and Salt Lake City, Utah markets, which the Company contributed to CS
Wireless pursuant to the terms of the Participation Agreement (see "Recent
Events - The CS Wireless Transaction"), the CMAX Assets will continue to be
used and operated by the Company in connection with its wireless cable
television business.
The TSC Transaction. On February 23, 1996, the Company consummated
the acquisition of certain assets of TSC pursuant to the Amended and Restated
Asset Purchase Agreement dated as of October 19, 1995 ("TSC Agreement") by and
among the Company, TSC and Technivision, formerly a subsidiary of TSC that has
been merged with and into TSC. Pursuant to the terms of the TSC Agreement, the
Company acquired certain assets from TSC representing substantially all of the
assets formerly held by Technivision. Under the terms of the TSC Agreement,
the Company issued to TSC approximately 1,180,000 shares of Company Common
Stock having an aggregate value as of February 23, 1996 of approximately $31.6
million, of which approximately 189,000 shares having an aggregate value as of
February 23, 1996 of approximately $5.1 million are being held in an escrow
established pursuant to the terms of the TSC Agreement to satisfy certain
indemnification obligations and secure certain post-closing covenants of TSC to
the Company. The assets previously held by TSC included certain rights and
properties held in connection with wireless cable television markets in El
Paso, Texas, Corpus Christi, Texas and Dayton, Ohio (collectively, the "TSC
Assets"). With the exception of the Dayton, Ohio market, which the Company
contributed to CS Wireless pursuant to the terms of the Participation Agreement
(see "Recent Events - The CS Wireless Transaction"), the TSC Assets will
continue to be used and operated by the Company in connection with its wireless
cable television business.
THE CS WIRELESS TRANSACTION
Effective February 23, 1996, immediately following the closing of the
Transactions, the Company, CAI and CS Wireless, a Delaware corporation and
wholly owned subsidiary of CAI, consummated the Participation Agreement
pursuant to which the Company (or certain of its subsidiaries) contributed or
sold to CS Wireless the wireless cable assets and all related liabilities of
the following wireless cable television markets (the "Heartland Contributed
Assets"):
(1) Maysville, Missouri
(2) Sweet Springs, Missouri
(3) Grand Rapids/Moline, Michigan
(4) Bloom Center/Napoleon, Indiana
(5) Dallas, Texas
(6) Fort Worth, Texas
(7) San Antonio, Texas
26
<PAGE> 30
(8) Dayton, Ohio
(9) Salt Lake City, Utah
(10) Minneapolis, Minnesota
Simultaneously with the contribution and sale of the Heartland
Contributed Assets to CS Wireless, CAI (or certain of its subsidiaries)
contributed to CS Wireless (directly or by contribution of the stock of its
subsidiaries) the wireless cable television assets associated with the
following markets (the "CAI Contributed Assets"):
(1) Stockton/Modesto, California
(2) Bakersfield, California
(3) Cleveland, Ohio
(4) Charlotte, North Carolina
The combination of the Heartland Contributed Assets and the CAI Contributed
Assets in CS Wireless (the "CS Transaction") created a company with
approximately 5.7 million line-of-sight households and approximately 58,500
subscribers, as of February 29, 1996.
In connection with the CS Transaction, the Company (or its
subsidiaries) received (i) shares of CS Wireless common stock constituting
approximately 40% of the outstanding shares of CS Wireless (35.4% following
dilution for certain additional stock issuances) (ii) approximately $28.3
million in cash paid at the closing (iii) a promissory note in the principal
sum of $25 million payable on or before nine (9) months from the closing and
secured by proceeds of a contemplated issuance by CS Wireless of senior
discount notes (which note has been prepaid) and (iv) a promissory note in the
sum of $15,000,000 payable ten (10) years from the closing and prepayable from
asset sales and certain other events. CAI and the Company are in the process
of completing certain post-closing net working capital calculations.
Components of such calculations include the relative accounts payable, accounts
receivable and related working capital assets of the contributed systems, the
number of granted channels represented and actually contributed to CS Wireless
for each market, increase or decrease in the number of subscribers in each
contributed system from the number of subscribers stated in the Participation
Agreement and related factors. Following the completion of these calculations,
payments will be made to or by the parties, depending upon such calculations.
Also, in connection with the closing of the CS Transaction, CAI, the
Company and CS Wireless have entered into a stockholders agreement (the
"Stockholders Agreement"). The Stockholders Agreement provides, among other
things, that the Company and CAI will vote their shares of CS Wireless common
stock in favor of a Board of Directors of CS Wireless having nine (9) members
consisting of (i) up to four members designated by CAI (provided that at least
one of whom may not be an affiliate of either CAI or the Company); (ii) up to
three members designated by the Company (provided at least one of whom may not
be an affiliate of either CAI or the Company); (iii) the Chief Executive
Officer of CS Wireless; and (iv) the Chief Operating Officer of CS Wireless.
The Stockholders Agreement and CS Wireless' bylaws further provide that certain
major transactions will require the affirmative approval of at least 70% (or
seven of nine) of the directors of CS Wireless.
27
<PAGE> 31
SERIES C SENIOR NOTE OFFERING
On March 28, 1996, the Company consummated the private placement of
$15 million principal amount 13% Senior C Senior Note due 2003 (the "Series C
Senior Notes"). The Company placed approximately $1.9 million of the $15.9
million net proceeds from the sale of the Series C Senior Notes into an escrow
account, representing funds sufficient to pay interest on the Series C Notes
from April 15, 1996 through April 14, 1997. In connection with the issuance of
the Series C Senior Notes, the Company agreed, among other things, to file
within 180 days of the issue date a registration statement with the Commission
with respect to an offer to exchange new notes registered under the Securities
Act of 1933 for the Series C Senior Notes, which new notes will be identical in
all respects with the Series C Senior Notes, except that the new notes will not
contain terms with respect to transfer restrictions, and to cause such
registration statement to become effective within 270 days of the issue date.
USE OF PROCEEDS
The Shares of Common Stock being offered hereby are for the account of the
Selling Stockholders. Accordingly, the Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders. See "Selling
Stockholders."
The Company will receive an aggregate of $2.646 million upon the exercise
of the warrants underlying 210,000 shares of Common Stock offered hereby by
GKM, if such warrants are exercised. See "Selling Stockholders." Any proceeds
received by the Company upon the exercise of such warrants will be used by the
Company for general corporate purposes. If GKM does not elect to exercise any
of its warrants, then the Company will not receive any proceeds in connection
with the sale of the Shares of Common Stock offered hereby.
DILUTION
The net tangible book value of the Company at December 31, 1995 was
($18.64) million, or ($1.48) per share. "Net tangible book value per share" is
equal to the Company's total tangible assets less total liabilities (excluding
deferred income taxes), divided by the number of shares of Common Stock
outstanding. Based on an assumed public offering price of $26.75 (the closing
price of the Common Stock on the Nasdaq National Market on April 3, 1996), new
investors purchasing shares at the public offering price would experience an
immediate dilution of $28.23 in net tangible book value per share.
The following table illustrates the per-share dilution at December 31,
1995:
<TABLE>
================================================================================
<S> <C> <C>
Assumed public offering price . . . . . . . . . . . . . $26.75
-------------------------------------------------------------------------------
Net tangible book value . . . . . . . . . . . . . . . . (1.48)
------
- --------------------------------------------------------------------------------
Assumed dilution to new investors in the offering . . . $28.23
======
================================================================================
</TABLE>
28
<PAGE> 32
SELLING STOCKHOLDERS
The following table sets forth the name of each of the Selling Stockholders
and the number of shares that may be offered by each. The number of Shares that
may be actually sold by the Selling Stockholders will be determined by each
Selling Stockholder, and may depend upon a number of factors, including, among
other things, the market price of the Common Stock. Because each Selling
Stockholder may offer all, some or none of the Shares that it holds, and
because the offering contemplated by this Prospectus is currently not being
underwritten, no estimate can be given as to the number of Shares that will be
held by any Selling Stockholder upon or prior to termination of this offering.
See "Plan of Distribution." The table below sets forth information as of March
29, 1996, concerning the beneficial ownership of the Shares of each Selling
Stockholder. All information as to beneficial owners has been furnished by
each of the Selling Stockholders.
<TABLE>
<CAPTION>
=====================================================================================
SHARES OF SHARES OF
SHARES OF COMMON COMMON STOCK COMMON STOCK
STOCK BENEFICIALLY OWNED OFFERED IN BENEFICIALLY OWNED AFTER
BEFORE OFFERING THE OFFERING OFFERING(1)
------------------------- ------------ ------------------------
- -------------------------------------------------------------------------------------
NAME NUMBER PERCENT NUMBER NUMBER PERCENT
---- ------ ------- ------ ------ -------
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charter Wireless 1,369,809 7.07% 1,369,809 0 0%
Cable Holdings,
L.L.C.(2)
- -------------------------------------------------------------------------------------
Ronald Jones 25,000 * 25,000 0 0%
- -------------------------------------------------------------------------------------
Neil Straub 2,580 * 1.000 1,580 *
- -------------------------------------------------------------------------------------
J. A. McWhorter 5,200 * 2,500 2,700 *
- -------------------------------------------------------------------------------------
Kenneth Christie 17,033 * 2,868 14,165 *
- -------------------------------------------------------------------------------------
Charles Calhoun 1,000 * 1,000 0 0%
- -------------------------------------------------------------------------------------
Paul McCully 1,716 * 1,716 0 0%
- -------------------------------------------------------------------------------------
Gerard Klauer 311,083 1.59% 210,000 101,083 *
Mattison & Co.,
LLC(3)
=====================================================================================
</TABLE>
- ----------------------
* Represents less than 1%.
(1) Assumes all shares of Common Stock offered hereby are sold.
(2) Membership interests in the CWCH are held as follows: Charterhouse
Equity Partners, L.P. ("CEP"): 74%; Galaxy Cablevision, L.P.: 15%; Galaxy
Management, Inc.: 6% and the Liquidating Trust for the Benefit of the
Shareholders of Supreme Cable Co., Inc.: 5%. The general partner of CEP is an
affiliate of Charterhouse Group International, Inc. ("Charterhouse").
Accordingly, Charterhouse may be deemed to control CWCH. As a result of the
foregoing, all of the shares of Company Common Stock held by CWCH would, for
purposes of Section 13(d) of the Exchange Act, be considered to be beneficially
owned by Charterhouse.
(3) Includes 210,000 shares of Company Common Stock upon the exercise of the
GKM Warrant.
29
<PAGE> 33
Prior to the consummation of the CMAX Merger Agreement, CWCH owned
5,010,900 shares (52.7%) of the outstanding shares of common stock of CMAX,
which shares were converted into the right to receive 1,519,809 shares of
Company Common Stock. On February 23, 1996, CWCH sold 150,000 shares of
Company Common Stock it received upon consummation of the CMAX Merger
Agreement.
Prior to July 26, 1995, J. A. McWhorter and Kenneth Christie owned 50,000
shares (5%) and 80,000 shares (8%), respectively, of the outstanding common
stock in Plainview Wireless Cable, Inc., an indirect subsidiary of the Company.
On July 26, 1995, the Company issued to Messrs. McWhorter and Christie 2,500
and 2,868 shares of Company Common Stock, respectively, in private
transactions, in exchange for their respective ownership interests in Plainview
Wireless Cable, Inc.
Prior to February 12, 1996, Charles Calhoun owned 25 shares (2.5%) of NDW,
Inc., an affiliate of the Company. On February 12, 1996, the Company issued to
Mr. Calhoun 1,000 shares of Company Common Stock in a private transaction in
exchange for Mr. Calhoun's ownership interest in NDW, Inc.
Prior to July 26, 1995, Neil Straub owned 1,000 shares of Arbuckle Wireless
Corp., an affiliate of the Company. On July 26, 1995, the Company issued to
Mr. Straub 1,000 shares of Company Common Stock in a private transaction in
exchange for Mr. Straub's ownership interest in Arbuckle Wireless Corp.
Prior to May 22, 1995, Ronald Jones owned 18% of Heartland Installations,
Inc., an indirect subsidiary of the Company. On May 22, 1995, the Company
issued to Ronald Jones 25,000 shares of Company Common Stock in a private
transaction in exchange for Mr. Jones' ownership interest in Heartland
Installations, Inc.
On December 28, 1995, Heartland issued to Paul McCully 1,716 shares of
Company Common Stock in a private transaction in exchange for 100% of the
equity interest of Corrinne Cable Systems, Inc.
GKM was an underwriter in the Company's initial public offering on April
28, 1994, and received, in such capacity, the GKM Warrant to acquire 210,000
shares of Company Common Stock at an exercise price of $12.60 per share.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from the sale of the Shares by the
Selling Stockholders. The Shares may be sold from time to time to purchasers
directly by each Selling Stockholder. Alternatively, each Selling Stockholder
may sell his or its Shares in one or more transactions (which may involve one
or more block transactions) on the Nasdaq National Market, in privately
negotiated transactions or otherwise or in a combination of such transactions;
each sale may be made either at market prices prevailing at the time of such
sale or at negotiated
30
<PAGE> 34
prices; some or all of the Shares may be sold through broker-dealers acting as
brokers or agents on behalf of each Selling Stockholder or to broker-dealers
acting as principals for resale by such dealers; and in connection with such
sales, such broker-dealers may receive compensation in the form of commissions,
discounts or fees from each Selling Stockholder and/or the purchasers of such
shares for whom they may act as broker or agent. However, none of the Selling
Shareholders nor the Company have entered into any arrangements or underwriting
agreements with any broker-dealer or agent relative to the Shares to be offered
hereby. It is anticipated that each Selling Stockholder will offer all of the
Shares held by it for sale. All expenses of registration incurred in
connection with this offering are being borne by the Company, but all brokerage
commissions and other similar expenses incurred by each Selling Stockholder
will be borne by such Selling Stockholder.
At the time a particular offer of Shares is made, to the extent required, a
supplement to this Prospectus (the "Prospectus Supplement") will be distributed
that will identify and set forth the aggregate amount of Shares being offered
and the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for Shares
purchased from each Selling Stockholder, any commissions, discounts and other
items constituting compensation from each Selling Stockholder and any
commissions, discounts or concessions allowed or reallowed or paid to dealers,
including the proposed selling price to the public.
Each Selling Stockholder and any dealer acting in connection with the
offering of any of the Shares or any broker executing or selling orders on
behalf of that Selling Stockholder may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any profit on the sale of any
or all of the Shares and any commissions, discounts or concessions received by
any such dealers or brokers may be deemed to be underwriting commissions and
discounts under the Securities Act of 1933, as amended. Any dealer or broker
participating in any distribution of the Shares may be required to deliver a
copy of this Prospectus, including the Prospectus Supplement, if any, to any
person who purchases any of the Shares from or through such dealer or broker.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period of nine business days
prior to the commencement of such distribution. Each Selling Stockholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, including without limitation rules 10b-6
and 10b- 7, which provisions may limit the timing of purchases and sales of the
Shares by such Selling Stockholder.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless the
Shares have been registered and qualify for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
31
<PAGE> 35
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Arter & Hadden, Dallas, Texas.
EXPERTS
The consolidated financial statements and schedule of Heartland Wireless
Communications, Inc. as of December 31, 1995 and 1994, and for each of the
years in the three-year period ended December 31, 1995, have been incorporated
by reference herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP refers
to a change in 1995 by the Company in the method of accounting for the direct
costs and installation fees related to subscriber installations.
The financial statements of Technivision, Inc. as of May 31, 1995 and 1994,
and for each of the years in the three- year period ended May 31, 1995, have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick
LLP contains an explanatory paragraph that states that the Technivision, Inc.'s
recurring losses from operations and excess of current liabilities over current
assets raise substantial doubt about the entity's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
The balance sheets of Cross Country Division as of December 31, 1993 and
1994, and the related statements of operations and division equity and cash
flows for the year ended December 31, 1993, the period from January 1, 1994 to
August 18, 1994 and the period from August 19, 1994 to December 31, 1994 have
been incorporated by reference herein and in the Registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm a experts in accounting and auditing. The report of KPMG Peat Marwick LLP
contains an explanatory paragraph that refers to a business combination in 1994
accounted for as a purchase involving assets comprising a portion of Cross
Country Division. As a result of the acquisition, financial information of
Cross Country Division for periods after August 18, 1994 is presented on a
different cost basis than that for periods before August 18, 1994 and,
therefore, such information is not comparable.
The consolidated balance sheets as of June 30, 1994 and 1995 and the
consolidated statements of operations, stockholders' equity and cash flows of
CableMaxx, Inc. for the period December 18, 1992 to June 30, 1993 and the
fiscal years ended June 30, 1994 and 1995, and the consolidated statements of
operations and cash flows of Supreme Cable Co., Inc. and its subsidiaries (the
"Predecessor") for the period commencing July 1, 1992 to December 17, 1992,
incorporated by reference in this Prospectus have been audited by Coopers &
Lybrand L.L.P.,
32
<PAGE> 36
independent certified public accountants, as indicated in their report with
respect thereto, which includes an explanatory paragraph which states that
specified circumstances raise substantial doubt about CableMaxx, Inc.'s ability
to continue as a going concern, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The financial statements of American Wireless Systems, Inc. incorporated by
reference in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
The consolidated financial statements of Fort Worth Wireless Cable T.V.
Associates incorporated by reference in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
Reference is made to said report which includes an explanatory paragraph that
describes factors raising substantial doubt about the Company's ability to
continue as a going concern.
The consolidated financial statements of Wireless Cable TV Associates #38
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report. Reference is made to
said report which includes an explanatory paragraph that describes factors
rasing substantial doubt about the Company's ability to continue as a going
concern.
33
<PAGE> 37
================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in
this Prospectus in connection with the offer made by this Prospectus, and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company, the Selling Stockholders or any other
person. This Prospectus does not constitute an offer to sell or the
solicitation of any offer to buy any security other than the Shares of Common
Stock offered by this Prospectus, nor does it constitute an offer to sell or a
solicitation of any offer to buy the Shares of Common Stock by anyone in any
jurisdiction in which such offer or solicitation is not authorized, or in which
the person making such offer or solicitation is not qualified to do so, or to
any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information contained herein is
correct as of any time subsequent to the date hereof.
--------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
----
<S> <C>
Available Information 2
Incorporation of Certain Documents
by Reference 2
Prospectus Summary 3
Risk Factors 6
The Company 19
Recent Events 24
Use of Proceeds 28
Dilution 28
Selling Stockholders 29
Plan of Distribution 30
Legal Matters 32
Experts 32
</TABLE>
================================================================================
================================================================================
1,613,893 SHARES
HEARTLAND WIRELESS
COMMUNICATIONS, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
April 8, 1996
================================================================================
<PAGE> 38
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . $ 14,959
Accounting fees and expenses . . . . . . . . . . . . . . . 10,000*
Legal fees and expenses (not including Blue Sky) . . . . . 7,500*
Printing and engraving expenses . . . . . . . . . . . . . 2,000*
Registrar and transfer agent's fees . . . . . . . . . . . 500*
Blue Sky fees and expenses (including counsel fees) . . . 2,000*
Miscellaneous expenses . . . . . . . . . . . . . . . . . . 2,000*
--------
Total . . . . . . . . . . . . . . . . . . . . . . $ 38,959*
========
</TABLE>
- ---------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), Article VI of the Registrant's Restated Certificate of
Incorporation (the "Certificate of Incorporation") eliminates the liability of
the Registrant's directors to the Registrant or its stockholders, except for
liabilities related to breach of duty of loyalty, actions not in good faith and
certain other liabilities.
Section 145 of the DGCL provides for indemnification by the Registrant
of its directors and officers. In addition, Article IX, Section 1 of the
Registrant's Restated By-Laws requires the Registrant to indemnify any current
or former director or officer to the fullest extent permitted by the DGCL. In
addition, the Registrant has entered into indemnity agreements with its
directors, which obligate the Registrant to indemnify such directors to the
fullest extent permitted by the DGCL. The Registrant has also obtained
officers' and directors' liability insurance which insures against liabilities
that officers and directors of the Registrant may incur in such capacities.
II-1
<PAGE> 39
ITEM 16. EXHIBITS.
(a) Exhibits
2.1 Letter Agreement regarding formation of the Registrant (filed as
Exhibit 2.1 to the Registrant's Registration Statement on Form S-1,
File No. 33-74244 (the "Form S-1"), and incorporated herein by
reference)
2.2 Supplement to Letter Agreement regarding formation of the Registrant
(filed as Exhibit 2.2 to the Form S-1 and incorporated herein by
reference)
2.3 Asset Purchase Agreement among RuralVision Joint Venture, RuralVision
Central, Inc. and RuralVision South, Inc. (filed as Exhibit 2.3 to
the Registrant's Registration Statement on Form S-1, File No. 33-84408
(the "November Form S-1") and incorporated herein by reference)
2.4 Supplemental Agreement to the Asset Purchase Agreement among
RuralVision Joint Venture, RuralVision Central, Inc. and RuralVision
South, Inc. (filed as Exhibit 2.4 to the November Form S-1 and
incorporated herein by reference)
2.5 Closing Agreement amending the Supplemental Agreement among
RuralVision Joint Venture, RuralVision Central, Inc. and RuralVision
South, Inc. (filed as Exhibit 2.5 to the November Form S-1 and
incorporated herein by reference)
2.6 Asset Purchase Agreement between RuralVision Joint Venture and Cable
Equity Partners, Inc. (filed as Exhibit 2.6 to the November Form S-1
and incorporated herein by reference)
2.7 Letter Agreement amending Asset Purchase Agreement between RuralVision
Joint Venture and Cable Equity Partners, Inc. (filed as Exhibit 2.7 to
the November Form S-1 and incorporated herein by reference)
2.8 Letter Agreement between the Registrant and Cross Country Wireless,
Inc. (filed as Exhibit 2.8 to the November Form S-1 and incorporated
herein by reference)
2.9 Letter Agreement between the Registrant and Cable Equity Partners,
Inc. (filed as Exhibit 2.9 to the Registrant's Registration Statement
on Form S-4, File No. 33-87076 (the "February 1995 Form S-4") and
incorporated herein by reference)
2.10 Lease Purchase Agreement between the Registrant and Choice Television
of Iowa, L.C. (filed as Exhibit 2.10 to the February 1995 Form S-4
and incorporated herein by reference)
2.11 Asset Purchase Agreement between the Registrant and RuralVision Joint
Venture (filed as Exhibit 2.11 to the Form 8-K Current Report dated as
of December 1, 1994 and filed
II-2
<PAGE> 40
with the Commission on December 14, 1994 (the "Form 8-K"), and
incorporated herein by reference)
2.12 Agreement for Purchase and Sales of Assets between the Registrant and
REC Services, Inc. (filed as Exhibit 2.12 to the February 1995 Form
S-4 and incorporated herein by reference)
2.13 Letter Agreement among the Registrant, United States Wireless Cable,
Inc. and United States Wireless Cable Systems, Inc. (filed as Exhibit
2.13 to the February 1995 Form S-4 and incorporated herein by
reference)
2.14 Letter Agreement among the Registrant, Cross Country Wireless, Inc.
and RuralVision Joint Venture (filed as Exhibit 2.14 to the February
1995 Form S-4 and incorporated herein by reference)
2.15 Extension Agreement among the Registrant, Cross Country Wireless,
Inc., Cross Country Wireless Cable West, L.P., RuralVision Joint
Venture, RuralVision Central, Inc., RuralVision South, Inc. and
Selling Shareholders of RuralVision Central, Inc. and RuralVision
South, Inc. (filed as Exhibit 2.15 to the February 1995 Form S-4 and
incorporated herein by reference)
2.16 Note Modification Agreement among the Registrant, Cross Country
Wireless, Inc., Cross Country Wireless Cable West, L.P., RuralVision
Joint Venture, RuralVision Central, Inc., RuralVision South, Inc., the
Selling Shareholders of RuralVision Central, Inc. and RuralVision
South, Inc., the Larry D. Hudson Trust and Jerri Hudson Bell (filed as
Exhibit 2.16 to the February 1995 Form S-4 and incorporated herein by
reference)
2.17 Asset Purchase Agreement between Heartland Wireless Paducah, Inc. and
Cross Country Wireless, Inc. (filed as Exhibit 2.17 to the February
1995 Form S-4 and incorporated herein by reference)
2.18 First Amendment to Joint Venture Agreement between the Registrant and
Cross Country Wireless, Inc. (filed as Exhibit 2.18 to the February
1995 Form S-4 and incorporated herein by reference)
2.19 Venture Distribution Agreement between the Registrant and RuralVision
Joint Venture (filed as Exhibit 2.19 to the February 1995 Form S-4 and
incorporated herein by reference)
2.20 Stock Purchase Agreement between Wireless Communications, Inc. and
Robert R. Story (filed as Exhibit 2.20 to the Registrant's
Registration Statement on Form S-4, File No. 33-65357, (the "January
1996 Form S-4") and incorporated herein by reference)
2.21 Asset Purchase Agreement between United States Wireless Systems, Inc.
and Robert R. Story, Inc. (filed as Exhibit 2.21 to the January 1996
Form S-4 and incorporated herein by reference)
II-3
<PAGE> 41
2.22 Amended and Restated Agreement and Plan of Merger dated as of
September 11, 1995 between American Wireless Systems, Inc., Heartland
Merger Sub, Inc. and the Registrant (filed as Exhibit 2.22 to the
January 1996 Form S-4 and incorporated herein by reference)
2.23 Amended and Restated Asset Purchase Agreement dated as of October 4,
1995 between Fort Worth Wireless Cable T.V. Associates and the
Registrant (filed as Exhibit 2.23 to the January 1996 Form S-4 and
incorporated herein by reference)
2.24 Amended and Restated Asset Purchase Agreement dated as of October 4,
1995 between Wireless Cable TV Associates #38 and the Registrant
(filed as Exhibit 2.24 to the January 1996 Form S-4 and incorporated
herein by reference)
2.25 Amended and Restated Agreement and Plan of Merger dated as of
September 11, 1995 between CableMaxx, Inc., Heartland Merger Sub 2,
Inc. and the Registrant (filed as Exhibit 2.25 to the January 1996
Form S-4 and incorporated herein by reference)
2.26 Amended and Restated Asset Purchase Agreement dated as of October 19,
1995, between Three Sixty Corp., Technivision, Inc. and the Registrant
(filed as Exhibit 2.26 to the January 1996 Form S-4 and incorporated
herein by reference)
2.27 Participation Agreement dated as of December 12, 1995, by and among
Registrant, CAS Wireless Systems, Inc. and CS Wireless Systems, Inc.
(the "Participation Agreement") (filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated December 12, 1995 and
incorporated herein by reference)
2.28 Amendment No. 1 to Participation Agreement dated February 22, 1996
(filed as Exhibit 2.7 to the Registrant's Current Report on Form 8-K
dated February 23, 1996 and incorporated herein by reference)
*5 Opinion of Arter & Hadden (including the consent of such firm)
regarding legality of securities being offered
*23.1 Consent of Arter & Hadden (included as part of its opinion filed as
Exhibit 5 hereto)
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants (Heartland Wireless Communications, Inc.)
*23.3 Consent of KPMG Peat Marwick LLP, independent certified public
accountants (Technivision, Inc.)
*23.4 Consent of Arthur Andersen LLP, independent certified public
accountants (American Wireless Systems, Inc., Wireless Cable TV
Associates #38, and Fort Worth Wireless Cable T.V. Associates)
*23.5 Consent of Coopers & Lybrand LLP, independent certified public
accountants (CableMaxx, Inc.)
II-4
<PAGE> 42
*23.6 Consent of KPMG Peat Marwick, LLP, independent certified public
accountants (Cross Country Division)
24 Powers of Attorney (included on page II-7)
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 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 Registration Statement is on Form S-3, Form S-8 or Form
F-3, and 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 Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post- effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) Filings incorporating subsequent Exchange Act documents by
reference. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
II-5
<PAGE> 43
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Request for acceleration of effective date. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Company's Certificate of Incorporation, Bylaws 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 Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(i) Rule 430A. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.
II-6
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on the 4th day of
April, 1996.
HEARTLAND WIRELESS
COMMUNICATIONS, INC.
By: /s/ John R. Bailey
------------------------------------
John R. Bailey
Senior Vice President-Finance,
Chief Financial Officer, Treasurer and
Secretary (Principal Financial Officer)
POWER OF ATTORNEY
We, the undersigned directors and officers of HEARTLAND WIRELESS
COMMUNICATIONS, INC., do hereby constitute and appoint J. R. HOLLAND, JR. and
JOHN R. BAILEY, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys and agents,
or either of them, may deem necessary or advisable to enable said Corporation
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall 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 on the 4th day of April, 1996, by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ J. R. Holland, Jr. Chairman of the Board and Director
- ---------------------------------
J. R. Holland, Jr.
/s/ David E. Webb President, Chief Executive Officer and Director
- --------------------------------- (Principal Executive Officer)
David E. Webb
/s/ John R. Bailey Senior Vice President-Finance, Chief Financial
- --------------------------------- Officer, Treasurer and Secretary (Principal Financial
John R. Bailey Officer)
/s/ David D. Hagey Vice President, Controller and Assistant Secretary
- --------------------------------- (Principal Accounting Officer)
David D. Hagey
</TABLE>
II-7
<PAGE> 45
<TABLE>
<S> <C>
/s/ Alvin H. Lane, Jr. Director
- ---------------------------------
Alvin H. Lane, Jr.
/s/ Dennis M. O'Rourke Director
- ---------------------------------
Dennis M. O'Rourke
Director
- ---------------------------------
John A. Sprague
/s/ Wes W. Watkins Director
- ---------------------------------
Wes W. Watkins
/s/ L. Allen Wheeler Director
- ---------------------------------
L. Allen Wheeler
</TABLE>
II-8
<PAGE> 46
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
============================================================================
<S> <C>
2.1 Letter Agreement regarding formation of the Registrant (filed
as Exhibit 2.1 to the Registrant's Registration Statement on
Form S-1, File No. 33-74244 (the "Form S-1"), and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.2 Supplement to Letter Agreement regarding formation of the
Registrant (filed as Exhibit 2.2 to the Form S-1 and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.3 Asset Purchase Agreement among RuralVision Joint Venture,
RuralVision Central, Inc. and RuralVision South, Inc. (filed
as Exhibit 2.3 to the Registrant's Registration Statement on
Form S-1, File No. 33-84408 (the "November Form S-1") and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.4 Supplemental Agreement to the Asset Purchase Agreement among
RuralVision Joint Venture, RuralVision Central, Inc. and
RuralVision South, Inc. (filed as Exhibit 2.4 to the November
Form S-1 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.5 Closing Agreement amending the Supplemental Agreement among
RuralVision Joint Venture, RuralVision Central, Inc. and
RuralVision South, Inc. (filed as Exhibit 2.5 to the November
Form S-1 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.6 Asset Purchase Agreement between RuralVision Joint Venture and
Cable Equity Partners, Inc. (filed as Exhibit 2.6 to the
November Form S-1 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
<PAGE> 47
<TABLE>
- ----------------------------------------------------------------------------
<S> <C>
2.7 Letter Agreement amending Asset Purchase Agreement between
RuralVision Joint Venture and Cable Equity Partners, Inc.
(filed as Exhibit 2.7 to the November Form S-1 and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.8 Letter Agreement between the Registrant and Cross Country
Wireless, Inc. (filed as Exhibit 2.8 to the November Form S-1
and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.9 Letter Agreement between the Registrant and Cable Equity
Partners, Inc. (filed as Exhibit 2.9 to the Registrant's
Registration Statement on Form S-4, File No. 33-87076 (the
"February 1995 Form S-4") and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.10 Lease Purchase Agreement between the Registrant and Choice
Television of Iowa, L.C. (filed as Exhibit 2.10 to the
February 1995 Form S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.11 Asset Purchase Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.11 to the Form
8-K Current Report dated as of December 1, 1994 and filed with
the Commission on December 14, 1994 (the "Form 8-K"), and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.12 Agreement for Purchase and Sales of Assets between the
Registrant and REC Services, Inc. (filed as Exhibit 2.12 to
the February 1995 Form S-4 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.13 Letter Agreement among the Registrant, United States Wireless
Cable, Inc. and United States Wireless Cable Systems, Inc.
(filed as Exhibit 2.13 to the February 1995 Form S-4 and
incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.14 Letter Agreement among the Registrant, Cross Country Wireless,
Inc. and RuralVision Joint Venture (filed as Exhibit 2.14 to
the February 1995 Form S-4 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
</TABLE>
<PAGE> 48
<TABLE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C>
2.15 Extension Agreement among the Registrant, Cross Country
Wireless, Inc., Cross Country Wireless Cable West, L.P.,
RuralVision Joint Venture, RuralVision Central, Inc.,
RuralVision South, Inc. and Selling Shareholders of
RuralVision Central, Inc. and RuralVision South, Inc. (filed
as Exhibit 2.15 to the February 1995 Form S-4 and incorporated
herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.16 Note Modification Agreement among the Registrant, Cross
Country Wireless, Inc., Cross Country Wireless Cable West,
L.P., RuralVision Joint Venture, RuralVision Central, Inc.,
RuralVision South, Inc., the Selling Shareholders of
RuralVision Central, Inc. and RuralVision South, Inc., the
Larry D. Hudson Trust and Jerri Hudson Bell (filed as
Exhibit 2.16 to the February 1995 Form S-4 and incorporated
herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.17 Asset Purchase Agreement between Heartland Wireless Paducah,
Inc. and Cross Country Wireless, Inc. (filed as Exhibit 2.17
to the February 1995 Form S-4 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.18 First Amendment to Joint Venture Agreement between the
Registrant and Cross Country Wireless, Inc. (filed as Exhibit
2.18 to the February 1995 Form S-4 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.19 Venture Distribution Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.19 to the
February 1995 Form S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.20 Stock Purchase Agreement between Wireless Communications, Inc.
and Robert R. Story (filed as Exhibit 2.20 to the Registrant's
Registration Statement on Form S-4, File No. 33-65357, (the
"January 1996 Form S-4") and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
<PAGE> 49
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------
2.21 Asset Purchase Agreement between United States Wireless
Systems, Inc. and Robert R. Story, Inc. (filed as Exhibit 2.21
to the January 1996 Form S-4 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.22 Amended and Restated Agreement and Plan of Merger dated as of
September 11, 1995 between American Wireless Systems, Inc.,
Heartland Merger Sub, Inc. and the Registrant (filed as
Exhibit 2.22 to the January 1996 Form S-4 and incorporated
herein by reference)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2.23 Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995 between Fort Worth Wireless Cable T.V.
Associates and the Registrant (filed as Exhibit 2.23 to the
January 1996 Form S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.24 Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995 between Wireless Cable TV Associates #38 and
the Registrant (filed as Exhibit 2.24 to the January 1996 Form
S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.25 Amended and Restated Agreement and Plan of Merger dated as of
September 11, 1995 between CableMaxx, Inc., Heartland Merger
Sub 2, Inc. and the Registrant (filed as Exhibit 2.25 to the
January 1996 Form S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.26 Amended and Restated Asset Purchase Agreement dated as of
October 19, 1995, between Three Sixty Corp., Technivision,
Inc. and the Registrant (filed as Exhibit to the January 1996
Form S-4 and incorporated herein by reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
2.27 Participation Agreement dated as of December 12, 1995, by and
among Registrant, CAS Wireless Systems, Inc. and CS Wireless
Systems, Inc. (the "Participation Agreement") (filed as
Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated December 12, 1995 and incorporated herein by reference)
- ----------------------------------------------------------------------------
</TABLE>
<PAGE> 50
<TABLE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C>
2.28 Amendment No. 1 to Participation Agreement dated February 22,
1996 (filed as Exhibit 2.7 to the Registrant's Current Report
on Form 8-K dated February 23, 1996 and incorporated herein by
reference)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*5 Opinion of Arter & Hadden (including the consent of such firm)
regarding legality of securities being offered
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.1 Consent of Arter & Hadden (included as part of its opinion
filed as Exhibit 5 hereto)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants (Heartland Wireless Communications, Inc.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.3 Consent of KPMG Peat Marwick LLP, independent certified public
accountants (Technivision, Inc.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.4 Consent of Arthur Andersen, LLP, independent certified public
accountants (American Wireless Systems, Inc., Wireless Cable
TV Associates #38, and Fort Worth Wireless Cable T.V.
Associates)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.5 Consent of Coopers & Lybrand LLP, independent certified public
accountants (CableMaxx, Inc.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
*23.6 Consent of KPMG Peat Marwick LLP, independent certified public
accountants (Cross Country Division)
===========================================================================
- ---------------------------------------------------------------------------
*24 Powers of Attorney (included on page II-7)
===========================================================================
</TABLE>
<PAGE> 1
EXHIBIT 5
[ARTER & HADDEN LETTERHEAD]
(214) 761-2100
April 8, 1996
Heartland Wireless
Communications, Inc.
903 N. Bowser, Suite 140
Richardson, Texas 75081
RE: OFFERING OF SHARES OF COMMON STOCK
OF HEARTLAND WIRELESS COMMUNICATIONS, INC.
Ladies and Gentlemen:
On April 8, 1996, Heartland Wireless Communications, Inc., a Delaware
corporation (the "Company"), expects to file with the Securities and Exchange
Commission a Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"). Such Registration
Statement relates to the offering (the "Offering") of up to 1,613,893 shares of
the common stock, $.001 par value per share (the "Common Stock"), by certain
stockholders and warrantholders of the Company (collectively, the "Selling
Stockholders"), of which 210,000 shares are issuable upon the exercise of
certain Common Stock Purchase Warrants ("Warrants") held by Gerard Klauer
Mattison & Co., LLC ("GKM"). This firm has acted as counsel to you in
connection with the preparation and filing of the Registration Statement, and
you have requested our opinion with respect to certain legal aspects of the
Offering.
In rendering our opinion, we have examined and relied upon the
original or copies, certified to our satisfaction, of (i) the Certificate of
Incorporation, as amended, and the By-Laws, as amended, of the Company; (ii)
copies of resolutions of the Board of Directors of the Company authorizing the
Offering, the issuance of the shares, the granting of the Warrants and related
matters; (iii) copies of the Warrant Agreement between the Company and GKM and
related agreements and correspondence; (iv) the Registration Statement and
exhibits thereto; and (v) such other documents and instruments as we have
deemed
<PAGE> 2
Heartland Wireless
Communications, Inc.
April 5, 1996
Page 2
necessary. In our examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or reproduction copies. As to various questions of fact material to
this opinion, we have relied, to the extent we deem reasonably appropriate,
upon representations or certificates of officers or directors of the Company
and upon documents, records and instruments furnished to us by the Company,
without independent check or verification of their accuracy.
Based on the foregoing examination and subject to the comments and
assumptions noted below, we are of the opinion that (i) the 1,403,893 shares of
Common Stock to be sold by the Selling Stockholders in the Offering were
validly issued and fully paid and are nonassessable and (ii) the Company
presently has available at least 210,000 shares of authorized but unissued
shares and/or treasury shares of Common Stock from which the 210,000 shares of
Common Stock covered by the Registration Statement may be issued upon the
exercise of the Warrants. Assuming that (i) the Warrants were duly issued,
(ii) the Company maintains an adequate number of authorized but unissued shares
and/or treasury shares of Common Stock available for issuance to GKM at the
time of the exercise of the Warrants, (iii) GKM properly exercises the
Warrants, and (iv) the consideration for the shares of Common Stock issued
pursuant to the Warrants is actually received by the Company as provided in the
Warrants and exceeds the par value of such shares, then the 210,000 shares of
Common Stock (or lesser number if the Warrants are not exercised in full)
issued upon the exercise of the Warrants will be duly and validly issued, fully
paid and nonassessable.
This opinion is limited in all respects to the General Corporation Law
of the State of Delaware as in effect on the date hereof; however, we are not
members of the Bar of the State of Delaware and our knowledge of its General
Corporation Law is derived from a reading of the most recent compilation of
that statute available to us without consideration of any judicial or
administrative interpretations thereof.
We bring to your attention the fact that this legal opinion is an
expression of professional judgment and not a guaranty of result. This opinion
is given as of the date hereof, and we assume no obligation to update or
supplement such opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in laws or judicial decisions
that may hereafter occur.
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Heartland Wireless
Communications, Inc.
April 5, 1996
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of
persons whose consent is required by Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
ARTER & HADDEN
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EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our reports dated
March 8, 1996, on the consolidated balance sheets of Heartland Wireless
Communications, Inc. as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, and the
related schedule, which reports are included in the December 31, 1995 annual
report on Form 10-K of Heartland Wireless Communications, Inc. and (b) the
reference to our firm under the heading "Experts" in the prospectus.
Our report relating to the consolidated statements of Heartland Wireless
Communications, Inc. refers to a change in the method of accounting for direct
costs and installation fees related to subscriber installations in 1995.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Dallas, Texas
April 4, 1996
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our report dated
October 25, 1995, on the balance sheets TechniVision, Inc. as of May 31, 1995
and 1994, and the related statements of operations, stockholders' deficit, and
cash flows for each of the years in the three-year period ended May 31, 1995,
which report is included in Form 8-K/A of Heartland Wireless Communications,
Inc. to be filed with the Securities and Exchange Commission on April 8, 1996
and (b) the reference to our firm under the heading "Experts" in the
prospectus.
Our report relating to the financial statements of TechniVision, Inc. contains
an explanatory paragraph that states that TechniVision, Inc.'s recurring losses
from operations and excess of current liabilities over current assets raise
substantial doubt about the entity's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Dallas, Texas
April 4, 1996
<PAGE> 1
EXHIBIT 23.4
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 23,
1996, included in Heartland Wireless Communications, Inc.'s current report on
Form 8-K/A dated February 23, 1996 and to all references to our firm included
in or made part of this registration statement.
/s/ ARTHUR ANDERSEN LLP
Phoenix, Arizona,
April 4, 1996.
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Form S-3 to be filed by
Heartland Wireless Communications, Inc., of our report, which includes an
explanatory paragraph which states that specified circumstances raise
substantial doubt about CableMaxx, Inc.'s ability to continue as a going
concern, dated August 25, 1995, on our audits of the consolidated balance
sheets of CableMaxx, Inc. as of June 30, 1994 and 1995, and the related
consolidated statements of operations, stockholder's equity and cash flows for
the period December 18, 1992 to June 30, 1993 and for the years ended June 30,
1994 and 1995, and of the consolidated statements of operations and cash flows
of Supreme Cable Co., Inc. and Subsidiaries (the "Predecessor") for the period
from July 1, 1992 to December 17, 1992. We also consent to the reference to
our firm under the caption "Experts."
/s/ COOPERS & LYBRAND LLP
Austin, Texas
April 4, 1996
<PAGE> 1
EXHIBIT 23.6
INDEPENDENT AUDITIORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our report dated
July 28, 1995, on the balance sheets of Cross Country Division as of December
31, 1994 and 1993, and the related statements of operations, division equity,
and cash flows for year ended December 31, 1993, the period from January 1,
1994 to August 18, 1994 and the period from August 19, 1994 to December 31,
1994, which reports are included in the Form 8-K/A of Heartland Wireless
Communications, Inc. to be filed with the Securities and Exchange Commission on
April 8, 1996 and (b) the reference to our firm under the heading "Experts" in
the prospectus.
Our report relating to the financial statements of Cross Country Division
contains an explanatory paragraph that refers to a business combination in 1994
accounted for as a purchase involving assets comprising a portion of Cross
Country Division. As a result of the acquisition, financial information of
Cross Country Division for periods after August 18, 1994 is presented on a
different cost basis than that for periods before August 18, 1994 and,
therefore, such information is not comparable.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Dallas, Texas
April 4, 1996
