<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 20, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
P-COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 77-0289371
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3175 S. WINCHESTER BOULEVARD, CAMPBELL, CALIFORNIA 95008
(408) 866-3666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------
GEORGE P. ROBERTS
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
P-COM, INC.
3175 S. WINCHESTER BOULEVARD
CAMPBELL, CALIFORNIA 95008
(408) 866-3666
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
--------------------
Copies to:
WARREN T. LAZAROW, ESQ.
BROBECK, PHLEGER & HARRISON LLP
TWO EMBARCADERO PLACE
2200 GENG ROAD
PALO ALTO, CALIFORNIA 94303
(650) 424-0160
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
Amount Proposed Maximum Proposed Maximum Amount
Title of Securities to Be Offering Price Per Aggregate of Registration
to be Registered Registered Share(1) Offering Price(1) Fee(1)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0001 par value 1,014,366 $17.0625 $17,307,619.88 $5,105.75
per share ("Common Stock")......
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) based on a per share price of
$17.0625, the average of the high and low sale prices per share of the
Company's Common Stock on January 14, 1998.
-----------------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM S-3
<TABLE>
<CAPTION>
FORM S-3 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
- ----------------------------------------------------------- ----------------------------------------------
<S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................. Inside Front Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.............................. Not Applicable; Risk Factors; Not Applicable
4. Use of Proceeds........................................ Outside Front Cover; Use of Proceeds
5. Determination of Offering Price........................ Outside Front Cover Page
6. Dilution............................................... Not Applicable
7. Selling Security Holders............................... Selling Stockholders
8. Plan of Distribution................................... Outside Front Cover Page; Plan of Distribution
9. Description of Securities to be Registered............. Information Incorporated by Reference
10. Interests of Named Experts and Counsel................ Legal Matters
11. Material Changes...................................... Not Applicable
12. Incorporation of Certain Information by Reference..... Information Incorporated by Reference
13. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities............................ Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
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.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION DATED JANUARY 20, 1998
P-COM, INC.
1,014,366 SHARES COMMON STOCK
($0.0001 PAR VALUE PER SHARE)
-------------------------------
This Prospectus relates to the public offering, which is not being underwritten,
of up to 1,014,366 shares (the "Resale Shares") of Common Stock, $0.0001 par
value per share, of P-Com, Inc. (referred to herein, together with its majority-
owned and wholly-owned subsidiaries, as "P-Com," the "Company" or the
"Registrant"). The Resale Shares may be offered by certain stockholders of the
Company or by pledgees, donees, transferees or other successors in interest that
receive such shares as a gift, partnership distribution or other non-sale
related transfer (the "Selling Stockholders"). The Resale Shares were received
by the Selling Stockholders in connection with either the acquisition of all of
the outstanding securities of Telematics, Inc. ("Telematics") pursuant to a
Securities Purchase Agreement dated November 17, 1997, or the acquisition of all
of the outstanding securities of RT Masts Limited ("RTM") pursuant to a Share
Purchase Agreement dated October 14, 1997 (the "Acquisitions"). See "Recent
Developments -- The Acquisitions." All of the Resale Shares were issued
pursuant to exemptions from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), provided by either Section 4(2)
thereof or by Regulation S promulgated thereunder. A total of 248,215 of the
Resale Shares are being registered by the Company pursuant to a registration
rights agreement with certain of the Selling Stockholders. A total of 766,151
of the Resale Shares are not subject to any registration rights agreements with
certain of the Selling Stockholders but are being voluntarily registered
hereunder by the Company. See the "Plan of Distribution" section herein.
The Resale Shares may be offered by the Selling Stockholders from time to time
in transactions on the Nasdaq National Market, in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Resale Shares to or
through broker-dealers and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders or
the purchasers of the Resale Shares for whom such broker-dealers may act as
agent or to whom they sell as principal or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). See
"Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the Resale
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Resale Shares being
offered by the Selling Stockholders.
The Company intends that this registration statement will remain effective until
no later than one year after the date on which the Securities and Exchange
Commission determines that this Prospectus is effective. On January 14, 1998,
the last reported sale price for the Common Stock, as reported on The Nasdaq
National Market, was $17-3/8 per share. The Company's Common Stock is currently
quoted on Nasdaq under the symbol "PCMS."
-------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
-------------------------------
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 COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY __, 1998
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by any other person. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities covered by this Prospectus, nor does
it constitute an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation may not lawfully be made.
AVAILABLE INFORMATION
P-Com is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and the following regional offices of the
Commission: Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of prescribed rates. In addition, the Commission maintains a Web site at
http://www.sec.gov that contains P-Com's reports, proxy and information
statements and other information that have been filed since P-Com began to file
electronically with the Commission in August 1996. The Common Stock of the
Company is quoted on the Nasdaq National Market, and such material may also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3, as amended (the "Registration Statement") of
which this Prospectus is a part, including exhibits set forth therein or
incorporated by reference thereto, which has been filed electronically with the
Commission under the Securities Act of 1933, as amended (the "Act"). Statements
made in this Prospectus as to the contents of any referenced contract, agreement
or other document are not necessarily complete, and each such statement shall be
deemed qualified in its entirety by reference thereto. Copies of the
Registration Statement and the exhibits and schedules thereto may be obtained,
upon payment of the fee prescribed by the Commission, or may be examined without
charge at the office of the Commission or at the Commission's Web site.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-25356) pursuant to the 1934 Act are incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. The Company's Proxy Statement for the Annual Meeting of Stockholders
held on May 19, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, and the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997;
4. The Company's Current Report on Form 8-K filed on March 10, 1997, the
Company's Current Report on Form 8-K filed on March 21, 1997, the
Company's Current Report on Form 8-K/A filed on May 21, 1997, the
Company's Current Report on Form 8-K filed on June 13, 1997, the
Company's Current Report on Form 8-K/A filed on June 26, 1997, the
Company's Current Report
2.
<PAGE>
on Form 8-K/A filed on June 27, 1997, the Company's Current Report on
Form 8-K filed on October 14, 1997, the Company's additional Current
Report on Form 8-K filed on October 14, 1997, the Company's Current
Report on Form 8-K filed on October 17, 1997, the Company's Current
Report on Form 8-K/A filed on October 30, 1997, the Company's Current
Report on Form 8-K filed on November 5, 1997, the Company's Current
Report on Form 8-K filed on November 21, 1997, and the Company's
Current Report on Form 8-K filed on December 10, 1997;
5. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission
on January 12, 1995, as amended on February 16, 1995; and
6. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus but prior to the termination of the offering of the Shares.
Any statement contained in a document incorporated by reference herein shall
be 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 any other subsequently filed document that also is
incorporated herein modifies or replaces such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Prospectus or such Registration Statement.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
therein). Requests should be submitted in writing or by telephone at (408) 866-
3666 to George P. Roberts, Chairman of the Board and Chief Executive Officer, P-
Com, Inc., at the principal executive offices of the Company, 3175 S. Winchester
Boulevard, Campbell, California 95008.
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Act, as amended, and Section 21E of the 1934 Act, as amended,
which are subject to the "safe harbor" created by those sections. The Company's
actual results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors, including those set forth
under "Risk Factors" and elsewhere in this Prospectus.
3.
<PAGE>
THE COMPANY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or incorporated by reference
herein. See "Risk Factors" for a discussion of certain factors that should be
considered by prospective investors. Unless otherwise indicated, all
information pertaining to share prices and number of shares in this Prospectus
reflect a 2-for-1 forward stock split in the form of a 100% stock dividend
effected on September 26, 1997.
THE COMPANY
P-Com supplies equipment and services for access to worldwide
telecommunications and broadcast networks. The Company's Tel-Link(R) systems are
used as wireless digital links in applications that include interconnecting base
stations and mobile switching centers in microcellular and personal
communications services ("PCN/PCS") networks and provide local telephone company
("telco") connectivity in the local loop. The integrated architecture and high
software content of the Company's systems are designed to offer cost-effective,
high-performance products with a high degree of flexibility and functionality.
Additionally, the Company offers turnkey microwave relocation services,
engineering, program management, installation and maintenance of communication
systems to new licensees of radio spectrum who must first remove existing users
from the frequencies before implementing new systems and provides equipment for
wireline network access applications. The Company is currently field testing and
further developing a range of point-to-multipoint radio systems for use in both
the telecommunications and broadcast industries.
P-Com's Tel-Link(R) wireless radios utilize a common architecture for systems
in multiple millimeter wave and spread spectrum microwave frequencies including
2.4 GHz, 5.7 GHz, 7 GHz, 13 GHz, 14 GHz, 15 GHz, 18 GHz, 23 GHz, 24 GHz, 26 GHz,
38 GHz and 50 GHz. The Company's systems are designed to be highly reliable,
cost effective and simple to install and maintain. Software embedded in the
Company's systems allows the user to easily configure and adjust system settings
such as frequency, power and capacity with minimal manual tuning and mechanical
adjustments. The Company also markets a full line of Windows and Simple Network
Management Protocol ("SNMP")-based software products that are complementary to
its systems as sophisticated diagnostic, maintenance and system configuration
tools.
The Company's radio systems are sold internationally through strategic
partners, system providers, original equipment manufacturers ("OEMs") and
distributors as well as directly to end-users, and domestically primarily
through its direct sales force. The Company's radio system customers include
Advanced Radio Telecom Corp. ("ART"), Bosch Telecom GmbH, Grupo Iusacell S.A. de
C.V., Lucent Technologies, Inc. (including the entities formerly known as AT&T
Network Systems Deutschland GmbH and AT&T Network Systems Nederland BV), Mercury
Communications Ltd., Mercury Personal Communications, Orange Personal
Communications Ltd., Italtel S.p.A. (formerly known as Siemens
Telecommunicazioni, S.p.A.), Ericsson, Ltd., Fujitsu Limited, Northern Telecom,
Ltd. and WinStar Wireless, Inc. (collectively with its subsidiary WinStar
Equipment Corporation, "WinStar"). The Company's customers for microwave
relocation services include Sprint Spectrum, AT&T Wireless, PrimeCo Personal
Communications, BellSouth, Omnipoint and South Carolina Public Service Authority
("SCPSA").
In December 1993, P-Com received its initial ISO 9001 registration, a standard
established by the International Organization for Standardization that provides
a methodology by which manufacturers can obtain quality certification. In
accordance with ISO 9001 requirements, the Company's ISO 9001 registration was
subsequently recertified. The Company also completed ISO 9001 registration for
its United Kingdom sales and customer support facility and Geritel facility in
Italy in 1996. The Company is in the process of obtaining ISO 9001 registration
for its other facilities outside of the United States.
4.
<PAGE>
P-Com was incorporated in the State of Delaware on August 23, 1991. Its
executive offices are located at 3175 S. Winchester Boulevard, Campbell,
California 95008, and its telephone number is (408) 866-3666.
5.
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve numerous
risks and uncertainties. The statements contained in this Prospectus that are
not purely historical are forward-looking statements within the meaning of
Section 27A of the Act and the 1934 Act, including without limitation statements
regarding the Company's expectations, beliefs, intentions or strategies
regarding the future. All forward-looking statements included in this
Prospectus are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus. In evaluating the Company's business, prospective investors should
consider carefully the following factors in addition to the other information
presented in this Prospectus.
SIGNIFICANT FLUCTUATIONS IN RESULTS OF OPERATIONS
The Company has experienced and will in the future continue to experience
significant fluctuations in sales, gross margins and operating results. The
procurement process for most of the Company's current and potential customers is
complex and lengthy, and the timing and amount of sales is difficult to predict
reliably. The sale and implementation of the Company's products and services
generally involves a significant commitment of the Company's senior management,
sales force and other resources. The sales cycle for the Company's products and
services typically involves a significant technical evaluation and commitment of
cash and other resources, with the attendant delays frequently associated with,
among other things: (i) existing and potential customers' seasonal purchasing
and budgetary cycles; (ii) educating customers as to the potential applications
of, and product-life cost savings associated with, using the Company's products
and services; (iii) complying with customers' internal procedures for approving
large expenditures and evaluating and accepting new technologies that affect key
operations; (iv) complying with governmental or other regulatory standards; (v)
difficulties associated with each customer's ability to secure financing; and
(vi) negotiating purchase and service terms for each sale. Orders for the
Company's products have typically been strongest towards the end of the calendar
year, with a reduction in shipments occurring during the summer months, as
evidenced in the third quarter of fiscal year 1997, due primarily to the
inactivity of the European market, the Company's major current customer base, at
such time. To the extent such seasonality continues, the Company's results of
operations will fluctuate from quarter to quarter.
In addition, a single customer's order scheduled for shipment in a quarter can
represent a significant portion of the Company's potential sales for such
quarter. There can be no assurance that the Company will be able to obtain such
large orders from single customers in the future. The Company has at times
failed to receive expected orders, and delivery schedules have been deferred as
a result of changes in customer requirements and commitments, among other
factors. As a result, the Company's operating results for a particular period
have in the past been and will in the future be materially adversely affected by
a delay, rescheduling or cancellation of even one purchase order. Much of the
anticipated growth in telecommunications infrastructure, if any, is expected to
result from the entrance of new service providers, many of which do not have the
financial resources of existing service providers. To the extent these new
service providers are unable to adequately finance their operations, they may
cancel orders. Moreover, purchase orders are often received and accepted
substantially in advance of shipment, and the failure to reduce actual costs to
the extent anticipated or an increase in anticipated costs before shipment could
materially adversely affect the gross margins for such orders, and as a result,
the Company's results of operations. Moreover, most of the Company's backlog
scheduled for shipment in the twelve months subsequent to September 30, 1997 can
be canceled since orders are often made substantially in advance of shipment,
and the Company's contracts typically provide that orders may be canceled with
limited or no penalties. As a result, backlog is not necessarily indicative of
future sales for any particular period. In addition, the Company's customers
have increasingly been requiring shipment of products at the time of ordering
rather than submitting purchase orders far in advance of expected dates of
product shipment. Furthermore, most of the Company's sales in recent quarters
have
6.
<PAGE>
been realized near the end of each quarter. Accordingly, a delay in a shipment
near the end of a particular quarter, as the Company has been experiencing
recently, due to, for example, an unanticipated shipment rescheduling, a
cancellation or deferral by a customer, competitive or economic factors,
unexpected manufacturing or other difficulties, delays in deliveries of
components, subassemblies or services by suppliers, or the failure to receive an
anticipated order, may cause sales in a particular quarter to fall significantly
below the Company's expectations and may materially adversely affect the
Company's operating results for such quarter.
In connection with its efforts to ramp-up production of products and services,
the Company expects to continue to make substantial capital investments in
equipment and inventory, recruit and train additional personnel and possibly
invest in additional manufacturing facilities. The Company anticipates that
these expenditures will be made in advance of, and in anticipation of, increased
sales and, therefore, that its gross margins will be adversely affected from
time-to-time due to short-term inefficiencies associated with the addition of
equipment and inventory, personnel or facilities, and that each cost category
may increase as a percentage of revenues from time-to-time on a periodic basis.
In addition, as the Company's customers increasingly require shipment of
products at the time of ordering, the Company must forecast demand for each
quarter and build up inventory accordingly. Such increases in inventory could
materially adversely affect the Company's operation, if such inventory were not
utilized or becomes obsolete.
A large portion of the Company's expenses are fixed and difficult to reduce
should revenues not meet the Company's expectations, thus magnifying the
material adverse effect of any revenue shortfall. Furthermore, announcements by
the Company or its competitors of new products, services and technologies could
cause customers to defer or cancel purchases of the Company's systems and
services, which would materially adversely affect the Company's business,
financial condition and results of operations. Additional factors that have
caused and will continue to cause the Company's sales, gross margins and results
of operations to vary significantly from period to period include: new product
introductions and enhancements, including related costs; the Company's ability
to manufacture and produce sufficient volumes of systems and meet customer
requirements; manufacturing capacity, efficiencies and costs; mix of sales
through direct efforts or through distributors or other third parties; mix of
systems and related software tools sold and services provided; operating and new
product development expenses; product discounts; accounts receivable collection,
in particular those acquired in recent acquisitions, especially outside of the
United States; changes in pricing by the Company, its customers or suppliers;
inventory writeoffs, as the Company recently experienced in the second and third
quarters for a relatively immaterial amount in each such quarter, which the
Company may experience again in the future; inventory obsolescence; natural
disasters; market acceptance by the Company's customers and the timing of
availability of new products and services by the Company or its competitors;
acquisitions, including costs and expenses; usage of different distribution and
sales channels; fluctuations in foreign currency exchange rates; delays or
changes in regulatory approval of its systems and services; warranty and
customer support expenses; customization of systems; and general economic and
political conditions. In addition, the Company's results of operations have been
and will continue to be influenced significantly by competitive factors,
including the pricing and availability of, and demand for, competitive products
and services. All of the above factors are difficult for the Company to
forecast, and these or other factors could materially adversely affect the
Company's business, financial condition and results of operations. As a result,
the Company believes that period-to-period comparisons are not necessarily
meaningful and should not be relied upon as indications of future performance.
Due to all of the foregoing factors, it is likely that in some future quarter
the Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
may be materially adversely affected.
SIGNIFICANT CUSTOMER CONCENTRATION
In 1996, six customers accounted for 74% of the Company's sales, and as of
December 31, 1996, seven customers accounted for most of the Company's backlog
scheduled for shipment in the twelve months subsequent to December 31, 1996.
During the first nine months of 1997, seven customers accounted for 59% of the
Company's sales, and as of September 30, 1997, five customers accounted for 53%
of the Company's backlog scheduled for shipment in the twelve months subsequent
to September 30, 1997. The Company anticipates that it will continue
7.
<PAGE>
to sell its products and services to a changing but still relatively small group
of customers. Several of the Company's subsidiaries are dependent on one or a
few customers. Some companies implementing new networks are at early stages of
development and may require additional capital to fully implement their planned
networks. The Company's ability to achieve sales in the future will depend in
significant part upon its ability to obtain and fulfill orders from, maintain
relationships with and provide support to existing and new customers, to
manufacture systems in volume on a timely and cost-effective basis and to meet
stringent customer performance and other requirements and shipment delivery
dates, as well as the condition, working capital availability and success of its
customers. As a result, any cancellation, reduction or delay in orders by or
shipments to any customer, as a result of manufacturing or supply difficulties
or otherwise, or the inability of any customer to finance its purchases of the
Company's products or services, as has been the case with certain customers
historically, may materially adversely affect the Company's business, financial
condition and results of operations. In addition, financial difficulties of any
existing or potential customers may limit the overall demand for the Company's
products and services (for example, certain potential customers in the
telecommunications industry have been reported to have undergone financial
difficulties and may therefore limit their future orders). In addition,
acquisitions in the communications industry are common, which further
concentrates the customer base and may cause orders to be delayed or cancelled.
There can be no assurance that the Company's sales will increase in the future
or that the Company will be able to support or attract customers.
ACQUISITIONS
Since April 1996, the Company has acquired seven complementary companies and
businesses. Integration of these companies into the Company's business is
currently ongoing, and no assurance may be made that the Company will be able to
successfully complete this process. Risks commonly encountered in such
transactions include the difficulty of assimilating the operations and personnel
of the combined companies, the potential disruption of the Company's ongoing
business, the inability to retain key technical and managerial personnel, the
inability of management to maximize the financial and strategic position of the
Company through the integration of acquired businesses, additional expenses
associated with amortization of acquired intangible assets, dilution of existing
stockholders, the maintenance of uniform standards, controls, procedures, and
policies, the impairment of relationships with employees and customers as a
result of any integration of new personnel, risks of entering markets in which
the Company has no or limited direct prior experience, and operating companies
in different geographical locations with different cultures. All of the
Company's acquisitions to date (the "Acquisitions"), except the acquisitions of
Control Resources Corporation ("CRC"), R T Masts Limited ("R T Masts"), and
Telematics, Inc. ("Telematics") have been accounted for under the purchase
method of accounting, and as a result, a significant amount of goodwill is being
amortized as set forth in the Company's consolidated financial statements. This
amortization expense may have a significant effect on the Company's financial
results. There can be no assurance that the Company will be successful in
overcoming these risks or any other problems encountered in connection with such
acquisitions, or that such transactions will not materially adversely affect the
Company's business, financial condition, or results of operations.
As part of its overall strategy, the Company plans to continue to acquire or
invest in complementary companies, products or technologies and to enter into
joint ventures and strategic alliances with other companies. The Company is
currently pursuing numerous acquisitions; however, except as set forth in this
Prospectus, no material acquisition has become the subject of any definitive
agreement, letter of intent or agreement in principle. The Company is unable to
predict whether and when any prospective acquisition candidate will become
available or the likelihood that any acquisition will be completed. The Company
competes for acquisition and expansion opportunities with many entities that
have substantially greater resources than the Company. There can be no assurance
that the Company will be able to successfully identify suitable acquisition
candidates, complete acquisitions, or expand into new markets. Once integrated,
acquired businesses may not achieve comparable levels of revenues,
profitability, or productivity as the existing business of the Company or
otherwise perform as expected. In addition, as commonly occurs with mergers of
technology companies, during the pre-merger and integration phases, aggressive
competitors may undertake formal initiatives to attract customers and to recruit
key employees through various incentives. If
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the Company proceeds with one or more significant acquisitions in which the
consideration consists of cash, a substantial portion of the Company's available
cash could be used to consummate the acquisitions. Many business acquisitions
must be accounted for as a purchase for financial reporting purposes. Most of
the businesses that might become attractive acquisition candidates for the
Company are likely to have significant goodwill and intangible assets, and
acquisition of these businesses, if accounted for as a purchase, would typically
result in substantial amortization of goodwill charges to the Company. The
occurrence of any of these events could have a material adverse effect on the
Company's workforce, business, financial condition and results of operations.
DEPENDENCE ON CONTRACT MANUFACTURERS; RELIANCE ON SOLE OR LIMITED SOURCES OF
SUPPLY
The Company's internal manufacturing capacity is very limited. The Company
utilizes contract manufacturers such as Remec, Inc., Sanmina Corporation, SPC
Electronics Corp., GSS Array Technology, Celeritek, Inc. and Senior Systems
Technology, Inc. to produce its systems, components and subassemblies and
expects to rely increasingly on these and other manufacturers in the future. The
Company also relies on outside vendors to manufacture certain other components
and subassemblies. There can be no assurance that the Company's internal
manufacturing capacity and that of its contract manufacturers will be sufficient
to fulfill the Company's orders. Failure to manufacture, assemble and ship
systems and meet customer demands on a timely and cost-effective basis could
damage relationships with customers and have a material adverse effect on the
Company's business, financial condition and operating results. Certain necessary
components, subassemblies and services necessary for the manufacture of the
Company's systems are obtained from a sole supplier or a limited group of
suppliers. In particular, Eltel Engineering S.r.L. and Associates, Milliwave,
Scientific Atlanta and Xilinx, Inc. each are sole source or limited source
suppliers for critical components used in the Company's radio systems.
The Company's reliance on contract manufacturers and on sole suppliers or a
limited group of suppliers and the Company's increasing reliance on contract
manufacturers and suppliers involves several risks, many of which the Company
has been experiencing, including an inability to obtain an adequate supply of
finished products and required components and subassemblies, and reduced control
over the price, timely delivery, reliability and quality of finished products,
components and subassemblies. The Company does not have long-term supply
agreements with most of its manufacturers or suppliers. Manufacture of the
Company's products and certain of these components and subassemblies is an
extremely complex process, and the Company has from time to time experienced and
may in the future continue to experience problems in the timely delivery and
quality of products and certain components and subassemblies from vendors.
Certain of the Company's suppliers have relatively limited financial and other
resources. Any inability to obtain timely deliveries of components and
subassemblies of acceptable quality or any other circumstance that would require
the Company to seek alternative sources of supply, or to manufacture its
finished products or such components and subassemblies internally, could delay
the Company's ability to ship its systems, which could damage relationships with
current or prospective customers and have a material adverse effect on the
Company's business, financial condition and results of operations.
NO ASSURANCE OF SUCCESSFUL EXPANSION OF OPERATIONS; MANAGEMENT OF GROWTH
Recently, the Company has significantly expanded the scale of its operations
to support increased sales and to address critical infrastructure and other
requirements. This expansion has included the leasing of additional space, the
opening of branch offices and subsidiaries in the United Kingdom, Italy, Germany
and Singapore, the opening of design centers and manufacturing operations
throughout the world, the acquisition of a significant amount of inventory (the
Company's inventory increased from $31 million at December 31, 1996 to $50
million at September 30, 1997) and accounts receivable, recent acquisitions,
significant investments in research and development to support product
development and services, including the recently introduced products and the
development of point-to-multipoint systems, and the hiring of additional
personnel in all functional areas, including in sales and marketing,
manufacturing and operations and finance, and has resulted in significantly
higher operating expenses. Currently, the Company is devoting significant
resources to the development of new products and technologies and is conducting
evaluations of these products and will continue to invest significant additional
resources in plant and
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equipment, inventory, personnel and other costs, to begin production of these
products and to provide the marketing and administration, if any, required to
service and support these new products. Accordingly, there can be no assurance
that gross profit margin and inventory levels will not be adversely impacted in
the future by start-up costs associated with the initial production and
installation of these new products. These start-up costs include, but are not
limited to, additional manufacturing overhead, additional allowance for doubtful
accounts, inventory and warranty reserve requirements and the creation of
service and support organizations. In addition, the increases in inventory on
hand for new product development and customer service requirements increase the
risk of inventory write-offs. As a result, the Company anticipates that its
operating expenses will continue to increase significantly. If the Company's
sales do not correspondingly increase, the Company's results of operations would
be materially adversely affected. See "--Limited Operating History."
Expansion of the Company's operations and its acquisitions have caused and are
continuing to impose a significant strain on the Company's management,
financial, manufacturing and other resources and have disrupted the Company's
normal business operations. The Company's ability to manage the recent and any
possible future growth, should it occur, will depend upon a significant
expansion of its manufacturing, accounting and other internal management systems
and the implementation and subsequent improvement of a variety of systems,
procedures and controls, including improvements relating to inventory control.
For a number of reasons, the Company has not been able to fully consolidate and
integrate the operations of certain acquired businesses. This inability may
cause inefficiencies, additional operational complexities and expenses and
greater risks of billing delays, inventory write-offs and financial reporting
difficulties. The Company must establish and improve a variety of systems,
procedures and controls to more efficiently coordinate its activities in its
acquired (and to be acquired) companies and their facilities in Rome and Milan,
Italy, France, Poland, Great Britain, New Jersey, Florida, Virginia and
elsewhere. There can be no assurance that significant problems in these areas
will not re-occur. Any failure to expand these areas and implement and improve
such systems, procedures and controls, including improvements relating to
inventory control, in an efficient manner at a pace consistent with the
Company's business could have a material adverse effect on the Company's
business, financial condition and results of operations. In particular, the
Company must successfully manage the transition to higher internal and external
volume manufacturing, including the establishment of adequate facilities, the
control of overhead expenses and inventories, the development, introduction,
marketing and sales of new products, the management and training of its employee
base, the integration and coordination of a geographically and ethnically
diverse group of employees and the monitoring of its third party manufacturers
and suppliers. Although the Company has substantially increased the number of
its manufacturing personnel and significantly expanded its internal and external
manufacturing capacity, there can be no assurance that the Company will not
experience manufacturing or other delays or problems that could materially
adversely affect the Company's business, financial condition or results of
operations.
In this regard, any significant sales growth will be dependent in significant
part upon the Company's expansion of its marketing, sales, manufacturing and
customer support capabilities. This expansion will continue to require
significant expenditures to build the necessary infrastructure. There can be no
assurance that the Company's attempts to expand its marketing, sales,
manufacturing and customer support efforts will be successful or will result in
additional sales or profitability in any future period. As a result of the
expansion of its operations and the significant increase in its operating
expenses, as well as the difficulty in forecasting revenue levels, the Company
will continue to experience significant fluctuations in its revenues, costs, and
gross margins, and therefore its results of operations.
LIMITED OPERATING HISTORY
P-Com was founded in August 1991 and was in the development stage until
October 1993 when it began commercial shipments of its first product. All
financial information presented in this Prospectus has been restated to include
the operating results of Control Resources Corporation, which was acquired in a
pooling of interests transaction on May 29, 1997. From inception to the end of
the third quarter of fiscal 1997, the Company generated a cumulative net profit
of approximately $8.8 million. From October 1993 through September 30, 1997, the
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Company generated sales of approximately $316.1 million, of which $241.1
million, or 76% of such amount, was generated in the year ended December 31,
1996 and the first nine months of 1997. The Company does not believe recent
growth rates are indicative of future operating results. Due to the Company's
limited operating history and limited resources, among other factors, there can
be no assurance that profitability or significant revenues on a quarterly or
annual basis will occur in the future. During 1996 and the first nine months of
1997, both the Company's sales and operating expenses increased more rapidly
than the Company had anticipated. There can be no assurance that the Company's
revenues will continue to remain at or increase from the levels experienced in
1996 or in the first nine months of 1997 or that sales will not decline. The
Company intends to continue to invest significant amounts in its operations,
particularly to support product development and the marketing and sales of
recently introduced products, and operating expenses will continue to increase
significantly in absolute dollars. If the Company's sales do not correspondingly
increase, the Company's results of operations would be materially adversely
affected. Accordingly, there can be no assurance that the Company will achieve
profitability in future periods. The Company is subject to all of the risks
inherent in the operation of a new business enterprise, and there can be no
assurance that the Company will be able to successfully address these risks.
DECLINING AVERAGE SELLING PRICES
The Company believes that average selling prices and gross margins for its
systems and services will decline in the long term as such systems mature, as
volume price discounts in existing and future contracts take effect and as
competition intensifies, among other factors. To offset declining average
selling prices, the Company believes that it must successfully introduce and
sell new systems on a timely basis, develop new products that incorporate
advanced software and other features that can be sold at higher average selling
prices and reduce the costs of its systems through contract manufacturing,
design improvements and component cost reduction, among other actions. To the
extent that new products are not developed in a timely manner, do not achieve
customer acceptance or do not generate higher average selling prices, and the
Company is unable to offset declining average selling prices, the Company's
gross margins will decline, and such decline will have a material adverse effect
on the Company's business, financial condition and results of operations.
TRADE ACCOUNT RECEIVABLES
The Company is subject to credit risk in the form of trade account
receivables. The Company may in certain circumstances be unable to enforce a
policy of receiving payment within a limited number of days of issuing bills,
especially in the case of customers that are in the early phases of business
development. In addition, many of the Company's foreign customers are granted
longer terms than those typically existing in the United States. The Company has
experienced difficulties in the past in receiving payment in accordance with the
Company's policies, particularly from customers awaiting financing to fund their
expansion and from customers outside of the United States and the days
outstanding of receivables have generally increased recently. There can be no
assurance that such difficulties will not continue in the future, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company typically does not require collateral or
other security to support customer receivables.
NO ASSURANCE OF PRODUCT QUALITY, PERFORMANCE AND RELIABILITY
The Company has limited experience in producing and manufacturing its systems
and contracting for such manufacture. The Company's customers require very
demanding specifications for quality, performance and reliability. There can be
no assurance that problems will not occur in the future with respect to the
quality, performance and reliability of the Company's systems or related
software tools. If such problems occur, the Company could experience increased
costs, delays in or cancellations or reschedulings of orders or shipments,
delays in collecting accounts receivable and product returns and discounts, any
of which would have a material adverse effect on the Company's business,
financial condition or results of operations. In addition, in order to maintain
its ISO 9001 registration, the Company periodically must undergo a
recertification assessment. Failure to
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maintain such registration could materially adversely affect the Company's
business, financial condition and results of operations. The Company completed
ISO 9001 registration for its United Kingdom sales and customer support facility
and its Geritel facility in Italy in 1996, and other facilities will also be
attempting ISO 9001 registration. There can be no assurance that such
registration will be achieved.
UNCERTAINTY OF MARKET ACCEPTANCE
The future operating results of the Company depend to a significant extent
upon the continued growth and increased availability and acceptance of
microcellular, PCN/PCS and wireless local loop access telecommunications
services in the United States and internationally. There can be no assurance
that the volume and variety of wireless telecommunications services or the
markets for and acceptance of such services will continue to grow, or that such
services will create a demand for the Company's systems. Because these markets
are relatively new, it is difficult to predict which segments of these markets
will develop and at what rate these markets will grow, if at all. If the short-
haul millimeter wave or spread spectrum microwave wireless radio market and
related services for the Company's systems fails to grow, or grows more slowly
than anticipated, the Company's business, financial condition and results of
operations would be materially adversely affected. In addition, the Company has
invested a significant amount of time and resources in the development of point-
to-multipoint radio systems. Should the point-to-multipoint radio market fail to
develop, or should the Company's products fail to gain market acceptance, the
Company's business, financial condition and results of operations could be
materially adversely affected. Certain sectors of the communications market will
require the development and deployment of an extensive and expensive
communications infrastructure. In particular, the establishment of PCN/PCS
networks will require very large capital expenditures. There can be no assurance
that communications providers have the ability to or will make the necessary
investment in such infrastructure or that the creation of this infrastructure
will occur in a timely manner. Moreover, one potential application of the
Company's technology, use of the Company's systems in conjunction with the
provision by wireless telecommunications service providers of alternative
wireless access in competition with the existing wireline local exchange
providers, is dependent on the pricing of wireless telecommunications services
at rates competitive with those charged by wireline telephone companies. Rates
for wireless access are currently substantially higher than those charged by
wireline companies, and there can be no assurance that rates for wireless access
will generally be competitive with rates charged by wireline companies. If
wireless access rates are not competitive, consumer demand for wireless access
will be materially adversely affected. If the Company allocates its resources to
any market segment that does not grow, it may be unable to reallocate its
resources to other market segments in a timely manner, which may curtail or
eliminate its ability to enter such market segments.
Certain of the Company's current and prospective customers are currently
delivering products and technologies which utilize competing transmission media
such as fiber optic and copper cable, particularly in the local loop access
market. To successfully compete with existing products and technologies, the
Company must, among many actions, offer systems with superior price/performance
characteristics and extensive customer service and support, supply such systems
on a timely and cost-effective basis in sufficient volume to satisfy such
prospective customers' requirements and otherwise overcome any reluctance on the
part of such customers to transition to new technologies. Any delay in the
adoption of the Company's systems may result in prospective customers utilizing
alternative technologies in their next generation of systems and networks, which
would have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that prospective
customers will design their systems or networks to include the Company's
systems, that existing customers will continue to include the Company's systems
in their products, systems or networks in the future, or that the Company's
technology will to any significant extent replace existing technologies and
achieve widespread acceptance in the wireless telecommunications market. Failure
to achieve or sustain commercial acceptance of the Company's currently available
radio systems or to develop other commercially acceptable radio systems would
materially adversely affect the Company's business, financial condition and
results of operations. In addition, there can be no assurance that industry
technical standards will remain the same or, if emerging standards become
established, that the Company will be able to conform to these new standards in
a timely and cost-effective manner.
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INTENSELY COMPETITIVE INDUSTRY
The wireless communications market is intensely competitive. The Company's
wireless-based radio systems compete with other wireless telecommunications
products and alternative telecommunications transmission media, including copper
and fiber optic cable. The Company has experienced increasingly intense
competition worldwide from a number of leading telecommunications companies that
offer a variety of competitive products and services and broader
telecommunications product lines, including Adtran, Inc., Alcatel Network
Systems, California Microwave, Inc., Cylink Corporation, Digital Microwave
Corporation, Ericsson Limited, Harris Corporation-Farinon Division, Innova
International Corp., Larus Corporation, Nokia Telecommunications, Philips T.R.T.
and Western Multiplex Corporation, many of which have substantially greater
installed bases, financial resources and production, marketing, manufacturing,
engineering and other capabilities than the Company. The Company faces actual
and potential competition not only from these established companies, but also
from start-up companies that are developing and marketing new commercial
products and services. The Company may also face competition in the future from
new market entrants offering competing technologies. In addition, the Company's
current and prospective customers and partners, certain of which have access to
the Company's technology or under some circumstances are granted the right to
use the technology for purposes of manufacturing, have developed, are currently
developing or could develop the capability to manufacture products competitive
with those that have been or may be developed or manufactured by the Company.
The Company's results of operations may depend in part upon the extent to which
these customers elect to purchase from outside sources rather than develop and
manufacture their own radio systems. There can be no assurance that such
customers will rely on or expand their reliance on the Company as an external
source of supply for their radio systems. The principal elements of competition
in the Company's market and the basis upon which customers may select the
Company's systems include price, performance, software functionality, ability to
meet delivery requirements and customer service and support. Recently, certain
of the Company's competitors have announced the introduction of competitive
products, including related software tools and services, and the acquisition of
other competitors and competitive technologies. The Company expects its
competitors to continue to improve the performance and lower the price of their
current products and services and to introduce new products and services or new
technologies that provide added functionality and other features. New product
and service offerings and enhancements by the Company's competitors could cause
a significant decline in sales or loss of market acceptance of the Company's
systems, or make the Company's systems, services or technologies obsolete or
noncompetitive. The Company has experienced significant price competition, and
expects such competition to intensify, which may materially adversely affect its
gross margins and its business, financial condition and results of operations.
The Company believes that to be competitive, it will continue to be required to
expend significant resources on, among other items, new product development and
enhancements. In marketing its systems and services, the Company will face
competition from vendors employing other technologies and services that may
extend the capabilities of their competitive products beyond their current
limits, increase their productivity or add other features. There can be no
assurance that the Company will be able to compete successfully in the future.
REQUIREMENT FOR RESPONSE TO RAPID TECHNOLOGICAL CHANGE AND REQUIREMENT FOR
FREQUENT NEW PRODUCT INTRODUCTIONS
The communications market is subject to rapid technological change, frequent
new product introductions and enhancements, product obsolescence, changes in
end-user requirements and evolving industry standards. The Company's ability to
be competitive in this market will depend in significant part upon its ability
to successfully develop, introduce and sell new systems and enhancements and
related software tools, including its point-to-multipoint systems currently
under development, on a timely and cost-effective basis that respond to changing
customer requirements. Recently, the Company has been developing point-to-
multipoint radio systems. Any success of the Company in developing new and
enhanced systems, including its point-to-multipoint systems currently under
development, and related software tools will depend upon a variety of factors,
including new product selection, integration of the various elements of its
complex technology, timely and efficient completion of system design, timely and
efficient implementation of manufacturing and assembly processes and its cost
reduction program,
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development and completion of related software tools, system performance,
quality and reliability of its systems and development and introduction of
competitive systems by competitors. The Company has experienced and is
continuing to experience delays from time to time in completing development and
introduction of new systems and related software tools, including products
acquired in the acquisitions. Moreover, there can be no assurance that the
Company will be successful in selecting, developing, manufacturing and marketing
new systems or enhancements or related software tools. There can be no assurance
that errors will not be found in the Company's systems after commencement of
commercial shipments, which could result in the loss of or delay in market
acceptance, as well as significant expenses associated with re-work of
previously delivered equipment. The inability of the Company to introduce in a
timely manner new systems or enhancements or related software tools that
contribute to sales could have a material adverse effect on the Company's
business, financial condition and results of operations.
INTERNATIONAL OPERATIONS; RISKS OF DOING BUSINESS IN DEVELOPING COUNTRIES
Most of the Company's sales to date have been made to customers located
outside of the United States. In addition, to date, the Company has acquired two
Italy-based companies and two United Kingdom-based companies. These companies
currently sell their products and services primarily to customers in Europe, the
Middle East and Africa. The Company anticipates that international sales will
continue to account for a majority of its sales for the foreseeable future.
Historically the Company's international sales have been denominated in British
pounds sterling or United States currencies. With recent acquisitions of foreign
companies, certain of the Company's international sales may be denominated in
other foreign currencies. A decrease in the value of foreign currencies relative
to the United States dollar could result in losses from transactions denominated
in foreign currencies. With respect to the Company's international sales that
are United States dollar-denominated, such a decrease could make the Company's
systems less price-competitive and could have a material adverse effect upon the
Company's business, financial condition and results of operations. The Company
has in the past mitigated its currency exposure to the British pound sterling
through hedging measures. However, any future hedging measures may be limited in
their effectiveness with respect to the British pound sterling and other foreign
currencies. Additional risks inherent in the Company's international business
activities include changes in regulatory requirements, costs and risks of
localizing systems in foreign countries, delays in receiving components and
materials, availability of suitable export financing, timing and availability of
export licenses, tariffs and other trade barriers, political and economic
instability, difficulties in staffing and managing foreign operations, branches
and subsidiaries, difficulties in managing distributors, potentially adverse tax
consequences, foreign currency exchange fluctuations, the burden of complying
with a wide variety of complex foreign laws and treaties and the difficulty in
accounts receivable collections. Many of the Company's customer purchase and
other agreements are governed by foreign laws, which may differ significantly
from U.S. laws. Therefore, the Company may be limited in its ability to enforce
its rights under such agreements and to collect damages, if awarded. There can
be no assurance that any of these factors will not have a material adverse
effect on the Company's business, financial condition and results of operations.
International telephone companies are in many cases owned or strictly
regulated by local regulatory authorities. Access to such markets is often
difficult due to the established relationships between a government owned or
controlled telephone company and its traditional indigenous suppliers of
telecommunications equipment. The successful expansion of the Company's
international operations in certain markets will depend on its ability to
locate, form and maintain strong relationships with established companies
providing communication services and equipment in targeted regions. The failure
to establish regional or local relationships or to successfully market or sell
its products in international markets could significantly limit the Company's
ability to expand its operations and would materially adversely affect the
Company's business, financial condition and results of operations. The Company's
inability to identify suitable parties for such relationships, or even if such
parties are identified, to form and maintain strong relationships with such
parties could prevent the Company from generating sales of its products and
services in targeted markets or industries. Moreover, even if such relationships
are established, there can be no assurance that the Company will be able to
increase sales of its products and services through such relationships.
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Some of the Company's potential markets consist of developing countries that
may deploy wireless communications networks as an alternative to the
construction of a limited wired infrastructure. These countries may decline to
construct wireless telecommunications systems or construction of such systems
may be delayed for a variety of reasons, in which event any demand for the
Company's systems in those countries will be similarly limited or delayed. In
doing business in developing markets, the Company may also face economic,
political and foreign currency fluctuations that are more volatile than those
commonly experienced in the United States and other areas.
EXTENSIVE GOVERNMENT REGULATION
Radio communications are subject to extensive regulation by the United States
and foreign laws and international treaties. The Company's systems must conform
to a variety of domestic and international requirements established to, among
other things, avoid interference among users of radio frequencies and to permit
interconnection of equipment. Each country has a different regulatory process.
Historically, in many developed countries, the unavailability of frequency
spectrum has inhibited the growth of wireless telecommunications networks. In
order for the Company to operate in a jurisdiction, it must obtain regulatory
approval for its systems and comply with different regulations in each
jurisdiction. Regulatory bodies worldwide are continuing the process of adopting
new standards for wireless communications products. The delays inherent in this
governmental approval process may cause the cancellation, postponement or
rescheduling of the installation of communications systems by the Company and
its customers, which in turn may have a material adverse effect on the sale of
systems by the Company to such customers. The failure to comply with current or
future regulations or changes in the interpretation of existing regulations
could result in the suspension or cessation of operations. Such regulations or
such changes in interpretation could require the Company to modify its products
and services and incur substantial costs to comply with such time-consuming
regulations and changes. In addition, the Company is also affected to the extent
that domestic and international authorities regulate the allocation and auction
of the radio frequency spectrum. Equipment to support new services can be
marketed only if permitted by suitable frequency allocations, auctions and
regulations, and the process of establishing new regulations is complex and
lengthy. To the extent PCS operators and others are delayed in deploying these
systems, the Company could experience delays in orders. Failure by the
regulatory authorities to allocate suitable frequency spectrum could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, delays in the radio frequency spectrum
auction process in the United States could delay the Company's ability to
develop and market equipment to support new services. These delays could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The regulatory environment in which the Company operates is subject to
significant change. Regulatory changes, which are affected by political,
economic and technical factors, could significantly impact the Company's
operations by restricting development efforts by the Company and its customers,
making current systems obsolete or increasing the opportunity for additional
competition. Any such regulatory changes, including changes in the allocation of
available spectrum, could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company might deem
it necessary or advisable to modify its systems and services to operate in
compliance with such regulations. Such modifications could be extremely
expensive and time-consuming.
FUTURE CAPITAL REQUIREMENTS
The Company's future capital requirements will depend upon many factors,
including the development of new products and related software tools, potential
acquisitions, requirements to maintain adequate manufacturing facilities and
contract manufacturing agreements, the progress of the Company's research and
development efforts, expansion of the Company's marketing and sales efforts, and
the status of competitive products. There can be no assurance that additional
financing will be available to the Company on acceptable terms, or at all. As a
result of the issuance of the Notes (as defined below), the Company may be
limited in its ability to raise additional debt financing. If
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additional funds are raised by issuing equity securities, further dilution to
the existing stockholders will result. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its research and
development, acquisition or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its technologies or potential products or other assets.
Accordingly, the inability to obtain such financing could have a material
adverse effect on the Company's business, financial condition and results of
operations.
UNCERTAINTY REGARDING PROTECTION OF PROPRIETARY RIGHTS
The Company relies on a combination of patents, trademarks, trade secrets,
copyrights and a variety of other measures to protect its intellectual property
rights. The Company generally enters into confidentiality and nondisclosure
agreements with its service providers, customers and others, and attempts to
limit access to and distribution of its proprietary rights. The Company also
enters into software license agreements with its customers and others. However,
there can be no assurance that such measures will provide adequate protection
for the Company's trade secrets or other proprietary information, that disputes
with respect to the ownership of its intellectual property rights will not
arise, that the Company's trade secrets or proprietary technology will not
otherwise become known or be independently developed by competitors or that the
Company can otherwise meaningfully protect its intellectual property rights.
There can be no assurance that any patent owned by the Company will not be
invalidated, circumvented or challenged, that the rights granted thereunder will
provide competitive advantages to the Company or that any of the Company's
pending or future patent applications will be issued with the scope of the
claims sought by the Company, if at all. Furthermore, there can be no assurance
that others will not develop similar products or software, duplicate the
Company's products or software or design around the patents owned by the Company
or that third parties will not assert intellectual property infringement claims
against the Company. In addition, there can be no assurance that foreign
intellectual property laws will adequately protect the Company's intellectual
property rights abroad. The failure of the Company to protect its proprietary
rights could have a material adverse effect on its business, financial condition
and results of operations.
Litigation may be necessary to enforce the Company's patents, copyrights and
other intellectual property rights, to protect the Company's trade secrets, to
determine the validity of and scope of the proprietary rights of others or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that infringement, invalidity, right to
use or ownership claims by third parties or claims for indemnification resulting
from infringement claims will not be asserted in the future or that such
assertions will not materially adversely affect the Company's business,
financial condition and results of operations. If any claims or actions are
asserted against the Company, the Company may seek to obtain a license under a
third party's intellectual property rights. There can be no assurance, however,
that a license will be available under reasonable terms or at all. In addition,
should the Company decide to litigate such claims, such litigation could be
extremely expensive and time consuming and could materially adversely affect the
Company's business, financial condition and results of operations, regardless of
the outcome of the litigation.
DEPENDENCE ON KEY PERSONNEL
The Company's future operating results depend in significant part upon the
continued contributions of its key technical and senior management personnel,
many of whom would be difficult to replace. The Company's future operating
results also depend in significant part upon its ability to attract and retain
qualified management, manufacturing, quality assurance, engineering, marketing,
sales and support personnel. Competition for such personnel is intense, and
there can be no assurance that the Company will be successful in attracting or
retaining such personnel. There may be only a limited number of persons with the
requisite skills to serve in these positions and it may be increasingly
difficult for the Company to hire such personnel over time. The loss of any key
employee, the failure of any key employee to perform in his or her current
position, the Company's inability to attract and retain skilled employees as
needed or the inability of the officers and key employees of the Company
16.
<PAGE>
to expand, train and manage the Company's employee base could materially
adversely affect the Company's business, financial condition and results of
operations.
The Company has experienced and may continue to experience employee turnover
due to several factors, including an expanding economy within the geographic
area in which the Company maintains its principal business offices, making it
more difficult for the Company to retain its employees. Due to this and other
factors, the Company has experienced and may continue to experience high levels
of employee turnover, which could adversely impact the Company's business,
financial condition and results of operations. The Company is presently
addressing these issues and will pursue solutions designed to retain its
employees and to provide performance incentives.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates. As a result, in fewer
than three years, computer systems and/or software used by many companies may
need to be upgraded to comply with such "Year 2000" requirements. Significant
uncertainty exists concerning the potential effects associated with such
compliance. Any Year 2000 compliance problem of any of the Company, its
customers or its suppliers could result in a material adverse effect on the
Company's business, financial condition and results of operations.
SUBSTANTIAL LEVERAGE
As a result of the issuance (the "Offering") of $100,000,000 aggregate
principal amount of promissory notes due 2002 (the "Notes") in November 1997,
the Company is highly leveraged. As of September 30, 1997, after giving pro
forma effect to the application of the estimated net proceeds from the Offering,
the Company's total indebtedness and stockholders' equity would have been $100.0
million and $139.1 million, respectively. The Company's ability to make
scheduled payments of the principal of, or interest on, its indebtedness will
depend on its future performance, which is subject to economic, financial,
competitive and other factors beyond its control.
DISCRETIONARY USE OF OFFERING PROCEEDS
The principal purposes of the Offering of Notes are to increase the Company's
capital base and financial flexibility. The Company expects to use the net
proceeds principally to fund acquisitions, to pay down and terminate the
Company's line-of-credit as well as other debt (which together amounted to $19.5
million as of September 30, 1997), and for working capital, capital expenditures
and other general corporate purposes. As of December 31, 1997, an aggregate of
$24.2 million was paid down out of the proceeds of the Offering. However, the
Company has no current specific plans for use of a majority of the net proceeds
of the Offering of Notes. As a consequence, the Company's management will have
the ability to allocate the net proceeds of the Offering of Notes at its
discretion. There can be no assurance that the proceeds will be utilized in a
manner that any securityholder deems optimal or that the proceeds can or will be
invested to yield a significant return upon the completion of the Offering of
Notes. Pending use of the remaining net proceeds, the balance all of which will
be invested in short-term, interest bearing, investment grade obligations for an
indefinite period of time.
LIMITATIONS ON DIVIDENDS
Since its incorporation in 1991, the Company has not declared or paid cash
dividends on its Common Stock, and the Company anticipates that any future
earnings will be retained for investment in its business. Any payment of cash
dividends in the future will be at the discretion of the Company's Board of
Directors and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, extent of indebtedness and
contractual restrictions with respect to the payment of dividends.
17.
<PAGE>
VOLATILITY OF STOCK PRICE
The Company believes that factors such as announcements of developments
related to the Company's business, announcements of technological innovations or
new products or enhancements by the Company or its competitors, developments in
the Asia/Pacific region, sales by competitors, including sales to the Company's
customers, sales of the Company's Common Stock into the public market, including
by members of management, developments in the Company's relationships with its
customers, partners, lenders, distributors and suppliers, shortfalls or changes
in revenues, gross margins, earnings or losses or other financial results that
differ from analysts' expectations (as recently experienced upon announcement of
third quarter results), regulatory developments, fluctuations in results of
operations and general conditions in the Company's market or the markets served
by the Company's customers or the economy, could cause the price of the
Company's Common Stock to fluctuate, perhaps substantially. In recent years the
stock market in general, and the market for shares of small capitalization and
technology stocks in particular, have experienced extreme price fluctuations,
which have often been unrelated to the operating performance of affected
companies. Many companies in the telecommunications industry, including the
Company, have recently experienced historic highs in the market price of their
Common Stock. There can be no assurance that the market price of the Company's
Common Stock will not decline substantially from its historic highs, or
otherwise continue to experience significant fluctuations in the future,
including fluctuations that are unrelated to the Company's performance. Such
fluctuations could materially adversely affect the market price of the Company's
Common Stock.
CONTROL BY EXISTING STOCKHOLDERS; EFFECTS OF CERTAIN ANTI-TAKEOVER PROVISIONS
Members of the Board of Directors and the executive officers of the Company,
together with members of their families and entities that may be deemed
affiliates of or related to such persons or entities, beneficially own
approximately 5% of the outstanding shares of Common Stock of the Company.
Accordingly, these stockholders are able to influence the election of the
members of the Company's Board of Directors and influence the outcome of
corporate actions requiring stockholder approval, such as mergers and
acquisitions. This level of ownership, together with the Company's stockholder
rights agreement, certificate of incorporation, equity incentive plans, bylaws
and Delaware law, may have a significant effect in delaying, deferring or
preventing a change in control of the Company and may adversely affect the
voting and other rights of other holders of Common Stock. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that may be issued in the
future. The issuance of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Although the Company has no present plans to issue shares
of preferred stock, the Board of Directors has preapproved the terms of a Series
A Junior Participating Preferred Stock that may be issued pursuant to the
stockholder rights agreement upon the occurrence of certain triggering events.
In general, the stockholder rights agreement provides a mechanism by which the
Board of Directors and stockholders may act to substantially dilute the share
position of any takeover bidder that acquires 15% or more of the Common Stock.
POSSIBLE ADVERSE EFFECT ON MARKET PRICE FOR COMMON STOCK OF SHARES ELIGIBLE FOR
FUTURE SALE
Sales of the Company's Common Stock into the market could materially
adversely affect the market price of the Company's Common Stock. Shares of
Common Stock sold in the initial public offering in March 1995 and follow-on
offerings in August 1995 and May 1996, 2,134,590 shares registered on a shelf
registration statement on Form S-3 effective in July 1997 covering shares of
Common Stock issued in the acquisitions of Columbia Spectrum Management L.P. and
CRC, 140,000 shares issued in connection with the acquisition of Atlantic
Communication Sciences, Inc., and option shares registered on the Company's
registration statements covering employee compensation plans are also, or will
be in the near future, eligible for immediate and unrestricted sale in the
public market at any time. Substantially all of the other shares of the
Company's Common Stock are not restricted and are freely tradeable in the public
market. The 1,014,311 registered for sale pursuant to this Prospectus will be
freely saleable after the date of this Prospectus.
18.
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Resale
Shares by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock owned by
each of the Selling Stockholders. None of the Selling Stockholders has had
a material relationship with the Company or with Telematics or RTM, as
applicable, within the past three years other than as a result of the ownership
of the Resale Shares or other securities of the Company or of Telematics or RTM,
as applicable; provided, however, that William Perkins and Mark Perkins each
served as Managing Director and as Directors of RTM prior to the acquisition and
Mark Perkins has served as Vice President of P-Com Network Services Limited, a
subsidiary of the Company, since the acquisition; and provided, further that
Daniel N. Carter served as Chairman of the Board, President, Treasurer and
Secretary of Telematics prior to the acquisition and has served as the Vice
President of P-Com Network Services, Inc., a subsidiary of the Company, since
the acquisition. Because the Selling Stockholders may offer all or some of the
Resale Shares which they hold pursuant to the offering contemplated by this
Prospectus and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the Resale Shares, no estimate
can be given as to the amount of Resale Shares that will be held by the Selling
Stockholders after completion of this offering. The Resale Shares offered by
this Prospectus may be offered from time to time by the Selling Stockholders
named below:
<TABLE>
<CAPTION>
Ownership
After Offering/1/
-----------------------
Number
Number of Shares of Shares
Name of Selling Owned Being Number of
Stockholders Prior to Offering Offered Shares Percent
- --------------- ----------------- --------- ---------- -------
<S> <C> <C> <C> <C>
William Robert Perkins, 178,207 178,207 0 0
Mark Robert Perkins,
Mary Perkins, Andrew
William Perkins as trustees
for the Andrew Perkins Trust
William Robert Perkins, 175,372 175,372 0 0
Mark Robert Perkins,
Mary Perkins, Andrew
William Perkins as trustees
for the Mark Perkins Trust
Mark Robert Perkins and 357,870 357,870 0 0
Andrew Williams Perkins
as trustees for the
Perkins Family 1997 Trust
Irene Clayson and Peter 34,401 34,401 0 0
Lewis Clayson as trustees
for the Irene Clayson Interest
in Possession Trust
Mary Perkins 5,900 5,900 0 0
Andrew Perkins 689 689 0 0
</TABLE>
19.
<PAGE>
<TABLE>
<CAPTION>
Ownership
After Offering/1/
-----------------------
Number
Number of Shares of Shares
Name of Selling Owned Being Number of
Stockholders Prior to Offering Offered Shares Percent
- --------------- ----------------- --------- ---------- -------
<S> <C> <C> <C> <C>
Mark Perkins 689 689 0 0
Jacqueline Perkins 689 689 0 0
Mark Robert Perkins and 689 689 0 0
Jacqueline Perkins as trustees
for the Ryan Perkins Trust
Mark Robert Perkins and 689 689 0 0
Jacqueline Perkins as trustees
for the Aimee Perkins Trust
Mark Robert Perkins and 689 689 0 0
Jacqueline Perkins as trustees
for the Kathryn Perkins Trust
Irene Clayson 8,504 8,504 0 0
Peter Clayson 1,763 1,763 0 0
Daniel N. Carter 248,215 248,215 0 0
--------- --------- -- --
Total: 1,014,366 1,014,366 0 0
========= ========= == ==
</TABLE>
- ---------------------
/1/ Based upon 42,747,503 shares of Common Stock outstanding on January 13,
- ---
1998. This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration which
results in an increase in the number of the Registrant's outstanding shares of
Common Stock.
RECENT DEVELOPMENTS
THE ACQUISITIONS.
On November 28, 1997, the Company completed the acquisitions of Telematics,
Inc., a Virginia-based company, ("Telematics") and RT Masts Limited, a United
Kingdom-based company, ("RTM"). Telematics, which was acquired through the
issuance of 248,215 shares of the Company's Common Stock, provides services to
operators of wireless communications systems in the United States. RTM, which
was acquired through the issuance of 766,151 shares of the Company's Common
Stock, provides services to operators of wireless communications systems in
Europe. These acquisitions were accounted for under the pooling of interest
method of accounting.
20.
<PAGE>
Telematics, located in Herndon, Virginia, and RTM, located in Wellingborough,
Northhamptonshire, U.K., supply, install and maintain telecommunications systems
and structures including antennas covering high frequency, medium frequency and
microwave systems. They manage the construction of radio system sites, as well
as construction of towers, and install radios and antennas at system sites.
PLAN OF DISTRIBUTION
The Company will not receive proceeds from the sale of Resale Shares in this
offering. The Resale Shares offered hereby may be sold by the Selling
Stockholders from time to time in transactions in the Nasdaq market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Resale Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Resale Shares for whom such broker-dealers may act
as agents or to whom they sell as principals, or both (which compensation as to
a particular broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if applicable,
the Resale Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the Resale Shares
may not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Resale Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Resale Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Company has advised the Selling Stockholders that, during such time as
they may be engaged in a distribution of the shares of Common Stock included
herein, they must comply with the applicable provisions under Regulation M under
the 1934 Act, ("Regulation M") and, in connection therewith, the Selling
Stockholders may not engage in any stabilization activity in connection with any
securities of the Company, that they must furnish copies of this Prospectus to
each broker-dealer through which the shares of Common Stock included herein may
be offered, and that they may not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any securities of the
Company except as permitted under Regulation M. The Selling Stockholders have
also agreed to inform the Company and broker-dealers through whom sales may be
made hereunder when the distribution of the shares is completed.
Rules 102 and 103 under the 1934 Act prohibits participants in a
distribution from bidding for or purchasing any of the securities that are the
subject of the distribution for an account in which the participant has a
beneficial interest. Rule 104 under the Regulation M governs bids and purchases
made to stabilize the price of a security in connection with a distribution of
the security.
The Resale Shares were originally issued in the Acquisitions pursuant to
exemptions from the registration requirements of the Act provided by either
Section 4(2) thereof or by Regulation S promulgated thereunder. The Company
agreed to register a total of 248,215 of the Resale Shares under the Act. The
Company has no contractual obligation requiring it to register the remaining
766,151 Resale Shares being registered hereunder. The Company has agreed to pay
all fees and expenses incident to the filing of this Registration Statement
other than underwriting discounts, commissions and fees and disbursements of
counsel for the Selling Stockholders.
21.
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California. As of the
date of this Prospectus, attorneys of Brobeck, Phleger & Harrison LLP and family
members thereof beneficially owned an aggregate of approximately 64,000 shares
of the Company's Common Stock.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1996 and
1995 and the related consolidated statements of operations, stockholder's equity
and cash flows for each of the three years in the period ended December 31,
1996, incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 into this Prospectus, have been
incorporated herein in reliance on the report of Price Waterhouse, LLP,
independent accountants, given on the integrity of that firm as experts in
accounting and auditing.
The financial statements of Columbia Spectrum Management ("CSM") as of and for
the years ended December 31, 1996 and 1995, appearing in the Company's Current
Report on Form 8-K filed on March 21, 1997, as amended, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report appearing
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Control Resources Corporation ("CRC") as
of December 31, 1996 and 1995, and for each of the years in the two-year period
ended December 31, 1996, have been incorporated by reference from the Company's
Current Report on Form 8-K filed on June 13, 1997, as amended, into this
Prospectus 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 covering the December 31, 1996
and 1995 financial statements contains an explanatory paragraph that states that
CRC's 1996 losses from operations and net stockholders' deficit raise
substantial doubt about CRC'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.
22.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized statement of all estimated
expenses in connection with the issuance and distribution of the securities
being registered:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee.......... $ 5,105.75
Legal expenses................ 30,000
Accounting fees and expenses.. 10,000
Total...................... $45,105.75
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Article VII of the Registrant's Bylaws provides for
mandatory indemnification of its directors and permissible indemnification of
its officers, employees and other agents to the maximum extent permitted by the
Delaware General Corporation Law. The Registrant has entered into
Indemnification Agreements with its officers and directors which are intended to
provide the Registrant's officers and directors with further indemnification to
the maximum extent permitted by the Delaware General Corporation Law. Reference
is also made to Section 1.10 of the Restated Investor Rights Agreement contained
in Exhibit 4.3 incorporated by reference herein, which contains provisions
indemnifying officers and directors of the Registrant against certain
liabilities. Reference is also made to the Underwriting Agreements entered into
in connection with the Company's three public equity offerings and one
convertible subordinated note offering indemnifying officers and directors of
the Company and other persons against certain liabilities, including those
arising under the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
4.1(1) Form of Common Stock Certificate.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1(2) Securities Purchase Agreement, dated November 17, 1997,
by and among P-Com, Inc., P-Com Field Services Inc.,
Telematics Inc. and Daniel N. Carter.
10.2(2) Share Purchase Agreement, dated October 14, 1997, by and
among P-Com, Inc., P-Com Services (UK) Limited and R T
Masts Limited.
23.1 Consent of Price Waterhouse LLP, Independent
Accountants.
23.2 Consent of Ernst & Young LLP, Independent Accountants.
23.3 Consent of KPMG Peat Marwick LLP, Independent
Accountants.
23.4 Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
- --------------------
(1) Incorporated by reference to identically numbered exhibits included in the
Company's Registration Statement on Form S-1 (File No. 33-88492) declared
effective with the Securities and Exchange Commission on March 2, 1995.
II-2
<PAGE>
(2) Incorporated by reference to the Company's Current Report on Form 8-K filed
on December 10, 1997 (File No. 0-25356).
ITEM 17. UNDERTAKING
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant, Indemnification Agreements
entered into between the Registrant and its officers and directors, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Campbell, State of California on this 20th day of
January, 1998.
P-COM, Inc.
By: /s/ George P. Roberts
------------------------------------
(George P. Roberts)
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints George P. Roberts and Michael J. Sophie,
and each of them singly, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement filed
herewith and any or all amendments to said Registration Statement (including
post-effective amendments and registration statements filed pursuant to Rule 462
and otherwise), and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents the full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as full to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his substitute, may lawfully do
or cause to be done by virtue hereof.
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ George P. Roberts Chairman of the Board and January 20, 1998
- ---------------------------- Chief Executive Officer and Director
(George P. Roberts) (Principal Executive Officer)
/s/ Michael J. Sophie Chief Financial Officer and January 20, 1998
- ---------------------------- Vice President, Finance and
(Michael J. Sophie) Administration
(Principal Accounting and
Financial Officer)
/s/ Gill Cogan Director January 20, 1998
- ----------------------------
(Gill Cogan)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ John A. Hawkins Director January 20, 1998
- -----------------------------
(John A. Hawkins)
/s/ M. Bernard Puckett Director January 20, 1998
- -----------------------------
(M. Bernard Puckett)
/s/ James J. Sobczak Director January 20, 1998
- -----------------------------
(James J. Sobczak)
</TABLE>
II-6
<PAGE>
P-COM, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Ernst & Young LLP, Independent Accountants.
23.3 Consent of KPMG Peat Marwick LLP, Independent Accountants.
23.4 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
II-7
<PAGE>
Exhibit 5.1
January 20, 1998
P-COM, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
Ladies and Gentlemen:
We have acted as counsel to P-COM, Inc. (the "Company"), a Delaware
corporation, in connection with its registration of 1,014,366 shares of Common
Stock (the "Common Stock") as described in the Company's Registration Statement
on Form S-3, filed with the Securities and Exchange Commission under the
Securities Act of 1933. The Common Stock consists of shares that may be offered
by certain stockholders of the Company or by pledgees, donees, transferees or
other successors in interest that receive such shares as a gift, partnership
distribution or other non-sale related transfer (the "Resale Shares").
We are familiar with the corporate proceedings taken by the Company in
connection with the issuance and sale of the Resale Shares. It is our opinion
that the Resale Shares have been duly authorized and are validly issued, fully
paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is part of the registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON, LLP
By: /s/ Warren T. Lazarow
---------------------
Warren T. Lazarow
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated January 22, 1997 (except
for the pooling of interests with Control Resources Corporation and other 1997
acquisitions described in Note 4, which is as of May 29, 1997, and except for
the second paragraph of Note 1 which is as of September 26, 1997) which appears
in the Current Report on 8-K dated October 16, 1997. We also consent to the
reference to us under the heading "Experts."
PRICE WATERHOUSE LLP
San Jose, California
January 16, 1998
<PAGE>
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 (No. 333-_______) and related prospectus of
P-COM, Inc. for the registration of 1,014,366 shares of its common stock, and to
the incorporation by reference therein of our report dated April 14, 1997, with
respect to the financial statements of Columbia Spectrum Management, L.P. as of
and for the years ended December 31, 1996 and 1995, included in P-COM, Inc.'s
March 21, 1997 Current Report on Form 8-K, as amended, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Vienna, VA
January 16, 1998
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Exhibit 23.3
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting
part of this registration statement on Form S-3 of P-COM, Inc. of our report
dated February 7, 1997, relating to the balance sheets of Control Resources
Corporation ("CRC") as of December 31, 1996 and 1995, and the related statements
of operations and (accumulated deficit) retained earnings, and cash flows for
each of the years in the two-year period ended December 31, 1996, which report
appears in the Form 8-K of P-COM, Inc. dated June 13, 1997, as amended. The
report of KPMG Peat Marwick LLP covering the December 31, 1996 and 1995
financial statements contains an explanatory paragraph that states that CRC's
1996 losses from operations and net stockholders' deficit raise substantial
doubt about CRC'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. We also consent to the reference to our firm under the
heading "Experts" in such Prospectus.
KPMG Peat Marwick LLP
Short Hills, New Jersey
January 16, 1998
