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As filed with the Securities and Exchange Commission on June 15, 1999
Registration No. 333-70937
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 5 TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933, as amended
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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)
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3175 S. Winchester Boulevard, Campbell, CA 95008
(408) 866-3666
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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George P. Roberts
Chairman of the Board and Chief Executive Officer
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
(408) 866-3666
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
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Copy 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.
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, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act of 1933, as amended, 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 of 1933, as amended, check the following box and list the
Securities Act of 1933, as amended, 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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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, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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PRELIMINARY PROSPECTUS
(SUBJECT TO COMPLETION, DATED JUNE 15, 1999)
8,000,000 Shares
P-COM, INC.
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COMMON STOCK
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The stockholders of P-COM, Inc. listed on page 2 below are offering
for resale and selling under this prospectus up to 8,000,000 shares of our
common stock.
Our common stock is traded on the Nasdaq National Market (Nasdaq
Symbol: PCMS). On June 9, 1999, the closing price of the common stock was
$4.4062 per share.
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You should carefully consider the risk factors commencing on page 3
before purchasing any of the common stock offered by the selling stockholders.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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The date of this prospectus is _____________, 1999.
The information in this prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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Summary
The common stock to be resold by the selling stockholders pursuant to
this prospectus was issued by us to the selling stockholders in exchange for all
outstanding shares of our Series B preferred stock and will be issued upon
exercise of warrants held by the selling stockholders. The name of each selling
stockholder and the number of shares of common stock and warrants held by it are
set forth in the following table:
<TABLE>
<CAPTION>
Number of Shares of Warrants to Purchase the
Common Stock Following Number of shares of
Beneficially Owned Common Stock Beneficially
Name of Selling Stockholder Prior to Offering Owned Before the Offering
- ----------------------------------- -------------------------- ------------------------------------
<S> <C> <C>
Marshall Capital Management, Inc...... 1,540,438 372,677
Castle Creek Technology Partners LLC.. 1,882,758 455,494
Capital Ventures International........ 1,711,598 414,086
</TABLE>
We develop, manufacture and market systems for the transport of voice
and data between the end user and a location where the information is
transferred onto the broader telecommunications network. Our systems are sold to
the worldwide wireless telecommunications market. Our systems are designed to
satisfy the network requirements of cellular and advanced-feature communications
device services, corporate communications, public utilities and local
governments. We also provide comprehensive network services including system and
program planning and management, consulting regarding the proper path between
radio terminals, installation and network performance monitoring devices. Our
radio systems are sold internationally through strategic partners, providers of
bundled consulting services and telecommunications equipment manufacturers who
resell our products under their brand names and distributors as well as directly
to end-users. Our executive offices are located at 3175 S. Winchester Boulevard,
Campbell, California 95008, and our telephone number is (408) 866-3666.
We issued and sold 15,000 shares of a newly designated Series B
preferred stock and warrants to purchase 1,242,257 shares of common stock, which
we refer to as the old warrants, to the selling stockholders in December 1998
for gross proceeds of $15 million. On June 4, 1999, in accordance with exchange
agreements with the selling stockholders, we exchanged:
. 5,134,795 shares of our common stock for all outstanding shares of
our outstanding Series B Preferred Stock, and
. new warrants having the terms set forth below, which we refer to as
the exchange warrants, for the old warrants.
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Risk Factors
You should carefully consider the risks described below before making
an investment decision.
We may be unable to obtain additional capital needed to operate and grow our
business, which could damage our financial condition and further erode our stock
price
Amendments to our bank credit agreement added covenants that require
that we satisfy our business plan. Our business plan includes provisions for an
infusion of approximately $15 million of additional capital during the second
quarter of 1999. Other future capital requirements will depend upon many
factors, including development of new products and related software tools,
potential acquisitions, maintenance of adequate manufacturing facilities and
contract manufacturing agreements, progress of research and development efforts,
expansion of marketing and sales efforts, and status of competitive products.
Additional financing may not be available in the future on acceptable
terms or at all. The continued existence of a substantial amount of debt could
also severely limit our ability to raise additional financing. In addition,
given the recent price for our common stock, if we raise additional funds by
issuing equity securities, significant dilution to our stockholders could
result.
If adequate funds are not available, we may be required to restructure
or refinance our debt or delay, scale back or eliminate our research and
development, acquisition or manufacturing programs. We may also need to obtain
funds through arrangements with partners or others that may require us to
relinquish rights to certain of our technologies or potential products or other
assets. Our inability to obtain capital, or our ability to obtain additional
capital only upon onerous terms, could materially adversely affect our business,
operating results and financial condition and further erode our stock price.
Due to our stage of development and industry, an investment in our stock is very
risky
We are a highly risky business
Due to our limited operating history and limited resources, among
other factors, profitability or significant revenue growth on a quarterly or
annual basis may not occur in the future. We were founded in August 1991 and
remained in the development stage until October 1993 when commercial shipments
of our first product began. We have not developed a large installed base of our
equipment or the kind of close relationships with a broad base of customers of a
type enjoyed by older more developed companies, which would provide a base of
financial performance from which to launch strategic initiatives and withstand
business reversals. In addition, we have not built up the level of capital
often enjoyed by more established companies, so, from time to time we may face
challenges in financing our continued operation. We may not be able to
successfully address these risks, which would adversely affect our results of
operations and, ultimately, our stock price.
Our stock price is volatile
The stock market in general, and the market for shares of small
capitalization and technology stocks in particular, have experienced extreme
price fluctuations in recent years. These fluctuations have often been
unrelated to the operating performance of affected
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companies. The market price of our common stock may continue to decline
substantially, or otherwise continue to experience significant fluctuations in
the future, sometimes reaching extreme and unexpected lows, including
fluctuations that are unrelated to our performance. During the 52 week period
ending June 9, 1999, the market price of a share of our common stock was as low
as $2 5/16 and as high as $20 3/4. These fluctuations may mean that investors
may not be able to sell our common stock at a favorable price at any given time.
We do not pay dividends
Our bank line-of-credit agreement prohibits us from paying any
dividends on our common stock except dividends paid in shares of our common
stock. Since our incorporation in 1991, we have not declared or paid cash
dividends on our common stock, and we anticipate that any future earnings will
be retained for investment in the business. Thus, the return on an investment
in our common stock will likely be through resale of shares at a price higher
than the price paid for those shares. As indicated above, the market for our
shares may not provide an opportunity to sell our shares at a favorable price at
any given time.
We rely on our existing customers, and it will materially adversely affect our
operating results and financial conditions if they do not support us
A substantial amount of our products and services are purchased by a
limited number of customers
If any of our important customers significantly reduce their purchases
from us, which has been the case during the last twelve months, then this may
materially adversely affect the profitability of our business and our ability to
remain in business. During 1998, one customer, Orange Personal Communications
Ltd., accounted for 23% of our sales and four customers accounted for
approximately 42% of our sales. Six customers accounted for approximately 59% of
the backlog scheduled for shipment in the twelve months subsequent to December
31, 1998.
Our customers may cancel orders
Our customers often enter into purchase orders with us far in advance
of manufacture of the equipment ordered. We have recently experienced several
purchase order cancellations and deferrals. Historically, we have chosen not to
harm our relationships with our customers by enforcing their obligations under
purchase orders when the customer wishes to cancel an order. Cancellations of
orders by customers may, depending upon the timing of the cancellation, leave us
with unsaleable equipment or idle capacity, which would adversely affect our
operating results and financial condition.
We may be required to redeem the common stock issued in the exchange, which
might have a material adverse effect on our business, financial condition and
prospects
If any of the following three events occur, the selling stockholders
can cause us to redeem the common stock issued in the exchange for cash in an
amount in excess of the original issue price:
. we fail to remove any restrictive legend from the stock
certificates representing the common stock owned by a holder,
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. the amended registration statement is not effective by August 13,
1999, or
. the amended registration statement cannot be used by a holder to
resell its common stock for 10 consecutive business days or more
than 20 days in a twelve month period.
The redemption price per share is equal to the higher of $4.00 and the highest
closing bid price for our common stock during the period beginning on the date
of the redemption notice and ending on the redemption date. If all of the
common stock issued in the exchange remains outstanding for redemption and
applicable limits under our credit agreement and Section 160 of the Delaware
General Corporation Law do not limit redemptions, the aggregate amount of
redemption payments would be at least $20,539,180, but could be much higher if
the market price of our stock significantly exceeds $4.00. Making redemption
payments may divert funds away from and thus adversely affect our business,
financial condition and results of operations. If we do not have the funds
available to make redemption payments, we may have to sell key operational
assets or become unable to pay our debts. Either of those events would have a
material adverse effect on our business, financial condition, prospects and
stock price.
If our credit agreement or Section 160 of the Delaware General Corporation Law
prevent redemptions, we may be required to turn fixed or financial assets into
liquid assets or otherwise obtain additional capital, which would materially
adversely affect our business, financial condition and operating results
In the event our credit agreement or DGCL Section 160 prevents
redemptions of the common stock issued in the exchange, we are required to use
our best efforts to take all reasonably necessary actions not prohibited by our
credit agreement and the exchange agreement to permit further redemptions. To
fulfill these requirements, we may need to alter our capital structure by
turning fixed or financial assets into liquid assets or otherwise obtaining
additional capital. Those liquid assets would augment our capital for purposes
of DGCL Section 160 and may permit us to amend our credit agreement to permit
additional payments to the selling stockholders. Any actions to accomplish
these purposes could materially adversely affect our business, operating results
and financial condition.
We may be forced to incur costs to restructure our business to reduce our
expenses, which could materially adversely affect our financial condition,
results of operations and stock price
During 1998, we generated a net loss of approximately $55.3 million.
During 1997 and 1998, operating expenses increased more rapidly than we had
anticipated and these increases also contributed to net losses. Should current
market conditions continue to deteriorate, we may also incur net losses in
subsequent periods. Recently, in response to market declines and poor
performance in our sector generally and our lower than expected performance over
the last several quarters, we introduced measures to reduce operating expenses.
These measures included reductions in our workforce in July, September and
November of 1998. Additionally, management continues to evaluate market
conditions to assess the need to take further action to more closely align our
cost structure with anticipated revenues. Any subsequent actions could result
in additional restructuring charges, reductions of inventory valuations and
provisions for the impairment of long-lived assets, which could materially
adversely affect our financial condition, results of operations and stock price.
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The exchange will result in adverse accounting charges, which will adversely
affect our results of operations
The exchange will lead to an accounting charge to shareholders' equity
of approximately $11.5 million in the fiscal quarter ending June 30, 1999, which
will materially adversely affect our financial condition and results of
operations. This charge and other future charges relating to the redemption of
the common stock will materially adversely affect our earnings per share which
may affect the market price of our common stock both currently and in future
periods.
When our large fixed costs combine with significant fluctuations in our sales,
large fluctuations in our results of operations may occur which could adversely
affect our stock price
A material portion of our significant expenses are fixed and difficult
to reduce, which magnifies the effects of any revenue shortfall. In addition,
to prepare for the future, we must continue to heavily invest resources in:
. our acquired and new businesses,
. the development of new products and technologies,
. the evaluation of these products,
. expansion into new geographic markets, and
. our plant and equipment, inventory, personnel and other items, in
order to efficiently produce these products and to provide
necessary marketing and administrative service and support.
As such, in addition to our fixed costs, our expenses will be increased by
start-up costs associated with the initial production and installation of these
new products.
We experience significant fluctuations in sales, gross margins and
operating results. Our results of operations have also been and will continue
to be influenced by competitive factors, including pricing, availability and
demand for other competitive products and services, which are difficult for us
to forecast, and have materially adversely affected our results of operations
and financial condition and may continue to do so. Because of our inability to
predict customer orders, delays, deferrals and cancellations, we may not be able
to achieve or maintain our current sales levels. We believe that period-to-
period comparisons are thus not necessarily meaningful and should not be relied
upon as indications of future performance. Because of all of the foregoing
factors, in some future quarter or quarters, revenues will be lower than
expected and our operating results and financial condition will be materially
adversely affected. In addition, to the extent our results of operations are
below those projected by public market analysts, the price of our common stock
may continue to be materially adversely affected by this discrepancy.
We may be unable to become profitable if the selling prices of our products and
services decline over time
We believe that average selling prices and possibly gross margins for
our systems and services will decline over time. If we are unable to offset
declining average selling prices by comparable cost savings, our gross margins
will decline, and our results or operations and financial condition would be
adversely affected. Reasons for that decline in average selling prices include
the maturation of our systems, the effect of volume price discounts in existing
and
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future contracts and the intensification of competition. To offset declining
average selling prices, we believe we must take a number of steps, including:
. successfully introducing and selling new systems on a timely basis;
. developing new products that incorporate advanced software and
other features that can be sold at higher average selling prices;
and
. reducing the costs of our systems through contract manufacturing,
design improvements and component cost reduction, among other
actions.
If we cannot develop new products in a timely manner, or if our new
products fail to achieve customer acceptance or do not generate higher average
selling prices, then we would be unable to offset declining average selling
prices.
We depend on contract manufacturers and limited sources of supply and, if they
fail us, production delays could damage our customer relationships
Our internal manufacturing capacity is very limited, and certain
components, subassemblies and services necessary for the manufacture and
production of our systems are obtained from a sole supplier or a limited group
of suppliers. As a result, we have reduced control over the price, timely
delivery, reliability and quality of finished products, components and
subassemblies. We have experienced problems in the timely delivery and quantity
of products and certain components and subassemblies from vendors. We expect to
rely increasingly on these contract manufacturers and outside vendors in the
future, and they may prove undependable, stop doing business with us, or go out
of business. Due to the complexity of our products, finding and educating
additional or replacement vendors may be expensive and take considerable time.
Our internal manufacturing capacity and that of our contract manufacturers may
be insufficient to fulfill our orders, and we may be unable to obtain timely
deliveries of components and subassemblies of acceptable quality. Our failure
to manufacture, assemble and ship systems and meet customer demands on a timely
and cost-effective basis could damage relationships with customers and our
business.
If we are successful in growing our business, we may be unable to manage and
integrate the expanded operations associated with revenue growth, which may
increase costs and hurt profitability
Our prior expansion has strained and continues to strain our
management, financial resources, manufacturing capacity and other resources and
has disrupted our normal business operations. Our ability to manage any
possible future growth may depend upon significant expansion of our
manufacturing, accounting and other internal management systems and the
implementation of a variety of systems, procedures and controls, all of which
would involve expenditures in advance of increased sales. In particular, if our
business grows, we must successfully manage overhead expenses and inventories,
develop, introduce and market new products, manage and train our employee base,
integrate and coordinate our geographically and ethnically diverse workforce and
the monitor third party manufacturers and suppliers. We have in the past and
may continue to experience significant problems in these areas.
If our business grows, any failure to efficiently coordinate and
improve systems, procedures and controls, including improved inventory control
and coordination with our subsidiaries, could cause continued inefficiencies,
additional operational complexities and expenses, greater risk of billing
delays, inventory write-downs and financial reporting
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difficulties. Those problems could impact our profitability and our ability to
effectively manage our business.
We may have difficulty integrating and managing the businesses we have acquired,
which may increase our costs and divert resources from our business
Since April 1996, we have acquired nine complementary companies and
businesses. We have encountered or expect to encounter the following problems
relating to integration and management of these companies:
. difficulty of combining . impairment of relationships with
operations and assimilating and customers as a result of
retaining personnel of acquired integration of new personnel;
companies;
. inability of management to maximize . risks of entering markets in which
financial and strategic position we have no or limited direct prior
through integration of acquired experience.
businesses; and
Overcoming existing and potential problems may entail increased costs,
additional investment and diversion of management attention and other resources,
or require divestment of one or more business units, which may adversely affect
our business, financial condition and operating results. Several of our
acquisitions have not worked out as originally anticipated and, as a result, we
have written off assets of several acquired companies. See - "We may be unable
to successfully acquire new businesses needed to effectively compete, or to make
those businesses pay off once acquired which could impact our customer base or
workforce and hurt our business."
We may be unable to successfully acquire new businesses needed to effectively
compete, or to make those businesses pay off once acquired which could impact
our customer base or workforce and hurt our business
As part of our overall strategy, we plan to continue acquisitions of
or investments in complementary companies, products or technologies and to
continue entering into joint ventures and strategic alliances with other
companies. We compete for acquisition and expansion opportunities against many
entities that have substantially greater resources. Our success in future
acquisition transactions may, therefore, be limited. We also may not be able to
successfully identify suitable candidates, pay for or complete acquisitions, or
expand into new markets. Once integrated, acquired businesses may not achieve
levels of revenues, profitability, or productivity comparable to our existing
business, or the stand alone acquired company, or otherwise perform as expected.
Also, as commonly occurs with mergers of technology companies during
the pre-merger and integration phases, aggressive competitors may try to attract
our customers and to recruit key employees. If we proceed with acquiring
companies through the payment of cash as consideration, a substantial portion of
our available cash could be used to consummate those acquisitions, as was the
case with the acquisition of the Cylink Wireless Group. The occurrence of any
of these events could impact our customer base or workforce and hurt our
business.
Accounting charges related to acquisitions may decrease future earnings
Many business acquisitions must be accounted for as purchase business
combinations for financial reporting purposes. Attractive acquisition
candidates are high
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technology companies which tend to have small amounts of tangible assets and, as
a result, our acquisition of such companies would result in significant
goodwill. If acquired, these businesses would typically result in substantial
future charges related to the amortization of that goodwill. All of our past
acquisitions to date, except the acquisitions of Control Resources Corporation,
RT Masts Limited and Telematics, Inc., have been accounted for as purchase
business combinations, resulting in a significant amount of goodwill being
amortized. Amortization expenses adversely affect our financial results.
If our results of operations are inadequate, we may have difficulty servicing
our debt, which could cause a default and acceleration of repayment of our debts
As of March 31, 1999, our total indebtedness including current
liabilities was approximately $157.2 million and our stockholders' equity was
approximately $133.3 million. Our ability to make scheduled payments of the
principal and interest on our indebtedness will depend on our future
performance, which is subject in part to economic, financial, competitive and
other factors beyond our control. We may be unable to make payments on or
restructure or refinance our debt in the future, if necessary, which could lead
to a default under our credit agreement and note indenture and acceleration of
repayments of the debts thereunder.
In addition, at various times since June 30, 1998, our bank has
amended our line of credit to prevent violations with respect to several
financial covenants. If we experience similar covenant violations in the future
and are unable to adequately remedy them through amendments or otherwise, those
violations will trigger cross defaults on the outstanding 4 1/4% convertible
promissory notes and other debt instruments and accelerate repayment of our
debts.
Our customers may not pay us on time, leaving us short of funds needed to
operate our business
We may in certain circumstances be unable to enforce a policy of
receiving payment within a limited number of days of issuing bills. We have had
difficulties in the past in receiving payment in accordance with our policies,
particularly from customers in the early phases of business development which
are awaiting financing to fund their expansion and from customers outside of the
United States. The outstanding level of our accounts receivable relative to our
sales has also recently increased. We have in the past and may continue from
time to time to sell our receivables, as part of an overall customer financing
program. However, we may not be able to locate parties to purchase our
receivables on acceptable terms or at all. Any inability to timely collect or
sell our receivables could cause us to be short of cash to fund operations and
could have a material adverse effect on our business, financial condition and
results of operations.
We may experience problems with product quality, performance and reliability,
which may damage our customer relationships and adversely affect our business,
condition and results of operations
We have limited experience in producing and manufacturing systems and
contracting for this manufacture. Our customers also require very demanding
specifications for quality, performance and reliability. As a consequence,
problems may occur with respect to the
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specifications for our systems or related software tools. If those problems
occur, we could experience increased costs, delays, cancellations or
reschedulings of orders or shipments, delays in collections of accounts
receivable and product returns and discounts. In addition, the failure of any of
our facilities to maintain or attain quality certification by the International
Standards Organization could adversely affect our sales and sales growth. If any
of these events occur, they might erode customer confidence and adversely impact
our business, financial condition and results of operations.
The market for our products may not grow fast enough to support our level of
investment, adversely affecting revenues and profitability
Our future operating results depend upon the continued growth and
increased availability and acceptance of advanced radio-based wireless
telecommunications systems and services in the United States and
internationally. The volume and variety of and the markets for and acceptance
of wireless telecommunications systems and services may not continue to grow as
anticipated. Because these markets are relatively new, predicting which market
segments will develop and at what rate they will grow is difficult. We have
recently invested additional significant time and resources in the development
of new products. If the market for these new products and the market for
related services for our systems fail to grow, or grow more slowly than
anticipated, revenue will also fail to grow, adversely affecting our results of
operations.
We may be unable to compete successfully for customers with either competitors
offering technologies similar to ours or with alternative technologies, which
could adversely affect our business condition and results of operations
Our wireless-based radio systems compete with other wireless
telecommunications products and alternative telecommunications transmission
media, including copper and fiber optic cable. We are experiencing intense
competition worldwide from a number of leading telecommunications companies.
Those companies offer a variety of competitive products and services and broader
telecommunications product lines, which makes us more vulnerable to shifts in
technology and customer preferences. Many of these companies have greater
installed bases, financial resources and production, marketing, manufacturing,
engineering and other capabilities than we do. We face 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.
Two of our primary competitors are Ericsson and Digital Microwave.
Ericsson is a formidable competitor for us because they provide both consulting
services and equipment they manufacture to customers as complete
telecommunications solutions. Ericsson's combined consulting and product
approach insulates them from competition for sales of products because, in order
for customers to obtain the complete solution, Ericsson requires them to
purchase the product from Ericsson, which completely forecloses our opportunity
to sell products to the customer. In contrast, Digital Microwave is a product
manufacturer like us, and competes directly against us for product sales to
customers, which leads to downward pressure on prices we can charge for our
products. If we are unable to successfully compete for customers, future
growth, revenues and profitability would be adversely affected.
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Failure to respond to rapid technological change or introduce new products in a
timely manner may limit our revenue growth and adversely impact our financial
condition and results of operations
Rapid technological change, frequent new product introductions and
enhancements, product obsolescence, changes in end-user requirements and
evolving industry standards characterize the communications market. Our ability
to compete in this market will depend upon successful development, introduction
and sale of new systems and enhancements and related software tools, on a timely
and cost-effective basis, in response to changing customer requirements. We
have experienced and continue to experience delays in customer procurement and
in completing development and introduction of new systems and related software
tools, including products acquired in acquisitions. Moreover, we may not be
successful in selecting, developing, manufacturing and marketing new systems or
enhancements or related software tools. Any inability to rapidly introduce, in
a timely manner, new systems, enhancements or related software tools could have
a material adverse effect on our financial results and limit future growth.
We have extensive international operations, in more volatile markets than the
United States, and changes in these markets may undermine our business there
In doing business in international markets, we face economic,
political, regulatory, logistical, legal, financial and business environments
and foreign currency fluctuations that are more volatile than those commonly
experienced in the United States. Most of our sales to date have been made to
customers located outside of the United States. We anticipate that
international sales will continue to account for a majority of our sales for the
foreseeable future. Because of the more volatile nature of these markets, the
basis for our business in these markets may be frequently jeopardized,
materially and adversely affecting our operations in these countries and our
overall profitability, revenues and growth.
We are subject to extensive government regulation, which may change and harm
our business
We operate in a constantly changing regulatory environment. Radio
communications are extensively regulated by the United States, foreign laws and
international treaties. Our 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. Regulatory changes, which are affected by political, economic and
technical factors, could significantly impact our operations by restricting our
development efforts and those of our customers. Many of our competitors have
broader telecommunications product lines, which makes us more vulnerable than
they are to regulatory changes that shift business from one product to another.
As a result, those regulatory changes could make current systems obsolete, favor
our competitors or increase competition. Any of those regulatory changes,
including changes in the allocation of available spectrum or changes that
require us to modify our systems and services, could prove costly and thus
affect profitability and performance.
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We may be the subject of additional class action suits, which would divert
significant resources away from our business
We are a defendant in a consolidated class action lawsuit in state
court. An unfavorable outcome could have a material adverse effect on our
prospects and financial condition. Even if the litigation is resolved in our
favor, the defense of that litigation will entail considerable cost and
diversion of efforts of management, either of which are likely to adversely
affect our results of operations.
We may be unable to protect our proprietary rights, permitting competitors to
duplicate our products and services which could have a material adverse effect
on our competitive market position and business
We rely on a combination of patents, trademarks, trade secrets,
copyrights and other measures to protect our intellectual property rights.
However, these measures may not provide adequate protection for our trade
secrets or other proprietary information. Any of our patents could be
invalidated, circumvented or challenged, or may not provide competitive
advantages to us. In addition, foreign intellectual property laws may not
adequately protect our intellectual property rights abroad. Any failure or
inability to protect proprietary rights could have a material adverse effect on
our competitive market position and business.
Even if our intellectual property rights are adequately protected,
litigation may also be necessary to enforce these rights, to protect our trade
secrets, to determine the validity and scope of proprietary rights of others or
to defend against claims of infringement. A variety of third parties have sent
correspondence to the former owner of the Cylink Wireless Group in which they
allege that the Cylink Wireless Group's products may be infringing their
intellectual property rights, but none of these third parties has ever taken any
further action with regard to these allegations. We recently acquired Cylink.
Therefore, any intellectual property litigation based upon those allegations
could result in substantial costs and diversion of management attention and
resources, and could prevent us from selling certain products or require us to
license technology to continue selling those products. Licenses to any of that
technology may not be available on acceptable terms or at all. Our inability to
sell those products, or our incurring high licensing costs, would adversely
affect our business, financial condition and operating results.
Our results may suffer if we are unable to attract and retain qualified
management and technical personnel
Our highly technical business depends upon the continued contributions
of key technical and senior management personnel, many of whom would be
difficult to replace. Competition for qualified management, manufacturing,
quality assurance, engineering, marketing, sales and support personnel is
intense in our industry and geographic areas, and we may not be successful in
attracting or retaining those personnel. We experience high employee turnover
which is disruptive and could adversely impact our business. The loss, or
failure to perform, of any key employee, could materially adversely affect our
performance, customer relations and profitability.
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<PAGE>
Our operations and business could be disrupted and our financial condition and
results of operations could be adversely affected if our systems, products or
suppliers are not year 2000 ready
The inability of our products to properly manage and manipulate data
relating to the year 2000 could result in increased warranty costs, customer
dissatisfaction issues, potential lawsuits and other material costs and
liabilities. The failure of our internal systems to achieve year 2000 readiness
could result in a material disruption of our operations. Any failure of the
internal systems or products of our single source or large volume suppliers
related to the year 2000 could have a material adverse effect on our business,
financial condition and results of operations.
Our board has the power to reject offers to acquire shares of our common stock
in a change of control transaction, which may prevent our stockholders from
having the opportunity to accept those offers and discourage certain offers for
shares of our common stock
The following factors give our board of directors the power to reject
acquisition proposals without any input or consideration of these proposals by
our stockholders:
. concentration of share ownership in our board of directors and
officers,
. our stockholder rights agreement,
. our certificate of incorporation and bylaws,
. our equity incentive plans, and
. Delaware law.
As a result of these factors, our board of directors could
significantly delay, defer or prevent a change in control transaction involving
P-Com, even if holders of our common stock may want the transaction to occur.
Thus, these factors may adversely affect the voting and other rights of other
holders of common stock, and prevent stockholders from receiving and accepting
offers to acquire their shares that the board deems not to be in the best
interest of our stockholders. In addition, the power of the board to reject
those offers may discourage certain third parties from making these offers. See
"Description of Our Capital Stock-Rights Agreement."
We implemented an option cancellation/regrant program in July 1998, which may be
dilutive of our outstanding common stock
On July 15, 1998, we implemented an option cancellation/regrant
program for all of our employees, excluding our executive officers and
directors. Pursuant to that program, each participant was given the opportunity
to surrender his or her outstanding options with exercise prices in excess of
$5.813 per share for a new option grant for the same number of shares but with
an exercise price of $5.813 per share. Options for a total of 2,745,000 shares
with a weighted average exercise price of $16.45 per share were surrendered for
cancellation and new options for the same number of shares were granted with an
exercise price of $5.813 per share. As a result, if these new options were
exercised using the net exercise provision, they could receive more shares of
common stock than they otherwise would have if these options were not
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<PAGE>
regranted at an exercise price of $5.813 per share. Therefore, our option
cancellation/regrant program may dilute our outstanding common stock.
Relying on results anticipated in forward-looking statements could cause you to
incorrectly assess the risks and uncertainties in investing in our stock because
our actual results could differ materially from those anticipated in forward-
locking statements contained in this prospectus
This prospectus also contains "forward-looking" statements that
involve risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including the risks faced by us described above and elsewhere
in this prospectus.
We may face other risks not described in the foregoing risk factors which may
impair our business operations
The risks and uncertainties described in the foregoing risk factors
may not be the only ones facing us. Additional risks and uncertainties not
presently known to us may also impair our business operations. If any of the
following risks actually occur, our business, financial condition and results of
operations could be materially adversely affected. In this case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public from our web site at http://p-com.com or at the SEC's web site at
http://www.sec.gov.
This prospectus is part of a registration statement (Registration No.
333-70937) we filed with the SEC. The SEC allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and later information filed with the SEC will update and supersede
this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13a, 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until the selling stockholders sell
all of the shares of common stock being registered for resale by the selling
stockholders or until the shares can be sold without being so registered:
(1) our Annual Report on Form 10-K for the year ended December 31, 1998,
filed as of April 15, 1999, and amended as of June 14, 1999;
(2) our quarterly report on Form 10-Q for the quarter ended March 31,
1999, filed as of May 17, 1999, and amended as of June 14, 1999;
(3) our current reports on Form 8-K filed as of January 4, 1999 (two
separate filings), January 29, 1999, February 3, 1999, April 19, 1999, April 22,
1999, April 23, 1999 and June 8, 1999, and on Form 8-K/A filed as of January 6,
1999 and April 30, 1999;
(4) the description of our common stock and Series A preferred stock
contained in our registration statements on Form 8-A filed as of January 12,
1995 and on Form 8-A/A filed as of February 16, 1995, October 9, 1997, December
22, 1998 and December 24, 1998; and
(5) all future reports and other documents filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated
by reference herein and to be a part of this prospectus from the date of filing
of each of the reports and documents. Any statement incorporated herein may
modify or supersede information or statements in this prospectus.
Upon request, we will provide without charge a copy of this
prospectus, and a copy of any and all of the information that has been or may be
incorporated by reference in this prospectus. Requests for these copies should
be directed to Corporate Secretary, P-Com, Inc., 3175 S. Winchester Boulevard,
Campbell, California 95008 (telephone (408) 866-3666).
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted.
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<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock by the selling stockholders.
DIVIDEND POLICY
Our credit agreement prohibits us from paying any dividend on our
common stock other than dividends paid in shares of our common stock. We
currently anticipate that we will retain any available funds for use in the
operation of its business, and we do not anticipate paying any cash dividends in
the foreseeable future.
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THE EXCHANGE OF COMMON STOCK FOR SERIES B PREFERRED STOCK
On June 4, 1999, we exchanged 5,134,795 shares of our common stock for
all 15,000 shares of our outstanding Series B Preferred Stock, such that no
shares of Series B preferred stock remain outstanding. We also exchanged
outstanding warrants to purchase 1,242,257 shares of common stock, which were
held by the selling stockholders, for new warrants to purchase 1,242,257 shares
of common stock having the terms set forth below.
Registration of resale of common stock. In connection with the
exchange, we and the holders agreed to other matters described below. We agreed
to register the 5,134,795 shares of common stock exchanged for the Series B
preferred stock held by holders and the 1,242,257 shares of common stock subject
to the warrants by amending the registration statement on Form S-3 that we
originally filed on January 21, 1999. We agreed to file this amendment by June
11, 1999, and to get the registration statement declared effective by July 19,
1999.
Separately, upon the effectiveness of the amended registration
statement, provided that that effectiveness occurs on or before July 19, 1999,
the holders will waive our obligation to make payments to the holders because
the registration statement was not effective on April 22, 1999 in respect to all
dates after June 4, 1999. However, if the amended registration statement is not
effective by July 19, 1999, we will be obligated to make payments to the holders
because the registration statement was not effective on April 22, 1999 in
respect to all dates after June 4, 1999. For the period beginning June 4, 1999
and ending on July 19, 1999.
Waiver of certain liabilities and restrictions. In connection with
this exchange, the holders released us from certain liabilities and restrictions
relating to the Series B preferred stock. Specifically, the holders:
. forgave all of accrued premium through the date of the exchange;
. waived the payments we owed through the date of the exchange
because the registration statement seeking to register for resale
by the holders the common shares issuable in respect of the Series
B preferred stock was not effective on April 22, 1999;
. waived all consequences of our failure to solicit by proxy the
shareholder approval needed to issue more than 8,663,895 shares of
common stock upon conversion of the Series B preferred stock and
exercise of the warrants;
. waived violations of the Series B preferred stock financing
documents with respect to our failure to timely file Annual Report
on Form 10-K for the year ended December 31, 1998;
. waived a requirement that we make certain payments to the holders
in shares of Series B preferred stock; and
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<PAGE>
. waive any cash payments that we might otherwise be required to make
to the holders because of events designated as "Override Election
Events" in the certificate of designations for the Series B
preferred stock which occurred prior to the date of the exchange.
Issuance of securities; restriction on filing new registration
statements. In addition, the holders waived the restrictions placed on us with
respect to new issuances of securities to others before December 21, 1999 so
long as each holder may participate in each new issuance in an amount up to
$3,000,000 and we neither agree to file, nor actually file, a registration
statement for any other securities on any date that is not at least twenty days
after the amended registration statement is declared effective.
Redemption right. In the event that:
. we fail to remove any restrictive legend from the stock
certificates representing the common stock owned by a holder,
. the amended registration statement is not effective by August 13,
1999, or
. the amended registration statement cannot be used by a holder to
resell its common stock for 10 consecutive business days or more
than 20 days in a twelve month period,
the relevant holders will have the right to the right to have their common stock
redeemed at the higher of $4.00 per share or the highest closing price during
the period beginning on the date of the holder's notice to us that it is
electing to redeem the stock to the date on which we redeem their stock. We
must amend our bank credit agreement by June 18, 1999 to facilitate this
redemption right.
In the event our credit agreement or Section 160 of the Delaware
General Corporation Law, which is also known as DGCL Section 160, prevents
redemptions of the common stock issued in the exchange, we are required to use
our best efforts to take all reasonably necessary actions not prohibited by our
credit agreement and the exchange agreement to permit further redemptions. DGCL
Section 160 prohibits a corporation from redeeming its shares for cash if the
capital of the corporation is impaired or if that redemption would result in the
impairment of the capital of the corporation. Once amended in accordance with
the exchange agreement, we expect that our credit agreement permits redemptions
up to a limit of $5 million in redemption payments.
To fulfill this best efforts requirement, we may need to alter our
capital structure by turning fixed or financial assets into liquid assets or
otherwise obtaining additional capital. Those liquid assets would augment our
capital for purposes of DGCL Section 160 and may permit us to amend our credit
agreement to permit additional redemptions. To fulfill these requirements, we
may need to alter our capital structure by turning fixed or financial assets
into liquid assets or otherwise obtaining additional capital. Those liquid
assets would augment our capital for purposes of DGCL Section 160 and may permit
us to amend our credit agreement to permit additional payments to the selling
stockholders. Any actions to accomplish these
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<PAGE>
purposes could materially adversely affect our business, operating results and
financial condition.
Any inability to redeem the shares of common stock issued in the
exchange after a redemption notice is given, including inabilities due to our
credit agreement or DGCL Section 160, shall be considered a breach of our
obligation to redeem the holders' common stock, and each holder shall have all
rights and remedies otherwise available to them.
Accounting Charges. The exchange will lead to an accounting charge to
shareholders' equity of approximately $11.5 million in the fiscal quarter ending
June 30, 1999, which will materially adversely affect our financial condition
and results of operations. This charge and other future charges relating to the
redemption of the common stock will materially adversely affect our earnings per
share which may affect the market price of our common stock both currently and
in future periods.
Anti-Dilution Provisions in our Convertible Notes. The exchange will
result in an anti-dilution adjustment to our 4 1/4% convertible promissory
notes, which will result in additional shares of common stock being issued upon
conversion of the notes. In addition, exercise of the new warrants at an
exercise price less than the current market price (as described below) may cause
an anti-dilution adjustment with respect to the conversion price of our 4 1/4%
convertible promissory notes, although we do not believe this to be the case.
Specifically, the conversion price of the notes is subject to anti-dilution
adjustment if we sell common stock or securities initially convertible into or
exercisable for common stock, excluding certain issuances such as common stock
issued under employee, director or consultant benefit plans, at a price per
share less than the conversion price then in effect, such that the adjusted
exercise price will be equal to:
. the conversion price in effect immediately prior to the issuance,
multiplied by
. the sum of
. the number of outstanding shares of our common stock
immediately prior to the issuance, and
. the number of shares of common stock the consideration
received for that stock issuance would purchase at the
current market price (as set forth below);
divided by
. the sum of
. number of shares of our common stock outstanding after the
issuance, and
. the number of shares common stock actually issued.
For purposes of the notes, the current market price is defined as the
average of the last sale price of our common stock on the 30 consecutive
business days immediately preceding the relevant issuance of common stock.
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<PAGE>
WARRANTS
The new warrants are immediately exercisable until December 22, 2003.
The warrants are exercisable by payment of the exercise price or by net
exercise, in which shares of our common stock having a market value equal to the
exercise price are not issued to the warrant holder upon exercise of the warrant
but instead are withheld by us to pay the exercise price. The exercise price
for the common stock underlying the warrant is $3.00 per share, subject to:
. adjustment to protect against dilution as described below, and
. re-set on June 4, 2000 to the average of the closing bid prices for
our common stock on the ten consecutive trading days immediately
preceding June 4, 2000, if that re-set will result in a lower
exercise price.
Specifically, the conversion price of the warrants is subject to anti-
dilution adjustment if we sell common stock or securities convertible into or
exercisable for common stock, excluding certain issuances such as common stock
issued under employee, director or consultant benefit plans, at a price per
share less than the conversion price then in effect, which initially shall be
$3.00 per share, such that the adjusted exercise price will be equal to:
. the exercise price in effect immediately prior to the issuance,
multiplied by
. the sum of
. the number of outstanding shares of our common stock
immediately prior to the issuance, and
. the number obtained when the total consideration received by
us in exchange for the stock issued is divided by the greater
of the conversion price then in effect or the market price on
the day prior to the issuance,
divided by
. the number of shares of our common stock outstanding after the
issuance plus the number of shares deemed outstanding by reason of
our issuance of options or convertible securities exercisable or
convertible at less than the option price in effect at the time of
issuance of those options or convertible securities.
In addition, with respect to any securities we issue that are
convertible into or exercisable for our common stock in accordance with a
fluctuating or re-setting conversion or exercise price or exchange ratio, the
anti-dilution adjustment described above will be made on the date of issuance of
those securities as though:
. all holding periods and other conditions to the discounts contained
in the securities have been satisfied, and
. the market price of our common stock on the date of exercise,
conversion or exchange of the securities was 80% of the market
price of our common stock on the date the securities were issued.
If there is a change at any time in:
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<PAGE>
. the amount of additional consideration payable to us upon exercise
of the securities, or
. the rate at which the securities are convertible into our common
stock, other than changes in such rate by reason of provisions
designed to protect against dilution,
the exercise price of the warrants shall be readjusted to the exercise price
that would have been in effect had such change been in effect at the time the
securities were issued. This adjustments described in this paragraph will not
be made with respect to securities issued under employee, director or consultant
benefit plans so long as the issuance of the securities is approved by a
majority of our non-employee directors.
The number of shares issuable upon exercise of the warrants will
increase if we issue securities for consideration that is equivalent to a
greater than 15% discount from the market price of our common stock.
Specifically, with respect to the first $20,000,000 of proceeds received by us
as consideration for the issuance of securities after June 4, 1999, if the
actual price per share received by us is more than 15% below the average price
equal to the average of the closing trade prices for the (15) consecutive
trading days ending on the date of such issuance, then the number of shares
issuable upon exercise of each of these three warrants shall be increased as
follows:
. in addition to any other increase required, for each percentage
point above 15% but less than or equal to 20% by which the actual
price is below the average price, the number of shares issuable
upon exercise of each warrant shall be increased by 10,000 shares;
and
. in addition to any other increase required, for each percentage
point above 20% but less than or equal to 25% by which the actual
price is below the average price, the number of shares issuable
upon exercise of each warrant shall be increased by 15,000 shares;
and
. in addition to any other increase required, for each percentage
point above 25% by which the actual price is below the average
price, the number of shares issuable upon exercise of each warrant
shall be increased by twenty thousand (20,000) shares.
The actual price will be equal to the valuation per share of the securities
issued by us, with such valuation to be determined by an investment banking firm
acceptable to us and the holder.
In the event we merge with any other company, the warrantholders are
entitled to the choices described below as to the consideration they will
receive in the merger or consolidation. If we merge with a public company
meeting the threshold criteria set forth above and our common stock will be
exchanged for common stock of the acquiror or its parent company, the warrant
holders will be entitled to receive in the merger the consideration they would
have received had they exercised their warrants the day before the public
announcement of the merger at the exercise price in effect on that day. If we
merge with a private company or a
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<PAGE>
public company not meeting the threshold criteria, the warrant holders will be
entitled, at their option,
. to retain their warrants, which will thereafter convert into common
stock of the surviving company, or
. receive either
. the consideration they would have received had they exercised
their warrants the day before the public announcement of the
merger or
. 125% of the Black-Scholes amount.
The Black-Scholes amount is the value of an option to purchase one
share of common stock as calculated on the Bloomberg online page using the
following values:
. the market price on the day prior to the date of notice of the
transaction,
. volatility equal to the historical 100 day volatility of the our
common stock during the period preceding the date of notice of the
transaction,
. a risk free interest rate equal to the rate on U.S. treasury bill
or treasury notes having a maturity similar to the term of the
warrant on the date of the notice of the transaction, and
. an exercise price equal to the exercise price on the date of notice
of the transaction.
If we declare or make a distribution of assets to our common
stockholders, then the warrant holders will be entitled to exercise their
warrants and receive the amount of those assets that the holder would have been
entitled to had it been a common stockholder on the record date for determining
shares entitled to the distribution. We have agreed to use our best efforts to
list the common stock issuable upon exercise of the warrants on a major
securities exchange so long as our other common stock is so listed.
SELLING STOCKHOLDERS
The selling stockholders, Marshall Capital Management, Inc., Castle
Creek Technology Partners LLC and Capital Ventures International acquired shares
of Series B preferred stock and warrants on December 22, 1998 pursuant to set of
financing agreements. The selling stockholders acquired shares of our common
stock and new warrants on June 4, 1999 pursuant to exchange agreements between
us and each of them. None of the selling stockholders own any other shares of
preferred stock of P-Com, and no selling stockholder has held any office or
position, or had any other material relationship with P-Com within the past
three years. The number of shares of common stock and warrants owned by each
selling stockholder is set forth in the following table:
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<PAGE>
<TABLE>
<CAPTION>
Number of
Shares of Number of Number of Total Percent-
Series B Shares of Shares of Number age of
Preferred Common Common of Shares Outstan-
Stock Stock Stock of ding
Beneficially Beneficially Issuable Common Common
Owned Owned upon Stock Stock as
Prior to the After the Exercise of held by of June
Name of Holder Exchange Exchange Warrants(1) Holder(2) 4, 1999
- -------------- -------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Marshall Capital 4,500 1,540,438 372,677 1,913,115 3.46%
Management, Inc..........
Castle Creek Technology 5,500 1,882,758 455,494 2,338,252 4.23%
Partners LLC.............
Capital Ventures 5,000 1,711,598 414,086 2,125,684 3.84%
International............
</TABLE>
(1) The number of shares issuable upon exercise of the new warrants
set forth above assumes that no adjustment is made due to the issuance of common
stock at a discount to market price of greater than 15%, as described below.
(2) This number assumes exercise of the new warrants on June 4, 1999.
To help ensure our compliance with the registration rights agreement
and the exchange agreements, we have chosen to register for resale by the
selling stockholders 8 million shares of common stock on behalf of the selling
stockholders. If the warrants were exercised as of June 9, 1999, only 6,377,051
shares of common stock would be issued and available for resale under this
prospectus. However, we cannot determine the exact number of shares of common
stock that we will ultimately issue upon exercise of the warrants because the
number of shares issuable upon exercise of the warrants may increase if we issue
securities in exchange for consideration having a value that more than 15% below
the market price of our common stock. See "Description of Our Capital Stock--
Warrants." For this reason, we may not issue the entire 8 million shares of
common stock covered by this prospectus. The 8 million shares covered by this
prospectus represent approximately 14.8% of our outstanding shares of common
stock as of June 9, 1999.
The following table sets forth the aggregate number of shares of
common stock beneficially owned by each selling stockholder as of June 9, 1999
and the percentage of all shares of common stock held by that selling
stockholder before and after giving effect to the offering based on 54,105,545
shares of common stock outstanding as of June 9, 1999. We considered the
following factors and made the following assumptions regarding the table:
. beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with
respect to securities and including any securities that grant the
selling securityholders the right to acquire common stock within 60
days of June 9, 1999; and
. the selling stockholders will sell all of the securities offered by
this prospectus.
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<PAGE>
Notwithstanding these assumptions, the selling stockholders may sell
less than all of the shares listed on the table. Each selling stockholders will
determine the number of shares of common stock that they will sell. In
addition, the shares listed below may be sold pursuant to this prospectus or in
privately negotiated transactions. Lastly, certain events may occur that cause
the number of shares of our common stock to be issued upon exercise of the
warrants to increase, which would cause the number of shares to be resold under
this prospectus to increase. See "Description of Capital Stock--Warrants" for
more detailed information and discussion of the adjustments to the number of
shares issuable upon exercise of the warrants. Accordingly, we cannot determine
with certainty the number of shares of common stock that the selling
stockholders will sell under this prospectus.
<TABLE>
<CAPTION>
Percent of
Number of Percent of Number of Outstanding
Shares of Outstanding Shares Shares
Common Stock Shares Beneficially Beneficially
Beneficially Beneficially Owned Owned
Owned Owned After After
Prior to Before the the the
Name of Selling Stockholder Offering Offering Offering Offering
- --------------------------- ----------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Marshall Capital Management, Inc......... 1,913,115 (1) 3.46% 0 0%
Castle Creek Technology Partners LLC..... 2,338,252 (2) 4.23% 0 0%
Capital Ventures International........... 2,125,684 (3) 3.84% 0 0%
</TABLE>
- -----------------
1. Consists of 1,540,438 shares of common stock issued in the exchange and
372,677 shares of common stock issuable upon the exercise of warrants.
Marshall Capital Management, Inc. is an indirect, wholly owned subsidiary
of Credit Suisse First Boston Group, which is a publicly held Swiss
financial services company. The direct and indirect parent companies of
Marshall Capital Management, Inc. may be deemed to be beneficial owners of
the securities. The direct and indirect parent companies of Marshall
Capital Management, Inc. disclaim that beneficial ownership.
2. Consists of 1,882,758 shares of common stock issued in the exchange and
455,494 shares of common stock issuable upon the exercise of warrants.
Pursuant to a management agreement, Castle Creek Partners LLC may be deemed
to beneficially own the securities held by Castle Creek Technology Partners
LLC. Castle Creek Partners LLC disclaims that beneficial ownership. John
Ziegelman and Daniel Asher, as managing members of Castle Creek Partners
LLC, may be deemed to be beneficial owners of the securities. Messrs.
Asher and Ziegelman disclaim that beneficial ownership.
3. Consists of 1,711,598 shares of common stock issued in the exchange and
414,086 shares of common stock issuable upon the exercise of warrants.
Heights Capital Management, Inc., a Delaware corporation, the investment
manager for Capital Ventures International, has voting control and
investment discretion over transactions by Capital Ventures International.
The shares of common stock underlying the warrants presented in the
table is based on the number of shares of common stock issuable upon exercise of
the warrants that is in effect on the date of this prospectus. The actual
number of shares of common stock will we issue is indeterminable as of the date
of this prospectus and is subject to future adjustments.
PLAN OF DISTRIBUTION
We will not receive any proceeds from the sale of the common stock
through this prospectus. We have agreed to pay the expenses of registration of
the common stock offered hereby, including legal and accounting fees, but
excluding underwriter's discounts and commissions, if any.
The offered shares may be sold from time to time at
. negotiated prices,
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<PAGE>
. fixed prices which may be changed,
. market prices prevailing at the time of sale or
. prices related to prevailing market prices.
The selling stockholders may effect those transactions
. in privately negotiated sales in the over-the-counter market or any
exchange on which the securities are listed,
. by selling the shares through broker-dealers, including
circumstances in which brokers or dealers attempt to sell the
shares to third parties, but, if they are initially unable to do
so, they may purchase the shares themselves and resell the shares
as principal, and
. in one or more underwritten offerings on a firm commitment or best
effort basis.
Sales of selling stockholders' shares may also be made pursuant to
Rule 144 under the Securities Act, where applicable.
To the extent required under the Securities Act, the following
information will be set forth in a post-effective amendment to this prospectus:
. the aggregate amount of selling stockholders' shares being offered
and the terms of the offering,
. the names of any agents, brokers, dealers, transferees or
underwriters, and
. any applicable fee or commission with respect to a particular
offer.
Each selling stockholder will be responsible for paying compensation
owed by it to any underwriters, dealers, brokers or agents participating in the
distribution of its shares, regardless of whether that compensation is in the
form of underwriting discounts, concessions, commission or fees. This
compensation might be in excess of customary commissions. The aggregate
proceeds to a selling stockholder from the sale of its shares offered by this
prospectus will be the purchase price of those shares less any discounts or
commissions.
If selling stockholders pledge, hypothecate or grant a security
interest in some or all of the shares, then the pledgees, secured parties or
persons to whom those securities have been hypothecated shall, upon foreclosure
in the event of default, shall be named as selling stockholders in a supplement
or post-effective amendment to this prospectus. Similarly, if the selling
stockholders transfer, pledge, donate or assign shares to lenders or others,
then each of those persons will be named as a selling stockholder in a
supplement or post-effective amendment to this prospectus. The number of shares
beneficially owned by the selling stockholders will decrease if and when a
selling stockholder transfers, pledges, donates or assigns shares. The plan of
distribution for selling stockholders' shares sold by this prospectus will
otherwise remain unchanged, except that the transferees, pledgees, donees or
other successors will be selling stockholders under this prospectus. There is,
however, no assurance that any selling stockholder will sell any or all of the
shares described in this prospectus. In addition, a selling stockholder may
transfer, devise or gift those securities by other means not described in this
prospectus. We will file a prospectus supplement or a post-effective
25
<PAGE>
amendment, to the extent required under the Securities Act of 1933, with respect
to those other means of transfer of the securities.
A selling stockholder may also use this prospectus in the following
ways:
. to enter into option or other transactions with broker-dealers that
involve the delivery of the shares to the broker-dealers, who may
then resell or otherwise transfer those shares, and
. to loan or pledge the shares to a broker-dealer and the broker-
dealer may sell the shares as loaned or upon a default may sell or
otherwise transfer the pledge shares.
The selling stockholders, any underwriter, any broker-dealer or any
agent that participates with the selling stockholders in the distribution of the
shares may be deemed to be "underwriter" within the meaning of the Securities
Act. As a result thereof, any discounts, commissions or concessions received by
them and any profit on the resales of the shares purchased by them may be deemed
to be underwriting commissions under the Securities Act.
To comply with securities laws of certain states, if applicable, the
shares will be sold in those jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the 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.
Pursuant to a registration rights agreement entered into in connection
with the Series B preferred stock financing, as impacted by the exchange
agreement, we have agreed to keep the registration statement of which this
prospectus is a part continuously effective until the earlier of the date that
all of the shares issued in the exchange or upon exercise of the new warrants
have been resold or until all those shares are immediately freely saleable under
Rule 144. In this regard, we are required to supplement and/or amend the
registration statement of which this prospectus is a part if more shares than
are registered for resale hereby are issued or issuable upon exercise of the new
warrants or to supplement or change the selling stockholders hereunder.
The registration rights agreement requires us to indemnify the selling
stockholders, any underwriter and the respective directors, officers, partners,
members, employees, agents and controlling persons of each selling stockholder
against certain liabilities in connection with the offer and sale of the shares
hereunder, including under the Securities Act. Similarly, each selling
stockholder is required to indemnify us and our directors, the officers who sign
the registration statement of which this prospectus is a part, our employees,
agents and controlling persons against certain liabilities in connection with
the offer and sale of the shares hereunder, including the Securities Act, to the
extent that liability occurs as a result of reliance with written information
furnished to us by that selling stockholder expressly for use in connection with
the registration statement of which this prospectus is a part. To the extent
this indemnification is prohibited, the selling stockholders and we are required
to contribute to payments the parties may be required to make in respect of
otherwise indemnifiable claims.
26
<PAGE>
LEGAL MATTERS
The validity of the common stock offered in this prospectus and
certain other legal matters will be passed upon for us 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 our common
stock.
EXPERTS
The financial statements incorporated in this prospectus by reference
to our Annual Report on Form 10-K for the year ended December 31, 1998, as
amended, have been so incorporated by reference in the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
27
<PAGE>
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Cover Page...................................... 1
Summary.................................................... 2
Risk Factors............................................... 3
Where You Can Find More Information........................ 15
Use of Proceeds............................................ 16
Dividend Policy............................................ 16
The Exchange of Common Stock for Series B Preferred Stock.. 17
Warrants................................................... 20
Selling Stockholders....................................... 22
Plan of Distribution....................................... 24
Legal Matters.............................................. 27
Experts.................................................... 27
</TABLE>
================================================================================
================================================================================
8,000,000 Shares
P-COM, INC.
common stock
--------------------
PROSPECTUS
--------------------
___________, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14 Other Expenses of Issuance and Distribution.
All expenses incurred in connection with the issuance and distribution
of the securities being registered for resale will be paid by the Registrant.
The following is an itemized statement of these expenses. All amounts except
Securities and Exchange Commission and Nasdaq Stock Market listing fees and the
placement agent fee to PaineWebber Incorporated are estimates.
<TABLE>
<S> <C>
Registration Statement-SEC............................................................ $ 25,806.31
Nasdaq listing fee.................................................................... $ 17,500
Printing and engraving................................................................ $ 15,000
Legal fees............................................................................ $ 325,000
Accounting fees and expenses.......................................................... $ 100,000
Placement agent fee to PaineWebber Incorporated $ 657,754
Miscellaneous......................................................................... $300,000.69
-----------
Total............................................................................ $ 1,441,061
===========
</TABLE>
Item 15 Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("Section 145")
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
that indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities 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 the underwriting agreements,
the purchase agreements and registration rights agreements entered into in
connection with P-Com's three public offerings, P-Com's nine acquisitions, the
sale of the 4 1/4% convertible promissory notes, the sale of the Series B
preferred stock, the warrants and the exchange agreements, each of which
contains provisions indemnifying officers and directors of P-Com and other
persons against certain liabilities, including, in some cases, those arising
under the Securities Act.
II-1
<PAGE>
Item 16 Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.2 Restated Certificate of Incorporation, as filed with the Delaware Secretary of
State filed on March 9, 1995*
3.2A Certificate of Amendment of Restated Certificate of Incorporation, as filed with
the Delaware Secretary of State on June 16, 1997*
3.2C Certificate of Designation for the Series A Junior Participating preferred stock,
as filed with the Delaware Secretary of State on December 21, 1998*
3.2D Certificate of Designation for the Series B Convertible Participating preferred
stock, as filed with the Delaware Secretary of State on December 21, 1998*
3.2E Certificate of Correction of Certificate of Designations for the Series B
Convertible Participating preferred stock, as filed with the Delaware Secretary of
State on December 23, 1998*
4.1 Specimen of common stock Certificate*
4.8 Amended and Restated Rights Agreement, dated as of December 21, 1998, between P-Com
and BankBoston, N.A.*
5.1 Opinion of Brobeck, Phleger & Harrison LLP*
10.22B Low Capacity Digital Radio Agreement dated February 13, 1995 by and between P-Com
and Siemens*
10.38 Securities Purchase Agreement dated as of December 21, 1998 by and among P-Com and
the purchasers listed therein*
10.39 Registration Rights Agreement dated as of December 21, 1998 by and among P-Com and
the purchasers listed therein*
10.48A Agreement between P-Com, Inc. and Marshall Capital Management, Inc., dated as of
June 4, 1999.*
10.48B Agreement between P-Com, Inc. and Castle Creek Technology Partners LLC, dated as of
June 4, 1999.*
10.48C Agreement between P-Com, Inc. and Capital Ventures International, dated as of June
4, 1999.*
10.49A Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Marshall Capital Management, Inc.*
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
10.49B Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Castle Creek Technology Partners LLC*
10.49C Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Capital Ventures International*
23.1 Consent of Independent Accountants (PricewaterhouseCoopers LLP)
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)*
24.1 Powers of Attorney (including in the signature page of this registration statement)*
</TABLE>
- ------------------------
* Previously filed.
Item 17 Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to that information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration
II-3
<PAGE>
statement relating to the securities offered therein, and the offering of
those 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission that sort of indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against those 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 that director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
that indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of the
issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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 those 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, as
amended, the Registrant, P-Com, Inc., a corporation organized and existing under
the laws of the State of Delaware, 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 amendment no. 5 to this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Campbell, State of California, on the 15th day of June, 1999.
P-COM, INC.
By: /s/ George P. Roberts
_________________________________________
George P. Roberts, Chairman of the Board
and Chief Executive Officer
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.2 Restated Certificate of Incorporation, as filed with the Delaware Secretary of
State filed on March 9, 1995*
3.2A Certificate of Amendment of Restated Certificate of Incorporation, as filed with
the Delaware Secretary of State on June 16, 1997*
3.2C Certificate of Designation for the Series A Junior Participating preferred stock,
as filed with the Delaware Secretary of State on December 21, 1998*
3.2D Certificate of Designation for the Series B Convertible Participating preferred
stock, as filed with the Delaware Secretary of State on December 21, 1998*
3.2E Certificate of Correction of Certificate of Designations for the Series B
Convertible Participating preferred stock, as filed with the Delaware Secretary of
State on December 23, 1998*
4.1 Specimen of common stock Certificate*
4.8 Amended and Restated Rights Agreement, dated as of December 21, 1998, between P-Com
and BankBoston, N.A.*
5.1 Opinion of Brobeck, Phleger & Harrison LLP*
10.22B Low Capacity Digital Radio Agreement dated February 13, 1995 by and between P-Com
and Siemens*
10.38 Securities Purchase Agreement dated as of December 21, 1998 by and among P-Com and
the purchasers listed therein*
10.39 Registration Rights Agreement dated as of December 21, 1998 by and among P-Com and
the purchasers listed therein*
10.48A Agreement between P-Com, Inc. and Marshall Capital Management, Inc., dated as of
June 4, 1999.*
10.48B Agreement between P-Com, Inc. and Castle Creek Technology Partners LLC, dated as of
June 4, 1999.*
10.48C Agreement between P-Com, Inc. and Capital Ventures International, dated as of June
4, 1999.*
10.49A Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Marshall Capital Management, Inc.*
10.49B Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Castle Creek Technology Partners LLC*
10.49C Warrant to purchase shares of common stock, dated as of June 4, 1999, issued by
P-Com to Capital Ventures International*
23.1 Consent of Independent Accountants (PricewaterhouseCoopers LLP)
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)*
24.1 Powers of Attorney (including in the signature page of this registration statement)*
</TABLE>
- ---------------------
* Previously filed.
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
April 20, 1999 which appears on page 79 of P-Com, Inc.'s Annual Report on Form
10-K, as amended, for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
San Jose California
June 11, 1999
