<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2000
Commission File Number: 000-28217
AIRNET COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3218138
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 Rialto Place, Suite 300, Melbourne, Florida 32901
(Address of Principal Executive Offices) (Zip Code)
(321) 953-6600
(Registrant's Telephone Number, Including Area Code)
Indicate by check x whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at October 25, 2000
----- -------------------------------
<S> <C>
Common stock, par value $.001 23,727,331
</TABLE>
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AIRNET COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Balance Sheets................................................................. 3
Condensed Statements of Operations....................................................... 4
Condensed Statements of Cash Flows....................................................... 5
Notes to Condensed Financial Statements.................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................... 8
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings........................................................................ 10
Item 2. Changes in Securities and Use of Proceeds................................................ 10
Item 5. Other Information........................................................................ 11
Item 6. Exhibits and Reports on Form 8-K......................................................... 11
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AIRNET COMMUNICATIONS CORPORATION
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------------- ---------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 52,695 $ 100,423
Accounts receivable - net of allowance for doubtful accounts
of $934 and $1,674 at September 30, 2000 and December
31, 1999, respectively 13,731 10,122
Notes receivable 9,015 -
Inventories 29,967 15,978
Other 1,543 500
------------------------- ---------------------------
Total current assets 106,951 127,023
Property and equipment, net 7,297 3,968
Notes receivable 1,712 -
Other long-term assets 400 22
------------------------- ---------------------------
Total assets $ 116,360 $ 131,013
========================= ===========================
Liabilities and Stockholders' Equity
Accounts payable $ 11,012 $ 6,464
Accrued expenses 3,301 2,101
Current portion of capital lease obligations 143 540
Customer deposits 2,127 5,234
Deferred revenues 7,635 8,209
------------------------- ---------------------------
Total current liabilities 24,218 22,548
Capital lease obligations 430 202
Stockholders' equity 91,712 108,263
------------------------- ---------------------------
Total liabilities and stockholders' equity $ 116,360 $ 131,013
========================= ===========================
</TABLE>
See Notes to Condensed Financial Statements
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<PAGE> 4
AIRNET COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------ ------------------ ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues $ 13,597 $ 6,704 $ 28,850 $ 11,077
Cost of revenues 8,639 4,172 18,520 7,084
---------------- ------------------ ----------------- -----------------
Gross profit 4,958 2,532 10,330 3,993
Operating expenses:
Research and development 7,395 3,382 20,388 10,576
Sales and marketing 2,666 985 7,230 2,741
General and administrative 1,367 761 3,654 1,903
Stock-based compensation 109 91 327 211
---------------- ------------------ ----------------- -----------------
Total costs and expenses 11,537 5,219 31,599 15,431
---------------- ------------------ ----------------- -----------------
Loss from operations (6,579) (2,687) (21,269) (11,438)
Other income, net 1,363 11 3,825 105
---------------- ------------------ ----------------- -----------------
Net loss $ (5,216) $ (2,676) $ (17,444) $ (11,333)
Preferred dividends (1) - 13,415 - 16,813
---------------- ------------------ ----------------- -----------------
Net loss attributable to common stockholder
$ (5,216) $ (16,091) $ (17,444) $ (28,146)
================ ================== ================= =================
Net loss per share attributable to common
stockholders-basic and diluted $ (0.22) $ (36.27) $ (0.74) $ (70.95)
Weighted average shares used in calculating
basic and diluted loss per common share 23,669,169 443,622 23,528,820 396,719
</TABLE>
(1) All accumulated dividends were cancelled when the Company closed on its
initial public offering in December 1999. This is a non-cash item.
See Notes to Condensed Financial Statements
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AIRNET COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
--------------------- -----------------------
(UNAUDITED)
<S> <C> <C>
Operating activities
Net cash used in operating activities $ (43,294) $ (9,568)
--------------------- -----------------------
Cash flows from investing activities:
Purchases of property and equipment (4,389) (566)
--------------------- -----------------------
Net cash used in investing activities (4,389) (566)
--------------------- -----------------------
Cash flows from financing activities:
Net proceeds from issuance of long-term borrowings 6,333
Principal payments on capital lease obligations (608) (555)
Offering Costs (136)
Proceeds from issuance of preferred and common stocks and warrants 699 23,771
--------------------- -----------------------
Net cash provided by financing activities (45) 29,549
--------------------- -----------------------
Increase (decrease) in cash and cash equivalents (47,728) 19,415
Cash and cash equivalents at beginning of period 100,423 7,580
--------------------- -----------------------
Cash and cash equivalents at end of period $ 52,695 $ 26,995
===================== =======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 59 $ 194
===================== =======================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired under capital lease obligations $ 430 $ 650
===================== =======================
Capital stock issued in exchange for conversion of the Bridge Financing - 5,306
===================== =======================
Issuance of warrants in connection with bridge financing $ $ 298
===================== =======================
Series G preferred deemed dividend $ - $ 11,716
===================== =======================
</TABLE>
See Notes to Condensed Financial Statements
-5-
<PAGE> 6
AirNet Communications Corporation
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1.) BASIS OF PRESENTATION
The accompanying condensed financial statements are unaudited, but in the
opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary to fairly state the Company's financial
position, results of operations, and cash flows as of and for the dates and
periods presented. The financial statements of the Company are prepared in
accordance with generally accepted accounting principles as adopted in the
United States of America for interim financial information.
These unaudited condensed financial statements should be read in conjunction
with the Company's audited financial statements and footnotes included in the
Company's Form 10-K filing on March 29, 2000 and the Company's Registration
Statement on Form S-1 declared effective by the Securities and Exchange
Commission on December 6, 1999. The results of operations for the nine-month
period ended September 30, 2000 are not necessarily indicative of the results
for the entire year ending December 31, 2000.
2.) REVENUE RECOGNITION
Revenue is recognized for direct product sales (including sales made through
agents) when a customer has placed the product in service, completed specified
acceptance testing procedures, or has otherwise accepted the product. Unless
the customer agrees to accept the product upon shipment, revenues on product
shipped are deferred until such time that the acceptance conditions of the
customer contract are satisfied. During 2000, in certain instances, the
Company has sold product to customers purchasing under agreements in which
customer acceptance is concurrent with shipment. The Company began offering
extended payment terms evidenced by long-term notes during 2000 in select
direct sales arrangements. Revenue related to sales under long-term note
agreements is deferred until the acceptance conditions are met and payments
become due under the notes.
Also during 2000, the Company initiated sales to an OEM. Revenue is recognized
for OEM product sales when title to the product passes to the OEM customer.
Typically, for an OEM product sale, title passes to the OEM customer at the
point of shipment.
3.) ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable have increased from $10.1 million at December
31, 1999 to $24.4 million at September 30, 2000. At September 30, 2000, $10.7
million of the amount due is subject to collateralized note arrangements, with
$9 million due at December 31, 2000. In mid-2000, management decided to
provide vendor financing in select situations. In early July 2000, one
customer with an open account balance was converted to a collateralized
short-term note totaling $9 million. All notes issued through September 2000
bear market rates of interest.
The Company wrote-off a previously fully reserved delinquent account of $1.1
million in the nine month period ended September 30, 2000. Provision for
doubtful accounts amounted to $.4 million and $.01 million for the nine months
ended September 30, 2000 and 1999, respectively. The allowance for doubtful
accounts of $.9 million at September 30, 2000 is considered adequate by
management, based on current knowledge of customer status' and market
conditions, to absorb possible losses in the account receivable portfolio. No
allowance for note losses is considered necessary by management at September
30, 2000 on the collateralized notes. However, as further described in Note 6
below, the Company has filed a lawsuit against another vendor of the customer
which issued the Company the $9 million note in July 2000. Although the Company
presently believes its customer will pay the note when due, if the customer
fails to pay and the note is charged off in the future, the Company's loss
exposure as of September 30, 2000 is $6.5 million.
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<PAGE> 7
4.) INVENTORIES
Inventories consist of the following at September 30, 2000:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
----------------------------- ----------------------------
(Unaudited)
<S> <C> <C>
Raw materials $ 19,149 $ 6,929
Work in process 1,427 2,660
Finished goods 2,724 -
Finished goods delivered to customers 6,667 6,389
----------------------------- ----------------------------
$ 29,967 $ 15,978
============================= ============================
</TABLE>
5.) BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share is calculated in accordance with
Statements of Financial Accounting Standards No. 128, "Earnings Per Share."
The denominator used in the computation of basic and diluted net loss per
share is the weighted average number of common shares outstanding for the
respective period. All potentially dilutive securities were excluded from the
calculation of diluted net loss per share, as the effect would be
anti-dilutive.
The computation of loss per share is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------ -------------------- -------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net loss attributed to common stockholders (5,216) (16,091) (17,444) (28,146)
Weighted average shares outstanding 23,669,169 443,622 23,528,820 396,719
------------------ ------------------ -------------------- -------------------
Basic and diluted loss per share (0.22) (36.27) (0.74) (70.95)
================== ================== ==================== ===================
Potentially dilutive securities consist of
the following:
Options to purchase common stock 2,145,470 1,416,974 1,979,615 1,245,428
Convertible preferred stock - 15,087,294 - 15,087,294
Warrants to purchase common stock 539,114 172,623 545,050 556,300
------------------ ------------------ -------------------- -------------------
Total 2,684,584 16,676,891 2,524,665 16,889,022
================== ================== ==================== ===================
</TABLE>
6.) SUBSEQUENT EVENT AND CONTINGENCY
On October 23, 2000, the Company filed a lawsuit against Lucent Technologies
(Lucent) alleging, among other claims, tortious interference with a business
relationship with one of the Company's largest customers to date. The Company
believes Lucent induced the customer to cancel a $10 million purchase order
placed with the Company. The ultimate outcome of this litigation, and the
impact it may have on the Company's relationship with its customer, and the
customer's willingness and ability to pay its note obligation due the Company
described in Note 3, is uncertain.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes forward-looking statements concerning pending legal
proceedings and other aspects of future operations. These forward-looking
statements are based on certain underlying assumptions and expectations of
management. Certain factors could cause actual results to differ materially
from the forward-looking statements included in this Form 10-Q. For additional
information on those factors that could affect actual results, please refer to
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999.
FINANCIAL CONDITION
This discussion should be read in conjunction with the Notes to Condensed
Financial Statements contained in this report and Management's Discussion and
Analysis of Financial Condition and Results of Operations appearing in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999. The results of operations for an interim period may not give a true
indication of results for the year. In the following discussion, all
comparisons are with the corresponding items in the prior year.
Overview
The Company provides base stations and other wireless telecommunications
infrastructure products designed to support the GSM, or Global Standard for
Mobile Communications, system of mobile voice and data transmission. The
Company markets its products to operators of wireless networks. A base station
is a key component of a wireless network and is used to receive and transmit
voice and data signals over radio frequencies. The Company's products include
the software defined AdaptaCell base station, meaning it uses software to
control the way it encodes and decodes voice and data wireless signals, and
the AirSite Backhaul Free Base Station, meaning it carries voice and data
signals back to the wireline network without using a physical communications
link.
From its inception in January 1994 through May 1997, the Company's operations
consisted principally of start-up activity associated with the design,
development, and marketing of its products. As a result, the Company did not
generate significant revenues until 1998 and generated net revenues of $17.8
million in 1999 and $28.9 million for the nine months ended September 30,
2000. The Company has incurred substantial losses since commencing operations,
and as of September 30, 2000 had an accumulated deficit of $118.8 million. The
Company has not yet achieved profitability on a quarterly or annual basis.
Because the Company will need to continue to focus heavily on developing its
technology and products, organizing its sales and distribution systems and
assembling the personnel necessary to support its anticipated growth in the
near future, the Company expects to continue to incur net losses for at least
the next several quarters. The Company will need to generate significantly
higher revenues in order to support expected increases in research and
development, sales and marketing and general and administrative expenses, and
to achieve and maintain profitability.
The Company's revenues are derived from sales of a single product line based
on the GSM system. The Company generates a substantial portion of its revenues
from a limited number of customers, with two customers accounting for 70% of
net revenues during the three months ended September 30, 2000. Most of the
Company's existing customers are start-up operators that have just commenced
the buildout of their networks, obtained necessary financing or acquired a
high degree of familiarity with the Company's products.
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<PAGE> 9
Results of Operations
The following table sets forth for the periods indicated the results of
operations expressed as a percentage of net revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 63.5% 62.2% 64.2% 64.0%
Gross profit 36.5% 37.8% 35.8% 36.0%
Operating expenses:
Research and development 54.4% 50.4% 70.7% 95.5%
Sales and marketing 19.6% 14.7% 25.0% 24.7%
General and administrative 10.1% 11.3% 12.7% 17.1%
Stock based compensation 0.8% 1.4% 1.1% 2.0%
Total operating expenses 84.9% 77.8% 109.5% 139.3%
Loss from operations (48.4)% (40.0)% (73.7)% (103.3)%
Other income, net 10.0% 0.0% 13.2% 1.0%
Net loss (38.4)% (40.0)% (60.5)% (102.3)%
</TABLE>
Three Months and Nine Months Ended September 30, 2000 Compared to Three
Months and Nine Months Ended September 30, 1999
Net revenue: Net revenues for the three months ended September 30, 2000
increased $6.9 million or 103% to $13.6 million as compared to $6.7 million
for the three months ended September 30, 1999. Net revenues were $28.9 million
and $11.1 million for the nine months ended September 30, 2000 and 1999,
respectively. These increases are the result of higher shipments, customer
deployments and installations to new and existing customers as they expand
their commercial service networks.
Gross profit: Gross profits for the three months ended September 30,
2000 increased $2.5 million or 96% to $5.0 million as compared to $2.5 million
for three-month period ended September 30, 1999. Gross profits were $10.3
million and $4.0 million for the nine months ended September 30, 2000 and
1999, respectively. The gross profit margins were 37% and 38% for the three
months ended September 30, 2000 and 1999, respectively, and 36% for the nine
months ended September 30, 2000 and 1999. The small change in gross profit
margins over the prior year's quarter is attributable to the product mix of
shipments during the period.
Research and development: Research and development expenses were $7.4
million and $3.4 million for the three months ended September 30, 2000 and
1999, respectively and $20.4 million and $10.6 million for the nine months
ended September 30, 2000 and 1999, respectively. These increases were due to
an increase in employees and engineering supplies required to support new and
accelerated product development efforts. Additional development investment was
made to deliver 900 MHz and 1800 MHz base station product offerings required
for the company's international marketplace expansion. We also made additional
investments in high speed data product development projects. Additionally,
development investments were made, and continue to be made, to support
adaptive array antenna technology in the AdaptaCell software defined base
station as well as to enhance the AirSite product line.
Sales and marketing: Sales and marketing expenses were $2.7 million and
$1.0 million for the three months ended September 30, 2000 and 1999,
respectively, and $7.2 million and $2.7 million for the nine months ended
September 30, 2000 and 1999, respectively. This increase is primarily
attributable to costs associated with a significant expansion of our
international sales and distribution activities and sales support functions to
support our growing customer base. International travel and public relations
expenses also contributed to the increase in the expense for the period.
General and administrative: General and administrative expenses were
$1.4 million and $0.8 million for the three months ended September 30, 2000
and 1999, respectively, and $3.7 million and $1.9 million for the nine months
ended September 30, 2000 and 1999, respectively. These increases were
primarily due to new hires to support the Company's growth, a provision for
bad debts, and the costs of being a publicly traded company, such as travel,
outside legal and accounting services.
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<PAGE> 10
Liquidity and Capital Resources
Prior to the Company's initial public offering, which occurred on
December 10, 1999 and raised net proceeds of $80.4 million, the Company funded
its operations primarily through the private sales of equity securities and
capital equipment leases. At September 30, 2000, the Company's principal
source of liquidity is $52.7 million of cash and cash equivalents. We have no
credit facilities.
Net cash used in operating activities for the nine months ended
September 30, 2000 was $43.3 million compared to net cash used in operating
activities of $9.6 million for the nine months ended September 30, 1999. The
significant use of cash by operating activities was the result of the net
losses during all reported periods together with cash used to finance our
increase in accounts and notes receivable and inventory purchases. Except for
sales to OEMs or to customers under agreements providing for acceptance
concurrent with shipment, our customers are billed as contractual milestones
are met. Deposits of approximately 20% of the contracted amount typically are
received at the inception of the contract and an additional 30% of the
contracted amount is generally billed upon shipment. Most of the remaining
unbilled amounts are invoiced after a customer has placed the products in
service, completed specified acceptance testing procedures or has otherwise
accepted the product. Collection of the entire amounts due under our contracts
to date have lagged behind shipment of our products due to the time period
between shipment and fulfillment of all of our applicable post-shipment
contractual obligations, the time at which we bill the remaining balance of
the contracted amount. This lag requires increasing investments in working
capital as our revenues increase. As of September 30, 2000, our accounts
receivable balance was $14.7 million. Of this balance 60% is attributable to
two customers, and receivables from one of these customers accounted for
approximately 39% of the total amount outstanding. In some instances, we have
offered vendor financing to certain customers where it assists us in entering
a strategic market or where it is an initial part of a larger order. As of
September 30, 2000, our total notes receivable balance was $10.7 million, of
which approximately 84% was owed by one customer. Part of this amount was a
conversion of accounts receivable to a secured note where extended terms were
provided to the customer.
Net cash used for capital expenditures for the nine months ended
September 30, 2000 was $4.4 million compared to net cash used for capital
expenditures for the nine months ended September 30, 1999 of $0.6 million.
These expenditures reflect the Company's investment in computer equipment,
software development tools and test equipment, and other capital equipment
which was required to support our business expansion. We anticipate an
increase in our capital expenditures for testing and manufacturing equipment
used during final assembly of our products as our revenues increase.
Net cash used in financing activities was $.05 million for the nine
months ended September 30, 2000 compared to net cash provided by financing
activities of $29.5 million for the nine months ended September 30, 1999. This
difference was primarily due to net proceeds from the issuance of preferred and
common stocks and warrants in 1999. Additionally, the Company had net proceeds
from the issuance of long-term borrowings last year.
The Company believes that its existing cash and cash equivalents will be
sufficient to meet capital requirements at least through the next twelve
months, although it could be required, or could elect, to seek additional
funding prior to that time. The Company's future capital requirements will
depend upon many factors, including rate of revenue growth, the timing and
extent of spending to support product development efforts and expansion of
sales and marketing.
Additionally, in the past, the Company has provided secured purchase
money financing to some customers. To the extent such financing is provided in
the future, it could affect liquidity. There can be no assurances that
additional equity or debt financing, if required, will be available on
acceptable terms or at all.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On October 23, 2000, the Company filed a complaint against Lucent
Technologies, Inc. et al. in the Circuit Court for the 18th Judicial Circuit
in Brevard County, Florida, alleging, among other claims, tortious
interference with a business relationship and misappropriation of trade
secrets in connection with the purported cancellation of certain phase II
purchase orders by Carolina PCS. The Company is seeking more than $10 million
in damages and injunctive relief.
On January 21, 1997, the Company filed a complaint against Amplidyne,
Inc. in the Circuit Court for the 18th Judicial Circuit in Brevard County,
Florida, alleging breach of contract and non-performance in connection with
the delivery of certain high-power amplifier units used in the Company's base
stations. The Company is seeking approximately $4.4 million in damages.
Amplidyne filed an answer alleging certain affirmative defenses and a
counterclaim against the Company for approximately $463,000. Amplidyne's
motion for summary judgment was denied in February 1999 and again in August
2000. A jury trial is docketed for January 2001.
The Company is also involved in various claims and litigation matters
arising in the ordinary course of business. The Company believes that the
ultimate outcome of these matters will not have a material effect on its
results of operations or financial condition.
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<PAGE> 11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Use of Proceeds of Initial Public Offering
The effective date of the Company's registration statement on Form S-1
filed under the Securities Act of 1933 (No. 333-87693) relating to the initial
public offering of the Company's common stock was December 6, 1999. A total of
5,500,000 shares of the Company's common stock were sold at a price of $14.00
per share to an underwriting syndicate led by Salomon Smith Barney Inc., Chase
Hambrecht & Quist LLC and Prudential Volpe Technology Group. The offering
commenced on December 7, 1999 and closed on December 10, 1999. An additional
825,000 shares of common stock were sold to the underwriters named above to
cover over-allotments.
The initial public offering resulted in gross proceeds of $88.6 million.
Net proceeds from the offering amounted to $80.4 million after deducting
offering expenses of approximately $2.0 million and underwriting commissions
and discounts of approximately $6.2 million. Except for proceeds that were
expended as described below, the net proceeds have been included within cash
and cash equivalents.
As of September 30, 2000, approximately $27.7 million of the proceeds
from the initial public offering had been used primarily for general corporate
purposes, including working capital, expansion of its engineering
organization, product development programs, sales and marketing capabilities
and general and administrative functions. Proceeds will continue to be used
for these purposes in addition to capital expenditures. The Company may also
use a portion of the net proceeds to invest in complementary products, to
license other technology or to make potential acquisitions. However, it has no
current understandings or agreements relating to potential acquisitions.
ITEM 5. OTHER INFORMATION
On September 19, 2000, Bruce R. DeMaeyer resigned from the Company's
Board of Directors for personal reasons.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C> <C>
(a) Exhibits:
****3.1 Seventh Amended and Restated Certificate of Incorporation.
*3.2 Second Amended and Restated Bylaws.
**3.3 Amendment to Second Amended and Restated Bylaws.
*4.1 Specimen Certificate evidencing shares of Common Stock.
*4.2 Second Amended and Restated Shareholders' and Registration Rights Agreement dated as
of April 16, 1997.
*4.3 First Amendment to Second Amended and Restated Shareholders' and Registration Rights
Agreement dated as of September 20, 1999.
*4.4 Second Amended and Restated Agreement Among Series E,
Series F and Series G Second Amended and Restated
Preferred Stockholders and Senior Registration Rights
Agreement dated as of September 7, 1999.
*4.5 First Amendment to Second Amended and Restated
Agreement Among Series E, Series F and Series G
Preferred Stockholders and Senior Registration Rights
Agreement dated as of September 20, 1999.
*10.1 AirNet Communications Corporation 1999 Equity Incentive Plan.
*10.2 OEM and Patent License Option Agreement dated January 27, 1995 between Motorola, Inc.
and AirNet Communications Corporation.
*10.3 Employee Noncompete and Post-Termination Benefits Agreement dated October 26, 1999
between AirNet Communications Corporation and R. Lee Hamilton, Jr.
***10.4 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and R. Lee Hamilton, Jr.
***10.5 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Gerald Y. Hattori.
</TABLE>
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<TABLE>
<S> <C> <C>
***10.6 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and William J. Lee.
***10.7 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Mark G. Demange.
***10.8 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Glenn A. Ehley.
***10.9 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Timothy Mahar.
****10.10 Agreement dated May 10, 2000 between AirNet Communications Corporation and Gerald Y.
Hattori.
27 Financial Data Schedule, September 30, 2000.
* Incorporated by reference to Registration Statement No. 333-87693 on Form S-1 as filed
with the Securities and Exchange Commission on September 24, 1999, as amended.
** Incorporated by reference to Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on March 29, 2000.
*** Incorporated by reference to Quarterly Report on Form 10-Q as filed with the
Securities and Exchange Commission on May 15, 2000.
**** Incorporated by reference to Quarterly Report on Form 10-Q as filed with the
Securities and Exchange Commission on August 14, 2000.
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(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on August 7, 2000 reporting one event under Item 5,
Other Events, and filing an exhibit under Item 7, Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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<S> <C> <C>
Dated: November 13, 2000 /s/ R. Lee Hamilton, Jr.
------------------------
R. Lee Hamilton, Jr., President and Chief Executive Officer
(Principal Executive Officer)
/s/ John C. Berens
------------------
John C. Berens, Vice President, Finance,
Chief Financial Officer, Secretary and Treasurer
(Principal Financial and Principal Accounting Officer)
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<PAGE> 13
AIRNET COMMUNICATIONS CORPORATION
INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT NO.
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<S> <C>
****3.1 Seventh Amended and Restated Certificate of Incorporation.
*3.2 Second Amended and Restated Bylaws.
**3.3 Amendment to Second Amended and Restated Bylaws.
*4.1 Specimen Certificate evidencing shares of Common Stock.
*4.2 Second Amended and Restated Shareholders' and Registration Rights Agreement dated as
of April 16, 1997.
*4.3 First Amendment to Second Amended and Restated Shareholders' and Registration Rights
Agreement dated as of September 20, 1999.
*4.4 Second Amended and Restated Agreement Among Series E, Series F and Series G Second
Amended and Restated Preferred Stockholders and Senior Registration Rights
Agreement dated as of September 7, 1999.
*4.5 First Amendment to Second Amended and Restated Agreement Among Series E, Series F
and Series G Preferred Stockholders and Senior Registration Rights Agreement dated
as of September 20, 1999.
*10.1 AirNet Communications Corporation 1999 Equity Incentive Plan.
*10.2 OEM and Patent License Option Agreement dated January 27, 1995 between Motorola, Inc.
and AirNet Communications Corporation.
*10.3 Employee Noncompete and Post-Termination Benefits Agreement dated October 26, 1999
between AirNet Communications Corporation and R. Lee Hamilton, Jr.
***10.4 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and R. Lee Hamilton, Jr.
***10.5 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Gerald Y. Hattori.
***10.6 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and William J. Lee.
***10.7 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Mark G. Demange.
***10.8 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Glenn A. Ehley.
***10.9 Amendment to Incentive Stock Option Agreements dated February 11, 2000 between AirNet
Communications Corporation and Timothy Mahar.
****10.10 Agreement dated May 10, 2000 between AirNet Communications Corporation and Gerald Y.
Hattori.
27 Financial Data Schedule, September 30, 2000.
* Incorporated by reference to Registration Statement No. 333-87693 on Form S-1 as
filed with the Securities and Exchange Commission on September 24, 1999, as amended.
** Incorporated by reference to Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on March 29, 2000.
*** Incorporated by reference to Quarterly Report on Form 10-Q as filed with the
Securities and Exchange Commission on May 15, 2000.
**** Incorporated by reference to Quarterly Report on Form 10-Q as filed with the
Securities and Exchange Commission on August 14, 2000.
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