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As filed with the Securities and Exchange Commission on November 19, 2002
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
P-COM, INC.
(Exact Name of Registrant as
Specified in Its Charter)
| Delaware |
77-0289371 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification
Number) |
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)
George P. Roberts
Chairman of the Board and Chief Executive Officer
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, California 95008
(408) 866-3666
(Name and Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copy to:
Hayden J. Trubitt, Esq.
Brobeck, Phleger & Harrison LLP
12390 El Camino Real
San Diego, California 92130
(858) 720-2500
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. ¨
CALCULATION OF REGISTRATION FEE
| Title of Securities to be Registered |
Amount to be Registered(2) |
Proposed Maximum Offering Price
Per Share(3) |
Proposed Maximum Aggregate Offering Price(3) |
Amount of Registration Fee | ||||
| Common Stock, $0.0001 par value(1) |
419,161 |
$0.305 |
$127,844.11 |
$11.77 |
(1) |
Each share of Common Stock is also paired with a stock purchase right under the Registrant’s Stockholder Rights Plan. |
(2) |
Pursuant to Rule 416, this registration statement also registers an indeterminate number of shares of Common Stock as may be issued upon outstanding shares upon
stock splits, stock dividends or similar situations (and conversely, upon reverse stock splits). |
(3) |
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and based upon the
average high and low prices of the Common Stock on November 14, 2002 as reported on the Nasdaq SmallCap Market. |
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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The information contained in this preliminary prospectus is not complete and may be changed. The selling stockholder may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary 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.
PRELIMINARY PROSPECTUS
(SUBJECT TO COMPLETION, DATED NOVEMBER 19, 2002)
419,161 Shares
Common Stock
The prospectus relates to the resale of up to 419,161 shares of our common stock which is
held by the selling stockholder identified in this prospectus. We are registering shares of our common stock for resale by the selling stockholder. The prices at which the selling stockholder may sell the shares will be determined by the prevailing
market for the shares or in negotiated transactions. We will not receive any proceeds from the sale of shares offered under this prospectus.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol “PCOM.” The last reported sales price of our common stock on November 14, 2002 was $.29 per share.
The shares of our common stock
offered or sold under this prospectus involve a high degree of risk. See “
Risk Factors” beginning on page 4 of this prospectus to read about important factors you should consider before buying the common stock.
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.
The date of this prospectus is November 19, 2002.
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This summary highlights some information from this prospectus, and
it may not contain all of the information that is important to you. It is qualified in its entirety by the more detailed information and consolidated financial statements, including the notes to the consolidated financial statements, incorporated by
reference in this prospectus. You should read the full text of, and consider carefully the more specific details contained in or incorporated by reference into this prospectus.
Our Business
We develop, manufacture and market
point-to-multipoint, point-to-point and spread spectrum radio systems for the worldwide telecommunications market. Cellular and personal communications services, or PCS, providers employ our point-to-point systems for backhaul between remote tower
sites and switching centers in their growing global markets. Network service providers and Internet service providers are able, through the deployment of our equipment and systems, to respond to the increasing global demands for high-speed wireless
access services, such as Internet access associated with business-to-business and e-commerce business processes. Through deployment of our systems, network providers can quickly and efficiently establish integrated Internet, data, voice, and video
services for their customers, and expand and grow those services as demand increases. Our market is a subset of the global telecom, cellular, PCS, wireless Internet access, and private network markets.
Our wholly-owned subsidiary, P-Com Network Services, Inc., or PCNS, provides engineering, installation support, program management and
maintenance support services to the telecommunications industry in the United States. Network service providers, including wireless and traditional wireline, outsource these tasks to approved service suppliers on a project-by-project basis.
Microwave service projects are typically short in duration, lasting one to two weeks, and primarily involve logistical installation or maintenance of millimeter wave radio systems. Central office services projects involve ordering materials and
substantial man-hour commitments and can last up to three months.
Our executive offices are located at 3175 S.
Winchester Boulevard, Campbell, California 95008, and our telephone number is (408) 866-3666.
The Offering
On April 23, 2002, we entered into a settlement agreement with EESA, Inc., and its affiliates, EESA Europe S.r.l., and ELTEL
Engineering S.r.l., collectively referred to as EESA, whereby we agreed to issue 419,161 shares of our common stock to settle outstanding manufacturing and supply disputes. On May 6, 2002, we issued 419,161 shares of our common stock to EESA, Inc.,
which we refer to in this prospectus as the “private placement.” The closing sale price of our common stock on May 6, 2002 was $0.80. As part of the settlement agreement, we agreed to register the shares of common stock for resale. This
prospectus relates to the resale of up to 419,161 shares of our common stock issued in the private placement. The prices at which the selling stockholder may sell the shares will be determined by the prevailing market for the shares or in negotiated
transaction. See “Selling Stockholder.”
Use of Proceeds
The selling stockholder will receive all of the proceeds from the sale of the common stock pursuant to this prospectus. We will not receive any of the proceeds from sales
by the selling stockholder of the offered shares of common stock.
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An investment in our common stock is subject to many risks. You should
carefully consider the risks described below, together with all of the other information included or incorporated by reference into this prospectus, including the financial statements and the related notes, before you decide whether to purchase
shares of our common stock. Our business, operating results and financial condition could be harmed by any of the following risks. The trading price of our common stock could decline due to any of these risks, and you could lose all or part of your
investment.
Continuing weakness in the telecommunications equipment and services sector would adversely affect the growth and
stability of our business.
A severe worldwide slowdown in the telecommunications equipment and services
sector is affecting us. Our customers, particularly systems operators and integrated system providers, are canceling orders, deferring capital spending and orders to suppliers such as our Company, and in general are not building out any significant
additional infrastructure at this time. In addition, our accounts receivable, inventory turnover, and operating stability can be jeopardized if our customers experience financial distress. Our largest customer in our services group, P-Com Network
Services, began a slowdown and deferral of previously committed work orders as of the end of the second quarter of 2001, and this has persisted in 2002. We do not believe that our products and services sales levels can recover while an industry-wide
slowdown in demand persists.
Global economic conditions have had a depressing effect on sales levels in past
years, including a significant slowdown for P-Com in 1998 and 2001-2002. The soft economy and slowdown in capital spending encountered in 2001-2002 in the United States, the United Kingdom and other geographical markets have had a significant
depressing effect on the sales levels of telecommunications products and services such as ours. These factors may continue to adversely affect our business, financial condition and results of operations. We cannot sustain ourselves at the currently
depressed sales levels.
Our business and financial positions have deteriorated significantly.
Our business and financial positions have deteriorated significantly. From inception to September 30, 2002, our aggregate net loss is
approximately $327 million. Our September 30, 2002 cash, working capital, accounts receivable, inventory, total assets, employee headcount, backlog and total stockholders’ equity were all substantially below levels of one year ago.
Our independent accountants’ opinion on our 2001 consolidated financial statements includes an explanatory
paragraph indicating substantial doubt about our ability to continue as a going concern. To continue long-term as a going concern, we will have to increase our sales, and possibly induce other creditors to forebear or to convert to equity, raise
additional equity financing, and/or raise new debt financing. We cannot guarantee that we will be able to accomplish these tasks.
If
the closing of our proposed merger with Telaxis Communications Corporation is delayed, or does not happen at all, we would be unable to realize the anticipated benefits of the transaction, which may negatively affect our business.
We signed an Agreement and Plan of Merger with Telaxis Communications Corporation, dated September 9, 2002. The transaction is
subject to shareholder approval and satisfaction of certain conditions to closing by both companies. In connection with or in anticipation of the proposed merger, our business, operating results and financial condition could be affected by any of
the following factors.
Our company and Telaxis may not realize the intended benefits of the merger if the
combined company is not able to integrate both companies’ operations, products and personnel in a timely and efficient manner. In order for the new combined company to provide products and services with greater value to its customer base after
the merger, all aspects of operations and other organizations functions will need to be integrated in a timely and efficient manner. This process may ultimately be difficult and time-consuming, as well as costly due to the existing separate natures
of the organizations and different markets served by their respective products. Coordination between the
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two organizations’ engineering, marketing, sales and administrative teams in merging into the new
company is critical to success. Telaxis’ chief executive officer, John Youngblood, is to become the chief executive officer of the combined company, but many other combined company officers will come from our team. Items such as corporate
culture differences, and different approaches to technology development and application may present difficulties in integrating the two organizations. If we are not successful in these efforts in a reasonable time, this could adversely affect the
combined company’s business processes and chances for success.
Sales of our products and Telaxis’
products could decline or be inhibited if the pending merger disrupts customer or partner relationships. Our customers or potential customers may delay or alter their buying patterns during the pending merger and possibly following the merger.
Customers may delay or change their purchasing habits for our products until products until they evaluate the likelihood of the successful integration of the companies’ operations and future product strategies are identified in the marketplace.
Existing or potential customers may purchase competitors’ products in the meantime. Also, by combining companies, our existing customers may view the new combined company as a more direct competitor than dealing with our previous organization
alone. Any delays in market acceptance of the new combined companies and management team could cause sales of the combined company’s products to decline.
Telaxis’ FiberLeap ™ product may not gain
commercial success in the broadband wireless marketplace and thus the anticipated upside sales and operating results from combining this product line with our existing lines may not materialize and the potential synergistic results of the merger
will not be realized. Indeed, if Telaxis’ products do not succeed, we may be seen to have issued a large number of shares and received relatively little value in return.
Telaxis is a defendant in a pending securities class action lawsuit alleging, among other things, violations of the registration and antifraud provisions of the federal
securities laws due to alleged statements or omissions in Telaxis’ initial public offering.
Since the
signing of the merger agreement, we have discussed with Telaxis the possibility of modifying or amending some of the terms of the merger. These discussions could result in significant changes to certain aspects of the pending merger. There can be no
assurance that the merger will be consummated under the terms set forth in the merger or as modified pursuant to these subsequent discussions. If this merger does not happen, we will have expended a significant portion of our present liquid
resources in the merger process and would have received no assumed benefits in terms of a stronger combined balance sheet and greater liquidity. It is possible that we would have diminished our ability to find alternative merger partners in a period
of tight financial markets and global customer market downturn, and with our own liquidity position further deteriorated.
In anticipation of the merger, we have prepared a business plan in the context of a combined company, which includes the cash that Telaxis would inject into our operations, and a marketing plan which harnesses the synergy from our
expanded product range. Our business plan may be modified from time to time in connection with our discussions with Telaxis regarding possible modifications or amendments to the terms of the proposed merger. Due to changes in our and Telaxis’
business conditions and operations results since the signing of the agreement, a closing date of the proposed merger cannot be estimated, nor can there be any assurance that the merger will be consummated as originally contemplated, or at all. If
the closing of the merger is delayed, or does not happen at all, we would be unable to execute our business plan of the combined company, thus we would be unable to realize the benefits of the improved liquidity and expanded product range that we
had anticipated. Our stock price could also fluctuate widely as a result, particularly to the extent that our current stock price reflects a market assumption that the merger will be completed as originally planned.
Our failure to comply with Nasdaq’s listing standards could result in our delisting by Nasdaq from the Nasdaq SmallCap Market and severely limit the
ability to sell any of our common stock.
To maintain the listing of our common stock on the Nasdaq National
Market, we are required to meet certain listing requirements, including a minimum bid price of $1.00 per share. Because we did not meet this requirement, Nasdaq moved our stock listing from the Nasdaq National Market to the Nasdaq SmallCap Market
effective August 27, 2002. Additionally Nasdaq notified us that, subject to maintaining compliance with the various rules necessary for continued listing on the Nasdaq SmallCap Market, the Company’s stock could be delisted from the market
unless it reaches and maintains the minimum $1 bid price for a period of 10 consecutive days by
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February 10, 2003. Should our common stock be delisted from the Nasdaq SmallCap Market, it would likely
be traded on the so-called “pink sheets” or on the “Electronic Bulletin Board” of the National Association of Securities Dealers, Inc. However, this alternative could result in a less liquid market available for existing and
potential shareholders to trade shares of our stock and could ultimately further depress the trading price of our common stock.
We do
not have the customer base or other resources of more established companies, which makes it more difficult for us to address the liquidity and other challenges we face.
We do not have the customer base or other resources of more established companies, which makes it more difficult for us to address the liquidity and other challenges we
face. Although we have installed and have in operation over 150,000 radio units globally, 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 larger,
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 serious challenges in financing our continued operation. We may not be able to successfully address these risks.
Our prospects for obtaining additional financing, if required, are uncertain and failure to obtain needed financing could affect our ability to pursue future growth and harm our business operations.
Even if we resolve our short term going concern difficulties, our future capital requirements will depend upon many factors,
including a re-energized telecommunications market, development costs of new products and related software tools, potential acquisition opportunities, 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 close business or product lines, further restructure
or refinance our debt or delay, further scale back or eliminate our research and development program, or manufacturing operations. We may also need to obtain funds through arrangements with partners or others that may require us to relinquish our
rights to certain technologies or potential products or other assets. Our inability to obtain capital, or our ability to obtain additional capital only upon onerous terms, could very seriously damage our business, operating results and financial
condition.
Market acceptance of our products might suffer if we are unable to keep pace with rapid technological changes and industry
standards.
Rapid technological change, frequency of new product introductions and enhancements, product
obsolescence, changes in end-user requirements and period-to-period demand, 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. Any success in developing new and enhanced systems and related software tools will depend upon a variety
of factors. Such factors include:
• |
new product development to respond to market demand; |
• |
integration of various elements of complex technology; |
• |
timely and efficient implementation of manufacturing and assembly processes at turnkey suppliers and design and manufacturing cost reduction programs for
existing product lines; |
• |
development and completion of related software tools, system performance, quality and reliability of systems; and |
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timely and cost effective system design process. |
We may not be successful in selecting, developing, manufacturing and marketing new systems or enhancements or related software tools. For example, to date, revenue generated through the sales of Point-to-Multipoint systems
has not met original expectations, and sales were down sharply in all product categories in the second half of 2001 and the first nine months of 2002. Also, errors could be found in our systems after commencement of commercial quantity shipments.
Such errors could result in the loss of or delay in market acceptance, as well as expenses associated with re-work of previously delivered equipment.
We rely on a limited number of customers for a material portion of our sales and the loss of sales to any of those customers could harm our business, financial conditions, and results of operations.
In the first nine months of 2002, sales to two customers accounted for 27% of sales. Our ability to maintain or increase our sales in the
future will depend, in part upon our ability to obtain orders from new customers as well as the financial condition and success of our customers, the telecommunications industry and the global economy. Our customer concentration also results in
concentration of credit risk. As of September 30, 2002, two customers accounted for 43% of our total accounts receivable balances. Many of our significant recurring customers are located outside United States, primarily in the Asia-Pacific Rim,
United Kingdom and continental Europe. Some of these customers are implementing new networks and are themselves in the various stages of development. They may require additional capital to fully implement their planned networks, which may be
unavailable to them on an as-needed basis, and which we cannot supply in terms of long-term financing.
If our
customers cannot finance their purchases of our products or services, this may materially adversely affect our business, operations and financial condition. Financial difficulties of existing or potential customers may also limit the overall demand
for our products and services. Current customers in the telecommunications industry have, from time to time, undergone financial difficulties and may therefore limit their future orders or find it difficult to pay for products sold to them. Any
cancellation, reduction or delay in orders or shipments, for example, as a result of manufacturing or supply difficulties or a customer’s inability to finance its purchases of our products or services, may materially adversely affect our
business. Difficulties of this nature have occurred in the past and we believe they can occur in the future. For instance, we recently announced a multiple year $100 million supply agreement with an Original Equipment Manufacturer in China. Even
with financial assurances in place, there is a possibility that the customer will change the timing and the product mix requested. Enforcement of the specific terms of the agreement could be difficult and expensive within China, and we may not
ultimately realize the total benefits currently expected in the contract period.
Finally, acquisitions in the
telecommunications industry are common, which tends to further concentrate the potential customer base and in some cases may cause orders to be delayed or cancelled.
We expect our quarterly revenue and operating results to fluctuate, and it is difficult to predict our future revenue and results of operations.
We have experienced and will continue to experience significant fluctuations in sales, gross margins and operating results. The
procurement process for most of our current and potential customers is complex and lengthy. As a result, the timing and amount of sales is often difficult to predict reliably. The sale and implementation of our products and services generally
involves a significant commitment of senior management, as well as our sales force and other resources.
The sales
cycles for our products and services typically involve technical evaluation and commitment of our cash and other resources for significant periods prior to realization of substantive sales and delays often occur. Delays have been associated with,
among other things:
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customers’ seasonal purchasing and budgetary cycles, as well as their own build-out schedules; |
• |
compliance with customers’ internal procedures for approving large expenditures and evaluating and accepting new technologies;
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compliance with governmental or other regulatory standards; |
• |
difficulties associated with customers’ ability to secure financing; negotiation of purchase and service terms for each sale;
|
• |
price negotiations required to secure purchase orders; and |
• |
education of customers as to the potential applications of our products and services, as well as related product-life cost savings.
|
Failure to maintain satisfactory shipping and delivery schedules could increase our costs, disrupt our supply chain, and result
in our inability to deliver our products, which would adversely affect our results of operations.
Due to
logistics of production and inventory, a delay in a shipment near the end of a particular quarter for any reason may cause sales in a particular quarter to fall significantly below our expectations and the stock market analysts’ expectations. A
single customer’s order scheduled for shipment in a quarter can represent a large portion of our potential sales for the quarter. Such delays have occurred in the past due to unanticipated shipment rescheduling, cancellations or deferrals by
customers, competitive and economic factors, unexpected manufacturing or other difficulties, delays in deliveries of components, subassemblies or services by suppliers and failure to receive anticipated orders. We cannot determine whether similar or
other delays might occur in the future, but expect that some or all of such problems might recur.
Our operating results could be
adversely affected by a continued decline in capital spending in the telecommunications market.
Although much
of the anticipated growth in the telecommunications infrastructure is expected to result from the entrance of new service providers, many new providers do not have the financial resources of existing service providers. For example, in the U.S., most
Competitive Local Exchange Carriers are experiencing financial distress, and/or have declared bankruptcy. If these new service providers are unable to adequately finance their operations, they may cancel or delay orders. Moreover, purchase orders
are often received and accepted far in advance of shipment and, as a result, we typically permit orders to be modified or canceled with limited or no penalties. Any failure to reduce actual costs to the extent anticipated when an order is received
substantially in advance of shipment or an increase in anticipated costs before shipment could materially adversely affect our gross margin in such situations. Ordering materials and building inventory based on customer forecasts or non-binding
orders can also result in large inventory write-offs, as occurred in 2000 and 2001. Global economic conditions have had a depressing effect on sales levels in past years. The soft economy and slowdown in capital spending in 2001 and to date in 2002
in the U.S. and U.K. telecommunications markets again had a significant depressing effect on the sales levels of products and services in both years.
Failure to maintain adequate levels of inventory could result in a reduction or delay in sales and harm our results of operations.
In a competitive industry such as broadband wireless, the ability to effect quick turnaround and delivery on customer orders can make the difference in maintaining an ongoing relationship with our
customers. This competitive market condition requires us to keep inventory on hand to meet such market demands. Given the variability of customer requirements and purchasing power, it is difficult to closely predict the amount of inventory needed to
satisfy demand. If we over or under-estimate inventory requirements to fulfill customer needs, our results of operations could continue to be adversely affected. If market conditions change swiftly, such as was the case in 2001, it may not be
possible to terminate purchasing contracts in a timely fashion to prevent periodic inventory increases, thus causing additional reserves to be recorded against realization of such inventory’s carrying value. In particular, increases in
inventory could materially adversely affect operations if such inventory is ultimately not used or becomes obsolete. This risk was realized in the large inventory write-downs in 1999, 2000 and 2001.
Difficulties in reducing our operating expenses could harm our results of operations.
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A material portion of our manufacturing related operating expenses is fixed. If we experience a reduction or delay in
sales, we may find it difficult to reduce our manufacturing related operating expenses on a timely basis. Difficulties of this nature would adversely affect our financial condition and harm our operating results.
Our limited manufacturing capacity and sources of supply may affect our ability to meet customer demand, which would harm our sales and damage our reputation.
Our internal manufacturing capacity, by design, is very limited. Under certain market conditions, as for
example when there is high capital spending and rapid system deployment, our internal manufacturing capacity will not be sufficient to fulfill customers’ orders. We would therefore rely on contract manufacturers to produce our systems,
components and subassemblies. 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 have a material adverse effect on our business,
financial condition and results of operations.
In addition, certain components, subassemblies and services
necessary for the manufacture of our systems are obtained from a sole supplier or a limited group of suppliers. Many of these suppliers are in difficult financial positions as a result of the significant slowdown that we too have experienced. Our
reliance on contract manufacturers and on sole suppliers or a limited group of suppliers involves risks. We have from time to time experienced an inability to obtain, or to receive in a timely manner, an adequate supply of finished products and
required components and subassemblies. As a result, our control over the price, timely delivery, reliability and quality of finished products, components and subassemblies is reduced.
If we fail to effectively manage our growth, our infrastructure, management, and resources could be strained, our ability to effectively manage our business could be diminished, and our result, of
operations could suffer.
To maintain a competitive market position, we are required to continue to invest
resources for growth. We continue to devote resources to the development of new products and technologies and are continuously conducting evaluations of these products. We will continue to invest additional resources in plant and equipment,
inventory, personnel and other items, to begin production of these products and to provide any necessary marketing and administration to service and support bringing these products to commercial production stage. Accordingly, our gross profit margin
and inventory management may be adversely impacted in the future by start-up costs associated with the initial production and installation of these new products. Start-up costs may include additional manufacturing overhead, additional allowance for
doubtful accounts, inventory and warranty reserve requirements and the creation of service and support organizations.
Additional inventory on hand for new product development and customer service requirements also increases the risk of further inventory write-downs if such products do not gain reasonable market acceptance at normal gross profit
margin. Although through monitoring our operating expense levels relative to business plan revenue levels, we try to maintain a given level of operating results, there are many market condition changes which have challenged and may continue to
challenge our ability to maintain given levels of operating expenses to revenue ratios. Expansion of our operations and acquisitions in prior periods have caused a significant strain on our management, financial, manufacturing and other resources
and has from time to time disrupted our normal business operations.
Our ability to manage any possible future
growth may again depend upon significant expansion of our executive, manufacturing, accounting and other internal management systems and the implementation of a variety of systems, procedures and controls, including improvements or replacements to
inventory and management systems designed to help control and monitor inventory levels and other operating decision criteria. In particular, we must successfully manage and control overhead expenses and inventories relative to sales levels we may
attain. Additionally we must successfully meet the challenge of development, introduction, marketing and sales of new products, the management and training of our employee base, the integration and coordination of a geographically and ethnically
diverse group of employees and the monitoring of third party manufacturers and suppliers. We cannot be certain that attempts to manage or again expand our marketing, sales, manufacturing and customer support efforts will be successful or result in
future additional sales or profitability. Any failure to coordinate and improve systems, procedures and controls, including improvements relating to inventory control and coordination with
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subsidiaries, at a pace consistent with our business, could cause inefficiencies, additional operational expenses and inherent risks, greater
risk of billing delays, inventory write-downs and financial reporting difficulties.
A significant ramp-up of
production of products and services could require us to make substantial capital investments in equipment and inventory, in recruitment and training of additional personnel and possibly in investment in additional manufacturing facilities. If
undertaken, we anticipate these expenditures would be made in advance of increased sales. In such event, operating results would be adversely affected from time-to-time due to short-term inefficiencies associated with the addition of equipment and
inventory, personnel or facilities, and such cost categories may periodically increase as a percentage of revenues.
A decline in the
selling price of our products would adversely affect our financial condition and results of operations.
We
believe that average selling prices and gross margins for our systems and services will tend to decline in both the near and the long term relative from the point at which a product is initially marketed and priced. Reasons for such decline may
include the maturation of such systems, the effect of volume price discounts in existing and future contracts and the intensification of competition.
If we cannot develop new products in a timely manner or fail to achieve increased sales of new products at a higher average selling price, then we would be unable to offset declining average selling
prices. If we are unable to offset declining average selling prices, or achieve corresponding decrease in manufacturing operating expenses, our gross margins will decline.
Difficulties in receiving payment from customers could adversely affect our financial conditions and results of operations.
We are subject to credit risk in the form of trade accounts receivable. We could be unable to enforce a policy of receiving payment within a limited number of days of
issuing bills, especially for customers in the early phases of business development. Our current credit policy typically allows payment terms between 30 and 90 days depending upon the customer and the economic norms of the region, as well as the
requirement for certain foreign customers to place irrevocable letters of credit to insure payment under terms. We could have difficulties in receiving payment in accordance with our policies, particularly from customers awaiting financing to fund
their expansion and from customers outside of the United States.
Our business depends on the acceptance of our products and services,
and it is uncertain whether the market will accept and demand our products and services at levels necessary for success.
Our future operating results depend upon the continued growth and increased availability and acceptance of microcellular, personal communications networks/personal communications services, or PCN/PCS, and wireless local loop access
telecommunications services in the United States and internationally. The volume and variety of wireless telecommunications services or the markets for and acceptance of such services may not continue to grow as expected. The growth of such services
may also fail to create anticipated demand for our systems. Predicting which segments of these markets will develop and at what rate these markets will grow is difficult.
Certain sectors of the telecommunications market will require the development and deployment of an extensive and expensive telecommunications infrastructure. In particular,
the establishment of PCN/PCS networks requires very large capital expenditure levels. Communications providers may not make the necessary investment in such infrastructure, and the creation of this infrastructure may not occur in a timely manner.
Moreover, one potential application of our technology, the use of our systems in conjunction with the provision of alternative wireless access in competition with the existing wireline local exchange providers, depends on the pricing of wireless
telecommunications services at rates competitive with those charged by wireline operators. Rates for wireless access must become competitive with rates charged by wireline companies for this approach to be successful. Absent that, consumer demand
for wireless access will be materially adversely affected. If we allocate resources to any market segment that does not grow, we may be unable to reallocate capital and other resources to other market segments in a timely manner, ultimately
curtailing or eliminating our ability to enter such other segments.
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Certain current and prospective customers are delivering services and features
that use competing transmission media such as fiber optic and copper cable, particularly in the local loop access market. To successfully compete with existing products and technologies, we must offer systems with superior price/performance
characteristics and extensive customer service and support. Additionally, we must supply such systems on a timely and cost-effective basis, in sufficient volume to satisfy such prospective customers’ requirements, in order to induce the
customers to transition to our technologies. Any delay in the adoption of our systems and technologies may result in prospective customers using alternative technologies in their next generation of systems and networks.
Prospective customers may design their systems or networks in a manner which excludes or omits our products and technology. Existing
customers may not continue to include our systems in their products, systems or networks in the future. Our technology may not replace existing technologies and achieve widespread acceptance in the wireless telecommunications market. Failure to
achieve or sustain commercial acceptance of our currently available radio systems or to develop other commercially acceptable radio systems would materially adversely affect us.
We face substantial competition and may not be able to compete effectively.
We are experiencing intense competition worldwide from a number of leading telecommunications equipment and technology suppliers. Such companies offer a variety of competitive products and services and some offer broader
telecommunications product lines, and include Alcatel Network Systems, Alvarion, Stratex Networks, Cerragon, Ericsson Limited, Harris Corporation-Farinon Division, Netro, NEC, NERA, Nokia Telecommunications, SIAE, Siemens, and Proxim/Western
Multiplex Corporation. 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. Some of our current and prospective customers and partners have developed, are currently developing or could manufacture
products competitive with our products. Nokia and Ericsson have developed competitive radio systems, and new technology featuring free space optical systems that are now in the marketplace.
The principal elements of competition in our market and the basis upon which customers may select our systems include price, performance, software functionality, perceived
ability to continue to be able to meet delivery requirements, and customer service and support. Recently, certain competitors have announced the introduction of new competitive products, including related software tools and services, and the
acquisition of other competitors and competitive technologies. We expect competitors to continue to improve the performance and lower the price of their current products and services and to introduce new products and services or new technologies
that provide added functionality and other features. New product and service offerings and enhancements by our competitors could cause a decline in sales or loss of market acceptance of our systems. New offerings could also make our systems,
services or technologies obsolete or non-competitive. In addition, we are experiencing significant price competition and expect such competition to intensify.
International sales and operation risks could adversely affect our results of operations.
As a result of our current heavy dependence on international markets, we face economic, political and foreign currency fluctuations that are often more volatile than those commonly experienced in the United States. The majority of
our sales to date have been made to customers located outside of the United States. Historically, our international sales have been denominated in British pounds sterling, Euros or United States dollars. A decrease in the value of foreign currencies
relative to the United States dollar could result in decreased margins from those transactions if such decreases are not hedged. For international sales that are United States dollar-denominated, such a decrease in the value of foreign currencies
could make our systems less price-competitive if competitors choose to price in other currencies and could have a material adverse effect upon our financial condition.
We fund our Italian subsidiary’s operating expenses which are denominated in Euros. An increase in the value of Euro currency if not hedged relative to the United
States dollar could result in more costly funding for our
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Italian operations, and as a result higher cost of production to us as a whole. Conversely a decrease in the value of Euro currency will result
in cost savings for us.
Additional risks are inherent in our international business activities. Such risks
include:
• |
changes in regulatory requirements; |
• |
costs and risks of localizing systems (homologation) in foreign countries; |
• |
delays in receiving and processing components and materials; |
• |
availability of suitable export financing; |
• |
timing and availability of export licenses, tariffs and other trade barriers; |
• |
difficulties in staffing and managing foreign operations, branches and subsidiaries; |
• |
difficulties in managing distributors; |
• |
potentially adverse tax consequences; |
• |
the burden of complying with a wide variety of complex foreign laws and treaties; |
• |
difficulty in accounts receivable collections, if applicable; and |
• |
political and economic instability. |
In addition, many of our customer purchase and other agreements are governed by foreign laws, which may differ significantly from U.S. laws. Therefore, we may be limited in our ability to enforce our rights under such agreements and
to collect damages, if awarded.
In many cases, local regulatory authorities own or strictly regulate
international telephone companies. Established relationships between government-owned or government-controlled telephone companies and their traditional indigenous suppliers of telecommunications often limit access to such markets. The successful
expansion of our international operations in certain markets will depend on our ability to locate, form and maintain strong relationships with established companies providing communication services and equipment in designated regions. The failure to
establish regional or local relationships or to successfully market or sell our products in international markets could limit our ability to expand operations.
Some of our potential markets include developing countries that may deploy wireless communications networks as an alternative to the construction of a limited wireline infrastructure. These countries
may decline to construct wireless telecommunications systems or construction of such systems may be delayed for a variety of reasons. Also, in developing markets, economic, political and foreign currency fluctuations may be even more volatile than
conditions in developed areas. Countries in the Asia/Pacific, African, and Latin American regions have recently experienced weaknesses in their currency, banking and equity markets. These weaknesses have adversely affected and could continue to
adversely affect demand for our products.
Governmental regulations affecting markets in which we compete could adversely affect our
business and results of operations.
Radio communications are extensively regulated by the United States and
foreign governments as well as by 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.
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Historically, in many developed countries, the limited availability of radio
frequency spectrum has inhibited the growth of wireless telecommunications networks. Each country’s regulatory process differs. To operate in a jurisdiction, we must obtain regulatory approval for its systems and comply with differing
regulations.
Regulatory bodies worldwide continue to adopt new standards for wireless communications products.
The delays inherent in this governmental approval process may cause the cancellation, postponement or rescheduling of the installation of communications systems by us and our customers. The failure to comply with current or future regulations or
changes in the interpretation of existing regulations could result in the suspension or cessation of operations. Such regulations or such changes in interpretation could require us to modify our products and services and incur substantial costs to
comply with such regulations and changes.
In addition, we are also affected by domestic and international
authorities’ regulation of the allocation and auction of the radio frequency spectrum. Equipment to support new systems and services can be marketed only if permitted by governmental regulations and if suitable frequency allocations are
auctioned to service providers. Establishing new regulations and obtaining frequency allocation at auction is a complex and lengthy process. If PCS operators and others are delayed in deploying new systems and services, we could experience delays in
orders. Similarly, failure by regulatory authorities to allocate suitable frequency spectrum could have a material adverse effect on our results. In addition, delays in the radio frequency spectrum auction process in the United States could delay
our ability to develop and market equipment to support new services.
We operate in a regulatory environment
subject to significant change. Regulatory changes, which are affected by political, economic and technical factors, could significantly impact our operations by restricting our development efforts and those of its customers, making current systems
obsolete or increasing competition. Any such regulatory changes, including changes in the allocation of available spectrum, could have a material adverse effect on our business, financial condition and results of operations. We may also find it
necessary or advisable to modify our systems and services to operate in compliance with such regulations. Such modifications could be expensive and time-consuming.
Our inability to protect our intellectual property could impair our competitive advantage, reduce our revenue and increase our costs.
We rely on a combination of patents, trademarks, trade secrets, copyrights and other measures to protect our intellectual property rights. We generally enter into
confidentiality and nondisclosure agreements with service providers, customers and others to limit access to and distribution of proprietary rights. We also enter into software license agreements with customers and others. However, such measures may
not provide adequate protection for our trade secrets or other proprietary information for a number of reasons. Any of our patents could be invalidated, circumvented or challenged, or the rights granted there under may not provide competitive
advantages to us. Any of our pending or future patent applications might not be issued within the scope of the claims sought, if at all.
Furthermore, others may develop similar products or software or duplicate our products or software. Similarly, others might design around the patents owned by us, or third parties may assert intellectual property
infringement claims against us.
In addition, foreign intellectual property laws may not adequately protect our
intellectual property rights abroad. A failure or inability to protect proprietary rights could have a material adverse effect on our business, financial condition and results of operations. Even if our intellectual property rights are adequately
protected, litigation may be necessary to enforce patents, copyrights and other intellectual property rights, to protect our trade secrets, to determine the validity of and scope of proprietary rights of others or to defend against claims of
infringement or invalidity. Litigation, even if wholly without merit, could result in substantial costs and diversion of resources, regardless of the outcome. If any claims or actions are asserted against us, we may choose to seek a license under a
third party’s intellectual property rights. However, such a license may not be available under reasonable terms or at all.
We
depend on key personnel who would be difficult to replace and our business will likely be harmed if we lost their services or cannot hire additional qualified personnel.
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Our future operating results depend in significant part upon the continued
contributions of key technical and senior management personnel, many of who would be difficult to replace. Future operating results also depend upon the ability to attract and retain qualified management and technical personnel. Competition for such
personnel is intense, and we may not be successful in attracting or retaining such personnel. Only a limited number of persons with the requisite skills to serve in these positions may exist and it may be increasingly difficult for us to hire such
personnel. If the Telaxis merger is consummated, the current chief executive officer of Telaxis, John Youngblood, will become our chief executive officer. He will lead a mixed executive team, some coming from our side and some from the Telaxis side.
Potential integration and retention problems could arise.
We have experienced and may continue to experience
employee turnover due to several factors, including the 2002 and 2001 layoffs at our U.S. and United Kingdom locations. Such turnover and layoffs could adversely impact our business.
Our stock price has been volatile and has experienced significant decline, and may continue to be volatile and decline.
In recent years, the stock market in general, and the market for shares of small capitalization, technology stocks in particular, have experienced extreme price
fluctuations. Such fluctuations have often been unrelated to the operating performance of individual affected companies. Companies with liquidity problems also often experienced downward stock price volatility. We believe that factors such as
announcements of developments related to our business (including any financings or any resolution of liabilities), announcements of technological innovations or new products or enhancements by us or our competitors, developments in the emerging
countries’ economies, sales by competitors, sales of our common stock into the public market, developments in our relationships with customers, partners, lenders, distributors and suppliers, shortfalls or changes in revenues, gross margins,
earnings or losses or other financial results that differ from analysts’ expectations, regulatory developments, fluctuations in results of operations and general conditions in our market, or the economy, could cause the price of our common
stock to fluctuate widely. The market price of our common stock may continue to decline, or otherwise continue to experience significant fluctuations in the future, including fluctuations that are unrelated to our performance.
We have never declared or paid cash dividends on our common stock nor do we anticipate doing so in the future.
We have never declared or paid cash dividends on our common stock, and we anticipate that any future earnings will be retained for
investment in the business. Any payment of cash dividends in the future will be at the discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, extent of indebtedness and
contractual restrictions with respect to the payment of dividends.
We have adopted anti-take over defenses that could delay or
prevent an acquisition of the company.
Our stockholder rights plan, certificate of incorporation, equity
incentive plans, bylaws and Delaware law may have a significant effect in delaying, deferring or preventing a change in control and may adversely affect the voting and other rights of other holders of common stock.
The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of any other preferred stock
that may be issued in the future, including the Series A junior participating preferred stock that may be issued pursuant to the stockholder rights plan, upon the occurrence of certain triggering events. In general, the stockholder rights plan
provides a mechanism by which the share position of anyone that acquires 15% or more, or 20% or more in the case of the State of Wisconsin Investment Board and Firsthand Capital Management, of our common stock will be substantially diluted. Future
issuance of stock or any additional preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.
Future sales or our securities in the public market could lower our stock price and impair our ability in new stock offerings to raise funds to continue operations.
Future sales of our common stock, including shares issued upon the exercise of our outstanding options and warrants or other derivative
transitions with respect to our stock, could have a significant negative effect on the
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market price of our common stock. These sales might also make it more difficult for us to sell equity
securities or equity-related securities in the future at a time and price that we would deem appropriate.
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This prospectus contains forward-looking statements that
involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “should,” “will,” and “would” or similar words. You should read statements that contain these words carefully because they may discuss our future expectations, contain projections of
our future results of operations or of our financial position or state other forward-looking information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are
not able to accurately predict or control. The factors listed above in the section captioned “Risk Factors,” as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our
actual results to differ materially from any expectations we describe. Actual results or outcomes may differ materially from those predicted in our forward-looking statements due to the risks and uncertainties inherent in our business, including
risks and uncertainties in:
• |
market acceptance of and continuing demand for our products; |
• |
our ability to protect our intellectual property; |
• |
the impact of competitive products, pricing and customer service and support; |
• |
our ability to obtain additional financing to support our operations; |
• |
obtaining and maintaining regulatory approval where required; and |
• |
the closing of our proposed merger with Telaxis Communications Corporation; and |
• |
changing market conditions and other risks detailed in this prospectus. |
You should also consider carefully the statements under “Risk Factors” beginning on page 4 and other sections of this prospectus and in the other documents filed
with the SEC, which address factors that could cause our actual results to differ from those set forth in the forward-looking statements. You should not place undue reliance on any forward-looking statements, which reflect our management’s view
only as of the date of this prospectus. We will not update any forward-looking statements to reflect events or circumstances that occur after the date on which such statement is made.
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://www.p-com.com or at the SEC’s Web site at http://www.sec.gov.
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The SEC allows us to “incorporate by
reference” into this prospectus the information we file with the SEC, 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 information we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, until the sale of all of the shares of common stock that are part of this offering. The documents we are incorporating by reference are as follows:
(1) |
our annual report on Form 10-K for the fiscal year ended December 31, 2001 filed on April 1, 2002; |
(2) |
our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2002, June 30, 2002 and September 30, 2002 filed on May 15, 2002, August 14, 2002
and November 14, 2002, respectively; |
(3) |
our current reports on form 8-K filed on June 26, 2002, July 9, 2002, September 12, 2002 and November 6, 2002; |
(4) |
the description of our common stock contained in our registration statement on Form 8-A filed on January 12, 1995, including any amendments or reports filed for
the purpose of updating such descriptions; and |
(5) |
the description of our preferred stock purchase rights, contained in our registration statement on Form 8-A filed on October 9, 1997, including any amendments
or reports filed for the purpose of updating such descriptions. |
Any statement contained in a
document incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the SEC and incorporated by reference) modifies
or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded.
Upon written or oral request, we will provide without charge a copy of these filings, 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 or amendment. We have not authorized
anyone to provide you with different information. No selling stockholder is authorized to make an offer of these securities in any state where the offer is not permitted. You should not assume the information in this prospectus is accurate as of any
date other than the date on the front of this prospectus.
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The following table sets forth the name of the selling stockholder
and the number of shares being registered for sale as of the date of this prospectus and sets forth the number of shares of common stock known by us to be beneficially owned by the selling stockholder. The following table assumes that the selling
stockholder will sell all of the shares being offered for its account by this prospectus. However, we are unable to determine the exact number of shares that actually will be sold. From March 1998 to April 2002, we purchased certain microwave radio
components used in our products from EESA and its affiliates. Other than as stated above, the selling stockholders has not had a material relationship with us within the past three years other than as a result of its ownership of our securities. The
shares offered by this prospectus may be offered from time to time by the selling stockholder. This information is based upon information provided by the selling stockholder and public documents filed with the SEC, and is not necessarily indicative
of beneficial ownership for any other purpose. The number of shares of common stock beneficially owned by the selling stockholder is determined in accordance with the rules of the SEC. The term “selling stockholder” includes the
stockholder listed below and its transferees, assignees, pledgees, donees or other successors. The percent of beneficial ownership for the stockholder is based on 31,104,311 shares of common stock outstanding as of November 14, 2002.
| Name of Selling Stockholder |
Number of Shares of Common Stock Beneficially Owned Prior to Offering |
Percent of Outstanding Shares Beneficially Owned Prior to Offering |
Number of Shares to be Sold Pursuant to this Prospectus |
Number of Shares Beneficially Owned After the Offering (1) |
Percent of Outstanding Shares Beneficially Owned After the Offering (1) |
||||||
| EESA, Inc. |
419,161 |
1.3 |
% |
419,161 |
— |
— |
(1) |
Assumes that all shares being offered by the selling stockholder under this prospectus are sold, and that the selling stockholder acquires no additional shares
of common stock before the completion of this offering. |
We will not receive any of the proceeds from the sale of the common
stock by the selling stockholder. All proceeds will be received by the selling stockholder.
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We are registering all 419,161 shares on behalf of the selling
stockholder. We issued all of the shares to the selling stockholder in a private placement transaction. The selling stockholder named in the table above or pledgees, donees, transferees or other successors-in-interest selling shares received from
the selling stockholder as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus may sell the shares from time to time. The selling stockholder will act independently of us in making decisions
regarding the timing, manner and size of each sale. The sales may be made on the Nasdaq SmallCap Market, in the over-the-counter market, through put or call option transactions relating to the shares, in negotiated transactions, or a combination of
such methods of sale or otherwise, at prices and on terms then prevailing or at prices related to the then current market price. The selling stockholder may effect these transactions by selling the shares to or through broker-dealers, or not. The
shares may be sold by one or more of, or a combination of, the following:
• |
a block trade in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate
the transaction; |
• |
purchases by a broker-dealer as principal and resale by such broker-dealer for its account under this prospectus; |
• |
an exchange distribution in accordance with the rules of the respective exchange; |
• |
ordinary brokerage transactions and transactions in which the broker solicits purchasers; and |
• |
in privately negotiated transactions. |
To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling
stockholder may arrange for other broker-dealers to participate in the resales.
The selling stockholder may enter
into hedging transactions with broker-dealers in connection with distributions of the shares or otherwise. In these transactions, broker-dealers may engage in short sales of the shares in the course of hedging the positions they assume with the
selling stockholder. The selling stockholder also may sell shares short and redeliver the shares to close out such short positions. The selling stockholder may enter into options or other transactions with broker-dealers that require the delivery to
the broker-dealer of the shares. The broker-dealer may then resell or otherwise transfer such shares covered by this prospectus. The selling stockholder also may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the shares so
loaned, or upon default the broker-dealer may sell the pledged shares under this prospectus.
Broker-dealers or
agents may receive compensation in the form of commissions, discounts or concessions from the selling stockholder. Broker-dealers or agents may also receive compensation from the purchasers of the shares for whom they act as agents or to whom they
sell as principals, or both. Compensation as to a particular broker-dealer might be in excess of customary commissions and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and any other participating
broker-dealers or the selling stockholder may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act of 1933, as amended, in connection with sales of the shares. Accordingly, any such commission, discount
or concession received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act. Because the selling stockholder may be deemed to be an
“underwriter” within the meaning of Section 2(11) of the Securities Act, the selling stockholder will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which
qualify for sale in compliance with Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholder has advised us that it has not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of its securities and that there is no underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholder.
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The shares will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. 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 and is complied with.
Under applicable rules and regulations under the Securities
Exchange Act of 1934, as amended, any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to our common stock for a restricted period before the commencement of such distribution.
In addition, the selling stockholder will be subject to applicable provisions of the Securities Exchange Act and the associated rules and regulations under the Securities Exchange Act, including Regulation M, which provisions may limit the timing of
purchases and sales of shares of our common stock by the selling stockholder.
We will make copies of this
prospectus available to the selling stockholder and have informed the selling stockholder of the need to deliver copies of this prospectus to purchasers at or before the time of any sale of the shares.
Upon being notified by the selling stockholder that a donee or pledgee intends to sell more than 500 shares, we will file a supplement to
this prospectus. We will bear all costs, expenses and fees in connection with the registration of the shares. The selling stockholder will bear all commissions and discounts, if any, attributable to the sales of the shares. The selling stockholder
may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against various liabilities, including liabilities arising under the Securities Act of 1933.
The validity of the common stock offered in this prospectus will be
passed upon for us by Brobeck, Phleger & Harrison LLP, San Diego, California. As of the date of this prospectus, attorneys of Brobeck, Phleger & Harrison LLP and family members thereof beneficially owned an aggregate of approximately 8,000
shares of our common stock.
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 2001 have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as
described in Note 1 to the consolidated financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
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You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. This prospectus should not be considered an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this
prospectus is accurate as of any date other than the date on the front of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
419,161 Shares
Common Stock
PROSPECTUS
November 19, 2002
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
All costs and expenses incurred in connection with the issuance and distribution of the securities being
registered for sale will be paid by the Registrant. The following is an itemized statement of these costs and expenses. All amounts are estimates except the Securities and Exchange Commission registration fee.
| SEC registration fee |
$ |
11.77 | |
| Printing and engraving |
$ |
5,000.00 | |
| Legal fees and expenses |
$ |
8,000.00 | |
| Accounting fees and expenses |
$ |
7,500.00 | |
| |
| ||
| Total |
$ |
20,511.77 |
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to award or a corporation’s board of directors to
grant indemnification to directors and officers in terms sufficiently broad to permit 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.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, 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 such indemnification is
against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
Item 16. Exhibits.
| Exhibit Number |
Description of Document | |
| 5.1 |
Opinion of Brobeck, Phleger & Harrison LLP. | |
| 23.1 |
Consent of PricewaterhouseCoopers LLP, Independent Accountants. | |
| 23.2 |
Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1). | |
| 24.1 |
Power of Attorney (included on the Signature Page of this registration statement). |
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 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;
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(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(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.
The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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 such 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 such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant, P-Com, Inc., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Campbell, State of California, on this 19 day of November, 2002.
| P-COM, INC. | ||
| By: |
/s/ GEORGE P. ROBERTS | |
| George P. Roberts Chairman of the Board and Chief Executive Officer | ||
| By: |
/s/ LEIGHTON J. STEPHENSON | |
| Leighton J. Stephenson Vice President and Chief Financial Officer | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint George P. Roberts,
the undersigned’s true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his name, place and stead, in any and all capacities (including the undersigned’s capacity as a
director and/or officer of P-Com, Inc.), to sign a Registration Statement on Form S-3 of P-Com, Inc. to be filed under the Securities Act of 1933, as amended, for the registration of the resale of 419,161 shares of Common Stock of P-Com, Inc. by the
selling stockholder named herein, and any and all amendments (including post-effective amendments) to such Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the
date indicated.
| Name |
Title |
Date | ||
| /s/ GEORGE P. ROBERTS George P. Roberts |
Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
November 19, 2002 | ||
| /s/ LEIGHTON J. STEPHENSON Leighton J. Stephenson |
Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
November 19, 2002 | ||
| /s/ FREDERICK R. FROMM Frederick R. Fromm |
Director of the Company |
November 19, 2002 | ||
| /s/ BRIAN T. JOSLING Brian T. Josling |
Director of the Company |
November 19, 2002 |
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| /s/ JOHN A. HAWKINS John A. Hawkins |
Director of the Company |
November 19, 2002 | ||
| /s/ GEN. HAROLD R. JOHNSON
(RET.) Gen. Harold R. Johnson (Ret.) |
Director of the Company |
November 19, 2002 |
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INDEX TO EXHIBITS
| Exhibit No. |
Description | |
| 5.1 |
Opinion of Brobeck, Phleger & Harrison LLP. | |
| 23.1 |
Consent of PricewaterhouseCoopers LLP, Independent Accountants. | |
| 23.2 |
Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1). | |
| 24.1 |
Power of Attorney (included on the Signature Page of this registration statement). |
.