As filed with the Securities and Exchange Commission on April 17, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
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P-COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware 77-0289371
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3175 S. Winchester Boulevard, Campbell, CA 95008
(408) 866-3666
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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George P. Roberts
Chairman of the Board and Chief Executive Officer
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, California 95008
(408) 866-3666
(Name and Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
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Copy to:
Hayden J. Trubitt, Esq.
Brobeck, Phleger & Harrison LLP
12390 El Camino Real
San Diego, California 92130
(858) 720-2500
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act of 1933, as amended, registration
statement number of the earlier effective registration statement for the same
offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, as amended, check the following box and list
the Securities Act of 1933, as amended, registration statement number of the
earlier effective registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Amount to Offering Aggregate Amount of
Securities to be Registered be Registered Price Per Share/(2)/ Offering Price /(2)/ Registration Fee
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Common Stock, $0.0001 par value /(1)/..... 3,797,468 $0.1425 $541,139.19 $49.78
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/(1)/ Each share of Common Stock is also paired with a stock
purchase right under the Registrant's Stockholder Rights Plan.
/(2)/ 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 April 16, 2002 as reported on the
Nasdaq National 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 stockholders 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 APRIL 17, 2002)
3,797,468 SHARES
P-Com, Inc.
COMMON STOCK
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This prospectus relates to the resale of up to 3,797,468 shares of our
common stock by certain of our current stockholders. Of this amount, 949,367
shares are being offered for sale by Gruber McBaine International and 2,848,101
shares are being offered for sale by Lagunitas Partners, L.P., which entities
are discussed here within. We are registering shares of our common stock for
resale by these selling stockholders. The prices at which such stockholders 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 the
shares offered under this prospectus.
Our common stock is traded on the Nasdaq National Market under the
symbol "PCOM." The last reported sales price of our common stock on April 10,
2002 was $0.16 per share.
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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.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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The date of this prospectus is __________, 2002.
TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY.................................................. 3
RISK FACTORS........................................................ 4
FORWARD-LOOKING STATEMENTS.......................................... 15
WHERE YOU CAN FIND MORE INFORMATION................................. 15
INFORMATION INCORPORATED BY REFERENCE............................... 16
SELLING STOCKHOLDERS................................................ 17
USE OF PROCEEDS..................................................... 17
PLAN OF DISTRIBUTION................................................ 18
LEGAL MATTERS....................................................... 20
EXPERTS............................................................. 20
PROSPECTUS SUMMARY
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 July 31, 2001, we sold 3,797,468 shares of our common stock in a
private transaction, which we refer to in this prospectus as the "private
placement," for an aggregate gross consideration of $3.0 million, or $0.79 per
share. The closing sale price of our common stock on July 31, 2001 was $0.48.
This prospectus relates to the resale of up to 3,797,468 shares of our common
stock sold in the private placement. Of this amount, 949,367 shares are being
offered for sale by Gruber McBaine International and 2,848,101 shares are being
offered for sale by Lagunitas Partners, L.P. (Gruber & McBaine Capital
Management LLC is general partner of Lagunitas Partners L.P. and is attorney in
fact for Gruber McBaine International. In each of these capacities, Gruber &
McBaine Capital Management LLC has full voting and investment power over all the
indicated shares. Combined, the shares so "beneficially owned" by Gruber &
McBaine Capital Management LLC constitute 4,356,628 shares beneficially owned
before this offering, or 5.1%; 3,797,468 shares to be sold pursuant to this
prospectus; and 559,160 shares beneficially owned after the offering, or less
than 1%). We are registering our common stock for resale by these selling
stockholders. The prices at which such stockholders may sell the shares will be
determined by the prevailing market for the shares or in negotiated
transactions. See "Selling Stockholders."
USE OF PROCEEDS
We will not receive any of the proceeds from sales by the selling
stockholders of the offered shares of common stock. All proceeds will be
received by the selling stockholders.
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RISK FACTORS
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 uncertainty in the communications equipment industry and the United
States economy may have serious implications for the growth and stability of
our business and may negatively affect our financial condition and results of
operations.
A severe worldwide slowdown in the telecommunications equipment and
services sector is affecting us. Customers, specifically systems operators and
integrated system providers, are deferring capital spending and orders to
suppliers such as our company, or canceling orders, and, in general, not
building out any significant additional infrastructure at this time. In
addition, our accounts receivable, inventory and stability can be jeopardized
if our customers experience financial distress. In the third quarter 2001, many
large telecommunications equipment manufacturers reduced or eliminated their
estimates of product sales levels for the remainder of 2001. We recorded large
valuation charges and other write-offs in the first quarter of 2001 because our
largest customer, Winstar Communications Inc., declared bankruptcy on April 18,
2001. Approximately 10% of our sales in the first quarter of 2001 were to
Winstar. We recorded additional write down of inventory on hand at September
30, 2001 to properly state our inventory to its net realizable value, given
current market conditions and sales activity projections. Our services
business' largest customer began a slowdown and deferral of previously
committed work orders as of the end of the second quarter. We do not think our
own product sales levels can likely recover while an industry-wide slowdown
persists.
Our business and financial positions have deteriorated significantly.
Our business and financial positions have deteriorated significantly. Our
core business' product sales were down very sharply in the second half of 2001,
and are unlikely to recover while the industry-wide slowdown persists. Our
December 31, 2001 cash, working capital, accounts receivable, inventory, total
assets, employee headcount, backlog and total stockholders' equity were all
down very substantially from December 31, 2000. Our working capital is
negative. Our gross margin on sales was negative in fiscal 2001 and in each of
the last two quarters of 2001. Our aggregate net loss for the last four fiscal
years is approximately $310.0 million. We have $29.3 million of convertible
notes maturing on November 1, 2002 that our current resources would not enable
us to pay. Our largest customer, Winstar, declared bankruptcy in April 2001,
leaving us with unpaid receivables and inventory purchase obligations to our
own suppliers.
Our independent accountants' opinion on our consolidated financial
statements includes an explanatory paragraph indicating substantial doubt, on
the basis described in that paragraph, about our ability to continue as a going
concern. We are able generally to pay our debts and meet our obligations as
they become due. Nevertheless to continue long-term as a going concern, we must
ultimately reach agreement with the holders of our 4.25% convertible
subordinated notes to extend the notes' maturity date and/or convert them into
equity. In addition, to continue long-term as a going concern we will have to
increase our sales, 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 goals.
Our failure to comply with Nasdaq's listing standards could result in our
delisting by Nasdaq from the Nasdaq National 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. We received a letter of notice dated June 20, 2001
from the Nasdaq National Market stating that due to our minimum bid price
levels remaining under the $1.00 level for 30 consecutive trading days, we are
therefore on notice that we could be subject to a delisting procedure should
the bid price continue to remain under the $1.00 level for an additional 90-day
period, unless our
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stock attains a bid price of $1.00 or more for a period of 10 consecutive days
during such 90-day period. Shortly after September 11, 2001, Nasdaq issued a
moratorium on delisting process until January 2, 2002. We received a new letter
of notice dated February 14, 2002 from Nasdaq stating that due to our minimum
bid price levels remaining under $1 for 30 consecutive days, we are again on
notice that we are subject to delisting procedures. Management received in
September 2001 stockholders' approval for a reverse stock split calling for one
share of newly issued common stock to be issued in place of each five shares of
existing stock as of the date at which the reverse stock split is effected.
Depending upon our stock price at implementation of the reverse stock split,
there can be no assurance that we will maintain compliance with the minimum bid
price. If we fail to meet the minimum bid process for 10 consecutive days
during the grace period, our common stock may be delisted from the Nasdaq
National Market. Even if we are able to comply with the minimum requirement,
there is no assurance that in the future we will continue to satisfy the Nasdaq
listing requirements, with the result that our common stock may be delisted
from the Nasdaq National Market. Should our common stock be delisted from the
Nasdaq National Market, it would likely be traded on the Nasdaq Small Cap
Market, and if delisted from the Nasdaq Small Cap Market, would likely be
traded on the so-called "pink sheets" or the "Electronic Bulletin Board" of the
Nasdaq National Market. However, this alternative could result in a less liquid
market available for existing and potential stockholders to exchange 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 older, more developed companies, which would provide a
base of financial performance from which to launch strategic initiatives and
withstand business reversals. In addition, we have not built up the level of
capital often enjoyed by more established companies, so from time to time we
may face 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 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, including
notes which come due November 1, 2002, 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. We expect that if we reach
agreements with the holders of the notes and or other short-term liabilities to
convert into equity financing in 2002, the new stock would be issued at a low
price per share and would be significantly dilutive to our current stock
holders.
If adequate funds are not available, we may be required to close business or
product lines, restructure or refinance our debt or delay, scale back or
eliminate our research and development, acquisition or manufacturing programs.
We may also need to obtain funds through arrangements with partners or others
that may require us to relinquish rights to certain of our technologies or
potential products or other assets. Our inability to obtain capital, or our
ability to obtain additional capital only upon onerous terms, could very
seriously damage our business, operating results and financial condition and
further erode our stock price.
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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. Recently, we have been developing our new
Point-to-Multipoint systems, and other upgraded products. 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 meet market demand;
. integration of various elements of complex technology;
. timely and efficient implementation of manufacturing and assembly
processes at turnkey suppliers and manufacturing cost reduction
programs for existing product lines;
. development and completion of related software tools, system
performance, quality and reliability of systems; and
. timely and efficient completion of system design.
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.
Additionally, 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 operation.
In 2001, sales to three customers accounted for 47.4% of our sales. Sales
to one service customer in the United States accounted for 62.0% of total
service revenue, and 18% of total 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
existing customers, the telecommunications industry and the economy in general.
Our customer concentration also results in concentration of credit risk.
In December 31, 2001, four customers represented approximately 62% of our total
accounts receivable. In April 2001,Winstar, which was then our largest
customer, declared bankruptcy and we had to write off $11.6 million of Winstar
receivables.
Many of our major product customers are located in foreign countries,
primarily in the United Kingdom, Europe and the Pacific Rim. Some of these
customers are implementing new networks and are themselves in the early 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. Both current
customers and potential future customers in the telecommunications industry
have, from time to time, reportedly undergone financial difficulties and may
therefore limit their future orders or find it difficult to pay our billings 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
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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.
Finally, acquisitions in the communications industry are common, which
further concentrates the customer base and may cause some orders to be delayed
or cancelled.
We expect our quarterly revenue and results of operations 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 cycle for our products and services
typically involve technical evaluation and commitment of cash and other
resources and delays often occur. Delays are frequently associated with, among
other things:
. customers' seasonal purchasing and budgetary cycles, as well as their
own buildout schedules;
. compliance with customers' internal procedures for approving large
expenditures and evaluating and accepting new technologies;
. 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.
The recent downward trends in sales, gross margins and operating results are
primarily due to the industry-wide downturn, however, rather than to factors
such as these.
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 and 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, for example, 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 results of operations 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 United States most competitive local
exchange carriers are experiencing
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financial distress. 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 for such orders. Ordering materials and building inventory based on
customer forecasts or non-binding orders can also result in large inventory
write-offs, such as occurred in 2000 and 2001.
Global economic conditions have had a depressing effect on sales levels in
past years, including a significant slowdown in 1998. The soft economy and
reported slowdown in capital spending in 2001 in the United States
telecommunications market again had a significant depressing effect on the
sales levels of products and services in 2001.
Failure to maintain adequate levels of inventory could result in a reduction or
delay in sales and harm our results of operations.
Our customers have increasingly been demanding short turnaround on orders
rather than submitting purchase orders far in advance of expected shipment
dates. This practice requires us to keep inventory on hand for immediate
shipment. Given the variability of customer need and purchasing power, it is
difficult to predict the amount of inventory needed to satisfy customer demand.
If we over or under-estimate inventory requirements to fulfill customer needs,
our results of operations could continue to be adversely affected. 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.
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 is very limited. We use contract
manufacturers in large part to produce our systems, components and
subassemblies and expect to rely increasingly on these manufacturers in the
future. We also rely on outside vendors to manufacture certain other components
and subassemblies. Our internal manufacturing capacity and that of our contract
manufacturers may not be sufficient to fulfill our orders. 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.
Our reliance on contract manufacturers and on sole suppliers or a limited
group of suppliers involves risks. We have experienced an inability to obtain
an adequate supply of finished products and required components and
subassemblies. As a result, we have reduced control over the price, timely
delivery, reliability and quality of finished products, components and
subassemblies. We do not have long-term supply agreements with most of our
manufacturers or suppliers. We have experienced problems in the timely delivery
and quality of products and certain components and subassemblies from vendors.
Some suppliers have relatively limited financial and other resources. Any
inability to obtain timely deliveries of components and subassemblies of
acceptable quality or any other circumstance would require us to seek
alternative sources of supply, or to manufacture finished products or
components and subassemblies internally. As manufacture of our products and
certain of our components and subassemblies is an extremely complex process,
finding and educating new vendors could delay our ability to ship our systems.
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If we fail to effectively use our resources, our infrastructure, management and
growth potential could be harmed, our ability to effectively manage our
business could be diminished and our results of operations could suffer.
To maintain a competitive market position, we are required to continue to
invest resources for growth. Currently, we are devoting significant 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, in addition to the effect our recent performance
has had on gross profit margin and inventory levels, our gross profit margin
and inventory management may be further 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
we, through monitoring our operating expense levels relative to business plan
revenue levels, try to maintain a given level of operating results, there are
many market condition changes which have 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 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, the 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
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 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, gross
margins 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 prices 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, our gross margins will decline.
9
Difficulties in receiving payment from customers could adversely affect our
financial condition 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 120 days depending upon the customer and the economic
norms of the region. 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. In 2001,
we recorded charges of $11.8 million for accounts receivable write-offs and
reserves additions. Similar write-offs may occur in the future, which could
have a further material adverse effect on our business, financial condition and
results of operations.
Our business depends on the increased acceptance of and demand for our products
and services, and it is uncertain whether the market will accept and demand our
products and services at levels necessary for our 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. Because these markets are relatively new, predicting which segments of
these markets will develop and at what rate these markets will grow is
difficult. In addition to our other products, we have recently invested
significant time and resources in the development of Point-to-Multipoint radio
systems. If the licensed millimeter wave, spread spectrum microwave radio or
Point-to-Multipoint microwave radio market and related services for our systems
fails to grow, or grows more slowly than anticipated, our business, financial
condition and results of operations will be materially adversely affected.
Certain sectors of the communications market will require the development
and deployment of an extensive and expensive communications infrastructure. In
particular, the establishment of PCN/PCS networks will require very large
capital 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 is 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 telephone
companies. Rates for wireless access must become competitive with rates charged
by wireline companies for this approach to be successful. If wireless access
rates are not competitive, 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 resources to other market
segments in a timely manner, ultimately curtailing or eliminating our ability
to enter such other segments.
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 and
otherwise overcome any reluctance on the part of such customers to transition
to new technologies. Any delay in the adoption of our systems may result in
prospective customers using alternative technologies in their next generation
of systems and networks.
Prospective customers may not design their systems or networks to include
our systems. 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.
10
We face substantial competition and may not be able to compete effectively.
The wireless communications market is intensely competitive. Our
wireless-based radio systems compete with other wireless telecommunications
products and alternative telecommunications transmission media, including
copper and fiber optic cable. We are experiencing intense competition worldwide
from a number of leading telecommunications companies. Such companies offer a
variety of competitive products and services and some offer broader
telecommunications product lines, and include Alcatel Network Systems, Bosch
Telekom, DMC Stratex Networks, Cerragon, Ericsson Limited, Harris
Corporation-Farinon Division, Lucent T.R.T., NEC, Nokia Telecommunications,
Nortel/BNI, SIAE, Siemens, and Western Multiplex Corporation.
Many of these companies have greater installed bases, financial resources
and production, marketing, manufacturing, engineering and other capabilities
than we do 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 recently developed new competitive radio
systems, and new technology featuring laser-based millimeter-wave delivery is
now on 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.
In doing business in international markets, we faces economic, political
and foreign currency fluctuations that are 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 or United States dollars. Certain of our international sales
are denominated in other foreign currencies, including Euro. 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 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 operation expenses which are denominated
in Euro. 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 Italian
operations, and as a result higher cost of production to us as a whole.
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;
11
. 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;
. foreign currency exchange fluctuations;
. 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 United States
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 targeted 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. Our inability to identify
suitable parties for such relationships, or even if such parties are identified
to form and maintain strong relationships with them, could prevent us from
generating sales of products and services in targeted markets or industries.
Moreover, even if such relationships are established, we may be unable to
increase sales of products and services through such relationships.
Some of our potential markets include developing countries that may deploy
wireless communications networks as an alternative to the construction of a
limited wired infrastructure. These countries may decline to construct wireless
telecommunications systems or construction of such systems may be delayed for a
variety of reasons. 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 products.
Governmental regulation 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. Historically, in many developed countries,
the limited availability of radio frequency spectrum has inhibited the growth
of wireless telecommunications networks.
12
Each country's regulatory process differs. To operate in a jurisdiction,
we must obtain regulatory approval for our 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 we 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 we
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 personal
communication services 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 our 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 thereunder 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 lose their services or cannot hire additional
qualified personnel.
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
13
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. Nonetheless business conditions forced us to reduce our
workforce by 35% in 2001. It may be difficult to reassemble the collective and
individual strength of our previous workforce.
We have experienced and may continue to experience employee turnover due
to several factors, including the 2001 layoffs and our location in the Silicon
Valley in Northern California. Such turnover could adversely impact our
business.
Our stock price has been volatile and has experienced a 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 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. The market price of our common stock may continue to decline
substantially, 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 our 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 of 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 outstanding options and warrants or other derivative transactions
with respect to our stock, could have a significant negative effect on the
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.
14
FORWARD-LOOKING STATEMENTS
This prospectus may contain 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
. changing market conditions and other risks detailed in this prospectus.
You should read and interpret any forward-looking statements together with the
following documents:
. our annual report on Form 10-K, our quarterly reports on Form 10-Q and
current reports on Form 8-K filed with the SEC since January 1, 2001
and our proxy statement for our annual meeting of stockholders held on
May 31, 2001;
. the risk factors contained in this prospectus under the caption "Risk
Factors"; and
. our other filings with the SEC.
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.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public from our Web site at http://www.p-com.com or at the SEC's Web
site at http://www.sec.gov.
15
INFORMATION INCORPORATED BY REFERENCE
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 and Exchange Act of 1934, as amended, until the sale of
all of the shares of common stock that are part of this offering is complete.
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) 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
(3) 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.
16
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders 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 each of the selling stockholders. The following table
assumes that the selling stockholders will sell all of the shares being offered
for their account by this prospectus, which were issued to them pursuant to a
private placement completed on July 31, 2001. However, we are unable to
determine the exact number of shares that actually will be sold. The shares
offered by this prospectus may be offered from time to time by the selling
stockholders. This information is based upon information provided by each
respective 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 each of the selling
stockholders is determined in accordance with the rules of the SEC. The term
"selling stockholders" includes the stockholders listed below and their
transferees, assignees, pledgees, donees or other successors. The percent of
beneficial ownership for each stockholder is based on 84,958,300 shares of
common stock outstanding as of February 28, 2002.
Number of
Number of Shares Percent of Number of Shares Percent of
of Common Stock Outstanding Shares to be Beneficially Outstanding
Beneficially Shares Beneficially Sold Pursuant Owned Shares Beneficially
Owned Owned to this After the Owned After the
Name of Selling Stockholder Prior to Offering Prior to Offering Prospectus Offering /(1)/ Offering /(1)/
--------------------------- ----------------- ----------------- ---------- -------------- --------------
Gruber McBaine International /(2)/ 1,070,924 1.3% 949,367 121,557 *
Lagunitas Partners, L.P. /(2)/..... 3,285,704 3.9% 2,848,101 437,603 *
------------
* Less than one percent.
/(1)/ Assumes that all shares being offered by the selling stockholders under
this prospectus are sold, and that the selling stockholders acquire no
additional shares of common stock before the completion of this offering.
/(2)/ Gruber & McBaine Capital Management LLC is general partner of Lagunitas
Partners L.P. and is attorney in fact for Gruber McBaine International.
In each of these capacities, Gruber & McBaine Capital Management LLC has
full voting and investment power over all the indicated shares. Combined,
the shares so "beneficially owned" by Gruber & McBaine Capital Management
LLC constitute 4,356,628 shares beneficially owned before this offering,
or 5.1%; 3,797,468 shares to be sold pursuant to this prospectus; and
559,160 shares beneficially owned after the offering, or less than 1%.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common stock
by the selling stockholders. All proceeds will be received by the selling
stockholders.
17
PLAN OF DISTRIBUTION
We are registering all 3,797,468 shares on behalf of the selling
stockholders. We issued all of the shares to the selling stockholders in a
private placement transaction. The selling stockholders named in the table
above or pledgees, donees, transferees or other successors-in-interest selling
shares received from the selling stockholders as a gift, partnership
distribution or other non-sale related transfer after the date of this
prospectus, collectively, the selling stockholders, may sell the shares from
time to time. The selling stockholders 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 National Market, in the over-the-counter market, through put
or call option transactions relating to the shares, 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, or in negotiated transactions.
The selling stockholders may effect these transactions by selling the shares to
or through broker-dealers. 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 stockholders 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 stockholders.
The selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders 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 stockholders 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
stockholders. 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 stockholders 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 stockholders may be
deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, the selling stockholders 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 stockholders have advised us that they have
not entered into any agreements, understandings or arrangements with
18
any underwriters or broker-dealers regarding the sale of their securities and
that there is no underwriter or coordinating broker acting in connection with
the proposed sale of shares by the selling stockholders.
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 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 stockholders will be subject to applicable provisions of
the Exchange Act and the associated rules and regulations under the Exchange
Act, including Regulation M, which provisions may limit the timing of purchases
and sales of shares of our common stock by the selling stockholders. We will
make copies of this prospectus available to the selling stockholders and have
informed them of the need to deliver copies of this prospectus to purchasers at
or before the time of any sale of the shares.
We will file a supplement to this prospectus, if required, to comply with
Rule 424(b) under the Securities Act, upon being notified by a selling
stockholder that any material arrangements have been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
. the name of each such selling stockholder and of the participating
broker-dealer(s);
. the number of shares involved;
. the price at which such shares were sold;
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
. other facts material to the transaction.
In addition, upon being notified by a 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, including a limited amount of one of the fees and
expenses of certain selling stockholders and have agreed to indemnify the
selling stockholders against specified liabilities arising in connection with
this registration statement and the related prospectus. In addition, the
selling stockholders will bear all commissions and discounts, if any,
attributable to the sales of the shares. The selling stockholders 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. The selling stockholders have
agreed to indemnify us, our directors and officers who sign the registration
statement of which this prospectus is a part, and control persons against
specified liabilities in connection with the offering of the shares, including
liabilities arising under the Securities Act. To the extent this
indemnification is prohibited, the selling stockholders and we are required to
contribute to payments the parties may be required to make in respect of
otherwise indemnifiable claims.
19
LEGAL MATTERS
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 40,000
shares of our common stock.
EXPERTS
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.
20
===============================================================================
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. We are not making 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.
3,797,468 SHARES
P-COM, INC.
COMMON STOCK
PROSPECTUS
April ___, 2002
===============================================================================
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.................................. $51
Printing and engraving................................ $5,000
Legal fees and expenses............................... $10,000
Accounting fees and expenses.......................... $7,500
-------------
Total............................................ $22,551
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 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.
10.91/(1)/ Common Stock PIPES Purchase Agreement dated as of July 25, 2001 by
and between P-Com, Inc., Gruber McBaine International and Lagunitas
Partners, L.P.
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 page II-3 of this registration
statement).
--------------
/(1)/ Incorporated by reference to identically numbered exhibit to the
Registrant's current report on Form 8-K dated July 25, 2001 and filed with
the Securities and Exchange Commission on August 9, 2001.
II-1
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;
(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.
II-2
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 17th day of April, 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 constitutes 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 3,797,468 shares of Common Stock
of P-Com, Inc. by the selling stockholders 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 Chairman of the Board and April 17, 2002
-------------------------------- Chief Executive Officer
George P. Roberts (Principal Executive Officer)
/s/ LEIGHTON J. STEPHENSON Vice President and Chief Financial Officer April 17, 2002
-------------------------------- (Principal Financial Officer and
Leighton J. Stephenson Principal Accounting Officer)
/s/ FREDERICK R. FROMM Director of the Company April 17, 2002
--------------------------------
Frederick R. Fromm
/s/ BRIAN T. JOSLING Director of the Company April 17, 2002
--------------------------------
Brian T. Josling
II-3
/s/ JOHN A. HAWKINS Director of the Company April 17, 2002
--------------------------------
John A. Hawkins
/s/ GEN. HAROLD R. JOHNSON (RET.) Director of the Company April 17, 2002
--------------------------------
Gen. Harold R. Johnson (Ret.)
II-4
INDEX TO EXHIBITS
Exhibit No. Description
---------- -----------
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.91/(1)/ Common Stock PIPES Purchase Agreement dated as of July 25,
2001by and between P-Com, Inc., Gruber McBaine International
and Lagunitas Partners, L.P.
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 page II-3 of this registration
statement).
-----------
/(1)/ Incorporated by reference to identically numbered exhibit to the
Registrant's current report on Form 8-K dated July 25, 2001 and filed with
the Securities and Exchange Commission on August 9, 2001.