Summary
This summary highlights certain important information regarding our business and this offering. You should read this entire prospectus, including the "Risk Factors" and the financial statements and all related notes before deciding to purchase our common stock.
About Our Business
We are a major provider of high-speed data communications services, and related applications, to business customers. We provide our data communications services using digital subscriber line, or DSL, technology, and generally market those services directly through our own sales force. DSL technology allows our customers to access their corporate networks and the Internet through high-speed, "always on" connections over traditional copper telephone lines at speeds up to 7 megabits per second, substantially higher than common dial-up modems. We have branded our DSL service "CopperNet," which we commercially launched in the northeast and mid-Atlantic regions of the United States, in January 1999.
In seeking to solve the data communications needs of our business customers, we offer them network services, telecommunications products and equipment made by others and consulting services. Although nearly all of our revenue has historically been derived from our product sales and consulting services, we expect to continue to dedicate most of our financial and management resources to further developing our network services business. Through this business, which includes our CopperNet service offering, we provide metropolitan area and wide area network services to our customers as well as manage and monitor our customers' networks. Through our product sales business, we sell telecommunications equipment that our customers use to build, maintain and secure their networks. Through our consulting services business, we design our customers' networks, install the related equipment and provide services to help them secure their networks. For the three months ended September 30, 1999, approximately 12.7% of our revenue resulted from network services, 74.7% from product sales and 12.6% from consulting services. During the same period in 1998, network services represented 2.7% of our revenue. If we are successful in implementing our business plan, we expect that network services will constitute most of our revenue.
We currently offer our DSL-based networking solutions in the following nine cities and their surrounding markets: Baltimore, Boston, New York, Norfolk, Philadelphia, Pittsburgh, Richmond, Washington D.C., and Wilmington. As of December 31, 1999, we had installed our equipment in central offices within our target markets and we expect to have installed our equipment in approximately 500 central offices by mid-2000, which will essentially complete the roll-out of our network in these markets. We believe that by concentrating the deployment of our network facilities in our target markets, we will be able to serve the overall networking and data communications needs of our business customers more effectively than our competitors. As of December 31, 1999, we had installed high-speed access lines.
We have designed our network to support our customers' changing data networking needs. Our network supports newer, evolving technologies designed to transmit both data and voice. Unlike traditional telecommunications networks, these newer technologies transmit data in small bundles, or packets, of information from multiple users over the same lines, and are referred to as packet-based technologies. These packet-based technologies generally allow for a more efficient use of a network. Our CopperNet service is compatible with packet-based communications systems such as asynchronous transfer mode, or ATM, frame relay, and Internet protocol, or IP. This same architecture also supports the traditional technologies that carry most of today's voice telephone conversations. This network design allows us to offer businesses and their telecommuters cost-effective solutions for accessing the Internet, as well as other emerging applications and services of corporate networks, such as video and audio conferencing, web and application hosting, multimedia and e-commerce. We create city-wide, or metropolitan area networks, or MANs, and connect them to our private, leased, high-speed fiber optic network, or backbone. This network design enables us to provide our customers seamless connections to remote offices or employees in other locations, including other cities. Our network provides dedicated connections to our customers, enabling them to operate as if they were using their own private network. These virtual private networks, or VPNs, have the capacity, speed, reliability and level of service that are designed to meet our customers' needs.
Market Opportunity
We believe that a substantial business opportunity exists because of the concurrence of several factors. The growing demand for high-speed data communications by businesses, their employees and consumers has created a need for a local access solution with a higher capacity than traditional dial-up modems and integrated services digital networks, or ISDNs. There is an increasing need by small- and medium-sized businesses for a cost-effective, high performance networking solution in order to access the Internet and utilize today's bandwidth applications. In addition, large businesses are seeking to improve remote worker productivity so that workers have access to the same high performance communication and networking resources available to workers located at corporate headquarters. Businesses are also looking to network service providers to implement and manage broadband-based applications and services. The commercial availability and acceptance of DSL technology has allowed service providers to meet their customers' needs through a high-speed access alternative that requires a much lower initial fixed investment than other alternatives, such as cable modems, fiber optic cable, fixed wireless and satellite communication systems. The 1996 Telecom Act and its related regulations also has allowed companies like us to implement DSL technology by taking advantage of traditional telephone companies' existing infrastructure rather than building our own at significant cost.
The NAS Solution
We provide a full range of services to allow businesses to effectively outsource their Internet access, data transport, and other telecommunications needs. Our service offering includes high-speed local connectivity through CopperNet, MAN and WAN solutions, along with network management, monitoring, security solutions and other value-added applications and services, which we expect to change over time to meet evolving customer needs.
The NAS Strategy
Our goal is to be the premier provider of data communications and networking solutions in the markets in which we focus. We plan to:
. Provide and expand coverage in our markets, initially within the northeast and mid-Atlantic regions and potentially in other regions in which we believe we can be successful;
. Focus on small- and medium-sized business customers, most of which do not have a cost-effective, high-performance and integrated solution to their Internet access and data transport needs;
. Focus on selected large enterprise customers, most of which do not have an adequate solution that allows them to provide high-speed access to remote workers;
. Continually enhance and expand our network to meet the broadest array of business requirements;
. Offer value-added, network-enabled features and applications to maximize revenues per customer;
. Provide superior customer care;
. Focus on direct marketing to our customers by using our experienced sales-force, which is supported by engineers who are trained, certified experts in the products and technologies we sell;
. Selectively utilize wholesale marketing channels; and . Capitalize on the lower fixed-cost economics of DSL technology.
We are a Delaware corporation. Our headquarters are located at 100 Carpenter Drive, Sterling, Virginia 20164. Our telephone number is (703) 742- 7700. We have established a Web site at www.nas-corp.com. The information on our Web site is not part of this prospectus.
We own the federal trademark for the mark COPPERNET and also own applications for federal registration and claim rights in the following trademarks: CU COPPERNET(TM) and CUNET(TM). This prospectus also refers to trade names and trademarks of other companies.
The Offering
Common stock offered by Network Access Solu- tions.................. shares Common stock to be out- standing after this of- fering(1).............. shares Use of proceeds(1)...... We expect to use the proceeds from this offering, after expenses, to finance capital expenditures, to finance operating losses that we expect to incur as we expand our customer base and network and for general corporate purposes. We have not definitively allocated any portion of the net proceeds of the offering. We will retain complete discretion in applying the proceeds of this offering.
Dividend policy......... We do not anticipate paying cash dividends for the foreseeable future. Instead, we will retain our earnings, if any, for the future operation and expansion of our business.
Nasdaq National Market symbol................. NASC (1) If the underwriters exercise the option granted to them in this offering by our selling stockholders to purchase up to additional shares of our common stock to cover over-allotments, then the total number of shares to be offered would be increased to up to shares. We will not receive any proceeds from the sale of shares by the selling stockholders. The number of shares outstanding excludes options that have been granted or may be granted under our stock option plans. As of December 31, 1999, options were outstanding under our stock option plans.