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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 29, 2012

OR

For the transition period from              to             

Commission file number 001-33226

NEXTWAVE WIRELESS INC.

(Exact name of registrant as specified in its charter)

(619) 573-1570

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 29, 2012, there were 24,938,132 shares of the registrant’s common stock outstanding.

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NEXTWAVE WIRELESS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NEXTWAVE WIRELESS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NEXTWAVE WIRELESS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NEXTWAVE WIRELESS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statement Preparation

The condensed consolidated financial statements of NextWave Wireless Inc. (together with its subsidiaries, the “Company,” “NextWave,” “we,” “our” or “us”) are unaudited. We have prepared the condensed consolidated financial statements in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated financial statements for the periods presented reflect all adjustments necessary to fairly state our financial position, results of operations and cash flows, including adjustments related to asset impairment write-offs and restructuring-related credits. These condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2011, from which the balance sheet data was derived, included in our Annual Report on Form 10-K filed with the SEC on March 12, 2012.

Proposed Acquisition by AT&T

On August 1, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AT&T Inc., a Delaware corporation (“AT&T”) and Rodeo Acquisition Sub Inc., a Delaware corporation and a direct wholly-owned subsidiary of AT&T (“Merger Sub”). Under the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a direct wholly-owned subsidiary of AT&T (the “Merger”).

The Merger Agreement provides that AT&T will acquire all of the outstanding common shares of NextWave for $1.00 per share plus a non-transferrable contingent payment right representing a pro rata interest in an amount of up to $25 million in the residual balance of a $50 million escrow fund to be initially funded with (i) a $25 million payment by AT&T pursuant to the terms of the Merger Agreement and (ii) $25 million of the price to be paid by AT&T for the NextWave Third Lien Notes (as defined below) pursuant to the terms of a note purchase agreement entered into between AT&T and the holders of NextWave Third Lien Notes. The escrow fund and the contingent payment rights are subject to reduction (including to $0) to satisfy indemnification rights held by AT&T in respect of losses resulting from, among other things, breaches of representations and warranties, certain pre-closing liabilities, balance sheet adjustments and other items described in the Merger Agreement and the purchase agreement for the NextWave Third Lien Notes, and to pay fees to be incurred under the related contingent payment rights agreement and escrow agreement.

Also on August 1, 2012, AT&T entered into note purchase agreements with each of the holders of our secured notes (collectively, the “Notes”). Pursuant to the note purchase agreements, immediately prior to the consummation of the Merger, AT&T will purchase our Senior Notes (as defined below), Second Lien Notes (as defined below) and NextWave Third Lien Notes (as defined below). AT&T will purchase our Senior Notes and Second Lien Notes for the aggregate principal amount of such notes plus accrued interest at the time of such purchase. AT&T will purchase the NextWave Third Lien Notes for a cash amount equal to $600 million, less the amounts paid to purchase the Senior Notes and Second Lien Notes, less the approximately $25 million cash consideration to be paid by AT&T at closing of the Merger pursuant to the terms of the Merger Agreement to holders of the Company’s common stock, stock options and warrants, and the $25 million to be deposited into the $50 million escrow fund in respect of the contingent payment rights at closing pursuant to the Merger Agreement and subject to a $25 million escrow hold-back to secure post-closing indemnification rights held by AT&T and other deductions pursuant to the note purchase agreement for the NextWave Third Lien Notes. The amount of cash to be paid at closing in respect of the NextWave Third Lien Notes will also be subject to reduction for closing date liabilities of NextWave, including certain tax amounts, and amounts necessary to repay any outstanding Senior Incremental Notes (as defined below). Pursuant to the Call Agreement (as defined below), immediately prior to the consummation of the Merger, the HoldCo Third Lien Notes (as defined below), will be redeemed for 100% of the equity in NextWave HoldCo, the direct or indirect parent of our subsidiaries that hold certain of our assets and liabilities, other than our U.S. WCS and AWS spectrum assets, including our Canadian WCS spectrum and 2.5 MHz EBS/BRS spectrum assets.

In connection with the Merger Agreement, on August 1, 2012, the Company and its wholly owned subsidiary NextWave Wireless LLC, and certain subsidiary guarantors entered into a Forbearance Agreement (the “Forbearance Agreement”) with the holders of the Notes. Pursuant to the Forbearance Agreement, each holder has agreed, and directed The Bank of New York Mellon, as collateral agent, to temporarily forbear from exercising their respective rights and remedies in connection with potential defaults and events of default that may occur during the forbearance period. The forbearance period will terminate on the earliest to occur of the effective time of the Merger, sixty days after the date of any termination of the Merger Agreement and January 31, 2014.

The Merger Agreement will terminate automatically if the Merger has not occurred on or prior to July 31, 2013 (the “Termination Date”). The Termination Date may be extended for up to two three-month periods at the option of AT&T if requisite regulatory approvals have not been obtained. In addition, either the Company or AT&T can terminate the Merger Agreement under specified circumstances. The Merger Agreement also provides that, upon termination of the Merger Agreement under specified circumstances, NextWave, or an alternative acquiror of NextWave will pay AT&T a termination payment of $5 million.

The Merger and the transactions contemplated thereby were unanimously approved by the Independent Committee of NextWave’s Board of Directors and NextWave’s Board of Directors.

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The transactions contemplated by the Merger Agreement are subject to closing conditions, including the approval of NextWave’s stockholders’ of record as of September 4, 2012, which was obtained by the Company on October 2, 2012, and regulatory approvals, including approval of the FCC.

August 2012 Debt Modification and Noteholder Representative Call Right

As required pursuant to the Merger Agreement, we entered into agreements with the holders of our Notes to amend and restate the Notes and amended certain documents ancillary to the Notes on August 16, 2012. Our Old Third Lien Notes were amended and restated to be no longer convertible into shares of common stock of the Company and were split into two series whereby certain of our Old Third Lien Notes remain direct obligations of the Company and the remaining principal balance of our Old Third Lien Notes became the direct obligations of NextWave HoldCo LLC, a new subsidiary that we formed on August 8, 2012, under the laws of the State of Delaware (“NextWave HoldCo”). Specifically, $318.6 million in aggregate principal, plus accrued and unpaid interest through August 15, 2012 of $6.4 million of the Company’s outstanding obligations under the Old Third Lien Notes remained the Company’s direct obligations (“NextWave Third Lien Notes”) and the remaining principal balance of the Old Third Lien Notes, consisting of $428.3 million in aggregate principal, plus accrued and unpaid interest through August 15, 2012 of $8.6 million, became the direct obligations of NextWave HoldCo (“HoldCo Third Lien Notes”). We provided a third priority guarantee of NextWave HoldCo’s obligations under the HoldCo Third Lien Notes. The terms of the HoldCo Third Lien Notes contain restrictive covenants relating to, among other things, the sale of assets transferred to NextWave HoldCo as part of our internal restructuring transactions contemplated by the Merger Agreement.

Our amended and restated Senior Notes provide for the issuance of up to $15 million of additional notes for payment of expenses incurred in the ordinary course of operations or in connection with payments to be made in connection with the Merger (the “Senior Incremental Notes”). The amended and restated Senior Notes accrue interest at an annual rate equal to 15% per annum, except that the Senior Incremental Notes will accrue interest at an annual rate not to exceed 10% per annum.

Our amended and restated Senior Notes contain representations and warranties, affirmative and negative covenants and events of default that are substantially the same as the corresponding provisions of our Senior Notes prior to their amendment and restatement. In addition, the restrictive covenants of the amended and restated Senior Notes were modified to mirror the additional restrictive covenants of the NextWave Third Lien Notes and the HoldCo Third Lien Notes along with an additional restrictive covenant prohibiting the Company from refinancing, modifying or amending the terms of the amended and restated Second Lien Notes, the NextWave Third Lien Notes or the HoldCo Third Lien Notes except in accordance with the terms of that certain Amended and Restated Intercreditor Agreement dated as of August 16, 2012 (the “Intercreditor Agreement”), among NextWave LLC, the Company, NextWave HoldCo, their respective subsidiaries party thereto, the holders of our amended and restated senior notes, Wilmington Trust, National Association, as collateral agent for the holders of our amended and restated senior notes, the holders of our amended and restated subordinated notes, and Wilmington Trust, National Association, as collateral agent for the holders of our amended and restated subordinated notes, the holders of our NextWave Third Lien Notes and the holders of the HoldCo Third Lien Notes.

Our amended and restated Second Lien Notes accrue interest at an annual rate equal to 15% per annum. The amended and restated Second Lien Notes contain representations and warranties, affirmative and negative covenants and events of default that are substantially the same as the corresponding provisions of our Second Lien Notes prior to their amendment and restatement. In addition, the restrictive covenants of the amended and restated subordinated notes were modified to mirror the additional restrictive covenants of the NextWave Third Lien Notes and the HoldCo Third Lien Notes along with an additional restrictive covenant prohibiting the Company from refinancing, modifying or amending the terms of the amended and rested Senior Notes, the NextWave Third Lien Notes or the HoldCo Third Lien Notes except in accordance with the terms of the Intercreditor Agreement.

In connection with the amendment and restatement of our Notes, NextWave HoldCo became the direct or indirect parent of our subsidiaries that hold certain of our assets and liabilities, other than our U.S. WCS and AWS spectrum assets, including our Canadian WCS spectrum and 2.5 MHz EBS/BRS spectrum assets. At September 29, 2012, our U.S. WCS and AWS spectrum assets had a book value of $336.8 million and our Canadian WCS spectrum and 2.5 MHz EBS/BRS spectrum assets had a book value of $94.6 million.

In connection with the amended and restated Notes, NextWave LLC and NextWave HoldCo entered into a Call Option/Note Redemption Agreement (the “Call Agreement”) with Wilmington Trust, National Association (the “noteholder representative”). Pursuant to the Call Agreement, the noteholder representative has been issued a call right, on behalf of the holders of the HoldCo Third Lien Notes, to require that we transfer 100% of the equity of NextWave HoldCo to the holders of the HoldCo Third Lien Notes to redeem, in full, the HoldCo Third Lien Notes. The NextWave HoldCo call right will not be exercisable until receipt of any required regulatory approvals and one of the following:

For the Senior Notes, Second Lien Notes, NextWave Third Lien and HoldCo Third Lien Notes, none of the terms of the notes that affect cash flows, such as maturity date, payment terms and applicable interest rates were changed. In accordance with generally accepted accounting principles, we determined that concessions were granted by the noteholders as a result of the August 2012 amendments to the Senior Notes, Second Lien Notes and Third Lien Notes, as their effective rates were less than that of the old respective notes prior to our earlier restructuring on December 14, 2011 and that troubled debt accounting provisions apply. In accordance with troubled debt restructuring accounting principles, the Senior Note, Second Lien Note and Third Lien Note amendments have been accounted for prospectively beginning August 16, 2012, with the carrying amount of the notes remaining unchanged as of this date. The new effective interest rates for all notes were determined as the discount rates that equated the present value of the future cash payments specified by the terms of the respective notes with the respective August 16, 2012 carrying amount of the notes, which resulted in effective interest rates that equated those used immediately prior to the August 2012 amendments.

All direct costs incurred to effect the August 2012 amendments and restatements were expensed as incurred.

Basis of Presentation and Liquidity

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business. We generated net losses of $131.9 million and $195.8 million during the nine months ended September 29, 2012 and October 1, 2011, respectively, and have an accumulated deficit of $1,703.1 million at September 29, 2012. We used cash from operating activities of our continuing operations of $12.5 million and $11.7 million during the nine months ended September 29, 2012 and October 1, 2011, respectively. Our unrestricted cash and cash equivalents included in current assets of continuing operations totaled $5.9 million at September 29, 2012. We had a net working capital deficit of $1,141.4 million at September 29, 2012.

We have funded our operations, business combinations, strategic investments and wireless spectrum license acquisitions primarily with the $550.0 million in cash received in our initial capitalization in 2005, the net proceeds of $295.0 million from our issuance of Senior Secured Notes (the “Senior Notes”) in 2006 and 2010, the net proceeds of $351.1 million from our issuance of Series A Senior Convertible Preferred Stock (the “Series A Preferred Stock”) in 2007, which, in 2008, we exchanged for Third Lien Subordinated Secured Convertible Notes (the “Old Third Lien Notes”) in the aggregate principal amount of $478.3 million, and the net proceeds of $101.0 million from our issuance of our Senior Subordinated Secured Second Lien Notes (the “Second Lien Notes” and together with the Senior Notes and the Old Third Lien Notes, the “Notes”) in 2008 and 2009. We did not receive any proceeds from the issuance of the Old Third Lien Notes.

As of September 29, 2012, the aggregate principal amount of our secured indebtedness was $1,146 million. This amount includes our Senior Notes with an aggregate principal amount of $153.4 million, our Second Lien Notes with an aggregate principal amount of $215.7 million, our NextWave Third Lien Notes (as defined below) with an aggregate principal amount of $331.4 million and our HoldCo Third Lien Notes (as defined below) with an aggregate principal amount of $445.5 million. Our current cash reserves are not sufficient to meet our payment obligations under our secured notes at their current maturity dates. The Forbearance Agreement will terminate sixty days after any termination of the Merger Agreement. Upon any termination of the Forbearance Agreement, if we are unable to further extend the maturity of our secured notes, or identify and successfully implement alternative financing to repay our Notes, the holders of our Notes could proceed against the assets pledged to collateralize these obligations. These conditions raise substantial doubt about our ability to continue as a going concern. Insufficient capital to repay our debt at maturity would significantly restrict our ability to operate and could cause us to seek relief through a filing in the United States Bankruptcy Court. Any alternative financing and/or maturity extension of our Notes may be costly to obtain, and could involve the issuance of equity securities that could cause significant dilution to our existing stockholders and potentially limit our net operating loss carry forwards.

During 2011, we had capital expenditure needs associated with certain build-out or substantial service requirements which apply to our domestic licensed wireless spectrum, which generally must be satisfied as a condition of the license. The substantial service deadlines applicable to our domestic and Canadian wireless spectrum assets, and our activities to meet these requirements, are described below:

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Principles of Consolidation

Our consolidated financial statements include the assets, liabilities and operating results of our wholly-owned subsidiaries as of September 29, 2012 and October 1, 2011, and for the three and nine months then ended, respectively. All significant intercompany accounts and transactions have been eliminated in consolidation.

Fiscal Year End

We operate on a 52-53 week fiscal year ending on the Saturday nearest to December 31 of the current calendar year or the following calendar year. Normally, each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks. Fiscal years 2012 and 2011 are 52-week years ending on December 29, 2012 and December 31, 2011, respectively. The three- and nine-month periods ending on September 29, 2012 and October 1, 2011 include 13 and 39 weeks each, respectively.

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to income taxes, share-based awards, wireless spectrum licenses and other long-lived assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid investments with a remaining time to maturity of three months or less when acquired to be cash equivalents. Cash equivalents at September 29, 2012 and December 31, 2011 consisted primarily of money market funds, the carrying amounts of which approximate fair value due to the short maturities of these instruments.

Restricted Cash

Restricted cash at September 29, 2012 and December 31, 2011 primarily represents net proceeds from the sale of wireless spectrum licenses that must be used to redeem our Senior Notes. Under our amended and restated Senior Notes, we are not required to redeem our Senior Notes until the net proceeds from specified asset sales are sufficient to satisfy, in full, our Senior Notes.

Marketable Securities

At December 31, 2011 our short-term held-to-maturity marketable securities consisted of $10.0 million in bank certificates of deposit with remaining maturities of less than one year. These securities are stated at their amortized costs which approximate their respective fair values at December 31, 2011.

Accounting for Troubled Debt Restructurings

A restructuring of a debt constitutes a troubled debt restructuring if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. A creditor is deemed to have granted a concession if the debtor’s effective borrowing rate on the restructured debt, after giving effect to all the terms of the restructured debt, including any new or revised sweeteners such as new debt that is made available to us, is less than the effective borrowing rate of the old debt immediately before the restructuring or immediately before a prior restructuring if one has occurred within the last year.

If a restructuring of debt constitutes a troubled debt restructuring, the new debt is accounted for prospectively, whereby the carrying amount of the debt remains unchanged and a new effective interest rate that equates the present value of the future cash payments with the carrying amount is determined and applied prospectively.

Costs incurred with third parties directly related to the troubled debt restructuring are expensed as incurred.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance requires us to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. This guidance also establishes a fair value hierarchy that prioritizes the inputs used in valuation techniques into the following three levels:

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per common share for the three and nine months ended September 29, 2012 and October 1, 2011 is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the respective periods, without consideration of common stock equivalents. If there is a loss from continuing operations, diluted net income (loss) per share is computed in the same manner as basic net income (loss) per share is computed, even if we report net income after adjusting for discontinued operations.

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Recently Adopted Accounting Pronouncement

In May 2011, the FASB issued authoritative guidance related to fair value measurements and disclosures. The new guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between accounting principles generally accepted in the United States and International Financial Reporting Standards. Our adoption of this guidance on January 1, 2012 did not have a material impact on our consolidated financial position, results of operations or cash flows.

Debt-Related Transactions

As discussed in the footnote above, pursuant to the Merger Agreement, we entered into agreements with the holders of our Notes to amend and restate the Notes and amended certain documents ancillary to the Notes on August 16, 2012, whereby our Old Third Lien Notes were split into the NextWave Third Lien Notes and the HoldCo Third Lien Notes. As of September 29, 2012, Avenue Capital Group and its affiliates (“Avenue Capital”) had an interest in shares of our issued and outstanding common stock, such that Avenue Capital would be considered a related party. On August 16, 2012, in exchange for Old Third Lien Notes with principal plus accrued interest of $214.6 million, Avenue was issued NextWave Third Lien Notes and HoldCo Third Lien Notes with principal plus accrued interest of $91.5 million and $123.1 million, respectively. At September 29, 2012, Avenue Capital held $115.2 million, or 75%, of the aggregate principal amount of our Senior Notes; $167.9 million, or 78%, of the aggregate principal amount of our Second Lien Notes; $93.4 million, or 28%, of the aggregate principal amount of our NextWave Third Lien Notes; and $125.5 million, or 28%, of the aggregate principal amount of our HoldCo Third Lien Notes.

As of September 29, 2012, Solus Core Opportunities Master Fund Ltd and its affiliates and co-investors (“Solus”) had an interest in shares of our issued and outstanding common stock, such that Solus would be considered a related party. On August 16, 2012, in exchange for Old Third Lien Notes with principal plus accrued interest of $129.2 million, Solus was issued NextWave Third Lien Notes and HoldCo Third Lien Notes with principal plus accrued interest of $55.1 million and $74.1 million, respectively. At September 29, 2012, Solus held $38.2 million, or 25%, of the aggregate principal amount of our Senior Notes; $47.8 million, or 22%, of the aggregate principal amount of our Second Lien Notes; $56.2 million, or 17%, of the aggregate principal amount of our NextWave Third Lien Notes; and $75.6 million, or 17%, of the aggregate principal amount of our HoldCo Third Lien Notes. At September 29, 2012 and December 31, 2011, Solus also held 0.4 million of warrants exercisable for shares of our common stock for an exercise price of $0.07 each. In April 2012, the expiration date of these warrants was extended to April 2013.

On August 16, 2012, in exchange for Old Third Lien Notes with principal plus accrued interest of $107.3 million, Navation, Inc., an entity owned by Allen Salmasi, our Chairman, was issued NextWave Third Lien Notes and HoldCo Third Lien Notes with principal plus accrued interest of $45.8 million and $61.5 million, respectively. As of September 29, 2012 Navation held $46.7 million, or 14%, and $62.8 million, or 14%, of the aggregate principal amounts of our NextWave Third Lien Notes and HoldCo Third Lien Notes, respectively.

On August 16, 2012, in exchange for Old Third Lien Notes with principal plus accrued interest of $107.3 million, Douglas F. Manchester, a member of our Board of Directors, was issued NextWave Third Lien Notes and HoldCo Third Lien Notes with principal plus accrued interest of $45.8 million and $61.5 million, respectively. As of September 29, 2012, Mr. Manchester held $46.7 million, or 14%, and $62.8 million, or 14%, of the aggregate principal amounts of our NextWave Third Lien Notes and HoldCo Third Lien Notes, respectively.

Business Divestitures

In 2009, we sold the majority of the assets and liabilities of our Inquam Broadband GmbH (“IBG”) subsidiary to Inquam Holding GmbH (“IHG”), a limited liability company and a related party, for a nominal amount under an Asset Purchase Agreement. In connection with the sale, we entered into an earn-out agreement with IHG that provided for payment to us upon the subsequent sale of the outstanding share capital of IHG. In March 2012, the shareholders of IHG sold and transferred all of the share capital of IHG to a third party, whereby we received $2.3 million in cash consideration and could receive up to an additional Euro 2.1 million ($2.7 million at September 29, 2012) in cash consideration in the 12 to 24 months following the sale if regulatory and other conditions are met. As a result of the sale of IHG to a third party and final realization of our investments in our WiMax Telecom AG and IBG subsidiaries, we have deemed these entities to be substantially liquidated as of March 2012 and have recognized a net gain on disposal of $19.9 million during the nine months ended September 29, 2012, all of which is reported in discontinued operations in the consolidated statement of operations and other comprehensive loss. The net gain represents the $2.3 million in cash received plus $17.6 million accumulated in the foreign currency translation adjustment component of equity for these two consolidated subsidiaries that was transferred to earnings upon substantial liquidation.

In June 2010, we sold the capital stock of our WiMAX Telecom Slovakia, s.r.o (“WT SRO”) subsidiary to flyhigh Partners s. r. o. (“flyhigh”), a private limited liability company of which the controlling shareholder is the former managing director and statutory representative of WT SRO, for $0.1 million and recognized an $8.8 million net loss from business divestitures. Upon closing of the sale, we have no remaining obligations to provide financing to support the ongoing operations of WT SRO. In connection with the sale, we entered into an additional consideration agreement with flyhigh that provided for payment to us upon the sale of all or part of the capital stock of WT SRO by flyhigh to any third party. In May 2011, flyhigh sold all of the capital stock of WT SRO to a third party whereby we received $0.4 million under the terms of the additional consideration agreement and recognized a net gain on business divestitures of $0.4 million during the nine months ended October 1, 2011, all of which is reported in discontinued operations in the condensed consolidated statement of operations.

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We continue to hold for sale our wireless spectrum holdings. Any sale or transfer of the ownership of our wireless spectrum holdings is generally subject to regulatory approval. We are required to use the net proceeds from the sale of our wireless spectrum licenses to redeem our Notes.

As of September 29, 2012, we do not believe it is probable that these wireless spectrum licenses will be sold within the next twelve months and, therefore, have not classified them as assets held for sale.

During the nine months ended September 29, 2012, we sold wireless spectrum licenses in Canada for $0.3 million and recognized net gains on the sales of $0.1 million.

During the nine months ended October 1, 2011, we recognized $0.3 million in net gains on the sale of wireless spectrum licenses, which represents our receipt of a $0.3 million holdback payment that was pending FCC clearance of a prior sale by us.

Long-term obligations held by continuing operations consist of the following:

The following table summarizes the activity related to our long-term obligations, net of any unamortized discounts, for the nine months ended September 29, 2012 and October 1, 2011:

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The following table summarizes the activity related to our unamortized deferred financing costs for the nine months ended September 29, 2012 and October 1, 2011:

Business Divestiture

During the nine months ended October 1, 2011, we completed the sale of our remaining subsidiaries in Latin America to a third party for $3.0 million and recognized a gain on the divestiture of $1.7 million, all of which is reported in discontinued operations in the condensed consolidated statement of operations, and of which $1.3 million was accumulated in the foreign currency translation adjustment component of equity for these consolidated subsidiaries and transferred to earnings upon substantial liquidation.

Discontinued Operations

In an effort to reduce our future working capital requirements and in order to comply with the terms of our Notes our Board of Directors approved the implementation of a global restructuring initiative in 2008, pursuant to which we have divested, either through sale, dissolution or closure, our multimedia, network infrastructure and semiconductor businesses.

Our continuing operations are comprised of our portfolio of licensed wireless spectrum assets. We continue to pursue sales of our wireless spectrum license assets, the net proceeds of which will be used to reduce our outstanding indebtedness.

The results of operations of our Global Services Support strategic business unit and our WiMAX Telecom, Inquam and South American businesses, have been reported as discontinued operations in the consolidated financial statements for all periods presented, prior to sale or dissolution of the respective business.

The carrying amounts of the assets and liabilities of our discontinued operations are as follows:

The financial results of our discontinued operations are as follows:

Total operating expense credits for the three months ended October 1, 2011 includes $0.1 million in sublease revenue. Total operating expense credits for the nine months ended October 1, 2011 include a $0.3 million favorable settlement with a service vendor, $0.2 million in net gains on the sale of equipment and $0.2 million in sublease revenue.

Net gains on business divestitures for the nine months ended October 1, 2011 includes $3.4 million in cash consideration received, partially offset by $1.3 million accumulated in the foreign currency translation adjustment component of equity that was transferred to earnings upon substantial liquidation of our foreign entities.

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Our weighted-average number of common shares outstanding includes the weighted-average number of 0.4 million warrants during each of the three and nine months ended September 29, 2012 and 1.8 million warrants during each of the three and nine months ended October 1, 2011, held by a related party (Note 2), exercisable for shares of our common stock, as they are issuable for an exercise price of $0.07 each. At September 29, 2012, 0.4 million of these warrants remained outstanding.

The following securities that could potentially reduce net income or increase net loss per share in the future are not included in the determination of diluted income (loss) per share as they are antidilutive. The share amounts are determined using a weighted-average of the common stock equivalents outstanding during the respective periods

Changes in shares of common stock outstanding and total stockholders’ deficit for the nine months ended September 29, 2012 are as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

There have been no significant changes to our assets and liabilities measured at fair value on a recurring basis during the nine months ended September 29, 2012

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

There have been no significant changes to our assets and liabilities measured at fair value on a nonrecurring basis during the nine months ended September 29, 2012.

Fair Value of Other Financial Instruments

The carrying amounts of certain of our financial instruments of continuing operations, including cash and cash equivalents, short-term investments, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of our long-term obligations of continuing operations are as follows:

At September 29, 2012 and December 31, 2011, we determined the fair value of our long-term obligations using discounted cash flow models with discount rates that represent our respective estimated incremental borrowing rates as of that date for that type of instrument (level 2 inputs).

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Legal Proceedings

On September 16, 2008, a putative class action lawsuit, captioned “Sandra Lifschitz, On Behalf of Herself and All Others Similarly Situated, Plaintiff, v. NextWave Wireless Inc. et al., Defendants,” was filed in the U.S. District Court for the Southern District of California against us and certain of our officers. The suit alleges that the defendants made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The suit seeks unspecified damages, interest, costs, attorneys’ fees, and injunctive, equitable or other relief on behalf of a purported class of purchasers of our common stock during the period from March 30, 2007 to August 7, 2008. A second putative class action lawsuit captioned “Benjamin et al. v. NextWave Wireless Inc. et al.” was filed on October 21, 2008 alleging the same claims on behalf of purchasers of our common stock during an extended class period, from November 27, 2006 through August 7, 2008. On February 24, 2009, the Court issued an Order consolidating the two cases and appointing a lead plaintiff pursuant to the Private Securities Litigation Reform Act. On May 15, 2009, the lead plaintiff filed an Amended Complaint, and on June 29, 2009, we filed a Motion to Dismiss that Amended Complaint. On March 5, 2010, the Court granted our Motion to Dismiss without prejudice, permitting the lead plaintiff to file an Amended Complaint. On March 26, 2010, the lead plaintiff filed a Second Amended Consolidated Complaint, and we subsequently filed a Motion to Dismiss. On March 16, 2011, the Court granted our Motion and dismissed the complaint without prejudice. On May 5, 2011, the lead plaintiff filed a Third Amended Complaint, and we again filed a Motion to Dismiss. On November 21, 2011, the Court granted our Motion and dismissed the case with prejudice. On December 19, 2011, the lead plaintiff filed a Notice of Appeal with the Ninth Circuit Court of Appeals. We and our insurance carrier have agreed with the lead plaintiff on the final terms of a settlement. The settlement provides for a full release and dismissal of all claims asserted against all defendants in the litigation and the appeal, in exchange for payment of $1.4 million by our insurance carrier. The settlement is subject to court approval following notice to the potential class members. The Court of Appeals dismissed the appeal on June 25, 2012 and the case has been returned to the district court for the approval process. The district court has approved the application for preliminary approval of the settlement and the final approval hearing is scheduled for November 9, 2012. We continue to maintain the D&O and corporate liability insurance covering certain risks associated with securities claims filed against us or our directors and officers, as described above, with insurance from multiple carriers, each insuring a different layer of exposure, up to a total of $50 million. We have accrued for liabilities equal to the financial deductible of our D&O policy for the period covering the time the class action lawsuit for this matter was filed. Other than accruing for our financial deductible, we have not recorded any significant accruals for contingent liabilities associated with this matter based on our belief that a liability in excess of our insurance coverage, while possible, is not probable.

On August 5, 2012, the Company became aware that the liquidator in the Go Networks (Israel) Ltd. bankruptcy, which was filed in Tel Aviv in September 2008, purportedly made a claim against the Company for damages alleging that the Company contributed to the demise of and failed to sufficiently fund its former subsidiary Go Networks (Israel) Ltd. While the Company believes that the liquidator’s claims are without merit, the Company cannot yet estimate the amount of legal fees and damages, if any, that could be awarded in connection with such claims.

On August 31, 2012, a putative class action lawsuit was filed in the Court of Chancery of the State of Delaware against the Company, AT&T, Merger Sub, Allen Salmasi, Douglas F. Manchester, Jack Rosen, Nadar Tavakoli, Carl E. Vogel and William H. Webster alleging, among other things, that the Company’s board of directors and certain of its executive officers breached various fiduciary duties in connection with the board of directors’ approval of the proposed Merger and that the Company, AT&T and Merger Sub aided and abetted such alleged breaches of fiduciary duties. The plaintiff seeks injunctive relief preventing the Merger, an order rescinding the proposed Merger in the event it is not enjoined, and damages as a result of the alleged actions of the defendants, including attorneys’ and experts’ fees (the foregoing, the “Weiss Action”). Subsequently, on September 6, 2012, two additional complaints were filed in the Superior Court of California, County of San Diego by Thomas Juzwik and Elias Rodriguez against the Company, AT&T, Merger Sub, Allen Salmasi, Jack Rosen, William Webster, Douglas F. Manchester, Robert Symington, Frank Cassou and Francis Harding, containing substantially similar allegations to those set forth in the Weiss Action. We collectively refer to the Juzwik, Rodriquez and Weiss actions as, the actions.

In order to avoid the costs, risks and uncertainties inherent in litigation and to allow stockholders to vote on the proposal to adopt the Merger Agreement at the scheduled special meeting, the Company and the other defendants entered into a memorandum of understanding (the “Memorandum of Understanding”) with plaintiffs’ counsel on September 20, 2012 in connection with the actions, pursuant to which the Company, the other named defendants and the plaintiffs have agreed to settle the actions subject to court approval. If the Delaware court approves the settlement, the Weiss action will be dismissed with prejudice and the plaintiffs in the Juzwik and Rodriquez actions will dismiss their complaints based on the settlement of the Weiss action. We continue to maintain the D&O and corporate liability insurance covering certain risks associated with securities claims filed against us or our directors and officers, as described above, with insurance from multiple carriers, each insuring a different layer of exposure, up to a total of $50 million. We have accrued for liabilities equal to the financial deductible of our D&O policy for the period covering the time the class action lawsuit for this matter was filed. Other than accruing for our financial deductible, we have not recorded any significant accruals for contingent liabilities associated with this matter based on our belief that a liability in excess of our insurance coverage, while possible, is not probable.

We are also currently involved in other legal proceedings, which we do not believe will result in a material liability. We estimate the range of liability related to pending litigation where the amount and range of loss can be estimated. We record our best estimate of a loss when the loss is considered probable. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the claim. As additional information becomes available, we assess the potential liability related to our pending litigation and revise our estimates. As of September 29, 2012, other than accrual for the financial deductible described above, we have not recorded any significant accruals for contingent liabilities associated with our legal proceedings based on our belief that a liability, while possible, is not probable. Further, any possible range of loss cannot be estimated at this time. Revisions to our estimate of the potential liability could materially impact future results of operations.

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In addition to historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. Our actual results could differ substantially from those anticipated by such forward-looking information due to a number of factors, including, but not limited to, risks described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report. Additionally, the following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2011 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2012. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and should be aware that the Company’s actual results could differ materially from those described in the forward-looking statements due to a number of factors, including, without limitation, those factors described under “Risk Factors” and elsewhere in this Quarterly Report. Any forward-looking statements should be considered in light of these factors. Unless otherwise required by law, the Company undertakes no obligation, and expressly disclaims any obligation, to update or publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, or otherwise.

We operate on a 52-53 week fiscal year ending on the Saturday nearest to December 31 of the current calendar year or the following calendar year. Normally, each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks. Fiscal years 2012 and 2011 are 52-week years ending on December 29, 2012 and December 31, 2011, respectively. The three- and nine-month periods ending September 29, 2012 and October 1, 2011 include 13 weeks and 39 weeks each, respectively.

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and extinguishment of liabilities in the normal course of business. As more fully described in Note 1 to the consolidated financial statements, we have incurred recurring operating losses and have substantial debt maturities in 2012 and 2013 and our cash reserves will not be sufficient to meet these payment obligations. These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

OVERVIEW

Third Quarter of 2012

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Our Business

NextWave Wireless Inc. is a holding company for our wireless spectrum portfolio. Our continuing operations are focused on the management of our wireless spectrum interests. Our total domestic spectrum holdings consist of approximately 3.9 billion MHz POPs. The term “MHz-POPs” is defined as the product derived from multiplying the number of megahertz associated with a license by the population of the license’s service area. Our wireless license portfolio covers approximately 218.6 million total POPs, with 104.8 million POPs covered by 20 MHz or more of spectrum, and an additional 94.9 million POPs covered by at least 10 MHz of spectrum. In addition, a number of markets, including much of the New York City metropolitan region, are covered by 30 MHz or more of spectrum. Our domestic spectrum resides in the 2.3 GHz Wireless Communication Services (“WCS”), 2.5 GHz Broadband Radio Service (“BRS”)/Educational Broadband Service (“EBS”), and 1.7/2.1 GHz Advanced Wireless Service (“AWS”) bands and offers propagation and other characteristics suitable to support high-capacity, mobile broadband services.

Our international spectrum included in continuing operations include 2.3 GHz licenses in Canada with 15 million POPs covered by 30 MHz of spectrum.

Our pending Merger and the related transactions are described in more detail in Note 1 to the Condensed Consolidated Financial Statements.

Discontinued Operations

The results of operations of our Global Services Support strategic business units and our WiMAX Telecom, Inquam and South American businesses, have been reported as discontinued operations in the condensed consolidated financial statements for all periods presented, prior to sale or dissolution of the respective business.

Our discontinued international operations hold a nationwide 2.0 GHz license in Norway.

RESULTS OF OPERATIONS

The results of operations of our Global Services Support strategic business units and our WiMAX Telecom, Inquam and South American businesses, have been reported as discontinued operations in the consolidated financial statements for all periods presented, prior to sale or dissolution of the respective business.

Comparison of Our Third Quarter of 2012 to Our Third Quarter of 2011 – Continuing Operations

General and Administrative

General and administrative expenses from continuing operations during the third quarter of 2012 were $11.1 million compared to $5.0 million for the third quarter of 2011. The $6.1 million increase is attributable primarily to higher legal and professional fees incurred as a result of the Merger and amendment of our Notes during the third quarter.

Included in general and administrative expenses during each of the third quarters of 2012 and 2011 is $1.9 million of amortization of finite-lived wireless spectrum. Also included in general and administrative expenses during the third quarters of 2012 and 2011 is $0.1 million and $0.2 million, respectively, of share-based compensation expense.

Interest Expense

Interest expense from continuing operations during the third quarter of 2012 was $44.8 million, compared to $64.8 million during the third quarter of 2011, a decrease of $20.0 million. The decrease is primarily attributable to lower interest accretion of debt discounts and issuances costs of $0.2 million, $3.1 million and $24.6 million on our Senior Notes, Second Lien Notes and Third Lien Notes, respectively. These decreases were partially offset by higher principal and paid-in-kind interest of $0.7 million, $1.1 million and $6.1 million on our Senior Notes, Second Lien Notes and Third Lien Notes, respectively.

Interest expense on our Senior Notes, Second Lien Notes and Third Lien Notes during 2012 is expected to be lower than that recognized during 2011 attributed to lower accretion of debt discounts and issuance costs related to these, partially offset by higher paid-in-kind interest.

Income Taxes

During the third quarters of 2012 and 2011, substantially all of our U.S. subsidiaries had net losses for tax purposes with full valuation allowances.

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Our effective income tax rate during the third quarter of 2012 was 0.4% resulting in an income tax benefit of $0.2 million on our pre-tax loss of $55.8 million. The income tax benefit is a result of taxes provided on income from discontinued operations that can be offset by losses from continuing operations.

Our effective income tax rate during the third quarter of 2011 was 0.4%, resulting in an income tax benefit of $0.3 million on our pre-tax loss of $69.8 million. The income tax benefit consists of a $0.3 million tax benefit on taxes provided on income from discontinued operations that can be offset by losses from continuing operations.

Comparison of Our First Nine Months of 2012 to Our First Nine Months of 2011 – Continuing Operations

General and Administrative

General and administrative expenses from continuing operations during the first nine months of 2012 were $21.7 million compared to $17.3 million for the first nine months of 2011. The $4.4 million increase is attributable primarily to higher legal and professional fees incurred as a result of the Merger and amendment of our Notes of $5.3 million, partially offset by lower maintenance and headcount related expenditures in addition to lower share-based compensation expense during 2012. Of the offset, $0.3 million is attributed to maintenance expenditures incurred during 2011 associated with certain build-out or substantial service requirements of our licensed wireless spectrum, which generally must be satisfied as a condition of the license.

Included in general and administrative expenses during the first nine months of 2012 and 2011 is $5.6 million and $5.7 million, respectively, of amortization of finite-lived wireless spectrum. Also included in general and administrative expenses during the first nine months of 2012 and 2011 is $0.3 million and $0.6 million, respectively, of share-based compensation expense.

Restructuring Credit

During the first nine months of 2011, we recognized a benefit of $1.1 million resulting from a renegotiation of our $1.9 million long-term obligation stemming from a previous renegotiation of one of our abandoned lease liabilities whereby we paid $0.8 million in full settlement of the obligation.

Net gain on Sale of Wireless Spectrum License

During the first nine months of 2012 we recognized a net gain of $0.1 million on the sale of our wireless spectrum licenses in Canada.

During the first nine months of 2011, we recognized a $0.3 million gain on the sale of wireless spectrum licenses which represents our receipt of a $0.3 million holdback payment that was pending FCC clearance of a prior sale by us.

Interest Expense

Interest expense from continuing operations during the first nine months of 2012 was $129.4 million, compared to $185.0 million during the first nine months of 2011, a decrease of $55.6 million. The decrease is primarily attributable to lower interest accretion of debt discounts and issuances costs of $2.3 million, $9.0 million and $69.9 million on our Senior Notes, Second Lien Notes and Third Lien Notes, respectively. These decreases were partially offset by higher principal and paid-in-kind interest of $1.9 million, $2.9 million and $20.9 million on our Senior Notes, Second Lien Notes and Third Lien Notes, respectively.

Other Income and Expense, Net

Other income, net, from continuing operations during the first nine months of 2011 was $1.2 million, and reflects primarily changes in the estimated fair values of our embedded derivatives.

Income Taxes

During the first nine months of 2012 and 2011, substantially all of our U.S. subsidiaries had net losses for tax purposes with full valuation allowances.

Our effective income tax rate during the first nine months of 2012 was 0.4% resulting in an income tax benefit of $0.6 million on our pre-tax loss of $151.1 million. The income tax benefit is a result of taxes provided on income from discontinued operations that can be offset by losses from continuing operations.

Our effective income tax rate during the first nine months of 2011 was 1.0%, resulting in an income tax benefit of $2.1 million on our pre-tax loss of $199.7 million. The income tax benefit consists of a $1.3 million tax benefit from the effect of the change in the effective income tax rate on the deferred tax liabilities associated with indefinite-lived intangible assets and a $0.8 million tax benefit on taxes provided on income from discontinued operations that can be offset by losses from continuing operations.

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Comparison of Our Third Quarter and First Nine Months of 2012 to Our Third Quarter and First Nine Months of 2011 – Discontinued Operations

The results of operations of our discontinued Global Services Support, WiMAX Telecom, Inquam and South American businesses, are as follows:

Total Operating Expense Credits

Total operating expense credits for the third quarter and first nine months of 2012 include $0.1 million and $0.3 million, respectively, in sublease revenue.

Total operating expense credits for the third quarter of 2011 include $0.1 million in sublease revenue. Total operating expense credits for the first nine months of 2011 include a $0.3 million favorable settlement with a service vendor, $0.2 million in net gains on the sale of equipment and $0.2 million in sublease revenue.

Net Gains on Business Divestitures

In 2009, we sold the majority of the assets and liabilities of our Inquam Broadband GmbH (“IBG”) subsidiary to Inquam Holding GmbH (“IHG”), a limited liability company and a related party, for a nominal amount under an Asset Purchase Agreement. In connection with the sale, we entered into an earn-out agreement with IHG that provided for payment to us upon the subsequent sale of the outstanding share capital of IHG. In March 2012, the shareholders of IHG sold and transferred all of the share capital of IHG to a third party, whereby we received $2.3 million in cash consideration. As a result of the sale of IHG and final realization of our investments in our WiMax Telecom AG and IBG subsidiaries, we recognized a net gain on disposal of $19.9 million during the first six month of 2012 which represents the $2.3 million in cash received plus $17.6 million accumulated in the foreign currency translation adjustment component of equity for these two consolidated subsidiaries that was transferred to earnings upon substantial liquidation.

During the first nine months of 2011, we completed the sale of our remaining subsidiaries in Latin America to a third party for $3.0 million, recognizing a gain on the divestiture of $1.7 million, and recognized a gain of $0.4 million for cash received in May 2011 under the terms of an additional consideration agreement that we entered into upon the sale of WT SRO in June 2010.

Income Taxes

The effective income tax rates for discontinued operations during the third quarter and first nine months of 2012 were 37.5% and 7.3% resulting in income tax provisions of $6,000 and $1.5 million on pre-tax income from discontinued operations of $16,000 and $20.0 million, respectively. The tax provisions were recorded as a result of allocations of current year losses from continuing operations during the respective periods.

The effective income tax rate for discontinued operations during the third quarter and first nine months of 2011 was 36.5%, resulting in income tax provisions of $24,000 and $1.0 million on pre-tax income from discontinued operations of $0.1 million and $2.7 million, respectively. The tax provisions were recorded as a result of allocations of current year losses from continuing operations during the respective periods.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations, business combinations, strategic investments and wireless spectrum license acquisitions primarily with the $550.0 million in cash received in our initial capitalization in April 2005, the net proceeds of $295.0 million from the issuance of the Senior Notes in 2006 and 2010, the net proceeds of $351.1 million from our issuance of Series A Senior Convertible Preferred Stock in March 2007 and the net proceeds of $101.0 million from our issuance of the Second Lien Notes in 2008 and 2009. Our total unrestricted cash and cash equivalents included in current assets of continuing operations totaled $5.9 million at September 29, 2012. We had a net working capital deficit of $1,141.4 million at September 29, 2012.

In an effort to reduce our future working capital requirements and in order to comply with the terms of our Senior Notes, Second Lien Notes and Third Lien Notes our Board of Directors approved the implementation of a global restructuring initiative in 2008, pursuant to which we have divested, either through sale, dissolution or closure, our multimedia, network infrastructure and semiconductor businesses. We have also taken other cost reduction actions. The results of operations of these businesses are reported as discontinued operations in the accompanying condensed consolidated financial statements.

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During the first nine months of 2012, our continuing operations used cash of $12.5 million for operations, which includes costs to maintain our wireless spectrum licenses and costs associated with being a public reporting company. We expect that our cash requirements for our continuing operations will continue at this rate during the remainder of 2012.

In 2011, we had capital expenditure needs associated with certain build-out or substantial service requirements which apply to our licensed domestic wireless spectrum, which generally must be satisfied as a condition of the license. The substantial service deadlines applicable to our domestic and Canadian wireless spectrum assets, and our activities to meet these requirements, are described below:

Debt Maturities and Ability to Continue as Going Concern

As of September 29, 2012, the aggregate principal amount of our secured indebtedness was $1,146 million. This amount includes our Senior Notes, due December 2012, with an aggregate principal amount of $153.4 million, our Second Lien Notes, due January 2013, with an aggregate principal amount of $215.7 million and our NextWave and HoldCoThird Lien Notes, due February 2013, with aggregate principal amounts of $331.4 million and $445.5 million, respectively. Our current cash reserves are not sufficient to meet our payment obligations under our secured notes at their current maturity dates.

In connection with the Merger Agreement, on August 1, 2012, the Company and its wholly owned subsidiary NextWave Wireless LLC, and certain subsidiary guarantors entered into the Forbearance Agreement with the holders of the Notes. Pursuant to the Forbearance Agreement, each holder has agreed, and directed The Bank of New York Mellon, as collateral agent, to temporarily forbear from exercising their respective rights and remedies in connection with potential defaults and events of default that may occur during the forbearance period. The forbearance period will terminate on the earliest to occur of the effective time of the Merger, sixty days after the date of any termination of the Merger Agreement and January 31, 2014.

As required pursuant to the Merger Agreement, the holders of the Notes amended and restated the Notes and amended certain documents ancillary to the Notes on August 16, 2012. Our Old Third Lien Notes were split into two series whereby certain of our Old Third Lien Notes remain direct obligations of the Company and the remaining principal balance of our Old Third Lien Notes

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became the direct obligations of NextWave HoldCo LLC, a new subsidiary that we formed on August 8, 2012, under the laws of the State of Delaware (“NextWave HoldCo”). Specifically, the parties have agreed that $325 million of the Company’s outstanding obligations under the Old Third Lien Notes remain the Company’s direct obligations (“NextWave Third Lien Notes”) and the remaining principal balance of the Old Third Lien Notes plus accrued and unpaid interest as of August 15, 2012 became the direct obligations of NextWave HoldCo (“HoldCo Third Lien Notes”). We provided a third priority guarantee of NextWave HoldCo’s obligations under the HoldCo Third Lien Notes. The terms of the HoldCo Third Lien Notes contain restrictive covenants relating to, among other things: