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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1998
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
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CyberCash, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
54-1725021
(I.R.S. Employer Identification No.)
2100 Reston Parkway
Third Floor
Reston, Virginia 20191
(703) 620-4200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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RUSSELL B. STEVENSON, JR.
2100 RESTON PARKWAY
THIRD FLOOR
RESTON, VIRGINIA 20191
(703) 620-4200
(name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
MICHAEL J. SILVER
HOGAN & HARTSON L.L.P.
111 S. CALVERT STREET, SUITE 1600
BALTIMORE, MARYLAND 21202
(410) 659-2741
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
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 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, please check the following
box and list the Securities Act 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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum Amount of
Title of each class of securities Amount to be Offering Price per Aggregate Offering Registration
to be registered registered unit (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value . . 4,885,731 (2) $ 12.375 $ 60,460,921 $ 18,321
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</TABLE>
(1) Estimated solely for the purpose of calculating the Registration Fee and
based upon the average of the high and low sale prices of the Registrant's
CommonStock on February 24, 1998, as reported on the Nasdaq Stock Market of
$ 12.375.
(2) Includes shares of Common Stock which may be offered pursuant to this
Registration Statement consisting of an estimated 2,461,540 shares issuable
upon conversion of 15,000 shares of Series D Convertible Preferred Stock and
708,382 shares issuable upon exercise of the Investment Options issued in
connection therewith. For purposes of estimating the number of shares of
Common Stock to be included in this Registration Statement, the Company
calculated 200% of the number of shares of Common Stock issuable in connection
with the conversion of the Company's Series D Convertible Preferred Stock
(based on a conversion price of $ 12.1875 which is the single lowest closing
price of the Common Stock reported on the Nasdaq National Market for the ten
(10) consecutive trading days ended February 24, 1998) and the exercise of the
Investment Options. In addition to the shares set forth in the table, the
amount to be registered includes an indeterminate number of shares issuable
upon conversion of or in respect of the Series D Convertible Preferred Stock
and Investment Options to purchase Common Stock, as such number may be adjusted
as a result of stock splits, stock dividends and antidilution provisions
(including floating conversion prices) in accordance with Rule 416.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included in this Registration Statement is a combined Prospectus which covers
Common Stock of the Registrant heretofore registered by Registration Statement
No. 333-34303. A filing fee in the amount of $10,428 has previously been paid.
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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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 3
SUBJECT TO COMPLETION
FEBRUARY 26, 1998
CYBERCASH, INC.
COMMON STOCK, PAR VALUE $.001 PER SHARE
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This Prospectus relates to the offer and sale of up to 4,885,731
shares (the "Shares") of common stock, $.001 par value ("Common Stock") of
CyberCash, Inc. ("CyberCash" or the "Company"). The Shares will be offered for
sale by certain stockholders of the Company, or by donees or certain other
permitted transferees (the "Selling Stockholders"), from time to time in one or
more transactions (which may involve block transactions) effected on the Nasdaq
Stock Market (or any national securities exchange or U.S. inter-dealer
quotation system of a registered national securities association, on which the
Shares are then listed), in sales occurring in the public market off such
exchange, in privately negotiated transactions, through the writing of options
on the Shares, short sales or in a combination of such methods of sale. Such
methods of sale may be conducted at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions directly, or
indirectly, through broker-dealers, underwriters or agents acting on their
behalf, and in connection with such sales, such broker-dealers or agents may
receive compensation in the form of commissions or discounts from the Selling
Stockholders and/or the purchasers of the Shares for whom they may act as agent
or to whom they sell Shares as principal or both (which commissions or
discounts are not anticipated to exceed those customary in the types of
transactions involved). In connection with any sales by the Selling
Stockholders of Common Stock hereunder, the Selling Stockholders and any
broker-dealers participating in such sales may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). To the extent required, the names of any agents or broker-dealers, and
applicable commissions or discounts and any other required information with
respect to any particular offer of Shares by the Selling Stockholders, will be
set forth in a Prospectus Supplement. Any securities covered by this Prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), may be sold under Rule 144 rather than
pursuant to this Prospectus. See "Selling Stockholders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all brokerage commissions and other expenses incurred by individual Selling
Stockholders will be borne by each such Selling Stockholder.
The Selling Stockholders and any dealer acting in connection with the
offering of any of the Shares or any broker executing selling orders on behalf
of the Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, in which event any profit on the sale of any or
all of the Shares by them and any discounts or commissions received by any such
brokers or dealers may be deemed to be underwriting discounts and commissions
under the Securities Act.
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN CYBERCASH.
The Company's Common Stock is traded on the Nasdaq Stock Market under
the symbol "CYCH." On February 24, 1998, the reported last sale price of the
Common Stock on Nasdaq was $ 12.375 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February , 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices in New York (Seven World Trade Center, Suite 1300, New York,
New York 10048) and Chicago (Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661). Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a World Wide Web site that contains
reports, proxy statements and other information regarding registrants,
including the Company, that file such information electronically with the
Commission. The address of the Commission's Web site is http:\\www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the Common Stock. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference and made a
part hereof: the Company's Annual Report on Form 10-K, as amended on Form
10-K/A, for the year ended December 31, 1996, the Company's quarterly reports
on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and September
30, 1997, the Company's current reports on Form 8-K filed on August 8, 1997 and
February 10, 1998 and the description of the Company's Common Stock set forth
in the Company's Registration Statements on Form 8-A filed under the Exchange
Act including all amendments and reports filed for the purpose of updating such
descriptions. All documents filed by the Company with the Commission pursuant
to Sections 13(a) of the Exchange Act and any definitive proxy statement filed
pursuant to Section 14 of the Exchange Act and any reports filed pursuant to
Section 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which is incorporated by reference
herein modifies or supersedes such earlier statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus. Copies of all documents
incorporated by reference herein (other than exhibits to such documents which
are not specifically incorporated by reference into such documents) will be
provided without charge to each person who receives a copy of this Prospectus,
upon request of such person, directed to James J. Condon, CyberCash, Inc., 2100
Reston Parkway, Reston, VA 20191, 703-620-4200, or via e-mail:
[email protected].
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RISK FACTORS
In addition to the other information contained or incorporated by
reference in this Prospectus, prospective investors should consider carefully
the following risk factors in evaluating the Company and its business before
purchasing Common Stock. The following discussion identifies important factors
that could cause CyberCash's actual results to differ materially from results
predicted or implied in any forward-looking statements made in this Prospectus
or elsewhere by or on behalf of CyberCash.
LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT
The Company was founded in August 1994, and has not yet operated at a
profit. The Company commercially released its Credit Card service in January
1996 and its CyberCoin(R) service in September 1996 and has only conducted
pilot projects for its PayNow(TM) Secure Electronic Check service. These
services have so far generated only limited revenues. The Company's limited
operating history offers little upon which an evaluation of the Company and its
long-term prospects can be based. The Company's prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their earlier stage of development, particularly companies in new
and rapidly evolving markets. To address these risks, the Company must, among
other things, continue to provide enhancements to its payment services and
supporting software, successfully implement its marketing strategy, respond to
competitive developments, continue to attract, retain and motivate qualified
personnel, expand its management processes and capabilities, and develop and
upgrade its technology. There can be no assurance that the Company will succeed
in addressing these risks, and the failure to do so could have a material
adverse effect on the Company's business, financial condition and operating
results.
As of September 30, 1997, the Company had an accumulated deficit of
$58,805,000. Since its inception, the Company revenues have been small relative
to its expenses. The Company's ability to generate significant revenue remains
subject to substantial uncertainty. Accordingly, the Company expects to
continue to incur significant operating losses on both a quarterly and an
annual basis at least through 1998 and perhaps for some time thereafter. There
can be no assurance that the Company will achieve or sustain profitability.
UNCERTAINTY OF DEVELOPMENT OF MARKET
The market for the Company's services is at an early stage of
development, is rapidly evolving, and is characterized by an increasing number
of market entrants who have introduced or are developing competing products and
services. As is typical for a new and rapidly evolving industry, demand and
market acceptance for recently introduced products and services are subject to
a high level of uncertainty. Moreover, critical issues concerning the Internet
(including security, reliability, cost, ease of use and quality of service)
remain unresolved and may affect growth of the use of the Internet in general
and of Internet commerce in particular. The widespread adoption of the Internet
for commerce will require a broad acceptance of new methods of conducting
business and exchanging information. Enterprises that have invested substantial
resources in other methods of conducting business have tended to be slow to
adopt a new strategy that may limit or compete with their existing business.
They have also had to overcome technical obstacles and develop new business
models to succeed in this new environment.
The Company intends that eventually banks and other financial
institutions will become important channels for the marketing of the Company's
technology and services. Many larger financial institutions have been reluctant
to commit to involvement with Internet commerce. They have expressed concerns
about the security, stability, and economic viability of Internet payment
systems such as those offered by the Company. While the Company believes that
some larger institutions are demonstrating an increased willingness to consider
offering Internet payment services, it is uncertain how many banks and other
financial institutions will decide to do so, or how long before they will do so
in significant numbers. If financial institutions do not commit to offering
Internet payment services, the Company will have to
<PAGE> 6
change its strategy. There is no assurance that the Company would be able to
develop a successful alternative strategy.
Consumers have also been slower to commence substantial volumes of
purchases over the Internet than had been anticipated. They have demonstrated
concerns about privacy and security, as well as convenience and ease of use of
payment systems. While the Company believes that consumers are beginning to be
more willing to use its payment services, the rate at which the services will
become widely accepted remains uncertain.
Some of the Company's services currently require consumers to download
and install the Company's Wallet software and to bind it to credit card or
checking accounts. With respect to the CyberCoin service, in particular, the
incentive for them to do so is largely dependent upon the number and quality of
merchants that have agreed to use the CyberCoin service. Conversely, the
incentive for merchants to adopt the CyberCoin service is largely dependent on
the number of consumers that are equipped to use it. For the CyberCoin service
to become successful, the Company will have to overcome the obstacle that this
presents, and there can be no assurance that it will succeed. If it cannot
achieve widespread acceptance of its services by both consumers and merchants,
the Company's business will be materially and adversely affected.
Internet commerce, and consequently the market for the Company's
services, have developed more slowly than some had predicted. Although Internet
commerce continues to grow, it is not known how soon, if ever, the demand for
payment services will become sufficient to sustain a viable market for the
Company's services. The Company's business includes services that have never
existed before, which operate in a market that previously did not exist. In
this regard, it is unknown whether any significant market for effecting
payments by electronic check or for making low denomination cash transfers over
the Internet will develop. The use of the Company's services is dependent in
part upon the continued development of an infrastructure for providing adequate
Internet access and the proper management of Internet traffic. The Internet may
not prove to be a viable commercial marketplace because of inadequate
development of the necessary infrastructure, such as adequate capacity, a
reliable network backbone or timely development of complementary products, such
as high speed modems. There can be no assurance that commerce over the Internet
will become widespread, that a significant market for the Company's services
will emerge, or that the Company's services will become generally adopted. If
the market fails to continue to develop, develops more slowly than expected or
becomes saturated with competitors, the infrastructure for the Internet is not
adequately developed or the Company's services do not achieve market acceptance
by a significant number of individuals, businesses and financial institutions,
the Company's business, financial condition and operating results will be
materially and adversely affected.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
Because Internet commerce is still at an early stage, the Company's
revenue expectations are based largely on expectations regarding the growth of
demand for its services and its ability to license its technology. Moreover,
the Company must continue to control its operating expenses. The Company
currently anticipates that its operating expenses for its existing business
will grow only slightly during 1998. Thereafter, however, operating expenses
may increase as the Company continues to develop its services and technology,
increase its sales and marketing operations, develop new distribution channels,
improve its operational and financial systems and broaden its customer support
capabilities. Any material shortfall of demand for the Company's services in
relation to the Company's expectations would have a material adverse effect on
the Company's business and financial condition and could cause significant
fluctuations in the Company's results of operations.
During 1997, the majority of the Company's revenues derived from
licensing its technology and fees for development work associated with
licensing activities. While the Company anticipates that recurring revenues
from fees paid by merchants and other customers will represent an increasing
proportion of its total revenues during the next several quarters, revenues
from licensing and development
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will continue to be important. Revenues from these sources are generally less
predictable and more inclined to vary from period to period than revenues from
fees paid by merchants and other customers. Accordingly, the Company may
experience significant fluctuations in future quarterly operating results. In
addition, as a strategic response to changes in the competitive environment,
the Company may from time to time make pricing, marketing or licensing
decisions or business combinations that could have a material adverse effect on
the Company's business, results of operations or financial condition. As a
result, the Company believes that period-to-period comparisons of its results
of operations should not be relied upon as an indication of future performance.
Because of all of the foregoing factors, it is likely that the Company's
quarterly operating results from time to time will be below the expectations of
public market analysts and investors. In such event, the price of the Company's
common stock would likely be materially adversely affected.
COMPETITION
The Internet payment services industry is new and rapidly evolving,
resulting in a dynamic competitive environment. The Company expects competition
to persist, intensify and increase in the future. Many of the Company's current
and potential competitors have longer operating histories, greater name
recognition, larger installed customer bases and significantly greater
financial, technical and marketing resources than the Company. In addition,
many of the Company's current or potential competitors, such as Microsoft, have
broad distribution channels that may be used to bundle competing products
directly to end-users or purchasers. If such competitors were to bundle
competing products for their customers, the demand for the Company's services
may be substantially reduced, and the ability of the Company to successfully
effect the distribution of its products and the utilization of its services
would be substantially diminished. There can be no assurance that the Company
will be able to compete effectively with current or future competitors or that
the competitive pressures faced by the Company will not have a material adverse
effect on the Company's business, financial condition or operating results.
The Company competes or may compete directly or indirectly with, among
others, (i) providers of digital cash, such as DigiCash bv; (ii) GC Tech, Inc.,
which currently is providing an Internet micropayment service in Europe; (iii)
Internet credit card service providers, such as VeriFone, Inc., First Virtual
Holdings, Inc., GC Tech, IBM and AT&T Corporation; (iv) banks and others which
may eventually offer direct transfers of funds from checking accounts over the
Internet; and (v) developers of "smart card" programs, such as Mondex.
Additional competition could come from Web browser companies and
software and hardware vendors that incorporate Internet payment capabilities
into their products. Further, because of the rapidly evolving nature of the
industry, many of the Company's collaborative partners are current or potential
competitors.
DEVELOPMENT OF NEW SERVICES, INDUSTRY ACCEPTANCE AND TECHNOLOGICAL
CHANGE
A large portion of the Company's anticipated revenues will be derived
from relatively small fees charged to financial institutions, businesses and
individuals for transactions effected using the Company's services.
Accordingly, broad acceptance of the Company's services and their use in large
numbers of transactions is critical to the Company's success, as is the
Company's ability to design, develop, test, introduce and support new services
and enhancements on a timely basis that meet changing customer needs and
respond to technological developments and emerging industry standards. The
market for the Company's services is characterized by rapidly changing
technology and evolving industry standards. The Company's services are designed
around certain technical standards, and current and future sales of the
Company's services will be dependent on industry acceptance of such standards.
While the Company intends to provide compatibility with the standards
promulgated by leading industry participants and groups, widespread adoption of
a proprietary or closed standard could preclude the Company from effectively
doing so. Moreover, a number of leading industry participants have announced
their intention to enter into or expand their position in the market for
Internet payments through the development of new
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<PAGE> 8
technologies and standards. There can be no assurance that the Company's
services will achieve market acceptance, that the Company will be successful in
developing and introducing its proposed services or new services that meet
changing customer needs and respond to technological changes or evolving
industry standards in a timely manner, if at all, that the standards upon which
the Company's services are or will be based will be accepted by the industry or
that services or technologies developed by others will not render the Company's
services noncompetitive or obsolete. The inability of the Company to respond to
changing market conditions, technological developments, evolving industry
standards or changing customer requirements, or the development of competing
technology or products that renders the Company's services noncompetitive or
obsolete would have a material adverse effect on the Company's business,
financial condition and operating results.
RISKS OF DEFECTS AND DEVELOPMENT DELAYS
Services based on sophisticated software and computing systems often
encounter development delays and the underlying software may contain undetected
errors or failures when introduced or when the volume of services provided
increases. The Company may experience delays in the development of the software
and computing systems underlying the Company's services. In addition, there can
be no assurance that, despite testing by the Company and potential customers,
errors will not be found in the underlying software, or that the Company will
not experience development delays, resulting in delays in the shipment of its
software, the commercial release of its services or in the market acceptance of
its services, each of which could have a material adverse effect on the
Company's business, financial condition or operating results.
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the
performance of its executive officers and key employees, most of whom have
worked together for only a short period of time. The Company is dependent on
its ability to retain and motivate high quality personnel, especially its
management and highly skilled development teams. The Company does not have "key
person" life insurance policies on any of its employees. The loss of the
services of any of its key employees, particularly its founder, William N.
Melton, could have a material adverse effect on the Company's business,
financial condition or operating results. The Company's future success also
depends on its continuing ability to identify, hire, train and retain other
highly qualified technical and managerial personnel. Competition for such
personnel is intense. There can be no assurance that the Company will be able
to attract, assimilate or retain qualified technical and managerial personnel
in the future, and the failure of the Company to do so would have a material
adverse effect on the Company's business, financial condition and operating
results.
LIMITED SALES FORCE; EVOLVING DISTRIBUTION CHANNELS
The Company has a limited number of sales and marketing employees and
has a limited number of established distribution channels for its software and
services. The Company intends to distribute much of its software to businesses
and individuals free of charge and to effect a significant amount of its
software distribution through bundling arrangements with various hardware and
software vendors. In order to generate substantial revenue, the Company must
achieve broad distribution of its software to individuals and businesses and
secure general adoption of its services and technology. No assurance can be
given as to the ability of the Company to continue to establish bundling
arrangements, to retain existing arrangements or to broadly distribute its
software and generate sufficient demand for its services, and the inability of
the Company to do so would have a material adverse effect on the Company's
business, financial condition and operating results.
DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS; RISK OF INFRINGEMENT;
POSSIBLE LITIGATION
4
<PAGE> 9
The Company's success and ability to compete is dependent in part upon
its proprietary technology. The Company relies primarily on copyright, trade
secret and trademark law to protect its technology. The Company has applied for
several patents in the United States and foreign countries. It intends to
continue to file patent applications on inventions that it may make in the
future. There can be no assurance that any of these patents will be granted, or
that if granted such patents would survive a legal challenge to their validity,
or provide meaningful levels of protection.
The source code for the Company's proprietary software is protected
both as a trade secret and as a copyrighted work. The Company generally enters
into confidentiality and assignment agreements with its employees, consultants
and vendors, and generally controls access to and distribution of its software,
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use the
Company's services or technology without authorization, or to develop similar
services or technology independently. In addition, effective copyright and
trade secret protection may be unenforceable or limited in certain foreign
countries, and the global nature of the Internet makes it difficult to control
the ultimate destinations of the Company's services. To license its services,
the Company often relies on "on-screen" licenses that are not manually signed
by the end-users and, therefore, may be unenforceable under the laws of certain
jurisdictions. Despite the Company's efforts to protect its proprietary rights,
third parties may attempt to copy aspects of the Company's services or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's services is difficult, particularly in the
global environment in which the Company operates, and the laws of other
countries may afford the Company little or no effective protection of its
intellectual property. There can be no assurance that the steps taken by the
Company will prevent misappropriation of its technology or that such agreements
will be enforceable. In addition, litigation may be necessary in the future to
enforce the Company's intellectual property rights, to protect the Company's
trade secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation, whether successful or unsuccessful, could result in substantial
costs and diversions of resources, either of which could have a material
adverse effect on the Company's business, financial condition or operating
results.
On January 29, 1996, the Company received notification from the holder
of a patent for which the Company holds a license of the licensor's intent to
file suit and to demand arbitration in the event that the Company did not
immediately enter into negotiations to resolve certain claims raised by the
licensor. On April 29, 1996, the licensor sent the Company a letter stating
that the licensor had terminated the license based on a purported breach by the
Company. The Company has informed the licensor that the Company does not
believe that any grounds for termination exist. Moreover, the Company does not
believe that its existing services or operations are covered by the patent.
There is a possibility, nevertheless, that the licensor could bring a legal
action against the Company, claiming that the license has been terminated and
that the Company is infringing the patent.
DigiCash bv has registered the trademark "CyberCash," in the Benelux
countries on an "intent-to-use" basis. The Company has not applied to register
its CyberCash mark in the Benelux countries. DigiCash has filed an application,
based on the Benelux registration, to register the CyberCash mark in the United
States but the United States Patent and Trademark Office has issued an office
action denying the registration. The Company believes it has a basis to
challenge this application but, if DigiCash overcomes the USPTO's objection,
its registration of the mark may create rights superior to the Company's rights
in the CyberCash mark. Nevertheless, CyberCash has filed an application to
register the CyberCash mark in the United States, as well as in certain
overseas jurisdictions. No assurance can be given as to the ability of the
Company to secure any registration of or the right to continue to use the name
and mark CyberCash nor can there be any assurance that a license to or
assignment of the CyberCash name and mark would be available to the Company on
reasonable terms or at all should the Company be unable to secure registration
of, or the right to continue to use, the CyberCash name and mark. The
prosecution of claims relating to the CyberCash mark, including the securing of
an injunction preventing the Company's use of CyberCash, could have a material
adverse effect on the Company's business, financial condition or operating
results.
5
<PAGE> 10
The Company is aware of various patents held by independent third
parties in the area of electronic payment systems. No assurance can be given as
to the applicability of such patents to the Company's services and
technologies. The assertion of these patent rights, if successful, could result
in substantial costs to the Company. There can be no assurance that the
Company's services are not, or in the future will not be, within the scope of
such patents or any other existing or future patents, and any litigation
arising thereunder, even if successfully contested, could have a material
adverse effect on the Company's business, financial condition or operating
results. In addition, the Company from time to time has received, and may
receive in the future, notices of claims of infringement of other parties'
proprietary rights. There can be no assurance that claims for infringement or
invalidity (or claims for indemnification resulting from infringement claims)
will not be asserted or prosecuted against the Company. If any such claims or
actions are asserted, the Company may seek to obtain a license under a third
party's intellectual property rights. There can be no assurance that such a
license would be available on reasonable terms or at all, and the assertion or
prosecution of any such claims could have a material adverse effect on the
Company's business, financial condition or operating results.
The Company also relies on certain technology which it licenses from
third parties, including software which is integrated with internally developed
software and used in the Company's software to perform key functions. In this
regard, all of the Company's services incorporate data encryption and
authentication technology licensed from RSA Data Security, Inc. RSA Data
Security has agreed to indemnify CyberCash for any claim against the Company on
the basis of proprietary rights infringement with respect to the licensed
technology. CyberCash has agreed to a similar indemnity of its licensees.
There also can be no assurance that the Company's other third party
technology licenses will continue to be available to the Company on
commercially reasonable terms or at all. The loss of or inability to maintain
any of these technology licenses could result in delays in introduction of the
Company's services until equivalent technology, if available, is identified,
licensed and integrated, which could have a material adverse effect on the
Company's business, financial condition or operating results.
RISKS ASSOCIATED WITH ENCRYPTION TECHNOLOGY
A significant barrier to Internet commerce is the secure exchange of
value over public networks. The Company relies on encryption and authentication
technology to provide the security and authentication necessary to effect the
secure exchange of value, including public key cryptography technology licensed
from RSA and private key Data Encryption Standard ("DES") cryptography. There
can be no assurance that advances in computer capabilities, new discoveries in
the field of cryptography or other events or developments will not result in a
compromise or breach of the RSA, DES or other algorithms used by the Company to
protect customer transaction data. Such a development could have a material
adverse effect on the Company's business, financial condition or operating
results.
GOVERNMENT REGULATION
The Company's operations are subject to various state and federal
regulations. Because Internet commerce in general, and the Company's services
in particular, are so new, the application of many of these regulations is
uncertain and difficult to interpret. The agencies responsible for the
interpretation and enforcement of these regulations could amend those
regulations or issue new interpretations of existing regulations. It is also
possible that new legislation may be passed that imposes additional regulation
on the Company. Any such change in the regulations applicable to the Company's
business could lead to increased operating costs and could also reduce the
convenience and functionality of the Company's services, possibly resulting in
reduced market acceptance. In addition, if a regulatory agency or law
enforcement authority should assert that the Company is failing to comply with
existing regulations, the costs of responding to such a challenge could result
in significant drains on the Company's financial and management resources,
which could have a material adverse effect on the Company's business, financial
condition or operating results.
6
<PAGE> 11
Due to the increasing popularity of the Internet, it is possible that
laws and regulations may be enacted with respect to the Internet, covering
issues such as user privacy, pricing, content, characteristics and quality of
products and services. The adoption of any such laws or regulations may
decrease the growth of the Internet, which could in turn decrease the demand
for the Company's services and increase the Company's cost of doing business or
could otherwise have a material adverse effect on the Company's business,
financial condition or operating results.
All of the Company's services utilize encryption technology, the
export of which is regulated by the U.S. government. The Company has obtained
authority to export the encryption technology in its Wallet and CashRegister
software worldwide, except to Libya, Syria, Cuba, North Korea, Sudan, Iraq and
Iran and certain persons designated by the U.S. government. This authority may
be revoked or modified at any time, however, for any particular jurisdiction or
in general. The Company also intends to apply for an export license covering
the encryption technology in its gateway server software. There can be no
assurance, however, that such a license will be obtained. Some countries
restrict the import of encryption software. In addition, there can be no
assurance that export controls or import controls, either in their current form
or as may be subsequently enacted, will not limit the Company's ability to
distribute its software outside of the United States. While the Company takes
precautions against unlawful exportation of its software, the global nature of
the Internet makes it virtually impossible to effectively control the
distribution of its software. Moreover, federal, state or foreign legislation
or regulation may further limit levels of encryption or authentication
technology. Any such export restrictions, the unlawful exportation of the
Company's software, new legislation or regulation could have a material adverse
effect on the Company's business, financial condition or operating results.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company believes that its available cash resources combined with
funds from operations will be sufficient to meet its working capital and
capital expenditure requirements until its cash flow from operations turns
positive. If this belief should prove mistaken, the Company may be required to
raise additional funds. If it does so through the issuance of equity
securities, the percentage ownership of the stockholders of the Company will be
reduced, stockholders may experience additional dilution, or such equity
securities may have rights, preferences or privileges senior to those of the
holders of the Company's Common Stock. Moreover, there can be no assurance that
additional financing will be available. If adequate funds are not available or
are not available on acceptable terms, the Company may be unable to develop or
enhance its services, take advantage of future opportunities or respond to
competitive pressures, which could have a material adverse effect on the
Company's business, financial condition or operating results.
RISK OF LOSS FROM RETURNED TRANSACTIONS, MERCHANT FRAUD OR ERRONEOUS
TRANSMISSIONS
The Company currently utilizes two principal fund transfer systems:
the automated clearing house ("ACH") system for electronic fund transfers and
the national credit card systems (e.g., MasterCard, Visa, American Express and
Discover) for electronic credit card settlements. In its use of these
established payment systems, the Company may bear some of the credit risks
normally assumed by other users of these systems arising from returned
transactions caused by unauthorized use, disputes, theft or fraud. The Company
also may bear some risk of merchant fraud and transmission errors if it is
unable to have erroneously transmitted funds returned by an unintended
recipient. In addition, the agreement between the Company's users of its
services for allocation of these risks will be in electronic form, and while
digitally signed, will not be manually signed and hence may not be enforceable.
Finally, the Company may be subject to merchant fraud, including such actions
as inputting false sales transactions or false credits. The Company intends to
manage all of these risks through risk management systems, internal controls
and system security. There can be no assurance that the Company's risk
management practices or reserves will be sufficient to protect the Company from
returned transactions, merchant fraud or erroneous transmissions which could
have a material adverse effect on the Company's business, financial condition
or operating results.
7
<PAGE> 12
The Company is currently testing technology that would provide means
other than the ACH system by which consumers can access their checking accounts
via the Internet. This technology has the promise of being more efficient, less
costly, and more secure than the ACH system. There is, however, no assurance
that the Company will be successful in the current effort, or, if it is
successful, that the new approaches it is seeking to develop will prove
cost-effective or will meet with market acceptance.
SYSTEM INTERRUPTION AND SECURITY RISKS; POTENTIAL LIABILITY AND LACK
OF INSURANCE
The Company's operations are dependent on its ability to protect its
system from interruption by damage from fire, earthquake, power loss,
telecommunications failure, unauthorized entry or other events beyond the
Company's control. Most of the Company's computer equipment, including its
processing equipment, are currently located at a single site. Moreover, the
Company has experienced growing transaction volumes that have from time to time
stressed the capacity of its systems. There can be no assurance that the
Company's existing and planned precautions of increased capacity, redundant
systems, regular data backups and other procedures are adequate to prevent any
significant system outage or data loss. Consequently, unanticipated problems
may cause such failures or losses.
Despite the implementation of security measures, the Company's
infrastructure may also be vulnerable to computer viruses, hackers or similar
disruptive problems caused by its customers or other Internet users. Any damage
or failure that causes interruptions in the Company's operations could have a
material adverse effect on the Company's business, financial condition or
operating results. Such computer break-ins and other disruptions may jeopardize
the security of information stored in and transmitted through the computer
systems of the individuals, businesses and financial institutions utilizing the
Company's services, which may result in significant liability to the Company
and also may deter potential customers from using the Company's services.
Persistent problems continue to affect public and private data networks. For
example, in a number of networks, hackers have bypassed firewalls and
misappropriated confidential information. In addition, while the Company
attempts to be careful with respect to the employees it hires and maintain
controls through software design, security systems and accounting procedures to
prevent unauthorized employee access to user accounts, it is possible that,
despite such safeguards, an employee of the Company could divert users' funds
while they are in the control of the Company, which would also expose the
Company to a risk of loss or litigation and possible liability to users. The
Company attempts to limit its liability to customers, including liability
arising from the failure of the security features contained in the Company's
system and services, through contractual provisions. However, there can be no
assurance that such limitations will be enforceable. The Company currently does
not have product liability insurance to protect against these risks and there
can be no assurance that such insurance will be available to the Company on
commercially reasonable terms or at all.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
A component of the Company's strategy is to expand its operations into
international markets. The Company has created joint ventures in Japan and
Germany and has arranged with local strategic allies for the delivery of
certain of its services in France and the United Kingdom. The majority of the
Company's revenues for 1997 were derived from fees and development work charged
to these joint ventures and foreign strategic allies. The deployment of the
Company's services in these countries is at an early stage, and revenues to the
Company from the operation of the services have so far been small. The Company
anticipates that revenues derived from development work and initial licensing
fees from international operations will decline over time. There can be no
assurance that the services will be commercially successful in these or other
foreign markets, or that revenues to the Company resulting from ongoing
commercial operations will ever be significant. In addition, there are certain
risks inherent in doing business in international markets, such as unexpected
changes in regulatory requirements, export restrictions, export controls
relating to encryption technology, tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, political
instability, fluctuations in currency exchange rates, seasonal reductions in
business activity during the summer months in Europe and certain other parts of
the
8
<PAGE> 13
world and potentially adverse tax consequences, which could adversely affect
the success of the Company's international operations. There can be no
assurance that one or more of such factors will not have a material adverse
effect on the Company's future operations and, consequently, on the Company's
business, financial condition or operating results.
BANK FAILURE; LIMITATION ON ACCESS TO FUNDS
Some of the Company's services involve holding funds in the user's
Wallet in financial institutions. These funds are held in accounts by the
Company as agent for its customers. The Company will place funds only in banks
which are subject to state or federal regulation (or the non-U.S. equivalent),
are insured by the Federal Deposit Insurance Corporation and are believed by
the Company to be financially sound. Such regulatory and deposit insurance
protection may not be available for foreign accounts. Even if deposit insurance
is available, such insurance may not fully cover amounts held on behalf of the
user. Furthermore, the Company believes that because the user funds are held in
a fiduciary or trust capacity by the Company, they would not be subject to the
claims of the Company's creditors or a bankruptcy trustee. There can be no
assurance, however, that should there be a failure of a financial institution
in which the Company has placed user funds, or should a creditor or trustee of
a user or of the Company seek control over an agency account containing user
funds, that the Company would not be subject to litigation and possibly
liability to users. The Company does not have insurance to protect against
certain of these risks, and there is no assurance that such insurance will
become available, or if made available, would be affordable to the Company.
DEPENDENCE ON THE INTERNET
The Company's operating performance depends in large part on the
emergence of the Internet as a widely-used commercial marketplace. The Internet
may not prove to be a viable commercial marketplace because of inadequate
development of the necessary infrastructure (e.g., reliable network backbone),
untimely development of complementary products (e.g., high speed modems),
delays in the development or adoption of new standards and protocols required
to handle increased levels of Internet activity, or due to increased government
regulation. In addition, to the extent that the Internet continues to
experience significant growth in the number of users and the level of use,
there can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by such potential growth. Because
global commerce on the Internet and other similar open wide area networks are
new and evolving, it is difficult to predict with any assurance whether the
Internet will prove to be a viable commercial marketplace. If the necessary
infrastructure or complementary products are not developed, or if the Internet
does not become a viable commercial marketplace, the Company's business,
operating results and financial condition will be materially adversely
affected.
EXTREME VOLATILITY OF STOCK PRICE AND RISK OF LITIGATION
The Company's Common Stock price has been extremely volatile and has
experienced substantial and sudden fluctuations, particularly as a result of
announcements by the Company and its competitors, changes in financial
estimates by securities analysts and announcements with respect to the industry
generally. In addition, the stock market has experienced significant price and
volume fluctuations that have especially affected the market prices of equity
securities of many high technology companies, particularly Internet-related
companies, and that often have been unrelated to the operating performance of
such companies. These broad market fluctuations have adversely affected and may
continue to adversely affect the market price of the Company's Common Stock. In
the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted
against such a company. Such litigation could result in substantial costs and a
diversion of management's attention and resources, which would have a material
adverse effect on the Company's business, operating results and financial
condition.
EFFECTS OF CERTAIN CHARTER AND BYLAW PROVISIONS
9
<PAGE> 14
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 5,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges, including voting rights, of
those shares without any further vote or action by the stockholders. The
Company issued 15,000 shares of Series C Convertible Preferred Stock (the
"Series C Stock") in August 1997. The Company also issued 15,000 shares of
Series D Convertible Preferred Stock (the "Series D Stock") in February 1998
and is contractually obligated to issue an additional 15,000 shares of Series D
Stock upon the satisfaction of certain conditions and the receipt of
consideration for the shares. The rights of the holders of the Company's Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The
Certificate of Incorporation provides for staggered terms for the members of
the Board of Directors. Certain provisions of the Company's Bylaws, the
issuance of preferred stock, certain provisions in the Certificate of
Incorporation, the staggered Board of Directors as well as applicable
provisions of Delaware law could have a depressive effect on the Company's
stock price or discourage a hostile bid in which stockholders could receive a
premium for their shares. In addition, these provisions could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, or delay, prevent or deter a merger,
acquisition, tender offer or proxy contest for the Company.
POTENTIAL FOR DILUTION
As of February 25, 1998, there were 7,600 shares of Series C Stock and
15,000 shares of Series D Stock (together with the Series C Stock, the
"Preferred Stock") issued and outstanding. Each share of Preferred Stock is
convertible into such number of shares of Common Stock as is determined by
dividing the stated value ($1,000) of the share of Preferred Stock (as such
value is increased by a premium based on the number of days the Preferred Stock
is held) by the then current Conversion Price (which is based on the market
price of the Common Stock). If converted on February 25, 1998, the Series C
Stock would have been convertible into approximately 726,735 shares of Common
Stock. If converted on February 25, 1998, the Series D Stock would have been
convertible into approximately 1,234,142 shares of Common Stock. Assuming
issuance of the additional 15,000 shares of Series D Stock, the additional
shares of Series D Stock would have been convertible into 1,234,142 shares of
Common Stock on February 25, 1998. Depending on market conditions at the time
of conversion, the number of shares issuable could prove to be significantly
greater in the event of a decrease in the trading price of the Common Stock.
Purchasers of Common Stock could therefore experience substantial dilution upon
conversion of the Preferred Stock. As of February 25, 1998, Investment Options
to purchase 354,191 shares of Common Stock issued to the purchasers of the
Series D Stock were outstanding. These Investment Options are exercisable
between January 1, 1999 and February 5, 2003. The resale of the shares of
Common Stock into which the Preferred Stock may be converted and the shares of
Common Stock issuable upon exercise of the Investment Options is being
registered pursuant to this Registration Statement.
THE COMPANY
CyberCash was incorporated in Delaware in 1994. The Company's home
page can be located on the Web at http://www.cybercash.com. CyberCash, Inc.
("CyberCash" or the "Company") is a leading provider of software and services
to enable secure financial transactions on the Internet. The Company's suite
of Internet payment services features the electronic counterparts to cash,
credit cards and checks. The Company believes that it is well-positioned to
capitalize on the emerging market for Internet commerce because it offers a
range of payment services that work with the existing transaction processing
systems of financial institutions. The Company's address is 2100 Reston
Parkway, 3rd Floor, Reston, Virginia 20191 and its phone number is
703/620-4200.
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<PAGE> 15
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Stockholders. Upon exercise of Warrants held by Carnegie
Mellon University ("CMU"), the Company will receive approximately $822,500,
which will be used for general corporate purposes. Upon exercise of the
Investment Options (as defined below) the Company will receive approximately
$3,750,880, which will be used for general corporate purposes.
SELLING STOCKHOLDERS
This Prospectus relates to the offering by the Selling Stockholders
for resale of up to 4,885,731 shares of Common Stock. After giving effect to
the Offering, the Selling Stockholders will beneficially own no shares of
Common Stock of the Company. CMU owns 120,000 shares of Common Stock and
warrants to purchase 50,000 shares of Common Stock. RGC International
Investors, LDC and Halifax Fund, L.P. (the "Series D Holders") will acquire
Common Stock upon (i) conversion, from time to time, of the Series C Preferred
Stock and the Series D Preferred Stock they acquired in a private placement in
August 1997 and February 1998, respectively, (ii) the exercise of options (the
"Investment Options") acquired in February 1998 and (iii) upon the conversion,
from time to time, of shares of Series D Preferred Stock and upon exercise of
the Investment Options the Series D Holders will acquire upon satisfaction of
conditions which are outside of the control of the Selling Stockholders,
including obtaining the approval of the Company's stockholders. This second
closing will occur no later than February 1999. See "Description of Capital
Stock -- Series D Convertible Preferred Stock." If the Series D Holders had
converted all of their respective shares of Series C Preferred Stock and
Series D Preferred Stock and exercised the Investment Options as of February
25, 1998, RGC International Investors would have received 1,537,003 shares of
Common Stock upon conversion of the 5,000 shares of Series C Preferred Stock it
owns, conversion of the 10,000 shares of Series D Preferred Stock it owns and
exercise of its Investment Option and Halifax Fund, L.P. would have received
778,065 shares of Common Stock upon conversion of the 2,600 shares of Series C
Preferred Stock it owns, conversion of the 5,000 shares of Series D Preferred
Stock it owns and exercise of its Investment Option. This Prospectus will be
supplemented from time to time to reflect the number of shares of Common Stock
acquired by each Series D Holder, as each Series D Holder converts its shares
of Series C Preferred Stock or Series D Preferred Stock and exercises its
Investment Option. The following table sets forth certain information with
respect to the Selling Stockholders as of February 25, 1998, as follows: (i)
the name and position or other relationship with the Company within the past
three years of each Selling Stockholder; (ii) the number of the Company's
outstanding shares of Common Stock beneficially owned by each Selling
Stockholder (including shares obtainable under options exercisable within sixty
(60) days of such date) prior to the offering hereby; (iii) the number of
shares of Common Stock being offered hereby; and (iv) the number and percentage
of the Company's outstanding shares of Common Stock to be beneficially owned by
each Selling Stockholder after completion of the sale of Common Stock being
offered hereby. There is no assurance that any of the Selling Stockholders will
sell any or all of the shares offered hereby.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Beneficially Owned Number of Shares Being Beneficially Owned
Selling Stockholders Prior to the Offering Offered After Offering
- ---------------------------- ------------------------------- ----------- --------------------
<S> <C> <C> <C>
Carnegie Mellon University (1) 170,000 170,000 0
RGC International Investors, LDC (1)(2) 1,537,003 1,537,003 0
Halifax Fund L.P. (1)(2) 778,065 778,065 0
</TABLE>
(1) The number of shares set forth in the table represents an estimate of
the number of shares of Common stock to be offered by the Selling Stockholder.
The actual number of shares of Common Stock issuable upon conversion of Series
C Preferred Stock or Series D Preferred Stock and exercise of the Investment
Options is indeterminate, is subject to adjustment and could be materially less
or more than such estimated number depending on factors which cannot be
predicted by the Company at this time, including, among other factors, the
future market price of the Common Stock. The actual number of shares of Common
Stock offered hereby, and included in the Registration Statement of which this
Prospectus is a part, includes such additional number of shares of Common Stock
as may be issued or issuable upon conversion of the Series C Preferred
Stock or Series D Preferred Stock and exercise of the Investment Options by
reason of the floating conversion price mechanisms described therein, or by
reason of any stock split, stock dividend or similar transaction involving the
Common Stock, in order to prevent dilution, in accordance with Rule 416 under
the Securities Act.
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<PAGE> 16
(2) The number of shares of Common Stock beneficially owned by the Selling
Stockholder with respect to Series D Preferred Stock is based on a conversion
price of $ 12.1875, which is the single lowest closing price of the Common
Stock during the ten consecutive trading days ending February 24, 1998. The
number of shares of Common Stock beneficially owned by the Selling Stockholder
with respect to Series C Preferred Stock is based on a conversion price of
$10.75. If the Series C Preferred Stock had been actually converted on
February 25, 1998, the conversion price would have been $10.75 (the single
lowest closing price during the fourteen (14) consecutive trading days ended
February 24, 1998). Pursuant to the terms of the Series D Preferred Stock, if
the Series D Preferred Stock had been actually converted on February 25, 1998,
the conversion price would have been $ 12.1875 (the single lowest closing price
of the Common Stock during the ten (10) consecutive trading days ending
February 24, 1998). Pursuant to the terms of the Series C Preferred Stock, the
Series D Preferred Stock and the Investment Options, the shares of Series C
Preferred Stock and Series D Preferred Stock are convertible and the Investment
Options are exercisable by any holder only to the extent that the number of
shares of Common Stock owned by such holder and its affiliates (but not
including shares of Common Stock underlying unconverted shares of Series C
Preferred Stock or Series D Preferred Stock, or unexercised portions of the
Investment Options, as appropriate) would not exceed 4.9% of the then
outstanding Common Stock as determined in accordance with Section 13(l) of the
Exchange Act. Accordingly, the number of shares of Common Stock set forth in
the table for this Selling Stockholder exceeds the number of shares of Common
Stock that this Selling Stockholder could own beneficially at any given time
through their ownership of the Series C Preferred Stock, Series D Preferred
Stock and the Investment Options. In that regard, beneficial ownership of this
Selling Stockholder set forth in the table is not determined in accordance with
Rule 13d-3 under the Exchange Act.
PLAN OF DISTRIBUTION
The Shares being offered by the Selling Stockholders or their
respective pledgees, donees, transferees or other successors in interest, will
be sold in one or more transactions (which may involve block transactions) on
the Nasdaq Stock Market or on such other market on which the Common Stock may
from time to time be trading, in privately-negotiated transactions, through the
writing of options on the Shares, short sales or any combination thereof. The
sale price to the public may be the market price prevailing at the time of
sale, a price related to such prevailing market price or such other price as
the Selling Stockholders determine from time to time. The Shares may also be
sold pursuant to Rule 144.
The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the Shares directly
to market makers acting as principals and/or broker-dealers acting as agents
for themselves or their customers. Brokers acting as agents for the Selling
Stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the Shares will
do so for their own account and at their own risk. It is possible that a
Selling Stockholder will attempt to sell shares of Common Stock in block
transactions to market makers or other purchasers at a price per share which
may be below the then market price. There can be no assurance that all or any
of the Shares offered hereby will be issued to, or sold by, the Selling
Stockholders. The Selling Stockholders and any brokers, dealers or agents, upon
effecting the sale of any of the Shares offered hereby, may be deemed
"underwriters" as that term is defined under the Securities Act or the Exchange
Act, or the rules and regulations thereunder.
The Selling Stockholders and any other persons participating in the
sale or distribution of the Shares will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such person. The foregoing may affect the
marketability of the Shares.
The Company has agreed to indemnify the Selling Stockholders, or their
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments the Selling Stockholders
or their respective pledgees, donees, transferees or other successors in
interest, may be required to make in respect thereof.
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<PAGE> 17
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, $.001 par value, and 5,000,000 shares of Preferred
Stock, $.001 par value ("Preferred Stock").
COMMON STOCK
As of February 25, 1998, there were 11,635,233 shares of Common Stock
outstanding and held of record by 7,015 stockholders.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. The
holders of Common Stock are entitled to receive ratably such dividends as may
be declared by the Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the Company,
holders of the Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to
the Common Stock. All outstanding shares of Common Stock are, and all shares
of Common Stock to be outstanding upon completion of this Offering will be,
fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000,000
shares of Preferred Stock in one or more series and to fix the rights,
preferences and privileges thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series, without any further vote or action by stockholders. The
issuance of Preferred Stock could adversely affect the voting power of holders
of Common Stock and the likelihood that such holders will receive dividend
payments and payments upon liquidation and could have the effect of delaying,
deterring or preventing a change in control of the Company.
SERIES D CONVERTIBLE PREFERRED STOCK
Pursuant to the Company's Certificate of Incorporation, the Board has
classified 30,000 shares of the Preferred Stock as Series D Convertible
Preferred Stock with the rights, preferences, privileges and terms set forth in
the Certificate of Designations filed pursuant thereto. The Stated Value Per
Share of the Series D Stock is $1000.00. With respect to rights upon
liquidation, winding up or dissolution and redemption rights, the Series D
Stock will rank (i) junior to the Series C Stock, (ii) with the consent of the
holders of the Series D Convertible Preferred Stock obtained in accordance with
the Certificate of Designation, junior to any other series of Preferred Stock
duly established by the Board of Directors of the Company, the terms of which
shall specifically provide that such series shall rank prior to the Preferred
Stock, whether now existing or hereafter created (the "Senior Preferred
Stock"), (iii) with the consent of the holders of the Series D Convertible
Preferred Stock obtained in accordance with the Certificate of Designation, on
a parity with any other series of Preferred Stock duly established by the Board
of Directors of the Company, the terms of which shall specifically provide that
such series shall rank on a parity with the Preferred Stock, whether now
existing or hereafter created (the "Parity Preferred Stock"), and (iv) prior to
any other class or series of capital stock of the Company, including, without
limitation, all classes of the Common Stock, par value $0.001 per share, of the
Company, whether now existing or hereafter created (the "Common Stock"; all of
such classes or series of capital stock of the Company to which the Series D
Stock ranks prior, including without limitation the Common Stock, and
including, without limitation, junior securities convertible into or
exchangeable for other junior securities or phantom stock representing junior
securities, are collectively referred to herein as "Junior Securities").
Of the 30,000 shares of Series D Stock authorized by the Board, 15,000
shares are currently outstanding. The Series D Holders will acquire the
remaining 15,000 shares upon the occurrence of certain events which are beyond
their control, including, but not limited to, the approval of the Company's
Stockholders. This second closing will occur no later than February 1999.
Dividends. Holders of the Series D Stock are not entitled to receive
dividends. So long as the Series D Stock is outstanding, however, no dividends
may be declared or paid on, nor shall any distribution be made on, any Junior
Securities, the Company may not redeem or repurchase any Junior Securities, nor
may any moneys be paid to or made available for a sinking fund for the benefit
of any Junior Securities, without the written consent of the holders of a
majority of the outstanding shares of Series D Stock.
-14-
<PAGE> 18
Liquidation. In the event of any dissolution, liquidation or winding
up of the Company, whether voluntary or involuntary, or any bankruptcy,
insolvency or similar proceedings, whether voluntary or involuntary, shall be
commenced with respect to the Company (a "Liquidation"), the holders of shares
of Series D Stock shall be entitled to receive out of the assets of the Company
legally available for distribution to stockholders (whether representing
capital or surplus), before any payment or distribution shall be made on the
Common Stock or any other Junior Securities (but after distribution of such
assets among, or payment thereof over to, creditors of the Company and to
holders of any stock of the Company with liquidation rights senior to the
Series D Stock, including holders of Series C Preferred Stock and Senior
Preferred Stock), the Stated Value Per Share plus an amount equal to 5% per
annum for the period beginning February 5, 1998 and ending on the date of final
distribution to the holder thereof (pro rated for any portion of such period)
(the "Preferred Stock Liquidation Distribution"). After the Preferred Stock
Liquidation Distribution has been made, the holders of shares of Series D Stock
shall not be entitled to any further participation in any distribution of
assets of the Company. If the assets distributable upon such dissolution,
liquidation or winding up (as provided above) shall be insufficient to pay cash
in an amount equal to the amount of the Preferred Stock Liquidation
Distribution to the holders of shares of Series D Stock, then such assets or
the proceeds thereof shall be distributed among the holders of the Series D
Stock ratably in proportion to the respective amounts of the Preferred Stock
Liquidation Distribution to which they otherwise would be entitled. The merger
or consolidation of the Company into or with another corporation, a merger or
consolidation of any other corporation with or into the Company upon the
completion of which the stockholders of the Company prior to the merger or
consolidation no longer hold a majority of the outstanding equity securities of
the Company or the sale, conveyance, exchange or transfer of all or
substantially all of the property or assets of the Company (any such event, a
"Reorganization Event") shall, at the option of the holders of at least 50 % of
the Series D Stock, be deemed to be a Liquidation of the Company.
Voting Rights. The holders of the Series D Stock shall be entitled to
notice of all stockholders meetings in accordance with the Company's bylaws.
Except as otherwise provided by the Delaware General Corporation Law (the
"DGCL"), the holders of the Series D Stock have no voting power whatsoever.
Conversion. Each share of Series D Stock is convertible into the
number of shares of the Company's Common Stock equal to (i) the Stated Value
Per Share plus a premium of 5% of the stated value from the date of issuance of
the Series D Stock divided by (ii) the Conversion Price. The Conversion Price
is equal to the lowest closing price of the Company's Common Stock on Nasdaq
during a measurement period ending one trading day prior to the conversion date
multiplied by a certain percentage. The measurement period initially is 10
consecutive trading days and will increase by 2 trading days each month
beginning August 1, 1998 and ending February 1, 1999, when the measurement
period will be 22 trading days. The percentage used to calculate the
Conversion Price shall be 100% through February 4, 1999, 92.5% from February 5,
1999 to August 4, 1999, and 85% thereafter.
The holders of the Series D Stock are subject to limits on the number
of shares they can convert at any one time. Unless the trading price of the
Common Stock on the date of conversion is greater than either $11.65 per share
or 125% of the then applicable Conversion Price, the following limits apply:
from the date of issuance until August 3, 1998, the Series D Stock may not be
converted; beginning on August 3, 1998, each holder of Series D Stock may
convert up to 30% of its initial holding of Series D Stock into Common Stock
("Initial Holding"); beginning on September 2, 1998, it may convert up to 60%
of its Initial Holding; beginning on October 2, 1998, it may convert up to 90%
of its Initial Holding; and beginning on November 1, 1998, it may convert up to
100% of its Initial Holding.
The Series D Stock will automatically convert into Common Stock, at
the then applicable Conversion Price, on February 4, 2003.
SERIES C CONVERTIBLE PREFERRED STOCK
Pursuant to the Company's Certificate of Incorporation, the Board has
classified 15,000 shares of the Preferred Stock as Series C Convertible
Preferred Stock with the rights, preferences, privileges and terms set forth in
the Certificate of Designations filed pursuant thereto. The Stated Value Per
Share of the Series C Stock is $1000.00. With respect to rights upon
liquidation, winding up or dissolution and redemption rights, the Series C
Stock will rank (i) with the consent of the holders of the Series C Convertible
Preferred Stock obtained in accordance with the Certificate of Designation,
junior to any other series of Preferred Stock duly established by the Board of
Directors of the
-15-
<PAGE> 19
Company, the terms of which shall specifically provide that such series shall
rank prior to the Preferred Stock, whether now existing or hereafter created
(the "Senior Preferred Stock"), (ii) with the consent of the holders of the
Series C Convertible Preferred Stock obtained in accordance with the
Certificate of Designation, on a parity with any other series of Preferred
Stock duly established by the Board of Directors of the Company, the terms of
which shall specifically provide that such series shall rank on a parity with
the Preferred Stock, whether now existing or hereafter created (the "Parity
Preferred Stock"), and (iii) prior to any other class or series of capital
stock of the Company, including, without limitation, all classes of the Common
Stock, par value $0.001 per share, of the Company, whether now existing or
hereafter created (the "Common Stock"; all of such classes or series of capital
stock of the Company to which the Series C Stock ranks prior, including without
limitation the Common Stock, and including, without limitation, junior
securities convertible into or exchangeable for other junior securities or
phantom stock representing junior securities, are collectively referred to
herein as "Junior Securities").
Dividends. Holders of the Series C Stock are not entitled to receive
dividends. So long as the Series C Stock is outstanding, however, no dividends
may be declared or paid on, nor shall any distribution be made on, any Junior
Securities, the Company may not redeem or repurchase any Junior Securities, nor
may any moneys be paid to or made available for a sinking fund for the benefit
of any Junior Securities, without the written consent of the holders of a
majority of the outstanding shares of Series C Stock.
Liquidation. In the event of any dissolution, liquidation or winding
up of the Company, whether voluntary or involuntary, or any bankruptcy,
insolvency or similar proceedings, whether voluntary or involuntary, shall be
commenced with respect to the Company (a "Liquidation"), the holders of shares
of Series C Stock shall be entitled to receive out of the assets of the Company
legally available for distribution to stockholders (whether representing
capital or surplus), before any payment or distribution shall be made on the
Common Stock or any other Junior Securities (but after distribution of such
assets among, or payment thereof over to, creditors of the Company and to
holders of any stock of the Company with liquidation rights senior to the
Series C Stock, including holders of Senior Preferred Stock), the Stated Value
Per Share plus an amount equal to 5% per annum for the period beginning August
5, 1997 and ending on the date of final distribution to the holder thereof (pro
rated for any portion of such period) (the "Preferred Stock Liquidation
Distribution"). After the Preferred Stock Liquidation Distribution has been
made, the holders of shares of Series C Stock shall not be entitled to any
further participation in any distribution of assets of the Company. If the
assets distributable upon such dissolution, liquidation or winding up (as
provided above) shall be insufficient to pay cash in an amount equal to the
amount of the Preferred Stock Liquidation Distribution to the holders of shares
of Series C Stock, then such assets or the proceeds thereof shall be
distributed among the holders of the Series C Stock ratably in proportion to
the respective amounts of the Preferred Stock Liquidation Distribution to which
they otherwise would be entitled. The merger or consolidation of the Company
into or with another corporation, a merger or consolidation of any other
corporation with or into the Company upon the completion of which the
stockholders of the Company prior to the merger or consolidation no longer hold
a majority of the outstanding equity securities of the Company or the sale,
conveyance, exchange or transfer of all or substantially all of the property or
assets of the Company (any such event, a "Reorganization Event") shall, at the
option of the holders of at least 50 % of the Series C Stock, be deemed to be a
Liquidation of the Company.
Voting Rights. The holders of the Series C Stock shall be entitled to
notice of all stockholders meetings in accordance with the Company's bylaws.
Except as otherwise provided by the DGCL, the holders of the Series C Stock
have no voting power whatsoever.
Conversion. Each share of Series C Stock is convertible into the
number of shares of the Company's Common Stock equal to (i) the Stated Value
Per Share plus a premium of 5% of the stated value from the date of issuance of
the Series C Stock divided by (ii) the Conversion Price. The Conversion Price
is equal to the lowest closing price of the Company's Common Stock on Nasdaq
during a measurement period ending one trading day prior to the conversion
date. The measurement period initially is 10 consecutive trading days and will
increase by 2 trading days each month beginning January 16, 1998 and ending
June 16, 1998, when the measurement period will be 22 trading days.
The holders of the Series C Stock are subject to limits on the number
of shares they can convert at any one time. Unless the trading price of the
Common Stock on the date of conversion is greater than either $17 per share or
125% of the then applicable Conversion Price, the following limits apply: from
the date of issuance until January 3, 1998, the Series C Stock may not be
converted; beginning on January 3, 1998, each holder of Series C Stock may
convert up to 30% of its initial holding of Series C Stock into Common Stock
("Initial Holding"); beginning on February 2, 1998, it may convert up to 60% of
its Initial Holding; beginning on March 4, 1998, it may convert up to 90% of
its Initial Holding; and beginning on April 3, 1998, it may convert up to 100%
of its Initial Holding.
-16-
<PAGE> 20
The Series C Stock will automatically convert into Common Stock, at
the then applicable Conversion Price, on August 4, 2002.
The issuance of the Series C Stock is subject to Nasdaq's MarketPlace
Rule 4460(i) and the holders of the Series C Stock have agreed that the Company
will not issue more than 19.99% of the Common Stock upon conversion of the
Series C Stock in the absence of (i) the approval of such issuance by the
Company's stockholders, (ii) a waiver by Nasdaq of the provisions of Rule
4460(i), or (iii) the provisions of Rule 4460(i) no longer being applicable to
the Company.
DELAWARE LAW AND CERTAIN ANTI-TAKEOVER CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the DGCL.
In general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the stockholder. Generally, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years prior, did
own) 15% or more of the corporation's voting stock.
The Company's Certificate of Incorporation provides that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing. The Company's Certificate of
Incorporation also provides that the authorized number of directors may be
changed only by resolution of the Board of Directors, and that directors can
only be removed for cause by a majority vote of the stockholders and without
cause by a vote of the stockholders. In addition, the Company's Certificate of
Incorporation provides for the classification of the Board of Directors into
three classes, only one of which shall be elected at any given annual meeting.
These provisions, which require the vote of at least two-thirds of the
stockholders to amend, could have the effect of delaying, deterring or
preventing a change in control of the Company or depressing the market price of
Common Stock or discouraging hostile bids in which stockholders of the Company
could receive a premium for their shares of Common Stock.
TRANSFER AGENT AND REGISTRAR
BankBoston N.A. has been appointed as the transfer agent and registrar
for the Company's Common Stock.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby
will be passed upon for the Company by Robert Stankey, Assistant General
Counsel.
EXPERTS
The consolidated financial statements of CyberCash, Inc. appearing in
CyberCash, Inc.'s Annual Report (Form 10-K), for the year ended December 31,
1996, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
-17-
<PAGE> 21
<TABLE>
<S> <C>
================================================================== =================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR CYBERCASH, INC.
A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS COMMON STOCK
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
--------
PROSPECTUS
--------
------------------------
TABLE OF CONTENTS PAGE
----
Available Information . . . . . . . . . . 2
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . 11
Use of Proceeds . . . . . . . . . . . . 12
Selling Stockholders . . . . . . . . . . 12
Plan of Distribution . . . . . . . . . . 13
Description of Capital Stock . . . . . . 14
Legal Matters . . . . . . . . . . . . 17
Experts . . . . . . . . . . . . 17
February , 1998
================================================================== =================================================
</TABLE>
II-1
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee, all amounts are estimates.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . $ 18,321
Accounting fees and expenses . . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . . . 5,000
Blue Sky fees and expenses (including counsel fees) 11,000
Printing and engraving expenses . . . . . . . . . . 5,000
Transfer agent's and registrar's fees and expenses 2,000
Miscellaneous expenses, including Listing Fees . . 35,000
--------
Total $ 81,321
</TABLE>
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, indemnity to directors
and officers under certain circumstances for liabilities incurred in connection
with their activities in such capacities (including reimbursement for expenses
incurred). Article SIXTH of the Registrant's Certificate of Incorporation
provides that the Registrant will indemnify its directors and officers to the
fullest extent permitted by law and that directors shall not be liable for
monetary damages to the Registrant or its stockholders for breach of fiduciary
duty, except to the extent not permitted under Delaware General Corporation
Law.
Section 145 of the Delaware General Corporation Law ("DGCL")
authorizes a court to award, or a corporation's board of directors to grant
indemnity to directors and officers under certain circumstances for liabilities
incurred in connection with their activities in such capacities (including
reimbursement for expenses incurred). The Registrant's Amended and Restated
Certificate of Incorporation provides that no director of the Registrant will
be personally liable to the Registrant or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Registrant or to its
stockholders, (ii) for acts or omissions not made in good faith or with
involved intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the DGCL, or (iv) for any transactions from which the director
derives an improper personal benefit. In addition, the Registrant's Amended
and Restated Bylaws provide that any director or officer who was or is a party
or is threatened to be made a party to any action or proceeding by reason of
his or her services to the Registrant will be indemnified to the fullest extent
permitted by the DGCL.
The Registrant has entered into agreements with each of its executive
officers and directors under which the Registrant has agreed to indemnify each
of them against expenses and losses incurred for claims brought against them by
reason of their being an officer or director of the Registrant. There is no
pending litigation or proceeding involving a director or officer of the
Registrant as to which indemnification is being sought, nor is the Registrant
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or executive officer.
II-2
<PAGE> 23
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.01 Amended and Restated Certificate of Incorporation (1)
3.02 Bylaws (1)
3.03 Certificate of Designation of Series C Convertible
Preferred Stock (2)
3.04 Certificate of Designation of Series D Convertible
Preferred Stock (3)
4.01 Specimen Stock Certificate (1)
4.02 Securities Purchase Agreement (3)
4.03 Registration Rights Agreement (3)
4.04 Investment Option issued to RGC International
Investors LDC (3)
4.05 Investment Option issued to Halifax Fund L.P. (3)
5.01 Legal Opinion
23.01 Consent of Robert Stankey (contained in Exhibit 5.01)
23.02 Consent of Ernst & Young LLP, independent auditors (4)
24.01 Power of Attorney (contained in signature page)
</TABLE>
-----------------
(1) Incorporated by reference to the Company's Registration
Statement on Form S-1 (SEC File No. 33-80725).
(2) Incorporated by reference to the Company's current Report on
Form 8-K filed with the Securities and Exchange Commission on
August 5, 1997.
(3) Incorporated by reference to the Company's current Report on
Form 8-K filed with the Securities and Exchange Commission on
February 10, 1998
(4) To be filed by amendment
(b) Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
(a) 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:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities and Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
II-3
<PAGE> 24
(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.
(b) 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
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
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.
(c) 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 and will be governed by the final adjudication
of such issue.
II-4
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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 County of Fairfax, Commonwealth of Virginia on February
26, 1998.
CYBERCASH, INC.
By: /s/ William N. Melton
-------------------------------------
William N. Melton
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints William
N. Melton, James J. Condon and Russell B. Stevenson, Jr., and each of them,
with full power of substitution and resubstitution and each with full power to
act without the other, his or her true and lawful attorney-in-fact and agent,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission or any state, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their, his or her substitutes
or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: February 26, 1998 /s/ William N. Melton
-------------------------------------------
William N. Melton
President and Chief Executive Officer
Date: February 26, 1998 /s/ James J. Condon
-------------------------------------------
James J. Condon
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date: February 26, 1998 /s/ Daniel C. Lynch
-------------------------------------------
Daniel C. Lynch
Chairman of the Board of Directors
Date: February 26, 1998 /s/ Michael Rothschild
-------------------------------------------
Michael Rothschild
Director
<PAGE> 26
Date: February 26, 1998 /s/ Charles T. Russell
-------------------------------------------
Charles T. Russell
Director
Date: February 26, 1998 /s/ Garen K. Staglin
-------------------------------------------
Garen K. Staglin
Director
<PAGE> 1
EXHIBIT 5.01
LEGAL OPINION
Board of Directors
CyberCash, Inc.
2100 Reston Parkway, Third Floor
Reston, Virginia 20191
Ladies and Gentlemen:
I am the Assistant General Counsel of CyberCash, Inc., a Delaware corporation
(the "Company"), and am furnishing this opinion in connection with the
Company's registration statement on Form S-3 (the "Registration Statement") to
register under the Securities Act of 1933, as amended, the sale of 2,815,731
shares (the "Conversion Shares") of the Company's common stock, $.001 par value
(the "Common Stock"), that may be issued upon conversion of the Company's
Series D Convertible Preferred Stock (the "Series D Stock") and upon the
exercise of the Investment Options.
I am of the opinion that when issued in accordance with the terms of the Series
D Stock and the Investment Options, the Conversion Shares will be validly
issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the heading "Legal
Matters" contained in the prospectus that forms a part of the Registration
Statement. In giving this consent, I do not admit that I am an "expert" within
the meaning of the Securities Act of 1933.
Very truly yours,
Robert F. Stankey
Assistant General Counsel
