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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1999
REGISTRATION NO. 333-___
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
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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Title of each class of Proposed Maximum Proposed Maximum Amount of
securities Amount to be Offering Price Aggregate Offering Registration
to be registered registered per unit (1) Price (1) Fee
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<S> <C>
Common Stock, $.001 par
value (2). . . . . . . . . 2,301,586 (3) $ 15.09 $ 34,739,564 $ 9,693
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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
Common Stock on February 1, 1999 as reported on the Nasdaq Stock Market of
$15.09.
(2) Includes Series E Junior Participating Preferred Stock Purchase Rights
attached thereto, for which no separate fee is payable pursuant to Rule 457(i).
(3) Includes shares of Common Stock which may be offered pursuant to this
Registration Statement consisting of an estimated 1,371,952 shares issuable upon
conversion of Warrants to purchase Common Stock. 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
upon exercise of the Warrants (based on the current exercise price of $20.00).
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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.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
PROSPECTUS SUBJECT TO COMPLETION
FEBRUARY ___, 1999
CYBERCASH INC.
2,301,586 SHARES OF COMMON STOCK
We have prepared this prospectus to allow two of our shareholders,
RGC International Investors, LDC and Halifax Fund, L.P., or their respective
pledgees, donees, transferees or other successors in interest, to sell up to
2,286,586 shares of our common stock. We entered into a Registration Rights
Agreement with them on January 6, 1999. This Registration Rights Agreement
requires us to file a registration statement with the Securities and Exchange
Commission for the resale of the common stock they own.
We also have prepared this prospectus to allow another one of our
shareholders, Donino, White & Partners, Inc., to sell up to 15,000 shares of our
common stock.
We are registering these shares by filing a registration statement
with the SEC using a "shelf" registration process. This shelf registration
process allows RGC International Investors, LDC, Halifax Fund, L.P. and Donino,
White & Partners, Inc. to sell their shares of common stock over a period of
time and in varying amounts. Throughout this Prospectus, we may refer to RGC
International Investors, LDC, Halifax Fund, L.P. and Donino, White & Partners,
Inc. as the "Selling Stockholders."
Our common stock is traded on the Nasdaq Stock Market under the
symbol "CYCH". On February 4, 1999, the last reported sale price of our common
stock on Nasdaq was $16.375 per share.
-------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
-------------------------
Neither the SEC nor any state securities commission has approved the common
stock, nor have these organizations determined that this prospectus is accurate
or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is February , 1999.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-732-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the Selling Stockholders sell all of their common stock:
- Annual Report on Form 10-K for the year ended
December 31, 1997;
- Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September
30, 1998;
- Current Reports on Form 8-K, as amended, dated
February 5, March 16, April 30, June 26, June 29,
July 14, September 16, December 18, 1998, January
6, 1999 and April 30, 1998; and
- The description of the Company's common stock
contained in Form 8-A.
To obtain a copy of these filings at no cost, you may write or telephone us
at the following address:
Corporate Secretary
CyberCash, Inc.
2100 Reston Parkway
Third Floor
Reston, Virginia 20191
(703) 620-4200
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. Neither we nor the
Selling Stockholders have authorized anyone else to provide you with different
information. Neither we nor the Selling Stockholders are making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of the prospectus.
The CyberCash logo, ICVERIFY, PCVERIFY, NetVERIFY, CyberCoin and
PayNow Secure Electronic Check Service are registered trademarks or service
marks of CyberCash or its affiliates in the United States and other countries.
CyberCash, PayNow, InstaBuy and Agile Wallet are trademarks of CyberCash in the
United States and other countries. This prospectus also includes names,
trademarks, service marks and registered trademarks and service marks of other
companies.
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RISK FACTORS
In evaluating our business, you should carefully consider the
following factors, as well as other information in this Prospectus before
purchasing our Common Stock. This Prospectus contains forward-looking
statements relating to future events or our future financial performance.
These statements are only predictions and actual events or results may be
materially different from our predictions. In evaluating these statements, you
should consider the various factors identified in this Prospectus, including
but not limited to the matters set forth below, which could cause actual
results to differ materially from those indicated by such forward-looking
statements.
LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT
Our company was founded in August 1994, and we have not yet
operated at a profit. Our limited operating history offers little information
to serve as a basis for evaluating our Company and our long-term prospects. You
should consider our prospects in light of the risks, expenses and difficulties
that companies in their earlier stage of development encounter, particularly
companies in new and rapidly evolving markets. Our success depends upon our
ability to address those risks successfully, which include, among other things:
- Whether we can continue to build and maintain a strong
management structure that can develop and execute our
business strategy, and respond effectively to changes
in the markets for our services and software products;
- Whether we can respond quickly and effectively to
technological changes and competitive forces in our
markets;
- Whether we will be able to assemble and maintain the
necessary resources, especially talented software
programmers, we will need to develop and upgrade our
technology to meet evolving market demands;
- Whether we will be successful in continuing to evolve
and successfully implement a sales and marketing
strategy;
- Whether we will be able to develop and manage
strategic relationships to maximize widespread
acceptance of our products and services; and
- Whether the effect of the volatility of the market
price of our stock will adversely affect our
ability to sell our products and services, develop
strategic relationships, attract and maintain
qualified employees, and raise additional capital
if necessary.
If we do not succeed in addressing these risks, our business likely will be
materially and adversely affected.
As of September 30, 1998, we had an accumulated deficit of
$86,843,498. Since we started our business, our revenues have been small
compared to our expenses. Our ability to generate significant revenue remains
uncertain. We expect to continue to incur operating losses at least through
1999, and perhaps for some time thereafter. We may never achieve, or be able to
sustain, profitability.
THE DEVELOPMENT OF A MARKET FOR OUR PRODUCTS AND SERVICES IS UNCERTAIN
The market for our services is still immature and is
evolving rapidly. An increasing number of market entrants have introduced
or are developing competing products and services to enable payment
transactions over the Internet. Critical issues concerning the Internet
(including security, reliability, cost, ease of use and quality of service)
remain unresolved and may limit the growth of electronic commerce. Delays in
the deployment of improvements to the infrastructure for Internet access,
including higher speed modems and other access devices, adequate capacity and a
reliable network backbone, also could hinder the development of the Internet as
a viable commercial marketplace. For all of these reasons, it remains uncertain
whether commerce over the Internet will continue to grow, a significant market
for our products and services will emerge, or our products and services will
become generally adopted. Even if such a market does develop, competitive
pressures may make it difficult, or impossible, for us to operate profitably.
In addition, the growth of our business depends upon widespread
acceptance of our products and services. This is particularly true of our new
InstaBuy service, the deployment of which is a major element of our business
strategy for 1999. The success of this service will depend on our ability to
obtain the agreement of several large financial institutions to sponsor the
issuance of InstaBuy wallets, to have the service adopted by a substantial
number of Internet merchants, and to distribute InstaBuy wallets to large
numbers of consumers. Moreover, our ability to persuade merchants to use the
service is dependent in part on the number of consumers who are using wallets;
and our ability to motivate consumers to use wallets is dependent in part on the
number and type of merchants that are using the service. To succeed, we will
have to motivate both groups to adopt the service simultaneously, which is
particularly difficult. We have only recently commenced operating the InstaBuy
service, and we cannot assure you that we will succeed in accomplishing any of
these goals. Our failure to accomplish these goals, or our inability to
accomplish them on the anticipated schedule, would have a material adverse
effect on our business.
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WE EXPECT OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE
Our quarterly operating results have varied significantly
and probably will continue to do so in the future as a result of a variety of
factors, many of which are outside our control:
- Sales of our ICVERIFY payment software and our
CashRegister service are affected by the reluctance of merchants
to modify their payment systems during the fourth calendar quarter
holiday period and during the first calendar quarter accounting
and auditing period. Consequently, revenues from sales of our
payment software and sign-up fees for our CashRegister service
are likely to be lower during these periods than the balance of
the year.
- In some cases our customers pay one-time licensing or
consulting fees in connection with acquiring our payment services.
The timing of the recognition of fees varies, which contributes
to quarterly fluctuations in revenues. In addition, many of our
distribution channels integrate our services with other electronic
commerce solutions. The timing for these channels to complete the
integration and deploy their solutions into their distribution
channel is unpredictable.
- Our InstaBuy service is new, and the pricing structures
and timing of the recognition of revenues for this service is
unpredictable at this time.
In addition to these factors, as a strategic response to changes in the
competitive environment, we may from time to time make pricing, marketing
decisions, licensing decisions or business combinations that adversely affect
our revenues or increase our costs. We also anticipate that revenues may
decline as customers focus their financial and technical resources on
responding to year 2000 issues instead of adopting payment technologies such as
our products and services. Extraordinary events such as material litigation or
acquisitions also could result in fluctuations in our operating results from
one reporting period to the next.
For these reasons, period-to-period comparisons of our results
of operations are not necessarily a reliable indication of future performance.
Because of all of the foregoing factors, it is likely that our quarterly
operating results from time to time will be below the expectations of public
market analysts and investors. In that case, we expect that the price of our
common stock would be materially and adversely affected.
WE FACE INTENSE COMPETITION
The Internet payment services industry is new and evolving
rapidly, resulting in a dynamic, competitive environment. We expect competition
to persist, intensify and increase in the future. Many of our current and
potential competitors have longer operating histories, greater name
recognition, larger installed customer bases and significantly greater
financial, technical and marketing resources than us. In addition, many of
our current or potential competitors, such as Microsoft, have broad
distribution channels that they may use to bundle competing products directly
to end-users or purchasers. If these competitors were to bundle competing
products for their customers, it could adversely affect our ability to market
our services.
Competitive pressures have led us on occasion to reduce our
prices. We expect that competition in our markets will continue to increase and
may force us to reduce prices for some of our products and services. Unless we
can increase our volume or reduce our costs, any such reductions would have an
adverse effect on our profitability.
WE MUST ACHIEVE MARKET ACCEPTANCE AND DEVELOP NEW PRODUCTS AND
SERVICES TO ADDRESS TECHNOLOGICAL CHANGE
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Broad acceptance of our products and services and their use in
large numbers is critical to our success because a large portion of our
revenues derive from one-time fees charged to customers buying our products and
services. In addition, our ability to earn significant revenues from our
InstaBuy service will depend in part on its acceptance by a substantial number
of prominent online merchants. One obstacle to widespread market acceptance
for our products and services is that widely adopted technological standards
for accepting and processing payments over the Internet have not yet emerged.
As a result, merchants and financial institutions have been slow to select
which service to use. Until one or more predominant standards emerge, we must
design, develop, test, introduce and support new services to meet changing
customer needs and respond to other technological developments. Our
technologies have not been accepted as standards. To be successful, we must
obtain widespread acceptance of our technologies, or modify our products and
services to meet whatever industry standards do ultimately develop. It is not
certain that we will be able to do either.
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. We may experience delays in the development of our
software products or the software and computing systems underlying our
services. In addition, despite testing by us and potential customers, it is
possible that our software may nevertheless contain errors, and this could have
a material adverse effect on our business.
SYSTEM INTERRUPTION AND SECURITY RISKS
The operations for our payment and InstaBuy services depend on
whether we are able to protect our system from interruption by events that are
beyond our control. Events that could cause system interruptions are:
- fire,
- earthquake,
- power loss,
- telecommunications failure, and
- unauthorized entry or other events.
We have established two separate operations centers in Northern Virginia that
provide backup support for our services. In addition, we are building out a
third operations center, which we anticipate will be in operation before June
30, 1999. If one of these sites should cease operations because of a power
outage, fire, or natural disaster, the others should be able to take over with
only a minimal disruption in service. We have not, however, been able to test
the transfer of operations under emergency conditions, and we cannot be sure
that the transfer would be successful. Also, we have experienced growing
transaction volumes that have from time to time stressed the capacity of our
systems. There is a possibility that our existing systems may be inadequate and
cause serious failures of our services. Finally, although we regularly back up
data from operations, and take other measures to protect against loss of data,
there is still some risk of such losses. A system outage or data loss could
materially and adversely affect our business.
Despite the security measures we maintain, our infrastructure
may be vulnerable to computer viruses, hackers, rogue employees or similar
sources of disruption. Any damage or failure that causes interruptions in our
operations could have a material adverse effect on our business. Any problem of
this nature could result in significant liability to customers or financial
institutions and also may deter potential customers from using our services. We
attempt to limit this sort of liability through back-up systems, contractual
provisions and insurance. However, we cannot assure you that these contractual
limitations on liability would be enforceable, or that our insurance coverage
would be adequate to cover any liabilities we did sustain.
YEAR 2000 RISKS
We use computer software, operating systems, and embedded
processors containing programs in the development of our products and services,
in the delivery of our services and in our administrative and management
operations. The software we use in our products and in the delivery of our
services contains, in addition to code written by our programmers, some
software that we license from third parties. In addition, we rely on equipment
and services provided by other vendors that are susceptible to year 2000
problems. We are reviewing the critical programs, systems and services we use
(including those provided by third party vendors) to assure that they are all
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able to handle properly the upcoming calendar year 2000. On the basis of our
work so far, we do not anticipate that the so-called "year 2000 issue" will
have a material effect on our business. It is, however, possible that problems
will surface that have not yet been identified that will require substantial
time and resources to remedy. It is also possible that we could fail to
identify a problem with a resulting failure or disruption of our operations.
Either eventuality could have a material adverse effect on our business.
WE ARE DEPENDENT ON KEY PERSONNEL
Our performance is substantially dependent on the performance
of our executive officers and key employees. We depend on our ability to retain
and motivate high quality personnel, especially our management and highly
skilled development teams. We do not have "key person" life insurance policies
on any of our employees. The loss of the services of any of our key employees,
particularly our founder and Chief Executive Officer, William N. Melton or our
President and Chief Operating Officer, James J. Condon, could have a material
adverse effect on us. Our future success also depends on our continuing ability
to identify, hire, train and retain other highly qualified technical and
managerial personnel. Competition for these employees is intense and
increasing. We may not be able to attract, assimilate or retain qualified
technical and managerial personnel in the future, and the failure of us to do
so would have a material adverse effect on our business.
WE HAVE A LIMITED SALES FORCE; OUR DISTRIBUTION CHANNELS ARE
NEW AND EVOLVING
We have only a limited number of sales and marketing employees
and, therefore, we rely heavily on distribution channels for sales of our
products and payment services. Because of the rapidly evolving nature of
electronic commerce, we are not certain that the distribution channels with
which we are working will provide an adequate distribution network for us to
achieve our goals, or that we will be able to develop alternative channels.
RISKS RELATED TO INTELLECTUAL PROPERTY
Our success and ability to compete is dependent in part upon
our proprietary technology. We rely primarily on copyright, trade secret and
trademark law to protect our technology. We hold one United States patent, and
have applied for several others in the United States and foreign countries. We
intend to continue to file patent applications on inventions that we 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 our proprietary software is protected both
as a trade secret and as a copyrighted work. We generally enter into
confidentiality and assignment agreements with our employees, consultants and
vendors, and generally control access to and distribution of our software,
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use our
products, services or technology without authorization, or to develop similar
products, 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 our products or services. To
license our products or services, we often rely on "on-screen" licenses that
are not manually signed by the end-users and, therefore, may be unenforceable
under some laws.
Despite our efforts to protect our proprietary rights, third
parties may attempt to copy aspects of our products and services or to obtain
and use information that we regard as proprietary. Policing unauthorized use of
our products and services is difficult, particularly in the global environment
in which we operate, and the laws of other countries may afford us little or no
effective protection of our intellectual property. We cannot assure you that
the steps that we have taken will prevent others from misappropriating our
technology or that these agreements will be enforceable.
We may engage in litigation related to our intellectual
property for a number of reasons, including to:
- Enforce our intellectual property rights,
- Protect our trade secrets,
- Determine the validity and scope of the proprietary
rights of others, or
- Defend against claims of infringement or invalidity.
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This litigation, whether successful or unsuccessful, could result in
substantial costs and diversions of resources, either of which could have a
material adverse effect on our business, financial condition or operating
results.
We are aware of various patents held by independent third
parties in the area of electronic payment systems. It is possible that the
holders of rights under these patents could assert them against us. In fact,
we have already received notices of claims of infringement of other parties'
proprietary rights. We cannot assure you that our products and services are not
within the scope of patents held by others, either now or in the future. If any
such claims are asserted, we 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. We may also decide to defend
against a claim of infringement, but litigation, even if successful, is costly
and may have a material adverse effect on us regardless of the eventual
outcome.
We also rely on certain technology which we license from
third parties, including software which is integrated with internally developed
software and used in our software to perform key functions We cannot assure
you that third party technology licenses will continue to be available to us 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 our
services, which could have a material adverse effect on our business, financial
condition or operating results.
GOVERNMENT REGULATION
Our operations are subject to various state and federal
regulations. Because electronic commerce in general, and most of our products
and 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 burdens .
Any such change could lead to increased operating costs and could also reduce
the convenience and functionality of our products or services, possibly
resulting in reduced market acceptance. It is possible that new 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 our products or
services and increase our cost of doing business or could otherwise have a
material adverse effect on our business, financial condition or operating
results.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
We believe that our available cash resources combined with
funds from operations will be sufficient to meet our working capital and
capital expenditure requirements until our cash flow from operations turns
positive. If this belief should prove mistaken, we may be required to raise
additional funds. Alternatively, we may decide to raise additional funds in
order to expand operations, finance acquisitions or to finance other activities
we decide may be beneficial to our business. If we raise additional funds
through the issuance of equity securities, the percentage ownership of the
stockholders of record will be reduced, and stockholders may experience
additional dilution. It is also possible that new equity securities may have
rights, preferences or privileges senior to those of the holders of our common
stock. Moreover, we cannot assure you that additional financing will be
available if we should need it. If adequate funds are not available or are not
available on acceptable terms, we may be unable to develop or enhance our
products and services, take advantage of future opportunities or respond to
competitive pressures, which could have a material adverse effect on our
business, financial condition or operating results.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
A component of our strategy is to expand our operations into
international markets. We have created joint ventures in Japan and Germany and
have arranged with Barclays Bank for the delivery of certain of our services in
the United Kingdom. The majority of our revenues in 1997 were derived from
licensing fees and customization work charged to these joint ventures and
foreign strategic allies. We anticipate that revenues derived from
customization work and initial licensing fees from these international
operations will continue to decline over time. We also have subsidiaries in the
United Kingdom and Germany to customize and market our products in Europe. The
deployment of our products and services through our joint ventures, alliances
and subsidiaries in Japan and Europe is at an early stage, and revenues have so
far have been small. We do not know if our products and services will be
commercially successful in these markets, or will generate significant revenues
for our business.
RISKS ASSOCIATED WITH ACQUISITIONS
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As our business evolves, we may acquire complementary
products, technologies, and businesses. Any significant acquisition would
entail a risk that we would not be successful in integrating and operating the
acquired business, product or technology. A failure to do so could have a
material adverse effect on us.
VOLATILITY OF STOCK PRICE AND RISK OF LITIGATION
The price of our Common Stock has been and likely will
continue to be subject to wide fluctuations in response to a number of events
and factors, such as
- quarterly variations in operating results,
- variances of our quarterly results of
operations from securities analyst estimates,
- announcements of technological innovations,
new products, acquisitions, capital
commitments or strategic alliances by
CyberCash or our competitors,
- changes in financial estimates and
recommendations by securities analysts,
- the operating and stock price performance of
other companies that investors may deem
comparable to us, and
- news reports relating to trends in our markets.
In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced significant price
and volume fluctuations that often have been unrelated to the operating
performance of the companies affected by these fluctuations. These broad
market fluctuations may adversely affect the market price of our Common Stock,
regardless of our operating performance. Securities class action litigation has
often been instituted against companies that have experienced periods of
volatility in the market price for their securities. If we were to become the
target of this kind of litigation, the cost in dollars and management
attention could be substantial, and the diversion of management's attention and
resources could have a material adverse affect on our business.
EFFECTS OF CERTAIN CHARTER AND BYLAW PROVISIONS
Our 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
rights of the holders of our 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. We also have a stockholders rights plan. It
provides for the issuance of rights if an acquiror purchases 15 percent or more
of our common stock without the approval of our board of directors. The rights
plan may have the effect of delaying, deterring, or preventing changes in
control or management of CyberCash, which may discourage potential acquirors
who otherwise might wish to acquire CyberCash without the consent of the Board
of Directors.
The Certificate of Incorporation provides for staggered terms
for the members of the Board of Directors. Certain provisions of our 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 our 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, or delay, prevent or deter a merger, acquisition, tender offer or
proxy contest for us.
POTENTIAL FOR DILUTION; MARKET OVERHANG
As of February 5, 1999, there were no issued or outstanding
shares of preferred stock. As of February 5, 1999, we had granted warrants,
investment options and stock options to acquire an aggregate of 6,076,984
shares of our common stock. In addition, we entered into a firm commitment to
issue 304,878 shares and warrants to acquire 228,659 shares of our common stock
for $5 million. We granted these securities and entered into these commitments
in connection with acquiring technologies, raising capital in private placement
transactions, entering into strategic alliances and providing incentives to
employees, consultants and non-employee directors under our stock option plans.
The issuance of preferred stock, or sales in the public market of substantial
amounts of shares acquired upon exercise of the foregoing warrants and options,
or the prospect of such sales, could adversely affect the market price of our
common stock.
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<PAGE> 10
THE COMPANY
CyberCash, Inc. is the world's leading provider of secure
electronic commerce payment technologies and services spanning the retail point
of sale through the Internet. We believe that we are well-positioned to
capitalize on the emerging market for electronic commerce because we offer a
range of software products and payment services that work with the existing
transaction processing systems of financial institutions. In addition, we
believe our new InstaBuy service will successfully simplify the online buying
experience for consumers. Our principal executive offices are located at 2100
Reston Parkway, 3rd Floor, Reston, Virginia 20191 and our phone number is
703/620-4200.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common
stock by the Selling Stockholders. Upon exercise of Warrants held by RGC
International Investors and Halifax Fund, L.P., the Company may receive
additional proceeds 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 2,301,586 shares of common stock. After
giving effect to the Offering, the Selling Stockholders will beneficially own
no shares of common stock of the Company. Certain of the Selling Stockholders
have acquired common stock in a private placement and may acquire additional
shares of common stock upon (i) the exercise of Warrants issued in the private
placement and (ii) upon satisfaction of conditions which are outside of the
control of these Selling Stockholders, including the effectiveness of this
Registration Statement. We will supplement this Prospectus from time to time
to reflect the number of shares of Common Stock acquired by the Selling
Stockholders, as those Selling Stockholders exercise their Warrants. The
following table sets forth certain information with respect to the Selling
Stockholders as of February 5, 1999, as follows: (i) the name and position or
other relationship with the Company within the past three years of the Selling
Stockholders; (ii) the number of the Company's outstanding shares of Common
Stock beneficially owned by the Selling Stockholders (including shares
obtainable under Warrants 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 the Selling Stockholders
after completion of the sale of common stock being offered hereby. We cannot
provide any assurance that 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 Beneficially Owned
Selling Stockholders Prior to the Offering Offered Hereby After Offering
---------------------------- --------------------- ---------------- ------------------
<S> <C> <C> <C>
RGC International Investors, LDC
(1)(2)(3)(4) 1,183,991 711,737 0
Halifax Fund, L.P. (1)(2)(3) 591,463 355,335 0
Donino, White & Partners, Inc. (1) 15,000 15,000 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
Stockholders.
(2) The actual number of shares of common stock issuable upon exercise of
the Warrants 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 exercise of the Warrants 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. The Warrants contain provisions
which limit the number of shares of common stock into which the
Warrants are exercisable. Under these provisions, the number of
shares of common stock into which the Warrants are exercisable on any
given date (together with any additional shares of common stock held
by this selling stockholder) will not exceed 9.9% of the Company's
then outstanding common stock.
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<PAGE> 11
(3) The number of shares of common stock beneficially owned by the
referenced Selling Stockholders is based on an exercise price of
$20.00. Pursuant to the terms of the Warrants, the exercise price
may be reset on January 6, 2000, January 6, 2001 and January 6, 2002,
if the average closing bid price of the Company's common stock over
the 10 trading days preceding any of these dates is less than $20.00.
In any of these circumstances, the exercise price would be reset to
equal the average closing bid price of the Company's common stock
over the 10 trading days preceding the applicable reset date.
Beginning January 6, 2002, the exercise price also could be reduced
if the Company issues securities below the market price of the
Company's common stock. If an adjustment of the exercise price
occurs, the number of shares of common stock issuable upon exercise
of the warrants would proportionately increase.
(4) RGC is a party to an investment management with Rose Glen
Capital Management, L.P., a limited partnership of which the general
partner is RGC General Partner Corp. Messrs. Wayne Bloch, Gary
Kaminsky and Steven Katznelson own all of the outstanding capital
stock of RGC General Partner Corp. and are partners to a shareholders
agreement pursuant to which they collectively control Rose Glen
Partner Corp., Through RGC General Partner Corp., such individuals
control Rose Gen Capital Management, L.P. Such indvividuals disclaim
beneficial ownership of the Company's common stock owned by the
Selling Stockholder.
PLAN OF DISTRIBUTION
The common stock 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 another market on which the common stock may
from time to time be trading, in privately-negotiated transactions, through the
writing of options on the common stock, 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 common stock may also
be sold pursuant to Rule 144. The Selling Stockholders shall have the sole and
absolute discretion not to accept any purchase offer or make any sale of common
stock if they deem the purchase price to be unsatisfactory at any particular
time.
The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the common stock
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 common
stock will do so for their own account and at their own risk. It is possible
that the Selling Stockholders 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. In addition, the Selling Stockholders
or their successors in interest may enter into hedging transactions with
broker-dealers who may engage in short sales of common stock in the course of
hedging the positions they assume with a Selling Stockholder. There can be no
assurance that all or any of the common stock 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 common stock 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 common stock 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 common
stock by the Selling Stockholders or any other such person. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time before the
commencement of such distributions subject to specified exceptions or
exemptions. The foregoing may affect the marketability of the common stock.
The Company has agreed to indemnify RGC International
Investors, LDC and Halifax Fund, L.P., or their respective transferees or
assignees, against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments these 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> 12
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
40,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of
preferred stock, $.001 par value.
COMMON STOCK
As of February 5, 1999, there were 19,736,152 shares of
common stock outstanding and held of record by 340 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.
WARRANTS
The Company issued warrants in a private placement which took
place on January 6, 1999. The warrants are initially exercisable for 457,317
shares of common stock. The warrants will expire on January 6, 2004. The
exercise price for each warrant is initially set at $20.00. The exercise price
may be reset on January 6, 2000, January 6, 2001 and January 6, 2002, if the
average closing bid price of the Company's common stock over the 10 trading
days preceding any of these dates is less than $20.00. In any of these
circumstances, the exercise price would be reset to equal the average closing
bid price of the Company's common stock over the 10 trading days preceding the
applicable reset date. Beginning January 6, 2002, the exercise price also could
be reduced if the Company issues securities below the market price of the
Company's common stock. If an adjustment of the exercise price occurs, the
number of shares of common stock issuable upon exercise of the warrants would
proportionately increase.
Under the warrants, a holder can elect to pay the exercise
price in immediately available funds, through the cancellation of a portion of
the warrants or through the delivery of shares of common stock. If the holder
elects to pay the exercise price through the delivery of common stock, the
common stock will be valued at $20.00.
Upon the effectiveness of this registration statement, the
Company is obligated to issue 304,878 additional shares of common stock and
additional warrants to RGC and Halifax, initially exercisable for 228,659
shares of common stock for $5 million, on the same terms and conditions as the
warrants described above.
CARNEGIE MELLON UNIVERSITY WARRANT
On March 21, 1997, the Company entered into a technology
licensing agreement with Carnegie Mellon University in connection with its
acquisition of CMU's exclusive worldwide rights to its NetBill technology for
use in network-based electronic commerce. The consideration included Warrants
to purchase 50,000 shares of the Company's Common Stock at an exercise price of
$16.45 per share. The Warrants are divided into 25,000 Class A Warrants and
25,000 Class B Warrants. Each class will become exercisable in five equal
annual installments of 5,000 Warrant shares, commencing on the first
anniversary of the license, provided that the exercise of the Class B Warrants
shall also be conditioned upon certain milestones, as described in the
agreement. The Company registered the shares underlying these Warrants for
resale in compliance with the 1933 Securities Act, as amended. As of February
4, 1999, Carnegie Mellon had not exercised any of its Class A or Class B
Warrants.
INVESTMENT OPTIONS
On February 5 and July 14, 1998, the Company issued Investment
Options to purchase up to 708,382 shares of its Common Stock to purchasers of
its Series D Convertible Preferred Stock. These Investment Options are
exercisable between January 1, 1999 and February 5, 2003. The exercise price of
the Investment Options is equal to the lesser of the average of $10.59 and the
market price of the Company's common stock at the end of 1998 and 110% of the
stock market price at the end of 1998. The Company registered the shares
underlying these Investment Options for resale in compliance with the 1933
Securities Act, as amended. As of February 4, 1999, the holders had not
exercised any of these Investment Options.
FIRST USA WARRANTS
On November 6, 1998, the Company entered into an agreement
with First USA Bank to market the InstaBuy service. In connection with that
agreement, the Company issued three warrants for First USA to purchase an
aggregate of 2,200,000 shares. Under the first warrant, First USA may acquire
600,000 shares of Common Stock from January 1, 1999 through June 30, 1999 at a
per share price of $12.50. From July 1, 1999 through December 31, 1999, these
same shares may be acquired at a per share price of $17.00. From January 1,
2000 through September 30, 2003, these same shares may be acquired at a per
share price of $32.00. Under the second warrant, 600,000 shares of Common Stock
may be acquired from January 1, 1999 through December 31, 1999 at a per share
price of $17.00. From January 1, 2000 through September 30, 2003, these same
shares may be acquired at a per share price of $32.00. Under the third warrant,
1,000,000 shares of Common Stock may be acquired from January 1, 1999 through
September 30, 2003 at a per share price of $32.00. As of February 4, 1999, the
holders had not exercised any of these Warrants.
PREFERRED STOCK
As of February 5, 1999, there were no shares of preferred
stock issued and outstanding.
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.
DELAWARE LAW AND CERTAIN ANTI-TAKEOVER CHARTER PROVISIONS
STOCKHOLDER RIGHTS PLAN
Under the Company's Rights Agreement dated June 26, 1998, as
amended December 18, 1998, each registered holder of a Right is entitled to
purchase from the Company one one-hundredth of a share of Series E Junior
Participating Preferred Stock at a price of $100 per one one-hundredth share,
subject to adjustment. The
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<PAGE> 13
description and terms of the Rights are set forth in a Rights Agreement between
the Company and BankBoston N.A., as Rights Agent.
The Rights are currently attached to all certificates
representing shares of common stock, and currently there are no separate
certificates evidencing the Rights. The Rights will separate from the common
stock and a distribution of rights certificates will occur upon the earlier to
occur of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of common stock (the "Stock Acquisition Date") or (ii) 10
business days following the commencement of a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
of 15% or more of the outstanding shares of common stock (the earlier of such
dates being called the "Distribution Date").
Until the Distribution Date, (i) the Rights will be evidenced
by the common stock certificates, and will be transferred with and only with
the common stock certificates, (ii) new common stock certificates issued after
June 30, 1998 upon transfer or new issuance of the common stock will contain a
notation incorporating the rights agreement by reference, and (iii) the
surrender for transfer of any certificates for common stock outstanding will
also constitute the transfer of the Rights associated with the common stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on June 30, 2008 unless earlier redeemed
or exchanged by the Company as described below. The Rights will not be
exercisable by a holder in any jurisdiction where the requisite qualification
to the issuance to such holder, or the exercise by such holder, of the Rights
has not been obtained or is not obtainable.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights will be mailed to holders of record
of the common stock as of the close of business on the Distribution Date and,
thereafter, the separate rights certificates alone will evidence the Rights.
Except as otherwise determined by the Board of Directors, only shares of common
stock issued prior to the Distribution Date will be issued with Rights.
In the event that a person or entity becomes the beneficial
owner of 15% or more of the then outstanding shares of common stock (except
pursuant to an offer for all outstanding shares of common stock which the
outside directors determine to be fair to and otherwise in the best interests
of the Company and its stockholders), each holder of a Right will, after the
end of a redemption period referred to below, have the right to exercise the
Right by purchasing, for an amount equal to the purchase price, common stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times such amount. Notwithstanding any of
the foregoing, following the occurrence of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the rights agreement) were, beneficially owned by any Acquiring Person will be
null and void. However, Rights are not exercisable following the occurrence of
the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at a purchase price of $100 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to purchase
$200 worth of common stock (or other consideration, as noted above) for $100.
Assuming that the common stock had a per share value of $20 at such time, the
holder of each valid Right would be entitled to purchase 10 shares of common
stock for $100.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger which follows an offer described in the second preceding paragraph), or
(ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall after the expiration of the redemption period
referred to below thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the purchase
price of the Right (e.g., common stock of the acquiring company having a value
of $200 for the $100 purchase price).
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or
group which have become void), in whole or in part, at an exchange ratio of one
share of common stock per Right (subject to adjustment).
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<PAGE> 14
The purchase price payable, and the number of one
one-thousandths of a share of preferred stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the preferred stock (ii) upon
the grant to holders of the preferred stock of certain rights or warrants to
subscribe for preferred stock or convertible securities at less than the
current market price of the preferred stock or (iii) upon the distribution to
holders of the preferred stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price
will be required until cumulative adjustments require an adjustment of at least
1% in such purchase price. No fractional shares will be issued and in lieu
thereof, an adjustment in cash will be made based on the market price of the
preferred stock on the last trading date prior to the date of exercise.
In general, the Board of Directors of the Company, may cause
the Company to redeem the Rights in whole, but not in part, at any time during
the period commencing on June 30, 1998, and ending on the tenth day following
the Stock Acquisition Date, as such period may be extended or shortened by the
Board of Directors at a price of $.001 per Right (payable in cash, common stock
or other consideration deemed appropriate by the Board of Directors). After
the redemption period has expired, the Company's right of redemption may be
reinstated if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of common stock in a transaction or series of
transactions not involving the Company and there are no other Acquiring
Persons. Immediately upon the action of the Board of Directors of the Company
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Rights will not be subject to federal taxation to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for common stock (or
other consideration) of the Company or for common stock of the acquiring
company as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the rights agreement may be
amended by the Board of Directors of the Company prior to the distribution
date. After the distribution date, the provisions of the rights agreement may
be amended by the Board in order to cure any ambiguity, defect or inconsistency
or to make changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or to shorten or
lengthen any time period under the rights agreement; provided however, no
amendment to adjust the time period governing redemption may be made at such
time as the Rights are not redeemable.
Each share of common stock outstanding on June 30, 1998
received one Right. A total of 300,000 shares of preferred stock are reserved
for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on a substantial number of Rights
being acquired, or in a manner or on terms not approved by the Board of
Directors. The Rights, however, should not deter any prospective offeror
willing to negotiate in good faith with the Board of Directors. Nor should the
Rights interfere with any merger or other business combination approved by the
Board of Directors.
DELAWARE LAW
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
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<PAGE> 15
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. is the transfer agent and registrar for the
Company's common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements of: (i) CyberCash, Inc. included in our Annual
Report on Form 10-K for the year ended December 31, 1997; (ii) and ICVerify,
Inc. included in our Current Report on Form 8-K/A dated May 27, 1998 for the
year ended December 31, 1997, as set forth in their reports, which are
incorporated in this prospectus by reference. These consolidated financial
statements are incorporated by reference in reliance on their reports, given on
their authority as experts in accounting and auditing.
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<PAGE> 16
<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 2,301,586
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 A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO
ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH CYBERCASH, INC.
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN COMMON STOCK
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------
PROSPECTUS
------------------- ------------
TABLE OF CONTENTS Page
----
Where You Can Find More
Information . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . 10
Use of Proceeds . . . . . . . . . . . . . . . . . 11
Selling Stockholders . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . 12
Description of Capital Stock . . . . . . . . . . 13
Legal Matters . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . 16
February , 1999
========================================================== ===============================
</TABLE>
15
<PAGE> 17
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 .............................. $ 9,458
Accounting fees and expenses ...................... 5,000
Legal fees and expenses ........................... 5,000
Blue Sky fees and expenses (including counsel fees) 0
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 $ 61,458
</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-1
<PAGE> 18
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.03 Warrant(2)
4.01 Specimen Stock Certificate (1)
4.02 Securities Purchase Agreement (2)
4.03 Registration Rights Agreement (2)
5.01 Legal Opinion
23.01 Consent of Russell Stevenson (contained in Exhibit 5.01)
23.02 Consent of Ernst & Young LLP, independent auditors
23.03 Consent of Ernst & Young LLP, independent auditors
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 January 11, 1999.
(b) Financial Statement Schedules.
The Registrant acquired ICVerify, Inc. on April 30, 1998 in a
transaction accounted for as a purchase. Accordingly, all financial statements
and pro forma financial information prescribed by Rule 3-05 of Regulation S-X
and Article 11 of Regulation S-X, respectively, are incorporated herein by
reference to the Company's Amended Current Report on Form 8-K/A filed May 27,
1998 and an Amended Current Report on Form 8-K/A filed February 5, 1999.
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.
(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.
II-2
<PAGE> 19
(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 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 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-3
<PAGE> 20
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 5, 1999.
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 5, 1999 /s/ William N. Melton
-------------------------------------
William N. Melton
President and Chief Executive Officer
Date: February 5, 1999 /s/ James J. Condon
-------------------------------------
James J. Condon
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Date: February 5, 1999 /s/ Daniel C. Lynch
-------------------------------------
Daniel C. Lynch
Chairman of the Board of Directors
Date: February 5, 1999 /s/ Michael Rothschild
-------------------------------------
Michael Rothschild
Director
Date: February 5, 1999 /s/ Charles T. Russell
-------------------------------------
Charles T. Russell
Director
Date: February 5, 1999 /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 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 914,634 shares of the
Company's common stock (the "Common Shares") and the sale of 685,976 shares of
the Company's common stock, $.001 par value , that may be issued upon exercise
of Warrants (the "Warrant Shares").
I am of the opinion that the Common Shares issued at the First Closing under
that certain Securities Purchase Agreement dated January 6, 1999 (the
"Securities Purchase Agreement"), have been validly issued, and are fully paid
and non-assessable. I am of the opinion that when issued in accordance with the
terms of the Warrants, the Warrant Shares will be validly issued, fully paid and
non-assessable. Further, I am of the opinion that the Common Shares to be issued
at the Second Closing under the Securities Purchase Agreement in accordance with
the terms of the Securities Purchase Agreement, and assuming the receipt of the
consideration specified therein, 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,
Russell B. Stevenson, Jr.
General Counsel
<PAGE> 1
EXHIBIT 23.02
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-__________) and related Prospectus of
CyberCash, Inc. for the registration of 2,301,586 shares of its common stock
and to the incorporation by reference therein of our report dated March 13,
1998, except for Note 13, as to which the date is March 16, 1998, with respect
to the consolidated financial statements of CyberCash, Inc. included in its
Annual Report on Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Vienna, Virginia
February 3, 1999
<PAGE> 1
EXHIBIT 23.03
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-__________) and related Prospectus of
CyberCash, Inc. for the registration of 2,301,586 shares of its common stock
and to the incorporation by reference therein of our report dated February 27,
1998, with respect to the consolidated financial statements of ICVerify, Inc.
included in CyberCash, Inc.'s Current Report on Form 8-K/A dated May 27, 1998,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
February 3, 1999
