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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1999
REGISTRATION NO. 333-70915
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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FAXSAV INCORPORATED
(Exact name of Registrant as specified in its Charter)
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DELAWARE 11-3025769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
399 THORNALL STREET, EDISON, NEW JERSEY 08837
(732) 906-2000
(Address, including zip code, and telephone number,
Including Area Code, Of Registrant's Principal Executive Offices)
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THOMAS F. MURAWSKI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FAXSAV INCORPORATED
399 THORNALL STREET
EDISON, NEW JERSEY 08837
(732) 906-2000
(Name, address, including zip code, and telephone number, including
area code, of agent for service of process)
------------------------------------------
COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
GARY N. PAPILSKY, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10019
(212) 581-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after this Registration Statement is declared 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. |_|
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 SECTION 8(A), MAY DETERMINE.
================================================================================
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PROSPECTUS
709,677 SHARES
FAXSAV INCORPORATED
COMMON STOCK
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This prospectus relates to the resale of up to 709,677 shares of our common
stock held by a current stockholder and warrantholder. The prices at which the
stockholder may sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions.
Our common stock is quoted on the Nasdaq National Market under the symbol
FAXX. On May 11, 1999, the last reported sales price of our common stock was
$7.00.
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THE SHARES OF COMMON STOCK OF FAXSAV OFFERED OR SOLD UNDER THIS PROSPECTUS
INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
------------------------------------------
Neither the Securities and Exchange Commission nor any state commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is May 13, 1999
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TABLE OF CONTENTS
Page
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THE COMPANY....................................................................2
RISK FACTORS...................................................................3
FORWARD-LOOKING INFORMATION...................................................11
USE OF PROCEEDS...............................................................12
PLAN OF DISTRIBUTION..........................................................13
SELLING STOCKHOLDER...........................................................16
WHERE YOU CAN FIND MORE INFORMATION...........................................17
LEGAL MATTERS.................................................................17
EXPERTS.......................................................................17
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THE COMPANY
FaxSav was incorporated in Delaware in November 1989 under the name Digitran
Corporation and changed its name to FaxSav Incorporated in February 1996. We
plan to change our name to Netmoves Corporation in the near future. Our
principal executive offices are located at 399 Thornall Street, Edison, New
Jersey 08837. Our telephone number is (732) 906-2000.
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RISK FACTORS
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF NET LOSSES AND EXPECT FUTURE LOSSES.
From our inception in 1989 through the year ending December 31, 1998, we have
experienced significant net losses. We incurred net losses of $7.5 million in
the year ended December 31, 1996, $7.1 million in the year ended December 31,
1997 and $8.1 million in the year ended December 31, 1998. We currently
anticipate that we will have additional net losses as we attempt to expand our
business and we may not have positive operating or net income in the future. As
of December 31, 1998, we had an accumulated deficit of $40.3 million.
Since inception, we have incurred substantial costs to develop and enhance
our technology and to create, introduce and enhance our service and product
offerings. We intend to continue these efforts and, in addition, to increase our
marketing spending. In early 1999, we announced a new marketing campaign which
will involve significant expenditures by us, including hiring an outside
advertising agency. As a result of these expenditures, we expect to continue to
experience operating losses. There can be no assurance that these expenditures
will result in any increase in revenues.
WE HAVE MANY COMPETITORS AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST
THEM.
The market for facsimile transmission services is intensely competitive and
the industry is characterized by low barriers to entry. We expect that
competition will intensify in the future. Our failure to compete successfully
could have a material adverse affect on our business, financial condition and
results of operations. We believe that our ability to compete successfully will
depend upon a number of factors, including market presence, the capacity,
reliability and security of our network infrastructure, the pricing policies of
our competitors and suppliers, the timing of introductions of new services and
service enhancements by us and our competitors, and industry and general
economic trends.
WE MAY NOT BE ABLE TO DELIVER OUR SERVICES IF LONG DISTANCE CARRIERS REFUSE TO
CARRY OUR TRAFFIC.
The foundation of our telephony network infrastructure consists of the right
to use the telecommunications lines of several long distance carriers, including
MCI WorldCom. As many of these companies are current or potential competitors of
ours, we cannot assure you that they will continue to handle our traffic. If
these companies discontinue or otherwise change their relationships with us we
may be unable to deliver our services which would have a material adverse effect
upon our business, financial condition and results of operations.
GOVERNMENT REGULATIONS COULD INCREASE COMPETITION FOR OUR SERVICES.
On August 7, 1997, the Federal Communications Commission issued new rules
which may significantly reduce the cost of international calls originating in
the United States. The five-year phase-in period began on January 1, 1998. To
the extent that these new regulations are implemented and result in reductions
in the cost of international calls originating in the United States, we will
face increased competition for our international fax services which may have a
material adverse effect on our business, financial condition or results of
operations.
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WE MAY NEED FUNDS WHICH MAY NOT BE AVAILABLE.
Our cash requirements may vary materially from those now planned as a result
of unforeseen changes that could consume a significant portion of our available
resources before this time.
If adequate funds are not available, we may be required to delay or to
eliminate certain expenditures or to license to third parties the rights to
commercialize technologies that we would otherwise seek to develop ourselves. To
the extent that funds expected to be generated from our operations are
insufficient to meet current or planned operating requirements or to maintain a
Nasdaq listing, we will seek to obtain additional funds through bank facilities,
equity or debt financing, collaborative or other arrangements with corporate
partners and from other sources. See "--We may be delisted from Nasdaq which
would affect your ability to sell our stock." Additional funding may not be
available when needed or on terms acceptable to us, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, if we obtain any additional funding, these financings may have a
dilutive effect on the holders of our securities.
UNAUTHORIZED USE OF OUR INTELLECTUAL PROPERTY BY THIRD PARTIES MAY DAMAGE OUR
BRAND.
We regard our copyrights, service marks, trademarks, trade secrets and other
intellectual property as critical to our success. Unauthorized use of our
intellectual property by third parties may damage our brand and our reputation.
We rely on trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, customers,
partners and others to protect our intellectual property rights. We were granted
patents related to our FaxSAV Connector and our "e-mail Stamps" security
technology incorporated into our fax mailer service. Despite our precautions, it
may be possible for third parties to obtain and use our intellectual property
without authorization. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are uncertain or do not
protect intellectual property rights to the same extent as the laws of the
United States.
DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE EXPENSIVE,
AND IF WE ARE NOT SUCCESSFUL, COULD DISRUPT OUR BUSINESS
We cannot be certain that our services and the finished products that we
deliver do not or will not infringe valid patents, copyrights or other
intellectual property rights held by third parties. We may be subject to legal
proceedings and claims from time to time relating to the intellectual property
of others in the ordinary course of our business. We may incur substantial
expenses in defending against these third-party infringement claims, regardless
of their merit. Successful infringement claims against us may result in
substantial monetary liability or may materially disrupt the conduct of our
business.
WE ARE DEPENDENT ON THE RELIABILITY AND EXPANSION OF OUR NETWORK INFRASTRUCTURE.
Our future success will depend in part upon the capacity, reliability and
security of our network infrastructure and in part upon our ability to expand
the deployment of an international network of Internet-capable facsimile nodes.
We must continue to expand and adapt our network infrastructure as the number of
customers and the volume of traffic they wish to transmit increases. The
expansion and adaptation of our network infrastructure will require substantial
financial, operational and management resources.
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There can be no assurance that we will be able to expand or adapt our network
infrastructure to meet any additional demand or to deploy additional
contemplated Internet-capable facsimile nodes on a timely basis, at a
commercially reasonable cost, or at all. Any failure to expand our network or
Internet-capable facsimile infrastructures or to adapt them to changing customer
requirements or evolving industry standards on a timely basis would have a
material adverse effect on our business, financial condition and results of
operations.
OUR FAILURE TO MANAGE GROWTH COULD ADVERSELY AFFECT US.
We have rapidly and significantly expanded our operations and anticipate that
significant expansion will continue to be required to address potential market
opportunities. There can be no assurance that this expansion will be
successfully completed or that it will generate sufficient revenues to cover our
expenses. Our inability to promptly address and respond to these circumstances
could have a material adverse effect on our business, financial condition and
results of operations.
BECAUSE WE ARE DEPENDENT ON COMPUTER SYSTEMS, A SYSTEMS FAILURE COULD CAUSE A
SIGNIFICANT DISRUPTION TO OUR BUSINESS.
Our business depends upon the efficient and uninterrupted operation of our
computer and communications hardware systems and infrastructure. We currently
maintain our computer hardware and switching equipment, including our processing
equipment, at three sites. While we have taken precautions against systems
failure, interruptions could result from natural disasters as well as power
loss, telecommunications failure and similar events. Any damage or failure that
disrupts or delays our operations could have a material adverse effect on our
business, financial condition and results of operations.
IF OUR SECURITY MEASURES ARE INADEQUATE, OUR BUSINESS WILL BE ADVERSELY
AFFECTED.
We have taken measures to protect the integrity of our infrastructure and the
privacy of confidential information. Nonetheless, our infrastructure is
potentially vulnerable to physical or electronic break-ins, viruses or similar
problems. If a person circumvents our security measures, he could jeopardize the
security of confidential information stored in and transmitted through the
computer systems of the individual, businesses and financial institutions
utilizing our services. This may result in significant liability to us and may
also deter potential customers from using our services. Any security breach that
causes interruptions or data loss in our operations or in the computer systems
of our customers could have a material adverse effect on our business, financial
condition and results of operations.
WE ARE DEPENDENT UPON OUR CURRENT SUPPLIERS, AND MAY NOT BE ABLE TO OBTAIN SOME
PRODUCTS OR SERVICES FROM OTHER SUPPLIERS.
We rely on third parties to supply key components of our network
infrastructure, including long distance telecommunications services and
telecommunications node equipment, many of which are available only from sole or
limited sources. MCI WorldCom is our primary provider of long distance
telecommunications services. We have from time-to-time experienced partial
interruptions of service from our telecommunications carriers which have
temporarily prevented customers in limited geographical areas from reaching the
FaxSav network. There can be no assurance that we will not experience partial or
complete service interruptions in the future. There can be no assurance that MCI
WorldCom and our other telecommunications providers will continue to provide
long distance services to us at attractive rates, or at all, or that we will be
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able to obtain these services in the future from these or other long distance
providers on the scale and within the time frames we require. Any failure to
obtain these services on a timely basis at an affordable cost, or any
significant delays or interruptions of service from these carriers, would have a
material adverse effect on our business, financial condition and results of
operations.
All of the faxboards used in our telecommunications nodes are supplied by
Brooktrout Technology, Inc. We purchase Brooktrout faxboards on a non-exclusive
basis through purchase orders placed from time-to-time, carry a limited
inventory of faxboards and have no guaranteed supply arrangement with
Brooktrout. In addition to faxboards, many of the routers, switches and other
hardware components used in our network infrastructure are supplied by sole or
limited sources on a non-exclusive, purchase order basis. There can be no
assurance that Brooktrout or our other suppliers will not enter into exclusive
arrangements with our competitors, or cease selling these components to us at
commercially reasonable prices, or at all.
The anticipated expansion of our network infrastructure is expected to place
a significant demand on our suppliers, some of which may have limited resources
and production capacity. In addition, certain of our suppliers, in turn, may
rely on sole or limited sources of supply for components included in their
products. Should our suppliers fail to adjust to meet this increasing demand,
they may be unable to continue to supply components and products in the
quantities and quality and at the times required by us, or at all. Our inability
to obtain sufficient quantities of sole or limited source components or to
develop alternative sources if required could result in delays and increased
costs in the expansion of our network infrastructure or in our inability to
properly maintain the existing network infrastructure, which would have a
material adverse effect on our business, financial condition and results of
operations.
WE MAY EXPERIENCE DEVELOPMENT DELAYS OR HAVE SOFTWARE DEFECTS WHICH COULD
ADVERSELY AFFECT OUR BUSINESS.
Software-based services and equipment, such as our faxSAV for Internet suite
of services and the faxSAV Connector, may contain undetected errors or failures
when introduced or when new versions are released. There can be no assurance
that, despite testing by us and by current and potential customers, errors will
not be found in this software or other releases after commencement of commercial
shipments, or that we will not experience development delays, resulting in
delays in the shipment of software and a loss of or delay in market acceptance,
any of which could have a material adverse effect on our business, financial
condition and results of operations.
WE MAY NOT BE ABLE TO RETAIN THE KEY PERSONNEL WE NEED TO SUCCEED.
Our future performance depends in significant part upon the continued service
of our key technical, sales and senior management personnel, none of whom is
bound by an employment agreement. Competition for this personnel is intense, and
there can be no assurance that we can retain our key technical, sales and
managerial employees or that we can attract, assimilate or retain other highly
qualified technical, sales and managerial personnel in the future.
WE DEPEND ON OUR INTERNATIONAL STRATEGIC ALLIANCES TO EXPAND OUR INTERNATIONAL
CUSTOMER BASE.
We have established and intend to expand an international customer base by
forming strategic sales and marketing alliances with foreign Internet service
providers, telecommunications companies and resellers. There can be no assurance
that we will be able to
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establish additional strategic alliances or to maintain these strategic
alliances. Our success in expanding our international customer base depends not
only on the formation of additional strategic alliances but also on the success
of these partners and their ability to market our services. The failure to
maintain these strategic alliances or the failure of these partners to
successfully develop and sustain a market for our services will have a material
adverse effect on our ability to expand our international customer base, which
could have a material adverse effect on our business, financial condition and
results of operations.
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS WHICH COULD MATERIALLY
AND ADVERSELY AFFECT OUR BUSINESS.
In 1998, we derived approximately $5.9 million, or 27.9% of our total
revenues from customers outside of the United States. We expect that these
revenues will represent an increasing percentage of our total revenues in the
future. Risks inherent in our international business activities generally
include unexpected changes in regulatory requirements, tariffs and other trade
barriers, costs of localizing products for foreign countries, lack of acceptance
of localized products in foreign markets, longer accounts receivable payment
cycles, difficulties in managing international operations, potentially adverse
tax consequences, and the burdens of complying with a wide variety of foreign
laws. There can be no assurance that these factors will not have a material
adverse effect on our future international revenues and, consequently, on our
business, financial condition and results of operations.
PROBLEMS RELATING TO THE "YEAR 2000 ISSUE" COULD ADVERSELY AFFECT OUR BUSINESS.
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than a year, computer systems and/or
software used by many companies may need to be upgraded to comply with these
"Year 2000" requirements or risk system failure or miscalculations causing
disruptions of normal business activities.
We have conducted a study of the Year 2000 readiness of our information
technology systems, including our computing and networking systems, and our
non-information technology systems and believe that they are currently Year 2000
compliant. Additionally, we have been informed by many of our vendors of
material hardware and software components of our information technology systems
that the products that we use are currently Year 2000 compliant. Despite our
efforts, there can be no assurance that our software contains all necessary date
code changes or that all Year 2000 problems were identified by our study and
subsequent testing. Compliance with Year 2000 requirements may disrupt our
ability to continue developing and marketing facsimile transmission products and
services. The failure to adequately address Year 2000 compliance issues in our
products and services, and in our information technology and non-information
technology systems could result in claims of mismanagement, misrepresentation or
breach of contract and related litigation, which could be costly and
time-consuming to defend.
In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of our control will be Year 2000 compliant. The failure by these
entities to be Year 2000 compliant could result in a systemic failure beyond our
control, such as a prolonged Internet, telecommunications or electrical failure,
which could also prevent us from delivering services to our customers, which
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could have a material adverse effect on our business, financial condition and
results of operations.
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RISKS RELATED TO OUR INDUSTRY
OUR FUTURE GROWTH DEPENDS UPON AN INCREASE IN THE USE OF THE INTERNET AS A
MEDIUM FOR FACSIMILE TRANSMISSIONS.
We believe that our future success will depend in part upon our ability to
significantly expand our base of Internet-capable nodes and route more of our
customers' traffic through the Internet. Our success is therefore largely
dependent upon the viability of the Internet as a medium for the transmission of
documents. There can be no assurance that document transmission over the
Internet will continue to be reliable or that Internet capacity constraints will
not develop which inhibit efficient document transmission.
We access the Internet from our Internet-capable nodes by dedicated
connection to third party internet service providers. We pay fixed monthly fees
for this Internet access, regardless of our usage or the volume of our
customers' traffic. There can be no assurance that the current pricing structure
for access to and use of the Internet will not change unfavorably. If material
capacity constraints develop on the Internet or the current Internet pricing
structure changes unfavorably, our business, financial condition and results of
operations would be materially and adversely affected. In addition, our future
success is dependent upon the increased acceptance by potential customers of the
Internet as the preferred medium for transmission of documents. There can be no
assurance that this market acceptance shall continue to increase. Lack of
increased market acceptance would materially and adversely affect our business,
financial condition and results of operations.
IF WE DO NOT KEEP PACE WITH TECHNOLOGICAL CHANGES, OUR SERVICES MAY BECOME
OBSOLETE AND OUR BUSINESS WILL SUFFER.
The telecommunications industry in general, and the facsimile transmission
business in particular, are characterized by rapid and continuous technological
change. Future technological advances in the telecommunications industry may
result in the availability of new services or products that could compete with
the facsimile transmission services we provide or reduce the cost of existing
products or services, any of which could enable our existing or potential
customers to fulfill their fax communications needs more cost efficiently. There
can be no assurance that we will be successful in developing and introducing new
services that meet changing customer needs and respond to technological changes
or evolving industry standards in a timely manner, if at all, or that services
or technologies developed by others will not render our services noncompetitive.
Our inability to respond to changing market conditions, technological
developments, evolving industry standards or changing customer requirements, or
the development of competing technology or products that render our services
noncompetitive would have a material adverse effect on our business, financial
condition and results of operations.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH COULD NEGATIVELY IMPACT
OUR BUSINESS.
We are subject to regulation by the FCC and other federal, state and
international communications regulatory agencies. We are licensed by the FCC as
an authorized telecommunications company and are classified as a "non-dominant
interexchange carrier." The FCC has the power to impose more stringent
regulatory requirements on us and to change our
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regulatory classification. There can be no assurance that the FCC will not
change our regulatory classification or otherwise subject us to more burdensome
regulatory requirements.
Our nodes and FaxLauncher service utilize encryption technology in connection
with the routing of customer documents through the Internet. The export of this
encryption technology is regulated by the United States government. While we are
currently allowed to export this encryption technology to most countries, any
change in these regulations could limit our ability to distribute our services
outside of the United States or electronically which could have a material
adverse effect on our business, financial condition and results of operations.
WE MAY BE SUBJECT TO CLAIMS REGARDING FOREIGN LAWS AND REGULATIONS.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign regulatory
requirements. While we intend to comply with these requirements on a
country-by-country basis as the deployment of Internet-capable facsimile nodes
continues, we cannot assure you we will be able to do so. The failure to satisfy
these requirements may prevent us from installing Internet-capable facsimile
nodes in these countries. Should we fail to deploy a number of these nodes, our
business, operating results and financial condition could be materially and
adversely affected.
RISKS RELATED TO OUR COMMON STOCK
WE MAY BE DELISTED FROM NASDAQ WHICH WOULD AFFECT YOUR ABILITY TO SELL OUR
STOCK.
Our common stock is currently traded on the Nasdaq National Market. To
continue to trade on Nasdaq, we need to maintain at least $4.0 million in net
tangible assets. In the past, we have not been in compliance with this
requirement. We believe that we are currently in compliance with Nasdaq's
requirements. However, if in the future we are unable to satisfy Nasdaq's
requirements, our securities may be delisted from Nasdaq. There can be no
assurance that our common stock will not be delisted, which would materially
affect your ability to buy or sell shares of our common stock.
FLUCTUATIONS IN OUR QUARTERLY RESULTS MAY NEGATIVELY IMPACT OUR STOCK PRICE.
We may experience significant quarter to quarter fluctuations in our results
of operations, which may result in volatility in the price of our common stock.
Quarterly results of operations may fluctuate due to a combination of factors.
Our revenues are difficult to forecast. Shortfalls in revenues may adversely
and disproportionately affect our results of operations because a high
percentage of our operating expenses are relatively fixed, and planned
expenditures, such as the anticipated expansion of our Internet infrastructure,
are based primarily on sales forecasts. In addition, the stock market in general
has experienced extreme price and volume fluctuations which have affected the
market price of securities of many companies in the telecommunications and
technology industries and which may have been unrelated to the operating
performance of these companies. These market fluctuations may adversely affect
the market price of our common stock. Accordingly, we believe that period to
period comparisons of results of operations are not necessarily meaningful and
should not be relied upon as an indication of future results of operations.
There can be no assurance that we will be profitable in any future quarter. Due
to the foregoing factors, it is likely that in one or more future quarters our
operating results will be below the expectations of public
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market analysts and investors. This would have a material adverse effect on the
price of our common stock.
FUTURE SALES OF OUR COMMON STOCK COULD CAUSE THE PRICE OF OUR SHARES TO DECLINE
AND AFFECT OUR ABILITY TO RAISE CAPITAL.
The market price of our common stock could drop as a result of sales of
substantial amounts of common stock in the public market or the perception that
these sales could occur. Registration statements are in effect covering the sale
of up to 2,709,677 shares of our common stock, including the shares offered by
this prospectus. A price drop may make it more difficult for us to raise the
capital necessary to fund our future operations by selling common stock. As of
March 24, 1999, without taking into account shares of common stock issued upon
exercise of stock options, warrants or other rights to acquire common stock
after this date, we had outstanding 14,067,105 shares of common stock.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS, AND DELAWARE LAWS MAKE IT MORE
DIFFICULT FOR A THIRD PARTY TO ACQUIRE US.
Our sixth amended and restated certificate of incorporation authorizes the
board of directors to issue, without stockholder approval, up to 1,000,000
shares of preferred stock with voting, conversion and other rights and
preferences that could adversely affect the voting power or other rights of the
holders of common stock. Our certificate of incorporation also provides for
staggered terms for the members of the board of directors. In addition, we will
be subject to the provisions of Section 203 of the Delaware General Corporation
Law, which will generally prohibit us from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The foregoing and other
provisions of our certificate of incorporation and our by-laws, as amended and
the application of Section 203 of the Delaware General Corporation Law could
have the effect of deterring certain takeovers or delaying or preventing certain
changes in our control or management, including transactions in which
stockholders might otherwise receive a premium for their shares over then
current market prices.
WE DO NOT INTEND TO PAY CASH DIVIDENDS AND, AS A RESULT, STOCKHOLDERS WILL NEED
TO SELL SHARES TO REALIZE A RETURN ON THEIR INVESTMENT.
We have never paid any cash dividends on our common stock and do not intend
to pay any cash dividends in the foreseeable future.
FORWARD-LOOKING INFORMATION
This prospectus includes "forward-looking statements" regarding future events
or our future performance within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements of
historical facts included in this prospectus or incorporated by reference
regarding our financial position and business strategy may constitute
forward-looking statements. Although we believe that the expectations reflected
in these forward-looking statements are reasonable, we can not guarantee that
these expectations will prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are listed in this
prospectus, and they include the forward-looking statements under "risk
factors." All subsequent written and oral forward-looking statements
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attributable to us or persons acting on our behalf are expressly qualified in
their entirety by these statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares. All
proceeds will be received by the selling stockholder. See "Selling
Stockholder."
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PLAN OF DISTRIBUTION
FaxSav is registering all 709,677 shares on behalf of the selling
stockholder. All of the shares either originally were issued by us or will be
issued upon exercise of warrants to acquire shares of our common stock in
connection with the recent purchase by The Tail Wind Fund Ltd. of 645,161 shares
of our common stock and warrants to purchase 64,516 shares of our common stock
by means of a Purchase Agreement.
Should FaxSav sell common stock or rights to acquire common stock within a
period ending the later of:
- December 28, 1999; and
- nine months after the effective date of this registration statement
at a price less than $5.425 per share, FaxSav will be required to issue
additional shares to Tail Wind so that the purchase price of the shares that
Tail Wind has purchased is reduced to the lower price.
The above provision does not apply to:
- sales of fewer than 50,000 shares of common stock in any one transaction
or series of related transactions, subject to a limit of 150,000 shares;
- sales of shares by FaxSav upon conversion or exercise of any convertible
securities, options or warrants outstanding 30 days before the date of the
Purchase Agreement, if the conversion price was fixed as of December 24,
1998; and
- sales of shares by FaxSav under the provisions of any stockholder-approved
employee benefit or incentive plan.
FaxSav will receive no proceeds from this offering. The selling stockholder
named in the table below or pledgees, donees, transferees or other
successors-in-interest selling shares received from the selling stockholder as a
gift, partnership distribution or other non-sale related transfer after the date
of this prospectus may sell the shares from time to time. The selling
stockholder will act independently of FaxSav in making decisions with respect to
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The selling stockholder may effect these transactions
by selling the shares to or through broker-dealers.
The shares may be sold by one or more of, or a combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by this
broker-dealer for its account through this prospectus;
- an exchange distribution that complies with the rules of the exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
13
<PAGE>
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in the resales.
The selling stockholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with the selling stockholder.
The selling stockholder also may sell shares short and redeliver the shares to
close out these short positions. The selling stockholder may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer these shares through this prospectus. The selling stockholder also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares by use of this prospectus.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from the selling stockholder. Broker-dealers or agents
may also receive compensation from the purchasers of the shares for whom they
act as agents or to whom they sell as principals, or both. Compensation as to a
particular broker-dealer might be in excess of customary commissions and will be
in amounts to be negotiated in connection with the sale. Broker-dealers or
agents and any other participating broker-dealers or the selling stockholder may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act in connection with sales of the shares. Accordingly, any
commission, discount or concession received by them and any profit on the resale
of the shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the selling stockholder may be
deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, the selling stockholder will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale through Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than through this prospectus.
The selling stockholder has advised FaxSav that it has not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the securities. There is no underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
selling stockholder.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days before the commencement of this distribution. In addition, the
selling stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholder. FaxSav will make copies
of this prospectus available to the selling stockholder and has informed it of
the need for delivery of copies of this prospectus to purchasers at or before
the time of any sale of the shares.
14
<PAGE>
FaxSav will file a supplement to this prospectus, if required, under Rule
424(b) under the Securities Act upon being notified by the selling stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. This supplement will
disclose:
- the name of the selling stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which these shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that the broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
- other facts material to the transaction.
In addition, upon being notified by the selling stockholder that a donee or
pledgee intends to sell more than 500 shares, FaxSav will file a supplement to
this prospectus.
FaxSav will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholder will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholder may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against some liabilities,
including liabilities arising under the Securities Act. FaxSav and the selling
stockholder have agreed to indemnify each other against some liabilities in
connection with the offering of the shares, including liabilities arising under
the Securities Act.
15
<PAGE>
SELLING STOCKHOLDER
The following table shows, as of January 14, 1999, the number of shares owned by
the selling stockholder. The selling stockholder has not had a material
relationship with FaxSav within the past three years other than as a result of
the ownership of the shares or other securities of FaxSav. No estimate can be
given as to the amount of shares that will be held by the selling stockholder
after completion of this offering because the selling stockholder may offer all
or some of the shares and because there currently are no agreements,
arrangements or understandings with respect to the sale of any of the shares.
The shares offered by this prospectus may be offered from time to time by the
selling stockholder named below. Mr. David Crook may be deemed to be the control
person of the Tail Wind Fund Ltd. He has advised us that he disclaims beneficial
ownership of the shares owned by Tail Wind. This registration statement shall
also cover any additional shares of common stock which become issuable in
connection with the shares registered for sale by this registration statement by
reason of any stock divided, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in an
increase in the number of FaxSav's outstanding shares of common stock. The
number of shares set forth below includes 64,516 shares issuable upon the
exercise of a Warrant. The Purchase Agreement between FaxSav and Tail Wind
provides that FaxSav may be required to issue additional shares to Tail Wind.
See "Plan of Distribution."
<TABLE>
<CAPTION>
Number of Number of
Shares Percent of Shares
Name of Selling Beneficially Outstanding Registered
Stockholder Owned Shares for Sale
- ----------------------- ------------ ----------- ----------
<S> <C> <C> <C>
The Tail Wind Fund
Ltd.................... 709,677 5% 709,677
======= =======
TOTAL............ 709,677 709,677
======= =======
</TABLE>
We have agreed to prepare and file amendments and supplements to the
registration statement necessary to keep this registration statement effective
so long as the selling stockholder desires to dispose of the securities covered
by this registration statement, or if earlier, at the time when the selling
stockholder could sell all of these securities under Rule 144(k).
16
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
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 those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede this information. We incorporate by reference our Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and any further
filings made with the SEC under Section 13a, 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Peter S. Macaluso
Vice President and Chief Financial Officer
FaxSav Incorporated
399 Thornall Street
Edison, N.J. 08837
732-906-2000
You should rely only on the information incorporated by reference or provided
in this prospectus or the prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or the prospectus supplement is accurate
as of any date other than on the front of this document.
LEGAL MATTERS
The validity of the securities offered under this registration statement will
be passed upon for FaxSav by Brobeck, Phleger & Harrison LLP, New York, New
York.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1998, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
17
<PAGE>
709,677 SHARES
FAXSAV INCORPORATED
COMMON STOCK
PROSPECTUS
May 13, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred by
FaxSav Incorporated in connection with the issuance and distribution of the
securities being registered hereby. All such expenses will be borne by FaxSav
Incorporated:
<TABLE>
<CAPTION>
Amount to
Be Paid
---------
<S> <C>
Nasdaq Listing Application.................................. $12,903
SEC Registration Fee........................................ 1,209
Legal Fees and Expenses..................................... 10,000
Accounting Fees and Expenses................................ 10,000
Miscellaneous............................................... 5,888
-------
Total....................................................... $40,000
=======
</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 indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Article IX of the Registrant's Sixth Amended and
Restated Certificate of Incorporation provides for indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent permitted by the Delaware General Corporation Law.
FaxSav Incorporated has purchased liability insurance on behalf of its
directors and officers for liabilities arising out of their capacities as such.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.3 to the Registrant's Registration
Statement on Form S-1, Registration No. 333-09613 ("Registrant's
Registration Statement")).
3.2 By-laws of the Registrant (incorporated by reference to Exhibits 3.4 and
3.5 to the Registrant's Registration Statement).
4.1 Specimen certificate for shares of the Registrant's Common Stock
(incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement).
4.2 Provisions of the Articles of Incorporation and By-laws of the Registrant
defining rights of holders of Common Stock of the Registrant (incorporated
herein by reference to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 to the
Registrant's Registration Statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
II-1
<PAGE>
10.1 Purchase Agreement, dated December 24, 1998, between the Registrant and
The Tail Wind Fund Ltd.
10.2 Common Stock Warrant between the Registrant and The Tail Wind Fund Ltd.,
dated December 28, 1998.
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion filed
as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants.*
24.1 Power of Attorney (included with signature page).
- --------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
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 provisions described in Item 14 above, 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 Act, and is, therefore, unenforceable. If a claim for indemnification
against such liabilities (other than 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 Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities offered hereby, 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 percent 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 the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is
II-2
<PAGE>
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 City of Edison, State of New Jersey, on May 13, 1999.
FAXSAV INCORPORATED
By: /s/ Thomas F. Murawski
-----------------------------------------
Thomas F. Murawski, Chairman of the Board of
Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 13, 1999.
SIGNATURE TITLE
--------- -----
/s/ THOMAS F. MURAWSKI
- --------------------------------------
Thomas F. Murawski Chairman of the Board of Directors,
President and Chief Executive Officer
(principal executive officer)
/s/ PETER S. MACALUSO*
- --------------------------------------
Peter S. Macaluso Vice President and Chief Financial
Officer (principal financial and
accounting officer)
/s/ JEFFREY M. DRAZAN*
- --------------------------------------
Jeffrey M. Drazan Director
/s/ PETER A. HOWLEY*
- --------------------------------------
Peter A. Howley Director
/s/ ROBERT LABANT*
- --------------------------------------
Robert Labant Director
*By: /s/ THOMAS F. MURAWSKI
--------------------------------
Thomas F. Murawski
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
3.1 Registrant's Sixth Amended and Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.3 to
the Registrant's Registration Statement on Form S-1,
Registration No. 333- 09613 ("Registrant's Registration
Statement")...................................................
3.2 By-Laws of the Registrant (incorporated by reference to
Exhibit 3.4 and 3.5 to the Registrant's Registration
Statement)....................................................
4.1 Specimen certificate for shares of the Registrant's Common
Stock (incorporated herein by reference to Exhibit 4.1 to the
Registrant's Registration Statement)..........................
4.2 Provisions of the Articles of Incorporation and By-laws of
the Registrant defining rights of holders of Common Stock of
the Registrant (incorporated herein by reference to Exhibits
3.1., 3.2, 3.3, 3.4 and 3.5 to the Registrant's Registration
Statement)....................................................
5.1 Opinion of Brobeck, Phleger & Harrison LLP....................
10.1 Purchase Agreement, dated December 24, 1998, between the
Registrant and The Tail Wind Fund Ltd.........................
10.2 Common Stock Warrant between the Registrant and The Tail Wind
Fund Ltd., dated December 28, 1998............................
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the
opinion filed as Exhibit 5.1).................................
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants*..................................................
24.1 Power of Attorney (included with signature page)..............
- --------------------
* Filed herewith.
II-5
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated February 3, 1999 relating to the
financial statements and the financial statement schedule, which appear in the
FaxSav Incorporated Annual Report on Form 10-K for the year ended December 31,
1998. We also consent to the references to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers, LLP
-------------------------------
PricewaterhouseCoopers, LLP
May 13, 1999
Florham, Park, New Jersey
