<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 2000
REGISTRATION NO. 333-44952
================================================================================
------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------------------------------------
CNET NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 7812 13-3696170
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
------------------------------------------
150 CHESTNUT STREET
SAN FRANCISCO, CA 94111
(415) 395-7800
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
--------------------------------------------------------------
SHELBY BONNIE
CHIEF EXECUTIVE OFFICER
CNET NETWORKS, INC.
150 CHESTNUT STREET
SAN FRANCISCO, CA 94111
(415) 395-7800
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------------------------------------------------
Copy to:
SHARON LE DUY
VICE PRESIDENT - LEGAL AND BUSINESS AFFAIRS
CNET NETWORKS, INC.
150 CHESTNUT STREET
SAN FRANCISCO, CA 94111
(415) 395-7800
--------------------------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time 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. [ ]
------------------------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a) MAY DETERMINE.
--------------------------------------------------------------
================================================================================
<PAGE> 2
PROSPECTUS
78,042 SHARES
CNET NETWORKS, INC.
COMMON STOCK
This prospectus relates to the public offering, which is not
being underwritten, of 78,042 shares of our common stock which is held
by some of our current stockholders.
The prices at which such stockholders may sell the shares
will be determined by the prevailing market price for the shares or in
negotiated transactions. We will not receive any of the proceeds from
the sale of the shares.
Our common stock is quoted on the Nasdaq National Market
under the symbol "CNET." On September 12, 2000, the average of the high
and low prices of our common stock was $29.375.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE
SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS
FOR A DISCUSSION OF CERTAIN RISKS AND UNCERTAINTIES YOU SHOULD CONSIDER
BEFORE MAKING AN INVESTMENT IN OUR COMMON STOCK.
---------------------------------------------
Neither the Securities and Exchange Commission nor any state
securities 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 September 13, 2000.
<PAGE> 3
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering of our common stock made by this prospectus. Any information given,
or any representation made, apart from those set forth in this prospectus must
not be relied upon as having been authorized by us. Neither the delivery of this
prospectus nor any sale made under this prospectus shall, under any
circumstance, create an implication that the information contained in this
prospectus is accurate or complete as of any time subsequent to the date of this
prospectus. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the common stock covered
by this prospectus, nor does it constitute an offer to, or solicitation of, any
person in any jurisdiction in which such an offer or solicitation may not
lawfully be made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Commission. You may read and copy any document we
file with the Commission at the Commission's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Commission at
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. Our filings with the Commission are also available to the public at the
Commission's web site at http://www.sec.goc.
The Commission 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 Commission will update and supercede information filed earlier. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until this offering is completed.
(a) Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed on March 30, 2000.
(b) Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2000, as filed on May 15, 2000.
(c) Our Quarterly Report on Form 10-Q for the quarter ended June
30, 2000, as filed on August 14, 2000.
(d) Our Current Reports on Form 8-K, as filed on January 24, 2000,
March 3, 2000, March 13, 2000, April 27, 2000 and July 21, 2000.
(e) The description of our common stock set forth in our
Registration Statement on Form 8-A, as filed on July 2, 1996.
(f) Our Registration Statement on Form S-4, as filed on August 16,
2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at CNET Networks, Inc., 150 Chestnut Street, San Francisco,
California 94111, Attention: Corporate Secretary.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
any person to provide you with different information. We are not making an offer
of these securities in any state where offers are not permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any time subsequent to the date of this prospectus.
3
<PAGE> 4
THE COMPANY
CNET Networks, Inc. is a global media company, producing a branded
Internet network, a computer product database and television and radio
programming for both consumers and businesses. Using unbiased content as our
platform, we have built marketplaces for technology products and serve millions
of users every day. Through our CNET Data Services subsidiary, we provide
information powering the computer and electronics sales and distribution
channels. CNET Data Services licenses its multi-lingual product database to U.S.
and European online computer retailers, resellers and e-commerce companies. CNET
television programming airs on CNBC and in national syndication, and in nearly
100 countries worldwide. CNET Radio airs in the San Francisco Bay Area on KNEW
910 AM.
On July 19, 2000, we entered into an Agreement and Plan of Merger that,
if consummated, will combine our business with that of Ziff-Davis Inc.
Ziff-Davis owns ZDNet, a leading online content site focused on technology
products and services. Historically, Ziff-Davis has engaged through its ZD
division in a variety of offline media and marketing businesses, substantially
all of which have been sold. Ziff-Davis now owns Computer Shopper, Smart Planet,
an investment in Red Herring Communications, Inc. and a retained interest in
ZDNet which is currently the equivalent of 60 million shares of ZDNet common
stock. Ziff-Davis has two series of common stock: ZDNet common stock, which is
intended to track the performance of ZDNet, and ZD common stock, which is
intended to track the performance of the ZD division. Under the terms of the
Agreement and Plan of Merger, each share of ZD common stock will be exchanged
for 0.3397 of a share of our common stock and each share of ZD common stock will
be exchanged for 0.5932 of a share of our common stock. If the merger is
consummated, Ziff-Davis will become our wholly owned subsidiary. We filed a
registration statement describing the proposed merger with the Securities and
Exchange Commission on August 16, 2000. At a special meeting to be held on
October 17, 2000, our stockholders will be asked to vote for the approval of the
issuance of shares of our common stock under the Agreement and Plan of Merger.
Our common stock is quoted on NASDAQ under the symbol "CNET." Our
principal executive offices are located at 150 Chestnut Street, San Francisco,
California 94111. Our telephone number is (415) 364-7800.
RISK FACTORS
RISK FACTORS RELATING TO OUR COMPANY
WE HAVE LIMITED A OPERATING HISTORY AND A HISTORY OF NET LOSSES, WHICH MAKES
YOUR EVALUATION OF OUR COMPANY DIFFICULT AND WILL AFFECT YOUR INVESTMENT IN OUR
COMPANY; WE CANNOT ASSURE YOU THAT WE WILL REPORT NET INCOME IN THE FUTURE.
We have a limited operating history. Our prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in developing industries, particularly companies in the relatively new
and rapidly evolving market for Internet products, content and services. These
risks include:
- an evolving and unpredictable business model
- uncertain acceptance of new services
- competition
- management of growth
We cannot assure you that we will succeed in addressing these risks. If
we fail to do so, our revenues could be materially reduced and our operating
results could suffer.
Our limited operating history, the evolving nature of the Internet and
the emerging nature of the markets in which we compete makes prediction of
future operating results difficult or impossible. We cannot assure you that our
revenues will increase or even continue at their current level or that we will
maintain operating profitability or generate cash from operations in future
periods. We have each incurred significant operating losses since inception and
may incur additional losses in the future.
4
<PAGE> 5
WE MAY EXPERIENCE FLUCTUATIONS IN OPERATING RESULTS AND MAY NOT BE ABLE TO
ADJUST SPENDING IN TIME TO COMPENSATE FOR ANY UNEXPECTED REVENUE SHORTFALL.
Our operating results may fluctuate significantly as a result of a
variety of factors, many of which are outside of our control. We may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in revenues in relation to
planned expenditures could materially reduce our operating results and
materially and adversely affect our financial condition.
Factors that may adversely affect our operating results include:
- demand for Internet advertising
- the addition or loss of advertisers, and the advertising
budgeting cycles of individual advertisers
- the level of traffic on the Internet and our network of Internet
channels in particular
- seasonal trends in Internet use and advertising
- the amount and timing of capital expenditures and other costs,
including marketing costs, relating to our Internet, television
and radio operations and costs relating to the expansion of
operations and the introduction of new sites and services
- competition
- our ability to manage effectively our development of new
business segments and markets
- our ability to successfully manage the integration of our
operations, technology acquisitions and other business
combinations
- our ability to upgrade and develop our systems and
infrastructure
- technical difficulties, system downtime, Internet brownouts or
denial of service or other similar attacks
- general economic conditions and economic conditions specific to
the Internet and Internet media
Due to all of the foregoing factors, our operating results may fall
below our expectations or the expectations of securities analysts or investors.
If this happens, the trading price of our common stock would likely be
materially and adversely affected.
OUR INTERNET, TELEVISION AND RADIO CONTENT AND SERVICES MAY NOT BE ACCEPTED,
WHICH COULD ADVERSELY AFFECT OUR PROFITABILITY.
Our future success depends upon our ability to deliver original and
compelling content and services that attract and retain users. We cannot assure
you that our content and services will be attractive to a sufficient number of
users to generate revenues sufficient to sustain operations. Costs related to
developing new content and services are expensed as they are incurred, while
revenue related to new content and services typically builds over time. As a
result, our profitability from year to year may be materially and adversely
affected by the number and timing of new launches. In addition, we cannot assure
you that any new content or services will be developed in a timely or
cost-effective manner.
The successful development and production of content is subject to
numerous uncertainties, including the ability to:
- anticipate and successfully respond to rapidly changing consumer
tastes and preferences
- obtain favorable distribution rights
- fund new program development
- attract and retain qualified editors, producers, writers,
technical personnel and television and radio hosts
If we are unable to develop content and services that allow us to
attract, retain and expand a loyal user base that is attractive to advertisers
and sellers of technology products, we will be unable to generate revenue.
5
<PAGE> 6
COMPETITION IS INTENSE AND IS EXPECTED TO INCREASE SIGNIFICANTLY; OUR FAILURE TO
COMPETE SUCCESSFULLY COULD ADVERSELY AFFECT OUR PROSPECTS AND FINANCIAL RESULTS.
The market for Internet content and services is new, intensely
competitive and rapidly evolving and we expect the competition to increase
significantly. It is not difficult to enter this market and current and new
competitors can launch new Internet sites at relatively low cost. We expect to
continue to derive our revenue primarily from advertising, for which we compete
with various media including newspapers, television, radio and various Internet
sites that offer consumers information similar to that provided by us. We cannot
assure you that we will compete successfully with current or future competitors.
Moreover, increased competition could result in price reductions, reduced
margins or loss of market share, any of which could have a material adverse
effect on our future revenue and profits.
If we do not compete successfully for new users and advertisers, our
financial results may be materially and adversely affected.
TO REMAIN COMPETITIVE, WE MUST EXPAND OUR OPERATIONS; FAILURE TO EFFECTIVELY
MANAGE GROWTH COULD RESULT IN OUR INABILITY TO SUPPORT AND MAINTAIN OUR
OPERATIONS
We have rapidly and significantly expanded our operations. We anticipate
that further expansion of our operations may be required following the merger in
order to address potential market opportunities. This rapid growth has placed,
and we expect it to continue to place, a significant strain on our management,
operational and financial resources. We cannot assure you that:
- our current personnel, systems, procedures and controls will be
adequate to support our operations
- management will be able to identify, hire, train, motivate or
manage the required personnel
- management will be able to successfully identify and exploit
existing and potential market opportunities
In addition, we could experience a materially negative impact on
earnings as a results of expenses associated with growing our operations,
whether through internal development or through acquisitions.
IF WE ARE UNABLE TO CONTINUE LICENSING THE CNET DATA SERVICES TRANSACTIVE
PRODUCTS DATABASE WE COULD FAIL TO ACHIEVE EXPECTATIONS FOR REVENUE GROWTH.
We receive license fees for the license of the CNET Data Services
transactive product database to manufacturers, distributors and resellers of
computer products. Our ability to meet expectations for revenue growth may
depend in part upon our ability to continue to license this product to new
customers. If we are unable to attract new customers for this product, we could
fail to achieve revenue growth expectations.
IF OUR INTERNET USER BASE DOES NOT CONTINUE TO GROW, WE MAY FAIL TO ACHIEVE
EXPECTATIONS FOR REVENUE GROWTH.
The rapid growth in the use of and interest in the Internet is a recent
phenomenon. We cannot assure you that acceptance and use of the Internet will
continue to develop or that the combined company will be able to attract a
sufficient number of users to support growth expectations for its business.
We also cannot assure you that the Internet infrastructure will be able
to support the demands placed upon it by:
- an increase in the number of users
- an increase in frequency of use
- an increase in bandwidth requirements of users
6
<PAGE> 7
If use of the Internet does not continue to grow or grows more slowly
than expected, if we do not attract more users despite Internet growth, or if
the Internet infrastructure does not effectively support growth that may occur,
our revenues and financial condition will be materially and adversely affected.
WE WILL DEPEND ON ADVERTISING AS A PRINCIPAL SOURCE OF OUR REVENUE; OUR
FINANCIAL RESULTS WILL BE ADVERSELY AFFECTED IF WE FAIL TO SUSTAIN ADVERTISING
REVENUES OR LEAD FEES.
Our revenues through December 31, 1999 were derived in large part from
the sale of advertising and other fees, such as lead fees, from sellers of
technology products on their Internet channels and from advertising and license
fees from producing television programs. It is expected that we will continue to
derive our revenue in a similar manner. Most of our advertising contracts will
be subject to termination by the customer at any time on very short notice. It
may be difficult to obtain performance from advertisers who have longer term
contracts. If we lose advertising customers, fail to attract new customers or
are forced to reduce advertising rates in order to retain or attract customers,
our revenues and financial condition will be materially and adversely affected.
Our ability to generate advertising revenue will depend on several
factors, including;
- the continued development of the Internet as an advertising
medium
- the pricing of advertising on other Internet sites
- the amount of traffic on our network of sites
- pricing pressures, delays and new product launches
- our ability to achieve, demonstrate and maintain attractive user
demographics
- our ability to develop and retain a skilled advertising sales
force.
WE WILL DEPEND ON, AND RECEIVE A SIGNIFICANT PERCENTAGE OF OUR REVENUE FROM, A
LIMITED NUMBER OF ADVERTISERS.
A relatively small number of advertisers contribute a significant
percentage of our revenue. Top advertising clients, and other advertising
clients, may not continue to use our services to the same extent, or at all,
following the merger. A significant reduction in advertising by one or more of
our largest advertisers could have a material adverse effect on our profits and
liquidity.
OUR ADVERTISING AND OTHER OPERATING REVENUES MAY BE SUBJECT TO SEASONALITY AND
CYCLICALITY, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUES AND
OPERATING RESULTS.
We believe that advertising sales in traditional media, such as
television, are generally lower in the first and third calendar quarters of each
year than in other quarters and that advertising expenditures fluctuate
significantly with economic cycles. Depending on the extent to which the
Internet is accepted as an advertising medium, seasonality and cyclicality in
the level of advertising expenditures generally could become more pronounced for
Internet advertising. Seasonality and cyclicality in advertising expenditures
generally, or with respect to Internet-based advertising specifically, could
have a material adverse effect on our business, prospects, financial condition
and operating results because advertising expenditures will account for
substantially all of our revenues following the merger.
We may also experience seasonality in our operating results,
particularly in connection with our shopping services, following the merger,
which may reflect seasonal trends in the retail industry. The level of consumer
retail spending generally decreases in the first and third calendar quarters.
INABILITY TO ATTRACT AND RETAIN KEY PERSONNEL COULD ADVERSELY AFFECT OUR ABILITY
TO OPERATE.
Our success depends to a large extent on the continued services of
Halsey M. Minor, Shelby W. Bonnie, and the other members of our senior
management team. The loss of the services of Mr. Minor or Mr. Bonnie, CNET's
founders, could have an adverse effect on us due to their crucial role in our
strategic development. Our success is also dependent on our ability to identify,
attract, retain and motivate other highly skilled officers, key employees and
personnel in a very competitive job environment.
7
<PAGE> 8
We do not have long-term employment agreements with key personnel and do
not maintain "key person" life insurance policies on officers or other
employees. The production of our Internet, television and radio content and
services requires highly skilled writers and editors and personnel with
sophisticated technical expertise. We have encountered difficulties in
attracting qualified software developers for their Internet channels and related
technologies and we cannot assure you that we will be able to attract or retain
such personnel in the future. If we do not attract, retain and motivate the
necessary technical, managerial, editorial and sales personnel following the
merger, there could be a material adverse effect on our business and operating
results.
WE MAY NEED TO SPEND SIGNIFICANTLY MORE MONEY ON ADVERTISING IN THE FUTURE.
We cannot assure you that our advertising campaigns, or any other
advertising campaign we may launch in the future, will be effective. To remain
competitive, we may need to spend significantly more money on advertising in the
future and such additional costs could materially and adversely affect our
profits.
IF WE DO NOT RESPOND ADEQUATELY TO THE INDUSTRY'S EVOLVING TECHNOLOGY STANDARDS
OR DO NOT CONTINUE TO MEET THE SOPHISTICATED NEEDS OF OUR CUSTOMERS, SALES OF
OUR PRODUCTS AND SERVICES MAY DECLINE.
The market for Internet products and services is characterized by:
- rapid technological developments
- frequent new product introductions
- evolving industry standards
The emerging character of these products and services and their rapid
evolution requires us to continually improve the performance, features and
reliability of our network infrastructure and Internet content, particularly in
response to competitive offerings and changing customer demands. We cannot
assure you that we will be successful in responding quickly, cost effectively or
adequately to these developments. In addition, the widespread adoption of new
Internet technologies or standards could require us to make substantial
expenditures to modify or adapt our Internet channels and services and could
fundamentally affect the character, viability and frequency of Internet-based
advertising. Finally, technologies adopted by us could fail to perform according
to expectations, resulting in system performance problems and increased costs.
Any of these events could have a material adverse effect on our financial
condition and operating results.
WE DEPEND ON ARRANGEMENTS WITH THIRD PARTIES FOR INTERNET TRAFFIC TO OUR SITES
AND OUR FAILURE TO DEVELOP AND MAINTAIN RELATIONSHIPS WITH THIRD PARTIES COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.
We rely on the cooperation of owners and operators of other Internet
sites with whom we have syndication and other arrangements to generate traffic
for our Internet sites. Our ability to advertise on other Internet sites and the
willingness of the owners of these sites to direct users to our Internet
channels through hypertext links will continue to be critical to the success of
our Internet operations. If we are unable to develop and maintain satisfactory
relationships with such third parties on acceptable commercial terms, or if our
competitors are better able to capitalize on these relationships, our financial
condition and operating results will be materially and adversely affected.
WE MAY HAVE DIFFICULTIES WITH OUR ACQUISITIONS AND INVESTMENTS, WHICH COULD
ADVERSELY AFFECT OUR GROWTH AND FINANCIAL CONDITION.
From time to time, we may consider new business opportunities and
ventures, including acquisitions, in a broad range of areas. Any decision by us
to pursue significant business expansion or new business opportunities would be
accompanied by risks, including, among others:
- requiring us to invest a substantial amount of capital, which
could have a material adverse effect on our financial condition
and our ability to implement our existing business strategy
8
<PAGE> 9
- requiring us to issue additional equity interests, which would
be dilutive to our current stockholders
- placing additional, substantial burdens on our management
personnel and our financial and operational systems
- the difficulty of assimilating ours and Ziff-Davis' operations,
technologies and personnel with those of any acquired company
- the potential disruption of our ongoing business
- the possible inability to retain key technical and managerial
personnel
- additional expenses associated with amortization of goodwill and
other purchased intangible assets
- additional operating losses and expenses associated with the
activities and expansion of acquired businesses
- the possible impairment of relationships with existing employees
and advertising customers
In addition, we cannot assure you that we will be successful in
overcoming these risks or any other problems encountered in connection with any
future transactions or that these transactions will be profitable.
WE PLAN TO EXPAND OUR INTERNATIONAL OPERATIONS AND MAY ENCOUNTER A NUMBER OF
PROBLEMS IN DOING SO. THERE ARE ALSO A NUMBER OF RISKS ASSOCIATED WITH
INTERNATIONAL OPERATIONS THAT COULD ADVERSELY AFFECT OUR BUSINESS.
EXPANSION OF INTERNATIONAL OPERATIONS. One component of our growth
strategy will be to further expand into international markets. Our international
operations will be expanded into markets where technology and online industries
are less well developed than in the U.S., which may adversely affect our results
of operations.
RISK OF INTERNATIONAL OPERATIONS. There are certain risks inherent in
doing business in international markets, such as the following:
- uncertainty of product acceptance by different cultures
- unforseen changes in regulatory requirements
- difficulties in staffing and managing multinational operations
- state-imposed restrictions on the repatriation of funds
- currency fluctuations
- difficulties in finding appropriate foreign licensees or joint
venture partners
- potential adverse tax consequences
There is a risk that such factors will have an adverse effect on our ability to
successfully operate internationally and on our profits and liquidity.
WE MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN DOMAIN NAMES, WHICH COULD ADVERSELY
AFFECT OUR ABILITY TO OPERATE OUR ONLINE SITES.
We currently hold various Web domain names relating to brands and sites.
The acquisition and maintenance of domain names generally is regulated by
government agencies and their designees. The regulation of domain names in the
United States and in foreign countries is subject to change. We cannot assure
you that we will be able to acquire or maintain relevant domain names in all
countries where we will conduct business. Any inability to acquire or maintain
domain names could have a material adverse effect on our business.
9
<PAGE> 10
CHANGES IN REGULATIONS COULD ADVERSELY AFFECT THE WAY WE OPERATE.
It is possible that new laws and regulations in the U.S. and elsewhere
will be adopted covering issues affecting our business, including:
- privacy
- copyrights, trademarks and domain names
- obscene or indecent communications
- pricing, characteristics and quality of Internet products and
services
Increased government regulation, or the application of existing laws to
online activities, could:
- decrease the growth of the Internet
- reduce our revenues
- increase our operating expenses
- expose us to significant liabilities
Any of these occurrences could have a material adverse effect on our profits and
liquidity.
We cannot be sure what effect any future material noncompliance by us
with these laws and regulations or any material changes in these laws and
regulations could have on our business.
WE MAY HAVE CAPACITY CONSTRAINTS AND MAY BE SUBJECT TO SYSTEM DISRUPTIONS, WHICH
COULD ADVERSELY AFFECT OUR REVENUES.
Our ability to attract and maintain relationships with users,
advertisers, merchants and strategic partners will depend on the satisfactory
performance, reliability and availability of our Internet channels and network
infrastructure. Our Internet advertising revenues will relate directly to the
number of advertisements delivered to our users. System interruptions or delays
that result in the unavailability of Internet channels or slower response times
for users would reduce the number of advertisements and sales leads delivered to
such users and reduce the attractiveness of our Internet channels to users,
strategic partners and advertisers or reduce the number of impressions delivered
and thereby reduce revenue. We have experienced periodic system interruptions in
the past and we will continue to suffer future interruptions from time to time.
System interruptions or slower response times could have a material adverse
effect on our revenues and financial condition.
Our Internet, television and radio systems and operations will be
vulnerable to interruption by fire, earthquake, power loss, telecommunications
failure, computer hacking and other events beyond our control. Most of our
servers and television production equipment are currently located in the Bay
Area of California, an area that is susceptible to earthquakes. We have
experienced system downtime for limited periods due to power loss and
telecommunications failures, and such interruptions in service may materially
and adversely affect our operations in the future. We will also rely on web
browsers and online service providers to provide Internet access to our sites.
We have only a limited amount of redundant facilities or systems, no formal
disaster recovery plan and do not carry sufficient business interruption
insurance or earthquake insurance to compensate for losses that may occur. Any
losses or damages incurred could have a material adverse effect on our financial
condition.
OUR BUSINESS WILL INVOLVE RISKS OF LIABILITY CLAIMS FOR INTERNET, TELEVISION AND
RADIO CONTENT OR TECHNOLOGY, WHICH COULD RESULT IN SIGNIFICANT COSTS.
As a publisher and a distributor of content over the Internet,
television and radio, we may face potential liability for:
- defamation
- negligence
- copyright, patent or trademark infringement
- other claims based on the nature and content of the materials
published or distributed
10
<PAGE> 11
These types of claims have been brought, sometimes successfully, against
online services and publishers of television and radio content. In addition, we
could be exposed to liability in connection with material indexed or offered on
our Internet sites or for information collected from and about users. There has
been a recent increase in the granting and attempted enforcement of business
process patents that cover practices that may be widely employed in the Internet
industry. If we are found to violate any such patent and we are unable to enter
into a license agreement on reasonable turns, our ability to offer services
could be materially and adversely affected. We cannot assure you that third
parties or users will not bring claims against the combined company relating to
proprietary rights or use of personal information. Although we will carry
general liability insurance, our insurance may not cover potential claims of
defamation, negligence and similar claims, and it may or may not apply to a
particular claim or be adequate to reimburse us for all liability that may be
imposed. Any imposition of liability that is not covered by insurance or is in
excess of insurance coverage could have a material adverse effect on our
financial condition.
OUR NETWORKS MAY BE VULNERABLE TO UNAUTHORIZED PERSONS ACCESSING OUR SYSTEMS,
WHICH COULD DISRUPT OUR OPERATIONS AND RESULT IN THE THEFT OF OUR PROPRIETARY
INFORMATION.
A party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions or malfunctions in
our Internet operations. We may be required to expend significant capital and
resources to protect against the threat of security breaches or to alleviate
problems caused by breaches in security. For example, so-called "spiders" have
and can be used in efforts to copy our databases, including our database of
technology products and prices.
Concerns over the security of Internet transactions and the privacy of
users may also inhibit the growth of the Internet, particularly as a means of
conducting commercial transactions. To the extent that our activities or the
activities of third party contractors involve the storage and transmission of
proprietary information, such as computer software or credit card numbers,
security breaches could expose us to a risk of loss or litigation and possible
liability. We cannot assure you that contractual provisions attempting to limit
our liability in these areas will be successful or enforceable, or that other
parties will accept such contractual provisions as part of our agreements.
WE WILL DEPEND ON LICENSED TECHNOLOGY FROM THIRD PARTIES AND OUR FAILURE TO
MAINTAIN THESE ARRANGEMENTS COULD ADVERSELY AFFECT OUR OPERATIONS.
We rely on technology licensed from third parties for use in operating
and managing our Internet sites and providing related services to users and
advertisers. Our ability to generate revenue from Internet commerce may also
depend on data encryption and authentication technologies that we may be
required to license from third parties. We cannot assure you that these third
party technology licenses will be available to us at all, will continue to be
available to us on acceptable commercial terms or will operate as intended.
OUR DEBT OBLIGATIONS EXPOSE US TO RISKS THAT COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
Our debt outstanding at June 30, 2000 was approximately $184.9 million.
We may incur substantial additional debt in the future. The level of our
indebtedness, among other things, could:
- make it difficult for us to make payments on our debt as
described below
- make it difficult for us to obtain any necessary financing in
the future for working capital, capital expenditures, debt
service, acquisitions or general corporate purposes
- limit our flexibility in planning for or reacting to changes in
our business
- reduce funds available to use for our operations
- impair our ability to incur additional debt because of financial
and other restrictive covenants
- make us more vulnerable in the event of a downturn in our
business or an increase in interest rates
If we experience a decline in revenues due to any of the factors
described in this "Risk Factors" section or any other factors, we could have
difficulty paying interest and other amounts due on our indebtedness. If we are
unable to generate sufficient cash flow or otherwise obtain funds necessary to
make required payments, or if we fail
11
<PAGE> 12
to comply with the various requirements of our indebtedness, we would be in
default, which would permit the holders of our indebtedness to accelerate the
maturity of the indebtedness and could cause defaults under our other
indebtedness. Any default under our indebtedness could have a material adverse
effect on our financial condition.
THE PRICE OF OUR COMMON STOCK IS SUBJECT TO WIDE FLUCTUATIONS.
The trading price of our common stock is subject to wide fluctuations.
Trading prices of our common stock may fluctuate in response to a number of
events and factors, including:
- quarterly variations in operating results
- announcements of innovations
- new products, strategic developments or business combinations by
us or our competitors
- changes in our expected operating expense levels or losses
- changes in financial estimates and recommendations of securities
analysis
- the operating and securities price performance of other
companies that investors may deem comparable to ours
- news reports relating to trends in the Internet
- other events or factors
In addition, the stock market in general, and the market prices for
Internet related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of these companies.
These broad market and industry fluctuations may adversely affect the trading
price of our common stock.
These fluctuations may make it more difficult to use stock as currency
to make acquisitions that might otherwise be advantageous, or to use stock
options as a means to attract and retain employees.
WE HAVE A SUBSTANTIAL NUMBER OF SHARES OF COMMON STOCK THAT MAY BE SOLD, WHICH
COULD AFFECT THE TRADING PRICE OF OUR COMMON STOCK.
We have a substantial number of shares of common stock subject to stock
options, and our notes may be converted into shares of our common stock. In
addition, we have a large number of authorized but unissued shares of our common
stock that are available for future sale. We cannot predict the effect, if any,
that future sales of shares of our common stock or notes, or the availability of
shares of our common stock or notes for future sale, will have on the market
price of our common stock. In addition, our founding stockholders might sell
shares of our common stock from time to time. Sales of substantial amounts of
our common stock, including shares issued in connection with acquisitions, upon
the exercise of stock options or warrants or the conversion of debt securities,
or the perception that such sales could occur, may adversely affect prevailing
market prices for our common stock.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW COULD
DETER TAKEOVER ATTEMPTS.
Some provisions in our certificate of incorporation and bylaws could
delay, prevent or make more difficult a merger, tender offer, proxy contest or
change of control. Our stockholders might view any transaction of this type as
being in their best interest since the transaction could result in a higher
stock price than the current market price for our common stock. Among other
things, our certificate of incorporation and bylaws:
- authorize our board of directors to issue preferred stock with
the terms of each series to be fixed by our board of directors
- divide our board of directors into three classes so that only
approximately one-third of the total number of directors is
elected each year
- permit directors to be removed only for cause
- specify advance notice requirements for stockholder proposals
and director nominations
In addition, with some exceptions, the Delaware General Corporation Law
restricts or delays mergers and other business combinations between us and any
stockholder that acquires 15% or more of our voting stock.
12
<PAGE> 13
LAWSUITS IN WHICH WE ARE A DEFENDANT COULD MATERIALLY AND ADVERSELY AFFECT OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In August 1999, the Simon Property Group filed a complaint against
mySimon, Inc., which became our subsidiary on February 29, 2000. The Simon
Property Group is a real estate investment trust that owns and develops mall
properties. The complaint, which was filed in the Southern District of Indiana
at Indianapolis, alleges that our "mySimon" mark infringes the Simon Property
Group's "SIMON" mark. On August 31, 2000 the jury found that the "mySimon" mark
infringes on the Simon Property Group's "SIMON" mark. The jury awarded Simon
Property Group damages of $26.8 million. We believe that the jury verdict was
not supported by the facts and we plan to appeal the verdict. The judge
presiding over the trial has not yet entered judgment on the jury's verdict, nor
has he ruled on Simon Property Group's request that mySimon relinquish its
name. Unless the verdict is overturned on appeal or unless the judge does not
require mySimon to relinquish its name, there could be a material adverse
effect on our business, financial condition and results of operation.
RISK FACTORS RELATING TO OUR PROPOSED MERGER WITH ZIFF-DAVIS
WE MAY NOT ACHIEVE THE BENEFITS WE EXPECT FROM OUR MERGER WITH ZIFF-DAVIS WHICH
MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND
OPERATING RESULTS AND COULD RESULT IN THE LOSS OF KEY PERSONNEL.
Following the merger, we will need to overcome significant issues in
order to realize any benefits or synergies from the merger, including the
timely, efficient and successful execution of a number of post-merger events,
including:
- integrating the operations of the two companies
- retaining and assimilating the key personnel of each company
- retaining existing advertisers on both companies' Internet sites
and attracting additional advertisers
- developing new Internet sites and services that benefit from the
assets and resources of both companies
- retaining strategic partners of each company
- creating uniform standards, controls, procedures, policies and
information systems
The successful execution of these post-merger events will involve
considerable risk and may not be successful. These risks include:
- the potential disruption of our ongoing business and distraction
of our management
- the difficulty of incorporating acquired technology and rights
into our Internet sites and services
- unanticipated expenses and potential delays related to
integration of technology and other resources of the two
companies
- the impairment of relationships with employees and advertisers
as a result of any integration of new management personnel
- the possibility that businesses that have advertised on both our
Internet sites and on those of Ziff-Davis may reduce their
advertising purchases from the combined company
13
<PAGE> 14
- potential unknown liabilities associated with the merger and the
recent disposition of Ziff-Davis' non-Internet operations
We may not succeed in addressing these risks or any other problems
encountered in connection with the merger.
THE MERGER COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.
We expect to incur significant transaction costs in connection with the
merger. If the benefits of the merger do not exceed the associated costs,
including any dilution to our stockholders resulting from the issuance of shares
of our common stock in connection with the merger, our financial results,
including earnings per share, could be materially and adversely affected.
We will account for the merger using the purchase method of accounting.
After the completion of the merger, the results of operations of Ziff-Davis will
be included in our consolidated financial statements. The purchase price will be
allocated to Ziff-Davis' assets and liabilities based on the fair values of the
assets acquired and the liabilities assumed. Any excess of cost over the fair
value of the net tangible assets of Ziff-Davis acquired in the merger will be
recorded as goodwill and other intangible assets and will be amortized by
charges against results of operations under generally accepted accounting
principles. These allocations will be made based upon valuations and other
studies that have not yet been finalized. However, it is expected that the
amortization associated with the merger will be significant and will have a
material adverse effect on our results of operations.
THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE AS A RESULT OF THE MERGER.
The market price of our common stock may decline as a result of the
merger for a number of reasons including if:
- our integration with Ziff-Davis is unsuccessful
- we do not achieve the perceived benefits of the merger as
rapidly or to the extent anticipated by us or by financial or
industry analysts
- the effect of the merger on our financial results is not
consistent with our expectations or the expectations of
financial or industry analysts
OWNERSHIP OF OUR COMMON STOCK FOLLOWING THE MERGER WILL BE CONCENTRATED IN A
SMALL GROUP OF SHAREHOLDERS WHOSE INTERESTS MAY DIFFER FROM THOSE OF OUR OTHER
STOCKHOLDERS.
After our merger with Ziff-Davis, Softbank, Halsey Minor, our chairman,
and Shelby Bonnie, our chief executive officer, will collectively control a high
percentage of our outstanding common stock. The concentration of ownership of
our common stock may delay, prevent or deter a change in control, could deprive
our other stockholders of an opportunity to receive a premium for their common
stock and may adversely affect the market price of our common stock. Also, these
stockholders can exert significant control over actions requiring the approval
of a majority of the voting stock, including amendments to our charter.
Following the merger, commercial and other transactions between our company, on
the one hand, and its directors, officers and major stockholders and their
affiliates, on the other, could create potential for, or could result in,
conflicting interests. We intend to enter into all related party transactions on
an arm's length basis according to terms that would be offered by an
unaffiliated third party.
In addition, after 180 days from the closing of our merger with
Ziff-Davis, Softbank will have a right, pursuant to registration rights granted
under a stockholder agreement, to require us to register for public sale our
common stock owned by Softbank. Also, Halsey Minor and Shelby Bonnie might sell
shares of our common stock from time to time.
14
<PAGE> 15
THE RECENT DISPOSITIONS OF ZIFF-DAVIS' NON-INTERNET BUSINESSES MAY ADVERSELY
AFFECT OUR FUTURE BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
PROSPECTS FOLLOWING THE MERGER.
It is possible that the dispositions of Ziff-Davis' non-Internet
businesses as part of its recent restructuring may materially and adversely
affect the our future business, financial condition, results of operations and
prospects following the merger in a number of ways, including the following:
- The remaining Ziff-Davis businesses will no longer be able to
leverage the Ziff-Davis brand and cross-market across all of the
platforms that were formerly part of the company.
- ZDNet historically has relied on content that it licenses from
ZD Publishing on an exclusive basis online. Under the agreement
for the sale of ZD Publishing, ZDNet has retained the rights to
this content online only through April 5, 2005 and those rights
will remain exclusive to ZDNet only through April 5, 2003. After
the three year exclusivity period expires, the entity that
bought ZD Publishing will be free to use the content to compete
with Ziff-Davis' ZDNet division on the Internet, and after four
years the buyer will be free to license it to other online
competitors.
- The buyer of ZD Publishing acquired the "Ziff-Davis" brand name
and is receiving a license for the "ZD" brand name, in each
case, for use in print publishing and its future actions may
adversely affect the ZD brand.
- Ziff-Davis' costs of services may increase significantly due to
the loss of certain large volume discounts or other special
pricing arrangements it received before it disposed of its
non-Internet businesses.
- Ziff-Davis has retained certain tax and other liabilities
relating to its former non-Internet businesses and may also be
liable for certain contingent liabilities relating to such
businesses. While Ziff-Davis believes that it has established
adequate reserves for such liabilities, contingent liabilities
are inherently uncertain and it is possible that such
liabilities could be materially greater than expected and have a
material adverse effect our financial condition and results of
operations following the merger.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT OUR STOCK PRICE, FUTURE
BUSINESS AND OPERATIONS.
If the merger is not completed for any reason, we may be subject to a
number of material risks, including the following:
- if the stockholders of Ziff-Davis approve the merger agreement
but our stockholders do not approve the issuance of our common
stock in the merger, then we must pay Ziff-Davis a termination
fee of $60 million and make a $15 million loan to Ziff-Davis
unless Ziff-Davis is in material breach of the merger agreement
- We may be obligated to pay Ziff-Davis a termination fee of $105
million if the merger agreement is terminated in connection with
our proposal for an alternative transaction.
- costs related to the merger, such as legal, accounting,
financial advisor and printing fees, must be paid even if the
merger is not completed
In addition, our advertisers and strategic partners, in response to the
announcement of the merger, may delay or defer decisions, which could have a
material adverse effect on our business, regardless of whether the merger is
ultimately completed. Further, if the merger is terminated and our board of
directors determines to seek another merger or business combination, there can
be no assurance that we will be able to find a partner on terms as attractive as
those provided for in the merger agreement with Ziff-Davis.
15
<PAGE> 16
THERE ARE SEVERAL LAWSUITS IN WHICH ZIFF-DAVIS IS A DEFENDANT WHICH COULD
MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOLLOWING THE MERGER.
In connection with the initial public offering of ZD common stock, which
is intended to track the performance of Ziff-Davis, on April 28, 1998 and the
repricing of certain stock options, Ziff-Davis has been named as a defendant in
several lawsuits. While Ziff-Davis believes there are substantial defenses to
all claims, we cannot assure you that Ziff-Davis will prevail. Defense costs
and/or settlement costs relating to these actions could be substantial, and the
defense of these actions may divert management's attention and resources. If the
plaintiffs prevail in these actions, any judgments awarded by the courts could
have a material adverse effect on our financial condition following the merger.
USE OF PROCEEDS
We are registering all 78,042 shares of our common stock covered by this
prospectus on behalf of the selling stockholders named in the table set forth on
page 17 of this prospectus. These shares were issued in connection with our
acquisition of Apollo Solutions, Inc. on July 1, 2000. This prospectus also
covers any additional shares of our common stock which may become issuable by
reason of any stock dividend, stock split, recapitalization or other similar
transaction that is effected without the receipt of consideration and results in
an increase in the number of shares of our common stock that are outstanding.
We will receive no proceeds from the sale of the shares of our common
stock covered by this prospectus. The named selling stockholders and their
permitted transferees may sell the shares from time to time and will receive all
proceeds from such sales, less any commissions, concessions or discounts payable
to broker-dealers or agents. Permitted transferees include pledgees, donees,
transferees or other successors-in-interest who receive shares from the named
selling stockholders after the date of this prospectus. Throughout this
prospectus, the named selling stockholders and their permitted transferees are
collectively referred to as the "selling stockholders."
DETERMINATION OF OFFERING PRICE
The selling stockholders will act independently of us in making
decisions regarding the offering price of the shares of our common stock to be
sold by them. Sales will likely be made at prices related to the market price at
the time of the sale or upon privately negotiated terms then prevailing.
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders. None of the selling stockholders had a material
relationship with us prior to our acquisition of Apollo Solutions, Inc. on July
1, 2000. No estimate can be given as to the number of shares that will be held
by the selling stockholders after the date of this prospectus because each of
the selling stockholders may offer some or all of their shares to third parties
from time to time. To our knowledge, there are not currently any agreements,
arrangements or understandings with respect to the sale by the selling
stockholders of their shares of our common stock.
16
<PAGE> 17
<TABLE>
<CAPTION>
Percent of Total Number of Shares
Name of Selling Number of Shares Number of Shares Registered by this
Stockholder Beneficially Owned Outstanding Prospectus (1)
----------- ------------------ ---------------- ------------------
<S> <C> <C> <C>
Greg Lurey 37,227 * 37,227
Ryan Rouland 32,568 * 32,568
Darren Guccione 5,063 * 5,023
Jack Kraft 2,496 * 2,496
Paul Skordilis 1,428 * 728
</TABLE>
* Represents beneficial ownership of less than one percent of the total
number of shares outstanding.
(1) This prospectus also covers any additional shares of our common stock which
become issuable by reason of any stock dividend, stock split, recapitalization
or other similar transaction that is effected without the receipt of
consideration and results in an increase in the number of shares of our common
stock that are outstanding.
PLAN OF DISTRIBUTION
The selling stockholders will determine the timing, manner and size of
each sale of the shares of our common stock covered by this prospectus. The
sales may be made on one or more exchanges, in the over-the-counter market or
otherwise. The selling stockholders may effect sales of their shares through
broker-dealers using one of the following methods:
- A block trade in which a broker-dealer attempts to sell shares
of our common stock 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 that
broker-dealer for its account using this prospectus.
The selling stockholders may also sell their shares through an exchange
distribution in accordance with the rules of that exchange, through an ordinary
brokerage transaction, in a privately negotiated transaction, or by using any
combination of the foregoing methods.
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 of our common stock covered by this prospectus, broker-dealers engaged by
the selling stockholders may arrange for other broker-dealers to participate in
resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of shares of our common stock
covered by this prospectus or otherwise. In these hedging transactions,
broker-dealers may engage in short sales of our common stock. In addition, the
selling stockholders may sell shares short and redeliver those shares to close
out short positions. The selling stockholders may also enter into options or
other transactions with broker-dealers that require delivery to the
broker-dealer of the covered shares. The broker-dealer may then resell or
otherwise transfer those shares using this prospectus. Finally, the selling
stockholders may loan or pledge shares to a broker-dealer. The broker-dealer may
then sell the shares so loaned, or upon a default, sell the shares so pledged,
in each case using this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders, and may
also receive compensation from the purchasers of the shares for whom they act as
agents, to whom they act as principals, or both. Particular broker-dealers may
receive compensation in excess of customary commissions in amounts negotiated in
the context of certain sales.
Broker-dealers acting on behalf of the selling stockholders, agents of
the selling stockholders, other broker-dealers participating in a given
transaction, or the selling stockholders themselves may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act in
connection with sales of our common stock covered by this prospectus. As a
consequence, any commissions, discounts or concessions received by them and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or
17
<PAGE> 18
concessions under the Securities Act. Any party deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act will be subject to the
prospectus delivery requirements imposed by the Securities Act.
Any securities covered by this prospectus that qualify for sale under
Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather
than under this prospectus. We have received no information suggesting that the
selling stockholders have entered into any understandings or arrangements with
any underwriters, broker-dealers or agents regarding the sale of our common
stock. To our knowledge, no underwriter or coordinating broker has been
commissioned to act in connection with any proposed sale of our common stock by
the selling stockholders.
The shares of our common stock covered by this prospectus will be sold
only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in some states shares of our
common stock may not be sold unless they have been registered or qualified for
sale in that state or an exemption from registration or qualification is
available and has been complied with.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, any person engaged in the distribution of shares of our common stock
covered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock for a period of two business days
prior to the commencement of that distribution. In addition, each of the selling
stockholders will be subject to applicable provisions of the Exchange Act,
including Regulation M, which may limit the timing of purchases and sales of our
common stock covered by this prospectus.
We will file a supplement to this prospectus under Rule 424(b) under the
Securities Act if required to disclose any material arrangement that has been
entered into between a selling stockholder and a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution.
We will bear all costs, expenses and fees in connection with the
registration of the shares of our common stock covered by this prospectus. The
selling stockholders will bear the cost of commissions, concessions or
discounts, if any, attributable to sales by them of our common stock. The
selling stockholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving the sale of our common stock covered by
this prospectus against some liabilities, including liabilities arising under
the Securities Act.
DESCRIPTION OF SECURITIES TO BE REGISTERED
A description of our common stock has been incorporated by reference to
our Registration Statement on Form 8-A, as filed with the Commission on July 2,
1996.
EXPERTS
Our consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the fiscal year ended December
31, 1999, as filed on March 30, 2000, have been so incorporated in reliance on
the report of KPMG LLP, independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon by Sharon Le Duy, Vice President - Legal and Business Affairs.
18
<PAGE> 19
--------------------------------------------------------------------------------
We have not authorized any person to make any statement that differs from what
is in this prospectus. If any person makes any statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking to buy, these securities in any state in which
the offer or sale is not permitted. The information in this prospectus is
complete and accurate as of its date, but may change after that date.
-----------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Where You Can Find More Information.......................................... 3
The Company.................................................................. 4
Risk Factors................................................................. 4
Use of Proceeds.............................................................. 16
Determination of Offering Price.............................................. 16
Selling Stockholders......................................................... 16
Plan of Distribution......................................................... 17
Description of Securities to be Registered................................... 18
Experts...................................................................... 18
Legal Matters................................................................ 18
</TABLE>
CNET NETWORKS, INC.
78,042 SHARES
OF COMMON STOCK
-----------------------------
PROSPECTUS
-------------------------------------
September 13, 2000
--------------------------------------------------------------------------------
19
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by us in
connection with the sale of the shares of our common stock being registered
under this registration statement. All amounts other than the registration fee
payable to the Commission are estimates.
<TABLE>
<S> <C>
Commission Registration Fee $ 690.20
Legal Fees and Expenses $ 2,500.00
Accounting Fees and Expenses $ 2,500.00
Miscellaneous $ 5,000.00
Total $10,690.20
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
("Delaware Corporation Law") provides, in general, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation), because the person is or was a
director or officer of the corporation. Such indemnity may be against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action,
suit or proceeding, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or proceeding, the
person did not have reasonable cause to believe the person's conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor because the person is or was a director or officer of the
corporation, against any expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation.
Section 145(g) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation
against any liability asserted against the person in any such capacity, or
arising out of the person's status as such, whether or not the corporation would
have the power to indemnify the person against such liability under the
provisions of the law.
Our bylaws and certificate of incorporation provide for the mandatory
indemnification of our directors and officers, and to the extent authorized by
the board of directors, Our employees and other agents, to the maximum extent
permitted by Delaware Corporation Law, and we have entered into agreements with
our officers, directors and certain key employees implementing such
indemnification.
II-1
<PAGE> 21
ITEM 16. EXHIBITS
5.1* Opinion of Sharon Le Duy, Vice President - Legal and Business Affairs.
23.1* Consent of KPMG LLP.
23.2* Consent of Sharon Le Duy, Vice President - Legal and Business Affairs
(included in the opinion of Ms. Le Duy filed as Exhibit 5.1).
24.1 Power of Attorney (included on page II-3 of this registration
statement).
-------
* Previously filed.
ITEM 17. UNDERTAKINGS
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; (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; and (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.
(2) That, for the purposes 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.
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 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 controlled person of the registrant in the
successful defense of any 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 of 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.
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
Exchange Act, and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act, that is
incorporated by reference in this 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.
II-2
<PAGE> 22
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 San Francisco, State of California, on this the
13th day of September, 2000.
By: /s/ Shelby W. Bonnie
------------------------------------
Name: Shelby W. Bonnie
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Shelby W. Bonnie and Douglas N. Woodrum
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his 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 documents in connection therewith, with the
Securities and Exchange Commission, 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, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in- fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
This power of attorney may be executed in counterparts.
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 and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Halsey M. Minor Chairman of the Board September 13, 2000
-----------------------------------
Halsey M. Minor
/s/ Shelby W. Bonnie Chief Executive Officer September 13, 2000
-----------------------------------
Shelby W. Bonnie
/s/ Richard M. Marino President September 13, 2000
-----------------------------------
Richard M. Marino
/s/ Douglas N. Woodrum Director, Executive Vice President September 13, 2000
----------------------------------- and Chief Financial Officer
Douglas N. Woodrum
/s/ John C. "Bud" Colligan Director September 13, 2000
-----------------------------------
John C. "Bud" Colligan
/s/ Mitchell Kertzman Director September 13, 2000
-----------------------------------
Mitchell Kertzman
/s/ Eric Robinson Director September 13, 2000
-----------------------------------
Eric Robinson
/s/ David P. Overmyer Senior Vice President, Finance and September 13, 2000
----------------------------------- Administration (Principal
David P. Overmyer Accounting Officer)
</TABLE>
II-3
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5.1* Opinion of Sharon Le Duy, Vice President - Legal and Business
Affairs.
23.1* Consent of KPMG LLP.
23.2* Consent of Sharon Le Duy, Vice President - Legal and Business
Affairs (included in the opinion of Ms. Le Duy filed as Exhibit
5.1).
24.1 Power of Attorney (included on page II-3 of this registration
statement).
</TABLE>
-------
* Previously filed.
