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Filed Pursuant to Rule 424(b)(3)
File No. 333-86731
PROSPECTUS
5,323,914 SHARES
MESSAGEMEDIA, INC.
COMMON STOCK
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The Selling Securityholders identified in this Prospectus are selling
5,325,154 shares of our common stock. These shares may be offered from time to
time by the Selling Securityholders through public or private transactions, on
or off the Nasdaq National Market, at prevailing market prices or at privately
negotiated prices. The Selling Securityholders will receive all of the proceeds
from the sale of the shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the shares. We will pay the
expenses of registration of the sale of the shares.
Our common stock is currently traded on The Nasdaq National Market
under the symbol "MESG." On September 23, 1999, the last reported sales price of
a share of MessageMedia common stock on The Nasdaq National Market was $11.44
per share.
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INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
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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 24, 1999.
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THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SEC. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE 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 IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
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 the documents we file at
the SEC's public reference room in Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the SEC's regional offices located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request
copies of these documents by writing to the SEC and paying a fee for the copying
cost. 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 at no
cost from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information that 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 information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act"):
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
3. Quarterly Report on Form 10-Q for the quarter ended June 30,
1999;
4. Current Reports on Form 8-K filed with the SEC on December 23,
1998 (as amended on February 19, 1999), April 5, 1999 and
August 24, 1999;
5. The description of our common stock set forth in our
Registration Statement on Form 8-A, dated November 19, 1996;
and
6. Definitive Proxy Statement dated April 28, 1999 for the 1999
annual meeting of stockholders held on May 28,1999.
On December 16, 1998 we changed our name from First Virtual Holdings
Incorporated to MessageMedia, Inc. All filings made with the SEC prior to
December 23, 1998 may be located using either "First Virtual Holding
Incorporated" or "First Virtual Holdings Incorporated" as our company name.
You may request a copy of these filings at no cost by writing or
calling us, or you may view a copy by visiting our website, each at the
following address:
MessageMedia, Inc.
6060 Spine Road
Boulder, Colorado 80301
Attn: Investor Relations
(303) 440-7550
http://www.messagemedia.com
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THE COMPANY
MessageMedia, Inc. provides a seamless outsource solution for
relationship-based, transactive communications using Internet e-mail. Termed
"e-messaging," this personalized sales, marketing and service channel creates
new revenue and servicing opportunities, while cutting the cost of interacting
with a large number of customers. The suite of messaging services allows clients
to easily control each step in the messaging process and provides a flexible
range of messaging options to suit every communications need. E-messages can be
personalized and carefully targeted to segments of selected recipients based on
multiple criteria. The result is a richer relationship between company and
consumer. In addition, the enhanced customer loyalty leads to retention and
repetition of contact with the customer leading to lower operating costs,
improved service levels and higher revenue generation per client.
MessageMedia consists of five e-mail related companies, First Virtual
Holdings Inc., Email Publishing Inc. ("EPub"), Distributed Bits, L.L.C.
("DBits"), Revnet Systems, Inc. and Decisive Technology Corporation,
consolidated into a single, combined company that offers a comprehensive suite
of outsource e-messaging services and capabilities. The combined company is a
member of the family of companies funded and supported by SOFTBANK Holdings Inc.
and its affiliates. Our singular focus is on e-messaging and we employ advanced
technology, tools and applications to help corporations fully utilize this new
channel for building and enhancing customer relationships online.
MessageMedia, DecisionSource, EnterpriseView, ResponseNow, Revnet,
UnityMail and our logo are among the trademarks or service marks owned by us,
and First Virtual(R) and MailKing(R) are among the registered marks owned by us.
This prospectus also makes reference to trademarks of other companies which are
the property of their respective owners.
Our principal executive offices are located at 6060 Spine Road,
Boulder, Colorado 80301 and our telephone number is (303) 440-7550. Our Web site
address is "www.messagemedia.com." Information contained on our Web site does
not constitute part of this prospectus.
RISK FACTORS
Except for the historical information contained or incorporated by
reference herein, this Prospectus (and the information incorporated herein by
reference) contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed
here or incorporated by reference. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the
following section, as well as those discussed elsewhere in this Prospectus and
in any other documents incorporated herein by reference.
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones we face. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially and adversely
affected. In that case, the trading price of our common stock could decline, and
you may lose all or part of your investment.
WE HAVE A HISTORY OF OPERATING LOSSES AND FUTURE LOSSES ARE LIKELY.
We have incurred net losses applicable to common shares of
approximately $43.7 million from our inception in March 1994 through December
31, 1998, approximately $13.8 million for the year ended December 31, 1998 and
approximately $13.2 million for the six month period ended June 30, 1999. As of
June 30, 1999, our accumulated deficit was approximately $56.9 million. We have
not achieved profitability and expect to continue to incur operating losses at
least into 2001. We intend to continue to invest heavily in acquisitions,
infrastructure development and marketing. Accordingly, we expect to continue to
incur significant operating and capital expenditures and, as a result, we will
need to generate significant revenue to achieve and maintain profitability.
Although our revenue has grown in recent quarters, we cannot assure you that we
will achieve sufficient revenue for profitability. Even if we do achieve
profitability, we cannot assure you that we can sustain or increase
profitability on a quarterly or annual basis in the future. If revenue grows
slower than we anticipate, or if operating expenses
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exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.
OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY AND RECENTLY HAVE CHANGED OUR BUSINESS MODEL.
We were incorporated in March 1994 for the purpose of developing an
Internet payment system. In 1998 we changed our business model to focus
exclusively on providing e-messaging solutions and acquired two e-messaging
companies, Epub and Dbits. In August 1999, we acquired two additional
e-messaging companies, Revnet Systems and Decisive Technology. An investor in
our common stock must consider the risks and difficulties frequently encountered
by early stage companies in new and rapidly evolving markets, including the
Internet e-messaging market. These risks include our:
o ability to sustain historical revenue growth rates;
o need to manage our expanding operations;
o need to successfully integrate our recent and any future
acquisitions;
o competition;
o ability to attract, retain and motivate qualified personnel;
o ability to maintain our current, and develop new, strategic
relationships;
o ability to anticipate and adapt to the changing Internet market;
and
o ability to attract and retain a large number of customers from a
variety of industries.
We also depend on the growing use of the Internet for marketing,
advertising, commerce and communication. We cannot assure you that our business
strategy will be successful or that we will successfully address these risks.
OUR MARKETS ARE RELATIVELY NEW AND UNPROVEN AND OUR SUCCESS DEPENDS ON MARKET
ACCEPTANCE AND THE EFFECTIVENESS OF OUR E-MESSAGING SERVICES.
Demand and market acceptance for Internet e-messaging solutions is
uncertain. Our future success is highly dependent on an increase in the use of
the Internet as a marketing, advertising and communications medium. The adoption
of Internet e-messaging, particularly by those entities that historically have
relied upon traditional media for marketing and advertising, requires the
acceptance of a new way of conducting business, exchanging information and
marketing products and services. Many of our current or potential e-messaging
customers have little or no experience using the Internet for marketing and
advertising purposes and they have allocated only a limited portion of their
budgets to Internet e-messaging. Moreover, our customers may find Internet
e-messaging to be less effective for promoting their products and services
relative to traditional marketing and advertising media. If the messaging
platform fails to meet customers' demands, the use of our e-messaging services
may decline over time and our business would suffer.
WE ADOPTED OUR CURRENT BUSINESS MODEL IN THE FOURTH QUARTER OF 1998 AND ITS
PROFIT POTENTIAL IS UNCERTAIN.
The profit potential for our business model, which is to generate
revenue solely by providing Internet e-messaging solutions to our customers, is
unproven. To be successful, both Internet marketing and our future and current
service offerings, including information distribution, e-mail marketing,
e-customer care, e-commerce messaging and e-surveys, will need to achieve broad
market acceptance. Our ability to generate significant revenue will depend, in
part, on our ability to contract with a sufficient number of customers. The
intense competition among Internet e-messaging companies has led to the creation
of a number of pricing alternatives for Internet e-messaging solutions. These
alternatives make it difficult for us to project future levels of revenue and
applicable gross profit that can be sustained by us or the Internet e-messaging
industry in general.
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WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE EPUB, DBITS, REVNET SYSTEMS AND
DECISIVE TECHNOLOGY OR FUTURE ACQUISITIONS.
In December 1998, we acquired Epub and Dbits and in August 1999 we
acquired Revnet Systems and Decisive Technology. As a result, companies that had
previously operated independently and with distinct business models must now
work together. The integration will require significant effort from our
personnel and the personnel of the acquired companies who are now our employees.
We may not be able to profitably consolidate these businesses.
The following risks are common to the integration of different
companies, and may be associated with recent or future acquisitions, including
the recent acquisitions of Revnet Systems and Decisive Technology:
o the difficulty of incorporating new operations, technology and
personnel into one company;
o the potential effects on operating results from increases in
goodwill amortization, acquired in-process technology, stock
compensation expense and increased compensation expense resulting
from newly hired employees;
o the diversion of management attention from other aspects of our
business;
o the potential disruption of our ongoing business;
o the potential reduction of the value of our e-messaging solutions
or reputation if an acquired company turns out to be a poor
performer;
o the maintenance of uniform standards, controls, procedures and
policies;
o the potential of disputes with the sellers of one or more acquired
entities;
o the possible failure to retain key acquired personnel;
o the assumption of most or all of the liabilities of the acquired
companies, some of which may be hidden, significant or not
reflected in the final acquisition price; and
o the impairment of relationships with employees and customers.
As part of our business strategy, we intend to focus on acquiring, or
making significant investments in, additional companies, products and
technologies that complement our business. The successful implementation of this
strategy depends on our ability to identify suitable acquisition candidates,
acquire those companies on acceptable terms and integrate their operations
successfully with our business. If we make additional acquisitions, we could
have difficulty in assimilating the acquired products, services or technologies
into our operations. These difficulties could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our results of operations. Furthermore, we may incur debt or issue equity
securities to pay for any future acquisitions. The issuance of equity securities
could be dilutive to our existing stockholders.
OUR FAILURE TO ENHANCE OUR EXISTING PRODUCTS AND INTRODUCE NEW PRODUCTS ON A
TIMELY BASIS COULD CAUSE OUR REVENUE TO FALL.
We are continually developing significant enhancements for our
e-messaging services and products. Any delay or difficulty associated with the
introduction of these enhancements could significantly harm our business,
results of operations and financial condition. We also may not be able to
develop the underlying core technologies necessary to create new products or
enhancements, or to license those products from third parties.
WE NEED TO ATTRACT AND RETAIN QUALIFIED PERSONNEL AND MAY NOT BE ABLE TO DO SO.
Our success depends on the continued service of our key senior
management personnel, in particular, A. Laurence Jones, our Chief Executive
Officer. The loss of any member of our senior management team could have a
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material adverse effect on our future operating results. Our future success also
depends on our continuing to attract, retain and motivate highly skilled
employees. We face significant competition for individuals with the skills and
experience required to perform in required roles and may not be able to attract
or retain such individuals in the future. Our management team is new and may not
be able to function effectively.
OUR MANAGEMENT TEAM HAS ONLY WORKED TOGETHER FOR A SHORT PERIOD OF TIME AND MAY
NOT WORK WELL TOGETHER.
Virtually all of our executive officers, including our Chief Executive
Officer, Vice President of Sales and Marketing and Vice President of Mergers and
Acquisitions, have joined our company in 1999. Due to the fact that many of our
executive officers are new to our company and never have worked together, our
management may not be able to function effectively, individually or as a team.
WE ANTICIPATE FLUCTUATIONS IN OUR FUTURE OPERATING RESULTS.
We expect that our future operating results will fluctuate
significantly. These fluctuations may be due to a number of factors, many of
which are beyond our control. Some of the factors that may cause fluctuations
include the following:
o Market response to our e-messaging services;
o Difficulties in the development or deployment of new messaging
products or services;
o The timing and rate at which we increase our expenses to support
projected growth;
o Fluctuating market demand for our products and services;
o The degree of acceptance of the Internet as a medium for
communicating with customers;
o Product introductions and service offerings by our competitors;
o The mix of the products and services provided by us; and
o The cost of compliance with applicable government regulations,
including anti-SPAM legislation.
Our revenue for the foreseeable future will remain dependent on
e-messaging activity, the fees that we charge for our services and license fees
for software products. These future revenues are difficult to forecast. In
addition, we plan to significantly increase our operating expenses to increase
our sales and marketing operations, to upgrade and enhance our e-messaging
solutions and to market and support our solutions. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. If we have a
shortfall in revenue in relation to our expenses, or if our expenses precede
increased revenue, then our business, results of operations and financial
condition would be materially and adversely affected. This would likely affect
the market price of our common stock in a manner which may be unrelated to our
long-term operating performance.
We believe that marketing and advertising sales in traditional media,
such as television and radio, generally are lower in the first calendar quarter
of each year. Seasonal or cyclical patterns may develop in our industry if our
market makes the transition from an emerging to a more developed medium. Our
revenue may also be affected by seasonal and cyclical patterns in Internet
e-messaging spending if they emerge.
We believe that period-to-period comparisons of our operating results
are not meaningful and should not be relied upon as an indication of our future
performance. Due to the factors we have listed above and other factors, it is
likely that our future operating results will at times not meet the expectations
of market analysts or investors. If our operating results fail to meet
expectations, the price of our common stock could fall.
WE NEED TO EFFECTIVELY MANAGE OUR GROWTH.
An effective planning and management process is required to
successfully implement our business plan in the rapidly evolving market for
Internet e-messaging. We continue to increase the scope of our operations, and
we
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have grown our workforce substantially. As of January 1, 1995, we had 5
employees and, as of August 17, 1999, we had 208 employees. In addition, we plan
to continue to expand our sales and marketing and service offerings. This growth
has placed, and our anticipated future growth in our operations will continue to
place, a significant strain on our management systems and resources. We expect
that we will need to continue to improve our financial and managerial controls
and reporting systems and procedures, and will need to continue to expand, train
and manage our workforce. Our future performance also may depend on the
effective integration of acquired businesses. Such integration, even if
successful, may take a significant period of time and expense, and may place a
significant strain on our resources. We recently relocated a computer processing
center from San Diego, California to a facility in Colorado. Our business,
results of operations and financial condition will be materially and adversely
affected if we are unable to effectively manage our expanding operations or the
relocation of our computer processing center.
WE DEPEND ON THIRD-PARTY PROVIDERS OVER WHOM WE HAVE NO CONTROL TO OPERATE OUR
MESSAGING PLATFORM.
We depend heavily on several third-party providers of Internet and
related telecommunication services, including hosting and co-location companies,
in operating our messaging platform. These companies may not continue to provide
services to us without disruptions in service, at the current cost, or at all.
Although we believe that we could obtain these services from other sources if
need be, the costs associated with any transition to a new service provider
would be substantial, requiring us to reengineer our computer systems and
telecommunications infrastructure to accommodate a new service provider. This
process would be both expensive and time-consuming.
In addition, failure of our Internet and related telecommunications
providers to provide the data communications capacity in the time frame required
by us could cause interruptions in the services we provide. Despite precautions
taken by us, unanticipated problems affecting our computer and
telecommunications systems in the future could cause interruptions in the
delivery of our e-messaging services, causing a loss of revenue and potential
loss of customers.
WE RELY ON A FEW CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUE.
A significant portion of our revenues are generated by a limited number
of customers. We expect that we will continue to depend on large contracts with
a small number of significant customers. This situation can cause our revenue
and earnings to fluctuate between quarters based on the timing of contracts.
None of our customers has any obligation to purchase additional products or
services from us. Consequently, if we fail to develop relationships with
significant new customers, our business and financial condition will suffer.
COMPETITION IN OUR INDUSTRY IS INTENSE.
We know of no competitor that offers the full range of solutions
provided by us. However, the market for our products and services is intensely
competitive. There are no substantial barriers to entry into our business, and
we expect that established and new entities will enter the market for
e-messaging services and interactive Internet communications in the near future.
Our principal competitors in the e-messaging services arena include
24x7, Inc., Axciom, Inc., Cyber Data Systems, Inc., DoubleClick, Inc., eGain
Communications Corporation, EmailChannel, Inc., Exactis.com, Inc., Experian,
Inc., Kana Communications, Inc., MarketHome, Inc., MatchLogic, Inc., Mustang
Software, Inc., NetCreations, Inc., PostX Corporation and ReplyNet, Inc. We also
compete with BroadVision, Inc., Digital Impact, E-Care Group and Mypoints.com,
Inc. for one-to-one marketing.
We may experience additional competition from Internet service
providers, or ISPs, and other large established businesses that enter the market
for e-messaging services. Companies such as ADVO Inc., America Online, Inc.,
AT&T, IBM Corporation, Harte-Hanks, Inc., Hewlett-Packard Company, Integrion
Financial Network LLC, The Interpublic Group of Companies, Inc., Microsoft
Corporation, Netscape Communications and Foote Cone & Belding, some of whom are
current clients of ours, which possess large, existing customer bases,
substantial financial resources and established distribution channels could
develop, market or resell a number of messaging services.
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The Internet, in general, and our e-messaging solutions, in particular,
also must compete for a share of advertisers' total advertising budgets with
traditional advertising media such as television, radio, cable and print.
Consequently, we compete with advertising and direct marketing agencies. To the
extent that e-messaging is perceived to be a limited or ineffective advertising
medium, companies may be reluctant to devote a significant portion of their
advertising budget to our e-messaging solutions, which could limit the growth of
e-messaging and would negatively effect our business.
We also expect that competition may increase as a result of industry
consolidation. Potential competitors may choose to enter the market for
e-messaging services by acquiring one or more of our existing competitors or by
forming strategic alliances with such competitors. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our potential e-messaging
customers. Accordingly, it is possible that new competitors or alliances may
emerge and rapidly acquire significant market share. Increased competition is
likely to result in price reductions, reduced gross margins and loss of market
share, any of which would have a material adverse effect on our business,
results of operations and financial condition. We also may experience
competition from internal information systems and development groups of our
current and prospective clients that have better access to senior management.
Many of our current and potential competitors have longer operating
histories, greater name recognition, larger customer bases, more diversified
lines of products and services and significantly greater resources than we do.
These competitors may be able to undertake more extensive marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to
potential customers. In addition, many of our current or potential competitors
have broad distribution channels that may be used to bundle competing products
or services directly to end-users or purchasers. If these competitors bundle
competing products or services for their customers, the demand for our products
and services could substantially decline. As a result of the above factors, we
cannot assure you that we will compete effectively with current or future
competitors or that competitive pressures will not have a material adverse
effect on our business, financial condition and results of operations.
THE MARKETS FOR OUR PRODUCTS ARE UNDEVELOPED AND RAPIDLY CHANGING, WHICH MAKES
AN INVESTMENT IN OUR COMPANY RISKY.
The Internet and Internet e-messaging markets are characterized by
rapidly changing technologies, evolving industry standards, frequent new product
and service introductions, changing customer demands and increasing numbers of
services providers. Our products and services are designed around current
technical standards and our revenue depends on continued industry acceptance of
these standards. While we intend to provide compatibility with the most popular
industry standards, widespread adoption of a proprietary or closed standard
could prevent us from doing so. The standards on which our products and services
are or will be based may not be accepted by the industry.
New market entrants have introduced or are developing products and
services for use on the Internet and the World Wide Web that compete with our
products. The products, services or technologies developed by others may render
our products and services noncompetitive or obsolete. Accordingly, our future
success will depend on our ability to adapt to rapidly changing technologies and
to enhance existing solutions and develop and introduce a variety of new
solutions to address new industry standards and our customers' changing demands.
We may experience difficulties that could delay or prevent the successful
design, development, introduction or marketing of our solutions. In addition,
our new solutions or enhancements must meet the requirements of our current and
prospective customers and must achieve significant market acceptance. Material
delays in introducing new solutions and enhancements may cause customers to
forego purchases of our solutions and purchase those of our competitors.
The degree to which our messaging platform is accepted and used in the
marketplace will depend on continued growth in the use of e-mail as a primary
means of communications by businesses and consumers. An increase in the use of
e-messaging also will depend on market acceptance of e-mail as a method for
targeted marketing of products and services. Our ability to successfully
differentiate our services from random mass e-mailing products and services
which have encountered substantial resistance from consumers will also be
important. Businesses that already have invested substantial resources in
traditional or other methods of conducting business may be reluctant to adopt
new commercial methods or strategies that may limit or compete with their
existing
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businesses. Individuals with established patterns of purchasing goods and
services may be reluctant to alter those patterns.
WE FACE RISKS OF DEFECTS AND DEVELOPMENT DELAYS IN OUR PRODUCTS AND SERVICES.
Products and services based on sophisticated software and computing
systems often encounter development delays. Our underlying software may contain
hidden errors and failures when introduced or when usage increases. It is
possible that we may experience delays in the development of the software and
computing systems underlying our services. Despite testing that our clients and
we conduct, we may not locate errors if they occur. Also, we may experience
development delays. These occurrences could harm our reputation and revenue
growth.
IF CURRENT GROWTH RATES CONTINUE, THE CAPACITY OF OUR SOFTWARE OR HARDWARE COULD
BE STRAINED, LEADING TO SLOWER RESPONSE TIMES OR SYSTEM FAILURES.
If the volume of messages that our systems process significantly
increases, the capacity of our software or hardware could be strained. This
could lead to slower response time or system failures. We have made and intend
to continue to make substantial investments to increase our server capacity by
adding new servers and upgrading our software as necessary. However, our
products and services may not be able to meet the growing demand as the number
of World Wide Web and Internet users increases. We also depend, as do our
customers, on Web browsers, e-mail clients and Internet and online service
providers for access to our services. Some users of our services have
experienced difficulties due to system failures unrelated to our system,
products or services. If we cannot effectively address these capacity
constraints, our business and financial condition could be materially and
adversely affected.
THE SUCCESS OF OUR MESSAGING PLATFORM DEPENDS ON INCREASED USAGE AND THE
STABILITY OF THE INTERNET.
Our success will depend, in large part, upon the maintenance of the
Internet infrastructure, such as a reliable network backbone with the necessary
speed, data capacity and security, and timely development of enabling products
such as high speed modems, for providing reliable Internet access and services
and improved content. We cannot assure you that the Internet infrastructure will
continue to effectively support the demands placed on it as the Internet
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users. Even if the necessary infrastructure
or technologies are developed, we may have to spend considerable amounts to
adapt our solutions accordingly. Furthermore, the Internet has experienced a
variety of outages and other delays due to damage to portions of its
infrastructure. Any future outages or delays could impact the Internet sites of
customers using our solutions.
We believe that the future of the Internet as a center for commerce
will depend in significant part on the following factors:
o Continued rapid growth in the number of households and commercial,
educational and government institutions with access to the
Internet;
o The level of usage by individuals;
o The number and quality of products and services designed for use on
the Internet; and
o Expansion of the Internet infrastructure.
The degree to which e-mail will become a common method of communication
depends on the extent that users increasingly prefer e-mail over traditional
means of communication. The growth of e-mail also depends on widespread access
to reliable and affordable e-mail services by individuals, businesses and other
organizations. Because usage of the Internet as a medium for on-line exchange of
information, advertising, merchandising and entertainment is a recent
phenomenon, it is difficult to predict whether the number of users drawn to the
Internet will continue to increase and whether any significant market for our
e-messaging platform, or any substantial commercial use of the Internet, will
develop. We cannot assure you that Internet usage patterns, and reliance on
e-mail communication in particular, will continue to grow and will not decline
as the newness of this method of communication wears off. It also is uncertain
whether the cost of Internet access will decrease. If either the Internet
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or e-mail communication fails to achieve increased acceptance and does not
become accessible to a broad audience at moderate costs, the market for our
products and services will be jeopardized. The success of our business also
depends on a significant expansion of the Internet infrastructure to provide
adequate Internet access and proper management of Internet traffic.
ANY SYSTEM FAILURE MAY HARM OUR BUSINESS OR REPUTATION.
The continuing and uninterrupted performance of our computer systems
and our customers' computer systems is critical to our ability to provide
outsourced services. Sustained or repeated system failures would reduce the
attractiveness of our solutions to our customers and could harm our business
reputation. Slower response time or system failures may also result from
straining the capacity of our deployed software or hardware due to an increase
in the volume of e-messaging delivered through our servers. To the extent that
we do not effectively address any capacity constraints or system failures, our
business, results of operations and financial condition would be materially and
adversely affected.
Our operations are dependent on our ability to protect our computer
systems against damage from fire, power loss, water damage, telecommunications
failures, vandalism, infection by computer viruses, other malicious acts and
similar unexpected adverse events. In addition, interruptions in our solutions
could result from the failure of our Internet and related telecommunications
providers to provide the necessary data communications capacity in the time
frame we require. Despite precautions we have taken, unanticipated problems
affecting our systems have from time to time in the past caused, and in the
future could cause, interruptions in the delivery of our solutions. Most of our
back-end systems for disaster recovery presently are redundant and we expect all
of our back-end systems to be fully redundant by December 1, 1999. Our business,
results of operations and financial condition could be materially and adversely
affected by any damage or failure that interrupts or delays our operations.
WE FACE SECURITY RISKS AND POTENTIAL LIABILITY ASSOCIATED WITH MISAPPROPRIATION
OF CONFIDENTIAL INFORMATION.
We currently retain highly confidential customer information in a
secure database server. We cannot assure you, however, that we will be able to
prevent unauthorized individuals from gaining access to this database server.
Any unauthorized access to our servers could result in the theft of confidential
customer information such as e-mail addresses. It also is possible that one of
our employees could attempt to misuse confidential customer information,
exposing us to liability. We use disclaimers and limitation of warranty
provisions in our client agreements in an attempt to limit our liability to
clients, including liability arising out of systems failure. However, such
provisions may not be enforceable or effective in limiting our exposure to
damage claims.
OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE TO COMPENSATE US FOR ALL POTENTIAL
LOSSES.
Although we carry insurance, which we believe to be adequate, the
coverage it provides may not be adequate to compensate us for all losses that
may occur. We are in the process of taking precautions to protect both our
company and our customers from events that could interrupt delivery of our
products and services or that could result in a loss of transaction or customer
data. However, these measures will not eliminate a significant risk to our
operations from a natural disaster or systems failure. We cannot guarantee that
these measures would protect the company from an organized effort to inundate
our servers with massive quantities of e-mail or other Internet message traffic
which could overload our systems and result in a significant interruption of
service. Our business interruption insurance would not fully compensate us for
lost revenue, income, additional costs or increased costs that we would
experience during the occurrence of any disruption of our computer systems. We
cannot guarantee that we will be able to obtain sufficient coverage on
reasonable terms or at all in the future.
OUR MEANS OF PROTECTING OUR PROPRIETARY RIGHTS MAY BE INADEQUATE AND OUR
COMPETITORS MAY DEVELOP SIMILAR TECHNOLOGY.
We rely on a combination of trade secret, copyright and trademark laws,
nondisclosure agreements, and other contractual provisions and technical
measures to protect our proprietary rights. We believe that, due to the rapid
pace of technological innovation for Internet products, our ability to establish
and maintain a position of technology leadership in the industry depends more on
the skills of our development personnel than upon the legal protections afforded
our existing technology. Trade secret, copyright and trademark protections may
not be
9
<PAGE> 11
adequate to safeguard the proprietary software underlying our products and
services. We may not have adequate remedies for any breach and our trade secrets
may otherwise become known. Competitors may be able to develop functionally
equivalent e-messaging technologies without infringing any of our intellectual
property rights. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use products or
technology that we consider proprietary, and third parties may attempt to
develop similar technology independently. In addition, effective protection of
intellectual property rights may be unavailable or limited in certain countries.
Accordingly, our means of protecting our proprietary rights may not be adequate
and our competitors may independently develop similar technology.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation. In
addition, we currently license certain software and communication systems from
third parties. Our failure to maintain these licenses, or to find replacements
for such technology in a timely and cost-effective manner, could have a material
adverse effect on our business, results of operations and financial condition.
WE HAVE IN THE PAST, AND MAY IN THE FUTURE, BECOME INVOLVED IN PATENT
INFRINGEMENT CLAIMS WHICH RESULT IN A SIGNIFICANT DRAIN ON OUR RESOURCES AND
PREVENT OUR MANAGEMENT TEAM FROM FOCUSING ON MORE PROFITABLE TASKS.
As the volume of Internet commerce increases, and the number of
products and service providers that support Internet commerce increases, we
believe that Internet commerce technology providers may become increasingly
subject to infringement claims. We have been subject to claims of alleged
infringement of intellectual property rights in the past, and may become
involved in additional claims in the future. For example, on October 19, 1998,
Exactis.com, Inc. filed a complaint against our subsidiary Epub in the Federal
District Court of Colorado. The complaint alleges infringement of a patent held
by Exactis.com, Inc. The complaint seeks injunctive relief and unspecified
damages. Any such claims, with or without merit, could be time consuming, result
in costly litigation, disrupt or delay the enhancement or shipment of our
products and services or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable or favorable to us, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, we may initiate claims or litigation against third parties
for infringement of our proprietary rights or to establish the validity of our
proprietary rights. On October 29, 1998, we filed a complaint in the U.S.
District Court for the Southern District of California against Exactis.com, Inc.
The complaint alleges infringement of a patent held by us and seeks injunctive
relief and unspecified damages. Litigation to determine the validity of any
claims could result in significant expense to us and divert the efforts of our
technical and management personnel from productive tasks, whether or not such
litigation is determined in our favor. In addition, patent litigation such as
the Exactis.com, Inc. lawsuit often gives rise to counterclaims by the
defendants, which could include challenges to the validity of patents held by
us. In the event of an adverse ruling in any such litigation, we may be required
to pay substantial damages, discontinue the use and sale of infringing products,
expend significant resources to develop non-infringing technology or obtain
licenses to infringing technology. Our failure to develop or license a
substitute technology could have a material adverse effect on our business.
IN THE FUTURE, WE MAY BE SUBJECT TO INCREASED GOVERNMENT REGULATION.
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. We believe that we are not
currently subject to direct regulation by any government agency in the United
States, other than regulations that are generally applicable to all businesses
and newly enacted
10
<PAGE> 12
laws prohibiting unsolicited commercial e-mail, or spam, or laws intended to
protect minors. A number of legislative and regulatory proposals are under
consideration by federal and state lawmakers and regulatory bodies and may be
adopted with respect to the Internet. Some of the issues that such laws or
regulations may cover include user privacy, obscenity, fraud, pricing and
characteristics and quality of products and services. The adoption of any such
laws or regulations may decrease the growth of the Internet, which could in turn
decrease the projected demand for our products and services or increase our cost
of doing business. Moreover, the applicability to the Internet of existing U.S.
and international laws governing issues such as property ownership, copyright,
trade secret, libel, taxation and personal privacy is uncertain and developing.
Any new legislation or regulation, or application or interpretation of existing
laws, could have a material adverse effect on our business.
OUR STOCK PRICE HAS BEEN VOLATILE IN THE PAST AND MAY BE VOLATILE IN THE FUTURE,
REGARDLESS OF OUR ACTUAL OPERATING PERFORMANCE.
The stock market in general, and Internet companies in particular,
including our company, have experienced extreme price and volume fluctuations
that often have been unrelated or disproportionate to operating performance. The
trading prices of many Internet companies' stocks are at or near historical
highs and these trading prices and price to earnings multiples are substantially
above historical levels. These trading prices and multiples may not be
sustained. Broad market and industry factors may reduce our stock price,
regardless of our actual operating performance. In addition, the trading price
of our common stock could fluctuate in response to factors such as:
o quarterly fluctuations in our revenue and financial results both in
absolute terms and relative to analyst and investor expectations;
o changes in recommendations of securities analysts;
o announcements of technological innovations or new services or
products;
o publicity regarding actual or potential results with respect to
technologies, services or products under development;
o disputes or other developments concerning proprietary rights,
including copyright and litigation matters; and
o other events or factors, many of which are beyond our control.
In the past, companies that have experienced volatility in the market
price of their stock have been the object of securities class action litigation.
If we were the object of securities class action litigation, it could result in
substantial costs and a diversion of management's attention and resources.
POTENTIAL YEAR 2000 PROBLEMS WITH OUR INTERNAL OPERATING SYSTEMS COULD HARM OUR
BUSINESS.
Many computer systems and software products are coded to accept only
two-digit entries in date code fields. Beginning in the year 2000, 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 one year, computer
systems and/or software used by many companies may need to be upgraded to comply
with "year 2000" requirements. Since we just recently developed the software for
our messaging platform and are adding new enhancements and functionality
regularly, we believe that our messaging platform is year 2000 compliant. Coding
errors or other defects may be discovered in the future as more testing is
completed or new functionality added.
We rely on a number of software and communications systems provided by
third parties to operate our messaging platform. Any of these could contain
coding which is not year 2000 compliant. These systems include server software
used to operate the network servers, software controlling routers, switches and
other components of the data network, disk management software used to control
the data disk arrays, firewall, security, monitoring and back-up software used
by us, as well as desktop PC applications software. In each case, we employ
widely available software applications from leading third party vendors, and
expect that such vendors will provide any required upgrades or modifications in
a timely fashion. However, if any third party software or communication systems
11
<PAGE> 13
suppliers fail to provide year 2000 compliant versions of the software or system
components we rely upon, our operations, including our messaging platform, could
be disrupted. We have contacted and monitor each of our key suppliers to
validate their efforts to ensure that their software products and communication
systems are year 2000 compliant and will continue to do so throughout the course
of this process.
Year 2000 compliance problems also could undermine the general
infrastructure necessary to support our operations. For instance, we depend on
third-party ISPs to provide connections to the Internet and to customer
information systems. Any interruption of service from ISPs could result in a
temporary interruption of our e-messaging and other services. We have attempted
to address this risk by obtaining the same service capacity from multiple ISPs.
In addition, we rely on two third-party data centers to house some servers and
communications systems. Any interruption in the security, access, monitoring or
power systems at the third-party data centers could result in an interruption of
services. Moreover, it is difficult to predict what effects year 2000 compliance
problems will have on the integrity and stability of the Internet. If businesses
and consumers are not able to reliably access the Internet, or if the ISPs on
which we rely fail to provide us with uninterrupted service, our reputation
could be harmed and the demand for our services could decline, resulting in an
adverse impact to our business, financial condition and results of operations.
With respect to any particular customer, our ability to provide
services to that customer could be adversely affected if that customer fails to
ensure that its software systems are year 2000 compliant. Disruptions in the
information systems of significant customers could temporarily prevent such
customers from accessing or using the messaging platform, which could materially
affect our operating results. The messaging platform is designed to interface
with customer databases and communications systems to retrieve relevant
information from customers' electronic commerce systems or customer databases
and to allow customers to independently control certain features of the service,
including the content of transmitted messages. We cannot assess or control the
degree of year 2000 compliance in our customers' information systems. To address
the risk of disruptions in customer information systems, we designed our
messaging platform to include redundant manual control features which can be
used by such customers. Nevertheless, certain customers may elect to discontinue
use of the e-messaging services until their internal information technology
problems have been alleviated, which would adversely affect our business,
financial condition and results of operations. The spending patterns of current
or potential customers may be affected by year 2000 issues as companies expend
significant resources to correct or update their systems for year 2000
compliance. Because of these expenditures, our customers may have less money
available to pay for services, which could have a material adverse affect on our
business, financial condition and results of operations.
SUBSTANTIAL SALES OF OUR COMMON STOCK BY OUR LARGE STOCKHOLDERS COULD CAUSE OUR
STOCK PRICE TO FALL.
We have a limited number of stockholders that hold a large portion of
our common stock. To the extent our large stockholders sell substantial amounts
of our common stock in the public market, the market price of our common stock
could fall. Additionally, beginning in December 1999, after the expiration of
lock-up agreements entered into by certain of our stockholders, approximately an
additional 6,000,000 shares of our common stock will become freely tradable in
the public market.
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT OR DELAY A
CHANGE IN CONTROL OF OUR COMPANY AND MAY REDUCE THE MARKET PRICE OF OUR COMMON
STOCK.
Provisions in our charter documents may delay, defer or prevent a
change in control of our company that a stockholder may consider favorable, may
discourage bids for our common stock at a premium over the market price of our
common stock and may adversely affect the market price of our common stock and
the voting and other rights of the holders of our common stock. These provisions
include:
o authorizing the issuance of preferred stock without stockholder
approval;
o providing for a classified board of directors with staggered,
three-year terms;
o prohibiting cumulative voting in the election of directors;
12
<PAGE> 14
o requiring super-majority voting to effect certain amendments to our
certificate of incorporation and bylaws;
o limiting the persons who may call special meetings of stockholders;
and
o prohibiting stockholder actions by written consent.
Other provisions of Delaware law also may discourage, delay or prevent
someone from acquiring or merging with us.
OUR OFFICERS AND DIRECTORS AND THEIR AFFILIATES EXERCISE SIGNIFICANT CONTROL
OVER OUR COMPANY.
Our directors and executive officers, and certain of their affiliates,
individually and as a group, will be able to effectively control us and direct
our affairs and business, including any determination with respect to the
acquisition or disposition of assets by us, future issuances of common stock or
other securities by us, declaration of dividends on our common stock and the
election of directors. This concentration of ownership may also have the effect
of delaying, deferring or preventing a change in control of our company.
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.
This prospectus contains certain forward-looking statements that
involve risks and uncertainties. We use words such as "anticipate", "believe",
"expect", "future", "intend", "plan" and similar expressions to identify
forward-looking statements. These statements are only predictions. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Our actual
results could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us and described on
the preceding pages and elsewhere in this prospectus.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this prospectus
could have a material adverse effect on our business, operating results,
financial condition and stock price.
13
<PAGE> 15
SELLING SECURITYHOLDERS
We are registering for resale certain shares of MessageMedia common
stock, including shares of MessageMedia common stock issuable upon exercise of
certain warrants. The following table sets forth (i) the name of the Selling
Securityholders; (ii) the number and percent of shares of MessageMedia common
stock that the Selling Securityholders beneficially owned prior to the offering
for resale of any of the shares of MessageMedia common stock being registered
hereby; (iii) the number of shares of MessageMedia common stock that may be
offered for resale for the account of the Selling Securityholders pursuant to
this Prospectus (the "Resale Shares"); and (iv) the number and percent of shares
of MessageMedia common stock to be held by the Selling Securityholders after the
offering of the Resale Shares (assuming all of the Resale Shares are sold by the
Selling Securityholders). The term "Selling Securityholder" includes the
securityholders listed below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING (2)
------------------------- SHARES BEING --------------------------
SELLING SECURITYHOLDERS (1) NUMBER PERCENT (3) OFFERED NUMBER PERCENT (3)
- --------------------------- --------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Airhart, Ottis 2,150 * 2,150 - -
Bachmeyer, Randall C. (4) 75,334 * 32,326 43,008 *
Balch, James V. 25,805 * 25,805 - -
Bearden, Cheryl 345 * 345 - -
Brower, Kim 1,727 * 1,727 - -
Brown, David 7,168 * 7,168 - -
Buss, Chris 3,455 * 3,455 - -
Campbell, Gary & Simone 17,203 * 17,203 - -
Campbell, Simone 5,182 * 5,182 - -
Chaffin, Lana G. 4,301 * 4,301 - -
Clark, Jon & Judi 3,441 * 3,441 - -
Clark, Jon (5) 30,980 * 9,476 21,504 *
Claussen, Thomas V. 43,009 * 43,009 - -
Clayton, Gregory 14,623 * 14,623 - -
Clayton, James L. 1,508,296 3.0 1,508,296 - -
Cline, John W. 38,708 * 38,708 - -
Cohen Partnership 8,602 * 8,602 - -
Cohen, Gilbert & Patti 8,602 * 8,602 - -
Crabtree, Snellgrove & Rowe 1,491 * 1,491 - -
Croom, David & Chandara 5,735 * 5,735 - -
Croom, David 8,272 * 8,272 - -
Curtis, Richard A. & Kerri L. 8,602 * 8,602 - -
Davis, James 14,336 * 14,336 - -
Dewane, Edward 21,504 * 21,504 - -
DuMont, Jeanie 345 * 345 - -
Fletcher, June/June-Collier 34,407 * 34,407 - -
Foster, Daniel 691 * 691 - -
Harley, Rick 149,383 * 149,383 - -
Hoffman, Steve 5,873 * 5,873 - -
Holton, Thomas J. 17,203 * 17,203 - -
Hubbard, John (IRA) 17,203 * 17,203 - -
Jemison Investments 121,859 * 121,859 - -
JHF Holdings, Inc. 17,203 * 17,203 - -
Johnson, Stan 14,630 * 14,630 - -
Kimery, Kevin D. 18,637 * 18,637 - -
Lee, Michael T. 11,608 * 11,608 - -
Legacy Capital 64,151 * 64,151 - -
Little, Jim 10,892 * 10,892 - -
Lossett, James K. 106,661 * 106,661 - -
</TABLE>
14
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C>
Maurice, Desiree K. 3,708 * 3,708 - -
Mavar, Geoffrey P. 21,504 * 21,504 - -
McSorely, Joseph T. 8,602 * 8,602 - -
Mead, Marcus 23,421 * 23,421 - -
Mead, Matt 19,354 * 19,354 - -
Mead, Melia M. 19,353 * 19,353 - -
Momentum LLC 50,176 * 50,176 - -
Morgan, Mike 1,727 * 1,727 - -
Mountain Shade Devel. 8,602 * 8,602 - -
Obermann, David/Stacy 4,301 * 4,301 - -
Obermann, David 4,301 * 4,301 - -
Obermann, Stuart (6) 201,609 * 158,601 43,008 *
Outland, James K. 8,602 * 8,602 - -
Pizitz, Merritt 8,602 * 8,602 - -
Pizitz, Michael 8,602 * 8,602 - -
Pizitz, Richard 8,602 * 8,602 - -
Portrush Group LLC 43,009 * 43,009 - -
Reddick Family Trust 17,203 * 17,203 - -
Reddick, Troy 5,297 * 5,297 - -
Reed, James W. 8,602 * 8,602 - -
Renteria, Kristene 1,727 * 1,727 - -
Richgood Corp. 36,116 * 36,116 - -
Riggle, Robert 3,596 * 3,596 - -
Ritchie, Alan 25,805 * 25,805 - -
RNR Ventures LLC 52,686 * 52,686 - -
Rollow, Brad 17,203 * 17,203 - -
Sansom, Steven 18,637 * 18,637 - -
Sayler Jr., John "Jack" M. 8,602 * 8,602 - -
Spencer III, William 28,673 * 28,673 - -
Stein, Larry 86,017 * 86,017 - -
Straw, John 2,150 * 2,150 - -
Styslinger III, Lee 34,407 * 34,407 - -
Thames, Walter 20,263 * 20,263 - -
Thornton, Derek 27,956 * 27,956 - -
Thornton, Steve 55,911 * 55,911 - -
Vestal, Gib 6,451 * 6,451 - -
White, Sidney R. 3,211 * 3,211 - -
White, Sidney R. & Judith 8,602 * 8,602 - -
White, Sidney III 2,150 * 2,150 - -
White, Sidney Jr. 4,301 * 4,301 - -
White, William G. 2,150 * 2,150 - -
Wilkinson, Brent 5,527 * 5,527 - -
*
*
Almanori Limited 5,530 * 5,530 - -
Bering, Charles A. 1,231 * 1,231 - -
Berkowitz, Robert 1,726 * 1,726 - -
Bonham, Mark (7) 26,839 * 22,911 3,928 *
Bravo-Trudell, Christie 78 * 78 - -
Brizendine, Linda K. 1,167 * 1,167 - -
Bromm, Tom 67 * 67 - -
Cai, Julia 344 * 344 - -
Chang, Candice 196 * 196 - -
Chisholm, John 185,740 * 185,740 - -
Chisholm, John D. and Elda D. as JT 1,378 * 1,378 - -
TEN
</TABLE>
15
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
Chisholm, John, Sr. & John Dana as 2,107 * 2,107 - -
JT TEN
Conte, Francine R. 778 * 778 - -
Convergence Entrepreneurs Fund I, 16,590 * 16,590 - -
L.P.
Convergence Ventures I, L.P. 417,102 * 417,102 - -
Cooper, Alan 186 * 186 - -
Cusson, Carol A. 778 * 778 - -
David William Hanna Trust (8) 35,291 * 32,010 3,281 *
Duncan, David 4,375 * 4,375 - -
Ebesu, Dean 473 * 473 - -
Forman, Ed 254 * 254 - -
Geneva Group International 4,355 * 4,355 - -
Gnau, Geoffrey 157 * 157 - -
Goldstein, Steven H. 389 * 389 - -
Goodrich, Robert 778 * 778 - -
Hall Revocable Trust 27,650 * 27,650 - -
Hanna, John D. 1,944 * 1,944 - -
Hanna, Laurie 1,944 * 1,944 - -
Hanna, Molly K. 1,944 * 1,944 - -
Hanna, William J. 1,944 * 1,944 - -
Helix (PEI) Inc. 552,743 1.1 552,743 - -
Henry, George 12,501 * 12,501 - -
Higgins, Roger 2,559 * 2,559 - -
Hill, Christy 78 * 78 - -
Kallet, Michael 395 * 395 - -
K-H Investors (1996-A), L.P. 44,949 * 44,949 - -
K-H Investors (1997-A), L.P. 62,489 * 62,489 - -
La Rocca, Joseph T. 3,675 * 3,675 - -
Lyons, Mike 710 * 710 - -
McDonald, Robert J. 1,570 * 1,570 - -
Medearis, Mark A. 221 * 221 - -
Minnesota Private Equity Fund, L.P. 11,060 * 11,060 - -
Moran, Patricia 160 * 160 - -
Multinvest Limited 2,765 * 2,765 - -
Ngo, Martha 343 * 343 - -
Ornest, James 290 * 290 - -
Partech Europe Partners III C.V. 33,180 * 33,180 - -
Partech U.S. Partners III C.V. 179,726 * 179,726 - -
Parvest U.S. Partners II C.V. 55,300 * 55,300 - -
Peranich, David 853 * 853 - -
Perkins, Jack B. 1,214 * 1,214 - -
Robinson's Bay Partners 22,120 * 22,120 - -
Ruehle, Roger 389 * 389 - -
Russell, Robert A. 1,214 * 1,214 - -
Schroeder, Leslie 1,836 * 1,836 - -
Sison, John 338 * 338 - -
SOFTBANK Ventures, Inc. (9) 22,285,074 44.7 254,036 22,031,038 44.2%
T'ang Advisory Services Limited 7,863 * 7,863 - -
VLG Investments 1997 885 * 885 - -
Williams, Scott 518 * 518 - -
Wilmot, Robert W. 3,565 * 3,565 - -
Yap, Harvey 10,702 * 10,702 - -
William Blair & Company LLC 48,126 * 48,126 - -
------------
Total 5,323,914
</TABLE>
- ----------
* less than 1%
16
<PAGE> 18
(1) This table is based upon information supplied to us by the Selling
Securityholders.
(2) Assumes the sale of all of the Resale Shares.
(3) Applicable percentage of ownership is based on 49,916,098 shares of
MessageMedia common stock issued and outstanding on September 1,
1999, adjusted as required by rules promulgated by the SEC.
(4) Includes options to purchase 43,008 shares of MessageMedia common
stock that are exerciseable within sixty days.
(5) Includes options to purchase 21,504 shares of MessageMedia common
stock that are exerciseable within sixty days.
(6) Mr. Obermann is Vice President of Commercial Software Products of
MessageMedia. Includes options to purchase 43,008 shares of
MessageMedia common stock that are exerciseable within sixty days.
(7) Includes options to purchase 3,928 shares of MessageMedia common
stock that are exerciseable within sixty days.
(8) Includes options to purchase 3,281 shares of MessageMedia common
stock that are exerciseable within sixty days.
(9) SOFTBANK Ventures, Inc. is a wholly owned subsidiary of SOFTBANK
Corp. Includes 10,575,775 shares held of record by SOFTBANK America
Inc., a wholly owned subsidiary of SOFTBANK Holdings, Inc., which in
turn is a wholly-owned subsidiary of SOFTBANK Corp., 10,376,950
shares held of record by SOFTBANK Technology Ventures IV LP, an
affiliate of SOFTBANK Corp., 879,488 shares held of record by
Softven No. 2 Investment Enterprise Partnership, an affiliate of
SOFTBANK Corp., 254,036 shares held by SOFTBANK Ventures, Inc.,
which is wholly owned by SOFTBANK Corp., and 198,825 shares held of
record by SOFTBANK Technology Advisors Fund LP, an affiliate of
SOFTBANK Corp. SOFTBANK Ventures, Inc. is a wholly owned subsidiary
of SOFTBANK Corp. The shares do not include 487,975 shares owned
by Bradly Feld including options to purchase 6,667 shares of
MessageMedia common stock that are exerciseable within sixty days,
options to purchase 6,667 shares of MessageMedia common stock
that are exerciseable within sixty days and are held by Gary
Rieschel or options to purchase 6,667 shares of MessageMedia
common stock that are exerciseable within sixty days and are held by
Ronald Fisher. Messrs. Feld Rieschel and Fisher are three of
MessageMedia's Directors who are deemed to be affiliates of SOFTBANK
Corp. and its affiliates. Messrs. Feld Rieschel and Fisher disclaim
the beneficial ownership of the shares of MessageMedia common stock
that are held by SOFTBANK Corp. and its affiliates.
17
<PAGE> 19
PLAN OF DISTRIBUTION
The Resale Shares may be sold from time to time by the Selling
Securityholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The Selling Securityholders may offer their Resale Shares in
one or more of the following transactions:
o On any national securities exchange or quotation service on
which the MessageMedia common stock may be listed or quoted at
the time of sale, including The Nasdaq National Market;
o In the over-the-counter market;
o In private transactions;
o Through options;
o By pledge to secure debts or other obligations; or
o A combination of any of the above transactions.
The Selling Securityholders may effect such transactions by selling to
or through one or more broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Securityholders. The Selling Securityholders and any
broker-dealers that participate in the distribution may, under certain
circumstances, be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by such broker-dealers and any
profits realized on any resale of the Resale Shares by them might be deemed to
be underwriting discounts and commissions under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Resale Shares may not simultaneously
engage in market making activities with respect to MessageMedia's common stock
for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Securityholders and any other person participating in a distribution will be
subject to applicable provisions of the Securities Exchange Act and the rules
and regulations thereunder, including without limitation, Regulation M under the
Exchange Act, which may limit the timing of purchases and sales of shares of
MessageMedia common stock by the Selling Securityholders or any such other
person.
We will make copies of this Prospectus available to the Selling
Securityholders and have informed the Selling Securityholders of the need for
delivery of a copy of this Prospectus to each purchaser of the Resale Shares
prior to or at the time of any sale of the Resale Shares.
The Selling Securityholders will pay all underwriting discounts,
commissions, transfer taxes and other expenses associated with the sale of the
Resale Shares by them. We will pay all costs and expenses associated with the
registration of the Resale Shares. We estimate that our expenses in connection
with this offering will be approximately $33,316.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the
Resale Shares by the Selling Securityholders. All proceeds from the sale of the
Resale Shares will be for the accounts of the Selling Securityholders.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward LLP, Boulder, Colorado.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our
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