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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1999
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MESSAGEMEDIA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C> <C>
DELAWARE 7389 33-0612860
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NUMBER)
</TABLE>
6060 SPINE ROAD
BOULDER, COLORADO 80301
(303) 440-7550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
A. LAURENCE JONES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MESSAGEMEDIA, INC.
6060 SPINE ROAD
BOULDER, COLORADO 80301
(303) 440-7550
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
MICHAEL L. PLATT, ESQ.
COOLEY GODWARD LLP
2595 CANYON BLVD., SUITE 250
BOULDER, CO 80302-6737
(303) 546-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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. [ ]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE (2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001..... 100,000 $ 11.91 $ 1,191,000.00 $ 332.00
================================================================================================================
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(1) The registration fee for the remaining 6,554,676 shares registered
hereunder has been previously paid by the Registrant pursuant to the
Registrant's earlier registration statements on Form S-3 (File No.
333-42855 and File No. 333-70959) as amended and supplemented.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based
upon the average of the high and low prices of Registrant's Common Stock
on June 14, 1999 as reported on the Nasdaq National Market.
Pursuant to Rule 429 under the Securities Act, the prospectus which forms a
part of this Registration Statement shall also relate to 6,554,676 shares of
the Registrant's Common Stock registered for resale pursuant to the
Company's registration statements on Form S-3 (File No. 333-42855 and No.
333-70959) and all amendments and supplements thereto.
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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 18, 1999
PROSPECTUS
6,654,676 SHARES
MESSAGEMEDIA, INC.
COMMON STOCK
The Selling Securityholders identified in this Prospectus are selling
6,654,676 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 "MAIL." On June 16, 1999, the last reported sales price of a share
of MessageMedia common stock on the Nasdaq National Market was $11.94 per share.
--------------------------
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
--------------------------
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 __________, 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 Washington, D.C., New York, New York and
Chicago, Illinois. 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; and
3. Current Reports on Form 8-K filed with the SEC on January 29,
1998, April 29, 1998, May 1, 1998, June 26, 1998 (as amended on
November 3, 1998), August 25, 1998, November 30, 1998, December
23, 1998 (as amended on February 19, 1999) and April 5, 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
2.
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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 three e-mail related companies, First Virtual
Holdings Inc., Email Publishing Inc. ("EPub") and Distributed Bits, L.L.C.
("DBits"), 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.
On June 9, 1999 we announced that we signed a letter of intent to
acquire Revnet Systems, Inc., a developer and supplier of advanced e-mail
marketing software and services. On June 10, 1999 we announced that we signed a
letter of intent to acquire Decisive Technology Corporation, a provider of
Internet software technology, research and project management services which
monitor and analyze customer perceptions. We believe these acquisitions will
help to position MessageMedia as the leading provider of electronic messaging
solutions.
Our executive offices are currently located at 6060 Spine Road, Boulder,
Colorado 80301, and our telephone number is (303) 440-7550. We maintain a
website at http://www.messagemedia.com.
MessageMedia, Interactive Messaging Platform, First Virtual, VirtualTAG,
VirtualPIN and our logo are trademarks or service marks of MessageMedia. All
other brand names or trademarks appearing in this prospectus are the property of
their respective holders.
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.
Investment in MessageMedia shares involves a high degree of risk. You
should consider the following discussion of risks as well as other information
in this Prospectus before purchasing any MessageMedia shares.
OUR HISTORY OF OPERATING LOSSES AND ANTICIPATED FUTURE LOSSES
We have incurred net operating losses in each quarter since our
inception in March 1994. To date, we have not generated significant revenues and
we cannot guarantee that our revenues will increase in the future. In addition,
we are currently making and plan to continue to make significant investments in
our systems, sales, marketing, research, development and engineering and
administrative infrastructure in the near future. As a result of these
expenditures, we expect to continue to incur significant operating losses for
the foreseeable future. For these and other reasons, we cannot assure you that
we will ever operate profitably.
OUR LIMITED OPERATING HISTORY
We began operations in March 1994. To date, we have generated
substantially all of our revenues from the following:
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- Messaging fees;
- Consulting fees;
- The receipt of registration fees from consumers and merchants;
- Transaction processing fees;
- Merchandising fees;
- Sales of our VirtualTAGs, an interactive banner; and
Since discontinuing the Internet Payment System operations in August
1998, we have dedicated all of our resources to developing and implementing our
messaging platform and related services and technologies.
Our future financial performance will depend significantly on customer
acceptance of our messaging platform and other new and enhanced products and
services. It is very difficult to predict what the demand will be for our
messaging platform because it is a relatively new type of product. Furthermore,
we believe that our prior experience in developing and operating the Internet
Payment System does not offer a meaningful basis to assess the future prospects
of our messaging platform and related products and services. Accordingly, we
cannot assure you that a significant market for our messaging platform or for
any of our other technologies or services will develop.
UNCERTAINTY RELATING TO INTEGRATING EMAIL PUBLISHING INC. AND DISTRIBUTED BITS,
L.L.C.
On December 9, 1998, we acquired EPub through a merger in which EPub
merged with and into our wholly-owned subsidiary. On December 11, 1998, we
acquired DBits in a similar transaction. As a result, companies that had
previously operated independently must now work together. The integration will
require significant effort from our personnel and the personnel of EPub and
DBits who are now MessageMedia employees. In addition to the integration risks
that we describe below, we cannot assure you that we will be able to profitably
consolidate such businesses.
INTEGRATION OF POTENTIAL ACQUISITIONS
As part of our business strategy, we may focus on acquiring, or making
significant investments in, complementary companies, products and technologies.
For example, on June 9, 1999 we announced that we signed a letter of intent to
acquire Revnet Systems, Inc. and on June 10, 1999 we announced that we signed a
letter of intent to acquire Decisive Technology. The following risks are common
to the integration of two companies, and may be associated with recent or future
acquisitions, including the proposed acquisitions of Revnet Systems, Inc. and
Decisive Technology:
- The difficulty of incorporating new operations, technology and
personnel into one company;
- The potential disruption of our ongoing business;
- The additional expense associated with amortization of acquired
intangible assets;
- The maintenance of uniform standards, controls, procedures and
policies; and
- The impairment of relationships with employees and customers.
We cannot assure you that we will successfully overcome these risks or
any other problems that we encounter in connection with any future acquisitions.
OUR NEED FOR ADDITIONAL CAPITAL
We will need to raise additional funds through the public or private
sale of our equity or debt securities or from other sources for the following
purposes:
- To fund our operations;
- To develop new or enhanced services;
- To respond to competitive pressures;
- To acquire complementary businesses or technologies; and
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- To remain in compliance with requirements of the Nasdaq National
Market for continued listing.
We will need to raise additional funds through the public or private
sale of our equity or debt securities or from other securities, before the end
of the first quarter 2000. We cannot assure you that additional funds will be
available when we need them, or that if funds are available, they will include
terms favorable to MessageMedia or our stockholders. If we are not able to
obtain sufficient funds or if adequate funds are not available on terms
acceptable to us, we may not be able to develop or enhance our products and
services. A lack of sufficient funds could also prevent us from taking advantage
of important opportunities or being able to respond to competitive pressures.
Any of these results could have a material adverse effect on our business,
financial condition and results of operations.
Our need to raise additional funds could also directly and adversely
affect your investment in MessageMedia in another way. When a company raises
funds by issuing shares of stock, the percentage ownership of the existing
stockholders of that company is reduced or diluted. If we raise funds in the
future by issuing additional shares of stock, you may experience significant
dilution. Additionally, certain types of equity securities that we may issue in
the future could have rights, preferences or privileges senior to your rights as
a holder of our common stock.
OUR ABILITY TO ATTRACT AND RETAIN PERSONNEL
Our success greatly depends on the continued service of our key senior
management personnel. None of the persons currently in such positions are bound
by an employment agreement. The loss of any member of our senior management team
could have a material adverse effect on our future operating results. Our future
success will depend in large part upon our ability to attract, retain and
motivate highly skilled employees, in particular in the roles of Chief Executive
Officer and Chief Financial Officer as well as other senior management
positions. At the time of this filing, the Company has an aggressive search in
process to fill the position of Chief Financial Officer. We face significant
competition for individuals with the skills and experience required to perform
in such roles. We cannot assure you that we will be able to attract or retain
such individuals, or that the departure of such individuals from MessageMedia
will not cause a disruption in our operations.
RISKS ASSOCIATED WITH NEW MANAGEMENT TEAM
Virtually all of our executive officers, including our Chief Executive
Officer, Vice President of Sales and Marketing and Vice President, Corporate
Development, have joined our company within the past several months. Our future
success will depend in large part upon the ability of our executive officers and
other members of our management to operate effectively, both individually and as
a group. Due to the fact that many of our executive officers are new to our
company and have never worked together, and that we do not yet have a full
management team in place, we cannot assure you that our management will be able
to function effectively, individually or as a team. Failure to do so could have
a material adverse effect on our business, financial condition and results of
operations.
RISKS ASSOCIATED WITH OUR RELOCATION
We are completing our plan to relocate and consolidate our offices in
our Boulder, Colorado. The consolidation includes the relocation of nine of our
employees currently residing in San Diego, California and is subject to risks
commonly encountered in making such a relocation, including, among others, the
difficulty associated with assimilating the personnel and operations from two
locations, the potential disruption of our business and the impairment of our
reputation and relationships with employees and clients. We cannot assure you
that we will overcome these risks and continue to operate our business
effectively.
Our relocation to Boulder, Colorado also presents risks with respect to
the services we provide to our customers. Currently we maintain technical
platforms in each of San Diego and Boulder. The platforms contain software which
we use to provide e-mail delivery services for our customers. Before the end of
this year, the technical platform in San Diego will be discontinued and the
software and services provided under the San Diego
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platform will be integrated into the Colorado platform, which utilizes software
acquired in the EPub acquisition. We will also integrate software obtained in
our acquisition of DBits. We cannot assure you that we will be successful in our
integration of the software acquired from EPub with the San Diego platform, in
our attempt to retrain our employees to manage the integrated platform, in the
transition of our customers to the new platform, or in our integration of the
DBits software.
ANTICIPATED FLUCTUATIONS IN OUR OPERATING RESULTS
We expect that our future operating results may fluctuate significantly.
These fluctuations will 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:
- Market response to our messaging platform;
- Difficulties in the development or deployment of new messaging
products or services;
- Market acceptance of Internet commerce, products and services in
general;
- Fluctuating market demand for our products and services;
- The degree of acceptance of the Internet as an advertising and
merchandising medium;
- The timing and effectiveness of collaborative marketing efforts
initiated by our strategic partners;
- The timing of the introduction of new products and services
offered by us;
- The timing of the release of enhancements to our products and
services;
- Product introductions and service offerings by our competitors;
- The mix of the products and services provided by us;
- The timing and rate at which we increase our expenses to support
projected growth;
- The cost of compliance with applicable government regulations;
- Competitive conditions in our marketplace; and
- General economic conditions.
The fees that we charge for messaging and consulting services may change
as we assess our marketing strategy and competitive position. 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 be materially and adversely affected.
UNCERTAIN ACCEPTANCE OF OUR MESSAGING SERVICES
Market demand for new product and service types such as interactive
messaging is inherently uncertain. The messaging platform is very different from
the traditional methods of marketing and information exchange used by our target
customers, who have typically relied on advertising and direct mail to attract
new customers and maintain customer relationships. We believe that the messaging
platform will prove to be an efficient and cost-effective marketing and
relationship-management tool for a broad variety of customers. However, we
cannot assure you that prospective customers will be able to implement the
messaging platform without substantial additional cost or that it will be cost
efficient when compared to traditional methods of marketing and information
exchange. If the messaging platform fails to meet customers' demands, the use of
our interactive messaging services may decline over time. If this were to
happen, our business, financial condition and results of operations would be
materially and adversely affected.
OUR DEPENDENCE ON THIRD-PARTY PROVIDERS
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We depend heavily on several third-party providers of Internet and
related telecommunication services in operating our messaging platform. We
cannot assure you that these companies will 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. We would have to reengineer our computer systems and
telecommunications infrastructure to accommodate a new service provider. This
process would be both expensive and time-consuming. Any interruption by our
service providers would also be likely to disrupt the operation of the messaging
platform, causing a loss of revenues and potential loss of customers. Such
losses could have a material adverse effect on our business, financial condition
and results of operations.
OUR RELIANCE ON SIGNIFICANT CUSTOMERS
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 for this portion of our business. 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, financial condition
and results of operations will be materially and adversely affected.
COMPETITION
The market for MessageMedia's products and services is intensely
competitive. There are no substantial barriers to entry into MessageMedia's
business, and the Company expects that established and new entities will enter
the market for interactive messaging services and interactive Internet
communications in the near future.
The Company's principal competitors in the interactive messaging
services arena include providers of e-mail based services such as Axciom, Cyber
Data Systems, Digital Impact, MarketHome, eGain, Email Channel, Exactis.com,
Inc. (formerly Infobeat), Matchlogic, Mustang, Postmaster Direct, PostX,
ReplyNet and RevNet. The Company also competes with BroadVision, Mypoints.com
and E-Care Group for one-to-one marketing. Additionally, MessageMedia competes
with traditional advertising, merchandising and direct marketing companies that
use more conventional means of delivering information and marketing messages to
consumers.
The Company may experience additional competition from Internet service
providers, advertising and direct marketing agencies and other large established
businesses that enter the market for interactive messaging services. Companies
such as America Online, Microsoft, IBM, Integrion, AT&T, Hewlett-Packard,
Harte-Hanks Data Technology, ADVO, The Interpublic Group of Companies
and Foote, Cone and Belding, which possess large, existing customer bases,
substantial financial resources and established distribution channels, could
develop, market or resell a number of messaging services. Such potential
competitors may also choose to enter the market for messaging services by
acquiring one of MessageMedia's existing competitors or by forming strategic
alliances with such competitors. Either of these occurrences could harm the
Company's ability to compete effectively.
Many of MessageMedia's 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 the Company does. Such 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 MessageMedia's
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 such competitors bundle competing products or services for their
customers, the demand for the Company's products and services could
substantially decline. As a result of the above factors, MessageMedia cannot
assure you that the Company will compete effectively with current or future
competitors or that competitive pressures will not have a material adverse
effect on the Company's business, financial condition and results of operations.
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UNDEVELOPED AND RAPIDLY CHANGING MARKETS FOR OUR PRODUCTS
The markets for our products and services are at a very early stage of
development and are rapidly changing. An increasing number of entities and
individuals continue to enter the market in which we compete. These 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. Demand for and
market acceptance of recently introduced products and services is both uncertain
and risky. The degree to which the 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 interactive messaging will also 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 businesses. Individuals with established patterns of purchasing goods
and services may be reluctant to alter those patterns. Accordingly, we cannot
assure you that sufficient demand for our products and services will develop to
sustain our business.
RISKS OF TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY STANDARDS
Our products and services are designed around current technical
standards and our revenues depend 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. We cannot assure you that the standards on which
our products and services are or will be based will be accepted by the industry.
Nor can we assure you that products, services or technologies developed by
others will not render our products and services noncompetitive or obsolete. If
we are unable to respond to changing market conditions, technological
developments, emerging industry standards or changing customer requirements, our
business, financial condition and results of operations could be materially and
adversely affected.
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. We cannot assure you that, despite
testing that our clients and we conduct, we will locate errors if they occur.
Nor can we assure you that we will not experience development delays. Either of
these occurrences could have a material adverse effect on our business,
financial condition and results of operations.
OUR RISK OF CAPACITY CONSTRAINTS
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. We cannot assure
you, however, that our products and services will be able to meet the growing
demand as the number of 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, financial condition and results of operations could
be materially and adversely affected.
OUR DEPENDENCE ON INCREASED USAGE AND STABILITY OF THE INTERNET
The future of the Internet as a center for commerce will depend in
significant part on the following factors:
- Continued rapid growth in the number of households and
commercial, educational and government institutions with access
to the Internet;
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- The level of usage by individuals;
- The number and quality of products and services designed for use
on the Internet; and
- 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
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 is also uncertain
whether the cost of Internet access will decrease. If either the Internet or
e-mail communication fails to achieve increased acceptance and does not become
accessible to a broad audience at moderate costs, the viability of Internet
commerce and 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. It also needs to be expanded to provide a
substantial amount of public education to increase confidence in the integrity
and security of Internet commerce. If the Internet infrastructure is not
adequately expanded or managed, or if our products and services do not achieve
sufficient market acceptance, then our business, financial condition and results
of operations will be materially and adversely affected.
OUR RISK OF SYSTEMS FAILURES, SECURITY RISKS, AND LACK OF SUFFICIENT INSURANCE
Risk of System Failures
The success of our services also depends on our ability to protect our
computer equipment and the information stored in our data centers against loss
or damage. We must protect against system overloads, fire, power loss,
telecommunications failures, unauthorized intrusion, infection by computer
viruses and similar events. We cannot assure you that a system failure would not
materially and adversely affect our ability to provide our products and
services.
Security Risks
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 is also 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, we cannot
guarantee that such provisions will be enforceable or will be effective in
limiting our exposure to damage claims.
Lack of Sufficient Insurance
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
9.
<PAGE> 12
interruption insurance would not fully compensate us for lost revenues, 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.
LIMITED INTELLECTUAL PROPERTY
The Company relies on a combination of trade secret, copyright and
trademark laws, nondisclosure agreements, and other contractual provisions and
technical measures to protect its proprietary rights. The Company believes that,
due to the rapid pace of technological innovation for Internet products, the
Company's ability to establish and maintain a position of technology leadership
in the industry depends more on the skills of its development personnel than
upon the legal protections afforded its existing technology. There can be no
assurance that trade secret, copyright and trademark protections will be
adequate to safeguard the proprietary software underlying the Company's products
and services, or that its agreements with employees, consultants and others who
participate in the development of its software will not be breached, that the
Company will have adequate remedies for any breach or that the Company's trade
secrets will not otherwise become known. Moreover, notwithstanding the Company's
efforts to protect its intellectual property, there is no assurance that
competitors will not be able to develop functionally equivalent interactive
messaging technologies without infringing any of the Company's intellectual
property rights. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy or otherwise obtain and use
products or technology that the Company considers 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, there can be no assurance that the Company's
means of protecting its proprietary rights will be adequate or that the
Company's competitors will not independently develop similar technology.
As the volume of Internet commerce increases, and the number of products
and service providers that support Internet commerce increases, the Company
believes that Internet commerce technology providers may become increasingly
subject to infringement claims. There can be no assurance that infringement
claims will not be filed by plaintiffs in the future. In particular, 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 the Company's products and services or require the Company to enter
into royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable or favorable to the Company,
which could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company may initiate
claims or litigation against third parties for infringement of the Company's
proprietary rights or to establish the validity of the Company's proprietary
rights. In particular, on October 29, 1998, the Company 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 MessageMedia and
seeks injunctive relief and unspecified damages. Litigation to determine the
validity of any claims could result in significant expense to the Company and
divert the efforts of the Company's technical and management personnel from
productive tasks, whether or not such litigation is determined in favor of the
Company. 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 the Company. In the event of an
adverse ruling in any such litigation, the Company 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. The failure of the Company to develop or license a
substitute technology could have a material adverse effect on the Company's
business, financial condition and results of operations.
GOVERNMENT REGULATION
There are currently few laws or regulations that directly apply to our
activities on the Internet. The Company believes that it is 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 laws prohibiting Unsolicited Commercial E-mail ("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
10.
<PAGE> 13
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, results of
operations, financial condition and prospects.
OUR STOCK MAY BE VOLATILE
The stock market in general, and Internet commerce companies in
particular, including our company, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to operating
performance. The trading prices of many Internet commerce companies' stocks are
at or near historical highs and these trading prices and 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:
- quarterly fluctuations in our revenues and financial results both
in absolute terms and relative to analyst and investor
expectations;
- changes in recommendations of securities analysts;
- announcements of technological innovations or new services or
products;
- publicity regarding actual or potential results with respect to
technologies, services or products under development;
- disputes or other developments concerning proprietary rights,
including copyright, and litigation matters; and
- other events or factors, many of which are beyond our control.
11.
<PAGE> 14
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>
Andrew C. Currie (4) ................... 1,819,795 4.1% 1,819,795 0 --
Brian P. Makare (5) .................... 992,616 2.2% 992,616 0 --
Bradley A. Feld (6) .................... 11,568,391 26.2% 496,308 11,072,083 25.1%
SOFTVEN No. 2 Investment
Enterprise Partnership .............. 879,488 2.0% 879,488 0 --
Dan Lynch .............................. 255,665 1.0% 255,665 0 --
John Strauss ........................... 191,748 * 191,748 0 --
WHP Family Limited Partnership ......... 63,916 * 63,916 0 --
Catalyst Infotech Development
Fund, L.P. .......................... 70 * 70 0 --
Grandhaven L.L.C ....................... 75,953 * 75,953 0 --
Hexagon Investments L.L.C .............. 75,953 * 75,953 0 --
Labyrinth Enterprises L.L.C ............ 75,953 * 75,953 0 --
Legacy Enterprises L.L.C ............... 75,953 * 75,953 0 --
Athena West ............................ 60,838 * 31,518 29,320 *
Business Plan Associates ............... 23,455 * 23,455 0 --
Thomas Bartel .......................... 10,443 * 10,443 0 --
Alan Welty ............................. 9,894 * 9,894 0 --
Intensity Channels, Inc. ............... 4,947 * 4,947 0 --
Daniel Diekhoff ........................ 6,596 * 6,596 0 --
Mueller & Company Inc. ................. 97,750(7) * 97,750(7) 0 --
The Jerusalem Fund Inc. ................ 4,250(7) * 4,250(7) 0 --
Irwin Katsof ........................... 1,700(7) * 1,700(7) 0 --
Millenco, L.P. ......................... 151,300(7) * 151,300(7) 0 --
Connie Lerner .......................... 17,000(7) * 17,000(7) 0 --
DBI, L.L.C ............................. 1,234,952(8) 2.8% 547,250(8) 687,702 --
Derek Scruggs .......................... 270,442(8) 1.0% 119,842(8) 150,600 --
Illinois Development Finance
Authority ........................... 145,653(8) * 64,544(8) 81,109 --
John Stafford .......................... 55,736(8) * 24,698(8) 31,038 --
Anthony O. Brown ....................... 56,577(8) * 25,072(8) 31,505 --
</TABLE>
12.
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C> <C>
Marshall Toplansky ..................... 32,144(8) * 14,244(8) 17,900 --
Scott Musser ........................... 9,816(8) * 4,350(8) 5,466 --
Valerie Anderson ....................... 38,015 * 38,015 0 --
Craig Dawson ........................... 30,660 * 30,660 0 --
Dwan Family L.P. ....................... 34,787 * 34,787 0 --
Hal M. Spitz ........................... 4,876 * 4,876 0 --
John P. Raeder, Jr ..................... 20,560 * 20,560 0 --
William G. Alexander ................... 2,437 * 2,437 0 --
Retirement Accounts & Co., FBO
Ronald Charles Given ................ 2,437 * 2,437 0 --
Richard Leavitt ........................ 2,437 * 2,437 0 --
Robert W. Pinna ........................ 2,437 * 2,437 0 --
Bruce D. Bower ......................... 1,218 * 1,218 0 --
Al Davis ............................... 2,443 * 2,443 0 --
Walter W. O'Haire ...................... 1,218 * 1,218 0 --
Retirement Accounts & Co., FBO
Reuben K. Sparks III ................ 1,218 * 1,218 0 --
Richard C. Wham and Julie K. Wham
JT .................................. 19,334 * 19,334 0 --
Ronald S. Johnson ...................... 612 * 612 0 --
John A. F. Smith ....................... 612 * 612 0 --
James Manson Temple .................... 24,963 * 24,963 0 --
The Wiegers Family Foundation .......... 24,963 * 24,963 0 --
First National Bank, Agent for
Dwyer, Huddleson & Ray, 401(k)
Profit Sharing Plan ................. 19,970 * 19,970 0 --
Greenwood Gulch Ventures, LLC .......... 19,970 * 19,970 0 --
John William Street .................... 22,415 * 22,415 0 --
Sensor Technology Development
Fund, LLC ........................... 15,976 * 15,976 0 --
Charles J. Vasilius .................... 14,976 * 14,976 0 --
Bruce M. Johnson ....................... 12,481 * 12,481 0 --
Ronald J. Muns ......................... 12,481 * 12,481 0 --
Gerard A. Maglio and Deborah M.
Maglio, JTWOS ....................... 12,481 * 12,481 0 --
David M. Stern and Mary S. Stern,
JT .................................. 11,233 * 11,233 0 --
Willem H.J. Andersen ................... 9,985 * 9,985 0 --
Mary Beazley ........................... 11,203 * 11,203 0 --
Dr. William W. Reenstra ................ 9,985 * 9,985 0 --
Dr. William W. Reenstra TTEE ........... 9,985 * 9,985 0 --
James M. Kunigenas and Donna L.
Jeker JT ............................ 7,488 * 7,488 0 --
GC&H Investments ....................... 6,239 * 6,239 0 --
LaBerge Associates Inc. ................ 6,239 * 6,239 0 --
Martin Erzinger, Smith Barney
Inc. Rollover Custodian ............. 5,491 * 5,491 0 --
Daniel C. Toney ........................ 6,239 * 6,239 0 --
</TABLE>
13.
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
Joel William Achramowicz ............... 4,991 * 4,991 0 --
Ed Bierdemen ........................... 4,991 * 4,991 0 --
Carl D. Carman ......................... 7,443 * 7,443 0 --
Ann T. Dwan ............................ 4,991 * 4,991 0 --
Wayne J. Lonowski ...................... 4,991 * 4,991 0 --
Dain Bosworth C/F Gary Feffer IRA ...... 4,991 * 4,991 0 --
Dain Bosworth C/F Ronald
Stockdale IRA ....................... 4,991 * 4,991 0 --
Pain Webber Inc., FBO IRA Account
of Jeanne A. Thomas ................. 4,991 * 4,991 0 --
Elizabeth McNamara and Michael J.
McNamara ............................ 4,991 * 4,991 0 --
MTR Investment Club .................... 4,991 * 4,991 0 --
Mary Clare Dwan ........................ 4,991 * 4,991 0 --
Lincoln Trust Company, Cust. FBO
Collis R. Woodward, Jr .............. 2,494 * 2,494 0 --
Paul Hines ............................. 2,494 * 2,494 0 --
</TABLE>
- ---------------------
* less than 1%
(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 44,181,722 shares
of MessageMedia common stock issued and outstanding on May 31,
1999, adjusted as required by rules promulgated by the SEC.
(4) Mr. Currie is the Vice President of Product Development of
MessageMedia.
(5) Mr. Makare is the Vice President of Engineering of MessageMedia.
(6) Mr. Feld is the Co-Chairman of the Board of MessageMedia.
Includes 10,560,349 shares held of record by SOFTBANK Technology
Ventures IV, 15,426 shares held of record by SOFTBANK Technology
Advisors Fund and 496,308 shares held by Mr. Feld. Mr. Feld is
the Managing Director of SOFTBANK Technology Ventures IV and
SOFTBANK Technology Advisors Fund and disclaims beneficial
ownership of the shares held by such entities except to the
extent of his pro rata partnership interest.
(7) Represents warrants exercisable for the same number of shares of
MessageMedia common stock at an exercise price of $1.00 per
share.
(8) Includes for (i) DBI, L.L.C., warrants to purchase 171,016 shares
of MessageMedia common stock at an exercise price of $6.00 and
171,016 shares of MessageMedia common stock at $8.00; (ii) Derek
Scruggs, warrants to purchase 37,451 shares of MessageMedia
common stock at an exercise price of $6.00 and 37,451 shares of
MessageMedia common stock at $8.00; (iii) Illinois Development
Finance Authority warrants to purchase 20,170 shares of
MessageMedia common stock at an exercise price of $6.00 and
20,170 shares of MessageMedia common stock at $8.00; (iv) John
Stafford, warrants to purchase 7,718 shares of MessageMedia
common stock at an exercise price of $6.00 and 7,718 shares of
MessageMedia common stock at $8.00; (v) Anthony O. Brown,
warrants to purchase 7,835 shares of MessageMedia common stock at
an exercise price of $6.00 and 7,835 shares of MessageMedia
common stock at $8.00; (vi) Marshall Toplansky warrants to
purchase 4,451 shares of MessageMedia common stock at an exercise
price of $6.00 and 4,451 shares of MessageMedia common stock at
$8.00; and (vii) Scott Musser warrants to purchase 1,359 shares
of MessageMedia common stock at an exercise price of $6.00 and
1,359 shares of MessageMedia common stock at $8.00.
14.
<PAGE> 17
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:
- 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;
- In the over-the-counter market;
- In private transactions;
- Through options;
- By pledge to secure debts or other obligations; or
- 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 $11,000.
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, San Diego, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements 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 in
this prospectus by reference. Our consolidated financial statements are
incorporated by reference in reliance on their report, given on their authority
as experts in accounting and auditing.
15.
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the common stock being registered. All the amounts
shown are estimates except for the registration fee.
<TABLE>
<S> <C>
Registration Fee..................... $ 332
Legal fees and expenses.............. $ 5,000
Accounting fees and expenses......... $ 5,000
-------
Total...................... $10,332
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that "[a] corporation may 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) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful." With
respect to derivative actions, Section 145(b) of the DGCL provides in relevant
part that "[a] corporation may 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 .
. . [by reason of his service in one of the capacities specified in the
preceding sentence] against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expense
which the Court of Chancery and such other court shall deem proper."
Article X of the Company's Certificate of Incorporation states that to
the fullest extent permitted by DGCL, no director of the Registrant shall be
personally liable to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director.
Article V of the Registrant's Bylaws provides that the Company may
indemnify each person who is or was a director of the Company to the full extent
permitted by the DGCL. Such Article also provides that the Registrant may, but
is not required to, indemnify its employees and agents (other than directors and
officers) to the extent and in the manner permitted by the DGCL.
The Registrant has entered into an indemnification agreement with each
of its directors and officers and intends to maintain insurance for the benefit
of its directors and officers insuring such persons against certain liabilities,
including liabilities under the securities laws.
II-1.
<PAGE> 19
ITEM 16. EXHIBITS
a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
*3.1 Registrant's Amended and Restated Certificate of
Incorporation.
*3.2 Registrant's Bylaws.
**3.3 Registrant's Certificate of Amendment of Amended and Restated
Certificate of Incorporation.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ------------
* Filed as an exhibit to Registrant's Registration Statement on Form S-1
(No. 333-14573) and incorporated herein by reference, as amended through
the date hereof.
** Filed as an exhibit to Registrant's Current Report on Form 8-K, filed on
December 23, 1998, and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by Registrant is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by these
clauses is contained in periodic reports filed by the Registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement;
II-2.
<PAGE> 20
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boulder, State of Colorado, on the 18th day of June
1999.
MESSAGEMEDIA, INC.
/s/ A. Laurence Jones
By:_____________________________________
A. Laurence Jones
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints A. Laurence Jones as their true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to the 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 attorney-in-fact and agent, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ A. Laurence Jones
___________________________________ President and Chief Executive June 18, 1999
A. Laurence Jones Officer (Principal Executive
Officer, Principal Financial
Officer and Accounting Officer)
/s/ Bradley A. Feld
___________________________________ Co-Chairman of the Board of June 18, 1999
Bradley A. Feld Directors
/s/ Gerald A. Poch
___________________________________ Co-Chairman of the Board of June 18 1999
Gerald A. Poch Directors
/s/ Dennis J. Cagan
___________________________________ Director June 18, 1999
Dennis J. Cagan
/s/ R. Terry Duryea
___________________________________ Director June 18, 1999
R. Terry Duryea
/s/ Ronald D. Fisher
___________________________________ Director June 18, 1999
Ronald D. Fisher
/s/ Pamela H. Patsley
___________________________________ Director June 18, 1999
Pamela H. Patsley
___________________________________ Director June___, 1999
Gary E. Rieschel
/s/ Lee H. Stein
___________________________________ Director June 18, 1999
Lee H. Stein
</TABLE>
II-4.
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
*3.1 Registrant's Amended and Restated Certificate of Incorporation.
*3.2 Registrant's Bylaws.
**3.3 Registrant's Certificate of Amendment of Amended and Restated
Certificate of Incorporation.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ------------
* Filed as an exhibit to Registrant's Registration Statement on Form S-1
(No. 333-14573) and incorporated herein by reference, as amended through
the date hereof.
** Filed as an exhibit to Registrant's Current Report on Form 8-K, filed on
December 23, 1998, and incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LETTERHEAD]
June 18, 1999
MessageMedia, Inc.
6060 Spine Road
Boulder, Colorado 80301
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by MessageMedia, Inc., a Delaware corporation (the "Company"),
of a Registration Statement on Form S-3 (the "Registration Statement") including
a related prospectus filed with the Registration Statement (the "Prospectus"),
covering the registration of up to 6,654,676 shares of the Common Stock, $.001
par value, of the Company (the "Securities") on behalf of certain selling
stockholders, including 5,882,676 shares of Common Stock (the "Shares") and
772,000 shares of Common Stock (the "Warrant Shares") issuable upon the exercise
of warrants held by certain selling security holders (the "Warrants").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Warrants, the Company's Amended and Restated Certificate
of Incorporation and Bylaws, as amended, and such other records, documents,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that (i) the Shares are validly issued, fully paid and nonassessable and (ii)
the Warrant Shares, when issued and sold in accordance with the terms of the
Warrants, will be validly issued, fully paid and a nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ D. BRADLEY PECK
- ------------------------------
D. Bradley Peck
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of MessageMedia, Inc.
for the registration of its common stock, to be filed on or about June 17,
1999, and to the incorporation by reference therein of our report dated
February 2, 1999, except for Note 12, for which the date is March 26, 1999,
with respect to the financial statements included in its Annual Report on Form
10-K for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
June 15, 1999
