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As filed with the Securities and Exchange Commission on November 1, 2000
Registration No. 333-_____
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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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CROSSWALK.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1831588
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
4100 LAFAYETTE DRIVE, SUITE 110
CHANTILLY, VA 20151
(703) 968-4808
(Address and telephone number of principal executive offices)
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WILLIAM M. PARKER
CROSSWALK.COM, INC.
4100 LAFAYETTE DRIVE, SUITE 110
CHANTILLY, VA 20151
(703) 968-4808
(Name, address and telephone number of agent for service)
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Copies to:
LARRY M. SPIRGEL, ESQ.
MORRISON & FOERSTER LLP
2000 PENNSYLVANIA AVENUE N.W.
SUITE 5500
WASHINGTON, D.C. 20006-1812
(202) 887-1682
(202) 887-0763 (FAX)
(COUNSEL FOR THE COMPANY)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for same offering. [ ]
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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 same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
BE REGISTERED (1) REGISTERED OFFERING PRICE (2) PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 862,069 $2.32 $2,000,000 $528
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</TABLE>
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(1) This registration statement relates to the resale from time to time, of
862,069 shares of Common Stock issuable by conversion of Series A preferred
shares issued by the company under a Regulation D private placement closed
September 29, 2000.
(2) $2.32 represents the conversion price available to Series A preferred
shareholders.
<PAGE> 2
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
862,069 Shares of Common Stock
CROSSWALK.COM, INC.
Some of our stockholders from time to time are using this prospectus to
sell common stock. The selling shareholders are offering all of the shares to be
sold. We will not receive any of the proceeds from the offer and sale of the
shares, but we have agreed to bear the expenses of registration of the shares by
this prospectus.
Nasdaq National Market System symbol:
AMEN
On October 31, 2000, the last sale price of our common stock as reported
on the Nasdaq National Market was $1.3125.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD NOT PURCHASE OUR COMMON
STOCK UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. 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 THE SECURITIES OR PASSED ON THE
ADEQUACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November 1, 2000
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
About Crosswalk.com, Inc......................................................1
Risk Factors..................................................................2
Special Note Regarding Forward-Looking Statements............................14
Use Of Proceeds..............................................................14
Selling Shareholders.........................................................14
Plan Of Distribution.........................................................16
Where You Can Find More Information..........................................18
Legal Matters................................................................18
Experts......................................................................19
Indemnification..............................................................19
</TABLE>
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ABOUT CROSSWALK.COM, INC.
Crosswalk.com, Inc. is primarily known as the creator of
crosswalk.com(TM), an interactive Web site, which provides information and
resources that we believe generally appeals to the Christian and family friendly
community. We focus on "the intersection of faith and life", covering a growing
spectrum of everyday life within a Christian context. Our strategy is to make
crosswalk.com a community portal with deep content and broad information for
Christians, not just Christian information, drawing many from the broad
Christian community offline to an online experience where faith and life meet
every day. We intend to continue enhancing crosswalk.com in order to become the
preferred online resource for Christians in search of information, interaction
and involvement opportunities that help them apply a Christian world view across
the breadth of their life and interests.
Crosswalk.com features channels including Music, Money, News & Culture,
Homeschooling, Sports, Movies, Spiritual Life, Women, Men, Careers and LiveIt.
Key services include: INVESTigator--the nation's leading values-based investment
database; the Goshen Directory, the largest directory of Christian sites on the
Web; over two dozen email newsletters; Religion Today and BibleStudyTools.com.
Content and site resources are developed and offered both by Crosswalk.com and
by ministries, secular retailers, and publishers.
Crosswalk.com also includes Wike Associates (d/b/a Media Management)
which we acquired on August 13, 1999. Media Management, which includes the Web
site GOSHEN.net, is now a wholly owned subsidiary. GOSHEN.net, which has been
fully integrated into crosswalk.com, provides, among other things, an extensive
searchable directory that can be used to discover such Internet services as Web
sites providing information about youth group resources, denominational
publications, Christian support groups, listings of various Christian radio
shows, and even the personal pages of Christian individuals and families. This
directory, which contains approximately 20,000 listed, categorized and
cross-referenced Web sites, is a resource for finding services and products on
the Web that will be of interest to Christians. Media Management also has an
advertising "card pack" business which distributes advertising materials to
250,000 churches, pastors and leading laymen through six annual mailings. The
average card pack contains between 90 to 120 advertisements, for which each
advertiser pays approximately $2,400.
On September 29, 2000 we closed a $2 million Regulation D financing,
consisting of 80,000 shares of three-year Series A Preferred Stock, convertible
into 862,069 shares of common stock. This is equivalent to $2.32 conversion
price per common share. The Series A Preferred Stock will also accrue a 6%
dividend per annum. There were no agency fees, no commissions paid, and no
warrants issued in connection with the offering. Pursuant to this financing, one
of the investors, Mr. Jon Morgan was appointed to the Board of Directors of
Crosswalk.com.
Crosswalk.com, Inc. was incorporated under the laws of the State of
Delaware in January 1997 as DIDAX INC. We changed our name to Crosswalk.com,
Inc. in May 1999. Our executive offices are located at 4100 Lafayette Center
Drive, Suite 110 and our telephone number is (703) 968-4808. Our Web site is
located at www.crosswalk.com. Information available on our Web site is not part
of this prospectus.
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RISK FACTORS
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. Additional risks and uncertainties not presently known to us
or that may be immaterial at this point may also impair our business operations.
If any of the following risks actually occur, our business, condition (financial
or otherwise), prospects or results of operations could be materially adversely
affected. In such case, the fair market value of our securities could decline,
and you may lose all or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY AND ARE SUBJECT TO THE RISKS ENCOUNTERED BY
DEVELOPING COMPANIES
Although we were founded in 1993, we did not start generating revenue
until 1996. Accordingly, we have a limited operating history and little
operating and financial data upon which you may evaluate us. Accordingly, our
business is subject to the risks, expenses and difficulties frequently
encountered by companies with a limited operating history including:
- Limited ability to respond to competitive developments;
- Rapid technological changes and increased competition could
adversely affect market acceptance of our services;
- Exaggerated effect of unfavorable changes in general economic and
market conditions;
- Ability to develop or fully utilize relationships with strategic
partners;
- Ability to identify, attract, retain and motivate qualified
personnel;
- Ability to develop and extend the Crosswalk brand; and
- Ability to develop and introduce new product and service
offerings.
There is no assurance we will be successful in addressing these risks. If
we are unable to successfully address these risks, our business could be
significantly affected.
WE HAVE A HISTORY OF LOSSES, EXPECT FUTURE LOSSES AND CANNOT ASSURE YOU THAT WE
WILL ACHIEVE PROFITABILITY
We have accumulated losses since our inception and we anticipate that we
will continue to accumulate losses for the foreseeable future. We have incurred
net losses since inception totaling $28,247,522 through June 30, 2000. In
addition, we expect to incur additional substantial operating and net losses in
2000 and perhaps thereafter. We expect to incur these additional losses because
we plan to continue increasing our capital expenditures and operating expenses
to expand the functionality and performance of our products and services and to
increase our sales and marketing efforts. Although our revenues have increased
in recent quarters, we cannot assure you that such growth will be maintained or
increased in the future and you should not rely on our recent revenue growth as
indicative of our future results of operations. We cannot predict with accuracy
our future results of operations and believe that any period-to-period
comparisons of our results are not meaningful.
THE EXPECTED FLUCTUATIONS OF OUR QUARTERLY RESULTS COULD CAUSE OUR STOCK PRICE
TO FLUCTUATE OR DECLINE.
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We expect to experience significant fluctuations in future quarterly
operating results that may be caused by multiple factors, many of which are not
within our control, including the following:
- the level of usage of the Internet;
- the demand for Internet advertising and our products and services;
- the level of user traffic on our online services;
- the number, timing and significance of new service announcements by us
and our competitors;
- the acceptance of our marketing initiatives;
- our ability to develop, market and introduce new and enhanced versions
of our services on a timely basis;
- the level of product and price competition;
- pricing changes for Internet-based advertising;
- changes in our operating expenses, service mix, or sales incentive
strategy; and
- changes in general economic factors or conditions specific to the
Internet industry.
Our operating expense levels are based, in significant part, on
management's expectations of future quarterly revenue. If actual revenue levels
on a quarterly basis are below management's expectations, both gross margins and
results of operations are likely to be adversely affected because a relatively
small amount of our costs and expenses varies with revenue in the short term. As
a result, if our revenues are lower than we expect, our quarterly operating
results may not meet the expectations of public market analysts or investors,
which could cause the market price of our common stock to decline.
COMPETITION IN OUR INDUSTRY COULD REDUCE OR ELIMINATE THE DEMAND FOR OUR
SERVICES.
We face intense competition in the markets our products and services. We
generate revenue from the sale of advertising space on our Web site; the online
retailing of select homeschooling products and services (including commissions
and referral fees from co-marketing relationships and affinity marketing
programs); and, to the provision of Internet services. For our retails sales
commissions and fees, we compete with traditional buying services, stores and
other Web sites where the products and services we feature may be available. To
sell advertising space on our Web site, we compete with all other mediums of
advertising such as print and direct mail, radio and television, as well as the
hundreds of thousands of Web sites.
For example, the largest providers of online navigation, information,
entertainment, business and community services, such as Yahoo!, Lycos,
AltaVista, Microsoft, Netscape and America Online, provide Internet products and
services that target a wide range of audiences and communities which may also
appeal to our Christian and family-friendly audience. Likewise, we face
competition from companies providing similar services to other vertical markets
or targeted audiences that overlap with the interests of our audience. There are
also several other companies, including nonprofit organizations, which are
attempting or may attempt to aggregate Christian or family-friendly content on
the Internet. These competitors include Christianity Online, a non-profit
community portal maintained by publisher Christianity Today, Inc.,
Christianity.com, a privately held provider of Christian content and
Internet-enabling solutions for individuals and Christian organizations.
OnePlace.com, and ICRN which was acquired by Salem Communications; Gospel
Communications Network, a non-profit Web site operated by a division of Gospel
Films; and Christian Answers.Net, a Web site operated by Eden Communications.
Many of these competitors have longer operating histories, greater name
recognition and significantly greater financial and other resources than
Crosswalk. Moreover, there are no substantial barriers to entry in our markets,
and we expect this competition to continue to intensify, especially as we
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expand our own product and service offerings. For instance, the presence of
these competitors in the Internet marketplace could cause us to increase our
spending on marketing, sales and product development.
There can be no assurance that we will ever be positioned to compete
successfully with our current or future competitors nor can there be any
assurance that the competitive pressures we face will not result in increased
marketing costs, decreased Internet traffic or loss of market share or otherwise
will not materially adversely affect our business, results of operations and
financial condition.
WE COMPETE IN A MARKET SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND MUST CONTINUE
TO ENHANCE OUR PRODUCTS AND SERVICES TO COMPETE EFFECTIVELY.
The market in which we compete is characterized by rapidly changing
technology, evolving industry standards, frequent new service and product
announcements, introductions and enhancements and changing customer demands. For
example, to the extent that higher bandwidth Internet access becomes more
available, we may be required to make significant changes to the design and
content of our products and services. In addition, the ever changing nature of
the Internet and the continual increase in the number of companies from a
multitude of industries offering Internet-based products and services indicate
that our future success will depend in significant part on our ability to adapt
to rapidly changing technologies, the ability to adapt our services and products
to evolving industry standards, and to continually improve the performance,
features and reliability of our services and products in response to both
evolving demands of the marketplace and competitive service and product
offerings.
For example, we must continue to enhance and improve the content,
features and functionality of our Web site. There is no assurance that we will
be able to successfully identify new product and service opportunities or
successfully design, develop, test and introduce new services and products in a
timely manner. Furthermore, even if we are able to successfully identify,
develop and introduce new products and service, there is no assurance that a
market for these products and services will materialize to the size and extent
that we anticipate. If a market does not materialize as we anticipate, our
business, operating results, and financial condition could be materially
adversely affected. The following factors could affect the success of our
products and services:
- The failure of our business plan to accurately predict the rate at
which the market for Internet products and services will grow;
- The failure of our business plan to accurately predict the types
of products and services the future Internet marketplace will
demand;
- Our limited experience in marketing our products and services;
- The failure of our business plan to accurately predict our future
participation in the Internet marketplace;
- The failure of our business plan to accurately predict the
estimated sales cycle, price, and acceptance of our products and
services;
- The development by others of products and services that render our
products and services noncompetitive or obsolete; and
- Our failure to keep pace with the rapidly changing technology,
evolving industry standards, and frequent new product and service
introductions that characterize the
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Internet marketplace.
OUR REVENUE MODEL DEPENDS ON THE ADOPTION AND EFFECTIVENESS OF THE INTERNET AS
AN ADVERTISING MEDIUM AND OUR ABILITY TO ATTRACT AND EXPAND OUR USER AND
ADVERTISER BASE
We currently derive and expect to continue deriving a significant portion
of our revenues from advertisements and sponsorships on our Web site.
Accordingly, our future success is highly dependent on the acceptance and growth
of the Internet as an advertising medium and our ability to attract and expand
our user and advertiser base. Our ability to sustain and increase our current
level of advertising revenues depends, in part, on our ability to hire, retain,
manage, train and motivate our internal sales force. If a significant portion of
our sales force leaves, we may not be able to compete effectively for or retain
current and potential advertisers.
In addition, for the adoption of the Internet as an advertising mechanism
to increase, particularly to those companies that have historically relied upon
other forms of media, companies must be convinced that advertising or promoting
their products or services on the Internet is more effective than other forms of
media. Most of our current and potential advertising customers, however, do not
have a long history of using the Internet as an advertising medium and continue
to allocate only a limited portion of their advertising budgets to Internet
advertising. Moreover, because the Internet advertising market is new and
rapidly evolving, there are no widely accepted standards or measurements for
gauging its effectiveness. As a result, our advertisers may challenge or refuse
to accept our internal or third-party measurements of advertisement delivery,
and such measurements may contain errors. If advertisers determine that banner
advertisements, or other forms of Internet advertising, are not an effective
advertising medium, then we may not be able to increase or sustain our current
advertising revenues. Likewise, since companies advertising on the Internet
typically prefer to advertise on high-traffic sites, our ability to increase our
advertising revenue will depend in large part on our ability to attract more
users to our Web site.
The intense competition we face in the sale of advertising has resulted
and will continue to result in a wide range of rates quoted by different vendors
for a variety of products and services. This, combined with a limitation on the
type and content of advertising acceptable to management for use on
crosswalk.com, makes it very difficult to project our future levels of Internet
advertising revenue.
WE MUST CONTINUE TO DEVELOP AND INCREASE AWARENESS OF A "BRAND IDENTITY" IN
ORDER TO ATTRACT AND EXPAND OUR USER AND ADVERTISER BASE.
With the growing number of Internet sites and low barriers to entry in
our industry, we believe that developing and maintaining the "crosswalk.com"
brand is critically important to our future success in attracting and expanding
our audience and advertiser base. Promotion and enhancement of our brand will
depend in large part on our ability to continue product high-quality products
and services to the users of our Web site. We may also find it necessary to
substantially increase our expenditures for creating and maintaining a distinct
brand loyalty among Internet users. In addition, if there is a breach (or
alleged breach) of our security or the privacy of our users, or if any third
party undertakes illegal or harmful activity that affects our services or users,
we could suffer substantial adverse publicity which may harm our brand
reputation. Therefore, if we (1) cannot provide high quality online products and
services, (2) introduce new online products and services that are not favorably
received by users, (3) fail to adequately promote and maintain our brands, (4)
incur excessive expenses in attempting to enhance our brand images or promote
our products and services, or (5) are subject to unfavorable publicity due to
breaches of our security systems, our business, results of operations and
financial condition could be materially effected.
WE MAY NOT BE ABLE TO SECURE FUNDING IN THE FUTURE TO OPERATE OUR BUSINESS
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We require substantial working capital to fund our business. We have had
significant operating losses and negative cash flow from operations since
inception and expect this to continue for the foreseeable future. Although we
believe that our present cash and cash equivalents, working capital and
commitments for additional equity investments will be adequate to sustain our
current level of operations for a year, we may need to raise additional funds to
expand our marketing initiatives and to accelerate the growth of the business.
We may also need to raise additional funds sooner in order to fund more rapid
expansion, to develop new or enhanced services or products, to respond to
competitive pressures or to acquire complementary products, businesses or
technologies. In addition, we may discover that we have underestimated our
working capital needs, and we may need to obtain additional funds to sustain our
operations. If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of the our shareholders
will be reduced and such securities may have rights, preferences or privileges
senior to those of our existing shareholders. There can be no assurance that
additional financing will be available on favorable terms, or at all. If
adequate funds are not available or are not available on acceptable terms, we
may not be able to fund growth, take advantage of acquisition opportunities,
develop or enhance services or products or respond to competitive pressures.
Such inability could have a material adverse effect on our business, results of
operations and financial condition.
COMPUTER SYSTEMS AND SOFTWARE ARE CRITICAL TO OUR OPERATION AND ANY SIGNIFICANT
DISRUPTION WOULD ADVERSELY AFFECT OUR BUSINESS
A key element of our strategy is to generate a high volume of traffic on
our Web site. Accordingly, the performance of our services and products is
critical to our reputation, our ability to attract customers to crosswalk.com
and market acceptance of these services and products. Any system failure,
including network, software or hardware failure, that causes interruptions in
the availability or increased response time of our services would reduce traffic
to crosswalk.com and, if sustained or repeated, would reduce the attractiveness
of our services to advertisers and other future potential customers or Internet
users. An increase in the volume of traffic conducted through our services and
products could strain the capacity of our software or hardware, which could lead
to slower response time or system failures. In addition, as the number of Web
sites and Internet users increases, there can be no assurance that our services
and products will be able to compete with firms who may have greater financial
resources than we do. We are also dependent upon Web browsers and Internet and
online service providers for access to our services and consumers may experience
difficulties due to system failures unrelated to our own internal systems,
services and products. To the extent that the capacity constraints described
above are not effectively addressed by management, such constraints would have a
material adverse effect on our business, results of operations and financial
condition.
We are also vulnerable to damage from fire, floods, earthquakes, power
loss, telecommunications failures, break-ins and similar events. Although we
carry property insurance, our coverage may not be adequate to compensate for all
losses that may occur. Despite the implementation of network security measures,
our servers are also vulnerable to computer viruses, physical or electronic
break-ins and similar disruptive problems. Computer viruses, break-ins or other
problems caused by third parties could lead to interruptions, delays or
cessations in service to users of our services and products. The occurrence of
any of these risks could have a material adverse effect on our business, results
of operations and financial condition.
WE INTEND TO PURSUE STRATEGIC ACQUISITIONS AND OUR BUSINESS COULD BE MATERIALLY
ADVERSELY AFFECTED IF WE FAIL TO CONSUMMATE SUCH TRANSACTIONS OR ADEQUATELY
INTEGRATE ACQUIRED BUSINESSES.
Our current strategy is to broaden the number, scope and content of
crosswalk.com through the acquisition of existing sites and businesses
specializing in Internet-related technologies and content, as
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well as through internally developed Internet sites and services. As part of
this strategy, we acquired gofishnet.com, Inc., an Internet retailer of
Christian music and videos, and Wike Associates (d/b/a Media Management, Inc.),
whose Web site GOSHEN.net is now our wholly owned subsidiary. Any similar future
investments would entail a number of risks, including the following:
- diversion of resources and management's attention;
- the inability to generate anticipated revenues;
- expenses, delays and difficulties integrating the acquired company
into our existing organization;
- the amortization of the acquired company's intangible assets;
- the potential loss of key employees of the acquired companies;
- the impairment of relationships with third parties; and
- potential additional expenses.
There can be no assurance that management would be successful in
overcoming these risks or any other problems encountered in connection with such
acquisitions or new investments.
WE RELY ON A NUMBER OF STRATEGIC RELATIONSHIPS WITH THIRD PARTIES TO SUPPLY THE
TECHNOLOGY TO OPERATE OUR BUSINESS.
We currently license several technologies from third parties. There can
be no assurance that these third party technology licenses will be available on
commercially reasonable terms, if at all. Our inability to obtain any of these
technology licenses could result in delays or reductions in the introduction of
new services or product shipments or could materially and adversely affect the
performance of our services until equivalent technology could be identified,
licensed and integrated. Any such delays or reductions in the introduction of
services or product shipments or adverse impact on service quality could
materially adversely affect our business, results of operations and financial
condition.
We have entered into certain material agreements with numerous
businesses, which provide us necessary services and products. The following
table provides information pertinent to these relationships:
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<TABLE>
<CAPTION>
Name Service Provided Term Consideration
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Exodus Communications Hosting 14 Month contract Company pays monthly usage rate
to March 2001
Genuity Hosting Month to month Company pays monthly usage rate
ichat Chat Technology Annual Renewal Company pays annual license fee
Microsoft Site Server3 Retail Application One Time Charge Company paid one time fee
Cybercash Internet secure Month to month Company pays fee per transaction
transaction capability
Doubleclick Ad server software One year renewable Company paid annual license fee
Sane Solutions Internet Statistical Annual Renewal Company paid annual license fee
"NetTracker" Reporting Software
Vignette Internet Publishing Annual Renewal Company paid one time license fee
Software and annual renewal license fee
CriticalPath email Server software Three Year License Company pays monthly usage fee
Oracle Database Management Annual Renewal Company pays one time license fee
Software and annual maintenance fee
Akamai Streaming Media Annual Renewal Company pays fees for services
Services rendered
</TABLE>
If these arrangements and activities with such companies were lessened,
curtailed, or otherwise modified, we may not be able to replace or supplement
such services alone or with other companies. If these companies were to cease to
jointly provide their services, our business, results of operations, and
financial condition could be materially and adversely affected.
WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR GROWTH THAT COULD ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS.
A key part of our strategy is to grow, which may strain our managerial,
operational and financial resources. The rapid execution necessary for us to be
established as a leader in the developmental market for Internet-based sales of
Christian related products, sponsorship and advertising requires an effective
planning and management process. Our development has placed, and is expected to
continue to place, a significant strain on managerial, technical, sales and
marketing and administrative personnel as well as our financial resources. To
manage our growth, we must implement operational and financial systems and train
and manage our employee base. There can be no assurance that we will be able to
successfully implement such systems on a timely basis, if at all. Further, we
will be required to manage multiple relationships with consumers, strategic
partners and other third parties. There can be no assurance that our systems,
procedures or controls will be adequate to support our future operations. Our
future operating results will also depend on our ability to expand our sales and
marketing organizations, implement and manage new services to penetrate broader
markets and further develop and expand our organization. If we are unable to
manage growth effectively, our business, results of operations and financial
condition will be materially adversely affected. There can be no assurance that
we will be able to effectively manage such change.
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OUR SUCCESS IS TIED TO THE CONTINUED GROWTH AND USE OF THE INTERNET AND THE
ADEQUACY OF THE INTERNET INFRASTRUCTURE.
Our success is dependent in large part upon the continued growth in the
use of the Internet. The number of users and advertisers on the Internet may not
increase and commerce over the Internet may not become more accepted and
widespread for a number of reasons, including:
- inconsistent quality of service;
- actual or perceived lack of security of information;
- lack of access and ease of use;
- the failure of the Internet's infrastructure to support Internet
usage or electronic commerce;
- the failure of businesses developing and promoting Internet commerce;
- regulation of the Internet; and
- lack of availability of cost-effective, high speed service or
communications equipment.
Published reports also indicate that as the Internet has grown, users
increasingly experience delays, transmission errors and other problems with
their use. The use of the Internet may not grow if there are delays in the
development or adoption of modifications by third parties to the current
configuration of the Internet to support the increased levels of activity. If
none of the foregoing changes occurs, or if the Internet does not become a
viable commercial medium, our business, results of operation, an financial
conditions could be materially adversely affected. Moreover, even if those
changes occur, we may need to spend substantial resources to adapt our services
to any new technologies relating to the Internet.
WE MUST RETAIN KEY PERSONNEL TO SUCCESSFULLY MANAGE OUR BUSINESS.
We believe our most important asset is our people. Our performance is
substantially dependent on the performance of our senior management, including
William Parker, our Chief Executive Officer and President, and other key members
of management. Although the Company has employment agreements, which include
non-compete provisions, with its senior management, these agreements may be
terminated upon thirty days' written notice. If these members of senior
management leave the Company, there could be a material adverse effect on our
business, results of operations and financial condition due to the loss of their
knowledge regarding the development, opportunities and challenges of our
business. Our future success will also depend on our continuing ability to
attract and retain additional qualified marketing, sales and technical
personnel. There is currently a shortage of qualified personnel with the skills
we require, and this shortage is likely to continue. If we are unable to
attract, motivate and retain qualified personnel, there could be a material
adverse effect on our business, results of operations and financial condition.
OUR CLASSIFICATION AS A "RELIGIOUS CORPORATION" MAY LIMIT OUR ABILITY TO ATTRACT
AND RETAIN PERSONNEL AND COULD SUBJECT US TO LEGAL LIABILITY.
Our bylaws provide that we are a "religious corporation." In general our
policy is to include (1) among our officers and directors, unconditionally, and
(2) among our employees where a bona-fide occupational qualification exists,
only persons who, upon request, subscribe to our Christian statement of
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<PAGE> 14
faith. We believe that this is necessary to best identify with and service our
selected Christian market niche and to generate our Internet product which is
heavily content laden. We believe that our use of these religious criteria in
our employment practices does not violate federal law relating to equal
employment opportunities because we qualify as an exempt religious corporation
for purposes of federal employment law. Federal employment law has been subject
to limited judicial and regulatory interpretation on the question of what type
of religious corporation would be exempt from the reach of the law. Federal
employment law is enforced, in part, by a federal regulatory agency that is
vested with broad discretion in interpreting its meaning. Our policies and
procedures with respect to hiring have not been examined by federal or state
authorities. For these reasons, there can be no assurance that a review of our
hiring practices or the operation of our business will not result in
determinations that materially adversely affect our business, results of
operations and financial condition or our ability to attain our objectives.
WE ARE SUBJECT TO U.S. AND FOREIGN GOVERNMENT REGULATION OF THE INTERNET THAT
COULD IMPACT OUR BUSINESS.
We are subject to existing federal, state and local laws and regulations
that are applicable to businesses generally on such issues as advertising,
sweepstakes, promotions, quality of products and services, and intellectual
property ownership and infringement. In addition, although we are not currently
subject to direct regulation by any government agency, there are currently a few
laws and regulations directly applicable to access to or commerce on the
Internet. The United States federal government, as well as various state and
local governments, have recently passed legislation that regulates various
aspects of the Internet relating to issues such as user privacy, online content,
copyright infringement, taxation, access charges, liability for third-party
activities, and jurisdictions. For example, the federal government recently
enacted a law imposing a three-year moratorium on new taxes on Internet-based
transactions. This moratorium relates to new taxes on Internet access fees and
state taxes on e-commerce. We have not been able to determine how we will be
affected by this moratorium, but to the extent that it provides a material
benefit, its expiration could have a material adverse effect on our financial
condition and results of operations.
Due to the increasing popularity and use of the Internet, it is possible
that a number of laws and regulations may be adopted with respect to the
Internet, covering issues such as libel, pricing, user privacy and
characteristics and quality of products and services. In addition, the European
Union has recently enacted privacy and copyright directives that could impose
additional burdens and costs on our operations as we expand internationally. Due
to the global nature of the Internet, it is possible that the governments of
other nations might attempt to regulate its transmissions, and we may
unintentionally violate such laws and be prosecuted for such violations. The
adoption of any additional laws or regulations may decrease the growth of the
Internet, which could in turn decrease the demand for our services and products
and increase our cost of doing business or otherwise have an adverse effect on
our business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws in various jurisdictions
governing issues such as property ownership, libel and personal privacy is
uncertain. Any such new legislation or regulation could have a material adverse
effect on our business, results of operations and financial condition.
WE MAY BE SUBJECT TO LIABILITY FOR OUR ONLINE SERVICES.
Our online products and services allow our users to exchange information,
generate and download content, and conduct business. The liability issues for
providers of these types of online services for the actions of their users is
unsettled. There is a potential that claims could be made against us for
defamation, negligence, personal injury, infringement of intellectual property
rights, or other theories based on the content of the information available from
our Web site. Similar types of claims
10
<PAGE> 15
have been brought, and sometimes successfully asserted, against other online
service providers or through content and materials that may have been posted by
users in our bulletin boards, classifieds or chat room services.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGY.
We regard our technology as proprietary and attempt to protect it with
copyrights, trademarks, trade secret laws, restrictions on disclosure and
transferring title and other methods. We also generally enter into
confidentiality or license agreements with our consultants and business
partners, and generally control access to and distribution of documentation and
other proprietary information. Despite these precautions, it may be possible for
a third party to copy or otherwise obtain and use our products or technology
without authorization, or to develop similar technology independently. Policing
unauthorized use of our technology is also difficult. There can be no assurance
that the steps taken by management will prevent misappropriation or infringement
of our technology. In addition, litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on our business, results of operations and
financial condition.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS OF THIRD PARTIES.
We cannot assure you that third parties will not claim that our products
or services infringe upon their intellectual property rights. We have not
conducted a search to determine whether any of our services or technologies may
be infringing upon the rights of any third parties. However, a number of
Internet companies are actively developing search, indexing, e-commerce and
other Web-related technologies. We expect that many of these companies will take
steps to protect these technologies, including obtaining patent protection. In
addition, we are aware that a number of patents have been issued in the areas of
e-commerce, online direct marketing, common Web graphics formats and Web-based
information indexing and retrieval. Third parties may assert claims against us
alleging that we infringe their intellectual property rights. We may incur
substantial expenses in defending ourselves against such claims regardless of
their merit. If we determine that licensing any third party's proprietary rights
is appropriate, we cannot guarantee that we will be able to obtain a license on
reasonable terms. As a result of these developments, we could incur substantial
costs that could have a material adverse effect on our business, results of
operation or financial condition.
WE MAY BE LIABLE IF THIRD PARTIES MISAPPROPRIATE OUR USER'S PERSONAL
INFORMATION.
If third parties were able to penetrate our network security and
misappropriate our users' personal information, we could be subject to
liability. For instance, if a third party misappropriates credit card
information of one of our users, we could be liable for unauthorized purchases
with the information or other similar fraud claims. In addition, such
misappropriation could result in liability for other misuses of personal
information, such as unauthorized marketing purpose.
OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE AND COULD AFFECT YOUR ABILITY TO
RESELL SHARES AT ATTRACTIVE PRICES.
The price of our common stock has been highly volatile due to factors
that will continue to affect the price of our stock. Our common stock traded as
high as $10.50 per share and as low as $1.03 between October 26, 1999 and
October 26, 2000. This volatility may continue. Some of the factors that could
lead to this type of volatility include:
11
<PAGE> 16
- Price and volume fluctuations in the stock market at large that do not
relate to our operating performance;
- Fluctuations in our quarterly revenue and operating results;
- Structure of future capitalization, if any;
- Announcements of product releases by us or our competitors;
- Failure to meet or exceed estimates by securities analysts;
- Any loss of key management;
- Announcements of acquisitions and/or partnerships by us or our competitors;
- General economic conditions and general market volatility of
Internet-related stocks; and
- Increases in outstanding shares of common stock, including upon exercise or
conversion of derivative securities.
These factors may continue to affect the price of our common stock in the
future.
WE CANNOT PREDICT THE EFFECT THAT THE EXERCISE OF EXISTING OPTIONS WILL HAVE ON
OUR STOCK.
As of September 30, 2000, there were 7,926,971 shares of common stock
outstanding and 2,298,581 shares of common stock issuable upon the exercise of
outstanding warrants and options. We are unable to predict the effect that any
subsequent sales of securities by our existing shareholders, under Rule 144 or
otherwise, may have on the then-prevailing market price of our common stock,
although such sales could have depressive effect on such market price.
Nevertheless, the possibility that substantial amounts of common stock may be
sold in the public market may adversely affect prevailing market prices of the
common stock and could impair our ability to raise capital through the sale of
its equity securities.
OUR STOCKHOLDERS' ABILITY TO RECOVER MONETARY DAMAGES FROM OUR OFFICERS AND
DIRECTORS IS LIMITED.
Section 145 of the General Corporation Law of the State of Delaware
contains provisions entitling our directors and officers to indemnification from
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorney's fees, as a result of an action or proceeding in which they may be
involved by reason of being or having been a director or officer of
Crosswalk.com provided the officers or directors acted in good faith. Our
certificate of incorporation contains provisions indemnifying our officers and
directors to the fullest extent provided by Delaware law. As a result, the
rights of our shareholders to recover monetary damages from directors of
Crosswalk.com for breaches of directors' fiduciary duties may be significantly
limited.
WE HAVE NOT HISTORICALLY PAID DIVIDENDS ON COMMON STOCK AND DO NOT ANTICIPATE
PAYING DIVIDENDS IN THE NEAR FUTURE.
We have not paid any dividends on capital stock to date and do not
currently intend to pay dividends in the foreseeable future. The payment of
dividends, if any, will be contingent upon our revenue and earnings, if any, our
capital requirements and our general financial condition. The payment of any
dividends will be within the discretion of our Board of Directors. It is the
Board's current intention to retain all earnings, if any, for use in business
operations and, accordingly, we do not anticipate paying any cash dividends in
the foreseeable future.
12
<PAGE> 17
WE ARE SUBJECT TO THE NASDAQ NATIONAL MARKET SYSTEM LISTING ELIGIBILITY AND
MAINTENANCE REQUIREMENTS AND OUR STOCK COULD BE AFFECTED IF WE FAIL TO MAINTAIN
THESE REQUIREMENTS.
Under the current rules relating to the continued listing of securities
on the Nasdaq National Market System, a company must maintain (a) at least
$4,000,000 in net tangible assets (b) public float of at least 750,000 shares,
(c) market value of public float of at least $5,000,000, and (d) a minimum bid
price of $1.00 per share. If we are not able to maintain these listing
requirements, we may be downgraded to Nasdaq SmallCap status.
If we should experience losses from operations, we may be unable to
maintain the standards for continued listing and our common stock could be
subject to delisting from the Nasdaq National Market System or furthermore from
the Nasdaq SmallCap Market. Trading, if any, in our common stock would
thereafter be conducted in the over-the-counter market on an electronic bulletin
board established for securities that do not meet the Nasdaq SmallCap listing
requirements or in what are commonly referred to as the "pink sheets." As a
result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, our common stock.
If our common stock were delisted from Nasdaq, and no other exclusion
from the definition of a "penny stock" under applicable SEC regulations were
available, our common stock may become subject to the penny stock rules that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally defined as investors with net worth in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase and must have received the purchaser's written
consent to the transaction prior to sale. Consequently, delisting from Nasdaq,
if it were to occur, could materially adversely affect the ability of
broker-dealers to sell the securities. and the liquidity and trading price of
our common stock.
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<PAGE> 18
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements made in this prospectus and the documents
incorporated by reference in this prospectus under the captions "The Company"
and "Risk Factors" and elsewhere in this prospectus constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are subject to the safe harbor provisions of the reform
act. Forward-looking statements may be identified by the use of terminology such
as may, will, expect, anticipate, intend, believe, estimate, should, or continue
or the negatives of these terms or other variations on these words or comparable
terminology. To the extent that this prospectus contains forward-looking
statements regarding the financial condition, operating results, business
prospects or any other aspect of our company, you should be aware that our
actual financial condition, operating results and business performance may
differ materially from that projected or estimated by us in the forward-looking
statements. We have attempted to identify, in context, some of the factors that
we currently believe may cause actual future experience and results to differ
from their current expectations. These differences may be caused by a variety of
factors, including but not limited to adverse economic conditions, intense
competition, including entry of new competitors, ability to obtain sufficient
financing to support our operations, progress in research and development
activities, variations in costs that are beyond our control, changes in capital
expenditure budgets for cable companies, adverse federal, state and local
government regulation, inadequate capital, unexpected costs, lower sales and net
income, or higher net losses than forecasted, price increases for equipment,
inability to raise prices, failure to obtain new customers, the possible
fluctuation and volatility of our operating results and financial condition,
inability to carry out marketing and sales plans, loss of key executives, and
other specific risks that may be alluded to in this prospectus.
USE OF PROCEEDS
All of the shares covered by this prospectus are being offered by the
selling shareholders. Accordingly, we will not receive any of the proceeds from
the offer and sale of the shares.
SELLING SHAREHOLDERS
The common stock covered by this prospectus consists of shares issued or
issuable to the selling shareholders pursuant to the conversion from time to
time of Series A preferred shares.
The maximum number of shares that may actually be sold by the selling
shareholders is 862,069. Because the selling shareholders may sell all, some or
none of the shares of common stock which they may hold, and because the offering
contemplated by this prospectus is not currently being underwritten, no estimate
can be given as to the number of shares of common stock that will be held by the
selling shareholders upon termination of the offering.
The following table sets forth certain information regarding the selling
shareholders, including:
- The name of the selling shareholders,
- The beneficial ownership of common stock of the selling
shareholders as of September 29, 2000, and
- The maximum number of shares of common stock offered by the
selling shareholders.
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<PAGE> 19
The information as to beneficial ownership is based on data
furnished to us by the selling shareholders as of September 29, 2000.
<TABLE>
<CAPTION>
Selling Shareholder Shares of Common Stock Shares of Common Stock
------------------- Beneficially Owned Prior to Registered For Resale Pursuant
Offering to this Registration Statement(1)
--------------------------- ---------------------------------
<S> <C> <C>
Jon M. Morgan Pension Plan 0 86,207 (1.0%)
303 W. Wall St. Suite 1700
Midland, TX 79701
J. M. Mineral and Land Co., Inc. 0 86,207 (1.0%)
303 W. Wall St. Suite 1700
Midland, TX 79701
John R. Norwood Pension Plan 0 21,552 (0.2%)
303 W. Wall St. Suite 1700
Midland, TX 79701
Gary J. Lamb 0 21,552 (0.2%)
303 W. Wall St. Suite 1700
Midland, TX 79701
Frosty Gilliam, Jr. 0 43,103 (0.5%)
4840 E. University Suite 200
Odessa, TX 79762
John D. Bergman 0 43,103 (0.5%)
600 N. Marienfield Suite 1100
Midland, TX 79701
A. Scott Dufford 0 64,655 (0.7%)
303 W. Wall St. Suite 1702
Midland, TX 79701
Stallings Properties, Ltd. 0 64,655 (0.7%)
P. O. Box 10217
Midland, TX 79702
SoftOp, LP. 0 107,759 (1.2%)
400 Pine Street Suite 1010
Abilene, TX 79601
Lighthouse Partners, LLP 0 43,103 (0.5%)
400 Pine Street Suite 1010
Abilene, TX 79601
Ray McGlothlin, Jr.
</TABLE>
----------
(1) "(__%)" represents the selling stockholder's percentage ownership of the
Company's total outstanding.
15
<PAGE> 20
<TABLE>
<S> <C> <C>
400 Pine Street Suite 1010 0 64,655 (0.7%)
Abilene, TX 79601
Julia Jones Matthews Family
Trust 0 64,655 (0.7%)
P.O. Box 176
Abilene, TX 79604
Dodge Jones Foundation
P.O. Box 176 0 150,863 (1.7%)
Abilene, TX 79604
</TABLE>
PLAN OF DISTRIBUTION
The sale of the shares offered by this prospectus may be made in the
Nasdaq National Market or other over-the-counter markets at prices and at terms
then prevailing or at prices related to the then current market price or in
negotiated transactions. These shares may be sold by one or more of the
following:
- A block trade in which the broker or dealer will attempt to sell shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction.
- Purchases by a broker or dealer as principal and resale by a broker or
dealer for its account using this prospectus.
- Ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
- In privately negotiated transactions not involving a broker or dealer.
In effecting sales, brokers or dealers engaged to sell the shares may
arrange for other brokers or dealers to participate. Brokers or dealers engaged
to sell the shares will receive compensation in the form of commissions or
discounts in amounts to be negotiated immediately prior to each sale. These
brokers or dealers and any other participating brokers or dealers may be deemed
to be underwriters within the meaning of the Securities Act of 1933 in
connection with these sales. We will receive no proceeds from any resales of the
shares offered by this prospectus, and we anticipate that the brokers or
dealers, if any, participating in the sales of the shares will receive the usual
and customary selling commissions.
To comply with the securities laws of some states, if applicable, the
shares will be sold in these states only through brokers or dealers. In
addition, in some states, the shares may not be sold in those states unless they
have been registered or qualified for sale in these states or an exemption from
registration or qualification is available and is complied with.
Each sale may be made either at market prices prevailing at the time of
such sale, at negotiated prices, at fixed prices, which may be changed, or at
prices related to prevailing market prices.
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<PAGE> 21
If necessary, the specific shares of our common stock to be sold, the
names of the selling shareholders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is a
part. We are required to register under applicable federal and state securities
laws, shares of our common stock issued to the selling shareholders under the
Sponsorship Agreement.
Under applicable rules and regulations under Regulation M under the
Securities Exchange Act of 1934, any person engaged in the distribution of the
common stock may not simultaneously engage in market making activities, subject
to certain exceptions, with respect to the common stock for a specified period
set forth in Regulation M prior to the commencement of such distribution and
until its completion. In addition and without limiting the foregoing, the
selling shareholder will be subject to the applicable provisions of the
Securities Act of 1933 and Securities Exchange Act of 1934 and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of the common
stock by the selling shareholder. The foregoing may affect the marketability of
the common stock.
We will bear all expenses of the offering of the common stock, except
that the selling shareholders will pay any applicable underwriting commissions
and expenses, brokerage fees and transfer taxes, as well as the fees and
disbursements of counsel to and experts for the selling shareholders.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC periodic reporting filing number is 0-22847.
You may read and copy any document we file with the SEC at the SEC's public
reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's public reference rooms located at it's regional offices in New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for
further information on the operation of public reference rooms. You can also
obtain copies of this material from the SEC's Internet web site located at
http://www.sec.gov.
The SEC allows us to incorporate by reference the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a 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 Exchange Act of 1934:
- The description of our common stock, par value $.01 per share, contained in
our registration statement on Form SB-2, declared effective by the SEC on
September 24, 1997, and Post-Effective Amendment No. 2 to that Form SB-2
declared effective by the SEC on May 4, 1999.
- Our annual report on Form 10-K for the year ended December 31, 1999.
- Our quarterly report on Form 10-Q for the quarter ended March 31, 2000.
- Our quarterly report on Form 10-Q for the quarter ended June 30, 2000.
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<PAGE> 22
- Our Definitive Proxy Statement on Schedule 14A as filed with the SEC on
March 30, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and telephone number:
Crosswalk.com, inc.
4100 Lafayette Drive, Suite 110
Chantilly, VA 20151
(703) 968-4808
Attn: Shareholder Services
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
The selling shareholders will not make an offer of these shares 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 page
of this prospectus.
LEGAL MATTERS
Morrison & Foerster LLP, Washington D.C., has passed on the validity of
the issuance of the shares registered by this prospectus.
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, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young's report, given on their authority as experts in accounting and
auditing.
Hoffman, Fitzgerald & Snyder PC, (formerly Hoffman, Morrison & Fitzgerald PC),
independent auditors, have audited our consolidated financial statements as of
December 31, 1998 and for the years ended December 31, 1998 and 1997 included in
our Annual Report on Form 10-K for the year ended December 31, 1999, as set
forth in their report, which is incorporated by reference in this registration
statement. Our financial statements are incorporated by reference in reliance on
Hoffman, Fitzgerald & Snyder PC's report, given on their authority as experts in
accounting and auditing.
INDEMNIFICATION
Our articles of incorporation provide that we shall indemnify, to the
full extent permitted by Delaware law, any of our directors, officers, employees
or agents who are made, or threatened to be made, a party to a proceeding by
reason of the fact that he or she is or was one of our directors, officers,
employees or agents against judgments, penalties, fines, settlements and
reasonable expenses incurred by the person in connection with the proceeding if
specified standards are met. Although indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to our directors, officers and
controlling persons under these provisions, we have been advised that, in the
opinion of the SEC, indemnification for liabilities arising under the Securities
Act of 1933 is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
18
<PAGE> 23
Our certificate of incorporation also limits the liability of our
directors to the fullest extent permitted by the Delaware law. Specifically, our
certificate of incorporation provides that our directors will not be personally
liable for monetary damages for breaches of their fiduciary duties as directors,
except for:
- Any breach of the duty of loyalty to our company or our shareholders,
- Acts or omissions not in good faith or that involved intentional misconduct
or a knowing violation of law,
- Dividends or other distributions of corporate assets that are in
contravention of specified statutory or contractual restrictions,
- Violations of specified laws, or
- Any transaction from which the director derives an improper personal
benefit.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus in connection with the offer made by this prospectus and, if given or
made, the information or representations must not be relied upon as having been
authorized by Crosswalk. This prospectus does not constitute an offer to sell or
the solicitation of any offer to buy any security other than the securities
offered by this prospectus, nor does it constitute an offer to sell or a
solicitation of any offer to buy the securities offered by this prospectus by
anyone in any jurisdiction in which the offer or solicitation is not authorized,
or in which the person making the offer or solicitation is not qualified to do
so, or to any person to whom it is unlawful to make an offer or solicitation.
Neither the delivery of this prospectus nor any sale made under this prospectus
shall, under any circumstances, create any implication that information
contained in this prospectus is correct as of any time subsequent to the date of
this prospectus.
CROSSWALK.COM, INC.
-----------------------------
PROSPECTUS
-----------------------------
November 1, 2000
19
<PAGE> 24
PART II
INFORMATION NOT REQUIRED TO BE IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses of Crosswalk.com in
connection with the sale and distribution of the shares being registered
pursuant to this Form S-3 Registration Statement. All of the amounts shown are
estimates, except for the Securities and Exchange Commission registration fee
and the Nasdaq listing fee. All of such expenses will be paid by Crosswalk.com.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission fee $ 528
Accounting fees and expenses 2,000
Legal fees and expenses 2,000
Printing, Filing 1,400
-----
TOTAL $5,928
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Crosswalk.com's certificate of incorporation provides that Crosswalk.com
shall indemnify, to the full extent permitted by Delaware law, any director,
officer, employee or agent of Crosswalk.com made or threatened to be made a
party to a proceeding, by reason of the fact that such person is or was a
director, officer, employee or agent of Crosswalk.com against judgments,
penalties, fines, settlements and reasonable expenses incurred by the person in
connection with the proceeding if certain standards are met. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may be permitted to directors, officers and controlling persons of
Crosswalk.com pursuant to the foregoing provisions, or otherwise, Crosswalk.com
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.
Crosswalk.com's certificate of incorporation limits the liability of its
directors to the fullest extent permitted by Delaware law. Specifically, the
certificate of incorporation provides that directors of Crosswalk.com will not
be personally liable for monetary damages for breach of fiduciary duty as
directors, except for (i) any breach of the duty of loyalty to Crosswalk.com or
its shareholders, (ii) acts or omissions not in good faith or that involved
intentional misconduct or a knowing violation of law, (iii) dividends or other
distributions of corporate assets that are in contravention of certain statutory
or contractual restrictions, (iv) violations of certain laws, or (v) any
transaction from which the director derives an improper personal benefit.
Liability under federal securities law is not limited by the foregoing.
20
<PAGE> 25
<TABLE>
<CAPTION>
Item 16. Exhibits
<S> <C>
4.1 Certificate of Incorporation, as amended, of Crosswalk.com, Inc. (1)
4.2 Bylaws of Crosswalk.com, Inc. (2)
4.3 Specimen form of Crosswalk.com, Inc. common stock certificate (2)
4.4 Certificate of Designations for Series A Preferred Stock*
5.1 Opinion of Morrison & Foerster LLP*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of Hoffman, Fitzgerald & Snyder PC, (formerly Hoffman, Morrison & Fitzgerald PC)*
23.3 Consent of Morrison & Foerster LLP (included as part of Exhibit 5.1)
</TABLE>
------------------
* Filed herewith
(1) Filed on Form S-8, filed May 28, 1999, Commission File No. 333-79663.
(2) Incorporated by reference from our Form SB-2, declared effective by the SEC
on September 24, 1997 (Commission File No. 333-25937), and Post-Effective
Amendment No. 2 to that Form SB-2 declared effective by the SEC on May 4, 1999
(Commission File No. 000-22847).
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, (b) 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 together,
represent a fundamental change in the information in the registration
statement, and to include any additional or changed material information
on the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(2) That, for the purpose of determining liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant as discussed above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. 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
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connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE> 27
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 Chantilly, State of Virginia, on October 30, 2000.
CROSSWALK.COM, INC.
By /s/ William M. Parker
-----------------------------------
William M. Parker, Chief Executive
Officer
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<PAGE> 28
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William M. Parker and Gary A. Struzik, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him/her and in his/her name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full powers and authority to do and perform each and
every act and things requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their 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, the following
persons in the capacities indicated have signed this registration statement
below on October 31, 2000:
<TABLE>
<S> <C>
By /s/ William M. Parker
---------------------------
William M. Parker
(Chief Executive Officer,
President and Director)
By /s/ Gary A. Struzik By /s/ James G. Buick
--------------------------- ------------------------
Gary A. Struzik James G. Buick
(Chief Financial Officer and Secretary, (Chairman of the Board and Director)
Chief Accounting Officer)
By /s/ Stephen M. Wike By /s/ Clay T. Whitehead
--------------------------- ------------------------
Stephen M. Wike Clay T. Whitehead
Chief Operating Officer and Director
Director
By /s/ Dane B. West By /s/ W.R. 'Max' Carey
--------------------------- ------------------------
Dane B. West W.R. 'Max' Carey
Director Director
By /s/ Bruce E. Edgington By /s/ Earl E. Gjelde
--------------------------- ------------------------
Bruce E. Edgington Earl E. Gjelde
Director Director
By /s/ Robert C. Varney, Ph.D. By /s/ Jon Morgan
--------------------------- ------------------------
Robert C. Varney, Ph.D. Jon Morgan
Director Director
</TABLE>
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