<PAGE> 1
FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-83135
SUPPLEMENT NO. 1 DATED AUGUST 31, 1999
TO PROSPECTUS DATED JULY 30, 1998
RELATING TO
17,504,129 SHARES OF
COMMON STOCK
$0.001 PAR VALUE PER SHARE OF
BEYOND.COM CORPORATION
------------------
SEE "RISK FACTORS" BEGINNING ON
PAGE 3 OF THE ACCOMPANYING PROSPECTUS
FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------
All capitalized terms used but not defined herein shall have the meanings
prescribed in the Prospectus dated July 30, 1999, forming a part of the
Registration Statement on Form S-3, File No. 333-83135. This Prospectus
Supplement is incorporated by reference into the Prospectus and should be read
in conjunction with the Prospectus. Any cross references in this Supplement
refer to portions of the Prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The following information amends and updates the information found on pages
24 - 28 of the Prospectus under the caption "Selling Securityholders" based upon
certain information received, and relied on, by the Company through August 30,
1999 as to the security ownership of the Selling Securityholders:
<PAGE> 2
SELLING STOCKHOLDERS
The following table provides the name of the selling stockholders and the
number of shares of common stock owned by the selling stockholders. Since the
selling stockholders may each sell all, some or none of their respective shares,
we cannot estimate the aggregate number and percentage of shares of common stock
that the selling stockholders will offer pursuant to this prospectus or that the
selling stockholders will own upon completion of an offering to which this
prospectus relates.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
William S. McKiernan......................... 8,407,577 23.4% 8,407,577 -- *
Vulcan Ventures Inc.......................... 2,932,375 8.2 2,932,375 -- *
110 110th Avenue NE, Suite 550
Bellevue, WA 98004
Global Retail Partners, L.P. and its
affiliates(2).............................. 1,188,924 3.3 1,188,924 -- *
2121 Avenue of the Stars, Suite 1630
Los Angeles, CA 90067
Bong Ju Suh.................................. 699,343 1.9 699,343 -- *
1350 Cole Street
San Francisco, CA 94117
Carlie Pasha Headapohl and William Ellin
Headapohl
TTEE 1996 Headapohl Family Trust........... 699,343 1.9 699,343 -- *
118 26th Avenue
San Francisco, CA 94121
CNET, Inc.................................... 683,443 1.9 683,443 -- *
Attn: Douglas Woodrum, Chief Financial
Officer
150 Chestnut Street
San Francisco, CA 94111
At Home Corporation.......................... 671,563 1.9 671,563 -- *
Attn: David Pine, VP, General Counsel
425 Broadway Street
Redwood City, CA 94063
Entities affiliated with C.E. Unterberg,
Towbin(3).................................. 479,515 1.3 479,515 -- *
Swiss Bank Tower
10 East 50th Street, 22nd Floor
New York, New York 10002
ZD Inc....................................... 394,250 1.1 394,250 -- *
Attn: Daryl Otte
28 East 28th Street
New York, NY 10016
Draper Richards L.P.......................... 118,552 * 118,552 -- *
Attn: Robin Donohoe
50 California Street
Suite 2925
San Francisco, CA 94114
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Bayview Investors Ltd........................ 104,229 * 104,229 -- *
c/o BancBoston Robertson Stephens
Attn: Jennifer Sherrill
555 California Street
Suite 2600
San Francisco, CA 94104
Jay Erik Lou................................. 80,750 * 80,750 -- *
2144 Green Street, #8
San Francisco, CA 94123
D. Kathryn Weller............................ 68,903 * 68,903 -- *
c/o Morgan Stanley Dean Witter
Attn: David Huang
6140 Stoneridge Mall Road
Suite 100
Pleasanton, CA 94588
Jody M. Sherman.............................. 52,810 * 52,810 -- *
Morgan Stanely Dean Witter
Attn: David Huang
6140 Stoneridge Mall Road
Suite 100
Pleasanton, CA 94588
Charles Moldow............................... 52,253 * 52,253 -- *
170 Seminary Drive
Menlo Park, CA 94025
Stanley J. Meresman.......................... 37,192 * 37,192 -- *
2071 Huntington Lane
Los Altos, CA 94024
Marian Susan Boardley........................ 36,424 * 36,424 -- *
c/o SalomonSmithBarney
Attn: Matthew L. Megorden
350 California Street, 22 nd Floor
San Francisco, CA 94104
Niall D. Hawkins............................. 33,878 * 33,878 -- *
3060 Turk Street
San Francisco, CA 94118
Wendover LLC................................. 33,848 * 33,848 -- *
Attn: H. Rankin, Jr.
66 Stanton Road
Darien, CT 06820
Charles R. Ewald............................. 29,637 * 29,637 -- *
50 California Street
Suite 2925
San Francisco, CA 94111
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Russell S. Reynolds Jr....................... 29,637 * 29,637 -- *
39 Clapboard Ridge Road
Greenwich, CT 06830
Doris Lynn Ellwood........................... 29,139 * 29,139 -- *
4812 SW 39th Drive
Portland, OR 97221
Thomas Warford Mullen........................ 26,276 * 26,276 -- *
850 Covington Road
Los Altos, CA 94024
Robert C. Harris............................. 25,000 * 25,000 -- *
One Sansome Street, 41st. Fl
San Francisco, CA 94104
Todd Rankin.................................. 22,325 * 22,325 -- *
730 Shrader Street
San Francisco, CA 94117
Wilblairco Associates, L.P................... 20,951 * 20,951 -- *
222 W. Adams Street
Chicago, IL 60606
ARBA, LLC.................................... 19,160 * 19,160 -- *
c/o Pell Development Co.
Attn: Dave Pell
600 Harrison Street
Suite 100
San Francisco, CA 94107
Scott and Rhonda Sorochak.................... 18,568 * 18,568 -- *
804 Whitehaven Place
San Ramon, CA 94583
RMC Investments, LLC......................... 17,237 * 17,237 -- *
c/o E. Tyler Miller
11750 Sorrento Valley Road
San Diego, CA 92121
Thanos Triant................................ 14,929 * 14,929 -- *
2170 Stockbridge Avenue
Woodside, CA 94062
Junho Suh.................................... 14,433 * 14,433 -- *
3950 Medford Street
Los Angeles 90063
Carlos Ramiro Teran.......................... 13,445 * 13,445 -- *
3199 Clay Street, #9
San Francisco, CA 94115
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Rainbow Trading Venture Partners, L.P........ 12,745 * 12,745 -- *
8201 Preston Road, Suite 400
Dallas, TX 75225
Fincher W. Smith............................. 10,848 * 10,848 -- *
2609 Cline Street
Tallahassee, FL 32312
William F. Headapohl......................... 10,649 * 10,649 -- *
120 Ben Hogan Drive
Missoula, MT 59803
Bruce Moldow................................. 9,355 * 9,355 -- *
5061 N.W. 119th Terrace
Coral Springs, FL 33076
Adrian Scott................................. 8,462 * 8,462 -- *
11 Brush Place, #1
San Francisco, CA 94103
Robert B. Deans, Jr.......................... 8,462 * 8,462 -- *
545 Madison Avenue
9th Floor
New York, NY 10022
Brad Garlinghouse............................ 8,394 * 8,394 -- *
1428 Oak Street
San Mateo, CA 94402
Brett Helm................................... 8,394 * 8,394 -- *
12155 Travertine Court
Poway, CA 92064
Wade Brown................................... 8,310 * 8,310 -- *
1705 Long Gate Road
Plymouth, CA 95669
Andrew L. Joos............................... 7,554 * 7,554 -- *
241 Arroyo Grande Way
Los Gatos, CA 95032
Ronald & Gayle Conway as Trustees of the
Conway
Family Trust dated 9/25/96................. 7,464 * 7,464 -- *
76 Adam Way
Atherton, CA 94027
Stanley J. and Sharon A. Meresman, as
Trustees of
the Meresman Family Trust U/D/T dated
9/19/89.................................... 7,464 * 7,464 -- *
2071 Huntington Lane
Los Altos, CA 94024
Jeff Kolodin................................. 6,769 * 6,769 -- *
43603 Daphney House Court
Potomac, MD 20850
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Garson Soe................................... 6,296 * 6,296 -- *
123 Woodview Circle
San Ramon, CA 94583
Berton and Gloria Muldow..................... 5,971 * 5,971 -- *
35 Bermuda Road
Westport, CT 06880
Jaideep Singh................................ 5,876 * 5,876 -- *
5 Villa Terrace
San Francisco, CA 94114
Kristin Link................................. 5,540 * 5,540 -- *
4 Lyndhurst Court
Belmont, CA 94002
Joseph R. Maravillas......................... 5,412 * 5,412 -- *
2231 Santa Ana Drive
Fairfield, CA 94533
Craig Winfield Johnson....................... 5,280 * 5,280 -- *
25 Cherokee Court
Portola Valley, CA 94028
Trevor Colby................................. 5,036 * 5,036 -- *
6701 Dune Drive
Malibu, CA 90265
James L. Brock............................... 4,478 * 4,478 -- *
1837 Brewster Avenue
Redwood City, CA 94062
CNA Trust Company, TTEE ULG 401(k) Retirement
Plan,
FBO Robert V. W. Zipp...................... 4,478 * 4,478 -- *
3080 South Bristol Street
Costa Mesa, CA 92626
Chris Berwind................................ 4,198 * 4,198 -- *
At Home Network
450 Broadway
Redwood City, CA 94063
Craig and Kathy Dunnigan..................... 4,198 * 4,198 -- *
3211 Bonita Drive
Sacramento, CA 95821
Joe Haar..................................... 4,198 * 4,198 -- *
2206 Foxworthy Avenue
San Jose, CA 95124
Eric and Lisa Kurland........................ 4,198 * 4,198 -- *
3040 Magnum Drive
San Jose, CA 95135
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Frank J. and Caroline Martini................ 4,198 * 4,198 -- *
4139 Terra Granada Drive 1B
Walnut Creek, CA 94595
William Martini.............................. 4,198 * 4,198 -- *
3131 Grey Eagle Drive
Walnut Creek, CA 94595
Kenneth Paris................................ 4,198 * 4,198 -- *
PMB # 345
2657 Windmill Parkway
Henderson, NV 89014
Terry Pashoian............................... 4,198 * 4,198 -- *
2859 S. Bascom Avenue, #302
Campbell, CA 95008
Patrick Lin.................................. 4,197 * 4,197 -- *
8 Honey Hill Road
Orinda, CA 94563
The Community Trust Under the Green Family
Trust Under Agreement Dated November 6,
1995....................................... 3,579 * 3,579 -- *
25 Magnolia Drive
Atherton, CA 94027
Mark A. Medearis............................. 2,996 * 2,996 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Teresa M. Crummett........................... 2,985 * 2,985 -- *
1999 Green Street, #104
San Francisco, CA 94123
Frank Czyz................................... 2,938 * 2,938 -- *
148 Haverhill Court
San Jose, CA 95139
Donald M. Keller, Jr......................... 2,693 * 2,693 -- *
165 James Avenue
Atherton, CA 94027
Tae Hea Nahm................................. 2,693 * 2,693 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Tyler Abbott................................. 2,099 * 2,099 -- *
105 Fairmount Street
San Francisco, CA 94131
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Richard and Brenda Albright.................. 2,099 * 2,099 -- *
2348 Gammay Common
Livermore, CA 94550
Murray J. and Alice K. Kurland............... 2,099 * 2,099 -- *
418 Stuart Lane
Palatine, IL 60067-6730
David Scher.................................. 2,099 * 2,099 -- *
2200 Nordica Court
Las Vegas, NV 84117
Forrest Stamps............................... 2,099 * 2,099 -- *
177 Valdivia Circle
San Ramon, CA 94583
Ken and Ann Schwing.......................... 2,098 * 2,098 -- *
2020 Limerick Lane
Brookfield, WI 53045
Mark Windfeld-Hansen......................... 2,087 * 2,087 -- *
1040 Parrott Drive
Hillsborough, CA 94010
Elias J. Blawie.............................. 1,783 * 1,783 -- *
665 San Mateo Drive
Menlo Park, CA 94025
Mark Bennett Weeks........................... 1,481 * 1,481 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
William W. Ericson........................... 1,279 * 1,279 -- *
4750 Carillon Point
Kirkland, WA 98033
Steven J. Tonsfeldt.......................... 1,279 * 1,279 -- *
75 Holbrook Lane
Atherton, CA 94027
Craig Elliott Sherman........................ 1,078 * 1,078 -- *
c/o Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Jeffrey Y. Suto.............................. 1,078 * 1,078 -- *
c/o Venture Law Group
2775 Sand Hill Road
Menlo Park, CA 94025
Kevin Schwing................................ 1,007 * 1,007 -- *
120 Cameron Street, #CS106
Alexandria, VA 22314
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Cathryn S. Chinn............................. 928 * 928 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Sonya F. Erickson............................ 928 * 928 -- *
c/o Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Edmund S. Ruffin, Jr......................... 928 * 928 -- *
842 Edgewood Road
Redwood City, CA 94062
Glen R. Van Ligten........................... 928 * 928 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Scott Gregory Jower.......................... 637 * 637 -- *
180 Derby Lane
Moraga, CA 94556
John V. Bautista............................. 617 * 617 -- *
4 Brady Place
Menlo Park, CA 94025
Jon E. Gavenman.............................. 617 * 617 -- *
2061 Camino A Los Cerros
Menlo Park, CA 94025
David C. Lee................................. 569 * 569 -- *
1910 Polk Court
Mountain View, CA 94040
Michael Andrew Morrissey..................... 569 * 569 -- *
2775 Sand Hill Road
Menlo Park, CA 94027
Renee R. Deming.............................. 542 * 542 -- *
309 Walsh Road
Atherton, CA 94025
Laura Andrea Gordon.......................... 532 * 532 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Kara Diane Palmer............................ 532 * 532 -- *
1919 E. Blaine Street
Seattle, WA 98112
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Christine A. Tomomatsu....................... 532 * 532 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Jon C. Richards.............................. 461 * 461 -- *
1031 Hamilton Avenue
Palo Alto, CA 94301
Christopher J. Hurley........................ 268 * 268 -- *
1722 4th Avenue North
Seattle, WA 98109
Kate West Rowan.............................. 216 * 216 -- *
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Kenneth D. Cramer............................ 93 * 93 -- *
1648 Eaton Avenue
San Carlos, CA 94070
16 other selling stockholders, the aggregate
share...................................... 195,755 * 195,755 -- *
amount of which is less than 1% of the
outstanding common stock prior to the
offering(4)
</TABLE>
- -------------------------
* Represents beneficial ownership of less than 1% of our common stock.
(1) Percent of shares beneficially owned prior to and after this offering is
determined based on 35,907,657 shares outstanding as of June 30, 1999.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. The number of shares beneficially owned
by a person includes shares of common stock subject to options held by that
person that are currently exercisable or exercisable within 60 days of June
30, 1999. Such shares issuable pursuant to such options are deemed
outstanding for computing the percentage ownership of the person holding
such options but not deemed outstanding for the purposes of computing the
percentage ownership of each other person. To our knowledge, the persons
named in this table have sole voting and investment power with respect to
all shares of common stock shown as owned by them, subject to community
property laws where applicable and except as indicated in the other
footnotes to this table. Unless otherwise indicated, the address of each of
the individuals named above is: c/o Beyond.com Corporation, 1195 West
Fremont Avenue, Sunnyvale, California 94087.
(2) Represents 755,676 shares held by Global Retail Partners, L.P., 52,026
shares held by Global Retail Partners Funding, Inc., 10,295 shares held by
Global Retail Partners, Inc., 49,124 shares held by GRP Partners, L.P.,
225,173 shares held by DLJ Diversified Partners, L.P., 83,625 shares held by
DLJ Diversified Partners-A, L.P., 7,951 shares held by DLJ First ESC L.P.
and 5,054 shares held by DLJ ESC II L.P.
(3) Represents 56,791 shares of common stock held by UT Capital Partners
International, LDC (formerly UH Capital Partners International, LDC),
345,753 shares held by UT Technology Partners, LDC (formerly UH Technology
Partners, LDC); 37,747 shares held by Unterberg Harris Private Equity
Partners, L.P., 8,063 shares held by Unterberg Harris
10
<PAGE> 11
Private Equity Partners, CV, 5,769 shares held by C.E. Unterberg Towbin LLC
and an aggregate of 25,392 shares held by individuals associated with these
entities.
(4) Represents 195,755 shares held by 16 stockholders who received such shares
in connection with the merger of one of our wholly-owned subsidiaries with
and into BuyDirect.com, Inc. and the exchange of all common and preferred
stock of BuyDirect.com, Inc. held by them, who, in the aggregate, hold less
than 1% of the outstanding common stock prior to this offering.
11
<PAGE> 12
17,504,129 SHARES
BEYOND.COM CORPORATION
COMMON STOCK
-------------------------
This prospectus relates to 17,504,129 outstanding shares of our common
stock that the selling stockholders named in this prospectus may offer from time
to time. Of these shares, 4,437,042 shares were issued to holders of
BuyDirect.com, Inc.'s common and preferred stock in connection with a
transaction whereby one of our wholly-owned subsidiaries merged with and into
BuyDirect.com, Inc. We are filing the registration statement of which this
prospectus is a part to satisfy our contractual obligations relating to the
shares issued in connection with the BuyDirect.com merger, as well as to provide
additional holders of up to 13,067,087 outstanding shares of our common stock
with freely tradeable securities. The registration of these shares does not
necessarily mean that any of the selling stockholders will offer or sell their
shares.
We are not offering or selling any shares of our common stock pursuant to
this prospectus. We will not receive any of the proceeds from the sale by the
selling stockholders of the shares of common stock. We will bear the expenses of
the offering of the common stock, except that the selling stockholders will pay
any applicable underwriting fees, discounts or commissions and transfer taxes,
as well as the feels and disbursements of his or her counsel and experts.
Our common stock is listed for trading on The Nasdaq Stock Market's
National Market under the symbol "BYND". On July 29, 1999, the last reported
sales price for our common stock on The Nasdaq Stock Market's National Market
was $21.00.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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 July 30, 1999
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RISK FACTORS........................ 3
BEYOND.COM CORPORATION.............. 22
USE OF PROCEEDS..................... 23
DIVIDEND POLICY..................... 23
SELLING STOCKHOLDERS................ 24
DESCRIPTION OF CAPITAL STOCK........ 29
PLAN OF DISTRIBUTION................ 34
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LEGAL MATTERS....................... 35
EXPERTS............................. 35
WHERE YOU CAN FIND MORE
INFORMATION....................... 35
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE...................... 36
</TABLE>
-------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. INFORMATION CONTAINED IN BEYOND.COM'S WEB SITE
DOES NOT CONSTITUTE PART OF THIS DOCUMENT. THIS DOCUMENT MAY BE USED ONLY WHERE
IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY
BE ACCURATE ON THE DATE OF THIS DOCUMENT.
2
<PAGE> 14
RISK FACTORS
You should carefully consider the risks described below before making a
decision to purchase shares of our common stock. If any of the following risks
actually occur, our business, financial condition or results of future
operations could be materially adversely affected. In such case, the trading
price of our common stock could decline, and you may lose all or part of your
investment. This prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of many factors,
including the risks faced by us described below and elsewhere in this
prospectus.
WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED NET LOSSES SINCE
INCEPTION AND EXPECT FUTURE LOSSES
We began selling software on our Web site in November 1994. As a result, we
have only a limited operating history upon which you may evaluate our business
and prospects. We incurred net losses of $57.5 million from inception of our
business through March 31, 1999. As of March 31, 1999, we had an accumulated
deficit of $61.2 million. We expect to continue to incur significant net
operating losses for the foreseeable future.
WE ANTICIPATE SIGNIFICANT LOSSES AND NEGATIVE CASH FLOW
We expect significant operating losses and negative cash flow to continue
for the foreseeable future. We anticipate our losses will increase significantly
from current levels because we expect to incur additional costs and expenses
related to:
- brand development, marketing and promotion;
- Web site content development;
- strategic relationship development and maintenance; and
- technology and operating infrastructure development, including improved
digital download capabilities.
In addition, in March 1999 we completed a transaction whereby one of our
wholly-owned subsidiaries merged with and into BuyDirect.com, Inc., an online
software retailer. As a result of the BuyDirect.com merger, we expect that our
losses will increase even more significantly due to additional costs and
expenses related to:
- increased headcount;
- additional facilities and infrastructure; and
- assimilation of operations and personnel.
In addition, as a result of the BuyDirect.com merger we recorded a
significant amount of goodwill, the amortization of which will adversely affect
our earnings and profitability for the foreseeable future. We recorded goodwill
and other intangible assets as of March 31, 1999 of approximately $136 million,
which are being amortized through 2002. We believe it is likely that we will not
generate additional earnings sufficient to recover the amount of goodwill and
other intangible assets recorded during the period in which they are amortized.
3
<PAGE> 15
Because we have relatively low gross margins, our ability to become
profitable given our planned expenses depends on our ability to generate and
sustain substantially higher net revenues. If we do achieve profitability, we
cannot be certain that we can sustain or increase profitability on a quarterly
or annual basis in the future.
We base our current and future expense levels, which are largely fixed, on
our operating plans and estimates of future revenues. We find sales and
operating results difficult to forecast, because they generally depend on the
volume and timing of the orders we receive. As a result, we may be unable to
adjust our spending in a timely manner to compensate for any unexpected revenue
shortfall. A shortfall in revenues will significantly harm our business and
operating results. In view of the rapidly evolving nature of our business,
proposed and possible future acquisitions and our limited operating history of
selling software online, we have little experience forecasting our revenues.
Therefore, we believe that period-to-period comparisons of our financial results
are not necessarily meaningful and you should not rely upon them as an
indication of our future performance. If we cannot achieve and sustain operating
profitability or positive cash flow from operations, we may be unable to meet
our debt service obligations or working capital requirements, which would
adversely affect our business.
OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE
Our revenues and operating results may fluctuate significantly from quarter
to quarter due to a number of factors, not all of which are in our control.
These factors include:
- our ability to attract and retain new customers and maintain customer
satisfaction;
- new Web sites, services and products introduced by us or by our
competitors;
- price competition;
- decreases in the level of growth, use of or consumer acceptance of the
Internet and other online services for the purchase of consumer products;
- our ability to upgrade and develop our systems and infrastructure and
attract new personnel in a timely and effective manner, and our ability
to integrate BuyDirect.com's systems and personnel;
- traffic levels on our Web site and our ability to convert that traffic
into customers;
- the amount and timing of operating costs and capital expenditures
associated with integrating BuyDirect.com's personnel and operations into
our business, including but not limited to, BuyDirect.com's financial
obligations under its strategic marketing alliance agreements;
- the termination of any strategic marketing alliances such as those we
have with America Online, Excite@Home, Network Associates, Yahoo!, CNET,
Inc., Xoom.com, ZDNet, a division of ZD, Inc. and other partners pursuant
to which we receive exposure to traffic on third-party Web sites;
- the termination of contracts with major purchasers, particularly United
States government agencies;
- technical difficulties or system downtime affecting the Internet or
online services, generally, or the operation of our Web site;
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- the failure of Internet bandwidth to increase significantly over time
and/or an increase in the cost to consumers of obtaining or using
Internet bandwidth;
- the amount and timing of operating costs and capital expenditures
relating to the expansion of our business, operations and infrastructure;
- the number of popular software titles introduced;
- government regulations related to use of the Internet for commerce or
sales and distribution of software; and
- general economic conditions and economic conditions specific to the
Internet, online commerce and the software industry.
We must increase software sales through Web sites and online sites by
increasing the number of visitors to our online sites or by increasing the
percentage of visitors to our online sites who purchase software. We must also
increase the number of repeat purchasers of software through our online sites,
increase revenues from sales to consumer purchasers and digital download
software product sales in absolute dollars and as a percentage of our total net
revenues. In addition, we must successfully establish, maintain and enhance the
Beyond.com brand. We cannot be certain that we can accomplish these objectives
or that our business strategy will be successful.
Seasonal fluctuations in the software industry, Internet and commercial
online service usage, and traditional retail, government and corporate seasonal
spending patterns and advertising expenditures may affect our business. In
particular, Internet and online service usage and its rate of growth may decline
in the summer. These seasonal patterns may cause quarterly fluctuations in our
operating results and could adversely and materially affect our financial
performance.
Our gross margins are likely to fluctuate over time. A number of factors
may impact our gross margins, including:
- the mix of revenues from sales to government, corporate, consumer and
publisher channels;
- the mix of revenues from sales of shrink-wrap products and products
delivered through digital download;
- the mix of revenues from sales of software products and computer
peripheral products (such as joysticks, personal organizers and related
products);
- the mix of revenues we derive from our relationships with strategic
partners such as America Online, Excite@Home, CNET, Network Associates,
Xoom, Yahoo! and ZDNet and from our Web site; and
- the amount of advertising or promotional revenues we receive.
We realize higher gross margins from:
- advertising and promotional revenues than from software products sales;
- product sales through digital download than from sales of shrink-wrap
software products;
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- sales of specialty software products than from sales of widely available
commodity software products; and
- sales to consumer purchasers than from sales to government or corporate
purchasers.
Any change in one or more of these factors could adversely and materially
affect our gross margins and operating results in future periods. Further, we
believe that the size of new software products will continue to increase and
that they will be suitable for digital download only if network bandwidth
increases significantly. This trend may limit our ability to distribute such
software products via digital download and may limit our ability to realize the
higher gross margins associated with digital download software product sales.
Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indicator of our future
performance. It is likely that in some future quarter our operating results may
fall below the expectations of securities analysts and investors. In this event,
the trading price of our common stock may fall significantly.
WE NEED ADDITIONAL CAPITAL TO PAY DEBT SERVICE ON THE 7 1/4% CONVERTIBLE
SUBORDINATED NOTES AND FOR OTHER PURPOSES
We require substantial working capital to fund our business. We expect
operating losses and negative cash flow to continue for the foreseeable future.
We anticipate our existing capital resources will meet our capital requirements
through at least the next 12 months from the date of this prospectus. However,
we may have additional capital needs before this period ends. Thereafter, we
will likely have to raise additional funds, in part to make interest payments to
holders of our 7 1/4% Convertible Subordinated Notes, and in part to meet our
obligations to America Online, Excite@Home, CNET, Excite, Netscape, Network
Associates, Xoom, Yahoo!, ZDNet, and other partners. We may elect to seek
additional funds at any time.
The actual amount and timing of our future capital requirements may differ
materially from our estimates. In particular, our estimates may be inaccurate as
a result of changes and fluctuations in our revenues, operating costs and
development expenses. Our revenues, operating costs and development expenses
will be negatively affected by any inability to:
- effectively and efficiently manage the expansion of our operations,
including the integration of BuyDirect.com's systems and personnel;
- obtain favorable co-branding or Internet marketing agreements with third
parties similar to those with America Online, Excite@Home, CNET, Network
Associates, Xoom, Yahoo! or ZDNet;
- negotiate favorable contracts with suppliers, including large volume
discounts on purchases of software; and
- improve brand recognition, attract sufficient numbers of customers or
increase the volume of our software sales.
Our revenues and costs also depend upon factors that we cannot control.
These factors include changes in technology and regulations, increased
competition and factors such as Web integrity, seasonality, and performance by
third parties in connection with our operations. Because of these factors, our
actual revenues and costs are uncertain and may vary considerably. These
variations may significantly affect our future need for capital.
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Also, if we accelerate the expansion of our operations or complete any
acquisitions, we will require more funding sooner than we currently expect. We
may be unable to raise financing sufficient for our needs, either on suitable
terms or at all. This will hinder our ability to satisfy our obligations to
holders of our 7 1/4% Convertible Subordinated Notes. This result would
substantially harm the trading price of our common stock and materially harm our
business.
WE ARE SIGNIFICANTLY LEVERAGED AND WE REQUIRE SUBSTANTIAL AMOUNTS OF CAPITAL FOR
DEBT SERVICE
By selling the 7 1/4% Convertible Subordinated Notes in November and
December 1998, we incurred $63,250,000 principal amount of indebtedness. This
resulted in a ratio of long-term debt to total capitalization at March 31, 1999
of approximately 23 to 1. Our increased leverage could limit or reduce our
ability to obtain financing for working capital, acquisitions or other purposes
and could make us more vulnerable to industry downturns and competitive
pressures.
We will likely require substantial amounts of cash to fund scheduled
payments of principal and interest on our 7 1/4% Convertible Subordinated Notes,
future capital expenditures and any increased working capital requirements. We
believe we may be unable to meet our cash requirements out of cash flow from
operations and available borrowings. We also may be unable to obtain alternative
financing. A lack of adequate financing may adversely affect our ability to:
- respond to changing business and economic conditions;
- make future acquisitions;
- absorb negative operating results; or
- fund capital expenditures or increased working capital requirements.
We could attempt to refinance our 7 1/4% Convertible Subordinated Notes if
our cash flow from operations is insufficient to repay them at maturity.
However, a refinancing might not be available on terms acceptable to us, or at
all. If we fail to make necessary payments on our 7 1/4% Convertible
Subordinated Notes, we will be in default under the terms of our 7 1/4%
Convertible Subordinated Notes, and may also be in default under agreements
controlling our other indebtedness, if any. Any default by us under our 7 1/4%
Convertible Subordinated Notes or on other indebtedness could adversely affect
our financial condition and operating results.
WE MUST ESTABLISH OUR NEW BRAND
A growing number of Internet sites, many of which already have
well-established brands, offer products and services that compete with ours. As
a result, we believe we must establish, maintain and enhance our "Beyond.com"
brand. We have been operating under the "Beyond.com" name since August 1998. Our
success in promoting and maintaining our new brand or any other brand that we
may use in the future will depend largely on our ability to provide a high
quality online experience supported by dedicated customer service. We cannot
assure that we will be able to meet these goals. In addition, to attract and
retain online users and to promote and maintain our new brand or future brands,
we may need to substantially increase our marketing expenditures to create and
maintain strong brand loyalty among our customers. Our business could be
adversely
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affected if our marketing efforts are unproductive or if we cannot increase our
brand awareness.
OUR MARKETS ARE HIGHLY COMPETITIVE
The online commerce market is new, rapidly evolving and intensely
competitive. We expect competition to intensify in the future because barriers
to entry are minimal, and current and new competitors can launch new Web sites
at a relatively low cost. In addition, the software reselling industry is
intensely competitive. We currently compete primarily with traditional software
resellers, other online software resellers and other vendors.
In the online market, we compete with many online software resellers and
vendors that maintain similar commercial Web sites (including CompUSA,
Outpost.com, Egghead.com and Buy.com). We also compete with the growing number
of software publishers that sell their software products directly online. We
also anticipate that we may soon compete with other software publishers,
including Microsoft, that plan to sell their products directly to customers
online, and indirect competitors that specialize in online commerce or derive
significant revenues from online commerce, including America Online, Amazon.com,
barnesandnoble.com, Netscape and Yahoo!.
We also compete with:
- mail order and/or direct marketers of computer products (including
cataloguers such as Micro Warehouse and CDW Computer Centers and
manufacturers such as Dell Computer, Compaq Computer Corporation and
Gateway 2000 Incorporated); and
- major store-based retailers of software and other related products, such
as CompUSA, OfficeMax, Staples, Office Depot and Wal-Mart.
Further, these traditional store-based retailers and mail order and/or
direct marketers of computer products have established or may soon establish,
commercial Web sites offering software and computer products.
Competitive pressures created by any one of these current or future
competitors, or by competitors collectively, could have a material adverse
affect on our business.
We believe that the principal competitive factors in our market are:
- brand recognition;
- selection;
- convenience;
- price;
- speed and accessibility;
- customer service;
- quality of site content; and
- reliability and speed of fulfillment.
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In addition to those factors, competition in the large enterprise market is
also based on:
- compatibility of products;
- administration and reporting;
- single source supply;
- security; and
- cost-effective deployment.
Many of our current and potential competitors have longer operating
histories and larger customer bases than we do. In addition, many of our current
and potential competitors have greater brand recognition and significantly
greater financial, marketing and other resources than we do.
In addition, as more people use the Internet and other online services,
larger, better established and better financed entities may:
- acquire online competitors or software publishers or suppliers;
- invest in online competitors or software publishers or suppliers; or
- form joint ventures with online competitors or software publishers or
suppliers.
Certain of our actual or potential competitors, such as Ingram Micro and
Tech Data, may be able to:
- secure merchandise from vendors on more favorable terms;
- devote greater resources to marketing and promotional campaigns;
- adopt more aggressive pricing or inventory availability policies; and
- devote substantially more resources to web site and systems development
than we do.
Competitors such as Software Spectrum, Government Technology Services,
Inc., ASAP Software Express Inc. and Corporate Software & Technology have
greater experience in selling software to the large enterprise market than we
do. In addition, new technologies and expansion of existing technologies, such
as price comparison programs that select specific titles from a variety of Web
sites, may direct customers to online software resellers which compete with us
and may increase competition. Increased competition may reduce our operating
margins, as well as cause a loss to both our market share and brand recognition.
Further, to strategically respond to changes in the competitive environment, we
may sometimes make pricing, service or marketing decisions or acquisitions that
could materially hurt our business. In addition, companies controlling access to
Internet transactions through network access or Web browsers could promote our
competitors or charge us a substantial fee for inclusion in their product or
service offerings. We cannot assure that we can compete successfully against
current and future competitors. Failure to compete successfully against our
current and future competitors could materially hurt our business.
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WE RELY ON SOFTWARE PUBLISHERS AND DISTRIBUTORS
We are entirely dependent upon the software publishers and distributors
that supply us with software and computer products for resale, and the
availability of these software and computer products is unpredictable. In 1997
and 1998, sales of software provided by Microsoft and by a major software
distributor accounted for a substantial majority of our revenues. As is common
in the industry, we have no long-term or exclusive arrangements with any
publishers or distributors that guarantee the availability of software for
resale. For example, our agreement with Microsoft automatically renews for
successive one-year periods but is terminable for any reason by 30 days written
notice prior to the expiration of the given term. Although we believe that we
can replace our relationship with the major software distributor without much
difficulty, if this relationship terminates then the publishers or distributors
that currently supply us with software might cease to continue to supply us and
we might be unable to establish new relationships with other publishers and
distributors.
We also rely on software distributors to ship shrink-wrap software to
customers that do not use digital download. We have limited control over the
shipping procedures of our distributors and shipments by these distributors have
in the past been, and may in the future be, subject to delays. Although most
software we sell carries a warranty from its publisher, publishers or
distributors occasionally fail to reimburse us for returns from customers.
Furthermore, our contract with Microsoft allows Microsoft to review and approve
our creditworthiness. If Microsoft determines that we are not creditworthy or
not in compliance with payment or reporting terms, it may require us to post
security acceptable to them which could negatively impact our financial
condition.
OUR CUSTOMERS ARE CONCENTRATED AND WE ARE SUBJECT TO RISKS ASSOCIATED WITH
RELIANCE ON U.S. GOVERNMENT CONTRACTS
We have six contracts with U.S. government agencies. Two of these
agreements accounted for approximately 29% of our revenues in 1997 and 28% of
our revenues in 1998. These agreements expired in June 1998 and July 1998. We
renewed the first of these contracts for an additional one-year term that
expired in June 1999. We replaced the second contract with a new contract with
the same government agency on substantially similar terms. We signed the third
agreement in January 1999 and it will expire in January 2000. The fourth
agreement was signed in February 1999 and expires in February of 2000. The fifth
agreement was signed in April 1999 and expires in May 2000. The sixth agreement
was signed in June 1999 and expires in May 2000. We expect that these existing
contracts will continue to account for a substantial portion of our revenues for
the foreseeable future. Each of these contracts is subject to annual review and
renewal by the government, and may be terminated at any time. Each government
contract, option and extension is only valid if the government appropriates
enough funds for expenditure on such contracts, options or extensions.
Accordingly, we might fail to derive any revenue from sales of software to the
U.S. government in any given future period. If the U.S. government fails to
renew or terminates any of these contracts it would adversely affect our
business and results of operations.
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OUR COMMON STOCK PRICE IS VOLATILE
The market price for our common stock is volatile and has fluctuated
significantly to date. The trading price of our common stock is likely to
continue to be highly volatile and subject to wide fluctuations in response to
factors including the following:
- actual or anticipated variations in our quarterly operating results;
- announcements of technological innovations, new sales formats or new
products or services by us or our competitors;
- changes in financial estimates by securities analysts;
- conditions or trends in the Internet and online commerce industries;
- changes in the economic performance and/or market valuations of other
Internet, online service or retail companies;
- announcements by us of significant acquisitions, strategic partnerships,
joint ventures or capital commitments;
- additions or departures of key personnel; and
- sales of common stock.
In addition, the securities market has experienced extreme price and volume
fluctuations and the market prices of the securities of Internet-related and
technology companies have been especially volatile. These broad market and
industry factors may adversely affect the market price of our common stock,
regardless of our actual operating performance. In the past, following periods
of volatility in the market price of stock, many companies have been the object
of securities class action litigation. If we were to be sued in a securities
class action, it could result in substantial costs and a diversion of
management's attention and resources.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH DEPENDENCE ON THE INTERNET AND INTERNET
INFRASTRUCTURE DEVELOPMENT
Our success depends in large part on continued growth in, and the use of,
the Internet. There are critical issues concerning the commercial use of the
Internet which remain unresolved. The issues concerning the commercial use of
the Internet which we expect to affect the development of the market for our
services include:
- security;
- reliability;
- cost;
- ease of access;
- quality of service; and
- necessary increases in bandwidth availability.
The adoption of the Internet for information retrieval and exchange,
commerce and communications, particularly by those enterprises that have
historically relied upon traditional means of commerce and communications,
generally will require that these
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enterprises accept a new medium for conducting business and exchanging
information. These entities likely will accept this new medium only if the
Internet provides them with greater efficiency and an improved area of commerce
and communication.
Demand and market acceptance of the Internet are subject to a high level of
uncertainty and are dependent on a number of factors, including the growth in
consumer access to and acceptance of new interactive technologies, the
development of technologies that facilitate interactive communication between
organizations and targeted audiences and increases in user bandwidth. If the
Internet fails to develop or develops more slowly than we expect as a commercial
or business medium, it will adversely affect our business.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH ONLINE COMMERCE SECURITY AND CREDIT CARD
FRAUD
A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. To securely
transmit confidential information, such as customer credit card numbers, we rely
on encryption and authentication technology that we license from third parties.
To the extent that our activities or those of third-party contractors
involve the storage and transmission of proprietary information (such as credit
card numbers), security breaches could damage our reputation and expose us to a
risk of loss or litigation and possible liability. Our business may be adversely
affected if our security measures do not prevent security breaches and we cannot
assure that we can prevent all security breaches. In addition, we have suffered
losses as a result of orders placed with fraudulent credit card data even though
the associated financial institution approved payment of the orders. Under
current credit card practices, a merchant is liable for fraudulent credit card
transactions where, as is the case with the transactions we process, that
merchant does not obtain a cardholder's signature. Fraudulent use of credit card
data in the future could adversely affect our business.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH DIGITAL DOWNLOAD
Our success depends in large part on our customers accepting digital
download as a method of buying software. We typically derive higher gross
margins from software sales via digital download than we do on shrink-wrap
software sales. Therefore, our success also depends on our ability to increase
the revenues we derive from product sales through digital download in absolute
dollars and as a percentage of our net revenues. Digital download is a
relatively new method of selling software products and its growth and market
acceptance is highly uncertain and subject to a number of factors, including:
- the availability of sufficient network bandwidth to enable purchasers to
rapidly download software;
- the impact of time-based Internet access fees;
- the number of software titles that are available for purchase through
digital download as compared to those available through traditional
methods;
- the level of consumer comfort with the process of downloading software;
and
- the relative ease of this process and transaction security concerns.
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We believe there is a maximum size of a software product that most
consumers are willing to purchase via digital download. We also believe that the
size of new software products will continue to increase and that these software
products will be unsuitable for digital download without significant increases
in network bandwidth. It will adversely affect our business if digital download
fails to achieve widespread market acceptance. Even if digital download achieves
widespread acceptance, we might not overcome the substantial existing and future
technical challenges associated with electronically delivering software reliably
and consistently on a long-term basis. This would also adversely affect our
business.
WE RELY ON STRATEGIC MARKETING ALLIANCES
Pursuant to our current strategic alliance agreements, we are obligated to
pay a total of $52.5 million from December 31, 1998 through December 31, 2001,
of which approximately $13.1 million must be paid during the second half of
1999.
Under the terms of our agreement with America Online, we are the exclusive
reseller of software on certain screens on the America Online service and
America Online's Web site, aol.com. We are a semi-exclusive reseller of software
on certain other screens on the America Online service. America Online also must
deliver to us minimum numbers of impressions (screen views with links to our Web
site). Pursuant to our agreement with America Online, we must make fixed
payments totaling approximately $21 million. In addition, we must pay America
Online a percentage of certain transactional advertising revenues we earn above
specified minimum amounts. Our agreement with America Online terminates in
August 2001, or earlier if there is a material breach.
Under the terms of our agreement with Excite, we may display banner
advertisements and links to our Web site on certain screens on Excite Web sites,
and Excite cannot display paid promotional links or banner advertisements of any
other software reseller on specified screens of the Excite Web site related to
software. Excite also must deliver minimum numbers of impressions to us. We must
make substantial payments to Excite during the three year term of that
agreement. Also, we must pay Excite a percentage of certain transactional
revenues we earn. Our agreement with Excite terminates when Excite meets certain
obligations relating to the delivery of impressions, but no earlier than April
2001, unless there is a material breach. We are not aware of how the acquisition
of Excite by AtHome Corporation will impact our relationship with Excite under
this agreement or otherwise.
We also entered into three contracts with Network Associates. In September
1997, we were authorized to electronically distribute Network Associates'
products on our Web site. In September 1998, we agreed to co-host Web sites with
Network Associates and agreed to resell Network Associates' products on Network
Associates' Web site at www.mcafeestore.com. Under these agreements, we must
make substantial payments to Network Associates for exclusive positioning of
links to our Web site on certain screens on Network Associates' Web sites, and
rights to resell Network Associates products.
In February 1999, we entered into an agreement with Yahoo!, a global
Internet media company that offers a branded network of comprehensive
information, communication and shopping services. Under this agreement, Yahoo!
will promote and advertise Beyond.com as a premier software merchant by
delivering page views across Yahoo!'s branded network of sites, including the
Yahoo! home page, My Yahoo!, Yahoo! Shopping, Yahoo! Games and relevant
categories and search result pages in the Yahoo! directory. Over the 18-month
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term of the agreement, we will make fixed payments, which may be augmented by
certain performance-based payments.
Traffic levels on our Web site and sales we generate from that traffic
might be insufficient to justify our significant fixed financial obligations to
America Online, Excite, Network Associates, Yahoo! or to satisfy our contractual
obligations necessary to prevent termination of these agreements. In addition,
the America Online, Excite, Network Associates and Yahoo! agreements do not
provide us with automatic renewal rights upon expiration. Therefore, we may be
unable to renew these agreements on commercially acceptable terms, or at all.
Furthermore, we based our significant investment in the America Online, Excite,
Netscape, Network Associates and Yahoo! relationships on a number of factors,
including:
- the continued positive market presence of these parties;
- the reputation and anticipated growth of these parties; and
- the commitment of America Online, Excite and Yahoo! to deliver specified
numbers of screen views with links to our Web site.
Although we expect our agreements with America Online, Excite, Network
Associates and Yahoo! to represent significant distribution channels for our
software, we cannot assume that these agreements will meet this expectation. In
addition, any termination of any or all of our agreements with these companies
would likely have a material adverse affect on our business.
WE NEED TO MANAGE POTENTIAL GROWTH AND OUR MANAGEMENT TEAM IS NEW
We have rapidly and significantly expanded our operations, and anticipate
this trend will continue. On March 31, 1999, we had a total of 258 employees.
This expansion has placed, and we expect will continue to place, a significant
strain on our managerial, operational and financial resources. The majority of
our senior management, including our President and Chief Executive Officer and
our Chief Financial Officer, joined us within the last 18 months, and three
directors joined our board of directors in March 1999. The Chairman of our Board
of Directors, William S. McKiernan, also serves as the President and Chief
Executive Officer of CyberSource Corporation and, accordingly, plays a limited
role in our management. Our new employees include a number of key managerial,
technical and operations personnel who we have not yet fully integrated into our
operations, and we expect to add additional key personnel in the near future. To
manage the expected growth of our operations and personnel, we will need to
improve existing and implement new transaction processing, operational and
financial systems, procedures and controls.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH ACQUISITIONS
On March 30, 1999, we completed a transaction whereby one of our
wholly-owned subsidiaries merged with and into BuyDirect.com, an online software
retailer for consumers and business customers. There can be no assurance that we
will successfully assimilate the additional personnel, operations, acquired
technology and products of BuyDirect.com into our business, or retain key
personnel. In particular, as a result of the merger, we will have operations in
multiple facilities. We are not experienced in managing facilities in
geographically distant areas. Accordingly, this physical expansion may result in
disruptions
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that adversely affect our business. Further, there is no assurance that the
BuyDirect.com merger will not have a negative impact on our business and
financial condition. We recorded goodwill and other intangible assets as of
March 31, 1999 of approximately $136 million, which are being amortized through
2002. We believe it is likely that we will not generate additional earnings
sufficient to recover the amount of goodwill and other intangible assets
recorded during the period in which they are amortized.
In addition, we intend to continue to make investments in complementary
companies, products or technologies. If we buy a company, we could have
difficulty in assimilating that company's personnel and operations. In addition,
the key personnel of the acquired company may decide not to work for us. If we
make other types of acquisitions, we could have difficulty in assimilating the
acquired technology or products into our operations. These difficulties could
disrupt our ongoing business, distract our management and employees and increase
our expenses. In addition, future acquisitions could have a negative impact on
our business, financial condition and results of operations. Furthermore, we may
have to incur debt or issue equity securities to pay for any future acquisition,
the issuance of which would be dilutive to our existing stockholders.
WE ARE DEPENDENT ON KEY PERSONNEL AND NEED ADDITIONAL PERSONNEL
Our future success depends on the continued service and performance of our
senior management and other key personnel, particularly William S. McKiernan,
Chairman of our Board of Directors, Mark L. Breier, our President and Chief
Executive Officer, and John P. Pettitt, our Executive Vice President and Chief
Technology Officer. In connection with the BuyDirect.com merger, we added
approximately 70 new employees including managerial, technical and operations
personnel. Our performance also depends on our ability to retain and motivate
our other officers and key employees. Our success also depends on a successful
transition of BuyDirect.com's management responsibility to our senior management
team. The loss of the services of any of our executive officers or other key
employees could adversely affect our business. We do not have long term
employment agreements with any of our key personnel. Our future success also
depends on our ability to identify, attract, hire, train, retain and motivate
other highly skilled technical, managerial, editorial, merchandising, marketing
and customer service personnel. Competition for these individuals is intense,
particularly in the Silicon Valley area, and we may be unable to successfully
attract, assimilate or retain sufficiently qualified personnel in the future.
WE ARE SUBJECT TO CAPACITY CONSTRAINT RISKS, RELIANCE ON INTERNALLY DEVELOPED
SYSTEMS AND SYSTEM DEVELOPMENT RISKS
A key element of our strategy is to generate a high volume of traffic on,
and use of, our Web site. Our revenues depend on the number of customers who use
our Web site to purchase software. Accordingly, our Web site, transaction
processing systems and network infrastructure performance, reliability and
availability are critical to our operating results. These factors are also
critical to our reputation and our ability to attract and retain customers and
maintain adequate customer service levels. The volume of goods we sell and the
attractiveness of our product and service offerings will decrease if there are
any systems interruptions that affect the availability of our Web site or our
ability to fulfill orders. We have experienced periodic systems interruptions,
which we believe may continue to occur. We are continually enhancing and
expanding our technology and transaction processing systems, and network
infrastructure and other technologies, to
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accommodate a substantial increase in the volume of traffic on our Web site. We
may be unsuccessful in these efforts or we may be unable to accurately project
the rate or timing of increases in the use of our Web site. We may also fail to
timely expand and upgrade our systems and infrastructure to accommodate these
increases. In addition, we cannot predict whether additional network capacity
will be available from third party suppliers as we need it. Also, our network or
our suppliers' network might be unable to timely achieve or maintain a
sufficiently high capacity of data transmission to timely process orders or
effectively conduct digital downloads, especially if our Web site traffic
increases. Our failure to achieve or maintain high capacity data transmission
could significantly reduce consumer demand for our services.
WE MAY HAVE POTENTIAL CONFLICTS OF INTEREST WITH CYBERSOURCE CORPORATION
In connection with the spin off of our Internet commerce services business
to CyberSource in December 1997, we entered into agreements with CyberSource to
define the ongoing relationship between the two companies. At the time these
agreements were negotiated, all of our directors were also directors of
CyberSource and other members of our management team joined CyberSource as
executive officers. As a result, these agreements may not be deemed the result
of arms' length negotiations. Further, although we and CyberSource are engaged
in different businesses, the two companies currently have no policies to govern
the pursuit or allocation of corporate opportunities between us and CyberSource,
in the event they arise. Our business could be adversely affected if the
overlapping board members of the two companies, of which there are currently
two, pursue CyberSource's interests over ours either in the course of
intercompany transactions or where the same corporate opportunities are
available to both companies.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR DEPENDENCE ON CYBERSOURCE
CORPORATION
We depend upon CyberSource for certain services such as credit card
processing, fraud screening, export control, sales tax computation, electronic
licensing, hosting of electronic downloads and fulfillment messaging. In
addition, under the terms of an Inter-Company Cross License Agreement we have
with CyberSource, we license certain technology, including Sm@rtCert, from
CyberSource. CyberSource also provides these services and licenses this
technology to other customers, including our competitors. It would be disruptive
to our business if any of the following occur:
- any discontinuation of these services;
- any termination of this license;
- any reduction in performance that requires us to replace these services;
- any reduction in performance that causes us to internally develop or
license these technologies from a third party; or
- any failure by CyberSource to ensure that this software complies with
"Year 2000" requirements.
Certain former and current members of our management have joined
CyberSource in executive management positions, including William S. McKiernan,
the Chairman of our Board of Directors, who serves as President and Chief
Executive Officer of CyberSource. Currently, two members of our Board of
Directors serve on the CyberSource Board of
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<PAGE> 28
Directors. Nothing in our agreements with CyberSource prohibits CyberSource from
competing directly with us or prevents a third party from acquiring CyberSource,
either of which could adversely affect our business.
WE ARE SUBJECT TO RISK OF SYSTEM FAILURE AND OUR SYSTEMS ARE LOCATED IN SINGLE
FACILITY
Our success, in particular our ability to successfully receive and fulfill
orders and provide high quality customer service, largely depends on the
efficient and uninterrupted operation of our computer and communications
systems. Substantially all of our development and management systems are in a
single facility we lease in Sunnyvale, California. Our operational systems are
in a single location in Santa Clara, California.
Our systems and operations are vulnerable to damage or interruption from
fire, flood, power loss, telecommunications failure, break-ins, earthquake and
similar events. We have no formal disaster recovery plan and carry insufficient
business interruption insurance to compensate us for losses that may occur.
Furthermore, our security mechanisms or those of our suppliers may not prevent
security breaches or service breakdowns. Despite our implementation of security
measures, our servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions. These events could cause
interruptions or delays in our business, loss of data or render us unable to
accept and fulfill customer orders.
RAPID TECHNOLOGICAL CHANGE MAY ADVERSELY AFFECT US
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our online store. The Internet and
the online commerce industry are characterized by rapid technological change,
changes in user and customer requirements and preferences and frequent product
and service introductions. If competitors introduce products and services
embodying new technologies or if new industry standards and practices emerge,
then our existing Web site, proprietary technology and systems may become
obsolete. Our future success will depend on our ability to do the following:
- both license and internally develop leading technologies useful in our
business;
- enhance our existing services;
- develop new services and technology that address the increasingly
sophisticated and varied needs of our prospective customers; and
- respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.
To develop our Web site and other proprietary technology entails
significant technical and business risks. We may use new technologies
ineffectively or we may fail to adapt our Web site, proprietary technology and
transaction processing systems to customer requirements or emerging industry
standards. If we face material delays in introducing new services, products and
enhancements, our customers may forego the use of our services and use those of
our competitors.
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<PAGE> 29
YEAR 2000 RISK MAY ADVERSELY AFFECT US
Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the Year
2000. We have assessed our proprietary software and our internally developed
systems which permit the sale, order, processing and delivery of off-the-shelf
software to our customers to determine Year 2000 compliance. We have searched
through software code for each of these applications and believe that we have
identified all instances where date specific information is required. We have
further investigated whether these date fields contain two or four digits. Based
on our review and the results of limited testing, we believe our other
proprietary software and internally developed systems are Year 2000 compliant.
In addition to our proprietary software and internally developed systems,
we utilize software, computer technology and other services internally developed
and provided by third-party vendors that may fail due to the Year 2000
phenomenon. For example, we are dependent on the institutions involved in
processing our members' credit card payments for Internet services. We are also
dependent on telecommunications vendors and leased point-of-purchase vendors to
maintain network reliability.
Our software applications run on several hardware platforms and associated
operating systems, primarily those provided by Sun Microsystems. In addition,
our software operates in accordance with several external Internet protocols,
such as HTTP and NNTP. Our software is therefore dependent upon the correct
processing of dates by these systems and protocols. We have reviewed information
made publicly available by Sun Microsystems and our other hardware platform
providers regarding Year 2000 compliance and researched the date handling
capabilities of applicable Internet protocols. Based on this research, we do not
believe that the underlying systems and protocols that operate in conjunction
with our software applications contain material Year 2000 deficiencies. However,
we have not conducted our own tests to determine to what extent our software
running on any of our hardware platforms and in accordance with any of our
supported Internet protocols fails to properly recognize Year 2000 dates.
We use multiple software systems for our internal business purposes,
including accounting, e-mail, development, human resources, customer service and
support, and sales tracking systems. All of these applications have been
purchased or developed within the preceding 18 months. We have made inquiries of
vendors of the systems that we believe are mission critical to our business
regarding their Year 2000 readiness. Each of these vendors has indicated to us
that it believes its applications are Year 2000 compliant. However, we have not
received affirmative documentation in this regard from any of these vendors and
we have not performed any operational tests on their internal systems. We
anticipate that our systems, including components thereof provided by
third-party vendors, will be Year 2000 compliant by the Year 2000.
However, our software applications and the underlying hardware systems and
protocols running the software may contain undetected errors or defects
associated with Year 2000 date functions. Our software applications directly and
indirectly interact with a large number of other hardware and software systems.
We are unable to predict to what extent our business may be affected if our
software or the systems that operate in conjunction with our software experience
a material Year 2000 failure. Known or unknown errors or defects that affect the
operation of our software could result in delay or loss of revenue,
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<PAGE> 30
interruption of shopping services, cancellation of customer contracts,
interference with digital download, diversion of development resources, damage
to our reputation, costs, and litigation costs, any of which could adversely
affect our business, financial condition and results of operation. Further, the
spending and purchasing patterns of customers or potential customers may be
affected by the Year 2000 issue as individuals, corporation and government
agencies expend significant resources to correct or update their current system
for Year 2000 compliance or delay purchases of new software until after the Year
2000. At this time, the expenses associated with our assessment and potential
remediation plan cannot be determined. Further, at this time, we do not have
enough information to determine the most reasonably likely worst case scenario.
Therefore, we do not have a contingency plan in place to handle the most
reasonably likely worst case scenario, and we do not intend to create one.
WE MAY NOT SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS
We regard our copyrights, service marks, trademarks, trade dress, trade
secrets and similar intellectual property as critical to our success. To protect
our proprietary rights, we rely on trademark and copyright law, trade secret
protection and confidentiality and/or license agreements with our employees,
customers, partners and others. We pursue the registration of our trademarks and
service marks in the U.S., and have applied for the registration of our
trademarks and service marks. We applied for Federal registration of the service
marks "BEYOND.COM" on July 10, 1998, and "BEYOND DOT COM" on July 14, 1998,
although we cannot be certain that federal registration of these service marks
or any other service mark will issue. In addition, effective trademark, service
mark, copyright and trade secret protection may be unavailable in every country
in which our products and services are available online.
We have licensed in the past, and expect to license in the future, certain
of our proprietary rights, such as trademarks or copyrighted material, to third
parties. While we attempt to ensure that these licensees maintain the quality of
our brand, the licensees could take actions that materially harm the value of
our proprietary rights or reputation. Furthermore, the steps we take to protect
our proprietary rights may be inadequate, or third parties might infringe or
misappropriate our trade secrets, copyrights, trademarks, trade dress and
similar proprietary rights. In addition, others could independently develop
substantially equivalent intellectual property. We may have to litigate 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 the diversion of our management
and technical resources which could harm our business.
INTELLECTUAL PROPERTY AND OTHER CLAIMS AGAINST US CAN BE COSTLY AND RESULT IN
THE LOSS OF SIGNIFICANT RIGHTS
Other parties may assert infringement, unfair competition or other claims
against us. In the past, other parties have sent us notice of claims of
infringement of proprietary rights, and we expect to receive other notices in
the future. We cannot predict whether others will assert infringement or other
claims against us, or whether any past or future assertions or prosecutions will
adversely affect our business. If we are forced to defend against any such
claims, whether they are with or without merit or are determined in our favor,
then we may face wasted time, costly litigation, diversion of technical and
management personnel, or product shipment delays, which could adversely affect
our
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<PAGE> 31
business. As a result an infringement dispute, we may have to develop
non-infringing technology or enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may be unavailable on terms
acceptable to us, or at all. If there is a successful claim of product
infringement against us and we are unable to develop non-infringing technology
or license the infringed or similar technology on a timely basis, it could
adversely affect our business.
WE MAY BECOME SUBJECT TO ADDITIONAL GOVERNMENT REGULATION
Laws and regulations directly applicable to communications or commerce over
the Internet are becoming more prevalent. The most recent session of the U.S.
Congress resulted in Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The European Union
recently enacted its own privacy regulations. The law of the Internet, however,
remains largely unsettled, even in areas where there has been some legislative
action. It may take years to determine whether and how existing laws such as
those governing intellectual property, privacy, libel, contracts and taxation
apply to the Internet. In addition, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection laws,
both in the United States and abroad, that may impose additional burdens on
companies conducting business online. The adoption or modification of laws or
regulations relating to the Internet could adversely affect our business.
WE MAY BE LIABLE FOR INTERNET CONTENT
We believe that our future success will depend in part upon our ability to
deliver original and compelling descriptive content about the software products
we sell on the Internet. As a publisher of online content, we face potential
liability for defamation, negligence, copyright, patent or trademark
infringement, or other claims based on the nature and content of materials that
we publish or distribute. In the past, plaintiffs have brought such claims and
sometimes successfully litigated them against online services. In addition, in
the event that we implement a greater level of interconnectivity on our Web
site, we will not and cannot practically screen all of the content our users
generate or access, which could expose us to liability with respect to such
content. Although we carry general liability insurance, our insurance may not
cover claims of these types or may be inadequate to indemnify us for all
liability that may be imposed on us. If we face liability, particularly
liability that is not covered by our insurance or is in excess of our insurance
coverage, then our reputation and our business may suffer.
WE MAY BE SUBJECT TO SALES AND OTHER TAXES
We do not currently collect sales or other similar taxes for physical
shipments of goods into states other than California, Virginia and the District
of Columbia. We do not currently collect sales or other similar taxes for
digital download of goods into states other than the District of Columbia.
However, one or more local, state or foreign jurisdictions may seek to impose
sales tax collection obligations on us and other out of state companies which
engage in online commerce. In addition, any new operations in states outside
California and the District of Columbia, could subject our shipments into such
states to state sales taxes under current or future laws. If one or more states
or any foreign country successfully asserts that we should collect sales or
other taxes on the sale of our merchandise, it could adversely affect our
business.
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<PAGE> 32
MANAGEMENT AND CERTAIN STOCKHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE OVER US
As of June 30, 1999, our current directors and executive officers and their
respective affiliates beneficially own in the aggregate approximately 45.9% of
our outstanding common stock. In particular, William S. McKiernan, the Chairman
of our Board of Directors, beneficially holds approximately 23.6% of our
outstanding common stock as of June 30, 1999. Therefore, if these stockholders
act together, they will be able to exercise significant influence over all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions. Such concentration of ownership
may also have the effect of delaying, preventing or deterring a change in our
control which could adversely affect the market price of our common stock.
SUBSTANTIAL FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD
ADVERSELY AFFECT OUR STOCK PRICE
If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could fall. Such sales might also make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH GLOBAL EXPANSION
Although we sell software to customers outside the United States, we have
no overseas fulfillment or distribution facility or arrangement. We also have no
Web site content localized for foreign markets. Therefore, we may be unable to
expand our global presence effectively. In addition, international operations
are subject to inherent risks, including:
- regulatory requirements;
- export restrictions;
- tariffs and other trade barriers;
- difficulties in protecting intellectual property rights;
- longer payment cycles;
- problems in collecting accounts receivable;
- political instability; and
- fluctuations in currency exchange rates.
In addition, the United States imposes export restrictions on certain
software because of its encryption technology and we may face liability if we
violate these restrictions.
WE MAY BE SUBJECT TO RISKS RELATED TO THE INTRODUCTION OF THE EURO CURRENCY
In January 1999, the new "Euro" currency was introduced in certain European
countries that are part of the European Monetary Union ("EMU"). During 2002, all
EMU countries are expected to completely replace their national currencies with
the Euro. A significant amount of uncertainty exists as to the effect the Euro
will have on the marketplace generally and, additionally, all of the final rules
and regulations have not yet
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<PAGE> 33
been defined and finalized by the European Commission with regard to the Euro
currency. We list the prices for our products, accounts, and invoices for sales
and collect payments in U.S. dollars, even for sales outside the U.S. We
currently utilize third-party vendor equipment and software products that may or
may not be EMU compliant. Although we are currently taking steps to address the
impact, if any, of EMU non-compliance for such third-party products, the failure
of any critical component to operate properly during and after the Euro
conversion process may have an adverse effect on our business or results of
operations or require us to incur expenses to remedy such problems.
OUR CHARTER DOCUMENTS AND OTHER AGREEMENTS MAY ADVERSELY AFFECT A POTENTIAL
TAKEOVER
Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws, option agreements and Delaware law could make it more difficult for a
third party to acquire us, even if doing so would be beneficial to our
stockholders. See "Description of Capital Stock."
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify such
forward-looking statements. This prospectus also contains forward-looking
statements attributed to certain third parties relating to their estimates
regarding the growth of certain electronic-commerce, electronic software
delivery, software and related service markets and spending. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this prospectus. Our actual results could differ materially from
those anticipated in these forward-looking statements for many reasons,
including the risks faced by us described above and elsewhere in this
prospectus.
BEYOND.COM CORPORATION
We are a leading online reseller of commercial off-the-shelf computer
software to the consumer, small business and large enterprise markets. Through
our online store (www.beyond.com), we offer customers a comprehensive selection
of software as well as related computer peripheral products, helpful customer
service, a convenient shopping experience and competitive prices. We believe
that our Beyond.com Web site is one of the most widely known and used sites on
the World Wide Web for the purchase of software. We deliver software to
customers one of two ways: either we physically deliver the shrink-wrap software
package or we deliver the software over the Internet through digital download.
Approximately 48,000 software stock-keeping units ("SKUs") are available for
online purchase with approximately 6,800 SKUs available for immediate,
electronic delivery.
We also have established strategic marketing alliances with America Online,
Inc., @Home Network, CNET Inc., Company Computer Corp., Excite, Inc., Microsoft
Corp., XOOM.com Inc., Yahoo! Inc. and ZDNET. These alliances promote our Web
site and services on the Web sites of these strategic partners.
Our address is 1195 West Fremont Avenue, Sunnyvale, California 94087 and
our telephone number is (408) 616-4200.
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We were incorporated in California in 1994 as CyberSource Corporation and
changed our name to software.net Corporation in April 1998. In June 1998, we
were reincorporated in Delaware as software.net Corporation. In December, 1998,
we changed our name from software.net Corporation to Beyond.com Corporation.
References in this prospectus to "Beyond.com", "we", "our" and "us" refer to
Beyond.com Corporation, a Delaware corporation and its predecessor, software.net
Corporation, both the California and the Delaware corporation. Our principal
executive offices are located at 1195 West Fremont Avenue, Sunnyvale, California
94087 and our telephone number is (408) 616-4200. We have applied for federal
registration of the service marks "BEYOND.COM" and "BEYOND DOT COM." Each
trademark, trade name or service mark of any other company appearing in this
prospectus belongs to its holder.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale by the selling
stockholders of shares of our common stock. We have agreed to bear certain
expenses relating to the registration of the shares of common stock registered
pursuant to the registration statement of which this prospectus is a part.
DIVIDEND POLICY
We have never declared or paid any cash dividends. We currently expect to
retain future earnings, if any, to finance the growth and development of our
business.
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<PAGE> 35
SELLING STOCKHOLDERS
The following table provides the name of the selling stockholders and the
number of shares of common stock owned by the selling stockholders. Since the
selling stockholders may each sell all, some or none of their respective shares,
we cannot estimate the aggregate number and percentage of shares of common stock
that the selling stockholders will offer pursuant to this prospectus or that the
selling stockholders will own upon completion of an offering to which this
prospectus relates.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
William S. McKiernan......................... 8,407,577 23.4% 8,407,577 -- *
Vulcan Ventures Inc.......................... 2,932,375 8.2 2,932,375 -- *
110 110th Avenue NE, Suite 550
Bellevue, WA 98004
Global Retail Partners, L.P. and its
affiliates(2).............................. 1,188,924 3.3 1,188,924 -- *
2121 Avenue of the Stars, Suite 1630
Los Angeles, CA 90067
Bong Ju Suh.................................. 699,343 1.9 699,343 -- *
1350 Cole Street
San Francisco, CA 94117
Carlie Pasha Headapohl and William Ellin
Headapohl
TTEE 1996 Headapohl Family Trust........... 699,343 1.9 699,343 -- *
118 26th Avenue
San Francisco, CA 94121
CNET, Inc.................................... 683,443 1.9 683,443 -- *
Attn: Douglas Woodrum, Chief Financial
Officer
150 Chestnut Street
San Francisco, CA 94111
At Home Corporation.......................... 671,563 1.9 671,563 -- *
Attn: David Pine, VP, General Counsel
425 Broadway Street
Redwood City, CA 94063
Entities affiliated with C.E. Unterberg,
Towbin(3).................................. 479,515 1.3 479,515 -- *
Swiss Bank Tower
10 East 50th Street, 22nd Floor
New York, New York 10002
ZD Inc....................................... 394,250 1.1 394,250 -- *
Attn: Daryl Otte
28 East 28th Street
New York, NY 10016
BuyPartners, LLC............................. 128,287 * 128,287 -- *
804 Whitehaven Place
San Ramon, CA 94583
</TABLE>
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<PAGE> 36
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Draper Richards L.P.......................... 118,552 * 118,552 -- *
Attn: Robin Donohoe
50 California Street
Suite 2925
San Francisco, CA 94114
Bayview Investors Ltd........................ 104,229 * 104,229 -- *
c/o BancBoston Robertson Stephens
Attn: Jennifer Sherrill
555 California Street
Suite 2600
San Francisco, CA 94104
Jay Erik Lou................................. 80,750 * 80,750 -- *
2144 Green Street, #8
San Francisco, CA 94123
D. Kathryn Weller............................ 68,903 * 68,903 -- *
c/o Morgan Stanley Dean Witter
Attn: David Huang
6140 Stoneridge Mall Road
Suite 100
Pleasanton, CA 94588
Jody M. Sherman.............................. 52,810 * 52,810 -- *
Morgan Stanely Dean Witter
Attn: David Huang
6140 Stoneridge Mall Road
Suite 100
Pleasanton, CA 94588
Charles Moldow............................... 52,253 * 52,253 -- *
170 Seminary Drive
Menlo Park, CA 94025
Stanley J. Meresman.......................... 37,192 * 37,192 -- *
2071 Huntington Lane
Los Altos, CA 94024
Marian Susan Boardley........................ 36,424 * 36,424 -- *
c/o SalomonSmithBarney
Attn: Matthew L. Megorden
350 California Street, 22 nd Floor
San Francisco, CA 94104
Niall D. Hawkins............................. 33,878 * 33,878 -- *
3060 Turk Street
San Francisco, CA 94118
Wendover LLC................................. 33,848 * 33,848 -- *
Attn: H. Rankin, Jr.
66 Stanton Road
Darien, CT 06820
</TABLE>
25
<PAGE> 37
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Charles R. Ewald............................. 29,637 * 29,637 -- *
50 California Street
Suite 2925
San Francisco, CA 94111
Russell S. Reynolds Jr....................... 29,637 * 29,637 -- *
39 Clapboard Ridge Road
Greenwich, CT 06830
Doris Lynn Ellwood........................... 29,139 * 29,139 -- *
4812 SW 39th Drive
Portland, OR 97221
Thomas Warford Mullen........................ 26,276 * 26,276 -- *
850 Covington Road
Los Altos, CA 94024
Robert C. Harris............................. 25,000 * 25,000 -- *
One Sansome Street, 41st. Fl
San Francisco, CA 94104
Todd Rankin.................................. 22,325 * 22,325 -- *
730 Shrader Street
San Francsico, CA 94117
Wilblairco Associates, L.P................... 20,951 * 20,951 -- *
222 W. Adams Street
Chicago, IL 60606
ARBA, LLC.................................... 19,160 * 19,160 -- *
c/o Pell Development Co.
Attn: Dave Pell
600 Harrison Street
Suite 100
San Francisco, CA 94107
RMC Investments, LLC......................... 17,237 * 17,237 -- *
c/o E. Tyler Miller
11750 Sorrento Valley Road
San Diego, CA 92121
Thanos Triant................................ 14,929 * 14,929 -- *
2170 Stockbridge Avenue
Woodside, CA 94062
Junho Suh.................................... 14,433 * 14,433 -- *
3950 Medford Street
Los Angeles 90063
Carlos Ramiro Teran.......................... 13,445 * 13,445 -- *
3199 Clay Street, #9
San Francisco, CA 94115
</TABLE>
26
<PAGE> 38
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Rainbow Trading Venture Partners, L.P........ 12,745 * 12,745 -- *
8201 Preston Road, Suite 400
Dallas, TX 75225
Fincher W. Smith............................. 10,848 * 10,848 -- *
2609 Cline Street
Tallahassee, FL 32312
William F. Headapohl......................... 10,649 * 10,649 -- *
120 Ben Hogan Drive
Missoula, MT 59803
Bruce Moldow................................. 9,355 * 9,355 -- *
5061 N.W. 119th Terrace
Coral Springs, FL 33076
Adrian Scott................................. 8,462 * 8,462 -- *
11 Brush Place, #1
San Francisco, CA 94103
Robert B. Deans, Jr.......................... 8,462 * 8,462 -- *
545 Madison Avenue
9th Floor
New York, NY 10022
Ronald & Gayle Conway as Trustees of the
Conway
Family Trust dated 9/25/96................. 7,464 * 7,464 -- *
76 Adam Way
Atherton, CA 94027
Stanley J. and Sharon A. Meresman, as
Trustees of
the Meresman Family Trust U/D/T dated
9/19/89.................................... 7,464 * 7,464 -- *
2071 Huntington Lane
Los Altos, CA 94024
Jeff Kolodin................................. 6,769 * 6,769 -- *
43603 Daphney House Court
Potomac, MD 20850
Berton and Gloria Muldow..................... 5,971 * 5,971 -- *
35 Bermuda Road
Westport, CT 06880
Joseph R. Maravillas......................... 5,412 * 5,412 -- *
2231 Santa Ana Drive
Fairfield, CA 94533
James L. Brock............................... 4,478 * 4,478 -- *
1837 Brewster Avenue
Redwood City, CA 94062
</TABLE>
27
<PAGE> 39
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
OFFERING(1) THIS OFFERING
------------------- SHARES BEING ----------------
NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT
---------------- --------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
CNA Trust Company, TTEE ULG 401(k) Retirement
Plan,
FBO Robert V. W. Zipp...................... 4,478 * 4,478 -- *
3080 South Bristol Street
Costa Mesa, CA 92626
Teresa M. Crummett........................... 2,985 * 2,985 -- *
1999 Green Street, #104
San Francisco, CA 94123
Scott Gregory Jower.......................... 637 * 637 -- *
180 Derby Lane
Moraga, CA 94556
17 other selling stockholders, the aggregate
share...................................... 232,321 * 232,321 -- *
amount of which is less than 1% of the
outstanding common stock prior to the
offering(4)
</TABLE>
- -------------------------
* Represents beneficial ownership of less than 1% of our common stock.
(1) Percent of shares beneficially owned prior to and after this offering is
determined based on 35,907,657 shares outstanding as of June 30, 1999.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. The number of shares beneficially owned
by a person includes shares of common stock subject to options held by that
person that are currently exercisable or exercisable within 60 days of June
30, 1999. Such shares issuable pursuant to such options are deemed
outstanding for computing the percentage ownership of the person holding
such options but not deemed outstanding for the purposes of computing the
percentage ownership of each other person. To our knowledge, the persons
named in this table have sole voting and investment power with respect to
all shares of common stock shown as owned by them, subject to community
property laws where applicable and except as indicated in the other
footnotes to this table. Unless otherwise indicated, the address of each of
the individuals named above is: c/o Beyond.com Corporation, 1195 West
Fremont Avenue, Sunnyvale, California 94087.
(2) Represents 755,676 shares held by Global Retail Partners, L.P., 52,026
shares held by Global Retail Partners Funding, Inc., 10,295 shares held by
Global Retail Partners, Inc., 49,124 shares held by GRP Partners, L.P.,
225,173 shares held by DLJ Diversified Partners, L.P., 83,625 shares held by
DLJ Diversified Partners-A, L.P., 7,951 shares held by DLJ First ESC L.P.
and 5,054 shares held by DLJ ESC II L.P.
(3) Represents 56,791 shares of common stock held by UT Capital Partners
International, LDC (formerly UH Capital Partners International, LDC),
345,753 shares held by UT Technology Partners, LDC (formerly UH Technology
Partners, LDC); 37,747 shares held by Unterberg Harris Private Equity
Partners, L.P., 8,063 shares held by Unterberg Harris Private Equity
Partners, CV, 5,769 shares held by C.E. Unterberg Towbin LLC and an
aggregate of 25,392 shares held by individuals associated with these
entities.
(4) Represents 232,321 shares held by 17 stockholders who received such shares
in connection with the merger of one of our wholly-owned subsidiaries with
and into BuyDirect.com, Inc. and the exchange of all common and preferred
stock of BuyDirect.com, Inc. held by them, who, in the aggregate, hold less
than 1% of the outstanding common stock prior to this offering.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
We are authorized to issue up to 70,000,000 shares of common stock and
15,000,000 shares of preferred stock. The following description of our capital
stock is not complete and is qualified in its entirety by our certificate of
incorporation and bylaws, both of which are included as exhibits to the
registration statement of which this prospectus forms a part, and by applicable
Delaware laws.
COMMON STOCK
As of June 30, 1999, there were 35,907,657 shares of common stock
outstanding held of record by approximately 107 stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock,
our board of directors may declare a dividend out of funds legally available and
the holders of common stock are entitled to receive ratably any such dividends.
In the event of our liquidation, dissolution or winding up, holders of our
common stock are entitled to share ratably in all of our assets remaining after
we pay our liabilities and liquidation preferences of any outstanding shares of
preferred stock. Holders of our common stock have no preemptive rights or other
subscription rights to convert their shares into any other securities. There are
no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock and the shares of common stock to be issued
upon conversion of our 7 1/4% Convertible Subordinated Notes will be fully paid
and nonassessable.
PREFERRED STOCK
Our board of directors has the authority, without further action by our
stockholders, to issue up to 15,000,000 shares of preferred stock in one or more
series and to fix the privileges and rights of each series. These privileges and
rights may be greater than those of the common stock. Our board of directors,
without further stockholder approval, can issue preferred stock with voting,
conversion or other rights that could adversely affect the voting power and
other rights of the holders of common stock. This type of "blank check preferred
stock" makes it possible for us to issue preferred stock quickly with terms
calculated to delay or prevent a change in our control or make removal of our
management more difficult. Additionally, if we issue this preferred stock, then
the market price of common stock may decrease, and voting and other rights may
decrease. We currently have no plans to issue any of this preferred stock.
WARRANTS
Concurrent with the purchase of 238,949 shares of our common stock at a
price per share equal to our initial public offering price (less underwriters'
discounts) by America Online in June 1998, we issued to America Online a
non-forfeitable warrant for 358,423 shares of common stock at a per share
exercise price of $8.37, which vests in increments of 1/36 per month commencing
March 1, 1998.
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CONVERTIBLE NOTES
In November and December 1998, we issued $63.25 million aggregate principal
amount of 7 1/4% Convertible Subordinated Notes. Our 7 1/4% Convertible
Subordinated Notes:
- are general unsecured obligations;
- mature on December 1, 2003;
- bear interest at a rate of 7 1/4% per year commencing November 23, 1998;
- are convertible, at any time prior to the close of business on December
1, 2003, into shares of our common stock at the conversion price of
$18.34 per share, subject to certain adjustments;
- may be redeemed at our option on or after December 6, 2001, in whole or,
from time to time, in part, upon not less than 30 nor more than 60 days
notice by mail at the following prices (expressed as a percentage of
principal amount) during the periods set forth below:
<TABLE>
<S> <C>
December 6, 2001 through November 30, 2002.................. 101.813%
December 1, 2002, through December 1, 2003.................. 100.000%
</TABLE>
- rank behind all existing and future senior indebtedness of ours and any
of our subsidiaries in right of payment;
- were issued in denominations of $1,000 principal amount and integral
multiples thereof; and
- were issued only in fully registered book entry form, without coupons,
and are represented by a permanent global 7 1/4% Convertible Subordinated
Note.
Upon the occurrence of certain events which constitute a "change of
control" (as defined in the 7 1/4% Convertible Subordinated Note), we may, at
the election of a holder of our 7 1/4% Convertible Subordinated Notes, be
required to purchase all or any part of such holder's notes.
LaSalle Bank National Association has agreed to serve as the Trustee under
the Indenture. LaSalle Bank National Association will be permitted to deal with
us and any of our affiliates with the same rights as if it were not Trustee;
provided, however, that under the Trust Indenture Act, if LaSalle Bank National
Association acquires any conflicting interest (as defined in the Trust Indenture
Act) and there exists a default with respect to our 7 1/4% Convertible
Subordinated Notes, it must eliminate such conflict or resign.
We, together with LaSalle Bank National Association, may amend or
supplement the terms of our 7 1/4% Convertible Subordinated Notes with the
written consent of the holders of at least a majority in principal amount of the
then outstanding notes. However, we may not, without the consent of the holder
of each 7 1/4% Convertible Subordinated Note affected thereby, amend the notes
to alter the rights of such holders in a materially adverse manner.
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The occurrence of any of the following events would constitute a default
(such events are referred to as "Events of Default") under our Indenture with
LaSalle Bank National Association and our 7 1/4% Convertible Subordinated Notes:
- our failure to pay any interest on our 7 1/4% Convertible Subordinated
Notes for 30 days after the same is due or our failure to pay any
principal of or premium, if any, on our 7 1/4% Convertible Subordinated
Notes when due;
- our failure to comply with any of our other agreements contained in our
7 1/4% Convertible Subordinated Notes or our Indenture with LaSalle Bank
National Association for 60 days after receipt of notice of such failure
from LaSalle Bank National Association or the holders of not less than
25% in aggregate principal amount of our 7 1/4% Convertible Subordinated
Notes then outstanding;
- our default under any bond, debenture, note or other evidence of
indebtedness for money borrowed or that of any subsidiary of ours having
an aggregate outstanding principal amount in excess of $10 million, which
default shall have resulted in such indebtedness being accelerated,
without such indebtedness being discharged, or such acceleration having
been rescinded or annulled, within ten days from the date of such
acceleration; and
- certain events of bankruptcy, insolvency or reorganization with respect
to us or any subsidiary of ours.
If an event of default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization with respect to us or any subsidiary of
ours) occurs and is continuing, LaSalle Bank National Association may, by notice
to us, declare all unpaid principal of and accrued interest to the date of
acceleration on our 7 1/4% Convertible Subordinated Notes then outstanding to be
due and payable immediately. Also, in such event, the holders of at least 25% in
principal amount of our 7 1/4% Convertible Subordinated Notes then outstanding
may, by notice to us and LaSalle Bank National Association, declare all unpaid
principal of and accrued interest to the date of acceleration on our 7 1/4%
Convertible Subordinated Notes then outstanding to be due and payable
immediately. If an Event of Default resulting from certain events of bankruptcy,
insolvency or reorganization with respect to us or subsidiary of ours occurs,
all unpaid principal of and accrued interest on our 7 1/4% Convertible
Subordinated Notes then outstanding shall become and be immediately due and
payable without any declaration or other act on the part of LaSalle Bank
National Association or any holder.
Our Indenture with LaSalle Bank National Association provides that the
holders of a majority in principal amount of our outstanding 7 1/4% Convertible
Subordinated Notes may on behalf of all holders waive any existing default or
Event of Default and its consequences except a default or Event of Default in
the payment of principal of or accrued interest on our 7 1/4% Convertible
Subordinated Notes or any default in respect of any provision of the Indenture
that cannot be modified or amended without the consent of the holder of each
7 1/4% Convertible Subordinated Note affected.
LaSalle Bank National Association shall, within 90 days after the
occurrence of any default known to it, give to the holders of our 7 1/4%
Convertible Subordinated Notes notice of such default; provided that, except in
the case of a default in the payment of principal of or interest on any of our
7 1/4% Convertible Subordinated Notes, LaSalle Bank National Association may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interests of such holders.
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<PAGE> 43
No holder of our 7 1/4% Convertible Subordinated Notes may pursue any
remedy under our Indenture with LaSalle Bank National Association or our 7 1/4%
Convertible Subordinated Notes against us (except actions for payment of overdue
principal or interest or for the conversion of our 7 1/4% Convertible
Subordinated Notes), unless:
- the holder gives to LaSalle Bank National Association written notice of a
continuing Event of Default;
- the holders of at least 25% in principal amount of our outstanding 7 1/4%
Convertible Subordinated Notes make a written request to LaSalle Bank
National Association to pursue the remedy;
- such holder or holders offer satisfactory indemnity to LaSalle Bank
National Association against any loss, liability or expense;
- LaSalle Bank National Association does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
- LaSalle Bank National Association shall not have received during such 60
day period a contrary direction from the holders of at least a majority
in principal amount of our outstanding 7 1/4% Convertible Subordinated
Notes.
We must deliver an officers' certificate to LaSalle Bank National
Association within 90 days after the end of each fiscal year as to the signers'
knowledge of our compliance with all conditions and covenants contained in our
Indenture with LaSalle Bank National Association, and stating whether or not the
signers know of any default or Event of Default. If any such signer knows of
such a default or Event of Default, the officers' certificate shall describe the
default or Event of Default and the efforts to remedy the same.
The holders of a majority in principal amount of all our outstanding 7 1/4%
Convertible Subordinated Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy or power
available to LaSalle Bank National Association, provided that such direction
does not conflict with any law or the Indenture, is not unduly prejudicial to
the rights of another holder or LaSalle Bank National Association and does not
involve liability for LaSalle Bank National Association.
CERTAIN CHARTER AND BYLAW PROVISIONS
We are subject to the "business combination" statute of the Delaware
General Corporation Law. This statute prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner, such as the approval of a
majority of certain members of the board of directors. The term "business
combination" includes mergers and stock and asset sales. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 15% or more of the corporation's voting stock. The
effect of this statute could, among other things, make it more difficult for a
third party to gain control of us, discourage bids for the common stock at a
premium or otherwise adversely affect the market price of the common stock.
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LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY; INDEMNIFICATION
Our certificate of incorporation includes provisions that limit the
personal liability of our officers and directors for monetary damages for breach
of their fiduciary duties as directors, except for liability that cannot be
eliminated under the Delaware General Corporation Law. Our certificate of
incorporation provides that, to the fullest extent provided by the Delaware
General Corporation Law, our directors will not be personally liable for
monetary damages for breach of their fiduciary duty as directors. The Delaware
General Corporation Law does not permit a provision in a corporation's
certificate of incorporation that would eliminate such liability (i) for any
breach of their duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for any unlawful payment of a dividend or
unlawful stock repurchase or redemption, as provided in Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care. The provisions described above apply to an
officer of a corporation only if he or she is a director of such corporation and
is acting in his or her capacity as director, and do not apply to the officers
of the corporation who are not directors.
Our bylaws provide that, to the fullest extent permitted by the Delaware
General Corporation Law, we may indemnify our directors, officers and employees.
Our bylaws further provide that we may similarly indemnify our agents. In
addition, we anticipate that each director will enter into an indemnification
agreement pursuant to which we will indemnify such director to the fullest
extent permitted by the Delaware General Corporation Law. At present, there is
no pending litigation or proceeding involving any of our directors or officers
in which indemnification is required or permitted, and we are not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
REGISTRATION RIGHTS
The holders of our 7 1/4% Convertible Subordinated Notes have the right to
have such notes and the 3,448,745 shares of our common stock issuable upon
conversion of such notes registered. On March 23, 1999 a shelf-registration
statement covering the resale of these notes and shares of common stock issuable
upon conversion of these notes, and which included an additional 247,531 shares
of our common stock which were issued in private transactions and 358,423 shares
of our common stock issuable upon exercise of an outstanding warrant was
declared effective. We may suspend the use of this shelf-registration statement
for limited periods under certain circumstances relating to pending corporate
developments, public filings with the Securities and Exchange Commission and
similar events. Subject to certain limitations, we have agreed to pay liquidated
damages to all holders of our 7 1/4% Convertible Subordinated Notes or common
stock into which our 7 1/4% Convertible Subordinated Notes may convert that have
requested to sell pursuant to the shelf registration statement if a stop order
suspending such registration statement or proceedings therefor have been
initiated under the Securities Act of 1933, or if the related prospectus is
unavailable for periods in excess of those set forth in the registration rights
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agreement. We have further agreed, if such unavailability continues for an
additional 30 day period, to pay liquidated damages to all such holders, whether
or not such holder has requested to sell pursuant to the shelf-registration
statement. Liquidated damages will accrue until such time as there are no
triggering events which have occurred and are continuing at a rate equal to one
half of one percent (0.50%) per annum of the principal amount of our 7 1/4%
Convertible Subordinated Notes and will be payable on the interest payment dates
for our 7 1/4% Convertible Subordinated Notes to the persons in whose names the
relevant securities were registered at the close of business on the immediately
preceding regular record dates for our 7 1/4% Convertible Subordinated Notes.
With respect to each holder, our obligations to pay liquidated damages
remains in effect only so long as our 7 1/4% Convertible Subordinated Notes and
the common stock issuable upon the conversion of our 7 1/4% Convertible
Subordinated Notes held by such holder are "registrable securities" within the
meaning of the registration rights agreement. We will pay all expenses of this
registration statement and provide each holder that is selling hereunder copies
of this prospectus and take certain other actions as are required to permit,
subject to the foregoing, unrestricted resales of the applicable securities.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is EquiServe. The
transfer agent's address is 150 Royall Street, Canton, Massachusetts 02021 and
telephone number is (781) 575-2000.
PLAN OF DISTRIBUTION
The shares of common stock offered by this prospectus are being sold by the
selling stockholders. We will not receive any of the proceeds from the sale of
these shares.
The distribution of the shares of common stock by the selling stockholders
may be made from time to time by the selling stockholders directly or through
one or more brokers, agents, or dealers in one or more transactions (which may
involve crosses and block transactions) on The Nasdaq Stock Market's National
Market, the Pacific Exchange, Inc. or other exchanges on which our common stock
is listed, pursuant to and in accordance with the rules of those exchanges, in
the over-the-counter market, in negotiated transactions or otherwise, at prices
related to prevailing market prices or at negotiated prices. In the event that
one or more brokers, agents or dealers agree to sell the shares, they may do so
by purchasing shares as principals or by selling shares as agents for the
selling stockholder. Any brokers, agents or dealers who sell the shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933.
Any broker, agent or dealer may receive compensation from the selling
stockholders which may be deemed to be underwriting discounts or commissions and
may receive commissions from purchasers of the securities for whom it may act as
agent. If any such broker or dealer purchases the shares as principal it may
resell the shares from time to time to or through other brokers or dealers, and
the other brokers or dealers may receive compensation in the form of concessions
or commissions from the selling stockholders or purchaser of the shares for whom
they may act as agents.
We have advised the selling stockholders that it and any brokers, dealers
or agents who effect a sale of the shares are subject to the prospectus delivery
requirements of the Securities Act of 1933. We have advised the selling
stockholders that in the event of a
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"distribution" of its shares, the selling stockholders and any broker, agent or
dealer who participates in the distribution may be subject to applicable
provisions of the Securities Exchange Act of 1934 and its rules and regulations,
including Regulation M.
In connection with distributions of the shares, the selling stockholders
may enter into hedging transactions with broker-dealers, and the broker-dealers
may engage in short sales of our common stock in the course of hedging the
positions they assume with the selling stockholder. The selling stockholders
also may sell our common stock short and deliver the shares to close out short
positions. The selling stockholders also may enter into option or other
transactions with broker-dealers that involve the delivery of the shares to the
broker-dealers, who may then resell or otherwise transfer the shares. The
selling stockholders may transfer the shares to a donee and any donee would
become a selling stockholders under this prospectus.
We will bear all expenses of the offering of the shares, except that the
selling stockholders will pay any applicable underwriting fees, discounts or
commissions and transfer taxes, as well as the fees and disbursements of his
counsel and experts.
LEGAL MATTERS
Certain legal matters will be passed on for us by our counsel, Morrison &
Foerster LLP, Palo Alto, California. As of the date of this prospectus, Richard
Scudellari, a partner in that firm, owns 40,000 shares of our common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements and schedule are incorporated
by reference in reliance upon Ernst & Young LLP's report, given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Securities and Exchange Commission at the
Securities and Exchange Commission's public reference rooms at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Securities and Exchange Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. The Securities and Exchange Commission also
maintains a web site that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
Securities and Exchange Commission (http://www.sec.gov). In addition, our common
stock is listed on the Nasdaq National Market and similar information concerning
Beyond.com can be inspected and
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copied at the offices of the National Association of Securities Dealers, Inc.,
9513 Key West Avenue, Rockville, Maryland 20850.
We have filed a registration statement of which this prospectus is a part
and related exhibits with the Securities and Exchange Commission under the
Securities Act of 1933. The registration statement contains additional
information about us. You may inspect the registration statement and exhibits
without charge at the office of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies from the
Securities and Exchange Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with the Securities and Exchange Commission,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is an important part
of this prospectus. Any statement contained in a document which is incorporated
by reference in this prospectus is automatically updated and superseded if
information contained in this prospectus, or information that we later file with
the Securities and Exchange Commission, modifies or replaces this information.
We incorporate by reference the following documents we have filed with the
Securities and Exchange Commission:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999;
- Current Reports on Form 8-K filed on January 21, 1999, March 3, 1999 and
April 13, 1999;
- the description of our common stock contained in our Registration
Statement on Form 8-A (File No. 000-24457) filed with the Securities and
Exchange Commission on June 12, 1999; and
- all documents filed by us with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 after the date of this prospectus and prior to the
termination of the offering.
To receive a free copy of any of the documents incorporated by reference in
this prospectus (other than exhibits, unless they are specifically incorporated
by reference in the documents), call or write Beyond.com Corporation, 1195 West
Fremont Avenue, Sunnyvale, California 94087, attention: Investor Relations,
(408) 616-4200.
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