CRITICAL PATH INC, 424B3, 2000-06-09

CRITICAL PATH INC
424B3, 2000-06-09
BUSINESS SERVICES, NEC

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Filed Pursuant to Rule 424(b)(3)

File No. 333-38000

PROSPECTUS

logo
3,805,821 Shares

CRITICAL PATH, INC.

COMMON STOCK
-------------------------

This Prospectus relates to the offering of our Common Stock that are or
will be held by certain Selling Shareholders in exchange for exchangeable shares
of Critical Path Messaging Co., a subsidiary of ours. These Selling Shareholders
may sell the shares from time to time. We will pay certain of the expenses of
this offering; however, the Selling Shareholders will bear the cost of all
brokerage commissions and discounts. We will not receive any proceeds from the
sale of shares by the Selling Shareholders.

The Selling Shareholders may offer and sell all the shares in the
over-the-counter market or on one or more exchanges. The Selling Shareholders
may sell the shares at the then prevailing market price for the shares or in
negotiated transactions.

Our Common Stock is listed on the Nasdaq National Market under the symbol
"CPTH." On June 8, 2000, the closing price of our Common Stock on the Nasdaq
National Market was $48.50 per share.

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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.

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The Securities and Exchange Commission may take the view that, under
certain circumstances, the Selling Shareholders and any broker-dealers or agents
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act.
Commissions, discounts or concessions received by any such broker-dealer or
agent may be deemed to be underwriting commissions under the Securities Act. See
"Plan of Distribution."

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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this Prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
-------------------------

THE DATE OF THIS PROSPECTUS IS JUNE 9, 2000

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PROSPECTUS

logo
3,805,821 Shares

CRITICAL PATH, INC.

COMMON STOCK
-------------------------

Our Common Stock is listed on the Nasdaq National Market under the symbol
"CPTH." On June 8, 2000, the closing price of our Common Stock on the Nasdaq
National Market was $48.50 per share.

-------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.

You should rely only on the information contained in this Prospectus.
Neither we nor any of the Selling Shareholders have authorized anyone to provide
you with information different from that contained in this Prospectus. The
Selling Shareholders are offering to sell, and seeking offers to buy, shares of
Common Stock only in jurisdictions where offers and sales are permitted. The
information contained in this Prospectus is accurate only as of the date of this
Prospectus, regardless of the time of delivery of this Prospectus or of any sale
of our Common Stock. In this Prospectus, the "Company," "Critical Path," "we,"
"us," and "our" refer to Critical Path, Inc., a California corporation.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Where You Can Find More Information......................... 1
The Company................................................. 2
Risk Factors................................................ 4
Use of Proceeds............................................. 16
Selling Shareholders........................................ 16
Plan of Distribution........................................ 23
Legal Matters............................................... 24
Experts..................................................... 24
</TABLE>

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, NW, Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available to the public from the SEC's
Website at "http://www.sec.gov."

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:

- Our Annual Report on Form 10-K/A for the fiscal year ended December 31,
1999;

- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
and

- The description of our Common Stock set forth in our Registration
Statement on Form 8-A filed on February 1, 1999.

You may request a copy of these filings, at no cost, by writing or
telephoning us as follows:

Critical Path, Inc.
320 First Street
San Francisco, California 94105
Attention: Investor Relations
(415) 808-8800

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THE COMPANY

We are a leading provider of complete end-to-end Internet messaging and
collaboration solutions for Internet service providers or ISPs,
telecommunications providers, web hosting companies, web portals and
corporations. We provide services and products, both on a hosted and licensed
basis, that enable our customers to provide feature-rich email, messaging,
collaboration and directory services to their customers and employees. Our
allsourcing strategy provides flexibility to our customers by giving them the
option of using our Critical Path hosted services, licensing our software to run
on their own hardware, or selecting a combination of both. Our solutions enable
customers to improve messaging performance, reduce the cost of providing
messaging services and focus on other aspects of their businesses.

We have over 2,000 customers and reach over 100 million end-users and 20
million wireless devices through our customer relationships. Our customers
include leading Internet companies such as AltaVista, eBay, E*TRADE, ICQ (a
subsidiary of America Online) and Netscape as well traditional enterprises such
as General Electric, Proctor & Gamble and Promus Hotel Corporation.
International customers include Avantel, British Telecommunications, Cable and
Wireless, Eircell, Global Telesystems Group, Korea Telecom, Sina and Starmedia.
In addition, we have a number of relationships to expand our distribution
channels with companies such as British Telecommunications, Compuserve, France
Telecom, MCI Worldcom, Mitsui, Network Solutions, NTT, Qwest Communications,
Sprint, US West and VeriSign.

There are a number of trends that are driving demand for messaging and
collaboration solutions. Email has broadened from a simple messaging tool to a
widely accepted form of communication. At the same time, the complexity of
individual messages and the scale of the supporting applications and hardware
are growing dramatically, forcing businesses to dedicate significant resources
to the operation and maintenance of their messaging systems. In addition,
customers are increasingly demanding reliable and scalable service and enhanced
product offerings. Accordingly, it is important for businesses to adopt more
effective approaches to the management of their messaging and collaboration
needs.

Our end-to-end solutions complement our core email hosting services and
support the growing demands of our rapidly expanding worldwide customer base. We
provide a full spectrum of messaging and collaboration solutions, such as
calendaring, document archival, Internet fax, secure document delivery, resource
management and wireless access. Our solutions are supported by our global
infrastructure with data centers located worldwide connected to key Internet
exchange points.

In recent months, we have significantly expanded our range of products and
services and the delivery options we offer our domestic and international
customers. Our extended messaging solutions include support for wireless devices
through relationships with American Mobile Satellite, Arch Communications,
Cellnet, VAST and other international wireless carriers; integrated calendaring
and resource scheduling; bi-directional fax to email, security measures and
directory services and collaborative messaging. In addition to our outsourced
hosted services, we now offer midsourcing, where a customer selects which
products and services to outsource to augment their existing messaging
infrastructure, and insourcing, where a customer installs and maintains our
software.

Our objective is to be the premier provider of comprehensive, advanced
messaging and collaboration services. We plan to attain this goal by:

- Extending our technology leadership in messaging applications;

- Acquiring new businesses and technologies that could expand our product
and service offerings;

- Developing and leveraging strategic relationships;

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- Increasing our sales and marketing efforts;

- Offering value-added products and services such as secure guaranteed
delivery, collaborative messaging and calendaring; and

- Expanding our international presence.

RECENT DEVELOPMENTS

To achieve our objectives, we have announced several recent acquisitions
and strategic relationships that have expanded our range of products and
customers and broadened our global reach, including:

RemarQ Acquisition. On March 30, 2000, we acquired RemarQ Communities Inc.,
a provider of customized, collaborative message boards for business use. The
total purchase price was valued at approximately $267.5 million in our Common
Stock. The acquisition enables us to offer products that allow customers to hold
online discussions for knowledge exchange and team collaboration over extranets,
intranets, or the Internet.

Critical Path Pacific Alliance. We have signed a memorandum of
understanding to enter into a joint venture with Mitsui and Co., Ltd. and NTT
Communications Corp. to bring our messaging solutions to Japan. The joint
venture will leverage our technology, infrastructure and services; Mitsui's
extensive partnerships in Japan and throughout Asia; and NTT's Data Centers and
technical backbone to deliver advanced Internet messaging services to the
Japanese business and wireless markets.

Convertible Note Offering. On March 30, 2000, the Company issued $300
million of five-year, 5.75% Convertible Subordinated Notes ("Notes") due April
1, 2005 to qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933. Holders may convert the Notes into shares of Critical
Path's Common Stock at any time before their maturity or the business day before
their redemption or repurchase by Critical Path. The conversion rate is 9.8546
shares per $1,000 principal amount of Notes, subject to adjustment in certain
circumstances. This is equivalent to a conversion price of approximately $101.48
per share.

Interest is payable on April 1 and October 1 of each year with the first
interest payment due on October 1, 2000. The Notes are subordinated in right of
payment to all senior debt of Critical Path and effectively subordinated to all
existing and future debt and all other liabilities of Critical Path's
subsidiaries.

On or after the third business day after April 1, 2003 through March 31,
2004, the Company has the option to redeem all or a portion of the Notes which
have not been previously converted at the redemption price equal to 102.30% of
the principal amount. During the period from April 1, 2004 through March 31,
2005, the Company has the option to redeem all or a portion of the Notes which
have not been previously converted at the redemption price equal to 101.15% of
the principal amount. The Notes will be non-callable for three years. In the
event of a "Change in Control," as defined in the Notes' Offering Circular, the
Holders have the option of requiring the Company to repurchase any Notes held at
a price of 100% of the principal amount of the Notes plus accrued interest to
the date of repurchase.

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RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this Prospectus before
deciding to invest in shares of our Common Stock. Our business, operating
results and financial condition could be adversely affected by any of the
following risks. The trading price of our Common Stock could decline due to any
of these risks, and you could lose all or part of your investment. You should
also refer to the other information set forth in this Prospectus, including our
financial statements and the related notes.

This Prospectus also contains forward-looking statements that involve risks
and uncertainties. These statements relate to our future plans, objectives,
expectations and intentions, and the assumptions underlying or relating to any
of these statements. These statements may be identified by the use of words such
as "expects," "anticipates," "intends," and "plans" and similar expressions. Our
actual results could differ materially from those discussed in these statements.
Factors that could contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this Prospectus.

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE OUR BUSINESS AND
FACE RISKS ASSOCIATED WITH EARLY STAGE COMPANIES THAT MAY ADVERSELY AFFECT OUR
BUSINESS.

Because we have had a limited operating history, it is difficult to
evaluate our business and we may face various risks, expenses and difficulties
associated with early stage companies. You should consider the risks, expenses
and difficulties that we may encounter when making your investment decision.
These risks include our ability to:

- Acquire businesses and technologies;

- Integrate the operations of the companies that we have recently acquired;

- Manage growing domestic and international operations;

- Create and maintain strategic relationships;

- Expand sales and marketing activities;

- Expand our customer base and retain key clients;

- Introduce new services;

- Compete in a highly competitive market;

- Upgrade our systems and infrastructure to handle any increases in
messaging traffic;

- Reduce service interruptions; and

- Recruit and retain key personnel.

WE HAVE A HISTORY OF LOSSES, EXPECT CONTINUING LOSSES AND WE MAY NEVER ACHIEVE
PROFITABILITY.

As of March 31, 2000, we had an accumulated deficit of approximately $206.4
million. We have not achieved profitability in any period, and expect to
continue to incur net losses for the foreseeable future. We expect that our
operating expenses will increase as we spend resources on building our business
and that this increase may have a negative effect on operating results and
financial condition in the near term.

We have spent heavily on technology and infrastructure development. We
expect to continue to spend substantial financial and other resources on
developing and introducing new end-to-end Internet

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messaging and collaboration solutions, and expanding our sales and marketing
organizations, strategic relationships and operating infrastructure. We expect
that our cost of revenues, sales and marketing expenses, general and
administrative expenses, operations and customer support expenses, and
depreciation and amortization expenses will continue to increase in absolute
dollars and may increase as a percent of revenues. If revenues do not
correspondingly increase, our operating results and financial condition could be
negatively affected.

Should we continue to incur net losses in future periods, we may not be
able to increase the number of employees or investment in capital equipment,
sales and marketing programs, and research and development in accordance with
our present plans. We may never obtain sufficient revenues to achieve
profitability. If we do achieve profitability, we may not sustain or increase
profitability in the future. This may, in turn, cause our stock price to
decline.

DUE TO OUR LIMITED OPERATING HISTORY AND THE EMERGING NATURE OF THE INTERNET
MESSAGING AND COLLABORATION SOLUTIONS MARKET, FUTURE REVENUES ARE UNPREDICTABLE,
AND OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE.

We cannot accurately forecast our revenues as a result of our limited
operating history and the emerging nature of the Internet messaging and
collaboration solutions market. Our revenues could fall short of expectations if
we experience delays or cancellations of even a small number of orders. We often
offer volume-based pricing, which may affect operating margins. A number of
factors are likely to cause fluctuations in operating results, including, but
not limited to:

- Continued growth of the Internet in general and of messaging and
collaboration usage in particular;

- Demand for outsourced messaging services;

- Demand for licensing of messaging, directory, and other products;

- Our ability to attract and retain customers and maintain customer
satisfaction;

- Our ability to upgrade, develop and maintain our systems and
infrastructure;

- The amount and timing of operating costs and capital expenditures
relating to expansion of business and infrastructure;

- Technical difficulties or system outages;

- The announcement or introduction of new or enhanced services by
competitors;

- Our ability to attract and retain qualified personnel with Internet
industry expertise, particularly sales and marketing personnel;

- The pricing policies of competitors;

- Failure to increase international sales; and

- Governmental regulation surrounding the Internet and messaging in
particular.

In addition to the factors set forth above, operating results will be
impacted by the extent to which we incur non-cash charges associated with
stock-based arrangements with employees and non-employees. In particular, we
have incurred and expect to continue to incur substantial non-cash charges
associated with the grant of warrants to our customers and other parties with
which we have commercial relationships. For example, we recognized a $2.1
million non-cash charge to advertising expense during the first quarter of 2000
in connection with the amortization of a warrant to ICQ, a subsidiary of America
Online.

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Period-to-period comparisons of operating results are not a good indication
of future performance. It is likely that operating results in some quarters will
be below market expectations. In this event, the price of our Common Stock is
likely to decline.

FURTHER ACQUISITIONS COULD RESULT IN DILUTION, OPERATING DIFFICULTIES AND OTHER
CONSEQUENCES.

We expect to acquire or invest in additional businesses, products, services
and technologies that complement or augment our service offerings and customer
base. Since January 1999, we have completed the acquisition of eight companies
for an aggregate consideration consisting of cash, Common Stock and the
assumption of stock options and warrants totaling approximately $1.3 billion.

We are currently engaged in discussions with a number of companies
regarding strategic acquisitions or investments. Although these discussions are
ongoing, we have not signed any definitive agreements, and cannot assure you
that any of these discussions will result in actual acquisitions. To be
successful, we will need to identify suitable acquisition candidates, integrate
disparate technologies and corporate cultures and manage a geographically
dispersed company. We cannot assure you that we will be able to do this
successfully. Acquisitions could divert attention from other business concerns
and could expose us to unforeseen liabilities. In addition, we may lose key
employees while integrating any new companies.

We expect to pay for acquisitions by issuing additional Common Stock, which
would dilute current shareholders. We may also use cash to make acquisitions. It
may be necessary for us to raise additional funds through public or private
financings. We cannot assure you that we will be able to raise additional funds
at any particular point in the future or on favorable terms. In addition, we may
be required to amortize significant amounts of goodwill and other intangible
assets in connection with future acquisitions, which would materially increase
operating expenses.

WE WILL FACE TECHNICAL, OPERATIONAL AND STRATEGIC CHALLENGES THAT MAY PREVENT US
FROM SUCCESSFULLY INTEGRATING REMARQ, DOCSPACE, ISOCOR, FAXNET, XETI, AMPLITUDE,
DOTONE AND FABRIK.

Acquisitions involve risks related to the integration and management of
acquired technology, operations and personnel. The integration of RemarQ,
docSpace, ISOCOR, FaxNet, Xeti, Amplitude, dotOne, and Fabrik Communications
into our business has been and will be a complex, time consuming and expensive
process and may disrupt our business if not completed in a timely and efficient
manner. We must operate as a combined organization utilizing, common information
and communication systems, operating procedures, financial controls and human
resources practices. In particular, we are currently evaluating, upgrading or
replacing our financial information systems and establishing uniformity among
the systems of the acquired businesses. We may encounter substantial
difficulties, costs and delays involved in integrating the operations of our
subsidiaries, including:

- potential incompatibility of business cultures;

- perceived adverse changes in business focus;

- potential conflicts in sponsor, advertising or strategic relationships;
and

- the loss of key employees and diversion of the attention of management
from other ongoing business concerns.

Consequently, we may not be successful in integrating acquired businesses
or technologies and may not achieve anticipated revenue and cost benefits. We
also cannot guarantee that these acquisitions will result in sufficient revenues
or earnings to justify our investment in, or expenses

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related to, these acquisitions or that any synergies will develop. If we fail to
execute our acquisition strategy successfully for any reason, our business will
suffer significantly.

WE HAVE EXPERIENCED RAPID GROWTH WHICH HAS PLACED A STRAIN ON RESOURCES AND OUR
FAILURE TO MANAGE GROWTH COULD CAUSE OUR BUSINESS TO SUFFER.

We have expanded our operations rapidly and intend to continue this
expansion. The number of our employees increased from 93 on December 31, 1998 to
921 on March 31, 2000. This expansion has placed, and is expected to continue to
place, a significant strain on managerial, operational and financial resources.
To manage any further growth, we will need to improve or replace our existing
operational, customer service and financial systems, procedures and controls.
Any failure to properly manage these systems and procedural transitions could
impair our ability to attract and service customers, and could cause us to incur
higher operating costs and delays in the execution of our business plan. We will
also need to continue the expansion of our operations and employee base. Our
management may not be able to hire, train, retain, motivate and manage required
personnel. In addition, our management may not be able to successfully identify,
manage and exploit existing and potential market opportunities. If we cannot
manage growth effectively, our business and operating results could suffer.

IF WE FAIL TO EXPAND SALES AND MARKETING ACTIVITIES, WE MAY BE UNABLE TO EXPAND
OUR BUSINESS.

Our ability to increase revenues will depend on our ability to successfully
recruit, train and retain sales and marketing personnel. We plan to continue to
invest significant resources to expand our sales and marketing organizations.
Competition for additional qualified personnel is intense and we may not be able
to hire and retain personnel with relevant experience.

The complexity and implementation of our Internet messaging services
require highly trained sales and marketing personnel to educate prospective
customers regarding the use and benefits of our services. Current and
prospective customers, in turn, must be able to educate their end-users. With
our relatively brief operating history and our plans for expansion, we have
considerable need to recruit, train and retain qualified staff. Any delays or
difficulties encountered in these staffing efforts would impair our ability to
attract new customers and to enhance our relationships with existing customers.
This in turn would adversely impact the timing and extent of revenues. Because
the majority of our sales and marketing personnel have recently joined us and
have limited experience working together, our sales and marketing organizations
may not be able to compete successfully against the larger and more experienced
sales and marketing organizations of our competitors. If we do not successfully
expand sales and marketing activities, our business could suffer and our stock
price could decline.

UNPLANNED SYSTEM INTERRUPTIONS AND CAPACITY CONSTRAINTS COULD REDUCE OUR ABILITY
TO PROVIDE MESSAGING AND COLLABORATION SERVICES AND COULD HARM OUR BUSINESS AND
REPUTATION.

Our customers have in the past experienced some interruptions in our
messaging service. We believe that these interruptions will continue to occur
from time to time. These interruptions are due to hardware failures, unsolicited
bulk email, or "spam," attacks and operating system failures. For example, in
January 2000, our customers experienced a service interruption due to an
operating system failure. Our revenues depend on the number of end-users who use
our messaging services. Our business will suffer if we experience frequent or
long system interruptions that result in the unavailability or reduced
performance of systems or networks or reduce our ability to provide email
services. We expect to experience occasional temporary capacity constraints due
to sharply increased traffic, which may cause unanticipated system disruptions,
slower response times, impaired quality and

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degradation in levels of customer service. If this were to continue to happen,
our business and reputation could suffer dramatically.

We have entered into service agreements with some customers that require
minimum performance standards, including standards regarding the availability
and response time of messaging services. If we fail to meet these standards, our
customers could terminate their relationships with us and we could be subject to
contractual monetary penalties. Any unplanned interruption of services may
adversely affect our ability to attract and retain customers.

IF WE DO NOT SUCCESSFULLY ADDRESS THE RISKS INHERENT IN THE EXPANSION OF OUR
INTERNATIONAL OPERATIONS, OUR BUSINESS COULD SUFFER.

We intend to continue to expand into international markets and to spend
significant financial and managerial resources to do so. If revenues from
international operations do not exceed the expense of establishing and
maintaining these operations, our business, financial condition and operating
results will suffer. At present, we have international operations in Argentina,
Brazil, Canada, Denmark, France, Germany, Ireland, Italy, Switzerland and the
United Kingdom and for the three months ended March 31, 2000 we derived
approximately 50% of our revenues from international sales. We have limited
experience in international operations and may not be able to compete
effectively in international markets. We face certain risks inherent in
conducting business internationally, such as:

- Unexpected changes in regulatory requirements including U.S. export
restrictions on encryption technologies;

- Difficulties and costs of staffing and managing international operations;

- Differing technology standards;

- Difficulties in collecting accounts receivable and longer collection
periods;

- Political and economic instability;

- Fluctuations in currency exchange rates;

- Imposition of currency exchange controls;

- Potentially adverse tax consequences; and

- Reduced protection for intellectual property rights in some countries.

Any of these factors could adversely affect international operations and,
consequently, business and operating results. Specifically, failure to
successfully manage international growth could result in higher operating costs
than anticipated, or could delay or preclude altogether our ability to generate
revenues in key international markets.

WE DEPEND ON STRATEGIC RELATIONSHIPS AND OTHER SALES CHANNELS AND THE LOSS OF
ANY STRATEGIC RELATIONSHIPS COULD HARM OUR BUSINESS AND HAVE AN ADVERSE IMPACT
ON REVENUES.

We depend on strategic relationships to expand distribution channels and to
undertake joint product development and marketing efforts. Our ability to
increase revenues depends upon marketing services through new and existing
strategic relationships. We have entered into written agreements with ICQ (a
subsidiary of America Online), E*TRADE, Network Solutions, Sprint, MCI Worldcom
and US West, among others. We depend on a broad acceptance of outsourced
messaging services on the part of potential partners and acceptance of our
company as the supplier for these outsourced messaging services. We also depend
on joint marketing and product development through strategic relationships to
achieve market acceptance and brand recognition. For example, through our

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relationship with E*TRADE, we can conduct shared advertising campaigns and
include messaging services in E*TRADE's international strategic relationships.
Our agreements with strategic partners typically do not restrict them from
introducing competing services. These agreements typically are for terms of one
to three years, and automatically renew for additional one-year periods unless
either party gives prior notice of its intention to terminate the agreement. In
addition, these agreements are terminable by our partners without cause, and
some agreements are terminable by us, upon 30-120 days' notice. Most of the
agreements also provide for the partial refund of fees paid or other monetary
penalties in the event that our services fail to meet defined minimum
performance standards. Distribution partners may choose not to renew existing
arrangements on commercially acceptable terms, or at all. If we lose any
strategic relationships, fail to renew these agreements or relationships or fail
to develop new strategic relationships, business will suffer. The loss of any
key strategic relationships would have an adverse impact on current and future
revenue. In addition to strategic relationships, we also depend on the ability
of our customers to sell and market our services to their end-users.

WE MAY NOT BE ABLE TO RESPOND TO THE RAPID TECHNOLOGICAL CHANGE OF THE INTERNET
MESSAGING AND COLLABORATION INDUSTRY.

The Internet messaging industry is characterized by rapid technological
change, changes in user and customer requirements and preferences, and the
emergence of new industry standards and practices that could render our existing
services, proprietary technology and systems obsolete. We must continually
improve the performance, features and reliability of our services, particularly
in response to competitive offerings. Our success depends, in part, on our
ability to enhance our existing email and messaging services and to develop new
services, functionality and technology that address the increasingly
sophisticated and varied needs of prospective customers. If we don't properly
identify the feature preferences of prospective customers, or if we fail to
deliver email features which meet the standards of these customers, our ability
to market our service successfully and to increase revenues could be impaired.
The development of proprietary technology and necessary service enhancements
entail significant technical and business risks and require substantial
expenditures and lead-time. We may not be able to keep pace with the latest
technological developments. We may also be unable to use new technologies
effectively or adapt services to customer requirements or emerging industry
standards.

IF OUR SYSTEM SECURITY IS BREACHED, OUR BUSINESS AND REPUTATION COULD SUFFER.

A fundamental requirement for online communications is the secure
transmission of confidential information over public networks. Third parties may
attempt to breach our security or that of our customers. If these attempts are
successful, customers' confidential information, including customers' profiles,
passwords, financial account information, credit card numbers or other personal
information could be breached. We may be liable to our customers for any breach
in security and a breach could harm our reputation. We rely on encryption
technology licensed from third parties. Although we have implemented network
security measures, our servers are vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to interruptions,
delays or loss of data. We may be required to expend significant capital and
other resources to license encryption technology and additional technologies to
protect against security breaches or to alleviate problems caused by any breach.
Failure to prevent security breaches may have a material adverse effect on
business and operating results.

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WE WILL CONTINUE TO DEPEND ON BROAD MARKET ACCEPTANCE FOR OUTSOURCED
INTERNET-BASED EMAIL SERVICE.

The market for outsourced Internet-based email service is new and rapidly
evolving. Concerns over the security of online services and the privacy of users
may inhibit the growth of the Internet and commercial online services. We cannot
estimate the size or growth rate of the potential market for our service
offerings, and we do not know whether our service will achieve broad market
acceptance. To date a substantial portion of our revenues have been derived from
sales of email service offerings and we currently expect that email service
offerings will account for a substantial portion of our revenues for the
foreseeable future. We depend on the widespread acceptance and use of
outsourcing as an effective solution for email. If the market for outsourced
email fails to grow or grows more slowly than we currently anticipate, our
business would suffer dramatically.

WE EXPECT THE MESSAGING SERVICES MARKET WILL BE VERY COMPETITIVE AND WE WILL
NEED TO COMPETE SUCCESSFULLY IN THIS MARKET.

We expect that the market for Internet-based email service will be
intensely competitive. In addition to competing with companies that develop and
maintain in-house solutions, we compete with email service providers, such as
USA.NET, Inc. and mail.com, and with product-based companies, such as
Software.com, Inc. and Lotus Development Corporation. We believe that
competition will increase and that companies such as Microsoft, which currently
offers email products primarily to Internet service providers that provide
access to the Internet; web hosting companies; web sites intended to be major
starting sites for users when they connect to the Internet, commonly referred to
as web portals; and corporations may leverage their existing relationships and
capabilities to offer email services.

We believe competition will increase as current competitors increase the
sophistication of their offerings and as new participants enter the market. Many
current and potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources than we do and may enter into strategic or
commercial relationships with larger, more established and better-financed
companies. Further, any delays in the general market acceptance of the email
hosting concept would likely harm our competitive position. Any delay would also
allow competitors additional time to improve their service or product offerings,
and provide time for new competitors to develop email service solutions and
solicit prospective customers within our target markets. Increased competition
could result in pricing pressures, reduced operating margins and loss of market
share, any of which could cause our business to suffer.

IF WE DO NOT SUCCESSFULLY ADDRESS SERVICE DESIGN RISKS, OUR REPUTATION COULD BE
DAMAGED AND OUR BUSINESS AND OPERATING RESULTS COULD SUFFER.

We must accurately forecast the features and functionality required by
target customers. In addition, we must design and implement service enhancements
that meet customer requirements in a timely and efficient manner. We may not
successfully determine customer requirements and may be unable to satisfy
customer demands. Furthermore, we may not be able to design and implement a
service incorporating desired features in a timely and efficient manner. In
addition, if any new service we launch is not favorably received by customers
and end-users, our reputation could be damaged. If we fail to accurately
determine customer feature requirements or service enhancements or to market
services containing such features or enhancements in a timely and efficient
manner, our business and operating results could suffer materially.

10
<PAGE> 13

WE NEED TO UPGRADE OUR SYSTEMS AND INFRASTRUCTURE TO ACCOMMODATE INCREASES IN
MESSAGING TRAFFIC.

We must continue to expand and adapt our network infrastructure as the
number of users and the amount of information we wish to transmit increases, and
as their requirements change. The expansion and adaptation of our network
infrastructure will require substantial financial, operational and management
resources. Due to the limited deployment of services to date, the ability of our
network to connect and manage a substantially larger number of customers at high
transmission speeds is unknown, and we face risks related to the network's
ability to operate with higher customer levels while maintaining expected
performance.

As the frequency and complexity of messaging increases, we will need to
make additional investments in our infrastructure, which may be expensive. In
addition, we may not be able to accurately project the rate or timing of
messaging traffic increases or upgrade our systems and infrastructure to
accommodate future traffic levels, which may cause service degradation or
outages. We may also not be able to achieve or maintain a sufficiently high
capacity of data transmission as customer usage increases. Customer demand for
our services could be greatly reduced if we fail to maintain high capacity data
transmission. In addition, as we upgrade our network infrastructure to increase
capacity available to customers, we are likely to encounter equipment or
software incompatibility which may cause delays in implementations. We may not
be able to expand or adapt our network infrastructure to meet additional demand
or customers' changing requirements in a timely manner or at all.

BECAUSE WE PROVIDE MESSAGING AND COLLABORATION SERVICES OVER THE INTERNET, OUR
BUSINESS COULD SUFFER IF EFFICIENT TRANSMISSION OF DATA OVER THE INTERNET IS
INTERRUPTED.

The recent growth in the use of the Internet has caused frequent
interruptions and delays in accessing the Internet and transmitting data. To
date we have not experienced a significant adverse effect from these
interruptions. However, because we provide messaging and collaboration services
over the Internet, interruptions or delays in Internet transmissions will
adversely affect customers' ability to send or receive their messages. We rely
on the speed and reliability of the networks operated by third parties.
Therefore, our market depends on improvements being made to the entire Internet
infrastructure to alleviate overloading and congestion.

We depend on telecommunications network suppliers such as Level 3, Qwest,
Exodus and TeleHouse to transmit messages across their networks. In addition, to
deliver our services, we rely on a number of public and private peering
interconnections, which are arrangements among access providers to carry one
another's traffic. If these providers were to discontinue these arrangements,
and alternative providers did not emerge or were to increase the cost of
providing access, our ability to transmit messaging traffic would be reduced. If
we were to increase our current prices to accommodate any increase in the cost
of providing access, it could negatively impact sales. If we did not increase
prices in response to rising access costs, margins would be negatively affected.
Furthermore, if additional capacity is not added as traffic increases, our
ability to distribute content rapidly and reliably through these networks will
be adversely affected.

IF WE ENCOUNTER SYSTEM FAILURES, WE MAY NOT BE ABLE TO PROVIDE ADEQUATE SERVICE
AND OUR BUSINESS AND REPUTATION COULD BE DAMAGED.

Our ability to successfully receive and send messages and provide
acceptable levels of customer service largely depends on the efficient and
uninterrupted operation of computer and communications hardware and network
systems. Our systems and operations are vulnerable to damage or interruption
from fire, flood, earthquake, power loss, telecommunications failure and similar
events. The occurrence of any of the foregoing risks could subject us to
contractual monetary penalties if we fail

11
<PAGE> 14

to meet minimum performance standards, and could have a material adverse effect
on business and operating results and damage our reputation.

WE MUST RECRUIT AND RETAIN OUR KEY EMPLOYEES TO EXPAND OUR BUSINESS.

Our success depends on the skills, experience and performance of senior
management and other key personnel, many of whom have worked together for only a
short period of time. For example, our Chief Operating Officer and Chief
Financial Officer have joined us within the past three months. The loss of the
services of any senior management or other key personnel, including the
President, David Thatcher, and Chief Executive Officer, Douglas Hickey, could
materially and adversely affect business results. We do not have long-term
employment agreements with any executive officers and other key personnel. Our
success also depends on our ability to recruit, retain and motivate other highly
skilled sales and marketing, technical and managerial personnel. Competition for
these people is intense, and we may not be able to successfully recruit, train
or retain qualified personnel. In particular, we may not be able to hire a
sufficient number of qualified software developers.

UNKNOWN SOFTWARE DEFECTS COULD DISRUPT SERVICES, WHICH COULD HARM OUR BUSINESS
AND REPUTATION.

Our service offerings depend on complex software, both internally developed
and licensed from third parties. Complex software often contains defects,
particularly when first introduced or when new versions are released. We may not
discover software defects that affect new or current services or enhancements
until after they are deployed. Although we have not experienced any material
software defects to date, it is possible that, despite testing, defects may
occur in the software. These defects could cause service interruptions, which
could damage our reputation or increase service costs, cause us to lose revenue,
delay market acceptance or divert development resources, any of which could
cause business to suffer.

WE MAY NEED ADDITIONAL CAPITAL AND RAISING ADDITIONAL CAPITAL MAY DILUTE
EXISTING SHAREHOLDERS.

We believe that existing capital resources will enable us to maintain
current and planned operations for at least the next 12 months. However, we may
be required to raise additional funds due to unforeseen circumstances. If
capital requirements vary materially from those current planned, we may require
additional financing sooner than anticipated. Such financing may not be
available in sufficient amounts or on terms acceptable to us and may be dilutive
to existing shareholders.

WE MAY NOT BE ABLE TO PROTECT INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

We regard our copyrights, service marks, trademarks, trade secrets and
similar intellectual property as critical to our success, and we rely on
trademark and copyright law, trade secret protection and confidentiality and/or
license agreements with employees, customers and partners to protect proprietary
rights. Despite these precautions, unauthorized third parties may infringe or
copy portions of our services or reverse engineer or obtain and use information
that we regard as proprietary. End-user license provisions protecting against
unauthorized use, copying, transfer and disclosure of the licensed program may
be unenforceable under the laws of certain jurisdictions and foreign countries.
The status of United States patent protection in the software industry is not
well defined and will evolve as the U.S. Patent and Trademark Office grants
additional patents. We have several patents pending in the United States and may
seek additional patents in the future. We do not know if the patent application
or any future patent application will be issued with the scope of the claims
sought, if at all, or whether any patents received will be challenged or
invalidated. In addition, the laws of some foreign countries do not protect
proprietary rights to the same extent as do

12
<PAGE> 15

the laws of the United States. Our means of protecting proprietary rights in the
United States or abroad may not be adequate and competitors may independently
develop similar technology.

Third parties may infringe or misappropriate copyrights, trademarks and
similar proprietary rights belonging to us. In addition, other parties have
asserted and may assert infringement claims against us. For example, a company
that we acquired is a party to a lawsuit involving alleged infringement of a
third party's patent. The recently acquired company has denied the allegations
of infringement and has made counterclaims. Although we have not received notice
of any other alleged patent infringement, we cannot be certain that our products
do not infringe issued patents that may relate to our products. In addition,
because patent applications in the United States are not publicly disclosed
until the patent is issued, applications may have been filed which relate to our
software products. We may be subject to legal proceedings and claims from time
to time in the ordinary course of business, including claims of alleged
infringement of trademarks and other intellectual property rights of third
parties. Intellectual property litigation is expensive and time-consuming and
could divert management's attention away from operating our business.

WE MAY NEED TO LICENSE THIRD-PARTY TECHNOLOGIES AND WE FACE RISKS IN DOING SO.

We intend to continue to license certain technology from third parties,
including web server and encryption technology. The market is evolving and we
may need to license additional technologies to remain competitive. We may not be
able to license these technologies on commercially reasonable terms or at all.
In addition, we may fail to successfully integrate any licensed technology into
our services. These third-party in-licenses may expose us to increased risks,
including risks related to the integration of new technology, the diversion of
resources from the development of proprietary technology, and an inability to
generate revenues from new technology sufficient to offset associated
acquisition and maintenance costs. An inability to obtain any of these licenses
could delay product and service development until equivalent technology can be
identified, licensed and integrated. Any such delays in services could cause our
business and operating results to suffer.

THE TRADING PRICES AND VOLUMES OF OUR STOCK HAVE BEEN VOLATILE AND WE EXPECT
THAT THIS VOLATILITY WILL CONTINUE.

Our stock price and trading volumes have been highly volatile since our
initial public offering on March 29, 1999. We expect that this volatility will
continue in the future due to factors such as:

- Actual or anticipated fluctuations in results of operations;

- Changes in or failure to meet securities analysts' expectations;

- Announcements of technological innovations and acquisitions;

- Introduction of new services by us or our competitors;

- Developments with respect to intellectual property rights;

- Conditions and trends in the Internet and other technology industries;
and

- General market conditions.

In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stocks of technology companies, particularly Internet companies. These
broad market fluctuations may result in a material decline in the market price
of our common stock. In the past, following periods of volatility in the market
price of a particular company's securities, securities class action litigation
has often been brought against that company. We may become involved in this type
of litigation in the future. Litigation is often

13
<PAGE> 16

expensive and diverts management's attention and resources, which could have a
material adverse effect on our business and operating results.

GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES COULD IMPAIR THE GROWTH OF THE
INTERNET AND DECREASE DEMAND FOR OUR SERVICES OR INCREASE OUR COST OF DOING
BUSINESS.

Although there are currently few laws and regulations directly applicable
to the Internet and messaging services, a number of laws have been proposed
involving the Internet, including laws addressing user privacy, pricing,
content, copyrights, distribution, antitrust and characteristics and quality of
products and services. Further, the growth and development of the market for
messaging services may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business
online. The adoption of any additional laws or regulations may impair the growth
of the Internet or commercial online services which could decrease the demand
for our services and increase our cost of doing business, or otherwise harm
business and operating results. Moreover, the applicability to the Internet of
existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve.

WE MAY HAVE LIABILITY FOR INTERNET CONTENT AND WE MAY NOT HAVE ADEQUATE
LIABILITY INSURANCE.

As a provider of messaging services, we face potential liability for
defamation, negligence, copyright, patent or trademark infringement and other
claims based on the nature and content of the materials transmitted via our
services. We do not and cannot screen all of the content generated by our users,
and we could be exposed to liability with respect to this content. Furthermore,
some foreign governments, such as Germany, have enforced laws and regulations
related to content distributed over the Internet that are more strict than those
currently in place in the United States.

Although we carry general liability and umbrella liability insurance, our
insurance may not cover claims of these types or may not be adequate to
indemnify us for all liability that may be imposed. There is a risk that a
single claim or multiple claims, if successfully asserted against us, could
exceed the total of our coverage limits. There is also a risk that single claim
or multiple claims asserted against us may not qualify for coverage under our
insurance policies as a result of coverage exclusions that are contained within
these policies. Should either of these risks occur, capital contributed by our
stockholders may need to be used to settle claims. Any imposition of liability,
particularly liability that is not covered by insurance or is in excess of
insurance coverage could have a material adverse effect on our reputation and
business and operating results, or could result in the imposition of criminal
penalties.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS THE PRICE OF OUR COMMON STOCK.

As of April 30, 2000, we had approximately 62.1 million shares of Common
Stock outstanding. Sales of a substantial number of shares of Common Stock in
the public market could cause the market price of our Common Stock to decline.
In the near future, 7.6 million shares, which amount includes the shares offered
hereunder, will become eligible for sale under an S-3 registration statement
that we will file to meet our registration rights obligations in connection with
recent acquisitions. Up to 2.9 million shares may be issued upon the conversion
of our Convertible Subordinated Notes and will become eligible for sale under an
S-3 registration statement that we will file to meet our registration rights
obligations in connection with our sale of Convertible Subordinated Notes.
Certain of our shareholders and warrantholders have registration rights with
respect to the Common Stock and Common Stock issuable under the warrants.

14
<PAGE> 17

OUR DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS WILL BE ABLE TO
EXERT SIGNIFICANT INFLUENCE OVER US.

After this offering, our directors, executive officers and principal
shareholders will beneficially own a substantial portion of our outstanding
Common Stock. These shareholders, if they vote together, will be able to
exercise significant influence over all matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also delay or prevent a change
in control of our company.

OUR ARTICLES OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS WHICH COULD DELAY OR
PREVENT A CHANGE IN CONTROL.

Our Articles of Incorporation and Bylaws contain provisions that could
delay or prevent a change in control of our company. These provisions could
limit the price that investors might be willing to pay in the future for shares
of our Common Stock. Some of these provisions:

- Authorize the issuance of preferred stock which can be created and issued
by the board of directors without prior stockholder approval, commonly
referred to as "blank check" preferred stock, with rights senior to those
of Common Stock;

- Prohibit shareholder action by written consent; and

- Establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by shareholders at a meeting.

15
<PAGE> 18

USE OF PROCEEDS

We will not receive any of the proceeds from the sale from time to time of
the Common Stock. All proceeds from the sale of the Common Stock will go to the
account of the Selling Shareholders. See "Selling Shareholders" and "Plan of
Distribution" below.

SELLING SHAREHOLDERS

The shares of our Common Stock to be offered and sold pursuant to this
prospectus were issued in connection with our acquisition of the docSpace
Company. Each former shareholder of the docSpace Company elected to receive
shares of our Common Stock or exchangeable shares of Critical Path Messaging
Co., our subsidiary, which may be exchanged on a one-for-one basis for shares of
our Common Stock. As a result, a portion of the shares being described by this
prospectus are held by Selling Shareholders and a portion will be held after the
exchange on a one-for-one basis for shares of Critical Path Messaging Co., our
subsidiary.

The following table lists, as of the date of this Prospectus, (i) the name
of each of the Selling Shareholders, (ii) the number of shares of Common Stock
that each such Selling Shareholder beneficially owned as of such date, (iii) the
number of shares of Common Stock owned by each Selling Shareholder that may be
offered for sale from time to time by this Prospectus, and (iv) the number of
shares of Common Stock to be held by each such Selling Shareholder assuming the
sale of all the Common Stock offered under this Prospectus. Except as indicated,
none of the Selling Shareholders has held any position or office or had a
material relationship with us or any of our affiliates within the past three
years other than as a result of the ownership of our Common Stock. We may amend
or supplement this Prospectus from time to time to update the disclosure set
forth herein.

16
<PAGE> 19

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
SHARES SHARES WHICH MAY AFTER OFFERING(2)
BENEFICIALLY BE SOLD PURSUANT -------------------
SELLING SHAREHOLDER OWNED(1) TO THIS PROSPECTUS NUMBER PERCENT(%)
------------------- ------------ ------------------ ------ ----------
<S> <C> <C> <C> <C>
Kenneth C. Nickerson(3).................... 143,231 143,231 0 *
240 Richmond Street West, 6th Floor
Toronto, ON
M5G 1V6
Frank M. Clegg(3).......................... 143,231 143,231 0 *
2365 Prince John Boulevard
Mississauga, ON
L5K 2J2
Daniel Leibu(3)............................ 79,520 79,520 0 *
55 Maitland, Suite 911
Toronto, ON
M4Y 1C9
Sumit Oberai(3)............................ 51,277 51,277 0 *
1001 Bay Street, Suite 706
Toronto, ON
M5S 3A6
Ken Schmitt(3)............................. 36,667 36,667 0 *
3 Lyndhurst Place
London, ON
N6C 4H7
Victor Chrapko(3).......................... 13,505 13,505 0 *
Box 110
Brosseau, AB
T0B 0P0
Elizabeth Chrapko(3)....................... 13,505 13,505 0 *
Box 110
Brosseau, AB
T0B 0P0
Michael Corcoran(3)........................ 25,000 25,000 0 *
299 Keele Street
Toronto, ON
M6P 2K5
David Gillespie(3)......................... 24,399 24,399 0 *
66 Hunter Street
Toronto, ON
M4J 1C2
Donald Dew(3).............................. 20,793 20,793 0 *
4 Sallis Drive
Ajax, ON
L1S 6Y8
Xina Chrapko(3)............................ 16,371 16,371 0 *
Box 110
Brosseau, AB
T0B 0P0
</TABLE>

17
<PAGE> 20

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
SHARES SHARES WHICH MAY AFTER OFFERING(2)
BENEFICIALLY BE SOLD PURSUANT -------------------
SELLING SHAREHOLDER OWNED(1) TO THIS PROSPECTUS NUMBER PERCENT(%)
------------------- ------------ ------------------ ------ ----------
<S> <C> <C> <C> <C>
Marissa Dobozy(3).......................... 15,715 15,715 0 *
300 Roncesvalles Avenue, Main Apt.
Toronto, ON
M5R 2M6
Rob Zuber(3)............................... 14,395 14,395 0 *
17 Lee Avenue, Unit #1
Toronto, ON
M4E 2N8
John P. Joseph(3).......................... 14,323 14,323 0 *
77 Davisville Avenue, #1502
Toronto, ON
M4S 1G4
Carmen M. de Antoni(3)..................... 9,638 9,638 0 *
33 Harbour Square, Suite 2223
Toronto, ON
M5J 2G2
Reg Shandro(3)............................. 8,184 8,184 0 *
4702-44 Street
St. Paul, AB
T0A 3A0
Ron Protacio(3)............................ 8,072 8,072 0 *
63 Beaconsfield Avenue
Brampton, ON
L6Y 4S2
Joan Kumlin(3)............................. 4,911 4,911 0 *
547 Woodpark Boulevard S.W.
Calgary, AB
T2W 3L7
1293314 Ontario Ltd.(3).................... 4,163 4,163 0 *
7050 Woodbine Avenue, Suite 307
Markham, ON
M4S 2M5
Matt Thornton(3)........................... 4,056 4,056 0 *
214 Westminster Avenue
Toronto, ON
M6R 1P1
Tom Martinicchio(3)........................ 2,892 2,892 0 *
201 Millwood Road, Upper Apartment
Toronto, ON
M4S 1J6
Blaine Horrocks(3)......................... 2,540 2,540 0 *
43 Winter Gardens Trail
Scarborough, ON
M1C 3M8
</TABLE>

18
<PAGE> 21

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
SHARES SHARES WHICH MAY AFTER OFFERING(2)
BENEFICIALLY BE SOLD PURSUANT -------------------
SELLING SHAREHOLDER OWNED(1) TO THIS PROSPECTUS NUMBER PERCENT(%)
------------------- ------------ ------------------ ------ ----------
<S> <C> <C> <C> <C>
Terri Anne Day(3).......................... 2,440 2,440 0 *
34 Holbrook Court
Unionville, ON
L3R 7P8
Byron Cassey(3)............................ 2,368 2,368 0 *
108 Dearbourne Avenue
Toronto, ON
M4K 1M7
Gorete Almeida(3).......................... 2,036 2,036 0 *
95 Prince Arthur Avenue, #301
Toronto, ON
M5R 3P6
Irene Dimopoulos(3)........................ 1,221 1,221 0 *
691 Cosburn Avenue
Toronto, ON
M5R 3P6
Edward Wear, Inc.(3)....................... 1,218 1,218 0 *
8039 Adera Street
Vancouver, BC
V6P 6P3
Jodi Munro(3).............................. 1,138 1,138 0 *
1397 Saginaw Crescent
Mississauga, ON
L5H 1X4
Martin Loeffler(3)......................... 814 814 0 *
362 Woodbine Avenue, Unit 2
Toronto, ON
M4L 2V6
Bil Harmer(3).............................. 541 541 0 *
537 A Mount Pleasant Road
Toronto, ON
M4S 2M5
Scott Wiebe(3)............................. 538 538 0 *
77 Maitland Place, Apt. 415
Toronto, ON
M4Y 2V6
Aleksander Gargenta(3)..................... 538 538 0 *
7 St. Dennis Drive, Suite 1104
Toronto, ON
M3C 1E5
Jonathan Newman(3)......................... 538 538 0 *
390 Queens Quay West, #1006
Toronto, ON
M5V 3A6
</TABLE>

19
<PAGE> 22

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
SHARES SHARES WHICH MAY AFTER OFFERING(2)
BENEFICIALLY BE SOLD PURSUANT -------------------
SELLING SHAREHOLDER OWNED(1) TO THIS PROSPECTUS NUMBER PERCENT(%)
------------------- ------------ ------------------ ------ ----------
<S> <C> <C> <C> <C>
Marisa Fernandes(3)........................ 529 529 0 *
4956 Natkarni Crescent
Mississauga, ON
L5V 1L5
Neil Shah(3)............................... 347 347 0 *
77 Gerard Street West, #605
Toronto, ON
M5G 2A1
Brian Shickluna(3)......................... 339 339 0 *
25 Wood Street, #2511
Toronto, ON
M4Y 2P9
Felix Tin(3)............................... 333 333 0 *
12 Berkinshaw Crescent
Toronto, ON
M3B 2T2
Laurie Harper(3)........................... 146 146 0 *
620 Jarvis Street, #1908
Toronto, ON
M4Y 2R8
Shannon Craig(3)........................... 2,302 2,302 0 *
82 Roncesvalles Avenue, #6
Toronto, ON
M6R 2K7
Antonio Santilli(3)........................ 2,302 2,302 0 *
97 Northey Drive
Toronto, ON
M2Z 2S8
Michael Kurtz(3)........................... 4,173 4,173 0 *
188 Eglinton Avenue East, Apt. 808
Toronto, ON
M4P 2M5
Toucan Capital Corp. LLC(3)................ 548,398 548,398 0 *
3 Bethesda Metro Center, Suite 700
Bethesda, MD 20814
Himalaya Capital LP(3)..................... 164,623 164,623 0 *
(other than Sumner)
10 East 53rd Street, 20th Floor
New York, NY 10022
G.M. Sumner(3)............................. 21,077 21,077 0 *
(partner in Himalaya)
10 East 53rd Street, 20th Floor
New York, NY 10022
C. Blair Fund Ltd.(3)...................... 3,259 3,259 0 *
5 Greenwich Office Park, 4th Floor
Greenwich, CT 06831
</TABLE>

20
<PAGE> 23

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
SHARES SHARES WHICH MAY AFTER OFFERING(2)
BENEFICIALLY BE SOLD PURSUANT -------------------
SELLING SHAREHOLDER OWNED(1) TO THIS PROSPECTUS NUMBER PERCENT(%)
------------------- ------------ ------------------ ------ ----------
<S> <C> <C> <C> <C>
C. Blair Partners, LP...................... 1,328 1,328 0 *
(other than LLC)
5 Greenwich Office Park, 4th Floor
Greenwich, CT 06831
C. Blair Capital LLC....................... 253 253 0 *
(partner in C. Blair Partners)
5 Greenwich Office Park, 4th Floor
Greenwich, CT 06831
C. Blair Partners II, LP................... 7,215 7,215 0 *
(other than 5 LLC partners)
5 Greenwich Office Park, 4th Floor
Greenwich, CT 06831
5 LLC Partners............................. 2,434 2,434 0 *
(partners subject to w/h tax)
5 Greenwich Office Park, 4th Floor
Greenwich, CT 06831
Vinton L. Rollins.......................... 30,814 30,814 0 *
239 East 79th Street, Apt. #11-H
New York, NY 10021
Michael C. Mathieu......................... 26,002 26,002 0 *
6234 29th Avenue NE
Seattle, WA 98115
Christopher A. Boies....................... 6,095 6,095 0 *
120 East 34th Street, Apt 18J
New York, NY 10016
David Boies................................ 6,912 6,912 0 *
2 Middle Patent Road
Armonk, NY 10504
Robert B . Silver.......................... 7,314 7,314 0 *
4 Martine Avenue, Apt. #1217
White Plains, NY 10606
Jonathan D. Schiller....................... 3,939 3,939 0 *
5301 Wisconsin Avenue NW, Unit 570
Washington, D.C. 20015
Norman A. Gretzinger....................... 18,806 18,806 0 *
120 East 34th Street, #9C
New York, NY 10016
Duncan G. Copeland......................... 18,806 18,806 0 *
Copeland & Company
13601 Query Mill Road
Gaitherburg, MD 20878
Lu Li...................................... 6,009 6,009 0 *
10 East 53rd Street, 20th Floor
New York, NY 10022
</TABLE>

21
<PAGE> 24

------------------------
* Indicates less than one percent.

(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days after
May 5, 2000 through the exercise of any stock option or other right. Unless
otherwise indicated in the footnotes, each person has sole voting and
investment power (or shares such powers with his or her spouse) with respect
to the shares shown as beneficially owned.

(2) Assumes the sale of all Common Stock offered under this Prospectus.

(3) Consists of shares of Critical Path Messaging Co. that are exchangeable for
shares of Critical Path.

22
<PAGE> 25

PLAN OF DISTRIBUTION

The Selling Shareholders may offer and sell the Common Stock covered by
this Prospectus from time to time. The Selling Shareholder's pledgees, donees,
transferees or other successors in interest that receive such Common Stock as a
gift, partnership distribution or other non-sale related transfer may likewise
offer and sell the Common Stock from time to time. The Selling Shareholders will
act independently of us in making decisions with respect to the timing, manner
and size of each sale. The Selling Shareholders may sell the Common Stock on one
or more exchanges, including the Nasdaq National Market, or in the
over-the-counter market or otherwise, at prices and at terms then prevailing or
at prices related to the then current market prices or in negotiated
transactions. The Selling Shareholders may sell the Common Stock by one or more
of the following means of distribution: (a) a block trade in which the
broker-dealer so engaged will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this Prospectus; and (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
We may amend this Prospectus from time to time to describe a specific plan of
distribution. In connection with distributions of the Common Stock or otherwise,
the Selling Shareholders may enter into hedging transactions with broker-dealers
or other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of our
Common Stock in the course of hedging the positions they assume with the Selling
Shareholders. The Selling Shareholders may also sell our Common Stock short and
redeliver the shares covered by this Prospectus to close out such short
positions. The Selling Shareholders may also enter into option or other
transactions with broker-dealers or other financial institutions which require
the delivery to such broker-dealer or other financial institution of the Common
Stock offered under this Prospectus, which Common Stock such broker-dealer or
other financial institution may resell pursuant to this Prospectus (as
supplemented or amended to reflect such transaction). The Selling Shareholders
may also pledge the shares of Common Stock registered hereunder to a broker-
dealer or other financial institution and, upon a default, such broker-dealer or
other financial institution may effect sales of the pledged Common Stock
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). In addition, the Selling Shareholder may also sell the Common
Stock under Rule 144 rather than pursuant to this Prospectus if the shares so
qualify for resale under Rule 144.

In effecting sales, brokers, dealers or agents engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Shareholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. We will pay all
expenses incident to the offering and sale of the Common Stock covered by this
Prospectus to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes.

In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.

We have advised the Selling Shareholders that the anti-manipulation rules
set forth in Regulation M under the Exchange Act may apply to sales of the
Shares in the market and to the activities of the Selling Shareholders and its
affiliates. In addition, we will make copies of this

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Prospectus available to the Selling Shareholders and have informed them of the
need for delivery of copies of this Prospectus to purchasers at or prior to the
time of any sale of the Common Stock covered by this Prospectus. The Selling
Shareholders may indemnify any broker-dealer that participates in transactions
involving the sale of the Common Stock against certain liabilities, including
liabilities arising under the Securities Act.

At the time a particular offer of the shares of Common Stock covered by
this Prospectus is made, if required, a prospectus supplement will be
distributed that will set forth the number of shares being offered and the terms
of the offering, including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter, any discount, commission and other item
constituting compensation, any discount, commission or concession allowed or
reallowed or paid to any dealer, and the proposed selling price to the public.

The Selling Shareholders may or may not sell all or any of the Common Stock
covered by this Prospectus.

We have agreed with the Selling Shareholders to keep the Registration
Statement of which this Prospectus constitutes a part effective until February
2002. The Company intends to de-register any of the shares not sold by the
Selling Shareholders at the end of such period; however, at such time, any
unsold shares may be freely tradable subject to compliance with Rule 144 of the
Securities Act.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, our legal counsel.

EXPERTS

Our consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K/A for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM
WHAT IS IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS
FROM WHAT IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON SUCH STATEMENT. THIS
PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE
INFORMATION MAY CHANGE AFTER THAT DATE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information.. 1
The Company.......................... 2
Risk Factors......................... 4
Use of Proceeds...................... 16
Selling Shareholders................. 16
Plan of Distribution................. 23
Legal Matters........................ 24
Experts.............................. 24
</TABLE>

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CRITICAL PATH, INC.

3,805,821 Shares
of
Common Stock
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PROSPECTUS
------------------------
June 9, 2000

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