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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 2000
REGISTRATION NO. 333-34020
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
24/7 MEDIA, INC.
(Exact name of Registrant as specified in its Charter)
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DELAWARE 13-3995672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10001
(212) 231-7100
(Address, including zip code, and telephone number,
Including Area Code, Of Registrant's Principal Executive Offices)
--------------------------
DAVID J. MOORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
24/7 MEDIA, INC.
1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10010
(212) 231-7100
FAX (212) 760-2811
(Name, address, including zip code, and telephone
number, including area code, of agent for service of process)
--------------------------
COPIES TO:
MARK E. MORAN, GENERAL COUNSEL
24/7 MEDIA, INC.
1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10010
(212) 231-7100
FAX (212) 760-2811
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after this Registration Statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH AMOUNT OFFERING MAXIMUM AGGREGATE
CLASS OF TO BE PRICE PER AGGREGATE REGISTRATION
SECURITIES REGISTERED SHARE PRICE FEE
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Common stock, par value $.01 per share....... 3,101,395(1) $17.50 $3,605,788(1) $952(1)
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(1) The Registrant paid a fee of $28,267 with the filing of the initial
registration statement on April 4, 2000, and an additional $2,240 filing fee
on April 14, 2000. The Registrant is registering an additional 206,045
shares for a registration fee of $952 pursuant to Rule 457(c) of the
Securities Act of 1933, as amended, based on a per share price of $17.50,
the average of the high and low prices of the common stock as reported on
the Nasdaq National Market on April 14, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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SUBJECT TO COMPLETION, DATED APRIL 17, 2000
PROSPECTUS
24/7 MEDIA, INC.
3,101,395 SHARES
OF COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of 3,101,395 shares of our common stock that are held by the
stockholders listed on pages 13 and 14. The stockholders may offer their shares
of common stock through public or private transactions, on or off the Nasdaq
National Market, at prevailing market prices, or at privately negotiated prices.
We will not receive any of the proceeds from the sale of the shares.
Our common stock is listed on the Nasdaq National Market, under the symbol
"TFSM." On April 14, 2000, the last reported sale price for the common stock was
$16.625 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2000
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TABLE OF CONTENTS
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PAGE
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24/7 Media.................................................. 1
Risk Factors................................................ 3
Forward Looking Information................................. 12
Use of Proceeds............................................. 12
Selling Stockholders........................................ 13
Plan of Distribution........................................ 15
Incorporation by Reference.................................. 16
Where You Can Find More Information......................... 17
Legal Matters............................................... 17
Experts..................................................... 17
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24/7 MEDIA
We are a leading global provider of end-to-end advertising and marketing
solutions for Web publishers, online advertisers, advertising agencies,
e-marketers and e-commerce merchants. We provide a comprehensive suite of media
and technology products and services that enable such Web publishers, online
advertisers, advertising agencies and e-marketers to attract and retain
customers worldwide, and to reap the benefits of the Internet and other
electronic media.
Our solutions include advertising and direct marketing sales, ad serving,
promotions, email list management, email list brokerage, email delivery, data
analysis, loyalty marketing and convergence solutions, all delivered from our
industry-leading data and technology platforms. Our 24/7 Connect ad serving
technology solutions are designed specifically for the demands and needs of
advertisers and agencies, Web publishers and e-commerce merchants.
Commencing in 2000, our business will be organized into three principal
lines of business:
- 24/7 Network
- 24/7 Mail
- 24/7 Technology Solutions.
THE 24/7 NETWORK
The 24/7 Network is a global online advertising network. The 24/7 Network
aggregates the advertising inventory of hundreds of Web sites that are
attractive to advertisers, generate a high number of ad impressions and
contribute a variety of online content to the network. Web publishers seeking to
join the network must meet our affiliation criteria, including high quality
content, brand name recognition, significant existing and projected page views,
attractive user demographics, and sponsorship opportunities. For Web sites on
the 24/7 Network, we sell Web site-specific advertising campaigns and also
bundle advertisements for sale in content channels or across the entire network.
For our flagship Web sites on the network, we actively solicit sponsorships and
integrate sales efforts with the Web site's management. We deliver advertising
on our network using our 24/7 Connect technology, which enables us to offer
advertisers the ability to target Internet users based on a variety of criteria
including on a geo-targeted basis.
Our Internet advertising network is organized as follows:
- In the U.S., the network consists of over 400 high profile Web sites to
which we delivered an aggregate of more than 3.3 billion advertisements in
December 1999;
- In Europe, the network consists of over 250 Web sites to which we
delivered an aggregate of more than 550 million advertisements in
December 1999. We developed our European operations in 1999 after
acquiring InterAd Holdings Ltd. (renamed 24/7 Media Europe) in a two-step
transaction through which we acquired a majority interest in January 1999
and the remainder in January 2000;
- In Canada, the network consists of over 80 high profile Web sites to which
we delivered an aggregate of more than 45 million advertisements in
December 1999. We developed our Canadian operations in 1999 after
acquiring Clickthrough Interactive Services, Inc. in July 1999;
- In Latin America, the network consists of over 30 Web sites to which we
delivered an aggregate of more than 5 million advertisements in
December 1999;
- In Asia, through our partner chinadotcom corporation, we support the
operation of the network, that consists of more than 500 high profile Web
sites. This network covers Greater China, the ASEAN nations, Australia,
South Korea and Japan; and
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- The 24/7 Network also includes The ContentZone, which consists of over
3,500 small to medium-sized Web sites to which we delivered an aggregate
of more than 100 million advertisements in December 1999.
Through the 24/7 Network we also offer network-related value-added solutions
to advertisers, marketers and Web publishers. For example, our AwardTrack
subsidiary offers a private label, loyalty customer relationship management
program that enables Web retailers and content sites to issue points to Web
users as a reward for making purchases, completing surveys or investigating
promotions. We also offer our creative design services, sponsorship
opportunities and syndication services.
24/7 MAIL
Our 24/7 Mail business was developed through the integration of our
acquisitions of Sift, Inc. in March 1999 and ConsumerNet, Inc. in August 1999
and subsequent growth. 24/7 Mail provides opt-in email direct marketing
services.
Our permission-based email-marketing database of more than 20 million email
addresses is the largest such database in the world and enables direct marketers
to target promotional campaigns to consumers who choose to receive commercial
messages. The users can opt out, or stop receiving these messages, at any time.
Currently, 24/7 Mail has U.S. operations that serve as list manager for
permission-based email lists that collectively contained more than 20 million
email addresses as of March 2000, and European operations that were recently
launched in the UK, and currently serve as list manager for permission-based
email lists that collectively contained more than two million email addresses as
of March 2000.
24/7 TECHNOLOGY SOLUTIONS
24/7 Technology Solutions is comprised of comprehensive service and software
solutions designed specifically for the needs of three targeted customer
segments: advertisers and agencies, Web publishers and e-commerce merchants. Our
technical service team of over 150 employees provides consulting services and
around-the-clock support for our ad-serving clients.
Products within 24/7 Technology Solutions include:
- 24/7 Connect, a next generation Internet ad serving system that is
available on two platforms: 24/7 Connect for Networks, that will initially
serve the 24/7 Network in the United States, and 24/7 Connect for
Advertisers and Publishers, our third-party ad serving solution. We expect
to combine the two platforms into a single solution later this year. We
acquired 24/7 Connect for Advertisers and Publishers through our
acquisition of Sabela Media, Inc. in January 2000; and
- e.merge, a fully integrated, customizable suite of business applications
designed to manage marketing campaigns across multiple forms of electronic
media including broadband, set-top boxes and wireless (WAP) applications.
We acquired e.merge through our acquisition of IMAKE Software and
Services, Inc. in January 2000.
We also operate Profilz, a database of Web user profiles that aids in
delivering targeted advertising and marketing messages based on demographic
profiles.
Our senior management team includes several individuals with over fifteen
years of experience in advertising sales in the television and proprietary
online network industries. Other members of senior management contribute
extensive knowledge of the technology that causes advertisements to be delivered
to Web sites, or ad serving technology, and data base targeting. We leverage our
media sales and technology expertise to maximize the value of ad campaigns for
both advertisers, direct marketers and Web sites.
Our principal executive offices are located at 1250 Broadway, 28th Floor,
New York, New York 10001. Our telephone number is (212) 231-7100. We currently
have offices in 50 cities in 27 countries. Our company's main Web site address
is WWW.247MEDIA.COM. Information contained on our Web site is not part of this
prospectus.
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RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO BUY OUR COMMON
STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITIONS OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN THIS CASE, THE PRICE
OF OUR SECURITIES COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT.
WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN INVESTOR CAN EVALUATE OUR
BUSINESS.
We were formed as a result of three companies in February 1998. None of the
companies nor any company that we have since acquired had an operating history
of more than four years prior to acquisition or merger. We, therefore, have an
extremely limited operating history. You must consider the risks, expenses and
difficulties typically encountered by companies with limited operating
histories, particularly companies in new and rapidly expanding markets such as
Internet advertising.
These risks include our ability to:
- develop new relationships and maintain existing relationships with our Web
sites, advertisers, and other third parties;
- further develop and upgrade our technology;
- respond to competitive developments;
- implement and improve operational, financial and management information
systems; and
- attract, retain and motivate qualified employees.
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE THE COMPANIES THAT WE HAVE ACQUIRED.
We were formed in February 1998 to consolidate three Internet advertising
companies and have since acquired or agreed to acquire eleven more companies. In
combining these entities, we have faced risks and continue to face risks of
integrating and improving our financial and management controls, ad serving
technology, reporting systems and procedures, and expanding, training and
managing our work force. This process of integration may take a significant
period of time and will require the dedication of management and other
resources, which may distract management's attention from our other operations.
We intend to continue pursuing selective acquisitions of businesses,
technologies and product lines as a key component of our growth strategy. Any
future acquisition or investment may result in the use of significant amounts of
cash, potentially dilutive issuances of equity securities, incurrence of debt
and amortization expenses related to goodwill and other intangible assets.
In addition, acquisitions involve numerous risks, including:
- the difficulties in the integration and assimilation of the operations,
technologies, products and personnel of an acquired business;
- the diversion of management's attention from other business concerns;
- the availability of favorable acquisition financing for future
acquisitions; and
- the potential loss of key employees of any acquired business.
Our inability to successfully integrate any acquired company could adversely
affect our business.
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WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE.
We incurred net losses attributable to common stockholders of $39.1 million
and $25.4 million for the years ended December 31, 1999 and 1998, respectively.
Each of our predecessors had net losses in every year of their operation. We
anticipate that we will incur operating losses for the foreseeable future due to
a high level of planned operating and capital expenditures. Although our revenue
has grown rapidly in recent periods, such growth may not continue and may not
lead to profitability. Even if we do achieve profitability, we cannot assure you
that we can sustain or increase profitability on a quarterly or annual basis in
the future.
OUR FUTURE REVENUES AND RESULTS OF OPERATIONS MAY BE DIFFICULT TO FORECAST.
Our results of operations may fluctuate significantly in the future as a
result of a variety of factors, many of which are beyond our control. These
factors include:
- the addition of new or loss of existing clients;
- changes in fees paid by advertisers and direct marketers;
- changes in service fees payable by us to owners of Web sites or email
lists, or ad serving fees payable by us to third parties;
- the introduction of new Internet marketing services by us or our
competitors;
- variations in the levels of capital or operating expenditures and other
costs relating to the maintenance or expansion of our operations,
including personnel costs; and
- general economic conditions.
Our future revenues and results of operations may be difficult to forecast
due to the above factors. In addition, our expense levels are based in large
part on our investment plans and estimates of future revenues. Any increased
expenses may precede or may not be followed by increased revenues, as we may be
unable to, or may elect not to, adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. As a result, we believe that
period-to-period comparisons of our results of operations may not be meaningful.
You should not rely on past periods as indicators of future performance. In
future periods, our results of operations may fall below the expectations of
securities analysts and investors, which could adversely affect the trading
price of our common stock.
OUR REVENUES ARE SUBJECT TO SEASONAL FLUCTUATIONS.
We believe that our revenues are subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year and direct marketers mail substantially more
marketing materials in the third quarter each year. Expenditures by advertisers
and direct marketers tend to vary in cycles that reflect overall economic
conditions as well as budgeting and buying patterns. Our revenue could be
materially reduced by a decline in the economic prospects of advertisers, direct
marketers or the economy in general, which could alter current or prospective
advertisers' spending priorities or budget cycles or extend our sales cycle.
OUR BUSINESS MAY NOT GROW IF THE INTERNET ADVERTISING MARKET DOES NOT CONTINUE
TO DEVELOP.
The Internet as a marketing medium has not been in existence for a
sufficient period of time to demonstrate its effectiveness. Our business would
be adversely affected if the Internet advertising market fails to continue to
develop. There are currently no widely accepted standards to measure the
effectiveness of Internet marketing other than clickthrough rates, which
generally have been declining. We cannot be certain that such standards will
develop to sufficiently support Internet marketing as a significant advertising
medium. Actual or perceived ineffectiveness of online marketing in general, or
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inaccurate measurements or database information in particular, could limit the
long-term growth of online advertising and cause our revenue levels to decline.
BANNER ADVERTISING, FROM WHICH WE CURRENTLY DERIVE MOST OF OUR REVENUES, MAY NOT
BE AN EFFECTIVE ADVERTISING METHOD IN THE FUTURE.
The majority of our revenues are derived from the delivery of banner
advertisements. If advertisers determine that banner advertising is an
ineffective or unattractive advertising medium, we cannot assure you that we
will be able to effectively make the transition to any other form of Internet
advertising. Also, there are "filter" software programs that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising, and our business, results of operations and financial
condition, would be materially and adversely affected by Web users' widespread
adoption of such software.
GROWTH OF OUR BUSINESS DEPENDS ON THE DEVELOPMENT OF ONLINE DIRECT MARKETING.
Adoption of online direct marketing, particularly by those entities that
have historically relied upon traditional means of direct marketing, such as
telemarketing and direct mail, is an important part of our business model.
Intensive marketing and sales efforts may be necessary to educate prospective
advertisers regarding the uses and benefits of our products and services to
generate demand for our direct marketing services. Enterprises may be reluctant
or slow to adopt a new approach that may replace, limit, or compete with their
existing direct marketing systems. In addition, since online direct marketing is
emerging as a new and distinct market apart from online advertising, potential
adopters of online direct marketing services will increasingly demand
functionality tailored to their specific requirements. We may be unable to meet
the demands of our clients.
OUR DEVELOPMENT OF A NEXT GENERATION AD SERVING TECHNOLOGY MAY NOT BE SUCCESSFUL
AND MAY CAUSE BUSINESS DISRUPTION.
24/7 Connect is our proprietary next generation ad serving technology that
is intended to serve as our sole ad serving solution. We recently launched 24/7
Connect, and to successfully complete the rollout of 24/7 Connect, we must,
among other things, ensure that this technology will function efficiently at
high volumes, interact properly with our Profilz database, offer the
functionality demanded by our customers and assimilate our sales and reporting
functions. This development effort could fail technologically or could take more
time than expected. Even if we successfully address all these challenges, we
must then work with our Web sites, advertisers and direct marketing clients to
transition them to our new system, which would also create a risk of business
disruption and loss of any of our clients.
LOSS OF FAILURE OF OUR THIRD PARTY AD SERVING TECHNOLOGY COULD DISRUPT OUR
BUSINESS.
Unless and until the complete rollout and transition to 24/7 Connect is
complete, we will be partially dependent on AdForce, Inc. to deliver ads to our
networks and Web sites. If such service becomes unavailable or fails to serve
our ads properly or fails to produce the frequent operational reports required,
our business would be adversely affected. Additionally, our use of multiple
systems to serve ads requires us to employ significant effort to prepare
information for billing, client statements and financial reporting. We are
upgrading our systems to integrate a new accounting system with our ad serving
technologies to improve our accounting, control and reporting methods. Our
inability to upgrade our existing reporting systems and streamline our
procedures may cause delays in the timely reporting of financial information.
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LOSS OF OUR MAJOR WEB SITES WOULD SIGNIFICANTLY REDUCE OUR REVENUES.
The 24/7 Network generates substantially all of our revenues and it consists
of a limited number of our Web sites that have contracted for our services under
agreements cancelable generally upon a short notice period. For the twelve-month
periods ended December 31, 1999 and 1998, approximately 32% and 47%,
respectively, of our total revenues were derived from advertisements on our top
ten Web sites. For the twelve month period ended December 31, 1999, the top ten
Web sites included AT&T WorldNet Service, Mapquest.com, Havas Interactive,
Netscape Communications, Earthlink Network, Goto.com, Small World Sports,
AllAdvantage.com, Multi-Player Games Network and World Gaming Corp. We
experience turnover from time to time among our Web sites, and we cannot be
certain that the Web sites named above remain or will remain associated with us.
Our business, results of operations and financial condition would be materially
adversely affected by the loss of one or more of the Web sites that account for
a significant portion of our revenue from the 24/7 Network.
LOSS OF OUR ADVERTISERS OR AD AGENCIES WOULD REDUCE OUR REVENUES.
We generate our revenues from a limited number of advertisers and ad
agencies that purchase space on our Web sites. We expect that a limited number
of these entities may continue to account for a significant percentage of our
revenues for the foreseeable future. For the twelve-month period ended
December 31, 1999, our top ten advertisers and ad agencies accounted for
approximately 26% of our total revenues.
ADVERTISERS AND AD AGENCIES TYPICALLY PURCHASE ADVERTISING UNDER PURCHASE ORDER
AGREEMENTS THAT RUN FOR A LIMITED TIME.
Typically, we enter into short-term contracts with advertisers and ad
agencies. Since these contracts are short-term, we will have to negotiate new
contracts or renewals in the future that may have terms that are not as
favorable to us as the terms of existing contracts. We cannot be certain that
current advertisers and ad agencies will continue to purchase advertising from
us or that we will be able to attract additional advertisers and ad agencies
successfully, or that agencies and advertisers will make timely payment of
amounts due to us. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to increase the ability of their products or services to address
the needs of our prospective clients.
OUR FAILURE TO SUCCESSFULLY COMPLETE MAY HINDER OUR GROWTH.
The markets for Internet advertising and related products and services are
intensely competitive and such competition is expected to increase. Our failure
to successfully compete may hinder our growth. We believe that our ability to
compete depends upon many factors both within and beyond our control, including:
- the timing and market acceptance of new products and enhancements of
existing services developed by us and our competitors;
- changing demands regarding customer service and support;
- shifts in sales and marketing efforts by us and our competitors; and
- the ease of use, performance, price and reliability of our services and
products.
Many of our competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than ours. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products or
services to address
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the needs of our prospective clients. We cannot be certain that we will be able
to successfully compete against current or future competitors.
In addition, the Internet must compete for a share of advertisers' total
budgets with traditional advertising media, such as television, radio, cable and
print, as well as content aggregation companies and other companies that
facilitate Internet advertising. To the extent that the Internet is perceived to
be a limited or ineffective advertising or direct marketing medium, advertisers
and direct marketers may be reluctant to devote a significant portion of their
advertising budgets to Internet marketing, which could limit the growth of
Internet marketing.
WE MAY BE UNABLE TO CONTINUE TO SUCCESSFULLY MANAGE RAPID GROWTH.
We continue to increase the scope of our operations both domestically and
internationally, in both sales and marketing as well as technological
development. We expect that we will need to continue to improve our financial
and managerial controls, reporting procedures and systems. We have experienced
rapid growth and expansion in operations that have placed a significant strain
on our managerial, operational and financial resources. We expect the number of
employees to increase in the future.
To successfully compete in the evolving Internet industry, we must:
- continue to improve our financial and management controls;
- enhance our reporting systems and procedures;
- continue to scale our ad serving systems and upgrade their functional
capabilities; and
- expand, train, retain and manage our work force.
We cannot be certain that our systems, procedures or controls will be
adequate to support our expanding operations, or that management will be able to
respond effectively to such growth. Our future results of operations also depend
on the expansion of our sales, marketing and customer support departments.
OUR INTERNATIONAL EXPANSION MAY POSE LEGAL AND CULTURAL CHALLENGES.
We have operations in a number of international markets, including Canada,
Europe, Asia, Australia and Latin America. We intend to continue to expand our
international operations and international sales and marketing efforts. To date,
we have limited experience in marketing, selling and distributing our solutions
internationally.
International operations are subject to other risks, including:
- changes in regulatory requirements;
- reduced protection for intellectual property rights in some countries;
- potentially adverse tax consequences;
- general import/export restrictions relating to encryption technology
and/or privacy;
- difficulties and costs of staffing and managing foreign operations;
- political and economic instability;
- fluctuations in currency exchange rates; and
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world.
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In addition to these factors, due to our minority stake in the 24/7 Network
in Asia, we are relying on chinadotcom corporation to conduct operations, build
the network, aggregate Web publishers and coordinate sales and marketing
efforts. The success of the 24/7 Network in Asia is directly dependent on the
success of chinadotcom corporation and its dedication of sufficient resources to
our relationship.
IF WE LOSE OUR CEO OR OTHER SENIOR MANAGERS WE MAY NOT BE ABLE TO GROW.
Our success depends upon our senior management and key sales and technical
personnel, particularly David J. Moore, Chief Executive Officer. The loss of the
services of one or more of these persons could materially adversely affect our
ability to develop our business. Our success also depends on our ability to
attract and retain qualified technical, sales and marketing, customer support,
financial and accounting, and managerial personnel. Competition for such
personnel in the Internet industry is intense, and we cannot be certain that we
will be able to retain our key personnel or that we can attract, integrate or
retain other highly qualified personnel in the future.
We have experienced in the past, and may continue to experience in the
future, difficulty in hiring and retaining candidates with appropriate
qualifications, especially in sales and marketing positions. Although we have
not experienced any material impact from the difficulty in hiring and retaining
qualified employees, we may be materially impacted in the future from such
hiring difficulties.
DEPENDENCE ON PROPRIETARY RIGHTS AND RISK OF INFRINGEMENT.
Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of patent, copyright, trade secret and trademark law. We have
received two patents in the United States, and have filed and intend to file
additional patent applications in the United States. In addition, we apply to
register our trademarks in the United States and internationally. We cannot
assure you that any of our patent applications or trademark applications will be
approved. Even if they are approved, such patents or trademarks may be
successfully challenged by others or invalidated. If our trademark registrations
are not approved because third parties own such trademarks, our use of such
trademarks will be restricted unless we enter into arrangements with such third
parties that may be unavailable on commercially reasonable terms.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation. We
cannot assure you that any of our proprietary rights will be viable or of value
in the future since the validity, enforceability and scope of protection of
certain proprietary rights in Internet-related industries is uncertain and still
evolving.
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD HINDER OUR ABILITY TO DELIVER
ADVERTISEMENTS OVER THE INTERNET.
We may be subject to claims of alleged infringement of the trademarks and
other intellectual property rights of third parties by us or the Web publishers
with Web sites in the 24/7 Network. Such claims and any resultant litigation
could subject us to significant liability for damages and could result
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in the invalidation of our proprietary rights. In addition, even if we prevail,
such litigation could be time-consuming and expensive to defend, and could
result in the diversion of our time and attention, any of which could materially
and adversely affect our business, results of operations and financial
condition. Any claims or litigation from third parties may also result in
limitations on our ability to use the trademarks and other intellectual property
subject to such claims or litigation unless we enter into arrangements with the
third parties responsible for such claims or litigation which may be unavailable
on commercially reasonable terms.
In December 1999, DoubleClick, Inc. filed a patent infringement lawsuit
against our subsidiary, Sabela Media, Inc. in the United States District Court
for the Southern District of New York. The suit alleges that Sabela is
infringing, and inducing and contributing to the infringement by third parties
of, a patent held by DoubleClick entitled "Method for Delivery, Targeting and
Measuring Advertising Over Networks". DoubleClick is seeking treble damages in
an unspecified amount, a preliminary and permanent injunction from further
alleged infringement and attorneys' fees and costs. This litigation can be
expected to result in significant expenses to us and the diversion of management
time and other resources, the extent of which cannot be quantified with any
reasonable accuracy given the early stage of this litigation.
In addition, some of our contracts with Web publishers require us to
indemnify the Web publishers for losses they incur arising from any infringement
by our ad serving technology of a third party's intellectual property rights. If
DoubleClick is successful in its claims against Sabela or files a similar suit
against us, we may be hindered or even prevented from competing in the Internet
advertising market and our operations could be severely harmed. The DoubleClick
suit could result in limitations on how we implement our 24/7 Connect for
Advertisers and Publishers product, delays and costs associated with redesigning
our 24/7 Connect for Advertisers and Publishers product and payments of license
fees and other monies. An injunction obtained by DoubleClick could eliminate our
ability to deliver advertisements over the Internet through our 24/7 Connect for
Advertisers and Publishers product. If DoubleClick is successful in its claims
against Sabela, we cannot assure you that we would be able to enter into a
licensing agreement with DoubleClick on commercially reasonable terms, if at all
for our 24/7 Connect for Advertisers and Publishers product. In that case, we
would be required to alter our technology in a way that would not infringe the
DoubleClick patent, and we cannot assure you that these alterations would be
successful.
INTELLECTUAL PROPERTY LIABILITY.
We may be liable for content available or posted on the Web sites of our
publishers. We may be liable to third parties for content in the advertising we
serve if the music, artwork, text or other content involved violates the
copyright, trademark or other intellectual property rights of such third parties
or if the content is defamatory. Any claims or counterclaims could be time
consuming, result in costly litigation or divert management's attention.
PRIVACY CONCERNS MAY PREVENT US FROM COLLECTING DEMOGRAPHIC OR OTHER CONSUMER
DATA.
Our 24/7 Connect technology targets advertising to users through the use of
identifying data, or "cookies" and other non-personally-identifying information.
24/7 Connect enables the use of cookies to deliver targeted advertising, to help
compile demographic information, and to limit the frequency with which an
advertisement is shown to the user. Any reduction or limitation in the use of
cookies could limit the effectiveness of our sales and marketing efforts and
impair our targeting capabilities. Due to privacy concerns, some Internet
commentators, advocates and governmental bodies have suggested that the use of
cookies be limited or eliminated. The effectiveness of our 24/7 Connect
technology to deliver targeted advertisements could be limited by any regulation
or limitation in the collection or use of information regarding Internet users.
Since many of the limitations are still in the proposal stage, we cannot yet
determine the full impact of these regulations on our business. In addition, we
are
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<PAGE>
developing our Profilz database to collect data derived from user activity on
our networks and from other sources.
We collect and compile information in databases for the product offerings of
all our businesses. Individuals or entities may claim in the future, that our
collection of this information is illegal. Although we believe that we have the
right to use and compile the information in these databases, we cannot assure
you that our ability to do so will remain lawful, that any trade secret,
copyright or other intellectual property protection will be available for our
databases, or that statutory protection that is or becomes available for
databases will enhance our rights. In addition, others may claim rights to the
information in our databases. Further, pursuant to our contracts with Web
publishers using our solutions, we are obligated to keep certain information
regarding each Web publisher confidential and, therefore, may be restricted from
further using that information in our business.
CHANGES IN LAWS AND STANDARDS RELATING TO DATE COLLECTION AND USE PRACTICES AND
THE PRIVACY OF INTERNET USERS AND OTHER INDIVIDUALS COULD HARM OUR BUSINESS.
Growing public concern regarding privacy and the collection, distribution
and use of information about individuals has led to increased federal and state
scrutiny and legislative and regulatory activity. In addition, the high
technology and direct marketing industries are considering various new,
additional or different self-regulatory standards. This focus, and any
legislation, regulations or standards promulgated, impacts us. The U.S. federal
and various state governments have recently proposed limitations on the
collection and use of information regarding Internet users. In October 1998, the
European Union adopted a directive that may limit our collection and use of
information regarding Internet users in Europe.
Various technology and direct marketing industry groups have also been
addressing this issue. The Network Advertising Initiative, an industry
self-regulatory group comprised of third-party ad servers, including us, has
proposed a series of self-regulatory principles. We cannot assure you that the
Federal Trade Commission and the Department of Commerce will endorse these
principles, and the position that these agencies adopt may be more adverse to us
than those currently under discussion. Other trade associations are active as
well. The Online Privacy Alliance, a broad coalition of high-technology
companies, is examining fair information practices and may offer proposals for
industry acceptance. The Direct Marketing Association, or DMA, the leading trade
association of direct marketers, has adopted guidelines regarding the fair use
of information which it recommends that industry participants, including us,
follow. We are also subject to various federal and state regulations concerning
the collection and use of information regarding individuals. These laws include
the Children's Online Privacy Protection Act, and state laws which limit or
preclude the use of voter registration and drivers license information, as well
as other laws that govern the collection and use of consumer credit information.
Although our compliance with applicable federal and state laws, regulations
and industry guidelines has not had a material adverse effect on us,
governments, trade associations and industry self-regulatory groups may enact
more burdensome laws, regulations and guidelines, including antitrust and
consumer privacy laws, for us and our clients. These regulations and guidelines
could materially and adversely affect the business, financial condition and
results of operations of our business. Furthermore, computer users may also use
software designed to filter or prevent the delivery of advertising to their
computers. We cannot assure you that the number of computer users who employ
filtering software will not increase or that additional Web publishers will not
seek contractual provisions barring us from developing profiles of users of
their Web sites, either of which could materially and adversely affect our
business, results of operations and financial condition.
Also, as a consequence of governmental legislation or regulation or
enforcement efforts or evolving standards of fair information collection
practices, we may be required to make changes to our
10
<PAGE>
products or services in ways that could diminish the effectiveness of the
product or service or its attractiveness to potential customers, which could
materially and adversely affect our business, financial condition or results of
operations.
CHANGES IN GOVERNMENT REGULATION COULD DECREASE OUR REVENUES AND INCREASE OUR
COSTS.
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent, and new laws and
regulations are under consideration by the United States Congress and state
legislatures. Any legislation enacted or restrictions arising from current or
future government investigations or policy could dampen the growth in use of the
Internet generally and decrease the acceptance of the Internet as a
communications, commercial and advertising medium.
The governments of other states or foreign countries might attempt to
regulate our transmissions or levy sales or other taxes relating to our
activities. The European Union has enacted its own privacy regulations that may
result in limits on the collection and use of certain user information. The laws
governing the Internet, however, remain 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 and taxation apply to the Internet and Internet advertising.
In addition, the growth and development of the market for Internet 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 over the Internet. Our business, results of operations and financial
condition could be materially and adversely affected by the adoption or
modification of laws or regulations relating to the Internet.
DEPENDENCE ON THE WEB INFRASTRUCTURE.
Our success will depend, in large part, upon the maintenance of the Web
infrastructure, such as a reliable network backbone with the necessary speed,
data capacity and security, and timely development of enabling products such as
high speed modems, for providing reliable Web access and services and improved
content. We cannot assure you that the Web infrastructure will continue to
effectively support the demands placed on it as the Web continues to experience
increased numbers of users, frequency of use or increased bandwidth requirements
of users. Even if the necessary infrastructure or technologies are developed, we
may have to spend considerable amounts to adapt our solutions accordingly.
Furthermore, the Web has experienced a variety of outages and other delays due
to damage to portions of its infrastructure. Such outages and delays could
impact the clients using our solutions and the level of user traffic on Web
sites on our networks.
RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE.
The Internet and Internet advertising markets are characterized by rapidly
changing technologies, evolving industry standards, frequent new product and
service introductions, and changing customer demands. Our future success will
depend on our ability to adapt to rapidly changing technologies and to enhance
existing solutions and develop and introduce a variety of new solutions to
address our customers' changing demands. We may experience difficulties that
could delay or prevent the successful design, development, introduction or
marketing of our solutions. In addition, our new solutions or enhancements must
meet the requirements of our current and prospective customers and must achieve
significant market acceptance. Material delays in introducing new solutions and
enhancements may cause customers to forego purchases of our solutions and
purchase those of our competitors.
POSSIBLE VOLATILITY OF STOCK PRICE.
The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile and could be subject to wide
fluctuations. In addition, the stock market has experienced
11
<PAGE>
extreme price and volume fluctuations. The market prices of the securities of
Internet-related companies have been especially volatile. Investors may be
unable to resell their shares of our common stock at or above the purchase
price. In the past, companies that have experienced volatility in the market
price of their stock have been the objects of securities class action
litigation. If we were the object of securities class action litigation, it
could result in substantial costs and a diversion of management's attention and
resources.
INTEREST RATE RISK, MARKET RISK AND CURRENCY RATE FLUCTUATIONS.
24/7 Media's investments are classified as cash and cash equivalents with
original maturities of three months or less. Therefore, changes in the market's
interest rates do not affect the value of the investments as recorded by 24/7
Media. 24/7 Media's accounts receivables are subject, in the normal course of
business, to collection risks. 24/7 Media regularly assesses these risks and has
established policies and business practices to protect against the adverse
effects of collection risks. As a result, 24/7 Media does not anticipate any
material losses in this area. We transact business in various foreign countries.
Accordingly, we are subject to exposure from adverse movements in foreign
currency exchange rates. This exposure is primarily related to revenue and
operating expenses in the countries whose currency is the Euro. The effect of
foreign exchange rate fluctuations for 1999 was not material. 24/7 Media does
not use derivative financial instruments to limit its foreign currency risk
exposure.
FORWARD LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and variations of these words or similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
from those expressed or forecasted in any forward-looking statements as a result
of a variety of factors, including those set forth in "Risk Factors" above and
elsewhere in, or incorporated by reference into, this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
USE OF PROCEEDS
The selling stockholders are offering all of the shares of common stock
covered by this prospectus. We will not receive any proceeds from the sale of
these shares.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders as of March 15, 2000. All information contained in the
table below is based upon information provided to us by the selling
stockholders, and we have not independently verified this information. We are
not able to estimate the amount of shares that will be held by the selling
stockholders after the completion of this offering because the selling
stockholders may offer all or some of their shares and because there currently
are no agreements, arrangements or understandings with respect to the sale of
any of their shares. The following table assumes that all of the shares being
registered will be sold. The selling stockholders are not making any
representation that any shares covered by the prospectus will be offered for
sale. The selling stockholders reserve the right to accept or reject, in whole
or in part, any proposed sale of shares.
<TABLE>
<CAPTION>
NUMBER NUMBER
OF SHARES OF SHARES
NAME OWNED REGISTERED
- ---- --------- ----------
<S> <C> <C>
Paul Conrad Chachko (1)..................................... 619,796 413,199
Troy Scheer (1)............................................. 45,421 20,411
Ravi Yadav (1).............................................. 413,197 275,466
Mezzanine Financial Fund, L.P. (1).......................... 11,583 7,723
John Mazzacco (1)........................................... 124,885 83,257
Robert M. Skoro (1)......................................... 124,885 83,257
James Green (2)............................................. 236,808 80,515
Freshwater Consulting Ltd. (2).............................. 236,808 80,515
Galmos Holdings, Ltd. (2)................................... 236,808 80,515
TOCAD Co., Ltd. (2)......................................... 37,636 37,636
TOCAD Networks, Co., Ltd. (2)............................... 8,364 8,364
Tocad Sunpak (Hong Kong) Ltd. (2)........................... 61,795 61,795
Sabela Media KAI. (2)....................................... 37,511 37,511
International Electronics Co., Ltd. (2)..................... 16,727 16,727
Ramport Trading Ltd. (2).................................... 65,159 65,159
Steven E. Blume and Kamish M. Blume (2)..................... 20,700 20,700
Nicole M. Blume (Irrevocable Trust) (2)..................... 5,520 5,520
Jenna J. Blume (Irrevocable Trust) (2)...................... 5,520 5,520
Andrew J. Blume (Irrevocable Trust) (2)..................... 5,520 5,520
Livewire Labs LLC (2)....................................... 45,980 45,980
Distribution Finance, Ltd. (2).............................. 36,782 36,782
Bruce Edmiston (2).......................................... 21,929 21,929
Erland & Company (2)........................................ 28,560 28,560
Taro Fujikawa (2)........................................... 10,036 10,036
Takeshi Fujikawa (2)........................................ 12,545 12,545
Masaru Fujikawa (2)......................................... 10,873 10,873
David Spence (2)............................................ 18,390 18,390
Inanda Associates (2)....................................... 23,478 23,478
Golden Words Pty Limited (2)................................ 10,036 10,036
Wilcrow Pty Ltd. (2)........................................ 20,072 20,072
Arton No. 0001 Pty Ltd (2).................................. 12,865 12,865
Ricard d'Abo (2)............................................ 2,208 2,208
Keith Boesky (2)............................................ 1,000 1,000
Richard Stevens (2)......................................... 1,000 1,000
Thomas Kirch (2)............................................ 1,000 1,000
Louisa Ramsey (2)........................................... 938 938
Abhay Puri (2).............................................. 18,459 9,230
Hoo Lam Woon (2)............................................ 15,895 7,948
Harry Weber-Brown (2)....................................... 12,857 6,429
Simon Johnson (2)........................................... 12,857 6,429
Mathew Tombers (2).......................................... 9,184 4,592
Birathon Kasemsri (2)....................................... 12,398 6,199
Andrew Fawcett (2).......................................... 6,268 3,134
Brian Anderson (3).......................................... 174,419 58,134
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NUMBER NUMBER
OF SHARES OF SHARES
NAME OWNED REGISTERED
- ---- --------- ----------
<S> <C> <C>
Jeffrey Newhouse (3)........................................ 41,331 13,776
John Watson (3)............................................. 8,266 2,755
Gregory Hassett (3)......................................... 5,166 1,722
Randy Moore (3)............................................. 14,466 4,822
Jack Daley (3).............................................. 41,331 13,776
MemberWorks Incorporated (3)................................ 804,650 804,650
National Discount Brokers Group, Inc. (3)................... 39,715 39,715
C. Andrew Johns (4)......................................... 9,375 9,375
Multimedia 2000, Inc. (5)................................... 28,809 28,809
Bryan W. Heathman (5)....................................... 1,516 1,516
Corum Group Ltd............................................. 2,637 2,637
Interadventures BV (6)...................................... 325,000 325,000
Kauppamainos Oy (6)......................................... 35,188 35,188
Interaktiivinen Satama Oy (6)............................... 20,267 20,267
ViaMedia Oy (6)............................................. 8,611 8,611
JMK-Invest Oy (6)........................................... 8,750 8,750
Asko Piekkola (6)........................................... 8,750 8,750
Heikki Leskinen (6)......................................... 814 814
Interactive Capital Partners LLC (6)........................ 21,365 21,365
TOTAL................................................... 4,260,679 3,101,395
</TABLE>
- --------------------------
(1) Shares issued in the acquisition of Music Marketing Network, Inc.
(ConsumerNet),a New Jersey corporation, in August 1999.
(2) Shares issued in the acquisition of Sabela Media, Inc., a Delaware
Corporation, in January 2000.
(3) Shares issued in the acquisition of AwardTrack, Inc., a California
corporation, in February 2000.
(4) Class C Warrants beneficially owned by our Chief Financial Officer.
(5) Shares issued in the acquisition of iPromotions, Inc., a Tennessee
corporation, in April 2000.
(6) Share issued in the buy-in of our subsidiary, 24/7 Media Europe N.V.
The above stockholders received their shares of common stock pursuant to one
of the acquisitions set forth in the footnotes above. The stockholders who
received their shares in connection with the acquisition of ConsumerNet are
parties to a registration rights agreement, dated August 17, 1999, pursuant to
which we agreed to file a registration statement on or prior to November 17,
1999 for certain holders named in the agreement and on or prior to February 17,
2000 for other holders named in the agreement, and in each case, to keep such
registration statement effective for a period of two years. The stockholders who
received their shares in connection with the acquisition of Sabela are parties
to an agreement and plan of merger, dated January 9, 2000, pursuant to which we
agreed to register their shares in registration statement on or prior to
April 1, 2000 and to keep such registration statement effective for a period of
at least twelve months. The stockholders who received their shares in connection
with the acquisition of AwardTrack are parties to a registration rights
agreement, dated February 11, 2000, pursuant to which we agreed to file a
registration statement on or prior to June 30, 2000, and to keep such
registration statement effective for a period of at least twelve months. The
stockholders who received their shares in connection with the acquisition of
iPromotions, Inc. are parties to an agreement and plan of merger dated
April 12, 2000, pursuant to which we agreed to register their shares in a
registration statement on or prior to July 2000 and to keep such registration
statement effective for a period of at least twelve months.
Several of the above stockholders currently hold positions with 24/7 Media
or its subsidiaries. James Green, David Turner, Gour Lentell, Brian Anderson and
Jack Daley are each employed by 24/7 Media, Inc. in positions of vice president
or above.
This prospectus also covers any additional shares of common stock that
become issuable in connection with the shares being registered by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of our outstanding shares of common stock.
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<PAGE>
PLAN OF DISTRIBUTION
We are registering the common stock on behalf of the above selling
stockholders. As used in this prospectus, the term "selling stockholders"
includes pledgees, transferees or other successors-in-interest selling shares
received from the selling stockholders as pledgors, borrowers or in connection
with other non-sale-related transfers after the date of this prospectus. This
prospectus may also be used by transferees of the selling stockholders,
including broker-dealers or other transferees who borrow or purchase the shares
to settle or close out short sales of shares of common stock. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner, and size of each sale or non-sale related transfer. We will
not receive any of the proceeds of this offering.
The selling stockholders are offering shares of common stock that they
received in connection the above acquisitions. This prospectus covers their
resale of up to 3,101,395 shares of common stock.
The selling stockholders may sell their shares of common stock directly to
purchasers from time to time. Alternatively, they may from time to time offer
the common stock to or through underwriters, broker/dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling stockholders or the purchasers of such securities
for whom they may act as agents. The selling stockholders and any underwriters,
broker/dealers or agents that participate in the distribution of common stock
may be deemed to be "underwriters" within the meaning of the Securities Act and
any profit on the sale of such securities and any discounts, commissions,
concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The common stock may be sold from time to time in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sale of the
common stock may be affected by means of one or more of the following
transactions (which may involve cross or block transactions):
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market or
- through the purchase and sale of over-the-counter options.
In connection with sales of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker/dealers, which may
in turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling stockholders may also sell common stock short
and deliver common stock to close out such short positions, or loan or pledge
common stock to broker/ dealers that in turn may sell such securities.
At the time a particular offering of the common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount common stock being offered and the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the common stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers.
The selling stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the common stock by the
selling stockholders. The foregoing may affect the marketability of such
securities.
15
<PAGE>
Pursuant to the various registration rights agreements with the selling
stockholders who received their shares of common stock in connection with the
above acquisitions, all expenses of the registration of the common stock will be
paid by us, including, without limitation, SEC filing fees; provided, however,
that the selling stockholders will pay all underwriting discounts and selling
commissions, if any. The selling stockholders will be indemnified by us against
certain civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith. We will be
indemnified by the selling stockholders severally against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
In addition, any common stock covered by this prospectus that qualify for
sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
such other available exemption rather than pursuant to this prospectus. There is
no assurance that any selling stockholder will sell any or all of the common
stock, and any selling stockholder may transfer, devise or gift such common
stock by other means not described herein.
We will be permitted to suspend the use of the prospectus which is a part of
the shelf registration statement for a period not to exceed 90 days in any
twelve-month period under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events.
INCORPORATION BY REFERENCE
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 later information filed with the SEC will
update and supersede this information. The prospectus incorporates by reference
the documents set forth below that we have previously filed with the SEC. The
documents contain important information about 24/7 Media and its finances. We
incorporate by reference our:
- Annual Report on Form 10-K for the year ended December 31, 1999 (SEC file
number 000-29767);
- Current Reports on Form 8-K dated September 1, 1999 (as amended on
Form 8-K/A dated October 29, 1999), January 25, 2000 (as amended on
Form 8-K/A dated March 24, 2000), January 27, 2000 (as amended on
Form 8-K/A dated March 28, 2000) and February 28, 2000 (SEC file numbers
000-29768); and
- The description of the 24/7 Media common stock contained in our
Registration Statement on Form 8-A dated July 28, 1998 registering the
24/7 Media common stock under Section 12(g) of the Exchange Act.
In addition, all of our filings with the SEC after the date of this
prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of the initial registration statement and prior to the effectiveness of the
registration statement shall be deemed to be incorporated by reference and to be
a part of this document until this offering is terminated or completed.
Any statement contained in the prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the any applicable prospectus supplement) or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
16
<PAGE>
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 rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's Web site at http://www.sec.gov.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
24/7 Media, Inc.
Megan M. Hurley
Vice President, Associate General Counsel
1250 Broadway, 28th Floor
New York, New York 10001
(212) 231-7100
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC under the Securities Act. You should rely only on the
information incorporated by reference or provided in this prospectus or the
prospectus supplement. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus or the prospectus supplement is accurate as of any date other than on
the front of this document.
LEGAL MATTERS
The validity of the securities offered under this registration statement
will be passed upon for 24/7 Media by Proskauer Rose LLP, New York, New York.
EXPERTS
The consolidated financial statements of 24/7 Media, Inc. and subsidiaries
as of December 31, 1999 and 1998 and for each of the years in the three-year
period ended December 31, 1999, the consolidated financial statements of Sabela
Media, Inc. and subsidiaries as of December 31, 1999 and 1998 and for the year
ended December 31, 1999 and the period from June 29, 1998 (inception) to
December 31, 1998, and the combined financial statements of the media divisions
of IMAKE Software & Services, Inc. and IMAKE Consulting, Inc. as of
December 31, 1999 and 1998, and for the years then ended, have been incorporated
by reference herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The financial statements incorporated by reference in this registration
statement for Music Marketing Network, Inc. (d/b/a ConsumerNet) as of
December 31, 1998 and 1997 and for the years then ended have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
17
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred by
24/7 Media, Inc. in connection with the issuance and distribution of the
securities being registered hereby. All such expenses will be borne by
24/7 Media, Inc.:
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
SEC Registration Fee........................................ $30,000
Legal Fees and Expenses..................................... $ 5,000
Accounting Fees and Expenses................................ $10,000
Miscellaneous............................................... $10,000
-------
Total................................................. $55,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Delaware ("DGCL") permits the
Company and its stockholders to limit directors' exposure to liability for
certain breaches of the directors' fiduciary duty, either in a suit on behalf of
the Company or in an action by stockholders of the Company.
The Certificate of Incorporation of the Company (the "Charter") eliminates
the liability of directors to stockholders or the Company for monetary damages
arising out of the directors' breach of their fiduciary duty of care. The
Charter also authorizes the Company to indemnify its directors, officers,
incorporators, employees, and agents with respect to certain costs, expenses,
and amounts incurred in connection with an action, suit, or proceeding by reason
of the fact that such person was serving as a director, officer, incorporator,
employee, or agent of the Company. In addition, the Charter permits the Company
to provide additional indemnification rights to its officers and directors and
to indemnify them to the greatest extent possible under the DGCL. The Company
has entered into indemnification agreements with each of its officers and
directors and intends to enter into indemnification agreements with each of its
future officers and directors. Pursuant to such indemnification agreements, the
Company has agreed to indemnify its officers and directors against certain
liabilities, including liabilities arising out of the offering made by this
registration statement.
The Company maintains a standard form of officers' and directors' liability
insurance policy which provides coverage to the officers and directors of the
Company for certain liabilities, including certain liabilities which may arise
out of this registration statement.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Charter. The Registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
3.1* Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of 24/7 Media,
Inc.'s Registration Statement on Form S-1 File No.
333-70857).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
3.2* Bylaws (incorporated by reference to Exhibit 3.5 of
24/7 Media, Inc.'s Registration Statement on Form S-1 File
No. 333-70857).
4.1* Registration Rights Agreement, dated as of August 17, 1999,
by and among 24/7 Media, Inc. and the holders named therein
(incorporated by reference to Exhibit 4.4 of 24/7 Media,
Inc.'s Registration Statement on Form S-3 File N.
333-89985).
4.2* Registration Rights Agreement, dated as of January 9, 2000,
by and among 24/7 Media, Inc. and the holders named therein.
4.3* Registration Rights Agreement, dated as of February 11,
2000, by and among 24/7 Media, Inc. and the holders named
therein.
4.4* Registration Rights Agreement, dated April 12, 2000, by and
among 24/7 Media, Inc., Multimedia 2000, Inc. and Bryan
Healthman.
5 * Opinion of Proskauer Rose LLP.
23.1 Consent of Proskauer Rose LLP, included in Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of KPMG LLP.
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act, and is, therefore, unenforceable. If a claim for indemnification
against such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities offered hereby, a post-effective amendment to this
Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated
II-2
<PAGE>
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offer d therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 24(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
REQUEST FOR ACCELERATION OF EFFECTIVE DATE
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in The City of New York, State of New York, on this 13th day of
April, 2000.
<TABLE>
<S> <C> <C>
24/7 MEDIA, INC.
By: /s/ DAVID J. MOORE
-----------------------------------------
David J. Moore
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 13, 2000:
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ DAVID J. MOORE
------------------------------------------- Chief Executive Officer and Director
David J. Moore (Principal Executive Officer)
/s/ R. THEODORE AMMON
------------------------------------------- Chairman of the Board
R. Theodore Ammon
/s/ JACOB FRIESEL
------------------------------------------- Executive Vice President and Director
Jacob I. Friesel
/s/ JOHN F. BARRY III
------------------------------------------- Director
John F. Barry III
/s/ ARNIE SEMSKY
------------------------------------------- Director
Arnie Semsky
/s/ CHARLES W. STRYKER, PH.D.
------------------------------------------- Director
Charles W. Stryker, Ph.D.
/s/ C. ANDREW JOHNS Executive Vice President, Treasurer & Chief
------------------------------------------- Financial Officer (Principal Financial
C. Andrew Johns Officer)
/s/ STUART D. SHAW
------------------------------------------- Senior Vice President and Controller
Stuart D. Shaw (Principal Accounting Officer)
</TABLE>
II-4
<PAGE>
EXHIBIT ANNEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
3.1* Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of 24/7 Media,
Inc.'s Registration Statement on Form S-1 File No.
333-70857).
3.2* By laws (incorporated by reference to Exhibit 3.5 of
24/7 Media, Inc.'s Registration Statement on Form S-1 File
No. 333-70857).
4.1* Registration Rights Agreement, dated as of August 17, 1999,
by and among 24/7 Media, Inc. and the holders named therein
(incorporated by reference to Exhibit 4.4 of 24/7 Media,
Inc.'s Registration Statement on Form S-3 (File
N. 333-89985).
4.2* Registration Rights Agreement, dated as of January 9, 2000,
by and among 24/7 Media, Inc. and the holders named therein.
4.3* Registration Rights Agreement, dated as of February 11,
2000, by and among 24/7 Media, Inc. and the holders named
therein.
4.4* Registration Rights Agreement, dated April 12, 2000, by and
among 24/7 Media, Inc., Multimedia 2000, Inc. and Bryan
Healthman.
5 * Opinion of Proskauer Rose LLP.
23.1 Consent of Proskauer Rose LLP, included in Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of KPMG LLP.
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
24/7 Media, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of 24/7 Media, Inc. of our report dated March 8, 2000, relating to
the consolidated balance sheets of 24/7 Media, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and comprehensive income and cash
flows for each of the years in the three-year period ended December 31, 1999,
and to the reference to our firm under the heading "Experts" in the registration
statement.
/s/KPMG LLP
KPMG LLP
New York, New York
April 13, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated September 9, 1999 on the Music Marketing Network, Inc. financial
statements and to all references to our Firm included in or made part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
April 13, 2000
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITIORS
The Board of Directors
24/7 Media, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of 24/7 Media, Inc., filed on or about April 13, 2000, of our report
dated March 10, 2000 relating to the consolidated balance sheets of Sabela
Media, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations and comprehensive income, stockholders'
equity and cash flows for the year ended December 31, 1999 and the period from
June 29, 1998 (inception) to December 31, 1998, which report appears in the
Current Report on Form 8-KA of 24/7 Media, Inc. dated March 24, 2000, and to the
reference to our firm under the heading "Experts" in the registration statement.
/s/ KPMG LLP
KPMG LLP
Los Angeles, California
April 13, 2000
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
24/7 Media, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of 24/7 Media, Inc. of our report dated March 14, 2000, relating to
the combined balance sheets of the media divisions of IMAKE Software & Services,
Inc. and IMAKE Consulting, Inc. as of December 31, 1999 and 1998, and the
related combined statements of operations, division equity (deficit) and cash
flows for the years then ended, and to the reference to our firm under the
heading "Experts" in the registration statement.
/s/KPMG LLP
KPMG LLP
McLean, Virginia
April 13, 2000
