<PAGE>
As filed with the Securities and Exchange Commission on January 20, 2000
Registration No. 333-88969
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
POST-EFFECTIVE
AMENDMENT NO. 1 ON FORM S-3
TO
REGISTRATION STATEMENT ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
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EMUSIC.COM INC.
(Exact name of registrant as specified in its charter)
Delaware 3652 94-3290594
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
1991 Broadway, 2nd Floor
Redwood City, California 94063
(650) 216-0200
(Address and telephone number of principal executive offices)
----------------
Gene Hoffman, Jr.
President and Chief Executive Officer
EMusic.com Inc.
1991 Broadway, 2nd Floor
Redwood City, California 94063
(650) 216-0200
(Name, address and telephone number of agent for service)
Copies to:
Andrew Zeif, Esq.
Craig Malina, Esq.
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, California 94301-1825
(650) 833-2000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Post-Effective Amendment.
----------------
If the only securities being registered on this Form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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. [_]
================================================================================
<PAGE>
The Resale of
13,434,102 Shares
[LOGO OF EMUSIC.COM INC.]
Common Stock
The selling price will be determined by market factors at
the time of their resale
- --------------------------------------------------------------------------------
This prospectus relates to the resale by the selling stockholders of up to
13,434,102 shares of common stock. The selling stockholders may sell the stock
from time to time at the prevailing market price or in negotiated transactions.
Of the shares offered:
. up to 11,737,000 shares are presently outstanding and were issued upon
the conversion of the Company's Series B Preferred Stock,
. up to 1,255,367 shares are presently outstanding and were issued in
connection with the acquisition of Creative Fulfillment, Inc. and the
purchase of certain assets of Nordic Entertainment Worldwide, Inc. and
certain related partnerships;
. up to 260,000 shares are issuable upon the exercise of common stock
purchase warrants and
. up to 181,735 shares issued in connection with a share exchange
transaction in connection with the acquisition by the Company of its
predecessor corporation and various other transactions.
We will receive no proceeds from the sale of the shares by the selling
stockholders. However, we have received proceeds from the sale of shares
currently outstanding and, if exercised, will receive proceeds equal to the
exercise price of the common stock purchase warrants.
Our common stock is listed on the Nasdaq National Market under the symbol
"EMUS." On January 19, 2000, the last reported sale price of the common stock
on the Nasdaq National Market was $9.56 per share.
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 4.
- --------------------------------------------------------------------------------
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 January , 2000.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
Risk Factors............................................................... 4
About EMusic............................................................... 15
Use of Proceeds............................................................ 16
Selling Stockholders....................................................... 17
Description of Capital Stock............................................... 36
Plan of Distribution....................................................... 37
Legal Matters.............................................................. 39
Experts.................................................................... 39
Where You Can Find More Information About Us............................... 39
Documents Incorporated by Reference........................................ 40
</TABLE>
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Prior to June 1999, we operated under the name GoodNoise Corporation. Our
executive offices are located at 1991 Broadway, 2nd Floor, Redwood City,
California 94063, and our telephone number is (650) 216-0200. Our website can
be found at EMusic.com. Our website does not constitute part of this
prospectus.
"EMusic" is a registered trademark of EMusic.com Inc. and the EMusic logo is a
trademark of EMusic.com Inc. All other trademarks or tradenames referred to in
this prospectus are the property of their respective owners.
As used in this prospectus, the terms "we," "us," "our" "the Company" and
"Emusic" mean EMusic.com Inc. and the term "common stock" means our common
stock, par value $0.001 per share.
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Risk Factors
Investing in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information contained in
this prospectus before deciding to invest in our stock.
Any of the following risks, if they actually occur, could materially and
adversely affect our business, financial condition or results of operations. In
such an event, the trading price of our common stock could decline, and you
could lose all or part of your investment.
We have a new and unproven business model and it may not generate sufficient
revenue for our business to survive or be successful.
Our model for conducting business and generating revenues is new and unproven
and if it fails to develop as we plan, our business may not succeed. Our
business model depends upon our ability to generate revenue streams from
multiple sources through our website, including:
. online sales of downloadable music;
. website advertising fees from third parties;
. licensing of musical recordings for use by others; and
. online sales of music-related merchandise.
It is uncertain whether a music-based website such as ours, that relies on
attracting people to purchase and download music, mostly from lesser-known
artists, can generate sufficient revenues to survive. This business model may
not succeed or it may not be sustainable as our business grows.
In order for our business to be successful, we must not only develop services
that directly generate revenue, but also provide content and services that
attract consumers to our website frequently. We will need to develop new
offerings as consumer preferences change and new competitors emerge. We may not
be able to provide consumers with an acceptable blend of products, services,
and informational and community offerings that will attract consumers to our
website frequently. We provide many of our products and services without
charge, and we may not be able to generate sufficient revenue to pay for these
products and services. Accordingly, we are not certain that our business model
will be successful or that we can sustain revenue growth or be profitable.
We are competing in a new market that may not develop sufficiently to support
our business.
The market for online music promotion and distribution is new and rapidly
evolving. As a result, demand and market acceptance for our products and
services are subject to a high degree of uncertainty and risk. We are
attempting to capitalize on a talent pool of artists underserved by the
traditional recording industry. Consumers may not continue to be interested in
listening to, or purchasing music from, these artists. If this new market fails
to develop, develops more slowly than expected or becomes saturated with
competitors, or our products and services do not achieve or sustain market
acceptance, we may not generate sufficient revenues to become profitable.
The future popularity of downloadable music will depend on consumer acceptance
of downloading music generally. We believe that consumer acceptance is, in
part, dependent on the availability of portable devices to store and play this
music. To the extent that devices are not available at affordable prices, or
consumer acceptance or distribution of these portable devices is delayed, our
potential market, and thus our ability to increase our revenues, may be
reduced.
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We have a limited operating history that makes an evaluation of our business
difficult.
We were incorporated in January 1998. During 1998, our operating activities
consisted largely of developing the infrastructure necessary to download music
on the Internet. Our limited operating history makes it difficult to evaluate
our current business and prospects. As a result of our limited operating
history, we do not have meaningful historical financial data upon which to
forecast quarterly revenues and results of operations. Before investing in us,
you should evaluate the risks, expenses and problems frequently encountered by
companies such as ours that are in the early stages of development.
We have incurred substantial losses to date and we expect net losses in the
future.
From inception through September 30, 1999, we had a deficit accumulated during
the development stage of approximately $63.1 million. We expect substantial net
losses and negative cash flow for the foreseeable future. We believe it is
critical to our long-term success that we continue to develop "EMusic" brand
awareness and loyalty through marketing and promotion, expand our artist and
consumer networks, develop our online content and expand our other services. We
expect that our operating expenses will increase significantly during the next
several years, especially in sales and marketing. With increased expenses, we
will need to generate significant additional revenues to achieve profitability.
As a result, we may never achieve profitability and, if we do achieve
profitability in any period, we may not be able to sustain or increase
profitability.
Our quarterly revenues and operating results are subject to fluctuation which
may result in volatility or a decline in the price of our stock.
We believe that period-to-period comparisons of our operating results are not
meaningful and should not be relied upon as indicators of future performance.
Our quarterly operating results are likely to fluctuate significantly in the
future as a result of a variety of factors, many of which are outside of our
control, including:
. the demand for downloadable music content and Internet advertising;
. the addition or loss of advertisers;
. the level of traffic on our Internet sites;
. the amount and timing of capital expenditures and other costs relating to
the expansion of our operations;
. the introduction of new sites and services by us or our competitors;
. seasonal trends in Internet use, purchases of downloadable music, and
advertising placements;
. price competition or pricing changes in the industry;
. technical difficulties or system downtime; and
. general economic conditions, and economic conditions specific to the
Internet and Internet media.
In addition, while our revenues may vary significantly, a portion of our
expenses are fixed. As a result, any decrease in revenues will not be
accompanied by a decrease in our fixed operating expenses and our operating
results will suffer. Our quarterly results may also be significantly impacted
by the accounting treatment of acquisitions, financing transactions or other
matters. Particularly at our early stage of development, such accounting
treatment can have a material impact on the results for any quarter. Because of
these and other factors it is likely that our operating results will fall below
expectations in some future quarter and the trading price of our stock may
drop.
Shares eligible for future sale in the open market may depress our stock price.
As of December 31, 1999, there were approximately 36,500,000 shares of common
stock outstanding, of which approximately 10,000,000 were tradable without
restriction under the Securities Act and approximately
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<PAGE>
24,000,000 shares of our outstanding stock were tradable, including shares
tradable under Rule 144 and the registration statement of which this prospectus
is a part.
Our stock price has been and may continue to be volatile.
Our common stock is currently traded on the Nasdaq National Market under the
ticker symbol "EMUS." There can be no assurance that an active trading market
will be sustained in the future. In addition to fluctuations in our operating
results, the following factors could cause the price of our securities to be
volatile:
. development of the downloadable music market;
. technological innovations;
. new products;
. acquisitions or strategic alliances entered into by us or our
competitors;
. failure to meet securities analysts' expectations;
. government regulatory action;
. patent or proprietary rights developments; and
. market conditions for internet and technology stocks in general.
If our brand name is not accepted, our ability to attract content and customers
to our website will be harmed.
During the quarter ended June 30, 1999, we began to operate under the name
EMusic.com Inc. and launched a marketing campaign to establish the brand name
"EMusic." We believe that establishing and maintaining the EMusic brand is a
critical aspect of our efforts to attract and expand our Internet audience and
acquire new content and that the importance of brand recognition will increase
due to the growing number of Internet sites and the relatively low barriers to
entry in providing Internet content. We intend to incur significant expenses in
our brand building efforts. If these efforts do not generate increased revenues
our operating results will suffer. If we are unable to provide high quality
content or otherwise fail to promote and maintain our brand, our business will
be harmed.
If we are unable to maintain or expand our contracts for music content, or if
the content we license does not sell, our popularity and business may suffer.
We believe that a primary draw to our website is the ability to access music
from known artists and independent record labels. Currently, we have exclusive
multi-year contracts for much of our music library. However, if we are unable
to sign contracts for new content, or if we are unable to extend the terms of
existing contracts as they expire, our website may fail to attract new, or
retain existing, customers which would harm our business.
For much of the content we license, we pay advances against future royalties
which will be owed on sale of the content. If the content we license does not
sell in sufficient quantities, we may not be able to recover all or part of the
advances we have paid and our business could be harmed.
We rely on a third party for the hosting of our website and if this hosting
service becomes unavailable, our customers will not be able to access our
website.
We currently rely on a third party which hosts our website at a single location
in Sunnyvale, California. We currently do not maintain a redundant website. If
for any reason our current website hosting services become unavailable or if
our hosting service experiences technical problems, customers will not be able
to access our website until these services are restored or until we are able to
make arrangements with an alternate provider.
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If we fail to adequately manage our growth, we may not be successful as we may
miss market opportunities.
We expect the scope of our operations and the number of our employees to grow
rapidly. In particular, we intend to hire additional engineering, sales,
marketing, content acquisition and administrative personnel. Additionally,
acquisitions could increase our employee headcount and business activity. We
expect our rapid growth to continue to place significant stress on our
technology, operations, management and employee base. Any failure to
successfully address the needs of our growing enterprise would harm our
business.
Our technology systems must be expanded and enhanced for our business to grow.
In order to support a growing business, we will need to continue to enhance and
expand the technology infrastructure which supports our business. We have
recently converted our central database to a new database based upon technology
licensed from Oracle Corporation and we expect to implement a new accounting
system in the first half of calendar year 2000. As our business continues to
grow, we will need to add additional servers and other hardware and software
systems as well as additional sites for website hosting. If we fail to
successfully implement these new and enhanced systems, our operations could be
disrupted, we may become less competitive, our revenues could be reduced and we
may need to incur additional costs to address these issues.
We may have difficulty executing acquisitions and integrating the acquired
companies into our business.
Our business strategy includes entering into strategic alliances and acquiring
complementary businesses, technologies, content or products. In January 1999,
we completed the acquisition of Creative Fulfillment, Inc., in June 1999, we
completed the acquisition of Internet Underground Music Archive and in December
1999, we completed the acquisition of Group K Inc. d/b/a Cductive. In November
1999, we entered into an agreement to acquire Tunes.com Inc. The closing of the
Tunes.com transaction is subject to customary closing conditions. These and any
other future acquisitions involve risks commonly encountered in acquisitions of
companies, including:
. exposure to unknown liabilities of acquired companies;
. incurring acquisition costs and expenses in excess of what we
anticipated;
. the occurrence of fluctuations in our quarterly and annual operating
results due to the costs and expenses of acquiring and integrating new
businesses or technologies;
. experiencing difficulties and expenses in assimilating the operations and
personnel of the acquired businesses;
. disruption of our ongoing business and diversion of our management's time
and attention;
. a possible inability to integrate successfully or to complete the
development and application of acquired technology and a possible failure
to achieve the anticipated financial, operating, and strategic benefits
from these acquisitions;
. experiencing difficulties in establishing and maintaining uniform
standards, controls, procedures, and policies;
. impairment of our relationships with key employees and customers of
acquired businesses or the loss of these key employees and customers as a
result of changes in management and ownership of the acquired businesses;
and
. acquisitions using the purchase method of accounting, which may result in
goodwill, creating amortization charges in future periods.
In addition, our shareholders may be diluted if the consideration for future
acquisitions consists of equity securities. We may not overcome these risks or
any other problems encountered in connection with acquisitions. If we are
unsuccessful in doing so, our business could be harmed.
7
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We expect competition to increase significantly in the future and we may not be
able to compete successfully.
The market for the online promotion and distribution of music and music-related
products and services is new, highly competitive and rapidly changing. The
number of websites on the Internet competing for the attention and spending of
consumers, users and advertisers has increased, and we expect it to continue to
increase, because there are few barriers to entry to Internet commerce. In
addition, the competition for advertising revenues, both on Internet websites
and in more traditional media, is intense. Currently, there are more than one
hundred music retailing websites on the Internet. We face competitive pressures
from numerous actual and potential competitors.
Certain companies have agreed to work together to offer music over the
Internet, and we may face increased competitive pressures as a result. For
example, it was recently announced that Time Warner and Sony's Columbia House
unit will merge with CDNow. In May 1999, Microsoft Corporation and Sony
Corporation announced an agreement to pursue a number of cooperative
activities. Sony has announced that it will make its music content downloadable
from the Internet using Microsoft's multimedia software. In addition, Universal
Music Group and BMG Entertainment have announced a joint venture to form an
online music store.
Competition is likely to increase significantly as new companies enter the
market and current competitors expand their services. Many of our current and
potential competitors in the Internet and music entertainment businesses may
have substantial competitive advantages relative to us, including:
. longer operating histories;
. significantly greater financial, technical and marketing resources;
. greater brand name recognition;
. larger existing customer bases; and
. more popular content or artists.
These competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements and devote greater resources
to the development, promotion, and sale of their products or services than we
can. Websites maintained by our existing and potential competitors may be
perceived by consumers, artists, talent management companies and other music-
related vendors or advertisers as being superior to ours. In addition, we may
not be able to maintain or increase our website traffic levels, purchase
inquiries and number of click-throughs on our online advertisement. Further,
our competitors may experience greater growth in these areas than we do.
Increased competition could result in advertising price reduction, reduced
margins or loss of market share, any of which could harm our business.
We may need to obtain additional funds to execute our business plan and if we
are unable to obtain such funds, we will not be able to expand our business as
planned.
We believe that our existing capital resources will be sufficient to fund our
planned level of operating activities, capital expenditures and other
obligations through the next 12 months. However, we may need to raise
additional funds in order to:
. finance unanticipated working capital requirements, including additional
working capital required as a result of acquisitions;
. develop or enhance existing services or products;
. fund distribution relationships;
. advertise to build global brand recognition;
. respond to competitive pressures; or
. acquire complementary businesses, technologies, content or products.
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Additional financing may not be available on terms favorable to us, or at all.
If adequate funds are not available or are not available on acceptable terms,
our ability to fund our expansion, take advantage of unanticipated
opportunities, develop or enhance services or products or otherwise respond to
competitive pressures would be significantly limited. If we raise additional
funds by issuing equity or convertible debt securities, the percentage
ownership of our then existing stockholders will be reduced, and these
securities may have rights, preferences or privileges senior to those of our
stockholders.
Our business is dependent on the continued development and maintenance of the
Internet and the availability of increased bandwidth to consumers.
The success of our business will depend largely on the development and
maintenance of the Internet infrastructure. This includes maintenance of a
reliable network with the necessary speed, data capacity and security, as well
as timely development of complementary products such as high speed modems, for
providing reliable Internet access and services. Because global commerce on the
Internet and the online exchange of information is new and evolving, we cannot
predict whether the Internet will prove to be a viable commercial marketplace
in the long term.
The success of our business will rely on the continued improvement of the
Internet as a convenient means of consumer interaction and commerce, as well as
an efficient medium for the delivery and distribution of music. Our business
will depend on the ability of our artists and consumers to continue to upload
and download mp3 and other music file formats, as well as to conduct commercial
transactions with us, without significant delays or aggravation that may be
associated with decreased availability of Internet bandwidth and slower access
to our website. Our penetration of a broader consumer market will depend, in
part, on continued proliferation of high speed Internet access. Even compressed
in mp3 format, a typical three minute song file can occupy more than three
megabytes of storage space. This file could take approximately seven minutes to
download over a conventional 56 kbps modem compared to less than one minute
over an xDSL or cable modem.
The Internet has experienced, and is likely to continue to experience,
significant growth in the numbers of users and amount of traffic. As the
Internet continues to experience increased numbers of users, increased
frequency of use and increased bandwidth requirements, the Internet
infrastructure may be unable to support the demands placed on it. In addition,
increases in users or bandwidth requirements may harm the performance of the
Internet. The Internet has experienced a variety of outages and other delays as
a result of damage to portions of its infrastructure, and it could face outages
and delays in the future. This might include outages and delays resulting from
the "year 2000" problem. These outages and delays could reduce the level of
Internet usage as well as the level of traffic, and could result in the
Internet becoming an inconvenient or uneconomical source of music and music-
related products and services. The infrastructure and complementary products or
services necessary to make the Internet a viable commercial marketplace for the
long term may not be developed successfully or in a timely manner. Even if
these products or services are developed, the Internet may not become a viable
commercial marketplace for the products or services that we offer.
We must maintain and establish strategic alliances to increase our customer
base and enhance our business.
In an attempt to increase our customer base and traffic on our website, build
brand recognition, attract paid advertising and enhance content, distribution
and commerce opportunities, we have entered into agreements with various media,
hardware device and Internet-related companies such as: America OnLine, Yahoo!,
Creative Labs and RealNetworks. Our failure to maintain or renew our existing
strategic alliances or to establish and capitalize on new strategic alliances
could harm our business. Our future success depends to a significant extent
upon the success of such alliances. Moreover, we are substantially dependent on
our ability to advertise on other Internet sites and the willingness of the
owners of other sites to direct users to our Internet sites through hypertext
links. We may not achieve the strategic objectives of these alliances, and
parties to strategic alliance agreements with us may not perform their
obligations as agreed upon. Such agreements also
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may not be specifically enforceable by us. In addition, some of our strategic
alliances are short term in nature and may be terminated by either party on
short notice. The termination or impairment of these strategic alliances could
reduce our ability to attract new customers.
Our success depends on our retention of key personnel.
Our performance is substantially dependent on the services of Robert H. Kohn,
our chairman, and Gene Hoffman, Jr., our chief executive officer, as well as on
our ability to recruit, retain and motivate other officers and key employees.
Competition for qualified personnel is intense and there are a limited number
of persons with knowledge of and experience in the Internet and music
entertainment industries. The loss of the services of any of our officers or
senior managers could harm our business.
We may not be able to hire and retain a sufficient number of qualified
employees to grow our business as planned.
Our future success will depend on our ability to attract, train, retain and
motivate other highly skilled technical, managerial, marketing and customer
support personnel. Competition for these personnel is intense, especially for
engineers, web designers and advertising sales personnel, and we may be unable
to successfully attract sufficiently qualified personnel. A large percentage of
our employees joined us in 1999 and we expect that our rate of hiring will
continue at a very rapid pace. To manage the expected growth of our operations,
we will need to integrate these employees into our business. Our inability to
hire, integrate and retain qualified personnel in sufficient numbers may reduce
the quality of our programs, products and services, and could harm our
business. In addition, companies in the Internet and music industries whose
employees accept positions with competitive companies frequently claim that
their competitors have engaged in unfair hiring practices. We may be subject to
claims in the future as we seek to hire qualified personnel and those claims
may result in material litigation involving EMusic. Even if unsuccessful, these
claims could harm our business by damaging our reputation, requiring us to
incur legal costs and diverting management's attention away from our business.
Security concerns regarding credit card or other confidential information
transmitted over the web could limit our growth and subject us to liability.
A significant barrier to e-commerce and communications over the Internet has
been the need for secure transmission of confidential information over public
networks. Internet usage may not increase at the rate we expect unless some of
these concerns are adequately addressed and found acceptable by the market.
Internet usage could also decline if any well publicized compromise of security
occurred. We may incur significant costs to protect against the threat of
security breaches or to alleviate problems caused by such breaches. Protections
against security breaches may not be available at a reasonable price or at all.
If a third party were able to circumvent our security measures and
misappropriate our users' personal information, it may cause interruptions to
our retail website operation, damage our reputation or subject us to claims by
users. Any compromise of confidential data during transmission over the
Internet may harm our business.
Any failure of our internal security measures could cause us to lose customers
and subject us to liability.
Our business is dependent on maintaining a database of confidential user
information, including credit card numbers. If the security measures that we
use to protect personal information are ineffective, we may lose customers and
our business would be harmed. We rely on security and authentication technology
licensed from third parties. With this technology, we perform real-time credit
card authorization and verification. We cannot predict whether new
technological developments could allow these security measures to be
circumvented. In addition, our software, databases and servers may be
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions. We may need to spend significant resources to protect against
security breaches or to alleviate problems caused by any breaches and we may
not be able to prevent all security breaches.
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Our intellectual property protection may be inadequate, and any loss or
reduction in intellectual property protection may harm our business.
Our intellectual property includes our trademarks and copyrights, proprietary
software, and other proprietary rights. We believe that our intellectual
property is important to our success and our competitive position, and we try
to protect it. However, our efforts to protect our intellectual property could
be inadequate. Use of the "EMusic" name by others could dilute our brand
identity and confuse the market. In addition, our ability to conduct our
business may be harmed if others claim we violate their intellectual property
rights. For example, Sightsound.com, Inc. and intouch group Inc. have asserted
that many online music providers, including EMusic, violate patent rights that
they allegedly owns covering the sale of music over the Internet through
digital downloads. If successful, these claims, or similar claims by others,
could seriously harm our business by forcing us to cease using intellectual
property that we depend on to operate our business. Even if unsuccessful, these
claims could harm our business by damaging our reputation, requiring us to
incur legal costs and diverting management's attention away from our business.
Government regulation may require us to change the way we do business.
Laws and regulations directly applicable to Internet communications, commerce
and advertising are becoming more prevalent. The United States Congress has
enacted Internet laws regarding children's privacy, copyrights and taxation.
Such legislation could dampen the growth in use of the Internet generally and
decrease the acceptance of the Internet as a communications, commercial and
advertising medium. Although our transmissions originate in California, 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 recently 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. Furthermore, the Federal Trade Commission has recently
investigated the disclosure of personal identifying information obtained from
individuals by Internet companies. Evolving areas of law that are relevant to
our business include privacy law, proposed encryption laws, content regulation
and sales and use tax. For example, changes in copyright law could require us
to change the manner in which we conduct business or increase our costs of
doing business. Because of this rapidly evolving and uncertain regulatory
environment, we cannot predict how these laws and regulations might affect our
business. In addition, these uncertainties make it difficult to ensure
compliance with the laws and regulations governing the Internet. These laws and
regulations could harm us by subjecting us to liability or forcing us to change
how we do business. In the event the Federal Trade Commission or other
governmental authorities adopt or modify laws or regulations applicable to our
business, including those relating to the Internet and copyright matters, our
business could be harmed.
We may have liability for content on our website and liability for other
materials which we distribute.
We may be liable to third parties for content on our website and any other
materials we distribute if:
. the music, text, graphics or other content on our website violates their
copyright, trademark, or other intellectual property rights;
. our artists or labels violate their contractual obligations to others by
providing content on our website; or
. content we distribute is deemed obscene, defamatory or excessively
violent.
We may also be subject to these types of liability for content that is
accessible from our website through links to other websites.
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Liability or alleged liability for content or other materials could harm our
business by damaging our reputation, requiring us to incur legal costs in
defense, exposing us to significant awards of damages, fines and costs and
could divert management's attention away from our business. In particular, in
addition to civil damages, liability for violations of copyright law currently
can result in penalties of up to $10,000 per occurrence.
Imposition of sales and other taxes on e-commerce transactions may impair our
ability to derive financial benefits from e-commerce.
Except for sales of tangible merchandise into certain states, we do not collect
sales or other taxes on sales of our products through our websites. Although
the Internet Tax Freedom Act precludes, for a period of three years ending
October 2001, the imposition of state and local taxes that discriminate against
or single out the Internet, it does not currently impact existing taxes.
However, one or more states may seek to impose sales tax collection obligations
on out-of-state companies such as us, which engage in or facilitate online
commerce. A number of proposals have been made at the state and local level
that would impose additional taxes on the sale of goods and services through
the Internet. Such proposals, if adopted, could substantially impair the growth
of electronic commerce and could adversely affect our opportunity to derive
financial benefit from electronic commerce. Moreover, if any state or foreign
country were to successfully assert that we should collect sales or other taxes
on the exchange of merchandise on its system, it could affect our cost of doing
business.
We may have difficulty expanding into international markets which could limit
the growth of our business.
Our future growth and success will depend in part on our ability to generate
international sales. There can be no assurance, however, that we will be
successful in generating international sales of our products. Sales to
customers in certain international countries may be subject to a number of
risks, including: currency exchange rate risk; the risks that agreements may be
difficult or impossible to enforce and receivables difficult to collect through
an international country's legal system; foreign customers may have longer
payment cycles; or foreign countries could impose withholding taxes or
otherwise tax our foreign income, impose tariffs, embargoes, or exchange
controls, or adopt other restrictions on foreign trade. In addition, the laws
of certain countries do not protect our offerings and intellectual property
rights to the same extent as the laws of the United States. If we fail to
compete successfully or to expand the distribution of our offerings in
international markets the growth of our business could be limited.
Development of new standards for the electronic delivery of music may threaten
our business.
We currently rely on mp3 technology as a delivery method for the digital
distribution of music. Mp3 is an open standard adopted by the Moving Picture
Experts Group for the compression of audio files. We do not own or control mp3
technology and are dependent upon a license to obtain rights to certain patents
relating to the technology. The onset of competing industry standards for the
electronic delivery of music could significantly affect the way we operate our
business as well as the public's perception of EMusic as a company. For
example, in December 1998, the major recording studios announced a plan to
develop a universal standard for the electronic delivery of music, called the
Secured Digital Music Initiative. If new standards are developed and adopted by
consumers, we may not be able to obtain a license to such technology on
favorable terms or at all and our business could be harmed. Even if new
standards are not developed, delays with respect to proposed standards, such as
those which have occured with respect to SDMI, can cause confusion in the
marketplace, slow the development of the market for downloadable music and
otherwise harm our business.
12
<PAGE>
Mp3 technology is controversial within certain segments of the traditional
music industry and we may face continued opposition to our use of mp3 which may
slow market development and harm our business.
Certain segments of the traditional music industry have not embraced the
development of the mp3 format to deliver music, in part because users of mp3
technology can download and distribute unauthorized or "pirated" copies of
copyrighted recorded music over the Internet. We believe that our success is
largely dependent upon the ease with which customers can download and play
music. We may face opposition from a number of different music industry sources
including record companies and studios, the Recording Industry Association of
America and certain artists. The adoption of competing standards may slow the
development of the market for downloadable music or result in increased costs
of doing business which could harm our business.
If we, or third parties on which we rely, fail to achieve year 2000 compliance,
our business could be harmed.
We may discover year 2000 compliance problems in our systems that will require
substantial revision. We have not conducted a formal year 2000 audit and have
relied only on our internal assessments of our year 2000 needs. If we
unexpectedly experience failures related to the year 2000 problem or if we fail
to fix or replace any affected systems on a timely basis, our business could be
harmed. In addition, governmental agencies, utility companies, Internet access
companies, third-party service providers and others outside of our control, as
well as the general infrastructure of the Internet, may not be year 2000
compliant. Failure of third parties or of the general Internet infrastructure
to be year 2000 compliant could prevent us from publishing our content,
generating sales or collecting revenue, decrease the use of the Internet or
prevent users from accessing our websites for a substantial period of time
which could harm our business. For more information on our state of readiness,
costs and rights associated with year 2000 issues, see "Management Discussion
and Analysis of Financial Condition and Results of Operation--Year 2000
Readiness" continued in our Quarterly Report in Form 10-Q for the quarter ended
September 30, 1999 incorporated herein by reference.
Our executive officers and directors control approximately 19% of our common
stock and have power to influence significant corporate matters, which may
delay, deter or prevent transactions that could benefit our stockholders.
Executive officers and directors, in the aggregate, beneficially own
approximately 19% of our outstanding common stock. These stockholders are able
to significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of significant corporate
transactions. This concentration of ownership may also have the effect of
delaying, deterring or preventing a change in control of EMusic and may make
some transactions more difficult or impossible without the support of these
stockholders.
Anti-takeover provisions in our charter documents could negatively impact our
stockholders.
Our Board of Directors has the authority to issue up to 20,000,000 shares of
preferred stock without need for stockholder approval. The board may also
determine the economic and voting rights, of this preferred stock. The holders
of our common stock could be adversely affected by the issuance of preferred
stock. Issuance of preferred stock could impede or prevent transactions that
would cause a change in control of our company. This might discourage bids for
our common stock as a premium over the market price of our common stock and
adversely affect the trading price of our common stock. We have no current
plans to issue shares of preferred stock. In addition, other provisions in our
charter documents could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders.
Our data warehousing and web server systems are vulnerable to natural
disasters, failure of third-party services and other unexpected problems.
Since our data warehousing, web server and network facilities are all located
in California, an earthquake or other natural disaster could affect all of our
facilities simultaneously. An unexpected event such as a power or
13
<PAGE>
telecommunications failure, fire, flood or earthquake at our on-site data
warehousing facility or at our Internet service providers' facilities could
cause the loss of critical data and prevent us from offering our services to
artists and consumers. Our business interruption insurance may not adequately
compensate us for losses that may occur. In addition, we rely on third parties
to securely store our archived data, house our web server and network systems,
and connect us to the Internet. A failure by any of these third parties to
provide these services satisfactorily could harm our business.
You should not rely on forward-looking statements in this prospectus.
This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology including, "could," "may," "will," "should," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue;" the
negative of these terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially. In evaluating
these statements, you should specifically consider various factors, including
the risks described above and in other parts of this prospectus. These factors
may cause our actual results to differ materially from any forward-looking
statement. Although we believe that the expectations reflected in the forward-
looking statements are reasonable, we cannot guarantee future results, levels
of activity, performance or achievements. We are under no duty to update any of
the forward-looking statements after the date of this prospectus to conform
them to actual results or to changes in our expectations.
14
<PAGE>
About EMusic
EMusic.com Inc. is a leading provider of downloadable music over the Internet.
Through our website at EMusic.com, we offer a compelling selection of music
from which our customers may discover, sample, and purchase popular recordings
for immediate digital delivery and enjoyment. The recordings available for
download at EMusic.com are provided through our relationships with a growing
roster of recording artists and independent record labels. We currently have
exclusive, multi-year, digital download licenses from over 500 record labels
and over 2,500 recording artists, including selected titles from such well
known artists as Bush, Phish, They Might Be Giants, B.B. King and Ella
Fitzgerald. We currently have over 50,000 titles available for download on our
EMusic.com website. In addition, our IUMA subsidiary offers our customers
access to over 7,500 unsigned artists. We believe this represents one of the
largest digital music content archives currently licensed for distribution over
the Internet.
Our website enables artists and labels to easily access a global customer base
while providing them with an integrated means of distributing, promoting and
tracking the sales of their recorded music. Recordings are currently offered
for sale on EMusic.com and partners' websites in the "mp3" format, the most
widely-recognized compression standard for the download of musical recordings.
We believe that our combination of selection, convenience, varied content,
improved distribution and tracking capabilities creates a compelling music
purchasing experience for consumers as well as an attractive distribution
alternative for artists and independent record labels.
We are a development stage company and have experienced net losses since
inception in January 1998. We intend to aggressively invest to implement our
strategy, and expect to continue to incur net losses for the forseeable future.
15
<PAGE>
Use of Proceeds
We will not receive any of the proceeds from the sale of shares of common stock
by the selling stockholders. If any warrants are exercised by selling
shareholders for cash, we will receive equal to the exercise price of the
warrants. We will use the net proceeds received upon the exercise of any
warrants for general corporate purposes, including working capital.
16
<PAGE>
Selling Stockholders
The following table sets forth certain information with respect to the selling
stockholders as of January 12, 2000. Except as set forth below, none of the
selling shareholders currently is an affiliate of ours, and none of them has
had a material relationship with us during the past three years.
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Citiventure 96 Partnership, L.P. 1,627,100(/2/) 1,627,100 0 --
c/o Invesco Private Capital
Attn: Mark Radovanovich, CFO
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Chancellor Private Capital Offshore Partners 624,000(/2/) 624,000 0 --
II, L.P.
c/o Invesco Private Capital
Attn: Mark Radovanovich, CFO
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Chancellor Private Capital Offshore Partners 58,300(/2/) 58,300 0 --
I, C.V.
c/o Invesco Private Capital
Attn: Mark Radovanovich, CFO
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Chancellor Private Capital Offshore Partners 379,000(/2/) 379,000 0 --
III, L.P.
c/o Invesco Private Capital
Attn: Mark Radovanovich, CFO
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
VantagePoint Communication Partners, L.P. 1,111,100(/2/) 1,111,100 0 --
c/o VantagePoint Venture Partners
Attn: James D. Marver
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
VantagePoint Venture Partners 1996 555,500(/2/) 555,500 0 --
c/o VantagePoint Venture Partners
Attn: James D. Marver
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
VantagePoint Venture Advisors, LLC 16,600(/2/) 16,600 0 --
c/o VantagePoint Venture Partners
Attn: James D. Marver
1002 Bayhill Drive, Suite 140
San Bruno, CA 94066
Seligman Communications and Information 1,000,000(/2/) 1,000,000 0 --
Fund, Inc.
c/o J. & W. Seligman & Co., Inc.
Attn: Storm Boswiek
100 Park Avenue, 7th Floor
New York, NY 10017
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
CTI Limited 999,900(/2/) 999,900 0 --
c/o Creative Technology Ltd.
31 International Business Park, Creative
Resource
Singapore 609921
Fred Arnold 1,092(/2/) 1,092 0 --
1401 Clubview Court
Arlington, TX 76013
Bank of America Capital Corp. 54,593(/2/) 54,593 0 --
231 S. LaSalle Street, Suite 1240
Chicago, IL 60697
Woodman's Food Market, Inc. 8,189(/2/) 8,189 0 --
2919 W. Lexington
Janesville, WI 53545
Los Angeles County Employees 54,593(/2/) 54,593 0 --
Retirement Association
GSB Building
One Belmont Avenue, 9th Floor
Bala Cynwyd, PA 19004
INVESCO F/B/O #4 10,919(/2/) 10,919 0 --
1166 Avenue of the Americas
27th Floor
New York, NY 10036
GM Hourly Rate Employees Pension Trust 57,322(/2/) 57,322 0 --
209 S. LaSalle St., Suite 114
Chicago, IL 60604-1295
GM Salaried Employees Non- 51,863(/2/) 51,863 0 --
Contributory Retirement Trust
209 S. LaSalle St., Suite 114
Chicago, IL 60604
INVESCO Private Capital--f/b/o #19 54,593(/2/) 54,593 0 --
1166 Avenue of the Americas
27th Floor
New York, NY 10036
INVESCO Private Capital--f/b/o #21 10,919(/2/) 10,919 0 --
1166 Avenue of the Americas
27th Floor
New York, NY 10036
First Union Investors, Inc. 54,593(/2/) 54,593 0 --
c/o Bowles Hollowell Conner
101 South Tryon Street, 40th Floor
Charlotte, NC 28280-8905
Samuel B. Guren 546(/2/) 546 0 --
1253 Linden Ave.
Highland Park, IL 60035
Robert L. Hall 1,092(/2/) 1,092 0 --
118 E. Ruelle St.
Mandeville, LA 70448
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Lyda Hill--Lyda Hunt--Margaret Trust 5,459(/2/) 5,459 0 --
5000 Thanksgiving Tower
1601 Elm Street
Dallas, TX 75201, Suite 805 West
Addison, TX 75001
Horsley Bridge Fund III, L.P.--Horsley 87,348(/2/) 87,348 0 --
Bridge Partners
505 Montgomery Street, 21st Floor
San Francisco, CA 94111-2553
Stephen S. Hyde 2,730(/2/) 2,730 0 --
31 Broadmoor Avenue
Colorado Springs, CO 80906
KCB BV, L.P. 10,919(/2/) 10,919 0 --
20 North Raymond Ave., #250
Pasadena, CA 91103
Landmark Secondary Partners, L.P. 54,593(/2/) 54,593 0 --
c/o Landmark Partners Inc.
760 Hopmeadow Street
Kroger Company Master Retirement Trust 35,485(/2/) 35,485 0 --
1014 Vine Street
Cincinnati, OH 45202-1100
Steven E. Lebow 1,092(/2/) 1,092 0 --
150 North Cliffwood Avenue
Los Angeles, CA 90049
John D. & Catherine T. MacArthur 65,511(/2/) 65,511 0 --
Foundation
140 S. Dearborn, Suite 1100
Chicago, IL 60603
Mark McNay 1,092(/2/) 1,092 0 --
2855 Jackson Street
Apt. 302
San Francisco, CA 94115
The Meadows Foundation, Inc. 21,837(/2/) 21,837 0 --
3003 Swiss Avenue
Dallas, TX 75204-6090
Henry J. and Michele M. Nasella, as Joint 1,092(/2/) 1,092 0 --
Tenants
24 Larchwood Drive
Cambridge, MA 02138
William J. Nasgovitz 2,184(/2/) 2,184 0 --
4470 N. Lake Drive
Shorewood, WI 53211
Pantheon USA Fund Limited 21,837(/2/) 21,837 0 --
Pantheon Ventures, Inc.
50 California Street, Suite 906
San Francisco, CA 94111
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Phillips-Smith Management Company 12,010(/2/) 12,010 0 --
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
Charles Pistor, Jr. 1,092(/2/) 1,092 0 --
4200 Belclaire
Dallas, TX 75205
Public Employees' Retirement Association 21,837(/2/) 21,837 0 --
of Colorado (PERA)
1300 Logan
Denver, CO 80203
Mark S. Reischmann 1,092(/2/) 1,092 0 --
5485 E. Mineral Lane
Littleton, CO 80122
James T. Rothe 1,092(/2/) 1,092 0 --
SEP/IRA Account # 12B-6965-7688
c/o RPRSC Custodian
925 Constellation Place
Colorado Springs, CO 80906
LGT Capital Invest Limited 54,593(/2/) 54,593 0 --
Herrengasse 12
FL-9490 Vaduz
Principality of Liechtenstein
Ron Stegall 1,092(/2/) 1,092 0 --
701 Loch Lomond
Arlington, TX 76072
G. Michael Machens 68,999(/2/) 68,999 0 --
c/o Phillips-Smith Management Company
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
Cece Smith 28,760(/2/) 28,760 0 --
c/o Phillips-Smith Management Company
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
Craig Foley 3,726(/2/) 3,726 0 --
7 Locust Lane
Bronxville, NY 10708
Don Phillips 24,100(/2/) 24,100 0 --
c/o Phillips-Smith Management Company
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
Donald J. Phillips II 2,330(/2/) 2,330 0 --
1942 N. Fremont
Chicago, IL 60614
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Donna Belcher 1,036(/2/) 1,036 0 --
c/o Phillips-Smith Management Company
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
Fred Arnold 552(/2/) 552 0 --
1401 Clubview Court
Arlington, TX 76013
G. Michael & Sherry Benham Machens 11,345(/2/) 11,345 0 --
c/o Phillips-Smith Management Company
5080 Spectrum Drive
Suite 805 West
Addison, TX 75001
James Flynn 1,966(/2/) 1,966 0 --
2600 Cole Avenue, #210
Dallas, TX 75204
James T. Rothe 2,898(/2/) 2,898 0 --
925 Constellation Place
Colorado Springs, CO 80906
Kristin Phillips Corr 2,330(/2/) 2,330 0 --
9607 East Oaks Lane
Irving, TX 75063-5027
idealab! Capital Partners I-B, L.P. 697,500(/2/) 697,500 0 --
c/o idealab! Capital Management I, LLC
Attn: William S. Elkus
130 W. Union Street
Pasadena, CA 91103
idealab! Capital Partners I-A, L.P. 136,500(/2/) 136,500 0 --
c/o idealab! Capital Management I, LLC
Attn: William S. Elkus
130 W. Union Street
Pasadena, CA 91103
Drake & Co. for the account of 645,000(/2/) 645,000 0 --
Citiventure Private Participations III
c/o Invesco Private Capital
Attn: Mark Radovanovich, CFO
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Weiss, Peck & Greer Venture Associates IV, 490,300(/2/) 490,300 0 --
L.L.C.
c/o Weiss, Peck & Greer LLC
Attn: Melissa Alves
555 California Street, Suite 3130
San Francisco, CA 94104
WPG Enterprise Fund III, L.L.C. 428,800(/2/) 428,800 0 --
c/o Weiss, Peck & Greer LLC
Attn: Melissa Alves
555 California Street, Suite 3130
San Francisco, CA 94104
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
WPG Information Sciences Entrepreneur 19,000(/2/) 19,000 0 --
Fund, L.P.
c/o Weiss, Peck & Greer LLC
Attn: Melissa Alves
555 California Street, Suite 3130
San Francisco, CA 94104
WPG Venture Associates IV Cayman, L.P. 61,900(/2/) 61,900 0 --
c/o BankAmerica Trust & Banking Corporation
(Cayman) Limited
Attn: Sarah Holbrook
P.O. Box 1092, BankAmerica House, Fort Street
George Town, Grand Cayman, Cayman Islands,
British West Indies
Abacus L.P. 10,000(/2/) 10,000 0 --
Box 8
Pebble Beach, CA 93953
Amcito Partners, L.P. 16,600(/2/) 16,600 0 --
Attn: William Brian Little
630 Fifth Ave., Suite 2620
New York, NY 10111
Bank Sal Oppenheim jr & cie (Schweiz) AG 250,000(/2/) 250,000 0 --
Attn: Marko Bianchi
Uraniastrasse 28, CH - 8022
Zurich, Switzerland
Tor Braham 46,600(/2/) 11,600 35,000 *
c/o Warburg Dillon Reed
555 California Street, Suite 4650
San Francisco, CA 94104
Jorge A. del Calvo and Gerine Ongkeko 8,300(/2/) 8,300 0 --
329 Walsh Road
Atherton, CA 94027
James Chapman 146,712(/2/) 46,600 100,112 *
3435 Clay Street, #3
San Francisco, CA 94118
Catherine Filippini 3,300(/2/) 3,300 0 --
63 Indian Hill Road
Winnetka, IL 60093
Fisher Capital Ltd. 162,100(/2/)(/8/) 162,100 0 --
c/o Citadel Investment Group, L.L.C.
225 West Washington Street, 9th Floor
Chicago, IL 60606
Attn: Daniel Hopkins
Craig Foley 33,300(/2/) 33,300 0 --
7 Locust Lane
Bronxville, NY 10708
GCWF Investment Partners 8,300(/2/) 8,300 0 --
Attn: Greg Gallo
400 Hamilton Avenue
Palo Alto, CA 94301-1825
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Roger B. Hackett 8,300(/2/) 8,300 0 --
c/o Go Video, Inc.
7835 East McClaine Drive
Scottsdale, AZ 85260-6949
John E. Kelley 3,300(/2/) 3,300 0 --
c/o Edgewood Management Company
675 Third Avenue
New York, NY 10017
Richard Lawson 3,300(/2/) 3,300 0 --
2795 East Cottonwood Parkway, suite 440
Salt Lake City, CA 84121
Greg Little 16,600(/2/) 16,600 0 --
163 Carl Street
San Francisco, CA 94117
Reid Payne 8,300(/2/) 8,300 0 --
c/o ABN AMRO
199 Bishopsgate
London EC2 M3TY
United Kingdom
City National Investment (formerly 724(/2/) 724 0 --
"North American Trust Company")
Trustee, PM&S Retirement Savings Plan
FBO Jorge A. del Calvo
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Michael J. Halloran and Virginia S. Halloran 724(/2/) 724 0 --
as Trustees of the Community
Property Trust under the Halloran
10/19/95 Revocable Trust Agreement
1913 Vallejo Street
San Francisco, CA 94123
Stanton D. Wong 217(/2/) 217 0 --
1039 Continentals Way No. 201
Belmont, CA 94002
Gary H. Anderson 289(/2/) 289 0 --
Dillingham & Muphy
225 Bush Street, 6th Floor
San Francisco, CA 94104
Christopher R. Ball 72(/2/) 72 0 --
71 22nd Avenue
San Francisco, CA 94121
Michael R. Barr 362(/2/) 362 0 --
1100 Union Street
San Francisco, CA 94109
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Terrence A. Callan 362(/2/) 362 0 --
144 Santa Rosa Avenue
Sausalito, CA 94965
Terry Calvani 101(/2/) 101 0 --
917 Huntington Circle
Nashville, TN 37215
City National Investment, Trustee, 145(/2/) 145 0 --
PM&S Retirement Savings Plan
FBO L. William Caraccio
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
L. William Caraccio 72(/2/) 72 0 --
2348 Harding
Redwood City, CA 94062
Kenneth R. Chiate 145(/2/) 145 0 --
Trustee of the Robert M. Morrison
Educational Trust (the Morrison Family
Trust dated August 6, 1993
assign 14285771-9/24/98)
c/o Robert L. Morrison
20646 Rockcroft Drive
Malibu, CA 90265
Kenneth R. Chiate 145(/2/) 145 0 --
Trustee of the Patrick L. Morrison
Educational Trust (the Morrison Family
Trust dated August 6, 1993
assign 14285771-9/24/98)
c/o Robert L. Morrison
20646 Rockcroft Drive
Malibu, CA 90265
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Mary B. Cranston
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 405(/2/) 405 0 --
PM&S Retirement Savings Plan
FBO John M. Dunn
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
David R. Farabee 174(/2/) 174 0 --
1276 Crown Court
Walnut Creek, CA 94596
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Kevin M. Fong 72(/2/) 72 0 --
6573 Dawes Street
Oakland, CA 94611
Martha H. Fuller & Charles E. Fuller 145(/2/) 145 0 --
Trustees of the Residuary Balance Trust
Dtd 11/30/99 under Fuller Family 1995 Trust
c/o Charles E. Fuller
722 Jacaranda Circle
Hillsborough, CA 94010-6559
Martha H. Fuller & Charles E. Fuller 145(/2/) 145 0 --
TTEES Survivors Tr dtd 5/22/99 under
Fuller Family 1995 Trust
c/o Charles E. Fuller
722 Jacaranda Circle
Hillsborough, CA 94010-6559
City National Investment Trustee, 434(/2/) 434 0 --
PM&S Retirement Savings Plan
FBO P. Garth Gartrell
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Robert B. Gex 217(/2/) 217 0 --
6081 Margarido Drive
Oakland, CA 94618
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Paul R. Griffin
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO F. Kinsey Haffner
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 724(/2/) 724 0 --
PM&S Retirement Savings Plan
FBO Robert C. Herr
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Thomas M. Hird 145(/2/) 145 0 --
1508 Rancho Encinitas Drive
Encinitas, CA 92024
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
William J. Hoehler 724(/2/) 724 0 --
39 Antilles Way
Tiburon, CA 94920
City National Investment Trustee, 362(/2/) 362 0 --
PM&S Retirement Savings Plan
FBO Philip Hudner
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Yuji Iwanaga
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 217(/2/) 217 0 --
PM&S Retirement Savings Plan
FBO Robert A. James
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Jonathan D. Joseph
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Terry M. Kee 289(/2/) 289 0 --
3 Los Cerros Drive
Greenbrae, CA 94904
Anita M. Kirkpatrick 145(/2/) 145 0 --
11087 Picaza Place
San Diego, CA 92127
Eric A. Kremer 72(/2/) 72 0 --
4675 Savona Place
San Diego, CA 92130
Anne E. Libbin 289(/2/) 289 0 --
18 Mateo Drive
Tiburon, CA 94920
City National Investment Trustee, 362(/2/) 362 0 --
PM&S Retirement Savings Plan
FBO Frederick K. Lowell
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
City National Investment Trustee, 362(/2/) 362 0 --
PM&S Retirement Savings Plan
FBO Christopher J. McNevin
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Keith J. Mendelson 217(/2/) 217 0 --
5837 Upton Street
McLean, VA 22101
City National Investment Trustee, 145(/2/) 145 0 --
PM&S Retirement Savings Plan
FBO M. David Minnick
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Daniel C. Minteer
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Nancy G. Morrison and Robert L. Morrison 724(/2/) 724 0 --
Trustees of the Morrison Family Trust
dated August 6, 1993
c/o Robert L. Morrison
20646 Rockcroft Drive
Malibu, CA 90265
City National Investment Trustee, 434(/2/) 434 0 --
PM&S Retirement Savings Plan
FBO J. Richard Morisseey
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Dana P. Newman 72(/2/) 72 0 --
1770 E. Altadena Drive
Altadena, CA 91001
City National Investment Trustee, 362(/2/) 362 0 --
PM&S Retirement Savings Plan
FBO Rodney R. Peck
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Glenn J. Perry
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Stanley F. Pierson 145(/2/) 145 0 --
330 Claremont Way
Menlo Park, CA 94025
Jay E. Powell 72(/2/) 72 0 --
1025 Springfield Drive
Walnut Creek, CA 94598
Richard P. Rados 72(/2/) 72 0 --
330 Sweet Road
Alameda, CA 94502
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Charles R. Ragan
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Toni Rembe 217(/2/) 217 0 --
2550 Broadway
San Francisco, CA 94115
City National Investment Trustee, 72(/2/) 72 0 --
PM&S Retirement Savings Plan
FBO D. Stanley Rowland
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Edwardo G. Roy 72(/2/) 72 0 --
1520 Parker
Berkeley, CA 94703
Barbara R. Shufro 217(/2/) 217 0 --
978 Addison
Palo Alto, CA 94301
City National Investment Trustee, 145(/2/) 145 0 --
PM&S Retirement Savings Plan
FBO David R. Snyder
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 362(/2/) 362 0 --
PM&S Retirement Savings Plan
FBO Glenn QA. Snyder
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
William E. Stoner 145(/2/) 145 0 --
1694 Fairmont Avenue
La Canada-Flintridge, CA 91011
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Robert E. Sullivan
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
City National Investment Trustee, 72(/2/) 72 0 --
PM&S Retirement Savings Plan
FBO Chinin Tana
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Allison Leopold Tilley 145(/2/) 145 0 --
26217 Dori Lane
Los Altos Hills, CA 94022
City National Investment Trustee, 145(/2/) 145 0 --
PM&S Retirement Savings Plan
FBO David W. Trotter
Bowles & Verna
2121 N. California Blvd.
Suite 875, Walnut Creek, CA 94596
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
Benjamin M. Vandegrift and 362(/2/) 362 0 --
Barbara P. Vandegrift
2367 King Place N.W.
Washington, DC 20008
Reed S. Waddell 145(/2/) 145 0 --
5800 West 74th Street
Los Angeles, CA 90045
William S. Waller 145(/2/) 145 0 --
4031 Hampstead Road
La Canada-Flintridge, CA 91011
Linda C. Williams 289(/2/) 289 0 --
2155 Buchanan Street, #8
San Francisco, CA 94115
Bruce L. Yonehiro 145(/2/) 145 0 --
223 Clipper Street
San Francisco, CA 94114
City National Investment Trustee, 289(/2/) 289 0 --
PM&S Retirement Savings Plan
FBO Debra L. Zumwalt
c/o John Billings
225 Broadway Street, 4th Floor
San Diego, CA 92101
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Debra L Zumwalt 145(/2/) 145 0 --
1751 Valparaiso Avenue
Menlo Park, CA 94025
John Boyle 276(/1/) 276 0 --
c/o Extreme Consulting
3300 Warner Blvd.
Burbank, CA 91505
Eric Lochtefeld 276(/1/) 276 0 --
c/o Grass Roots Event Marketing
725 B Liggett Avenue
San Francisco, CA 94129
Promethean Service Company, LLC 84,000(/2/) 84,000 0 --
c/o Promethean
Attn: Mike Hamill
750 Lexington Avenue, 22nd Floor
New York, NY 10022
Bryan Rutberg 3,300(/2/) 3,300 0 --
638 Minna Street, Apt #6
San Francisco, CA 94103
Baird Ryan 8,300(/2/) 8,300 0 --
c/o Edgewood Management Co.
350 Park Avenue, 18th Floor
New York, NY 10022
Sofinnova Venture Partners IV, L.P. 333,300(/2/) 333,300 0 --
Attn: Natalie Auber, CFO
140 Geary Street, 10th Floor
San Francisco, CA 94108
Edward Straube 6,600(/2/) 6,600 0 --
67 Murray Avenue
Larkspur, CA 94939
Jason Strober 3,300(/2/) 3,300 0 --
c/o VantagePoint Venture Partners
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
Wingate Capital Ltd. 87,200(/2/)(/8/) 87,200 0 --
c/o Citadel Investment Group, L.L.C.
225 West Washington Street, 9th Floor
Chicago, IL 60606
Attn: Daniel Hopkins
Stanton D. Wong 5,000(/2/) 5,000 0 --
c/o Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Carm Adimando 20,300(/2/) 20,300 0 --
47 Cherry Gate Lane
Trumbull, CT 06611
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Jose J. Cofino 20,400(/2/) 20,400 0 --
2735 Nicols Canyon Rd.
Los Angeles, CA 90046
Deborah A. Coleman 40,600(/2/) 40,600 0 --
c/o Smart Forest Ventures
317 SW Alder, Suite 900
Portland, OR 97204
Sheldon Derezin 20,400(/2/) 20,400 0 --
6409 Ridge Manor Ave.
San Diego, CA 92120
Elrod Lawing & Sharpless, P.A., Employees 40,800(/2/) 40,800 0 --
Profit Sharing Plan & Trust
Joseph Elrod, Trustee
2900 St. Regis Road
P.O. Box 13566
Greensboro, NC 27415-3566
Lawrence Gerbrandt 5,500(/2/) 5,500 0 --
3880 Via Mar Monte
Carmel, CA 93923
Laura Greenstein 5,100(/2/) 5,100 0 --
c/o Martin Greenstein
55 South Market Street, Ste. 1630
San Jose, CA 95113
James H. Gregg 40,800(/2/) 40,800 0 --
580 Viejo Road
Carmel, CA 93932
Chase Bank Custodian, IRA fbo Jay C. Huffard 20,400(/2/) 20,400 0 --
Attn: Brenda Jackson AVP
One Chase Manhattan Plaza
New York, NY 10081
Brian Kahn 10,200(/2/) 10,200 0 --
1071 N. Hillcrest Dr.
Beverly Hills, CA 90210
Dennis Levett 8,100(/2/) 8,100 0 --
c/o Strutz-Levett Investment & Holding Co.
502 Waverley Street
Palo Alto, CA 94302
Spencer Leyton 65,118(/2/) 4,000 61,118 *
1689 Calypso Drive
Aptos, CA 95003
Richard Lipson 10,200(/2/) 10,200 0 --
c/o Rainbow Leather, Inc.
14-15 112th St.
College Point, NY 11256
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
Raymond L. Ocampo Jr. or Sandra O. Ocampo 20,400(/2/) 20,400 0 --
Trustees of the Ocampo Family Trust UTA Dated
May 30, 1996
Attn: Raymond L. Ocampo, Jr.
500 Roehampton Rd.
Hillsborough, CA 94010
peermusic III, Ltd. 61,400(/2/) 61,400 0 --
3220 Blume Drive, Suite 290
Richmond, CA 94806
Rand International Corporation 102,300(/2/) 102,300 0 --
Attn: Shawkat Raslan
770 Lexington Ave., 16th Floor
New York, NY 10021-8110
Sensory Sciences 102,000(/2/) 102,000 0 --
c/o Go Video
Attn: Douglas Klein, CFO
7835 East McLain Drive
Scottsdale, AZ 85260-1732
Judith Stevens 5,100(/2/) 5,100 0 --
c/o Martin Greenstein
55 South Market Street, Ste. 1630
San Jose, CA 95113
Seymour Svirsky 20,300(/2/) 20,300 0 --
44 Penn Blvd.
Scarsdale, NY 10583
Carl Tiedemann 40,700(/2/) 40,700 0 --
c/o Private Financial Services Corp.
Attn: Stephanie Christie
535 Madison Ave., 35th Floor
New York, NY 10022
Tiedemann Investment Group 20,300(/2/) 20,300 0 --
c/o Private Financial Services Corp.
Attn: Stephanie Christie
535 Madison Ave., 35th Floor
New York, NY 10022
Samuel S. Trust 20,400(/2/) 20,400 0 --
P.O. Box 22274
Carmel, CA 92921
Neil & Lydia Weiss 10,200(/2/) 10,200 0 --
511 San Felicia Way
Los Altos, CA 94022
Norbert R. Wirsching 20,300(/2/) 20,300 0 --
303 E. 57th St. Apt. 22L
New York, NY 10022-2947
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Maximum Number
Beneficial of Shares of Shares Percentage
Ownership of Common Stock Owned Owned
Common Stock as Offered for after after
Name and Addresses of January 12, 2000 Sale Offering Offering
- ------------------ ------------------- -------------- -------- ----------
<S> <C> <C> <C> <C>
HFTP Investment LLC 304,800(/3/) 304,800 0 --
c/o Promethean Investment Group, L.L.C.
Attn: Mike Hamill
750 Lexington Avenue, 22nd Floor
New York, NY 10022
Mark S. Chasan 642,506(/1/) 535,006 107,500 --
21414 Arcos Dr.
Woodland Hills, CA 91364
Dan Barrett 645(/1/) 645 0 --
1175 Eggleston Street
Napa, CA 94559
Scott Bergevin 461(/1/) 461 0 --
c/o Nordic Entertainment
2512 Jefferson St.
Napa, CA 94558
Fred and Rosalyn Chasan 7,380(/1/) 7,380 0 --
13633 Pasco De La Huerta
Poway, CA 92064
Griffith Emery 153(/1/) 153 0 --
156 7th St.
Del Mar, CA 92014
Trent George 13,836(/1/) 13,836 0 --
6398 Flamingo Drive
Buena Park, CA 90620
Get Travel Corporation 2,950(/1/) 2,950 0 --
3355 Vincent Road
Pleasant Hill, CA 94523
Goff Johnson LLP 6,301(/1/) 6,301 0 --
c/o Wayne Johnson
1800 Avenue of the Stars, Suite 1000
Los Angeles, CA 90067
Lochelle Harrison 368(/1/) 368 0 --
1012 Charlson Way
Napa, CA 94558
Marilyn Jarrells 1,752(/1/) 1,752 0 --
1716 Caton Avenue, #35
Brooklyn, NY 11226
Phil Jones 461(/1/) 461 0 --
145 Northridge Lane
Woodside, CA 94062
Jamie Riggs 276(/1/) 276 0 --
c/o Nordic Entertainment
2512 Jefferson Street
Napa, CA 94558
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF EMUSIC.COM INC.]
13,434,102 Shares
Common Stock
-----------------
PROSPECTUS
-----------------
January , 2000
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. No
dealer, salesperson or other person is authorized to give information that is
not contained in this prospectus. This prospectus is not an offer to sell nor
is it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
<PAGE>
Part II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, to be paid by the Registrant in connection with this
offering. All amounts shown are estimates except for the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee................................................... $ 553
Nasdaq National Market additional listing fee.......................... 2,000
Printing expenses...................................................... 5,000
Legal fees and expenses................................................ 20,000
Accounting fees and expenses........................................... 10,000
Transfer Agent and Registrar fees...................................... 1,000
Miscellaneous expenses................................................. 1,000
-------
Total................................................................ $39,553
=======
</TABLE>
Item 14. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law permits indemnification of
officers, directors and other corporate agents under certain circumstances and
subject to certain limitations. The Registrant's Amended and Restated
Certificate of Incorporation and Bylaws provide that the Registrant shall
indemnify its directors, officers, employees and agents to the full extent
permitted by Delaware General Corporation Law, including in circumstances in
which indemnification is otherwise discretionary under Delaware law. In
addition, the Registrant has entered into separate indemnification agreements
(Exhibit 10.1) with its directors and officers which would require the
Registrant, among other things, to indemnify them against certain liabilities
which may arise by reason of their status or service (other than liabilities
arising from willful misconduct of a culpable nature). The Registrant also
intends to continue to maintain director and officer liability insurance, if
available on reasonable terms. These indemnification provisions and the
indemnification agreements may be sufficiently broad to permit indemnification
of the Registrant's officers and directors for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act.
Item 15. Recent Sales of Unregistered Securities
On May 6, 1998, we issued 2,500,000 shares of our common stock and warrants to
purchase a total of 500,000 shares of our common stock at an exercise price of
$1.00 per share to accredited investors in exchange for $500,000.00 in reliance
on Rule 504 of Regulation D promulgated under the Securities Act. Warrants to
purchase 200,000 shares of common stock were exercised at the time of their
issuance.
On May 11, 1998, we acquired all of the outstanding shares of GoodNoise
Corporation, a Delaware corporation, in exchange for 11,015,300 shares of our
common stock in reliance on Section 4(2) of the Securities Act. On the same
date, we assumed options to purchase 1,722,500 shares of the Delaware
corporation's common stock, which were automatically converted into options to
purchase 2,032,550 shares of our common stock at a weighted average exercise
price of approximately $0.03 per share.
On July 29, 1998, we issued 170 shares of our common stock to a consultant in
exchange for consulting services in reliance on Section 4(2) of the Securities
Act.
II-1
<PAGE>
On August 10, 1998, investors exercised warrants to purchase 300,000 shares of
our common stock in exchange for $300,000. These warrants had been issued as a
part of the private placement which occurred on May 6, 1998.
On October 28, 1998, we issued 500 shares of our Series A Preferred Stock and a
warrant to purchase 100,000 shares of our common stock at an exercise price of
$7.91 to an investor in reliance on Regulation D.
On December 16, 1998, we issued 10,000 shares of our common stock to an
employee upon exercise of an employee stock option in reliance on Rule 701.
On February 24, 1999, we acquired all of the outstanding shares of Creative
Fulfillment, Inc. in exchange for 630,179 shares of our common stock in
reliance on Section 4(2) of the Securities Act.
On March 23, 1999, we issued 117,570 shares of our Series B Preferred Stock to
accredited investors in exchange for $32,523,900.00 in cash, cancellation of
debt of $1,777,250 and conversion of the outstanding shares of our Series A
Preferred Stock in reliance on Rule 506 of Regulation D promulgated under the
Securities Act.
On April 27, 1999, we issued 665,188 shares of our common stock in
consideration of the acquisition of certain music rights in reliance on Section
4(2) of the Securities Act.
On June 11, 1999, we issued 448,000 shares of our common stock in exchange for
all of the outstanding shares of Internet Underground Music Archive, Inc. in
reliance on Section 4(2) of the Securities Act.
On June 10, 1999 we granted warrants for the purchase of 1,607,800 shares
solely to accredited investors in reliance on Regulation D.
From May 11, 1998 through September 20, 1998, we granted options to purchase
435,000 shares of our common stock at a weighted average exercise price of
approximately $5.07 per share. These options were granted to our employees and
consultants in exchange for services rendered in transactions exempt from
registration under the Securities Act under Rule 701. From September 21, 1998
through July 15, 1999, we granted options to purchase 4,186,000 shares of our
common stock at a weighted average purchase price of approximately $7.078 per
share. These options were granted to our employees and consultants in exchange
for services rendered in transaction exempt from registration under the
Securities Act under Section 4(2) thereof.
In December 1999, we issued approximately 2,100,000 shares in connection with
our acquisition of Cductive. Such issuance was made in reliance on Regulation
D.
There were no underwriters employed in connection with any of the above
transactions.
II- 2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
2.1(a) Agreement and Plan of Reorganization by and among GoodNoise
Corporation, Atlantis Ventures Corp., GN Acquisition Corp and certain
other parties dated as of May 11, 1998
2.2(a) Agreement and Plan of Reorganization by and among GoodNoise
Corporation, Creative Fulfillment, Inc., GN Acquisition Corp and
certain other parties dated as of October 8, 1998
2.3(c) Agreement and Plan of Reorganization by and among GoodNoise
Corporation, GNA Corporation, Internet Underground Music Archive, Inc.
and certain shareholders of Internet Underground Music Archive, Inc.
dated as of May 16, 1999
2.4(b) Agreement and Plan of Merger by and between EMusic.com Inc., a Florida
corporation, and EMusic.com Inc., a Delaware corporation, dated as of
July 21, 1999
2.5(d) Agreement and Plan of Reorganization by and among EMusic.com Inc., GNA
Corporation, Group K Inc., d.b.a. Cductive and the principal
shareholders of Cductive, dated as of November 15, 1999.
2.6(e) Agreement and Plan of Reorganization dated as of November 29, 1999,
among EMusic.com Inc., GNB Corporation and Tunes.com Inc.
3.1(c) Amended and Restated Certificate of Incorporation
3.2(c) Amended and Restated Bylaws
5.1* Opinion of Gray Cary Ware & Freidenrich LLP
10.1(c) Form of Indemnity Agreement
10.2(a) Stock Purchase Agreement dated as of March 30, 1998 with Gary
Culpepper
10.3(a) 1998 Stock Option Plan
10.4(c) 1998 Nonstatutory Stock Option Plan
10.5(c) 1999 Employee Stock Purchase Plan
10.6(c) Form of Amendment to Investor Rights Agreement dated July 19, 1999
21(c) Subsidiaries
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1)
23.3 Consent of Ernst & Young LLP
23.4 Consent of Richard A. Eisner & Company LLP
24.1* Power of Attorney
27.1* Financial Data Schedule
</TABLE>
- ------------------
(a) Previously filed as an exhibit to the Registrant's Form 10-SB/A dated
December 24, 1998.
(b) Previously filed as an exhibit to the Registrant's Form 8-K dated July 23,
1999.
(c) Previously filed as an exhibit to the Registrant's Form S-1 (Registration
Statement No. 333-83685).
(d) Previously filed as an exhibit to the Registrant's Form 8-K dated November
15, 1999.
(e) Previously filed as an exhibit to the Registrant's From 8-K dated November
29, 1999.
* Previously filed.
Item 17. Undertakings
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(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
II-3
<PAGE>
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 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%
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 paragraphs (a)(1)(i) and (a)(1)(ii) 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
the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act 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
Securities 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
Securities Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, 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 EMusic pursuant to Rule 424(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 the time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
Signatures
In accordance with the requirements of the Securities Act of 1933, EMusic
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 Post-Effective
Amendment No. 1 on Form S-3 to the registration statement on Form S-1 to be
signed on its behalf by the undersigned, in the City of Redwood City, State of
California, on the 20th day of January 2000.
EMUSIC.COM INC.
/s/ Peter M. Astiz
By: _________________________________
Peter M. Astiz
Executive Vice President
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and January 20, 2000
______________________________________ Assistant Secretary
Robert H. Kohn
* President, Chief Executive January 20, 2000
______________________________________ Officer and Director
Gene Hoffman, Jr. (Principal Executive
Officer)
* Executive Vice President January 20, 2000
______________________________________ and Chief Financial
Joseph H. Howell Officer (Principal
Financial and Accounting
Officer)
* Director January 20, 2000
______________________________________
Ralph Peer, II
* Director January 20, 2000
______________________________________
Tor Braham
* Director January 20, 2000
______________________________________
Ed Rosenblatt
/s/ Peter M. Astiz
*By: _________________________________
Peter M. Astiz
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated July 26, 1999 relating to the
financial statements, which appears in EMusic.com Inc.'s Annual Report on Form
10-K for the year ended June 30, 1999. We also consent to the incorporation by
reference of our reports dated March 31, 1999 and July 21, 1999 relating to the
financial statements of Creative Fulfillment Inc and Internet Underground Music
Archive Inc. ("IUMA"), which appear in the Reports on Form 8-K dated
January 31, 1999 and June 11, 1999, respectively. We also consent to the
reference to us under the headings "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
January 19, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No.1 to the Registration Statement (Form S-3 No. 333-88969) and
related Prospectus of Emusic.com, Inc. for the registration of 13,434,102
shares of its common stock and to the incorporation by reference therein of our
report dated January 26, 1999, with respect to the consolidated financial
statements of Tunes.com, Inc. and to our report dated June 22, 1998, with
respect to the financial statements of Tunes Network, Inc. included in
Amendment No. 1 to the Registration Statement (Form S-1 No. 333-88969) and
related Prospectus of Emusic.com, Inc., filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
January 20, 2000
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Post Effective Amendment
No. 1 to Form S-1 on the Registration Statement on Form S-3 of EMusic.com Inc.
of our report dated November 19, 1999, on our audits of the financial
statements of Group K Inc. as of December 31, 1998 and 1997 and for the period
June 16, 1997 (inception) through December 31, 1998, the year ended December
31, 1998 and the period June 16, 1997 (inception) through December 31, 1997
included in the Amendment No. 1 to the Registration Statement (Form S-1 No.
333-88969) and related Prospectus of EMusic.com Inc. as amended filed with the
Securities and Exchange Commission and to the reference to our firm under the
caption "Experts".
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
New York, New York
January 18, 2000
