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As filed with the Securities and Exchange Commission on November 12, 1999
Registration No. 333-84307
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
ON FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EARTHWEB INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3899472
(State of other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
3 Park Avenue
New York, New York 10016
(212) 725-6550
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Jack D. Hidary
President and Chief Executive Officer
EarthWeb Inc.
3 Park Avenue
New York, New York 10016
(212) 725-6550
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
With Copies to:
John R. Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0050
(212) 468-8000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The Registrant hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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EXPLANATORY NOTE
This Post-Effective Amendment No. 2 on Form S-3 is being filed to convert the
Registration Statement on Form S-1 (No. 333-84307) (the "S-1 Registration
Statement") into a Registration Statement on Form S-3. The S-1 Registration
Statement related to an aggregate of 1,000,000 shares of common stock of
EarthWeb Inc. to be offered from time to time for the account of certain
stockholders of EarthWeb Inc. As of the date of this Post-Effective Amendment,
152,740 shares of common stock have been sold pursuant to the S-1 Registration
Statement. Accordingly, the prospectus contained in this Post-Effective
Amendment relates to the remaining 847,260 shares of Common Stock.
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Prospectus
847,260 Shares
EarthWeb Inc.
Common Stock
This prospectus relates to:
(1) 492,778 shares of common stock issued to Lloyd Linn and Diane Rickert in
connection with our acquisition of dice.com;
(2) an aggregate of 14,674 shares of common stock issued to Steve Anderson,
Doug Anderson, Robert Anderson and Ascent Partners, Inc. in connection with
our acquisition of MicroHouse International Inc.; and
(3) 127,763 shares of common stock issued to Zafir Anjum at the closing of our
acquisition of substantially all of the assets, properties and rights of the
business of the Codeguru web sites including www.codeguru.com.
See "Selling Stockholders" for a more complete description of these shares.
These shares were issued and sold in transactions exempt from registration
under Section 4(2) of the Securities Act of 1933, because these shares were
part of the consideration given in transactions not involving a public
offering. See "Plan of Distribution" for a more complete description of these
transactions.
These shares are to be offered and sold for the account of the selling
stockholders. We will not receive any of the proceeds from the sale of these
shares by the selling stockholders. These shares may be offered by the selling
stockholders or their respective pledgees, donees, transferees or other
successors in interest in negotiated transactions or otherwise, at market
prices prevailing at the time of the sale or at negotiated prices. In
addition, these shares may be offered from time to time through ordinary
brokerage transactions on the Nasdaq National Market. See "Plan of
Distribution" for a more complete description of these transactions.
The selling stockholders may be "underwriters" as defined in the Securities
Act. If any broker-dealers are used by the selling stockholders, any
commissions paid to broker-dealers and any profit received by broker-dealers
on the resale of the shares may be underwriting discounts or commissions under
the Securities Act. Any profits realized by the selling stockholders may be
also underwriting commissions.
(4) 212,045 shares of common stock covered by this prospectus may be offered
and issued from time to time in connection with acquisitions of other
businesses, properties or securities in business combination transactions in
accordance with Rule 415(a)(1)(viii) of Regulation C under the Securities Act
of 1933. See "Securities Covered by this Prospectus" for a more complete
description of these shares.
This prospectus has also been prepared for use, with EarthWeb's prior consent,
by persons who have received or will receive shares in connection with such
acquisitions and who wish to offer and sell such shares under circumstances
requiring or making desirable its use. See "Securities Covered by this
Prospectus" for the identity of any such individuals.
The common stock is quoted on the Nasdaq National Market under the symbol
"EWBX." On November 11, 1999, the reported last sale price for the common
stock on Nasdaq was $32 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 passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
November 12, 1999
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FORWARD-LOOKING STATEMENTS
This prospectus and the documents that are and will be incorporated into
this prospectus contain forward-looking statements that involve risks and
uncertainties. The outcome of the events described in these forward-looking
statements is subject to risks and actual results could differ materially.
These statements relate to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words like
"believes," "expects," "may", "will," "should," "seeks," "pro forma," or
"anticipates," and similar expressions. Our actual results could differ
materially from those discussed in these statements. Factors that could
contribute to these differences include those discussed under "Risk Factors,"
beginning on page 4 and elsewhere in this prospectus and documents
incorporated by reference. Unless otherwise indicated, all references to
"EarthWeb," "we," "our" and "us" for the period prior to October 25, 1996 are
to EarthWeb Inc.'s predecessors and, for later periods, refer to EarthWeb Inc.
and, subsequent to their acquisition or formation, its subsidiaries, including
EW Career Solutions, Inc. (a/k/a D&L Online, Inc., which owns dice.com job
board) and EW Subscription Services Inc. (formerly known as MicroHouse
International, Inc.).
TABLE OF CONTENTS
<TABLE>
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Forward Looking Statements.................................................. 1
EarthWeb.................................................................... 2
Risk Factors................................................................ 4
Use of Proceeds............................................................. 14
Securities Covered by This Prospectus....................................... 14
Selling Stockholders........................................................ 15
Plan of Distribution........................................................ 16
Legal Matters............................................................... 17
Experts..................................................................... 17
Where You Can Find More Information......................................... 17
</TABLE>
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EARTHWEB
We are the leading provider of business-to-business online services for the
global information technology industry. EarthWeb offers various online
services focused on a series of vertical markets such as networking and
telecommunications, software development and internet technologies. Our
network of vertical sites serves various constituents of the IT Industry,
including:
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. Programmers and engineers . Recruiters . Hardware manufacturers
. IT managers . Corporate IT purchasers . Value-added resellers
. Technical consultants . Software publishers . IT services firms
</TABLE>
Our integrated online services address the needs of these constituents for
content, career management and recruiting, commerce and community.
. Content. Members of the IT industry need independent, in-depth and up-
to-date content such as reference and training materials, source code,
IT product information and other technical data. EarthWeb's online
services each focus on a particular segment of the IT industry.
Developer.com, one of our flagship services, focuses primarily on the
software and Internet development segments. Datamation.com, another of
our flagship services, is a leading resource for IT enterprise managers.
We also offer premium subscription services through ITknowledge.com and
the Support Source product line, which together provide extensive
electronic reference libraries and online training materials.
. Career Management and Recruiting. Companies and other organizations
depend on a qualified pool of IT professionals. EarthWeb connects IT
professionals, such as programmers, engineers and consultants, with part
and full-time employment through a variety of online job resources.
These resources include our online job board, dice.com, which is a
leading service for IT professionals seeking employment as well as
companies and other organizations recruiting technical personnel.
International Data Corporation (IDC) estimated that the total amount
spent on IT recruiting was $18 billion in 1998, a 20% increase over
1997.
. Commerce. The IT industry needs a marketplace to buy and sell IT
products and services. EarthWeb provides an online marketplace where
vendors can promote and advertise their goods and services, and
purchasers can identify, evaluate and buy the products and services that
meet their needs. Earthwebdirect.com, which focuses on software products
for IT professionals, is one of the leading e-commerce sites within the
EarthWeb network.
. Community. Members of the IT industry need a neutral third-party
environment to share information. EarthWeb's online discussion area
(discussions.earthweb.com) indexes hundreds of online technology forums
where users can contribute material and communicate with each other. Our
other community areas, such as question and answer services and user
surveys, allow users to help one another solve technical problems.
IDC forecasts that the worldwide market for information technology, or IT,
products and services will grow from approximately $800 billion in 1998 to
over $1.0 trillion in 2001. As a global intermediary for the IT industry, we
are positioned as the trusted third party that offers an integrated
environment where various constituents can share information, manage their
careers, recruit personnel, transact business and interact with one another.
We believe that we offer the most in-depth content and comprehensive range of
business-to-business online services for the IT industry.
We have broadened our online content and services since our initial public
offering in November 1998 to address the needs of the various constituents
within the IT industry. We have added content in such areas as security,
networking, hardware and Linux to address a wider range of IT industry
segments. We have also expanded our online business-to-business services, in
part through the acquisition of dice.com. In addition, our acquisition of
MicroHouse added an important line of subscription-based products. We intend
to continue expanding the content we offer our users, the segments of the IT
industry we address and the business-to-business services we provide.
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Our business has grown substantially, as measured by revenues, advertising
customers and the size of our sales force. Our revenues increased from $1.1
million in 1997 to $15.3 million in 1998 on a pro forma basis to include our
acquisition of dice.com and MicroHouse. We have increased our advertising
customer base for our content areas to over 300 customers as of September 30,
1999 from 175 as of December 31, 1998, and have broadened this advertiser base
to include both technology and non-technology companies. Additionally,
dice.com had over 3,600 advertisers as of September 30, 1999 on its job board.
Our subscription revenue stream has also grown rapidly. We have increased our
subscriber base to 17,000 as of September 30, 1999. To support our growth, we
have increased our sales organization to approximately 50 people.
Our Market Opportunity
The role of information technology in companies and other organizations has
expanded and has become even more critical to the successful implementation of
business strategy. While IT traditionally has focused on internal systems,
including accounting and human resources, IT is expanding its role by changing
the way in which organizations interact with their suppliers, market and
deliver their products and services and support their customers. IDC forecasts
that the worldwide market for IT products and services will grow from an
estimated $800 billion in 1998 to $1.0 trillion in 2001.
The growth of the IT industry has generated significant market
opportunities. For example:
. Vendors of IT products and services spent over $5 billion in 1997 in
product advertising, with an increasing amount being spent online,
according to Ad Age's Business Marketing.
. Expenditures on IT recruiting increased from an estimated $15 billion in
1997 to $18 billion in 1998, according to IDC.
. The IT education and training market is forecasted to grow from an
estimated $16.5 billion in 1998 to $25.3 billion in 2002, according to
IDC.
. Expenditures on computer reference books totaled approximately $1
billion in 1998, according to Simba Information.
. Based on industry sources, we believe expenditures on IT industry
reports and analyses totaled an estimated $1 billion in 1998.
Increasingly companies are using the Internet to purchase goods and
services. Internet commerce is forecasted to grow from an estimated $50.4
billion in 1998 to $733.6 billion in 2002, with the business-to-business
component growing from an estimated $27.4 billion to $526.2 billion in the
same period, according to IDC.
Our Strategy
We seek to strengthen our position as the leading provider of business-to-
business online services for the global IT industry by:
. broadening and enhancing business-to-business services for the IT
industry;
. promoting EarthWeb and our other brands;
. cultivating multiple revenue streams;
. pursuing strategic acquisitions and investments; and
. expanding internationally.
Our principal executive office is located at 3 Park Avenue, New York, New
York 10016, and our telephone number at this location is (212) 725-6550. Our
corporate Web site address is http://www.earthweb.com. Information contained
on our Web site is not part of this prospectus.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in shares of our common stock. If
any of the following risks actually occur, our business, financial condition
and results of operations could be materially adversely affected. This could
cause the trading price of our common stock to decline, and you may lose part
or all of your investment.
Risks Particular to EarthWeb
You cannot predict our future success based on our limited operating history
Although we commenced operations in October 1994, we did not begin our
business of providing online services to IT professionals until October 1995,
and only recently broadened our online services to address the needs of other
constituents of the IT industry. We did not begin generating advertising
revenues until June 1996. The limited amount of information about us makes it
difficult for you to predict whether we will be successful.
EarthWeb competes in the relatively new markets for Internet services and
products. Thus, you should also evaluate our chances of financial and
operational success in light of the risks, uncertainties, expenses, delays and
difficulties associated with operating a business in a relatively new and
unproven market, many of which may be beyond our control. Some of the risks
that we face are described in the following paragraphs. Our failure to address
these risks could have a material adverse effect on our business, results of
operations and financial condition.
We have a history of losses and may need additional funds
We had an accumulated deficit of $42.2 million at September 30, 1999. We
have also experienced operating losses as well as net losses for all of the
fiscal years during which we have operated. We expect that we will continue to
operate at a loss for the foreseeable future. Although our revenues have
increased in recent quarters, we cannot assure you that such growth will be
maintained or increased in the future. You should not rely on our recent
revenue growth as indicative of our future results of operations. We cannot
predict with accuracy our future results of operations and believe that any
period-to-period comparisons of our results of operations are not meaningful.
We expect to increase our operating expenses significantly, expand our sales
and marketing operations and continue to develop and extend our online
services. In the future, we may not generate sufficient revenues to pay for
all of these operating or other expenses. If we fail to generate sufficient
cash to pay these expenses, we will need to identify other sources of
financing. We may not be able to borrow money or issue more shares of common
stock or other securities to meet our cash needs, and even if we can complete
such transactions, the terms may seem to us to be unfavorable.
We compete in a highly competitive developing market without certainty of
future growth
The market for EarthWeb's online services has only recently begun to
develop, is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical of a new and rapidly evolving industry, demand
and market acceptance for recently introduced services is uncertain and we
cannot accurately predict the future growth, if any, and size of this market.
The market for our online services may not continue to develop or become
sustainable. If use of our online services fails to grow, our ability to
establish other online services would be materially adversely affected. In
addition, we may not be successful in our business strategy of extending our
online services model to additional segments of the IT industry.
EarthWeb competes with other companies that direct portions of their Web
sites towards certain segments or sub-segments of the IT industry. Some of
EarthWeb's competitors include:
. Ziff-Davis (DevHead)
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. CNET (builder.com and activex.com)
. CMP Media (cmpnet)
. Internet.com (webdeveloper.com)
. Wired Digital (Webmonkey)
. IDG (Javaworld)
In addition, we compete for advertising revenues with general interest
portal and destination sites, as well as traditional media. Our competitors
for sales of products are book, software and online retailers that sell
products similar to ours. Many of our competitors have longer operating
histories, larger client bases, longer relationships with clients, greater
brand or name recognition and significantly greater financial, technical,
marketing and public relations resources than we do. As a result, they may be
in a position to respond more quickly to new or emerging technologies and
changes in customer requirements and to develop and promote their products and
services more effectively. We may not be able to compete successfully against
present or future competitors.
There are relatively low barriers to entry in the online services market. We
do not own any patent technology that precludes or inhibits competitors from
entering the IT online market. Existing or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could have a material adverse effect on our business, results of operations
and financial condition.
Our future revenues are dependent on the adoption and effectiveness of the
Internet as an advertising medium
Our future success is highly dependent on an increase in the use of the
Internet as an advertising medium. The Internet advertising market is new and
rapidly evolving, and it cannot yet be compared with traditional advertising
media to gauge its effectiveness. As a result, demand and market acceptance
for Internet advertising solutions is uncertain. Most of our current or
potential advertising customers have little or no experience using the
Internet for advertising purposes and they have allocated only a limited
portion of their advertising budgets to Internet advertising. The adoption of
Internet advertising, particularly by those entities that have historically
relied upon traditional media for advertising, requires the acceptance of a
new way of conducting business, exchanging information and advertising
products and services. Such customers may find Internet advertising to be less
effective for promoting their products and services relative to traditional
advertising media. If the market for Internet advertising fails to develop or
develops more slowly than we expect, then our business, results of operations
and financial condition could be materially adversely affected.
There are currently no standards for the measurement of the effectiveness of
Internet advertising and standard measurements may need to be developed to
support and promote Internet advertising as a significant advertising medium.
Our advertising customers may challenge or refuse to accept our or third-party
measurements of advertisement delivery, and our customers may not accept any
errors in such measurements. In addition, the accuracy of database information
used to target advertisements is essential to the effectiveness of Internet
advertising that may be developed in the future. The information in our
database, like any database, may contain inaccuracies that our customers may
not accept.
If advertisers determine that banner advertising is an ineffective or
unattractive advertising medium, we may not be able to maintain our revenues
with other forms of advertising that we offer. Also, "filter" software
programs limit or prevent advertising from being delivered to a user's
computer. The commercial viability of Internet advertising, and our business,
results of operations and financial condition, would be materially adversely
affected by Web users' widespread adoption of such software.
We rely heavily on advertising revenues
To date, substantially all of our revenues are derived from banner
advertisements, paid listings and sponsorships. We rely primarily on our in-
house advertising sales force for domestic advertising sales. Our
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success depends, in part, on hiring, retaining, managing, training and
motivating our sales force. If a significant portion of our advertising sales
force leaves, we may not be able to compete for or retain advertisers and we
may not be able to sustain or increase our current advertising sales level.
The reduction in the amount of revenue from advertising sales could have a
material adverse effect on our business, results of operations and financial
condition.
In addition, the competition in the sale of advertising on the Internet,
including competition from Internet portals and other high-traffic sites is
intense. This competition has resulted in a wide range of rates quoted by
different vendors for a variety of advertising services. As a result, we
cannot accurately predict the future levels of Internet advertising revenues
that we will realize. The prices for Internet advertising may also be affected
by competition among current and future suppliers of Internet navigational
services or Web sites and advertising networks. This, together with
competition with other traditional media for advertising placements, could
result in significant price competition, reduced pricing for Internet
advertising and reductions in EarthWeb's advertising revenues.
A significant portion of our revenue comes from a limited number of
advertisers
Our revenues to date have been derived from a limited number of advertising
customers and we expect that a limited number of advertisers will continue to
account for a significant portion of our revenues. While for the nine months
ended September 30, 1999, no advertiser accounted for more than 10% of
revenues and our top 20 advertisers accounted for an aggregate of
approximately 21% of our revenues, IBM accounted for approximately 11% and
Microsoft accounted for approximately 10% of our revenues for the year ended
December 31, 1998 and our top 20 advertisers accounted for an aggregate of
approximately 52% of our revenues during 1998. Both Microsoft and IBM
advertised on EarthWeb's online services during the year ended December 31,
1997, but revenues from each accounted for less than 10% of EarthWeb's
revenues during 1997. Moreover, we generally use purchase order agreements
that are subject to cancellation in order to sell advertising. Current
advertisers may not continue to purchase advertising from us or we may not be
able to attract additional advertisers. The loss of one or more of the
advertisers that represent a material portion of our revenues could have a
material adverse effect on our business, results of operations and financial
condition. In addition, the non-payment or late payment of amounts due by a
significant advertiser could have a material adverse effect on our business,
results of operations and financial condition.
We engage in barter transactions which do not generate cash revenue
We engage in barter transactions, which reduce cash expenditures in
marketing and other areas, and leverage our advertising inventory. While for
the nine months ended September 30, 1999, revenues from barter transactions
represented approximately 10% of total revenues, during 1998, revenues from
barter transactions represented approximately 25% of total revenue and less
than 10% of total revenue on a pro forma basis after giving effect to the
acquisition of dice.com. Barter revenues may continue to represent a
significant portion of our total revenues in future periods.
We must continue to maintain and develop our reputation and brand recognition
We believe that establishing and maintaining the identity of our several
brands is critical in attracting and expanding our audience, and that the
importance of brand recognition will increase due to the growing number of
Internet online services. Promotion and enhancement of our brands will depend
largely on our success in continuing to provide high quality online services.
If users do not perceive EarthWeb's existing online services to be of high
quality, or if we introduce new online services or enter into new business
ventures that are not favorably received by users, the uniqueness of our
brands could be diminished and the attractiveness of our audiences to
advertisers could be reduced. We may also find it necessary to increase
substantially our financial commitment to creating and maintaining a distinct
brand loyalty among users. If we (1) cannot provide high quality online
services, (2) fail to promote and maintain our brands, or (3) incur excessive
expenses in an attempt to improve our online services or promote and maintain
our brands, our business, results of operations and financial condition could
be materially adversely affected.
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We must retain key executives and personnel
Our performance is substantially dependent on the performance of our senior
management and key technical personnel. In particular, our success depends
substantially on the continued efforts of our senior management. EarthWeb has
employment agreements, which include non-compete provisions, with members of
senior management. However, these key personnel and others may leave EarthWeb
or compete with us, which could have a material adverse effect on our
business, results of operations and financial condition. In addition, we have
not purchased key person life insurance on all members of our senior
management.
Our future success also depends upon our continuing ability to identify,
attract, hire and retain highly qualified personnel. There is currently a
shortage of qualified personnel in the online services market, and this
shortage is likely to continue. We compete intensely for qualified personnel
with other companies. If we cannot attract, motivate and retain qualified
professionals, our business and results of operations could be materially
adversely affected.
Our continued future growth may strain our resources
A key part of our strategy is to grow, which may strain our managerial,
operational and financial resources.
To manage recent acquisitions and future growth, our management must
continue to improve our operational and financial systems and expand, train,
retain and manage our employee base. Our management may not be successful in
managing EarthWeb's growth effectively. If our systems, procedures and
controls are inadequate to support our operations, our expansion would be
halted and we could lose our opportunity to gain significant market share. Any
inability to manage growth effectively could have a material adverse effect on
our business, results of operations and financial condition.
We may be unable to consummate potential acquisitions or integrate the
operations of companies we acquire
Our strategy includes the acquisition of assets of online service providers
that enhance our current services. As part of this strategy, we acquired both
dice.com and MicroHouse, as well as the businesses of GoCertify and The Perl
Journal, among others. Our continued growth will depend in part on our ability
to continue to identify suitable acquisition candidates and to acquire them on
appropriate terms. In addition, the anticipated results of any acquisitions
may not be realized. Some of the risks that we may encounter in acquiring
other companies include the following:
. expenses, delays and difficulties of integrating the acquired company
into EarthWeb's existing organization;
. potential disruption of our ongoing business;
. diversion of management's attention;
. the amortization of the acquired company's intangible assets;
. impact on our financial condition due to the timing of the acquisition;
. failure to retain key personnel;
. difficulties of integrating the personnel and cultures of the acquired
company into our organization; and
. potential legal liabilities.
If any of these risks materialize, they could have a material adverse effect
on our business, results of operations and financial condition.
We rely on a number of content providers
Our success depends upon our ability to provide a wide range of in-depth
content. The markets for our online services are characterized by rapidly
changing technology, emerging industry standards and the rapidly
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changing needs of our audience. We rely on a number of publishers of technical
materials, our vendors and the users of our online services for the continuing
provision of up-to-date content. No single content provider is material to
EarthWeb's operations. However, publishers of technical materials with which
we currently have a relationship, our current vendors or the current users of
our online services, may not continue to provide us with a similar flow of
content or may not continue to do so on the same terms and conditions. If the
flow of content for our online services decreases either in terms of quality
or quantity, or ceases completely, our business, results of operations and
financial condition could be materially adversely affected.
We rely on a number of strategic alliances
We rely on strategic alliances with Sun Microsystems, CMP Media, Ziff-Davis,
Macmillan, FairMarket, beyond.com and fatbrain.com, among others, to attract
users and paid advertising to our online services. These relationships may not
continue or we may not be able to develop any additional third party alliances
on acceptable commercial terms. No one of these strategic alliances is
individually material to our operations. However, our inability to maintain
current strategic relationships generally or develop new strategic
relationships could have a material adverse effect on our business, results of
operation and financial condition.
Our quarterly results may fluctuate significantly
Because of our limited operating history, we plan our expenses based in part
upon our expectations concerning future revenue. Our expenses, to a large
extent, are fixed. Our quarterly revenues and operating results depend
substantially upon the advertising revenues we receive within that quarter,
which are difficult to forecast accurately. The cancellation or deferral of a
small number of advertising contracts could have a material adverse effect on
our business, results of operations and financial condition. We may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall, and any significant shortfall could have a material adverse effect
on our business, results of operation and financial condition.
Our quarterly results have historically been affected by variations in the
following:
. the level of usage of the Internet;
. demand for Internet advertising;
. the addition or loss of advertisers;
. the level of user traffic on EarthWeb's online services;
. economic conditions specific to the Internet industry; and
. online media and economic conditions generally.
We also believe that our revenues are subject to seasonal fluctuations
because advertisers generally place fewer advertisements during the first and
third calendar quarters of each year. As a strategic response to this, we have
and may continue to make pricing, service or marketing decisions. We also may
consummate business combinations to reduce our exposure to seasonality. Any
failure of one or more of these strategies could have a material adverse
effect on our business, results of operations and financial condition.
We may have difficulty in expanding and managing our international operations
A key part of our strategy is to develop our online services in
international markets. To date, we have had limited experience in developing
localized versions of our online services and in marketing and operating our
online services internationally. We intend to enter into relationships with
foreign business partners. If the international revenues are not adequate to
offset our investments in international activities, our business, results of
operations and financial condition could be materially and adversely affected.
We may experience difficulty in managing international operations because of
distance, as well as language and cultural differences. We and any of our
future foreign business associates may not be able to successfully
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market and operate our online services in foreign markets. Furthermore, in
light of substantial anticipated competition, we believe that it will be
necessary to implement our business strategy quickly in international markets
to obtain a significant share of the market. We cannot give you any assurance
that we will be able to do so. Other risks that could affect EarthWeb's
potential international operations include:
. fluctuations in currency exchange rates;
. difficulties arising from staffing and managing foreign operations;
. unexpected changes in the legal and regulatory requirements of different
countries;
. potential political and economic instability; and
. overlapping or differing tax laws.
If any of these risks materialize, EarthWeb's domestic and international
businesses, results of operations and financial condition could be materially
adversely affected.
Risks Typical of the Internet Industry
Our success is tied to the continued growth in the use of the Internet and
the adequacy of the Internet infrastructure
Our future success is substantially dependent upon continued growth in the
use of the Internet. The number of users and advertisers on the Internet may
not increase and commerce over the Internet may not become more accepted and
widespread for a number of reasons, including:
. actual or perceived lack of security of information, including credit
card numbers;
. lack of access and ease of use;
. congestion of traffic on the Internet;
. inconsistent quality of service and lack of availability of cost-
effective, high speed service;
. possible disruptions due to Year 2000 difficulties, computer viruses or
other damage to the Internet servers or to users' computers;
. excessive governmental regulation;
. uncertainty regarding intellectual property ownership; and
. lack of high-speed modems and other communications equipment.
Published reports have also indicated that growth in the use of the Internet
has resulted in users experiencing delays, transmission errors and other
difficulties. As currently configured, the Internet may not support an
increase in the number or requirements of our users. In addition, there have
been outages and delays on the Internet as a result of damage to the current
infrastructure. The amount of traffic on EarthWeb's online services could be
materially affected if there are outages or delays in the future. The use of
the Internet may also decline if there are delays in the development or
adoption of modifications by third parties that are required to support
increased levels of activity on the Internet. If none of the foregoing changes
occur, or if the Internet does not become a viable commercial medium, our
business, results of operations and financial condition could be materially
adversely affected. In addition, even if those changes occur, we may be
required to spend significant amounts to adapt our online services to any new
or emerging technologies relating to the Internet.
Capacity constraints or systems failures could materially and adversely
affect our business
The performance of our online services is critical to:
. our reputation;
. our ability to attract advertisers to our services; and
. achieving market acceptance of our online services.
9
<PAGE>
Any system failure, including network, software or hardware failure, that
causes interruption or an increase in response time of our online services
could result in decreased usage of our services. If these failures are
sustained or repeated, they could reduce the attractiveness of our online
services to our users, vendors and advertisers. An increase in the volume of
queries conducted through our online services could strain the capacity of the
software or hardware we employ, which could lead to slower response time or
system failures, that could adversely affect our advertising revenues. We also
face technical challenges associated with higher levels of personalization and
localization of content delivered to users of our online services. The process
of managing advertising within our large, high traffic Internet online service
is an increasingly important and complex task. EarthWeb relies on both
internal and licensed third party advertising, inventory management and
analysis systems. We could incur so-called "make good" obligations to our
advertising customers if an extended failure of our advertising system results
in incorrect advertising insertions. By displacing advertising inventory,
these obligations could defer advertising revenues and thereby have a material
adverse effect on our business, results of operations and financial condition.
Our operations are dependent in part upon our ability to protect our
operating systems against:
. physical damage from acts of God;
. power loss;
. telecommunications failures;
. physical and electronic break-ins;
. computer viruses; and
. similar events.
The occurrence of any of these events could result in interruptions, delays
or cessations in service to users of our online services, which could have a
material adverse effect on our business, results of operations and financial
condition.
We may face liability for the services that we provide
Because content made available by third parties may be downloaded by the
online services operated or facilitated by us and may be subsequently
distributed to others, there is a potential that claims will be asserted
against EarthWeb for defamation, negligence or personal injury, or based on
other theories due to the nature of the content. These claims have been
brought, and sometimes successfully asserted, against other online service
providers. In addition, we could be exposed to liability with respect to the
selection of listings that may be accessible through our online services or
through content and materials that may be posted by users in our classifieds,
bulletin board or chat room services. By providing hypertext links to Internet
sites operated by other providers, third parties may attempt to assert claims
or liability for wrongful actions by these other providers through these
Internet sites. It is also possible that users could claim that we were
responsible for losses incurred in reliance on information provided on
EarthWeb's online services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate
to provide full indemnification. Any imposition of liability or legal defense
expenses that are not covered by insurance or are in excess of insurance
coverage could have a material adverse effect on our business, results of
operations and financial condition. Consumers may sue us if any of the
products that we sell online are defective, fail to perform properly or injure
the user. To date, we have had very limited experience in the sale of products
online and the development of relationships with manufacturers or suppliers of
such products. Liability claims could require us to spend significant time and
money in litigation or to pay significant damages. As a result, any such
claims, whether or not successful, could seriously damage our reputation and
our business.
Misappropriation of our intellectual property could harm our reputation,
affect our competitive position and cost us money
We believe that our service marks and other proprietary rights are important
to our success and competitive position. We have registered some of our
service marks in the United States and abroad. We also limit access to
10
<PAGE>
and distribution of our proprietary information, as well as proprietary
information licensed from third parties. Our management cannot ensure that
these strategies will be adequate to deter misappropriation of our proprietary
information and material.
Despite our efforts to protect our intellectual property, we face the
following risks:
. non-recognition or inadequate protection of our proprietary rights in
various foreign countries;
. undetected misappropriation of our proprietary information or materials;
. development of similar technologies by competitors;
. unenforceability of the non-competition agreements entered into by our
employees; and
. infringement claims, even if not meritorious.
If any of these risks materialize, we could be required to pay significant
amounts to defend our rights and our managerial resources could be diverted.
Legal standards relating to the validity, enforceability and scope of
protection of various intellectual property rights in Internet-related
industries are uncertain and still evolving, and no assurance can be given as
to the future viability or value of any intellectual property rights of
EarthWeb or other companies within the IT industry. We generally enter into
confidentiality agreements with our employees, consultants, vendors and
customers, license agreements with third parties and generally seek to control
access to and distribution of our technology, documentation and other
proprietary information. EarthWeb pursues the registration of its service
marks in the United States and internationally. We have obtained United States
service mark registrations for EarthWeb and its related logo (the "Fang Logo
Design"), have been assigned Plugin Datamation and Datamation and have applied
for the registration of additional service marks, including developer.com.
Effective trademark, copyright and trade secret protection may not be
available in every country in which EarthWeb's online services are distributed
or made available through the Internet. The steps we have taken to protect our
proprietary rights may not be adequate, and third parties could infringe or
misappropriate our copyrights, service marks, trade dress and similar
proprietary rights.
We have licensed in the past, and expect to license in the future, various
elements of our distinctive trademarks, service marks, trade dress, trade
secrets and similar proprietary rights to third parties. While we attempt to
ensure that the quality of our several brands is maintained by these
licensees, no assurance can be given that these licensees will not take
actions that could materially and adversely affect the value of proprietary
rights or the reputation of our online services, either of which could have a
material adverse effect on business, results of operation and financial
condition. Also, we are aware that third parties have from time to time copied
significant portions of developer.com directory listings for use in
competitive Internet navigational tools and services, and we cannot guaranty
that the distinctive elements of developer.com can be protected under
copyright law.
We may be liable if third parties misappropriate our users' personal
information
If third parties were able to penetrate our network security or otherwise
misappropriate our users' personal information or credit card information, we
could be subject to liability. This liability could include claims for
unauthorized purchases with credit card information, impersonation or other
similar fraud claims. They could also include claims for other misuses of
personal information, including unauthorized marketing purposes. These claims
could result in litigation. In addition, the Federal Trade Commission and
state agencies have been investigating various Internet companies regarding
their use of personal information. We could incur additional expenses if new
regulations regarding the use of personal information are introduced or if our
privacy practices are investigated.
Our business is subject to U.S. and foreign government regulation of the
Internet and taxation
Congress and various state and local governments, as well as the European
Union, have recently passed legislation that regulates various aspects of the
Internet, including online content, copyright infringement, user
11
<PAGE>
privacy, taxation, access charges, liability for third-party activities and
jurisdiction. In addition, federal, state, local and foreign governmental
organizations are also considering legislative and regulatory proposals that
would regulate the Internet. Areas of potential regulation include libel,
pricing, quality of products and services and intellectual property ownership.
A number of proposals have been made at the state and local level that would
impose taxes on the sale of goods and services through the Internet. Such
proposals, if adopted, could substantially impair the growth of e-commerce and
could adversely affect our future results of operation and financial
condition.
A law imposing a three-year moratorium on new taxes on Internet-based
transactions has recently been enacted in the US. This moratorium relates to
new taxes on Internet access fees and state taxes on e-commerce that
discriminate against out-of-state Web sites. Sales or use taxes imposed by
those buying or selling products or services over the Internet will not be
affected by this moratorium. We have not yet been able to determine how we
will be affected by this moratorium. To the extent that the moratorium
provides a material benefit, its expiration after three years could have a
material adverse effect on our financial condition and results of operations.
Because these laws are relatively new and still in the process of being
implemented, it is not known how courts will interpret both existing and new
laws. Therefore, EarthWeb's management is uncertain as to how new laws or the
application of existing laws will affect our business. Increased regulation of
the Internet may reduce the use of the Internet, which could decrease the
demand for our services, increase our cost of doing business or otherwise have
a material adverse effect on our business, results of operations and financial
condition.
Risks Relating to the Offering
Our stock price, like that of other Internet companies, is volatile
EarthWeb's common stock began trading on the Nasdaq National Market on
November 11, 1998 and its market price has been highly volatile. The price
range for our common stock has ranged from a low of $25.38 to a high of $89
since it began trading on the Nasdaq National Market. In addition, the overall
market for the equity securities issued by Internet-related companies has been
volatile. This volatility may continue. Factors that may materially adversely
affect the market price of our common stock include:
. variations in our financial results and earnings;
. failure to meet or exceed estimates by securities analysts;
. fluctuations in the stock prices of our competitors;
. any loss of key management;
. adverse regulatory actions or decisions;
. announcements of extraordinary events, including material litigation or
acquisitions or changes in pricing policies by us or our competitors;
. changes in the market for our online services; and
. general economic, political and market conditions.
We are controlled by a small number of investors
As of September 30, 1999, Warburg, Pincus Ventures L.P., Jack D. Hidary and
Murray Hidary (or their affiliates) owned 35.68% in the aggregate of the
outstanding shares of common stock and individually owned the percentage set
forth opposite their respective names below. Two of our directors are
affiliated with Warburg Pincus Ventures L.P. and both Jack Hidary and Murray
Hidary are directors and officers of EarthWeb.
<TABLE>
<S> <C>
Warburg, Pincus Ventures, L.P.................. 18.62%
Jack D. Hidary................................. 8.55%
Murray Hidary.................................. 8.50%
</TABLE>
12
<PAGE>
If the stockholders listed above choose to act or vote in concert, they will
have the power to influence the election of EarthWeb's directors, the
appointment of new management and the approval of any other action requiring
the approval of EarthWeb's stockholders, including any amendments to our
certificate of incorporation and mergers or sales of all of its assets. In
addition, without the consent of these stockholders, EarthWeb could be
prevented from entering into potentially beneficial transactions. Conversely,
third parties could be discouraged from making a tender offer or bid to
acquire EarthWeb at a price per share that is above the price at which the
common stock trades on the Nasdaq National Market.
Substantial sales of our common stock could adversely affect our stock price
In connection with our acquisitions of dice.com, MicroHouse and Codeguru, we
issued 577,778 shares of common stock to the former owners of dice.com, issued
50,856 shares of common stock and a note convertible into 126,475 shares of
common stock to the former shareholders of MicroHouse and issued 284,514
shares of common stock to the former owner of Codeguru. Of these shares,
152,740 have been sold by such shareholders and 635,215 are being offered and
sold under this prospectus. These shareholders have agreed to restrict their
sales of these shares of common stock to a limited number of shares per
quarter. Certain of these shares are currently held under escrow arrangements
and are not immediately resellable. However, in the event that all of these
shares available for sale in any quarter are all sold on one day, such sales
may have an adverse effect in the market price of our common stock.
Our charter documents could make it more difficult for a third party to
acquire us
Various provisions of our certificate of incorporation and by-laws are
designed to discourage or prevent a third party from acquiring control of
EarthWeb. Our by-laws include restrictions on who may call a special meeting
of stockholders, and either a majority of the board of directors or the
holders of 66.66% of the outstanding capital stock of EarthWeb, which are
entitled to vote in the elections of the board of directors, must approve all
amendments to EarthWeb's by-laws.
EarthWeb's certificate of incorporation authorizes the board of directors to
issue up to 2,000,000 shares of "blank check" preferred stock. The board of
directors will have the authority without action by EarthWeb's stockholders to
fix the rights, privileges and preferences of, and to issue shares of this
preferred stock. In addition, EarthWeb's certificate of incorporation provides
that the board of directors will be divided into three classes with the
directors serving staggered three-year terms. Only the holders of 66.66% of
the outstanding capital stock of EarthWeb that are entitled to vote in the
elections of the board of directors can amend this provision.
13
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of these shares by
selling stockholders. See "Selling Stockholders" for a list of those persons
and entities receiving proceeds from sales of these shares. We are registering
these shares to satisfy various obligations we have to the selling
stockholders.
SECURITIES COVERED BY THIS PROSPECTUS
Certain shares of common stock of EarthWeb covered by this prospectus are
available for use in connection with acquisitions of other businesses,
properties or securities in business combination transactions, which may
relate to businesses similar or dissimilar to our services and other
operations. The consideration offered by EarthWeb in such acquisitions, in
addition to any shares of common stock offered by this prospectus, may include
cash, debt or other securities, which may be convertible into shares of common
stock of EarthWeb covered by this prospectus, or assumption by EarthWeb of
liabilities of the business being acquired, or a combination. The terms of
acquisitions are typically determined by negotiations between EarthWeb and the
owners of the businesses, properties or securities, including newly issued
securities, to be acquired, with our taking into account the quality of
management, the past and potential earning power and growth of the businesses,
properties or securities to be acquired, and other relevant factors. Shares of
common stock issued to the owners of the businesses, properties or securities
to be acquired normally are valued at a price reasonably related to the market
value of the common stock either at the time the terms of the acquisition are
tentatively agreed upon or at or about the time or times of delivery of the
shares.
With our consent, this prospectus may also be used by persons who have
received or will receive from us common stock covered by this prospectus or by
prospectuses under other registration statements in connection with
acquisitions and who may wish to sell such stock under circumstances requiring
or making desirable its use. See "Selling Stockholders" for a list of those
persons who are using this prospectus to sell their shares of common stock.
Our consent to such use may be conditioned upon such persons' agreeing not to
offer more than a specified number of shares following amendments to this
prospectus, which we may agree to use our best efforts to prepare and file at
certain intervals. EarthWeb may require that any such offering be affected in
an organized manner through securities dealers. Sales by means of this
prospectus may be made from time to time privately at prices to be
individually negotiated with the purchasers, or publicly through transactions
on the Nasdaq National Market, which may involve crosses and block
transactions, or in the over-the-counter market, at prices reasonably related
to market prices at the time of sale or at negotiated prices. Broker-dealers
participating in such transactions may act as agent or as principal and, when
acting as agent, may receive commissions from the purchasers as well as from
the sellers, if also acting as agent for the purchasers. EarthWeb may
indemnify any broker-dealer participating in such transactions against certain
liabilities, including liabilities under the 1933 Act. Profits, commissions
and discounts on sales by persons who may be deemed to be underwriters within
the meaning of the 1933 Act may be deemed underwriting compensation under that
Act.
Stockholders may also offer shares of stock issued in past and future
acquisitions by means of prospectuses under other available registration
statements or pursuant to exemptions from the registration requirements of the
1933 Act, including sales which meet the requirements of Rule 145(d) under
that Act, and stockholders should seek the advice of their own counsel with
respect to the legal requirements for such sales.
See "Selling Stockholders" for the identity of any persons who have received
stock in connection with acquisitions by EarthWeb and with respect to whom we
have consented to the use of this prospectus in connection with sales of such
stock.
14
<PAGE>
SELLING STOCKHOLDERS
492,778 shares that are being offered and sold under this prospectus were
originally issued by EarthWeb in connection with EarthWeb's acquisition of D&L
Online, Inc., in February 1999. 14,674 shares that are being offered and sold
under this prospectus were originally issued by EarthWeb in connection with
EarthWeb's acquisition of MicroHouse International Inc. in March 1999. 127,763
shares of common stock that are being offered and sold under this prospectus
were originally issued by EarthWeb in connection with its acquisition of the
website Codeguru.com in August 1999.
The selling stockholders and holders listed in any supplement to this
prospectus, and any transferors, pledgees, donees or successors to these
persons, may from time to time offer and sell, pursuant to this prospectus,
any and all of these shares. Any supplement to this prospectus may contain
certain information about the selling stockholders and the aggregate principal
amount of the shares beneficially owned by each selling stockholder that they
are offering. Such information will be obtained from the selling stockholders.
Except for Lloyd Linn, who is a Vice President of EarthWeb and President of
EW Career Solutions, Inc., none of the selling stockholders currently has any
position, office or other material relationship with the Company or its
affiliates. Because the selling stockholders may offer all or some portion of
their shares, no estimate can currently be given as to the number of shares
that will be held by any selling stockholder upon termination of such sales.
In addition, selling stockholders may have disposed of, or may dispose of, all
or a portion of their shares in transactions exempt from the requirements of
the Securities Act of 1933.
15
<PAGE>
PLAN OF DISTRIBUTION
In February 1999, EarthWeb issued 527,510 shares of common stock to Lloyd
Linn and Diane Rickert in connection with EarthWeb's acquisition of dice.com.
In March, 1999 EarthWeb issued 22,182 shares of common stock to Steve
Anderson, Doug Anderson, Robert Anderson and Ascent Partners, Inc. in
connection with EarthWeb's acquisition of MicroHouse International Inc. We
agreed to register these shares under the Securities Act for resale to the
public. Under the registration rights agreements between EarthWeb and the
selling stockholders, we must use commercially reasonable efforts to cause the
registration statement, or a replacement, to be continuously effective under
the Securities Act until the earlier of (1) two years from the original
effective date of the registration statement of which this prospectus forms a
part or (2) such time as the selling stockholders have sold all shares, or a
replacement prospectus. In August 1999, EarthWeb issued 284,514 shares of
common stock to Zafir Anjum in connection with the acquisition of
substantially all of the assets of the website Codeguru.com, of which 238,263
registered shares are included in the Registration Statement of which this
Prospectus is a part and may be offered and sold from time to time by Mr.
Anjum. 212,045 shares of common stock covered by this prospectus may be
offered and issued from time to time in connection with the acquisition of
other businesses, properties or securities in business combination
transactions in accordance with Rule 415 (a)(1)(viii) of Regulation C under
the Securities Act.
The sale of all or a portion of these shares of common stock by the selling
stockholders may be effected from time to time at prevailing market prices at
the time of such sales, at prices related to such prevailing prices, at fixed
prices that may be changed or at negotiated prices. The selling stockholders
may effect such transactions by selling directly to purchasers in negotiated
transactions, to dealers acting as principals or through one or more brokers,
or any combination of these methods of sale. In addition, shares may be
transferred in connection with the settlement of call options, short sales or
similar transactions that may be effected by the selling stockholders. Dealers
or brokers may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders. The selling stockholders and any
brokers or dealers that participate in the distribution may under certain
circumstances be "underwriters" within the meaning of the Securities Act, and
any commissions received by such brokers or dealers and any profits realized
on the resale of shares by them may be underwriting discounts and commissions
under the Securities Act. EarthWeb and the selling stockholders may agree to
indemnify such brokers or dealers against certain liabilities, including
liabilities under the Securities Act.
To the extent required under the Securities Act or the rules of the
Securities and Exchange Commission, a supplemental prospectus will be filed
disclosing:
. the name of any such brokers or dealers,
. the number of shares involved,
. the price at which such shares are to be sold,
. the commissions paid or discounts or concessions allowed to such brokers
or dealers, where applicable,
. that such brokers or dealers did not conduct any investigation to verify
the information set out in this prospectus and
. other facts material to the transaction.
We can give no assurance that any of the selling stockholders will sell any
or all of these shares of common stock.
EarthWeb has agreed, among other things, to bear all expenses other than
underwriting discounts and selling commissions but including reasonable fees
and disbursements of one firm or counsel designated to act as counsel for the
selling stockholders, in connection with the registration and sale of these
shares. EarthWeb will not receive any of the proceeds from the offering of
these shares.
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LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for
EarthWeb by Morrison & Foerster LLP, New York, New York.
EXPERTS
The balance sheets of EarthWeb Inc. as of December 31, 1998 and 1997 and the
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1998, the balance sheets of
D&L Online, Inc. as of December 31, 1998 and 1997 and the statements of
earnings, stockholders' equity and cash flows for the two years ended, and the
balance sheet of MicroHouse as of December 31, 1998 and the statement of
operations and comprehensive loss, stockholders' deficit and cash flows for
the year ended incorporated by reference in this prospectus and in the
registration statement have been included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
EarthWeb has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1, as amended for the common stock being
offered by this prospectus. On November 11, 1999, EarthWeb became eligible to
use the Form S-3 Registration Statement, which allows us to incorporate by
reference (as described below) information filed with the Securities and
Exchange Commission and we filed an amendment on Form S-3 to our existing
Registration Statement on November 12, 1999. This prospectus does not contain
all of the information set forth in the registration statement and the
exhibits and schedules thereto. For further information with respect to
EarthWeb and the shares of common stock offered hereby, reference is made to
the registration statement, including the exhibits and schedules thereto.
Statements contained in this prospectus as to the contents of any contract or
other document referred to in this prospectus are not necessarily complete
and, where this contract is an exhibit to the registration statement, each
statement is qualified in all respects by the provisions of this exhibit.
Copies of the registration statement, including the exhibits and schedules
thereto, may be examined without charge at the Public Reference Section of the
Securities and Exchange Commission, 450 Fifth Street, N.W. Room 1024,
Washington, D.C. 20549, and the Securities and Exchange Commission's Regional
Offices located at 500 West Madison Street, Suite 1400, Chicago, IL 60661, and
7 World Trade Center, 13th Floor, New York, NY 10048 or on the Internet at
http://www.sec.gov. Copies of all or a portion of the registration statement
can be obtained from the Public Reference Section of the Securities and
Exchange Commission upon payment of prescribed fees. Please call the SEC at
800-SEC-0330 for further information about the public reference room.
EarthWeb is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, under which it files periodic
reports, proxy statements and other information with the Securities and
Exchange Commission. These reports, proxy and information statements and other
information may also be inspected at the offices of Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006.
The Securities and Exchange Commission allows us to "incorporate by
reference" into this Prospectus the information we file with it. This means
that we can disclose important business, financial and other information in
our Securities and Exchange Commission filings by referring you to the
documents containing this information. All information incorporated by
reference is part of this Prospectus, unless and until that information is
updated and superseded by the information contained in this Prospectus or any
information incorporated later. Any information that we subsequently file with
the Securities and Exchange Commission that is incorporated by reference will
automatically update and supersede any previous information that is part of
this Prospectus.
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<PAGE>
We incorporate by reference our documents listed below and any future
filings we make with the Securities and Exchange Commission under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended,
until the termination of this offering:
1. Annual Report on Form 10-K, filed March 19, 1999, as amended by Annual
Report on Form 10-K/A, filed April 16, 1999, for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q, filed May 17, 1999, for the fiscal
quarter ended March 31, 1999;
3. Quarterly Report on Form 10-Q, filed August 13, 1999, for the fiscal
quarter ended June 30, 1999;
4. Quarterly Report on Form 10-Q, filed November 12, 1999, for the fiscal
quarter ended September 30, 1999;
5. Current Report on Form 8-K filed February 16, 1999, as amended by
Current Report on Form 8-K/A, filed April 15, 1999;
6. Current Report on Form 8-K filed March 26, 1999, as amended by Current
Report on Form 8-K/A, filed May 26, 1999;
7. The description of our common stock contained in our Registration
Statement on Form S-1 filed August 6, 1999, as amended.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
EarthWeb Inc.
3 Park Avenue
New York, NY 10016
Attention: Investor Relations
(212) 725-6550
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be paid by the registrant,
other than underwriting discount, in connection with the issuance and
distribution of the Common Stock hereunder.
<TABLE>
<CAPTION>
Item Amount
---- --------
<S> <C>
SEC registration fee............................................... $ 10,946
Nasdaq National Market Listing Fees................................ 9,006
*Accounting fees and expenses...................................... 10,000
*Legal fees and expenses........................................... 40,000
*Printing costs.................................................... 80,000
*Miscellaneous..................................................... 10,048
--------
*Total........................................................... $160,000
========
</TABLE>
* Estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 ("Section 145") of the General Corporation Law of the State of
Delaware (the "DGCL") provides that directors and officers of Delaware
corporations may, under certain circumstances, be indemnified against expenses
(including attorneys' fees) and other liabilities actually and reasonably
incurred by them as a result of any suit brought against them in their
capacity as a director or officer, if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they
had no reasonable cause to believe their conduct was unlawful. Section 145
also provides that directors and officers may also be indemnified against
expenses (including attorneys' fees) incurred by them in connection with a
derivative suit if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification may be made without court approval if such
person was adjudged liable to the corporation.
EarthWeb has implemented such indemnification provisions in its Amended and
Restated Certificate of Incorporation which provides that officers and
directors shall be entitled to be indemnified by EarthWeb to the fullest
extent permitted by law against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred in connection with
any action, suit or proceeding by reason of the fact that he or she is or was
an officer or director of the Company.
The above discussion of EarthWeb's Amended and Restated Certificate of
Incorporation and Sections 102(b)(7) and 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Amended and Restated
Certificate of Incorporation and statutes.
EarthWeb has agreed to indemnify the Underwriters and their controlling
persons, and the Underwriters have agreed to indemnify EarthWeb and its
controlling persons, including directors and executive officers of EarthWeb,
against certain liabilities, including liabilities under the Securities Act.
Reference is made to the Underwriting Agreement filed as part of the Exhibits
hereto.
For information regard EarthWeb's undertaking to submit to adjudication the
issue of indemnification for violation of the securities laws, see Item 17
hereof.
II-1
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
*2.1 Agreement and Plan of Merger among EarthWeb Inc., EW Acquisition
Corporation, D&L Online, Inc., Lloyd Linn, and Diane Rickert. (1)
2.2 Securities Purchase Agreement among the Registrant, MicroHouse
International, Inc. and Steve Anderson, Doug Anderson, Robert Anderson
and Ascent Partners. (2)
4.1 Amended and Restated Shareholders Agreement dated as of June 24, 1997
among the Registrant, EarthWeb LLC, GNP, Warburg, Jack D. Hidary,
Murray Hidary and Nova Spivack. (3)
4.2 Specimen Common Stock Certificate of Registrant. (3)
4.3 Registration Rights Agreement dated as of October 25, 1996 by and
between the Registrant, Warburg, EarthWeb LLC and GNP. (3)
4.4 Registration Rights Agreement between EarthWeb Inc., Lloyd Linn and
Diane Rickert. (1)
4.5 Registration Rights Agreement dated as of March 19, 1999 between
EarthWeb Inc., Steve Anderson, Doug Anderson, Robert Anderson and
Ascent Partners. (2)
4.6 Zero Coupon Convertible Promissory Note dated as of March 19, 1999, of
Registrant in favor of Steven Anderson. (2)
4.7 Zero Coupon Convertible Promissory Note dated as of March 19, 1999, of
Registrant in favor of Doug Anderson. (2)
4.8 Zero Coupon Convertible Promissory Note dated as of March 19, 1999, of
Registrant in favor of Robert Anderson. (2)
+ 5 Opinion of Morrison & Foerster LLP
+ 21 Subsidiaries
23.1 Consents of PricewaterhouseCoopers LLP
23.2 Consent of Morrison & Foerster LLP (set forth in Exhibit 5)
+ 23.3 Consent of International Data Corporation
+ 23.4 Consent of Simba Information, Inc.
+ 24 Powers of Attorney (set forth in the signature page hereto)
</TABLE>
- --------
* Confidential treatment has been received with respect to certain portions
of this Exhibit. Omitted portions have been filed separately with the
Commission.
+ Previously filed.
(1) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated February 2, 1999.
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated March 2, 1999.
(3) Incorporated by reference to Registrant's Registration Statement on Form
S-1 (SEC File No. 333-60837).
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes the following:
(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;
(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
II-2
<PAGE>
the aggregate, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(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.
(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 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.
(4) Insofar as indemnification 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, EarthWeb 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,
EarthWeb 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.
(b) The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
November 12, 1999.
EarthWeb Inc.
/s/ Jack D. Hidary
By: _________________________________
Jack D. Hidary
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Name and Signature Title
------------------ -----
<S> <C>
*/s/ Jack D. Hidary President, Chief Executive
________________________________ Officer and Director
Jack D. Hidary
*/s/ Murray Hidary Executive Vice President,
________________________________ Secretary, Treasurer and
Murray Hidary Director
*/s/ Peter Derow Director
________________________________
Peter Derow
*/s/ Henry Kressel Director
________________________________
Henry Kressel
*/s/ Cary Davis Director
________________________________
Cary Davis
*/s/ Irene Math Senior Vice President, Finance
________________________________ (Principal Financial and
Irene Math Accounting Officer)
*/s/ Jack D. Hidary
By: ____________________________
Jack D. Hidary
Attorney-in-fact
November 12, 1999
</TABLE>
S-1
<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 (1) our report dated January 21, 1999, relating to the
financial statement audits and financial statement schedules, which appears in
EarthWeb Inc.'s Annual Report on Form 10K for the year ended December 31, 1998
(2) our report dated January 22, 1999 relating to the financial statements of
D&L Online Inc., which appears in the Current Report on Form 8-K/A dated April
15, 1999 and (3) our report dated April 23, 1999 relating to the financial
statements of MicroHouse, International Inc., which appears in the Current
Report on Form 8-K/A dated May 26, 1999. We also consent to the reference to us
under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
------------------------------
New York, New York
November 11, 1999
