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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
SEPTEMBER 8, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AUDIBLE, INC.
(Exact Name of Registrant as Specified in Its Charter)
65 WILLOWBROOK BOULEVARD
WAYNE, NEW JERSEY
07470-7056
(Address of Principal Executive Offices)
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<S> <C> <C>
DELAWARE 7375 22-3407945
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
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THOMAS G. BAXTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AUDIBLE, INC.
65 WILLOWBROOK BOULEVARD
WAYNE, NJ 07470
(973) 837-2700
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code of Agent for Service)
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COPIES TO:
NANCY A. SPANGLER, ESQUIRE
PIPER MARBURY RUDNICK & WOLFE LLP
1850 CENTENNIAL PARK DRIVE
RESTON, VA 20191
(703) 391-7100
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
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, as amended (the "Securities Act") 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. [_]
CALCULATION OF REGISTRATION FEE
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PROPOSED
AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE REGISTRATION FEE
================================================== ============ ==================== ================
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Common stock, par value $.01 per share 1,509,813 $2,830,900 $747
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(1) Pursuant to Rule 457(c), the proposed maximum aggregate offering price and
registration fee are based upon the closing price of $1.875 per share of
Audible, Inc.'s common stock on September 1, 2000, as reported on the Nasdaq
National Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
SEPTEMBER 8, 2000
1,509,813 SHARES
AUDIBLE, INC.
COMMON STOCK
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This Prospectus relates to the public offering, which is not being
underwritten, from time to time of up to 1,509,813 shares of common stock, par
value $.01 per share, of Audible, Inc., a Delaware corporation, by two
stockholders. See "Selling Stockholders" on page 10.
Audible's common stock is traded on the Nasdaq National Market under the
symbol "ADBL" On September 1, 2000, the reported closing price of Audible's
common stock on the Nasdaq National Market was $1.875 per share.
BEGINNING ON PAGE 4, AUDIBLE HAS LISTED SEVERAL "RISK FACTORS" WHICH YOU
SHOULD CONSIDER. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE YOU MAKE
YOUR INVESTMENT DECISION.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
NEITHER THE SEC 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.
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WHERE YOU CAN FIND MORE INFORMATION
Audible is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Securities Exchange Act"), and in accordance with the
Securities Exchange Act, files reports, proxy statements and other information
with the SEC. You may obtain such reports, proxy statements and other
information from the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330, or from the
SEC's Internet web site at http:\www.sec.gov.
This Prospectus is a part of a registration statement that Audible filed
with the SEC. The registration statement contains more information than this
Prospectus, including certain exhibits. You can get a copy of the registration
statement from the SEC at the address listed above or from its web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows Audible to "incorporate" into this Prospectus information
Audible periodically files with the SEC in other documents. This means that we
can disclose important information to you by referring to other documents that
contain that information. The information may include documents filed after the
date of this Prospectus which update and supersede the information you read in
this Prospectus. We incorporate by reference the documents listed below, and all
future documents filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act until we terminate the offering of these securities.
SEC File No.: 000-26529 Period/Filing Date
------------------------------ ------------------
Annual Report on Form 10-K/A Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31 and June 30, 2000
Definitive Proxy Statement Filed on April 30, 2000
You may request a copy of these documents, at no cost, by writing to:
Audible, Inc.
65 Willowbrook Boulevard
Wayne, N.J. 07470
(973) 837-2700
You should rely on the information incorporated by reference or provided in
this prospectus or the prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or the prospectus supplement is accurate
as of any date other than the date on the front of the document.
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OUR BUSINESS
We are the leading provider of premium spoken audio content, such as audio
versions of books and newspapers and radio programs that is delivered over the
Internet and can be streamed and played back on personal computers and hand-held
digital audio players. The Audible service allows consumers to purchase and
download our content from our Web site (www.audible.com (TM)), store it in
digital files and play it back on personal computers and portable digital audio
players. More than 24,000 hours of audio content from more than 160 leading
audiobook publishers, broadcasters, magazine and newspaper publishers, business
information services, authors and educational and cultural institutions, is
currently available on our Web site.
Several manufacturers have agreed to support and promote the playback of
our content on their hand-held portable digital audio players. As defined under
a Co-branding, Marketing and Distribution agreement, we will be the exclusive
provider of digital spoken audio to Amazon.com. In addition to Amazon.com, our
key partners include AT&T Corp., Compaq Computer Corporation, Microsoft
Corporation, Real Networks, Inc., Texas Instruments and VoiceAge Corporation.
AudibleReady(TM) devices include numerous Pocket PC personal digital assistants
powered by the Microsoft(R) Windows(R) Operating System that are manufactured by
Casio Inc., Compaq and the Hewlett-Packard Company, as well as portable digital
audio devices manufactured by S3 Incorporated's Rio Audio Group, Sanyo (SEC.
Ltd.), Panasonic, Royal Philips Electronics, and Toshiba. Additionally, we are
strategically aligned with Random House, Inc. to pioneer Random House Audible,
the first-ever publishing imprint, to produce spoken word titles specifically
suited for digital distribution.
The market for the Audible service results from the increasing usage of the
Internet and the introduction of hand-held electronic devices that have digital
audio capabilities. In contrast to traditional radio broadcasts, the Audible
service offers customers access to content of their choice and the ability to
listen to what they want, when and where they want - whether commuting,
exercising, relaxing or sitting at their personal computers. Unlike traditional
and online bookstores, which are subject to physical inventory constraints and
shipping delays, we provide a selection that is readily available in digital
format that can be quickly delivered over the Internet directly to our
customers.
We help publishers, producers, authors, device manufacturers and our Web
site affiliates create incremental sources of revenue. We provide new sources of
revenue for publishers of newspapers, magazines, journals, newsletters,
professional publications and business information and producers of radio
broadcasts. In addition, our service provides companies that distribute or
promote our service and manufacturers of hand-held audio enabled digital players
with a wide selection of content to offer to their customers.
Audible was incorporated in Delaware in November 1995. Our principal
executive offices are located at 65 Willowbrook Boulevard, Wayne, N.J. 07470,
and our telephone number is (973) 837-2700.
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RISK FACTORS.
We have a limited operating history with which you can evaluate our business and
our future prospects.
Our limited operating history and small number of customers makes predicting
our future operating results difficult. From the time we were incorporated in
November 1995 until September 1997, we generated no revenue while we developed
our secure delivery system and a prototype audio playback device, created our
audible.com Web site and established relationships with providers of audio
content. Although we began earning limited revenue in October 1997, we have
continued to focus our resources on refining and enhancing our Web site and our
playback and management software and in expanding our content selections and
developing relationships with manufacturers of hand-held electronics devices. We
have limited history of selling content to users of hand-held electronic devices
manufactured by other parties which only recently became AudibleReady. We expect
to spend significant resources on expanding our service and promoting our brand
name.
We have limited revenue, we have a history of losses and we may not be
profitable in the future.
Our limited revenue and history of losses makes it uncertain when or if we
will become profitable. Our failure to achieve profitability within the time
frame expected by investors may adversely affect our business and the market
price of our common stock. We had total net revenue of $844,000 and $1,180,000
for the six months ended June 30, 1999 and 2000 respectively. This limited
revenue makes it difficult to predict our future quarterly results and our
revenue and operating results can vary significantly quarter to quarter. Our
limited revenue will make relatively minor fluctuations in revenue much more
significant on a percentage basis. Our revenue is dependent on the availability
and sales of AudibleReady devices by third-party manufacturers. We had content
and services revenue of $150,000 and $802,000 for the six months ended June 30,
1999 and 2000, respectively. We had other revenue of $513,000 and $378,000 for
the six months ended June 30, 1999 and 2000, respectively. During the six months
ended June 30, 1999, $450,000 of the other revenue is considered nonrecurring.
We had operating expenses of $4.7 million and $19.4 million for the six months
ended June 30, 1999 and 2000, respectively. Because most of our expenses, such
as employee compensation and rent, are relatively fixed in the short term, we
may be unable to adjust our spending to compensate for unexpected revenue
shortfalls. Accordingly, any significant shortfall in relation to our
expectations could cause significant declines in our operating results. This
would likely affect the market price of our common stock in a manner which may
be unrelated to our long-term operating performance. As of June 30, 2000, we
have incurred net operating losses of approximately $50.5 million since
inception, and we expect to continue to incur significant losses for the
foreseeable future.
The market for our service is uncertain and consumers may not be willing to use
the Internet to purchase spoken audio content.
Downloading of audio content from the Internet is a relatively new method of
distribution and its growth and market acceptance is highly uncertain. Our
success will depend in large part on consumer willingness to purchase and
download spoken audio content over the Internet. Purchasing this content over
the Internet involves changing purchasing habits, and if consumers are not
willing to purchase and download this content over the Internet, our revenue
will be limited and our business will be materially adversely affected. We
believe that acceptance of this method of distribution may be subject to network
capacity constraints, hardware limitations, company computer security policies,
the ability to change user habits and the quality of the audio content
delivered.
We may not be able to license or produce sufficiently compelling audio content
to attract and retain customers and grow our revenue.
If we are unable to obtain licenses from the creators and publishers of
content to have that content available on our Web site on terms acceptable to us
or if a significant number of content providers terminate their agreements with
us, we would have less content available for our customers, which would limit
our revenue growth and materially adversely affect our financial performance.
Our future success depends upon our ability to accumulate and deliver premium
spoken audio content over the Internet. Although we currently collaborate with
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the publishers of periodicals and other branded print materials to convert their
written material into original spoken audio content, the majority of our content
originates from producers of audiobooks, radio broadcasts, conferences, lectures
and other forms of spoken audio content. Although many of our agreements with
content providers are for initial terms of one to three years, our content
providers may choose not to renew their agreements with us or may terminate
their agreements early if we do not fulfill our contractual obligations. We
cannot be certain that our content providers will enter into new agreements with
us on the same or similar terms as those currently in effect or that additional
content providers will enter into agreements on terms acceptable to us.
Our relationship with Amazon could divert resources from other potentially more
profitable relationships.
Our Agreement with Amazon restricts our ability to freely compete with
Amazon and commits us to future expenditures regardless of the amount of revenue
or number of customers generated throughout the relationship. These restrictions
and commitments could divert resources from other potentially more profitable
relationships which would impair our ability to generate new customers and grow
revenue.
Under this Agreement:
. we may not sell, from our own web site, any products or services
offered by Amazon, other than spoken word audio products and services;
. we may not sell spoken word audio products and services through certain
web sites identified as Amazon competitors;
. we have paid $20 million in advance royalty and other fees for sales of
spoken word audio products and services for the first two years of the
agreement, and have committed to an additional $10 million for the third year,
regardless of whether any revenue or sales are generated through the agreement;
and
. we may face competition from competitors that could provide, through
the Amazon web site, similar products and services to those that we offer.
Manufacturers of electronic devices may not manufacture, make available or sell
a sufficient number of products suitable for our service, which would limit our
revenue growth.
If manufacturers of electronic devices do not manufacture, make available or
sell a sufficient number of devices promoted as AudibleReady, or if these
devices do not achieve sufficient market acceptance, we will not be able to grow
revenue and our business will be materially adversely affected. Manufacturers of
electronic devices have experienced delays in their delivery schedule of their
electronic devices due to parts shortages and other factors. Although the
content we sell can be played on personal computers, we believe that a key to
our future success is the ability to playback this content on hand-held
electronic devices. Because we have discontinued to manufacture our own
AudibleReady devices, we depend on manufacturers, such as Philips, Casio,
Everex, Compaq and Diamond Multimedia, to develop and sell their own products
and promote them as AudibleReady.
We must establish, maintain and strengthen our brand names, trademarks and
service marks in order to acquire customers and generate revenue.
If we fail to promote and maintain our brand names, our business, operating
results and financial condition could be materially adversely affected. We
believe that building awareness of the " Audible," " audible.com" and
"AudibleReady" brand names is critical to achieving widespread acceptance of our
service by customers, content providers, device manufacturers and marketing and
distribution companies with which we have business relationships. To promote our
brands, we will need to substantially increase our marketing expenditures. We
have applied for trademark and service mark registrations of our brand names in
the United States. The application for "audible.com" has been allowed and the
applications for "Audible" and "AudibleReady" have received adverse actions by
the Patent and Trademark Office. We are challenging the adverse actions by
filing a request for
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reconsideration and a notice of appeal with the Patent and Trademark Office.
There can be no assurance that any of our brand names will be registered as
trademarks or that we will effectively protect the use of these names.
Increasing availability of digital audio technologies may increase competition
and reduce our gross margins, market share and profitability.
If we do not continue to enhance our service and adapt to new technology,
we will not be able to compete with new and existing distributors of spoken
audio, we will lose market share and our business will be materially adversely
effected. The market for the Audible service is new, rapidly evolving and
intensely competitive. We expect competition to intensify as advances in and
standardization of digital audio distribution, download, security, management
and playback technologies reduce the cost of starting a digital audio delivery
system or a service that gathers audio content. To remain competitive, we must
continue to either license or internally develop technology that will enhance
the features of the Audible service, our software that manages the downloading
and playback of audio content, our ability to compress audio files for
downloading and storage and our download, security and playback technologies.
Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any of which could materially adversely affect
our financial performance.
Our industry is highly competitive and we cannot assure you that we will be able
to compete effectively.
We face competition in all aspects of our business and we cannot assure you
that we will be able to compete effectively. We compete for consumers of audio
content with other Internet-based audio distributors and distributors of audio
on cassette tape or compact disc. We compete with others for relationships with
manufacturers of electronic devices with audio playback capabilities. The
business of providing content over the Internet is experiencing rapid growth and
is characterized by rapid technological changes, changes in consumer habits and
preferences and the emergence of new and established companies. We compete with
(1) traditional and online retail stores, catalogs, clubs and libraries that
sell, rent or loan audiobooks on cassette tape or compact disc, such as
AudioBook Club, Borders, Barnes & Noble and Amazon.com, (2) Web sites that offer
streaming access to spoken audio content using tools such as the RealPlayer or
Windows Media Player, such as Broadcast.com, (3) other companies offering
services similar to ours, such as Audiohighway.com and Command Audio and (4) on-
line and Internet portal companies such as America Online, Inc., Yahoo! Inc.,
Excite, Inc., Lycos Corporation, Infoseek Corporation and Microsoft Network,
with the potential to offer audio content. Many of these companies have
financial, technological, promotional and other resources that are much greater
than those available to us and could use or adapt their current technology, or
could purchase technology, to provide a service directly competitive with the
Audible service.
Capacity constraints and failures, delays or overloads could interrupt our
service and reduce the attractiveness of our service to existing or potential
customers.
Any capacity constraints or sustained failure or delay in using our Web
site could reduce the attractiveness of the Audible service to consumers, which
would materially adversely affect our financial performance. Our success depends
on our ability to electronically distribute spoken audio content through our Web
site to a large number of customers efficiently and with few interruptions or
delays. Accordingly, the performance, reliability and availability of our Web
site, our transaction processing systems and our network infrastructure are
critical to our operating results. We have experienced periodic systems
interruptions including planned system maintenance, hardware and software
failures triggered by high traffic levels, and network failure in the Internet
and our Internet service providers. We believe the complexities of our software
and hardware and the potential instability of the Internet due to rapid user
growth mean that periodic interruptions to our service are likely to continue. A
significant increase in visitors to our Web site or simultaneous download
requests could strain the capacity of our Web site, software, hardware and
telecommunications systems, which could lead to slower response times or system
failures. These interruptions may make it difficult to download audio content
from our Web site in a timely manner.
We could be liable for substantial damages if there is unauthorized duplication
of the content we sell.
We believe that we are able to license premium audio content in part
because our service has been designed
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to reduce the risk of unauthorized duplication and playback of audio files. If
these security measures fail, our content may be vulnerable to unauthorized
duplication or playback. If others duplicate the content we provide without
authorization, content providers may terminate their agreements with us and hold
us liable for substantial damages. Although we maintain general liability
insurance, including insurance for errors or omissions, we cannot assure you
that the amount of coverage will be adequate to compensate us for these losses.
Security breaches might also discourage other content providers from entering
into agreements with us. We may be required to expend substantial money and
other resources to protect against the threat of security breaches or to
alleviate problems caused by these breaches.
We do not have a disaster recovery plan or back-up systems, and a disaster could
severely damage our operations.
If our computer systems are damaged or interrupted by a disaster for an
extended period of time, our business, results of operations and financial
condition would be materially adversely affected. We do not have a disaster
recovery plan in effect and do not have fully redundant systems for the Audible
service at an alternate site. Our operations depend upon our ability to maintain
and protect our computer systems, all of which are located in our headquarters
and at two third party offsite hosting facilities. Although we maintain
insurance against general business interruptions, we cannot assure you that the
amount of coverage will be adequate to compensate us for our losses.
Problems associated with the Internet could discourage use of Internet-based
services like ours.
If the Internet fails to develop or develops more slowly than we expect as
a commercial medium, our business may also grow more slowly than we anticipate,
if at all. Our success will depend in large part on increasing use of the
Internet. There are critical issues concerning the commercial use of the
Internet which we expect to affect the development of the market for the Audible
service, including:
. the secure transmission of customer credit card numbers and other
confidential information;
. the reliability and availability of Internet service providers;
. the cost of access to the Internet;
. the availability of sufficient network capacity; and
. the ability to download audio content through computer security
measures employed by businesses.
The loss of key employees could jeopardize our growth prospects.
The loss of the services of any of our executive officers or other key
employees could materially adversely affect our business. Our future success
depends on the continued service and performance of our senior management and
other key personnel, particularly Thomas Baxter, our President and CEO, and
Donald R. Katz, our Founder and Chairman of the Board. We do not have employment
agreements with any of our executive officers or other key employees.
Our inability to hire new employees may hurt our growth prospects.
The failure to hire new personnel could damage our ability to grow and
expand our business. Our future success depends on our ability to attract, hire
and retain highly skilled technical, managerial, editorial, marketing and
customer service personnel, and competition for these individuals is intense. In
particular, we have experienced difficulty in hiring software and Web site
developers. Our failure to hire these technical employees could delay
improvements in, and enhancements to, the Audible service.
We have no experience in acquiring companies or technologies and any
acquisitions of this type may disrupt our business or distract our management,
due to difficulties in assimilating acquired personnel and
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operations.
We have no experience in acquiring businesses, technologies, services or
products. From time to time, we engage in discussions and negotiations with
companies regarding our acquiring or investing in such companies' businesses,
products, services or technologies. If we acquire or invest in another company,
we could have difficulty in assimilating that company's personnel, operations,
technology and software. In addition, the key personnel of the acquired company
may decide not to work for us. If we make other types of acquisitions, we could
have difficulty in integrating the acquired products, services or technologies
into our operations. These difficulties could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our results of operations. Furthermore, we may incur indebtedness or
issue equity securities to pay for any future acquisitions. The issuance of
equity securities would be dilutive to our existing stockholders. As of the date
of this prospectus, we have no agreement to enter into any material investment
or acquisition transaction.
We may not be able to protect our intellectual property.
If we fail to protect our intellectual property, we may be exposed to
expensive litigation or risk jeopardizing our competitive position. The steps we
have taken may be inadequate to protect our technology and other intellectual
property. Our competitors may learn or discover our trade secrets or may
independently develop technologies that are substantially equivalent or superior
to ours. We rely on a combination of patents, licenses, confidentiality
agreements and other contracts to establish and protect our technology and other
intellectual property rights. We have one patent and have filed eight patent
applications. We also rely on unpatented trade secrets and know-how to maintain
our competitive position. We may have to litigate to enforce our intellectual
property rights, to protect our trade secrets or to determine the validity and
scope of the proprietary rights of others. This litigation could result in
substantial costs and the diversion of our management and technical resources
which would harm our business.
Other companies may claim that we infringe their copyrights or patents.
If the Audible service violates the proprietary rights of others, we may be
required to redesign our software, and re-encode the Audible content, or seek to
obtain licenses from others to continue offering the Audible service without
substantial redesign and such efforts may not be successful. We do not conduct
comprehensive patent searches to determine whether our technology infringes
patents held by others. In addition, software development is inherently
uncertain in a rapidly evolving technological environment in which there may be
numerous patent applications pending, many of which are confidential when filed,
with regard to similar technologies. Any claim of infringement could cause us to
incur substantial costs defending against the claim, even if the claim is
invalid, and could distract our management from our business. A party making a
claim could secure a judgment that requires us to pay substantial damages. A
judgment could also include an injunction or other court order that could
prevent us from offering the Audible service. Any of these events could have a
material adverse effect on our business, operating results and financial
condition.
We could be sued for content that we distribute over the Internet.
A lawsuit based on the content we distribute could be expensive and
damaging to our business. Our service involves delivering spoken audio content
to our customers. As a distributor and publisher of content over the Internet,
we may be liable for copyright, trademark infringement, unlawful duplication,
negligence, defamation, indecency and other claims based on the nature and
content of the materials that we publish or distribute to customers. Although we
generally require that our content providers indemnify us for liability based on
their content and we carry general liability insurance, the indemnity and the
insurance may not cover claims of these types or may not be adequate to protect
us from the full amount of the liability. If we are found liable in excess of
the amount of indemnity or of our insurance coverage, we could be liable for
substantial damages and our reputation and business may suffer.
Future government regulations may increase our cost of doing business on the
Internet.
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Laws and regulations applicable to the Internet covering issues such as
user privacy, pricing and copyrights are becoming more prevalent. The adoption
or modification of laws or regulations relating to the Internet could force us
to modify the Audible service in ways that could adversely affect our business.
We may become subject to sales and other taxes for direct sales over the
Internet.
Increased tax burden could make our service too expensive to be
competitive. We do not currently collect sales or other similar taxes for
download of content into states other than in New Jersey and Texas.
Nevertheless, one or more local, state or foreign jurisdictions may require that
companies located in other states collect sales taxes when engaging in online
commerce in those states. If we open facilities in other states, our sales into
such states may be taxable. If one or more states or any foreign country
successfully asserts that we should collect sales or other taxes on the sale of
our content, the increased cost to our customers could discourage them from
purchasing our services, which would materially adversely affect our business.
Our contractual obligations, charter and by-laws could discourage an acquisition
of our company that would benefit our stockholders.
Provisions of our agreement with Microsoft and of our certificate of
incorporation and bylaws may make it more difficult for a third party to acquire
control of our company, even if a change in control would benefit our
stockholders. These provisions include:
. prior to discussing with anyone the sale of our company, we must
notify Microsoft and Microsoft has a right to negotiate exclusively
with us for 21 days to acquire our company. We are not obligated to
accept any offer from Microsoft. If we do not reach agreement during
this period, we may discuss with others the sale of our company;
. our board of directors, without stockholder approval, may issue
preferred stock on terms that they determine. This preferred stock
could be issued quickly with terms that delay or prevent the change in
control of our company or make removal of management more difficult.
Also, the issuance of preferred stock may cause the market price of
our common stock to decrease;
. our board of directors is "staggered" so that only a portion of its
members are elected each year;
. only our board of directors, our chairman of the board, our president
or stockholders holding a majority of our stock can call special
stockholder meetings; and
. special procedures which must be followed in order for stockholders to
present proposals at stockholder meetings.
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USE OF PROCEEDS
Audible will not receive any proceeds from the sale of the shares
hereunder.
SELLING STOCKHOLDERS
The following table sets forth the name of each of the Selling Stockholders
and the material relationships of the Selling Stockholders with Audible, the
number of Shares held by such Selling Stockholder, the Selling Stockholder's
percentage ownership of Audible's outstanding common stock and the number of
Shares being offered by such Selling Stockholder.
<TABLE>
<CAPTION>
Number of
Number of Percentage Shares
Name Shares Held Ownership Offered(1) Material Relationship with Audible
==== =========== ========= ========== ==================================
<S> <C> <C> <C> <C>
Amazon.com Commerce
Services, Inc. 1,340,033 5% 1,340,033 Party to a Co-Branding, Marketing and Distribution Agreement.
Random House
Ventures, LLC 169,780 * 169,780 Party to a Co-Publishing, Marketing and Distribution Agreement.
--------- ---------
Total 1,509,813 1,509,813
========= =========
</TABLE>
_________________________________________
(1) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration which
results in an increase in the number of our outstanding shares of common stock.
* Random House Ventures, LLC owns less than 1% of the common stock of the
Company.
PLAN OF DISTRIBUTION
We are registering an aggregate of 1,509,813 shares of common stock to
permit public secondary sales of the shares of common stock by the Selling
Stockholders, or any of them, from time to time after the date of this
Prospectus. We anticipate that the Selling Stockholders may sell all or a
portion of the common stock from time to time through the Nasdaq National Market
and may sell common stock to or through one or more broker-dealers at prices
prevailing on such Nasdaq National Market at the times of such sales. The
Selling Stockholders may also make private sales directly or through one or more
broker-dealers. Broker-dealers participating in such transactions may receive
compensation in the form of discounts, concessions or commissions (including,
without limitation, customary brokerage commissions) from the Selling
Stockholders effecting such sales. The Selling Stockholders and any broker-
dealers who act in connection with sales of common stock may be deemed to be
"underwriters" as that term is defined in the Securities Act, and any
commissions received by them and profit on any resale of the common stock might
be deemed to be underwriting discounts and commissions under the Securities Act.
In effecting sales, broker-dealers engaged by a Selling Stockholder may arrange
for other broker-dealers to participate.
The Selling Stockholders will pay all discounts and selling commissions (if
any), fees and expenses of counsel and other advisors to the Selling
Stockholders, or any of them, and any other expenses incurred in connection with
the registration and sale of the common stock, other than the registration fee
payable to the SEC hereunder, the listing fee to be paid for listing the shares
of common stock on the Nasdaq National Market, fees and expenses relating to the
registration or qualification of the shares of common stock pursuant to any
applicable
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state securities or "blue sky" laws and the fees and expenses of our counsel and
independent accountants, which will be paid by us.
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LEGAL MATTERS
Counsel for Audible, Piper Marbury Rudnick & Wolfe LLP, Reston, Virginia,
has rendered an opinion to the effect that the Audible Common Stock offered
hereby is duly and validly issued, fully paid and nonassessable.
EXPERTS
The financial statements of Audible, Inc. as of December 31, 1999 and 1998,
and for each of the years in the three-year period ended December 31, 1999, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. Our
Certificate of Incorporation and Bylaws include provisions to require us to
indemnify our directors and officers to the fullest extent permitted by Section
145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers us to purchase and maintain insurance
that protects our officers, directors, employees and agents against any
liabilities incurred in connection with their service in such positions.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Audible
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses and costs expected to
be incurred in connection with the sale and distribution of the securities
offered hereby, other than underwriting discounts and commissions. All of the
amounts shown are estimated except the SEC registration fee.
SEC registration fee $ 747.00
Legal fees and expenses 5,000.00
Accounting fees and expenses 2,000.00
Transfer Agent fees 500.00
Printing expenses 2,000.00
----------
Total $10,247.00
----------
All expenses will be borne by Audible, Inc.
15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. Our
Bylaws include provisions to require us to indemnify our directors and officers
to the fullest extent permitted by Section 145, including circumstances in which
indemnification is otherwise discretionary. Section 145 also empowers us to
purchase and maintain insurance that protects our officers, directors, employees
and agents against any liabilities incurred in connection with their service in
such positions.
At present, there is no pending litigation or proceeding involving a
director or officer of Audible as to which indemnification is being sought nor
are we aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
16. EXHIBITS
Item 21. Exhibits and Financial Statements.
(a) Exhibits
3.1#* Amended and Restated Certificate of Incorporation of Audible
3.2##* Amended and Restated Bylaws of Audible
5.1 Opinion of Piper & Marbury L.L.P.
10.1+* License Agreement dated November 4, 1998, by and between Microsoft
Corporation and Audible
10.2+* Digital Rights Management Agreement dated November 4, 1998, between
Microsoft Corporation and Audible
10.3+* Development Agreement dated November 12, 1998, by and between
RealNetworks, Inc. and Audible
10.4* RealMedia Architecture Partner Program Internet Agreement dated
November 12, 1998, between RealNetworks, Inc. and Audible
10.5* Master Lease Agreement dated November 19, 1996, by and between
Comdisco, Inc. as lessor, and Audible as lessee
10.5.1* Addendum to Master Lease Agreement dated November 20, 1996, by and
between Comdisco, Inc., as lessor, and Audible, as lessee (relating
to Exhibit 10.5)
10.8* Loan and Security Agreement dated April 6, 1998, by and between
Silicon Valley Bank, as
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<PAGE>
lender, and Audible, as borrower, for a revolving line of credit of
up to $1,000,000
10.10* Security and Loan Agreement dated November 20, 1996, between Audible,
as borrower, and Imperial Bank, as lender, for up to $500,000
10.12* Promissory Note dated March 28, 1997, from Donald Katz in favor of
Audible, in the principal amount of $100,000.
10.12.1* Allonge to Note dated April 21, 1999 between Donald Katz and Audible
(relating to Exhibit 10.12.1)
10.13* Security Agreement dated March 28, 1997, by and between Donald Katz
and Audible
10.14* Amended and Restated Registration Rights Agreement dated February 26,
1998, by and among Audible and certain stockholders named therein
10.14.1* Amendment No. 1 to Amended and Restated Registration Rights Agreement
dated December 18, 1998 (relating to Exhibit 10.14)
10.14.2* Amendment No. 2 to Amended and Restated Registration Rights Agreement
dated June 17, 1999 (relating to Exhibit 10.14)
10.15* 1999 Stock Incentive Plan
10.16* Form of Common Stock Warrants issued March 31, 1997 by Audible to
various investors in connection with the Series C preferred stock
financing
10.17* Form of Stock Restriction Agreement by and between Audible and the
Named Executive Officers made in connection with various purchases
and sales of shares of restricted common stock
10.18* Form of Promissory Note made by the Named Executive Officers in favor
of Audible in connection with various purchases and sales of shares
of restricted common stock
10.19* Office Lease dated June 20, 1997, by and between Audible, as tenant,
and Passaic Investment LLC, Sixty-Five Willowbrook Investment LLC and
Wayne Investment LLC, as tenants-in-common, as landlord
10.20* Sublease Agreement dated July 19, 1996, by and between Audible, as
sublessee, and Painewebber Incorporated, as sublessor
10.21+* Agreement dated April 3, 1999 by and between Audible and Diamond
Multimedia Systems, Inc.
10.22* Common Stock Purchase Warrant, issued April 22, 1999, to Microsoft
Corporation
10.23* Employment Offer Letter from Audible to Guy Story dated June 10, 1996
10.24* Employment Offer Letter from Audible to Brian Fielding dated April
25, 1997
10.25* Employment Offer Letter from Audible to Travis Millman dated
September 29, 1997
10.26* Employment Offer Letter from Audible to Andrew Kaplan dated May 25,
1999
10.27o Employment Offer Letter from Audible to Thomas G Baxter dated
February 3, 2000
10.28++ Warrant Agreement to purchase 10,000 shares of Common Stock at a
price of $7.65 per share, dated October 8, 1999, issued by Audible to
National Public Radio, Inc.
10.29* Common Stock Purchase Warrant, W-1, issued June 17, 1999, to Robin
Williams
10.30* Common Stock Purchase Warrant, W-2, issued June 17, 1999, to Robin
Williams
10.31+ Securities Purchase Agreement dated January 30, 2000, by and between
Audible and Amazon.com Commerce Services, Inc.
10.32+ Co-Branding, Marketing and Distribution Agreement dated January 30,
2000, by and between Audible and Amazon.com Commerce Services, Inc.
23.1 Consent of Independent Public Accountants
23.1 Consent of Piper & Marbury L.L.P (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
# Incorporated by reference from the Company's Registration Statement on Form S-
1 (No. 333-76985) as Exhibit No.3.2.
## Incorporated by reference from the Company's Registration Statement on Form
S-1 (No. 333-76985) as Exhibit No.3.4.
o Incororporated by reference from the Company's 10K/A as Exhibit 10.24.
++ Incororporated by reference from the Company's 10K/A as Exhibit 10.25.
* Incorporated by reference from the Company's Registration Statement on Form S-
1 (No. 333-76985).
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+ Incorporated by reference from the Company's 10Q for the quarter ended June
30, 2000. Information has been omitted from this exhibit pursuant to a request
for confidential treatment filed with the Securities and Exchange Commission.
15
<PAGE>
17. UNDERTAKINGS
The undersigned 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;
(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; 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 of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or 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.
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, the registrant has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and therefore is 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 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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wayne, State of New Jersey, on September 8, 2000.
AUDIBLE, INC.
By:
/s/ Thomas G. Baxter
_______________________
Thomas G. Baxter
Chief Executive Officer and President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated. Each person whose signature appears
below in so signing also makes, constitutes and appoints Thomas G. Baxter,
Andrew P. Kaplan, and Nancy A. Spangler, and each of them, his or her true and
lawful attorney-in-fact, with full power of substitution, for him in any and all
capacities, to execute and cause to be filed with the SEC any and all amendments
and post-effective amendments to this Registration Statement, with exhibits
thereto and other documents in connection therewith, and hereby ratifies and
confirms all that said attorney-in-fact or his substitute or substitutes may do
or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Thomas G. Baxter President, Chief Executive Officer September 8, 2000
_________________ and Director (Principal Executive ------------
THOMAS G. BAXTER Officer)
/s/ Andrew P. Kaplan Vice President, Finance and
_________________ Administration and September 8, 2000
ANDREW P. KAPLAN Chief Financial Officer ------------
(Principal Financial Officer)
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<PAGE>
/s/ Donald R. Katz Chairman of the September 8, 2000
_________________________ Board of Directors -----------------
Donald R. Katz
/s/ Richard Brass September 8, 2000
_________________________ Director -----------------
Richard Brass
/s/ R. Bradford Burnham September 8, 2000
_________________________ Director -----------------
R. Bradford Burnham
/s/ Erik Engstrom September 8, 2000
_________________________ Director -----------------
Erik Engstrom
/s/ W. Bingham Gordon September 8, 2000
_________________________ Director -----------------
W. Bingham Gordon
/s/ Thomas Hirschfeld September 8, 2000
_________________________ Director -----------------
Thomas Hirschfeld
/s/ Winthrop Knowlton September 8, 2000
_________________________ Director -----------------
Winthrop Knowlton
/s/ Timothy Mott September 8, 2000
_________________________ Director -----------------
Timothy Mott
18
