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Registration No. 333-
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As filed with the Securities and Exchange Commission on August 4, 2000
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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MAIL.COM, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 13-3780773
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
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11 Broadway, 6th Floor
New York, NY, 10004
(212) 425-4200
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
David W. Ambrosia, Esq.
Executive Vice President and General Counsel
Mail.com, Inc.
11 Broadway, 6th Floor
New York, NY 10004
(212) 425-4200
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Ronald A. Fleming, Jr., Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
(212) 858-1143
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class of Proposed maximum Proposed maximum Amount of
securities to be Amount to be offering price per aggregate offering registration
registered registered(1) unit(2) price(2) fee(2)
Class A Common Stock,
par value $0.01 per
share 780,396 $7.86 $6,133,913 $1,619
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(1) Plus such indeterminable number of additional shares of common stock
as may be issued from time to time as a result of adjustments for
certain stock dividends and stock splits.
(2) Estimated in accordance with Rule 457(c) under the Securities Act
solely for the purpose of computing the registration fee based upon
the average of the high and low prices of the Class A common stock on
August 3, 2000, as quoted 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 OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. 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.
SUBJECT TO COMPLETION, DATED AUGUST 4, 2000
PROSPECTUS
780,396 SHARES
MAIL.COM, INC.
CLASS A COMMON STOCK
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This prospectus relates to the offering of our Class A common stock held
by certain selling stockholders. The selling stockholders may sell the shares
from time to time. We will pay certain of the expenses of this offering;
however, the selling stockholders will bear the cost of all brokerage
commissions and discounts. We will not receive any proceeds from the sale of
shares by the selling stockholders.
The selling stockholders may offer and sell all the shares in the
over-the-counter market or on one or more exchanges. The selling stockholders
may sell the shares at the then prevailing market price for the shares or in
negotiated transactions.
Our Class A common stock is listed on the Nasdaq National Market under the
symbol "MAIL." On August 3, 2000, the closing price of our Class A
common stock on the Nasdaq National Market was $7.88 per share.
THIS INVESTMENT INVOLVES RISK. YOU SHOULD PURCHASE ONLY IF YOU CAN AFFORD A
COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
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The date of this prospectus is [August] , 2000
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TABLE OF CONTENTS
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Incorporation of Documents By Reference.................................... 2
Where You Can Get More Information......................................... 3
Cautionary Statements Regarding Forward-Looking Statements................. 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 6
Use of Proceeds............................................................ 25
Description of Capital Stock............................................... 25
Selling Stockholders....................................................... 32
Plan of Distribution....................................................... 32
Legal Matters.............................................................. 33
Experts.................................................................... 34
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell,
and seeking offers to buy, the Class A common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or the date of any sale of the Class A common
stock.
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INFORMATION CONTAINED ON OUR WEB SITES WILL NOT BE DEEMED TO BE PART OF
THIS PROSPECTUS.
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INCORPORATION OF DOCUMENTS BY REFERENCE
We furnish our stockholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission. Instead of repeating in this prospectus
information that we have already filed with the Securities and Exchange
Commission, rules of the Securities and Exchange Commission permit us to
"incorporate by reference" the information we file with them. These rules mean
that we can disclose important information to you by referring you to those
documents that we have previously filed with the Securities and Exchange
Commission. These documents are considered to be part of this prospectus. Any
documents that we file with the Securities and Exchange Commission in the
future will also be considered to be part of this prospectus and will
automatically update and supersede the information in this prospectus. We
incorporate by reference the 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 until the selling
stockholders sell all of the Class A common stock offered by this prospectus.
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, filed with the Commission on March 30, 2000;
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000;
- Our Current Reports on Form 8-K dated March 28, 2000 (as amended on
Form 8-K/A dated May
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26, 2000), February 11, 2000 (as amended on Form 8-K/A dated April 24,
2000), January 24, 2000 and January 6, 2000; and
- Our Proxy Statement filed on April 18, 2000.
WHERE YOU CAN GET MORE INFORMATION
We have filed a registration statement with the Securities and Exchange
Commission to register the Class A common stock that the selling stockholders
are offering to you. This prospectus is part of that registration statement. As
allowed by the Securities and Exchange Commission's rules, we have not included
in this prospectus all of the information that is included in the registration
statement. At your oral or written request, we will provide to you, without
charge, a copy of the registration statement or any of the exhibits to the
registration statement not delivered with this prospectus. If you want more
information, write or call us at:
Mail.com, Inc.
11 Broadway, 6th Floor
New York, NY 10004
Telephone: (212) 425-4200
Attention: Investor Relations
You may also obtain a copy of any filing we have made with the Securities
and Exchange Commission directly from the Securities and Exchange Commission.
You may either:
- read and copy reports, statements or other information we have filed
with the Securities and Exchange Commission at the Securities and
Exchange Commission's public reference room at 450 Fifth Street N.W.,
Washington, D.C.
- obtain copies of documents that we have filed with the Securities and
Exchange Commission on the Securities and Exchange Commission's
Internet web site at http://www.sec.gov
You can get more information about the Securities and Exchange
Commission's public reference room by calling the Securities and Exchange
Commission at 1-800-SEC-0330.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 throughout this
prospectus. These statements relate to our future plans, objectives,
expectations and intentions. These statements may be identified by the use of
words such as "expects," "anticipates," "intends," "believes," "estimates,"
"plans" and similar expressions. Our actual results could differ materially
from those discussed in these statements. Factors that could contribute to such
differences include, but are not limited to, those discussed in the "Risk
Factors" section of this prospectus.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. This is not intended to be a complete description
of the matters covered in this prospectus and is subject to and qualified in
its entirety by reference to the more detailed information and financial
statements, including the notes thereto, appearing elsewhere or incorporated by
reference in this prospectus.
OUR COMPANY
We are a leading global provider of Internet messaging services to
businesses, Internet Service Providers (ISPs), Web sites and direct to
consumers. We offer our messaging services to both the consumer and business
markets. Additionally, we have, through our newly-formed subsidiary, WORLD.com,
Inc., begun to develop domain names from among our extensive portfolio of
Internet domain names.
BUSINESS MESSAGING SERVICES
We provide businesses with email service, Internet facsimile transmission
services and collaboration services. Our email services include services that
permit email systems to connect to the Internet, email hosting services and
email monitoring services. Our email monitoring services include virus
scanning, attachment control, spam control, legal disclaimers and other legends
affixed to outgoing emails and real time Web-based reporting. Our fax services
include email to fax, fax to email, enhanced fax and broadcast fax. Our
collaboration services include web-hosted services and on-premise software
solutions for group calendaring, group scheduling, project management and
document sharing. We earn revenues in the business market on a usage or per
seat basis.
CONSUMER MESSAGING SERVICES
In the consumer market, we provide Web-based email services, or WebMail,
to ISPs including several of the world's top ISPs, and we partner with top
branded Web sites to provide WebMail services to their users. In addition, we
serve the consumer market directly through our flagship site at www.mail.com.
Our basic consumer email services are free to our members. A consumer can
become a member of Mail.com by signing up for our email service at any of our
partners' Web sites or our own Web sites. We earn revenues in the consumer
market from a combination of:
- advertising related sales, including permission marketing and
e-commerce promotion and
- subscription services, such as a service that allows members to
purchase increased storage capacity for their emails.
WORLD.COM, INC.
In March 2000, we formed WORLD.com, Inc. to focus on developing our
extensive portfolio of Internet domain names into major Web properties which
will serve the worldwide business-to-business and business-to-consumer
marketplace, beginning with Asia.com and India.com. In connection with the
formation of Asia.com, Inc., we acquired eLong.com, Inc., which through its
wholly-owned subsidiary operates the Web site www.elong.com in the Peoples'
Republic of China. Other properties from our portfolio of over 1,000 domains
include Europe.com, USA.com, Japan.com, lawyer.com and doctor.com. WORLD.com is
headquartered in New York, New York.
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We are a Delaware corporation. Our principal executive offices are located
at 11 Broadway, 6th Floor, New York, NY 10004. Our phone number is (212)
425-4200.
RECENT DEVELOPMENTS
On July 25, 2000, we announced unaudited results for the three and six
months ended June 30, 2000. For the quarter ended June 30, 2000, revenues
increased to $15.0 million from $2.1 million for the three months ended June 30,
1999. For the three months ended June 30, 2000. we had a net loss attributable
to common stockholders of $47.9 million compared to a net loss attributable to
common stockholders of $22.5 million for the three months ended June 30,1999.
For the six months ended June 30, 2000, revenues increased to $25.0 million from
$3.2 million for the six months ended June 30, 1999. For the six months ended
June 30, 2000, we had a net loss attributable to common stockholders of $90.4
million compared to a net loss attributable to common stockholders of $28.9
million for the six months ended June 30,1999.
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RISK FACTORS
Before you invest in our Class A common stock, you should carefully
consider the risks described below and the other information included or
incorporated by reference in this prospectus.
WE HAVE ONLY A LIMITED OPERATING HISTORY, AND WE ARE INVOLVED IN A NEW AND
UNPROVEN INDUSTRY.
We have only a limited operating history upon which you can evaluate our
business and our prospects. We have offered a commercial email service since
November 1996 under the name Name We changed our company name to Mail.com,
Inc. in January 1999. In March 2000, we formed WORLD.com to develop and operate
our domain name properties as independent Web sites. Our success will depend in
part upon the development of a viable market for email advertising and
fee-based Internet messaging and collaboration services and outsourcing, and
upon our ability to compete successfully in those markets. Our success will
also depend on our ability to successfully develop and operate our domain name
properties under WORLD.com, beginning with Asia.com and India.com, and the
acceptance by businesses and consumers of the services offered at these Web
sites. For the reasons discussed in more detail below, there are substantial
obstacles to our achieving and sustaining profitability.
WE HAVE INCURRED LOSSES SINCE INCEPTION AND EXPECT TO INCUR SUBSTANTIAL LOSSES
IN THE FUTURE.
We have generated only limited revenues to date. We have not achieved
profitability in any period, and we may not be able to achieve or sustain
profitability. We incurred a net loss of $42.5 million for the quarter ended
March 31, 2000. See "Prospecuts Summary--Recent Developments." We had an
accumulated deficit of $105.6 million as of March 31, 2000. We expect to
continue to incur substantial net losses and negative operating cash flow for
the foreseeable future. We have begun and will continue to significantly
increase our operating expenses in anticipation of future growth. We intend to
expand our sales and marketing operations, upgrade and enhance our technology,
continue our international expansion, and improve and expand our management
information and other internal systems. We intend to continue to make strategic
acquisitions and investments, which may result in significant amortization of
goodwill and other expenses. We are making these expenditures in anticipation of
higher revenues, but there will be a delay in realizing higher revenues even if
we are successful. If we do not succeed in substantially increasing our
revenues, our losses will continue indefinitely and will increase.
IF WE ARE UNABLE TO RAISE NECESSARY CAPITAL IN THE FUTURE, WE MAY BE UNABLE TO
FUND NECESSARY EXPENDITURES.
We anticipate the need to raise additional capital in the future. However,
we may not be able to raise on terms favorable to us, or at all, amounts
necessary to fund our planned expansion, develop new or enhanced services,
respond to competitive pressures, promote our brand name or acquire
complementary businesses, technologies or services. Some of our stockholders
have registration rights that could interfere with our ability to raise needed
capital.
If we raise additional funds by issuing equity securities, stockholders
may experience dilution of their ownership interest. Moreover, we could issue
preferred stock that has rights senior to those of the Class A common stock. If
we raise funds by issuing debt, our lenders may place limitations on our
operations, including our ability to pay dividends.
WE INTEND TO CONTINUE TO ACQUIRE, OR MAKE STRATEGIC INVESTMENTS IN, OTHER
BUSINESSES AND ACQUIRE OR LICENSE TECHNOLOGY AND OTHER ASSETS AND WE MAY HAVE
DIFFICULTY INTEGRATING THESE BUSINESSES OR GENERATING AN ACCEPTABLE RETURN.
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We have completed a number of acquisitions and strategic investments since
our initial public offering. For example, we recently acquired NetMoves
Corporation, a provider of a variety of Internet document delivery services to
businesses, and The Allegro Group, Inc., a provider of email and email related
services, such as virus blocking and content screening, to businesses. We also
made two investments in 3Cube, Inc., a company specializing in Internet fax
technology, and acquired TCOM, Inc., a software technology consulting firm, and
Lansoft U.S.A., Inc., a provider of email management, e-commerce and Web
hosting services to businesses. We also recently acquired eLong.com, Inc. and
Huelink Corporation Ltd. in connection with the formation of Asia.com, Inc. and
Multiple Zones in connection with the formation of India.com. We also recently
acquired technology related assets from IntraACTIVE, Inc. (now named Bantu,
Inc.) and made a strategic investment in IntraACTIVE and committed to make
additional investments in them. We will continue our efforts to acquire or make
strategic investments in businesses and to acquire or license technology and
other assets, and any of these acquisitions may be material to us. We cannot
assure you that acquisition or licensing opportunities will continue to be
available on terms acceptable to us or at all. Such acquisitions involve risks,
including:
- inability to raise the required capital;
- difficulty in assimilating the acquired operations and personnel;
- inability to retain any acquired member or customer accounts;
- disruption of our ongoing business;
- the need for additional capital to fund losses of acquired businesses;
- inability to successfully incorporate acquired technology into our
service offerings and maintain uniform standards, controls,
- procedures and policies; and
- lack of the necessary experience to enter new markets.
We may not successfully overcome problems encountered in connection with
potential acquisitions. In addition, an acquisition could materially impair our
operating results by diluting our stockholders' equity, causing us to incur
additional debt or requiring us to amortize acquisition expenses and acquired
assets.
THE ISSUANCE OF OUR CONVERTIBLE SUBORDINATED NOTES SIGNIFICANTLY INCREASED OUR
LEVERAGE.
In January 2000, we issued $100 million of convertible subordinated notes
due 2005. The sale of our convertible notes has increased our debt as a
percentage of total capitalization. We may incur substantial additional
indebtedness in the future. The level of our indebtedness, among other things,
could (1) make it difficult for us to make payments on our convertible notes,
(2) make it difficult to obtain any necessary financing in the future for
working capital, capital expenditures, debt service requirements or other
purposes, (3) limit our flexibility in planning for, or reacting to changes in,
our business, and (4) make us more vulnerable in the event of a downturn in our
business.
WE MAY BE UNABLE TO PAY DEBT SERVICE ON OUR CONVERTIBLE NOTES AND OTHER
OBLIGATIONS.
We had an operating loss and negative cash flow during the quarters ended
March 31, 2000 and 1999
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and expect to incur substantial losses and negative cash flows for the
foreseeable future. Accordingly, cash generated by our operations would have
been insufficient to pay the amount of interest payable annually on our
convertible notes. We cannot assure you that we will be able to pay interest
and other amounts due on our convertible notes on the scheduled dates or at
all. If our cash flow and cash balances are inadequate to meet our obligations,
we could face substantial liquidity problems. If we are unable to generate
sufficient cash flow or otherwise obtain funds necessary to make required
payments, or if we otherwise fail to comply with any covenants in our
indebtedness, we would be in default under these obligations, which would
permit these lenders to accelerate the maturity of the obligations and could
cause defaults under our indebtedness. Any such default could have a material
adverse effect on our business, results of operations and financial condition.
We cannot assure you that we would be able to repay amounts due on our
convertible notes if payment of the convertible notes were accelerated
following the occurrence of an event of default under the indenture for the
convertible notes.
TO GENERATE INCREASED REVENUES FROM OUR CONSUMER SERVICES, WE WILL HAVE TO
SUBSTANTIALLY INCREASE THE NUMBER OF OUR MEMBERS, WHICH WILL BE DIFFICULT TO
ACCOMPLISH.
To achieve our objective of generating advertising related revenues and
subscription revenues through our consumer email services, we will have to
retain our existing members and acquire a large number of new members. We have
relied upon strategic alliances with third party Web sites to attract the
majority of our current members.
We believe that our success in our consumer business will partially depend
on our ability to maintain our current alliances and to enter into new ones
with Web sites and ISPs on acceptable terms. We believe, however, that the
opportunity to form alliances with third party Web sites that are capable of
producing a substantial number of new members is diminishing. Many third party
Web sites that we have identified as potential sources for significant
quantities of new members already offer their visitors an email service similar
to ours. We cannot assure you that we will be able to enter into successful
alliances with third party Web sites or ISPs on acceptable terms or at all.
OUR CONTRACTS WITH OUR WEB SITE AND ISP PARTNERS REQUIRE US TO INCUR
SUBSTANTIAL EXPENSES.
In nearly all cases our Web site and ISP partners do not pay us to provide
our services. We bear the costs of providing our services. We generate revenues
by selling advertising space to advertisers who want to target our members and
by selling subscription services to these members. We pay the partner a share
of the revenues we generate. In addition, a number of our contracts have
required us to pay significant fees or to make minimum payments to the partner
without regard to the revenues we realize. If we are unable to generate
sufficient revenues at our partner sites, these fees and minimum payments can
cause the partner's effective share of our revenues to approach or exceed 100%.
We intend to reduce or eliminate the payment of these fees or minimum payments
made without regard to the revenues realized. We cannot assure you that we will
be able to renew partner contracts on the basis of reducing or eliminating
these payments or if renewed that the revised terms of such contracts will be
favorable to us.
THE FAILURE TO RENEW OUR PARTNER CONTRACTS, WHICH HAVE LIMITED TERMS, CAN
RESULT IN THE LOSS OF MEMBERS AND IMPAIR OUR CREDIBILITY.
Our partner contracts generally have one or two year terms. A partner can
decide not to renew at the end of the term for a variety of reasons, including
dissatisfaction with our service, a desire to switch to one of our outsourcing
competitors, or a decision to provide email service themselves. Partners can
also choose not to renew our contract because they have entered into a merger
or other strategic relationship with another company that can provide email
service. This last factor is becoming increasingly common in light of the
consolidation taking place among Web sites, ISPs and other Internet-related
businesses. For
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example, XOOM recently combined with Snap, which is jointly owned by CNET and
NBC Multimedia, to create a new Internet services company named NBC Internet,
Inc., or NBCi. XOOM offers a free email service at its xoom.com Web site. We
cannot assure you that these partners will not seek to terminate their
contractual relationships with us. A partner may also fail to renew our
contract with them because we decide not to continue making payments to them
without regard to the revenue that we generate from their site. The loss of a
partner can be very disruptive for us for a number of reasons:
We may lose a substantial number of members. When members register for our
service at a partner's Web site, the default domain name members use for their
email address is typically a domain name that is owned by the partner. As of
March 31, 2000, we estimate that approximately 28% of our established
emailboxes have email addresses at partner-owned domain names. Upon expiration,
most partners can require us to relinquish existing members with addresses at
partner-owned domain names. Even those members who have selected addresses
using our domain names may find it more convenient to switch to whatever
replacement email service may be available at the partner's site. The loss of
members due to expiration or non-renewal of partner contracts may materially
reduce our revenues. Moreover, as of March 31, 2000, we estimate that
approximately 17% of our emailboxes established are at the email.com domain. If
CNET and NBCi exercise their rights to terminate our agreement, which includes
the right to terminate for convenience after May 13, 2001, we would be
obligated to transfer the email.com domain name and related member information
to them. If CNET and NBCi terminate for convenience, they would be obligated to
pay us the greater of $5.0 million or 120% of the fair market value of the
email.com user data based on the projected economic benefit of the users and
either return to us the shares that we issued to them for the establishment of
emailboxes or pay us the then fair market value of these shares. If CNET and
NBCi terminate for other reasons, the amount of compensation they must pay to
us varies depending on the reason for termination. NBC Multimedia may elect to
exercise similar rights relating to email.com emailboxes established through
their sites under our agreement with them.
Losing relationships with prominent partners can impair our credibility
with advertisers and other partners. We believe that partnerships with Web
sites that have prominent brand names help give us credibility with other
partners and with advertisers. The loss of our better-known Web site partners
could damage our reputation and adversely affect the advertising, direct
marketing, e-commerce and subscription rates we charge.
BECAUSE WE ARE DEPENDENT ON A SMALL NUMBER OF PARTNER SITES FOR A SUBSTANTIAL
PERCENTAGE OF OUR ANTICIPATED NEW MEMBERS, A DISRUPTION IN OUR RELATIONSHIP
WITH ANY OF THESE PARTNERS OR A DECREASE IN TRAFFIC AT ANY OF THESE SITES COULD
REDUCE OUR ADVERTISING RELATED REVENUES AND SUBSCRIPTION REVENUES.
Most of our partner sites, including most of those with well-known brand
names, do not generate significant numbers of new emailboxes. The following
four partners accounted for 34% of our new emailboxes established in May 2000:
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PERCENTAGE
OF NEW DATE THAT OUR
E-MAILBOXES CONTRACT WITH
IN THE PARTNER
PARTNER MAY 2000 EXPIRES
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Snap............................................................ 10% *
Juno............................................................ 10% December 2001
iWon............................................................ 7% October 2000
EarthLink....................................................... 7% April 2001
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* Snap may terminate its contracts for convenience after May 13, 2001.
If any of the Web sites operated by these parties were to experience lower
than anticipated traffic, or
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if our relationships with any of these parties were disrupted for any reason,
our revenues could decrease and the growth of our business would be impeded.
Lower than anticipated traffic could result in decreased advertising related
revenues because those revenues are in part dependent on the number of members
and the level of member usage.
WE HAVE ONLY LIMITED INFORMATION ABOUT OUR MEMBERS AND THEIR USAGE, WHICH MAY
LIMIT OUR POTENTIAL REVENUES.
Our ability to generate revenue from advertising related sales is directly
related to our members' activity levels and the quality of our demographic
data. To be successful, we will have to increase members' usage of our service.
We are subject to several constraints that will limit our ability to maximize
the value of our member base:
We believe that most of our members do not use their emailboxes
regularly, and many do not use them at all. We believe that a substantial
majority of our members do not access their emailboxes regularly or at all.
Moreover, we believe that many of our emailboxes that are accessed were first
established during a recent period prior to access. We expect our proportion of
active members to decrease as our total number of established emailboxes
increases. On an ongoing basis, we believe that a significant number of members
will cease using our service each month. We cannot assure you that we will be
able to add enough new members to compensate for this anticipated loss of
usage.
We have only a limited ability to generate advertising revenues from
forwarding and POP3 accounts, which represent a significant percentage of our
emailboxes. Members who choose our forwarding service or subscribe to our POP3
service do not need to come to our partners' or our Web sites to access their
email. Therefore, we do not deliver Web-based advertisements to these members.
Forwarding and POP3 accounts represented approximately 29% of our total
emailboxes as of March 31, 2000, and 9% of the emailboxes that were established
during March 2000. If a disproportionate percentage of members choose either of
these options, it will adversely affect our ability to generate advertising
related revenues.
Our database contains inaccuracies that could reduce the value of our
information. Although we attempt to collect basic demographic information about
members at the time they establish their accounts, we do not verify the
accuracy of this information. Moreover, even if the information is correct when
we receive it, members may move, change jobs or die without our knowledge. As a
result, our database contains inaccuracies that could make our information less
appealing to advertisers.
We do not know how many members have established multiple emailboxes.
Because we do not charge for our basic service, individuals can easily
establish multiple emailboxes. This makes it impossible for us to determine the
number of separate individuals registering for our service, which may reduce
the advertising rates we can command.
WEBMAIL, EMAIL ADVERTISING AND INTERNET MESSAGING AND COLLABORATION SERVICES
OUTSOURCING MAY NOT PROVE TO BE VIABLE BUSINESSES.
We operate in an industry that is only beginning to develop. Our success
will require the widespread acceptance by consumers of Webmail. We are also
dependent on the development of viable markets for email advertising and the
outsourcing of email services to businesses and other organizations. For a
number of reasons, each of these developments is somewhat speculative:
Consumers may not be willing to use Webmail in large numbers. As a
Web-based messaging service, Webmail is subject to the same concerns and
shortcomings as the Internet itself. Concerns about
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the security of information carried over the Internet and stored on central
computer systems could inhibit consumer acceptance of Webmail. Moreover,
Webmail can only function as effectively as the Web itself. If traffic on the
Web does not move quickly or Internet access is impeded, consumers are less
likely to use Webmail. Consumers may also react negatively to the relatively
new concept of an advertising supported email service. Our business will suffer
if public perception of our service or of Webmail in general is unfavorable.
Articles and reviews published in popular publications relating to computers
and the Internet have a great deal of impact on public opinion within our
markets, and an article or review unfavorable to Webmail or to our service
specifically could slow or prevent broad market acceptance. Similarly, if
employers in large numbers implement policies or software designed to restrict
access to Webmail, Webmail is much less likely to gain popular acceptance.
There are even greater uncertainties about our ability to successfully
market premium Webmail services. Consumers have generally been very reluctant
to pay for services provided over the Internet. In August 1999, we discontinued
charging our members for virtually all of our premium domain names. Moreover,
if our competitors choose to provide POP3 access, greater storage capacity or
other services without charge or as part of a bundled offering, we may be
forced to do the same.
There are significant obstacles to the development of a sizable market
for Internet messaging and collaboration services outsourcing. Outsourcing is
one of the principal methods by which we will attempt to reach the size we
believe is necessary to be successful. Security and the reliability of the
Internet, however, are likely to be of concern to Web sites, ISPs, schools,
businesses and organizations deciding whether to outsource their email or fax
services or to continue to provide it themselves. These concerns are likely to
be particularly strong at larger businesses, which are better able to afford
the costs of maintaining their own systems. We provide a range of email and fax
services to businesses and organizations. We currently generate revenues in the
business market primarily from email service fees related to our email system
connection services, email monitoring services and fax transmission services.
We cannot be sure that we will be able to expand our business customer base,
attract additional customers in other segments or acquire a sufficient base of
customers for whom we would provide hosting and other outsourced services. In
addition, the sales cycle for hosting services is lengthy and could delay our
ability to generate revenues in the business email services market.
Furthermore, we may not be able to generate significant additional revenues by
providing our email services to businesses. Standards for pricing in the
business email services market are not yet well defined and some businesses,
schools and other organizations may not be willing to pay the fees we wish to
charge. We cannot assure you that the fees we intend to charge will be
sufficient to offset the related costs of providing these services.
The market for email advertising is only beginning to develop and the
effectiveness of this form of advertising is unproven. Even if Webmail proves
to be popular, we will still need large numbers of advertisers to purchase
space on our Webmail service. We currently do not sell advertisements in
connection with our business email services.
Because we, and our competitors, have only recently begun to offer email
advertising, our potential advertising customers have little or no experience
with this medium. We do not yet have enough experience to demonstrate the
effectiveness of this form of advertising. As a result, those customers willing
to try email advertising are likely to allocate only a limited portion of their
advertising budgets. If early customers do not find email advertising to be
effective for promoting their products and services, the market for our
products will be unlikely to develop. Prices for banner advertisements on the
Internet may fall, in part because of diminishing "click" or response rates.
Advertisers may also request fewer "cost per thousand advertisements" pricing
arrangements and more "cost per click" pricing, which could effectively lower
advertising rates.
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There are currently no standards for measuring the effectiveness of
Webmail advertising. Standard measurements may need to be developed to support
and promote Webmail advertising as a significant advertising medium. Our
advertising customers may refuse to accept our own measurements or third-party
measurements of advertisement delivery, which would adversely affect our
ability to generate advertising related revenues.
Filtering software could prevent us from delivering advertising.
Inexpensive software programs are available which limit or prevent the delivery
of advertising to a user's computer. The widespread adoption of this software
would seriously threaten the commercial viability of email advertising and our
ability to generate advertising revenues.
THERE ARE SIGNIFICANT OBSTACLES TO OUR ABILITY TO INCREASE ADVERTISING
REVENUES.
Our success will largely depend on our ability to substantially increase
our advertising related revenues, which we currently generate only in
connection with our consumer services. Several factors will make it very
difficult for us to achieve this objective:
A limited number of advertisers account for a high percentage of our
revenues, our contracts with our advertisers typically have terms of only one
or two months, and we may be unable to renew these contracts. We are dependent
on a limited number of advertisers to derive a substantial portion of our
revenues. For the quarters ended March 31, 2000 and 1999, revenues from our
five largest advertisers accounted for an aggregate of 11% and 51%,
respectively, of our revenues. Our future success will depend upon our ability
to retain these advertisers, to generate significant revenues from new
advertisers and to reduce our reliance on any single advertiser. Our existing
contracts with advertisers generally have terms of only one or two months and
we may be unable to renew them. The loss of one of our major advertisers or our
inability to attract new advertisers would cause our revenues to decline.
We may not be able to sell as much advertising on a "cost per thousand"
basis or to charge as much under this type of arrangement as we have in the
past. To date, we have generated a significant portion of our advertising
revenues on a "cost per thousand" basis. These agreements require the
advertiser to pay us a fixed fee for every 1,000 advertisements that we deliver
to our members. We believe that this type of agreement is the most effective
for us, but we may not be able to charge as much for these agreements, or to
continue to sell as much advertising on this basis, in the future.
We face greater risks when selling advertising on a "cost per action"
basis. The two types of "cost per action" contracts are "cost per click" and
"cost per conversion." In cost per click contracts, an advertiser agrees to pay
us a fee for each occasion on which a member "clicks" on the advertisement.
Cost per conversion contracts provide that we receive a fee only when a member
both "clicks" on the advertisement and proceeds to purchase an item, order a
catalog or take some other step specified by the advertiser. In general, these
arrangements do not yield as much revenue for us for each advertisement that we
deliver to our members. Moreover, cost per conversion contracts present
additional risks for us because we have no control over the advertiser's
ability to convert a "click" into a sale or other action. We also must rely on
the advertiser to report to us the number of conversions. These reports may not
be accurate, and they may not be timely, both of which can adversely affect our
revenues. Notwithstanding these risks, we may have to sell more of our
advertising on a cost per click or cost per conversion basis in the future.
WE MAY FAIL TO MEET MARKET EXPECTATIONS BECAUSE OF FLUCTUATIONS IN OUR
QUARTERLY OPERATING RESULTS, WHICH WOULD CAUSE OUR STOCK PRICE TO DECLINE.
Although we intend to steadily increase our spending and investment to
support our planned growth,
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our revenues (and some of our costs) will be much less predictable. This is
likely to result in significant fluctuations in our quarterly results, and to
limit the value of quarter-to-quarter comparisons. Because of our limited
operating history and the emerging nature of our industry, we anticipate that
securities analysts will have difficulty in accurately forecasting our results.
It is likely that our operating results in some quarters will be below market
expectations. In this event, the price of our Class A common stock is likely to
decline.
The following are among the factors that could cause significant
fluctuations in our operating results:
- incurrence of other cash and non-cash accounting charges resulting
from acquisitions, including charges resulting from acquisitions;
- incurrence of additional expenditures without receipt of offsetting
revenues as a result of the development of our domain name properties;
- delay or cancellation of even a small number of advertising contracts;
- expiration or termination of partnerships with Web sites or ISPs,
which can result from mergers or other strategic combinations as
Internet businesses continue to consolidate;
- system outages, delays in obtaining new equipment or problems with
planned upgrades;
- disruption or impairment of the Internet;
- introduction of new or enhanced services by us or our competitors;
- changes in our pricing policy or that of our competitors;
- seasonality in the demand for advertising, or changes in our own
advertising rates or advertising rates in general, both on and off the
Internet;
- changes in governmental regulation of the Internet and email in
particular; and
- general economic and market conditions, and particularly those
affecting email advertising.
SEVERAL OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES, LONGER
OPERATING HISTORIES, LARGER CUSTOMER BASES AND BROADER PRODUCT OFFERINGS.
Our business is, and we believe will continue to be, intensely
competitive. Our competitors with respect to email services include such large
and established companies as Microsoft, America Online, Yahoo!, Excite@Home,
Disney (which owns the GO Network) and Lycos. Microsoft offers free Webmail
through its Hotmail Web site, and has dominant market share with over 40
million emailboxes according to Microsoft. We also compete for partners with
email service providers such as USA.NET, Inc., Critical Path, Inc. and
CommTouch Software, Ltd. In offering email services to businesses, schools and
other organizations, we expect to compete with MCI Mail, USA.NET and Critical
Path. Our current and prospective competitors in the facsimile transmission
services market generally fall into the following groups: telecommunication
companies, such as AT&T, WorldCom, Sprint, the regional Bell operating
companies and telecommunications resellers, ISPs, such as UUnet and NETCOM
On-Line Communications Services, Inc.; on-line services providers, such as
Microsoft and America Online and direct fax delivery competitors, including
Premiere Document Distribution (formerly Xpedite Systems,
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Inc.) and IDT Corporation. In addition, we compete for advertisers with
DoubleClick, 24/7 Media, and other Internet advertising networks. We also
compete for advertisers with other Internet publishers as well as traditional
media such as television, radio, print and outdoor advertising. Our domain
properties developed by WORLD.com will compete with the major business and
consumer portals in the markets in which they operate. See "Business -
Competition."
Some of our competitors provide a variety of Web-based services such as
Internet access, browser software, homepage design and Web site hosting, in
addition to email. The ability of these competitors to offer a broader suite of
complementary services may give them a considerable advantage over us. In
addition, some competitors who have other sources of revenue do not, or in the
future may not, place advertising on their Webmail pages. Consumers may prefer
a service that does not include advertisements.
The level of competition is likely to increase as current competitors
increase the sophistication of their offerings and as new participants enter
the market. In the future, as we expand our service offerings, we expect to
encounter increased competition in the development and delivery of these
services. Further, some of our competitors may offer services for which we now
charge our members at or below cost or for free. If our competitors choose to
offer premium or other services at or below cost or for free, we may be forced
to do the same for our comparable services. If this occurs, our ability to
generate revenues from our subscription services would be materially impaired.
Some of our competitors may offer advertisement-free email on a subscription
basis or for free, which could adversely affect our ability to attract and
retain members unless we do the same. In addition, new technologies and the
expansion of existing technologies may increase competitive pressures on us. We
may not be able to compete successfully against our current or future
competitors.
OUR RAPID EXPANSION IS STRAINING OUR EXISTING RESOURCES, AND IF WE ARE NOT ABLE
TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS AND OPERATING RESULTS WILL
SUFFER.
We have begun aggressively expanding our operations in anticipation of an
increasing number of strategic alliances and a corresponding increase in the
number of members as well as development of our business customer base. We have
entered into agreements with additional partners and have upgraded our email
services. We have also developed the technology and infrastructure to begin
offering a range of services in the business Internet messaging and
collaboration services market. In addition, we have formed WORLD.com for the
purpose of developing our portfolio of domain names. This expansion has placed,
and we expect it to continue to place, a significant strain on our managerial,
operational and financial resources. If we cannot manage our growth
effectively, our business and operating results will suffer.
IT IS DIFFICULT TO RETAIN KEY PERSONNEL AND ATTRACT ADDITIONAL QUALIFIED
EMPLOYEES IN OUR BUSINESS AND THE LOSS OF KEY PERSONNEL AND THE BURDEN OF
ATTRACTING ADDITIONAL QUALIFIED EMPLOYEES MAY IMPEDE THE OPERATION AND GROWTH
OF OUR BUSINESS AND CAUSE OUR REVENUES TO DECLINE.
Our future success depends to a significant extent on the continued
service of our key technical, sales and senior management personnel, but they
have no contractual obligation to remain with us. In particular, our success
depends on the continued service of Gerald Gorman, our Chairman and Chief
Executive Officer, Gary Millin, CEO of WORLD.com, Lon Otremba, our President,
Debra McClister, our Executive Vice President and Chief Financial Officer, Sam
Kline, our Chief Operating Officer, Thomas Murawski, our Chief Executive
Officer, Mail.com Business Messaging Services, Inc., and Aaron Fessler,
President of Allegro. The loss of the services of Messrs. Gorman, Millin,
Otremba, Kline, Murawski and Fessler or of Ms. McClister, or several other key
employees, would impede the operation and growth of our business.
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To manage our existing business and handle any future growth, we will have
to attract, retain and motivate additional highly skilled employees. In
particular, we will need to hire and retain qualified salespeople if we are to
meet our sales goals. We will also need to hire and retain additional
experienced and skilled technical personnel in order to meet the increasing
technical demands of our expanding business. Competition for employees in
Internet-related businesses is intense. We have in the past experienced, and
expect to continue to experience, difficulty in hiring and retaining employees
with appropriate qualifications. If we are unable to do so, our management may
not be able to effectively manage our business, exploit opportunities and
respond to competitive challenges.
OUR BUSINESS IS HEAVILY DEPENDENT ON TECHNOLOGY, INCLUDING TECHNOLOGY THAT HAS
NOT YET BEEN PROVEN RELIABLE AT HIGH TRAFFIC LEVELS AND TECHNOLOGY THAT WE DO
NOT CONTROL.
The performance of our computer systems is critical to the quality of
service we are able to provide to our members and to our business customers. If
our services are unavailable or fail to perform to their satisfaction, they may
cease using our service. Reduced use of our service decreases our revenues by
decreasing the advertising space that we have available to sell. In addition,
our agreements with several of our partners establish minimum performance
standards. If we fail to meet these standards, our partners could terminate
their relationships with us and assert claims for monetary damages.
WE NEED TO UPGRADE OUR COMPUTER SYSTEMS TO ACCOMMODATE INCREASES IN EMAIL AND
FAX TRAFFIC AND TO ACCOMMODATE INCREASES IN THE USAGE OF OUR COLLABORATION
SERVICES, BUT WE MAY NOT BE ABLE TO DO SO WHILE MAINTAINING OUR CURRENT LEVEL
OF SERVICE, OR AT ALL.
We must continue to expand and adapt our computer systems as the number of
members and customers and the amount of information they wish to transmit
increases and as their requirements change, and as we develop our business
messaging and collaboration services. Because we have only been providing our
services for a limited time, and because our computer systems have not been
tested at greater capacities, we cannot guarantee the ability of our computer
systems to connect and manage a substantially larger number of members or meet
the needs of business customers at high transmission speeds. If we cannot
provide the necessary service while maintaining expected performance, our
business would suffer and our ability to generate revenues through our services
would be impaired.
The expansion and adaptation of our computer systems will require
substantial financial, operational and managerial resources. We may not be able
to accurately project the timing of increases in email traffic or other
customer requirements. In addition, the very process of upgrading our computer
systems is likely to cause service disruptions. This is because we will have to
take various elements of the network out of service in order to install some
upgrades.
OUR COMPUTER SYSTEMS MAY FAIL AND INTERRUPT OUR SERVICE.
Our members have in the past experienced interruptions in our services. We
believe that these interruptions will continue to occur from time to time.
These interruptions are due to hardware failures, unsolicited bulk emails that
overload our system and other computer system failures. In particular, we have
experienced outages and delays in email delivery and access to our email
service related to disk failures, the implementation of changes to our computer
system and insufficient storage capacity. These failures have resulted and may
continue to result in significant disruptions to our service. Although we plan
to install backup computers and implement procedures to reduce the impact of
future malfunctions in these systems, the presence of these and other single
points of failure in our network increases the risk of service interruptions.
Some aspects of our computer systems are not redundant. These include our
member database system and our email storage system, which stores emails and
other data for our
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members. In addition, substantially all of our computer and communications
systems relating to our email services are currently located in our primary
data centers in Manhattan, Edison, New Jersey and Dayton, Ohio. We currently do
not have alternate sites from which we could conduct operations in the event of
a disaster. Our computer and communications hardware is vulnerable to damage or
interruption from fire, flood, earthquake, power loss, telecommunications
failure and similar events. Our services would be suspended for a significant
period of time if either of our primary data centers was severely damaged or
destroyed. We might also lose stored emails and other member files, causing
significant member dissatisfaction and possibly giving rise to claims for
monetary damages.
OUR SERVICES WILL BECOME LESS DESIRABLE OR OBSOLETE IF WE ARE UNABLE TO KEEP UP
WITH THE RAPID CHANGES CHARACTERISTIC OF OUR BUSINESS.
Our success will depend on our ability to enhance our existing services
and to introduce new services in order to adapt to rapidly changing
technologies, industry standards and customer demands. To compete successfully,
we will have to accurately anticipate changes in consumer and business demand
and add new features to our services very rapidly. We also have to regularly
upgrade our software to ensure that it remains compatible with the wide and
changing variety of Web browsers and other software used by our members and
business customers. For example, our system currently cannot properly receive
files sent using some third party email programs. We may not be able to
integrate the necessary technology into our computer systems on a timely basis
or without degrading the performance of our existing services. We cannot be
sure that, once integrated, new technology will function as expected. Delays in
introducing effective new services could cause existing and potential members
to forego use of our services and to use instead those of our competitors.
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO PROVIDE ADEQUATE SECURITY FOR OUR
SERVICE, OR IF OUR SERVICE IS IMPAIRED BY SECURITY MEASURES IMPOSED BY THIRD
PARTIES.
Security is a critical issue for any online service, and presents a
number of challenges for us.
If we are unable to maintain the security of our service, our reputation
and our ability to attract and retain members and business customers may
suffer, and we may be exposed to liability. Third parties may attempt to breach
our security or that of our members or any business customers whose networks we
may maintain or for whom we provide services. If they are successful, they
could obtain our members' confidential information, including our members'
profiles, passwords, financial account information, credit card numbers, stored
email or other personal information, or obtain information that is sensitive or
confidential to a business customer or otherwise disrupt a business customer's
operations. Our members or any business customers may assert claims for money
damages for any breach in our security and any breach could harm our
reputation.
Our computers are vulnerable to computer viruses, physical or electronic
break-ins and similar incursions, which could lead to interruptions, delays or
loss of data. We expect to expend significant capital and other resources to
license or create encryption and other technologies to protect against security
breaches or to alleviate problems caused by any breach. Nevertheless, these
measures may prove ineffective. Our failure to prevent security breaches may
expose us to liability and may adversely affect our ability to attract and
retain members and develop our business market.
Security measures taken by others may interfere with the efficient
operation of our service, which may harm our reputation, adversely impact our
ability to attract and retain members and impede the delivery of advertisements
from which we generate revenues. "Firewalls" and similar network security
software employed by many ISPs, employers and schools can interfere with the
operation of our Webmail service, including denying our members access to their
email accounts. Similarly, in their efforts to filter
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out unsolicited bulk emails, Web sites, ISPs and other organizations may block
email from all or some of our members.
OUR DEPENDENCE ON LICENSED TECHNOLOGY EXPOSES US TO THE RISK THAT WE MAY NOT BE
ABLE TO INTEGRATE OUR TECHNOLOGY, WHICH MAY RESULT IN LESS DEVELOPMENT OF OUR
OWN TECHNOLOGY AND MAY INCREASE OUR COSTS.
We license a significant amount of technology from third parties,
including technology related to our Web servers, email monitoring services,
billing processes, database and Internet fax services. We anticipate that we
will need to license additional technology to remain competitive. We may not be
able to license these technologies on commercially reasonable terms or at all.
Third-party licenses expose us to increased risks, including risks relating to
the integration of new technology, the diversion of resources from the
development of our own proprietary technology, a greater need to generate
revenues sufficient to offset associated license costs, and the possible
termination of or failure to renew an important license by the third-party
licensor.
IF THE INTERNET AND OTHER THIRD-PARTY NETWORKS ON WHICH WE DEPEND TO DELIVER
OUR SERVICES BECOME INEFFECTIVE AS A MEANS OF TRANSMITTING DATA, THE BENEFITS
OF OUR SERVICE MAY BE SEVERELY UNDERMINED.
Our business depends on the effectiveness of the Internet as a means of
transmitting data. The recent growth in the use of the Internet has caused
frequent interruptions and delays in accessing and transmitting data over the
Internet. Any deterioration in the performance of the Internet as a whole could
undermine the benefits of our services. Therefore, our success depends on
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. We also depend on telecommunications network
suppliers such as MFS, BBN Planet and UUNET to transmit and receive email
messages on behalf of our members and our business customers. We are also
affected by service outages at our partners' Web sites. If service at a
partner's site is unavailable for a period of time, we will be unable to sign
up new members and generate page views and revenue at that site during the
outage.
IF THE THIRD PARTY THAT WE DEPEND ON FOR THE ACTUAL DELIVERY OF THE
ADVERTISEMENTS WE SELL EXPERIENCES TECHNICAL DIFFICULTIES OR OTHERWISE FAILS TO
PERFORM, OUR REVENUES FROM ADVERTISING MAY BE ADVERSELY AFFECTED.
We contract with DoubleClick, Inc. to deliver the advertisements that we
sell and that appear on our Web pages and on the Web pages of our partners. If
DoubleClick experiences technical difficulties or otherwise fails to perform,
our revenues from advertising may be adversely affected. Furthermore,
DoubleClick may not have the same priorities for technology development as we
do and this may limit our ability to improve our delivery of advertising for
our specific needs.
GERALD GORMAN CONTROLS MAIL.COM AND WILL BE ABLE TO PREVENT A CHANGE OF
CONTROL.
Gerald Gorman, our Chairman and Chief Executive Officer, beneficially
owned as of June 30, 2000 Class A and Class B common stock representing
approximately 68.5% of the voting power of our outstanding common stock. Each
share of Class B common stock entitles the holder to 10 votes on any matter
submitted to the stockholders. As a result of his share ownership, Mr. Gorman
will be able to determine the outcome of all matters requiring stockholder
approval, including the election of directors, amendment of our charter and
approval of significant corporate transactions. Mr. Gorman will be in a
position to prevent a change in control of Mail.com even if the other
stockholders were in favor of the transaction.
Mail.com and Mr. Gorman have agreed to permit our stockholders who
formerly held our preferred
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stock to designate a total of three members of our board of directors.
Our charter contains provisions that could deter or make more expensive a
takeover of Mail.com. These provisions include the ability to issue "blank
check" preferred stock without stockholder approval.
OUR GOAL OF BUILDING BRAND IDENTITY IS LIKELY TO BE DIFFICULT AND EXPENSIVE.
We believe that a quality brand identity will be essential if we are to
increase membership, traffic on our sites and revenues, and to develop our
business services market. We do not have experience with some of the types of
marketing that we are currently using. If our marketing efforts cost more than
anticipated or if we cannot increase our brand awareness, our losses will
increase and our ability to succeed will be seriously impeded.
OUR EXPANSION INTO INTERNATIONAL MARKETS IS SUBJECT TO SIGNIFICANT RISKS AND
OUR LOSSES MAY INCREASE AND OUR OPERATING RESULTS MAY SUFFER IF OUR REVENUES
FROM INTERNATIONAL OPERATIONS DO NOT EXCEED THE COSTS OF THOSE OPERATIONS.
We intend to continue to expand into international markets and to expend
significant financial and managerial resources to do so. We have limited
experience in international operations and may not be able to compete
effectively in international markets. If our revenues from international
operations do not exceed the expense of establishing and maintaining these
operations, our losses will increase and our operating results will suffer. We
face significant risks inherent in conducting business internationally, such
as:
- uncertain demand in foreign markets for Webmail advertising, direct
marketing and e-commerce;
- difficulties and costs of staffing and managing international
operations;
- differing technology standards;
- difficulties in collecting accounts receivable and longer collection
periods;
- economic instability and fluctuations in currency exchange rates and
imposition of currency exchange controls;
- potentially adverse tax consequences;
- regulatory limitations on the activities in which we can engage and
foreign ownership limitations on our ability to hold an interest in
entities through which we wish to conduct business, and
- political instability, unexpected changes in regulatory requirements,
and reduced protection for intellectual property rights in some
countries.
REGULATION OF EMAIL AND INTERNET USE IS EVOLVING AND MAY ADVERSELY IMPACT OUR
BUSINESS.
There are currently few laws or regulations that specifically regulate
activity on the Internet. However, laws and regulations may be adopted in the
future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. For example, the
Telecommunications Act of 1996 restricts the types of information and content
transmitted over the Internet. Several telecommunications companies have
petitioned the FCC to regulate ISPs and online
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service providers in a manner similar to long distance telephone carriers and
to impose access fees on these companies. This could increase the cost of
transmitting data over the Internet. Any new laws or regulations relating to
the Internet could adversely affect our business.
Moreover, the extent to which existing laws relating to issues such as
property ownership, pornography, libel and personal privacy are applicable to
the Internet is uncertain. We could face liability for defamation, copyright,
patent or trademark infringement and other claims based on the content of the
email transmitted over our system. We do not and cannot screen all the content
generated and received by our members. Some foreign governments, such as
Germany, have enforced laws and regulations related to content distributed over
the Internet that are more strict than those currently in place in the United
States. We may be subject to legal proceedings and damage claims if we are
found to have violated laws relating to email content.
We are subject to regulation by various state public service and public
utility commissions and by various international regulatory authorities with
respect to our fax services. We are licensed by the FCC as an authorized
telecommunications company and are classified as a "non-dominant interexchange
carrier." Generally, the FCC has chosen not to exercise its statutory power to
closely regulate the charges or practices of non-dominant carriers.
Nevertheless, the FCC acts upon complaints against such carriers for failure to
comply with statutory obligations or with the FCC's rules, regulations and
policies. The FCC also has the power to impose more stringent regulatory
requirements on us and to change its regulatory classification. There can be no
assurance that the FCC will not change its regulatory classification or
otherwise subject us to more burdensome regulatory requirements.
On August 7, 1997, the FCC issued new rules which may significantly reduce
the cost of international calls originating in the United States. Such rules
are scheduled to be phased in over a five-year period starting on January 1,
1998. To the extent that these new regulations are implemented and result in
reductions in the cost of international calls originating in the United States,
we will face increased competition for our international fax services which may
have a material adverse effect on our business, financial condition or results
in operations.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign
regulatory requirements. We intend to explore and seek to comply with these
requirements on a country-by-country basis as the deployment of
Internet-capable facsimile nodes continues. There can be no assurance that we
will be able to satisfy the regulatory requirements in each of the countries
currently targeted for node deployment, and the failure to satisfy such
requirements may prevent us from installing Internet-capable facsimile nodes in
such countries. The failure to deploy a number of such nodes could have a
material adverse effect on its business, operating results and financial
condition.
Our facsimile nodes and our faxLauncher service utilize encryption
technology in connection with the routing of customer documents through the
Internet. The export of such encryption technology is regulated by the United
States government. We have authority for the export of such encryption
technology other than to Cuba, Iran, Iraq, Libya, North Korea, and Rwanda.
Nevertheless, there can be no assurance that such authority will not be revoked
or modified at any time for any particular jurisdiction or in general. In
addition, there can be no assurance that such export controls, either in their
current form or as may be subsequently enacted, will not limit our ability to
distribute our services outside of the United States or electronically. While
we take precautions against unlawful exportation of our software, the global
nature of the Internet makes it virtually impossible to effectively control the
distribution of our services. Moreover, future Federal or state legislation or
regulation may further limit levels of encryption or authentication technology.
Any such export restrictions, the unlawful exportation of our services, or new
legislation or regulation could have a material adverse effect on our business,
financial condition and
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results of operations.
The legal structure and scope of operations of our subsidiaries in some
foreign countries may be subject to restrictions which could result in severe
limits to our ability to conduct business in these countries and this could
have a material adverse effect on our financial position, results of operations
and cash flows. We have announced the formation of WORLD.com, Inc. for the
purpose of developing our portfolio of domain names, including Asia.com and
India.com. In connection with the formation of Asia.com, Inc., we acquired
eLong.com, Inc. which operates through its wholly-owned subsidiary the Web site
www.elong.com in the Peoples Republic of China or the PRC. We have also
announced that we intend to expand our Internet messaging business in
international markets. To the extent that we develop and operate web sites or
offer Internet messaging services in foreign countries, we will be subject to
the laws and regulations of these countries. The laws and regulations relating
to the Internet in many countries are evolving and in many cases are unclear as
to their application. For example, in India, the PRC and other countries we may
be subject to licensing requirements with respect to the Internet activities in
which we propose to engage and we may also be subject to foreign ownership
limitations or other approval requirements that preclude our ownership
interests or limit our ownership interests to up to 49% of the entities through
which we propose to conduct any regulated activities. If these limitations
apply to our activities, including our activities conducted through eLong.com,
Inc. or other subsidiaries, our opportunities to generate revenue will be
reduced, our ability to compete successfully in these markets will be adversely
affected, our ability to raise capital in the private and public markets may be
adversely affected and the value of our investments and acquisitions in these
markets may decline. Moreover, to the extent we are limited in our ability to
engage in certain activities or are required to contract for these services
from a licensed or authorized third party, our costs of providing our services
will increase and our ability to generate profits may be adversely affected.
OUR INTELLECTUAL PROPERTY RIGHTS ARE CRITICAL TO OUR SUCCESS, BUT MAY BE
DIFFICULT TO PROTECT.
We regard our copyrights, service marks, trademarks, trade secrets, domain
names and similar intellectual property as critical to our success. We rely on
trademark and copyright law, trade secret protection and confidentiality and/or
license agreements with our employees, members, strategic partners and others
to protect our proprietary rights. Despite our precautions, unauthorized third
parties may improperly obtain and use information that we regard as
proprietary. Third parties may submit false registration data attempting to
transfer key domain names to their control. Our failure to pay annual
registration fees for key domain names may result in the loss of these domains
to third parties. Third parties have challenged our rights to use some of our
domain names, and we expect that they will continue to do so.
The status of United States patent protection for software products is not
well defined and will evolve as additional patents are granted. We do not know
if our current or future patent applications will be issued with the scope of
the claims we seek, if at all. Current United States law does not adequately
protect our database of member contact and demographic information. In
addition, the laws of some foreign countries do not protect proprietary rights
to the same extent as do the laws of the United States. Our means of protecting
our proprietary rights in the United States or abroad may not be adequate and
competitors may independently develop similar technology.
Third parties may infringe or misappropriate our copyrights, trademarks
and similar proprietary rights. In addition, other parties have asserted and
may in the future assert infringement claims against us. We cannot be certain
that our services do not infringe issued patents. Because patent applications
in the United States are not publicly disclosed until the patent is issued,
applications may have been filed which relate to our services.
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We have been and may continue to be subject to legal proceedings and
claims from time to time in the ordinary course of our business, including
claims related to the use of our domain names and claims of alleged
infringement of the trademarks and other intellectual property rights of third
parties. Third parties have challenged our rights to register and use some of
our domain names based on trademark principles and on the recently enacted
Anticybersquatting Consumer Protection Act. As domain names become more
valuable to businesses, we expect that third parties will continue to challenge
some of our domain names and that the number of these challenges may increase.
In addition, the existing or future laws of some countries, in particular
countries in Europe, may limit or prohibit our ability to use in those
countries or elsewhere some of our geographic names that contain the names of a
city in those countries or the name of those countries. Intellectual property
litigation is expensive and time-consuming and could divert management's
attention away from running our business.
THE SUCCESS OF OUR GLOBAL OPERATIONS IS SUBJECT TO SPECIAL RISKS AND COSTS.
We have begun, and intend to continue, to expand our operations outside of
the United States. This international expansion will require significant
management attention and financial resources. We face substantial risks in
doing business globally, including unexpected changes in regulatory
requirements, export restrictions, difficulties in staffing and managing
foreign operations, difficulties in protecting intellectual property rights,
problems in collecting accounts receivable, political instability, fluctuations
in currency exchange rates and exchange rate controls, difficulties in
enforcing contracts and potentially adverse consequences. In addition, as
described elsewhere in this prospectus, governments in foreign jurisdictions
may regulate the Internet or other online services in such areas as content,
privacy, network security, encryption or distribution, which may also affect
our ability to conduct business internationally.
THE LIMITED INSTALLED PERSONAL COMPUTER BASE AND HIGH COST OF ACCESSING THE
INTERNET IN CHINA AND INDIA LIMITS THE POOL OF POTENTIAL CUSTOMERS FOR ASIA.COM
AND INDIA.COM.
The market penetration rates of personal computers and on-line access in
China and India are far lower than such rates in the United States. Alternate
methods of obtaining access to the Internet, such as through cable television
modems or set-top boxes for televisions, are currently unavailable in India and
China. There can be no assurance that the number or penetration rate of
personal computers in China and India will increase rapidly or at all or that
alternate means of accessing the Internet will develop and become widely
available in China and India.
Our growth is limited by the cost to Chinese and Indian consumers of
obtaining the hardware, software and communications links necessary to connect
to the Internet in China and India. If the costs required to access the
Internet do not significantly decrease, most of China's and India's population
will not be able to afford to use our services. The failure of a significant
number of additional Chinese and Indian consumers to obtain affordable access
to the Internet would make it very difficult to execute our business plan.
We believe that wireless access to the Internet through a variety of
hand-held and other devices such as mobile phones will become increasingly
important in Asia. Accordingly, our Asia.com subsidiary has made wireless
internet services for businesses an important part of its business focus. We
cannot assure you that wireless access to the Internet will in fact develop and
reach wide use and acceptance in Asia as we expect.
WE ARE RELYING ON ELECTRONIC COMMERCE AS A SIGNIFICANT PART OF OUR FUTURE
REVENUE, BUT THE INTERNET HAS NOT YET BEEN PROVEN AS AN EFFECTIVE COMMERCE
MEDIUM IN CHINA AND INDIA.
Our revenue growth depends in part on the increasing acceptance and use of
electronic commerce in
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China and India. The Internet may not become a viable commercial marketplace in
Asia for various reasons, many of which are beyond our control, including:
- inexperience with the Internet as a sales and distribution channel;
- inadequate development of the necessary infrastructure to facilitate
electronic commerce;
- concerns about security, reliability, cost, ease of deployment,
administration and quality of service associated with conducting
business over the Internet; and
- inexperience with credit card usage or with other means of electronic
payment.
UNDERDEVELOPED TELECOMMUNICATIONS INFRASTRUCTURE HAS LIMITED AND MAY CONTINUE
TO LIMIT THE GROWTH OF THE INTERNET MARKET IN CHINA AND INDIA.
The telecommunications infrastructure in China and India is not well
developed. The underdeveloped Internet infrastructure in China and India has
limited the growth of Internet usage there. If the necessary Internet
infrastructure is not developed, or is not developed on a timely basis, future
growth of the Internet in China and India will be limited and our business
could be harmed.
OUR ASIA.COM BUSINESS MAY BE ADVERSELY AFFECTED BY CHINESE GOVERNMENT
REGULATION OF INTERNET COMPANIES.
China has recently begun to regulate its Internet sector by making
pronouncements or enacting regulations regarding the legality of foreign
investment in the Chinese Internet sector, the existence and enforcement of
content restrictions on the Internet and the availability of securities
offerings by companies operating in the Chinese Internet sector. There are
substantial uncertainties regarding the proper interpretation of current and
future Chinese Internet laws and regulations.
Issues, risks and uncertainties relating to Chinese government regulation
of the Chinese Internet sector include the following:
A prohibition of foreign investment in businesses providing value-added
telecommunication services, including computer information services or
electronic mail box services, may be applied to Internet businesses such as
ours. Some officials of the Chinese Ministry of Information and Industry, or
MII, have taken the position that foreign investment in the Internet sector is
prohibited.
The MII has also stated recently that it intends to adopt new laws or
regulations governing foreign investment in the Chinese Internet sector in the
near future. If these new laws or regulations forbid foreign investment in the
Internet sector, our business in China will be severely impaired.
Under the agreement reached in November 1999 between China and the United
States concerning the United States' support of China's entry into the World
Trade Organization, or WTO, foreign investment in Chinese Internet services
will be liberalized to allow for 30% foreign ownership in key telecommunication
services, including Chinese Internet ventures, for the first year after China's
entry into the WTO (subject to certain geographic limitations), 49% in the
second year (with expanded geographic coverage) and 50% thereafter (with no
geographic limitations). The implementation of this agreement is subject to
approval by the U.S. Congress, China's completion of bilateral negotiations
with other WTO members, the multilateral negotiation of China's accession
protocol with the WTO and the completion of
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China's own domestic procedures for accession. Within the United States,
China's WTO accession faces opposition from trade unions, environmentalists and
human rights organization.
The MII has also stated recently that the activities of Internet content
providers are also subject to regulation by various Chinese government
authorities, depending on the specific activities conducted by the Internet
content provider. Various government authorities have stated publicly that they
are in the process of preparing new laws and regulations that will govern these
activities. The areas of regulation may include online advertising and online
news reporting. In addition, the new laws and regulations may require various
Chinese government approvals for securities offerings by companies engaged in
the Internet sector in China.
The interpretation and application of existing Chinese laws and
regulations, the stated positions of the MII and the possible new laws or
regulations have created substantial uncertainties regarding the legality of
existing and future foreign investments in, and the businesses and activities
of, Chinese Internet businesses, including our Asia.com business.
Accordingly, it is possible that the relevant Chinese authorities could,
at any time, assert that any portion or all of Asia.com's existing or future
ownership structure and businesses violates Chinese laws and regulations. It is
also possible that the new laws or regulations governing the Chinese Internet
sector that may be adopted in the future will prohibit or restrict foreign
investment in, or other aspects of, any of Asia.com's current or proposed
businesses and operations. In addition, these new laws and regulations may be
retroactively applied to Asia.com.
If Asia.com is found to be in violation of any existing or future Chinese
laws or regulations, the relevant Chinese authorities would have broad
discretion in dealing with such a violation, including, without limitation, the
following:
- levying fines;
- revoking our business license;
- requiring us to restructure our ownership structure or operations; and
- requiring us to discontinue any portion or all of our Internet
business.
EVEN IF ASIA.COM COMPLIES WITH CHINESE GOVERNMENTAL REGULATIONS, THE CHINESE
GOVERNMENT MAY PREVENT US FROM DISTRIBUTING, AND WE MAY BE SUBJECT TO LIABILITY
FOR, CONTENT THAT IT BELIEVES IS INAPPROPRIATE.
China has enacted regulations governing Internet access and the
distribution of news and other information. Even if we comply with Chinese
governmental regulations relating to licensing and foreign investment
prohibitions, if the Chinese government takes any action to limit or prohibit
the distribution of information through our network or to limit or regulate any
current or future content or services available to users on our network, our
Asia.com business would be harmed.
SOME OF OUR OPERATIONS ARE BASED IN INDIA, WHICH PRESENTS SPECIAL REGULATORY
AND OTHER RISKS TO OUR BUSINESS.
India has also recently begun to regulate its Internet sector by making
pronouncements or enacting regulations regarding various Internet activities in
India and the legality of foreign investment in the
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Indian Internet sector. There are substantial uncertainties regarding the
proper interpretation of current and future Indian Internet laws and
regulations. Issues, risks and uncertainties relating to Indian government
regulation of the Indian Internet sector include risks similar to those in
China, in particular with respect to limitations on foreign investment.
Political instability related to the formation of a new government in
India could halt or delay the liberalization of the Indian economy and
adversely affect business and economic conditions in India generally and our
business in particular. During the past decade, the government of India has
pursued policies of economic liberalization, including significantly relaxing
restrictions on the private sector. Nevertheless, the role of the Indian
central and state governments in the Indian economy has remained significant.
The government of India recently changed for the fifth time since 1996. A
significant change in India's economic liberalization and deregulation policies
could adversely affect business and economic conditions in India generally and
our India.com business in particular.
A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK MAY COME ONTO THE MARKET IN THE
FUTURE, WHICH COULD DEPRESS OUR STOCK PRICE.
Sales of a substantial number of shares of our common stock in the public
market could cause the market price of our Class A common stock to decline. As
of June 30, 2000, we had an aggregate of 59,161,555 shares of Class A and Class
B common stock and 14,361,356 options and 1,251,233 warrants to purchase an
aggregate of 15,612,589 shares of Class A common stock outstanding. As of such
date, approximately 50,746,846 shares of Class A common stock and Class B
common stock were freely tradable, in some cases subject to the volume and
manner of sale limitations contained in Rule 144. As of such date,
approximately 8,414,709 shares of Class A common stock will become available
for sale at various later dates upon the expiration of one-year holding periods
or upon the expiration of any other applicable restrictions on resale. We are
likely to issue large amounts of additional Class A common stock, which may
also be sold and which could adversely affect the price of our stock.
As of June 30, 2000 the holders of up to 21,211,911 shares of Class A
common stock, had the right, subject to various conditions, to require us to
file registration statements covering their shares, or to include their shares
in registration statements that we may file for ourselves or for other
stockholders, including the shelf registration statement we are required to
file with respect to our convertible notes. By exercising their registration
rights and selling a large number of shares, these holders could cause the
price of the Class A common stock to fall. An undetermined number of these
shares have been sold publicly pursuant to Rule 144.
OUR STOCK PRICE HAS BEEN VOLATILE AND WE EXPECT THAT IT WILL CONTINUE TO BE
VOLATILE.
Our stock price has been volatile since our initial public offering and we
expect that it will continue to be volatile. As discussed above, our financial
results are difficult to predict and could fluctuate significantly. In
addition, the market prices of securities of Internet-related companies have
been highly volatile. A stock's price is often influenced by rapidly changing
perceptions about the future of the Internet or the results of other Internet
or technology companies, rather than specific developments relating to the
issuer of that particular stock. As a result of volatility in our stock price,
a securities class action may be brought against us. Class-action litigation
could result in substantial costs and divert our management's attention and
resources.
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USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of
our Class A common stock under this prospectus. We will not receive any
proceeds from these sales.
DESCRIPTION OF CAPITAL STOCK
The following descriptions of our capital stock and the relevant
provisions of our amended and restated certificate of incorporation, as
amended, and bylaws are summaries and are qualified by reference to our amended
and restated certificate of incorporation, as amended, and our bylaws.
We are authorized to issue up to 150,000,000 shares of Class A common
stock, par value $.01 per share, 10,000,000 shares of Class B common stock, par
value $.01 per share, and 60,000,000 shares of preferred stock, par value $.01
per share.
COMMON STOCK
As of June 30, 2000, we had 49,161,555 shares of Class A common stock
outstanding held of record by approximately 372 stockholders and 10,000,000
shares of Class B common stock outstanding held entirely by Gerald Gorman, our
Chairman and Chief Executive Officer.
All of the issued and outstanding shares of our Class A common stock are
fully paid and nonassessable. Except as described below, the issued and
outstanding shares of our Class A common stock and Class B common stock
generally have identical rights. In addition, under our amended and restated
certificate of incorporation, as amended, holders of Class A common stock have
no preemptive or other subscription rights to purchase shares of our stock, nor
are they entitled to the benefits of any redemption or sinking fund provisions.
VOTING RIGHTS
The holders of our Class A common stock are entitled to one vote per share
on all matters to be voted on by stockholders generally, including the election
of directors. The holder of our Class B common stock is entitled to ten votes
per share on all matters to be voted on by stockholders generally, including
the election of directors. In addition to any class vote that may be required
under law or our amended and restated certificate of incorporation, as amended,
all classes of capital stock entitled to vote generally on any matter vote
together as a single class. There are no cumulative voting rights. Accordingly,
holders of a majority of the total votes entitled to vote in an election of
directors will be able to elect all of the directors standing for election.
Please see "Risk Factors - Gerald Gorman controls Mail.com and will be
able to prevent a change of control."
LIQUIDATION PREFERENCES
If we are liquidated, dissolved or wound up, the holders of our Class A
common stock and Class B common stock will be entitled to receive distributions
only after satisfaction of all liabilities and the prior rights of any
outstanding class of preferred stock. If we are liquidated, dissolved or wound
up, our assets legally available after satisfaction of all of our liabilities
shall be distributed to the holders of our Class A common stock and Class B
common stock pro rata based on the respective numbers of shares of Class A
common stock held by these holders or issuable to them upon conversion of Class
B common stock.
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CONVERSION RIGHTS/MANDATORY CONVERSION
Holders of our Class A common stock have no conversion rights. Holders of
our Class B common stock may convert each share into one share of Class A
common stock. In addition, the holder of Class B common stock has contractually
agreed with the former holders of Class C preferred stock and Class E preferred
stock and some former holders of Class A preferred stock that he will not
transfer his shares of Class B common stock in the form of Class B common stock
unless such holders have had the opportunity within specified time periods to
dispose of their shares of Class A common stock issuable upon conversion of
their preferred stock at specified prices. As a result, until this condition
has been satisfied or the former holders of a majority in interest of each
class of preferred stock otherwise consent in writing, the holder of Class B
common stock must convert shares of Class B common stock into shares of Class A
common stock prior to transfer.
DIVIDENDS
The holders of both classes of our common stock are entitled to receive
equal non-cumulative dividends when and as declared from time to time by the
board of directors, subject to any preferential dividend rights of any
outstanding preferred stock.
PREFERRED STOCK
Under our amended and restated certificate of incorporation, as amended,
the board of directors is authorized, without further stockholder approval, to
issue up to 60,000,000 shares of preferred stock in one or more classes or
series. The board also has the authority to fix or alter the designations,
preferences, rights and any qualifications, limitations or restrictions of the
shares of each such class or series, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences.
Preferred stock could thus be issued quickly with terms that could delay or
prevent a change of control of Mail.com or make removal of management more
difficult. Additionally, the issuance of preferred stock may decrease the
market price of our Class A common stock and may adversely affect the voting
and other rights of the holders of our Class A common stock. Currently, we does
not have any preferred stock outstanding and have no plans to create or issue
any shares of any new class or series of preferred stock.
WARRANTS/OPTIONS
Under an engagement letter dated March 2, 1998 between PaineWebber
Incorporated and Mail.com and entered into in connection with the private
placement of our Class C preferred stock, we issued to PaineWebber Incorporated
warrants to purchase 143,484 shares of our Class A common stock and we issued
to a former employee of PaineWebber Incorporated warrants to purchase 35,872
shares of our Class A common stock. These warrants are exercisable at an
exercise price of $3.50 per share and expire July 31, 2003. The warrants are
entitled to anti-dilution adjustment in the event of stock splits, stock
dividends, stock distributions or combinations.
Under our letter agreement with AT&T dated May 26, 1999, we issued
warrants to purchase 1,000,000 shares of our Class A common stock at an
exercise price of $11.00 per share. AT&T may exercise the warrants at any time
on or before December 31, 2000. AT&T may not sell or otherwise transfer to a
third party the warrants or the shares issuable upon exercise of the warrants
until May 26, 2004. If AT&T does not exercise the warrants on or before
December 31, 2000, the warrants will expire and be cancelled.
REGISTRATION RIGHTS
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PREFERRED STOCKHOLDERS
The stockholders who formerly held shares of our Class A preferred stock,
other than Lycos, and the stockholders who formerly held shares of our Class C
and Class E preferred stock are entitled to various registration rights with
respect to their shares of Class A common stock issued upon conversion of each
class of preferred stock.
- Demand registration rights. The holders of a majority of our shares
issued upon conversion of our Class A preferred stock and the holders
of a majority of the shares issued upon conversion of our Class C
preferred stock, voting as separate classes, have the right to demand
that we register their shares of Class A common stock under the
Securities Act. The stockholders who formerly held shares of our Class
A preferred stock may exercise their demand registration rights up to
three times, and the stockholders who formerly held shares of our
Class C preferred stock may exercise their demand registration right
once. In addition, the holders of 20% or more of the shares issued
upon conversion of our Class E preferred stock may demand that we
register their shares of Class A common stock under the Securities
Act. If 30% or more of the shares registered in any Class C or Class E
demand registration are shares requested to be registered by Lycos,
then the former holders of each of our Class C and Class E preferred
stock have the right to a second demand registration.
- Piggyback registration rights. The stockholders who formerly held
shares of our Class A, Class C and Class E preferred stock can request
to have their shares registered under the Securities Act any time we
file a registration statement to register any of our securities for
our own account or for the account of any of our stockholders in
connection with an underwritten public offering. The number of times
such rights may be exercised is unlimited, but the number of shares
that can be registered at any one time is subject to limitations that
any underwriters may impose.
- S-3 demand registration rights. The holders of at least a majority of
the shares issued upon conversion of each of our Class A preferred
stock and Class C preferred stock have the right to have their shares
of Class A common stock registered under the Securities Act on Form
S-3. The holders of at least 25% of the shares issued upon conversion
of our Class E preferred stock also have the right to demand a Form
S-3. The number of times these Form S-3 registration rights may be
exercised is unlimited, but we are required to file only one Form S-3
in any twelve-month period.
In the case of the stockholders who formerly held shares of our Class A
preferred stock, their registration rights will terminate on June 23, 2004,
five years from the closing of our initial public offering. In the case of the
stockholders who formerly held shares of our Class C and Class E preferred
stock, their registration rights will terminate on December 23, 2001, 30 months
from the closing of our initial public offering.
LYCOS
Lycos has the right to have its shares of our Class A common stock
registered any time we file a registration statement for any of our securities
for our own account or the account of any of our directors, officers or 5%
stockholders. The number of times Lycos may exercise its right is unlimited,
but the number of shares that can be registered at any one time is subject to
limitations that any underwriters may impose.
CNET AND NBC MULTIMEDIA
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We granted registration rights to CNET and NBC Multimedia with respect to
the shares of our Class A common stock issued upon exercise of their warrants.
The holder or holders of a majority of the shares of Class A common stock
issued upon exercise of their warrants may require us to effect one
registration under the Securities Act. If 30% or more of the shares to be
registered in that demand registration are shares requested to be registered by
Lycos, then the holders have the right to a second demand registration.
The holder or holders of a majority of shares of our Class A common stock
issued upon exercise of the CNET and NBC Multimedia warrants have the right to
have their shares of Class A common stock registered under the Securities Act
any time we file a registration statement to register any of our securities for
our own account or for the account of any of our stockholders in connection
with an underwritten public offering.
The holder or holders of a majority of shares of our Class A common stock
issued upon exercise of the CNET and NBC Multimedia warrants have the right to
have their shares of Class A common stock registered on Form S-3. The number of
times this registration right may be exercised is unlimited, but we are
required to file only one Form S-3 in any twelve-month period.
These registration rights will terminate 30 months from the closing of our
initial public offering, which occurred on June 23, 1999.
3CUBE, INC.
In connection with our investments in 3Cube, Inc. we granted 3Cube
registration rights. We agreed to register on Form S-3 the shares of our Class
A common stock that we issued in June 2000. 3Cube has the right to have its
other shares of our Class A common stock registered under the Securities Act
any time we file a registration statement to register any of our securities for
our own account or for the account of any of our stockholders in connection
with an underwritten public offering. The number of times these piggyback
rights may be exercised is unlimited, but the number of shares that can be
registered at any one time is subject to limitations that any underwriters may
impose.
BANTU, INC.
In connection with our investment in Bantu, Inc., we agreed to register on
Form S-3 the shares of our Class A common stock issued or issuable to Bantu,
Inc.
BULLETN.NET,INC.
In connection with our investment in BulletN.net, Inc., we agreed to
register on Form S-3 the shares of our Class A common stock issued to
BulletN.net, Inc. Our filing of the registration statement in which this
prospectus is included is intended to satisfy this obligation.
EDD HELMS GROUP, INC.
In connection with our acquisition of a telephone number, we granted
registration rights to Edd Helms Group, Inc. We are required to register on
Form S-3 all of the shares of our Class A common stock issued to Edd Helms
Group. Our filing of the registration statement in which this prospectus is
included is intended to satisfy this obligation.
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MADISON AVENUE TECHNOLOGY GROUP, INC.
In connection with our investment in Madison Avenue Technology Group, Inc.
we agreed to register on Form S-3 the shares of our Class A common stock issued
to Madison Avenue Technology Group, Inc. Our filing of the registration
statement in which this prospectus is included is intended to satisfy this
obligation.
SAPIENT CORPORATION
In connection with our Web site development contract with Sapient
Corporation, we agreed to register on Form S-3 the shares of our Class A common
stock issuable to Sapient upon conversion of a Convertible Promissory Note
issuable to Sapient. Our filing of the registration statement in which this
prospectus is included is intended to satisfy this obligation.
STD, INC.
In connection with our investment in STD, Inc.(doing business as Software
Tool and Die), we granted registration rights to STD. Holders of a majority of
the shares of our Class A common stock issued to STD have the right to require
us to have their shares registered on Form S-3. Prior to effectiveness of such
registration statement, STD has the right to have its shares of our Class A
common stock registered under the Securities Act any time we file a
registration statement to register any of our shares of capital stock for our
account or the account of any of our stockholders in connection with an
underwritten public offering. The number of times these piggyback rights may be
exercised is unlimited, but the number of shares that can be registered at any
one time is subject to limitations that the underwriters may impose.
ELONG.COM, INC.
In connection with our acquisition of eLong.com, Inc., we granted
registration rights to former stockholders of eLong. The holders of a majority
of the shares of our Class A common stock issued in connection with this
acquisition have a one-time right to have their shares registered on Form S-3
on or after January 1, 2001.
HUELINK CORPORATION LIMITED
In connection with our acquisition of Huelink Corporation Limited, we
granted registration rights to Aligned Investments Limited, the former
principal shareholder of Huelink. Holders of a majority of the subject shares
have a one-time right to have their shares registered on Form S-3. Prior to the
effectiveness of such registration statement, Aligned has the right to have the
subject shares registered under the Securities Act any time we file a
registration statement to register any of our shares of capital stock for our
account or the account of any of our stockholders in connection with an
underwritten public offering. The number of times these piggyback rights may be
exercised is unlimited, but the number of shares that can be registered at any
time is subject to limitations that the underwriters may impose.
NETMOVES WARRANTS
In connection with our acquisition of NetMoves, we assumed registration
rights obligations with respect to shares underlying certain outstanding
warrants of NetMoves that we assumed. Under a warrant held by The Tail Wind
Fund Ltd. representing the right to purchase 24,860 shares of our Class A
common stock, we are obligated to register on Form S-3 the shares issuable upon
exercise of the warrant. Tail Wind also has the right to have the shares
underlying the warrant, and not included in an effective registration
statement, registered under the Securities Act any time we file a registration
statement to register any of our shares for our account or for any stockholders
in connection with a public offering. The number of times these piggyback
rights may be exercised is unlimited, but the number of shares that can be
registered at any time is subject to limitations that the underwriters may
impose.
Under warrants held by Comdisco representing the right to purchase an
aggregate of 17,540 shares of our Class A common stock, we are obligated to
effect up to two registrations relating to the shares underlying such warrants.
In addition, Comdisco has the right to have the shares underlying the warrants
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included any time we file a registration statement for our account or for the
account of any stockholder in connection with a public offering. The number of
times the piggyback rights may be exercised is unlimited, but the number of
shares that may be included at any time is subject to limitations that the
underwriters may impose.
OTHER REGISTRATION RIGHTS
In connection with our acquisition of a domain name, we granted
registration rights to an individual. We are required to register on Form S-3
all of the shares of our Class A common stock issued to this individual.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE LAW AND OUR AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, AND BYLAWS
We are subject to the provisions of Section 203 of the General Corporation
Law of the State of Delaware. Generally, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a prescribed
manner. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
a corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeovers or changes in control with respect
to Mail.com and, accordingly, may discourage attempts to acquire Mail.com.
In addition, provisions of the amended and restated certificate, as
amended, and bylaws, which provisions are summarized in the following
paragraphs, may be deemed to have an anti-takeover effect. These provisions may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider to be in its best interests, including those attempts that might
result in a premium over the market price for the shares held by stockholders.
BOARD OF DIRECTORS VACANCIES. Our bylaws authorize the board of directors
to fill vacant directorships or increase the size of the board of directors.
This may prevent a stockholder from removing incumbent directors and
simultaneously gaining control of the board of directors by filling the
resulting vacancies created by such removal with its own nominees.
SPECIAL MEETINGS OF STOCKHOLDERS. Our bylaws provide that special meetings
of stockholders of Mail.com may be called at any time by the Chairman of the
board, the Vice Chairman of the board, if any, the President, if any, or the
board of directors. Written notice of the meeting must be given not less than
10 nor more than 60 days before the date of the meeting.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of our
common stock and preferred stock are available for future issuance without
stockholder approval, subject to the limitations imposed by The Nasdaq National
Market. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued and unreserved common stock and preferred stock could render more
difficult or discourage an attempt to obtain control of Mail.com by means of a
proxy contest, tender offer, merger or otherwise.
The General Corporation Law of the State of Delaware provides generally
that, in addition to the
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<PAGE> 33
approval of the board of directors, the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation unless a corporation's certificate of
incorporation requires a greater percentage.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our Class A common stock is American
Stock Transfer and Trust Company.
31
<PAGE> 34
SELLING STOCKHOLDERS
The shares offered hereby by the selling stockholders have been issued, or
are issuable, in connection with investments by us in BulletN.net, and Madison
Avenue Technology Group, our acquisition of a telephone number from Edd Helms
Group and our Web site development contract with Sapient. Under the terms of
these transactions, we agreed to register the common stock received by the
selling stockholders. None of the selling stockholders has had a material
relationship with us during the past three years except as indicated in the
table or the footnotes thereto. The table below sets forth information with
respect to the beneficial ownership of our Class A common stock by the selling
stockholders immediately prior to this offering and as adjusted to reflect the
sale of shares of our Class A common stock in the offering. All information with
respect to the beneficial ownership has been furnished by the respective selling
stockholders. Percentages are based on the 49,161,555 shares of Class A common
stock outstanding on June 30, 2000.
<TABLE>
<CAPTION>
Number of Shares Number of Shares to Percentage of Shares
Number of Shares Offered by this be Held After to be Held After
Selling Shareholder Beneficially Owned Prospectus(1) Offering Offering
------------------- ------------------ ------------- -------- --------
<S> <C> <C> <C> <C>
BulletN.net, Inc. (2) 364,431 364,431 0 *
Edd Helms Group, Inc. 13,750 13,750 0 *
Madison Avenue Technology
Group, Inc(3) 102,215 102,215 0 *
Sapient Corporation (4) 300,000(5) 300,000(5) 0 *
</TABLE>
--------
* Less than one percent
(1) This prospectus also will cover any additional shares of common stock that
become issuable as a result of a stock split, stock dividend or similar
transaction that results in an increase in the number of our outstanding
shares of common stock.
(2) In July 2000, we entered into a strategic agreement with BulletN.net to
enable our users to receive and send email messages and notifications
wirelessly and to allow BulletN.net's users to sign up for our instant
messaging services.
(3) In July 2000, we entered into a preferred list hosting agreement with
Madison Avenue Technology Group that appointed us as a preferred reseller
of CheetahMail's list host management services.
(4) In April 2000, we entered into a Web site development contract with
Sapient.
(5) The maximum number of shares issuable under the Convertible Promissory
Note.
PLAN OF DISTRIBUTION
The selling stockholders may offer and sell the Class A common stock
covered by this prospectus from time to time. The selling stockholders'
pledgees, donees, transferees or other successors in interest that receive such
Class A common stock as a gift, partnership distribution or other non-sale
related transfer may likewise offer and sell Class A common stock from time to
time. The selling stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholders may sell the Class A common stock on one or more exchanges,
including the Nasdaq National Market, or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market prices or in negotiated transactions.
The selling stockholders may sell the Class A common stock by one or more
of the following means of distribution:
- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent, but may purchase and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
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<PAGE> 35
We may amend this prospectus from time to time to describe a specific plan
of distribution. In connection with distributions of the Class A common stock
or otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of our Class A common stock in the course of hedging the positions
they assume with the selling stockholders. The selling stockholders may also
sell our Class A common stock short and redeliver the shares covered by this
prospectus to close out such short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or other
financial institution of the Class A common stock offered under this
prospectus, which Class A common stock such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). The selling stockholders may also pledge the
shares of Class A common stock registered hereunder to a broker-dealer or other
financial institution and, upon a default, such broker-dealer or other
financial institution may effect sales of the pledged Class A common stock
pursuant to this prospectus (as supplemented or amended to reflect such
transaction). In addition, the selling stockholders may also sell the Class A
common stock under Rule 144 rather than pursuant to this prospectus if the
shares so qualify for resale under Rule 144.
In effecting sales, brokers, dealers or agents engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act in connection
with such sales, and any such commission, discount or concession may be deemed
to be underwriting discounts or commissions under the Securities Act. We will
pay all expenses incident to the offering and sale of the Class A common stock
covered by this prospectus to the public other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the Class A common stock will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Class A common stock may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied
with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of the shares
by the selling stockholders. All of the foregoing may affect the marketability
of the shares.
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained or incorporated by reference
in this prospectus. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered by
this prospectus, but only under the circumstances and in jurisdictions where it
is lawful to do so. The information contained in this prospectus is current
only as of its date.
LEGAL MATTERS
33
<PAGE> 36
The validity of the Class A common stock offered in this prospectus has
been passed upon by David Ambrosia, our General Counsel. As of the date hereof,
Mr. Ambrosia owned 4,475 shares of our Class A common stock and held options to
purchase 308,030 shares of our Class A common stock.
EXPERTS
Our consolidated financial statements appearing in our Annual Report (Form
10-K) for the year ended December 31, 1999 have been audited by KPMG LLP,
independent accountants, as set forth in their report thereon incorporated
herein by reference. Such consolidated financial statements are incorporated by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Asia.com, Inc. (formerly
eLong.com, Inc.) (a development stage enterprise) incorporated in this
prospectus by reference to Mail.com's Amendment to Current Report on Form
8-K/A, dated May 26, 2000, have been audited by KPMG, independent public
accountants, as indicated in their report with respect thereto and have been
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing. Our report dated May 24, 2000, contains an
emphasis paragraph that states the group's operations are subject to extensive
regulation and supervision by the People's Republic of China ("PRC")
government. The laws and regulations pertaining to Internet content provider
businesses in the PRC are evolving and may be subject to change.
The financial statements of NetMoves Corporation (formerly FaxSav
Incorporated) incorporated in this prospectus by reference to Mail.com's
Amendment to Current Report on Form 8-K/A, dated April 24, 2000, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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<PAGE> 37
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee $ 1,619
Accounting fees and expenses 7,500
Legal fees and expenses 15,000
Miscellaneous expenses 1,881
----------
Total: $26,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Delaware General Corporation Law empowers the Company
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe that such person's
conduct was unlawful. The termination of any cause of action, suit or
proceeding by judgment, order, settlement, conviction, or upon plea of nolo
contendre or its equivalent, does not, of itself, create a presumption that
such person did not act in good faith and in a manner that such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.
As permitted by Section 145 of the Delaware General Corporation Law,
the registrant's amended and restated certificate of incorporation, as amended
provides that a director of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for any breach of the director's duty of loyalty to the
Company or its stockholders; for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; for the unlawful
payment of dividends or unlawful stock repurchases under Section 174 of the
Delaware General Corporation Law; or for any transaction from which the
director derived an improper personal benefit.
The bylaws of the Company provide that the Company shall indemnify
directors, officers and employees for such liabilities in such manner, under
such circumstances and to such extent as permitted by Section 145 of the
Delaware General Corporation Law, as now enacted or hereafter amended and that
the Company shall advance all reasonable costs and expenses (including
attorney's fees) incurred in defending any action, suit or proceeding to all
persons entitled to such indemnification, all in the manner, under the
circumstances and to the extent permitted by Section 145 of the Delaware
General Corporation Law, as now enacted or hereafter amended.
The Company has entered into indemnity agreements with each of its
directors and executive officers to give them additional contractual assurances
regarding the scope of the indemnification described above and to provide
additional procedural protections. In addition, the Company has obtained
II-1
<PAGE> 38
directors' and officers' insurance providing indemnification for directors,
officers and key employees for various liabilities.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the certificate of incorporation. The registrant is
not aware of any threatened litigation or proceeding that may result in a claim
for such indemnification.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney (set forth on signature page hereof).
</TABLE>
ITEM 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 this 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 this registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
II-2
<PAGE> 39
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, 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) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on August 4,
2000.
MAIL.COM, INC.
By /s/ Lon Otremba
---------------
Lon Otremba
President
<PAGE> 41
POWER OF ATTORNEY
We, the undersigned officers and directors of Mail.com, Inc., hereby
severally and individually constitute and appoint Lon Otremba and David
Ambrosia, and each of them, the true and lawful attorneys-in-fact and agents of
each of us to execute in the name, place and stead of each of us (individually
and in any capacity stated below) (1) any and all amendments (including
post-effective amendments) to this registration statement, and to file the
same, with all exhibits thereto, and other documents or instruments necessary
or advisable in connection therewith, and (2) a registration statement, and any
and all amendments thereto, relating to the offering covered hereby filed
pursuant to Rule 462(b) under the Securities Act of 1933, with the Securities
and Exchange Commission, each of said attorneys-in-fact and agents to have the
power to act with or without the others and to have full power and authority to
do and perform in the name and on behalf of each of the undersigned every act
whatsoever necessary or advisable to be done in and about the premises, as
fully to all intents and purposes as any of the undersigned might or could do
in person, and we hereby ratify and confirm our signatures as they may be
signed by our said attorneys-in-fact and agents or each of them to any and all
such amendments and instruments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Gerald Gorman Chairman and Chief Executive Officer August 4, 2000
--------------------------------- and Director (principal executive
(Gerald Gorman) officer)
/s/ Gary Millin Director August 4, 2000
---------------------------------
(Gary Millin)
/s/ Debra McClister Executive Vice President and Chief August 4, 2000
--------------------------------- Financial Officer (principal
(Debra McClister) accounting and finance officer)
/s/ William Donaldson Director August 4, 2000
---------------------------------
(William Donaldson)
/s/ Thomas Murawski Director August 4, 2000
---------------------------------
(Thomas Murawski)
</TABLE>
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney (set forth on signature page hereof).
</TABLE>
