<PAGE>
As filed with the Securities and Exchange Commission on
August 11, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8/S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 (Including Registration of
shares for resale by means of a Form S-3 Prospectus)
-------------------------
IBEAM BROADCASTING CORPORATION
(Exact name of Registrant as specified in its charter)
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<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 94-3296895
(State or other jurisdiction of 645 Almanor Avenue, Suite 100 (I.R.S. Employer
incorporation or organization) Sunnyvale, CA 94086 Identification Number)
</TABLE>
(408) 523-1600
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-------------------------
1998 Stock Plan
webcasts.com 1999 Stock Option Plan
2000 Stock Plan
2000 Employee Stock Purchase Plan
2000 Director Plan
(Full title of the plans)
-----------------------------
CHRIS DIER
Chief Financial Officer
IBEAM Broadcasting Corporation
645 Almanor Avenue, Suite 100
Sunnyvale, CA 94086
(408) 523-1600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies to:
BARRY TAYLOR, ESQ.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
CALCULATION OF REGISTRATION FEE
<TABLE>
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Registration
to be Registered Registered Share Price Fee
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<S> <C> <C> <C> <C>
Common Stock $0.0001 per share par value: Issued
under the 1998 Stock Plan....................... 843,639 shares $10.875 (1) $9,174,574.13 (1) $2,422.09
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Common Stock $0.0001 per share par value: To be 12,322,427
issued under the 1998 Stock Plan................ shares $5.1716 (2) $63,726,663.47 (2) $16,823.84
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Common Stock, $0.0001 per share par value: To be
issued under the webcasts.com, Inc. 1999 Stock
Option Plan..................................... 532,097 shares $3.5386 (2) $1,882,878.44(2) $497.08
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Common Stock, $0.0001 per share par value: To be
issued under the 2000 Stock Plan................ 1,575,681 shares $10.8934 (2) $17,164,523.41 (2) $4,531.43
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Common Stock: $0.0001 per share par value:
Available for issuance under the 2000 Stock Plan 8,063,319 shares $10.875 (1) $87,688,594.13 (1) $23,149.79
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Common Stock: $0.0001 per share par value:
Available for issuance under the 2000 Employee
Stock Purchase Plan............................. 1,500,000 shares $10.875 (1) $16,312,500.00 (1) $4,306.50
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Common Stock, $0.0001 per share par value.
Available for issuance under the 2000 Director
Option Plan..................................... 688,500 shares $10.875 (1) $7,487,437.50 (1) $1,976.68
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25,525,663
Total: shares $203,437,171.07 $53,708
====================================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
prices of the Common Stock as reported on the Nasdaq National Market on
August 9, 2000.
(2) The registration fee for the shares of Common Stock to be issued pursuant
to outstanding options under each employee stock option plan, was
calculated in accordance with Rule 457(h) of the Securities Act based upon
the weighted average price per share at which the options may be exercised.
<PAGE>
EXPLANATORY NOTE
This registration statement relates to (i) 24,682,024 shares of common
stock to be issued in the future upon the exercise of options or the purchase of
stock under our employee benefit plans and (ii) the resale of 843,639 shares of
common stock previously issued under our employee benefit plans.
<PAGE>
PROSPECTUS
843,639 Shares
iBEAM BROADCASTING CORPORATION
Common Stock
------------
This prospectus relates to 843,639 shares of the common stock of iBEAM
Broadcasting Corporation, which may be offered from time to time by selling
stockholders identified on page 23 of this prospectus. It is anticipated that
the selling stockholders will offer shares for sale at prevailing prices in the
Nasdaq National Market on the date of sale. We will receive no part of the
proceeds from sales of the shares. The selling stockholders will bear all sales
commissions and similar expenses. Any other expenses incurred by us in
connection with the registration and offering and not borne by the selling
stockholders will be borne by us. The shares were acquired by the selling
stockholders under our employee benefit plans.
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Our common stock is listed on the Nasdaq National Market under the
symbol "IBEM." On August 9, 2000, the last reported sale price of our common
stock on the Nasdaq National Market was $10.50 per share.
-------------------
See "Risk Factors" beginning on page 6 to read about certain risks that
you should consider before buying shares of our common stock..
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These securities have not been approved or disapproved by the
Securities and Exchange Commission nor has the Commission passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
-------------------
The date of this prospectus is August 11, 2000
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. Certain selling
stockholders are offering to sell shares and seeking offers to buy shares only
in jurisdictions where offers and sales are permitted. The information contained
in or incorporated by reference in this prospectus is accurate only as of the
date of this prospectus, regardless of the time of delivery of this prospectus
or any sale of our common stock.
TABLE OF CONTENTS
Page
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Where You Can Find More Information..................... 3
Information Incorporated by Reference................... 3
Our Company............................................. 4
Special Note Regarding Forward-Looking Statements....... 5
Risk Factors............................................ 6
Use of Proceeds......................................... 23
Selling Stockholders.................................... 23
Plan of Distribution.................................... 24
Legal Matters .......................................... 25
Experts................................................. 25
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, a
registration statement on Form S-8/S-3, of which this prospectus is a part,
under the Securities Act with respect to the shares of common stock offered
hereby. The prospectus does not contain all of the information included in the
registration statement. Statements contained in this prospectus concerning the
provisions of any document are not necessarily complete. You should refer to the
copies of these documents filed as exhibits to the registration statement or
otherwise filed by us with the SEC for a more complete understanding of the
matter involved. Each statement concerning these documents is qualified in its
entirety by such reference.
We are also subject to the informational requirements of the Securities
Exchange Act of 1934. In accordance with the Exchange Act we file reports, proxy
statements and other information with the SEC. The registration statement,
including the attached exhibits and schedules, may be inspected and copied at
the public reference facilities maintained by the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional
offices at 500 West Madison Street, Suite 1400, Chicago, IL 60661 and Seven
World Trade Center, 13th Floor, New York, NY 10048. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. The SEC
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
Copies of the registration statement and the reports, proxy and information
statements and other information that we file with the SEC may be obtained from
the SEC's Internet address at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents and information previously filed with the
Securities and Exchange Commission by us are hereby incorporated by reference in
this registration statement:
(1) We have filed a registration statement on Form S-1
(Registration No. 333-95833) under the Securities Act of 1933,
as amended, in the form declared effective on May 17, 2000
including the prospectus dated May 17, 2000 as filed by the us
pursuant to Rule 424(b) on May 18, 2000
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2000, filed pursuant to Section 13 of the Exchange
Act.
(3) The description of our common stock contained in our
registration statement on Form 8-A filed May 16, 2000 pursuant
to Section 12(g) of the Exchange Act and declared effective
May 17, 2000.
All reports and other documents subsequently filed by us pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus and prior to the filing of a post-effective amendment which indicates
that all securities registered have been sold or which de-registers all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be part hereof from the date of
filing of such documents. You may request a copy of these filings, at no cost,
by writing or telephoning Rick Gaisser, Director of Investor Relations, iBEAM
Broadcasting Corporation, at 645 Almanor Avenue, Suite 100, Sunnyvale, CA 94086
and our telephone number is (408) 523-1600.
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<PAGE>
OUR COMPANY
We provide an Internet broadcast network that delivers streaming media
to large audiences of simultaneous users with viewing and listening quality that
can approach that of television and radio. Streaming is a media distribution
process that allows simultaneous broadcasting and playback of video and audio
content. Our network uses a combination of land-line networks and
point-to-multipoint satellite broadcasting, which is the use of satellite
technology to broadcast streaming content simultaneously to large,
geographically dispersed audiences. Our network is designed to broadcast
directly to iBEAM servers located at the edge of Internet, the Internet access
point closest to the end user. This improves the quality of the broadcast stream
by avoiding Internet congestion. Our network broadcasts to iBEAM servers located
in the facilities of Internet service providers, or ISPs, and other companies
that host Internet applications and services.
We provide a wide range of services to our content provider customers
to facilitate their use of streaming media on the Internet, including event
production and broadcasting services. To expand our service offerings to our
customers, we have acquired and developed software and interface tools that
enable us to broadcast high-fidelity video and audio streams integrated with
e-commerce links and functions. Our investment in servers at the edge of the
Internet will also allow for the development of new value-added services in the
future, such as pay-per-view event programming, advertising to targeted end
users and interactive Internet-based training.
The Internet was not designed to support the traffic load created by
broadcasting full-motion video or high-fidelity audio simultaneously to large
audiences. Users, however, are investing in high-speed Internet connections to
their homes and businesses, such as digital subscriber lines, or DSL, and cable
modems, to improve their viewing and listening quality and are increasing the
traffic load on the Internet causing web congestion and degradation of viewing
and listening quality. Despite these limitations, existing websites, traditional
media companies, new media companies and creators of new applications, such as
online education, are aggressively trying to attract and retain Internet users
by using greater amounts of streaming audio-visual content. The Gartner Group
projects that approximately 50% of websites will include some streaming media by
2001, a five-fold increase from 1998. Our approach of using a combination of
land-line networks and satellite broadcasting to deliver content directly to the
edge of the Internet bypasses much of the web congestion and improves the
delivery of streaming audio-visual media and the quality of the viewing and
listening experience.
Our logo and certain titles and logos of our services are our
trademarks. Each trademark, trade name or service mark of any other company
appearing in this prospectus belongs to its holder. The terms iBEAM Broadcasting
and iBEAM are our service marks or trademarks that are registered or otherwise
protected under the laws of various jurisdictions.
We were incorporated in Delaware in March 1998. Our principal executive
offices are located at 645 Almanor Avenue, Suite 100, Sunnyvale, CA 94086 and
our telephone number is (408) 523-1600. Our website is ibeam.com. The
information on the website is not a part of this prospectus.
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<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements within "Our Company," "Risk Factors," and
elsewhere in this prospectus constitute forward-looking statements. These
statements involve known and unknown risks, uncertainties, and other factors
that may cause our or our industry's actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue" or
the negative of these terms or other comparable terminology. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of these statements.
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<PAGE>
RISK FACTORS
You should consider carefully the following risks before you decide to
buy our common stock. If any of the following risks actually materializes, our
business, financial condition or results of operations would likely suffer. In
such case, the trading price of our common stock could fall, and you could lose
all or part of the money paid to buy our common stock.
Because we are an early stage company that has generated limited revenues
and only recently began offering our services in October 1999, our business and
prospects are unproven and difficult to evaluate.
We were founded in March 1998 and began offering our Internet
broadcasting services for streaming video and audio in October 1999. The revenue
and income potential of our services and business and the size of our market are
unproven. We have limited meaningful historical financial data upon which to
base planned operating expenses and upon which investors may evaluate us and our
prospects. In addition, our operating expenses are largely based on anticipated
revenue trends and a high percentage of our expenses are and will continue to be
fixed for the foreseeable future. Accordingly, we are subject to all of the
risks that are associated with companies in an emerging industry and in an early
stage of development, particularly companies in the rapidly evolving Internet
infrastructure market, including:
. Undercapitalization;
. Cash shortages;
. The unproven nature of our business plan;
. The new and unproven nature of the market for our services;
. The need to make significant expenditures and incur significant
expenses as we develop our business and network;
. The lack of sufficient clients and revenues to sustain our operations
and growth without additional financing;
. Difficulties in managing growth including integration of businesses
that may be acquired into our business; and
. Limited experience in providing some of the services that we offer or
plan to offer.
If we are unsuccessful in addressing these risks, our business may be
seriously harmed.
We are entirely dependent on our Internet broadcasting services and
applications, and our future revenue depends on their commercial success.
Our future revenue growth depends on the commercial success of our
Internet broadcasting services and applications. We have recently begun to
commercially introduce our streaming video and audio services and applications,
and our future revenue growth will depend upon customer demand for these
services and applications. Failure of our current and planned services and
applications to operate as expected or the occurrence of any service
interruptions or technical problems with our network could delay or prevent
customer acceptance of our services. If our target customers do not adopt and
purchase our current and planned services, our revenue will not grow
significantly and we may not become profitable as a result.
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<PAGE>
The current pricing of our On-Air and On-Demand services may not meet our
gross margin objectives if less than 50% of the demand for content offered
through these services is being served from the edge of the Internet.
We have priced our content delivery services on the assumption that by
2001 we will enjoy the benefits of delivering at least 50% of On-Air and
On-Demand services from the edge of the Internet, which is the access point
closest to the end user. However, there can be no assurance that at least 50% of
the demand will come from consumers served by ISP's enabled with iBEAM edge
service. Current experience indicates that the largest percentage of the demand
for content delivered through our On-Air and On-Demand services is being
generated by end-users accessing Internet radio and news from their offices and
therefore requires more expensive land line delivery. If more than 50% of user
demand comes from users that cannot be served from the edge of the Internet, the
current pricing for our On-Air and On-Demand services will not meet our gross
margin targets. As a result, we may have to increase our prices, which could
decrease the demand for our services and harm our financial results.
Our ability to build our broadcast network to the edge of the Internet is
dependent on our relationship with Internet service providers.
The long-term growth in demand for On-Air and On-Demand services for
the consumer market depends on our ability to build our broadcast network to the
edge of the Internet. An edge network provides content providers with
competitively better quality and lower-cost distribution of streaming video and
audio content to home consumers. The development of our edge network requires
that we locate our servers in the facilities of ISPs, which control the Internet
access points closest to the end user. Based on current contracts with ISP's and
installation plans, we expect to be able to serve up to 40% of Internet home
consumers on our network through our servers located at the edge of the Internet
by the end of 2000. In order to achieve this deployment, we estimate that we
will need to make at least $2.0 million in capital expenditures for edge servers
during the second half of 2000. We may choose to accelerate the deployment of
our network or increase expenditures relating to our network. There can no
assurance that consumer demand for our edge service will result in 40% of
traffic being delivered to our edge servers by the end of year 2000.
To accomplish our business strategy of developing an edge network, we
will need to deploy our edge servers in the facilities of Internet service
providers. Although we provide Internet service providers with our servers at no
cost, Internet service providers may nevertheless refuse to allow us to install
our equipment in their facilities. If we are unable to further develop our edge
network, our costs may increase and our services may not eliminate packet loss
and jitter, resulting in poor quality service. If the quality of our services
suffers we may lose or fail to obtain customers, which would harm our revenues.
Therefore, our failure to deploy our edge servers close to the end user will
cause our business and results of operations to suffer greatly. The development
of our edge network will require that we not only enter into additional
agreements with ISPs to locate our servers in their facilities, but also that we
successfully move content from our hosting centers to our edge servers such that
we serve end users from the edge.
Our agreements with larger ISPs are critical to the success of our
business plan because through these agreements we gain access to large numbers
of end users that we can reach through our satellite distribution network rather
than through land-lines. Our agreements with high speed Internet access
providers are important because through these agreements we can reach Internet
users with high-speed or "broadband" connections from the edge of the Internet.
These users tend to access greater volumes of streaming content. Unless we can
reach large numbers of Internet users through our edge network, our services
will not be attractive to content providers. In order to secure agreements with
large ISPs and high speed Internet access providers, in some instances we have
agreed to share between 15% and 20% of the revenue we derive from content
delivered through their networks. We have also agreed to make non-refundable
prepayments to ISPs in the amount of $5.5 million, of which $3.0 million has
been paid as of June 30, 2000.
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<PAGE>
Our agreement with America Online provides that we will deploy our
servers in America Online's facilities in North America. Considering the reach
of America Online's network and market position as the leading provider of
Internet access in the United States, our agreement with America Online is
critical to our strategy of delivering more content to the edge of the Internet.
The agreement will increase the availability of content delivered through our
network on the edge of the Internet. The agreement with America Online has an
initial two year term, but may be terminated by either party for material breach
by the other upon 30 days notice. In addition, in the first year of the
agreement America Online has the right to terminate the agreement if we do not
deliver a required level of Internet content through their network. A
termination of, or adverse change in, our relationship with America Online would
seriously impair our efforts to establish and maintain an Internet broadcast
network that can reach most U.S. Internet users.
Our agreement with Excite@Home provides that we will deploy our servers
in Excite@Home national data centers upon Excite@Home's completion of their
centers. Considering Excite@Home's position as a provider of high-speed Internet
access though cable access, our agreement is important to the development of our
network on the edge of the Internet. The agreement has a three year term. Either
party may terminate the agreement with 30 days notice upon a material default by
the other. Excite@Home may terminate the agreement upon 30 days notice upon a
change of control of iBEAM. In addition, Excite@Home may terminate the agreement
without cause after two years. A termination of, or adverse change in, our
relationship with Excite@Home would seriously impair our efforts to establish an
Internet broadcast network that can broadcast to the edge of the Internet.
Our agreement with Covad provides that we will deploy our servers in
Covad's network, which is in North America. Considering the size of Covad's
network and market position as a provider of broadband access using digital
subscriber line, or DSL, technology, our agreement is important to the
deployment of our edge servers. Within the first year of our agreement with
Covad, either party may terminate the agreement upon 60 days notice. During the
second and third years of the agreement, either party may terminate the
agreement upon a material breach by the other. A termination of, or adverse
change in, our relationship with Covad could harm our efforts to deploy our edge
servers and our ability to develop new technologies that complement our existing
service offerings.
Our agreement with Northpoint provides that we will deploy our services
in Northpoint's network, which is in North America. Considering the size of
Northpoint's network and market position as a provider of broadband access, our
agreement is important to the deployment of our edge servers. The agreement has
a three year term and is terminable by either party upon 60 days notice in the
first year of the agreement. In the second and third years of the agreement,
either party may terminate the agreement due to a material breach by the other.
A termination of, or adverse change in, our relationship with Northpoint could
harm our efforts to deploy our edge servers.
Because our Internet broadcasting network is complex and is deployed in
complex environments, it may have errors or defects that could seriously harm
our business.
Our Internet broadcasting network is highly complex and is deployed in
complex environments. Because of the nature of our services, we can only fully
test it when it is fully deployed in very large networks with high traffic
volumes. Given the current early stage of deployment of our network, we cannot
test it for all possible defects. However, as a result of testing conducted to
date, we and our customers have from time to time discovered errors and defects
in our software. Since we commenced offering our services in October 1999, we
have experienced four network outages, one of which was due to failure of our
network software and three of which were due to outages of third party land-line
network services providers. We may continue to experience problems with our
software. Outages that have occurred to date have resulted in between one and
nine hours of network downtime during which time we were prevented from
delivering our services to our customers. These downtimes resulted in lost
revenues for usage not billed during down periods.
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<PAGE>
In the future, there may be additional errors and defects in our
software and servers that may adversely affect our service. If we are unable to
efficiently fix errors or other problems that may be identified, we could
experience:
. Loss of or delay in sales and loss of market share;
. Loss of customers;
. Failure to attract new customers or achieve market acceptance;
. Diversion of development resources;
. Loss of credibility;
. Increased service costs; or
. Legal action by our customers.
Any failure of our network infrastructure or the satellite or land-line
communication services provided to us by third part providers could lead to
significant costs and disruptions which could harm our reputation and cause us
to lose customers, which would have a negative impact on our revenues.
Our business and reputation are dependent on providing our customers
with high-fidelity and low-cost Internet broadcasting services through our
network. To meet these customer requirements, we must protect our network
infrastructure against damage from:
. Human error;
. Network software errors;
. Physical or electronic security breaches;
. Fire, earthquake, flood and other natural disasters;
. Power loss; and
. Sabotage and vandalism.
Our costs are generally higher and quality of service is generally
lower when we deliver content to end users from our hosting centers rather than
our edge servers. As a result, the occurrence of any of the unanticipated
problems listed above at one or more of our edge servers could result in service
interruptions or significant damage to equipment, increase our costs and cause a
degradation in the quality of our services. Further, if we are unable to provide
our network services to our customers, we could face legal action by our
customers, which would be costly and divert management's attention from
important business activities. Because our servers are located in the facilities
of others, such as Internet service providers and Internet hosting companies, we
must rely on others to protect our equipment.
Our network architecture uses satellite transmission to bypass the
congestion of the Internet backbone by broadcasting directly to our edge
servers. We have entered into a three-year agreement with a satellite service
provider for transmission capacity over a specified satellite. While the
agreement provides for a back-up satellite if difficulties arise with our
designated satellite, if we are required to change the designated satellite we
would be required to readjust our equipment. This adjustment could take several
weeks and would
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<PAGE>
result in a decrease in the quality of our service and an increase in our cost
relating to the more expensive transmission costs of distributing content from
our hosting centers over our land-line network. The ongoing failure of the
satellite service we use could prevent us from broadcasting content directly to
the edge of the Internet. This would significantly increase our costs and reduce
our ability to cost-effectively broadcast high-fidelity streaming video and
audio content.
Since we commenced offering our services in October 1999, we have
experienced four network outages. One was caused by a failure of one of our
servers and the other three were caused by a failure in the land-line
communication services provided to us by third parties. Outages that have
occurred to date have resulted in between one and nine hours of network downtime
during which time we were prevented from delivering our services to our
customers. These downtimes resulted in lost revenues for usage not billed during
down periods.
We may have inaccurately predicted our satellite capacity needs and may
find it difficult to add capacity when needed on reasonable terms.
We may need to add additional satellite capacity as we take on
additional content provider customers that distribute their content over our
network. Increases in the amount of content that is broadcast through our
network decreases our remaining satellite capacity. We are currently using only
a small fraction of our contracted for capacity. Nevertheless, we cannot assure
you that we have contracted for sufficient satellite capacity under our current
three-year satellite capacity contract, that we will be able to renew this
contract or that we would be able to increase satellite capacity through our
current or a potential additional provider. Additional capacity may not be
available to us on reasonable terms or at all. Failure to obtain necessary
capacity would limit revenue growth.
The market for Internet broadcasting services is new and our business will
suffer if it does not develop as we expect.
The market for Internet broadcasting services is new and rapidly
evolving. Content providers, such as existing web-based companies and
traditional media and entertainment companies, may not increasingly seek to
broadcast streaming video and audio over the Internet. Therefore, we cannot be
certain that a viable market for our services will emerge or be sustainable. If
this market does not develop, or develops more slowly than we expect, our
revenues will suffer and we may not become profitable.
The markets in which we operate are highly competitive and we may be unable
to compete successfully against new entrants and established companies with
greater resources.
We compete in a market that is new, intensely competitive, highly
fragmented and rapidly changing. We have experienced and expect to continue to
experience increased competition. Many of our current competitors, as well as a
number of our potential competitors, have longer operating histories, greater
name recognition and substantially greater financial, technical and marketing
resources than we do. Some of our current and potential competitors have the
financial resources to withstand substantial price competition. Moreover, many
of our competitors have more extensive customer bases, broader customer
relationships and broader industry alliances that they could use to their
advantage in competitive situations, including relationships with many of our
current and potential customers. We do not have exclusive contracts with
Internet service providers for the deployment of our servers within their
networks and we expect that many Internet service providers will allow our
competitors to install equipment at their sites. In addition, our competitors
may be able to respond more quickly than we can to new or emerging technologies
and changes in customer requirements.
Some of our current or potential competitors may bundle their services
with other software or hardware to offer a full range of Internet broadcasting
products and services to meet all of the content
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<PAGE>
distribution needs of content providers. We currently do not offer a full range
of products and services. This may discourage content providers from purchasing
services we offer or Internet service providers from installing our servers in
their facilities.
As competition in the Internet broadcasting market continues to
intensify, new solutions will come to market. We are aware of other companies
that are focusing or may in the future focus significant resources on developing
and marketing products and services that will compete with ours. We believe our
competitors primarily come from five market segments:
. Internet content distribution networks which accelerate delivery of
web pages, such as Akamai, Digital Island, Enron Communications and
Intel;
. Internet webcasting companies that deliver streaming media through
land- line networks, such as InterVu which was acquired by Akamai;
. Internet software vendors that reduce the cost of content distribution
by storing content near the end user, such as Inktomi;
. Internet production and event services companies, such as
Broadcast.com and Network24 Communications which was acquired by
Akamai; and
. Satellite companies that deliver streaming video through satellite
networks, such as PanAmSat and Cidera.
Increased competition could result in:
. Price and revenue reductions and lower profit margins;
. Increased cost of service from telecommunications providers and
revenue sharing demands by ISPs;
. Loss of customers; and
. Loss of market share.
Any one of these results would harm our financial results.
We believe that the Internet broadcasting and content delivery industry
is likely to encounter consolidation, such as the recent acquisition of InterVu
by Akamai, both of which compete with us. This consolidation could lead to the
formation of more formidable competitors and could result in increased pressure
on us to decrease our prices. In addition, consolidation among Internet content
providers could reduce the number of potential customers for our services and
may increase the bargaining power of these organizations, which could force us
to lower prices.
Because our Internet content provider customers may terminate the use of
our services at any time without penalty, revenues from these customers may
decrease significantly without notice.
We do not have exclusive contracts with our Internet content provider
customers. These customers may refrain from using our services or shift to use
the services of our competitors at any time without penalty. There is a risk
that some content providers will determine that it is more cost effective for
them to develop and deploy their own Internet broadcasting or content delivery
systems than it is to outsource these services to companies such as iBEAM.
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This competitive threat is particularly acute from content providers
that own content distribution networks. If any of our existing or future content
provider customers make this determination and refrain from using our services,
our revenues will be harmed. A vertically integrated competitor is more likely
to use their internal resources rather than outsourcing these services to us.
If our commercial relationship with Microsoft terminates, then our business
could be harmed.
We entered into an agreement with Microsoft Corporation in September
1999. Our agreement with Microsoft provides that Microsoft will recommend us as
a service provider for the delivery of broadband streaming media over the
Internet. Considering the widespread acceptance of Microsoft's Windows
technology, we believe Microsoft's recommendation in this regard will be an
important source of customers for us. This agreement may be terminated by either
Microsoft or us if the other party materially breaches the agreement. A
termination of, or significant adverse change in, our relationship with
Microsoft could harm our ability to obtain customers and develop new
technologies that complement our existing service offerings.
Our business will suffer if we do not respond rapidly to technological
changes or if new technological developments make our services non-competitive
or obsolete.
The market for Internet broadcasting services is characterized by rapid
technological change, frequent new product and service introductions and changes
in customer requirements. We may be unable to respond quickly or effectively to
these developments. If competitors introduce products, services or technologies
that are better than ours or that gain greater market acceptance, or if new
industry standards emerge, our services may become non-competitive or obsolete,
which would harm our revenues and cause our business and financial results to
suffer. In addition, technological developments could eventually make Internet
infrastructure much faster and more reliable such that performance enhancing
services like those we provide would be less relevant to content providers.
In developing our service, we have made, and will continue to make,
assumptions about the standards that our customers and competitors may adopt. If
the standards adopted are different from those which we may now or in the future
promote or support, market acceptance of our service may be significantly
reduced or delayed and our business will be seriously harmed. In addition, the
emergence of new industry standards could render our existing services
non-competitive or obsolete.
We had operating losses of $30.2 million for the year ended December 31,
1999 and $55.6 million for the six months ended June 30, 2000 and our
accumulated deficit was $99.4 million as of June 30, 2000. Considering that
operating expenses are expected to increase in future periods we will need to
increase our revenues significantly to achieve profitability.
We have never been profitable. We had operating losses of $30.2 million
for the year ended December 31, 1999 and $55.6 million for the six months ended
June 30, 2000 and our accumulated deficit was $99.4 million as of June 30, 2000.
Considering that operating expenses are expected to increase in future periods
we will need to increase our revenue significantly to achieve profitability. Our
operating losses as a percentage of revenue were 20,247% in 1999 and 1,420% for
the first six months 2000. In fiscal 2000, based on the planned deployment of
our network, we expect to have capital expenditures of at least $60.0 million,
of which approximately $39.8 million was incurred in the first six months. We
expect to continue to incur increasing operating losses in the future. We will
apply the proceeds from our initial public offering to pay for our capital
expenditures and to fund these losses.
We cannot be certain that our revenue will grow or that we will achieve
sufficient revenue to achieve profitability. Our failure to significantly
increase our revenue would seriously harm our business and operating results. We
have large fixed expenses, and we expect to continue to incur significant and
increasing sales and marketing, product development, administrative and other
expenses, including fees to obtain access
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to bandwidth transport of data over our network, while we build out our network
to the edge of the Internet. As a result, we will need to generate significantly
higher revenues to achieve and maintain profitability. If our revenue grows more
slowly than we anticipate or if our operating expenses increase more than we
expect or cannot be reduced in the event of lower revenue, we may not become
profitable.
The uncertainty in the sales and installation cycles for our service
resulting from our limited operating history may cause revenue and operating
results to vary significantly and unexpectedly from quarter to quarter, which
could adversely affect our stock price.
Because of our limited operating history and the nature of our
business, we cannot predict our sales and installation cycles. The uncertain
sales and installation cycles may cause our revenue and results of operations to
vary significantly and unexpectedly from quarter to quarter. If this occurs and
our quarterly operating results fall below the expectations of our investors or
securities analysts, if any are covering our common stock, then the market price
of our common stock could decline.
We expect the rates we can charge for our services to decline over time,
which could reduce our revenue and could cause our business and financial
results to suffer.
We expect the prices we can charge for our Internet broadcasting
services will decline over time as a result of, among other things, the
increasing availability of bandwidth at reduced costs and existing and new
competition in the markets we address. If we fail to accurately predict the
decline in costs of bandwidth or, in any event, if we are unable to sell our
service at acceptable prices relative to our costs, or if we fail to offer
additional services from which we can derive additional revenue, our revenue
will decrease and our business and financial results will suffer.
We are currently pricing our services at levels that exceed our direct
variable costs but are insufficient to cover indirect costs such as our network
operations center and billing system. There is no assurance that our revenues
will increase to cover our increasing indirect costs, or that we have accurately
estimated indirect costs. If we fail to increase revenues, we may not be able to
achieve or maintain profitability.
Our business will suffer if we do not anticipate and meet specific customer
requirements.
Our current and prospective customers may require features and
capabilities that our current service offering does not have. To achieve market
acceptance for our service, we must effectively and timely anticipate and adapt
to customer requirements and offer services that meet these customer demands.
The development of new or enhanced services is a complex and uncertain process
that requires the accurate anticipation of technological and market trends. We
may experience design, manufacturing, marketing and other difficulties that
could delay or prevent the development, introduction or marketing of these new
or enhanced services. In addition, the introduction of new or enhanced services
also requires that we manage the transition from older services to minimize
disruption in customer service and ensure that we can deliver services to meet
anticipated customer demand. Our failure to offer services that satisfy customer
requirements would decrease demand for our products and seriously harm our
revenues and financial results.
Our business will suffer if we do not expand our direct and indirect sales
organizations and our customer service and support operations.
We currently have limited sales and marketing experience and limited
trained sales personnel. Our limited experience may restrict our success in
commercializing our services. Our services require a sophisticated sales effort
targeted at a limited number of key people within our prospective customers'
organizations. This sales effort requires the efforts of trained sales
personnel. We need to expand our marketing and sales organization in order to
increase market awareness of our service and generate increased revenue. We are
in the process of building our direct sales force and plan to hire additional
qualified sales
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personnel. Competition for these individuals is intense, and we might not be
able to hire the kind and number of sales personnel we need. In addition, we
believe that our future success is dependent upon our ability to establish
successful relationships for indirect sales with a variety of distribution
partners. If we are unable to expand our direct and indirect sales operations,
we may not be able to increase market awareness or sales of our service, which
may prevent us from increasing our revenue and achieving and maintaining
profitability.
Hiring customer service and support personnel is very competitive in
our industry because there is a limited number of people available with the
necessary technical skills and understanding of our market. Once we hire these
personnel, they require extensive training. If we are unable to expand our
customer service and support organization or train these personnel as rapidly as
necessary, we may not be able to maintain satisfied existing customers of our
service, which would harm our revenues and our ability to achieve or maintain
profitability.
We will incur significant costs relating to the planned expansion of
our marketing, sales and customer support organization. We are unable to
quantify the expenses associated with expanding our sales organization and
customer service and support operations because these expenses depend on a
number of factors relating to our operations, including the rate of hiring
personnel and the timing and amount of marketing and advertising expenses. We
expect that over the next two years these costs will significantly exceed any
revenues that we receive for our services. We expect to apply the proceeds from
this offering to the payment of these expenses. If our revenues do not grow in
the future, these costs may never be recuperated and we may not become
profitable.
We face a number of risks related to our acquisitions of webcasts.com and
Server-Side Technologies, and we may face similar risks in the future if we
acquire other businesses or technologies.
In April 2000, we acquired webcasts.com and in June 2000, we acquired
Server-Side Technologies. Also in July 2000 we entered into an agreement to
acquire NextVenue Inc. which is expected to close in the forth quarter of 2000.
If we are unable to effectively integrate these companies' products, personnel
and systems, our business and operating results are likely to suffer. The
integration of webcasts.com will be made more difficult because webcasts.com
operations are located in Oklahoma City, Oklahoma, where we otherwise have no
operations. We expect the integration of these companies to place a significant
burden on our management team by diverting management's attention from the
day-to-day operations of iBEAM.
As part of our business strategy, we frequently review acquisition and
strategic investment prospects that would complement our current service
offerings, augment our market coverage or enhance our technical capabilities, or
that may otherwise offer growth opportunities. If we make any future
acquisitions, we could:
. Issue equity securities, which would dilute current stockholders'
percentage ownership;
. Incur substantial debt, the holders of which would have claims to our
assets in preference to the holders of our common stock; or
. Assume contingent liabilities, which could materialize and involve
significant cost.
These actions could materially and adversely affect our operating
results and/or the price of our common stock. Acquisitions and investments may
require us to incur significant amortization and depreciation charges and
acquisition related costs that adversely affect our financial results.
Acquisitions and investment activities also entail numerous risks, including:
. Difficulties in the assimilation of acquired operations, technologies
or services;
. Unanticipated costs associated with the acquisition or investment
transaction;
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. Adverse effects on existing business relationships with suppliers and
customers;
. Risks associated with entering markets in which we have no or limited
prior experience; and
. Potential loss of key employees of acquired organizations.
We may not be able to successfully integrate webcasts.com, Server-Side
Technologies or any business, products, technologies or personnel that we might
acquire in the future, and our failure to do so could harm our business. We
continue to look for acquisitions and investments.
As a result of our recent acquisitions, we have recorded goodwill and
acquired intangibles, the amortization of which will increase our operating
expenses.
As a result of the webcasts.com acquisition, we recorded $95.2 million
of goodwill and acquired intangibles, which is amortized over a three-year
period. This will increase our operating expenses by approximately $21.1 million
in 2000, $31.7 million in 2001 and 2002 and $10.7 million in 2003. We also
recorded $0.4 million of intangibles related to the Server-Side Technologies
acquisition, which will be amortized over a three-year period. In addition,
based on NextVenue's capitalization and our share price of $18 per share on June
30, 2000, upon the closing of our acquisition of NextVenue we expect to record
$354.8 million of goodwill acquired intangibles, the amortization of which is
expected to occur over three to five years, pending completion of an independent
appraisal.
To the extent we do not generate sufficient cash flow to recover the
amount of the investment recorded, the investment could be considered impaired
and could be subject to earlier write-off. In such event, our net loss in any
given period could be greater than anticipated and the market price of our stock
could decline.
We will require additional capital in the future and may not be able to
secure adequate funds on terms acceptable to us.
The expansion and development of our business will require significant
capital, which we may be unable to obtain, to fund our capital expenditures and
operating expenses, including working capital needs. In fiscal 2000, we expect
to make $60.0 million in capital expenditures, of which $39.8 million was
incurred in the first six months, including investments in edge servers, hosting
centers and our network operations center, and we expect to incur significant
and increasing losses. In addition, we are obligated to invest $5 million in
iBEAM Asia and $10 million in iBEAM Europe. During the next twelve months, we
expect to meet our cash requirements with existing cash, cash equivalents and
short-term investments, the net proceeds from our initial public offering and
cash flow from sales of our services.
We may fail to generate sufficient cash flow from the sales of our
services to meet our cash requirements. Further, our capital requirements may
vary materially from those currently planned if, for example, our revenues do
not reach expected levels or we have to incur unforeseen capital expenditures
and make investments to maintain our competitive position. If this is the case,
we may require additional financing sooner than anticipated or we may have to
delay or abandon some or all of our development and expansion plans or otherwise
forego market opportunities. If we seek to raise additional capital through the
issuance of equity or equity-related securities, the percentage ownership of
existing stockholders will be diluted.
By mid-2001 and possibly sooner, we will need to raise additional
capital. We may not be able to obtain future equity or debt financing on
favorable terms, if at all. Future borrowing instruments such as credit
facilities and lease agreements are likely to contain restrictive covenants and
may require us to pledge
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assets as security for borrowings thereunder. Our inability to obtain additional
capital on satisfactory terms may delay or prevent the expansion of our
business.
We may decide to raise additional equity capital in the next twelve
months through a follow-on public offering. The decision to do a follow-on
public offering will depend on market conditions, including whether our stock
price has increased and whether there is additional demand for our stock, and
our need for additional funds at the time. Our business will suffer if we fail
to manage the expansion of our operations properly.
Our business will suffer if we fail to manage the expansion of our
operations properly.
We have grown rapidly by hiring new employees and by expanding our
offering of services. Our total number of employees grew from approximately 40
on March 31, 1999 to 420 on June 30, 2000 and several members of our senior
management team have only recently joined us. The acquisitions of webcasts.com
and Server-Side Technologies added 94 employees. This growth has placed, and our
growth in future operations, if any, will continue to place, a significant
strain on our management systems and resources. Our ability to offer our
services and implement our business plan in a rapidly evolving market requires
an effective planning and management process. If we fail to:
. Improve our financial and managerial controls, reporting systems and
procedures,
. Hire, train, manage and retain additional qualified personnel,
including additional senior management level personnel to fulfill our
current of future needs,
. Integrate the operations of webcasts.com and Server-Side Technologies,
and
. Effectively manage and multiply relationships with our customers,
suppliers, and other third parties,
We may be unable to execute our business plan, which would curtail our
growth and harm our results of operations.
In addition, we have recently hired and plan to hire in the near future
a number of key employees and officers. To become integrated into our company,
these individuals must spend a significant amount of time learning our business
model and management system, in addition to performing their regular duties.
Accordingly, the integration of new personnel has resulted and will continue to
result in some disruption to our ongoing operations. If we fail to integrate new
employees in an efficient manner, our business and financial results will
suffer.
The unpredictability of our quarterly results may adversely affect the
trading price of our common stock.
Our revenue and operating results will vary significantly from quarter
to quarter due to a number of factors, many of which are outside of our control
and any of which may cause our stock price to fluctuate. The primary factors
that may affect our quarterly results include the following:
. Fluctuations in the demand for our Internet broadcasting services;
. The timing and size of sales of our services;
. The timing of recognizing revenue and deferred revenue;
. New product and service introductions and enhancements by our
competitors and ourselves;
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. Changes in our pricing policies or the pricing policies of our
competitors;
. Increases in the prices of, and availability of, the products,
services or components we purchase, including bandwidth;
. Our ability to attain and maintain quality levels for our services;
. Expenses related to testing our services;
. Costs related to acquisitions of technology or businesses; and
. General economic conditions as well as those specific to the Internet
and related industries.
We plan to increase significantly our operating expenses to fund the
build-out of our broadcast network, accelerate engineering and development,
expand our sales and marketing operations, broaden our customer support
capabilities and continue to develop new distribution channels. We also plan to
expand our general and administrative functions to address the increased
reporting and other administrative demands resulting from our initial public
offering and the increasing size of our business. Our operating expenses are
largely based on anticipated revenue trends and a high percentage of our
expenses are, and will continue to be, fixed in the short term. As a result, a
delay in generating or recognizing revenue for the reasons set forth above, or
for any other reason, could cause significant variations in our operating
results from quarter to quarter and could result in substantially operating
losses.
Due to the above factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that in some future quarters our operating results may
be below the expectations of investors and security analysts, if any follow our
stock. In this event, the price of our common stock will probably fall.
We rely on a limited number of customers, and any decrease in revenues
from, or loss of, these customers, without a corresponding increase in revenues
from other customers, would harm our operating results.
Our customer base is limited and highly concentrated. In the six months
ended June 30, 2000, iBEAM Asia accounted for 16% of revenue, and MTV
Interactive accounted for 12% of revenue. We expect that the majority of our
revenues will continue to depend on sales of our products to a small number of
customers. If current customers do not continue to place significant orders, we
may not be able to replace these orders. In addition, any downturn in the
business of existing customers could result in significantly decreased sales to
these customers, which could seriously harm our revenues and results of
operations. Sales to any single customer may vary significantly from quarter to
quarter.
America Online accounted for an aggregate of 20% of webcasts.com's
revenue in 1999. The loss of this customer, or a significant reduction in the
level of webcasts.com's services used by this customer, could seriously harm our
results of operations.
We expect to amortize stock-based compensation expense of $7.6 million in
the remainder of 2000, $8.6 million in 2001, $3.9 million in 2002, and $1.4
million in 2003, which will decrease our net earnings during these periods.
In connection with the grant of stock options to employees and
consultants for the period from March 20, 1998 (inception) to June 30, 2000, we
recorded unearned stock-based compensation of $34.7 million, of which $5.4
million was amortized during 1999 and $7.7 million was amortized in the first
six months of 2000. If our stock price increases, the amount of stock-based
compensation related to stock option
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grants to consultants would increase as the fair value of these grants is re-
measured at each reporting date using a Black-Scholes option pricing model.
These expenses will increase our losses during each of these periods and delay
our ability to achieve profitability.
We depend on our executive officers to manage our business effectively in a
rapidly changing market and, if we are unable to retain our executive officers,
our ability to compete could be harmed.
Our future success depends upon the continued services of our executive
officers who have critical industry experience and relationships that we rely on
in implementing our business plan. We do not have "key person" life insurance
covering any of our executive officers. The loss of services of any of our
executive officers could delay the development and introduction of and
negatively impact our ability to sell our services.
We face risks associated with international operations that could harm our
business.
To be successful, we believe we must expand our international
operations. Therefore, we expect to commit significant resources to expand our
international sales and marketing activities. We are currently targeting the
United Kingdom, Germany, France, Hong Kong, Singapore, Indonesia, Malaysia and
India for expansion. The expenses we will incur in expanding our international
operations will depend on the arrangements into which we will enter to provide
our services in such markets. These factors have yet to be determined.
In May 2000, we entered into an agreement with Pacific Century
CyberWorks to establish a joint venture, named iBEAM Asia, to introduce our
network services to the Pacific Rim, the Indian subcontinent and the Middle
East. In July 2000, we entered into an agreement with Societe Europenne Des
Satellites S.A. to establish a joint venture, named iBEAM Europe, to introduce
our network services to Europe. In order to bring our services to these regions,
the joint ventures will need to deploy a network of servers, which will involve
large capital expenditures and operating expenses. We initially expect to incur
approximately 49% of the operating losses of iBEAM Asia and 66% of the operating
losses of iBEAM Europe. We expect our ownership interests, and therefore our
share of the operating losses of the joint ventures, to decline in the future as
the joint ventures raise additional funding through sales of equity interests to
third parties, which would dilute our interests. We expect iBEAM Asia to begin
delivering content to end users by the end of 2000 and iBEAM Europe by the first
quarter of 2001. In connection with the formation of the joint venture, we will
contribute $5.0 million to iBEAM Asia and $10 million to iBEAM Europe. We expect
that the joint ventures will be funded thereafter from independent third party
sources. We may decide to provide additional financing to the joint ventures in
the future if the joint ventures is unable to raise additional funding from
third parties on favorable terms. In addition, we may provide additional
financing to iBEAM Europe to maintain our majority ownership.
In addition, in connection with our expansion into Asia, Europe, Latin
America, Africa and the Middle East pursuant to our agreement with InterPacket,
we will incur capital expenditures in connection with our deployment of servers
in InterPacket's network. InterPacket's network serves developing countries and
there can be no assurance that these markets will develop sufficiently to
justify our investments. We currently plan to begin placing servers in up to 20
locations in InterPacket's network in the second half of 2000. We expect that
our capital expenditures in 2000 in connection with deployment in InterPacket's
network will be less than $1.0 million.
We may be unable to maintain or increase market demand for our service
internationally, which may harm our business. As we expand internationally, we
will be increasingly subject to a number of risks associated with international
business activities that could increase our costs, lengthen our sales cycle and
require significant management attention. These risks include:
. Potential difficulty in enforcing intellectual property rights in
foreign countries;
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. Compliance with and unexpected changes in regulatory requirements
resulting in unanticipated costs and delays;
. Lack of availability of trained personnel in international locations;
. Tariffs, export controls and other trade barriers;
. Longer accounts receivable payment cycles than in the United States;
. Potential difficulty in obtaining access to additional satellite and
telecommunication transmission capacity;
. Potential difficulty of enforcing agreements and collecting
receivables in some foreign legal systems;
. Potentially adverse tax consequences, including restrictions on the
repatriation and earnings;
. General economic conditions in international markets; and
. Currency exchange rate fluctuations.
Any inability to adequately protect our intellectual property could harm
our competitive position.
We rely on a combination of patent, copyright, trademark and trade
secret laws and restrictions on disclosure to protect our intellectual property
rights. Our future growth, if any, will depend on our ability to continue to
seek patents and otherwise protect the intellectual property rights in our
network technology. However, these legal protections afford only limited
protection; competitors may gain access to our network technology, including our
software and server technology, which may result in the loss of our customers.
Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit or interfere with our ability to
make, use or sell our service. This would cause our revenues to decline and
seriously harm our results of operations.
We may in the future initiate claims or litigation against third
parties for infringement of our proprietary rights or to determine the scope and
validity of our proprietary rights or the proprietary rights of competitors.
These claims could result in costly litigation and the diversion of our
technical and management personnel. As a result, our operating results could
suffer and our financial condition could be harmed.
We could incur substantial costs defending our intellectual property from
infringement or a claim of infringement.
Any litigation or claims, whether or not valid, could result in
substantial costs and diversion of resources. Companies in the Internet industry
are increasingly bringing suits alleging infringement of their proprietary
rights, particularly patent rights. Our patent applications to date cover our
streaming platform standard, content management, distribution capabilities and
subscriber management. If a company brings a claim against us, we may be found
to infringe their proprietary rights. In the event of a successful claim of
infringement against us and our failure or inability to license the infringed
technology, our business and operating results would be significantly harmed.
In January 2000, we received a letter from a competitor, which
suggested that we review patents to which this competitor claims rights. These
patents purport to cover "a system and method for delivery of video and data
over a computer network." We believe that we do not infringe any claims of these
patents. However, there can be no assurance that this competitor will agree with
our conclusion or not pursue a claim or litigation against us. To date, no
complaint has been filed or served.
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Intellectual property litigation or claims could force us to do one or more of
the following:
. Cease selling, incorporating or using products or services that
incorporate the challenged intellectual property;
. Obtain a license from the holder of the infringed intellectual
property right, which license may not be available on reasonable terms
if at all; and
. Redesign products or services that incorporate the disputed
technology.
If we are forced to take any of the foregoing actions, we could face
substantial costs and our business may be seriously harmed. Although we carry
general liability insurance, our insurance may not cover potential claims of
this type or be adequate to indemnify us for all liability that may be imposed.
Internet-related laws could cause us to change the manner in which we
operate our network, which could be disruptive, time consuming and expensive.
Our Internet broadcast network is designed to deliver streaming media
to large audiences of simultaneous users. Currently our network and the media we
broadcast are largely unregulated, even though traditional television and radio
are highly regulated by the Federal Communications Commission. If laws and
regulations that apply to communications over the Internet are enacted that
require us to change the manner in which we operate our network, our business
could be disrupted with time consuming and expensive modifications of our
technology. In addition, our business could be harmed to the extent that our
content provider customers are adversely affected. Laws and regulations that
apply to communications over the Internet are becoming more prevalent. Several
bills are currently being considered by the U.S. Congress. Recently the U.S.
Congress enacted Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The European Union
recently enacted its own privacy regulations, and is currently considering
copyright legislation that may extend the right of reproduction held by
copyright holders to include the right to make temporary copies for any reason.
The adoption or modification of laws or regulations relating to the Internet, or
interpretations of existing law, could harm our business directly or indirectly
due to effects on our customers.
Our stock price may be volatile which could result in litigation against us
and substantial losses for our investors.
The market for technology stocks has been extremely volatile. The
following factors could cause the market price of our common stock in the public
market to fluctuate significantly:
. Announcements by us or our competitors of significant contracts, new
products or services offerings or enhancements, acquisitions,
distribution partnerships, joint ventures or capital commitments;
. Variations in our quarter-to-quarter operating results including our
failure to meet estimates of financial analysts;
. Changes in financial estimates by securities analysts, if any analysts
elect to follow our stock;
. Our sales of common stock or other securities in the future or
substantial sales by current stockholders after the 180-day lock-up
relating to our initial public offering expires;
. Changes in market valuations of networking, Internet and
telecommunications companies;
. The addition or departure of our personnel; and
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. Fluctuations in stock market prices and volumes.
In the past, class action litigation has often been brought against
companies following periods of volatility in the market price of those
companies' common stock. We may become involved in this type of litigation in
the future. Litigation is often expensive and diverts management's attention and
resources, which could materially and adversely affect our business and results
of operations.
Insiders beneficially own approximately 38% of our outstanding common
stock, which could limit our investors' ability to influence the outcome of key
transactions, including changes of control.
Our executive officers and directors, together with Accel Partners and
Crosspoint Venture Partners, each of which is an entity affiliated with one of
our directors, own in the aggregate approximately 38% of our outstanding common
stock. These stockholders, if acting together, would be able to influence
significantly all matters requiring approval by our stockholders, including the
election of directors and the approval of mergers or other business combination
transactions.
Provisions of our charter documents and agreements with some of our large
stockholders may have anti-takeover effects that could prevent a change in
control even if the change in control would be beneficial to our stockholders.
Our board of directors is divided into three classes, with each class
serving staggered three-year terms. This may discourage a third party from
making a tender offer or otherwise attempting to obtain control of us because it
generally makes it more difficult for stockholders to replace a majority of the
directors. We have in place procedures which prevent stockholders from acting
without holding a meeting and which limit the ease with which a stockholder
meeting can be called. We are subject to the "interested stockholder" provisions
of Delaware law which impose restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding common
stock. These provisions of our amended and restated certificate of
incorporation, by-laws, and Delaware law could make it more difficult for a
third party to acquire us, even if doing so would be beneficial to our
stockholders.
In addition, each of Microsoft, Sony, Pacific Century CyberWorks,
America Online, Covad and Liberty Media, which in the aggregate own
approximately 16% of our common stock, have agreed to vote their securities as
directed by our board of directors in any merger in which more than 50% of our
voting power is transferred or in a sale of substantially all of our assets.
This obligation lapses for each of these companies if and when it owns less than
5% of our voting power. Microsoft, Sony, Pacific Century CyberWorks, America
Online, Excite@Home and Covad have each also agreed not to acquire more than
15.0% of our voting stock at any time before the end of April 2005 without our
permission. Our agreement with these stockholders could make it more difficult
for a third party or one of these entities to acquire us, even if doing so would
be beneficial to our stockholders.
The sale of a substantial number of shares of common stock could cause
the market price of our common stock to decline.
Sales of a substantial number of shares of our common stock in the
public market, or the appearance that such shares are available for sale, could
adversely affect the market price for our common stock. Based upon shares
outstanding as of June 30, 2000, we will have 108,111,550 shares of common stock
outstanding. Of these shares, 11,587,150 of the shares of common stock that we
sold in our initial public offering are freely tradeable in the public market
without restriction unless held by our affiliates, in which case the shares are
tradeable subject to certain volume limitations. The remaining 1,062,850 shares
of common stock that we sold in our initial public offering and the 843,639
shares of common stock covered by this prospectus are subject to 180-day lock-
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<PAGE>
up agreements entered into between the holders of these shares and Morgan
Stanley & Co. Incorporated, one of the representatives of the underwriters for
our initial public offering. These lock-up agreements provide that such holders
will not sell their shares until November 14, 2000. Upon expiration of these
lock-up agreements these shares will be freely tradeable.
The remaining 94,617,911 shares of outstanding common stock are subject
to similar lock-up agreements and, as a result of being issued and sold by us in
reliance on exemptions from the registration requirements of the Securities Act,
are limited by resale restrictions. Upon expiration of the lock-up agreements on
November 14, 2000, an aggregate of 81,211,517 will be eligible for sale, in some
cases subject only to volume, manner of sale and notice requirements of Rule 144
under the Securities Act.
As of the date of this prospectus, we also have 14,430,205 shares
subject to outstanding options under our stock option plans and 8,751,819 shares
are available for future issuance under these plans. We have registered the
shares of common stock subject to outstanding options and reserved for issuance
under our stock option plans and the 1,500,000 shares of common stock reserved
for issuance under our 2000 employee stock purchase plan. Accordingly, shares
underlying vested options will be eligible for resale in the public market
beginning on November 14, 2000.
In addition, 1,949,987 shares of our common stock issuable upon
exercise of warrants will become eligible for sale on various dates upon
expiration or release of the lock-up agreements. After this offering and
expiration or release of the lock-up agreements, holders of 76,328,908 shares of
the common stock and the holders of warrants to purchase approximately 1,438,687
shares of common stock may require us to register their shares for resale under
the federal securities laws.
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<PAGE>
USE OF PROCEEDS
iBEAM will not receive any of the proceeds from the sale of the shares
of common stock pursuant to this prospectus. All proceeds from the sale of the
shares will be for the account of the selling stockholders, as described below.
See "Selling Stockholders" and "Plan of Distribution" described below.
SELLING STOCKHOLDERS
The following table shows the names of the selling stockholders and the
number of shares of common stock to be sold by them pursuant to this prospectus:
Name No. of Shares
-------------------------------------------------------------------
David Brewer.................................. 433,291
Paul Harrington............................... 103,275
Michael Wolters............................... 238,222
Thomas Panicker............................... 68,851
TOTAL......................................... 843,639
David Brewer is our Vice President of Operations, and Mr. Brewer owns
845,616 shares of our common stock. Paul Harrington and Michael Wolters are
iBEAM employees who own 103,275 shares, and 238,222 shares of our common stock,
respectively. Thomas Panicker is a former iBEAM employee who owns 68,851 shares
of our common stock. As of the date of this prospectus, none of the selling
stockholders beneficially owns more than 1% of our outstanding common stock.
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<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may sell all or a portion of the shares from
time to time on the Nasdaq National Market for their own accounts at prices
prevailing in the public market at the times of such sales. The selling
stockholders may also make private sales directly or through one or more
brokers. These brokers may act as agents or as principals. The selling
stockholders will pay all sales commissions and similar expenses related to the
sale of the shares. We will pay all expenses related to the registration of the
shares.
The selling stockholders and any broker executing selling orders on
behalf of the selling stockholders may be considered "an underwriter" under the
Securities Act. As a result, commissions received by a broker may be treated as
underwriting commissions under the Securities Act. Any broker-dealer
participating as an agent in that kind of transaction may receive commissions
from the selling stockholders and from any purchaser of shares.
Underwriters, dealers and agents may be entitled to indemnification by
us against certain civil liabilities, including liabilities under the Securities
Act. Underwriters, dealers and agents also may be entitled to contribution with
respect to payments made by the underwriters, dealers or agents, under
agreements between us and the underwriters, dealers and agents.
Any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this prospectus. There can be no assurance that the selling
stockholders will sell any or all of the shares of common stock offered
hereunder.
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<PAGE>
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be
passed upon for iBEAM by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. As of the date of this Registration
Statement, an investment partnership composed of certain current and former
members of and persons associated with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, in addition to certain current individual members of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, beneficially own an
aggregate of 50,154 shares of iBEAM Broadcasting Corporation Common Stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Registration Statement on Form S-1 (File No. 333-95833) of iBEAM
Broadcasting Corporation 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..
The consolidated financial statements of webcasts.com, Inc. and
subsidiary as of December 31, 1998 and 1999, and for the years then ended have
been incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
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<PAGE>
iBEAM BROADCASTING CORPORATION
843,639 Shares
of
Common Stock
--------------------------------------------------------------------------------
Prospectus
--------------------------------------------------------------------------------
August 11, 2000
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents and information previously filed with the
Securities and Exchange Commission by the Company are hereby incorporated by
reference in this Registration Statement:
1. The Company's Registration Statement on Form S-1 (Registration
No. 333-95833) filed under the Securities Act, as amended, in
the form declared effective on May 17, 2000, including the
Prospectus dated May 17, 2000 as filed by the Company pursuant
to Rule 424(b) on May 18, 2000.
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2000, filed pursuant to Section 13 of the Exchange
Act.
3. The description of the Company's common stock contained in its
Registration Statement on Form 8-A, dated May 16, 2000, filed
pursuant to Section 12(g) of the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all
securities registered have been sold or which de-registers all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the
date of filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of Common Stock offered hereby has been
passed upon for iBEAM Broadcasting Corporation by Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California. As of the date of this
Registration Statement, an investment partnership composed of certain current
and former members of and persons associated with Wilson Sonsini Goodrich &
Rosati, Professional Corporation, in addition to certain current individual
members of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
beneficially own an aggregate of 50,154 shares of iBEAM Broadcasting Corporation
Common Stock.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article X of our Amended and Restated Certificate of Incorporation
provides for the indemnification of directors to the fullest extent permissible
under Delaware law.
II-1
<PAGE>
Article VI of our Amended and Restated Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of us
if such person acted in good faith and in a manner reasonably believed to be in
and not opposed to our best interest, and, with respect to any criminal action
or proceeding, the indemnified party had no reason to believe his or her conduct
was unlawful.
We have entered into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our Amended
and Restated Bylaws, and intend to enter into indemnification agreements with
any new directors and executive officers in the future. The indemnification
agreements may require us, among other things, to indemnify our directors and
officers against certain liability that may arise by reason of their status or
service as directors and officers (other than liabilities arising from willful
misconduct of a culpable nature), to advance their expenses incurred as a result
of any proceeding against them as to which they could be indemnified, and to
obtain directors and officers' insurance, if available on reasonable terms.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit
Number Description
--------- -------------------------------------------------------------------
5.1 Opinion of counsel as to legality of securities being registered.
10.3* 1998 Stock Plan
10.4* 2000 Stock Plan
10.5* 2000 Director Plan
10.6* 2000 Employee Stock Purchase Plan
10.25 Webcasts.com 1999 Stock Option Plan
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of KPMG LLP, Independent Auditor.
23.3 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-4).
----------------
* Incorporated by reference to the exhibit of corresponding number filed with
our registration statement on Form S-1 (No. 333-95833).
Item 9. Undertakings.
(a) 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 to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered, which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8/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 Sunnyvale, State of California, on this 11th day of
August, 2000.
iBEAM BROADCASTING CORPORATION
/s/ Chris Dier
------------------------------
Chris Dier
Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Chris Dier and Dan Sroka, and each
of them acting individually, as his attorney-in-fact, with full power of
substitution, for him in any and all capacities, to sign any and all amendments
to this Registration Statement on Form S-8/S-3, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1933,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant in the capacities indicated below on this 11th day of
August, 2000.
<TABLE>
<CAPTION>
Signature Title
--------------------------------------------------- --------------------------------------------------------------
<S> <C>
/s/ Peter Desnoes President, Chief Executive Officer and Chairman of the Board
--------------------------------------------------- (Principal Executive Officer)
Peter Desnoes
/s/ Chris Dier Vice President and Chief Financial Officer
--------------------------------------------------- (Chief Financial Officer)
Chris Dier
/s/ Barry Baker
--------------------------------------------------- Director
Barry Baker
/s/ Frederic Seegal
--------------------------------------------------- Director
Frederic Seegal
/s/ Richard Shapero
--------------------------------------------------- Director
Richard Shapero
/s/ Peter Wagner
--------------------------------------------------- Director
Peter Wagner
/s/ Robert Wilmot
--------------------------------------------------- Director
Robert Wilmot
</TABLE>
II-5
<PAGE>
IBEAM BROADCASTING CORPORATION
REGISTRATION STATEMENT ON FORM S-8/S-3
--------------------------------------
INDEX TO EXHIBITS
Exhibit
Number Description
------- -------------------------------------------------------------------
5.1 Opinion of counsel as to legality of securities being registered.
10.3* 1998 Stock Plan
10.4* 2000 Stock Plan
10.5* 2000 Director Plan
10.6* 2000 Employee Stock Purchase Plan
10.25 Webcasts.com 1999 Stock Option Plan
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of KPMG LLP, Independent Auditor.
23.3 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-4).
----------------
* Incorporated by reference to the exhibit of corresponding number filed with
our registration statement on Form S-1 (No. 333-95833).
