|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: IBEAM BROADCASTING CORP, 10-Q/A, 2001-01-08 |
Next: IBEAM BROADCASTING CORP, S-8, EX-5.1, 2001-01-08 |
As filed with the Securities and Exchange Commission on January 8, 2001
Registration No. 333-
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)
| Delaware (State or other jurisdiction of incorporation or organization) |
94-3296895 (I.R.S. Employer Identification Number) |
| 645 Almanor Avenue, Suite 100, Sunnyvale, CA (Address of Registrant’s principal executive offices) |
94086 (Zip Code) |
(408) 523-1600
(Registrant’s telephone number, including area code)
| 1998 Stock Plan NextVenue Inc. Amended and Restated 1999 Stock Option Plan |
2000 Stock Plan 2000-B Stock Plan |
(Full title of the plans)
Geoff Ribar
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:
| Larry W. Sonsini, Esq. Ramsey Hanna, Esq. Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, California 94304 |
Daniel Sroka, Esq. iBEAM Broadcasting Corporation 645 Almanor Avenue, Suite 100 Sunnyvale, California 94085 |
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed Maximum Offering Price Per Share |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee |
| Common Stock, $0.0001 per share par value: Issued under the 1998 Stock Plan (1) | 536,795 shares | $1.15625(3) | $620,669.22(3) | $155.17 |
| Common Stock, $0.0001 per share par value: Issued under the 2000 Stock Plan | 3,000 shares | $1.15625(3) | $3,468.75(3) | $0.87 |
| Common Stock, $0.0001 per share par value: To be issued under the NextVenue Inc. Amended and Restated 1999 Stock Option Plan (2) | 286,195 shares | $1.15625(3) | $330,912.97(3) | $82.73 |
| Common Stock, $0.0001 per share par value: To be issued under the 2000-B Stock Plan | 6,000,000 shares | $1.15625(3) | $6,937,500.00(3) | $1,734.38 |
| Total: | 6,825,990 shares | $7,892,550.94 | $1,973.15 |
| (1) | The 536,795 shares issued under the 1998 Stock Plan which are registered for resale pursuant to this Registration Statement are in addition to the 843,639 shares issued under the 1998 Stock Plan which were registered pursuant to iBEAM’s Registration Statement on Form S-8 filed on August 11, 2000 (SEC File No. 333-43638). | ||
| (2) | The 286,195 shares to be issued under the NextVenue Amended and Restated 1999 Stock Option Plan (the “NextVenue Plan”) registered pursuant to this Registration Statement are in addition to 1,402,500 shares to be issued under the NextVenue Plan registered pursuant to iBEAM’s Registration Statement on Form S-8 filed on November 9, 2000 (SEC File No. 333-49660). | ||
| (3) | Computed in accordance with Rule 457(c) and (h) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee based upon the average between the high and low sales price reported on the Nasdaq National Market on January 2, 2001, which is equal to $1.15625 per share. | ||
EXPLANATORY NOTE
This registration statement relates to (i) 286,195 shares of common stock to be issued in the future upon the exercise of options granted under the NextVenue Amended and Restated 1999 Stock Option Plan , (ii) 6,000,000 shares to be issued in the future upon the exercise of options under our 2000-B Stock Plan, (iii) the resale of 536,795 shares of common stock previously issued under our 1998 Stock Plan and (iv) the resale of 3,000 shares of common stock previously issued under our 2000 Stock Plan.
The prospectus that forms a part of this registration statement relates solely to the resale of (i) 536,795 shares of common stock issued under our 1998 Stock Plan and (ii) 3,000 share of common stock issued under our 2000 Stock Plan.
PROSPECTUS
539,795 Shares
iBEAM BROADCASTING CORPORATION
Common Stock
This prospectus relates to 539,795 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 or in negotiated transactions at such prices as may be agreed upon, or in a combination of such methods of sale. See “Plan of Distribution”. 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.
Our common stock is listed on the Nasdaq National Market under the symbol “IBEM.” On January 4, 2001, the last reported sale price of our common stock on the Nasdaq National Market was $1.375 per share.
See “Risk Factors” beginning on page 7 to read about certain risks that you should consider before buying shares of our common stock.
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.
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.
The date of this prospectus is January 8, 2001.
TABLE OF CONTENTS
| Page |
| Where You Can Find More Information | 5 |
| Information Incorporated by Reference | 5 |
| Our Company | 6 |
| Special Note Regarding Forward-Looking Statements | 6 |
| Risk Factors | 7 |
| Use of Proceeds | 21 |
| Selling Stockholders | 21 |
| Plan of Distribution | 22 |
| Legal Matters | 23 |
| Experts | 23 |
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) 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 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 Securities Exchange Act of 1934 (the “ Exchange Act”).
(3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000, filed pursuant to Section 13 of the Exchange Act on November 14, 2000 and as amended on January 8, 2001.
(4) Our Current Report on Form 8-K, dated October 18, 2000 and as amended on January 8, 2001, filed pursuant to Section 13 of the Exchange Act.
(5) 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.
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.
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.
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 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:
If we are unsuccessful in addressing these risks, our business may be seriously harmed.
We are 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.
If our customers, Internet service provider partners and other strategic partners do not receive additional funding to sustain their operations and grow their businesses, our operating results will be negatively impacted.
Many of our customers, Internet service provider partners and other strategic partners have not reached profitability and will require additional funding to sustain their operations and grow their businesses. Given the recent volatility in the capital markets, many of these companies are having difficulty raising additional financing, which in turn, will require them to curtail their operating activities, or file for bankruptcy protection. To the extent that any of our customers curtail or cease their operations, we may incur costs for streaming content for which we will not receive any revenue or we may be required to write-off existing accounts receivable.
Our relationship with 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. To the extent that any of our ISP partners cease or curtail their operations, we may not grown or maintain the number of end users that can be reached through our satellite distribution network, which would negatively impact our costs and operating results.
Similarly, our operating results are also dependent on our strategic relationships. To the extent that any of our strategic partners cease or curtail their operations, we may lose the value associated with such strategic relationships or we may be required to increase our financial commitment to the relationship. In any event, our operating results would suffer.
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 ISPs and network deployment, we are able to serve up to 40% of Internet home consumers on our network through our servers located at the edge of the Internet as of December 31, 2000.
To accomplish our business strategy of developing an edge network, we will need to deploy our edge servers in the facilities of ISPs. Although we provide ISPs with our servers at no cost, ISPs 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 revenue. Therefore, our failure to deploy our edge servers close to the end user will cause our business and results of operations to suffer. 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. We may choose to accelerate the deployment of our network or increase expenditures relating to our network.
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 $4.3 million has been paid as of December 31, 2000.
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.
We face a number of risks related to our acquisitions of NextVenue, webcasts.com and Server-Side Technologies, and we may face similar risks in the future if we acquire other businesses or technologies.
We acquired webcasts.com in April 2000; Server-Side Technologies in June 2000; and NextVenue in October 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 NextVenue and webcasts.com will be made more difficult because webcasts.com and NextVenue operations are located in Oklahoma City, Oklahoma, and New York, New York, respectively, 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:
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:
We may not be able to successfully integrate NextVenue, 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.
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.
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:
Any failure of our network infrastructure or the satellite or land-line communication services provided to us by third party 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 revenue.
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:
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 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, none of which occurred during the forth quarter 2000. One was caused by a failure of our network software 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 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 six market segments:
Increased competition could result in:
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, revenue 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.
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.
Because we currently derive substantial revenues from the financial services industry, downturns in financial markets or changes in regulation may adversely affect our revenues and growth.
Through our acquisition of NextVenue, we expect to derive a significant portion of revenue from our equity roadshow services for the foreseeable future. As a result, material adverse developments in financial markets will adversely affect our revenues and growth in the foreseeable future.
Currently, we and our customers rely on a series of no-action letters from the Securities and Exchange Commission permitting companies to use the Internet for roadshow presentations in connection with various offerings of securities. These letters state the precise criteria for compliance. If the Commission were to change its position, limit the use of the Internet for this purpose or change the criteria for compliance, we could lose a substantial portion of our revenue.
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 $93.3 million for the nine months ended September 30, 2000 and our accumulated deficit was $135.6 million as of September 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 $93.3 million for the nine months ended September 30, 2000 and our accumulated deficit was $135.6 million as of September 30, 2000. Considering that operating expenses are expected to increase in future periods, we will need to increase our revenue significantly to achieve profitability. 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 $51.8 million was incurred in the first nine months. We may continue to incur increasing operating losses in the future.
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 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 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.
As a result of our recent acquisitions, we have recorded goodwill and acquired intangibles, and 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. Our purchase of technology for $15.6 million from SES/Astra is being amortized over a three-year period. Goodwill and acquired intangibles related to the NextVenue acquisition is expected to be $297.8 million and will be amortized over a five-year period. As a result, operating expenses will increased by approximately $24.2 million in the fourth quarter of 2000, $96.6 million in 2001 and 2002, and $72.8 million in 2003, $59.6 million in 2004 and $44.7 million in 2005.
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 $51.8 million was incurred in the first nine months, including investments in edge servers, hosting centers and our network operations center, and we expect to incur significant and increasing losses. At September 30, 2000, we were obligated to invest $5 million in iBEAM Asia and $9 million in iBEAM Europe and to prepay an ISP $2.5 million. Based on our current operating plan, our existing cash resources will fund operations for at least the next twelve months.
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, 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.
We intend to raise additional capital early in 2001 to fund operations throughout 2001. 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 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.
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 September 30, 2000 and several members of our senior management team have only recently joined us. The acquisitions of webcasts.com, Server-Side Technologies and NextVenue added 214 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:
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:
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 revenue 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 nine months ended September 30, 2000, MTV Interactive accounted for 12% of revenue. We expect that the majority of our revenue 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.
We expect to amortize stock-based compensation of $3.0 million in the remainder of 2000, $7.1 million in 2001, $3.3 million in 2002, and $1.3 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 September 30, 2000, we recorded unearned stock-based compensation of $30.8 million, of which $5.4 million was amortized during 1999 and $10.7 million was amortized in the first nine months of 2000. If our stock price increases, the amount of stock-based compensation related to stock option 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 need to 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, and Japan 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 and iBEAM Europe to begin delivering content to end users early in the first quarter of 2001. In connection with the formation of the joint ventures, we contributed $2.2 million to iBEAM Asia and $10.0 million to iBEAM Europe as of December 31, 2000. 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 are 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.
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:
We may be liable if the content we have distributed is unlawful or causes injury.
The publication or dissemination of content that we distribute may give rise to liability for defamation, negligence, breach of copyright, patent, trade secret or trademark infringement or other claims or charges based on the nature of the content. As a distributor of this content, we may be directly or indirectly liable to claims or charges of this nature. In addition, we could be exposed to liability arising from the activities of our customers or their users with respect to the unauthorized duplication of, or insertion of inappropriate material into, the content we supply. The general liability insurance we carry may not cover claims of these types or may be inadequate to indemnify us for all liability that may be imposed on us.
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.
Intellectual property litigation or claims could force us to do one or more of the following:
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:
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 28.2% of our outstanding common stock as of December 31, 2000, 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 28.2% of our outstanding common stock as of December 31, 2000. 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 13.3% 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 available for sale, could adversely affect the market price for our common stock. As of December 31, 2000, we had 126.4 million shares of common stock outstanding. A significant number of these shares are not currently publicly traded but are available for immediate resale to the public, subject to certain limitations under the securities laws. We also have 27.0 million shares of our common stock remaining that are reserved for issuance pursuant to options under our stock option plans, of which 18.6 million shares were subject to outstanding options at December 31, 2000, and 1.5 million shares of common stock reserved for issuance under our 2000 Employee Stock Purchase Plan as of December 31, 2000. In addition, 4.2 million shares of our common stock are issuable upon exercise of outstanding warrants, which shares will be eligible for resale upon exercise of the warrants. Shares underlying vested options are generally eligible for immediate resale in the public market. In addition, a significant portion of our stockholders and warrant holders have certain registration rights with respect to their shares.
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 Registered for Resale |
No. of Shares Owned by Selling Stockholder at December 31, 2000 |
|||||
| Alyssa Aleles | 10,431 | 10,931 | |||||
| Polly Brewington | 4,131 | 4,213 | |||||
| Thomas Burke | 13,770 | 13,870 | |||||
| Bi Chen | 5,508 | 5,508 | |||||
| Timothy Doelger | 5,515 | 5,515 | |||||
| Lynn Dwigans | 3,000 | 3,000 | |||||
| Keh-Yueh Fu | 14,459 | 15,959 | |||||
| Gregory Fuqua | 10,337 | 10,337 | |||||
| Gijo George | 30,992 | 31,492 | |||||
| Terry Giles | 516 | 666 | |||||
| Thomas B. Gillis | 82,620 | 82,620 | |||||
| Donna Glover | 1,378 | 2,243 | |||||
| Naresh Gupta | 1,500 | 1,500 | |||||
| Andrew Henry | 26,876 | 26,876 | |||||
| Howard Fischer Associates | 5,737 | 5,737 | |||||
| Max Infante | 3,306 | 3,306 | |||||
| Benoy James | 8,262 | 8,962 | |||||
| Jonathan Lange | 10,328 | 10,328 | |||||
| Bruce Lawler | 1,033 | 1,033 | |||||
| Hee-Jung Lee | 4,131 | 4,131 | |||||
| Brett Linderman | 4,591 | 4,591 | |||||
| Chien Ping Lu | 4,131 | 4,131 | |||||
| James P. McDermott | 75,000 | 79,000 | |||||
| Richard Nock | 7,692 | 8,692 | |||||
| Chris Pappas | 13,440 | 13,440 | |||||
| Kirsten Sachs | 41,310 | 41,310 | |||||
| Bruce Sandell | 459 | 14,909 | |||||
| Joseph Shepela | 75,000 | 75,000 | |||||
| Eric Snyder | 42,687 | 42,687 | |||||
| Daniel Sroka | 413 | 713 | |||||
| Eu Sudhakaran | 5,000 | 5,500 | |||||
| Yi-Feng (Effie) Tseng | 1,000 | 1,000 | |||||
| Jeffrey Way | 15,491 | 15,491 | |||||
| Susan Williams | 800 | 1,800 | |||||
| Raymond Wong | 4,820 | 4,820 | |||||
| Jian Xu | 4,131 | 4,131 | |||||
| Total: | 539,795 | 565,442 | |||||
The selling stockholders are all current or former iBEAM employees, consultants or service providers. As of the date of this prospectus, none of the selling stockholders beneficially owns more than 1% of our outstanding common stock.
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. Furthermore, the selling stockholders may dispose of the Shares by gifts to a third party or as a donation to a charitable or other non-profit entity. 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.
The Company has advised the selling stockholders that the anti-manipulative rules of Regulation M under the Exchange Act may apply to sales in the market has informed them of the possible need for delivery of copies of this Prospectus. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the Shares against certain liabilities including liabilities arising under the Securities Act. Any commissions paid or any discounts or concessions allowed to any such broker-dealers, and, if any such broker-dealers purchase shares as principal, any profits received on the resale of such shares, may be deemed to be underwriting discounts and commissions under the Securities Act.
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, certain current and former members of and persons associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation, beneficially own an aggregate of approximately 50,000 shares of 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.
The consolidated financial statements of NextVenue Inc. and subsidiary as of December 31, 1998 (Predecessor Company) and 1999 and for the years ended December 31, 1998 (Predecessor Company) and 1999, 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 auditing and accounting. KPMG LLP’s opinion contains an explanatory paragraph relating to NextVenue Inc.’s acquisition of the production services business of CNBC/Dow Jones Business Video (Predecessor Company), which became effective January 1, 1999 for accounting purposes. As a result of the change in control, the financial information for the period after the change in control is presented on a different cost basis than that for the period before the change in control and, therefore, is not comparable.
iBEAM BROADCASTING CORPORATION
539,795 Shares
of
Common Stock
Prospectus
January 8, 2001
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) Our 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 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) Our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000, filed pursuant to Section 13 of the Exchange Act on November 14, 2000 and as amended on January 8, 2001.
(4) Our Current Report on Form 8-K, dated October 18, 2000 and as amended on January 8, 2001, filed pursuant to Section 13 of the Exchange Act.
(5) 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 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, certain current and former members of and persons associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation, beneficially own an aggregate of approximately 50,000 shares of 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.
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.
The issuance of the shares being offered by the Form S-3 resale prospectus contained in this Registration Statement were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients had adequate access, through their relationship with the Registrant, to information about the Registrant.
Item 8. Exhibits.
| Exhibit Number | Description | ||
| 5.1 | Opinion of counsel as to legality of securities being registered. | ||
| 10.1* | 1998 Stock Plan | ||
| 10.2** | 2000 Stock Plan | ||
| 10.3*** | NextVenue Inc. Amended and Restated 1999 Stock Option Plan | ||
| 10.4 | 2000-B Stock 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). | ||
| 23.4 | Consent of KPMG LLP, Independent Auditor. | ||
| 24.1 | Power of Attorney (contained on page II-4). |
______________
| * | Incorporated by reference to exhibit 10.3 filed with the Company’s Registration Statement on Form S-1 (No. 333-95833). | ||
| ** | Incorporated by reference to exhibit 10.4 filed with the Company’s Registration Statement on Form S-1 (No. 333-95833). | ||
| *** | Incorporated by reference to exhibit 10.1 filed with the Company’s Registration Statement of Form S-8 dated November 9, 2000. | ||
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:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”)
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement.
(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 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to 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.
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 eighth day of January, 2001.
| iBEAM BROADCASTING CORPORATION | |||
| /s/ Geoff Ribar | |||
| Geoff Ribar 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 Geoff Ribar and Daniel 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.
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 eighth day of January, 2001.
| Signature |
Title |
|||
| /s/ Peter Desnoes Peter Desnoes |
President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | |||
| /s/ Geoff Ribar Geoff Ribar |
Vice President and Chief Financial Officer (Chief Financial Officer) |
|||
| /s/ Barry Baker Barry Baker |
Director | |||
| /s/ Richard Shapero Richard Shapero |
Director | |||
| /s/ Peter Wagner Peter Wagner |
Director | |||
| /s/ Robert Wilmot Robert Wilmot |
Director | |||
| /s/ Nicholas Balletta Nicholas Balletta |
Director |
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. | ||
| 10.1* | 1998 Stock Plan | ||
| 10.2** | 2000 Stock Plan | ||
| 10.3*** | NextVenue Inc. Amended and Restated 1999 Stock Option Plan | ||
| 10.4 | 2000-B Stock 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). | ||
| 23.4 | Consent of KPMG LLP, Independent Auditor. | ||
| 24.1 | Power of Attorney (contained on page II-4). | ||
______________
| * | Incorporated by reference to exhibit 10.3 filed with the Company’s Registration Statement on Form S-1 (No.333-950833). | ||
| ** | Incorporated by reference to exhibit 10.3 filed with the Company’s Registration Statement on Form S-1 (No.333-950833). | ||
| *** | Incorporated by reference to exhibit 10.1 filed with the Company’s Registration Statement on Form S-8 dated November 9, 2000. | ||
|
|