As filed with the Securities and Exchange Commission on December 11, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
DIGITAL COURIER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Commission file number: 0-20771
Delaware 87-0461856
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
136 Heber Avenue, Suite 204
Park City, Utah 84060
(435) 655-3617
Address, including zip code, and telephone number,
Including area code of registrant's principal executive offices)
MITCHELL EDWARDS
Executive Vice President
DIGITAL COURIER TECHNOLOGIES, INC.
P.O. Box 8000
136 Heber Avenue, Suite 204
Park City, Utah 84060
(435) 655-3617
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
copies to:
WILLIAM C. GIBBS
SNELL & WILMER
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
--------------------
Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
[ ]
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If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Title of each Proposed Proposed
class of Amount Maximum maximum Amount of
securities to be to be offering price aggregate Registration
registered (1) registered(2) per unit(3) offering price(3) Fee
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Common Stock 3,412,890 $6.66 $22,729,847 $6,319
=======================================================================================================
</TABLE>
(1) This registration statement ("Registration Statement") covers the
resale by certain selling security holders ("Selling Stockholders") of
up to an aggregate of 3,412,890 shares of Common Stock, $.0001 par
value, of Digital Courier Technologies, Inc. (the "Company"), 1,775,948
shares of which were previously acquired by such Selling Stockholders,
and 1,636,942 shares of which may be acquired by such Selling
Stockholders upon the exercise of presently outstanding warrants.
(2) In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's Common Stock, in order to prevent dilution,
the number of shares registered shall automatically be increased to
cover the additional shares in accordance with Rule 416(a) under the
Securities Act.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
average of the high and low prices of the Registrant's Common Stock on
December 4, 1998, as reported by Nasdaq National Market.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
PROSPECTUS
136 Heber Avenue, Suite 204
P.O. Box 8000
Park City, Utah 84060
Telephone (435) 655-3617
DIGITAL COURIER TECHNOLOGIES, INC.
3,412,890 SHARES OF COMMON STOCK
With this prospectus, the selling stockholders identified in this
prospectus or in the accompanying prospectus supplement are offering 3,412,890
shares of our common stock.
The selling stockholders may sell the shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately negotiated prices. The selling stockholders will receive all of
the net proceeds from the sale of the shares offered with this prospectus. The
selling stockholders will pay all commissions in connection with the sale of
those shares. Other than the exercise price the selling stockholders will pay to
exercise their warrants, we will not receive any proceeds from the sale of the
Shares offered in this prospectus. For more information, see "Plan of
Distribution" beginning on page 13 of this prospectus.
Before purchasing any of the shares, you should consider very
carefully the information presented under the caption "Risk
Factors" beginning on page 3 of this prospectus.
The Company's common stock is traded on the Nasdaq National Market
under the symbol "DCTI."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The Date of this Prospectus is December 11, 1998
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission ("SEC") to register 3,412,890 shares of
our common stock, par value $.0001 (the "Shares"). This prospectus does not
include all of the information contained in the registration statement and the
exhibits to the registration statement. For further information about the
Company and the Shares, you should read the registration statement and the
exhibits to the registration statement. Statements contained in this prospectus
concerning documents we have filed with the SEC as exhibits to the registration
statement or otherwise are not necessarily complete and, in each instance, you
should refer to the actual filed document.
We have not authorized anyone to provide you any information different
from that contained in this prospectus. The selling stockholders may offer to
sell the Shares only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of the Shares.
In this prospectus, the "Company," "DCTI," "we," "us," and "our" refer
to Digital Courier Technologies, Inc.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, Mail Stop 1-2, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public at the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below, and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"):
(1) Annual Report on Form 10-K for the fiscal year ended June 30, 1998, as
amended through the date hereof;
(2) Quarterly Report on Form 10-Q for the quarter ended September 30, 1998,
as amended through the date hereof;
(3) Proxy Statement for the Special Meeting of Shareholders held September
16, 1998;
(4) Proxy Statement for the Annual Meeting of Shareholders to be held
December 15, 1998;
(5) Current Report on Form 8-K filed October 1, 1998;
(6) Current Report on Form 8-K filed December 11, 1998, and
(7) Description of the Company's capital stock contained in its
registration statement on Form 8-A, including all amendments or reports
filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning DCTI at P.O. Box 8000, 136 Heber Avenue, Park City, Utah 84060,
telephone (435) 655-3617, attention: Investor Relations.
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THE COMPANY
DCTI develops and markets proprietary electronic commerce software and
technologies and online information services for a variety of computer platforms
and hand-held computing devices connected to the Internet. The core technology
is organized into three product groups which include (1) a suite of electronic
commerce tools for building Internet storefronts designed for retailing a wide
variety of consumer and business products, (2) a distributed content publishing
software suite that allows businesses to creatively deliver information services
across the Internet as well as wireless networks, and (3) a transaction software
suite that incorporates a complete Internet payment processing system to
streamline credit card transactions over the Internet. We use our software
suites to host and deliver information services and e-commerce tools to major
businesses, Internet portals, and financial institutions on the Internet. We
also license the software. Our sophisticated software and technology is
currently used by major portals such as Excite, Netscape and America Online, as
well as by our own prominent group of websites including www.weatherlabs.com and
www.videosnow.com.
Our four operating divisions include netClearing(TM), WeatherLabs(TM),
Videos Now(TM), and Books Now(TM). The netClearing division uses both the
e-commerce tools and the transaction software suite to provide a complete
electronic commerce package for conducting business and facilitating credit card
payment processing over the Internet. The WeatherLabs division supplies
proprietary real-time weather information to online businesses throughout the
world, and hosts its own website for consumers and business customers. Videos
Now and Books Now utilize DCTI's software suites to operate e-commerce websites
that sell media products to consumers and online businesses.
Our content and e-commerce software is designed to be co-branded or
private labeled by our customers. This approach enables our customers and
partners to brand their own sites and products and build additional value into
their online presence by using our technology. We believe that significant
revenue opportunities exist for all our divisions in the rapidly expanding
e-commerce sector of the Internet industry.
We believe that our combined strengths in information technology,
software development and e-commerce for the Internet equate to a powerful
business model that can yield significant per-transaction based revenue streams
at a comparatively low cost to the Company. We believe that this model for
growth is sustainable in the rapidly expanding market for Internet commerce.
RISK FACTORS
Before purchasing the Shares, you should carefully consider the risk
factors described below. If any of the following risks actually occurs, it could
materially adversely affect our business, financial condition, and results of
operations. The risks and uncertainties described below are not the only ones we
are facing. We may have other risks and uncertainties of which we are not yet
aware or which we currently believe are immaterial that may also impair our
business operations. As a prospective investor, you should consult independent
advisors as to the technical, tax, business and legal considerations regarding
an investment in the Shares.
Additional Funding Requirements
Although we have recently completed a private placement of equity
securities, the full amount committed will only become available to the Company
upon the occurrence of certain conditions over which the Company may have little
or no control, such as the price of the Company's common stock. If we do not
receive the full amount committed, we project that we may not have sufficient
cash flows from operating activities during the next twelve months to provide
the necessary capital to fully implement our marketing strategy or to sustain
operations at current levels. We are continuing to attempt to obtain additional
debt or equity funding. If adequate funding is not available, we may be required
to revise our plans and reduce future expenditures. We have incurred substantial
losses from continuing operations, and our operating activities have used a
significant amount of cash during the past three years. We also have a working
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capital deficit and we are scheduled to make substantial creditor payments. We
require additional funding before our continuing operations will achieve and
sustain profitability, if at all.
Limited Operating History; Anticipated Losses
Due to our limited operating history and the uncertain nature of the
Internet industry, we are unable to predict future results of operations. We
only began generating Internet-based revenues in January 1998. Our prospects are
subject to the risks, expenses and uncertainties frequently encountered by
companies in the new and rapidly evolving market for Internet products and
services, including e-commerce and web-based advertising. These risks include,
without limitation, (1) web consumers' and/or advertisers' rejection of our
services, (2) our inability to maintain and increase the levels of traffic and
purchasers on our websites, (3) competitors' development of equal or superior
services or products, (4) the market's failure to adopt the web as an
advertising medium, (5) our internal sales force's failure to successfully sell
web-based products and services, (6) consumers' failures to purchase goods from
our websites, (7) our inability to effectively integrate the technology and
operations of any acquired businesses or technologies with our operations, and
(8) our inability to identify, attract, retain and motivate qualified personnel.
We may not be successful in addressing these risks. As of September 30, 1998, we
had an accumulated deficit of $23,022,353. We incurred a loss of $9,340,816 for
the year ended June 30, 1997 and a loss of $1,790,934 for the year ended June
30, 1998. We also incurred a loss of $8,342,280 for the quarter ended September
30, 1998. We will likely incur significant losses on a quarterly and annual
basis in the future until advertising, licensing and sales revenue on our
websites significantly increases.
Fluctuations in Quarterly Operating Results
Because of our limited operating history and lack of historical
financial data for a significant number of periods, we are unable to accurately
predict operating results. We believe that period to period comparisons of our
operating results are not meaningful and that you should not rely on the results
for any period as an indication of our future performance. Although we expect
sales, licensing and advertising revenue on our websites to eventually increase,
there can be no assurance in this regard. Moreover, the market for e-commerce
and the sale of advertisements on the web is an emerging market that is
difficult to forecast accurately. Our quarterly revenues and operating results
depend substantially upon the sales, licensing and advertising revenues we
receive within the quarter. Our expense levels are based in part on our
expectations concerning future revenue and to a large extent are fixed. We also
have high fixed costs and expenses relating to the development of our websites.
Accordingly, customer deferral of purchases or cancellation of even a small
number of advertising contracts could have a material adverse effect on our
business, results of operations and financial condition. In the event of a
revenue shortfall, we may be unable to adjust spending in a timely manner.
Our operating results may fluctuate significantly in the future as a
result of a variety of factors. These factors include (1) the usage level of the
Internet, (2) the demand for Internet advertising, (3) the purchase of products
from our websites, (4) the user traffic levels on our websites, (5) the
advertising budget cycles of individual advertisers, (6) the amount and timing
of our capital expenditures and other costs relating to our expansion of
operations, (7) the introduction of new products or services, (8) the potential
pricing changes for web-based advertising, (9) the technical difficulties we may
experience with our websites or other media properties, and (10) the incurrence
of costs relating to acquisitions, general economic conditions and economic
conditions specific to the Internet and online media. Many of these factors are
outside our control. Additionally, to compete, we may from time to time make
certain pricing, service or marketing decisions or business combinations that
could cause our operating results to significantly fluctuate. We also expect to
experience seasonality in our business because user traffic on our websites is
typically lower during the summer and year-end vacation and holiday periods. We
expect additional seasonal fluctuations because advertisers historically spend
less during our first and third fiscal quarters.
Due to all of the foregoing factors, in future quarters our operating
results may fall below securities analysts' and investors' expectations. In such
event, the trading price of our common stock would likely be materially and
adversely affected.
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Integration of Digital Courier International, Inc.
Uncertainty Relating to Integration. We acquired Digital Courier
International, Inc. ("DCI") in September 1998. We are now attempting to
integrate DCI into our operations and we believe there are risks involved in
combining any two companies. We are putting forth a significant effort to
successfully combine the two companies. Our efforts include coordinating
development of new products, commercializing in-process development, integrating
product offerings, and coordinating sales and marketing efforts and business
development efforts. We also have different systems and procedures from DCI in
many operational areas and these systems and procedures must be rationalized and
integrated. To be profitable, we will need to integrate and streamline
overlapping functions successfully. We will likely incur the costs generally
associated with this type of integration including the costs to integrate
product lines, cross-train the sales force and position products in the market.
While we have not specifically identified the integration costs, any such costs
may have an adverse effect on our operating results in the periods in which they
are incurred. Our integration of the two companies will require management
resources that may distract attention from normal operations. Employee
uncertainty and lack of focus may also disrupt our business during such
integration. Our failure to quickly and effectively accomplish the integration
of the operations of the two companies could harm us. Moreover, uncertainty in
the marketplace or customer concern regarding the impact of our acquisition of
DCI could also have a material adverse effect on our consolidated business,
financial condition and results of operations.
Retention of Employees. Our success depends in part on our ability to
retain and integrate management, technical, marketing, sales and customer
support personnel. There can be no assurance that we will be able to retain such
personnel or that we will be able to attract, hire and retain replacements for
employees that leave. Our failure to attract, hire, retain and integrate such
skilled employees could have a material adverse effect on our business,
operating results and financial condition.
Potential Dilutive Effect to Stockholders. Our issuance of common stock
in connection with our acquisition of DCI could reduce the market price of our
common stock unless we can achieve revenue growth or cost savings and other
business synergies sufficient to offset the effect of such issuance. Although we
believe that we will experience beneficial synergies from our acquisition of
DCI, we are not certain that the combined results of operations and financial
condition will be superior to what would have been achieved by each company
independently.
Dependence on Continued Growth in Use of the Internet
Our future success is substantially dependent upon continued growth in
the use of the Internet to support our sale of products and advertising on our
websites. Rapid growth in the use of and interest in the Internet is a recent
phenomenon. The Internet may not prove to be a viable commercial marketplace for
a number of reasons, including (1) potentially inadequate development of the
necessary infrastructure, such as a reliable network backbone, or (2) untimely
development and commercialization of performance improvements, including high
speed modems. Additionally, to the extent that the number of users and the level
of use of the Internet continues to grow, there can be no assurance that the
Internet infrastructure will continue to be able to support the demands placed
upon it. This continued growth may adversely affect the performance and
reliability of the Internet. Furthermore, the Internet could lose its viability
due to delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity, or due to increased
governmental regulation. Changes in or insufficient availability of
telecommunications services to support the Internet also could result in slower
response times and adversely affect Internet usage. If use of the Internet does
not continue to grow, or if the Internet infrastructure does not effectively
support growth that may occur, our business, operating results and financial
condition would be materially and adversely affected.
Developing Market; Unproven Acceptance of the Company's Products
The markets for our products and media properties have only recently
begun to develop and may prove unprofitable. These markets are rapidly evolving
and are characterized by an increasing number of market entrants who have
introduced or developed information navigation products and services for use on
the Internet. As is typical in the case of a new and rapidly evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty and risk. Because the market for virtual
commerce and advertising on the Internet is new and evolving, we are unable to
predict the future growth rate and size of this market. We cannot be certain
that the market for virtual commerce and advertising on the Internet will
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develop or that demand content and promotional advertising will emerge or become
sustainable. Our ability to successfully sell advertising on our co-branded
websites depends substantially on consumer use of our websites. If consumers
fail to use our websites or such usage fails to continue to grow, we may be
unable to sell advertising. If the market fails to develop, develops more slowly
than expected or becomes saturated with competitors, or if our websites do not
achieve or sustain market acceptance, our business, operating results and
financial condition will be materially and adversely affected.
Risks Associated with Brand Development
If consumers do not perceive our existing or future products and
services to be of high quality and therefore do not use our brands, sales will
be adversely affected and advertisers will not be attracted to our audiences.
Although our software and services are engineered to be "private labelled" by
web portals and merchants on the Internet, we believe that establishing and
maintaining our "netClearing(TM)," "Books Now(TM)," "WeatherLabs(TM)" and
"Videos Now(TM)" brands is a critical aspect of our efforts to attract and
expand our Internet audience. We also believe that the importance of brand
recognition will increase due to the growing number of Internet sites and the
relatively low barriers to entry. We will be successful in promoting and
enhancing these brands if we are able to provide high quality products and
services. However, in response to competitive pressures, we may be forced to
substantially increase our financial commitment to creating and maintaining a
distinct brand loyalty among our consumers. If we are unable to provide high
quality products and services or if we fail to promote and maintain our brands,
or if we incur excessive expenses in maintaining brand loyalty, our business,
operating results and financial condition will be materially and adversely
affected.
Reliance on Advertising Revenues and Uncertain Adoption of the Internet as an
Advertising Medium
Our ability to generate significant advertising revenues will depend
upon, among other things, advertisers' acceptance of the Internet as an
effective and sustainable advertising medium. We currently derive a portion of
our revenues from selling advertisements on our websites. We expect such
revenues to continue for the foreseeable future. Most Internet advertising
customers, however, have only limited experience with the Internet as an
advertising medium. Additionally, most of these customers have not devoted a
significant portion of their advertising expenditures to web-based advertising
and may not find such advertising to be effective for promoting their products
and services relative to traditional print and broadcast media. Any inability by
us to sell advertising on our websites, particularly the WeatherLabs co-branded
websites, will adversely affect our revenues and profitability.
We face many other challenges in selling web-based advertising. For
example, there are no widely accepted standards for measuring the effectiveness
of web-based advertising, and there can be no assurance that such standards will
develop to support web-based advertising as a significant advertising medium. In
addition, certain advertising filter software programs are available that limit
or remove advertising from an Internet user's desktop. Such software, if
generally adopted by users, may have a materially adverse effect upon the
viability of Internet advertising.
We have an additional risk in relying on Internet advertising revenues
because there is intense competition in the sale of Internet advertising,
including competition from other Internet navigational tools as well as other
high-traffic sites. This competition provides a wide range of rates for a
variety of advertising services, which makes it difficult to project future
levels of industry or company Internet advertising revenues. Competition among
current and future suppliers of Internet navigational services or websites, as
well as competition with other traditional media for advertising placements,
could result in significant price competition and reductions in advertising
revenues. Our advertising customers may not accept the internal and third-party
measurements of impressions received by advertisements on our websites, and such
measurements may contain errors.
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Substantial Dependence Upon Third Parties
We depend substantially upon third parties for several critical
elements of our business. These elements include, among others,
telecommunications, technology and infrastructure and distribution offered by
the major web portals. Although we believe that there are other third party
providers who can provide the same services as those providers we currently use,
loss or interruption of service by such providers would have an adverse effect
on the business of the Company.
Dependence on Technology and Infrastructure
We depend substantially upon our computer equipment and its maintenance
and technical support to ensure accurate and rapid presentation of content and
advertising to our customers. Our failure to effectively maintain such equipment
and provide such information could have a material adverse effect on our
business, operating results and financial condition. In addition, if we
terminate any of our telecom agreements with Sprint, or Sprint fails to renew
our agreements upon expiration, we could incur substantial additional costs to
develop or license replacement telecom capacity.
Enhancement of the Company's Products
Our failure to effectively improve our software, websites or other
products, or our failure to achieve market acceptance of design modifications,
could adversely affect our business, results of operations and financial
condition. To remain competitive, we must continue to enhance and improve the
responsiveness, functionality, features and content of our main product
offerings. If we are unable to develop increasingly complex technologies to
improve our products, we may not successfully maintain competitive user response
time or implement new features and functions. Furthermore, enhancements of or
improvements to our products may contain undetected errors that require
significant design modifications. Such errors could result in a loss of customer
confidence and user support and a decrease in the value of our products and
services.
Technological Change
Our future success will depend in significant part on our ability to
continually improve the performance, features and reliability of our products
and content offerings in response to both evolving demands of the marketplace
and competitive product offerings. The market for Internet products and services
is characterized by rapid technological developments, evolving industry
standards and customer demands, and frequent new product introductions and
enhancements. These market characteristics are exacerbated by the emerging
nature of this market and the fact that many companies are expected to introduce
new Internet products and services in the near future. We may not be successful
in this area.
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Management of Potential Growth
Our inability to effectively manage growth could have a material
adverse effect on our business, operating results and financial condition. The
process of managing large, potentially high traffic websites such as our
products and content offerings is an increasingly important and complex task. To
the extent that our technology fails and affects our customers or partners, we
may be exposed to "make good" obligations with these customers or partners,
which could adversely affect us. We may not be able to effectively manage the
expansion of our operations and our systems, procedures or controls may not be
adequate to support our operations. Additionally, we may not be able to achieve
the rapid execution necessary to fully exploit our market opportunities.
Capacity Constraints and Systems Failures
Any disruption in Internet access or any failure of our technology to
handle higher volumes of user traffic could have a material adverse effect on
our business, operating results and financial condition. A key element of our
business strategy is to generate high volume usage of our products and content
offerings. Accordingly, our technology performance is critical to our
reputation. Our technology performance also affects our ability to (1) attract
advertisers to our products, and (2) achieve market acceptance of these products
and media properties. If we experience a system failure that causes an
interruption or an increase in response time of our websites, we may have less
traffic to our content destinations. If the interruptions or delays are
sustained or repeated, our advertisers may find our content offerings less
attractive and our customers may choose to shop elsewhere. An increase in the
volume of traffic to our websites could strain our software or hardware
capacity, which could lead to slower response time or system failures. In
addition, as the number of users increases, our infrastructure may not be able
to scale accordingly. We are also dependent upon our own technology and link to
the Internet. Furthermore, we are dependent on hardware suppliers for prompt
delivery, installation and service of servers and other equipment which we use
to deliver our products and services.
Our operations are dependent in part upon our ability to protect our
operating systems against physical damage from fires, floods, earthquakes, power
losses, telecommunications failures, break-ins and similar events. We do not
presently have redundant, multiple-site capacity in the event of any such
occurrence. Despite our implementation of network security measures, our servers
are vulnerable to computer viruses, break-ins and similar disruptions from
unauthorized tampering. If we experience any of these events, the users of our
websites may encounter interruptions, delays or cessations in service, which
could have a material adverse effect on our business, operating results and
financial condition.
Integration of Potential Acquisitions
If we enter into future acquisitions, we may not be successful in
overcoming risks or any other problems typically encountered in connection with
such acquisitions. During fiscal year 1998 and the first quarter of fiscal year
1999, we have acquired several companies and we have evaluated several potential
acquisitions. As part of our business strategy we expect to enter into further
business combinations and/or make significant investments in complementary
companies, products or technologies. Any such transactions would be accompanied
by the risks commonly encountered in such transactions. Such risks include,
among other things, (1) the difficulty of assimilating the operations and
personnel of the acquired companies, (2) the potential disruption of our ongoing
business, (3) the inability of management to maximize our financial and
strategic position through the successful incorporation of acquired technology
or content and rights into our products and services, (4) the difficulties of
integrating personnel of acquired entities, (5) the additional expenses
associated with amortization of acquired intangible assets, (6) the maintenance
of uniform standards, controls, procedures and policies, (7) the impairment of
relationships with employees and customers as a result of any new management
integration, and (8) the potential unknown liabilities associated with acquired
businesses.
Trademarks and Proprietary Rights
We are not certain that the steps we have taken to protect our
proprietary rights will be adequate or that third parties will not infringe or
misappropriate our copyrights, trademarks, trade dress and similar proprietary
rights. In addition, we cannot be certain that other parties will not assert
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infringement claims against us. We believe our copyrights, trademarks, trade
dress, trade secrets and similar intellectual property are critical to our
success. We rely upon trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, customers,
partners and others to protect our proprietary rights. We pursue the
registration of our trademarks in the United States, and we have applied for the
registration of certain of our trademarks.
We anticipate that we may be subject to legal proceedings and claims in
the ordinary course of our business, including claims of alleged infringement by
us and our licensees of the trademarks and other intellectual property rights of
third parties. We may be forced to use significant financial and managerial
resources to defend such claims, even if they are not meritorious. We are not
aware of any legal proceedings or claims that we believe will have, individually
or in the aggregate, a material adverse effect on our financial position or
results of operations.
Dependence on Key Personnel
Our performance is substantially dependent on the effectiveness of our
senior management and key technical personnel. In particular, our success
depends substantially on the continued efforts of our senior management team,
which currently is composed of a small number of individuals who only recently
joined the Company. We do not carry key person life insurance on any of our
senior management personnel. The loss of the services of any of our executive
officers or other key employees could detrimentally affect us.
Our future success also depends on our continuing ability to attract
and retain highly qualified technical and managerial personnel. Competition for
such personnel is intense and we may not be able to retain them. Furthermore, we
may not be able to attract and retain additional highly qualified technical and
managerial personnel in the future. Our inability to attract and retain the
necessary technical and managerial personnel could have a material and adverse
effect upon our business, operating results and financial condition.
Government Regulation and Legal Uncertainties
Any new legislation or regulation or the application of existing laws
and regulations to the Internet could have a material adverse effect on our
business, operating results and financial condition. We are not currently
subject to direct regulation by any United States government agency, other than
regulations applicable to businesses generally. There are currently few laws or
regulations directly applicable to access to or commerce on the Internet. Due to
the increasing popularity and use of the Internet, it is possible that a number
of laws and regulations may be adopted with respect to the Internet, covering
issues such as user privacy, pricing and characteristics and quality of products
and services. For example, we may be subject to the provisions of the
Communications Decency Act (the "CDA"). Although the constitutionality of the
CDA, the manner in which the CDA may be interpreted and enforced and the effect
of the CDA on our operations cannot be determined, it is possible that the CDA
could expose us to substantial liability. A number of other countries also have
enacted or may enact laws that regulate Internet content. The adoption of such
laws or regulations may decrease the growth of the Internet, which could in turn
decrease the demand for our products and media properties. Such laws and
regulations also could increase our cost of doing business or otherwise have an
adverse effect on our business, operating results and financial condition.
Moreover, existing laws governing issues such as property ownership, defamation,
obscenity and personal privacy may also be applicable to the Internet, and we
may be subject to claims that our services and websites violate such laws.
9
<PAGE>
Liability for Information Services
Because materials may be downloaded by the online or Internet services
operated or facilitated by the Company and may be subsequently distributed to
others, we may be subject to a variety of claims. These claims may include
defamation, negligence, copyright or trademark infringement, personal injury or
other theories based on the nature and content of such downloaded materials. In
the past, other online services have been sued for such claims and in some cases
have lost. In addition, we could be exposed to liability with respect to the
books, videos, content and links that may be accessible through our websites, or
through content and materials that may be posted by users on websites. It is
also possible that if we provide any information through our websites or
services which contains errors, third parties could make claims against us for
losses incurred in reliance on such information. Also, to the extent we provide
users with information relating to purchases of goods and services, we could
face claims relating to injuries or other damages arising from such goods and
services. Although we carry general liability insurance, our insurance may not
cover potential claims of this type or may not be adequate to indemnify us for
all liability that may be imposed. Our business, operating results and financial
condition could be adversely affected by any liability or legal defense expenses
that are not covered by insurance or that are in excess of our insurance
coverage.
Concentration of Stock Ownership
Our present directors, executive officers, greater than 5% stockholders
and their respective affiliates beneficially own approximately 44% of our
outstanding common stock. As a result of their ownership, the directors,
executive officers, greater than 5% stockholders and their respective affiliates
collectively are able to control or significantly influence all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of the Company.
Volatility of Stock Price
Broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our operating performance. The trading
price of our common stock has been and may continue to be subject to wide
fluctuations in response to a number of events and factors. These events and
factors include (1) quarterly variations in operating results, (2) technological
innovations or new affiliations announcements by us or by our competitors, (3)
changes in financial estimates and recommendations by securities analysts, (4)
performance of operating and stock price of other companies that investors may
deem comparable to the Company, and (5) news reports relating to trends in our
markets. In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of such companies.
Antitakeover Effect of Certain Charter Provisions
The rights of the holders of common stock may be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. Our Board of Directors has the authority to issue up to
2,500,000 shares of preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders. The issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change of control of the Company without further action by the stockholders and
may adversely affect the voting and other rights of the holders of common stock.
Shares Eligible for Future Sale
If our shareholders sell a substantial number of shares of our common
stock in the public market following this registration, or if the public
believes that such sales could occur, the market price of our common stock could
decline. Upon completion of this registration, in addition to the 3,412,890
shares registered in this prospectus, approximately 6,283,925 shares will be
immediately eligible for resale in the public market without restriction under
the Securities Act. Approximately 1,401,753 shares of common stock are eligible
for sale in the public market, subject to the provisions of Rule 144 under the
Securities Act.
10
<PAGE>
As of December 2, 1998, an aggregate of 2,115,942 shares of common
stock were reserved for issuance pursuant to certain warrants. Of the common
stock which will be issued on exercise of these warrants, 1,436,942 shares are
being registered in this prospectus.
As of December 2, 1998, 1,052,500 shares of common stock were subject
to options outstanding under the Amended and Restated DataMark Holding, Inc.
Incentive Plan ("Incentive Plan") at a weighted average exercise price of $4.26
per share. Of these options, 850,000 were exercisable at that date at a weighted
average exercise price of $4.44 per share. The remainder of these options become
exercisable at various points over the next 2 years. An additional 1,447,500
shares of common stock are reserved for future issuance under the Incentive
Plan. We filed a registration statement on Form S-8 registering the shares of
common stock reserved for future issuance under the Incentive Plan, thus
permitting the resale of such shares in the public market without restriction
under the Securities Act, subject to Rule 144.
Year 2000
Computer systems, software packages, and microprocessor dependent
equipment may cease to function properly or generate erroneous data when the
year 2000 arrives. The problem affects those systems or products that are
programmed to accept a two-digit code in date code fields. To correctly identify
the year 2000, a four-digit date code field will be required to be what is
commonly termed "year 2000 compliant."
Although we believe that we are year 2000 compliant, it is possible
that we are not. We may realize exposure and risk if the systems for which we
are dependent upon to conduct day-to-day operations are not year 2000 compliant.
The potential areas of exposure include electronic data exchange systems
operated by third parties with whom we transact business, server software which
we use to present content and advertising to our customers and partners and
computers, software, telephone systems and other equipment used internally. In
October 1997, we initiated the review and assessment of all our computerized
hardware and internal-use software systems to ensure that such systems will
function properly in the year 2000 and beyond. During the last two years, our
computerized information systems have been substantially replaced and are
believed to be year 2000 compliant. It is possible, however, that our systems
are not compliant or that that the software programs which we acquired from
third parties and incorporated into our other applications may not be fully year
2000 compliant.
We have not yet determined a contingency plan in the event that any
noncompliant critical systems are not remedied by the year 2000, nor have we
formulated a timetable to create such a contingency plan. It is possible that
costs associated with year 2000 compliance efforts may exceed our current
projections and have a material impact on our financial results or operations.
It is also possible that if systems material to our operations have not been
made year 2000 compliant, or if third parties fail to make their systems
compliant in a timely manner, the year 2000 issue could have a material adverse
effect on our business, financial condition and results of operations.
Forward-Looking Statements and Associated Risks
This prospectus, including all documents incorporated herein by
reference, includes certain "forward-looking statements" within the meaning of
that term in Section 27A of the Securities Act, as amended (the "Securities
Act") and Section 21E of the Exchange Act, including, among others, those
statements preceded by, followed by or including the words "believes,"
"expects," "anticipates" or similar expressions.
These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Our actual
results could differ materially from these forward-looking statements. In
addition to the other risks described elsewhere in this "Risk Factors"
discussion, important factors to consider in evaluating such forward-looking
statements include (i) we have only generated minimal revenue from our Internet
businesses, and we have not generated and may not generate the level of
purchases, users or advertisers anticipated, and (ii) the costs to market our
Internet services. In light of these risks and uncertainties, many of which are
described in greater detail elsewhere in this "Risk Factors" discussion, there
can be no assurance that the events contemplated by the forward-looking
statements contained in this prospectus will, in fact, occur.
11
<PAGE>
USE OF PROCEEDS
We are registering the Shares for the benefit of the selling
stockholders and the selling stockholders will sell the Shares from time to time
under this prospectus. Other than the exercise price the selling stockholders
will pay to exercise their warrants, we will not receive any proceeds from the
sale of the Shares offered in this prospectus. We will pay the costs of this
offering which are estimated to be $40,000. The selling stockholders are not
obligated to exercise their warrants, and there can be no assurance that they
will choose to exercise all or any of the warrants. We intend to use any
proceeds we receive from any warrant exercise to augment our working capital for
general corporate purposes.
SELLING STOCKHOLDERS
The following table sets forth certain information as of December 2,
1998, with respect to the selling stockholders. Beneficial ownership after this
offering will depend on the number of Shares actually sold by the selling
stockholders. To our knowledge, all selling stockholders have sole voting and
investment power with respect to their securities, except as otherwise
indicated. Except for the purchase of the Shares and except as noted below, none
of the selling stockholders has had any position, office or other material
relationship with the Company within the past three years.
<TABLE>
<CAPTION>
Shares of
Shares of Common Stock Common Stock Shares of Common Stock
Beneficially Owned Being Owned
Name of Selling Stockholder Prior To Offering Registered After the Offering (2)
- --------------------------- ----------------- for Resale ----------------------
----------
Number % of Class (1) Number Number % of Class
------ --------------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
At Home Network 220,534 1.4 220,534(3) 0 -
Brown Simpson Strategic Growth Fund, -
Ltd. 970,000 6.49 1,120,000(4) 0
Brown Simpson Strategic Growth Fund, -
L.P. 430,000 2.91 480,000(5) 0
America Online, Inc. 1,592,356 10.45 1,592,356(6) 0 -
</TABLE>
12
<PAGE>
* Represents less than 1% of the total issued and outstanding shares of common
stock.
(1) Includes all common stock beneficially owned by the selling stockholder as
a percentage of the 14,593,837 shares of common stock outstanding on
December 2, 1998, together with all currently exercisable warrants or
options for such selling stockholder. Shares of common stock subject to
warrants or options are deemed outstanding for computing the percentage
ownership of the person holding such rights, but are not deemed outstanding
for computing the percentage of any other person.
(2) Assumes that the selling stockholder disposes of all of the Shares covered
by this prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights, if
any.
(3) Includes 200,000 shares of common stock which have not been issued but
which are issuable upon exercise of warrants. 100,000 of the warrants will
vest only upon the attainment by At Home Network of certain performance
criteria.
(4) Includes 410,000 shares of common stock which have not been issued but
which are issuable upon exercise of warrants and 150,000 shares which have
not yet been issued and which are not currently exercisable.
(5) Includes 90,000 shares of common stock which have not been issued but which
are issuable upon exercise of warrants and 50,000 shares which have not yet
been issued and which are not currently exercisable.
(6) Includes 636,942 shares of common stock which have not been issued but
which are issuable upon exercise of warrants. 318,471 of the warrants will
vest only upon attainment by America Online, Inc. of certain performance
criteria.
PLAN OF DISTRIBUTION
The selling stockholders may offer and sell the Shares covered by this
prospectus from time to time. The selling stockholders will act as principals
for their own accounts in selling the Shares.
The distribution of the Shares by the selling stockholders is not
subject to any underwriting agreement. We expect that the selling stockholders
will sell the Shares covered by this prospectus through customary brokerage
channels, either through (1) broker-dealers acting as principals, who may then
resell the Shares through Nasdaq, (2) in private sales, (3) in a combination of
such methods of sale, (4) in transactions pursuant to Rule 144 under the
Securities Act or (5) in block trades in which the broker or dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction. We expect the selling
stockholders will sell the Shares at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The selling stockholders may pledge all or a portion of the Shares as
collateral in loan transactions. Upon default by the selling stockholders, the
pledgee in such loan transaction would have the same rights of sale as such
selling stockholders under this prospectus. The selling stockholders may also
transfer Shares in other ways not involving market makers or established trading
markets, including directly by gift, distribution, or other transfer without
consideration, and upon any such transfer the transferee would have the same
rights of sale as such selling stockholders under this prospectus. Finally, the
selling stockholders and any brokers and dealers through whom sales of the
Shares are made may be deemed to be "underwriters" within the meaning of the
Securities Act, and the commissions or discounts and other compensation paid to
such persons may be regarded as underwriters' compensation.
From time to time the Selling Stockholders may engage in short sales,
short sales against the box, puts and calls and other transactions in securities
of the Company or derivatives thereof, and may sell and deliver the Shares in
connection therewith or in settlement of securities loans.
In effecting sales, brokers and dealers engaged by the Selling
Stockholder may arrange for other brokers or dealers to participate in such
sales. Brokers or dealers may receive commissions or discounts from the Selling
Stockholders (or, if any such broker-dealer acts as agent for the purchaser of
such shares, from such purchaser) in amounts to be negotiated which are not
expected to exceed those customary in the types of transactions involved.
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of such Shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for a Selling Stockholder, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholders.
13
<PAGE>
Broker-Dealers who acquire Shares as principal may thereafter resell
such Shares from time to time in transactions (which may involve block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of the sale, at
prices then related to the then-current market price or in negotiated
transactions and, in connection with such resales, may pay to or receive from
the purchasers of such Shares commissions as described above. We will pay all
expenses of registration incurred in connection with this offering, but the
selling stockholders will pay all brokerage commissions and other similar
expenses incurred by the selling stockholders.
At the time a particular offer of the Shares is made, to the extent
required, we will distribute a supplement to this prospectus which will identify
and set forth the aggregate amount of Shares being offered and the terms of the
offering.
The selling stockholders may sell the Shares at any price. Sales of the
Shares at less than market prices may depress the market price of our common
stock. Moreover, generally the selling stockholders are not restricted as to the
number of shares which may be sold at any one time, and it is possible that a
significant number of Shares could be sold at the same time. However, to the
extent the selling stockholders are affiliates of the Company, such selling
stockholders are subject to the volume limitations of Rule 144 under the
Securities Act.
The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of the Shares by the
selling shareholders and any other such person. Furthermore, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the Shares to engage in market-making activities with respect to the
particular Shares being distributed for a period of up to five business days
prior to the commencement of such distribution. All of the foregoing may affect
the marketability of the Shares and the ability of any person or entity to
engage in market-making activities with respect to the Shares.
To comply with certain states' securities laws, if applicable, the
Shares may be sold in any such jurisdictions only through registered or licensed
brokers or dealers. In certain states the Shares may not be sold unless the
seller meets the applicable state notice and filing requirements.
LEGAL MATTERS
For purposes of this offering, Snell & Wilmer L.L.P., Salt Lake City,
Utah, counsel to the Company, is giving its opinion on the validity of the
Shares.
EXPERTS
The audited financial statements as of June 30, 1998 and 1997 and for
each of the three years in the period ended June 30, 1998, incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report. We
refer you to the report on those financial statements, dated September 23, 1998,
which includes an explanatory paragraph with respect to the uncertainty
regarding the Company's ability to continue as a going concern as discussed in
Note 1 to the financial statements.
14
<PAGE>
We have not authorized any dealer, salesperson or 3,412,890
other person to give any information or represent
anything not contained in this prospectus. You DIGITAL COURIER
must not rely on any unauthorized information. TECHNOLOGIES, INC.
This prospectus does not offer to sell or buy any
shares in any jurisdiction where it is unlawful. Common Stock
The information in this prospectus is current only -------------------
as of its date. PROPECTUS
-------------------
- -----------------------------------------------------
TABLE OF CONTENTS
PAGE
ABOUT THIS PROSPECTUS...............................2
WHERE YOU CAN FIND MORE
INFORMATION.........................................2
RISK FACTORS........................................3
THE COMPANY.........................................3
USE OF PROCEEDS....................................12
SELLING STOCKHOLDERS...............................12
PLAN OF DISTRIBUTION...............................13
LEGAL MATTERS......................................14
EXPERTS............................................14
December 11, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The Company estimates that expenses in connection with the transactions
described in this registration statement will be as follows. All expenses
incurred with respect to the transactions will be paid by the Company.
SEC Registration Fee...............................$6,319
Printing Expenses.....................................500
Accounting Fees and Expenses........................5,000
Legal Fees and Expenses............................25,000
Transfer Agent Fees and Expenses....................1,500
Total...................................$ 38,319
Item 15. Indemnification of Directors and Officers
The General Corporation Law of the State of Delaware provides for
indemnification as set forth in Section 145 thereof. The Company's Bylaws
provide for indemnification of the Company's directors, officers and others
against all expenses and amounts of liability incurred by them in connection
with any action, suit or proceeding in which they are involved by reason of
their affiliation with the Company. This indemnification is to the fullest
extent permitted by law upon receipt of an undertaking by or on behalf of such
person (and the heirs and legal representatives of such person) to repay such
advances if it shall ultimately be determined that such person is not entitled
to indemnification by the Company.
Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibits Description
4.1 Interactive Marketing Agreement with America Online,
Inc., filed with the Form 10-K for the year ended June
30, 1998, incorporated herein by reference
4.2 Content License and Distribution Agreement with At Home
Corporation, filed with the Form 10-K for the year
ended June 30, 1998, incorporated herein by reference
4.3 Loan Agreement between the Company and Certain Lenders
dated as of October 22, 1998, filed with the Form 8-K
dated December 11, 1998, incorporated herein by
reference
4.4 Securities Purchase Agreement among the Company, Brown
Simpson Strategic Growth Fund, Ltd. and Brown Simpson
Strategic Growth Fund, L.P. dated as of November 23,
1998, as amended on December 2, 1998, filed with the
Form 8-K dated December 11, 1998, incorporated herein
by reference
5.1 Opinion of Snell & Wilmer L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Snell & Wilmer L.L.P. (included in opinion
filed as Exhibit 5.1)
24.1 Power of Attorney (contained on signature page)
II-1
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(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. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a twenty percent (20%) change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
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 (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and 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 the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, 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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(6) That, 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 Commission such
II-2
<PAGE>
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.
II-3
<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-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Salt Lake City, Utah on December 10, 1998.
DIGITAL COURIER TECHNOLOGIES, INC.
a Delaware corporation
By:/s/Raymond J. Pittman
----------------------------------------
Raymond J. Pittman
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4.1 Interactive Marketing Agreement with America
Online, Inc., filed with the Form 10-K for the year
ended June 30, 1998, incorporated herein by
reference
4.2 Content License and Distribution Agreement with At
Home Corporation, filed with the Form 10-K for the
year ended June 30, 1998, incorporated herein by
reference
4.3 Loan Agreement between the Company and Certain
Lenders dated as of October 22, 1998, filed with
the Form 8-K dated December 11, 1998, incorporated
herein by reference
4.3 Securities Purchase Agreement among the Company,
Brown Simpson Strategic Growth Fund, Ltd. And Brown
Simpson Strategic Growth Fund, L.P. dated as of
November 23, 1998, as amended on December 2, 1998,
filed with the Form 8-K dated December 11, 1998,
incorporated herein by reference
5.1 Opinion of Snell & Wilmer LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Snell & Wilmer LLP (included in Exhibit
5.1)
24 Power of Attorney (included on signature page of
registration statement)
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
and appoints Mitchell Edwards with full power of substitution and resubstitution
and full power to act without the other, as his true and lawful attorney-in-fact
and agent to act in his name, place and stead and to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to
file, any and all amendments to this registration statement, including any and
all post-effective amendments and any registration statement relating to the
same offering as this registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, as amended, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing, ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities indicated
below on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Raymond J. Pittman Dec 11, 1998
- ---------------------------- --------------
Chief Executive Officer and Director
Raymond J. Pittman (Principal Executive Officer)
/s/ Michael S. Bard Dec 11, 1998
- ---------------------------- --------------
Senior Vice President and Controller
Michael S. Bard (Principal Financial and Accounting Officer)
/s/ Mitchell Edwards Dec 11, 1998
- ---------------------------- --------------
Executive Vice President and Director
Mitchell Edwards
/s/ Kenneth M. Woolley Dec 11, 1998
- ---------------------------- --------------
Director
Kenneth M. Woolley
/s/ Glen Hartman Dec 11, 1998
- ---------------------------- --------------
Glen Hartman Director
/s/ James A. Egide Dec 11, 1998
- ---------------------------- --------------
James A. Egide Chairman of the Board
/s/ Mitchell Edwards Dec 11, 1998
- ---------------------------- --------------
Mitchell Edwards
Attorney-in-Fact
EXHIBIT 5.1
OPINION OF SNELL & WILMER L.L.P.
December 10, 1998
Digital Courier Technologies, Inc.
136 Heber Avenue, Suite 204
Park City, Utah 84060
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Digital Courier Technologies, Inc., a
Delaware corporation (the "Company"), and in such capacity have examined the
Company's Registration Statement on Form S-3 (the Form S-3, including the
amendments thereto being referred to collectively herein as the "Registration
Statement"), to be filed by the Company with the Securities and Exchange
Commission ("Commission") on December 10, 1998 under the Securities Act of 1933,
as amended ("Act"). The Registration Statement relates to the proposed
registration for resale by certain selling shareholders ("Selling Shareholders")
of up to an aggregate of 3,412,890 shares of common stock, $.0001 par value per
share of the Company, 1,775,948 of such shares which were previously acquired by
such Selling Shareholders, and 1,636,942 of such shares which may be acquired by
such Selling Shareholders upon the exercise of outstanding warrants.
As counsel for the Company and for purposes of this opinion, we have
made those examinations and investigations of legal and factual matters we
deemed advisable and have examined originals or copies, certified or otherwise
identified to our satisfaction as true copies of the originals, of those
corporate records, certificates, documents and other instruments which, in our
judgment, we considered necessary or appropriate to enable us to render the
opinion expressed below, including the Company's Certificate of Incorporation,
as amended to date, the Company's Bylaws, as amended to date, and the minutes of
meetings of the Company's Board of Directors and other corporate proceedings
relating to the authorization and issuance of the Selling Shareholder's shares.
We have assumed the genuineness and authorization of all signatures and the
conformity to the originals of all copies submitted to us or inspected by us as
certified, conformed or photostatic copies. Also, we have assumed the proper
exercise and payment for the warrants underlying the shares being registered in
the Registration Statement. Further, we have assumed the due execution and
delivery of certificates representing the Selling Shareholder's shares.
Based upon the foregoing, and relying solely thereon, we are of the
opinion that the Selling Shareholders' shares have been duly authorized and when
issued, were or will be legally and validly issued, fully paid and
nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included in the Registration Statement. In giving
this consent we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
SNELL & WILMER L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of our
report dated September 23, 1998 included in Digital Courier Technologies, Inc.'s
Form 10-K for the year ended June 30, 1998 and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
December 7, 1998
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