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RULE 424(b)(3)
REGISTRATION NO. 333-33708
PROSPECTUS
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ZIXIT CORPORATION
25,000 SHARES
COMMON STOCK
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This prospectus relates to an offering of up to 25,000 shares of our
common stock, par value $.01 per share, acquired pursuant to a Representation
Agreement and Stock Option Agreement, effective as of November 1, 1999, by and
between Henry Kuehne and us.
The common stock being registered is being offered for the account of
Mr. Kuehne as further described under "Selling Shareholder" on page 8. We will
not receive any proceeds from the sale of the shares of common stock offered
under this prospectus.
The shares may be offered in transactions on the NASDAQ Stock Market,
in negotiated transactions, or through a combination of methods of distribution,
at prices relating to the prevailing market prices or at negotiated prices.
Please see "Plan of Distribution" on page 9.
Our common stock is quoted on NASDAQ under the symbol "ZIXI". On June
6, 2000, the last sale price of our common stock, as reported on NASDAQ, was
$32.66 per share.
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THIS INVESTMENT INVOLVES RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU
CAN AFFORD A LOSS OF ALL OR A PORTION OF YOUR INVESTMENT. PLEASE SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
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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.
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The date of this prospectus is June 9, 2000.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ZixIt Corporation.............................................................1
Risk Factors..................................................................2
Documents Incorporated by Reference...........................................7
Where You Can Get More Information............................................8
Selling Shareholder...........................................................8
Plan of Distribution..........................................................9
Use of Proceeds..............................................................10
Legal Matters............................................................... 10
Experts......................................................................10
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
AND NOT ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. NEITHER ZIXIT
CORPORATION NOR ANY OF ITS REPRESENTATIVES HAS AUTHORIZED ANYONE TO PROVIDE
PROSPECTIVE INVESTORS WITH ANY INFORMATION OR TO REPRESENT ANYTHING NOT
CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. FURTHERMORE, NO
DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO
REPRESENT ANYTHING NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. THIS PROSPECTUS IS AN OFFER TO SELL ONLY THE SHARES OFFERED BY THIS
PROSPECTUS, BUT ONLY UNDER THE CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS
LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS
OF ITS DATE, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY
SALE OF THESE SECURITIES.
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ZIXIT CORPORATION
Historically, we operated in one industry segment, the provision of
systems and solutions for the intelligent transportation, electronic security
and other markets. Our operations included the design, manufacturing,
installation and support of hardware and software products utilizing our
wireless data and security technologies. We sold the businesses comprising this
industry segment during 1997 and 1998.
In 1999, we began developing digital signature and encryption
technology and have been planning a series of products that enhance privacy,
security and convenience over the Internet. To date, we have not earned any
revenues from these products. ZixMail(TM), which was commercially released in
March 2000, is a secure document delivery, private email and messaging tracking
service that enables Internet users worldwide to easily send and receive
encrypted and digitally signed communications using their existing email systems
and addresses. ZixCharge(TM), which has not been commercially released, is a
shopping portal and payment authorization system that enables consumers to
purchase goods and services over the Internet without being required to provide
personal and charge card information to Internet merchants. Additionally, in
October 1999, we purchased all the outstanding shares of Anacom Communications,
Inc., a provider of Internet transaction processing and real-time credit
processing services to Internet merchants.
Successful growth of a development stage enterprise, like ours, is
costly. In addition, the Internet arena is highly competitive. Our growth
depends on the timely development and market acceptance of our new products. Our
future growth involves risks and uncertainties, and there are no assurances that
we will be successful in our current business endeavors. See "Risk Factors" on
page 2.
We were incorporated in Texas in 1988. Our executive offices are
located at 2711 N. Haskell Avenue, Suite 2850, LB 36, Dallas, Texas 75204-2910,
and our telephone number is (214) 515-7300. Our Web site address is
www.zixit.com. Information contained in our Web site is not a part of this
prospectus. In this prospectus, "we", "us", "our" and "ZixIt" refer to ZixIt
Corporation and its subsidiaries unless the context otherwise requires.
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RISK FACTORS
The following is a "safe harbor" statement under the Private Securities
Litigation Reform Act of 1995: Certain matters discussed in this prospectus
contain statements that constitute forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934 (we refer to it as the
"Exchange Act"). The words "expect," "estimate," "anticipate," "predict,"
"believe" and similar expressions and variations thereof are intended to
identify forward-looking statements. We caution you that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors.
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risks and uncertainties, in addition to
the other information contained or incorporated by reference in this prospectus.
Also, you should be aware that the risks and uncertainties described below are
not the only ones facing us. Additional risks and uncertainties that we do not
yet know of or that we currently think are immaterial may also impair our
business operations. If any of those risks or uncertainties or any of the risks
and uncertainties described below actually occur, our business, financial
condition, prospects, or results of operations could be materially and adversely
affected. In that case, the trading price of the common stock offered in this
prospectus could decline, and you may lose all or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY.
We have only a limited operating history in the Internet arena on which
to base an evaluation of our business and prospects. Our prospects must be
considered in light of the risks and uncertainties encountered by other
companies in the early stages of development. These risks and uncertainties are
often worse for companies in new and rapidly evolving markets, particularly
Internet-related businesses.
THE MARKET MAY NOT BROADLY ACCEPT OUR NEW PRODUCTS, WHICH COULD
ADVERSELY AFFECT OUR GROWTH PROSPECTS.
The ZixMail and ZixCharge products are targeted at the new and rapidly
evolving market for secure Internet communications and e-commerce. Although the
competitive environment in this market has yet to fully develop, we anticipate
that it will be intensely competitive, subject to rapid change and significantly
affected by new products and service introductions and other market activities
of industry participants. Our success will depend on many factors, including,
but not limited to, the following:
o We must be able to successfully and timely develop our
products. The commercial version of ZixMail was released in
March 2000. ZixCharge has not been commercially released,
however.
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o We must be able to achieve broad market acceptance for our
products. There is currently no known Internet secure document
delivery and private messaging system, such as ZixMail, that
currently operates at the scale that we would require, at our
current expenditure levels and proposed pricing, to become
profitable from our ZixMail operations. To reach a larger
ZixMail customer base than we can reach through our direct
sales and marketing efforts, we are pursuing strategic or
other similar collaborative relationships with third parties.
There is no assurance that we will be successful in entering
into these relationships, or that if entered into, they will
significantly assist us in obtaining large numbers of ZixMail
users. Moreover, in any event, there is no assurance that
enough paying users of ZixMail will be ultimately obtained to
enable us to operate profitably.
o Since the commercial version of ZixCharge has not yet been
released, there are currently no consumers or merchants using
ZixCharge. The success of ZixCharge will depend on our ability
to obtain, as users, large numbers of consumers who desire to
shop privately over the Internet and our ability to obtain
large numbers of merchants that will permit them to do so
using ZixCharge. To obtain access to large numbers of
consumers, we are pursuing strategic or similar collaborative
relationships with companies that have existing business
relationships with large numbers of people. There is no
assurance that we will be successful in entering into these
relationships, or that if entered into, they will
significantly assist us in obtaining large numbers of
ZixCharge users. Moreover, in any event, there is no assurance
that we will be successful in obtaining a critical mass of
consumers as ZixCharge users or obtaining a critical mass of
merchants that will allow consumers to use ZixCharge. If we
are unable to obtain the necessary critical mass, we may
decide not to commercially introduce ZixCharge.
WE HAVE NO SIGNIFICANT REVENUES.
We currently have no significant revenues.
WE FACE STRONG COMPETITION FROM NUMEROUS AND SOMETIMES LARGER COMPANIES
THAT MAY BE ABLE TO DEVELOP AND INTRODUCE NEW PRODUCTS THAT COULD RENDER OUR
PRODUCTS OBSOLETE OR NONCOMPETITIVE.
We are a new entrant into the rapidly evolving secure Internet
communications and e-commerce markets. We will be competing with larger
companies that have access to greater capital, research and development,
marketing, distribution and other resources than we do. In addition, the
Internet arena is characterized by extensive research efforts and rapid product
development and technological change that could render our products obsolete or
noncompetitive. Our failure to develop and introduce new products and services
successfully on a timely basis and to achieve market acceptance for those
products and services could have a significant adverse effect on our business,
financial condition and results of operations. We may decide, at any time, to
delay, discontinue or not initiate the development and release of any one or
more of our planned or contemplated products.
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SECURITY INTERRUPTIONS TO OUR SECURE DATA CENTER COULD DISRUPT OUR
BUSINESS, AND ANY SECURITY BREACHES COULD EXPOSE US TO LIABILITY AND NEGATIVELY
IMPACT CUSTOMER DEMAND FOR OUR PRODUCTS.
Our business depends on the uninterrupted operation of our secure data
center. We must protect this center from loss, damage, or interruption caused by
fire, power loss, telecommunications failure, or other events beyond our
control. Any damage or failure that causes interruptions in our secure data
center operations could materially harm our business, financial condition and
results of operations.
In addition, our ability to issue digitally-signed certified
time-stamps and public encryption codes in connection with our ZixMail service
depends on the efficient operation of the Internet connections between customers
and our data center. We depend on Internet service providers efficiently
operating these connections. These providers have experienced periodic
operational problems or outages in the past. Any of these problems or outages
could adversely affect customer satisfaction.
Furthermore, it is critical that our facilities and infrastructure
remain secure and the market perceive them to be secure. Despite our security
measures, our infrastructure may be vulnerable to physical break-ins, computer
viruses, attacks by hackers or similar disruptive problems. It is possible that
we may have to use additional resources to address these problems. Our planned
ZixCharge business will retain certain confidential customer information in our
secure data center. Any physical or electronic break-ins or other security
breaches or compromises of this information could expose us to significant
liability, and customers could be reluctant to use our Internet-related
products.
WE DEPEND ON KEY PERSONNEL.
We depend on the performance of our senior management team and other
key employees, particularly highly skilled technical and sales and marketing
personnel. Our success also depends on our ability to attract, retain and
motivate these individuals. There is intense competition for these personnel,
and we face a tight employment market in general. There are no agreements with
any of our personnel that prevent them from leaving ZixIt at any time. In
addition, we do not maintain key person life insurance for any of our personnel.
The loss of the services of any of our key employees or our failure to attract,
retain and motivate key employees could harm our business.
ZIXMAIL AND ZIXCHARGE COULD CONTAIN UNKNOWN DEFECTS OR ERRORS.
ZixMail and ZixCharge could contain undetected defects or errors.
Despite our testing, defects or errors may occur, which could result in loss of
or delay in revenues, failure to achieve market acceptance, diversion of
development resources, injury to our reputation, litigation claims, increased
insurance costs or increased service and warranty costs. Any of these could harm
our business.
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PUBLIC KEY CRYPTOGRAPHY TECHNOLOGY IS SUBJECT TO RISKS.
Our ZixMail product employs, and future products may employ, public key
cryptography technology. With public key cryptography technology, a user has a
public key and a private key, which are used to encrypt and decrypt messages.
The security afforded by this technology depends, in large measure, on the
integrity of a user's private key, which is dependent, in part, on the
application of certain mathematical principles. The integrity of a user's
private key is predicated on the assumption that it is difficult to
mathematically derive a user's private key from the user's related public key.
Should methods be developed that make it easier to derive a user's private key,
the security of encryption products using public key cryptography technology
would be reduced or eliminated and such products could become unmarketable. This
could require us to make significant changes to our products, which could damage
our reputation and otherwise hurt our business. Moreover, there have been public
reports of the successful decryption of certain encrypted messages. This, or
related, publicity could affect public perception of the security afforded by
public key cryptography technology, which could harm our business.
WE COULD BE AFFECTED BY GOVERNMENT REGULATION.
Exports of software products using encryption technology are generally
restricted by the U.S. government. Although we have obtained U.S. government
approval to export our ZixMail product to almost all countries in the world, the
list of countries to which ZixMail cannot be exported could be revised in the
future. Furthermore, some foreign countries impose restrictions on the use of
software products using encryption technology, such as ZixMail. Failure to
obtain the required governmental approvals would preclude us from selling
ZixMail in international markets.
OUR PRODUCTS MAY NOT BECOME GENERALLY ACCEPTED STANDARDS OR BE
COMPATIBLE WITH GENERALLY ACCEPTED STANDARDS, WHICH COULD ADVERSELY AFFECT OUR
REVENUE GROWTH AND PROFITABILITY.
We cannot assure you that ZixMail or ZixCharge will become a generally
accepted standard or that they will be compatible with any standards that become
generally accepted.
WE MAY HAVE TO DEFEND OUR RIGHTS IN INTELLECTUAL PROPERTY THAT WE USE
IN OUR PRODUCTS, WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO OUR BUSINESS.
We may have to defend our intellectual property rights or defend
against claims that we are infringing the rights of others. Intellectual
property litigation and controversies are disruptive and expensive. Infringement
claims could require us to develop non-infringing products or enter into royalty
or licensing arrangements. Royalty or licensing arrangements, if required, may
not be obtainable on terms acceptable to us. Our business could be significantly
harmed if we are not able to develop or license the necessary technology.
Furthermore, it is possible that others may independently develop substantially
equivalent intellectual property, thus enabling them to effectively compete
against us.
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WE MAY HAVE LIABILITY FOR INDEMNIFICATION CLAIMS ARISING FROM THE SALE
OF OUR PREVIOUS BUSINESSES IN 1998 AND 1997.
We disposed of our previous operating businesses in 1998 and 1997. In
selling those businesses, we agreed to provide customary indemnification to the
purchasers of those businesses for breaches of representations and warranties,
covenants and other specified matters. Although we believe that we have
adequately provided for future costs associated with these indemnification
obligations, indemnifiable claims could exceed our estimates.
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated significantly in
the past and is likely to fluctuate in the future. Also, the market prices of
securities of other Internet-related companies have been highly volatile.
WE MAY ENCOUNTER OTHER UNANTICIPATED RISKS AND UNCERTAINTIES IN THE
INTERNET MARKET OR IN DEVELOPING NEW PRODUCTS, AND WE CANNOT ASSURE YOU THAT WE
WILL BE SUCCESSFUL IN RESPONDING TO ANY UNANTICIPATED RISKS OR UNCERTAINTIES.
We cannot assure you that we will be successful or that we will not
encounter other, and even unanticipated, risks. We discuss other operating,
financial or legal risks or uncertainties in our periodic SEC filings. We are,
of course, also subject to general economic risks.
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DOCUMENTS INCORPORATED BY REFERENCE
We furnish our shareholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission (we refer to it as the "SEC"). Instead of
repeating information that we have already filed with the SEC, we are allowed to
"incorporate by reference" in this prospectus information contained in those
documents we have filed with them. These documents are considered to be part of
this prospectus.
We incorporate by reference in this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act until the selling shareholder sells all of the
shares of common stock offered by this prospectus:
o our Annual Report on Form 10-K, including audited financial
statements, for our fiscal year ended December 31, 1999;
o all other reports we have filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of our fiscal year
covered by the Annual Report referred to above; and
o the description of our common stock contained in our
Registration Statement on Form 8-A, dated September 25, 1989,
including any amendment or report filed for the purpose of
updating such description.
Any documents that we file with the SEC pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act, prior to the termination of the
offering, will also be considered to be part of this prospectus and will
automatically update and supersede the information contained in this prospectus.
At your request, we will provide you, without charge, a copy of any of
the documents we have incorporated by reference into this prospectus but not
delivered with the prospectus (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates). If you want more information, write or call:
Steve M. York
Senior Vice President and Chief Financial Officer
ZixIt Corporation
2711 N. Haskell Avenue
Suite 2850, LB 36
Dallas, Texas 75204-2910
Telephone: (214) 515-7300
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WHERE YOU CAN GET MORE INFORMATION
We are delivering this prospectus to you in accordance with the United
States securities laws. We have filed a registration statement with the SEC to
register the common stock that the selling shareholder is offering to you. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information that is included
in the registration statement.
You may obtain a copy of the registration statement, or a copy of any
other filing we have made with the SEC, directly from the SEC. You may either:
o read and copy any materials we have filed with the SEC at the
SEC's Public Reference Room maintained at 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following
regional offices: 7 World Trade Center, 13th Floor, New York,
New York 10048; and Northwest Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661; or
o visit the SEC's Internet site at http://www.sec.gov, which
contains reports, proxy statements, and other information
regarding issuers that file electronically.
You can obtain more information about the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330.
SELLING SHAREHOLDER
The shares of common stock being offered are issuable under options
acquired by the selling shareholder pursuant to a Representation Agreement and
Stock Option Agreement, effective as of November 1, 1999. This agreement
provides for the selling shareholder, a professional golfer, to wear
"information" designated by us on his golf hat at tournaments at which he plays
or during television interviews in which he participates.
The table below sets forth information with respect to the beneficial
ownership of our common stock by the selling shareholder immediately prior to
this offering and as adjusted to reflect the sale of shares of common stock
pursuant to the offering. All information with respect to the beneficial
ownership has been furnished by the selling shareholder.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
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Number of Shares to Number of
Name of Beneficial Owner Shares be Sold Shares
----------------------------- ---------- ---------- --------
<S> <C> <C> <C>
Henry Kuehne 100,000 25,000 75,000
</TABLE>
Mr. Kuehne's beneficial ownership prior to and after the offering is less than
1% of our common stock, based on the 16,553,363 shares of our common stock
outstanding on June 6, 2000. Beneficial ownership after the offering assumes all
the shares that may be offered are sold.
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PLAN OF DISTRIBUTION
The sale of shares offered in this prospectus by the selling
shareholder or his pledgee may be effected from time-to-time directly, or by one
or more broker-dealers or agents, in one or more transactions on the NASDAQ
Stock Market or other exchanges on which our common stock may be listed for
trading, in negotiated transactions, or through a combination of such methods of
distribution, at prices related to prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The selling shareholder will
act independently of us in making decisions with respect to the timing, manner
and size of each sale.
In the event one or more broker-dealers or agents agree to sell the
shares, they may do so by purchasing the shares as principals or by selling the
shares as agents for the selling shareholder. Any broker-dealer that does this
may receive compensation in the form of discounts, concessions, or commissions
from the selling shareholder or the purchasers of the shares for which the
broker-dealer may act as agent or to whom they sell as principal, or both, which
compensation as to a particular broker-dealer may be in excess of customary
compensation. To our knowledge, the selling shareholder has not entered into any
agreement, arrangement or understanding with any particular broker-dealer or
market maker with respect to the shares offered hereby, nor do we know the
identity of any brokers or market makers that will participate in the offering.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of the
distribution. In addition, the selling shareholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M. These provisions may limit the
timing of purchases and sales of the shares by the selling shareholder. All of
the foregoing may affect the marketability of the shares.
In order to comply with some states' securities laws, if applicable,
our common stock will be sold in jurisdictions only through registered or
licensed brokers or dealers. In some states, our common stock may not be sold
unless it has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
We will pay at least one-half of the expenses incident to this offering of the
shares by the selling shareholder to the public other than commissions,
concessions and discounts of brokers, dealers or other agents.
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USE OF PROCEEDS
We will not receive any proceeds from the offering.
LEGAL MATTERS
The validity of the stock offered hereby will be passed upon for us by
Ronald A. Woessner, our Senior Vice President, General Counsel, and Secretary.
EXPERTS
The consolidated financial statements appearing in the Annual Report on
Form 10-K for our fiscal year ended December 31, 1999, referred to under
"Documents Incorporated by Reference" on page 7, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon, included
therein, and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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