As filed with the Securities and Exchange Commission on July 16, 1999
Registration No. 333-79519
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
eFax.com, Inc.
(Exact name of registrant as specified in its charter)
Delaware 3577 77-0182451
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification
organization) Code Number)
1378 Willow Road
Menlo Park, California 94025
(650) 324-0600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Mr. Todd J. Kenck
Chief Financial Officer
eFax.com, Inc.
1378 Willow Road
Menlo Park, California 94025
(650) 324-0600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
Patrick A. Pohlen, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155
(650) 843-5000
Approximate date of commencement of proposed sale to public: As soon as
practicable after this registration Statement becomes effective.
1.
<PAGE> 4
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the registration
statement of the earlier effective registration statement for the same
offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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 Commission, acting pursuant to Section 8(a), may
determine.
2.
<PAGE> 5
Subject to completion, dated July 16, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
EFAX.COM, INC.
1,194,635 shares of Common Stock
This prospectus relates to an aggregate of up to 1,194,635 shares of common
stock, $.01 par value, which are registered under this prospectus. These
shares include:
o 709,640 shares of eFax.comTM common stock which Fisher Capital Ltd.
and Wingate Capital Ltd. may acquire upon conversion of 1,500 shares of
eFax.com's series A convertible preferred stock sold to Fisher Capital
and Wingate Capital in a private transaction.
o 300,000 shares of eFax.com common stock which are issuable upon the
exercise of warrants. eFax.com issued a warrant to purchase 195,000
shares of eFax.com's common stock to Fischer Capital Ltd. and a warrant
to purchase 105,000 shares of eFax.com's common stock to Wingate
Capital Ltd. in connection with a Securities Purchase Agreement dated
May 7, 1999 among eFax.com, Fisher Capital and Wingate Capital.
o Up to 60,000 shares of eFax.com common stock which may be issued to
Fisher Capital and Wingate Capital upon conversion of an 8% accrual
amount on the series A convertible preferred stock in the first year
after the date of the Securities Purchase Agreement.
o 124,995 shares of eFax.com common stock which are issuable upon the
exercise of a warrant to purchase eFax.com common stock issued to
Reedland Capital Partners for their services in connection with the
sale of series A preferred stock and warrants to Fisher Capital and
Wingate Capital.
Fisher Capital, Wingate Capital and Reedland Capital Partners may wish to sell
these shares in the future, and this prospectus allows them to do so. Fisher
Capital and Wingate Capital may also offer additional shares of common stock
acquired upon conversion of the series A convertible preferred stock or
exercise of the warrants as a result of antidilution provisions, stock splits
or similar events. Reedland Capital Partners may also offer additional shares
of common stock acquired upon exercise of the warrants as a result of stock
splits or similar events.
eFax.com will receive the proceeds from the exercise of the warrants issued to
Fisher Capital, Wingate Capital and Reedland Capital Partners. The per share
exercise price of the Fisher Capital and Wingate Capital warrants is $23.25125.
eFax.com will receive the proceeds from the exercise of the warrant issued to
Reedland Capital Partners. The per share exercise price of the Reedland
Capital Partners warrant is $26.325.
eFax.com will not receive any of the proceeds from any future sale of the
shares of common stock issued to Fisher Capital, Wingate Capital and Reedland
Capital Partners upon exercise of the warrants. eFax.com will not receive any
of the proceeds from any future sale of the preferred shares issued to Fisher
Capital, Wingate
3.
<PAGE> 6
Capital or Reedland Capital Partners, or from any future sale of the common
stock issued upon conversion of the preferred shares. However, eFax.com has
agreed to bear the expenses of registration of the shares by this prospectus.
Fisher Capital, Wingate Capital and Reedland Capital Partners, the "selling
stockholders," may sell their eFax.com common stock in one or more transactions
on the Nasdaq National Market at prevailing market prices or at privately
negotiated prices. These selling stockholders may sell their shares directly
or through agents, brokers, dealers or underwriters. The selling stockholders
will pay for underwriting discounts and selling commissions related to the sale
of shares. eFax.com will pay for all other expenses related to such sales.
eFax.com's common stock is traded on the Nasdaq National Market under the
symbol "EFAX." On July 12, 1999, the closing sale price for the common stock
was $17 per share.
Investing in eFax.com's common stock involves a high degree of risk. See "Risk
Factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state Securities
Commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
July 16, 1999
4.
<PAGE> 7
You should rely only on the information or representations provided in this
prospectus or incorporated by reference into this prospectus. eFax.com has not
authorized anyone to provide you with any different information or to make any
different representations in connection with any offering made by this
prospectus. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, in any state where the offer or sale is
prohibited. Neither the delivery of this prospectus, nor any sale made under
this prospectus shall, under any circumstances, imply that the information in
this prospectus is correct as of any date after the date of this prospectus.
INFORMATION AVAILABLE TO YOU
eFax.com's annual, quarterly and special reports, proxy statements and other
information are filed with the SEC as required by the Securities Exchange Act
of 1934. You may inspect and copy these reports, proxy statements and other
information at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of these
materials by mail from the Public Reference Section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
SEC also maintains an Internet web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at the Internet web site address:
http://www.sec.gov. eFax.com's common stock is listed on the Nasdaq National
Market, and you may also inspect and copies these reports, proxy statements and
other information at the offices of The Nasdaq Stock Market, 1735 K Street,
N.W., Washington DC 20006.
This prospectus provides you with a general description of the common stock
being registered. This prospectus is part of a registration statement that
eFax.com has filed with the SEC. To see more detail, you should read the
exhibits and schedules files with eFax.com's registration statement. You may
obtain copies of the registration statement and the exhibits and schedules to
the registration statement as described above.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows this prospectus to "incorporate by reference" other information
that eFax.com files or has filed with the SEC, 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 the prospectus.
Information that eFax.com later files with the SEC will automatically update
and replace the information in this prospectus.
We incorporate by reference the documents listed below:
A. eFax.com's Annual Report on Form 10-K for the year ended January 2,
1999;
B. eFax.com's quarterly report on Form 10-Q for the quarter ended April
3, 1999;
C. The description of the common stock contained in eFax.com's
registration statement on Form S-1 (Registration No. 333-23763)
filed on March 31, 1997, as amended by Amendment No. 1 filed March
28, 1997 and by Amendment No. 2 filed May 12, 1997; and
5.
<PAGE> 8
D. Any future filings which eFax.com makes with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities and Exchange Act of
1934, until the selling stockholders have sold all of the securities
that we have registered with the registration statement.
eFax.com will provide to you at no cost a copy of any and all of the
information incorporated by reference into the registration statement of which
this prospectus is a part. You may make a request for copies of this
information in writing or by telephone. Requests should be directed to
eFax.com, Inc., Attention: Chief Financial Officer, 1378 Willow Road, Menlo
Park, California 94025, telephone (650) 324-0600.
EFAX.COM, INC.
eFax.com was incorporated in Delaware in August 1988. Since that time,
eFax.com has engaged in the development, manufacture and sale of its brand
hardware and software technologies, brand products and desktop software
solutions for the multifunction product market. The "multifunction product
market" consists of electronic office devices that combine print, fax, copy and
scan capabilities in a single device or unit. Building from this strong
technology base, eFax.com is now emphasizing Internet services for its document
transmission and software expertise.
To date, the majority of eFax.com's revenues have been generated from sales of
JetFax(tm) brand products and services through business equipment dealers. Our
hardware and software technologies provide the intelligence for our
multifunction products. These hardware and software technologies coordinate,
control and optimize the printing, faxing, copying and scanning operations of
the multifunction product. We license our hardware and software technologies
for a range of multifunction products sold under the brand names of our
manufacturing customers. eFax.com also offers software which can be sold on a
stand-alone basis, or bundled with hardware and software technologies to
provide the customer with a complete, integrated hardware and software product
solution. Our software products include JetSuite and PaperMaster.
eFax.com is utilizing its e-mail-document-attached technology for Internet
products and services, including our HotSend software which we introduced in
December 1998, and our M900e multifunction product which we introduced in
January 1999. On February 8, 1999, we changed our name from JetFax, Inc. to
eFax.com, Inc. and announced our "eFax(c)" service, a free fax-to-e-mail
service. It is eFax.com's intention to expand its product offerings to include
a variety of Internet-based products and services for electronic and paper-
document communication.
RISK FACTORS
An investment in the shares being offered in this prospectus involves a high
degree of risk. eFax.com operates in a dynamic and rapidly changing
environment that involves numerous risks and uncertainties. You should not
make an investment in these securities if you cannot afford to lose your entire
investment. Before purchasing these securities, you should carefully consider
the following risk factors, as well as other information contained in this
prospectus or incorporated by reference into this prospectus, in evaluating an
investment in the shares of common stock offered by this prospectus. This
prospectus and the documents incorporated by reference into this prospectus may
contain projections of results of operations and financial condition or other
"forward-looking statements" which involve risks and uncertainties. The words
"anticipate," "believe," "estimate," and "expect" and similar expressions when
used in this prospectus in relation to eFax.com or its management are intended
to identify such forward-looking statements. eFax.com's actual results,
performance, or achievements could differ materially from these projections or
forward-looking statements as a result of many factors, including those
discussed in this "Risk Factors" section of the prospectus.
6.
<PAGE> 9
WE HAVE EXPERIENCED FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS.
eFax.com in the past has experienced, and in the future may experience,
significant fluctuations in its quarterly operating results. These fluctuations
have been or may be caused by many factors, including:
o acceptance and timing of new products combining fax technology with
the Internet;
o the size and timing of development or software licensing
agreements;
o the timing of new introductions or phase-out of eFax.com's brand
products;
o fluctuations in consumer demand for eFax.com's brand products and
for products which are made by eFax.com's manufacturing customers
incorporating eFax.com's products; and
o seasonal trends, competition and pricing.
eFax.com expects that its operating results will continue to fluctuate as a
result of these and other factors.
eFax.com has often received a substantial portion of its quarterly revenues
during the last month of a quarter. These revenues frequently concentrate in
the last weeks or days of a quarter. One reason for this is that eFax.com's
brand products are primarily sold through dealers, and these dealers often
place orders for products at or near the end of a quarter. The booking and
shipping of one or more key orders at the end of a quarter may be delayed until
the beginning of the next quarter or it may be cancelled. As a result, we are
not able to predict future revenues with any significant degree of accuracy.
For these and other reasons, we believe that period-to-period comparisons of
eFax.com's results of operations are not necessarily meaningful. We believe
that you should not rely upon these comparisons as indicators of future
performance. It is likely that in future quarters, eFax.com's operating results
will sometimes be below the expectations of public market analysts and
investors. This could have a material adverse effect on the price of eFax.com's
common stock.
We believe that the accuracy of eFax.com's report of its quarterly license
revenues received from its manufacturing customers has been, and will continue
to be, dependent on the timing and accuracy of product sales reports which we
receive from these manufacturing customers. Our manufacturing customers only
provide these reports on a quarterly basis and this quarterly basis may not
coincide with eFax.com's quarter. Our manufacturing customers may also delay or
revise these reports. Therefore, we are required to estimate all of the
recurring license revenues from manufacturing customers for each quarter. As a
result, we will record an estimate of such revenues prior to public
announcement of eFax.com's quarterly results. In the event the product sales
reports we receive from our manufacturing customers are delayed or subsequently
revised, we may be required to restate eFax.com's recognized revenues or adjust
revenues for subsequent periods. This restatement or adjustment of revenues
could have a material adverse effect on eFax.com's business, financial
condition and results of operations and, as a result, the price of eFax.com's
common stock.
THE PRICE OF EFAX.COM STOCK MAY BE VOLATILE DUE TO MANY FACTORS, INCLUDING OUR
STATUS AS AN INTERNET-RELATED COMPANY, FLUCTUATIONS IN OUR QUARTERLY OPERATING
RESULTS, THE RAPID PACE OF TECHNOLOGICAL CHANGE, THE UNCERTAINTY OF OUR
BUSINESS TRANSACTIONS AND THE CONTENTS OF NEWS AND SECURITY ANALYST REPORTS.
The trading price of eFax.com's common stock is likely to be highly volatile.
The price could be subject to wide fluctuations in response to factors such as:
7.
<PAGE> 10
o actual or anticipated variations in eFax.com's quarterly operating
results;
o announcements of technological innovations or new services by
eFax.com or its competitors;
o announcements of significant acquisitions or strategic partnerships
by eFax.com or its competitors;
o changes in financial estimates and recommendations by securities
analysts; and
o news reports relating to trends in eFax.com's markets.
In addition, the stock market in general, and the market prices for Internet-
related companies in particular, have experienced extreme volatility that is
often unrelated to the operating performance of these companies. These broad
market and industry fluctuations may adversely affect the price of eFax.com's
common stock, regardless of eFax.com's actual operating performance.
ALTHOUGH WE TAKE STEPS TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, WE MAY
BECOME SUBJECT TO TIME-CONSUMING AND COSTLY LITIGATION WHERE WE ARE ACCUSED OF
INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHER PARTIES. IN FACT, WE WERE
RECENTLY SUED FOR INFRINGING A TRADEMARK OF E-FAX COMMUNICATIONS.
eFax.com's success is heavily dependent upon its intellectual property. To
protect its proprietary rights, eFax.com relies on a combination of copyright,
trade secret and trademark laws, patents, nondisclosure agreements and other
contractual restrictions. As part of its confidentiality procedures, eFax.com
generally enters into nondisclosure agreements with its employees, consultants,
manufacturing customers and strategic partners. eFax.com also limits access to
and distribution of its designs, software and other proprietary information.
Despite these efforts, eFax.com may be unable to effectively protect its
proprietary rights. In addition, enforcement of eFax.com's proprietary rights
may be expensive. We cannot assure you that eFax.com's means of protecting its
proprietary rights will be adequate. Nor can we assure you that eFax.com's
competitors will not independently develop similar technology.
As the number of patents, copyrights, trademarks and other intellectual
property rights in eFax.com's industry increases, eFax.com's intellectual
property may increasingly become the subject of infringement claims. In the
past, eFax.com has received communications from other parties claiming that
eFax.com's trademarks or products infringe the proprietary rights of these
parties. eFax.com has also received communications asking for
"indemnification" against such infringement. "Indemnification" means that
eFax.com would promise to repay or reimburse the other party for loss or
damages suffered by that other party as a result of infringement. eFax.com's
manufacturing customers generally require eFax.com to reimburse or "indemnify"
the manufacturing customers for claims of infringement from third parties. We
can give you no assurance that third parties will not make infringement claims
against eFax.com or its manufacturing customers in the future. Any of these
claims, even if they have no legal merit, could be time consuming (especially
for key management and technical personnel), result in costly litigation or
cause delays in revenues. In addition, these claims could require eFax.com to
enter into royalty or licensing agreements on terms unacceptable to eFax.com.
If eFax.com fails to develop a substitute technology, or to license a
substitute technology on acceptable terms, this could have a material adverse
effect on
eFax.com's business, financial condition and results of operations. As an
example, eFax.com was recently sued by E-Fax Communications which claimed that
the use of the name "eFax.com" infringed this party's trademark rights. In
settlement of the matter, eFax.com has agreed to pay E-Fax Communications a
combination of cash and Common Stock in an amount not exceeding $2.5 million
based on the average share price of the Common Stock just prior to the stock
registration becoming effective.
8.
<PAGE> 11
OUR REVENUES MAY NOT GROW AS ANTICIPATED BECAUSE THE MARKET FOR OUR INTERNET-
RELATED SERVICES IS NEW, RAPIDLY CHANGING AND UNCERTAIN.
The market for Internet-related document communication and handling services is
very new and is evolving rapidly. eFax.com expects to rely significantly in
the future on revenues generated through its "eFax" service, a free fax-to-e-
mail service, and products which support this service. We cannot assure you,
however, that the base of customers subscribing to our eFax(c) service will
continue to expand rapidly. Nor can we assure you that users will be willing to
pay fees for premium services or that the subscriber base will grow large
enough to be capable of generating advertising revenue. As a result, our
revenues may not grow as anticipated, which would have a negative effect on our
business.
WE HAVE CHANGED THE FOCUS OF OUR BUSINESS TO INTERNET-RELATED SERVICES,
PRODUCTS AND TECHNOLOGIES AND GROWTH OF BUSINESS IN THIS NEW FOCUS AREA IS
UNCERTAIN.
Historically, eFax.com has focused primarily on the development, manufacture
and sale of its brand multifunction products. eFax.com currently derives a
substantial portion of its revenues from the sale of these brand multifunction
products. However, eFax.com expects that its future revenue growth will be
dependent, in part, on expansion of its recently introduced Internet-based
document services, such as its fax-to-e-mail service, and on further licensing
of eFax.com's hardware and software technologies and software products.
However, we cannot assure you that eFax.com will realize growth in revenues
from such sales. If such growth in revenues does not occur and if revenues from
the sale of eFax.com's brand multifunction products does not to continue at
past growth rates, it could have a material adverse effect on eFax.com's
business, financial condition and results of operations.
WE DEPEND ON THE CONTINUED GROWTH OF INTERNET COMMERCE. WE FACE THE RISKS THAT
INTERNET COMMERCE MAY NOT GROW AS RAPIDLY AS ANTICIPATED AND THAT THE INTERNET
MAY EXPERIENCE TECHNICAL PROBLEMS DUE TO INSUFFICIENT INFRASTRUCTURE AND
INADEQUATE TECHNOLOGICAL IMPROVEMENTS.
eFax.com intends to derive a significant portion of its revenues from its fax-
to-e-mail service, called "eFax", and related products. Rapid growth in the use
of and interest in the Internet and online Internet services is a recent
phenomenon. As a result, a sufficiently broad base of consumers may not adopt
and continue to use the Internet and other online services as a way of
purchasing and conducting business. Internet web-based advertising and the
sales of premium Internet services are relatively new. It is difficult to
predict the extent that these will grow, or if they will grow at all. In
addition, the Internet may not prove to be a viable commercial marketplace for
reasons such as potentially inadequate development of:
o Internet network infrastructure;
o technologies which enable use of the Internet; and
If any of the following take place, it could have a material adverse effect on
eFax.com's business, financial condition and results of operation:
o if the use of the Internet and other online services does not
continue to increase or increases more slowly than expected;
9.
<PAGE> 12
o performance improvements to support increased levels of Internet
activity.
o if the infrastructure for the Internet and online services proves
to be inadequate to effectively support expansion; or
o if the Internet does not become a viable commercial marketplace.
OUR MANUFACTURING CUSTOMERS, WHICH PROVIDE A SIGNIFICANT PORTION OF OUR
REVENUES, MAY NOT CONTINUE TO DEVELOP, MARKET OR SELL PRODUCTS INCORPORATING
EFAX.COM'S TECHNOLOGY.
eFax.com has derived a significant portion of its revenues from licensing of
its software and hardware and software technologies to other parties and from
providing development services to manufacturing customers. eFax.com currently
has manufacturing relationships with Hewlett-Packard Company, Oki Data
Corporation, and Konica Business Systems. eFax.com anticipates that it will
derive a significant portion of its revenues in the future from its
manufacturing customers and that eFax.com's revenues will be dependent upon,
among other things, the ability and willingness of its manufacturing customers
to develop and promote multifunction products that incorporate eFax.com's
technology. The ability and willingness of these manufacturing customers to do
this is based upon a number of factors, including eFax.com's ability to
complete timely development of designs for them. We cannot give you any
assurances regarding the ability or willingness of eFax.com's manufacturing
customers to continue developing, marketing and selling products incorporating
eFax.com's technology. The loss of any of eFax.com's significant manufacturing
customers could have a material adverse effect on eFax.com's business,
financial condition and results of operations.
OUR DEALERS AND DISTRIBUTORS MAY REDUCE OR DELAY SALES OR STOP MARKETING
EFAX.COM'S PRODUCTS WITH A RESULTING LOSS OF REVENUES.
eFax.com has derived a substantial portion of its revenues from sales of its
JetFax brand multifunction products through dealers and distributors. eFax.com
expects that sales of these products through its dealers and distributors will
continue to account for a substantial portion of eFax.com's revenues for the
foreseeable future. eFax.com currently maintains distribution relationships
with dealers associated with IKON Office Solutions, a national group of office
equipment dealers, and A. Messerli AG, one of eFax.com's office equipment
dealers located in Switzerland. Each of eFax.com's dealers and distributors can
stop marketing eFax.com's products with only limited notice to eFax.com and
with little or no penalty. The loss of one or more of eFax.com's major dealers
or distributors could have a material adverse effect on eFax.com's business,
financial condition and results of operations. eFax.com's dealers and
distributors also offer competing products manufactured by third parties. We
can give no assurance that eFax.com's dealers and distributors will give
priority to the marketing of eFax.com's products as compared to the marketing
of our competitors' products. Any reduction or delay in sales of eFax.com's
products by our dealers and distributors could have a material adverse effect
on eFax.com's business, financial condition and results of operations.
WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT
eFax.com has had annual net losses since the company was formed. eFax.com's
historical losses and certain preferred stock dividends have resulted in an
accumulated deficit of approximately $30.5 million as of March 31, 1999. We
can give you no assurance that eFax.com will achieve profitability on a
quarterly or annual basis in the future.
WE MAY FAIL TO ADAPT TO OUR MARKET'S RAPIDLY CHANGING TECHNOLOGY AND EVOLVING
INDUSTRY STANDARDS AND WE MAY LOSE COMPETITIVENESS AND REVENUES AS A RESULT.
10.
<PAGE> 13
The market for eFax.com's products and services is characterized by rapidly
changing technology, evolving industry standards and needs, and frequent new
product introductions. As the market for Internet-based document communication
and handling services grows, this market will begin to exert more pressure on
companies to develop advanced features at more economical pricing. The
multifunction product market already expects the continued development and
release of new products with better performance and improved features at
competitive prices. As product development increases in complexity and the
expected time to bring a product to market continues to decrease, the risk and
difficulty in meeting these development schedules increases and the costs to
eFax.com and its manufacturing customers also increases. In addition,
eFax.com, its manufacturing customers and their competitors may, from time to
time, announce new products, capabilities or technologies that may replace or
shorten the life cycles of eFax.com's brand products and software and the life
cycles of manufacturing customers' products incorporating eFax.com's
technology. eFax.com's success will depend on, among other things:
o market acceptance of eFax.com's product offerings; and
o the ability of eFax.com and its manufacturing customers to respond
to industry changes and market demands.
Any failure of eFax.com to anticipate or respond adequately to the rapidly
changing technology and evolving industry standards and needs could result in a
loss of our competitiveness or revenues. Any significant delay in our
development or introduction of new and enhanced products and services could
also result in a loss of competitiveness or revenues. Such a loss of
competitiveness or revenues could have a material adverse effect on eFax.com's
business, financial condition and results of operations.
WE FACE A HIGH LEVEL OF COMPETITION IN OUR INTERNET-RELATED INDUSTRY.
The market for Internet-related document communication and handling services,
such as eFax.com's fax-to-e-mail service, is a newly emerging market and
competitors are just beginning to appear. eFax.com anticipates that it will
need to:
o provide good service and grow its business rapidly to meet demand;
o create name recognition for eFax.com in advance of competitors;
o build its subscriber base prior to any significant entry by the
competition; and
o continue to expand and improve on its eFax fax-to-e-mail service
offerings. eFax.com's technology, development services and software
primarily compete with solutions developed internally by manufacturing
customers. Virtually all of eFax.com's manufacturing customers have
significant investments in their existing solutions. These
manufacturing customers have the substantial resources necessary to
develop competing multifunction technologies and software that may be
implemented into their own products. eFax.com also competes with
technologies, software and development services provided in the
multifunction product market by other systems and software suppliers to
manufacturing customers.
With respect to hardware and software technologies for multifunction products,
eFax.com competes with Peerless Systems Corporation, Personal Computer
Products, Inc. and Xionics Document Technologies, Inc., among others. With
respect to desktop software, eFax.com competes with Caere Corporation, Simplify
Development Corporation, Smith Micro Software, Inc., Visioneer Inc., Wordcraft
International and Xerox,
11.
<PAGE> 14
among others. In the newly evolving market for fax- to-e-mail services,
competitors include JFAX.com, Inc., an established business, and CallWave, a
start-up that is just introducing its product.
The market for multifunction products and related technology and software is
highly competitive. This market is characterized by continuous pressure to
improve performance, to introduce new features and to accelerate the release of
new products. eFax.com's brand products compete primarily with the dominant
vendors in the fax market, all of whom have substantially greater resources
than eFax.com. These dominant vendors include Canon Inc., Panasonic, a
division of Matsushita Electrical Industrial Co., Ltd., Pitney Bowes Inc.,
Ricoh Co. Ltd., Sharp Electronics Corporation and Xerox, among others. eFax.com
also competes on the basis of vendor name and recognition, technology and
software expertise, product functionality, development time and price. eFax.com
anticipates increasing competition for its multifunction products,
technologies, software under development and Internet services. Most of
eFax.com's existing competitors, many of its potential competitors and all of
eFax.com's manufacturing customers have substantially greater financial,
technical, marketing and sales resources than eFax.com. In the event that
price competition increases, competitive pressures could cause eFax.com to:
o reduce the cost of its eFax Service offerings;
o reduce the price of its brand products;
o reduce the amount of royalties received on new licenses; and
o reduce the fees for its development services in order to maintain
existing business and generate additional product sales and license
and development revenues.
In turn, these reductions could reduce eFax.com's profit margins and result in
losses and a decrease in market share, which would have a material adverse
effect on eFax.com's business, financial condition and results of operations.
WE ARE DEPENDENT ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR
SERVICES.
eFax.com is largely dependent upon the skills and efforts of its senior
management, particularly Edward R. Prince, III, known as ''Rudy", its Chief
Executive Officer, and Lon Radin, its Vice President of Engineering, as well as
other officers and key employees, some of whom only recently have joined
eFax.com. eFax.com maintains key person life insurance policies on Rudy Prince
and Lon Radin. None of eFax.com's officers or key employees have an employment
agreement with eFax.com. eFax.com believes that its future success will depend
in large part upon its ability to attract and retain highly skilled
engineering, managerial, sales, marketing and operations personnel, many of
whom are in great demand. Competition for such personnel, especially
engineering personnel, has recently increased significantly. The loss of key
personnel or the inability to hire or retain qualified personnel could have a
material adverse effect on eFax.com's business, financial condition and results
of operations.
OUR RAPID GROWTH PLACES A STRAIN ON OUR OPERATIONS AND FINANCIAL RESOURCES AND
WE MAY FAIL TO MANAGE OUR GROWTH EFFECTIVELY. IN ADDITION, WE MAY FACE RISKS
ASSOCIATED WITH ANY POTENTIAL ACQUISITION OF OTHER COMPANIES WHICH WE MAY
CHOOSE TO UNDERTAKE.
12.
<PAGE> 15
eFax.com has grown rapidly in recent years. A continuing period of rapid
growth could place a significant strain on eFax.com's management, operations
and other resources. eFax.com's ability to manage its growth will require
eFax.com to continue to invest in its operational, financial and management
information systems, procedures and controls, and to attract, retain, motivate
and effectively manage its employees. We can give no assurance that eFax.com
will be able to manage its growth effectively. Failure to manage growth
effectively would have a material adverse effect on eFax.com's business,
financial condition and results of operations. eFax.com may, from time to time,
pursue the acquisition of other companies, assets or product lines that
complement or expand its existing business. Acquisitions involve a number of
risks that could adversely affect eFax.com's operating results. These risks
include:
o the diversion of management's attention from day-to-day business;
o the difficulty of combining and assimilating the operations and
personnel of the acquired companies;
o charges to the company's earnings as a result of the purchase of
intangible assets; and
o the potential loss of key employees as a result of an acquisition.
eFax.com has no present commitments nor is it engaged in any discussions or
negotiations regarding possible acquisitions. However, should any acquisition
by eFax.com take place, we can give no assurance that this acquisition will not
materially and adversely affect eFax.com or that any such acquisition will
enhance eFax.com's business.
WE ARE DEPENDENT ON A LIMITED NUMBER OF SUPPLIERS AND MAY BE AFFECTED BY
CHANGES, DELAYS OR INTERRUPTIONS IN SUPPLY OF COMPONENTS OF OUR PRODUCTS FROM
THESE SUPPLIERS.
eFax.com relies on various suppliers of components for its products. eFax.com
generally buys components under purchase orders and does not have long-term
agreements with its suppliers. Alternate suppliers may be readily available for
some of these components. However, for other components, we do not know how
long it would take to find a replacement supplier and to receive replacement
components. If we need to find another supplier of those components which we
now purchase from a single source, we may not have sufficient inventory
to fill customer orders without interruption. Although we believe we could
develop other sources for these single source components, no alternative source
currently exists and the process of finding an alternate source could take
several months or longer. Therefore, any interruption in the supply of these
components could have a material adverse effect on eFax.com's business,
financial condition and results of operations. eFax.com purchases many of the
components used in its products from suppliers located outside the United
States. Foreign manufacturing facilities are subject to the risk of changes in
governmental policies, imposition of tariffs and import restrictions and other
factors beyond eFax.com's control. We can give you no assurance that United
States or foreign trading policies will not restrict the availability of
components or increase their cost. Any significant increase in component prices
or decrease in component availability could have a material adverse effect on
eFax.com's business, financial condition and results of operations.
Certain components used in eFax.com's products are available only from one
source. eFax.com is dependent on Oki America, Inc., as the supplier of major
components, contained in eFax.com's Series M900, one of eFax.com's most
important products. Oki America is also a competitor of eFax.com. eFax.com is
also dependent on:
13.
<PAGE> 16
o American Microsystems, Inc. to provide customized integrated
circuits incorporating eFax.com's imaging and logic circuitry;
o Motorola, Inc. to provide microprocessors;
o Pixel Magic, Inc., a subsidiary of Oak Technology, Inc., to provide
a specialized imaging processor;
o Conexant Systems, Inc., to provide modem chips.
Given our dependence on single source suppliers, any of the following events
could have a material adverse effect on eFax.com's business, financial
condition and results of operations:
o if any of these companies were to limit or reduce the sale of such
components to eFax.com;
o if these suppliers were to experience financial difficulties or
other problems which prevented them from supplying eFax.com with
necessary components;
o any shortage or interruption in the supply of any of the components
used in eFax.com's products; or
o the inability of eFax.com to obtain these components from alternate
sources on acceptable terms.
WE GENERATE A SIGNIFICANT PORTION OF OUR REVENUES FROM OUR INTERNATIONAL
ACTIVITIES AND WE ARE SUBJECT TO MANY RISKS AS A RESULT OF THESE ACTIVITIES.
A significant portion of eFax.com's total revenues come from sales to
eFax.com's customers outside the United States. The international market for
eFax.com's brand products and products incorporating eFax.com's technology and
software is highly competitive. Risks inherent in eFax.com's international
business activities also include:
o currency fluctuations and restrictions;
o the burdens of complying with a wide variety of foreign laws and
regulations;
o longer accounts receivable cycles;
o the imposition of government controls;
o risks of localizing and internationalizing products to local
requirements in foreign countries;
o trade restrictions;
o tariffs and other trade barriers;
o restrictions on bringing earnings back into the United States; and
o potentially adverse tax consequences.
Any of these risks could have a material adverse effect on eFax.com's business,
financial condition and results of operations. Substantially all of eFax.com's
international sales are currently made in U.S. dollars. Therefore, increases in
the value of the U.S. dollar relative to foreign currencies could make
eFax.com's products less
14.
<PAGE> 17
competitive in foreign markets. Because of eFax.com's international activities,
it faces currency exposure and currency exchange risks. For example, eFax.com
purchases some of its key components pursuant to purchase contracts which
require payment in foreign currency which results in currency exchange risks.
OUR ONLY MANUFACTURING FACILITY AND SEVERAL OF OUR SUPPLIERS ARE LOCATED IN ONE
GEOGRAPHIC AREA. A DISRUPTION OF OUR MANUFACTURING FACILITY AND OUR SUPPLIERS
IN THE SAME GEOGRAPHIC AREA WOULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS.
eFax.com's manufacturing operations are located in its facility in Northern
California. In addition, eFax.com relies on several suppliers of components
for eFax.com's products and a number of companies which assemble eFax.com
products which are located in Northern California. eFax.com does not currently
operate multiple facilities in different geographic areas and does not have
alternative sources for many of its components or assembly processes. As a
result, a disruption of eFax.com's manufacturing operations, or the operations
of its suppliers, could cause eFax.com to cease or limit its manufacturing
operations. Consequently, this would have a material adverse effect on
eFax.com's business, financial condition and results of operations.
WE MAY BE ADVERSELY AFFECTED IF OUR COMPUTER SYSTEMS OR THOSE OF OUR
DISTRIBUTORS, SUPPLIERS AND CUSTOMERS FAIL BECAUSE OF YEAR 2000 PROBLEMS.
Readiness for the year 2000 refers to the issue surrounding computer programs
that use two digits rather than four to define a given year. These programs
might read a date using "00" as the year 1900 rather than the year 2000, which
could cause a system failure or a miscalculation.
We do not believe eFax.com's manufacturing facilities are vulnerable in any
significant way to year 2000 system failures involving non-information
technology. In August 1998, eFax.com renovated its existing telephone system at
a cost of approximately $40,000, which made the phone system ready for the year
2000.
eFax.com has invested approximately $367,000 and will continue to make certain
investments, estimated not to exceed $50,000, in its software systems and
applications to ensure eFax.com's information systems are ready for the year
2000. The necessary funds to support these renovations have come from
eFax.com's operating budget and eFax.com does not anticipate that it will need
to allocate special future funding outside of historical levels for this item.
The financial impact of eFax.com's year 2000 readiness effort has not been and
is not anticipated to be material to eFax.com's financial position or results
of operations in any given year. For example, during 1997 and 1998, eFax.com
purchased and implemented new manufacturing and accounting information systems
with a total capitalized cost of $338,000. eFax.com has obtained written
assurances from the vendor, QAD Inc., that the systems are ready for the year
2000. However, eFax.com has not conducted internal testing of the systems'
readiness.
eFax.com believes that its current products are ready for the year 2000.
Certain of eFax.com's older products, which may not be year 2000 ready, are no
longer under warranty. eFax.com believes it has no obligation related to these
products. If eFax.com is mistaken in this assessment, eFax.com could incur
expenses in defending legal actions for breach of contract or other causes of
action. We can give you no assurance that these expenses will not be material
to eFax.com's financial position or results of operations.
As discussed above, eFax.com has recently implemented new information systems
and accordingly does not anticipate any internal year 2000 problems from those
information systems, databases or programs. However, year 2000 problems faced
by major distributors, suppliers, customers and financial service organizations
with which we interact could adversely impact eFax.com. We expect to complete
our assessment of the potential impact of these additional issues by August 31,
1999. We can give you no assurance that we will be able to detect
15.
<PAGE> 18
all potential failures of eFax.com's computer systems or the computer systems
of third parties. A significant failure of eFax.com's or a third party's
computer system could have a material adverse effect on eFax.com's business,
financial condition and results of operations. However, we are unable at this
time to assess what might be the extent of such effect. eFax.com intends to
complete a contingency plan by August 31, 1999, detailing actions that would be
taken in the event that such a failure occurs.
FUTURE SALES OF SHARES OF COMMON STOCK AFTER THE OFFERING COULD AFFECT THE
STOCK TRADING PRICE.
Sales of substantial amounts of common stock in the public market could have an
adverse effect on the trading price of the common stock. Based on shares
outstanding as of July 8, 1999, eFax.com has outstanding approximately
12,670,661 shares of common stock. Of such shares outstanding, approximately
11,826,945 shares are freely tradable without restriction or further
registration under the Securities Act, unless held by "affiliates" of eFax.com
as that term is defined in Rule 144 under the Securities Act. After the
registration of the 1,194,635 shares offered hereby, the remaining
approximately 843,716 shares of common stock outstanding are "restricted
securities" as that term is defined in Rule 144, and may be sold under Rule 144
subject to the holding period, volume limitations and other restrictions under
Rule 144.
Up to 1,194,635 shares of common stock are offered by this prospectus and are
registered for resale under the Securities Act. eFax.com has entered into
agreement with Fisher Capital, Wingate Capital and Reedland Capital Partners
pursuant to which approximately 1,194,635 shares of common stock are offered by
this prospectus and are registered for resale under the Securities Act. In
addition to the shares registered hereunder, additional shares of common stock
may become issuable upon conversion of the series A preferred stock as a result
of future adjustments of the conversion pricing of the series A preferred
stock. The Company would be obligated to register these additional shares of
common stock.
DESCRIPTION OF THE SERIES A CONVERTIBLE PREFERRED STOCK
This section summarizes the terms of the series A convertible preferred stock.
For a more complete review of the terms of the series A convertible preferred
stock, we suggest reviewing the Certificate of Designations and other documents
filed as exhibits to eFax.com's quarterly report on Form 10-Q for the quarter
ended April 3, 1999 (SEC File No. 000-22561) incorporated in this registration
statement by reference.
If converted prior to May 13, 2002, each share of series A preferred stock is
convertible into that number of shares of common stock equal to: (A) $10,000
plus accrued but unpaid dividends (plus any unpaid interest accrued as a result
of a default) divided by (B) 100% of the average closing bid prices of the
common stock for the five trading days prior to May 12, 1999. If converted on
or after May 13, 2002, each share of series A convertible preferred stock is
convertible into that number of shares of common stock equal to: (A) $10,000
plus accrued but unpaid dividends (plus any unpaid interest accrued as a result
of a default) divided by (B) 100% of the average closing bid prices of the
common stock for the twenty trading days prior to the conversion date. The
series A preferred stock bears cumulative dividends at a rate of 8% per annum,
payable in cash or common stock on May 13, 2000, May 13, 2001 and May 13, 2002.
The number of shares of common stock issuable upon conversion is subject to
adjustment for future issuance of stock at a price below the closing price,
stock splits, dividends and similar events. In addition, the conversion price
of the series A preferred stock is subject to a one-time adjustment if the
average closing bid prices of the common stock on the twenty trading days prior
to May 13, 2000
16.
<PAGE> 19
is less than the then-current conversion price. In such an event, the
conversion price will be adjusted to equal the greater of (A) 60% of the
initial conversion price, as adjusted as of May 12, 2000, and (B) the average
closing bid prices of the common stock on the twenty trading days prior to May
13, 2000.
If any shares of series A preferred stock are outstanding on May 13, 2002,
eFax.com has the option to convert or redeem such shares for $10,000 plus any
accrued but unpaid dividends (plus any unpaid interest accrued as a result of a
default). eFax.com also has the right to redeem any outstanding series A
preferred stock for $12,500 plus any accrued but unpaid dividends (plus any
unpaid interest accrued as a result of a default) in the event of a
consolidation, merger or other business combination which results in a change
of control of eFax.com. eFax.com also has the right to redeem any outstanding
series A preferred stock at a redemption premium of 30% annualized in the case
of an underwritten public offering with at least $25,000,000 in proceeds, and a
redemption premium ranging from 10% to 100% depending on the market price of
the common stock in the case of a private offering, plus, in each case, any
accrued but unpaid dividends (plus any unpaid interest accrued as a result of a
default). In addition, each holder of series A preferred stock has the right
to require eFax.com to redeem any of their shares for at least $12,500 plus any
accrued but unpaid dividends (plus any unpaid interest accrued as a result of a
default) upon a change of control of eFax.com or in the event eFax.com fails to
comply with certain requirements.
In the event of a liquidation, dissolution or winding up of eFax.com, the
series A convertible preferred stock will received $10,000 plus any accrued but
unpaid dividends (plus any unpaid interest accrued as a result of a default)
before any amount is distributed to the holders of common stock. A
consolidation, merger or sale of substantially all assets is NOT deemed to be a
liquidation, dissolution or winding up of eFax.com.
USE OF PROCEEDS
eFax.com will not receive any proceeds from the resale of eFax.com common stock
by Fisher Capital or Wingate Capital. eFax.com will receive all proceeds from
the exercise of the warrants by Fisher Capital, Wingate Capital and Reedland
Capital Partners, but will not receive any proceeds from the sale of the shares
of common stock issued upon exercise of the warrants. eFax.com anticipates
that the net proceeds received by eFax.com from the exercise of the warrants
will be used for general corporate purposes.
SELLING STOCKHOLDERS
The table below lists the selling stockholders and other information regarding
the beneficial ownership of our common stock by each of the selling
stockholders.
The second column lists the number of shares of common stock that would have
been issuable to Fisher Capital and Wingate Capital on May 24, 1999 upon
exercise of the warrants and conversion of all of our series A convertible
preferred stock then held by Fisher Capital and Wingate Capital, including
shares issuable to pay the 8% accrual amount on the series A preferred stock as
of that date. Our conversion calculations in the second column assume a
conversion price for our series A convertible preferred stock of $21.1375,
which represents the average of the closing bid prices during the five
consecutive trading days before May 12, 1999. With respect to Reedland Capital
Partners, the second column lists 124,995 shares of common stock registered for
sale upon exercise of the warrant.
The third column lists Fisher Capital's and Wingate Capital's portion of: the
709,640 shares of common stock registered for sale which are issuable upon
conversion of our series A convertible preferred stock; the 300,000 shares of
common stock registered for sale which are issuable upon exercise of the
warrants; and the 60,000 shares of common stock registered for sale upon
issuance to pay the 8% accrual amount. With respect to Reedland Capital
Partners, the third column lists 124,995 shares of common stock registered for
sale upon exercise of the warrant.
The fourth column assumes the sale of all of the shares offered by each selling
stockholder.
17.
<PAGE> 20
eFax.com is not obligated to issue any shares of common stock upon conversion
of the series A preferred stock if the issuance would exceed that number of
shares of common stock which the company may issue without breaching eFax.com's
obligations under the rules or regulations of the Nasdaq National Market or the
market or exchange where eFax.com common stock is then traded. In addition, we
are not required to issue shares of our common stock on conversion of our
series A convertible preferred stock or exercise of the warrants if any holder,
together with its affiliates, (1) would beneficially own more than 10% of our
outstanding common stock after conversion or (2) would have acquired more than
10% of our common stock in the 60-day period ending on the date of conversion.
The information provided in the table below has been obtained from the selling
stockholders. The selling stockholders may sell all, some or none of their
shares in this offering. See "Plan of Distribution."
<TABLE>
<CAPTION>
Shares Owned
Shares Owned After Offering
Name of Before Maximum Number ------------------
Selling Stockholder Offerings(2) of Shares Offered Number Percentage
------------ ----------------- ------ ----------
<S> <C> <C> <C> <C>
Fisher Capital Ltd.
(1)................ 657,378 (3) 695,266 0 --
Wingate Capital Ltd.
(1)................ 353,973 (4) 374,374 0 --
Reedland Capital
Partners........... 124,995 124,995 0 --
</TABLE>
(1) Citadel Limited Partnership is the trading manager of each of Fisher
Capital Ltd. and Wingate Capital Ltd. (collectively, the "Citadel
Entities") and consequently has voting control and investment discretion
over securities held by the Citadel Entities. Kenneth C. Griffin
indirectly controls Citadel Limited Partnership.
The ownership for each of the Citadel Entities does not include the
ownership information for the other Citadel Entity. Citadel Limited
Partnership, Kenneth C. Griffin, and each of the Citadel Entities
disclaims ownership of the shares held by the other Citadel Entities.
(2) Beneficial ownership is determined in accordance with the rules of
the Securities Exchange Commission and includes sole or shared voting or
investment power with respect to shares shown as beneficially owned.
(3) Includes 461,266 shares issuable upon conversion of the series A
convertible preferred stock, 195,000 shares of common stock which may be
issued upon exercise of the warrant and 1,112 shares which may be issued
upon conversion of the preferred stock in payment of the 8% accrual
amount as of May 24, 1999.
(4) Includes 248,374 shares issuable upon conversion of the series A
convertible preferred stock, 105,000 shares of common stock which may be
issued upon exercise of warrant and 599 shares which may be issued in
payment of the 8% accrual amount as of May 24, 1999.
We are registering the shares for resale by the selling stockholders in
accordance with registration rights granted to the selling stockholders. We
will pay the registration and filing fees, printing expenses, listing fees,
blue sky fees, if any, and fees and disbursements of our counsel and the
selling security holders' counsel in connection with this offering, but the
selling stockholders will pay any underwriting discounts, selling commissions
and similar expenses relating to the sale of the shares. In addition, we have
agreed to indemnify the selling stockholders, underwriters who they may select,
and certain affiliated parties against certain liabilities, including
liabilities under the Securities Act, in connection with this offering. The
selling stockholders have agreed to indemnify us and our directors and
officers, as well as any person that controls us, against certain liabilities,
including liabilities under the Securities Act. Insofar as indemnification for
liabilities under the
18.
<PAGE> 21
Securities Act may be permitted to our directors or officers, or persons that
control us, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
PLAN OF DISTRIBUTION
The selling stockholders (or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest) may sell
shares from time to time in public transactions, on or off the Nasdaq National
Market, or private transactions, at prevailing market prices or at privately
negotiated prices, including but not limited to, one or any combination of the
following types of transactions:
o ordinary brokers' transactions;
o transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
o purchases by brokers, dealers or underwriters as principal and
resale by these purchasers for their own accounts pursuant to this
prospectus;
o "at the market," to or through market makers, or into an existing
market for eFax.com's common stock;
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through
agents;
o through transactions in options, swaps or other derivatives
(whether exchange-listed or otherwise);
o in privately negotiated transactions; or
o to cover short sales.
In effecting sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate in the resales. The
selling stockholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling stockholders also may sell shares short and
deliver the shares to close out such short positions. The selling stockholders
also may enter into option or other transactions with broker-dealers that
require the delivery to the broker-dealer of the shares, which the broker-
dealer may resell pursuant to this prospectus. The selling stockholders also
may pledge the shares to a financial institution, broker or dealer. Upon a
default, the financial institution, broker or dealer may effect sales of the
pledged shares pursuant to this prospectus.
Brokers, dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders in amounts to be negotiated
in connection with the sale. The selling stockholders and any participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commission,
discount or concession these "underwriters" receive may be deemed to be
underwriting compensation.
To the extent required, the following information will be set forth in a
supplement to this prospectus:
o information as to whether underwriters who the selling stockholders
may select, or any other broker-dealer, is acting as principal or agent
for the selling stockholders;
19.
<PAGE> 22
o the compensation to be received by underwriters that the selling
stockholders may select or by any broker-dealer acting as principal or
agent for the selling stockholders; and
o the compensation to be paid to other broker-dealers, in the event
the compensation of such other broker-dealers is in excess of usual and
customary commissions.
Any dealer or broker participating in any distribution of the shares may be
required to deliver a copy of this prospectus, including a prospectus
supplement, if any, to any person who purchases any of the shares from or
through this dealer or broker.
We have advised the selling stockholders that they are required to comply with
Regulation M promulgated under the Securities Exchange Act during such time as
they may be engaged in a distribution of the shares. With certain exceptions,
Regulation M precludes any selling stockholder, any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security that is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases
made in order to stabilize the price of a security in connection with the
distribution of that security. All of the foregoing may affect the
marketability of the common stock.
We will not receive any of the proceeds from the selling stockholders' sale of
their common stock.
This registration statement will remain effective until the earlier of (i) the
date when all of the shares registered by this registration statement have been
distributed to the public and there are no shares of series A preferred stock
or warrants outstanding, (ii) the date the shares of common stock are eligible
for sale in their entirety under Rule 144(k), or (iii) the date three years and
thirty days after May 13, 1999. In the event that any shares remain unsold at
the end of such period, eFax.com may file a post-effective amendment to the
registration statement for the purpose of deregistering the shares registered
by this prospectus.
LEGAL MATTERS
For the purpose of this offering, Cooley Godward LLP, Palo Alto, California is
giving an opinion of the validity of the common stock offered by this
prospectus.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended January 2, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
20.
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $4,877.85
Legal fees and expenses $70,000.00
Accountants' fees $4,500.00
Miscellaneous $2,000.00
Total $81,377.85
</TABLE>
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated.
Item 15. Indemnification of Directors and Officers
As permitted by the Delaware General Corporation Law, eFax.com has included in
its certificate of incorporation a provision to eliminate the personal
liability of its directors for monetary damages for breach or alleged breach of
their fiduciary duties as directors, subject to certain exceptions. In
addition, the bylaws of eFax.com provide that eFax.com is required to indemnify
its officers and directors under certain circumstances, including those
circumstances in which indemnification would otherwise be discretionary, and
eFax.com is required to advance expenses to its officers and directors as
incurred in connection with proceedings against them for which they may be
indemnified. eFax.com has entered into indemnification agreements with its
officers and directors containing provisions that are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require eFax.com, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance expenses incurred as a result of any proceeding against
them as to which they could be indemnified and to obtain directors' and
officers' insurance if available on reasonable terms. At present, eFax.com is
not aware of any pending or threatened litigation or proceeding involving a
director, officer, employee or agent of eFax.com in which indemnification would
be required or permitted. eFax.com believes that its charter provisions and
indemnification agreements are necessary to attract and retain qualified
persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 16. Exhibits
<TABLE>
Exhibit No. Description
-----------
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Independent Auditors
23.2 Consent of Cooley Godward LLP (Reference is made to Exhibit 5.1.)
24.1 Power of Attorney
</TABLE>
II - 1.
<PAGE> 24
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
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 with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act 1934 that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the bona fide
offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
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
II - 2.
<PAGE> 25
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II - 3.
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this registration
statement to be filed on its behalf by the undersigned, thereunto duly
authorized in the City of Menlo Park, State of California, this 16th day of
July, 1999.
eFax.com, Inc.
By: /s/ Todd J. Kenck
---------------------
Todd J. Kenck,
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities on the
dates indicated.
Signature Title Date
----- ----
/s/ EDWARD R. PRINCE III* Chief Executive Officer July 16, 1999
- ------------------------ and Chairman of the Board
(Rudy Prince) (Principal Executive Officer)
/s/ TODD J. KENCK Chief Financial Officer July 16, 1999
- ------------------------ (Principal Financial
(Todd J. Kenck, as and Accounting Officer)
Attorney-in-Fact)
/s/ THOMAS B. AKIN* Director July 16, 1999
- ------------------------
(Thomas B. Akin)
/s/ DOUGLAS Y. BECH* Director July 16, 1999
- ------------------------
(Douglas Y. Bech)
/s/ STEVEN J. CARNEVALE* Director July 16, 1999
- ------------------------
(Steven J. Carnevale)
/s/ LON B. RADIN* Director July 16, 1999
- ------------------------
(Lon B. Radin)
/s/ ALBERT E. SISTO* Director July 16, 1999
- ------------------------
(Albert E. Sisto)
By: /s/ Todd J. Kenck July 16, 1999
-------------------
(Todd J. Kenck, as Attorney in Fact)
II - 4.
<PAGE> 27
INDEX TO EXHIBITS
Exhibit No. Description
-----------
<TABLE>
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Independent Auditors
23.2 Consent of Cooley Godward LLP (Reference is made to Exhibit 5.1.)
24.1 Power of Attorney
</TABLE>
II - 5.
<PAGE> 28
Exhibit 5.1
[Cooley Godward LLP Letterhead]
July 16, 1999
eFax.com, Inc.
1378 Willow Road
Menlo Park, California 94025
Dear Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by eFax.com, Inc. (the "Company") of a Registration Statement
on Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering for resale of up to 1,194,635 shares of the
Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
The Registration Statement covers:
(i) 709,640 shares of the Common Stock (the "Citadel Shares") which
may be issued to Fisher Capital Ltd. and Wingate Capital Ltd.
(together, collectively, the "Citadel Entities") upon conversion
of 1,500 shares of Series A Convertible Preferred Stock (the
"Preferred Stock") issued to the Citadel Entities pursuant to
that certain Securities Purchase Agreement, dated as of May 7,
1999, by and between the Company and the Citadel Entities (the
"Securities Purchase Agreement");
(ii) 300,000 shares of Common Stock (the "Citadel Warrant Shares")
issuable upon the exercise of warrants issued to the Citadel
Entities pursuant to the Securities Purchase Agreement (the
"Citadel Warrant");
(iii) up to 60,000 shares of Common Stock (the "Dividend Shares") which
may be issued to the Citadel Entities upon conversion of accrued
dividends on the Preferred Stock payable on May 13, 2000; and
(iv) 124,995 shares of Common Stock (the "Reedland Warrant Shares")
issuable upon conversion of a warrant issued to Reedland Capital
Partners in connection with the Securities Purchase Agreement
(the "Reedland Warrant").
In connection with this opinion, we have examined the Registration Statement,
the Company's Bylaws, as amended, the Company's Certificate of Incorporation,
as amended, including the Certificate of Designations filed with the Delaware
Secretary of State on May 12, 1999 (the "Certificate of Designations") and the
Certificate of Amendment of the Certificate of Designations filed with the
Delaware Secretary of State on May 13, 1999 (the "Certificate of Amendment"),
the Citadel Warrants, the Reedland Warrant and such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that: (i) the Citadel Shares have been duly authorized and reserved for
issuance, and upon issuance and delivery in accordance with the terms of the
Certificate of Designations and the Certificate of Amendment, will be validly
issued, outstanding, fully paid
II - 6.
<PAGE> 29
and nonassessable; (ii) the Citadel Warrant Shares have been duly authorized
and reserved for issuance, and upon issuance and delivery against payment
therefor in accordance with the terms of the Citadel Warrants, will be validly
issued, outstanding, fully paid and nonassessable; (iii) the Dividend Shares
have been duly authorized and reserved for issuance and, upon conversion of
accrued preferred stock dividends and issuance and delivery in accordance with
the terms of the Certificate of Designations and the Certificate of Amendment,
will be validly issued, fully paid and nonassessable; and (iv) the Reedland
Warrant Shares have been duly authorized and reserved for issuance, and upon
issuance and delivery against payment therefor in accordance with the terms of
the Reedland Warrants, will be validly issued, outstanding, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the prospectus included in the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Patrick A. Pohlen
Patrick A. Pohlen, Esq.
II - 7.
<PAGE> 30
EXHIBIT 23.1
Consent of Independent Auditors
eFax.com, Inc.:
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement No. 333-79519 of eFax.com, Inc. on Form S-3 of our
reports dated February 8, 1999 (April 9, 1999 as to Note 14) and April 9, 1999
(relating to the financial statement schedule), appearing in the Annual Report
on Form 10-K of eFax.com, Inc. for the year ended January 2, 1999 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
San Jose, California
July 16, 1999
II - 8.
<PAGE> 31
