As filed with the Securities and Exchange Commission on January 27, 2000
Registration No. 333-79519
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
eFax.com
(Exact name of registrant as specified in its charter)
Delaware 7389 77-0182451
(State or other Primary Standard (I.R.S. Employer
jurisdiction of incorporation) Industrial Identification Number)
or organization or Classification
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
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:
Matthew W. Sonsini, 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.
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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.
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Subject to completion, dated January 27, 2000
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
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.com(tm) 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 184,995 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 during approximately
the first two years after the date of the Securities Purchase Agreement.
Fisher Capital and Wingate Capital 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.
eFax.com will receive the proceeds from the exercise of the warrants issued to
Fisher Capital and Wingate Capital. The per share exercise price of the Fisher
Capital and Wingate Capital warrants is $23.25125
eFax.com will not receive any of the proceeds from any future sale of the
shares of common stock issued to Fisher Capital and Wingate Capital 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 or Wingate
Capital, 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 and Wingate Capital, 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.
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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 January 26, 2000, the closing sale price for the common
stock was $8.9375 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.
January 27, 2000
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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, Inc.'s Annual Report on Form 10-K for the year ended
January 2, 1999;
B. eFax.com, Inc.'s quarterly report on Form 10-Q for the quarter
ended April 3, 1999;
C. eFax.com, Inc.'s quarterly report on Form 10-Q for the quarter
ended July 3, 1999;
D. eFax.com, Inc.'s quarterly report on Form 10-Q for the quarter
ended October 2, 1999;
E. 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
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F. 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, Attention: Chief Financial Officer, 1378 Willow Road, Menlo Park,
California 94025, telephone (650) 324-0600.
EFAX.COM
eFax.com was incorporated in Delaware in August 1988.
eFax.com is a leading provider of Internet communications services. eFax.com
currently provides its free and fee-base Internet communications services to
more than 1.6 million users. In February 1999, eFax.com launched its Internet
communications services that incorporate fax-to-email, voicemail and voice-to-
email capabilities. Prior to entering this market, eFax.com had developed and
marketed branded and licensed products and software solutions for the
"multifunction product market," which consists of electronic office devices
that combine print, fax, copy and scan capabilities in a single unit. In
addition, eFax.com has licensed its embedded systems technology and software to
a number of manufacturers of multi-function products. eFax.com recently
announced that it will discontinue its branded product sales and dealer channel
in order to increase its focus on Internet services.
To date, the majority of eFax.com's revenues have been generated from sales of
multifunction products. We license our hardware and software technologies for
a range of multifunction products sold under the brand names of our
manufacturing and software license 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, Filing
Central, eFax Messenger and HotSend.
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. On December
16, 1999, eFax.com's corporate name changed from eFax.com, Inc. to eFax.com.
It is eFax.com's intention to expand its service and product offerings to
include a variety of Internet-based communication services and products.
RECENT DEVELOPMENTS
On January 10, 2000, we announced that we will focus the Company exclusively on
expanding its position as a leading provider of enhanced Internet
communications services and solutions and that we will discontinue
manufacturing and sales of multifunction products. The discontinuation of
these operations will result in a charge of approximately $2.5 million
associated with the restructuring and discontinuation of hardware operations of
which approximately $2.0 million will be recognized in the fourth quarter of
1999 and approximately $500,000 will be recognized in the first quarter of
2000. Expenses will include the write down of inventory, capital equipment,
intellectual property and leasehold improvements, excess facilities accruals,
and severance costs. It is anticipated that the discontinuation and
restructuring will be substantially completed during the first quarter of 2000.
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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.
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 communications
technology with the Internet;
o the size and timing of development or software licensing
agreements;
o the timing of the phase-out of eFax.com's hardware products;
o fluctuations in consumer demand for eFax.com's brand products
and for products which are made by eFax.com's manufacturing and
software license customers incorporating eFax.com's technology;
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.
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 and software license customers has
been, and will continue to be, dependent on the timing and accuracy of
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product sales reports which we receive from these manufacturing and software
license customers. Our manufacturing and software license customers only
provide these reports on a quarterly basis and this quarterly basis may not
coincide with eFax.com's quarter. Our manufacturing and software license
customers may also delay or revise these reports. Therefore, we are required to
estimate all of the recurring license revenues from manufacturing and software
license 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 and
software license 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:
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 and software license 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
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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 and software license customers generally require eFax.com to
reimburse or "indemnify" the manufacturing and software license 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 and software license 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.
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 communication 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-email, email-to-
fax and voice-to-email 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 derived a substantial
portion of its revenues from the sale of these brand multifunction products.
However, on January 10, 2000, we announced the discontinuation of our
manufacturing operations and that we now expect that our future revenue growth
will be dependent, in part, on expansion of its Internet-based communications
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, 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
Internet communications services, 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
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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; and
o technologies which enable use of the Internet.
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;
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 AND SOFTWARE LICENSE 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 and software license 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 and software license customers and that
eFax.com's revenues will be dependent upon, among other things, the ability and
willingness of its manufacturing and software license customers to develop and
promote products that incorporate eFax.com's technology. The ability and
willingness of these manufacturing and software license 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 and software license
customers to continue developing, marketing and selling products incorporating
eFax.com's technology. The loss of any of eFax.com's significant manufacturing
and software license customers 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 $44.5 million as of September 30, 1999.
We can give you no assurance that eFax.com will achieve profitability on a
quarterly or annual basis in the future.
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WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT FUNDS TO GROW OUR BUSINESS.
We intend to continue to grow our business. Due to our limited operating
history in Internet communication services and the nature of our industry, our
future capital needs are difficult to predict. Therefore, we may require
additional capital after this offering to fund any of the following:
o unanticipated opportunities;
o strategic alliances;
o potential acquisitions;
o changing business conditions; and
o unanticipated competitive pressures.
Obtaining additional financing will be subject to a number of factors,
including market conditions, our operating performance and investor sentiment.
These factors may make the timing, amount, terms and conditions of additional
financings unattractive to us. If we are unable to raise additional capital,
our growth could be impeded.
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.
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 communication services
grows, this market will begin to exert more pressure on companies to develop
advanced features at more economical pricing. 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 and software license
customers also increases. In addition, eFax.com, its manufacturing and
software license 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 services and software and the life cycles of
manufacturing and software license customers' products incorporating eFax.com's
technology. eFax.com's success will depend on, among other things:
o market acceptance of eFax.com's service offerings; and
o the ability of eFax.com and its manufacturing and software
license 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 communication services, such as eFax.com's fax-
to-e-mail service, is a newly
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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 Internet communication
service offerings.
eFax.com's technology, development services and software primarily compete with
solutions developed internally by manufacturing and software license customers.
Virtually all of eFax.com's manufacturing and software license customers have
significant investments in their existing solutions. These manufacturing and
software license 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 and software license customers.
The market for Internet-related communication services, 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 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 and software license 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 fee-based eFax Service offerings;
o expand services to match those offered by competitors; or
o reduce the amount of royalties received on new licenses.
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, as well as other officers and key employees, some of whom only
recently have joined eFax.com. 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
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or retain qualified personnel could have a material adverse effect on
eFax.com's business, financial condition and results of operations. Edward R.
Prince, III, our Chief Executive Officer, and Lon Radin, our Vice President of
Engineering recently resigned.
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.
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 SERVICE PROVIDERS AND MAY BE AFFECTED
BY CHANGES, DELAYS OR INTERRUPTIONS IN OF SERVICES FROM THESE SUPPLIERS.
eFax.com relies on various providers or network communication infrastructure,
telecommunications infrastructure and other partners providing network
management services. We depend on relationships with providers and partners
for, among other things:
o management of our network operations;
o providing and managing our telephone numbers;
o telephony infrastructure; and
o network connectivity.
eFax.com generally purchases network and telecommunications services under
multi-year agreements. Alternate providers or partners may be
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<PAGE> 29
readily available for some of these services, but there may be unavoidable
interruptions in service if we change service providers. However, for other
network management services, we do not know how long it would take to find a
replacement provider or partner and to establish a replacement network
operations center. If we need to find another provider or partner of those
network management services which we now purchase from a single source, we may
experience delays, operational difficulties and increased expenses, and our
ability to provide services to our users or expand our operations may be
impaired. Although we believe we could develop other providers or partners for
these single source services, no alternative providers or partners currently
exist and the process of finding an alternate provider or partner could take
several months or longer. Therefore, any interruption in the performance of
these network management services could have a material adverse effect on
eFax.com's business, financial condition and results of operations.
Given our dependence on network communication infrastructure,
telecommunications infrastructure and network management partners, 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 experience extended
interruptions in network services;
o if these providers were to experience financial difficulties or
other problems which prevented them from meeting contractual
service obligations;
o any shortage or interruption in the supply of telephone numbers
used in eFax.com's services; or
o the inability of eFax.com to obtain any of these services from
alternate providers or partner 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.
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<PAGE> 30
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 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 BUSINESS DEPENDS UPON THE DELIVERY OF ACCURATE ELECTRONIC INFORMATION VIA
THE INTERNET, AND IF YEAR 2000 ISSUES CAUSE LONG-TERM INOPERABILITY OF THE
INTERNET OR OUR SERVICES, WE COULD LOSE USERS OF OUR SERVICES OR BE UNABLE TO
CONTINUE OUR BUSINESS.
Year 2000 issues 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.
Significant uncertainty exists concerning the potential costs and effects
associated with any year 2000 compliance problems. Any year 2000 compliance
problems faced by us, users of our online marketplace and strategic partners
could seriously harm our business. In addition, our ability to operate our
business depends upon delivery of accurate, electronic information via the
Internet. To the extent year 2000 issues result in the long-term inoperability
of the Internet or our online marketplace, our business would be seriously
harmed.
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. Our assessment of the
potential impact of these additional issues was completed in October 1999. We
can give you no assurance that we were able to detect 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. eFax.com has completed its contingency plan, detailing
actions that would be taken in the event that such 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 December 31, 1999, eFax.com has outstanding approximately
12,999,356 shares of common stock. Of such shares outstanding, approximately
12,167,111 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 832,245 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 and Wingate Capital 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
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<PAGE> 31
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.
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.
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) $21.1375, which represents 100% of the average
closing bid prices of the common stock for the five trading days prior to May
12, 1999. For example, if all shares of series A preferred stock were
converted on September 30, 1999 at a conversion price of $21.1375, 731,415
shares of common stock would be issued upon conversion, including 709,640
shares to be issued upon conversion of the series A preferred stock and 21,775
shares issued upon conversion of accrued but unpaid dividends. 731,415 shares
represents approximately 5.68% of the approximately 12,876,300 shares of common
stock outstanding as of September 30, 1999. This example assumes that no
adjustments to the conversion price, including adjustments resulting from
events of default under the Series A preferred stock purchase documents, have
occurred prior to September 30, 1999.
On May 13, 2000, the conversion price of the series A preferred stock is
subject to a one-time adjustment if the average closing bid price of the common
stock for the twenty trading days prior to May 13, 2000 is lower 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 for the twenty trading days prior to May 13, 2000. For example,
if the average closing bid price for the twenty trading days prior to May 13,
2000 is $10.00, then the conversion price would be reduced from the initial
conversion price of $21.1375 to $12.6825, which represents 60% of $21.1375. If
all of the series A preferred stock is converted on May 14, 2000 at an adjusted
conversion price of $12.6825, 1,182,732 shares of common stock would be issued
upon conversion. 1,182,732 shares represents approximately 9.19% of the
12,876,300 common stock outstanding as of September 30, 1999. This example
assumes that no events of default or other adjustments to the conversion price
have occurred prior to May 13, 2000 and that eFax.com pays the accrued
dividends on May 13, 2000.
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. For example, if the series A preferred stock is converted on
May 13, 2002 and the average of the closing bid prices for the twenty trading
days prior to May 13, 2002 is equal to $10, the number of shares to be issued
upon conversion is 1,500,000. This example assumes that no adjustments to the
conversion price, including adjustments resulting from events of default under
the Series A preferred stock purchase documents, have occurred prior to May 13,
2002 and that eFax.com pays the accrued dividends on May 13, 2002 prior to such
conversion.
In addition, 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
sale price, stock splits, dividends and similar events.
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If any shares of series A preferred stock are outstanding on May 13, 2002,
eFax.com has the option to convert or redeem each of 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 each outstanding
share of 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. In the event of an underwritten public
offering with at least $25,000,000 in proceeds, eFax.com has the right to
redeem any outstanding series A preferred stock for the initial price paid of
$10,000 per share, plus a redemption premium equal to 30% of the initial price
for each full year that the Series A preferred stock is outstanding, measured
from the date of May 14, 1999 to the date of redemption, plus any accrued but
unpaid dividends (plus any unpaid interest accrued as a result of a default).
In the event of a private offering with at least $25,000,000 in proceeds,
eFax.com has the right to redeem any outstanding series A preferred stock for
the initial price paid of $10,000 per share plus a redemption premium ranging
from 0% to 100% of the initial price depending on the market price of the
common stock at that time, plus 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 per share 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 per share 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 and Wingate Capital, 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 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 September 30, 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.
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 184,995 shares of common stock registered for sale upon
issuance to pay the 8% accrual amount during approximately the first two years
after the date of the Securities Purchase Agreement.
The fourth column assumes the sale of all of the shares offered by each selling
stockholder.
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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>
Name of Selling Shares Owned Maximum Number of Shares Owned Number
Stockholder Before Offering Shares Offered After Offering Percentage
<S> <C> <C> <C> <C>
Fisher Capital
Ltd. (1). 722,420 (3) 776,513 0 --
Wingate Capital
Ltd. (1). 388,995 (4) 418,122 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 66,154 shares which
may be issued upon conversion of the preferred stock in payment of
the 8% accrual amount as of December 31, 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 35,621 shares which may
be issued in payment of the 8% accrual amount as of December 31,
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 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.
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Reedland Capital Partners acted as an exclusive placement agent in connection
with the private placement. Reedland's compensation as placement agent was
determined in accordance with an engagement letter dated March 1, 1999, which
provides that Reedland would be paid a commission equal to five percent (5%) of
the aggregate proceeds of the equity securities placed on behalf of the
Company, to be deducted from the proceeds of the offering. The engagement
letter also provides that Reedland would receive warrants to purchase 8,333
shares of the Company's Common Stock per $1,000,000 of equity securities
placed, exercisable for three years following issuance at an exercise price per
share equal to 130% of the closing bid price of the Common Stock on the day
immediately preceding the closing date of the private placement.
PLAN OF DISTRIBUTION
Fisher Capital, Ltd. and Wingate Capital Ltd. purchased the shares of series A
convertible preferred stock in the ordinary course of business in a private
placement transaction. At the time they purchased the shares of series A
convertible preferred stock, neither Fisher Capital, Ltd. nor Wingate Capital
Ltd. were a party to any agreement or other understanding to distribute these
shares either directly or indirectly. The only role that Fisher Capital, Ltd.
and Wingate Capital Ltd. played in the private placement transaction was as
investors. There were no other investors in that transaction.
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
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<PAGE> 35
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;
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.
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<PAGE> 36
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.
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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 $7,500.00
Miscellaneous $2,000.00
Total $84,377.85
</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.
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Item 16. Exhibits
Exhibit No. Description
-----------
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
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
23
<PAGE> 39
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
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.
24
<PAGE> 40
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 27th day of
January, 2000.
eFax.com
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/ TODD J. KENCK Chief Financial Officer January 27, 2000
- ----------------- (Principal Financial and
(Todd J. Kenck, Accounting Officer)
as Attorney-in-Fact)
/s/ THOMAS B. AKIN* Director January 27, 2000
- -------------------
(Thomas B. Akin)
/s/ DOUGLAS Y. BECH* Director January 27, 2000
- --------------------
(Douglas Y. Bech)
/s/ STEVEN J. CARNEVALE* Director January 27, 2000
- ------------------------
(Steven J. Carnevale)
/s/ LON B. RADIN* Director January 27, 2000
- -----------------
(Lon B. Radin)
/s/ ALBERT E. SISTO* Director January 27, 2000
- --------------------
(Albert E. Sisto)
* By: /s/ Todd J. Kenck January 27, 2000
- -----------------------
(Todd J. Kenck,
as Attorney-in-Fact)
25
<PAGE> 41
INDEX TO EXHIBITS
Exhibit No. Description
-----------
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
26
<PAGE> 42
EXHIBIT 5.1
[Cooley Godward LLP Letterhead]
January 27, 2000
eFax.com
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 (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"); and
(iii) up to 184,995 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.
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 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 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; and (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.
27
<PAGE> 43
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.
28
<PAGE> 44
EXHIBIT 23.1
Consent of Independent Auditors
-------------------------------
eFax.com:
We consent to the incorporation by reference in this Amendment No. 3 to
Registration Statement No. 333-79519 of eFax.com 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
January 27, 2000
29
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