As filed with the Securities and Exchange Commission on May 24, 2002.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ZIXIT CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-2216818
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2711 N. HASKELL AVENUE
SUITE 2300, LB 36
DALLAS, TEXAS 75204-2960
(214) 370-2000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
----------
STEVE M. YORK
CHIEF FINANCIAL OFFICER
2711 N. HASKELL AVENUE
SUITE 2300, LB 36
DALLAS, TEXAS 75204-2960
(214) 370-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------
Approximate date of commencement of proposed sale to the public: From
time-to-time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 of 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 of 1933, 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 a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
===================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
---------------- ---------- ---------------- ----------------- ------------
Common Stock,
$.01 par value 116,833 $5.00 $584,165.00 $53.74
===================================================================================
(1) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c) under the Securities Act, based on the average of
the high and low prices of the common stock on The Nasdaq Stock Market on
May 20, 2002.
----------
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
The information in this prospectus is not complete and may be changed. The
selling shareholder 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 we are not soliciting
offers to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion
May 24, 2002
ZIXIT CORPORATION
116,833 SHARES
COMMON STOCK
---------
This prospectus relates to an offering of up to 116,833 shares of our
common stock, par value $.01 per share, that have been issued to the selling
shareholder pursuant to a Common Stock Issuance Agreement, effective March 28,
2002, between Tumbleweed Communications Corp. and us.
The common stock being registered is being offered for the account of
the security holder described under "Selling Shareholder" on page 9. We will not
receive any proceeds from the sale of the shares of common stock offered under
this prospectus.
The shares may be offered in transactions on The Nasdaq Stock Market,
in negotiated transactions, or through a combination of methods of distribution,
at prices relating to the prevailing market prices, at negotiated prices or at
fixed prices that may be changed. Please see "Plan of Distribution" on page 10.
Our common stock is quoted on The Nasdaq Stock Market under the symbol
"ZIXI." On May 20, 2002, the last sale price of our common stock, as reported on
Nasdaq, was $4.99 per share.
---------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A LOSS OF ALL OR A PORTION OF YOUR INVESTMENT.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 1.
---------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------
The date of this prospectus is May 24, 2002.
TABLE OF CONTENTS
ZixIt Corporation.............................................................1
Risk Factors..................................................................1
Recent Development............................................................7
Note on Forward-Looking Statements and Risk Factors...........................7
Documents Incorporated by Reference...........................................8
Where You Can Get More Information............................................9
Selling Shareholder...........................................................9
Plan of Distribution.........................................................10
Use of Proceeds..............................................................11
Indemnification of Directors and Officers....................................12
Legal Matters................................................................12
Experts......................................................................12
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND NOT ON
ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. NEITHER ZIXIT CORPORATION NOR
ANY OF ITS REPRESENTATIVES HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE
INVESTORS WITH ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. FURTHERMORE, NO DEALER,
SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO
REPRESENT ANYTHING NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. THIS PROSPECTUS IS AN OFFER TO SELL ONLY THE SHARES OFFERED BY THIS
PROSPECTUS, BUT ONLY UNDER THE CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS
LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS
OF ITS DATE, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY
SALE OF THESE SECURITIES.
i
ZIXIT CORPORATION
This prospectus relates to an offering of up to 116,833 shares of our
common stock, par value $.01 per share, that have been issued to the selling
shareholder pursuant to a Common Stock Issuance Agreement, effective March 28,
2002, between Tumbleweed Communications Corp. and us. These shares were issued
to the selling shareholder as consideration for a cross-licensing patent
arrangement entered into between the parties.
We are a development-stage company and currently have no significant
revenues. Since January 1999, we have been developing and marketing products and
services that bring privacy, security and convenience to Internet users. We were
incorporated in Texas in 1988. Our executive offices are located at 2711 North
Haskell Avenue, Suite 2300, LB 36, Dallas, Texas 75204-2960, and our telephone
number is (214) 370-2000. Our Web site address is www.zixit.com. Information
contained on our Web site is not a part of this prospectus. In this prospectus,
"we," "us," "our" and "ZixIt" refer to ZixIt Corporation and its subsidiaries
unless the context otherwise requires.
RISK FACTORS
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risks and uncertainties, in addition to
the other information contained or incorporated by reference in this prospectus.
Also, you should be aware that the risks and uncertainties described below are
not the only ones facing us. Additional risks and uncertainties that we do not
yet know of or that we currently think are immaterial may also impair our
business operations. If any of those risks or uncertainties or any of the risks
and uncertainties described below actually occur, our business, financial
condition, prospects or results of operations could be materially and adversely
affected. In that case, the trading price of the common stock offered in this
prospectus could decline, and you may lose all or part of your investment.
WE HAVE NO SIGNIFICANT REVENUES, AND WE MAY NOT BE ABLE TO RAISE NEEDED
FUNDS.
We currently have no significant revenues; however, we believe
$15,159,000 in cash and marketable securities at March 31, 2002, combined with
scheduled installment payments due from resellers and distributors of
approximately $1,400,000, are sufficient to sustain our estimated level of
operating expenditures through the end of the first quarter of 2003. We are
considering various capital funding alternatives in order to
1
strengthen our financial position. We cannot assure you that we will be able to
raise additional capital on satisfactory terms, if and when needed.
THE MARKET MAY NOT BROADLY ACCEPT OUR PRODUCTS AND SERVICES, WHICH
WOULD PREVENT US FROM OPERATING PROFITABLY.
We must be able to achieve broad market acceptance for our products and
services in order to operate profitably. We have not yet been able to do this.
To our knowledge, there are currently no secure Internet communications
businesses similar to ours, that currently operate at the scale that we would
require, at our current expenditure levels and proposed pricing, to become
profitable. There is no assurance that our products and services will become
generally accepted or that they will be compatible with any standards that
become generally accepted, nor is there any assurance that enough paying users
will ultimately be obtained to enable us to operate profitably.
THOUGH WE HAVE ESTABLISHED STRATEGIC AND COLLABORATIVE RELATIONSHIPS
WITH SEVERAL STRATEGIC MARKETING PARTNERS, WE HAVE NOT REALIZED SIGNIFICANT
REVENUES FROM THESE RELATIONSHIPS AND MAY NOT IN THE FUTURE.
One of our primary business strategies has been to enter into strategic
or other similar collaborative relationships to reach a larger customer base
than we can reach through our direct sales and marketing efforts. To date, these
strategic and collaborative business relationships have not yielded any
significant revenues.
Assuming we are successful in entering into business relationships that
yield revenues, we will want to maintain these relationships and enter into
additional relationships to successfully execute our business plan. If we are
unable to do so, we will have to devote substantially more resources to the
distribution, sale and marketing of our products and services than we would
otherwise.
Furthermore, our ability to achieve future growth will also depend on
our ability to continue to establish direct seller channels and to develop
multiple distribution channels. Failure to enter into productive reseller
arrangements could harm our business.
COMPETITION IN THE SECURE MESSAGING DELIVERY BUSINESS IS EXPECTED TO
INCREASE, WHICH COULD CAUSE OUR BUSINESS TO FAIL.
ZixIt's products and services are targeted to the secure messaging
delivery market. Although there are many large, well-funded participants in the
information technology (IT) security industry, none currently participate in the
secure messaging delivery market. ZixIt's primary competitors in this market are
Tumbleweed Communications, CertifiedMail.com, PrivateExpress, and Sigaba
Corporation. ZixIt believes that the secure messaging delivery market is
immature, and, for the most part, unpenetrated, unlike many segments of the IT
security industry - which are saturated. After several years of infrastructure
deployment and product development, ZixIt believes that it is the only provider
that has made the investments necessary to successfully penetrate the relatively
untapped secure messaging delivery market. ZixIt does not believe that its
primary competitors have made the investments required to match ZixIt's
infrastructure development and product offerings. Nevertheless, others may, over
time, make the necessary investments in infrastructure and product offerings.
These competitors may develop new technologies that are perceived as being more
secure, effective or cost efficient than our own. If ZixIt is not successful in
exploiting the technology advantage it believes it currently holds, these
competitors could successfully garner a significant share of the market, to the
exclusion of ZixIt. Furthermore, increased competition could result in pricing
pressures, reduced margins or the failure of our business to achieve or maintain
market acceptance, any of which could harm our business.
2
OUR INABILITY TO DEVELOP AND INTRODUCE NEW SECURE E-MESSAGING PRODUCTS
AND RELATED SERVICES AND TO IMPLEMENT TECHNOLOGICAL CHANGES COULD HARM OUR
BUSINESS.
The emerging nature of the Internet and the secure Internet e-messaging
business and their rapid evolution, require us continually to develop and
introduce new products and services and to improve the performance, features and
reliability of our existing products and services, particularly in response to
competitive offerings. We have received no significant revenues from the sale of
any of our products and related services.
We also have under development new feature sets for our current product
line and are considering new secure e-messaging products. The success of new or
enhanced products and services depends on several factors - primarily, market
acceptance. We may not succeed in developing and marketing new or enhanced
products and services that respond to competitive and technological developments
and changing customer needs. This could harm our business. We do not currently
anticipate using any significant portion of our cash resources to acquire new
technologies from third parties in connection with developing new secure
e-messaging products or new feature sets for our current products.
IF THE MARKET FOR SECURE INTERNET ELECTRONIC MESSAGING DOES NOT
CONTINUE TO GROW, DEMAND FOR OUR PRODUCTS AND SERVICES WILL BE ADVERSELY
AFFECTED.
The market for secure Internet electronic messaging is at an early
stage of development. Continued growth of the secure Internet electronic
messaging market will depend to a large extent on the public recognizing the
potential threat posed by computer hackers and other unauthorized users. Failure
of the secure e-messaging market to grow could reduce demand for our products
and services, which would harm our business.
CAPACITY LIMITS ON OUR TECHNOLOGY AND NETWORK HARDWARE AND SOFTWARE MAY
BE DIFFICULT TO PROJECT, AND WE MAY NOT BE ABLE TO EXPAND AND UPGRADE OUR
SYSTEMS TO MEET INCREASED USE, WHICH WOULD RESULT IN REDUCED REVENUES.
While we have ample through-put capacity to handle our customers'
requirements for the medium term, at some point we may be required to expand and
upgrade our technology and network hardware and software. We may not be able to
accurately project the rate of increase in
3
usage on our network. In addition, we may not be able to expand and upgrade, in
a timely manner, our systems and network hardware and software capabilities to
accommodate increased traffic on our network. If we do not timely and
appropriately expand and upgrade our systems and network hardware and software,
we may lose customers and revenues.
SECURITY INTERRUPTIONS TO OUR SECURE DATA CENTER COULD DISRUPT OUR
BUSINESS, AND ANY SECURITY BREACHES COULD EXPOSE US TO LIABILITY AND NEGATIVELY
IMPACT CUSTOMER DEMAND FOR OUR PRODUCTS AND SERVICES.
Our business depends on the uninterrupted operation of our secure data
center. We must protect this center from loss, damage or interruption caused by
fire, power loss, telecommunications failure or other events beyond our control.
Any damage or failure that causes interruptions in our secure data center
operations could materially harm our business, financial condition and results
of operations.
In addition, our ability to issue digitally-signed certified
time-stamps and public encryption codes in connection with our products and
services depends on the efficient operation of the Internet connections between
customers and our data center. We depend on Internet service providers
efficiently operating these connections. These providers have experienced
periodic operational problems or outages in the past. Any of these problems or
outages could adversely affect customer satisfaction.
Furthermore, it is critical that our facilities and infrastructure
remain secure and the market perceives them to be secure. Despite our
implementation of network security measures, our infrastructure may be
vulnerable to physical break-ins, computer viruses, attacks by hackers and
similar disruptions from unauthorized tampering with our computer systems. In
addition, we are vulnerable to coordinated attempts to overload our systems with
data, resulting in denial or reduction of service to some or all of our users
for a period of time. We may not carry sufficient business interruption
insurance to compensate us for losses that may occur as a result of any of these
events; therefore, it is possible that we may have to use additional resources
to address these problems.
Messages sent through our ZixMail.netTM message portal will reside, for
a user-specified period of time, in our data center facilities. Also, since we
receive payments online for our ZixMail service, certain confidential customer
information is retained in our data center facilities. Any physical or
electronic break-ins or other security breaches or compromises of this
information could expose us to significant liability, and customers could be
reluctant to use our Internet-related products and services.
As was previously announced, we determined in June 2001 that credit
card databases at our independently operated subsidiary, Anacom Communications,
Inc. (we refer to it as "Anacom"), had been improperly accessed. As a result of
this improper access, we shut down the Anacom operations and Anacom ceased doing
business. The ZixMail and ZixMail.net systems and our secure data center
operations were entirely separate from the systems operated by Anacom. No ZixIt
technologies or operations were involved in the incident, nor are the Anacom
technologies involved being
4
used in our "Zix" family of secure e-messaging products and services.
Accordingly, we do not anticipate that this breach will have any lasting effect
on the development and deployment of our secure e-messaging products and related
services. Although no claims have been asserted against us with respect to this
incident to date, claims could be asserted in the future. We are unable to
assess the amount of the liability, if any, to Anacom or us, which may result
from any claims that may be asserted.
WE MAY HAVE TO DEFEND OUR RIGHTS IN INTELLECTUAL PROPERTY THAT WE USE
IN OUR PRODUCTS AND SERVICES, WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO OUR
BUSINESS.
We may have to defend our intellectual property rights or defend
against claims that we are infringing the rights of others. Intellectual
property litigation and controversies are disruptive and expensive. Infringement
claims could require us to develop non-infringing products or enter into royalty
or licensing arrangements. Royalty or licensing arrangements, if required, may
not be obtainable on terms acceptable to us. Our business could be significantly
harmed if we are not able to develop or license the necessary technology.
Furthermore, it is possible that others may independently develop substantially
equivalent intellectual property, thus enabling them to effectively compete
against us.
OUR PRODUCTS AND SERVICES COULD CONTAIN UNKNOWN DEFECTS OR ERRORS.
We subject our products and services to quality assurance testing prior
to product release. To date, we have not become aware after product release of
any defect or error that materially affects their functionality. Nevertheless,
our products and services could contain undetected defects or errors. This could
result in loss of or delay in revenues, failure to achieve market acceptance,
diversion of development resources, injury to our reputation, litigation claims,
increased insurance costs or increased service and warranty costs. Any of these
could prevent us from implementing our business model and achieving the revenues
we need to operate profitably.
PUBLIC KEY CRYPTOGRAPHY TECHNOLOGY IS SUBJECT TO RISKS.
Our products and services employ, and future products and services may
employ, public key cryptography technology. With public key cryptography
technology, a user has a public key and a private key, which are used to encrypt
and decrypt messages. The security afforded by this technology depends, in large
measure, on the integrity of a user's private key, which is dependent, in part,
on the application of certain mathematical principles. The integrity of a user's
private key is predicated on the assumption that it is difficult to
mathematically derive a user's private key from the user's related public key.
Should methods be developed that make it easier to derive a user's private key,
the security of encryption products using public key cryptography technology
would be reduced or eliminated and such products could become unmarketable. This
could require us to make significant changes to our products, which could damage
our reputation and otherwise hurt our business. Moreover, there have been public
reports of the successful decryption of certain encrypted messages. This, or
related, publicity could adversely affect public perception of the security
afforded by public key cryptography technology, which could harm our business.
5
WE DEPEND ON KEY PERSONNEL.
We depend on the performance of our senior management team - including
our Chairman, President and Chief Executive Officer, John A. Ryan, and his
direct reports; our Founder, David P. Cook; and other key employees,
particularly highly skilled technical personnel. Our success also depends on our
ability to attract, retain and motivate these individuals. There is competition
for these personnel, and we face a tight employment market for the particular
individuals we need to attract. Other than for Messrs. Ryan and Cook, none of
our employees have employment contracts with us nor are there any agreements
with members of our senior management team or other key employees that prevent
them from leaving ZixIt at any time. In addition, we do not maintain key person
life insurance for any of our personnel. The loss of the services of any of our
key employees or our failure to attract, retain and motivate key employees could
harm our business.
WE COULD BE AFFECTED BY GOVERNMENT REGULATION.
Exports of software products using encryption technology are generally
restricted by the United States government (we refer to it as the "U.S.").
Although we have obtained U.S. government approval to export our ZixMail product
to almost all countries in the world, the list of countries to which ZixMail
cannot be exported could be revised in the future. Furthermore, some foreign
countries impose restrictions on the use of encryption products, such as the
ZixMail product. Failure to obtain the required governmental approvals would
preclude the sale or use of the ZixMail product in international markets.
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated significantly in
the past and is likely to fluctuate in the future. Also, the market prices of
securities of other Internet-related companies have been highly volatile and, as
is well known, have generally declined substantially and broadly.
FURTHER ISSUANCES OF EQUITY SECURITIES MAY BE DILUTIVE TO CURRENT
SHAREHOLDERS.
As noted above, we are considering various capital funding alternatives
in order to strengthen our financial position. These capital funding
alternatives could involve one or more types of equity securities, including
convertible debt, common or convertible preferred stock and warrants to acquire
common or preferred stock. Such equity securities could be issued at or below
the then-prevailing market price for our shares of common stock. In addition, we
incentivize employees and attract new employees by issuing options to purchase
our shares of common stock. The interest of our existing shareholders could be
diluted by stock option issuances to employees and any equity securities issued
in a capital funding financing. Moreover, we currently have on file registration
statements covering the resale of securities held by existing holders of our
common stock and holders of warrants or options to purchase shares of our common
stock.
6
A PRIVATE INVESTOR OWNS A LARGE PERCENTAGE OF OUR OUTSTANDING STOCK AND
COULD SIGNIFICANTLY INFLUENCE THE OUTCOME OF ACTIONS.
George Weaver Haywood, a private investor, has beneficial ownership of
approximately 20% of our outstanding common stock, according to his recent
filings with the Securities and Exchange Commission (we refer to it as the
"SEC"). Mr. Haywood, in his most recent SEC filing, has stated that our stock
was not acquired for, and is not being held for, the purpose of, or with the
effect of, changing or influencing the control of ZixIt. However, because of his
large percentage ownership, Mr. Haywood could be able to significantly influence
all matters requiring approval by our shareholders, including the election of
directors and the approval of mergers or other business combination
transactions. Mr. Haywood's interests may not be aligned with the interests of
our other shareholders.
TERRORIST ATTACKS HAVE CONTRIBUTED TO ECONOMIC INSTABILITY IN THE U.S.;
CONTINUED TERRORIST ATTACKS, WAR OR OTHER CIVIL DISTURBANCES COULD LEAD TO
FURTHER ECONOMIC INSTABILITY AND DEPRESS OUR STOCK PRICE.
On September 11, 2001, the U.S. was the target of terrorist attacks of
unprecedented scope. These attacks caused instability in the global financial
markets and contributed to volatility in the stock prices of U.S. publicly
traded companies. These attacks may lead to armed hostilities or to further acts
of terrorism and civil disturbances in the U.S. or elsewhere, which may further
contribute to economic instability in the U.S. and could harm our business.
WE MAY HAVE LIABILITY FOR INDEMNIFICATION CLAIMS ARISING FROM THE SALE
OF OUR PREVIOUS BUSINESSES IN 1998 AND 1997.
We disposed of our remaining operating businesses in 1998 and 1997. In
selling those businesses, we agreed to provide customary indemnification to the
purchasers of those businesses for breaches of representations and warranties,
covenants and other specified matters. Although we believe that we have
adequately provided for future costs associated with these indemnification
obligations, indemnifiable claims could exceed our estimates.
WE MAY ENCOUNTER OTHER UNANTICIPATED RISKS AND UNCERTAINTIES IN THE
INTERNET MARKET OR IN DEVELOPING NEW PRODUCTS AND SERVICES, AND WE CANNOT ASSURE
YOU THAT WE WILL BE SUCCESSFUL IN RESPONDING TO ANY UNANTICIPATED RISKS OR
UNCERTAINTIES.
There are no assurances that we will be successful or that we will not
encounter other, and even unanticipated, risks. We discuss other operating,
financial or legal risks or uncertainties in our periodic filings with the SEC.
We are, of course, also subject to general economic risks.
RECENT DEVELOPMENT
In April 2002, we entered into an agreement with Yahoo! Inc. (we refer
to it as "Yahoo!") that terminated our obligation to provide secure messaging
services to users of Yahoo! Mail. In connection with the termination of the
secure messaging services, the total remaining commitment owed to Yahoo! was
reduced by $850,000, and we issued a promissory note in the amount of
$2,500,000, which may be paid in either cash or registered common stock. The
note is expected to be satisfied in the second quarter of 2002 when the
registration of the required shares with the SEC becomes effective, using the
then-current stock price.
NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS
This document contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended. All statements other than statements of
historical fact are "forward-looking statements" for purposes of federal and
state securities laws, including: any projections of earnings, revenues or other
financial items; any statements of the plans, strategies and objectives of
management for future operations; any statements concerning proposed new
products, services or developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. Forward-looking statements may
include the words "may," "will," "estimate," "intend," "continue," "believe,"
"expect" or "anticipate" and other similar words. Such forward-looking
statements may be contained in the "Risk Factors" section above, among other
places.
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to inherent risks and
uncertainties, such as those disclosed in this document. We do not intend, and
undertake no obligation, to update any forward-looking statement.
7
DOCUMENTS INCORPORATED BY REFERENCE
We furnish our shareholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and special reports, proxy statements and other information with the
SEC. Instead of repeating information that we have already filed with the SEC,
we are allowed to "incorporate by reference" in this prospectus information
contained in those documents we have filed with the SEC. These documents are
considered to be part of this prospectus.
We incorporate by reference in this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until the selling shareholder sells all of the
shares of common stock offered by this prospectus:
o our Annual Report on Form 10-K/A, including audited financial
statements, for our fiscal year ended December 31, 2001;
o our Quarterly Report on Form 10-Q/A for the quarterly period
ended March 31, 2002;
o all other reports we have filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of our fiscal year
covered by the Annual Report referred to above; and
o the description of our common stock contained in our
Registration Statement on Form 8-A, dated September 25, 1989,
including any amendment or report filed for the purpose of
updating such description.
Any documents that we file with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering, will also be considered to be part of this prospectus and will
automatically update and supersede the information contained in this prospectus.
At your request, we will provide you, without charge, a copy of any of
the documents we have incorporated by reference into this prospectus but not
delivered with the prospectus (other than exhibits to such documents, unless
those exhibits are specifically incorporated by reference into the documents
that this prospectus incorporates). If you want more information, write or call:
Steve M. York
Senior Vice President and Chief Financial Officer
ZixIt Corporation
2711 North Haskell Avenue
Suite 2300, LB 36
Dallas, Texas 75204-2960
Telephone: (214) 370-2000
8
WHERE YOU CAN GET MORE INFORMATION
We are delivering this prospectus to you in accordance with the U.S.
securities laws. We have filed a registration statement with the SEC to register
the common stock that the selling shareholder is offering to you. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information that is included
in the registration statement.
You may obtain a copy of the registration statement, or a copy of any
other filing we have made with the SEC, directly from the SEC. You may either:
o read and copy any materials we have filed with the SEC at the
SEC's Public Reference Room maintained at 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following
regional offices: 233 Broadway, New York, New York 10279; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; or
o visit the SEC's Internet site at http://www.sec.gov, which
contains reports, proxy statements, and other information
regarding issuers that file electronically.
You can obtain more information about the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330.
SELLING SHAREHOLDER
The selling shareholder acquired the shares being sold in this offering
from us on March 28, 2002, in a private placement exempt from registration under
the Securities Act of 1933 pursuant to Regulation D and/or Section 4(2).
The table below sets forth information with respect to the beneficial
ownership of our common stock by the selling shareholder immediately prior to
this offering and as adjusted to reflect the sale of shares of common stock
pursuant to the offering. The selling shareholder's beneficial ownership prior
to and after this offering is less than 1% of our common stock, based on the
17,674,687 shares of our common stock outstanding on April 30, 2002. The table
assumes that the selling shareholder sells all of the shares offered by the
selling shareholder in this offering, but the selling shareholder is not
required and may elect not to do so. We are unable, however, to determine the
exact number of shares that will actually be sold or when or if these sales will
occur. All information with respect to beneficial ownership in the following
table has been furnished by the selling shareholder, and this and certain
information under "Plan of Distribution" below is the only information furnished
by the selling shareholder to us that is included in this prospectus.
9
BENEFICIAL OWNERSHIP PRIOR TO BENEFICIAL OWNERSHIP AFTER
OFFERING OFFERING
------------------------------------- --------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES SHARES TO BE SOLD NUMBER OF SHARES
------------------------ ---------------- ----------------- --------------------------
Tumbleweed
Communications Corp. 116,833 116,833 0
This prospectus also covers any additional shares of common stock that
we may issue or that may be issuable by reason of any stock split, stock
dividend or similar transaction involving the common stock.
PLAN OF DISTRIBUTION
The sale of shares offered in this prospectus by the selling
shareholder may be effected from time-to-time directly, or by one or more
broker-dealers or agents, in one or more transactions on The Nasdaq Stock
Market, in negotiated transactions or through a combination of such methods of
distribution, at prices related to prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The selling shareholder will
act independently of us in making decisions with respect to the timing, manner
and size of each sale. The selling shareholder may sell the shares registered
here in one or more of the following methods:
o cross trades or block trades in which the broker or dealer
so engaged will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker, dealer or underwriter as principal
and resale by such broker, dealer or underwriter for its own
account pursuant to this prospectus;
o "at the market" to or through market makers or into an
existing market for the shares;
o ordinary brokerage transactions and transactions in which
the broker solicits purchasers, which may include long sales
or short sales effected after the effective date of the
registration statement of which this prospectus is a part;
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); or
o any combination of the foregoing, or by any other legally
available means.
The selling shareholder may also enter into option or other
transactions with brokers or dealers that require the delivery by these brokers
or dealers of the shares, which shares may be resold thereafter pursuant to this
prospectus. In addition, the selling shareholder may pledge its
10
shares to brokers or dealers or other financial institutions. Upon a default by
the selling shareholder, the brokers, dealers or financial institutions may
offer and sell the pledged shares.
In connection with the sale of shares, underwriters may receive
compensation from the selling shareholder, and, if acting as agent for the
purchaser of such shares, from such purchaser, in the form of discounts,
concessions or commissions. Underwriters, dealers and agents that participate in
the distribution of shares may be deemed to be underwriters and any discounts or
commissions received by them from the selling shareholder and any profit on the
resale of shares by them may be deemed to be underwriting discounts and
commissions under the Securities Act. At such time that the selling shareholder
elects to make an offer of shares, a prospectus supplement, if required, will be
distributed that will identify any underwriters, dealers or agents and any
discounts, commissions and other terms constituting compensation from such
selling shareholder and any other required information.
We have agreed to indemnify the selling shareholder against certain
liabilities, including liabilities arising under the Securities Act. Under
agreements which may be entered into by the selling shareholder, underwriters
who participate in the distribution of shares may be entitled to indemnification
by the selling shareholder against certain liabilities, including liabilities
under the Securities Act.
Some of the underwriters or agents and their associates may be
customers of or engage in transactions with and perform services for us in the
ordinary course of business. In order to comply with some states' securities
laws, if applicable, our common stock will be sold in jurisdictions only through
registered or licensed brokers or dealers.
The selling shareholder is not obligated to, and there is no assurance
that the selling shareholder will, sell any or all of the shares being offered
by this prospectus.
We will pay all reasonable costs and expenses incurred by us or the
selling shareholder in connection with the registration of the shares under the
Securities Act, including all registration and filing fees and our legal fees.
We agreed with the selling shareholder to keep the registration
statement effective until March 28, 2004 or until the shares being offered by
this prospectus have been sold.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock by the selling shareholder, rather, the selling shareholder will receive
those proceeds directly.
11
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Texas Business Corporation Act, our Restated
Articles of Incorporation provide that our directors shall not be personally
liable to us or our shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability for:
o any breach of the director's duty of loyalty to us or to our
shareholders;
o any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law;
o any transaction from which the director derived any improper
personal benefit;
o any act or omission where the liability of the director is
expressly provided by statute; or
o any act related to an unlawful stock repurchase or payment of
a dividend.
In addition, our Restated Articles of Incorporation and Restated Bylaws
include provisions permitted by the Texas Business Corporation Act whereby our
directors, officers, employees, and agents generally are to be indemnified
against certain liabilities to the fullest extent authorized by the Texas
Business Corporation Act. In addition, the employment agreement between John A.
Ryan and us, dated November 14, 2001, provides Mr. Ryan, our Chairman, President
and Chief Executive Officer, with a contractual right to indemnification as an
officer and/or director of us as set forth in Article VII of our Restated
Bylaws, dated September 14, 1999.
LEGAL MATTERS
The validity of the stock offered hereby will be passed upon for us by
Ronald A. Woessner, our Senior Vice President, General Counsel and Secretary.
EXPERTS
The consolidated financial statements appearing in the Annual Report on
Form 10-K/A for our fiscal year ended December 31, 2001, referred to under
"Documents Incorporated by Reference" on page 8, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon, included
therein, and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
12
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee $ 53.74
Nasdaq filing fee 2,000.00*
Accounting fees and expenses 2,500.00*
Legal fees and expenses 1,000.00*
Miscellaneous expenses 1,000.00*
-----------
Total $ 6,553.74
===========
----------
* Estimated.
All of the above expenses will be borne by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Texas Business Corporation Act, the registrant's
Restated Articles of Incorporation provide that its directors shall not be
personally liable to the registrant or its shareholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the registrant or its shareholders, (ii)
any act or omission not in good faith or which involves intentional misconduct
or a knowing violation of law, (iii) any transaction from which the director
derived any improper personal benefit, (iv) any act or omission where the
liability of the director is expressly provided for by statute, or (v) any act
related to an unlawful stock repurchase or payment of a dividend. In addition,
the registrant's Restated Articles of Incorporation and Restated Bylaws include
certain provisions permitted by the Texas Business Corporation Act whereby its
directors, officers, employees and agents generally are to be indemnified
against certain liabilities to the fullest extent authorized by the Texas
Business Corporation Act. The registrant maintains insurance on behalf of its
directors and executive officers insuring them against any liability asserted
against them in their capacities as directors or officers or arising out of such
status.
ITEM 16. EXHIBITS.
The exhibits to this registration statement are listed in the Index to
Exhibits on page II-5 of this registration statement, which Index is
incorporated herein by reference.
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-1
(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 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (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 of 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 therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 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 provisions described in Item 6 or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
II-2
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on May 24, 2002.
ZIXIT CORPORATION
By: /s/ Steve M. York
------------------------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer and Treasurer
II-3
POWER OF ATTORNEY
Each of the undersigned hereby appoints John A. Ryan and Steve M. York,
and each of them acting individually, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, for and in the name, place and
stead of the undersigned, in any and all capacities, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, any and all
amendments and exhibits to this registration statement, any and all supplemental
registration statements (including post-effective amendments), and any and all
applications, instruments and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby or the transactions contemplated herein.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John A. Ryan Chairman, President, Chief May 24, 2002
--------------------------- Executive Officer and
John A. Ryan Director (Principal Executive Officer)
/s/ Steve M. York Senior Vice President, May 24, 2002
--------------------------- Chief Financial Officer
Steve M. York and Treasurer (Principal
Financial and Accounting Officer)
/s/ David P. Cook Founder and Director May 24, 2002
---------------------------
David P. Cook
/s/ H. Wayne Huizenga Co-Vice Chairman and Director May 24, 2002
---------------------------
H. Wayne Huizenga
/s/ Michael E. Keane Director May 24, 2002
---------------------------
Michael E. Keane
/s/ James S. Marston Director May 24, 2002
---------------------------
James S. Marston
/s/ Jeffrey P. Papows Co-Vice Chairman and Director May 24, 2002
---------------------------
Jeffrey P. Papows
/s/ Antonio R. Sanchez, Jr. Director May 24, 2002
---------------------------
Antonio R. Sanchez, Jr.
/s/ Dr. Ben G. Streetman Director May 24, 2002
---------------------------
Dr. Ben G. Streetman
II-4
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
*4.1 Common Stock Issuance Agreement between Tumbleweed
Communications Corp. and ZixIt Corporation, effective March
28, 2002.
*5.1 Opinion of Ronald A. Woessner as to the validity of the
securities being registered.
23.1 Consent of Ronald A. Woessner (included in his opinion filed
as Exhibit 5.1).
*23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included in Part II of this registration
statement).
----------
*Filed electronically herewith.
II-5