As filed with the Securities and Exchange Commission on June 27, 2002.
Registration No. 333-89056.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
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)
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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)
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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(2)
---------------- ---------- ---------------- ----------------- ------------
Common Stock,
$.01 par value 625,000 $5.00 $3,125,000 $287.50
(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.
(2) Previously paid on May 24, 2002 with the initial filing.
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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
June 27, 2002
ZIXIT CORPORATION
625,000 SHARES
COMMON STOCK
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This prospectus relates to an offering of up to 625,000 shares of our
common stock, par value $.01 per share, that are issuable to the selling
shareholder, Yahoo! Inc., pursuant to a Termination Agreement between Yahoo!
Inc. and us, effective April 8, 2002, and related Convertible Promissory Note.
This prospectus does not relate to the 916,667 shares or 116,833 shares that are
concurrently being offered pursuant to Registration Statements on Form S-3
(Registration Nos. 333-83934 and 333-89052, respectively).
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 9.
Our common stock is quoted on The Nasdaq Stock Market under the symbol
"ZIXI." On June 24, 2002, the last sale price of our common stock, as reported
on Nasdaq, was $5.08 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 June 27, 2002.
TABLE OF CONTENTS
ZixIt Corporation.................................................................................................1
Risk Factors......................................................................................................1
Note on Forward-Looking Statements and Risk Factors...............................................................7
Documents Incorporated by Reference...............................................................................7
Where You Can Get More Information................................................................................8
Selling Shareholder...............................................................................................9
Plan of Distribution..............................................................................................9
Use of Proceeds..................................................................................................10
Indemnification of Directors and Officers........................................................................10
Legal Matters....................................................................................................11
Experts..........................................................................................................11
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.
ZIXIT CORPORATION
This prospectus relates to an offering of up to 625,000 shares of our
common stock, par value $.01 per share, that are issuable to the selling
shareholder, Yahoo! Inc., pursuant to a Termination Agreement between Yahoo!
Inc. and us, effective April 8, 2002, and related Convertible Promissory Note.
The agreement terminated our obligation to provide secure messaging services to
users of Yahoo! Mail. In connection with such termination, the total remaining
commitment owed to Yahoo! Inc. was reduced by $850,000, and we issued a note in
the amount of $2,500,000, which is being paid with the shares to which this
prospectus relates.
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 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
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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 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.
3
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.net(TM) 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 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.
4
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.
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,
5
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.
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.
6
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.
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.
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.
7
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
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:
8
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 shares of common stock being offered are issuable to the selling
shareholder pursuant to a Termination Agreement, effective April 8, 2002, and
related Convertible Promissory Note (we refer to it as the "Note"). The
principal amount of the Note of $2,500,000 plus accrued interest of 6% owing
under the Note is due when the registration statement to which this prospectus
relates becomes effective. We will fulfill our obligations under the Note by
delivering the applicable number of shares of stock being registered under the
registration statement. The number of shares to be delivered under the Note is
determined by dividing the $2,500,000 plus accrued interest owing under the Note
by the "per share stock price" (which is the average of the closing prices of
our common stock for the three consecutive trading days preceding the due date
of the Note). Accordingly, upon the effectiveness of the registration statement,
our obligations under the Note will be fulfilled.
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 the applicable number of
shares of common stock pursuant to this offering. The selling shareholder's
beneficial ownership 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. 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 has
been furnished by the selling shareholder.
BENEFICIAL OWNERSHIP PRIOR TO OFFERING BENEFICIAL OWNERSHIP AFTER OFFERING
------------------------------------------ -----------------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES* SHARES TO BE SOLD* NUMBER OF SHARES
------------------------ ----------------- ------------------ ----------------
Yahoo! Inc. 625,000 625,000 0
----------
* The stated numbers are approximate and are estimated solely for
purposes of the table. The actual numbers, which are established
pursuant to a formula in the Note, may be slightly different.
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
9
with respect to the timing, manner and size of each sale, subject to a daily
trading volume limitation as set forth in the Termination Agreement. The
selling shareholder may sell all, some or none of the shares offered by this
prospectus.
In the event one or more broker-dealers or agents agree to sell the
shares, they may do so by purchasing the shares as principals or by selling the
shares as agents for the selling shareholder. Any broker-dealer that does this
may receive compensation in the form of discounts, concessions or commissions
from the selling shareholder or the purchasers of the shares for which the
broker-dealer may act as agent or to whom they sell as principal, or both, which
compensation as to a particular broker-dealer may be in excess of customary
compensation. To our knowledge, the selling shareholder has not entered into any
agreement, arrangement or understanding with any particular broker-dealer or
market maker with respect to the shares offered hereby, nor do we know the
identity of any brokers or market makers that will participate in the offering.
In managing the selling shareholder's investment in us, the selling shareholder
could employ various methods involving hedging, short sales or loans of the
shares covered by this prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of the
distribution. In addition, the selling shareholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M. These provisions may limit the
timing of purchases and sales of the shares by the selling shareholder. All of
the foregoing may affect the marketability of the shares.
In order to comply with some states' securities laws, if applicable,
our common stock will be sold in jurisdictions only through registered or
licensed brokers or dealers. In some states, our common stock may not be sold
unless it has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
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.
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;
10
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 7, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon, included
therein, and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
11
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee $ 287.50*
Nasdaq filing fee 2,000.00**
Accounting fees and expenses 2,500.00**
Legal fees and expenses of registrant 1,000.00**
Miscellaneous expenses 1,000.00**
---------
Total $6,787.50
=========
----------
* Previously paid on May 24, 2002 with the initial filing.
** 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 defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
II-2
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 June 27, 2002.
ZIXIT CORPORATION
By: /s/ Steve M. York
------------------------------------
Steve M. York
Senior Vice President, Chief
Financial Officer and Treasurer
II-3
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 27, 2002.
Signature Title
--------- -----
/*/ Chairman, President, Chief
--------------------------- Executive Officer and
John A. Ryan Director (Principal Executive Officer)
/s/ Steve M. York Senior Vice President,
--------------------------- Chief Financial Officer
Steve M. York and Treasurer (Principal
Financial and Accounting Officer)
/*/ Founder and Director
---------------------------
David P. Cook
/*/ Co-Vice Chairman and Director
---------------------------
H. Wayne Huizenga
/*/ Director
---------------------------
Michael E. Keane
/*/ Director
---------------------------
James S. Marston
/*/ Co-Vice Chairman and Director
---------------------------
Jeffrey P. Papows
/*/ Director
---------------------------
Antonio R. Sanchez, Jr.
/*/ Director
---------------------------
Dr. Ben G. Streetman
*By: /s/ STEVE M. YORK
---------------------------
Steve M. York
Attorney-in-Fact
II-4
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1* Opinion of Ronald A. Woessner as to the validity of the
securities being registered.
10.1** Termination Agreement, effective April 8, 2002, between Yahoo!
Inc. and ZixIt Corporation (excluding Annex A and Exhibit A).
The registrant agrees to furnish supplementally to the
Commission upon request a copy of any of the exhibits referred
to but not included in the Termination Agreement filed with
the Commission.
10.2** Convertible Promissory Note, entered into as of April 8, 2002,
between ZixIt Corporation and Yahoo! Inc.
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).
----------
* Previously filed.
** Filed electronically herewith.
II-5