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Beyond Com Corp ˇ 424B3 ˇ On 8/31/99

Filed On 8/31/99   ˇ   SEC File 333-83135   ˇ   Accession Number 891618-99-4029

  in   Show  and 
  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 8/31/99  Beyond Com Corp                   424B3                  1:47                                     891618

Prospectus   ˇ   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus Supplement No. 1 Dated August 31, 1999     47    265K 


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
2Selling Stockholders
12Beyond.Com Corporation
14Risk Factors
34Use of Proceeds
"Dividend Policy
40Description of Capital Stock
45Plan of Distribution
46Legal Matters
"Experts
"Where You Can Find More Information
47Incorporation of Certain Documents by Reference
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FILED PURSUANT TO RULE 424(B)(3) REGISTRATION NO. 333-83135 SUPPLEMENT NO. 1 DATED AUGUST 31, 1999 TO PROSPECTUS DATED JULY 30, 1998 RELATING TO 17,504,129 SHARES OF COMMON STOCK $0.001 PAR VALUE PER SHARE OF BEYOND.COM CORPORATION ------------------ SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------ All capitalized terms used but not defined herein shall have the meanings prescribed in the Prospectus dated July 30, 1999, forming a part of the Registration Statement on Form S-3, File No. 333-83135. This Prospectus Supplement is incorporated by reference into the Prospectus and should be read in conjunction with the Prospectus. Any cross references in this Supplement refer to portions of the Prospectus. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The following information amends and updates the information found on pages 24 - 28 of the Prospectus under the caption "Selling Securityholders" based upon certain information received, and relied on, by the Company through August 30, 1999 as to the security ownership of the Selling Securityholders:
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SELLING STOCKHOLDERS The following table provides the name of the selling stockholders and the number of shares of common stock owned by the selling stockholders. Since the selling stockholders may each sell all, some or none of their respective shares, we cannot estimate the aggregate number and percentage of shares of common stock that the selling stockholders will offer pursuant to this prospectus or that the selling stockholders will own upon completion of an offering to which this prospectus relates. ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- William S. McKiernan......................... 8,407,577 23.4% 8,407,577 -- * Vulcan Ventures Inc.......................... 2,932,375 8.2 2,932,375 -- * 110 110th Avenue NE, Suite 550 Bellevue, WA 98004 Global Retail Partners, L.P. and its affiliates(2).............................. 1,188,924 3.3 1,188,924 -- * 2121 Avenue of the Stars, Suite 1630 Los Angeles, CA 90067 Bong Ju Suh.................................. 699,343 1.9 699,343 -- * 1350 Cole Street San Francisco, CA 94117 Carlie Pasha Headapohl and William Ellin Headapohl TTEE 1996 Headapohl Family Trust........... 699,343 1.9 699,343 -- * 118 26th Avenue San Francisco, CA 94121 CNET, Inc.................................... 683,443 1.9 683,443 -- * Attn: Douglas Woodrum, Chief Financial Officer 150 Chestnut Street San Francisco, CA 94111 At Home Corporation.......................... 671,563 1.9 671,563 -- * Attn: David Pine, VP, General Counsel 425 Broadway Street Redwood City, CA 94063 Entities affiliated with C.E. Unterberg, Towbin(3).................................. 479,515 1.3 479,515 -- * Swiss Bank Tower 10 East 50th Street, 22nd Floor New York, New York 10002 ZD Inc....................................... 394,250 1.1 394,250 -- * Attn: Daryl Otte 28 East 28th Street New York, NY 10016 Draper Richards L.P.......................... 118,552 * 118,552 -- * Attn: Robin Donohoe 50 California Street Suite 2925 San Francisco, CA 94114 2
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Bayview Investors Ltd........................ 104,229 * 104,229 -- * c/o BancBoston Robertson Stephens Attn: Jennifer Sherrill 555 California Street Suite 2600 San Francisco, CA 94104 Jay Erik Lou................................. 80,750 * 80,750 -- * 2144 Green Street, #8 San Francisco, CA 94123 D. Kathryn Weller............................ 68,903 * 68,903 -- * c/o Morgan Stanley Dean Witter Attn: David Huang 6140 Stoneridge Mall Road Suite 100 Pleasanton, CA 94588 Jody M. Sherman.............................. 52,810 * 52,810 -- * Morgan Stanely Dean Witter Attn: David Huang 6140 Stoneridge Mall Road Suite 100 Pleasanton, CA 94588 Charles Moldow............................... 52,253 * 52,253 -- * 170 Seminary Drive Menlo Park, CA 94025 Stanley J. Meresman.......................... 37,192 * 37,192 -- * 2071 Huntington Lane Los Altos, CA 94024 Marian Susan Boardley........................ 36,424 * 36,424 -- * c/o SalomonSmithBarney Attn: Matthew L. Megorden 350 California Street, 22 nd Floor San Francisco, CA 94104 Niall D. Hawkins............................. 33,878 * 33,878 -- * 3060 Turk Street San Francisco, CA 94118 Wendover LLC................................. 33,848 * 33,848 -- * Attn: H. Rankin, Jr. 66 Stanton Road Darien, CT 06820 Charles R. Ewald............................. 29,637 * 29,637 -- * 50 California Street Suite 2925 San Francisco, CA 94111 3
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Russell S. Reynolds Jr....................... 29,637 * 29,637 -- * 39 Clapboard Ridge Road Greenwich, CT 06830 Doris Lynn Ellwood........................... 29,139 * 29,139 -- * 4812 SW 39th Drive Portland, OR 97221 Thomas Warford Mullen........................ 26,276 * 26,276 -- * 850 Covington Road Los Altos, CA 94024 Robert C. Harris............................. 25,000 * 25,000 -- * One Sansome Street, 41st. Fl San Francisco, CA 94104 Todd Rankin.................................. 22,325 * 22,325 -- * 730 Shrader Street San Francisco, CA 94117 Wilblairco Associates, L.P................... 20,951 * 20,951 -- * 222 W. Adams Street Chicago, IL 60606 ARBA, LLC.................................... 19,160 * 19,160 -- * c/o Pell Development Co. Attn: Dave Pell 600 Harrison Street Suite 100 San Francisco, CA 94107 Scott and Rhonda Sorochak.................... 18,568 * 18,568 -- * 804 Whitehaven Place San Ramon, CA 94583 RMC Investments, LLC......................... 17,237 * 17,237 -- * c/o E. Tyler Miller 11750 Sorrento Valley Road San Diego, CA 92121 Thanos Triant................................ 14,929 * 14,929 -- * 2170 Stockbridge Avenue Woodside, CA 94062 Junho Suh.................................... 14,433 * 14,433 -- * 3950 Medford Street Los Angeles 90063 Carlos Ramiro Teran.......................... 13,445 * 13,445 -- * 3199 Clay Street, #9 San Francisco, CA 94115 4
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Rainbow Trading Venture Partners, L.P........ 12,745 * 12,745 -- * 8201 Preston Road, Suite 400 Dallas, TX 75225 Fincher W. Smith............................. 10,848 * 10,848 -- * 2609 Cline Street Tallahassee, FL 32312 William F. Headapohl......................... 10,649 * 10,649 -- * 120 Ben Hogan Drive Missoula, MT 59803 Bruce Moldow................................. 9,355 * 9,355 -- * 5061 N.W. 119th Terrace Coral Springs, FL 33076 Adrian Scott................................. 8,462 * 8,462 -- * 11 Brush Place, #1 San Francisco, CA 94103 Robert B. Deans, Jr.......................... 8,462 * 8,462 -- * 545 Madison Avenue 9th Floor New York, NY 10022 Brad Garlinghouse............................ 8,394 * 8,394 -- * 1428 Oak Street San Mateo, CA 94402 Brett Helm................................... 8,394 * 8,394 -- * 12155 Travertine Court Poway, CA 92064 Wade Brown................................... 8,310 * 8,310 -- * 1705 Long Gate Road Plymouth, CA 95669 Andrew L. Joos............................... 7,554 * 7,554 -- * 241 Arroyo Grande Way Los Gatos, CA 95032 Ronald & Gayle Conway as Trustees of the Conway Family Trust dated 9/25/96................. 7,464 * 7,464 -- * 76 Adam Way Atherton, CA 94027 Stanley J. and Sharon A. Meresman, as Trustees of the Meresman Family Trust U/D/T dated 9/19/89.................................... 7,464 * 7,464 -- * 2071 Huntington Lane Los Altos, CA 94024 Jeff Kolodin................................. 6,769 * 6,769 -- * 43603 Daphney House Court Potomac, MD 20850 5
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Garson Soe................................... 6,296 * 6,296 -- * 123 Woodview Circle San Ramon, CA 94583 Berton and Gloria Muldow..................... 5,971 * 5,971 -- * 35 Bermuda Road Westport, CT 06880 Jaideep Singh................................ 5,876 * 5,876 -- * 5 Villa Terrace San Francisco, CA 94114 Kristin Link................................. 5,540 * 5,540 -- * 4 Lyndhurst Court Belmont, CA 94002 Joseph R. Maravillas......................... 5,412 * 5,412 -- * 2231 Santa Ana Drive Fairfield, CA 94533 Craig Winfield Johnson....................... 5,280 * 5,280 -- * 25 Cherokee Court Portola Valley, CA 94028 Trevor Colby................................. 5,036 * 5,036 -- * 6701 Dune Drive Malibu, CA 90265 James L. Brock............................... 4,478 * 4,478 -- * 1837 Brewster Avenue Redwood City, CA 94062 CNA Trust Company, TTEE ULG 401(k) Retirement Plan, FBO Robert V. W. Zipp...................... 4,478 * 4,478 -- * 3080 South Bristol Street Costa Mesa, CA 92626 Chris Berwind................................ 4,198 * 4,198 -- * At Home Network 450 Broadway Redwood City, CA 94063 Craig and Kathy Dunnigan..................... 4,198 * 4,198 -- * 3211 Bonita Drive Sacramento, CA 95821 Joe Haar..................................... 4,198 * 4,198 -- * 2206 Foxworthy Avenue San Jose, CA 95124 Eric and Lisa Kurland........................ 4,198 * 4,198 -- * 3040 Magnum Drive San Jose, CA 95135 6
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Frank J. and Caroline Martini................ 4,198 * 4,198 -- * 4139 Terra Granada Drive 1B Walnut Creek, CA 94595 William Martini.............................. 4,198 * 4,198 -- * 3131 Grey Eagle Drive Walnut Creek, CA 94595 Kenneth Paris................................ 4,198 * 4,198 -- * PMB # 345 2657 Windmill Parkway Henderson, NV 89014 Terry Pashoian............................... 4,198 * 4,198 -- * 2859 S. Bascom Avenue, #302 Campbell, CA 95008 Patrick Lin.................................. 4,197 * 4,197 -- * 8 Honey Hill Road Orinda, CA 94563 The Community Trust Under the Green Family Trust Under Agreement Dated November 6, 1995....................................... 3,579 * 3,579 -- * 25 Magnolia Drive Atherton, CA 94027 Mark A. Medearis............................. 2,996 * 2,996 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Teresa M. Crummett........................... 2,985 * 2,985 -- * 1999 Green Street, #104 San Francisco, CA 94123 Frank Czyz................................... 2,938 * 2,938 -- * 148 Haverhill Court San Jose, CA 95139 Donald M. Keller, Jr......................... 2,693 * 2,693 -- * 165 James Avenue Atherton, CA 94027 Tae Hea Nahm................................. 2,693 * 2,693 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Tyler Abbott................................. 2,099 * 2,099 -- * 105 Fairmount Street San Francisco, CA 94131 7
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Richard and Brenda Albright.................. 2,099 * 2,099 -- * 2348 Gammay Common Livermore, CA 94550 Murray J. and Alice K. Kurland............... 2,099 * 2,099 -- * 418 Stuart Lane Palatine, IL 60067-6730 David Scher.................................. 2,099 * 2,099 -- * 2200 Nordica Court Las Vegas, NV 84117 Forrest Stamps............................... 2,099 * 2,099 -- * 177 Valdivia Circle San Ramon, CA 94583 Ken and Ann Schwing.......................... 2,098 * 2,098 -- * 2020 Limerick Lane Brookfield, WI 53045 Mark Windfeld-Hansen......................... 2,087 * 2,087 -- * 1040 Parrott Drive Hillsborough, CA 94010 Elias J. Blawie.............................. 1,783 * 1,783 -- * 665 San Mateo Drive Menlo Park, CA 94025 Mark Bennett Weeks........................... 1,481 * 1,481 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 William W. Ericson........................... 1,279 * 1,279 -- * 4750 Carillon Point Kirkland, WA 98033 Steven J. Tonsfeldt.......................... 1,279 * 1,279 -- * 75 Holbrook Lane Atherton, CA 94027 Craig Elliott Sherman........................ 1,078 * 1,078 -- * c/o Venture Law Group 4750 Carillon Point Kirkland, WA 98033 Jeffrey Y. Suto.............................. 1,078 * 1,078 -- * c/o Venture Law Group 2775 Sand Hill Road Menlo Park, CA 94025 Kevin Schwing................................ 1,007 * 1,007 -- * 120 Cameron Street, #CS106 Alexandria, VA 22314 8
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Cathryn S. Chinn............................. 928 * 928 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Sonya F. Erickson............................ 928 * 928 -- * c/o Venture Law Group 4750 Carillon Point Kirkland, WA 98033 Edmund S. Ruffin, Jr......................... 928 * 928 -- * 842 Edgewood Road Redwood City, CA 94062 Glen R. Van Ligten........................... 928 * 928 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Scott Gregory Jower.......................... 637 * 637 -- * 180 Derby Lane Moraga, CA 94556 John V. Bautista............................. 617 * 617 -- * 4 Brady Place Menlo Park, CA 94025 Jon E. Gavenman.............................. 617 * 617 -- * 2061 Camino A Los Cerros Menlo Park, CA 94025 David C. Lee................................. 569 * 569 -- * 1910 Polk Court Mountain View, CA 94040 Michael Andrew Morrissey..................... 569 * 569 -- * 2775 Sand Hill Road Menlo Park, CA 94027 Renee R. Deming.............................. 542 * 542 -- * 309 Walsh Road Atherton, CA 94025 Laura Andrea Gordon.......................... 532 * 532 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Kara Diane Palmer............................ 532 * 532 -- * 1919 E. Blaine Street Seattle, WA 98112 9
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ˇ Enlarge/Download Table SHARES SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO THIS OWNED AFTER OFFERING(1) THIS OFFERING ------------------- SHARES BEING ---------------- NAME AND ADDRESS NUMBER PERCENT SOLD NUMBER PERCENT ---------------- --------- ------- ------------ ------ ------- Christine A. Tomomatsu....................... 532 * 532 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Jon C. Richards.............................. 461 * 461 -- * 1031 Hamilton Avenue Palo Alto, CA 94301 Christopher J. Hurley........................ 268 * 268 -- * 1722 4th Avenue North Seattle, WA 98109 Kate West Rowan.............................. 216 * 216 -- * c/o Venture Law Group 2800 Sand Hill Road Menlo Park, CA 94025 Kenneth D. Cramer............................ 93 * 93 -- * 1648 Eaton Avenue San Carlos, CA 94070 16 other selling stockholders, the aggregate share...................................... 195,755 * 195,755 -- * amount of which is less than 1% of the outstanding common stock prior to the offering(4) ------------------------- * Represents beneficial ownership of less than 1% of our common stock. (1) Percent of shares beneficially owned prior to and after this offering is determined based on 35,907,657 shares outstanding as of June 30, 1999. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The number of shares beneficially owned by a person includes shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of June 30, 1999. Such shares issuable pursuant to such options are deemed outstanding for computing the percentage ownership of the person holding such options but not deemed outstanding for the purposes of computing the percentage ownership of each other person. To our knowledge, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as owned by them, subject to community property laws where applicable and except as indicated in the other footnotes to this table. Unless otherwise indicated, the address of each of the individuals named above is: c/o Beyond.com Corporation, 1195 West Fremont Avenue, Sunnyvale, California 94087. (2) Represents 755,676 shares held by Global Retail Partners, L.P., 52,026 shares held by Global Retail Partners Funding, Inc., 10,295 shares held by Global Retail Partners, Inc., 49,124 shares held by GRP Partners, L.P., 225,173 shares held by DLJ Diversified Partners, L.P., 83,625 shares held by DLJ Diversified Partners-A, L.P., 7,951 shares held by DLJ First ESC L.P. and 5,054 shares held by DLJ ESC II L.P. (3) Represents 56,791 shares of common stock held by UT Capital Partners International, LDC (formerly UH Capital Partners International, LDC), 345,753 shares held by UT Technology Partners, LDC (formerly UH Technology Partners, LDC); 37,747 shares held by Unterberg Harris Private Equity Partners, L.P., 8,063 shares held by Unterberg Harris 10
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Private Equity Partners, CV, 5,769 shares held by C.E. Unterberg Towbin LLC and an aggregate of 25,392 shares held by individuals associated with these entities. (4) Represents 195,755 shares held by 16 stockholders who received such shares in connection with the merger of one of our wholly-owned subsidiaries with and into BuyDirect.com, Inc. and the exchange of all common and preferred stock of BuyDirect.com, Inc. held by them, who, in the aggregate, hold less than 1% of the outstanding common stock prior to this offering. 11
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17,504,129 SHARES BEYOND.COM CORPORATION COMMON STOCK ------------------------- This prospectus relates to 17,504,129 outstanding shares of our common stock that the selling stockholders named in this prospectus may offer from time to time. Of these shares, 4,437,042 shares were issued to holders of BuyDirect.com, Inc.'s common and preferred stock in connection with a transaction whereby one of our wholly-owned subsidiaries merged with and into BuyDirect.com, Inc. We are filing the registration statement of which this prospectus is a part to satisfy our contractual obligations relating to the shares issued in connection with the BuyDirect.com merger, as well as to provide additional holders of up to 13,067,087 outstanding shares of our common stock with freely tradeable securities. The registration of these shares does not necessarily mean that any of the selling stockholders will offer or sell their shares. We are not offering or selling any shares of our common stock pursuant to this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear the expenses of the offering of the common stock, except that the selling stockholders will pay any applicable underwriting fees, discounts or commissions and transfer taxes, as well as the feels and disbursements of his or her counsel and experts. Our common stock is listed for trading on The Nasdaq Stock Market's National Market under the symbol "BYND". On July 29, 1999, the last reported sales price for our common stock on The Nasdaq Stock Market's National Market was $21.00. INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 3. 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 July 30, 1999
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TABLE OF CONTENTS ˇ Download Table PAGE ---- RISK FACTORS........................ 3 BEYOND.COM CORPORATION.............. 22 USE OF PROCEEDS..................... 23 DIVIDEND POLICY..................... 23 SELLING STOCKHOLDERS................ 24 DESCRIPTION OF CAPITAL STOCK........ 29 PLAN OF DISTRIBUTION................ 34 ˇ Download Table PAGE ---- LEGAL MATTERS....................... 35 EXPERTS............................. 35 WHERE YOU CAN FIND MORE INFORMATION....................... 35 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................... 36 ------------------------- YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. INFORMATION CONTAINED IN BEYOND.COM'S WEB SITE DOES NOT CONSTITUTE PART OF THIS DOCUMENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS DOCUMENT. 2
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RISK FACTORS You should carefully consider the risks described below before making a decision to purchase shares of our common stock. If any of the following risks actually occur, our business, financial condition or results of future operations could be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including the risks faced by us described below and elsewhere in this prospectus. WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED NET LOSSES SINCE INCEPTION AND EXPECT FUTURE LOSSES We began selling software on our Web site in November 1994. As a result, we have only a limited operating history upon which you may evaluate our business and prospects. We incurred net losses of $57.5 million from inception of our business through March 31, 1999. As of March 31, 1999, we had an accumulated deficit of $61.2 million. We expect to continue to incur significant net operating losses for the foreseeable future. WE ANTICIPATE SIGNIFICANT LOSSES AND NEGATIVE CASH FLOW We expect significant operating losses and negative cash flow to continue for the foreseeable future. We anticipate our losses will increase significantly from current levels because we expect to incur additional costs and expenses related to: - brand development, marketing and promotion; - Web site content development; - strategic relationship development and maintenance; and - technology and operating infrastructure development, including improved digital download capabilities. In addition, in March 1999 we completed a transaction whereby one of our wholly-owned subsidiaries merged with and into BuyDirect.com, Inc., an online software retailer. As a result of the BuyDirect.com merger, we expect that our losses will increase even more significantly due to additional costs and expenses related to: - increased headcount; - additional facilities and infrastructure; and - assimilation of operations and personnel. In addition, as a result of the BuyDirect.com merger we recorded a significant amount of goodwill, the amortization of which will adversely affect our earnings and profitability for the foreseeable future. We recorded goodwill and other intangible assets as of March 31, 1999 of approximately $136 million, which are being amortized through 2002. We believe it is likely that we will not generate additional earnings sufficient to recover the amount of goodwill and other intangible assets recorded during the period in which they are amortized. 3
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Because we have relatively low gross margins, our ability to become profitable given our planned expenses depends on our ability to generate and sustain substantially higher net revenues. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future. We base our current and future expense levels, which are largely fixed, on our operating plans and estimates of future revenues. We find sales and operating results difficult to forecast, because they generally depend on the volume and timing of the orders we receive. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall. A shortfall in revenues will significantly harm our business and operating results. In view of the rapidly evolving nature of our business, proposed and possible future acquisitions and our limited operating history of selling software online, we have little experience forecasting our revenues. Therefore, we believe that period-to-period comparisons of our financial results are not necessarily meaningful and you should not rely upon them as an indication of our future performance. If we cannot achieve and sustain operating profitability or positive cash flow from operations, we may be unable to meet our debt service obligations or working capital requirements, which would adversely affect our business. OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE Our revenues and operating results may fluctuate significantly from quarter to quarter due to a number of factors, not all of which are in our control. These factors include: - our ability to attract and retain new customers and maintain customer satisfaction; - new Web sites, services and products introduced by us or by our competitors; - price competition; - decreases in the level of growth, use of or consumer acceptance of the Internet and other online services for the purchase of consumer products; - our ability to upgrade and develop our systems and infrastructure and attract new personnel in a timely and effective manner, and our ability to integrate BuyDirect.com's systems and personnel; - traffic levels on our Web site and our ability to convert that traffic into customers; - the amount and timing of operating costs and capital expenditures associated with integrating BuyDirect.com's personnel and operations into our business, including but not limited to, BuyDirect.com's financial obligations under its strategic marketing alliance agreements; - the termination of any strategic marketing alliances such as those we have with America Online, Excite@Home, Network Associates, Yahoo!, CNET, Inc., Xoom.com, ZDNet, a division of ZD, Inc. and other partners pursuant to which we receive exposure to traffic on third-party Web sites; - the termination of contracts with major purchasers, particularly United States government agencies; - technical difficulties or system downtime affecting the Internet or online services, generally, or the operation of our Web site; 4
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- the failure of Internet bandwidth to increase significantly over time and/or an increase in the cost to consumers of obtaining or using Internet bandwidth; - the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure; - the number of popular software titles introduced; - government regulations related to use of the Internet for commerce or sales and distribution of software; and - general economic conditions and economic conditions specific to the Internet, online commerce and the software industry. We must increase software sales through Web sites and online sites by increasing the number of visitors to our online sites or by increasing the percentage of visitors to our online sites who purchase software. We must also increase the number of repeat purchasers of software through our online sites, increase revenues from sales to consumer purchasers and digital download software product sales in absolute dollars and as a percentage of our total net revenues. In addition, we must successfully establish, maintain and enhance the Beyond.com brand. We cannot be certain that we can accomplish these objectives or that our business strategy will be successful. Seasonal fluctuations in the software industry, Internet and commercial online service usage, and traditional retail, government and corporate seasonal spending patterns and advertising expenditures may affect our business. In particular, Internet and online service usage and its rate of growth may decline in the summer. These seasonal patterns may cause quarterly fluctuations in our operating results and could adversely and materially affect our financial performance. Our gross margins are likely to fluctuate over time. A number of factors may impact our gross margins, including: - the mix of revenues from sales to government, corporate, consumer and publisher channels; - the mix of revenues from sales of shrink-wrap products and products delivered through digital download; - the mix of revenues from sales of software products and computer peripheral products (such as joysticks, personal organizers and related products); - the mix of revenues we derive from our relationships with strategic partners such as America Online, Excite@Home, CNET, Network Associates, Xoom, Yahoo! and ZDNet and from our Web site; and - the amount of advertising or promotional revenues we receive. We realize higher gross margins from: - advertising and promotional revenues than from software products sales; - product sales through digital download than from sales of shrink-wrap software products; 5
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- sales of specialty software products than from sales of widely available commodity software products; and - sales to consumer purchasers than from sales to government or corporate purchasers. Any change in one or more of these factors could adversely and materially affect our gross margins and operating results in future periods. Further, we believe that the size of new software products will continue to increase and that they will be suitable for digital download only if network bandwidth increases significantly. This trend may limit our ability to distribute such software products via digital download and may limit our ability to realize the higher gross margins associated with digital download software product sales. Due to the foregoing factors, we believe that quarter-to-quarter comparisons of our operating results are not a good indicator of our future performance. It is likely that in some future quarter our operating results may fall below the expectations of securities analysts and investors. In this event, the trading price of our common stock may fall significantly. WE NEED ADDITIONAL CAPITAL TO PAY DEBT SERVICE ON THE 7 1/4% CONVERTIBLE SUBORDINATED NOTES AND FOR OTHER PURPOSES We require substantial working capital to fund our business. We expect operating losses and negative cash flow to continue for the foreseeable future. We anticipate our existing capital resources will meet our capital requirements through at least the next 12 months from the date of this prospectus. However, we may have additional capital needs before this period ends. Thereafter, we will likely have to raise additional funds, in part to make interest payments to holders of our 7 1/4% Convertible Subordinated Notes, and in part to meet our obligations to America Online, Excite@Home, CNET, Excite, Netscape, Network Associates, Xoom, Yahoo!, ZDNet, and other partners. We may elect to seek additional funds at any time. The actual amount and timing of our future capital requirements may differ materially from our estimates. In particular, our estimates may be inaccurate as a result of changes and fluctuations in our revenues, operating costs and development expenses. Our revenues, operating costs and development expenses will be negatively affected by any inability to: - effectively and efficiently manage the expansion of our operations, including the integration of BuyDirect.com's systems and personnel; - obtain favorable co-branding or Internet marketing agreements with third parties similar to those with America Online, Excite@Home, CNET, Network Associates, Xoom, Yahoo! or ZDNet; - negotiate favorable contracts with suppliers, including large volume discounts on purchases of software; and - improve brand recognition, attract sufficient numbers of customers or increase the volume of our software sales. Our revenues and costs also depend upon factors that we cannot control. These factors include changes in technology and regulations, increased competition and factors such as Web integrity, seasonality, and performance by third parties in connection with our operations. Because of these factors, our actual revenues and costs are uncertain and may vary considerably. These variations may significantly affect our future need for capital. 6
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Also, if we accelerate the expansion of our operations or complete any acquisitions, we will require more funding sooner than we currently expect. We may be unable to raise financing sufficient for our needs, either on suitable terms or at all. This will hinder our ability to satisfy our obligations to holders of our 7 1/4% Convertible Subordinated Notes. This result would substantially harm the trading price of our common stock and materially harm our business. WE ARE SIGNIFICANTLY LEVERAGED AND WE REQUIRE SUBSTANTIAL AMOUNTS OF CAPITAL FOR DEBT SERVICE By selling the 7 1/4% Convertible Subordinated Notes in November and December 1998, we incurred $63,250,000 principal amount of indebtedness. This resulted in a ratio of long-term debt to total capitalization at March 31, 1999 of approximately 23 to 1. Our increased leverage could limit or reduce our ability to obtain financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. We will likely require substantial amounts of cash to fund scheduled payments of principal and interest on our 7 1/4% Convertible Subordinated Notes, future capital expenditures and any increased working capital requirements. We believe we may be unable to meet our cash requirements out of cash flow from operations and available borrowings. We also may be unable to obtain alternative financing. A lack of adequate financing may adversely affect our ability to: - respond to changing business and economic conditions; - make future acquisitions; - absorb negative operating results; or - fund capital expenditures or increased working capital requirements. We could attempt to refinance our 7 1/4% Convertible Subordinated Notes if our cash flow from operations is insufficient to repay them at maturity. However, a refinancing might not be available on terms acceptable to us, or at all. If we fail to make necessary payments on our 7 1/4% Convertible Subordinated Notes, we will be in default under the terms of our 7 1/4% Convertible Subordinated Notes, and may also be in default under agreements controlling our other indebtedness, if any. Any default by us under our 7 1/4% Convertible Subordinated Notes or on other indebtedness could adversely affect our financial condition and operating results. WE MUST ESTABLISH OUR NEW BRAND A growing number of Internet sites, many of which already have well-established brands, offer products and services that compete with ours. As a result, we believe we must establish, maintain and enhance our "Beyond.com" brand. We have been operating under the "Beyond.com" name since August 1998. Our success in promoting and maintaining our new brand or any other brand that we may use in the future will depend largely on our ability to provide a high quality online experience supported by dedicated customer service. We cannot assure that we will be able to meet these goals. In addition, to attract and retain online users and to promote and maintain our new brand or future brands, we may need to substantially increase our marketing expenditures to create and maintain strong brand loyalty among our customers. Our business could be adversely 7
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affected if our marketing efforts are unproductive or if we cannot increase our brand awareness. OUR MARKETS ARE HIGHLY COMPETITIVE The online commerce market is new, rapidly evolving and intensely competitive. We expect competition to intensify in the future because barriers to entry are minimal, and current and new competitors can launch new Web sites at a relatively low cost. In addition, the software reselling industry is intensely competitive. We currently compete primarily with traditional software resellers, other online software resellers and other vendors. In the online market, we compete with many online software resellers and vendors that maintain similar commercial Web sites (including CompUSA, Outpost.com, Egghead.com and Buy.com). We also compete with the growing number of software publishers that sell their software products directly online. We also anticipate that we may soon compete with other software publishers, including Microsoft, that plan to sell their products directly to customers online, and indirect competitors that specialize in online commerce or derive significant revenues from online commerce, including America Online, Amazon.com, barnesandnoble.com, Netscape and Yahoo!. We also compete with: - mail order and/or direct marketers of computer products (including cataloguers such as Micro Warehouse and CDW Computer Centers and manufacturers such as Dell Computer, Compaq Computer Corporation and Gateway 2000 Incorporated); and - major store-based retailers of software and other related products, such as CompUSA, OfficeMax, Staples, Office Depot and Wal-Mart. Further, these traditional store-based retailers and mail order and/or direct marketers of computer products have established or may soon establish, commercial Web sites offering software and computer products. Competitive pressures created by any one of these current or future competitors, or by competitors collectively, could have a material adverse affect on our business. We believe that the principal competitive factors in our market are: - brand recognition; - selection; - convenience; - price; - speed and accessibility; - customer service; - quality of site content; and - reliability and speed of fulfillment. 8
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In addition to those factors, competition in the large enterprise market is also based on: - compatibility of products; - administration and reporting; - single source supply; - security; and - cost-effective deployment. Many of our current and potential competitors have longer operating histories and larger customer bases than we do. In addition, many of our current and potential competitors have greater brand recognition and significantly greater financial, marketing and other resources than we do. In addition, as more people use the Internet and other online services, larger, better established and better financed entities may: - acquire online competitors or software publishers or suppliers; - invest in online competitors or software publishers or suppliers; or - form joint ventures with online competitors or software publishers or suppliers. Certain of our actual or potential competitors, such as Ingram Micro and Tech Data, may be able to: - secure merchandise from vendors on more favorable terms; - devote greater resources to marketing and promotional campaigns; - adopt more aggressive pricing or inventory availability policies; and - devote substantially more resources to web site and systems development than we do. Competitors such as Software Spectrum, Government Technology Services, Inc., ASAP Software Express Inc. and Corporate Software & Technology have greater experience in selling software to the large enterprise market than we do. In addition, new technologies and expansion of existing technologies, such as price comparison programs that select specific titles from a variety of Web sites, may direct customers to online software resellers which compete with us and may increase competition. Increased competition may reduce our operating margins, as well as cause a loss to both our market share and brand recognition. Further, to strategically respond to changes in the competitive environment, we may sometimes make pricing, service or marketing decisions or acquisitions that could materially hurt our business. In addition, companies controlling access to Internet transactions through network access or Web browsers could promote our competitors or charge us a substantial fee for inclusion in their product or service offerings. We cannot assure that we can compete successfully against current and future competitors. Failure to compete successfully against our current and future competitors could materially hurt our business. 9
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WE RELY ON SOFTWARE PUBLISHERS AND DISTRIBUTORS We are entirely dependent upon the software publishers and distributors that supply us with software and computer products for resale, and the availability of these software and computer products is unpredictable. In 1997 and 1998, sales of software provided by Mic