As filed with the Securities and Exchange Commission on November 10, 2004
Registration No. 333-118397
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTERNET COMMERCE CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13-3645702
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
805 Third Avenue
New York, New York 10022
(212) 271-7640
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
THOMAS J. STALLINGS
Chief Executive Officer
INTERNET COMMERCE CORPORATION
805 Third Avenue
New York, New York 10022
(212) 271-7640
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(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to:
GLEN SHIPLEY PETER S. KOLEVZON, ESQ.
Chief Financial Officer Kramer Levin Naftalis & Frankel LLP
Internet Commerce Corporation 919 Third Avenue
6801 Governors Lake Parkway -and- New York, New York 10022-3903
Suite 110 (212) 715-9100
Norcross, GA 30071
678-533-8004
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Approximate date of commencement of proposed sale to the public: at such
time or times after the effective date of this Registration Statement as the
selling stockholders may determine.
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 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, 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. |_|
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to section 8(a), may
determine.
Preliminary Prospectus, Subject to Completion, dated November 10, 2004
INTERNET COMMERCE CORPORATION
This prospectus will be used by selling stockholders to resell all or a
portion of the 1,941,409 shares of our class A common stock issued in connection
with our acquisition of Electronic Commerce Systems, Inc. on June 22, 2004.
Our class A common stock is traded on the Nasdaq SmallCap Market under the
symbol "ICCA." On November 9, 2004, the last sale price for the class A common
stock was $.85. From October 20, 2004 through November 9, 2004, the bid price
for our class A common stock was less than $1.00 per share. If our class A
common stock fails to maintain a minimum bid price of $1.00 for 30 consecutive
trading days, it may no longer be eligible for trading in The Nasdaq SmallCap
Market.
Any selling stockholder may sell the class A common stock on the Nasdaq
SmallCap Market or any other stock exchange, market or other trading facility on
which the shares are traded or in privately negotiated transactions, whenever it
decides and at the price it sets. The price at which any of the shares of class
A common stock are sold and the commissions paid, if any, may vary from
transaction to transaction. We will not receive any proceeds from the sale of
these shares.
This investment involves a high degree of risk. You should carefully
consider the risk factors beginning on page 6 of this prospectus before you
decide to invest.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
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 date of this prospectus is November __, 2004
Important Notice about the Information Presented in this Prospectus
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making an offer
to sell these securities in any jurisdiction where the offer or sale is not
permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date on the front cover of this prospectus only. The
business, financial condition, results of operations and prospects of ICC may
have changed since that date.
TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY...........................................................3
FORWARD LOOKING INFORMATION..................................................5
RISK FACTORS.................................................................6
Risks Relating to ICC......................................................6
Risks Relating to the Internet and Online Commerce
Aspects of Our Business..................................................9
Risks Relating to our Class A Common Stock................................10
RECENT DEVELOPMENTS.........................................................11
USE OF PROCEEDS.............................................................11
DESCRIPTION OF TRANSACTION..................................................11
SELLING STOCKHOLDERS........................................................12
PLAN OF DISTRIBUTION........................................................13
DESCRIPTION OF SECURITIES...................................................14
Common Stock..............................................................14
Preferred Stock...........................................................15
Warrants..................................................................16
Delaware Law and Certificate of Incorporation and Bylaw
Provisions..............................................................17
Transfer Agent and Registrar..............................................18
LEGAL MATTERS...............................................................18
EXPERTS.....................................................................18
WHERE YOU CAN FIND MORE INFORMATION.........................................18
INFORMATION NOT REQUIRED IN PROSPECTUS....................................II-1
SIGNATURES................................................................II-5
EXHIBIT INDEX.............................................................II-6
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you should
consider before purchasing shares of our class A common stock. You should read
the entire prospectus carefully, including Risk Factors beginning on page 6 of
this prospectus, before making an investment decision.
Internet Commerce Corporation
References in this prospectus to "ICC," "we," "us" and "our" refer to
Internet Commerce Corporation and our wholly-owned subsidiaries on a
consolidated basis, unless otherwise stated.
Internet Commerce Corporation uses the Internet for business-to-business
(B2B) e-commerce solutions. Our customers rely on our solutions, expertise and
support to help balance cost, fit and function required to meet their individual
requirements for coordinating communications with their trading partners in
compliance with the specifications of their trading partners. We are a provider
of business-to-business solutions to businesses, regardless of size and level of
technical sophistication. We help enable our customers' strategies to conduct
business electronically.
Organizationally, our operations are comprised of two segments:
o ICC.NET(TM) segment
o Service Bureau segment
These segments are complementary to each other and support our ability to
provide solutions to many different kinds of enterprises, from sole
proprietorships to large corporations, operating in a variety of industries and
business model formats.
ICC combines knowledge of procurement processes, expertise in electronic
data interchange (EDI), and capabilities of the Internet for
business-to-business transaction workflows. By using the Internet for
business-to-business e-commerce solutions, we exploited the Internet's
capabilities to enable trading partners to exchange information just as the
Internet was entering mainstream commerce. We were able to offer e-commerce
solutions with significantly more user benefits at a lower price than the
competition.
Initially, we offered complementary products and services designed to
enable paperless electronic commerce among trading partners. Our flagship
service, the ICC.NET value added network (VAN), was the mechanism to launch and
grow our revenues.
Through July 2000, we were entirely focused on ICC.NET VAN services that
allowed for the secure exchange of business-to-business electronic forms and
data files. Recognizing that the market required a more complete range of
services, we made two acquisitions during fiscal year 2001, as follows:
o We acquired Intercoastal Data Corporation (IDC) in August 2000 for
its service bureau; and
o We acquired Research Triangle Commerce Incorporated (RTCI) in
November 2000 for its professional services.
These acquisitions enabled us to offer a range of services to support
customers seeking to expand their e-commerce trading communities and to bridge
legacy systems to the Internet. With these newly acquired businesses, we were
able to offer complementary services that furthered our image in the industry
and expanded our business model.
In the year ended July 31, 2004, we began to realign our business with the
cessation of a non-profitable service and the investment in a strategic growth
opportunity.
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o We ceased providing our e-commerce and electronic data interchange
education and training services in February 2004.
o We acquired Electronic Commerce Systems, Inc. (ECS) in June 2004 for
its service bureau and software products.
With the ECS acquisition, our focus broadened from selling VAN services
and we expanded our ability to provide e-commerce solutions.
ICC.NET Segment
Network Services. ICC.NET is a complete VAN solution which meets
electronic data interchange requirements in a secure, reliable, available and
flexible environment - all at an affordable price to enable the movement of
information seamlessly and efficiently and expedite transaction processing
regardless of file size, communication protocol or data format.
Managed Services. We offer a wide-range of Managed Services to simplify
business-to-business connectivity, including the management of initiatives and
programs and facilitation of the on-going alignment within business strategies.
Consulting and Professional Services. We offer consulting and professional
services that assist customers with all phases of an e-commerce communication
and connectivity initiative, including planning, analyzing, designing and
constructing solutions.
Service Bureau Segment
EC Service Center. At our EC Service Center, our professionals serve as an
extension of our customers' organizations by performing activities that enable
participation in the extended supply chain, including:
o EDI-to-Fax - We receive our customers' electronic formatted
information, convert it into a fax-readable file and route that
information to our customers' fax machines or email accounts.
o Fax-to-EDI - When the customers are ready to respond, we receive
their information via a fax or email. That information is then
entered into a Web form and transmitted to the trading partner in a
format that is consistent with trading partner specifications.
o Labels - For suppliers who are required to send an Advanced Ship
Notice to comply with retailers' requirements, we generate and print
UCC-128 case labels. Those printed labels are sent to our customers
so they can be applied to the cartons that will be shipped to a
retailer. We also print UPC stickers, tickets and hang tags for our
customers.
o UPC Catalog - We update on-line UPC catalogs for our customers. Once
we have received our customer's electronic or hard-copy product
information, we use that information to generate the necessary EDI
transaction and send it to the catalog service provider. Through
this process, our customer's product information is added, updated
or deleted from the UPC catalog.
Software Solutions. We also offer software solutions that are designed to
enable the management and exchange of vital information between trading partners
and that address a range of requirements for operations within the extended
supply chain. The applications operate on Microsoft Windows computing platforms,
feature "plug-and-play" installation, inter-operate with many pre-packaged
accounting systems and integrate easily to existing processes.
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Hosted Web Applications. We also offer hosted Web applications, giving our
customers an alternative to operating and supervising an electronic data
interchange environment. Simply by accessing a Web browser, our customers have
the technology required to participate in electronic data interchange with their
trading partners.
Global Data Synchronization. At the end of fiscal year 2004, we launched a
solution that leverages the services offered in both our business segments to
capitalize on a supply chain initiative, commonly referred to as Global Data
Synchronization, to eliminate the inefficient and error-prone approaches for
exchanging and updating item information in buyer and seller systems. Our broad
range of solutions to address Global Data Synchronization meet the needs of
customers of all sizes in retail, distribution and manufacturing industries. As
a certified UCCnet(TM) Solution Partner, we have completed a certification
process to ensure standards-compliance, technical expertise, solution
requirements and implementation tasks in accordance with UCCnet standards.
Our principle executive offices are located at 805 Third Avenue, Ninth
Floor, New York, New York 10022, and our telephone number at that location is
212-271-7640. We plan to relocate our executive offices to Atlanta, Georgia in
January 2005.
The Offering
On June 22, 2004, we completed the acquisition of ECS. In accordance with
the terms of the Agreement and Plan of Merger, dated May 25, 2004, ICC
Acquisition Corporation, Inc., a Georgia corporation and our wholly owned
subsidiary, merged with and into ECS and ECS became our wholly owned subsidiary.
We issued a total of 1,941,409 shares of our class A common stock in connection
with the acquisition of ECS, of which 345,183 shares were issued in exchange for
$471,171.59 of outstanding debt ECS owed to certain of its shareholders and in
payment of ECS's legal fees.
This prospectus has been prepared, and the registration statement of which
this prospectus is a part has been filed with the Securities and Exchange
Commission, to satisfy our obligations to the recipients of the shares of class
A common stock we issued in connection with the acquisition of ECS as described
above. Accordingly, this prospectus covers the resale by the selling
stockholders of the 1,941,409 shares of class A common stock issued in
connection with our acquisition of ECS.
Investing in our securities involves risks. You should carefully consider
the information under "Risk Factors" beginning on page 6 of this prospectus and
the other information included in this prospectus before investing in our
securities.
FORWARD LOOKING INFORMATION
This prospectus contains a number of "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Specifically, all statements other than statements
of historical facts included or incorporated in this prospectus by reference
regarding our financial position, business strategy and plans and objectives of
management for future operations are forward-looking statements. These
forward-looking statements are based on the beliefs of management, as well as
assumptions made by and information currently available to management. When used
in this prospectus, including the information incorporated by reference, the
words "anticipate," "believe," "estimate," "expect," "may," "hope," "will,"
"continue" and "intend," and words or phrases of similar import, as they relate
to our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
cautionary statements reflect our current view regarding future events and are
subject to risks, uncertainties and assumptions related to various factors which
include but may not be limited to those listed under the heading Risk Factors
beginning on page 6 of this prospectus and other cautionary statements in this
prospectus and in the information incorporated in this prospectus by reference
Although we believe that our expectations are reasonable, we cannot assure
you that our expectations will prove to be correct. Should any one or more of
these risks or uncertainties materialize, or should any underlying
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assumptions prove incorrect, actual results may vary materially from those
described in this prospectus as anticipated, believed, estimated, expected,
hoped, intended or planned.
RISK FACTORS
You should carefully consider each of the following risk factors in
addition to the other information contained in this prospectus before purchasing
shares of our class A common stock. Investing in our class A common stock
involves a high degree of risk. Any of the following risks could materially and
adversely affect our business, operating results, financial condition and the
market price of our class A common stock and could result in the complete loss
of your investment.
Risks Relating to ICC
We have never earned a profit, may incur losses in the future and cannot
assure that we will be profitable in the future on an operating basis or
otherwise. We have incurred significant losses since we were founded in 1991. We
have never earned a profit in any fiscal quarter and, as of July 31, 2004, we
had an accumulated deficit of approximately $86 million.
Our primary focus has been on growing VAN service. The success of our VAN
service, as well as the success of our other services, depends to a large extent
on the future of business-to-business electronic commerce, our ability to
effectively compete in the marketplace and our ability to earn a profit, each of
which is uncertain. In particular, the success of the VAN service depends on the
number of customers that subscribe to our VAN service, the volume of the data,
documents or other information they send or retrieve utilizing this service and
the price we are able to charge for this service.
Over the past year, the VAN business has become significantly more price
competitive, with major networks restructuring to reduce their overhead and
other costs to better compete against Internet-based networks such as our
ICC.NET service. While we have been successful in maintaining, and in fact have
improved, our margins and we have increased the volume of data transmitted
through our VAN, we have experienced price erosion in competing for larger
customers. Although we expect to continue to add new customers and increase the
volume of data transmitted through our service, we do not expect our revenue
from VAN services to continue to grow as rapidly as in the past. If our revenues
grow at a slower rate than we anticipate, or decrease, and we are unable to
adjust spending in a timely manner or if our expenses increase without
commensurate increases in revenues, our operating results will suffer and we may
not ever achieve profitability.
We acquired ECS in June 2004 and expect to focus more on our Service
Bureau in the future. While we believe that the Service Bureau is approaching
profitability, we cannot be certain that it will ever generate significant
profits.
We may not be able to compete effectively in the business-to-business
electronic commerce market, which could limit our market share and harm our
financial performance. We face a significant number of competitors, ranging from
very large enterprises or divisions of very large companies to a number of
relatively small organizations, including:
o Corporate IT departments of current customers or prospects who are
capable of internal solution development and support;
o Large corporations with broad and diverse offerings, including a
division that offers business-to-business information exchange
services, such as IBM;
o Large e-Commerce business-to-business vendors with a broad array of
offerings, including GXS, Sterling Commerce and Inovis; and
o Small companies developing a core competence in a particular
industry, including companies such as Pubnet in the publishing
industry and Covisint in the automotive industry.
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These competitors are diverse in terms of their histories, business
models, corporate strategies, financial strength, name recognition, company
reputation, customer base and breadth of offerings.
Many of our large competitors have more history, significantly greater
financial resources, larger customer bases and more easily recognized names than
we do. As a result, our competitors may be able to respond more quickly to
changing technology and changes in customer requirements or be able to undertake
more extensive marketing campaigns, adopt more aggressive pricing policies and
make more attractive offers to potential customers and employees, or be able to
devote greater resources to the development, promotion and sale of their
services than we can. As a result, we may not be successful in competing against
our competitors.
The principal competitive factors affecting our market for products and
services are:
o Compliance with industry standards;
o Functionality and features of offerings;
o Level of customer and technical support;
o Price of offerings;
o Reliability, security and availability of services;
o Technical and industry expertise; and
o Vendor and offering reputations.
New competition is emerging in the form of web services networks,
collaborative applications, application service providers, e-marketplaces and
integration broker suites. ICC has enhanced its technologies to communicate with
these AS2-based technologies. As described above, we have developed new product
and service offerings (AS2 and Data Synchronization) to improve our value
proposition; however, there can be no assurance that these new product and
service offerings will compete effectively and generate any significant
revenues. Competitors providing these alternatives include Cyclone Corporation
and Inovis. They offer software solutions that utilize the Internet to transmit
data between trading partners. We believe that the high cost of implementation
and the ongoing costs of supporting a company's trading partners are a barrier
to the wider acceptance of their product offerings in the marketplace.
Our catalog service competes with Quick Response Systems Corporation, or
QRS. QRS and Global eXchange Services have dominated the catalog service
industry for more than ten years, but we believe that our catalog pricing and
functionality may create competitive advantages for our service.
Furthermore, we rely on many of our competitors to interconnect with our
service to promote an "open community" so all businesses can take advantage of
the efficiencies of EDI, no matter what network they choose as their provider.
In September 2001 and April 2002, two of our competitors, GXS and Sterling
Commerce, terminated existing interconnect agreements with us and we made
alternative arrangements to serve our customers.
If we do not keep pace with rapid technological changes, customer demands
and intense competition, we will not be successful. Our market is characterized
by rapidly changing technology, customer demands and intense competition. The
satisfactory performance, reliability and availability of our network
infrastructure, customer support and document delivery systems and our web site
are critical to our reputation and our ability to attract customers and maintain
adequate customer service levels. If we cannot keep pace with these changes, and
maintain the performance and reliability of our network, our ICC.NET VAN service
could become uncompetitive and our business will suffer. The Internet's recent
growth and the intense competition in our industry require us to continue to
develop strategic business and Internet solutions that enhance and improve the
customer service features, functions and responsiveness of our ICC.NET and other
proposed services and that keep pace with continuing changes in information
technology and customer requirements. As indicated above, we have developed new
product and service offerings (AS2 and Data Synchronization) to improve our
value proposition and have incorporated this communication methodology into our
standard network services and are achieving success in stemming a migration of
our customers' network traffic to those who could otherwise purchase an AS2
software offering. Furthermore, we are actively searching for ways to expand our
business and the products and services we offer to keep pace with the rapidly
changing technology, customer demands and intense competition. However, there
can be no assurance that we will be able to keep pace with these changes and if
we are not successful in developing and marketing
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enhancements to our ICC.NET VAN or other proposed services that respond to
technological change or customer demands, our business will suffer.
If we are unable to obtain necessary future capital, our business will
suffer. As of July 31, 2004, we had unrestricted cash in the amount of
approximately $3,790,000. We may need to raise additional funds if competitive
pressures or technological changes are greater than anticipated, if we are
unable to increase revenue at anticipated rates, if our expenses increase
significantly or if our customers delay payment of our receivables. We cannot
assure you that any additional financing will be available on reasonable terms
or at all. Raising additional funds in the future by issuing securities could
adversely affect our stockholders and negatively impact our operating results.
If we raise additional funds through the issuance of debt securities, the
holders of the debt securities will have a claim to our assets that will have
priority over any claim of our stockholders. The interest on these debt
securities would increase our costs and negatively impact our operating results.
If we raise additional funds through the issuance of class A common stock or
securities convertible into or exchangeable for class A common stock, the
percentage ownership of our then-existing stockholders will decrease and they
may experience additional dilution. In addition, any convertible or exchangeable
securities may have rights, preferences and privileges more favorable to the
holders than those of the class A common stock.
Failure of our third-party providers to provide adequate Internet and
telecommunications service could result in significant losses of revenue. Our
operations depend upon third parties for Internet access and telecommunications
service. Frequent or prolonged interruptions of these services could result in
significant losses of revenues. Each of them has experienced outages in the past
and could experience outages, delays and other difficulties due to system
failures unrelated to our online architecture. From the evening of April 6, 2004
until 6:00 a.m. on April 8, 2004, our network lost connectivity to the network
of one of our interconnection service providers because of equipment failure at
the supplier's data center. These types of occurrences could also cause users to
perceive our services as not functioning properly and therefore cause them to
use other methods to deliver and receive information. We have limited control
over these third parties and cannot assure you that we will be able to maintain
satisfactory relationships with any of them on acceptable commercial terms or
that the quality of services that they provide will remain at the levels needed
to enable us to conduct our business effectively.
We may suffer systems failures and business interruptions that would harm
our business. Our success depends in part on the efficient and uninterrupted
operation of our service which is required to accommodate a high volume of
traffic. Almost all of our network operating systems are located at the
Securities Industry Automation Corporation, or SIAC. SIAC runs all computing
operations for the New York Stock Exchange and the American Stock Exchange. Our
systems are vulnerable to events such as damage from fire, power loss,
telecommunications failures, break-ins and earthquakes. This could lead to
interruptions or delays in our service, loss of data or the inability to accept,
transmit and confirm customer documents and data. Our business may suffer if our
service is interrupted. Although we have implemented network security measures,
our servers may be vulnerable to computer viruses, electronic break-ins,
attempts by third parties deliberately to exceed the capacity of our systems and
similar disruptions.
If we are unable to manage our growth, our financial results will suffer.
Our ability to implement our business plan successfully in a new and rapidly
evolving market requires effective planning and growth management. If we cannot
manage our anticipated growth effectively, our business and financial results
will suffer. We expect that we will need to continue to manage and to expand
multiple relationships with customers, Internet service providers and other
third parties. We also expect that we will need to continue to improve our
financial systems, procedures and controls and will need to expand, train and
manage our workforce, particularly our information technology and sales and
marketing staffs.
If we lose our net operating loss carryforward of approximately $78.5
million, our financial results will suffer. Section 382 of the Internal Revenue
Code contains rules designed to discourage persons from buying and selling the
net operating losses of companies. These rules generally operate by focusing on
ownership changes among stockholders owning directly or indirectly 5% or more of
the common stock of a company or any change in ownership arising from a new
issuance of stock by a company. In general, the rules limit the ability of a
company to utilize net operating losses after a change of ownership of more than
50% of its common stock over a three-year period. Purchases of our class A
common stock in amounts greater than specified levels could inadvertently create
a
8
limitation on our ability to utilize our net operating losses for tax purposes
in the future. We are currently subject to a limitation on the utilization of
our net operating loss carryforward.
If we cannot successfully expand our business outside of the United
States, our revenues and operating results will be adversely affected. Our
current and future customers are conducting their businesses internationally. As
a result, one component of our business strategy is to expand our international
marketing and sales efforts and if we do not successfully expand our business in
this way, we may lose current and future customers.
If we cannot hire and retain highly qualified employees, our business and
financial results will suffer. We are substantially dependent on the continued
services and performance of our executive officers and other key employees. If
we are unable to attract, assimilate and retain highly qualified employees, our
management may not be able to effectively manage our business, exploit
opportunities and respond to competitive challenges and our business and
financial results will suffer. Many of our competitors may be able to offer more
lucrative compensation packages and higher-profile employment opportunities than
we can.
We depend on our intellectual property, which may be difficult and costly
to protect. If we fail to adequately protect our proprietary rights, competitors
could offer similar products relying on technologies we developed, potentially
harming our competitive position and decreasing our revenues. We attempt to
protect our intellectual property rights by limiting access to the distribution
of our software, documentation and other proprietary information and by relying
on a combination of patent, copyright, trademark and trade secret laws. In
addition, we enter into confidentiality agreements with our employees and
certain customers, vendors and strategic partners. In some circumstances,
however, we may, if required by a business relationship, provide our licensees
with access to our data model and other proprietary information underlying our
licensed applications.
Despite the precautions we take, it may be possible for unauthorized third
parties to copy aspects of our current or future products or to obtain and use
information that we regard as proprietary. Policing unauthorized use of software
is difficult, and some foreign laws do not protect proprietary rights to the
same extent as United States laws. Litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others, any of
which could be costly and adversely affect our operating results.
Intellectual property infringement claims against us could harm our
business. Our business activities and our ICC.NET service may infringe upon the
proprietary rights of others and other parties may assert infringement claims
against us. Any such claims and any resulting litigation could subject us to
significant liability for damages and could invalidate our proprietary rights.
We could be required to enter into royalty and licensing agreements, which may
be costly or otherwise burdensome or which may not be available on terms
acceptable to us.
Risks Relating to the Internet and Online Commerce Aspects of Our Business
If Internet usage does not continue to grow or if its infrastructure
fails, our business will suffer. If the Internet does not gain increased
acceptance for business-to-business electronic commerce, the growth of our
business will be adversely affected. We cannot be certain that the
infrastructure or complementary services necessary to maintain the Internet as a
useful and easy means of transferring documents and data will continue to
develop. The Internet infrastructure may not support the demands that growth may
place on it and the performance and reliability of the Internet may decline.
Privacy concerns may prevent customers from using our services. Concerns
about the security of online transactions and the privacy of users may inhibit
the growth of the Internet as a means of delivering business documents and data.
We may need to incur significant expenses and use significant resources to
protect against the threat of security breaches or to alleviate problems caused
by security breaches. We rely upon encryption and authentication technology to
provide secure transmission of confidential information. If our security
measures do not prevent security breaches, we could suffer operating losses,
damage to our reputation, litigation and possible liability. Advances in
computer capabilities, new discoveries in the field of cryptography or other
developments that render current encryption technology outdated may result in a
breach of our encryption and authentication technology and could enable an
outside party to steal proprietary information or interrupt our operations.
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Government regulation and legal uncertainties relating to the Internet
could harm our business. Changes in the regulatory environment in the United
States and other countries could decrease our revenues and increase our costs.
The Internet is largely unregulated and the laws governing the Internet remain
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws such as those governing
intellectual property, privacy and taxation apply to the Internet. In addition,
because of increasing popularity and use of the Internet, any number of laws and
regulations may be adopted in the United States and other countries relating to
the Internet or other online services covering issues such as:
o user privacy;
o security;
o pricing and taxation;
o content; and
o distribution.
Costs of transmitting documents and data could increase, which would harm
our business and operating results. The cost of transmitting documents and data
over the Internet could increase. We may not be able to increase our prices to
cover these rising costs. Also, foreign and state laws and regulations relating
to the provision of services over the Internet are still developing. If
individual states or foreign countries impose taxes or laws that negatively
impact services provided over the Internet, our cost of providing our ICC.NET
and other services may increase.
Risks Relating to our Class A Common Stock
Trading of our class A common stock is volatile. The closing price of our
class A common stock has been very volatile in the past, ranging from a high of
$2.55 to a low of $0.80 between January 1, 2003 and the date of this prospectus,
and is likely to fluctuate substantially in the future. From October 20, 2004
through November 9, 2004, the bid price for our class A common stock was less
than $1.00 per share. If our class A common stock fails to maintain a minimum
bid price of $1.00 for 30 consecutive trading days, it may no longer be eligible
for trading in The Nasdaq SmallCap Market.
Shares eligible for future sale by our existing stockholders may adversely
affect our stock price and may render it difficult to sell class A common stock.
Between January 1, 2003 and October 2004, we registered on one or more
registration statements, an aggregate of 9,897,817 shares of our class A common
stock, which includes 3,016,917 shares of class A common stock issuable upon the
exercise of warrants to purchase shares of class A common stock and 192,307
shares of class A common stock issuable upon conversion of our series D
preferred stock. The market price of our class A common stock could be
materially and adversely affected by sales of even a small percentage of these
shares or the perception that these sales could occur.
The market for our class A common stock may be illiquid, which would
restrict the ability to sell shares of class A common stock. Our class A common
stock is trading on the Nasdaq SmallCap Market. It is possible that the trading
market for the class A common stock in the future will be thin and illiquid,
which could result in increased volatility in the trading prices for our class A
common stock. The price at which our class A common stock will trade in the
future cannot be predicted and will be determined by the market. The price may
be influenced by many factors, including investors' perceptions of our business,
our financial condition, operating results and prospects, the use of the
Internet for business purposes and general economic and market conditions.
Our board of directors can issue preferred stock with rights adverse to
the holders of class A common stock. Our board of directors is authorized,
without further stockholder approval, to determine the provisions of and to
issue up to 4,979,575 shares of preferred stock. Issuance of preferred shares
with rights to dividends and other distributions, voting rights or other rights
superior to the class A common stock could be adverse to the holders of class A
common stock. In addition, issuance of preferred shares could have the effect of
delaying, deterring or preventing an unsolicited change in control of our
company, or could impose various procedural and other requirements that could
make it more difficult for holders of our class A common stock to effect certain
corporate actions, including the replacement of incumbent directors and the
completion of transactions opposed by the incumbent Board of Directors. The
rights of the holders of our class A common stock would be
10
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. We are also subject to Section
203 of the Delaware General Corporation Law, which prohibits us from engaging in
a business combination with any "interested" stockholder (as defined in Section
203) for a period of three years from the date the person becomes an interested
stockholder, unless certain conditions are met.
We may have to use significant resources indemnifying our officers and
directors or paying for damages caused by their conduct. The Delaware General
Corporation Law provides for broad indemnification by corporations of their
officers and directors and permits a corporation to exculpate its directors from
liability for their actions. Our bylaws and certificate of incorporation
implement this indemnification and exculpation to the fullest extent permitted
under this law as it currently exists or as it may be amended in the future.
Consequently, subject to this law and to some limited exceptions in our
certificate of incorporation, none of our directors will be liable to us or to
our stockholders for monetary damages resulting from conduct as a director.
RECENT DEVELOPMENTS
On June 22, 2004, we announced the completion of our acquisition of ECS.
See "The Offering".
On March 31, 2004, we announced a restructuring of our senior management.
Mr. G. Michael Cassidy was appointed Chairman and President, Mr. Thomas J.
Stallings was appointed Chief Executive Officer and Mr. Arthur R. Medici was
appointed Chief Operating Officer. On June 14, 2004, Mr. Stallings was appointed
to our Board of Directors. We also announced that our Board of Directors had
accepted the resignation of Walter M. Psztur, our Chief Financial Officer.
Michael Piccininni, our Corporate Controller, was appointed to fulfill the
responsibilities of Chief Financial Officer while we searched for a new Chief
Financial Officer. On October 14, 2004, Mr. John S. Simon, formerly a director
of ECS, was appointed to our Board of Directors. On November 1, 2004, Mr. Glen
Shipley was appointed Chief Financial Officer.
USE OF PROCEEDS
The selling stockholders are selling all the shares of class A common
stock covered by this prospectus for their own account. We will not receive any
proceeds from the sale of shares of class A common stock by the selling
stockholders.
DESCRIPTION OF TRANSACTION
On June 22, 2004, we completed our acquisition of Electronic Commerce
Systems, Inc., a Georgia corporation. In accordance with the terms of the
Agreement and Plan of Merger, dated May 25, 2004, ICC Acquisition Corporation,
Inc., a Georgia corporation and our wholly owned subsidiary, merged with and
into ECS and ECS became our wholly owned subsidiary. We issued a total of
1,941,409 shares of our class A common stock in connection with the acquisition
of ECS, of which 345,183 shares were issued in exchange for $471,171.59 of
outstanding debt ECS owed to certain of its shareholders and in payment of ECS's
legal fees.
We entered into a registration rights undertaking dated as of June 22,
2004 in favor of the recipients of the shares of class A common stock we issued
in connection with the acquisition of ECS as described above. Pursuant to the
registration rights undertaking, we agreed to file with the SEC a registration
statement covering the resale of all of these shares of class A common stock.
Accordingly, we filed a registration statement on Form S-3, of which this
prospectus forms a part, with respect to the resale of these shares from time to
time. In addition, we agreed to use our commercially reasonable efforts to cause
the registration statement to be declared effective under the Securities Act by
December 17, 2004, and to use our commercially reasonable efforts to keep the
registration statement effective until June 22, 2005, unless the shares of our
class A common stock issued in connection with our acquisition of ECS and
covered by this prospectus have been sold and the distribution of the shares has
been completed.
11
SELLING STOCKHOLDERS
The table below sets forth information regarding the beneficial ownership
of the shares of class A common stock by the selling stockholders. As used
herein, "selling stockholders" includes donees and pledgees selling shares of
class A common stock received from the persons or entities listed below after
the date of this prospectus.
Number of Number of
Shares of Shares of Class A Common Stock
Class A Class A Beneficially Owned
Common Stock Common After Offering (1)
Beneficially Owned Stock -------------------
Selling Stockholders Before Offering Offered Number Percent*
-------------------- --------------- --------- ------ --------
Laura and Thomas Beien 737 737 0 *
John Bell 295,575 295,575 0 *
William Bishop 3,685 3,685 0 *
Randal E. Brauchler 16,654 16,654 0 *
Ron L. Braund 11,496 11,496 0 *
Fletcher Bright 10,317 10,317 0 *
The Bristol Company (2) 447,818 447,818 0 *
Mark Brunn 1,916 1,916 0 *
Betty C. Burton 2,911 2,911 0 *
Sondril Cook 2,948 2,948 0 *
Danny Cox 4,004 4,004 0 *
Marietta Gandy 19,712 19,712 0 *
The Gandy Family LLLP 11,053 11,053 0 *
Ernest Grant 885 885 0 *
John L. Herbert, Jr. 7,369 7,369 0 *
Johnny League 3,193 3,193 0 *
Michael Loia 22,106 22,106 0 *
Brandy Partridge McCorsley 74 74 0 *
W. Alexander McDaniel 369 369 0 *
John H. McDonald 642,057 642,057 0 *
Dorothy Megel 36,844 36,844 0 *
Paul Miller 148 148 0 *
Russ Neal 22,106 22,106 0 *
Timothy J. O'Neill 254,110 254,110 0 *
Laura Pearson 737 737 0 *
Reliance Trust Company c/u/a FBO: Thomas
J. Haas, III, IRA 14,738 14,738 0 *
Brian K. Sass 737 737 0 *
John S. Simon (3) 4,422 4,422 0 *
Jacinda Taylor 74 74 0 *
Al Tetrault 1,474 1,474 0 *
Alan Windsor 3,685 3,685 0 *
Nicholas R. Wreden, III 28,178 28,178 0 *
Robert Yancy 6,632 6,632 0 *
- ---------------------
* Constitutes less than 1%.
(1) Assumes that all shares of class A common stock covered by the prospectus
are sold in the offering.
(2) Mr. Donald R. Harkleroad, the President and owner of The Bristol Company,
was appointed a Director of ICC on June 22, 2004, to serve until the next
annual meeting of stockholders.
(3) Mr. Simon was appointed a Director of ICC on October 14, 2004, to serve
until the next annual meeting of stockholders.
12
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of class A common stock covered by this prospectus on any stock exchange, market
or trading facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. The selling stockholders may
use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker/dealer solicits purchasers;
o block trades in which the broker/dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker/dealer as principal and resale by the
broker/dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o put or call options transactions;
o settlement of short sales;
o broker/dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker/dealers engaged by the selling stockholders may arrange for other
brokers/dealers to participate in sales. Broker/dealers may receive commissions
from the selling stockholders (or, if any broker/dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions to exceed what is customary
in the types of transactions involved.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling
stockholders to include the donee, pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
The selling stockholders and any broker/dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker/dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions under the Securities Act. Each selling stockholder has informed us
that it does not have any agreement or understanding, directly or indirectly,
with any person to distribute the shares of class A common stock covered by this
prospectus.
At the time a particular offering of securities is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase
13
price paid by any underwriters for securities purchased from the selling
stockholders, any discounts, commissions and other items constituting
compensation from the selling security holders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers.
Pursuant to applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the securities offered hereby may not
simultaneously engage in market activities for the shares of common stock for a
period of five business days prior to the commencement of such distribution. In
addition, each selling stockholder and any other person who participates in a
distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M.
These provisions may limit the timing of purchases and may affect the
marketability of the securities and the ability of any person to engage in
market activities for the shares of class A common stock.
We are required to pay all fees and expenses incident to the registration
of the shares of class A common stock covered by this prospectus. We and the
selling stockholders have agreed to indemnify each other or against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.
DESCRIPTION OF SECURITIES
The following summary description of the material terms of our capital
stock and warrants is not intended to be complete. The terms of our capital
stock are also governed by the provisions of our certificate of incorporation
and bylaws, which are included as exhibits to the registration statement of
which this prospectus is a part, and the Delaware General Corporation Law. You
should read our certificate of incorporation and bylaws very carefully. Some of
the relevant provisions of our certificate of incorporation and bylaws and the
Delaware General Corporation Law are discussed under the heading "Delaware Law
and Certificate of Incorporation and Bylaw Provisions" beginning on page 17 of
this prospectus.
We have the authority to issue up to 40,000,000 shares of class A common
stock, 2,000,000 shares of class B common stock and 5,000,000 shares of
preferred stock.
Common Stock
Class A common stock
As of October 31, 2004, there were 19,057,230 shares of class A common
stock outstanding, held of record by approximately 231 stockholders. The class A
common stock is currently trading on the Nasdaq SmallCap Market under the symbol
"ICCA."
Holders of class A common stock are entitled to one vote per share on all
matters to be voted on by our common stockholders. Subject to the preferences of
the preferred stock, the holders of class A common stock are entitled to a
proportional distribution of any dividends that may be declared by the board of
directors, provided that if any distributions are made to the holders of class A
common stock, identical per-share distributions must be made to the holders of
the class B common stock, even if the distributions are in class A common stock.
In the event of a liquidation, dissolution or winding up of ICC, the holders of
class A common stock are entitled to share equally with holders of the class B
common stock in all assets remaining after liabilities and amounts due to
holders of preferred stock have been paid in full or set aside. Class A common
stock has no preemptive, redemption or conversion rights. The rights of holders
of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of series C preferred stock and series D preferred stock
or any other series of preferred stock that ICC may designate and issue in the
future.
Class B common stock
There are no shares of class B common stock outstanding, and we do not
intend to issue any shares of Class B common stock. The class B common stock is
identical to the class A common stock, except that each share of class B common
stock is entitled to six votes.
14
Preferred Stock
Our certificate of incorporation authorizes our board of directors,
without any approval of our stockholders, to issue up to 5,000,000 shares of
preferred stock from time to time and in one or more series and to fix the
number of shares of any series and the designation, conversion, dividend,
liquidation preference and other rights of the series. The board of directors
has designated 10,000 shares of preferred stock as series A preferred stock, 175
shares of preferred stock as series S preferred stock, 10,000 shares of
preferred stock as series C preferred stock and 250 shares of preferred stock as
series D preferred stock. No shares of series A preferred stock or series S
preferred stock are outstanding and the Board of Directors does not intend to
authorize the issuance of any of these shares.
Future issuances of preferred stock may have the effect of delaying or
preventing a change in control of ICC. The issuance of preferred stock could
decrease the amount of earnings and assets available for distribution to the
holders of common stock or could adversely affect the rights and powers,
including voting rights, of the holders of our common stock. In some
circumstances, the issuance of preferred stock could have the effect of
decreasing the market price of our common stock.
Series C Preferred Stock
As of October 31, 2004, ICC had 10,000 shares of series C preferred stock
outstanding, held by one stockholder.
Series C preferred stock is convertible, at the option of the holder, into
class A common stock. Each share of series C preferred stock is convertible into
a number of shares of class A common stock determined by dividing $1,000 by the
conversion price at the date of conversion. The conversion price for the series
C preferred stock is $22.34 per share, which is subject to adjustment in the
case of a reclassification, subdivision or combination of ICC's common stock and
upon a consolidation, merger or sale of substantially all of the assets of ICC.
Series C preferred stock is redeemable, in whole or in part, by ICC,
commencing on January 5, 2005. The redemption price for each share of series C
preferred stock is $1,000 plus unpaid dividends. Notice of redemption must be
given not less than fifteen days nor more than 45 days before the redemption
date.
Upon a liquidation, dissolution or winding up of ICC, the holder of series
C preferred stock is entitled to receive an amount equal to $1,000 per share of
series C preferred stock plus unpaid dividends before any distribution is made
to holders of common stock or any other class or series of stock (including the
series D preferred stock).
The holder of the outstanding shares of series C preferred stock is
entitled to a 4% annual dividend payable in cash or in shares of class A common
stock (valued at the then market price of the class A common stock), at the
option of ICC. These dividends are payable on each January 1 and commenced on
January 1, 2001. ICC elected to issue 111,142 shares of class A common stock in
payment of the dividend due on January 1, 2001, 98,839 shares of class A common
stock in payment of the dividend due on January 1, 2002, 302,343 shares of class
A common stock in payment of the dividend due on January 1, 2003 and 361,702
shares of class A common stock in payment of the dividend due on January 1,
2004. On October 14, 2004, the Board of Directors declared a dividend of
$400,000 on the series C preferred stock payable on January 1, 2005 in shares of
class A common stock.
Each share of series C preferred stock is entitled to a number of votes
equal to the number of whole shares of common stock into which each share of
series C preferred is convertible as of the record date for the determination of
stockholders entitled to vote on any matter submitted to stockholders. As of the
date of this prospectus, each share of series C preferred stock is entitled to
approximately 44.76 votes.
Series D Preferred Stock
As of October 31, 2004, ICC had 250 shares of series D preferred stock
outstanding, held by one stockholder.
15
Series D preferred stock is convertible, at the option of the holder, into
class A common stock. Each share of series D preferred stock is convertible into
a number of shares of class A common stock determined by dividing $1,000 by the
conversion price at the date of conversion. The conversion price for the series
D preferred stock is $1.30 per share, which is subject to adjustment in the case
of a reclassification, subdivision or combination of ICC's common stock and upon
a consolidation, merger or sale of substantially all of the assets of ICC.
Subject to the existence of certain conditions, the series D preferred
stock is redeemable, in whole or in part, by ICC, commencing on the day that is
the second anniversary after the first date on which the series D preferred
stock is issued. The redemption price for each share of series D preferred stock
is $1,000 plus all accrued by unpaid dividends. Notice of redemption must be
given not less than fifteen days nor more than 45 days before the redemption
date.
Upon a voluntary or involuntary liquidation, dissolution, reorganization
or winding-up of ICC, the holder of series D preferred stock are entitled to
receive an amount equal to $1,000 per share of series D preferred stock plus
accrued and unpaid dividends before any distribution is made to holders of class
A common stock and any issued class of securities ranking junior in liquidation
preference to the series D preferred stock but after provision for the holders
of series C preferred stock.
The holder of the outstanding shares of series D preferred stock is
entitled to a dividend when and if declared by the Board of Directors.
Each share of series D preferred stock is entitled to a number of votes
equal to the number of whole shares of class A common stock into which each
share of series D preferred is convertible as of the record date for the
determination of stockholders entitled to vote on any matter submitted to
stockholders. As of the date of this prospectus, each share of series D
preferred stock is entitled to approximately 769 votes.
Warrants
In connection with our strategic global alliance with Cable & Wireless
plc, we issued to Cable & Wireless warrants to purchase 400,000 shares of our
class A common stock. Each of these warrants entitles the holder upon exercise
to purchase one share of class A common stock for $22.21 per share and expires
in January 2005. The number and exercise price of these warrants are subject to
appropriate adjustment in the event of any stock dividend, subdivision or
combination of the outstanding class A common stock. As of the date of this
prospectus, all of these warrants were outstanding.
On October 29, 2001, we sold in a private placement 1,159,716 shares of
class A common stock and warrants to purchase 347,915 additional shares of class
A common stock for gross proceeds of $3,189,219. The warrants expire in October
2006 and are exercisable at $3.58 per share. The warrants are redeemable at our
option for $.10 per warrant commencing in April 2003 if the closing bid price of
our class A common stock is at least 200% of the exercise price of the warrants
for 30 consecutive trading days. In connection with the private placement, we
incurred fees of $152,111, of which $35,000 was paid in cash and $117,511 was
paid by issuing warrants to purchase 50,000 shares of class A common stock.
These warrants have substantially the same terms as the warrants issued in the
October 2001 private placement.
We commenced a warrant exchange offer on April 23, 2002 that ended on May
31, 2002. The offer was made to investors who participated in the private
placement on October 29, 2001 and to holders of warrants issued as fees in
connection with the private placement. The offer reduced the exercise price of
the warrants issued in the private placement to $2.50 per share for those
investors that agreed to exercise those warrants. In addition, for each share of
class A common stock purchased pursuant to the warrant exercise, a new five-year
warrant to purchase an equivalent number of shares of class A common stock was
issued. These warrants have an exercise price of $3.50 per share and otherwise
contain the same terms as the warrants issued in the private placement. We
received $659,288 in proceeds and issued a total of 263,715 shares of class A
common stock and warrants to purchase the same number of shares of class A
common stock.
16
On July 11, 2002, we entered into a settlement agreement with ING Merger,
LLC and ING Capital, LLC, a wholly-owned subsidiary of ING Merger, pursuant to
which, we issued to ING Capital warrants to purchase 60,000 shares of class A
common stock at an exercise price of $3.58 per share in settlement of
outstanding fees owed to ING Barings LLC. The warrants are exercisable for a
five-year period. We may redeem the warrants, at our option, if the closing bid
price of the class A common stock exceeds 200% of the exercise price for a
period of 30 consecutive trading days and if the shares of stock deliverable
upon exercise may be sold in whole. The redemption price is ten cents per
warrant.
On April 30, 2003 and May 1, 2003, we sold in a private placement
1,682,683 shares of our class A common stock, warrants to purchase an aggregate
of 1,499,985 shares of our class A common stock at an exercise price per share
of $1.47 and 250 shares of our Series D Preferred Stock, resulting in gross
proceeds of approximately $2,085,500. In addition, we issued 48,076 shares of
class A common stock and warrants to purchase 38,460 shares of our class A
common stock at an exercise price per share of $1.47 in settlement of certain
outstanding payables valued at $50,000, the invoice amount of the services
provided. The Series D Preferred Stock is initially convertible into 192,307
shares of class A common stock. The warrants are exercisable until the fifth
anniversary of the date of issuance. In addition, the warrants are redeemable at
our option for $.10 per warrant commencing on the date the warrants were issued
if the closing bid price of our class A common stock exceeds 200% of the
exercise price of the warrants for 30 consecutive trading days. In addition, in
connection with the private placement that closed on April 30, 2003 and May 1,
2003, we incurred fees of $325,750, of which $237,938 was payable in cash and
$87,802 was paid by issuing warrants to purchase 110,680 shares of class A
common stock. These warrants have substantially the same terms as the warrants
issued in the private placement referred to in this paragraph.
On May 30, 2003, we executed an accounts receivable financing agreement
with Silicon Valley Bank with a term of 1 year, which was extended to August 31,
2004 and then to December 29, 2004. In connection with the financing agreement,
we issued to Silicon Valley Bank warrants to purchase 40,000 shares of our class
A common stock. The warrants are immediately exercisable at an exercise price of
$1.39 per share, equal to the fair market value of our class A common stock on
the date of closing of the financing agreement. The warrants are exercisable for
a seven-year period.
On April 20, 2004, we completed a private placement of 2,831,707 shares of
our class A common stock and warrants to purchase an aggregate of 849,507 shares
of our class A common stock. The private placement resulted in net proceeds to
us of approximately $4,500,000. The warrants are exercisable for 5 years,
commencing on October 20, 2004, at $2.22 per share, subject to appropriate
adjustment for stock splits, combinations and dividends. In addition, in
connection with the private placement, we paid fees of $396,439 in cash and
issued warrants to purchase up to 283,170 shares of our Class A common stock.
These warrants have substantially the same terms as the warrants issued in the
private placement referred to in this paragraph.
Delaware Law and Certificate of Incorporation and Bylaw Provisions
The following is a summary description of some material provisions of the
Delaware General Corporation Law and our certificate of incorporation and
bylaws. For further information you should refer to our certificate of
incorporation and bylaws.
We must comply with the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 prohibits a publicly-held Delaware corporation from
engaging in a business combination with an interested stockholder for three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A business combination includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. An interested
stockholder is generally a person who, together with affiliates and associates,
owns, or within the past three years did own, 15% of the corporation's voting
stock.
There are provisions in our certificate of incorporation, our bylaws and
Delaware law that make it more difficult for a third party to obtain control of
ICC, even if doing so would be beneficial to our stockholders. This could
depress our stock price. However, these provisions enhance the likelihood of
continuity and stability in the composition of the policies formulated by our
board of directors. In addition, these provisions are intended to ensure that
the board of directors will have sufficient time to act in what it believes to
be in the best interests of ICC
17
and its stockholders. These provisions also are designed to reduce our
vulnerability to an unsolicited takeover proposal that does not contemplate the
acquisition of all of our outstanding shares or an unsolicited proposal for the
restructuring or sale of all or part of ICC. The provisions are also intended to
discourage some tactics that may be used in proxy fights.
Classified Board of Directors. Our board of directors is divided into
three classes of directors. The classes serve staggered three-year terms. One
class of directors is elected each year to serve a three-year term. The
classified board provision will help to assure the continuity and stability of
the board of directors and our business strategies and policies as determined by
the board of directors. The classified board provision could have the effect of
discouraging a third party from making a tender offer for our shares or
attempting to obtain control of ICC. In addition, the classified board provision
could delay stockholders who do not agree with the policies of the board of
directors from replacing a majority of the board of directors for two years.
Exculpation and Indemnification. We have included in our certificate of
incorporation and bylaws provisions to (1) eliminate the personal liability of
our directors for monetary damages resulting from breaches of their fiduciary
duty to the extent permitted by the Delaware General Corporation Law, and (2)
indemnify our directors and officers to the fullest extent permitted by the
Delaware General Corporation Law, including circumstances in which
indemnification is discretionary.
We believe that these provisions are necessary to attract and retain
qualified persons as directors and officers.
Transfer Agent and Registrar
The transfer agent and registrar for our class A common stock is American
Stock Transfer and Trust Company.
LEGAL MATTERS
The legality of the shares of class A common stock being offered by this
prospectus has been passed upon by Kramer Levin Naftalis & Frankel LLP, New
York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedules, incorporated in this prospectus by reference from Internet Commerce
Corporation's Annual Report on Form 10-K dated October 29, 2004, which contain
the consolidated financial statements for the year ended July 31, 2004, have
been audited by Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their report (which report expresses an
unqualified opinion and includes an explanatory paragraph referring to our
adoption of the provisions of Statement of Financial Accounting Standards (SFAS)
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets," effective August 1, 2001), which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Electronic Commerce Systems,
Inc., as of and for the year ended December 31, 2003, incorporated in this
prospectus by reference from Internet Commerce Corporation's Current Report on
Form 8-K/A dated August 17, 2004, have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Government Filings. We file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC's web site at
18
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the SEC's public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We have filed with the SEC a registration statement on form S-3 to
register the shares of class A common stock to be offered. This prospectus is
part of that registration statement and, as permitted by the SEC's rules, does
not contain all the information included in the registration statement. For
further information about us and our class A common stock, you should refer to
that registration statement and to the exhibits and schedules filed as part of
that registration statement, as well as the documents we have incorporated by
reference which are discussed below. You can review and copy the registration
statement, its exhibits and schedules, as well as the documents we have
incorporated by reference, at the public reference facilities maintained by the
SEC as described above. The registration statement, including its exhibits and
schedules, are also available on the SEC's web site, given above.
o Stock Market. Shares of our class A common stock are traded on the
Nasdaq SmallCap Market.
o Information Incorporated by Reference. The SEC allows us to
incorporate by reference the information we file with it, which
means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below
and any further filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, until this offering has been
completed:
(a) Our Annual Report on Form 10-K for the year ended July 31,
2004;
(b) Our Current Report on Form 8-K dated November 2, 2004;
(c) Our Current Report on Form 8-K/A dated August 17, 2004; and
(d) The description of our class A common stock contained in our
Rule 424 prospectus filed with the SEC on July 18, 1995,
including any amendments or reports filed for the purpose of
updating the description. See also "Description of Securities"
beginning on page 14 of this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
(212) 271-7640
Attn: Victor Bjorge
19
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the distribution of the securities covered by this Registration Statement. All
of the expenses will be borne by ICC except as otherwise indicated.
SEC Registration Fee (actual)...................................$ 268.11
Printing and engraving fees and expenses........................$ 2,000.00
Legal fees and expenses.........................................$20,000.00
Accounting fees and expenses....................................$10,000.00
Miscellaneous...................................................$ 2,731.89
Total...........................................................$35,000.00
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, or
the DGCL, provides that a corporation may indemnify directors and officers as
well as other employees and individuals against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement in connection with
specified actions, suits, proceedings whether civil, criminal, administrative,
or investigative, other than action by or in the right of the corporation, known
as a derivative action, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses, including attorneys' fees, incurred in connection with the
defense or settlement of the action, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
certificate of incorporation, bylaws, disinterested director vote, stockholder
vote, agreement or otherwise. Section 145 thus makes provision for
indemnification in terms sufficiently broad to cover officers and directors,
under certain circumstances, for liabilities arising under the Securities Act.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders 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 corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payment of unlawful dividends or unlawful
stock purchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
Article VII of our bylaws and Article Seventh of our Amended and Restated
Certificate of Incorporation, as further amended, both provide that we shall
indemnify, to the fullest extent permitted by Section 145 of the DGCL, each
person that Section 145 grants us power to indemnify. Article VIII of our bylaws
and Article Seventh of our Amended and Restated Certificate of Incorporation, as
further amended, both provide that no director shall be liable to us or any of
our stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of loyalty
to the corporation or its stockholders, (2) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the DGCL or (4) a transaction from which the
director derived an improper personal benefit, and that it is the intention of
the foregoing provisions to eliminate the liability of our directors to ICC and
our stockholders to the fullest extent permitted by Section 102(b)(7) of the
DGCL.
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Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have 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. If a claim for indemnification against such liabilities (other
than the payment by ICC of expenses incurred or paid by a director, officer or
controlling person of ICC in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
ICC is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated in this registration statement
by reference to a prior filing of ICC under the Securities Act or the Securities
Exchange Act of 1934, as amended, as indicated in parenthesis:
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger among ICC, ICC Acquisition
Corporation, Inc., a wholly-owned subsidiary of ICC, Research
Triangle Commerce, Inc., or RTCI, and the selling shareholders of
RTCI (5)
2.2 Agreement and Plan of Merger among ICC, IDC, and the selling
shareholders of IDC (3)
2.3 Form of Agreement and Plan of Merger dated May 25, 2004 by and
among ICC, ICC Acquisition Corporation, Inc., Electronic Commerce
Systems, Inc. and certain shareholders thereof. (9)
4.1 Specimen Certificate for Class A Common Stock (2)
4.2 Form of Class A Bridge Warrant issued in the 1998 bridge financing
(1)
4.3 Warrant Agreement dated January 12, 2000, by and among ICC and
Cable and Wireless USA, Inc. (4)
4.4 Form of Registration Rights Agreement dated as of October 29, 2001
by and among ICC and the purchasers identified therein (7)
4.5 Registration Rights Agreement dated as of October 29, 2001 by and
between ICC and Amaranth Trading LLC (6)
4.6 Form of Class A Common Stock Warrant issued in the October 29,
2001 private placement (6)
4.7 Form of Warrant Agreement issued in the April 30, 2003 and May 1,
2003 private placement (7)
4.8 Form of Securities Purchase Agreement dated as of April 15, 2004
by and among ICC and the purchasers named therein (8)
4.9 Form of Warrant Agreement dated as of April 20, 2004 (8)
4.10 Form of Registration Rights Agreement dated as of April 20, 2004
by and among ICC and the purchasers named therein (8)
4.11 Form of Registration Rights Undertaking dated as of June 22, 2004,
by ICC, in favor of the shareholders of Electronic Commerce
Systems, Inc. (10)
5.1 Legal Opinion of Kramer Levin Naftalis & Frankel LLP*
23.1 Consent of Deloitte & Touche LLP dated August 19, 2004*
23.2 Consent of Deloitte & Touche LLP dated November 9, 2004**
II-2
23.3 Consent of Deloitte & Touche LLP dated November 9, 2004**
- -----------------------
* Previously filed.
** Filed herewith.
(1) Incorporated by reference to ICC's registration statement on Form S-3
(File no. 333-80043), as filed with the Securities and Exchange Commission
on June 4, 1999.
(2) Incorporated by reference to ICC's registration statement on form SB-2
(File no. 33-83940).
(3) Incorporated by reference to ICC's Quarterly Report on Form 10-QSB for the
quarter ended October 31, 1997, as filed with the Securities and Exchange
Commission on December 12, 1997.
(4) Incorporated by reference to Amendment No. 1 to ICC's registration
statement on Form S-3 (File no. 333-93301), as filed with the Securities
and Exchange Commission on February 8, 2000.
(5) Incorporated by reference to ICC's Current Report on Form 8-K dated June
14, 2000, as filed with the Securities and Exchange Commission on June 15,
2000.
(6) Incorporated by reference to ICC's registration statement on Form S-3
(file No. 333-99059), as filed with the Securities and Exchange Commission
on August 30, 2002.
(7) Incorporated by reference to ICC's Current Report on Form 8-K dated April
30, 2003, as filed with the Securities and Exchange Commission on May 2,
2003.
(8) Incorporated by reference to ICC's Current Report on Form-K dated April
20, 2004, as filed with the Securities and Exchange Commission on April
20, 2004.
(9) Incorporated by reference to ICC's Current Report on Form-K dated May 25,
2004, as filed with the Securities and Exchange Commission on May 26,
2004.
(10) Incorporated by reference to ICC's Current Report on Form-K dated June 22,
2004, as filed with the Securities and Exchange Commission on June 22,
2004.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that clauses (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed by the registrant with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
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(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.
(4) 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.
II-4
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 or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
November 9, 2004.
Internet Commerce Corporation
By: /s/ Thomas J. Stallings
---------------------------------
Thomas J. Stallings
Chief Executive Office
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes
and appoints Thomas Stallings and Arthur R. Medici, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this registration statement (including all pre-effective and
post-effective amendments thereto and all registration statements filed pursuant
to Rule 462(b) which incorporate this registration statement by reference), and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons on November 9, 2004 the capacities indicated below.
Signature Title
- --------- -----
/s/ Thomas J. Stallings Chief Executive Officer (Principal Executive Officer)
- ------------------------ and Director
Thomas J. Stallings
/s/ Glen Shipley Chief Financial Officer (Principal Financial Officer)
- ------------------------
Glen Shipley
/s/ Richard J. Berman
- ------------------------ Director
Richard J. Berman
/s/ Spencer I. Browne
- ------------------------ Director
Spencer I. Browne
/s/* Director
- -----------------------
G. Michael Cassidy
/s/*
- ----------------------- Director
Kim D. Cooke
/s/*
- ----------------------- Director
Donald R. Harkleroad
/s/ Charles C. Johnston
- ----------------------- Director
Charles C. Johnston
/s/*
- ----------------------- Director
Arthur R. Medici
/s/ John S. Simon
- ----------------------- Director
John S. Simon
* By Thomas J. Stallings, as attorney-in-fact
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger among ICC, ICC Acquisition
Corporation, Inc., a wholly-owned subsidiary of ICC, Research
Triangle Commerce, Inc., or RTCI, and the selling shareholders of
RTCI (5)
2.2 Agreement and Plan of Merger among ICC, IDC, and the selling
shareholders of IDC (3)
2.3 Form of Agreement and Plan of Merger dated May 25, 2004 by and
among ICC, ICC Acquisition Corporation, Inc., Electronic Commerce
Systems, Inc. and certain shareholders thereof. (9)
4.1 Specimen Certificate for Class A Common Stock (2)
4.2 Form of Class A Bridge Warrant issued in the 1998 bridge financing
(1)
4.3 Warrant Agreement dated January 12, 2000, by and among ICC and
Cable and Wireless USA, Inc. (4)
4.4 Form of Registration Rights Agreement dated as of October 29, 2001
by and among ICC and the purchasers identified therein (7)
4.5 Registration Rights Agreement dated as of October 29, 2001 by and
between ICC and Amaranth Trading LLC (6)
4.6 Form of Class A Common Stock Warrant issued in the October 29,
2001 private placement (6)
4.7 Form of Warrant Agreement issued in the April 30, 2003 and May 1,
2003 private placement (7)
4.8 Form of Securities Purchase Agreement dated as of April 15, 2004
by and among ICC and the purchasers named therein (8)
4.9 Form of Warrant Agreement dated as of April 20, 2004 (8)
4.10 Form of Registration Rights Agreement dated as of April 20, 2004
by and among ICC and the purchasers named therein (8)
4.11 Form of Registration Rights Undertaking dated as of June 22, 2004,
by ICC, in favor of the shareholders of Electronic Commerce
Systems, Inc. (10)
5.1 Legal Opinion of Kramer Levin Naftalis & Frankel LLP*
23.1 Consent of Deloitte & Touche LLP dated August 19, 2004*
23.2 Consent of Deloitte & Touche LLP dated November 9, 2004**
23.3 Consent of Deloitte & Touche LLP dated November 9, 2004**
- ------------------------
* Previously filed.
** Filed herewith.
(1) Incorporated by reference to ICC's registration statement on Form S-3
(File no. 333-80043), as filed with the Securities and Exchange Commission
on June 4, 1999.
(2) Incorporated by reference to ICC's registration statement on form SB-2
(File no. 33-83940).
(3) Incorporated by reference to ICC's Quarterly Report on Form 10-QSB for the
quarter ended October 31, 1997, as filed with the Securities and Exchange
Commission on December 12, 1997.
(4) Incorporated by reference to Amendment No. 1 to ICC's registration
statement on Form S-3 (File no. 333-93301), as filed with the Securities
and Exchange Commission on February 8, 2000.
II-6
24
(5) Incorporated by reference to ICC's Current Report on Form 8-K dated June
14, 2000, as filed with the Securities and Exchange Commission on June 15,
2000.
(6) Incorporated by reference to ICC's registration statement on Form S-3
(file No. 333-99059), as filed with the Securities and Exchange Commission
on August 30, 2002.
(7) Incorporated by reference to ICC's Current Report on Form 8-K dated April
30, 2003, as filed with the Securities and Exchange Commission on May 2,
2003.
(8) Incorporated by reference to ICC's Current Report on Form-K dated April
20, 2004, as filed with the Securities and Exchange Commission on April
20, 2004.
(9) Incorporated by reference to ICC's Current Report on Form-K dated May 25,
2004, as filed with the Securities and Exchange Commission on May 26,
2004.
(10) Incorporated by reference to ICC's Current Report on Form-K dated June 22,
2004, as filed with the Securities and Exchange Commission on June 22,
2004.
II-7