As filed with the Securities and Exchange Commission on March 29, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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DIGITAL COURIER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Commission file number: 0-20771
Delaware 87-0461856
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
136 Heber Avenue, Suite 204
Park City, Utah 84060
(435) 655-3617
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
BOBBIE DOWNEY
Vice President-Legal
DIGITAL COURIER TECHNOLOGIES, INC.
P.O. Box 8000
136 Heber Avenue, Suite 204
Park City, Utah 84060
(435) 655-3617
fax (435) 655-3647
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
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. |_|
CALCULATION OF REGISTRATION FEE
=========================================================================================================
Title of each Proposed Proposed
class of Amount Maximum Maximum Amount of
securities to be to be Offering price Aggregate Registration
registered (1) registered(2) per unit(3) offering price Fee
---------------- ------------- ------------ ------------- ------------
Common Stock 2,250,000 $10.00 $22,500,000 $6,255
=========================================================================================================
(1) This registration statement ("Registration Statement") covers the
resale by Transaction Systems Architects, Inc. (the "Selling
Stockholder") of up to 2,250,000 shares of Common Stock, $.0001 par
value, of Digital Courier Technologies, Inc. (the "Company"), 1,250,000
shares of which were previously acquired by the Selling Stockholder,
and 1,000,000 shares of which may be acquired by the Selling
Stockholder upon the exercise of presently outstanding warrants.
(2) In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's Common Stock, in order to prevent dilution,
the number of shares registered shall automatically be increased to
cover the additional shares in accordance with Rule 416(a) under the
Securities Act.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
average of the high and low prices of the Registrant's Common Stock on
March 24, 2000, as reported by NASDAQ National Market.
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 Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
PROSPECTUS
136 Heber Avenue, Suite 204
P.O. Box 8000
Park City, Utah 84060
Telephone (435) 655-3617
DIGITAL COURIER TECHNOLOGIES, INC.
2,250,000 SHARES OF COMMON STOCK
With this prospectus, the selling stockholder identified in this
prospectus may offer from time to time up to 2,250,000 shares of our common
stock. We are registering the resale of these shares, but the registration of
such shares does not necessarily mean that any of such shares will be offered or
sold by the Selling Stockholder.
Before purchasing any of the shares, you should consider very
carefully the information presented under the caption "Risk
Factors" beginning on page 2 of this prospectus.
Our common stock is traded on the NASDAQ National Market under the
symbol "DCTI."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April, 2000
RISK FACTORS
Before purchasing the shares, you should carefully consider the risk
factors described below. If any of the following risks actually occurs, it could
materially adversely affect our business, financial condition, and results of
operations. The risks and uncertainties described below are not the only ones we
are facing. While the risks described below are all the material risks of which
we are currently aware, we may have other risks and uncertainties of which we
are not yet aware or which we currently believe are immaterial that may also
impair our business operations.
We Have Incurred Substantial Losses
We incurred losses of $21,564,713, $5,597,967 and $7,158,851 from
continuing operations during the years ended June 30, 1999, 1998 and 1997,
respectively. Our operating activities used $7,783,023, $6,377,970 and
$6,334,660 of cash during the years ended June 30, 1999, 1998 and 1997,
respectively. During the six months ended December 31, 1999, we incurred a loss
of $12,507,518 from continuing operations.
Only Two Years of Internet Based Revenues
We have a limited history of generating revenue on the Internet. Prior
to fiscal 1998, most of our revenues came from non-Internet businesses. In
fiscal years 1998 and 1999, we generated a small amount of revenue from
WeatherLabs' Internet-only weather service, and from our previously owned Books
Now and VideosNow divisions. Since we did not acquire SB.com until June 1999,
only one month of revenues from fees derived from Internet payment processing
are reflected in our fiscal 1999 operating results.
Going Concern Opinion by our Auditors
The Report of Independent Public Accountants on our financial
statements as of and for the year ended June 30, 1999 includes the following,
"The Company has suffered recurring losses from continuing operations of
$21,564,713, $5,597,967, and $7,158,851 during the years ended June 30, 1999,
1998 and 1997, respectively. The Company has a tangible working capital deficit
of $1,285,266 as of June 30, 1999. Only the recent acquired operations of Access
Services and SB.com are generating positive cash flows. Additional funding will
be required before the Company's continuing operations will achieve and sustain
profitability, if at all. These matter raise substantial doubt about the
Company's ability to continue as a going concern."
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We May Be Liable for Customer Credit Card Chargebacks
If merchants for which we process credit cards go out of business or
otherwise cannot satisfy customers' legitimate returned credit card charges, and
the reseller responsible for such merchant is also not financially viable, then
we could be liable to the merchant bank for the amount of the customer
chargebacks. During the six months ended December 31, 1999, we experienced
approximately $2.9 million of returned credit card charges from our merchants.
These losses negatively impacted our operating results for the six months ended
December 31, 1999. Future chargebacks could have a materially adverse effect on
our future operating results.
The Expected Fluctuations of Our Quarterly Results Could Cause Our Stock Price
to Fluctuate or Decline
We expect that our quarterly operating results could fluctuate
significantly in the future based upon a number of factors, many of which are
not within our control. We base our operating expenses on anticipated market
growth and our operating expenses are relatively fixed in the short term. As a
result, if our revenues are lower than we expect, our quarterly operating
results may not meet the expectations of public market analysts or investors,
which could cause the market price of our common stock to decline.
Our quarterly results may fluctuate in the future as a result of many
factors that impact our revenue, including the following:
o changes in the number and size of transactions effected by our merchants,
especially as a result of seasonality or general economic conditions;
o our ability to attract and retain financial institutions as clients;
o our ability to attract new merchants and to retain our existing merchants;
o merchant and financial institution acceptance of our pricing model; and
o our success in expanding our sales and marketing programs.
Other factors that may affect our quarterly results are set forth
elsewhere in this section. As a result of these factors, our revenues are not
predictable with any significant degree of certainty.
Due to the uncertainty surrounding our revenues and expenses, we
believe that quarter-to-quarter comparisons of our historical operating results
should not be relied upon as an indicator of our future performance.
We May Need Additional Funding in the Future
We require substantial working capital to fund our business. We have
had significant operating losses and negative cash flows from continuing
operations during the last few years. We believe that with the acquisition of
DataBank on October 5, 1999 and the sale of the assets of WeatherLabs as of
October 31, 1999, our existing cash and revenues, including the cash received
from sale of the WeatherLabs assets and the revenues generated by our newly
acquired subsidiaries and DataBank, will be sufficient to meet our operating and
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capital requirements for the next twelve months. However, our capital
requirements depend on several factors, including the rate of market acceptance
of our services, the ability to expand our customer base, the growth of sales
and marketing and other factors. If capital requirements vary materially from
those currently planned, we may require additional financing in the future.
Additional financing may not be available when needed on terms favorable to us
or at all. If adequate funds are not available or are not available on
acceptable terms, we may be unable to develop or enhance our services, take
advantage of future opportunities or respond to competitive pressures, which
could have a materially adverse effect on our financial condition and results of
operations.
Integration of DataBank, SB.com and Access Services
There are risks in attempting to integrate the operations of previously
separate companies. We acquired Access Services, Inc. ("Access Services") in
April 1999, SB.com ("Secure-Bank") in June 1999 and DataBank International, Ltd.
("DataBank") in October 1999. We are putting forth a significant effort to
successfully integrate the three companies with us. Our efforts include
coordinating development of new products, commercializing in-process
development, integrating product offerings, and coordinating sales and marketing
efforts and business development efforts.
In order to build a successful company, we will need to integrate and
streamline overlapping functions successfully. Among the risks we face are:
o We must incur the costs generally associated with this type of integration
including the costs to: o integrate product lines,
o cross-train the sales force, and
o position products in the market;
o We do not yet know what the ultimate cost of integration will be and how
significant the impact will be; the cost may have an adverse effect on our
operating results;
o Our integration of Access Services, Secure-Bank and DataBank will require
management resources that may distract attention from normal operations.
Employee uncertainty and lack of focus may disrupt our business; and
o Our failure to quickly and effectively accomplish the integration could harm
us. Uncertainty in the marketplace or customer concern regarding the impact of
our acquisitions could also have a material adverse effect on our consolidated
business, financial condition and results of operations.
The Demand for Our Services Could Be Negatively Affected by a Reduced Growth of
e-Commerce or Delays in the Development of the Internet Infrastructure
Sales of goods and services over the Internet do not currently
represent a significant portion of overall sales of goods and services. We
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depend on the growing use and acceptance of the Internet as an effective medium
of commerce by merchants and customers. Rapid growth in the use of and interest
in the Internet is a relatively recent development. We cannot be certain that
acceptance and use of the Internet will continue to develop or that a
sufficiently broad base of merchants and consumers will adopt, and continue to
use, the Internet as a medium of commerce.
The emergence of the Internet as a commercial marketplace may occur
more slowly than anticipated for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. If the number
of Internet users or their use of Internet resources continues to grow, it may
overwhelm the existing Internet infrastructure. Delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity could also have a detrimental effect. These factors could
result in slower response times or adversely affect usage of the Internet,
resulting in lower numbers of e-commerce transactions and lower demand for our
services.
Proprietary Technology is Important to our Business
Our success depends upon our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights.
As part of our confidentiality procedures, we enter into non-disclosure
agreements with our employees. Despite these precautions, third parties could
copy or otherwise obtain and use our technology without authorization, or
develop similar technology independently. Effective protection of intellectual
property rights may be unavailable or limited in foreign countries. We cannot be
certain that the protection of our proprietary rights will be adequate or that
our competitors will not independently develop similar technology, duplicate our
services or design around any patents or other intellectual property rights we
hold.
We also cannot be certain that third parties will not claim that our
current or future services infringe upon their rights. We have not conducted any
search to determine whether any of our services or technologies may be
infringing upon patent rights of third parties. As the number of services in our
market increases and functionalities increasingly overlap, companies such as
ours may become increasingly subject to infringement claims. In addition, these
claims also might require us to enter into royalty or license agreements. Any
infringement claims, with or without merit, could cause costly litigation that
could absorb significant management time. If required to do so, we may not be
able to obtain royalty or license agreements, or obtain them on terms acceptable
to us.
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We Depend Upon Third Parties
We depend substantially upon third parties for several critical
elements of our business, including:
o Sprint, for telecommunications services;
o Hewlett-Packard, for maintenance and upgrades of the HP-9000 computers in our
data center;
o Sun Microsystems, for maintenance and upgrades of the Sun Enterprise 500
servers in our data center;
o Cisco, for maintenance and upgrades of our routers which are used to connect
our computer network to the Internet; and
o other vendors of software and hardware for maintenance and upgrades of
software, systems, and hardware used to deliver our products on the Internet.
Although we believe that there are other third party providers who can
provide the same services as those providers we currently use, loss or
interruption of service by such providers would have an adverse effect on our
business and prospects.
We Depend on our Existing Technology and Infrastructure
Our ability to deliver services to our merchants depends on the
uninterrupted operation of our Internet payments processing systems. Our systems
and operations are vulnerable to damage or interruption from:
o earthquake, fire, flood and other natural disasters;
o power loss, telecommunications or data network failure;
o operator negligence, improper operation by employees, physical and electronic
break-ins and similar events; and
o computer viruses.
Despite the fact that we have implemented redundant servers in our data
center, we may still experience service interruptions for the reasons listed
above and a variety of other reasons. If our redundant servers are not
available, we may suffer substantial losses as well as loss of business. In
addition, any interruption in our systems that impairs our ability to provide
services could damage our reputation and reduce demand for our services.
Our success also depends on our ability to grow, or scale, our payments
processing systems to accommodate increases in the volume of traffic on our
system, especially during peak periods of demand. We may not be able to
anticipate increases in the use of our systems and successfully expand the
capacity of our network infrastructure. Our inability to expand our systems to
handle increased traffic could result in system disruptions, slower response
times and other difficulties in providing services to our merchant banks and
customers, which could materially harm our business.
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A Breach of Security Measures Could Reduce Demand for Our Services
A requirement of the continued growth of e-commerce is the secure
transmission of confidential information over public networks. We rely on SSL,
Secure Socket Layer Protocol, to provide the security and authentication
necessary for secure transmissions of confidential information. In addition, we
rely on private key cryptography, an encryption method that utilizes two keys
for encoding and decoding data, for ensuring the integrity of our computer
networks. Regulatory and export restrictions may prohibit us from using the
strongest and most secure cryptographic protection available and thereby expose
us to a risk of data interception. A party who is able to circumvent our
security measures could misappropriate proprietary information or interrupt our
operations. Any compromise or elimination of our security could reduce demand
for our services.
We may be required to expend significant capital and other resources to
protect against security breaches or to address any problems they may cause.
Concerns over the security of the Internet and other online transactions and the
privacy of users may also inhibit the growth of the Internet and other online
services generally, and the Web in particular, especially as a means of
conducting commercial transactions. Because our activities involve the storage
and transmission of proprietary information, such as credit card numbers,
security breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability. Our security measures may not prevent
security breaches and failure to prevent security breaches may disrupt our
operations.
The Intense Competition in Our Industry Could Reduce or Eliminate the Demand for
Our Services
The market for our services is intensely competitive and subject to
rapid technological change. We expect competition to intensify in the future.
Our primary source of competition comes from developers of other systems for
Internet payments processing such as Clear Commerce, CyberCash, Cyber Source,
Digital River, HNC Software, Open Market and Hewlett-Packard (VeriFone). In
addition, other companies may enter the market for our services. In the future,
we may also compete with large financial institutions that develop custom
systems for their use and their merchants' use.
Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. Our competitors may be able to respond more quickly than
we can to new or emerging technologies and changes in financial institution and
merchant requirements. Competition could seriously impede our ability to sell
additional services on terms favorable to us. Our current and potential
competitors may develop and market new technologies that render our existing or
future services obsolete, unmarketable or less competitive. Our current and
potential competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with other solution providers, thereby
increasing the ability of their services to address the needs of our prospective
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customers. Competitive pressures could reduce our market share or require the
reduction of the prices of our services, either of which could materially and
adversely affect our business, results of operations or financial condition.
We Must Continually Enhance Our Systems to Remain Competitive
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our services and the underlying
network infrastructure. The Internet and the e-commerce industry are
characterized by rapid technological change, changes in user requirements and
preferences, frequent new product and service introductions embodying new
technologies and the emergence of new industry standards and practices that
could render our technology and systems obsolete. Our success will depend, in
part, on our ability to both internally develop and license leading technologies
to enhance our existing services and develop new services. We must continue to
address the increasingly sophisticated and varied needs of our financial
institutions and merchants, and respond to technological advances and emerging
industry standards and practices on a cost-effective and timely basis. The
development of proprietary technology involves significant technical and
business risks. We may fail to develop new technologies effectively or to adapt
our proprietary technology and systems to merchant and financial institution
requirements or emerging industry standards. If we are unable to adapt to
changing market conditions, customer requirements or emerging industry
standards, our business would be materially harmed.
Management of Internal Growth
As we grow, we may not be able to effectively manage the expansion of
our operations and our systems, procedures or controls may not be adequate to
support our operations. Additionally, when market opportunities arise, we may
not have sufficient personnel or procedures in place to be able to take
advantage of those opportunities.
Our Management Team Must Work Together Effectively
Our performance is substantially dependent on the effectiveness of our
senior management and key technical personnel. In particular, our success
depends substantially on the continued efforts of our senior management team,
many of whom only recently joined the Company through acquisitions. Because
these members of our management team are new, there is an increased risk that
management will not be able to work together effectively as a team, especially
in the short term, to address the challenges to our business. We do not carry
key person life insurance on any of our senior management personnel. The loss of
the services of any of our executive officers or other key employees could
detrimentally affect us.
8
Attracting and Retaining Qualified Employees
Our future success and our ability to expand our operations depends on
our continuing ability to attract and retain highly qualified technical and
managerial employees. Competition for people experienced in the technical areas
in which we operate is intense due to the limited number of qualified
professionals and, as a small company, we may not be able to attract them.
Failure to attract and retain personnel, particularly marketing and technical
personnel, could make it difficult for us to manage our business and meet our
objectives.
We May Become Subject to Government Regulation and Legal Uncertainties
We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, export control laws and laws or regulations directly applicable to
e-commerce. However, due to the increasing usage of the Internet, it is possible
that a number of laws and regulations may be applicable or may be adopted in the
future with respect to conducting business over the Internet covering issues
such as:
o taxes;
o user privacy;
o pricing;
o content;
o right to access personal data;
o copyrights;
o distribution; and
o characteristics and quality of services.
For example, we believe that some of our services may require us to
comply with the Federal Credit Reporting Act. Complying with this statute would
require us to provide information about personal data stored by us or our
merchants. Failure to comply with this act could result in claims being made
against us.
Furthermore, the growth and development of the market for e-commerce
may prompt more stringent consumer protection laws that may impose additional
burdens on those companies conducting business online. The adoption of
additional laws or regulations may decrease the growth of the Internet or other
online services, which could, in turn, decrease the demand for our services and
increase our cost of doing business.
The applicability of existing laws governing issues such as property
ownership, copyrights, encryption and other intellectual property issues,
taxation, libel, export or import matters and personal privacy to the Internet
is uncertain. The vast majority of laws were adopted prior to the broad
commercial use of the Internet and related technologies. As a result, they do
not contemplate or address the unique issues of the Internet and related
technologies. Changes to these laws intended to address these issues, including
some recently proposed changes in the United States regarding taxation and
9
encryption and in the European Union regarding contract formation and privacy,
could create uncertainty in the Internet marketplace and impose additional costs
and other burdens. Such uncertainty, costs and burden could reduce demand for
our services or increase the cost of doing business due to increased costs of
litigation or increased service delivery costs.
Concentration of Stock Ownership
Our present directors, executive officers, greater than 5% stockholders
and their respective affiliates beneficially own approximately 33% of our
outstanding common stock. As a result of their ownership, the directors,
executive officers, greater than 5% stockholders and their respective affiliates
collectively are able to control or significantly influence all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control.
Volatility of Stock Price
Broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our operating performance. The trading
price of our common stock has been and may continue to be subject to wide
fluctuations. In the last twelve months our stock has traded as low as $4.063
and as high as $14.50. The wide swings in the price of our stock have not always
been in response to any factors that we can identify.
Future Issuance of Preferred Stock Could Hurt Common Stockholders
Rights of preferred stockholders take priority over common
stockholders. The only preferred stock currently outstanding consists of 360
shares of Series A Convertible Preferred Stock. Our Board of Directors has the
authority to issue up to 2,500,000 shares of preferred stock. They can determine
the price, rights, preferences, privileges and restrictions, including voting
rights, of those shares without any further vote or action by the stockholders.
Although the Series A Preferred Stock does not have voting rights, future
preferred stockholders could delay, defer or prevent a change of control of
which our common stockholders may have been in favor.
Some of Our Equipment May Fail in Year 2000
Computer systems, software applications, and microprocessor dependent
equipment may cease to function properly or generate erroneous data in the year
2000. The problem affects those systems or products that are programmed to
accept a two-digit code in date code fields. To correctly identify the year
2000, a four-digit date code field will be required to be what is commonly
termed "year 2000 compliant."
10
To date we have invested $80,000 in an effort to certify all aspects of
the business are year 2000 compliant. The areas of the business which have been
targeted for compliance testing are our operations and our software products and
services. We conducted the certification process over a three-month period in
which all software products and service components under our direct control
certified year 2000 compliant. For the major operational components and
remaining software and services that are under the control of third party
organizations, we have received written confirmation and evidence of year 2000
compliance. We may realize operational exposure and risk if the systems for
which we are dependent upon to conduct day-to-day operations are not year 2000
compliant. The potential areas of software exposure include:
o electronic data exchange systems operated by third parties with whom we
transact business;
o server software which we use to present content and advertising to our
customers and partners; and
o computers, software, telephone systems and other equipment used internally.
During the last two years, our computerized information systems have
been substantially upgraded to be year 2000 compliant. Thus far in the year
2000, we have not experienced any date-related problems. It is still possible
that if systems material to our operations have not been made year 2000
compliant, or if third parties failed to make their systems compliant in a
timely manner, the year 2000 issue could have a material adverse effect on our
business, financial condition, and results of operations. This would result in
an inability to provide functioning software and services to our customers in a
timely manner, and could then result in lost revenues from these customers,
until such problems are resolved by us or the responsible third parties.
Shares Eligible for Future Sale
Up to 14,049,010 shares of our common stock are freely trading or
eligible for sale in the public market. 1,250,000 (excluding shares issuable
upon exercise of warrants) are being registered in this prospectus which will
make them available for sale. If the Selling Stockholder sells a substantial
number of shares in the public market following this registration, or if the
public believes that such sales could occur, the market price of our common
stock could decline. Under the federal securities laws, shares may not be sold
unless they are registered with the SEC or are exempt from registration. In
addition, approximately 9,096,301 shares of our stock are immediately eligible
for resale in the public market without restriction under Section 4(1) of the
Securities Act, which permits sales by people other than the issuer, underwriter
or dealer. Approximately another 3,702,709 shares of common stock have been held
long enough to now be eligible for sale in the public market, subject to the
provisions of Rule 144 under the Securities Act. Rule 144 allows holders of
restricted stock, who have held their stock for at least one year, to sell the
stock publicly subject to volume and manner of sale restrictions.
As of March 27, 1999, an aggregate of 4,590,000 shares of common stock
were reserved for issuance pursuant to certain warrants. Of the common stock
which will be issued on exercise of these warrants, 1,000,000 shares are being
registered in this prospectus.
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As of March 27, 2000, 2,689,250 shares of common stock were subject to
options outstanding under our employee stock option plan. An additional
1,152,400 shares of common stock are reserved for future issuance under the
plan. We filed a registration statement on Form S-8 registering the shares of
common stock reserved for future issuance under the plan, thus permitting the
resale of such shares in the public market without restriction under the
Securities Act, subject to Rule 144.
FORWARD-LOOKING STATEMENTS
This prospectus, including all documents incorporated by reference,
includes forward-looking statements. Forward-looking statements are generally
those preceded by, followed by or including the words "believes," "expects,"
"anticipates" or similar expressions.
These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties including
those risks described in the "Risk Factors" section. Our actual results could
differ materially from these forward-looking statements. In light of these risks
and uncertainties, there can be no assurance that the events contemplated by the
forward-looking statements contained in this prospectus will, in fact, occur.
THE COMPANY
We provide state of the art payment processing solutions for merchants
and financial institutions worldwide through an integrated solution called
netClearing. netClearing is a suite of commerce-enabling technologies designed
specifically for merchants and merchant banks.
netClearing: e-Commerce Payments Processing
- --------------------------------------------
Introduction
We provide state of the art payment processing solutions for merchants
and financial institutions worldwide through an integrated solution called
netClearing. netClearing is a suite of commerce-enabling technologies designed
specifically for merchants and merchant banks.
Merchant Services
Online transactions need to be fast, secure and efficient. As a
technology driven payment-processing expert, netClearing delivers
next-generation software and a highly secure payment system that provides fast
transactions at a lower cost. Our technologies and services help merchants set
up their merchant bank account, install payment processing software, and manage
payment processing transactions from credit card authorization to final sale.
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netClearing's Payment Plug-in is e-commerce software for transaction processing.
The Payment Plug-in is a lightweight file that connects a merchant's commerce
server through our Internet Payment Gateway to the major card networks
(Visa(TM), MasterCard(TM), American Express(TM), Discover(TM)). At the
merchant's request, transactions are recorded in a secure transaction database
and screened by sophisticated fraud detection software as they pass through the
Internet Payment Gateway. These functions enable reporting capabilities and
enhance fraud control. netClearing's reporting system allows merchants to
search, sort and analyze transaction reports by criteria such as:
o netClearing transaction ID
o Merchant order tracking ID
o Date ranges
o Credit card number
o Customer name
netClearing's reports can be used to track a variety of information
about the merchant's business and are available 24 hours a day on the Merchant
Access Web site. Custom reports can be generated and custom formats are
available for download to merchants requiring unique information. The reports
available are:
Authorizations report
Authorization reports detail all orders that have been
authorized but not yet settled. These reports are used to view
the total number and value of orders the merchant has received
in any date range--daily, monthly or yearly.
Settlement report
This report details all cash receipts that have been deposited
into the merchant's account (this amount does not include
credit card company fees). This report is used to understand
the cash amounts being transferred into a merchant's bank
account.
Credit report
Credit reports detail all credits or refunds for various
transactions. netClearing provides a list of credits issued as
well as details about why the credit was given.
Declined report
This report details all orders that have been declined either
by the card network or by netClearing's internal fraud check.
The reason the cards have been declined is detailed in the
report. Merchants can determine if fraud is being attempted on
a systematic basis on their site or if the design of their Web
site is causing problems with the entry of credit card
information.
13
By combining these services into a single solution, we streamline the
process for merchants to begin doing business on the Internet. Once the merchant
is up and running, netClearing provides merchants with a complete set of tools
for managing their online business transactions. Merchants can track and
initiate payments on continuing shipments using one order number. Card lookup
and transaction history reports and analysis can help customer service
departments identify and correct problems stemming from possibly erroneous
transactions. netClearing will also maintain a database of tax jurisdictions
worldwide to provide reliable tax assessment on transactions originating from
and shipping from any domestic or VAT tax nexus.
Merchant Banking Services
For financial institutions and netClearing resellers, netClearing's
real-time merchant management, transaction monitoring, and fraud auditing tools
enable these institutions to monitor merchants and manage merchant portfolio
risk. The Internet Payment Gateway incorporates all of netClearing's risk
management, reporting and merchant management tools while interacting directly
with legacy financial and banking networks, operating systems, acquiring
gateways, VAPS (Visa's access point) and MIPS (Mastercard's access point). The
Gateway is comprised of a commerce server, a transaction database and fraud
screening software that easily integrate with existing systems. This enables us
to integrate any components of our platform with participating banks. These
components can be customized to the bank's specifications and allow for a
seamless integration of the applications into the ongoing banking transactions.
Integrating a portfolio of merchants with the Internet Payment Gateway
is straightforward and efficient. The product comes with an easy to use
administration interface that allows the bank to perform functions such as
adding and updating merchants, accessing reports and monitoring fraud across an
entire portfolio of merchants that want to accept credit card transactions to
process the sales of their products across the Internet.
This important technology is available to financial institutions either
remotely through a standard Web browser, or by electing to install the hardware
and software directly at the bank location for direct access to the networks.
Through its Bank Access secure Web site, netClearing offers complete settlement
activity reports for financial institutions. All reports are generated from the
live transaction database. This valuable information includes:
Settlement report
According to netClearing, summary of portfolio activity for
reporting period.
14
Merchant ledger
According to the Settlement Authority, the amount that has
been settled into a merchant's account.
Adjustments
Users can view a list and edit a report including pre- and
post-authorizations, credits, fees, etc.
Processing Services
netClearing ensures that the merchant and the bank maintain a solid
business relationship by protecting each party from fraud, theft, and
mismanagement of accounts. netClearing can process credit, debit, and ACH
transactions directly through its own proprietary Authorization Network or
through any other third party Authorization Network such as FDC/FDR, MAPP,
VisaNet, and others. Our service bureau provides payments processing and related
services to merchants and merchant banks. By integrating our transaction service
bureau with our automated Internet Payment Gateway, common settlement mistakes
and clerical errors are virtually eliminated. The business operation is divided
into two parts, transaction processing and direct merchant sales and support.
The transaction processing system is based on HP-9000 server systems
operating a modified version of Verifone's "Omnihost" acquiring processing
platform. The facility supports merchant transaction acquisition, capture, and
settlement transmission for all popular credit card types. This operation
currently supports more than three thousand merchants and its clients include
Equifax Merchant Services and First Tennessee Bank. This is fully integrated
with our Internet Payment Gateway to manage and route a high volume of Internet
transactions through the traditional financial networks for settlement.
The direct merchant sales and support function provides complete
services for merchant portfolios. The services include merchant risk management,
transaction processing, charge-back and retrieval services, payments settlement
and reporting, around the clock merchant terminal and bank help-desk, and
point-of-sale terminal implementation. The operation leverages netClearing
technologies to ensure its merchants receive complete fraud control as well as
the total online transaction and settlement reporting. In addition, the
operation distributes and maintains credit card payments processing products and
services developed in-house as well as products fielded by VisaNet, First USA
and other payment solutions providers.
Risk Management and Internet Fraud Control
netClearing offers data screening software to help merchants reduce
risk due to credit card fraud and data entry errors. As with all netClearing
products, these controls were developed specifically for e-commerce businesses.
Merchants can select the filters that are most appropriate for their business.
Since we acquired Secure-Bank in June of 1999, we have integrated its risk
15
management software into the netClearing platform. The software protects the
processing banks and merchants by scrubbing all transactions through various
transaction screens and/or databases to ensure that much of the fraud and
potential credit card charge backs are spotted and eliminated prior to
authorization. This risk management technology service has also been made
available to other third party processors on a per transaction basis, to allow
them to increase their own risk management capabilities. Currently, we offer
risk management in two packages, one for the merchant, and one for the merchant
bank. These packages include the following services:
Risk Management for Merchants
Checksum (Luhn check)
A basic check of how many digits are in a credit card number
to ensure the customer's credit card is valid.
Address Verification System (AVS)
Merchants can require customers to submit the billing address
of their credit card. The address supplied by the customer is
compared to the address on file with the issuing bank.
Merchants may choose the degree of match (between credit card
number and address) at which the transaction should fail.
Difference between name and card number
A credit card number can be matched to a card holder's name
for an existing client. A mismatch may indicate that a card
has been compromised.
Unusual frequency of purchases
A merchant may record information about how frequently their
product or service is typically purchased with a particular
card number (indicating an individual). The information is
matched to actual activity so merchants are notified of
significant variation from that mean.
Unusual time of day for purchases
A merchant may record typical transaction volume for a
particular time of day. The information is matched to actual
activity so merchants are notified of significant variation
from that mean.
16
Geographic mismatch
Matching a card's geographic origin (indicated by Bank
Identification Number or "BIN") against where the purchase
originates (indicated by Internet service provider or "ISP")
may detect when a stolen card is in use.
Compromised BIN and card database
All transactions can be checked against a database of BINs
(Bank Identification Numbers) or card numbers that may have
been compromised. These options include:
BIN Screening
A BIN corresponds to a whole set of cards that a card issuing
bank has released. When the security of a BIN is compromised,
chances for fraud increase for that BIN. netClearing BIN
screens help to flag numbers that may be compromised.
Card Screening
Transactions may be checked against a database of invalid,
compromised and otherwise questionable credit card numbers.
Declined card screening
All transactions may be checked against a database of credit
card numbers that have declined charges recently. This service
saves clients transaction fees by declining the charge before
it is submitted to the banking network.
Risk Management for Merchant Banks
netClearing merchant banks using Bank Access to audit
transaction and settlement activity are processing up to $25
million per month with almost no loss due to fraud. These
robust tools and fraud screening software include:
Summary activity
Banks can monitor activity of a single merchant or all
merchants to track sales, credits and single transactions.
Even the flow of money across credit cards can be reviewed to
reveal customer histories, purchasing habits, and money flow
into or out of a card on a daily or historical timeline.
17
Fraud reporting
Banks can survey and analyze activity by BIN, card number, AVS
and velocity of purchases. Stolen credit cards and
questionable transactions present themselves on demand.
BIN check
Entire BINs can be reviewed for questionable activity and
transactions. Customer data associated with credit cards can
be compared to locate unreported, stolen or generated card
usage. Related merchants are a click away from review with any
transaction under suspicion.
Unusual activity
netClearing also provides the ability to generate 90-day
baseline data for any merchant in a Bank's portfolio. Side
reports offer the ability to locate transactions exceeding the
baseline by whatever range a bank determines is valid for that
merchant. Excessive tickets, unusual daily deposits and more
can be located quickly and reviewed 24 hours a day.
Review merchant and portfolio activity in real-time
A bank's entire merchant portfolio or a single merchant can be
viewed with netClearing's online charting tools. The ability
to graphically review a merchant's dollar and transaction
count can be a simple indicator of merchant or consumer fraud.
Peak hours can be located as hourly summaries appear in easy
to understand bar charts.
Credit Card Clearing Process
To understand our service better, the following explanation
and diagram describes how the credit card clearing process works, and
how netClearing simplifies the process. netClearing generates real-time
reporting and transaction management services through a secure Web
server. Information such as authorization notices and settlement data
from the credit card companies are stored in the netClearing database,
which generates reports on the netClearing Web site. This means
merchants and merchant banks can view real-time transaction information
any time of day via a Web browser.
18
[Graphic Ommitted]
1. Authorization - Before the credit card clearing process begins, merchants
must first have a Web site in which they plan to accept credit cards as
payment for goods or services (1a). Merchants also need a merchant bank
account with a financial institution. Merchants then subscribe to an online
payment service such as netClearing and install payment-processing
technology on their Web server. With netClearing, this is a single program
called the Payment Plug-in.
Once the customer submits a credit card number on the merchant's Web site,
the Payment Plug-in contacts the netClearing Internet Payment Gateway (1b)
to request authorization, final sale or credit. The Gateway filters the
information for fraud and may reject the transaction.
If the transaction is not rejected for potential fraud, the transaction
information is then sent to the credit card network (1c) for authorization
or declination of the charge by the Issuing Bank. Unlike most of our
competitors, this process is completed in-house; we do not use third party
acquiring processors. If the transaction is approved, an authorization code
is returned to the merchant's Web site and the authorization is complete.
With netClearing's system, the real-time authorization and capture process
occurs within 3-5 seconds. Batch requests are completed within 1 hour.
2. Settlement - Once the product the customer ordered is shipped (or
downloaded), the authorization code is used to settle the amount of the
transaction. netClearing's Internet Payment Gateway and the credit card
network exchange information with the Settlement Authority (2) to confirm
the transaction.
3. Funds transfer - Finally, the Settlement Authority requests a funds
transfer from the Issuing Bank (3a), which moves money through the
Settlement Authority into the merchant's bank (3b). The payment process is
now complete.
19
Marketing
We have entered into a two-year distribution agreement with ACI
Worldwide, a leading international provider of electronic funds transfer
processing systems. ACI is a wholly-owned subsidiary of the Selling Stockholder.
ACI will exclusively, with certain geographic exceptions, market our proprietary
electronic commerce technologies through its global sales force. ACI has
integrated our software with its BASE 24(R), WINPAY24(TM) and related products,
as part of its i24(R)-payments strategy. The marketed product includes all
aspects of handling payments over the Web, including value-added features in
areas like customer service, merchant reporting and management, and web-centric
fraud detection and management. The agreement enables our e-commerce products to
be distributed on a global scale through ACI's vast and experienced sales staff
in a shorter time frame than we likely would have been able to achieve on our
own.
Acquired Technology
We recently licensed ACI Worldwide's BASE24(R) and Trans24 software.
The software enhances our existing Internet-based platforms that offer secure
payments processing for business-to-consumer electronic commerce. BASE24(R)
offers fault-tolerant, around-the-clock processing power to acquire, route and
authorize secure electronic payment transactions for our Internet-based merchant
network. Trans24 allows us to manage the Merchant and Issuing accounting. It
also provides an interface into BASE 24 settlement and ACH systems. Information
from Trans24 can easily be made available to Web based reporting system for
real-time settlement and account information.
Corporate History. We were incorporated in Delaware in 1985. We began
as a national direct marketing company under the name DataMark Holding, Inc.,
and began incorporating online business strategies five years ago. We recruited
an experienced management and technical team to design and implement a
sophisticated Internet services business. In addition to engineering and
constructing a state-of-the-art computer and data facility in Salt Lake City, we
acquired an Internet access business and contracted with companies in the
electronic mail business. We formed a division to create a network of
interconnected web sites to be promoted by local television stations. We sold
our direct marketing and internet access businesses, as well as certain assets
related to our television web site hosting activities during fiscal 1998. We
retained the computer and data facility in Salt Lake City and the Books Now,
Videos Now and netClearing businesses. In September 1998, we acquired Digital
Courier International, Inc., a private Internet software development company and
changed our name to Digital Courier Technologies, Inc.
20
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission to register 2,250,000 shares of our
common stock, par value $.0001. This prospectus does not include all of the
information contained in the registration statement and the exhibits to the
registration statement. For further information about us and the shares being
registered, you should read the registration statement and the exhibits to the
registration statement. Statements contained in this prospectus concerning
documents we have filed with the SEC as exhibits to the registration statement
or otherwise are not necessarily complete and, in each instance, you should
refer to the actual filed document.
We have not authorized anyone to provide you any information different
from that contained in this prospectus. The Selling Stockholder may offer to
sell the shares only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of the shares.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, Mail Stop 1-2, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public at the SEC's web site at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, 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. Our SEC file
number is 000-20771. We incorporate by reference the documents listed below, and
any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended or under Section 5 of
the Securities Act of 1933, as amended:
(1) Annual Report on Form 10-K for the fiscal year ended June 30, 1999;
(2) Proxy Statement for the Special Meeting of Shareholders held October 5,
1999;
(3) Quarterly Report on Form 10-Q for the quarter ended September 30, 1999;
(4) Current Report on Form 8-K dated October 19, 1999;
21
(5) Proxy Statement for the Annual Meeting of Stockholders to be held
January 13, 1999;
(6) Current Report on Form 8-K dated November 24, 1999;
(7) Quarterly Report on Form 10-Q for the quarter ended December 31, 1999;
and
(8) Description of our capital stock contained in our registration
statement on Form 8-A, including all amendments or reports filed for
the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning DCTI at P.O. Box 8000, 136 Heber Avenue, Park City, Utah 84060,
telephone (435) 655-3617, attention: Investor Relations.
USE OF PROCEEDS
We are registering the shares of common stock for the benefit of the
Selling Stockholder and the Selling Stockholder may sell the shares from time to
time under this prospectus. Other than the exercise price the Selling
Stockholder may pay to exercise its warrants, we will not receive any proceeds
from the sale of the shares offered in this prospectus. We will pay the costs of
this offering which are estimated to be $30,000. The Selling Stockholder is not
obligated to exercise its warrants, and there can be no assurance that it will
choose to exercise all or any of the warrants. If all the warrants are
exercised, we will receive $5,200,000, subject to adjustment under the terms of
the warrants. We intend to use any proceeds we receive from any warrant exercise
to augment our working capital for general corporate purposes.
SELLING STOCKHOLDER
The following table sets forth certain information as of March 27, 2000
with respect to the Selling Stockholder. Beneficial ownership after this
offering will depend on the number of shares actually sold by the Selling
Stockholder. To our knowledge, the Selling Stockholder has sole voting and
investment power with respect to its securities, except as otherwise indicated.
The percentage shown in the second column includes all common stock
beneficially owned by the Selling Stockholder as a percentage of the 47,680,066
shares of common stock outstanding on March 27, 2000, together with all
currently exercisable warrants held by the Selling Stockholder. Shares of common
stock underlying warrants are deemed outstanding for computing the percentage
ownership of the person holding such securities, but are not deemed outstanding
for computing the percentage of any other person. We calculated the amounts in
the last two columns on the right of the table assuming that the Selling
Stockholder disposes of all of the shares covered by this prospectus and does
not acquire any additional common stock.
22
Shares of Common
Shares of Common Stock Stock Being
Name of Selling Stockholder Beneficially Owned Registered for Shares of Common Stock Owned
Prior To Offering Resale After the Offering
----------------- ------ ------------------
Number % of Class Number Number % of Class
------ ---------- ------ ------ ----------
Transaction Systems Architects, 2,250,000 4.6% 2,250,000* 0 -
Inc.
* Includes 1,000,000 shares of common stock which have not been issued but which
are issuable upon exercise of warrants.
On June 14, 1999, pursuant to a Securities Purchase Agreement between
the Selling Stockholder and Digital Courier Technologies, the Selling
Stockholder purchased 1,250,000 shares of common stock and warrants to purchase
an additional 1,000,000 shares of common stock for an aggregate purchase price
of $6,500,000. The exercise price for the warrants is $5.20. The warrants expire
on June 13, 2004.
Under the terms of the Securities Purchase Agreement, for so long as
the Selling Stockholder or any of its affiliates own at least 500,000 shares
(subject to adjustment for stock splits, stock dividends, subdivisions or
similar transactions) of common stock, the Selling Stockholder will be entitled
to propose one candidate for election to the Board of Directors of Digital
Courier Technologies. Subject to its fiduciary duties to stockholders, Digital
Courier Technologies is required to recommend to its stockholders that the
person designated by the Selling Stockholder be elected to the Board of
Directors.
The shares being sold pursuant to this prospectus have been registered
pursuant to the Selling Stockholder's registration rights under a Registration
Rights Agreement between the Selling Stockholder and Digital Courier
Technologies dated June 14, 1999.
On March 25, 1999 Digital Courier Technologies entered into a 60 month
software license agreement with ACI Worldwide, Inc. ("ACI"), a wholly-owned
subsidiary of the Selling Stockholder, for ACI's BASE24(R) and Trans24 software.
See "The Company - Acquired Technology." Digital Courier Technologies made a
payment to ACI upon signing the license agreement of $591,218. Pursuant to an
amendment to the license agreement entered into in June 1999, Digital Courier
Technologies paid ACI a final payment of $3,888,453 in June, 1999.
Digital Courier Technologies has also entered into a two-year
distribution agreement with ACI. See "The Company - Marketing."
23
PLAN OF DISTRIBUTION
The Selling Stockholder may offer and sell the shares covered by this
prospectus from time to time. The Selling Stockholder will receive all of the
net proceeds from the sale of the shares offered with this prospectus. The
Selling Stockholder will pay all commissions in connection with the sale of
those shares. Other than the exercise price the Selling Stockholder will pay to
exercise its warrants, we will not receive any proceeds from the sale of the
shares offered in this prospectus.
The shares of common stock may be sold from time to time pursuant to
this prospectus by the selling stockholder in one or more of the following
transactions:
(a) through brokers, acting as principal or agent, in transactions
(which may involve block transactions) on the Nasdaq National
Market, in special offerings, in the over-the-counter market,
or otherwise;
(b) to underwriters who will acquire the shares for their own
account and resell them in one or more transactions, including
negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to
time);
(c) directly or through brokers or agents in private sales at
negotiated prices;
(d) to lenders pledged as collateral to secure loans, credit or
other financing arrangements and any subsequent foreclosure,
if any, thereunder;
(e) through put or call options transactions relating to the
shares;
(f) through short sales of shares; or
(g) by any other legally available means.
Offers to purchase shares may be solicited by agents designated by the selling
stockholder from time to time. In addition, any shares covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
of 1933 may be sold under Rule 144 rather than pursuant to this prospectus.
We expect the Selling Stockholder will sell the shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholder may pledge all or a
portion of the shares as collateral in loan transactions. Upon default by the
Selling Stockholder, the pledgee in such loan transaction would have the same
rights of sale as the Selling Stockholder under this prospectus. The Selling
Stockholder may also transfer shares in other ways not involving market makers
or established trading markets, including directly by gift, distribution, or
other transfer without consideration, and upon any such transfer the transferee
would have the same rights of sale as the Selling Stockholder under this
prospectus. Finally, the Selling Stockholder and any brokers and dealers through
24
whom sales of the shares are made may be deemed to be "underwriters" within the
meaning of the Securities Act, and the commissions or discounts and other
compensation paid to such persons may be regarded as underwriters' compensation.
From time to time the Selling Stockholder may engage in short sales,
short sales against the box, puts and calls and other transactions in our
securities or derivatives thereof, and may sell and deliver the shares in
connection therewith or in settlement of securities loans.
In effecting sales, brokers and dealers engaged by the Selling
Stockholder may arrange for other brokers or dealers to participate in such
sales. Brokers or dealers may receive commissions or discounts from the Selling
Stockholder (or, if any such broker-dealer acts as agent for the purchaser of
such shares, from such purchaser) in amounts to be negotiated which compensation
as to a particular broker or dealer might be in excess of customary commissions.
Broker-dealers may agree with the Selling Stockholder to sell a specified number
of such shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for the Selling Stockholder, to
purchase as principal any unsold shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholder. Broker-dealers who acquire
shares as principal may thereafter resell such shares from time to time in
transactions (which may involve block transactions and sales to and through
other broker-dealers, including transactions of the nature described above) in
the over-the-counter market or otherwise at prices and on terms then prevailing
at the time of the sale, at prices then related to the then-current market price
or in negotiated transactions and, in connection with such resales, may pay to
or receive from the purchasers of such shares commissions as described above. We
will pay all expenses of registration incurred in connection with this offering.
At the time a particular offer of the shares is made, to the extent
required, we will distribute a supplement to this prospectus which will identify
and set forth the aggregate amount of shares being offered and the terms of the
offering.
Sales of the shares at less than market prices may depress the market
price of our common stock. Moreover, the Selling Stockholder is not restricted
as to the number of shares which may be sold at any one time, and it is possible
that a significant number of shares could be sold at the same time.
The Selling Stockholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of the shares by the
Selling Stockholder and any other such person. Furthermore, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the shares to engage in market-making activities with respect to the
particular shares being distributed for a period of up to five business days
prior to the commencement of such distribution. All of the foregoing may affect
the marketability of the shares and the ability of any person or entity to
engage in market-making activities with respect to the shares.
25
To comply with certain states' securities laws, if applicable, the
shares may be sold in any such jurisdictions only through registered or licensed
brokers or dealers.
EXPERTS
The audited financial statements as of June 30, 1999 and 1998 and for
each of the three years in the period ended June 30, 1999, incorporated by
reference in this prospectus and elsewhere in the registration statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report. We
refer you to the report on those financial statements, dated September 10, 1999,
which includes an explanatory paragraph with respect to the uncertainty
regarding the Company's ability to continue as a going concern as discussed in
Note 1 to the financial statements.
26
We have not authorized any dealer,
salesperson or other person to give any
information or represent anything not 2,250,000 Shares
contained in this prospectus. You must
not rely on any unauthorized DIGITAL COURIER
information. This prospectus does not TECHNOLOGIES, INC.
offer to sell or buy any shares in any
jurisdiction where it is unlawful. The
information in this prospectus is Common Stock
current only as of its date.
------------------------
- ------------------------------------------------------
PROSPECTUS
------------------------
TABLE OF CONTENTS
PAGE
RISK FACTORS........................................2
FORWARD-LOOKING STATEMENTS.........................12
THE COMPANY........................................12
ABOUT THIS PROSPECTUS..............................21
WHERE YOU CAN FIND MORE INFORMATION................21
USE OF PROCEEDS....................................22
SELLING STOCKHOLDER................................22
PLAN OF DISTRIBUTION...............................24
EXPERTS............................................26
April ,2000
27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The Company estimates that expenses in connection with the transactions
described in this registration statement will be as follows. All expenses
incurred with respect to the transactions will be paid by the Company.
SEC Registration Fee.......................$ 6,255
Printing Expenses..............................500
Accounting Fees and Expenses................15,000
Legal Fees and Expenses......................5,000
Transfer Agent Fees and Expenses.............1,500
Miscellaneous................................1,745
Total.............................$30,000
Item 15. Indemnification of Directors and Officers
The General Corporation Law of the State of Delaware provides for
indemnification as set forth in Section 145 thereof. The Company's Bylaws
provide for indemnification of the Company's directors, officers and others
against all expenses and amounts of liability incurred by them in connection
with any action, suit or proceeding in which they are involved by reason of
their affiliation with the Company. This indemnification is to the fullest
extent permitted by law upon receipt of an undertaking by or on behalf of such
person (and the heirs and legal representatives of such person) to repay such
advances if it shall ultimately be determined that such person is not entitled
to indemnification by the Company.
Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
II-1
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibits Description
-------- -----------
4.1 Securities Purchase Agreement between the Company and
Transaction Systems Architects, Inc., dated as of June
14, 1999, filed with the Form 8-K dated June 21, 1999,
incorporated herein by reference
5.1 Opinion of Counsel
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers
23.3 Consent of Counsel (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (contained on signature page)
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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a twenty percent (20%) change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act, 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, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) 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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(6) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Park City, Utah on March 28, 2000.
DIGITAL COURIER TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ James A. Egide
------------------------
James A. Egide
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
and appoints Bobbie Downey with full power of substitution and re-substitution
and full power to act without the other, as his true and lawful attorney-in-fact
and agent to act in his name, place and stead and to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to
file, any and all amendments to this registration statement, including any and
all post-effective amendments and any registration statement relating to the
same offering as this registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, as amended, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing, ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities indicated
below on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ James A. Egide March 29, 2000
--------------------
James A. Egide Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Michael D. Bard March 29, 2000
--------------------
Michael D. Bard Senior Vice President and Controller
(Chief Financial and Accounting Officer)
/s/ Don Marshall March 29, 2000
--------------------
Don Marshall President and Director
Signature Title Date
--------- ----- ----
/s/ Kenneth M. Woolley March 29, 2000
--------------------
Kenneth M. Woolley Director
/s/ Ken Nagel March 29, 2000
--------------------
Ken Nagel Director
/s/ Glenn Hartman March 29, 2000
--------------------
Glenn Hartman Director
/s/ Gregory J. Duman March 29, 2000
--------------------
Gregory J. Duman Director
EXHIBIT INDEX
Exhibit Number Exhibit
-------------- -------
4.1 Securities Purchase Agreement between the Company and
Transaction Systems Architects, Inc., dated as of June
14, 1999, filed with the Form 8-K dated June 21, 1999,
incorporated herein by reference
5.1 Opinion of Counsel
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers
23.2 Consent of Counsel (included in Exhibit 5.1)
24 Power of Attorney (included on signature page of
registration statement)