Summary
This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus, including "Risk Factors" and the Financial Statements, carefully before making an investment decision.
The Company
We are a leading provider of email hosting services designed to allow a wide range of organizations, including Internet service providers, web hosting companies, web portals and corporations, to reduce costs and improve customer service by outsourcing their email systems. We believe we are a leading provider of email hosting services because our services are designed to support growth, enhance reliability, allow access to advanced technologies and provide greater access with high levels of security. In addition, our service is designed so that our customers can enhance their brand recognition by maintaining their existing "look and feel" while improving the functionality of their email service. We intend to build on our expertise in email services to provide additional Internet messaging services in the future. We have approximately 250 customers. We seek to establish strategic relationships with entities that are both commercial partners and/or equity investors or with whom we have contractualized reseller relationships. We have strategic relationships with ICQ, a subsidiary of America Online, E*TRADE, Network Solutions, Sprint and US West.
Email, one of the most popular Internet applications, has broadened from a simple messaging tool to a widely accepted form of communication for both personal and business use. According to Electronic Mail & Messaging Systems ("EMMS"), there were approximately 263 million electronic mailboxes worldwide as of September 30, 1998. EMMS estimates that this number increased to 382 million electronic mailboxes worldwide as of March 31, 1999. According to the Gartner Group, approximately 300 billion electronic mail messages were sent in 1998. In addition, the complexity of the individual messages is increasing, allowing email to become a more functional communications tool for both personal and business use. At the same time, we believe that customers are increasingly expecting the same reliability from their email service that they are accustomed to receiving from their telephone service, commonly referred to as web-tone reliability. Due to this expectation and the expense and expertise required to maintain a reliable email system, organizations are increasingly seeking to outsource their email systems.
Our services provide the following benefits to our customers:
. reduced costs associated with acquiring and maintaining hardware and software and with recruiting and retaining systems engineering and administrative support;
. a scalable and reliable system architecture designed to support global service over hundreds of millions of mailboxes across millions of domains with web-tone reliability;
. access to advanced technologies based on our expertise in rapidly deploying new technologies, combating system failures and maintaining network and system security;
. easy access by customers and end-users by designing our services on open Internet-based standards; and . control over their own brand and functionality through customized web- based email interfaces.
Recent Developments
Since our initial public offering, we have announced several strategic contracts that help us to expand our customer base and broaden our global reach. We have expanded our relationship with America Online so it now includes ICQ, AOL Latin America and AOL Enterprise, which provides us with access to one of the largest concentrated customer bases of e-mail users on the Internet. Our relationship with Promus provides us with access to 1,362 hotels with more than 194,000 rooms in North and South America. Furthermore, we have significantly expanded our international customer base to include Asiamail, Avantel, British Telecom and o.tel.o.
The Offering
Common stock offered by Critical Path.............. 3,000,000 shares Common stock offered by selling shareholders....... 1,000,000 shares Common stock to be outstanding after the offering.. 38,002,091 shares Use of proceeds by Critical Path................... Acquisition of businesses and technologies, expansion of sales and marketing activities, open additional data centers, expansion of international operations and general corporate purposes. Nasdaq National Market symbol...................... CPTH Summary Consolidated Financial Data (in thousands, except per share data) Please see Note 1 of Notes to Consolidated Financial Statements for an explanation of the determination of the number of shares used in computing per share data. The Pro Forma Consolidated Balance Sheet Data summarized below reflects the application of the net proceeds from our initial public offering of $115.5 million. The Pro Forma As Adjusted Consolidated Balance Sheet Data reflects the sale of the 3,000,000 shares of common stock offered by Critical Path in this offering at an assumed public offering price of $82.25 per share and after deducting the estimated underwriting discounts and commissions and our estimated offering expenses.
Period from Three Months Ended
February 19, 1997 Year Ended March 31,
(Inception) to December 31, -------------------
December 31, 1997 1998 1998 1999
(unaudited)
Consolidated Statement of Operations Data: Net revenues............... $ -- $ 897 $ 70 $ 1,049 Loss from operations....... (1,056) (11,448) (1,170) (17,881) Net loss................... (1,074) (11,461) (1,320) (17,594) Net loss per share -- basic and diluted............... $ (0.54) $ (2.94) $ (0.49) $ (2.51) Weighted average shares -- basic and diluted......... 1,994 3,889 2,687 7,011 Pro forma net loss per share (unaudited): Net loss per share -- basic and diluted....... $ (0.81) $ (0.68) Weighted average shares -- basic and diluted.... 14,194 26,018
March 31, 1999 Pro Forma Actual Pro Forma As Adjusted (unaudited)
Consolidated Balance Sheet Data: Cash and cash equivalents......................... $22,506 $138,006 374,386 Working capital................................... 18,851 134,351 370,731 Total assets...................................... 32,681 148,181 384,561 Capital lease obligations, long-term.............. 4,095 4,095 4,095 Shareholders' equity.............................. 23,440 138,940 375,320
Our headquarters are located at 320 1st Street, San Francisco, California 94105 and our telephone number is (415) 808-8800. Our website address is www.cp.net. The information on our website is not a part of this prospectus.