AS FILED WITH THEAs filed with the Securities and Exchange Commission on March 8, 2002
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
ON JUNE 16, 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
-------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
EURONET SERVICESWORLDWIDE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE(Exact Name of Registrant as Specified in Its Charter)
Delaware 74-2806888
(STATE OR OTHER JURISDICTION(State or other jurisdiction of (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
HORVAT U. 14-24
1027 BUDAPEST
HUNGARY
011-361-224-1000
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)Employer
incorporation or organization) Identification Number)
4601 College Boulevard
Suite 300
Leawood, Kansas 66211
(913) 327-4200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
CT CORPORATION SYSTEMCorporation System
1633 BROADWAY
NEW YORK, NEW YORKBroadway
New York, New York 10019
(212) 664-7666
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
---------------
COPIES TO:
ARNOLD R. WESTERMAN, ESQ.
ARENT FOX KINTNER PLOTKIN(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------------
Copies to:
James M. Bartos
Shearman & KAHN, PLLC
1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:Sterling
Broadgate West
9 Appold Street
London EC2A 2AP
United Kingdom
011 44 20 7655-5000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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 (the "Securities Act"), please 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 earliestearlier
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 earliestearlier effective registration statement
for the same offering. [_][ ]
If this Formform is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliestearlier 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
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- -------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) FEE========================================================================================================
Proposed
Maximum Proposed Maximum
Title of Each Class Amount to be Offering Price Aggregate Amount of
of Securities to be Registered Registered Per Share (1) Offering Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.02................... 1,000,000 $5.50 $5,500,500 $1,623par value $.02
per share........... 625,000 shares $18.85 $11,781,250 $1,083.88
========================================================================================================
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(1) Estimated solely for the purpose of calculatingcomputing the amount of the
registration fee.
(2) Representsfee pursuant to Rule 457(c) under the aggregate exercise priceSecurities Act of the Warrants, which is $5.50
per Warrant, representing a 10% premium over1933
based on the closing price for Common Stock on March 6, 2002.
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
Common StockSecurities Act of 1933 or until the Registration Statement shall become
effective on such date as reported on the Nasdaq National Market on June 12, 1998.
---------------
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 SAID
SECTION 8(A)Commission, acting pursuant to said Section 8(a),
MAY DETERMINE.
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- -------------------------------------------------------------------------------may determine.
================================================================================
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++********************************************************************************
The information in this prospectus is not complete and may be changed.
********************************************************************************
SUBJECT TO COMPLETION, DATED JUNE 15, 1998
PROSPECTUS
LOGOMARCH 8, 2002
[LOGO]
625,000 Shares
EURONET SERVICESWORLDWIDE, INC.
SHARES OF COMMON STOCK
($.02 PAR VALUE)
This Prospectus relates toCommon Stock
----------------
All of the shares of Common Stock par value $.02 per
shareoffered by this Prospectus are being sold
by selling stockholders. Euronet Worldwide, Inc. ("Euronet", "we" or "us")
(formerly Euronet Services Inc.) will not receive any of the proceeds from the
sale of these shares. We originally issued all of the shares offered by this
prospectus pursuant to Stock Purchase Agreements among us and the selling
stockholders identified below dated between February 1 and February 5, 2002 (the
"Common Stock""Stock Purchase Agreements"), and we are registering the shares pursuant to the
Stock Purchase Agreements.
The selling stockholders may sell all or a portion of the shares from time
to time on the Nasdaq Small Cap Market and at prices which will be determined by
the prevailing market price for the shares. Our shares are listed for trading on
the Nasdaq Small Cap Market under the symbol "EEFT". We recently applied to have
our shares listed on the Nasdaq National Market. As of March 8, 2002, this
application is still pending. On March 6, 2002, the last reported sales price of
our Common Stock on the Nasdaq Small Cap Market was $18.85.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" STARTING
ON PAGE 1.
Neither the Securities and Exchange Commission (the "SEC") 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 March , 2002.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
---------------------
TABLE OF CONTENTS
---------------------
Page
----
PROSPECTUS SUMMARY........................................................ 1
RISK FACTORS.............................................................. 1
USE OF PROCEEDS........................................................... 8
SELLING STOCKHOLDERS...................................................... 8
PLAN OF DISTRIBUTION...................................................... 9
LEGAL MATTERS............................................................. 10
EXPERTS .................................................................. 10
WHERE YOU CAN FIND ADDITIONAL INFORMATION................................. 10
INCORPORATION BY REFERENCE................................................ 10
FORWARD-LOOKING STATEMENTS................................................ 11
You should rely only on information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
i
PROSPECTUS SUMMARY
We are a leading provider of secure electronic financial transaction
solutions. We provide financial payment middleware, financial network gateways,
outsourcing, and consulting services to financial institutions, retailers and
mobile operators. We operate an independent automated teller machine ("ATM")
network of 2,999 ATMs in Europe (and until January 2002 in the United States),
and through our software subsidiary, Euronet USA, Inc. ("Euronet USA"), we offer
a suite of integrated software solutions for electronic payment and transaction
delivery systems. We offer comprehensive electronic payment solutions consisting
of ATM network participation, outsourced ATM management solutions and software
solutions. Our principal customers are banks and other companies such as mobile
phone operators that require electronic financial transaction processing
services. With nine offices in Europe and two in the United States, we offer our
solutions in more than 60 countries around the world.
The first company in the Euronet group was established in 1994 as a
Hungarian limited liability company. We began operations in 1995, setting up a
small processing center and installing our first ATMs in Budapest, Hungary. We
commenced operations in Poland and Germany in 1995 and 1996, respectively. The
Euronet group was reorganized on March 6, 1997 in connection with its initial
public offering, and at that time the operating entities of the Euronet group
became wholly owned subsidiaries of Euronet Services Inc., a Delaware
corporation
(the "Company"), that may be sold from time to time by the Company on exercise
of the Warrants. The Warrants were sold by the Company as part of a Unit
Offering which consisted of an aggregate of DM177,000,000 (approximately $100
million based on a Dollar-Deutsch Mark exchange rate of DM1.77=$1.00, which was
the noon buying rate in New York City for cable transfers in Deutsch Marks on
June , 1998) in principal amount at maturity of % Senior Discount Notes
Due 2006 (the "Senior Discount Notes") and Warrants. Each Unit consisted
of DM 1,000 principal amount at maturity of Senior Discount Notes and Warrants
to purchase shares of Common Stock. The Senior Discount Notes and
Warrants were separately transferable immediately on issuance. Each Warrant
entitles the holder thereof to purchase one share of Common Stock for $ at
any time on or before the close of business in New York City on June , 2006.
The number of shares of Common Stock issuable on exercise of each Warrant, and
the exercise price per share, are subject to adjustment as provided in the
Warrant Agreement pursuant to which the Warrants were issued.
The Common Stock is quoted on NASDAQ National Market under the symbol "EEFT".
On June ,corporation.
Until December 1998, the reported closing sales price of the Common Stock was
$ per share.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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NUMBER OF SHARES PRICE TO PUBLIC(1) PROCEEDS TO ISSUER
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Per Share.......... $ $
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Total.............. $ $
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SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH THE EXERCISE OF THE WARRANTS AND THE PURCHASE OF
THE COMMON STOCK.
-----------
The date of this Prospectus is June , 1998.
AVAILABLE INFORMATION
The Company has filed with the U.S. Securities and Exchange Commission (the
"Commission") a registration statement (herein, together with all amendments,
exhibits and schedules thereto, referred to as the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus, which is part of
the Registration Statement, does not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company, reference is hereby made to the Registration
Statement.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. The
Registration Statement, including the exhibits thereto, and reports and other
information filed by the Company with the Commission can be inspected without
charge and copied, upon payment of prescribed rates, at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at 7 World Trade Center, 13th Floor, New York, New York 10048 and the
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material and any part thereof will also be
available by mail from the Public Reference Section of the Commission, at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, and via the
Commission's address on the World Wide Web at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed below are incorporated by reference in this
Registration Statement, and all documents concurrently and subsequently filed
by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which de-registers all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
document.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as filed with the Commission on March 31, 1998;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, as filed with the Commission on May 15, 1998;
(3) The description of the Company's Common Stock contained in the
Company's Form 8-A, as filed with the Commission on February 21, 1997.
For purposes of this Registration Statement, any statement contained in a
document incorporated by or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Registration
Statement.
The Company shall furnish without charge to each person, to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any orwe devoted substantially all of the documents which are incorporated by reference
herein (other than exhibitsour resources to
such documents, unless such exhibits are
specifically incorporated by reference into such documents). Written or
telephone requests for such documents should be directed to Jeffrey Newman at
Horvat U. 14-24, 1027 Budapest, Hungary,establishing and the phone number at that address
is 011 361 224 1020.
FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus, and in the documents incorporated
by reference into this Prospectus, that are not based upon historical fact are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Forward-looking statements
included in this Prospectus and in documents incorporated herein by reference
involve known and unknown risks,
uncertainties and other factors which could cause the Company's actual
results, performance (financial or operating) or achievements expressed or
implied by such forward-looking statements not to occur or be realized. Such
forward-looking statements generally are based upon the Company's best
estimates of future results, performance or achievement and are based upon
current conditions and the most recent results of operations. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may," "will," "expect," "believe," "estimate," "anticipate," "continue," or
similar terms, variations of those terms or the negative of those terms. All
statements other than statements of historical facts included in this
Prospectus, and in the documents incorporated by reference into this
Prospectus, including, without limitation, statements regarding (i) the use of
proceeds, (ii) the Company's business plans and financing plans and
requirements; (iii) trends affecting the Company's business financial
condition or results of operations, (iv) the impact and extent of competition,
(v) expansion of the Company'sexpanding an ATM network and expansion ofoutsourced ATM management services
business in Central Europe (including Hungary, Poland, the Company's
operations, (vi)Czech Republic, and
Croatia) and Germany. On December 2, 1998, we acquired Euronet USA (formerly
Arkansas Systems, Inc.), a U.S. company that produces electronic payments
systems software for retail banks and is the adequacy of capital to meetleading electronic payment software
system for the Company's capital
requirements and expansion plans, (vii) the assumptions underlying the
Company's business plans, (viii) business strategy, (ix) government regulatory
actions, (x) technological advances, (xi) projected costs and revenues and
(xii) risk factors, are forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to
be correct.
Prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties
and that actual results may differ materially from those in the forward-
looking statements asIBM A/S 400 platform. As a result of various factors. The information contained
in this Prospectus, and in the documents incorporated by reference into this
Prospectus, including, without limitation, the information under "Risk
Factors," identifies important factors that could cause such differences, and
any such forward-looking statements are expressly qualified in their entirety
by such factors.
THE COMPANY
The Company operates the only independent non-bank owned automatic teller
machine ("ATM") network in Central Europe as a service provider to banks and
other financial institutions, and is one of the largest of such providers in
Europe. The Company was established in 1994 and commenced operations in June
1995. Since it commenced operations, the Company has undertaken a rollout of
its ATM network with 53, 166 and 693 ATMs in operation at December 31, 1995,
1996 and 1997, respectively. As of March 31, 1998 the Company operated a
network of 798 state of the art ATMs in Europe, with 359 located in Hungary,
332 in Poland, 64 in Germany, 35 in Croatia and 8 in the Czech Republic. In
addition, in December 1997, the Company established offices in France and
Romania. Subject to full evaluation of market opportunities, the Company
expects to install approximately 800 additional ATMs during 1998 and pursue
the possible acquisition, of ATM network assets in Europe, the U.S. and other
markets. Through agreements and relationships established with local banks,
international debt and credit card issuers and associations of such issuers
such as American Express, Diners Club International, VISA, Mastercard and
EUROPAY (together "International Card Organizations"), the Company's ATMs arewe were
able to process ATM transactions for holdersoffer a broader and more complete line of services and solutions to the
retail banking market, including software solutions related not only to ATMs,
but also to point-of-sale ("POS"), credit and debit cards issued
by or bearingcard operations and internet
and PC banking. We have invested in software research, development and delivery
capabilities and have integrated our ATM business and software business. These
two complementary businesses present strong cross selling opportunities within
our combined customer base and new opportunities to leverage the logoscore
infrastructure and software to provide innovative value-added e-commerce
products and services.
Since 1999 we have expanded our presence to Western Europe and in
particular the United Kingdom. As of suchDecember 31, 2001, we operated 567 ATMs in
the United Kingdom.
We changed our name from Euronet Services Inc. to Euronet Worldwide, Inc.
in August 2001.
We currently operate in two principal business segments. The first is the
Processing Services Segment, which comprises our proprietary ATM network,
outsourced management of ATMs for banks and International Card Organizations. In
addition,various new processing services that
we provide for banks and mobile phone companies through its sponsorship arrangements with banksour ATM network and
managed ATMs, such as mobile phone recharge services. Our second principal
segment is the Software Solutions Segment, which issue VISA and
EUROPAY cards, the Company is ableprovides transaction processing
software solutions to accept cards with the PLUS and Cirrus
logos. The Company receives a fee from the relevant card issuing bank or
International card Organization for any ATM transactions processed on the
Company's ATMs. The Company also offers out-sourced ATM management services to
local banks that own proprietary ATM networks for which the Company receives a
fixed monthly fee and/or a per transaction fee. The Company's Common Stock is
traded on the NASDAQ National Market under the symbol "EEFT"permit them to operate ATMs and based on its
share price as of the close of June 8, 1998, the Company's equity market
capitalization was approximately $83 million.
As of March 31, 1997, Euronet's ATM machines accepted approximately 99% of
the domestic creditPOS terminals
and debit cards issued in Hungary and 64% of the domestic
credit and debit cards in Poland. The Company is able to accept substantially
all of the domestic credit and debit cards issued in Germany due to its
connection, through a sponsorship agreement with the German Bank, Service Bank
GmbH, to a central transaction authorization switch in Germany. In Croatia,
the Company currently accepts 11% of the issued credit and debit cards, and it
expects
2
to be able to accept 29% by the end of May 1998 through an agreement signed
with Atlas American Express. The Company is at the early stages of
establishing its network in the Czech Republic where it currently operates
eight ATMs which are currently able to accept VISA cards, representing 22% of
the credit and debit cards issued in the Czech Republic.
The Company believes that one of the most important factors in determining
the success of an ATM network is the location of the ATMs. The Company's
strategy is to establishing sites for its ATMS that provide high visibility
and cardholders utilization. As part of its strategy, the Company identifies
major pedestrian traffic locations where people need quick and convenient
access to cash. Key target locations for Euronet's ATMs include (i) major
shopping malls, (ii) busy intersections, (iii) local smaller shopping areas
offering grocery stores, supermarkets and services where people routinely
shop, (iv) mass transportation hubs such as city bus and subway stops, rail
and bus stations, airports and gas stations, and (v) tourist and entertainment
centers such as historical sections of cities, cinemas, and recreational
facilities.
Recognizing that convenience and reliability are principal factors in
attracting and retaining ATM customers, the Company has invested in the
establishment of advanced ATM machines and monitoring systems, as well as
redundancies to protect against network interruption. Approximately 77% of the
Company's machines are available to customers 24 hours per day (with the
majority of the balance of the machines being limited by retail hours of
operation in the particular location). The performance and cash positions of
the Company's ATMs are monitored centrally, with location operations and
maintenance contractors dispatched to fill and service the machines. The
Company's machines in all markets, except Germany, are linked by satellite or
land based telecommunications lines to the Company's central processing center
in Budapest (the "Processing Center"). In order to obtain transaction
authorization, the Processing Center interfaces with either the bank or
International Card Organization that issued the card ("Card Issuer").
The Company believes that the level of services it providesprocess financial transactions from those devices and the location
of its ATMs make it an attractive provider to banks and International Card
Organizations. By connecting to the Company's network, local banks can offer
their customers the convenience of cash withdrawal and balance inquiry
services in numerous off-site locations without incurring additional branch
operating costs. Alternatively, banks can outsource the management of their
proprietary ATM networks to the Company, thereby reducing their operating
costs and improving the allocation of their own resources. In addition, the
Company believes that the services it provides permit it to capitalize on the
increase in bank account usage and credit and debt card issuance in Central
Europe, as demand for banking services continues to grow in the region.
The Company's principal executive offices are located at 14-24 Horvat u.,
1027 Budapest, Hungary and its telephone number at this address is 011-36-1-
224-1000.
THE OFFERING
Securities Offered..... shares of Common Stock, par value $.02 per
share
Common Stock shares*
Outstanding............
Use of Proceeds........ Assuming that all of the Warrants are exercised for
cash, as to which there can be no assurance, the
Company will realize net proceeds of $ . Net
proceeds will be used for working capital and general
corporate purposes.
Risk Factors........... The shares offered hereby are speculative and involve
a high degree of risk and should not be purchased by
investors who cannot afford the loss of their entire
investment. See "Risk Factors."
NASDAQ/NM Symbol....... EEFT
- --------
* As of March 31, 1998. Does not include (i) shares issuable
upon exercise of outstanding warrants, options and rights, including the
Warrants, entitling the holders thereof to purchase an aggregate of
shares of Common Stock at prices ranging from $ to $ .
3
internet.
RISK FACTORS
An investment in the shares of Common Stock involves a high degree of risk.
Accordingly, prospective purchasers should consider carefully all of the
information set forth in this Prospectusprospectus and in the documents incorporated by
reference into this Prospectus,prospectus, in particular, the risks described below, prior
to making any investment decision. This Prospectusprospectus contains certain
forward-looking statements within the meaning of the federal securities laws.
Actual results and the timing of certain events could differ materially from
those projected in the forward-looking statements due to a number of factors,
including those set forth below and elsewhere in this Prospectus.prospectus. See
"Forward-Looking Statements."
SUBSTANTIAL INDEBTEDNESS; LIQUIDITY
The Company has1
Substantial indebtedness; liquidity
We have substantial indebtedness. As of MarchDecember 31, 1998, after giving
pro forma effect to the Senior Discount Note offering and the application of
the net proceeds therefrom, the Company's2001, our total
indebtedness iswas approximately $103.3 million, its stockholders' equity is approximately $46.0$69.1 million and the Company'sour total assets arewere
approximately $154.8$61.4 million. The Company
believesWe incurred this indebtedness in part as a result
of our issuance of certain 12 3/8 % senior discount notes that fall due on July
1, 2006. We have not been required to make interest payments under these notes
to date, but interest payments will become due beginning on January 1, 2003.
On January 4, 2002, we sold assets of EFT Network Services LLC, resulting
in proceeds to us of $6 million. We believe the net proceeds from the Senior Discount Note offering,Stock
Purchase Agreements with the selling stockholders and the proceeds of this asset
sale, together with itsour cash flows from operations, and remaining proceeds from the 1997
initial public offering (approximately $33.5 million at March 31, 1998), will be sufficient to fund
the Company'sour operating losses, debt service requirements and capital expenditures
associated with itsour expansion plan
through the year 2000.plans. However, there can be no assurance that the Companywe
will achieve or sustain profitability or generate sufficient revenues in the
future. If anthe opportunity to consummateof a strategic acquisition arises or if one or more
new contracts isare executed requiring more rapid installation of ATM machines
than anticipated or a significant increase in the number of ATM machines in any
market area, the Companywe may require additional financing for such purpose and to fund
itsour working capital needs. Such additional financing may be in the form of
additional indebtedness which would increase the
Company'sour overall leverage.
The level of the Company'sour indebtedness could have important consequences to
investors, including the following: (i) the Companywe may not be able to generate
sufficient cash flows to service the Discount Notes and its otherour outstanding indebtedness and to fund
adequately itsour planned capital expenditures and operations; (ii) theour ability of the Company to
obtain any necessary financing in the future for working capital, capital
expenditures, debt service requirements or other purposes may be limited or such
financing may be unavailable; (iii) a substantial portion of the Company'sour cash flows
if any, must
be dedicated to the payment of principal and interest on itsour indebtedness and
other obligations and will not be available for use in itsour business; (iv) the Company'sour
level of indebtedness could limit itsour flexibility in planning for, or reacting
to, changes in itsour business and markets;the markets in which we operate; and (v) the Company'sour
high degree of indebtedness will make itus more vulnerable to changes in general
economic conditions and a downturn in itsour business, thereby making it more
difficult for the Companyus to satisfy its obligations under the
Notes.
The Companyour obligations.
We must substantially increase itsour net cash flows in order to meet itsour debt
service obligations, including obligations under the Senior Discount
Notes, and there can be no assurance that the Companywe will be able to meet
such obligations, including its obligations under the Senior Discount Notes.obligations. If the Company iswe are unable to generate sufficient cash flows or
otherwise obtain funds necessary to make required payments, or if it otherwise failswe fail to
comply with the variousother covenants under its indebtedness, itin our debt service agreements, we would be in
default under the terms thereof, whichof such agreements. This would permit the holders of
such indebtedness to accelerate the maturity of such indebtedness and could
cause defaults under other indebtedness of the Company.
Such defaults could result in a default on
the NotesHistorical and could delay or preclude payments of interest or principal
thereon.
LIMITED OPERATING HISTORY; HISTORICAL AND FUTURE OPERATING LOSSES AND NEGATIVE
CASH FLOW
The Company has had a limitedpossible future operating history.losses and negative cash flow
For the period from June
22, 1994 (inception) to December 31, 1994,year ended 2001, we had net income of approximately $0.7 million
and for the years ended December 31, 1995,
19962000 and 1997 and the three months ended March 31, 1998, the Company1999, we had net losses of approximately $228,000, $1.9 million, $7.6 million, $8$49.6
million and $3.6$30.9 million respectively, resulting in an aggregate net loss of
approximately $21.3$79.8 million as of March 31, 1998.
4
(The 1996for the period 1999 through 2001. Our results have
progressively improved and we generated a small operating profit for the first
time in the fourth quarter, 2001. Nonetheless, we could generate net loss includes a one-time non-cash stock compensation expense of
approximately $4.2 million relating to the grant of certain employee and
management options.) The Company expects tolosses
again while we continue to generate losses from
operating activities, negative EBITDA and negative cash flow while it
concentratesconcentrate on the expansion of its ATM network business. As a result of the
Company's strategy of continuing expansionour business and
increasing itsour market share,
the Company's net losses are expected to increase. Thereshare. Thus, there can be no assurance that the Company'sour revenues
will continue to grow or be sustained in future periods or that the Companywe will be able
to achieve or sustain profitability or positive cash flow from operations in any
future period. If the Companywe cannot achieve and sustain operating profitability or
positive cash flow from operations, itwe may not be able to meet itsour debt service
or working capital requirements,
including its obligations with respectrequirements.
Risks related to the Senior Discount Notes.
SIGNIFICANT CAPITAL REQUIREMENTS
The development and expansion of the Company's ATM network and its ATM
management services operations in Hungary, Poland, Germany, the Czech
Republic, Croatia, France and other markets, and the resulting operating
losses will require substantial additional cash from outside sources.business
The Company anticipates that its substantial cash requirements will continue into
the foreseeable future. Based on the Company's plans with respect to the
installation of ATMs and the provision of ATM management services in Hungary,
Poland, Germany, the Czech Republic, Croatia, France and other markets in the
near to medium term, and the Company's requirements with respect to related
infrastructure and operational costs, management believes the net proceeds
from the offering of Senior Discount Notes will provide sufficient funds
necessary for the Company to expand its business as currently planned through
the year 2000. There can be no assurance, however, that additional financing
will not be required. The Indenture limits, but does not prohibit the Company
and its subsidiaries from incurring additional indebtedness, including
indebtedness to fund working capital and operating losses and for the
acquisition of assets related to its business. There can be no assurance that
the Company will be able to raise additional required capital on satisfactory
terms or at all. If the Company is able to raise additional funds through the
incurrence of debt, and it does so, it would likely become subject to
additional restrictive financial covenants. Failure to obtain such financing
could result in the delay or abandonment of some or all of the Company's
acquisition, development and expansion plans and expenditures, which could
have a material adverse effect on its business.
RISKS RELATED TO RAPID EXPANSION OF BUSINESS
The continued rapid expansion and development of the Company'sour ATM business will depend on
various factors including the following: the demand for our ATM services in the
Company'sour
current target markets, the ability to locate appropriate ATM sites and obtain
necessary approvals for the installation of ATMs, the ability to install ATMs in
an efficient and timely manner, the expansion of the Company'sour business into new countries
as currently planned, entering into additional card acceptance agreementsand ATM
management agreement with banks, the ability to obtain sufficient numbers of
ATMs on a timely basis and the availability of financing for such expansion. In
addition, such expansion may involve
2
acquisitions which, if made, could divert theour resources and management time of the Company and
require integration of new assets with the Company'sour existing networks and services. The
Company'sOur
ability to manage effectively itsour rapid expansion effectively will require itus to continue to
implement and improve itsour operating, financial and accounting systems and to
expand, train and manage itsour employee base. The inability to manage effectively itsour planned
expansion effectively could have a material adverse effect on the Company'sour business,
growth, financial condition and results of operations.
DEPENDENCE ON RELATIONSHIPS WITH BANKS AND INTERNATIONAL CARD ORGANIZATIONS;
TERMINATION OF OTP CONTRACT
The Company'sexpansion of our software business will depend primarily upon the
demand for our software products, including in particular our core electronic
financial transaction processing product, ITM. This product is platform
dependent, and runs only on the IBM A/S 400 platform. Although the IBM A/S 400
is a popular platform for banks, there can be no assurance that it will continue
to be in the future as new technology develops. In addition, our product is a
relatively inexpensive software package targeted at banks with smaller
transaction processing networks and as consolidation occurs in the banking
industry in developed countries, demand for this product may fall.
Seasonality may cause our quarterly operating results to vary
Our experience is that the level of transactions on our networks is subject
to substantial seasonal variation. Transaction levels have consistently been
much higher in the last quarter of the year due to increased use of ATMs during
the holiday season. There is a drop in the level of transactions in the first
quarter, during which transaction levels are generally the lowest we experience
during the year. As an example, transactions in the first quarter of 2001 were
approximately 11% lower over our entire network than in the second quarter.
Transactions in the fourth quarter 2001 were approximately 4% higher over our
entire network than in the third quarter. Since revenues of the Processing
Services Segment are primarily transaction based, this segment is directly
affected by this seasonality. As a result of these seasonal variations, our
quarterly operating results may fluctuate materially and could lead to
volatility in the price of our shares.
Dependence on relationships with banks and international card organizations
The future growth of our ATM business depends on itsa number of factors,
including our ability to sign card acceptance and ATM management agreements with
banks and Internationalinternational card organizations. Card Organizations whichacceptance agreements allow the
Company'sour
ATMs to accept credit and debit cards issued by such banks and International Card Organizations as well as retaininginternational
card organizations, and renewing suchATM management agreements generate service income from
our management of ATMs for banks. Our card acceptance agreements, which generally provide for a two to five year term.
The Company's card acceptanceand ATM management
agreements with banks generally include termination and/or renewal clauses,
which provide that either party may elect to
5
terminate or not renew an agreement
upon completion of its term. In some cases, banks may terminate their contracts
with the Company by giving notice prior to the expiration of their terms. There can be no
assurance that the
Companywe will be able to continue to sign or maintain the card acceptancethese agreements
on terms and conditions acceptable to the Companyus or that International Card Organizationsinternational card
organizations will continue to permit Euronet'sour ATMs to accept their credit and debit
cards. The inability to continue to sign or maintain such agreements, or to
continue to accept the credit and debit cards of local banks and International Card Organizations as itsinternational
card organizations at our ATMs in the future, could have a material adverse
effect on the Company'sour business, growth, financial condition and results of operations.
In January, 1998, OTP notified the Company that it was terminating its
contract with Euronet effective as of July 27, 1998. OTP advised the Company
that it terminated the contract since it desired to promote the use of its own
ATM network. OTP also indicated that the Company selected ATM sites which OTP
believed to be in competition with OTP ATM sites and that the Company failed
to provide OTP with certain transaction reportsDependence on a timely basis. It should
be noted that the reporting failure had been corrected more than two months
prior to OTP's notice of termination. As a result of this termination the
Company will not have a direct connection with OTP and will not be able to
accept OTP proprietary bank cards and OTP will no longer act as the Company's
EUROPAY sponsor in Hungary. The Company will still be able to accept all OTP
issued VISA cards through its VISA gateway. The Company is negotiating a new
EUROPAY sponsorship arrangement with a bank to replace OTP as its EUROPAY
sponsor, and subject to final execution and implementation of that agreement,
the Company will still be able to accept all OTP issued EUROPAY cards through
its EUROPAY gateway. VISA and EUROPAY cards represent over 95% of the cards
issued by OTP. The Company's contract with OTP represented approximately 51%
of consolidated revenues for the three months ended March 31, 1998. The
financial impact of the OTP contract termination is difficult to assess and
there can be no assurance that this termination will not have a material
adverse affect on the Company's financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company iskey personnel
We are dependent upon the services of certain of itour executive officers for
the management of the Companyour business and the implementation of itsour strategy. Euronet'sOur
strategy and its implementation depend in large part on the founders of the
Company,company, in particular Michael Brown and Daniel Henry, and their continued
involvement in the CompanyEuronet in the future. Michael Brown, who
is involved in strategy, planning and establishing operational procedures,
resides in Leawood, Kansas and travels to Europe on a regular basis. Daniel
Henry, who supervises the Company's day-to-day operations currently resides in
Budapest, Hungary. Although Mr. Henry may relocate to Kansas City next year,
he will continue to be involved in the Company's operations and in view of the
Company's present geographic expansion plans will likely be responsible for
overseeing the Company's expansion to the South American or Asian markets. The
Company will employ a new executive officer to supervise the Company's day-to-
day operations prior to Mr. Henry's relocation. This new executive would
reside in Central Europe. TheOur success of the Company also depends in part upon itsour
ability to hire and retain highly skilled and qualified operating, marketing,
financial and technical personnel. The competition for qualified personnel in
Central Europe and the other markets where the Company conducts
itswe conduct our business is intense
and, accordingly, there can be no assurance that the
Companywe will be able to continue to
hire or retain the required personnel. Although the Company'sOur officers and certain of itsour key
personnel have entered into service or employment agreements containing
non-competition, non-
disclosurenon-disclosure and non-solicitation covenants and providing for
the granting of incentive stock options with long-term vesting requirements,requirements.
However, most of these contracts do not guarantee that these individuals will
continue their employment with the Company.us. The loss of certain key personnel could have
a material adverse effect on the Company'sour business, growth, financial condition and
results of operations.
DEPENDENCE ONDependence on ATM TRANSACTION FEEStransaction levels and fees
Transaction fees from banks and International Card Organizationsinternational card organizations for
transactions processed on the Company'sour ATMs have historically accounted for a significant
portion of the Company'sour revenues. The
6
Company expectsWe expect that revenues from ATM transaction fees will
continue to account for a substantial majority of itsour revenues for the
foreseeable future. Consequently, the Company'sour future operating results are almost
entirely dependent on the increased issuance of credit and debit cards,
increased market acceptance of Euronet'sour services in itsour target markets, the
maintenance of the level of transaction fees received by the Company,we receive, installation by the
Company of larger
numbers of ATMs and continued usage of the Company'sour ATMs by credit and debit cardholders.
Although we believe that transactions in developing countries will tend to
increase due to increases in the number of cards being issued by banks in these
markets, we anticipate that transaction levels on any given ATM in developing
markets will not increase significantly. We can improve the levels of
transactions on our ATM network
3
overall by acquiring good sites for our ATMs, eliminating poor locations and
adding new transactions to the sets of transactions that are available on our
ATMs. However, there can be no assurance that we will be successful in
materially increasing transaction levels through these measures. Moreover, there
are developments in the field of electronic financial transactions that may
reduce the amount of cash that individuals need on a daily basis, including the
promotion by international card organizations and banks of the use of bank debit
cards for transactions of small amounts. These developments may reduce the
transaction levels that we experience on our ATMs in the markets where these
developments occur. A decline in usage of the Company'sour ATMs by ATM cardholders or in the
levels of fees received by the Companywe receive in connection with such usage would have a material
adverse impact on the Company'sour business, growth, financial condition and results of
operations. Banks also could elect to pass through to their customers all, or a
large part of, the fees charged by the Companyus for transactions on itsour ATMs. This would
increase the cost of using the Company'sour ATM machines to the bank's customers, which may
cause a decline in use of the Company'sour ATM machines and, thus, have an adverse effect on
revenues. LEGAL CONSTRAINTS ON CONDUCTING BUSINESS IN GERMANY AND FRANCE; DEPENDENCE ON
FINANCIAL INSTITUTIONS
Under German law,If transaction levels over our existing ATM network do not increase,
growth in our revenues will depend primarily on rolling out ATMs at new sites
and developing new markets, which requires capital investment and resources and
reduces the margin we realize from such revenues.
The amount of fees we receive per transaction is set in various ways in the
markets in which we do business. We have card acceptance agreements or ATM
management agreements with some banks under which fees are set. However, the
bulk of our revenues in most markets derives from "interchange fees" that are
set by the central ATM processing switch. The banks that participate in these
switches set the interchange fee among them, and we are not in a position in any
market to greatly influence these fees, which may increase or decrease over
time. A significant decrease in the interchange fee in any market could
adversely affect our results in that market.
In the United Kingdom, we receive substantially all of our revenues from
the "surcharge fee" that we are entitled to charge users of our ATMs. This fee
is set by market conditions and ranges from GBP1 to GBP 1.50 on our network, but
typically is GBP 1.50. A decrease in our ability to achieve this level of
surcharge fee would adversely affect our results in the United Kingdom.
Moreover, this surcharge fee is substantially higher than the interchange fee in
the U.K., which allows us to realize more income per transaction in the U.K.
than most of our other markets. Our aggressive roll-out of ATMs in the United
Kingdom during 2001 was based on the ability to surcharge there. The continuance
of an aggressive roll-out of ATMs in the United Kingdom is dependent on our
ability to find additional sites for ATMs that are capable of highly profitable
transaction levels. Certain machines that we have installed recently in the
United Kingdom had transaction levels that are lower that those of machines
installed earlier. This is partially due to the fact that transaction levels are
lower at ATM machines at Post Office sites and at sites at which cash is
replenished by merchants. Although these ATMs are profitable, they are
generating returns that are lower than we expected. We are examining a number of
responses to this situation, including using lower cost machines at these sites
or reducing our roll-out of machines in the United Kingdom. A decision to reduce
our rate of roll-out of ATMs or the continuing weakness of performance of
certain ATMs could result in a decrease in growth in our revenues.
Operational risk; security
Our business involves the operation and maintenance of a sophisticated
computer network and telecommunications connections with banks, financial
institutions and mobile operators. This, in turn, requires the maintenance of
computer equipment and infrastructure, including telecommunications and
electrical systems, and the integration and enhancement of complex software
applications. There are certain operational risks inherent in this type of
business which can result in temporary shut-down of parts or all of our
processing systems, including failure of electrical supply, failure of computer
hardware and software errors. All of our ATMs other than our ATMs in Germany are
operated through our processing center in Budapest, so any operational problem
in Budapest may have a significant adverse impact on the operation of our
network generally. We have experienced operations and computer development staff
and have created redundancies and procedures, particularly in our Budapest
processing center, to mitigate such risks, but they cannot be eliminated
entirely. Any technical failure that prevents operation of our systems for a
significant period of time will prevent us from processing transactions during
that period of time and will directly and adversely affect our revenues and
financial results.
Our ATM network systems process electronic financial transactions using
information read by ATMs or POS terminals from bank debit and credit cards or
input into our systems by our customers in the registration process for mobile
phone recharge services. We capture, transmit, handle and store this sensitive
bank card
4
information in performing services for our customers. In addition, our software
is used by our customers to operate electronic financial transaction networks
similar to our network. These businesses involve certain inherent security
risks, in particular the risk of electronic interception and theft of the
information for use in fraudulent card transactions. We have incorporated
industry standard encryption technology and processing methodology into our
systems and software to maintain high levels of security. Although this
technology and methodology mitigates security risks, they cannot be eliminated
entirely as criminal elements apply increasingly sophisticated technology to
attempt to obtain unauthorized access to the information handled by ATM and
electronic financial transaction networks.
Any breach in our security systems could result in the perpetration of
fraudulent financial transactions for which we may be operated only byfound liable. We are
insured against various risks, including theft and negligence, but our insurance
coverage is subject to deductibles, exclusions and limitations that may leave us
bearing some or all of any losses arising from security breaches.
In addition to electronic fraud issues, theft and vandalism of ATMs
presents risks for our ATM business. We install ATMs at sites that are high foot
traffic sites and are exposed to theft and vandalism. Although we are insured
against such risks, exclusions or limitations in our insurance coverage may
leave us bearing some or all of any losses arising from theft or vandalism of
ATMs.
Legal constraints on conducting business in certain European countries;
dependence on financial institutions
Under the laws of some of the European countries where we operate,
including Germany, we are required to have licensed financial institutions. The Company, therefore, may not operate its owninstitutions act
as our "sponsors" before banking authorities or the central ATM network in
Germany and musttransaction
processing switches for the operation of our ATMs. In these markets, we either
act under its contract with Service Bank GmbH ("Service
Bank"), as a subcontractorcontractor providing certain ATM-related servicesATMs to Service
Bank.a sponsor bank or have a bank agree
contractually to act as an intermediary in the settlement process for card
transactions. As a result, the Company'sour activities in the German market currentlythese markets are
entirely dependent upon
the continuance of the agreementsuch "sponsor" agreements with Service Bank, or
the abilityfinancial institutions. While
we have been successful in reaching contractual arrangements that have permitted
us to enter into a similar agreement with another bankoperate in the event
of a termination of such contract. The inability to maintain such agreement or
to enter into a similar agreement with another bank upon a terminationall of the agreement with Service Bank couldmarkets that we have a material adverse effect on the
Company's operations in Germany.
The Company is considering expansion into France, whose laws relativetargeted to the
operation of ATMs are similar to those of Germany. Expansion into France would
require the Company to establish and thereafter maintain a relationship with
one or more French financial institutions. Although the Company has not yet
identified a French financial institution, it has retained a managing director
for France, and is exploring potential relationships with French financial
institutions and is searching for potential ATM locations. Theredate, there can be
no assurance asthat we will continue to whenbe successful in reaching such
arrangements, or if the Companythat our current contractual arrangements will continue to be
able to establish the necessary
relationshiprenewed.
Competition
Our principal competitors for the commencement of operations in France.
COMPETITION
Principal competitors of the CompanyATM business in markets outside the
United StatedKingdom include ATM networks owned by banks and regional networks
consisting of consortiums of local banks. In the U.S.,United Kingdom, principal
competitors of the Company
would include individual banks operating proprietary ATM networks shared bank
networks such as the Plus and Cirrus networks,well
as several independent, non-bank owned ATM networks of varying sizes (ranging up
to over a thousand ATMs). In the United Kingdom, we are encountering direct
competition for ATM sites from a few ATMs to many thousandsthese other independent networks, which sometimes
offer higher amounts of ATMs)
and individual retail outlets operating ATMs. Large,rent for ATM sites than we do. In the future, large,
well financed companies that operate ATMs such as EDS or American Express may
also establish ATM networks in competition with the Companyus in various markets.
Competitive factors in the Company'sour ATM business include network availability and
response time, price to both the bank and to its customers, ATM location and
access to other networks.
There can be no assurance that the
Companywe will be able to compete successfully in
the ATM business in the future or that competition will not have a material
adverse effect on the Company'sour business, growth, financial condition and results of
operations. In addition,particular, there can be no assurance that Euronet'sour competitors will
not introduce or expand their own ATM networks in the future, which would lead
to a decline in the usage of Euronet'sour ATMs.
POLITICAL, ECONOMIC AND LEGAL RISKS
The Company'sThere are many companies that offer electronic recharge services for mobile
phone airtime in the markets where we do business, particularly through use of
POS terminals. These companies include Sonera Smart Trust, ITG, Hypercom,
PreNet, e-Vita and Sicap. We believe that we have a competitive advantage in
that we offer recharge solutions on all customer touch points, including ATMs,
POS terminals, mobile phones and the internet, and we process the financial
transactions associated with the recharge. However, there are relatively few
barriers to entry in this business and larger companies that have more financial
resources than we do could successfully compete with us based on a number of
factors, including price.
5
Competitors of our software business compete primarily in the following
four areas: (i) ATM, network and point-of-sale software systems, (ii) internet
banking software systems, (iii) credit card software systems and (iv) wireless
banking software systems. Currently, the principal operatingcompetitor with respect to
ATM, network and point-of-sale software systems is Applied Communications Inc.
("ACI") based in Omaha, Nebraska which enjoys a large market share due to its
early entry into the financial systems software market and a client base of
larger banks and financial institutions. Oasis Software International, based in
Toronto, Canada, also competes in the area of ATM, network and point-of-sale
software systems. Internet banking software systems competitors include Edify
Corporation, a division of S1 Corporation based in Santa Clara, California and Q
UP Systems Inc. based in Austin, Texas. Both Edify Corporation and Q UP Systems
Inc. have started operations during the last decade and specialize in internet
banking software systems. Our principal competitor with respect to credit card
software systems is PaySys International Inc., based in Orlando, Florida. There
are many successful manufacturers of wireless banking software that compete with
us in our target markets.
Political, economic and legal risks
We have subsidiaries currently operate in Hungary, Poland, the Czech Republic, Romania, Croatia
and other countriesIndonesia and have operations in Central Europe.
These and other countries in Central Europe, the
Middle East and Asia. We sell software in many other markets in the developing
world. These countries have undergone significant political anand economic change
in recent years. Political, economic, social and other developments in such
countries may in the future have a material adverse effect on the Company'sour business. In
particular, changes in laws or regulations (or in the interpretation of existing
laws or regulations), whether caused by change in the 7
government of such
countries or otherwise, could materially adversely affect the Company'sour business, growth,
financial condition and results of operations. Currently there are no
limitations on the repatriation of profits from Hungary, Poland,all of the Czech Republic, Croatia and other countries in Central
Europe,which we
have subsidiaries, but there can be no assurance that foreign exchange control
restrictions, taxes or limitations will not be imposed or increased in the
future with regard to repatriation of earnings and investments from such
countries. If such exchange control restrictions, taxes or limitations are
imposed, theour ability of the Company to receive dividends or other payments from itsaffected
subsidiaries could be reduced, which may have a material adverse effect on the Company.
Prior to 1995, Croatia was involved in hostilities with Serbia and was also
involved in the hostilities in Bosnia-Herzegovina. The hostilities in Croatia
ended in a cease-fire in 1995 and the hostilities in Bosnia-Herzegovina ended
in the Dayton Accords in 1995. No assurance can be given that the cease-fire
with Serbia will not be breached or that the peace process initiated by the
Dayton Accords will continue. Any breakdown in the peace process or any
failure of any of the relevant parties to abide by the cease-fire or the
provisions of the Dayton Accords or the relevant agreements could result in
the recommencement of hostilities in the region, which could have an adverse
effect on the Croatian economy or Euronet's operations in Croatia.us.
Annual inflation and interest rates in Hungary, Poland, the Czech Republic,
Romania, Croatia and other countries in Central Europe have been much higher
than those in Western Europe. Exchange rate policies have not always allowed for
the free conversion of currencies at the market rate. Fluctuations of inflation,
interest and exchange rates could have an adverse effect on our business and the
Croatian
economy or Euronet's operations in Croatia.market value of the shares.
Corporate, contract, property, insolvency, competition, securities and
other laws and regulations in Hungary, Poland, the Czech Republic, Romania, Croatia
and other countries in Central Europe have been, and continue to be,
substantially revised during the completion of their transition to market
economies. Therefore, the interpretation and procedural safeguards of the new
legal and regulatory systems are in the process of being developed and defined
and existing laws and regulations may be applied inconsistently. Also, in some
circumstances, it may not be possible to obtain the legal remedies provided for
under those laws and regulations in a reasonably timely manner, if at all. In
addition, transmittal of data by electronic means and telecommunicationtelecommunications is
subject to specific regulation in most Central European countries. Although such
regulations have not had a material impact on the Company'sour business to date, there can be
no assurance that any such changes in such regulation, including taxation or
limitations on transfers of data across national borders, would not have a
material adverse effect on the Company'sour business, growth, financial condition and results
of operations.
Hungary, Poland, the Czech Republic, CroatiaInflation, exchange rate and othercurrency risk
We derive our revenues from a multitude of countries, in Central
Europe generally are considered by international investors to be emerging
markets. There can be no assurance that political, economic, social and other
developments in these emerging markets will not have an adverse effect on the
Company's operations and profitability and, therefore, on the Company's
ability to pay principal and interest on the Notes.
INFLATION, EXCHANGE RATE AND CURRENCY RISK
The Company operates primarily in Central Europe and Germany and, as a
result, itsour business is
affected by fluctuations in foreign exchange rates of the various countries in
which it operates. With the exceptionwe operate. Substantially all of Germany
where transaction fees are Deutsche Mark denominated, transaction fees charged
by the Company are primarilyour indebtedness is denominated in U.S. dollars or denominated in
local currencyEuro
and inflation adjusted. Aa significant amount of the Company'sour expenditures, in Central Europe, including the acquisition of ATMs
and executive salaries, are made in U.S. dollars.
Since the fall of Communist rule, both Hungary and Poland have experienced
high levels of inflation and significant fluctuation in the exchange rate for
their currencies. The Polish government has adopted policies that slowed the
annual rate of inflation from approximately 600% in 1990 to approximately 15%
in 1997. In addition, the exchange rate for the zloty has stabilized and the
rate of devaluation of the zloty has decreased significantly since 1991.
Similarly, in Hungary, the forint has continued to depreciate, principally by
way of devaluation, against the major currencies of the OECD and has limited
convertibility to other currencies. The inflation rate in Hungary was
approximately 18.0% in 1997.
8
The Company attemptsWe attempt to match any assets denominated in currencies other
than U.S. dollarsa currency with liabilities
denominated in the same currencies.currency. Nonetheless, inflation and currency exchange
fluctuations have had, and will continue to have, an effect on theour financial
condition and results of operations of the Company. The Company anticipates that in the future a
substantial portion of its assets will be denominated in the foreign
currencies of each market.operations. As exchange rates between these foreign currencies
andamong the U.S. dollar,
the Euro and other
6
currencies fluctuate, the translation effect of such fluctuations may have a
material adverse effect on the Company'sour results of operations or financial condition as
reported in U.S. dollars.
In addition, fluctuations in the exchange rate between the Deutsche Mark and
the U.S. dollar will affect the U.S. dollar equivalent of both the Deutsche
Mark principal of and interest on the Notes.
YEAR 2000 COMPLIANCE
The Company has made an assessment of the impact of the advent of the year
2000 on its systems and operations. The Processing Center will require certain
upgrades which have been ordered and are scheduled for installation by the
fourth quarter of 1998. Most of the ATMs in the Euronet network are not year
2000 compliant, and hardware and software upgrades will be installed under
contracts with the Company's ATM maintenance vendors. According to the
Company's current estimates, the cost will be approximately $1,000 per ATM,
and the required installation will be finished by the end of 1998. The Company
estimates that approximately 560 of its ATMs will require upgrades for year
2000 compliance.
The Company is currently planning a survey of its bank customers concerning
the compliance of their back office card authorization systems with year 2000
requirements, and anticipates launching such survey in the third quarter of
1998. If the Company's bank customers do not bring their card authorization
systems into compliance with year 2000 requirements the Company may be unable
to process transactions on cards issued by such banks and may lose revenues
from such transactions. This could have a material adverse effect on the
Company's revenues.
DEVELOPMENT AND MAINTENANCE OF PUBLIC MARKET FOR COMMON STOCK; AND POSSIBLE
VOLATILITY OF STOCK PRICE
The Company completed its initial public offering of Common Stock in March,
1997, prior to which there had been no public market for the Common Stock.
There can be no assurance that a trading market for the Common Stock will be
maintained. The market price of the Common Stock could be subject to
significant fluctuations in response to various factors and events, including
the liquidity of the market for the Common Stock, actual and participated
period-to-period fluctuations in the Company's operating results, changes in
currency exchange rates and other external factors, including general economic
conditions inrecent years, Hungary, Poland Germany,and the Czech Republic and Croatia andhave experienced
high levels of inflation. Consequently, these countries' currencies have
continued to decline in value against the Company's other markets or other events or factors.
ANTI-TAKEOVER PROVISIONSmajor currencies of the OECD over this
time period. Due to the significant reduction in the inflation rate of these
countries in recent years, none of these countries are considered to have a
hyper-inflationary economy. Nonetheless, rates of inflation in these countries
may continue to fluctuate from time to time. The majority of all three
subsidiaries' revenues are denominated in the local currency.
Anti-takeover provisions
Certain provisions of the Company'sour Certificate of Incorporation (the "Certificate of
Incorporation") and By-Laws (the "By-Laws") and of Delaware law could discourage
potential acquisition proposals and could delay or impede a change in control of
the Company.Euronet. These provisions, among other things: (i) classify the Company'sour Board of
Directors into three classes serving staggered three-year terms; (ii) permit the
Board of Directors, without further stockholder approval, to issue preferred
stock; and (iii) prohibit the Companyus from engaging in a business combination (as such
term is defined in the Delaware law) with interested shareholders,stockholders, except under
certain circumstances. Such provisions could diminish the opportunities for a
stockholder to participate in tender offers, including tender offers at a price
above the then current market value of theour Common Stock. The issuance of
preferred stock could also adversely affect the voting power of the holders of
Common Stock. The Company hasWe have no present plans to issue any preferred stock. Directors,
officers and certain significant shareholdersstockholders of the Company,Euronet, together with entities
with which they are associated, with certain directors of the Company, own beneficially in the aggregate approximately
64%40% of the outstanding shares of our Common Stock in the
Company.Stock. Such
9
concentration of
ownership may have the effect of delaying or preventing transactions involving
an actual or potential change in control of the
Company. The Indenture pursuant to which the Notes are issued contains a
provision which accelerates the maturity dateEuronet.
Concentration of the Notesvoting control in the event of a
change of control. Such provision may also delay or impede a change of
control.
CONCENTRATION OF VOTING CONTROL IN MANAGEMENT
Themanagement
Our directors and officers, of the Company, together with entities inwith which they are
associated, beneficially owned and controlled approximately 64%40% of the Company'sour
outstanding Common Stock at March 31, 1998.as of February 1, 2002. As a consequence, the directors
and officers have significant control over the Company's
directionour management and operation,
including the ability to elect all of theother directors of the CompanyEuronet and to cast the majoritya large
block of the votes with respect to virtually all matters submitted to a vote of the Company'sour
stockholders. Such concentration of control may have the effect of delaying or
preventing transactions or a potential change of control of the Company.
POTENTIAL ADVERSE EFFECT AS SHARES ELIGIBLE FOR FUTURE SALEEuronet.
Potential adverse effect of shares eligible for future sale
As of the date of this Prospectus, the CompanyFebruary 20, 2002, we had 15,138,45423,035,994 shares of Common Stock
outstanding,outstanding. Based on our review of which 8,066,171public filings, we are aware that 2,166,350
shares are held by persons who may be deemed to be affiliates of the Company.ours. In
addition, the Companywe had an aggregate of 3,415,5554,880,006 options outstanding held by
directors, officers and employees entitling the holders thereof to acquire an
equal number of shares of Common Stock on exercise, of which an aggregate of
1,792,1182,074,064 would be held by persons who may be deemed to be affiliates of the Company.ours.
In addition, we have 390,510 outstanding warrants which could be exercised to
receive 405,086 shares of our Common Stock. Except as hereafter noted, the
shares of Common Stock that may be issued on exercise of such options are freely
tradeable in the public market. The public sale of the shares of Common Stock
held by affiliates, or acquired by affiliates on exercise of options, is limited
and such persons are either required to register such shares or to comply with
Rule 144 of the general rulesGeneral Rules and regulations underRegulations of the Securities Act which limits
the number of shares that may be sold by any one person during each 90-day
period. Affiliates also have the right, under certain circumstances, to require
the Companyus to register such salesshares for public sale. The sale of a substantial amount of
shares of Common Stock in the public market, or even the potential of such sale,
could adversely affecthave a material adverse effect on the market price of the Common Stock and
the Company'sour ability to sell shares of Common Stock in the future.
7
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
Common Stock. All proceeds from the sale of the shares will be for the account
of the selling stockholders, as described below. See "Selling Stockholders" and
"Plan of Distribution" described below.
SELLING STOCKHOLDERS
The selling stockholders listed below have acquired the shares in a private
placement transaction pursuant to those Stock Purchase Agreements among us and
the selling stockholders identified below dated between February 1 and February
5, 2002 (the "Stock Purchase Agreements"). Under the terms of the Stock Purchase
Agreements we agreed to register all of the shares of Common Stock purchased by
the selling stockholders in the private placement.
The following table sets forth, as of the date of this prospectus, the
names of the selling stockholders, the number of our shares that the selling
stockholders beneficially own as of such date, the number of our shares owned by
selling stockholders that may be offered for sale from time to time by this
prospectus, and the number of our shares to be held by such selling stockholder
assuming the sale of all of the shares offered hereby.
We may amend or supplement this prospectus from time to time to update the
disclosure hereunder.
Except as set forth above, the selling stockholders have not held any
position or office or had a material relationship with us or any of our
affiliates within the past three years other than as a result of the ownership
of our Common Stock.
Percent of
Shares Shares Owned Outstanding
Beneficially After Offering Euronet Stock
Name of Selling Stockholder Owned /(1)/ Shares Offered /(1)//(2)/ /(1)//(2)//(3)/
--------------------------- ------------ -------------- ------------ ---------------
AIM Growth Series 125,000 125,000 0 *
Volksbanken KAG 30,000 30,000 0 *
US Global Equity Fund 10,000 10,000 0 *
Waddell & Reed Investment
Management Company/(4)/ 2,211,350 300,000 1,911,350 8.3
Harrington Wealth Management
Company 10,075 10,075 0 *
Prime Petroleum Profit Sharing
Trust 50,000 50,000 0 *
Lagunitas Partners LP 69,000 69,000 0 *
Gruber & McBaine International 20,925 20,925 0 *
John & Linda Gruber 10,000 10,000 0 *
- ----------
* Represents less than one percent.
(1) The number and percentage of shares beneficially owned are determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934 (the
"Exchange Act"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual
has the right to acquire within 60 days of the date of this prospectus
through the exercise of any stock option or other right. Furthermore, the
number and percentage are determined based on the number of shares we sold
to the selling stockholders pursuant to the Stock Purchase Agreements and
any other shares owned by these selling stockholders as they have reported
to us.
(2) Assumes the sale of all shares offered hereby.
(3) These percentages are based on 23,035,994 shares of our Common Stock
outstanding as of February 20, 2002.
(4) These shares are beneficially owned by one or more open-end investment
companies or other managed accounts that are advised by Waddell & Reed
Investment Management Company.
8
PLAN OF DISTRIBUTION
The selling stockholders may offer the shares at various times and from
time to time while this registration statement is effective, in one or more of
the following transactions:
. on the Nasdaq Small Cap Market (or the Nasdaq National Market if our
listing application is approved);
. in the over-the-counter market;
. in transactions other than market transactions;
. in connection with short sales of shares of our Common Stock;
. by pledge to secure debts or other obligations;
. in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options; or
. in a combination of any of the above.
The selling stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholders may sell shares at market prices then prevailing, at prices related
to prevailing market prices, at negotiated prices or at fixed prices. In
addition, the selling stockholders may sell any shares that qualify for sale
under Rule 144 under the Securities Act in transactions complying with Rule 144,
rather than pursuant to this prospectus. We will not receive any proceeds from
the sale of shares by the selling stockholders.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
The selling stockholders may use broker-dealers to sell shares. If this
happens, broker-dealers will either receive discounts or commissions from the
selling stockholders, or they will receive commissions from purchasers of shares
for whom they have acted as agents. Neither we nor the selling stockholders can
presently estimate the amount of such compensation. We know of no existing
arrangements between any selling stockholders, any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the shares.
The selling stockholders and any broker-dealers who act in connection with
the sale of the shares hereunder might be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions they receive and proceeds of
any sale of the shares might be deemed to be underwriting discounts and
commissions under the Securities Act.
We will pay all of the expenses of the registration, offering and sale of
the shares to the public other than commissions or discounts of underwriters,
broker-dealers or agents. We also agreed to indemnify the selling stockholders
and related persons against liabilities, including liabilities under the
Securities Act. We have been advised that, in the opinion of the SEC,
indemnification for liabilities arising under the Securities Act is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
We have advised the selling stockholders that while they are engaged in a
distribution of the shares included in this prospectus they are required to
comply with Regulation M promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). With limited exceptions, Regulation M precludes
the selling stockholders, any affiliated purchasers, and any broker-dealer or
other person who participates in the distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase any
security which is the subject of the distribution until the entire distribution
is complete. Regulation M also prohibits any bids
9
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of this might affect the
marketability of the shares offered hereby.
This offering will terminate on the earlier of (1) the date on which all
selling stockholders may sell all shares then held by them without restriction
pursuant to Rule 144 under the Securities Act, or (2) the date on which all
shares offered by this prospectus have been sold by the selling stockholders.
We may suspend the effectiveness of the registration statement and, upon
receipt of written notice from us, the selling stockholders shall cease using
this prospectus, if at any time we determine, in our reasonable judgment and in
good faith, sales of shares of Common Stock pursuant to the registration
statement or this prospectus would require public disclosure by us of material
nonpublic information that is not included in the registration statement and
that immediate disclosure of such information would be detrimental to us.
If we suspend the effectiveness of the registration statement, we shall use
our reasonable efforts to cause the use of the prospectus so suspended to be
resumed as soon as reasonably practicable, subject however, to our right to
delay further sales of shares of Common Stock until the conditions or
circumstances referred to above have ceased to exist or have been disclosed. We
agreed with the selling stockholders that our right to delay sales of shares of
Common Stock held by the selling stockholders will not be exercised by us on
more than two occasions of not more than 45 days each in any twelve month
period, unless in our good faith judgment the sale of shares under the
registration statement would be reasonably likely to cause a violation of, or
create liability for us under, the Securities Act or the Exchange Act.
LEGAL MATTERS
Certain legal matters relating to the Unitsvalidity of the shares offered hereby
will be passed upon for the
Issuerus by Arent Fox Kintner PlotkinShearman & Kahn, PLLC.Sterling.
EXPERTS
Consolidated Financial StatementsThe consolidated financial statements of the CompanyEuronet and subsidiaries as of
December 31, 19962001 and 19972000 and for each of the three years in the three-year period
ended December 31, 19972001 have been incorporated by reference into this Prospectus have been audited byherein and in the
registration statement in reliance upon the reports of KPMG Polska Sp. z o.o.,
independent public accountants, as indicated in their
report with respect thereto,incorporated by reference herein, and are incorporated herein in reliance upon the
authority of saidthis firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports, proxy statements and other information with the SEC in
accordance with the Exchange Act. You may read and copy our reports, proxy
statements and other information filed by us at the public reference facilities
of the SEC in Washington, D.C. and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. Our
reports, proxy statements and other information filed with the SEC are available
to the public over the Internet at the SEC's World Wide Web site at www.sec.gov.
------------
We have filed a registration statement on Form S-3 under the Securities Act
with respect to our Common Stock. This prospectus, which forms a part of the
registration statement, does not contain all of the information included in the
registration statement. Some information is omitted and you should refer to the
registration statement and its exhibits.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we have
previously filed with them, which means that we can disclose important
information by referring you to those documents. The information incorporated by
reference is considered to be a 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
10
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE ISSUER OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICI-
TATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AU-
THORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUAL-
IFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SO-
LICITATION.
----------------
TABLE OF CONTENTS
PAGE
----
Available Information...................................................... 1
Incorporation of Documents by Reference.................................... 1
Forward-Looking Statements................................................. 1
The Company................................................................ 2
The Offering............................................................... 3
Risk Factors............................................................... 4
Legal Matters.............................................................. 10
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
EURONET SERVICES INC.
SHARES OF COMMON STOCK
($.02 PAR VALUE)
----------------
PROSPECTUS
----------------
JUNE below as well as any future filings made by us with the SEC under Sections
13(a), 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------13(c), 14 or 15(d) of the Exchange Act until our offering is complete:
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2001.
(b) Our current report on Form 8-K dated January 4, 2002 and amended on
January 18, 2002.
(c) The description of our Common Stock contained in our Registration
Statement on Form 8-A filed with the SEC on February 21, 1997, including any
amendment or report filed for the purpose of updating any such description.
You may request a copy of these filings, at no cost, by writing, calling or
e-mailing us at the following address:
Euronet Worldwide, Inc.
4601 College Boulevard
Suite 300
Leawood, Kansas 66211
(913) 327-4200
FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference may contain
certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements in this prospectus that are not
historical facts are hereby identified as "forward-looking statements" for the
purpose of the safe harbor provided by Section 21E of the Exchange Act and
Section 27A of the Securities Act. Words such as "estimate," "project," "plan,"
"intend," "expect," "believe" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are found at
various places throughout this prospectus and the other documents incorporated
by reference, including, but not limited to, our Annual Report on Form 10-K for
the year ended December 31, 2001. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this prospectus. We do not undertake any obligation to publicly update or
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events.
11
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEMItem 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forthOther Expenses of Issuance and Distribution.
We will pay all expenses incident to the Registrant's estimated expenses in
connection withoffering and sale to the issuance and distributionpublic
of the securitiesshares being registered:
Securities and Exchange Commission registration fee........... $
Transfer agent fees and other expenses........................
Listing fees and expenses.....................................
Legal fees and expenses.......................................
Accounting fees and expenses..................................
Printing fees and expenses....................................
Miscellaneous expenses........................................
----------
Total..................................................... $
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles Eighthregistered other than any commissions and Ninthdiscounts of
underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the Registrant's Certificateamounts shown are estimates except the
SEC registration fee.
SEC registration fee .................................... $ 1,083.88
Legal fees and expenses ................................. $112,650.00
Accounting fees and expenses ............................ $ 0
Miscellaneous expenses .................................. $ 0
Total ........................................ $113,733.88
Item 15. Indemnification of Incorporation
provide as follows:
"EIGHTH: The Corporation shall indemnify each of the individuals who may
be indemnified to the fullest extent permitted byDirectors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Paragraph 8 of the StateRegistrant's
Amended Certificate of Delaware, as it may be amended from
time to time ("Section 145"), (i) in eachIncorporation and every situation where the
Corporation is obligated to make such indemnification pursuant to Section
145, and (ii) in each and every situation where, under Section 145, the
Corporation is not obligated, but is permitted or empowered, to make such
indemnification. The Corporation shall promptly make or cause to be made
any determination which Section 145 requires.
"NINTH: A directorArticle VII of the Corporation shall not be personally liableRegistrant's Bylaws
provide for indemnification of the Registrant's directors and officers to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. This provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, or (iv) for any transaction from which the director
derived any improper personal benefit. If the General Corporation Law of
the State of Delaware is subsequently amended to further eliminate or limit
the liability of the director, then a director of the Corporation, in
addition to the circumstances in which a director is not personally liable
as set forth in the preceding sentence, shall not be liable to the fullestmaximum extent permitted by the amendedDelaware General Corporation LawLaw. The Registrant
also maintains, and intends to continue to maintain, insurance for the benefit
of its directors and officers to insure such persons against certain
liabilities, including liabilities under the State of
Delaware."
Article VII of the Company's By-laws provides as follows:
"Section 1 INDEMNIFICATION AND EXCULPATION. Reference is hereby made to
Section 145 of the General Corporation Law of the State of Delaware (or any
successor provision thereto). The Corporation shall indemnify each person
who may be indemnified (the "Indemnitees") pursuant to such section to the
full extent permitted thereby. In each and every situation where the
Corporation may do so under such section, the Corporation hereby obligates
itself to so indemnify the Indemnitees, and in each case, if any, where the
Corporation must make certain investigations on a case-by-case basis prior
to indemnification, the Corporation hereby obligates itself to pursue such
investigation diligently, it being the specific intention of these Bylaws
to obligate the Corporation to indemnify each person whom it may indemnify
to the fullest extent permitted by law at any time and from time to time.
To the extent not prohibited by Section 145 of the General Corporation Law
of Delaware (or any other provision of the General Corporation Law of the
State of Delaware), the Indemnitees shall not be liable to the Corporation
except for their own individual willful misconduct or actions taken in bad
faith. Expenses incurred by an officer or director in defending
II-1
any action, suit or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding to the fullest
extent permitted by subsection (e) of Section 145."
ITEMSecurities laws.
Item 16. EXHIBITSExhibits.
Exhibit
Number Description
- ------ -----------
4.1** New4.01 Form of WarrantStock Purchase Agreement with form of Warrant attached.
4.2* Certificate of Incorporation
5.1*** Form ofbetween Euronet Worldwide and the selling stockholders.
5.01 Opinion of Arent Fox Kintner PlotkinShearman & Kahn, PLLC as to
the legalitySterling.
23.01 Consent of the Common Stock.
23.1***Shearman & Sterling (included in Exhibit 5.01).
23.02 Consent of KPMG Polska Sp. Z o.o.
23.2*** Consent of Arent Fox Kintner Plotkin & Kahn, PLLC
24.1 Power of Attorney (included on signature page).Sp.z o.o, independent public accountants.
- --------
*Previously filed as an exhibit----------
Item 17. Undertakings.
A. Undertaking Pursuant to Registration Statement No. 333-18121 and
incorporated by referenced herein.
**Previously filed as an exhibit to Registration Statement No. 333-48309 and
incorporated by reference herein.
***Filed herewith.
ITEM 17. UNDERTAKINGS
(a)Rule 415
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, of
the securities registered hereby, a post-effective amendment to this Registrant Statement;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 thisthe
Registration Statement.Statement;
II-1
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in thisthe Registration Statement or any
material change to such information in thisthe Registration Statement;
provided,Statement.
Provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in thisthe Registration
Statement.
(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 Statementregistration 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.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 thethis offering.
(b)B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference
The undersigned Registrant hereby further undertakes 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 Statementregistration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c)C. Undertaking in Respect of Indemnification
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, described under "Item 15,
Indemnification of Directors and Officers" above, or otherwise, the Registrant
has been advised that in the II-2
opinion of the Securities and Exchange CommissionSEC 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 toby 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-3II-2
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETSPursuant 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 the 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 Kansas City, state of Missouri, on this day of March
8, 2002.
EURONET WORLDWIDE, INC.
By /s/ Michael J. Brown
---------------------------------------------
Name : Michael J. Brown
Title: Chairman of the Board of Directors and
Chief Executive Officer
KNOW ALL OF THE
REQUIREMENTS FOR FILING ON FORMPERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael J. Brown and Daniel R. Henry,
jointly and severally, his attorneys-in-fact, each with the owner of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-3, AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN BUDAPEST, HUNGARY ON THE 15TH DAY OF JUNE, 1998.
EURONET SERVICES INC.and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, or his substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the day
of March 8, 2002 in the capacities indicated.
Signature Title
--------- -----
/s/ Michael J. Brown Chairman of the Board of Directors, Chief Executive
- ------------------------- Officer and Director (principal executive officer)
Michael J. Brown
/s/ Daniel R. Henry By: _________________________________Chief Operating Officer, President and Director
- -------------------------
Daniel R. Henry
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS MICHAEL J. BROWN AND DANIEL/s/ Eriberto R. HENRY, AND EACH
OF THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT WITH POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM, AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES,Scocimara Director
- -------------------------
Eriberto R. Scocimara
/s/ Thomas A. McDonnell Director
- -------------------------
Thomas A. McDonnell
/s/ M. Jeannine Strandjord Director
- -------------------------
M. Jeannine Strandjord
/s/ Andzrej Olechowski Director
- -------------------------
Andzrej Olechowski
II-3
/s/ Kendall Coyne Chief Financial Officer and Chief Accounting Officer
- ------------------------- (principal financial and accounting officer)
Kendall Coyne
II-4
INDEX TO SIGN ANY AND ALL AMENDMENTS (INCLUDING POST
EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT ON FORM S-3, AND TO FILE
THE SAME, WITH ALL EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION
THEREWITH, WITH THE COMMISSION, GRANTING UNTO SAID ATTORNEY-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 TO COMPLY WITH THE
PROVISIONS OF THE SECURITIES ACT AND ALL REQUIREMENTS OF THE COMMISSION,
HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEY-IN-FACT OR ANY OF THEM,
OR THEIR OR HIS OR HER 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 HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED:
SIGNATURES TITLE DATE
---------- ----- ----Exhibit
Number Description
- ------ -----------
/s/ Michael J. Brown Chairman4.01 Form of Stock Purchase Agreement between Euronet Worldwide and the Boardselling stockholders.
5.01 Opinion of June 15, 1998
____________________________________ Directors, Chief Executive
Michael J. Brown Officer and President
(principal executive
officer)
/s/ Daniel R. Henry Director and Chief Operating June 15, 1998
____________________________________ Officer
Daniel R. Henry
/s/ Steven J. Buckley Director June 15, 1998
____________________________________
Steven J. Buckley
/s/ Eriberto R. Scocimara Director June 15, 1998
____________________________________
Eriberto R. Scocimara
/s/ Andrzej Olechowski Director June 15, 1998
____________________________________
Andrzej Olechowski
/s/ Thomas A. McDonnell Director June 15, 1998
____________________________________
Thomas A. McDonnell
/s/ Nicholas B. Callinan Director June 15, 1998
____________________________________
Nicholas B. Callinan
/s/ Bruce S. Colwill Chief Financial Officer and June 15, 1998
____________________________________ Chief Accounting Officer
Bruce S. Colwill (principal financial
officer and principal
accounting officer)Shearman & Sterling.
23.01 Consent of Shearman & Sterling (included in Exhibit 5.01).
23.02 Consent of KPMG Polska Sp.z o.o, independent public accountants.
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