Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including "Risk Factors" and the financial statements, before making an investment decision.
CoolSavings
We are a leading provider of a comprehensive set of e-marketing services used by online and offline advertisers to build one-to-one customer relationships. Under our established brand, advertisers can deliver, target and track a wide array of incentives to promote their products or services in any online or offline environment. We deliver these incentives to targeted segments of our large audience of consumers, who have registered their demographic profiles with us and have given us permission to deliver personalized savings opportunities to them. In 1999, our advertisers included leading brands such as barnesandnoble.com, Bigstar, CDNow, First USA, JC Penney, Kids "R" Us, MCI WorldCom, MotherNature.com, NetGrocer, petsmart.com, Service Merchandise, SmarterKids.com and US News & World Report. As of December 31, 1999, we had over 5.0 million registered members, representing nearly 3.9 million households.
The compelling advantages of the Internet as a direct marketing medium have led to the development of e-marketing services that enable businesses to drive customer acquisition, retention and loyalty. Forrester Research projects that online direct marketing will account for 50% to 70% of a projected $10.4 billion in total U.S. online advertising spending in 2002. While online companies are the most frequent users of e-marketing services, traditional offline businesses such as national retailers and consumer packaged goods manufacturers are increasingly seeking to use e- marketing services to drive offline sales and build consumer relationships. In doing so, many online companies and traditional businesses are devoting larger portions of their marketing budgets to Internet direct marketing.
Our web site, coolsavings.com, offers convenient and personalized incentives for goods and services from a broad range of advertisers, including online retailers, national brick-and-mortar chains, consumer packaged goods manufacturers, large consumer service providers and neighborhood businesses. We offer a wide array of promotional services for advertisers including printed and electronic coupons, personalized e-mails, rebates, samples, sales notices, loyalty programs, gift certificates, contests and banner advertisements. According to Media Metrix, for November 1999, CoolSavings was the eighth most popular shopping web site for women (believed to be the principal shoppers in 74% of U.S. households) and received 3.2 million unique visitors. We sent approximately 22.0 million e-mails to our members in December 1999.
Although we keep our members' identities private, we capture and store detailed member demographic information, track shopping preferences and behavior, and with advertiser cooperation can track redemption of these incentives back to our members' households. In doing so, we have developed a valuable database of information that we use for the benefit of our advertisers. We analyze our database with sophisticated data mining, targeting and tracking technology to help our advertisers execute effective promotional campaigns. The diversity of the incentives we offer and the variety of places where our members can redeem them further enrich our member profiles for future database marketing.
Our objective is to be the leading provider of e-marketing services to advertisers. To achieve this objective, we plan to continue to add to our base of members and advertisers through an active online and offline marketing program that enhances the CoolSavings brand. We must also continue to enrich our database and develop deeper data for predictive modeling and targeting purposes. In order to offer a comprehensive e-marketing solution for advertisers, we plan to expand the promotional services we offer. Finally, we intend to continue to pursue strategic relationships with co-branding partners.
Our corporate offices are located at 8755 West Higgins Road, Suite 100, Chicago, Illinois 60631. Our telephone number at that location is (773) 693- 1300. Our Internet address is http://www.coolsavings.com. Information contained on our web site is not a part of this prospectus.
The Offering
Common stock offered by CoolSavings................. shares Common stock to be outstanding after this offering.. shares Use of proceeds..................................... For general corporate purposes, including working capital, capital expenditures and additional sales and marketing efforts. See "Use of Proceeds." Proposed Nasdaq National Market Symbol.............. CSAV Unless otherwise indicated, share information in this prospectus:
. is based on our shares outstanding as of December 31, 1999;
. assumes conversion of our convertible subordinated notes into shares of common stock upon completion of this offering, based on an assumed initial public offering price of $ per share;
. assumes conversion of our Series A convertible preferred stock into shares of common stock upon completion of this offering;
. gives effect to a for stock split which will occur prior to completion of this offering; and . assumes the underwriters' over-allotment option is not exercised.
The number of shares to be outstanding after this offering excludes, as of December 31, 1999:
. 4,136.798 shares of common stock reserved for issuance under our 1997 Stock Option Plan, of which 3,635.580 shares are subject to outstanding options at a weighted average exercise price of $3,996.74 per share;
. 282.380 shares subject to options granted outside of our 1997 Stock Option Plan at an exercise price of $318.72 per share; and . 551.573 shares of common stock reserved for issuance under our 1999 Non- Employee Director Stock Option Plan, of which 55.000 shares are subject to outstanding options at a weighted average exercise price of $5,394.18 per share.
The summary financial data presented below are derived from the financial statements of CoolSavings. The quarterly financial data have been derived from unaudited financial statements. The shares used to compute pro forma loss per share include convertible subordinated notes and Series A convertible preferred stock on an as-converted basis, as well as common stock. The as adjusted balance sheet data presented below reflect the receipt of the net proceeds from the sale of the shares of common stock offered by CoolSavings at an assumed initial public offering price of $ per share and after deducting estimated underwriting discounts and commissions and the estimated offering expenses.
Summary Financial Data (in thousands, except share and per share data)
Inception Nine Months Ended
through Year Ended December 31, September 30,
December 31, ------------------------------------- ------------------------
1995 1996 1997 1998 1998 1999
(unaudited)
Statement of Operations Data: Net revenues.......... $ -- $ -- $ 110 $ 1,143 $ 663 $ 6,240 Gross profit (loss)... -- -- (38) 715 399 5,197 Loss from operations.. (16) (883) (2,725) (5,346) (3,180) (10,035) Net loss.............. (16) (874) (2,732) (5,741) (3,609) (9,786) Historical loss per common share, basic and diluted.......... $ (0.00) $ (73.40) $ (171.97) $ (306.42) $ (185.72) $ (355.21) Weighted average shares used to compute historical basic and diluted loss per common share................ 9,532.877 11,910.725 15,883.975 18,736.675 19,430.790 27,548.912 Pro forma loss per common share, basic and diluted.......... $ $ Weighted average shares used to compute pro forma basic and diluted loss per share.......
September 30, 1999 Pro Pro Forma Actual Forma As Adjusted (unaudited)
Balance Sheet Data: Cash and cash equivalents........................... $ 5,295 Working capital..................................... 3,941 Total assets........................................ 14,275 Long-term debt...................................... 829 Convertible subordinated debt....................... 1,500 Total stockholders' equity.......................... 6,314