Summary
This summary may not contain all the information that may be important to you. You should read the entire prospectus, including the financial data and related notes, before making an investment decision. Upon the completion of this offering, the only class of our capital stock outstanding will be our Common Stock. Except where otherwise indicated, all information in this prospectus (a) assumes the automatic conversion of Class A, Class B and Class C Convertible Preferred Stock and Class A and Class B Common Stock into Common Stock, (b) assumes the exchange of shares of Common Stock for all outstanding shares of Class D Nonvoting Preferred Stock upon the closing of this offering, (c) assumes the automatic conversion of warrants to purchase shares of Class B Convertible Preferred Stock, and warrants to purchase Class A and Class B Common Stock, into 2,246,000 warrants to purchase shares of Common Stock, (d) assumes the cashless exercise of warrants which are mandatorily exercisable upon the closing of this offering into shares of Common Stock and (e) assumes the Underwriters' over-allotment option will not be exercised.
iXL Enterprises, Inc.
We are a leading Internet services company which provides Internet strategy consulting and comprehensive Internet-based solutions to Fortune 1000 companies and other corporate users of information technology. We help businesses identify how the Internet can be used to their competitive advantage and use our expertise in creative design and systems engineering to design, develop and deploy advanced Internet applications and solutions.
Our service offerings include Internet strategy consulting, e-commerce systems, business information management systems, interactive learning environments, digital media services, traditional web site development, customized hosting, proprietary sales presentation systems and web publishing technology. We use our extensive engineering capabilities to deliver complex Internet-based business solutions by employing proven technologies such as Java, XML, Perl, CGI, C and C++. To foster the best possible solutions and service, we have assembled industry practice groups including professionals with expertise in the business practices and processes of specific industries. In addition, we utilize an engagement methodology (iD5) which defines and delineates business procedures and processes to take full advantage of best practices developed throughout our Company. We offer our services primarily on a fixed price basis. In 1998 our clients included BellSouth, Carlson Wagonlit Travel, Chase Manhattan Bank, First USA, Gateway, GE, Lucent, Time Warner and WebMD.
The Internet represents a revolutionary and powerful new opportunity for business. International Data Corporation expects dramatic growth in total e- commerce transaction volume, projecting an increase from $32 billion in 1998 to $426 billion in 2002. Many companies currently do not have the capabilities required to conduct e-commerce with suppliers and customers. These companies are looking to independent service providers that can assist them in taking full advantage of the Internet's ability to improve their business. We expect this to drive growth in the worldwide Internet development services market, which according to IDC, will grow from $7 billion in 1998 to $44 billion by 2002.
We have expanded rapidly since our founding in March 1996 through a combination of acquisitions and internal growth. We have completed 34 acquisitions to gain critical mass, experienced professionals, industry expertise, technical skills and geographic coverage. As of December 31, 1998, we had approximately 1,300 employees. We have invested in our management information systems to create a scalable organization capable of maximizing the sharing of our knowledge base and the utilization of our staff. Our headquarters is located in Atlanta, Georgia and we have 18 regional offices located throughout the United States and in England, Germany, Spain and Italy.
In addition to our strategic Internet services offerings, we have developed Consumer Financial Network, Inc., a sophisticated e-commerce platform for marketing financial services and employee benefits over corporate intranets and the Internet, as well as through a telesales center. CFN has contracted with competing providers of various financial services (automobile, homeowners and other lines of personal insurance, home mortgages, home equity loans, auto finance, long-term care insurance, term life insurance and prepaid legal services) to create a platform for comparison shopping and purchase of these services. CFN's platform is provided at no cost to large companies and associations for distribution as a human resources benefit to their employees or members. CFN service providers include Nationwide Mutual Insurance Co., Liberty Mutual Insurance Co., and Chase Manhattan Mortgage Corporation. Member companies include Nextel and DaimlerChrysler. CFN receives a fee from the financial service providers for each sale of their services through the CFN network. CFN's equity is owned 88% by the Company and 12% by General Electric Capital Corporation.
Our goal is to become the preferred provider of strategic Internet services and to become a leader in Internet-delivered financial services and employee benefits. To achieve this goal, our strategy is to leverage and expand our industry expertise, develop our technology capabilities, expand our geographic coverage, capture and disseminate our knowledge and best practices, expand our client relationships, attract, train and retain experienced professionals, and enhance and extend the CFN platform.
The Offering
Common Stock offered:
U.S. Offering............... shares
International Offering...... shares Total...................... shares
Shares outstanding after the U.S. and International Offerings.................. shares(1) Overallotment Option........ shares of Common Stock Use of Proceeds............. We estimate that the net proceeds from this offering (without exercise of the over-allotment option) will be approximately $ million. We intend to use these net proceeds for (a) repayment of indebtedness and (b) general corporate purposes, including working capital requirements and acquisitions. See "Use of Proceeds."
Risk Factors................ See "Risk Factors" for a discussion of factors you should carefully consider before deciding to invest in the shares of the Common Stock.
Nasdaq National Market Symbol..................... "IIXL" (1) Excludes a currently undeterminable number of shares of Common Stock issuable upon the exercise of certain contingent rights of preferred stockholders of Consumer Financial Network, Inc. to exchange their shares of Consumer Financial Network, Inc. capital stock for shares of the Company's Common Stock. See "Description of Capital Stock--CFN's Series A Convertible Preferred Stock." Also excludes as of February 5, 1999 (a) 23,489,725 shares of Common Stock subject to outstanding options at a weighted average exercise price of $7.67 per share, (b) 2,246,000 shares of Common Stock subject to outstanding warrants at a weighted average exercise price of $6.99 per share, and 7,510,275 shares of Common Stock reserved for options to be granted under our 1996 Stock Option Plan, 1998 Non-Employee Stock Option Plan and 1999 Employee Stock Option Plan and (c) 4,000,000 shares of Common Stock to be registered pursuant to a Registration Statement on Form S-4 for use in future acquisitions.
Summary Historical and Pro Forma Consolidated Financial Information The following summary historical and pro forma consolidated financial information and pro forma as adjusted information should be read in conjunction with "Pro Forma Consolidated Financial Information," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's audited Consolidated Financial Statements included elsewhere in this prospectus. The Consolidated Statement of Operations Data set forth below for the years ended December 31, 1997 and 1998 and the Consolidated Balance Sheet Data at December 31, 1998, are derived from and qualified by reference to, the Company's audited Consolidated Financial Statements, which appear elsewhere in this prospectus. The acquisitions of the Acquired Companies, described herein, were accounted for using the purchase method and accordingly, the actual Consolidated Statement of Operations Data reflects the results of operations of these businesses from their respective acquisition dates. The summary pro forma and pro forma as adjusted information does not purport to represent what our results actually would have been if such events had occurred at the dates indicated, nor does such information purport to project our results for any future period. The pro forma Consolidated Statement of Operations Data gives effect to the acquisitions of the 1998 Acquired Companies as if they had occurred on January 1, 1998 and the pro forma Consolidated Balance Sheet Data as if (a) the sale and issuance of 22,825 shares of Class A Convertible Preferred Stock (which shall be converted into 2,282,500 shares of Common Stock upon the closing of this offering) that occurred subsequent to December 31, 1998 (the "Equity Financing") occurred as of December 31, 1998 and (b) the repayment of approximately $10 million of revolving debt that occurred subsequent to December 31, 1998 (the "Revolving Debt Repayment") occurred as of December 31, 1998.
Years Ended December 31,
1997 1998 1998
Actual Actual Pro Forma
(in thousands, except per
share data)
Consolidated Statement of Operations Data:
Revenues........................................ $ 18,986 $ 64,767 $ 87,160 Cost of revenues................................ 11,343 44,109 57,790 Gross profit.................................. 7,643 20,658 29,370 Sales and marketing expenses.................... 3,903 16,397 17,519 General and administrative expenses............. 9,114 28,770 37,279 Research and development expenses............... 4,820 4,408 4,413 Stock option and warrant expenses............... -- 2,454 4,299 Depreciation.................................... 1,408 5,217 5,895 Amortization.................................... 5,531 16,354 29,817 Loss from operations.......................... (17,133) (52,942) (69,852) Other income (expense), net..................... 116 (28) (138) Loss on equity investment....................... (1,443) (1,640) (1,640) Interest income................................. 136 750 777 Interest expense................................ (238) (770) (1,748) Loss before income taxes...................... (18,562) (54,630) (72,601) Income tax benefit (expense).................... 1,550 -- (8) Net loss...................................... (17,012) (54,630) (72,609) Dividends and accretion on mandatorily redeemable preferred stock..................... -- (9,099) (9,099) Net loss available to common stockholders..... $(17,012) $(63,729) $(81,708)
Basic and diluted net loss per common share..... $ (2.60) $ (5.41) $ (5.08) Weighted average common shares outstanding...... 6,540 11,777 16,088 As of December 31, 1998 Pro Forma as Actual Pro Forma Adjusted(1)
Consolidated Balance Sheet Data: Cash and cash equivalents...................... $19,259 $31,984 Working capital................................ 27,119 39,844 Total assets................................... 135,215 147,940 Debt, including current portion................ 21,420 11,420 Mandatorily redeemable preferred stock......... 65,679 65,679 Mandatorily redeemable preferred stock of subsidiary.................................... 9,839 9,839 Stockholders' equity........................... 17,824 40,549
(1) As adjusted to reflect (a) the automatic conversion of Class A, Class B and Class C Convertible Preferred Stock and Class A and Class B Common Stock into Common Stock upon the closing of this offering, (b) the exercise of warrants which are mandatorily exercisable upon the closing of this offering into shares of Common Stock (assuming a cashless exercise), (c) the exchange of shares of Common Stock for all outstanding shares of Class D Nonvoting Preferred Stock upon the closing of this offering and (d) this offering and the application of our estimated net proceeds (assumed to be $ million) after deducting the underwriting discount and the estimated offering expenses that we will pay.