Prospectus Summary
Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading "Risk Factors."
We are a leading provider of comprehensive online advertising and direct marketing solutions for advertisers and Web publishers. We design, develop and implement sophisticated "beyond the banner" advertising campaigns featuring sponsorships, co-branding, content integration, rich media and other innovative marketing techniques that we believe are more effective than traditional banner ad campaigns. Our sales force and creative design team work closely with our advertising clients to create dynamic marketing campaigns that enable them to achieve their strategic objectives. Furthermore, our adMonitor technology offers advertisers and Web publishers the ability to selectively target ads to Web users based upon their specific interests and characteristics. adMonitor also enables advertisers to track, measure and manage the effectiveness of their ad campaigns in real time. We believe that our solutions enable:
. Advertisers to leverage the unique capabilities of the Internet to communicate their messages, obtain high response rates and achieve a higher return on ad spending; and . Web publishers to realize increased ad sales, improved pricing for their ad inventory and more efficient ad inventory management.
We represent a network of select Web publishers featuring sites with strong online brand awareness and innovative content such as Alloy Online, Big Yellow, Hollywood.com and Liquid Audio. Over 450 advertisers, including Ford Motor Company, iVillage, Microsoft, Netscape, Procter & Gamble and Visa, have utilized our solutions.
We believe that the growth of the Internet is driving advertisers to devote an increasing portion of their overall advertising and marketing budgets to online advertising and direct marketing. Forrester Research estimates that worldwide Internet advertising spending was approximately $3.3 billion in 1998 and will increase to approximately $24.1 billion by 2003. Moreover, the Direct Marketing Association estimates that worldwide expenditures for online direct marketing campaigns will grow from $603 million in 1998 to approximately $5.3 billion in 2003. Online advertisers are increasingly demanding effective advertising campaigns that go beyond traditional banner ads and incorporate enhanced features such as sponsorships, co-branding, content integration and rich media. eStats estimates that sponsorships will grow from approximately 40% of total online advertising in 1998 to approximately 58% in 2001. We believe that our focus on creating innovative sponsorship-driven advertising campaigns, our in-depth industry knowledge and our robust adMonitor technology enable us to provide our clients with fully-outsourced solutions that meet their complex and evolving needs.
Our objective is to be the leading provider of comprehensive online advertising and direct marketing solutions. The following are key elements of our strategy:
. Capture a greater share of online advertising budgets;
. Grow our sales and marketing organization;
. Selectively expand our network of Web publishers;
. Enhance and expand our adMonitor technology;
. Develop, deploy and leverage our library of creative marketing solutions; and . Expand our direct marketing capabilities.
Our business began in January 1997 as a proprietorship of one of our founders, John C. Bohan. We changed our form of operations in May 1997 to a California limited liability company known as John Bohan & Associates, LLC. We initially conducted business under the name AdNet Strategies, and in January 1998, we incorporated under the name AdNet Strategies, Inc. in California and elected S-corporation status. In December 1998, we changed our name to Latitude 90, Inc. and became a C-corporation. We reincorporated in Delaware as L90, Inc. in September 1999. Our principal executive offices are located at 2020 Santa Monica Boulevard, Suite 400, Santa Monica, California 90404. Our telephone number at that location is (310) 315-1199. Our Web address is www.L90.com. Information contained on our Web site does not constitute part of this prospectus. References in this prospectus to "the Company," "L90," "we," "our," and "us" refer to L90, Inc. and its predecessor businesses and entities.
Unless otherwise indicated, all information in this prospectus:
. reflects the automatic conversion of all 2,000 shares of Series A preferred stock, 4,107,044 shares of Series B preferred stock and 1,307,190 shares of Series C preferred stock into 7,914,234 shares of common stock upon completion of this offering;
. reflects the cashless exercise of warrants to acquire shares of common stock with a weighted average exercise price of $3.23 per share;
. excludes options and warrants outstanding as of August 31, 1999, to purchase 3,962,490 shares of common stock with a weighted average exercise price of $1.70 per share; and . assumes no exercise of the underwriters' over-allotment option.
The Offering
The following information excludes 3,962,490 shares of common stock issuable upon the exercise of stock options and warrants outstanding as of August 31, 1999, with a weighted average exercise price of $1.70 per share.
Common Stock we are offering........................ shares Common Stock to be outstanding after this offering.. shares Underwriters' over-allotment option................. shares Use of Proceeds..................................... We intend to use the net proceeds of this offering for general corporate purposes, including working capital, information technology investments, sales and marketing efforts and potential acquisitions. See "Use of Proceeds."
Proposed Nasdaq National Market Symbol.............. "LNTY" Summary Financial Data (in thousands, except per share data) The following summary financial data is derived and qualified in its entirety by our financial statements. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Period from Inception (January 5, Six Months 1997) through Year Ended Ended June 30, December 31, December 31, -------------- 1997 1998 1998 1999 (unaudited)
Statement of Operations Data: System revenue...................... $4,210 $8,024 $3,376 $ 5,796 Revenue............................. $1,160 $2,189 $ 921 $ 1,949 Gross profit........................ 1,160 2,189 921 1,640 Operating income (loss)............. 307 (306) 38 (1,897) Net income (loss) attributable to common stockholders................ $ 310 $ (313) $ 41 $(1,942) Pro forma basic and diluted net loss per share(1)....................... $ $ $ $ Weighted average shares outstanding used in pro forma basic and diluted per share calculation(1)...........
June 30, 1999 Pro Forma Actual As Adjusted(1) (unaudited)
Balance Sheet Data: Cash and cash equivalents............................... $ 972 $ Current assets.......................................... 3,444 Total assets............................................ 3,933 Long-term capital lease obligations, net of current portion................................................ 271 Total stockholders' equity ............................. 191
(1) The foregoing table assumes no exercise of any stock options or warrants outstanding as of June 30, 1999 (except the pro forma data, which assume the cashless exercise of warrants to acquire shares of common stock). As of June 30, 1999, there were options and warrants outstanding to purchase a total of 2,052,890 shares of common stock with a weighted average exercise price of $1.01 per share.