Prospectus Summary
You should read the following summary together with the more detailed information regarding Stamps.com including the financial statements and notes appearing elsewhere in this prospectus. Unless otherwise indicated, this prospectus assumes no exercise of the underwriters' over-allotment option and does not include up to 8,000,000 shares of our common stock that will be issued in the proposed acquisition of iShip.com. This prospectus contains forward- looking statements that involve risks and uncertainties. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of the factors set forth under "Risk Factors" and elsewhere in this prospectus.
Stamps.com Inc.
We offer a convenient, cost-effective and easy-to-use service for purchasing and printing postage over the Internet. Our core service is approved by the US Postal Service and enables users to print information-based indicia, or electronic stamps, directly onto envelopes, labels or business documents using ordinary laser or inkjet printers. Our service is currently the only commercially available offering that requires no additional hardware to purchase and print postage; the user's existing PC, printer and Internet setup are sufficient. Accessing our service is simple. Our free software can be downloaded from the Internet or installed from a free CD-ROM. After installing the software and completing a brief registration process, customers can purchase and print postage 24 hours a day, seven days a week from their PCs. Customers are charged a monthly convenience fee based on their usage of our service. Our technology meets strict US government security standards and our service incorporates US Postal Service-mandated address verification features to enhance the efficiency of mail processing and delivery. In addition, our Internet Postage(TM) service is designed to interact with word processing, contact and address management, accounting and corporate applications to stamp letters, invoices, statements, checks and other business documents automatically.
On October 22, 1999, we commercially launched our Internet Postage service. As of October 29, 1999, our customer base consisted of over 15,000 users who had downloaded our software and registered for our service.
Our Strategy
Our objective is to be the leading provider of Internet postage and shipping services. To achieve this objective, our strategy includes the following key elements:
. Enhancing our brand name through a variety of marketing and promotional techniques;
. Leveraging strategic partnerships with companies in the Internet, software, original equipment manufacturer, office supply and media industries;
. Exploiting our first-to-market advantage as the first approved, commercially available software-based Internet postage solution;
. Rapidly growing our customer base by capitalizing on our brand name, strategic partnerships and first-to-market advantage;
. Utilizing our software-based solution and technology to enhance our service offering and expand the benefits of secure online transactions; and . Pursuing additional revenue opportunities, including postage and shipping- related products and insurance, the international Internet postage market, and authenticated document delivery.
Recent Developments
In October 1999, we entered into a three-year marketing and distribution agreement with America Online, Inc., or AOL. This partnership is an expansion of our agreement with AOL made in December 1998, and under the agreement we will become the exclusive provider of postage software available across several AOL brands including AOL, CompuServe, Netscape Netcenter and Digital City. Our software will also be bundled on AOL, Netscape and CompuServe branded CD-ROMs. Under the new agreement, we will make aggregate payments of $56 million over three years to AOL. In addition, AOL has agreed to make an $11 million equity investment in Stamps.com. For a further description of the AOL investment, see "Description of Capital Stock--America Online Investment".
In October 1999, we signed a definitive agreement to acquire iShip.com, a privately-held company located in Bellevue, Washington. iShip.com has developed Web-based technology that will give online buyers and sellers a complete, one- stop shipping and tracking solution. iShip.com's tools are designed to help merchants, consumers and large corporations price, ship, track and manage shipments over the Internet. iShip.com's service will enable a comparison of rates and services among multiple carriers, including Airborne Express, Federal Express, United Parcel Service, or UPS, the US Postal Service and Yellow Freight. Under the terms of the agreement, we will issue up to 8,000,000 shares of our common stock for all outstanding shares, options and warrants of iShip.com. The acquisition will be accounted for under the purchase method of accounting and has been approved by the boards of directors of both companies. We anticipate that the iShip.com acquisition will close during the fourth quarter of 1999. The iShip.com acquisition is subject to a number of closing conditions, including governmental approval, stockholder approval by both iShip.com and Stamps.com and other customary conditions. As a result, we cannot be certain that the iShip.com acquisition will be completed.
Corporate Information In September 1996, our founders began to investigate the feasibility of entering into the US Postal Service's Information Based Indicia Program and initiated the certification process. In January 1998, we were incorporated in Delaware as StampMaster, Inc. and changed our name to Stamps.com Inc. in December 1998. Our executive offices are located at 3420 Ocean Park Boulevard, Suite 1040, Santa Monica, California 90405, and our telephone number is (310) 581-7200. Information contained on our Web site does not constitute part of this prospectus. References in this prospectus to "we", "us" or "our" refer to Stamps.com and do not include iShip.com unless otherwise noted.
Stamps.com(TM), Internet Postage(TM), Postage from your printer(TM) and the Stamps.com logo are our trademarks. This prospectus also includes trademarks of entities other than Stamps.com.
The Offering
The following information assumes that the underwriters do not exercise the option granted by us to purchase additional shares in the offering. The number of shares to be outstanding after the offering includes 178,638 shares of common stock purchased by AOL in October 1999 and 148,860 shares of common stock that AOL has agreed to purchase concurrently with the closing of this offering, and excludes outstanding options and warrants to purchase a total of 7,082,414 shares of common stock with a weighted average exercise price of $7.65 per share and the shares of our common stock to be issued in the proposed iShip.com acquisition. See "Capitalization".
Common stock offered by Stamps.com................. 5,000,000 shares Common stock to be outstanding after the offering.. 40,192,305 shares Use of proceeds.................................... For general corporate purposes, principally expansion of our marketing and distribution partnerships, advertising and brand promotion, technology development, and working capital.
Nasdaq National Market symbol...................... STMP Summary Financial Data The following summary financial information is derived from our financial statements included elsewhere in this prospectus. You should read the following summary financial information in conjunction with those financial statements and the related notes.
The summary financial information below reflects that we were incorporated on January 9, 1998. The statement of operations data displayed in the "Pro Forma for iShip.com Acquisition 1999" column give effect to the proposed iShip.com acquisition as if it were completed on January 1, 1999. The pro forma general and administrative expenses include expenses related to the amortization of intangibles, which was $85.3 million for the nine months ended September 30, 1999.
The balance sheet data displayed in the "As Adjusted" column reflect the application of the net proceeds from the sale of 5,000,000 shares of common stock offered by us at an assumed initial price to public of $57.50 per share after deducting the underwriting discount and commissions and estimated offering expenses payable by us, and the sale of 327,498 shares of common stock to AOL at an assumed offering price of $33.59 per share.
The balance sheet data displayed in the "As Adjusted and Pro Forma for iShip.com Acquisition" column reflect the application of proceeds from the offering as well as the effect of the proposed iShip.com acquisition as if it were completed on September 30, 1999.
Nine Months Ended
Period from September 30, 1999
January 9, 1998 Period from -------------------------
(inception) to January 9, 1998 Pro Forma for
December 31, (inception) to iShip.com
1998 September 30, 1998 Actual Acquisition
(unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
Statement of Operations: Revenues................ $ -- $ -- $ -- $ -- Costs and expenses: Research and development........... 1,532 548 5,049 6,542 Sales and marketing.... 632 -- 10,856 11,090 General and administrative........ 2,016 1,126 8,276 95,592 Loss from operations.... (4,180) (1,674) (24,181) (113,224) Net loss................ $(4,196) $(1,676) $(23,103) $(112,010)
Basic and diluted net loss per share......... $ (0.85) $ (0.35) $ (1.59) $ (5.39) Pro forma (for conversion of preferred shares into common shares) basic and diluted net loss per share.................. $ (0.36) $ (0.17) $ (0.74) $ (2.98) Weighted average shares outstanding used in basic and diluted per- share calculation...... 4,956 4,738 14,496 20,800 Weighted average shares outstanding used in pro forma basic and diluted per-share calculation.. 11,593 9,613 31,260 37,564 As of September 30, 1999 As Adjusted and Pro Forma for iShip.com Actual As Adjusted Acquisition (unaudited) (unaudited) (unaudited) (in thousands)
Balance Sheet Data: Cash and cash equivalents............. $61,198 $345,182 $350,704 Working capital....................... 61,380 345,364 349,863 Total assets.......................... 74,185 358,169 781,678 Line of credit, capital lease obligations and other long-term liabilities.......................... 1,972 1,972 4,000 Total stockholders' equity............ 66,652 350,636 766,296