Prospectus Summary
Because this is only a summary, it does not contain all of the information that may be important to you. You should read the entire prospectus, including the "Risk Factors" section and the consolidated financial statements and the notes thereto, before deciding to invest in our common stock.
Our Company
We are a leading online entertainment destination. Through our network of Web sites, we provide online game shows and interactive single- and multi-player games that appeal to a broad audience. Our registered users have grown from 96,000 in January 1998 to 4.7 million in November 1999. Our unique user audience has similarly grown from 1.3 million in November 1998 to 3.5 million in November 1999. Our sites are very sticky, which means that our users consistently spend significantly more time per visit on our sites than the industry average. According to Media Metrix, a leading Internet audience measurement service, in October 1999, our users in the United States spent an average of 15.6 minutes per usage day on our sites and we were ranked as the fifth stickiest network of Web sites on the Internet. In addition, we were ranked by Media Metrix among the five stickiest networks in each month during 1999.
We derive substantially all of our revenues from the sale of advertisements on our network of Web sites. We believe that our large user base and the stickiness of our sites provide advertisers with an attractive platform to reach their target audiences. As a result, the number of advertisers and sponsors on our network has grown from 99 as of December 1998 to 176 as of September 30, 1999. Similarly, the number of advertising impressions served over our Web sites increased from 70.7 million in December 1998 to 261 million in October 1999. Because we attract a large, diversified user base and can segment it based upon information we collect, such as geography, age and gender, we believe we will be able to target advertisements to particular demographic profiles specified by our advertisers.
We believe that our technology platform is integral to maintaining the entertaining and engaging nature of our content. We have made significant investments in developing and implementing a technology platform to support our interactive multi-user game shows and games. We believe that our Web sites are among a few in the world that enable large numbers of users to simultaneously play interactive multi-player game shows and games. Moreover, we have designed our technology platform to easily accommodate our growing user base and to take advantage of emerging technology trends such as alternative access devices, interactive television platforms and broadband distribution services.
Our Market Opportunity As a result of the growing popularity of the Internet, an increasing number of users are looking beyond traditional media, such as radio and television, to the Internet as a source of entertainment. Game shows are among the most popular and long-lived programs on television in both the United States and worldwide. They were among the first entertainment formats to be successfully adapted to television from radio. Moreover, new game shows are frequently developed and introduced in order to capitalize on the popularity of the format and to draw larger audiences to television.
Games and game shows are particularly well suited for online entertainment content, especially with the development of higher bandwidth distribution channels, and can be easily adapted to the Internet. We believe that online games and game shows are a compelling entertainment medium for a mass user audience because they:
o provide users with an opportunity to win prizes;
o allow users to access entertaining content according to their own schedule from any location; and o enable users to participate interactively in the games and game shows and to compete against other users.
Despite the opportunity presented by the widespread adoption of the Internet as a medium for delivering entertainment content to a growing user base, only a limited number of Web sites are currently dedicated to providing a broad array of fun and challenging interactive entertainment. We believe that we can grow our revenues by leveraging our large audience and our engaging content through targeting our advertising placement to specific demographics within our audience in order to attract more advertisers to our network.
Our Strategy
Our objective is to be the leading online entertainment destination. We believe we can achieve this objective through the following strategies:
o enhancing our content;
o aggressively expanding our audience;
o further monetizing our audience and building additional revenue streams;
o capitalizing on the popularity of our PrizePoint rewards program;
o continuing to expand internationally; and o pursuing strategic acquisitions and alliances.
The Offering
Common stock offered... shares Common stock outstanding after this offering......... shares Use of proceeds.......... We intend to use the proceeds of this offering to fund our marketing activities, expand our sales force, enhance our products and services, expand our business internationally, enter into distribution and affiliate arrangements with other Web sites, potentially make strategic investments and acquisitions, and for general corporate purposes.
Proposed Nasdaq National Market Symbol.................. "UPRO" EASDAQ Symbol............ "UPRO" This information is based on our shares of common stock outstanding as of September 30, 1999. This information:
o excludes 2,468,632 shares subject to options outstanding as of September 30, 1999 with a weighted average exercise price of $15.64; and o assumes no exercise of the underwriters' over-allotment option.
As used in this prospectus, UPROAR and the UPROAR logo are service marks, the registration of which has been applied for and is pending in the United States and in other markets in which we register our marks. The UPROAR service mark is registered in Germany and the United Kingdom. We have also applied for the registration of numerous other trademarks in the United States and those applications are pending. Those marks include BINGO BLITZ, BLOWOUT BINGO, GAMESCENE, LET THERE BE FUN, MENTAL STATE, PRIZEPOINT, PRIZEPOINTS and TRIVIA BLITZ. All other trademarks and service marks used in this prospectus are the property of their respective owners.
Uproar Inc. was incorporated in Delaware on December 16, 1999 and is the successor to Uproar Ltd., a Bermuda limited liability company that was formed on July 7, 1997. Our principal executive offices are located at 240 West 35th Street, 9th Floor, New York, New York 10001. Our telephone number at that location is (212) 714-9500. Information contained on our Web sites does not constitute part of this prospectus. References in this prospectus to "Uproar," "we," "our," and "us" refer to Uproar Inc., its predecessor Uproar Ltd., and its subsidiaries.
Summary Consolidated Financial and Operating Data The following table sets forth summary consolidated financial and operating data for our business. You should read this information together with the consolidated financial statements and the notes to those statements appearing elsewhere in this prospectus.
Period ended
Year Ended December 31,
December 31, -----------------------------------------------------
1995 1996 1997 1998
Statement of Operations Data: Revenues ................................. $ 43,365 $ 59,698 $ 348,709 $ 1,632,969 Cost of revenues ......................... -- (40,781) (216,586) (760,376) Gross profit ............................. 43,365 18,917 132,123 872,593 Operating expenses: Sales and marketing ..................... -- 166,806 1,087,058 3,770,866 Product development ..................... 33,190 389,346 772,744 849,486 General and administrative .............. 70,182 187,362 2,092,394 2,337,023 Amortization of intangible assets ....... -- -- -- -- Loss from operations ..................... (60,007) (724,597) (3,820,073) (6,084,782) Foreign exchange gain (loss) ............. (2,233) 49,946 (85,439) 57,401 Interest income (expense), net ........... 4,326 (27,829) 82,349 205,751 Provision for income taxes ............... -- (4,909) (5,582) (9,020) Net loss ................................. $ (57,914) $ (707,389) $ (3,828,745) $ (5,830,650) Basic and diluted net loss per share ..... $ (0.10) $ (0.33) $ (0.85) $ (0.79) Weighted average number of shares outstanding ............................. 569,178 2,129,042 4,517,464 7,348,556
Nine Months Ended September 30, 1998 1999 (unaudited)
Statement of Operations Data: Revenues ................................. $ 911,253 $ 5,274,896 Cost of revenues ......................... (525,230) (1,690,692) Gross profit ............................. 386,023 3,584,204 Operating expenses: Sales and marketing ..................... 1,860,913 13,531,320 Product development ..................... 529,985 1,676,920 General and administrative .............. 1,195,503 5,105,128 Amortization of intangible assets ....... -- 4,553,728 Loss from operations ..................... (3,200,378) (21,282,892) Foreign exchange gain (loss) ............. 36,400 (136,374) Interest income (expense), net ........... 106,164 177,131 Provision for income taxes ............... (4,000) (44,324) Net loss ................................. $ (3,061,814) $ (21,286,459) Basic and diluted net loss per share ..... $ (0.45) $ (2.00) Weighted average number of shares outstanding ............................. 6,781,044 10,649,857
The following table is a summary of our balance sheet at September 30, 1999. The as adjusted data reflect the sale of shares of common stock offered hereby at an assumed initial public offering price in the United States of $ per share after deducting the estimated underwriting discount and estimated offering expenses payable by us.
September 30, 1999 Actual As Adjusted (in thousands)
Balance Sheet Data: Cash and cash equivalents ................................ $22,554 $ Working capital .......................................... 32,370 Total assets ............................................. 55,849 Total indebtedness, including current maturities ......... 174 Total stockholders' equity ............................... 52,061