Prospectus Summary
This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all the information you should consider before buying shares in this offering. You should read the entire prospectus carefully.
WatchGuard Technologies, Inc.
WatchGuard is a leading provider of Internet security solutions designed to protect enterprises or telecommuters using the Internet for electronic commerce and communications. Our core market is small- to medium-sized enterprises, or SMEs, those businesses, governmental entities and educational institutions with fewer than 1,000 employees. We have recently expanded our marketing focus, however, to include larger enterprises as well as small offices and home offices, or SOHOs, and telecommuters, particularly those utilizing broadband Internet connections. Our innovative LiveSecurity solution enables both large and small enterprises to keep their security systems current with minimal effort through our broadcast over the Internet of threat responses, software updates, information alerts, expert editorials, support flashes and virus alerts. LiveSecurity is made possible through an updatable security appliance that executes software sent from a remote management system that receives our LiveSecurity broadcasts. Our LiveSecurity solution is a fully integrated, comprehensive, easy-to-install package. Our solution for SMEs and larger enterprises features a firewall, virtual private networking, user authentication, web surfing control and our LiveSecurity broadcast service. In the first quarter of 2000, we expect to introduce security solutions for SOHOs and telecommuters that will feature a firewall, virtual private networking, Internet protocol sharing and our LiveSecurity broadcast service.
We provide enterprises a security management choice through our two product offerings, the LiveSecurity System and LiveSecurity for MSS, or managed security service. Our LiveSecurity System enables enterprises to manage their own Internet security with an easy-to-configure solution that provides point- and-click security management. The LiveSecurity System allows enterprises to rapidly distribute security protection from a desktop personal computer to all security appliances on their corporate network, while retaining centralized control and administration. Alternatively, SMEs, larger enterprises and, in the near future, SOHOs and telecommuters, can outsource their security management to Internet service providers, or ISPs, that have implemented our LiveSecurity for MSS. Through LiveSecurity for MSS, enterprises can sign up with an ISP to centrally configure, monitor and update their network security. For the ISP, our technology greatly improves the economics of managed security services through a scalable delivery platform that enables the ISP to remotely configure and manage thousands of customer sites quickly, easily and economically.
We initially incorporated in Washington in 1996 and reincorporated in Delaware in 1997. References to "we," "our," "us" and "WatchGuard" in this prospectus refer to WatchGuard Technologies, Inc. and its predecessor. Our executive offices are located at 316 Occidental Avenue South, Suite 200, Seattle, Washington 98104, and our telephone number is (206) 521-8340. Our web site is located at http://www.watchguard.com. Any information that is included on or linked to our web site is not a part of this prospectus.
We own or have rights to various trademarks and trade names used in our business. These include WatchGuard(R), Firebox(TM) and LiveSecurity(TM). This prospectus also includes trademarks, service marks and trade names of other companies, which remain the property of their owners.
The Offering
Common stock offered by WatchGuard......... 1,500,000 shares Common stock offered by the selling 1,500,000 shares stockholders.............................. Common stock to be outstanding after this offering.................................. 21,011,752 shares Use of proceeds............................ For working capital, corporate facilities expansion, repayment of indebtedness and other general corporate purposes, as well as the possible acquisition of or investment in complementary businesses or technologies Nasdaq National Market symbol.............. WGRD The number of shares of outstanding common stock is based on shares outstanding as of December 31, 1999, and excludes . 524,999 shares available for grant under our stock option plan as of December 31, 1999;
. 6,502,680 shares of common stock issuable upon exercise of options outstanding under our stock option plan as of December 31, 1999, at a weighted average exercise price of $4.60 per share, of which options to purchase 2,359,707 shares were exercisable;
. 225,000 shares of common stock issuable upon exercise of warrants outstanding as of December 31, 1999, at a weighted average exercise price of $0.92 per share, all of which were exercisable; and . 600,000 shares of common stock available for issuance under our employee stock purchase plan as of December 31, 1999.
Except where stated otherwise, the information we present in this prospectus assumes (1) no exercise by the underwriters of their over-allotment option and (2) a public offering price of $31.50 per share, which is based on the average of the high and low trading prices of our common stock on January 19, 2000.
You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may be used only where it is legal to sell these securities. The information in this document may be accurate only on the date of this document.
Summary Financial Data
Period From
February 14, 1996 Year Ended Nine Months Ended
(Inception) December 31, September 30,
to December 31, ---------------- ------------------
1996 1997 1998 1998 1999
(unaudited)
(In thousands, except per share data)
Statement of Operations Data: Total revenues ........ $ 331 $ 5,098 $11,379 $ 7,766 $ 14,096 Operating loss ........ (462) (4,396) (9,000) (5,889) (9,218) Net loss .............. (468) (4,334) (9,119) (5,948) (9,447) Basic and diluted net loss per share ....... N/A $(17.17) $(11.34) $ (8.01) $ (1.76) Shares used in calculation of basic and diluted net loss per share ............ N/A 252 804 743 5,379 Pro forma basic and diluted net loss per share (unaudited)..... $ (0.68) $ (0.60) Shares used in calculation of pro forma basic and diluted net loss per share (unaudited)..... 13,366 15,755 See note 6 of Notes to Financial Statements for information concerning the calculation of pro forma basic and diluted net loss per share.
September 30, 1999 Actual As Adjusted (unaudited) (In thousands)
Balance Sheet Data: Cash and cash equivalents................................. $ 32,468 $ 76,344 Working capital........................................... 31,543 75,881 Total assets.............................................. 40,306 84,182 Long-term debt, less current portion...................... -- -- Total stockholders' equity................................ 33,344 77,682
The preceding table summarizes . actual balance sheet data; and . balance sheet data as adjusted to give effect to the sale by WatchGuard of 1,500,000 shares of common stock offered through this prospectus at an assumed public offering price of $31.50 per share, after deducting underwriting discounts and commissions and estimated offering expenses.