Stamps.com 2001 Annual Report Download - page 5

In May 2001, we sold the iShip multi-carrier shipping service assets to United Parcel Service for $2.8 million. In addition, in May 2001, we
terminated our marketing relationship with a direct selling organization called Cydcor Limited as a result of low return on investment from that
marketing channel.
In August 2001, we continued to execute our business strategy to decrease our operating losses and enhance our ability to achieve profitability
by reducing our headcount by approximately 25% to under 70 employees, contractors and temporary employees. Due to this reduction, we took
an additional charge in the quarter ended September 30, 2001, of approximately $200,000 consisting of employee severance.
During 2001, we experienced significant change in the personnel at the senior management and board level. In February 2001, our Senior Vice
President and General Manager of the Enterprise Business Unit, David N. Duckwitz, our Vice President, Sales of the Enterprise Business Unit,
Blake Karpe, and our Senior Vice President and General Manager of the Small Business Unit, Douglas Walner resigned. In March 2001, David
Bohnett resigned from our board of directors. In May 2001, following the divestiture of our iShip assets, John A. Duffy and Stephen M.
Teglovic, who served on our board of directors as a result of the iShip acquisition, resigned from our board of directors. In June 2001, Carolyn
M. Ticknor and Thomas N. Clancy also resigned from our board of directors.
In August 2001, Kathy Brush, our Vice President of Marketing, left Stamps.com, Marvin Runyon resigned from our board of directors and Ken
McBride was appointed President and Chief Executive Officer. Mr. McBride, who has also served as our Chief Financial Officer since October
2000, replaced Bruce Coleman who held the position of Chief Executive Officer on an interim basis. In November 2001, our Vice President of
Strategy, Kyle Huebner, filled the open Vice President of Marketing position. We may continue to experience changes in personnel at the
senior management and board level.
On November 16, 1999, we announced the formation of a subsidiary, EncrypTix, Inc., to develop secure printing opportunities in the events,
travel and financial services industries. In February 2000, we invested $1.0 million and granted EncrypTix a license to our technology.
EncrypTix raised approximately $35.0 million in private financing. On March 12, 2001, EncrypTix ceased operations and effected a general
assignment of its assets for the benefit of its creditors. EncrypTix took this action because it was not able to secure additional funding. We do
not expect to be impacted by any of EncrypTix's resulting liabilities. Additionally, we terminated our license agreement with EncrypTix and
have received limited licenses to some of EncrypTix's intellectual property. Due to this cessation in business, we wrote off the invested $1.0
million and took a one-time gain to eliminate the cumulative loss from EncrypTix in the amount of $23.2 million in the first quarter of 2001.
On March 7, 2000, we completed the acquisition of iShip.com, Inc. (iShip), a development stage enterprise that developed Internet-based
shipping technology. The acquisition was accounted for as a purchase in accordance with the provisions of Accounting Principles Board
Opinion (APB) No. 16. Under the purchase method of accounting, the purchase price was allocated to the assets acquired and liabilities
assumed based on their estimated fair values at the date of acquisition.
On March 2, 2001, United Parcel Service and Mail Boxes Etc. USA, Inc. (MBE) jointly announced that United Parcel Service would acquire
MBE. MBE represented a significant future source of revenue and market leverage for the enterprise shipping service that we acquired in the
iShip acquisition. United Parcel Service also informed us at that time that it would be unlikely to continue to use our enterprise shipping
services at MBE in the future. As a result of the March 2001 events, we reduced goodwill and other intangibles associated with the purchase of
iShip to reflect the present value of future cash flows, net of estimated transaction costs. This resulted in a non-cash charge of $163.6 million in
the first quarter of 2001.
On May 18, 2001, we completed the sale of our iShip multi-carrier shipping service assets to United Parcel Service for $2.8 million. The
difference between the sale price of iShip and the value we attributed to the iShip
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2002. EDGAR Online, Inc.