Stamps.com 2013 Annual Report Download - page 13

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Section 382 Update
We currently have federal and state net operating loss (“NOL”) carry-forwards of approximately $200 million and $95 million, respectively.
Under Internal Revenue Code Section 382 rules, if a “change of ownership” is triggered, our NOL asset may be impaired. A change in
ownership can occur whenever there is a shift in ownership by more than 50 percentage points by one or more “5% shareholders” within a three-
year period. We estimate that as of December 31, 2013 we were at approximately a 19% level compared with the 50% level that would trigger
impairment of our NOL asset.
Under our certificate of incorporation, any person or entity, including any company or investment firm that wishes to become a “5%
shareholder” (as defined in our certificate of incorporation) must first obtain a waiver from our Board of Directors. In addition any person or
entity, including any company or investment firm that is already a “5% shareholder” of ours cannot make any additional purchases of our stock
without a waiver from our Board of Directors. These NOL protective measures contained in our certificate of incorporation (the “NOL
Protective Measures”) are more particularly discussed in our Definitive Proxy Statement filed with the Securities and Exchange Commission on
April 2, 2008.
On July 22, 2010, our Board of Directors suspended the NOL Protective Measures by approving a waiver from the NOL Protective Measures to
all persons and entities, including companies and investment firms. As a result, our stockholders are now allowed to become “5% shareholders”
and existing “5% shareholders” are allowed to make additional purchases of our stock each without having to comply with the restrictions
contained in the NOL Protective Measures. This waiver may be revoked by our Board of Directors at any time if the Board deems the revocation
necessary to protect against a Section 382 “change of ownership” that would limit our ability to utilize future NOLs. For complete details about
this waiver from the NOL Protective Measures, please see our Form 8-K filed on July 28, 2010.
As of February 28, 2014, we had 16,246,601 shares outstanding, and therefore ownership of approximately 812,000 shares or more would
currently constitute a “5% shareholder”. We strongly urge that any stockholder contemplating becoming a 5% or more shareholder
contact us before doing so.
Employees
As of December 31, 2013, we had approximately 250 employees not including temporary or contract workers. Our employees work in various
departments including customer support, research and development, sales and marketing, information technology and general administration.
None of our employees are represented by a labor union. We believe that we have a good relationship with our employees.
Segments, Geographical and Revenue Information
We operate in a single market segment, “Internet Mailing and Shipping Services” and therefore have only one reportable segment. All of our
operations, revenue and assets are within the United States. During 2013, 2012 and 2011, we did not recognize revenue from any one customer
that represented 10% or more of revenues. See Item 7.“Management’s Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations for years ended December 31, 2013 and 2012,” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations for years ended December 31, 2012 and 2011,” for the percentage of total revenue
contributed by categories of similar products or services that accounted for 10 percent or more of consolidated revenue. Our product and
insurance revenues are subject to seasonal variations with the first and fourth calendar quarters being typically seasonally stronger and the
second and third calendar quarters being typically seasonally slower. Our service revenue does have some seasonal variation driven by typically
seasonally stronger customer acquisition and usage in the first and fourth calendar quarters and typically seasonally slower customer acquisition
and usage in the second and third calendar quarters. Our PhotoStamps revenue is typically seasonally stronger in the fourth calendar quarter due
to the holidays.
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