Stamps.com 2008 Annual Report Download - page 5

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three-year period. We estimate that as of December 31, 2008 we were at approximately a 34% level compared with the 50%
level that would trigger impairment of our NOL asset.
During the second quarter of 2008, we received shareholder approval to amend our articles of incorporation in order to
protect our NOL asset (the “NOL Protective Measures”) and those measures are now in effect. Under the NOL Protective
Measures there is no change to the way that existing Stamps.com shares are held or traded, but any person, company or
investment firm which wishes to become a “5% shareholder” of Stamps.com must first obtain a waiver from our board of
directors. In addition, any person, company or investment firm which is already a “5% shareholder” of Stamps.com cannot make
any additional purchases of Stamps.com stock without a waiver from our board of directors.
As of February 27, 2009, we had 16,653,144 shares outstanding, and therefore ownership of approximately 833,000 shares or
more would currently constitute a “5% shareholder”. We strongly urge that any stockholder contemplating owning more
than 675,000 shares contact us before doing so .
1
TABLE OF CONTENTS
Item 1. Business.
Overview
Stamps.com® is the leading provider of Internet-based postage solutions. Our customers use our service to mail and ship a
variety of mail pieces, including postcards, envelopes, flats and packages, using a wide range of United States Postal Service (the
“USPS”) mail classes including First Class Mail®, Priority Mail®, Express Mail®, Media Mail®, Parcel Post®, and others. Our
customers include home businesses, small businesses, corporations and individuals. We were the first ever USPS-licensed
vendor to offer PC Postage® in a software-only business model in 1999.
Services and Products
We offer the following products and services to our customers:
Our customers can print postage (i) on NetStamps® labels, which can be used just like regular stamps, (ii) directly on
envelopes or on other types of mail or labels, in a single-step process that saves time and provides a professional look,
(iii) on plain 8.5” x 11” paper or on special labels for packages, and (iv) on integrated customs forms for international
mail. For added convenience, our PC Postage services incorporate address verification technology that verifies each
destination address for mail sent using our service against a database of all known addresses in the United States and can
be integrated into common small business and productivity software applications such as word processing, contact and
address management, and accounting and financial applications. We also offer several different versions of NetStamps
such as Themed NetStamps and Photo NetStamps that allow customers to add stock or full custom designs to their mail
while still providing the same NetStamps convenience of printing and using postage whenever it is needed.
•
PC Postage Service
. Our USPS-approved PC Postage service enables users to print “electronic stamps” directly onto
envelopes, plain paper, or labels using only a standard personal computer, printer and Internet connection. Our service
currently supports a variety of USPS and international mail classes. Customers can also add USPS Special Services such
as Delivery Confirmation
TM
, Signature Confirmation
TM
, Registered Mail, Certified Mail, Insured Mail, Return
Receipt, Collect on Delivery and Restricted Delivery to their mail pieces. After installing our free software and
completing the registration process, customers can purchase and print postage 24 hours a day, seven days a week. When
a customer purchases postage for use through our service, the customer pays face value, and the funds are transferred
directly from the customer’s account to the USPS’s account. Currently the majority of new customers signing up for our
service pay a monthly convenience fee ranging from $15.99 to $19.99.
•
PhotoStamps
®. PhotoStamps is a patented form of postage that allows consumers to turn digital photos, designs or
images into valid US postage. With this product, individuals or businesses can now create customized US postage using
pictures of their children, pets, vacations, celebrations, business logos and more. PhotoStamps can be used as regular
postage to send letters, postcards or packages. The product is available via our separately-marketed website at
www.photostamps.com . Customers upload a digital photograph or image file, customize the look and feel by choosing a
border color to complement the photo, select the value of postage, and place the order online. Each sheet includes 20
individual PhotoStamps, and orders arrive via US Mail in a few business days. PhotoStamps is currently available under
authorization of the USPS for its fourth phase market test, with an authorization through May 2009. We do not include
our PhotoStamps business when we refer to our PC Postage business.