Mail Stop 0407
February 10, 2005
Mr. Kurt A. Johnson
President and Chief Executive Officer
Fastclick, Inc.
360 Olive Street
Santa Barbara, CA 93101
RE: Fastclick, Inc.
Amendment #1 to Form S-1
Filed January 28, 2005
File No. 333-121528
Dear Mr. Johnson:
We have reviewed your filing and have the following
comments.
Please amend your Form S-1 in response to these comments. We
welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form S-1
Prospectus Summary, page 1
1. Further revise your summary section to clearly describe the
technologies and services that you provide. In this regard,
please
address the following:
* indicate on what basis the ads referenced in the third paragraph
on
page 1 are the "most effective;"
* clarify what you mean by "unique" users in the fourth paragraph
on
page 1;
* briefly explain what is "performance-based Internet advertising"
in
the last paragraph on page 1 and how it is relevant to your
business;
and
* replace "actively manage and optimize" in the second bullet on
page
2 with language that clearly describes what advertisers can do
with
your new search engine technology.
2. Your assertion that you "have one of the largest Internet
advertising networks" may suggest that your network is one of the
largest in terms of the number of third-party websites included in
your network. While the support you have provided indicates that
your network has reached the third largest number of "unique"
visitors in December of 2004, it does not appear that the comScore
Media Metrix ranking supports any suggestion that the number of
website publishers that have joined your network is one of the
largest. Please revise accordingly.
Risk Factors, page 6
3. We note the continued use of the phrases that your "business
and
growth could suffer" or that your business or results of
operations
"would be harmed" in the captions and text of many of your risk
factors. This disclosure is still generic and does not provide
any
meaningful information about the potential impact of these risks
on
you and your investors. Please refer to prior comment #13 and
revise
the following risk factors and their captions to provide more
specific disclosure about the risks:
* "If we are unable to retain our senior management..." on page 7;
* "We need to hire additional qualified personnel..." on page 7;
* "Any constraints on the capacity of our technology
infrastructure..." on page 11;
* "If we fail to keep pace with rapidly changing technologies..."
on
page 13;
* "If any of our advertisers are unable to pay for our
technologies
and services..." on page 18; and
* "We rely on bandwidth and data center providers..." on page 19.
4. Several of your risk factor headings are still so vague or
generic
that they could apply to any other issuer in any industry. See
for
example "We may pursue the acquisition of other businesses..." on
page 10 and "If we do not adequately protect our intellectual
property rights..." on page 12. Revise the headings so that they
specifically relate to you, your business or your industry. See
prior comment #12.
If we do not adequately protect our intellectual property..., page
12
Third parties may sue us for intellectual property
infringement...,
page 12
5. Please disclose whether you are currently aware of any third
parties that may be infringing on your intellectual property and
whether any third parties have alleged that you are infringing on
their intellectual property.
We rely on bandwidth and data center providers..., page 19
6. Clarify what you mean by the industry term "co-location
services."
Use of Proceeds, page 26
7. We reissue comment #20. Revise to specifically identify the
purposes for which you expect to use the net proceeds of this
offering and quantify the amount intended to be allocated to each
purpose. Despite your response to our prior comment, your
disclosure
on pages 34 and 42 of the MD&A section indicates more specific
purposes for which you intend to use the proceeds, including "to
fund
a portion of the increase in sales and marketing, technology and
general and administrative operating expenses, including the
estimated $2 million expenses relating to public company costs"
and
provide "additional liquidity for use in the expansion of
operations,
increased working capital needs, investment in new product
development and strategic initiatives."
Management`s Discussion and Analysis..., page 31
Components of our Operating Costs and Other Items, page 33
8. Disclose that you are currently unable to estimate the
increases
in your operational expenses, as indicated in your response to
comment #21.
Trends that Affect our Business, page 34
9. We note your response to comment #22. Please discuss the
potential impact that increased volume of lower-priced ads in your
revenue mix will have on your revenues and gross margins going
forward.
10. We note your response to comment #23 that to mitigate the risk
from paying publishers on a cost-per-thousand impressions basis,
you
typically build in a higher profit margin for your pricing
campaigns.
Please further discuss how you adjust your profit margins for
these
campaigns. Furthermore, please discuss the potential impact of
continually pricing in higher margins for campaigns on your
revenues
and expenses going forward as you increase your cost-per-action
and
cost-per-click based pricing campaigns.
Liquidity and Capital Resources, page 41
11. Please provide a more detailed analysis of the factors
contributing to the changes in your cash flows. In addition, to
the
extent known, please quantify your expected capital expenditures
to
fund and expand your business for the next twelve months.
Business
Our Advertisers, page 53
12. Please disclose that the one advertiser that accounted for
11.2%
of your revenues for the year ended December 31, 2003 is no longer
a
customer.
Technology, page 55
13. We note your response to comment 31 and corresponding
revisions
to the section entitled "Our Strategy." Please also provide in
the
"Technology" section an enhanced discussion of your new
advertising
search engine technology that clearly describes your new service.
In
this regard, the brief description appearing on pages 52 and 53
that
advertisers can "actively manage their search word bids across
multiple third-party search engines" is insufficient.
Additionally,
please discuss how this service differs from the search engine
advertising services provided by potential competitors such as
Google
and Yahoo!.
Competition, page 56
14. Please disclose that you are unable to provide quantified
disclosure regarding your market share in the markets in which you
operate, as indicated in your response to prior comment #33, and
explain the reason for that inability.
Underwriting, page 87
15. We note your response to comment #40. Please disclose whether
the underwriters have any current intention to release any of the
shares subject to the lock-up agreement. Also disclose that the
underwriters will make any determination to release those shares
on a
case-by-case basis, as suggested by your response to our prior
comment. Furthermore, are there any factors that the underwriters
might consider in making such a determination, such as market
conditions, the possible impact on the market price of your common
stock, who is making the request, etc.? If so, please revise to
describe those factors.
16. We note, in your response to our prior comment #42, the
communication the representatives propose to send to the
syndicate.
Please delete your suggestion that the representatives are
informing
the syndicate of the information because the Commission has asked
the
representatives to do so. Also revise the end of the second
clause
of the communication to add "and those procedures have not
changed."
17. We note that your underwriters intend to use the i-Deal
electronic prospectus delivery system. Please provide us, on a
supplemental basis, an expanded description of these procedures as
well as any screen shots, emails, and any others communications
that
will be used. We may have further comment once we have reviewed
your
materials.
18. Provide us with a copy of the directed share program materials
that will be given to potential purchasers of the reserved shares.
Again, we may have further comment after reviewing the materials.
Financial Statements
19. We note your response to comment #44; however, we reiterate
our
request that you disclose historic earnings per share data for all
periods as required by GAAP.
20. We reiterate our previous comment #45.
* * * *
Please amend your registration statement in response to
these
comments. You may wish to provide us with marked copies of the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Indicate in the cover
letter
where you have made changes in the amendment. Detailed cover
letters
greatly facilitate our review. Please file your cover letter on
EDGAR.
You may contact Drew Walker, Staff Accountant, at (202) 942-
2893 or Robert Littlepage, Accountant Branch Chief, at (202) 942-
1947
if you have questions regarding comments on the financial
statements
and related matters. Please contact Reginald A. Norris, Staff
Attorney, at (202) 942-2875 or me at (202) 942-1990 with any other
questions.
Sincerely,
Michele M. Anderson
Legal Branch Chief
cc: via facsimile (805) 568-1955
C. Thomas Hopkins, Esq.
??
??
??
??