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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

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This is the initial public offering of Intersections Inc. We are offering 3,000,000 shares of our common stock. A selling stockholder, which is a subsidiary of Equifax Inc., is offering an additional 3,250,000 shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholder. We anticipate that the initial public offering price will be between $15.00 and $17.00 per share. Our common stock has been approved for listing on the Nasdaq National Market under the symbol “INTX,” subject to official notice of issuance.

Investing in our common stock involves risk. See “Risk Factors” beginning on page 9.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The selling stockholder and certain other stockholders have granted the underwriters the right to purchase from them up to 937,500 additional shares of common stock at the same price to cover over-allotments.

Until , 2004 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before buying shares of our common stock. You should read the entire prospectus carefully before making an investment in our common stock.

Intersections provides identity theft protection and credit management services on a subscription basis to its subscribers. Our services are principally marketed to customers of our clients and branded and tailored to meet our clients’ specifications. Our clients are principally credit and charge card issuing financial institutions. Our subscribers purchase our services either directly from us or through arrangements with our clients.

Our services include daily, monthly or quarterly monitoring of our subscribers’ credit files at one or all three of the major credit reporting agencies, Equifax, Experian and TransUnion. We deliver our services online or by mail to our subscribers in a user-friendly format. We also offer credit score analysis tools, credit education, a consumer fraud resource center and identity theft cost coverage.


	•	Guard against identity theft and its detrimental effects by periodically monitoring their credit files at one or all three major credit reporting agencies for changes that may indicate identity theft. Based on such information, subscribers may take actions to prevent or mitigate identity theft and speak to our identity theft customer service specialists. Through a master policy issued by a third-party insurer, some of our subscribers receive coverage for the out-of-pocket costs of correcting a stolen identity.

	•	Review their credit profiles in an easy to understand format, analyze their credit records and credit scores and keep informed of changes to their credit records on a daily, monthly or quarterly basis. Using our services, subscribers may verify the accuracy of and monitor changes to their credit records at the credit reporting agencies. Our services also help subscribers learn how their credit scores change with varying events and how to correct errors on their credit reports.

We provide our services to subscribers principally under the private label brands of our clients, including fifteen large financial institutions. Among those clients are financial institutions that constituted approximately 72% of the credit card market in the United States as of December 31, 2002, based on information from Card Source One. At December 31, 2003, we had 25 clients, and an additional 39 financial and other companies were offering our services through arrangements with our clients.

We customize our services, branding and pricing to our clients’ specifications. We believe that our services enable our clients to increase customer loyalty, generate a recurring stream of commission and fee income and enhance other client offerings.

Our subscriber base grew from approximately 57,000 at the end of 1997 to approximately 2.3 million subscribers as of December 31, 2003. Our revenue grew from $1.0 million in 1997 to $147.3 million in 2003. We became profitable in the second quarter of 2002 and have been profitable in every subsequent quarter. We generated pre-tax income for 2003 of $14.6 million.

We believe that one of the keys to growth in our company and industry is the increased awareness by consumers of the importance of monitoring and understanding their credit records to prevent and mitigate the effects of identity theft. “Identity theft,” as defined in the Identity Theft Survey Report (September 2003) sponsored by the Federal Trade Commission, means misuse of a person’s name or personal information, which includes opening new

fraudulent credit card accounts or loans. This kind of identity theft often results in monetary loss borne by the victim, damage to the victim’s credit record and other detrimental effects. Our services are designed to prevent or mitigate this type of identity theft. Identity theft also means the misuse of existing accounts, such as fraudulent charges on a consumer’s credit card. The monetary losses associated with this type of fraud are typically borne by financial institutions. The Federal Trade Commission’s Identity Theft Survey Report, based on a survey conducted in the Spring of 2002, found that identity theft struck almost 10 million individuals in the United States in the 12 months prior to the survey. More than three million of those individuals were victimized by the opening of new accounts and, as a result, suffered an average loss of $1,180 and spent an average of 60 hours to address the problem. According to the Identity Theft Survey Report, almost 40% of new account identity theft victims discovered the problem by monitoring their accounts. Our services include daily monitoring and notification of credit file changes that may indicate identity theft, including the opening of new accounts, changes of address and account inquiries.

We believe that another source of growth is the increased awareness by consumers of the importance of their credit files and credit scores. According to data released by the Federal Reserve Bank, consumer debt in the United States grew from $3.6 trillion in 1990 to $8.7 trillion in the first quarter of 2003. This growth together with changes in the federal Fair Credit Reporting Act and state laws and increasing coverage by the media have made consumers aware of how their credit files and credit scores impact the availability of credit.

We believe these concerns are creating a growing market for our services. According to an Online Banking Report (June 28, 2002), the market for consumer-direct credit reporting is estimated to range from $350 million to $2 billion by 2007, with a mid-range projection of $1 billion.

We provide a flexible and diversified suite of identity theft protection and credit management services that are branded and tailored to meet the specifications of our clients. These services are marketed and delivered to customers of our clients on a subscription basis.

Our growth has been the result of our success in expanding our subscriber base and in attracting and retaining clients who market our services to their customers. We have supported our growth by enhancing our services and maintaining profitable prices. We expect to generate continued growth from:


	•	Increasing subscribers from our existing clients’ customer bases: Based on the marketing plans we have developed with our clients, we believe that our clients’ customers represent significant opportunities for further subscriber growth and the replacement of subscribers lost in the ordinary course of business.


	•	Diversifying and expanding our client base: We added several new large financial institutions as clients in 2003, and plan to continue to increase the number of financial institutions utilizing our services. We have diversified from our historical credit and charge card issuer client base into other financial services markets, such as the mortgage, consumer banking and insurance industries. In addition, we intend to add such channels as direct-to-consumer financial service sales organizations and selected membership groups and associations.

	•	Expanding into the Canadian and U.S. Hispanic markets: Our Canadian initiative, launched in April 2003, is our first non-U.S. marketing initiative. Through our U.S. Hispanic initiative, we will market our identity theft protection and credit management services within the U.S. Hispanic community, which currently comprises approximately 38.8 million people.

	•	Developing new service offerings: We continue to develop and enhance our identity theft protection and credit management services. For example, in December 2003 we introduced what we believe is the first service to provide ongoing daily monitoring of credit files at all three major credit reporting agencies. We also are developing new fraud detection and prevention services using non-credit reporting agency data and advanced proprietary technology. We plan to begin marketing these services to financial institutions in 2004.

	•	Distributing certain of our services as enhancements to our clients’ product and service offerings: Our clients offer certain of our services as enhancements to their own products and services.

	•	Building our small business services: Based on the U.S. Department of Commerce, Bureau of Census and data from the Small Business Administration, there were 22 million small businesses (businesses with fewer than 100 employees) in the United States as of the end of 2002. We plan to address this market with an expanded version of our small business service. This service will include credit profiles of and credit information monitoring for business owners and their businesses. In addition, we will provide these small businesses with access to credit analysis and ongoing monitoring of business credit information about their customers and suppliers. This service will be marketed to our clients’ small business customers on a client-branded basis.

	•	Evaluating selected strategic opportunities: We will evaluate and may engage in strategic acquisitions and partnership opportunities that capitalize on our knowledge and capabilities in identity theft protection, credit management and branded delivery of services for financial institutions and other clients.

In November 2001, we issued a $20.0 million senior secured convertible note to CD Holdings, Inc., a subsidiary of Equifax, Inc. Upon the closing of this offering, the senior secured convertible note will be converted automatically into 3,755,792 shares of our common stock, or approximately 26.9% of our outstanding common stock before this offering, and any covenants or other restrictions on us under the note documents will terminate. After this offering, CD Holdings will beneficially own 3.0% of our outstanding common stock, but will not beneficially own any shares of our common stock if the underwriters exercise their over-allotment option in full.

We purchase credit data under an agreement with a subsidiary of Equifax, Equifax Information Services, LLC. The agreement continues until November 26, 2006 and automatically renews for two-year terms unless either party terminates upon twelve months’ notice.

We have a separate master agreement with Equifax Consumer Services, Inc. Under the master agreement, we provide our identity theft protection and credit management services to customers of Capital One, which markets those services under an agreement between Capital One and Equifax. The service materials identify us to the subscribers as the provider of those services, using Equifax data. Pursuant to our master agreement with Equifax Consumer Services, Equifax Consumer Services may not modify its agreement with Capital One, waive any right applicable to us or take any discretionary action under that agreement, without our approval. Total revenue earned during 2003 under the master agreement was $44.6 million, or approximately 30% of our revenue, of which approximately $29.4 million, or approximately 66%, was earned for services provided to customers of Capital One.

Also under the master agreement, we were providing to customers of Equifax a one-time, non-subscription report with data from Equifax, Experian and TransUnion for delivery online. Equifax Consumer Services terminated our provision of that service effective October 16, 2003, when it began to provide those services directly to consumers. The revenue for this report was one-time transactional revenue. As a result, in 2004 we will not have revenue from sales of that report, which was $15.2 million, or 10% of our revenue, in 2003. The contribution to our operating income from these sales was significantly lower as a percentage of revenue than that of our subscription business. We continue to provide Equifax customers with credit monitoring services delivered offline. The revenue for such services constituted less than 1% of our revenue in 2003, and is not expected to constitute a higher percentage of our revenue in 2004. We also are in discussions with Equifax about providing online credit monitoring services to Equifax customers in Canada. At the same time, we expect to continue to compete with Equifax and its subsidiaries in the marketing of identity theft protection and credit management services to consumers.

We were incorporated in Delaware in 1999. We conduct certain of our operations through our wholly-owned subsidiary, CreditComm Services LLC, a Delaware limited liability company, which was originally formed in May 1996. Our principal executive offices are located at 14901 Bogle Drive, Chantilly, Virginia 20151 and our telephone number is (703) 488-6100. Our website address is www.intersections.com. Information contained on our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. Our website address is included here only as an inactive technical reference.

The common stock outstanding after the offering is based on the number of shares outstanding as of December 31, 2003, and excludes:


	•	2,999,556 shares issuable upon the exercise of outstanding options (of which 2,163,122 are exercisable), at a weighted average exercise price of $9.37 per share, which includes 244,171 shares issuable upon exercise of non-employee stock options;

	•	212,956 shares issuable upon the exercise of outstanding warrants, at a weighted average exercise price of $9.10 per share;

	•	1,000,000 shares available for issuance upon the exercise of options, which will be granted upon the closing of the offering at the initial public offering price; and

	•	the remaining 1,775,000 shares available for issuance upon the exercise of options, which may be granted in the future under our 2004 stock option plan.

Except as otherwise noted, we have presented the information in this prospectus based on the following assumptions:


	•	giving effect to the conversion of all outstanding shares of our preferred stock and the senior secured convertible note held by a subsidiary of Equifax into an aggregate of 8,988,895 shares of common stock, which will occur immediately prior to the closing of this offering;

	•	giving effect to an assumed 554.9338-for-one stock split of our common stock, which will occur immediately prior to the closing of this offering; and

	•	no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders in this offering.

The following summary consolidated financial data should be read in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, all included elsewhere in this prospectus. The pro forma balance sheet data below gives effect to the conversion of all of our outstanding shares of preferred stock and our senior secured convertible note into an aggregate of 8,988,895 shares of common stock. The pro forma as adjusted balance sheet data below gives effect to the conversion of all outstanding shares of our preferred stock and our senior secured convertible note into an aggregate of 8,988,895 shares of common stock and reflects the receipt and application of the estimated net proceeds to us from the sale of common stock in this offering at an assumed initial public offering price of $16.00 per share. We have supplied selected subscriber and other data below under the caption “Other Data.”


(1)	In August 1999, we reorganized as a corporation under the name Intersections Inc. Prior to the reorganization, we operated under the name CreditComm Services LLC. The statement of operations data provided in the table through August 1999 is data reported for CreditComm Services LLC.

(2)	General and administrative costs in 2001 include a $2.8 million fee we incurred for restructuring a contract for credit data processing costs to reduce the term and the cost.

(3)	For periods prior to the third quarter of 2003, we did not record a tax benefit from net operating losses but instead recorded an off-setting valuation allowance. The valuation allowance was required because it was more likely than not that some or all of the net deferred tax assets would not be realized. Based on recent positive and anticipated projected income it was determined that the valuation allowance was no longer necessary and we recognized a $6.5 million tax benefit in the third quarter of 2003.

If you purchase shares of our common stock, you will assume a high degree of risk. In deciding whether to invest, you should carefully consider the following risk factors, as well as the other information contained in this prospectus. Any of the following risks as well as other risks and uncertainties discussed in this prospectus could have a material adverse effect on our business, financial condition, results of operations or prospects and cause the value of our stock to decline, which could cause you to lose all or part of your investment. Additional risks and uncertainties that we are unaware of, or that are currently deemed immaterial, also may become important factors that affect us.

We have only recently become profitable and cannot give assurances of our future profitability.

We incurred significant operating losses from our inception in 1996 through 2001. As of December 31, 2003, we had an accumulated deficit of approximately $15.4 million. We historically incurred and will continue to incur significant marketing costs and commissions to grow our business, which affected our profitability in prior periods and will continue to affect our profitability in future periods. Although we have had revenue growth in recent periods, our growth rates may not be sustainable or indicative of future operating results. Although we became profitable in the second quarter of 2002, we cannot assure you that we will remain profitable.

We must replace the subscribers we lose in the ordinary course of business and if we fail to do so our revenue and subscriber base will decline.

A substantial number of our subscribers cancel their subscriptions each year. Cancellations may occur due to numerous factors, including:


	•	changing subscriber preferences;

	•	competitive price pressures;

	•	general economic conditions;

	•	subscriber dissatisfaction; and

	•	credit or charge card holder turnover.

The number of cancellations within the first 90 days as a percentage of new subscribers was 39.5% in 2001, 33.8% in 2002 and 29.0% in 2003. We analyze subscriber cancellations during the first 90 days because we believe this time period affords the subscriber the opportunity to evaluate the service. The number of cancellations after the first 90 days, as a percentage of the number of subscribers at the beginning of the year plus the net of new subscribers and cancellations within the first 90 days, was 32.2% in 2001, 26.6% in 2002 and 28.6% in 2003. The increase in the percentage of cancellations after 90 days from 2002 to 2003 is related to the launch of a new indirect marketing arrangement in the third quarter of 2002. Under this arrangement, subscribers tended to remain in the service slightly longer than subscribers on an overall basis. As a result, the percentage of cancellations under this indirect marketing arrangement was lower than our overall cancellation percentage during the first 90 days but was slightly higher than our overall cancellation percentage after 90 days. Despite this increase, the total number of cancellations during the year as a percentage of the beginning of the year subscribers plus new subscribers was 47.5% in 2001, 43.4% in 2002, and 40.9% in 2003. Conversely, our retention rates, calculated by taking the sum of the beginning of the year subscribers plus new subscribers less cancellations during the year and dividing that amount by

Failure to obtain new subscribers, producing revenue equivalent to the revenue from the canceling subscribers, would result in a reduction in our revenue and the number of our subscribers. Because of the large number of subscribers we need to replace each year, there can be no assurance that we can successfully replace them.

We historically have depended upon a few clients to derive a significant portion of our revenue, and the loss of any of these clients could have a material adverse effect on our growth strategy and prospects.

Revenue from subscribers obtained through our largest clients in 2002 and 2003, as a percentage of our total revenue, was: Discover — 35% and 18%, American Express — 29% and 23%, Citibank — 14% and 15%, Capital One (through our relationship with Equifax) — 3% and 20%, and Equifax — 7% and 10%, respectively. Substantially all of the revenue from Equifax (not including the revenue from Capital One) was comprised of revenue from a one-time, non-subscription report we provided to customers of Equifax, for which Equifax terminated our services effective October 16, 2003. There can be no assurance that one or more of these key clients or other clients will not terminate their relationship with us. The termination or non-renewal of a key client relationship could have a material adverse effect on our future revenue from existing services of which such client’s customers are subscribers and on our ability to further market new or existing services through such client.

If one or more of our agreements with clients were to be terminated or expire, or one or more of our clients were to reduce the marketing of our services, we would lose access to prospective subscribers and could lose sources of revenue.

Many of our key client relationships are governed by agreements that may be terminated without cause by our clients upon notice of as few as 60 days without penalty. Under many of these agreements, our clients may cease or reduce their marketing of our services. If one or more of our agreements with clients were to be terminated or expire, or one or more of our clients were to reduce the marketing of our services, we would lose access to prospective subscribers.

Our typical contracts provide that after termination of the contract we may continue to provide our services to existing subscribers under the same economic arrangements that existed before termination. Under certain of our agreements, however, the clients may require us to cease providing services under existing subscriptions after time periods ranging from 90 days to three years after termination of the contract. Clients under certain contracts also may require us to cease providing services to their customers under existing subscriptions if the contract is terminated for material breach by us. If one or more of these clients were to terminate our agreements with them, and require us to cease providing our services to subscribers, then we would lose significant sources of revenue.

We are substantially dependent upon our consumer identity theft protection and credit management services for a significant portion of our revenue, and market demand for these services could decrease.

Substantially all of our revenue historically has been derived from consumer identity theft protection and credit management services. We expect to remain dependent on revenue from these services for the foreseeable future. Any significant downturn in the demand for these services would materially decrease our revenue.

If we lose our ability to purchase data from any of the three major credit reporting agencies, each of which is a competitor of ours, demand for our services could decrease.

We rely on the three major credit reporting agencies, Equifax, Experian and TransUnion, to provide us with essential data for our consumer identity theft protection and credit management services. The Equifax agreement continues until November 26, 2006 and automatically renews for successive two-year terms unless either party terminates the agreement upon twelve-months’ prior notice. Our agreements with Experian and TransUnion may be terminated by them on 30 days and 60 days notice, respectively. Each of the three major credit reporting agencies owns its consumer credit data and is a competitor of ours in providing credit information directly to consumers, and may decide that it is in their competitive interests to stop supplying data to us. Any interruption, deterioration or termination of our relationship with one or more of the three credit reporting agencies would be disruptive to our business and could cause us to lose subscribers.

CD Holdings, a subsidiary of Equifax, has been and may continue to be an investor in us, and any adverse changes in our relationship with Equifax or its subsidiaries or affiliates after this offering could have a material adverse effect on our business.

CD Holdings, a subsidiary of Equifax, owns approximately 26.9% of our outstanding common stock before this offering, and will own approximately 3.0% of our outstanding common stock after this offering if the underwriters do not exercise the over-allotment option. If the underwriters exercise the over-allotment option in full, Equifax will not beneficially own any shares of our common stock. We also purchase credit data from an Equifax subsidiary, and receive revenue from an Equifax subsidiary based on our provision of identity theft protection and credit management services to customers of the Equifax subsidiary and subscribers obtained through the subsidiary’s contract with Capital One. At the same time, we expect to continue to compete with Equifax and its subsidiaries in the marketing of identity theft protection and credit management services to consumers. Any disruption or deterioration of our relationship with Equifax and its subsidiaries could have a material adverse effect on our business, including loss of the ability to purchase credit data owned by Equifax or obtain subscription revenue or subscribers through Equifax.

If we experience system failures or interruptions in our telecommunications or information technology infrastructure, our revenue could decrease and our reputation could be harmed.

Our operations depend upon our ability to protect our telecommunications and information technology systems against damage or system interruptions from natural disasters, technical failures and other events beyond our control. We receive credit data electronically, and this delivery method is susceptible to damage, delay or inaccuracy. A significant portion of our business involves telephonic customer service as well as mailings, both of which depend upon the data generated from our computer systems. Unanticipated problems with our telecommunications and information technology systems may result in a significant system outage or data loss, which could interrupt our operations. Our infrastructure may also be vulnerable to computer viruses, hackers or other disruptions entering our systems from the credit reporting agencies, our clients and subscribers or other authorized or unauthorized sources. Our business could be materially adversely affected if there is any damage to our telecommunications and information technology systems, failure of communication links or other loss that causes interruption in, or damage to, our operations.

We and our clients outsource telemarketing to third parties who may take actions that lead to negative publicity and consumer dissatisfaction.

We and our clients solicit some of our subscribers through outbound telemarketing that we outsource to third-party contractors. In outbound telemarketing, the third-party contractors make the initial contact with potential subscribers. We attempt to control the level and quality of the services provided by these third parties through a combination of contractual provisions, monitoring, on-site visits and records audits. In arrangements where we bear the marketing cost, which represented 35% of new subscribers acquired in 2003, approximately 85% of new subscribers were obtained through outbound telemarketing by our vendors. In arrangements where the clients bear the marketing cost, which represented 65% of new subscribers acquired in 2003, approximately 31% of new subscribers were obtained through outbound telemarketing by outsourced vendors. Any quality problems could result in negative publicity and customer dissatisfaction, which could cause us to lose clients and subscribers and decrease our revenue.

We may lose subscribers and significant revenue if our existing services become obsolete, or if we fail to introduce new services with broad consumer appeal or fail to do so in a timely or cost-effective manner.

Our growth depends upon developing and successfully introducing new services that generate client and consumer interest. Our failure to introduce these services or to develop new services, or the introduction or announcement of new services by competitors, could render our existing services noncompetitive or obsolete. Although we have a limited history of developing and introducing services outside the areas of identity theft protection and consumer credit management, we are currently developing or introducing new services in the area of small business credit information and fraud detection. There can be no assurance that we will be successful in developing or introducing these or any other new services. Our failure to develop, introduce or expand our services could harm our business and prospects.

We expect that our revenue, expenses and operating results may be subject to significant fluctuations, which could contribute to wide fluctuations in period-to-period performance and could have a material adverse effect on the price of our stock.

These fluctuations may be attributable to a number of factors, many of which are beyond our control, including:


	•	the timing and rate of subscription cancellations;

	•	our ability to introduce new services on a timely basis;

	•	the introduction of competing services by our competitors;

	•	market acceptance of our services;

	•	the demand for consumer subscription services generally;

	•	the ability of third parties to market and support our services; and

	•	general economic conditions.

Any one or a combination of these factors could contribute to wide fluctuations in period-to-period performance and have an adverse effect on our stock price.

We may be unable to meet our future capital requirements to grow our business which could adversely impact our financial condition and growth strategy.

We cannot assure you that the net proceeds from this offering, together with currently available funds, will be sufficient to meet our needs, including our anticipated working capital and capital expenditure requirements for the foreseeable future. We may need to raise additional funds in the future in order to operate and expand our business. There can be no assurance that

We may raise additional funds in the future, which could cause dilution to our existing stockholders or adversely affect their voting or other rights.

We may seek additional funding in the future through public or private financings and the terms of these financings may adversely affect the holdings or the rights of our stockholders. If we raise funds by selling more stock, your ownership share in us will be diluted, and we may grant future investors rights superior to those of the common stock that you are purchasing. If additional funds are raised by issuing debt, we may be subject to covenants limiting our operations. As a result, our stock price may decline and you may not be able to sell your shares at or above the initial public offering price.

If we are not able to hire and retain qualified personnel, our ability to grow and maintain our business could be adversely affected.

Our success depends on the continued services of our key senior management and our marketing, customer service and technology personnel. If one or more of these individuals were unable or unwilling to continue in their present positions, our business could be materially adversely affected. In addition, we do not maintain key person life insurance on our senior management other than Michael R. Stanfield, our chairman and chief executive officer. We also believe that our future success will depend, in part, on our ability to attract, retain and motivate skilled managerial, marketing and other personnel. We may not be able to attract, assimilate or retain highly qualified employees in the future, which could result in increased labor costs and operating expenses and diminished customer service, any of which would have a material adverse effect on our results of operations and ability to grow and maintain our business.

Our failure to protect private data could damage our reputation and cause us to expend capital and resources to protect against future security breaches.

Our services are based upon the collection, distribution and protection of sensitive private data. Unauthorized users might access that data or human error might cause the wrongful dissemination of that data. If we experience a security breach, the integrity of our services may be affected. We have incurred and may incur in the future significant costs to protect against the threat of a security breach or to alleviate problems caused by a breach. Moreover, any public perception that we have engaged in the unauthorized release of, or have failed to adequately protect, private information could adversely affect our ability to attract and retain clients and subscribers and could subject us to legal claims from clients or subscribers. We cannot assure you that we would prevail in such litigation. In addition, unauthorized third parties might alter information in our databases, which would adversely affect both our ability to market our services and the credibility of our information.

We are subject to government regulation and increasing public scrutiny, which could impede our ability to market and provide our services and have a material adverse effect on our business.

Our consumer identity theft protection and credit management services involve the use of consumer credit reports governed by the federal Fair Credit Reporting Act and similar state laws and regulations governing the use of consumer credit information. Our services involve the use of nonpublic personal information that may be subject to the federal Gramm-Leach-Bliley Act and state laws and regulations governing consumer privacy. Telemarketing of our services is subject to federal and state telemarketing regulation. These laws and regulations are subject to revision. We cannot predict the impact of legislative or regulatory changes on our business.

For example, the Federal Trade Commission has enacted the national Do Not Call Registry, which enables consumers to elect to prohibit telemarketers from calling them. We may not be able to reach potential subscribers because they are placed on the national Do Not Call Registry.

We commenced marketing our services in Canada in 2003. Various Canadian federal and provincial laws govern our services, including provincial credit reporting laws similar in scope to the Fair Credit Reporting Act in the United States and privacy laws. These laws vary by province and are subject to changes that may affect our business.

Although we do not believe that we are engaging in, and do not plan to engage in, activities prohibited by laws or regulations governing our activities, any allegation or finding that we are violating such laws or regulations could harm our business. Furthermore, the media often publicizes perceived non-compliance with consumer protection regulations and violations of fair dealing with consumers. If we received this kind of publicity or became associated with other entities receiving negative publicity, our reputation, client and subscriber relationships, and consumer acceptance and subscriber loyalty could be materially adversely affected.

Laws requiring the free issuance of credit reports by credit reporting agencies could impede our ability to obtain new subscribers or maintain existing subscribers and could have a material adverse effect on our revenue.

Laws in several states, including Colorado, Georgia, Illinois, Maine, Maryland, Massachusetts, New Jersey and Vermont, require credit reporting agencies to provide each consumer one credit report (or two credit reports, in the case of Georgia) per year upon request without charge. On December 4, 2003, the President signed into law certain amendments to the federal Fair Credit Reporting Act. Among other things, these amendments provide consumers the ability to receive one free consumer credit report per year from each major consumer credit reporting agency and require each consumer credit reporting agency to provide the consumer a credit score along with his or her credit report for a reasonable fee as determined by the Federal Trade Commission. We are not required to comply with these requirements because we are not a “consumer reporting agency.” A “consumer reporting agency” generally means any person who for monetary fees regularly engages in assembling consumer credit information for the purpose of furnishing consumer reports to third parties. Our services do not provide consumer credit information to third parties. These laws do apply to the three major credit reporting agencies from which we purchase data for our services. The rights of consumers to obtain free annual credit reports from these credit reporting agencies and credit scores for a fee could cause consumers to believe that the value of our services is reduced or replaced by those free credit reports, which would adversely impact the marketability of our services and could have a material adverse effect on our revenue, results of operations and business.

A significant downturn in the charge or credit card industry or a trend in that industry to reduce or eliminate marketing programs could harm our business.

We depend upon clients in the charge and credit card industry. Services marketed through our charge and credit card issuer clients have accounted for substantially all of our revenue. Therefore, a significant downturn in the charge and credit card industry could harm our business. The reduction or elimination of marketing programs within our charge and credit card issuer clients could materially adversely affect our ability to acquire new subscribers and to expand the range of services offered to current subscribers.

Several of our competitors offer services that are similar to, or that directly compete with, our services. Competition for new subscribers is also intense. Even after developing a client relationship, we compete within the client organization with other services for appropriately targeted customers because client organizations typically have only limited capacity to market third-party services like ours. Many of our competitors have greater financial and other

resources than we do. We compete directly with the credit reporting agencies that control the credit file data that we use to provide our services. We believe that the major credit reporting agencies currently market and deliver their services primarily online and generally do not provide client-branded services that meet our clients’ specifications and needs. We have no assurance, however, that the major credit reporting agencies will not expand their marketing channels or strategies or develop capabilities competitive with ours, which, if successful, could have a material adverse effect on our business, results of operations and financial condition. There also can be no assurance that our current or future competitors will not provide services comparable or superior to those provided by us, or at lower prices, adapt more quickly to evolving industry trends or changing market requirements, increase their emphasis on services similar to ours, enter the market in which we operate or introduce competing services. Any of these factors could reduce our market share or decrease our revenue.

If we are unable to enforce or defend our ownership and use of our intellectual property, our competitive position and operating results could be harmed.

The success of our business depends in part on the intellectual property involved in our processes, systems, methodologies, materials and software. We rely on a combination of trade secret, patent, copyright, trademark and other laws, license agreements and nondisclosure, noncompetition and other contractual provisions and technical measures to protect our intellectual property rights. However, current law may not provide for adequate protection of our intellectual property. In addition, legal standards relating to the validity, enforceability and scope of protection of proprietary rights are uncertain and evolving, and we cannot assure you ========= of the future viability or value of any of our proprietary rights. Our business could be harmed if we are not able to protect our intellectual property. The same would be true if a court found that our services infringe another party’s intellectual property rights. Any intellectual property lawsuits in which we are involved, either as a plaintiff or as a defendant, could cost us a significant amount of time and money and detract management’s attention from operating our business. In addition, if we do not prevail on any intellectual property claims, this could result in a change to our processes, systems, methodologies, materials and software and could reduce our profitability.

If you purchase common stock in this offering, the value of your shares based upon our actual book value will immediately be less than the offering price you paid. This reduction in the value of your equity is known as “dilution.” Based upon the pro forma net tangible book value of our common stock at December 31, 2003, the net tangible book value of your shares will be $11.84 less per share than the price you would pay in the offering. If the options and warrants we previously granted or those we may grant in the future are exercised, additional dilution is likely to occur. As of December 31, 2003, options to purchase 2,999,556 shares of common stock at the weighted-average exercise price of $9.37 per share were outstanding, of which 2,755,385 were employee stock options and the remaining 244,171 were non-employee stock options, and warrants to purchase 212,956 shares of common stock at the weighted-average exercise price of $9.10 per share were outstanding. In addition, if we raise additional funding by issuing more equity securities, the newly-issued shares will further dilute your percentage ownership of our shares and may also reduce the value of your equity.

Our stock price will fluctuate after this offering and an active public market for our common stock may not develop or continue, which may cause your investment in our

If you purchase shares of our common stock in the offering, you will pay a price that was not established in a competitive market. Rather, you will pay a price that we negotiated with the representatives of the underwriters based upon an assessment of the valuation of our stock. The public market may not agree with or accept this valuation, in which case you may not be able to sell your shares at or above the initial offering price.

In addition, the market price of our common stock may fluctuate significantly in response to period-to-period fluctuations in our revenue, expenses and operating results and other factors which are beyond our control. The stock market in general has recently experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of listed companies. These broad market fluctuations could result in extreme fluctuations in the price of our common stock, which could cause a decline in the value of your shares.

A large number of shares of our common stock may be sold in the market following the offering, which could cause the market price of our common stock to decline.

Our sale, or the sale or resale by our stockholders, of shares of our common stock after this offering, or the perception that such sales may occur, could cause the market price of the common stock to decline.

After this offering, we will have 16,952,850 shares of common stock outstanding. Of these shares, the 6,250,000 shares sold in this offering (7,187,500 shares if the underwriters’ over-allotment option is exercised in full) will be freely transferable without restriction except for any shares purchased by our “affiliates” as defined in Rule 144 of the Securities Act. The remaining 10,702,850 shares of common stock held by our existing stockholders will be “restricted securities” and will become eligible for public sale when registered or when they qualify for an exemption from registration under the Securities Act.

Substantially all of our existing stockholders will have signed lock-up agreements before the commencement of this offering. Under these lock-up agreements, these stockholders will agree, subject to limited exceptions, not to sell or pledge any shares owned by them as of the date of this prospectus for a period of at least 180 days thereafter, unless they first obtain the written consent of Deutsche Bank Securities Inc. At the end of the lock-up period, approximately 10,702,850 shares of common stock, excluding shares issuable upon exercise of vested options and warrants, will be eligible for immediate resale in accordance with the provisions of Rule 144 of the Securities Act. There can be no assurance that our existing stockholders will not be released from the lock-up agreements prior to the 180th day after this offering.

Upon the completion of this offering, the holders of 10,545,735 shares of our common stock and 149,138 shares issuable upon the exercise of warrants have the right under specified circumstances to require us to register their shares for resale to the public or to participate in a registration of shares by us.

Insiders will continue to have substantial control over us after this offering and could delay or prevent a change in corporate control, which may harm the market price of our common stock.

After this offering, our directors, executive officers and principal stockholders, together with their affiliates, will beneficially own, in the aggregate, approximately 54% of our outstanding common stock, or 52% if the underwriters exercise their over-allotment option in full. These stockholders may have interests that conflict with yours and, if acting together, may have the ability to determine the outcome of matters submitted to our stockholders for approval,

including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our common stock by:


	•	delaying, deferring or preventing a change in control of our company;

	•	impeding a merger, consolidation, takeover or other business combination involving our company; or

	•	discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.

We will have discretionary authority over the use of our net proceeds from this offering.

We will have the discretion to allocate the net proceeds received by us from this offering. Moreover, because of the number and variability of factors that determine our use of the net proceeds of this offering, there can be no assurance that such applications will not vary substantially from our current intentions.

Provisions in our certificate of incorporation and bylaws and under Delaware law could prevent or delay transactions that stockholders may favor.

We are incorporated in Delaware. Our certificate of incorporation and bylaws, as well as Delaware corporate law, contain provisions that could delay or prevent a change of control or changes in our management that a stockholder might consider favorable, including a provision which authorizes our board of directors to issue preferred stock with such voting rights, dividend rates, liquidation, redemption, conversion and other rights as our board of directors may fix without further stockholder action. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline.

Delaware law also prohibits a corporation from engaging in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. This provision may prevent changes in our management or corporate structure. Also, under applicable Delaware law, our board of directors is permitted to and may adopt additional anti-takeover measures in the future.

This prospectus contains forward-looking statements that involve risks and uncertainties. We may, in some cases, use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” or “may,” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this prospectus may include statements about:


	•	our ability to maintain our relationships with the three credit reporting agencies and our various clients;

	•	our ability to obtain new clients;

	•	our ability to compete successfully with our competitors;

	•	our ability to protect and maintain our computer and telephone infrastructure;

	•	our ability to maintain the security of our data;

	•	our use of our proceeds from this offering;

	•	our cash needs;

	•	implementation of our corporate strategy; and

	•	our financial performance.

There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss in this prospectus under the caption “Risk Factors.” You should read these factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

We estimate that our net proceeds from the sale of the shares of common stock by us will be approximately $42,990,000, assuming an initial public offering price of $16.00 per share and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders, including pursuant to the underwriters’ over-allotment option.

We expect to use approximately $6.0 million of the net proceeds to expand our business into new markets including the small business and Canadian markets, with the balance to be used to introduce new services for consumers, small businesses and financial institutions and for working capital and other general corporate purposes.

We also may use a portion of the net proceeds from this offering to improve our technology, systems and operating infrastructure, and to acquire or invest in businesses, joint ventures, technologies, products, services or assets that complement our business. We currently do not have any commitments or agreements with respect to any such transactions. Furthermore, we have not determined the amounts we plan to spend on certain of the items listed above or the timing of these expenditures. As a result, we will have broad discretion to allocate the net proceeds from this offering. Until we use the net proceeds, we may invest them in short-term, interest-bearing, investment grade and U.S. government securities.

We never have paid or declared any cash dividends on our common stock and have no plans to do so in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth and development of our business. Future dividends, if any, will depend on, among other things, our results of operations, capital requirements and such other factors as our board of directors may, in its discretion, consider relevant.


	•	on an actual basis,

	•	on a pro forma basis to give effect to the conversion of all of our outstanding shares of preferred stock and our senior secured convertible note into an aggregate of 8,988,895 shares of common stock, and

	•	on a pro forma as adjusted basis to give effect to the conversion of all outstanding shares of our preferred stock and our senior secured convertible note into an aggregate of 8,988,895 shares of our common stock and the issuance and sale of shares of our common stock in this offering at an assumed initial public offering price of $16.00 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

This table should be read with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


(1)	The obligation to pay accrued interest, which was $2,016,367 at December 31, 2003, on the senior secured convertible note will be extinguished upon conversion and treated as a capital contribution.

The pro forma net tangible book value of our common stock as of December 31, 2003 was approximately $27,501,431, or $1.97 per share of common stock, after giving effect to the conversion of all of our outstanding shares of preferred stock and our senior secured convertible note into an aggregate of 8,988,895 shares of our common stock. Pro forma net tangible book value per share is equal to our total assets less intangible assets and less total liabilities, divided by the number of pro forma shares of our common stock outstanding as of December 31, 2003. Assuming that the 6,250,000 shares offered by this prospectus are sold at an initial public offering price of $16.00 per share, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, our pro forma net tangible book value as of December 31, 2003 would have been $70,491,431, or $4.16 per share. This represents an immediate increase in pro forma net tangible book value of $1.97 per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $11.84 per share to investors purchasing shares in this offering. The following table illustrates this per share dilution:

The following table shows at December 31, 2003, on the pro forma basis described above, the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders for their common stock and by new investors purchasing common stock in this offering:

The tables above assume no exercise of stock options or warrants outstanding as of December 31, 2003. As of December 31, 2003, there were outstanding options to purchase 2,999,556 shares of common stock at a weighted average exercise price of $9.37 and warrants to purchase 212,956 shares of common stock at a weighted average exercise price of $9.10. Additionally, options to purchase 1,000,000 shares of common stock at the initial public offering price will be granted upon the closing of this offering, and there will be 1,775,000 options available for future grant under our 2004 stock option plan. To the extent we issue additional shares or the option holders exercise these outstanding options or any options we grant in the future, there will be further dilution to new investors.

This section presents our historical financial data. The selected consolidated financial data is qualified by reference to and should be read carefully in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The selected consolidated financial data in this section is not intended to replace the financial statements.

The selected consolidated statement of operations data for the years ended December 31, 2001, 2002 and 2003 and the selected consolidated balance sheet data as of December 31, 2002 and 2003 set forth below are derived from our audited financial statements, which are included elsewhere in this prospectus. The selected consolidated statement of operations data for the years ended December 31, 1999 and 2000 and the selected consolidated balance sheet data as of December 31, 1999, 2000 and 2001 set forth below are derived from our audited financial statements which are not included in this prospectus.


(1)	In August 1999, we reorganized as a corporation under the name Intersections Inc. Prior to the reorganization, we operated under the name CreditComm Services LLC. The statement of operations data provided in the table through August 1999 is data reported for CreditComm Services LLC.

(2)	General and administrative costs in 2001 include a $2.8 million fee we incurred for restructuring a contract for credit data processing costs to reduce the term and the cost.

(3)	For periods prior to the third quarter of 2003, we did not record a tax benefit from net operating losses but instead recorded an off-setting valuation allowance. The valuation allowance was required because it was more likely than not that some or all of the net deferred tax assets would not be realized. Based on recent positive and anticipated projected income it was determined that the valuation allowance was no longer necessary and we recognized a $6.5 million tax benefit in the third quarter of 2003.

The following discussion and analysis of financial condition and results of operations should be read together with “Selected Consolidated Financial Data,” and our financial statements and accompanying notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors”, “Forward-Looking Statements” and elsewhere in this prospectus.

We commenced operations in 1996 and initially focused our efforts on building our infrastructure, including the establishment of management systems and procedures, customer service and relationships with vendors to provide data processing and information delivery services. Initial subscriber acquisition efforts were focused on unendorsed marketing, which entailed soliciting new subscribers without the benefit of a client marketing relationship. In March 1997, we entered into a client marketing agreement with American Express and began to focus our marketing strategy on endorsed partnerships with the major financial institutions and financial services companies. We had 25 clients at December 31, 2003 and an additional 39 financial and other companies offering our services through arrangements with our clients. We have grown from approximately 57,000 subscribers as of December 31, 1997 to approximately 2.3 million subscribers as of December 31, 2003.

Initially, we acquired subscribers principally through direct marketing arrangements (primarily through direct mail and telemarketing) where we incurred the marketing cost or, in some cases, shared marketing arrangements in which we shared the marketing cost with the client. Although this channel was effective in growing our subscriber base, it required a significant up-front cash investment for each new subscriber. Beginning in late 1999, we expanded our subscriber acquisition channels to include indirect marketing arrangements, in which our clients bear the marketing costs. Since 2001, we have experienced a significant increase in subscribers acquired through indirect marketing relationships. Subscribers from indirect marketing arrangements have grown to represent approximately 52.4% of total subscribers as of December 31, 2003 compared to 35.3% as of December 31, 2002 and 5.0% as of December 31, 2001.

The number of subscribers obtained from our direct and shared marketing arrangements increased from approximately 848,967 subscribers at December 31, 2001 to 1,011,256 subscribers at December 31, 2002 and to 1,081,957 subscribers at December 31, 2003. The number of subscribers obtained from our indirect marketing arrangements increased from approximately 45,097 subscribers at December 31, 2001 to 551,281 subscribers at December 31, 2002 and to 1,192,648 subscribers at December 31, 2003. While our direct and shared marketing arrangements tend to provide us higher operating margins in periods after the marketing costs have been amortized, under our indirect arrangements we receive higher operating margins in the first year, have the opportunity to acquire a greater number of subscribers and generally experience improved retention.

The classification of a client relationship as direct, indirect or shared is based on whether we or the client pay the marketing expenses. Our accounting policies for revenue recognition, however, are not based on the classification of a client arrangement as direct, indirect or shared. We look to the specific client arrangement to determine the appropriate revenue recognition policy, as discussed in detail in note 2 to our consolidated financial statements.

The number of cancellations within the first 90 days as a percentage of new subscribers was 39.5% in 2001, 33.8% in 2002 and 29.0% in 2003. We analyze subscriber cancellations during the first 90 days because we believe this time period affords the subscriber the opportunity to evaluate the service. The number of cancellations after the first 90 days, as a percentage of the number of subscribers at the beginning of the year plus new subscribers during the year less cancellations within the first 90 days, was 32.2% in 2001, 26.6% in 2002 and 28.6% in 2003. The increase in the percentage of cancellations after 90 days from 2002 to 2003 is related to the launch of a new indirect marketing arrangement in the third quarter of 2002. Under this arrangement, subscribers tended to remain in the service slightly longer than subscribers on an overall basis. As a result, the percentage of cancellations under this indirect marketing arrangement was lower than our overall cancellation percentage during the first 90 days but was slightly higher than our overall cancellation percentage after 90 days. Despite this increase, the total number of cancellations during the year as a percentage of the beginning of the year subscribers was 47.5% in 2001, 43.4% in 2002, and 40.9% in 2003. Conversely, our retention rates, calculated by taking the sum of the beginning of the year subscribers plus new subscribers less cancellations during the year and dividing that amount by the beginning of the year subscribers plus new subscribers, increased from 52.5% in 2001 to 56.6% in 2002 and 59.1% in 2003. We believe that the increased retention rates in 2002 and 2003 compared to 2001 is due to the increased use of indirect marketing channels, improved retention strategies, enhancement of our customer service centers, improvements in our service features and increased consumer awareness of the usefulness of the services we provide.

We became profitable during the second quarter of 2002. Our profitability was due to several factors, including an increasing base of subscribers from existing clients, an increase in subscribers obtained through indirect marketing arrangements, improved economies of scale, and to a lesser extent, an increase in one-time transactional sales. In addition, we expect to be profitable in the future as our base of subscribers continues to grow, revenue generated from indirect marketing arrangements increases and we continue to add new clients.

Since 2000, we have focused on monthly-billed services and de-emphasized annual subscriptions due to increased market acceptance by the consumer and client and generally higher annualized prices and overall profitability. By focusing on monthly-billed services, we experienced an increase in acquisitions, a higher retention rate and a reduction of the percentage of credit card transactions that are declined. The table below shows monthly- and annually-billed subscribers at the end of each period as a percentage of total subscribers:

Any subscriber can cancel his or her subscription at any time, in which case we will cease billing the subscriber. For an annual subscription, upon cancellation, the subscriber generally would receive a pro-rata refund of the annual fee for the unused portion of the service. If we refund a subscription fee under a direct or shared marketing arrangement, we are entitled to a refund of the related commission paid to the client.

Revenue from subscribers obtained through our largest clients in 2002 and 2003 as a percentage of total revenue, and the principal contract arrangements with those clients, were as follows:

In preparing our consolidated financial statements, we make estimates and assumptions that can have a significant impact on our financial position and results of operations. The application of our critical accounting policies requires an evaluation of a number of complex criteria and significant accounting judgments by us. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. We have identified the following policies as critical to our business operations and the understanding of our results of operations. For additional information, see Note 2 to Consolidated Financial Statements — Summary of Significant Accounting Policies.

We receive revenue from recurring revenue from existing subscriptions, the sale of new subscriptions and one-time transaction sales. Subscription fees recognized as revenue by us are generally billed to the subscriber’s credit card on a monthly basis directly by our client or through our credit card processor. The prices to subscribers of various configurations of our services range from $4.99 to $12.99 per month. A percentage of our revenue is received by our clients as a commission.

The point in time we recognize revenue from our services is determined in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. Revenue for monthly subscriptions is recognized in the month the subscription fee is earned. For subscriptions with refund provisions whereby only the prorated subscription fee is refunded upon cancellation by the subscriber, deferred subscription fees are recorded when billed and amortized as subscription fee revenue on a straight-line basis over the subscription period, generally one year. Revenue for annual subscription fees must be deferred if the subscriber has the right to cancel the service and receive a full refund at any time during the subscription period. We recognize a pro rata portion of revenue earned upon expiration of the full refund

period. An allowance for monthly subscription refunds is established based on our actual cancellation experience. We also provide services for which certain financial institution clients are the primary obligors directly to their customers. Revenue from these arrangements is recognized when earned, which is at the time we provide the service, generally on a monthly basis. In addition, we generate revenue from the sale of one-time credit reports, which is recognized when the credit report is delivered to the customer.

The amount of revenue recorded by us is determined in accordance with FASB’s Emerging Issues Task Force (“EITF”) 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, which addresses whether a company should report revenue based on the gross amount billed to a customer or the net amount retained by the company (amount billed less commissions or fees paid). We generally record revenue on a gross basis in the amount that we bill the subscriber when our arrangements with financial institution clients provide for us to serve as the primary obligor in the transaction, we have latitude in establishing price and we bear the risk of physical loss of inventory and credit risk for the amount billed to the subscriber. We generally record revenue in the amount that we bill our financial institution clients, and not the amount billed to their customers, when our financial institution client is the primary obligor, establishes price to the customer and bears the credit risk.

Our deferred subscription solicitation costs consist of subscription acquisition costs, including telemarketing and direct mail expenses such as printing and postage, and commissions paid to clients. Telemarketing and direct mail expenses are direct response advertising costs, which are accounted for in accordance with American Institute of Certified Public Accountants Statement of Position (“SOP”) 93-7, “Reporting on Advertising Costs” (“SOP 93-7”). The recoverability of amounts capitalized as deferred subscription solicitation costs are evaluated at each balance sheet date, in accordance with SOP 93-7, by comparing the carrying amounts of such assets on a cost pool basis to the probable remaining future benefit expected to result directly from such advertising costs. Probable remaining future benefit is estimated based upon historical subscriber patterns, and represents net revenues less costs to earn those revenues. In estimating probable future benefit (on a per subscriber basis) we deduct our contractual cost to service that subscriber from the known sales price. We then apply the future benefit (on a per subscriber basis) to the number of subscribers expected to be retained in the future to arrive at the total probable future benefit. In estimating the number of subscribers we will retain (i.e., factoring in expected cancellations), we utilize historical subscriber patterns maintained by us that show attrition rates by client and marketing channel. The total probable future benefit is then compared to the costs of a given marketing campaign (i.e., cost pools), and if the probable future benefit exceeds the cost pool, the amount is considered to be recoverable. If direct response advertising costs were to exceed the estimated probable remaining future benefit, an adjustment would be made to the deferred subscription costs to the extent of any shortfall.

We amortize deferred subscription solicitation costs on a cost pool basis over the period during which the future benefits are expected to be received. The period of time in which we amortize these costs reflects historical subscriber patterns, but has historically not exceeded 12 months.

In accordance with SAB No. 101, “Revenue Recognition in Financial Statements,” commissions that relate to annual subscriptions with full refund provisions and monthly subscriptions are expensed in the month incurred, unless we are entitled to a refund of the commissions. If annual subscriptions are cancelled prior to their initial terms, we are generally entitled to a full refund of the previously paid commission for those annual subscriptions with a full refund provision and a pro-rata refund, equal to the unused portion of their subscription, for those annual subscriptions with a pro-rata refund provision. Commissions that relate to annual

subscriptions with full commission refund provisions are deferred until the earlier of expiration of the refund privileges or cancellation. Once the refund privileges have expired, the commission costs are recognized ratably in the same pattern that the related revenue is recognized. Commissions that relate to annual subscriptions with pro-rata refund provisions are deferred and charged to operations as the corresponding revenue is recognized. If a subscription is cancelled, upon receipt of the refunded commission from our client, we record a reduction to the deferred commission.

We develop software for internal use and capitalize software development costs incurred during the application development stage in accordance with SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use and EITF 00-2, Accounting for Web Site Development Costs. Costs incurred prior to and after the application development stage are charged to expense. When the software is ready for its intended use, capitalization ceases and such costs are amortized on a straight-line basis over the estimated useful life, which is generally three years.

We account for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for future tax consequences and attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. Negative evidence, such as losses in recent years, would suggest that a valuation allowance is needed. Positive evidence, such as our recent positive taxable income for the year ended December 31, 2003 of $14.6 million and our projections for the years ending December 31, 2004 and 2005, indicates that we will be able to utilize our net operating loss. In projecting future taxable income, we used detailed budgets and forecasts prepared by us in managing our business. Our forecasts indicate that, based on our existing contracts with our clients, our customer base and existing sales prices and cost structures, we will produce more than enough taxable income to realize the deferred tax asset. While the projection of future taxable income is always dependent on certain estimates and assumptions, the realization of the deferred tax asset is not highly sensitive to deviations from actual results, as we anticipate generating taxable income sufficient to realize the net deferred tax asset during the year ending December 31, 2004. Furthermore, as the net operating losses do not begin to expire until 2019, we have concluded that it is more likely than not that the deferred tax asset will be realized. As a result, we determined that the valuation allowance was no longer necessary as of September 30, 2003.

In April 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections (“SFAS No. 145”). As a result of rescinding FASB Statement No. 4, Reporting Gains Losses from Extinguishment of Debt, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30. This statement also amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. Additional amendments include changes to other existing

authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. We adopted SFAS No. 145 during 2003. For the year ended December 31, 2001, we reclassified $205,106 from extraordinary income to income before income taxes and minority interest in accordance with SFAS No. 145 and such reclassification is reflected in the accompanying consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”). SFAS No. 146 replaces EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs To Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by this standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on our consolidated financial position, results of operations or cash flow.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 addresses disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees. FIN 45 also clarifies requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the fair value of the obligations the guarantor has undertaken in issuing that guarantee. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for guarantees existing as of December 31, 2002. The adoption of FIN 45 did not have a material effect on our consolidated financial position, results of operations or cash flow.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure an Amendment of FASB Statement No. 123. This statement amends SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), to allow for alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock issued to team members. This statement also amends FASB Statement No. 123 to require disclosure of the accounting method used for valuation in both annual and interim financial statements. This statement permits an entity to recognize compensation expense under the prospective method, modified prospective method or the retroactive restatement method. If an entity elects to adopt this statement, fiscal years beginning after December 15, 2003 must include this change in accounting for stock-based compensation. We are currently evaluating the effect of voluntarily adopting the fair value provisions of SFAS No. 123 and will elect a transition method if the fair value method is adopted.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to variable interest entities created after January 31, 2003, or variable interest entities in which a company obtains an interest after that date. The interpretation applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The adoption of FIN 46 did not have a material effect on our consolidated financial position, results of operations or cash flow.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (“SFAS No. 150”). SFAS No. 150 requires that an issuer classify financial instruments that are within the scope of SFAS No. 150 as a liability. Under prior guidance, these same instruments would be classified as equity. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003 or otherwise for interim periods beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material effect on our consolidated financial position, results of operations or cash flow.

The following table sets forth, for the periods indicated, certain items on our statement of operations as a percentage of revenue:

Revenue. Total revenue increased by 50.3% to $147.3 million in 2003 from $98.0 million in 2002 due to an increase in subscribers and one-time transactional sales including three-bureau credit reports provided to customers of Equifax described below. Our subscription base increased to 2.3 million subscribers as of December 31, 2003 from 1.6 million subscribers as of December 31, 2002. The number of one-time transactional sales also increased to approximately 609,000 in 2003 from approximately 224,000 in 2002. The growth in our subscriber base has been accomplished through continued marketing efforts with existing clients and the addition of 12 new clients in 2003. As shown in the table below, an increasing percentage of our subscribers and revenue is generated from indirect marketing arrangements.

Under a master agreement with Equifax Consumer Services, a subsidiary of Equifax, we were providing to customers of Equifax through electronic delivery a one-time, non-subscription report with data from Equifax, Experian and TransUnion, which Equifax Consumer Services then

marketed online. This one-time report service was terminated by Equifax Consumer Services effective October 16, 2003 when Equifax Consumer Services began to provide this service directly to consumers. The one-time report service is not the same as our credit monitoring service, which monitors the credit files of subscribers at one or all three major credit reporting agencies on an ongoing subscription basis. As a result, revenue generated from these sales decreased from $5.0 million for the quarter ended September 30, 2003 to $787,000 for the quarter ended December 31, 2003, and in 2004, we will not have revenue from sales of that report. Our revenue from that one-time three-bureau credit report which began in June 2002 was $6.9 million in 2002 and $15.2 million in 2003. However, the contribution to our operating income by these sales was significantly lower as a percentage of revenue than that of our subscription business.

Marketing and Commission Expenses. Marketing and commission expenses consist of subscriber acquisition costs, including telemarketing and direct mail expenses such as printing and postage, as well as commissions paid to clients. Marketing and commission expenses increased by 41.8% to $75.5 million in 2003 from $53.3 million in 2002. Commission expenses increased by $28.1 million in 2003 of which $21.8 million, or 77.6%, of the increase is related to commissions paid to new and existing clients and the remaining $6.3 million, or 22.4%, is related to commissions paid to our clients for transactional sales. The marketing expenses related to subscriber acquisition costs decreased $5.9 million in 2003 primarily due to one of our clients shifting from a direct arrangement to an indirect arrangement. As a percentage of revenue, marketing and commission expenses decreased to 51.3% in 2003 from 54.4% in 2002. Approximately 45% of the decrease is attributable to an increase in revenue in 2003 from arrangements where the client bears the marketing costs.

Subscription Servicing Expense. Subscription servicing expense consists of the costs of operating our customer service and information processing centers, data costs and billing costs for subscribers and one-time transactional sales. Subscription servicing expense increased 51.3% to $35.7 million in 2003 from $23.6 million in 2002. Approximately 53%, or $6.4 million, of the increase is due to increased customer service and information processing center operating costs and approximately 37%, or $4.5 million, of the increase is due to increased data costs associated with the growth in our subscriber base. As a percentage of revenue, subscription servicing expenses increased slightly to 24.2% in 2003 from 24.0% in 2002. Higher information processing costs incurred per dollar of revenue received on transactional sales and the expansion of our customer service and information processing centers to include second locations were the primary reasons for the increase. In 2003, we enhanced our capabilities by expanding our Fraud Resource Center, Customer Correspondence Team and Web Support Team. We also opened a second customer service center in Rio Rancho, New Mexico and a second information processing center in Manassas, Virginia.

General and Administrative Expenses. General and administrative expenses consist of personnel and facilities expenses associated with our executive, sales, marketing, information technology, finance, program and account management functions, as well as depreciation and amortization. General and administrative expenses increased 37.8% to $20.5 million in 2003 from $14.9 million in 2002. Approximately $4.3 million, or 76.8%, of the increase is attributable to personnel expenses as a result of increased headcount in 2003. As a percentage of revenue, general and administrative expenses decreased to 13.9% in 2003 from 15.2% in 2002. The decrease is largely attributable to improved economies of scale realized by spreading overhead over a larger base of subscribers during the period.

Operating Income. Operating income increased by 149.3% to $15.6 million in 2003 from $6.2 million in 2002. As a percentage of revenue, operating income in 2003 was 10.6% compared to 6.4% in 2002. The increase is primarily due to growth in subscribers, an increase in revenue and improved economies of scale, offset in part by growth in lower-margin transactional sales.

Interest Income and Expense. Interest expense consists of accrued interest on the $20.0 million senior secured convertible note of $964,000 and interest expense on equipment leases. Interest expense decreased 5.6% to $1 million in 2003 from $1.1 million in 2002. The decrease is a result of several capital equipment leases whose terms expired during 2003.

Other Income. Other income consists of miscellaneous smaller transactions. Other income decreased to $12,000 in 2003 from $90,000 in 2002.

Provision for Income Taxes. Through the second quarter of 2003, we had recorded a valuation allowance against our net deferred tax assets, which included net operating loss carryforwards. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. Negative evidence, such as our losses in recent years, suggested that a valuation allowance was needed. Positive evidence, such as recent positive taxable income generated during the year ended December 31, 2003 and our projections for the years ending December 31, 2004 and 2005 indicate that we will be able to utilize our net operating loss. In projecting future taxable income, we used the detailed budgets and forecasts prepared by us in managing our business. Our forecasts indicate that, based on our existing contracts with our clients, our customer base and existing sales prices and cost structures, we will produce more than enough taxable income to realize the deferred tax asset. As a result, we determined that the valuation allowance was no longer necessary as of September 30, 2003.

Revenue. Total revenue increased by 73.4% to $98.0 million in 2002 from $56.5 million in 2001 due to an increase in our subscription base and an increase in the effective annualized subscription price of up to 20% resulting from a shift from monthly and annual subscriptions to primarily monthly subscriptions. New monthly subscribers from direct marketing arrangements represented 93.6% of total new subscribers from direct marketing arrangements during 2002 compared to 65.3% during 2001. Our subscription base increased to approximately 1.6 million subscribers at December 31, 2002 from approximately 894,000 subscribers at December 31, 2001. The number of one-time transactional sales also increased to approximately 224,000 in 2002 from none in 2001. The growth in our subscriber base was accomplished through continued marketing efforts and retention of subscribers from existing clients, an increase in subscribers from indirect marketing arrangements and the addition of five new clients in 2002.

Marketing and Commission Expenses. Marketing and commission expenses increased 45.3% to $53.3 million in 2002 from $36.7 million in 2001. $12.1 million, or 72.9%, of the increase was primarily due to commissions paid to our clients on higher revenue. Marketing costs, which include telemarketing and direct mail, accounted for $4.5 million, or 27.1%, as marketing efforts with current clients expanded. As a percentage of revenue, marketing expenses decreased to 54.4% in 2002 from 64.9% in 2001. The decrease is attributable to an increase in the number of arrangements where the client bears the marketing costs, an increase in the proportion of revenue from subscribers acquired in previous periods and reduced telemarketing costs resulting from re-negotiating our contracts.

Subscription Servicing Expense. Subscription servicing expense increased 27.8% to $23.6 million in 2002 from $18.4 million in 2001. $2.3 million, or 45.3%, of the increase is due to increased customer service and information processing center operating costs. Data costs associated with growth in our subscriber base and an increase in transactional sales accounted for $1.1 million, or 21.8%, of the increase. The remaining $1.8 million, or 32.9%, is primarily related to the information processing costs to provide the service to our growing subscriber base. As a percentage of revenue, subscription servicing expense decreased to 24.0% in 2002 from 32.6% in 2001. The decrease is primarily due to cost savings recognized from reduced monitoring costs per subscriber as a result of reaching higher volumes and

reduced credit report costs by transferring our one-bureau reports to a different credit bureau. In addition, in the fourth quarter of 2001, we changed our identity theft insurance provider and restructured a data processing contract, resulting in a per subscriber cost savings in 2002.

General and Administrative Expenses. General and administrative expenses decreased 9.2% to $14.9 million in 2002 from $16.4 million in 2001. The decrease is attributable to a $2.8 million fee recognized in the fourth quarter of 2001 as the result of restructuring our contract for credit data processing costs. As a result of the restructuring, the contract term was reduced from 20 years to five years and credit data and related processing costs were reduced approximately $4.3 million over the new term of the contract. Excluding the $2.8 million fee, general and administrative costs increased $1.3 million or 9.4% from 2001 to 2002 primarily as the result of increased personnel and facilities costs to meet our growing needs. As a percentage of revenue, general and administrative expenses decreased to 15.2% in 2002 from 24.1% in 2001, excluding the $2.8 million charge. The decrease is largely attributable to improved economies of scale realized by spreading overhead over a larger base of subscribers during the period.

Operating Income. Operating income increased $21.2 million to $6.2 million for 2002 from an operating loss of $15.0 million for 2001. The increase is attributable to several factors including significant growth in our subscriber base, an increase in revenue, an increase in the number of arrangements where the client bears the marketing costs, cost savings associated with marketing and subscription servicing expenses and improved economies of scale associated with general and administrative expenses.

Interest Income and Expense. Interest expense decreased 11.3% to $1.1 million in 2002 from $1.2 million in 2001. The decrease is due to a reduction in interest expense of $1.1 million related to notes payable and vendor financing arrangements in 2001 offset by interest expense incurred during 2002 of $1.0 million related to the senior secured convertible note.

Other Income. Other income increased to $90,000 in 2002 from other expense of $17,000 in 2001 due to the recognition of miscellaneous income items.

Provision for Income Taxes. We recorded a valuation allowance against net operating loss carryforwards and other deferred tax assets due to uncertainty of their ultimate realization.

The following table sets forth certain unaudited quarterly statements of operations data for each of the eight quarters in the period ended December 31, 2003. In the opinion of our management, this unaudited information has been prepared on a basis consistent with the audited consolidated financial statements appearing elsewhere in the prospectus and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the information set forth therein when read in conjunction with the consolidated financial statements


(1)	Marketing and commission expenses decreased from the third quarter 2003 to the fourth quarter 2003 due to reduced commissions associated with a reduction in revenue from sales of one-time reports to customers of Equifax Consumer Services.

(2)	For periods prior to the third quarter of 2003, we did not record a tax benefit from net operating losses but instead recorded an off-setting valuation allowance. The valuation allowance was required because it was more likely than not that some or all of the net deferred tax assets would not be realized. Based on recent positive and anticipated projected income it was determined that the valuation allowance was no longer necessary and we recognized a $6.5 million tax benefit in the third quarter of 2003.

(3)	Prior to realizing the deferred tax asset in the third quarter of 2003, income taxes were calculated and offset 90% by a deduction for net loss carryforwards. As a result of realizing the deferred tax asset associated with the balance of net loss carryforwards as of September 30, 2003, income tax expense in the fourth quarter of 2003 is calculated based on the statutory rate.

(4)	Total revenue decreased from the third quarter of 2003 to the fourth quarter of 2003 as the result of the termination of the three-bureau one-time report service we provided to a subsidiary of Equifax. Excluding revenue generated from these one-time reports, our revenue increased by 8% from the third to fourth quarter of 2003.

The following table sets forth, for the periods indicated, certain items on our statement of operations as a percentage of revenue:


Delaware	7375	54-1956515
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


	Per Share	Total
Public Offering Price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to Intersections Inc.	$	$
Proceeds, before expenses, to the selling stockholder	$	$


Service Features		Description

Credit profile		An easy-to-read initial presentation of the subscriber’s credit files at one or all three of the major credit reporting agencies.
Daily credit monitoring and notification		Daily monitoring and notification of significant potential identity theft indicators in the subscriber’s credit files at one or all three major credit reporting agencies.
Periodic updates		Complete update of changes to the subscriber’s credit files at one or all three major credit reporting agencies.
Credit score and analysis tools		A periodic credit score comparable to scores used by many consumer lenders based on the data from one or all three major credit reporting agencies, tracking of that score against previously reported scores, and an online credit score simulation tool that allows the subscriber to test different credit management scenarios.
Credit education		Printed or online information, together with live access to our trained credit education specialists, to assist subscribers in understanding their credit profiles, credit scores and changes to their reported credit information.
Fraud resource center		Access to our specialists for assistance in the event of identity theft or fraud. In addition, the fraud resource center is available to any financial institution on a fee basis for use by its customers, whether or not the customers are subscribers.
Identity theft cost coverage		Coverage through our insurer for certain costs incurred by the subscriber to correct an identity theft incident.
Fraud alert reporting service		In the event of a lost or stolen card incident, we provide the subscriber with automatic enrollment in our credit monitoring service, notification of the subscriber’s designated card issuers and assistance in obtaining an optional cash advance from the subscriber’s card issuer.


Common stock offered by Intersections		3,000,000 shares

Common stock offered by the selling stockholder		3,250,000 shares

Common stock to be outstanding after this offering		16,952,850 shares

Over-allotment option		937,500 shares

Use of proceeds		We intend to use the net proceeds of this offering to expand into new markets, to introduce new services and for working capital and general corporate purposes. See “Use of Proceeds.”

Nasdaq National Market symbol		INTX



		Year Ended December 31,

		1999(1)			2000			2001			2002			2003

Statement of Operations Data:
Revenue		$	21,670		$	40,974		$	56,505		$	98,005		$	147,306
Operating expenses:
	Marketing and commissions		20,099			32,915			36,658			53,281			75,531
	Subscription servicing		14,584			17,020			18,445			23,568			35,668
	General and administrative(2)		6,261			11,447			16,435			14,914			20,546

Total operating expenses			40,944			61,382			71,538			91,763			131,745

Operating income (loss)			(19,274	)		(20,408	)		(15,033	)		6,242			15,561
Interest income (expense)			(64	)		47			(1,204	)		(1,068	)		(1,008	)
Other income (expense)			—			11			(17	)		90			12
Gain from extinguishment of debt			—			—			205			—			—

Income (loss) before income taxes and minority interest			(19,338	)		(20,350	)		(16,049	)		5,264			14,565
Income tax benefit (expense)			(814	)		122			692			—			4,811	(3)
Minority interest in net loss of subsidiary			—			97			218			83			35

Net income (loss)		$	(20,152	)	$	(20,131	)	$	(15,139	)	$	5,347			19,411

Net income (loss) per share:
	Basic	$	(4.19	)	$	(4.17	)	$	(3.08	)	$	1.09		$	3.92
	Diluted		(4.19	)		(4.17	)		(3.08	)		0.43			1.36
Weighted average shares outstanding:
	Basic		4,806,838			4,828,548			4,921,292			4,921,292			4,954,344
	Diluted		4,806,838			4,828,548			4,921,292			14,665,848			14,964,857


Martin H. Neidell, Esq. Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038-4982 (212) 806-5836 Facsimile: (212) 806-7836		Thomas R. Brome, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019-7475 (212) 474-1000 Facsimile: (212) 474-3700


	Page

Prospectus Summary		1
Risk Factors		9
Forward-Looking Statements		18
Use of Proceeds		19
Dividend Policy		19
Capitalization		20
Dilution		21
Selected Consolidated Financial Data		22
Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Business		40
Management		51
Principal Stockholders		59
Selling Stockholders		61
Certain Transactions		63
Description of Capital Stock		67
Shares Eligible for Future Sale		70
Material U.S. Federal Tax Considerations		73
Underwriting		76
Legal Matters		79
Experts		79
Where You Can Find More Information		79
Index to Financial Statements		F-1



	December 31, 2003

					Pro Forma
	Actual		Pro Forma		As Adjusted


			(Unaudited)
Balance Sheet Data:
Cash and cash equivalents	$	14,411	$	14,411	$	57,401
Deferred subscription solicitation costs		9,768		9,768		9,768
Working capital		10,344		12,360		55,350
Total assets		49,900		49,900		92,890
Long-term obligations		972		972		972
Senior secured convertible note		20,000		—		—
Total stockholders’ equity		5,485		27,501		70,491



					As of December 31, 2003

											Pro Forma
					Actual			Pro Forma			As Adjusted

Cash and cash equivalents					$	14,411,276		$	14,411,276		$	57,401,276

Senior secured convertible note(1)					$	20,000,000		$	—		$	—
Other long-term debt and capital leases, net of current portion						972,142			972,142			972,142
Stockholders’ equity:
	Preferred stock, $0.01 par value per share: 56,268 shares authorized, actual; 5,000,000 shares authorized, pro forma and pro forma as adjusted:
		Series A: 20,000 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted				200			—			—
		Series B: 9,500 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted				95			—			—
		Series C: 20,000 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted				200			—			—
	Common stock, $0.01 par value per share: 24,268,365 shares authorized, actual; 50,000,000 shares authorized, pro forma and pro forma as adjusted; 4,963,955 shares, 13,952,850 shares and 16,952,850 shares issued and outstanding, actual, pro forma and pro forma as adjusted, respectively					49,640			139,529			169,529
	Deferred compensation					(49,177	)		(49,177	)		(49,177	)
	Additional paid-in capital(1)					20,888,835			42,815,808			85,775,808
	Accumulated deficit					(15,404,729	)		(15,404,729	)		(15,404,729	)

			Total stockholders’ equity			5,485,064			27,501,431			70,491,431

				Total capitalization	$	26,457,206		$	28,473,573		$	71,463,573


Assumed initial public offering price per share			$	16.00
Historical net tangible book value per share as of December 31, 2003	$	1.10
Increase attributable to conversion of preferred stock and senior secured convertible note		0.87

Pro forma net tangible book value per share as of December 31, 2003		1.97
Increase per share attributable to sale of common stock in this offering		2.19

Pro forma net tangible book value per share after this offering				4.16

Dilution of pro forma net tangible book value per share to new investors			$	11.84



		Shares Issued					Total Consideration					Average
												Price
		Number		Percent			Amount		Percent			Per Share

Existing stockholders			13,952,850		82.3	%	$	42,955,337		47.2	%	$	3.08
New investors			3,000,000		17.7			48,000,000		52.8		$	16.00

	Total		16,952,850		100.0	%	$	90,955,337		100.0	%



	As of December 31,

	1999(1)			2000			2001			2002			2003

Balance Sheet Data:
Cash and cash equivalents	$	2		$	1,553		$	14,308		$	9,459		$	14,411
Deferred subscription solicitation costs		8,453			7,632			13,002			11,684			9,768
Working capital (deficit)		(4,381	)		(7,042	)		(1,533	)		3,603			10,344
Total assets		12,288			14,149			32,201			28,006			49,900
Long-term obligations		839			1,015			865			698			972
Senior secured convertible note		—			—			20,000			20,000			20,000
Total stockholders’ equity (deficit)		(2,453	)		(4,430	)		(19,321	)		(13,975	)		5,485



		Percentage of Revenue for the
		Years Ended December 31,

Client	Relationship	2002	2003	Expiration or Termination

American Express	Shared Marketing	29%	23%	One-year annual renewal at American Express’ option
Capital One (through Equifax)	Indirect Marketing	3%	20%	Continues until termination of applicable Capital One-Equifax agreement upon 120 days prior notice by Capital One or Equifax
Citibank	Direct Marketing	14%	15%	Expired, except for ongoing subscriptions
Citibank	Indirect Marketing	N/A (Marketing commenced in January 2004)	N/A (Marketing commenced in January 2004)	Termination by either party upon 90 days’ prior notice
Discover	Direct Marketing	32%	14%	Expires May 1, 2004, unless renewed by the parties
Discover	Indirect Marketing	3%	4%	Termination by Discover upon 60 days’ prior notice



	Year Ended
	December 31,

	2002		2003

Percentage of subscribers from indirect marketing arrangements to total subscribers at December 31,		35.3%		52.4%
Percentage of revenue from indirect marketing arrangements to total subscription revenue		7.7%		30.1%



		Quarter Ended


		2002												2003

		March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31


		(In thousands)
Statement of Operations Data:
Revenue		$	18,858		$	22,909		$	27,146		$	29,092		$	35,242		$	37,485		$	38,033		$	36,546
Operating Expenses:
	Marketing and commissions		10,862			12,300			14,028			16,091			18,622			19,297			19,662			17,950	(1)
	Subscription servicing		4,669			5,130			6,578			7,191			8,522			8,753			9,608			8,785
	General and administrative		3,104			3,525			3,798			4,487			4,495			4,969			5,472			5,610

Total operating expenses			18,635			20,955			24,404			27,769			31,639			33,019			34,742			32,345

Operating income			223			1,954			2,742			1,323			3,603			4,466			3,291			4,201
Interest expense			(265	)		(268	)		(270	)		(265	)		(261	)		(248	)		(249	)		(250	)
Other income (expense)			(1	)		(10	)		1			100			13			(13	)		(1	)		13

Income (loss) before income taxes and minority interest			(43	)		1,676			2,473			1,158			3,355			4,205			3,041			3,964
Income tax benefit (expense)			—			—			—			—			(84	)		(84	)		6,456	(2)		(1,477	)(3)
Minority interest in net loss of subsidiary			30			18			17			18			18			17			—			—

Net income		$	(13	)	$	1,694		$	2,490		$	1,176		$	3,289		$	4,138		$	9,497		$	2,487


Deutsche Bank Securities	Lazard



		Year Ended December 31,

		1999(1)			2000			2001			2002			2003

Statement of Cash Flow Data:
Cash flow from:
	Operating activities	$	(17,147	)	$	(14,435	)	$	(7,518	)	$	(1,353	)	$	11,162
	Investing activities		(790	)		(1,076	)		(355	)		(1,097	)		(5,265	)
	Financing activities		17,436			17,061			20,627			(2,400	)		(944	)



		Year Ended December 31,

		1999(1)			2000			2001			2002			2003

Statement of Cash Flow Data:
Cash flow from:
	Operating activities	$	(17,147	)	$	(14,435	)	$	(7,518	)	$	(1,353	)	$	11,162
	Investing activities		(790	)		(1,076	)		(355	)		(1,097	)		(5,265	)
	Financing activities		17,436			17,061			20,627			(2,400	)		(944	)