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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2001, 2000 and 1999
The Company's revenue assumptions were based on the stream of income that could be attributed to the GiantBear customer base
assuming renewals, and the prospective customer base, assuming similar pricing.
The Company's expense assumptions included cost of revenues, which were estimated to be 24% of revenues for 2002 and decreasing to
7.4%, as revenues grow and costs of revenues are expected to remain relatively fixed. Research and development costs were estimated to be
56% in 2002 and decreasing to 25.2%. Sales and marketing combined with general and administrative expenses were estimated to be 51.9% in
2002 and thereafter decreasing to 23.3% in line with industry levels as wireless carriers adopt the technology and market the suite of services to
their subscribers and the Company capitalizes on economies of scale. However, cost of revenues, research and development and sales and
marketing and general and administrative expenses may vary, both in absolute dollars and as a percentage of revenues.
While the Company believes that the assumptions discussed above were made in good faith and were reasonable when made, the
assumptions may prove to be inaccurate, and there can be no assurance that the Company will realize the revenues, gross profit, growth rates,
expense levels or other variables set forth in the Company's assumptions.
The Company does not expect to have the ability to calculate revenues specifically and exclusively attributable to the integrated GiantBear
technology. The amount that the Company can charge the wireless carriers for access and use of these products and application services will be
greatly influenced by market forces and competitors' pricing of their own integrated offerings.
: On November 28, 2001, the Company acquired certain assets of Excite.com (Excite). The acquired assets included domain
names, trademarks and user traffic associated with the Excite.com Web site. Total net consideration for the acquired assets was $6.7 million.
Concurrently, the Company announced an Internet services agreement with iWon. Under the agreement, the Company agreed to power the
search and directory components of the Excite Web site, and will sell and/or license the portal's other components to iWon. iWon is
responsible for maintaining the look and feel of the Excite Web site. As the Company did not acquire all of the assets of the Excite portal which
was a component of the At Home Corporation, and the Company has licensed certain of the acquired assets to iWon, this acquisition was not
classified as a purchase of a business. The acquired intangible assets will be amortized over two years.
Locus Dialogue, Inc
.: On January 1, 2001, the Company acquired all of the common stock of Locus Dialogue, Inc. (now called
InfoSpace Speech Solutions), a developer of speech recognition enabled applications, for purchase consideration of 5,114,233 shares, which
included 253,175 restricted shares and 1,173,216 replacement stock options, of the Company's common stock and acquisition expenses of
$556,000. The valuation of shares issued of $23.46 per share was based on the seven day stock price average for the period including
November 6, 2000 and the three days before and after that date. The acquisition was accounted for as a purchase.