Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2001, 2000 and 1999
Within the Locus Dialogue technology there are two main product lines, Liaison and SpeechPortal, both of which run on the SoftDialogue
platform (core speech engine). Liaison addresses the needs of enterprises that require speech enabled communication solutions. SpeechPortal
enables businesses and consumers to use the Internet via telephone or voice, without requiring an Internet enabled device. The Company plans
to offer a co branded version of SpeechPortal to the Company's wireless carriers and device manufacturer customers. As of the date of
acquisition, the Company estimated that Liaison was 80% complete. The percentage completed pre acquisition was based primarily on the
evaluation of three major factors: time based data, cost based data, and complexity based data.
The expected life of the modules being developed was assumed to be five years, after which substantial modification and enhancement
would be required for the technology to remain competitive.
The Company's revenue assumptions were based on the estimated growth potential of the industry and estimated market acceptance of the
Locus Dialogue technology. The Company's expense assumptions included cost of revenue of 20% of revenue, sales, general and
administrative of 35% of revenue, and product development of 2% of revenue. However, cost of revenues, sales, general and administrative
and product development 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 the Company made may prove to be inaccurate, and there can be no assurance that the Company will realize the revenue, gross
profit, growth rates, expense levels or other variables set forth in such assumptions.
As discussed in Note 5, the Company sold the Liaison assets of Locus Dialogue in July 2001 and recorded an impairment charge of $64.2
million to adjust the Liaison core technology and associated goodwill to its estimated fair value. The remaining personnel and assets of Locus
Dialogue including the voice application, SpeechPortal and SoftDialogue, are now operated under the name of InfoSpace Speech Solutions.
Fiscal Year 2000
The boxLot Company:
On December 7, 2000, the Company closed an asset purchase with The boxLot Company. The Company
acquired certain assets including interactive on line variable pricing and dynamic pricing engine technology, equipment and domain names.
The Company exchanged $2.6 million of cash and 501,527 shares of the Company's common stock in this transaction for a total purchase price
of $8.9 million and recorded goodwill of $9.2 million which is being amortized over three years. The valuation of the shares issued of $12.47
per share was based on the seven day stock price average for the period represented by the date of acquisition and the three days before and
after the date of acquisition. The Company incurred acquisition costs of $227,000.
On October 12, 2000, the Company completed the merger with Go2Net, Inc., a publicly held provider of applications and
technology infrastructure for narrowband and broadband. Under the terms of the merger, which was accounted for as a pooling of interests, the
Company exchanged 74,154,448 shares of the Company's common stock for all of the preferred and common shares of Go2Net. The
consolidated balance sheet as of December 31, 2000 and 1999 and the consolidated statements of operations, statements of cash flow and
statements of stockholder's equity for the years ended December 31, 2000, 1999 and 1998 are presented as if Go2Net was a wholly owned
subsidiary since inception. The revenue of the Company and Go2Net for the nine months ended September 30, 2000 was $76.0 million and
$72.9 million, respectively. The net loss for the Company and Go2Net for the nine months ended September 30, 2000 was $155.0 million and
$27.3 million, respectively.