VICINITY CORP, 424B4, 2000-02-09

VICINITY CORP
424B4, 2000-02-09
BUSINESS SERVICES, NEC

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<PAGE>

Filed pursuant to Rule 424(B)(4)
Registration No. 333-90253
Prospectus

7,000,000 Shares

[LOGO OF VICINITY CORP.]

Vicinity Corporation

Common Stock

This is the initial public offering by Vicinity Corporation of shares of its
common stock.

Our common stock has been approved for quotation on the Nasdaq National Market
under the symbol "VCNT."

Investing in our common stock involves material risks. See "Risk Factors"
beginning on page 6.

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.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discounts Vicinity
- ------------------------------------------------------
<S> <C> <C> <C>
Per Share $17.00 $1.19 $15.81
- ------------------------------------------------------
Total $119,000,000 $8,330,000 $110,670,000
- ------------------------------------------------------
</TABLE>

We have granted the underwriters the right to purchase up to an additional
1,050,000 shares of common stock to cover over-allotments.

J.P. Morgan & Co.

Bear, Stearns & Co. Inc.

U.S. Bancorp Piper Jaffray

February 8, 2000
<PAGE>

[GRAPHIC- Vicinity logo in the upper left-hand corner. A picture of shoppers in
a store is under logo. Text in the upper right-hand corner reads "Vicinity
drives customers to the world's leading brands." The lower half of the page has
a white rectangle with the logos of some of Vicinity's clients.]

[GRAPHIC- Text across the top reads "Vicinity Reaches Customers Anytime.
Anywhere." Beneath that, text line reads "A day in the life of Vicinity
Customers" and shows five scenarios of how consumers can use Vicinity's
products.]
<PAGE>

Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 6
Risks Related to Our Business......... 6
Risks Related to this Offering........ 15
Forward-looking Statements............. 18
Use of Proceeds........................ 19
Dividend Policy........................ 19
Capitalization......................... 20
Dilution............................... 21
Selected Financial Data................ 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations......................... 24
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Business............................... 31
Management............................. 50
Principal Stockholders................. 60
Certain Transactions................... 62
Description of Capital Stock........... 63
Shares Eligible for Future Sale........ 66
Underwriting........................... 68
Legal Matters.......................... 71
Experts................................ 71
Available Information.................. 71
Index to Financial Statements.......... F-1
</TABLE>

---------------

In deciding whether to buy our common stock, you should rely only on the
information contained in this prospectus. To understand this offering fully,
you should read this entire prospectus carefully, including the financial
statements and notes. Individual sections of this prospectus, such as the
section entitled "Prospectus Summary," are not complete and do not contain all
of the information that you should consider before investing in our company. We
have not authorized anyone to provide you with 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.

Until March 4, 2000, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.

---------------
<PAGE>

Prospectus Summary

This summary highlights information found in greater detail elsewhere in this
prospectus. We urge you to read the entire prospectus carefully, especially the
risks of investing in our common stock discussed under "Risk Factors," before
you decide to buy our common stock.

Our Business

We are a leading provider of Internet-based marketing infrastructure
services. Our "clicks-and-mortar" solutions enable our clients to direct
consumers searching for a specific product or service to the nearest brick-and-
mortar location that carries that product or service. We have approximately 300
clients with an aggregate of more than three million real world store
locations. Our growing client list includes leading companies in a number of
industry segments such as Barnes & Noble, Marriott, McDonald's, Mercedes-Benz
and Nike.

While use of the Internet continues to grow rapidly and consumers are
increasingly going online to research products and services, an estimated 99%
of all retail transactions still take place at traditional brick-and-mortar
retail stores. We believe the reasons for consumers' continuing preference for
shopping in retail stores include the ability to physically inspect and compare
products, the possibility of same-day fulfillment and the relative ease with
which products can be returned to the store where purchased. In addition, many
merchants, such as restaurants, hotels and gas stations, offer goods and
services that cannot be provided online. Jupiter Communications Inc., an
industry research firm, has stated that the key to success for retailers in the
Internet age will be to find compelling ways to direct consumers researching
products online to the nearest brick-and-mortar store where they can complete a
purchase.

We provide a suite of Internet-based marketing infrastructure services
designed to help our clients turn Web traffic into store traffic. We host our
clients' store location and product information and deliver that information to
potential customers on demand via the Internet, land-line telephones, wireless
telephones and other wireless devices. We can also provide information to
potential customers concerning which items are regularly stocked at given
locations and what promotions are being offered by participating merchants.

Using our services, our clients are able to:

. Direct visitors from our clients' Web sites to the nearest store
location carrying our clients' products or services. For example, Levi
Strauss uses our Web Business Finder to direct customers from its Web
site located at www.levi.com to the nearest store that stocks a
selected model of Levi blue jeans.

. Provide customers with store and product location information via
telephone. For example, The Wherehouse, Inc. uses our Telephone
Business Finder to direct callers to its toll-free number,
1-800-WHEREHOUSE, to the nearest Wherehouse retail music store.

. Enable customers to find client locations via Internet-enabled
wireless devices. With our wireless BrandFinder product, users can
instantly generate information on a wide array of businesses from
banks and cash machines to restaurants, gas stations and hotels via a
Palm VII or a wireless telephone utilizing Wireless Applications
Protocol.

. Create a unique Web presence and extend local store-specific
promotions while maintaining brand integrity. For example, CarClub.com
uses our SiteMaker to permit each of its

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member locations to customize individual Web sites with information
such as store hours and special promotions while maintaining control
over CarClub.com's brand integrity through the use of standard
templates.

. Provide customers with timely and relevant information about our
clients' products, services and regional promotions via electronic
mail. Our clients can distribute promotional messages to consumers
that have indicated a desire to receive these messages with our
MailMaker service that assembles, targets and delivers electronic mail
messages.

. Provide customers with timely incentives designed to motivate
purchases. Through our relationship with Prio, Inc. and other
Internet-based promotion companies, our clients can extend an "Act
Now!" promotional message to potential customers through a credit card
rebate system that eliminates the need for paper coupons and mail-in
receipts.

. Extend their Web presence through our partnerships with Inktomi
Corporation, AltaVista, ShopNow.com, Inc. and other Internet portals
and search engines. For example, a consumer submitting a search
request to a participating search engine will receive a list generated
by our BrandFinder of nearby stores that carry the desired product.

Our Strategy

We intend to enhance our position as a leading provider of Internet-based
marketing infrastructure services that enable our clients to direct consumers
to real world retail locations. Key elements of our strategy include the
following:

. expand our client base of large companies with established consumer
brands;

. enhance our relationships with existing clients;

. continue to develop relationships with strategic technology and
distribution partners;

. expand our international presence;

. expand our service offerings; and

. develop our transactional revenue model to receive payments based on
leads generated by, and actual sales resulting from, our services.

Our Organization

Our principal executive offices are located at 1135A San Antonio Road, Palo
Alto, California 94303, and our telephone number is (650) 237-0300. Our
corporate Web site is located at www.vicinity.com. The information contained on
our Web site does not constitute a part of this prospectus.

2
<PAGE>

The Offering

<TABLE>
<C> <S>
Common stock offered.......................... 7,000,000 shares

Common stock outstanding after this offering.. 26,953,007 shares

Use of proceeds............................... We intend to use the net
proceeds of this offering to
expand our sales and marketing
resources, including expanding
our business in Europe and
Asia, to develop new
technologies and products and
improve our technology
infrastructure and to use the
balance of the proceeds for
working capital and other
general corporate purposes.

Nasdaq National Market symbol................. "VCNT"
</TABLE>

The 26,953,007 shares of common stock outstanding after this offering is
based on the 6,119,571 shares of common stock outstanding at October 31, 1999
and includes the following:

. the conversion of all outstanding shares of our convertible preferred
stock into 12,163,373 shares of common stock upon the closing of this
offering;

. the issuance of 952,381 shares of common stock upon the conversion of
shares of Series E Preferred Stock issued to Oak Investment Partners
VIII, L.P. and Oak VIII Affiliates Fund, L.P. in November 1999 upon the
exercise of warrants with an exercise price of $2.10 per share; and

. the issuance of 717,682 shares of common stock upon exercise of stock
options between November 1, 1999 and February 7, 2000.

The shares of common stock outstanding after this offering exclude 2,044,318
shares of common stock issuable upon exercise of outstanding stock options
under our stock option plans with a weighted average exercise price of $8.18
per share.

Please see "Management--Employee Benefit Plans" and "Description of Capital
Stock."

Conventions Which Apply to this Prospectus

Unless we indicate otherwise, all information in this prospectus reflects the
following:

. our reincorporation in Delaware from California approved in October 1999
and effective in January 2000;

. the conversion of all outstanding shares of our convertible preferred
stock into 12,163,373 shares of common stock upon the closing of this
offering;

. no exercise by the underwriters of their over-allotment option to
purchase up to 1,050,000 additional shares of common stock.

3
<PAGE>

References in this prospectus to the offering refer to the initial public
offering of our common stock being made by this prospectus, and references to
fiscal years refer to the fiscal year of our company ended on July 31 of that
year. We were incorporated as a California corporation in October 1995 and
reincorporated as a Delaware corporation in January 2000. Vicinity(R) and
MapBlast!(R) are registered marks of our company. Each trademark, trade name or
service mark of any other company appearing in this prospectus belongs to its
holder.

4
<PAGE>

Summary Financial Information

The following table sets forth summary financial data for our company. You
should read this information together with our financial statements and the
notes to those statements appearing elsewhere in this prospectus and the
information under "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The pro forma data
set forth below give effect to the following:

. the conversion of all outstanding shares of our redeemable
convertible preferred stock into 12,163,373 shares of common stock
upon the closing of this offering; and

. the issuance of 952,381 shares of common stock upon the conversion of
shares of Series E Preferred Stock issued to Oak Investment Partners
VIII, L.P. and Oak VIII Affiliates Fund, L.P. in November 1999 upon
the exercise of warrants with an exercise price of $2.10 per share.

<TABLE>
<CAPTION>
----------------------------------------------------------
Three Months Ended
Year Ended July 31, October 31,
----------------------------------- ---------------------
In thousands, except per 1997 1998 1999 1998 1999
share data ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues:
License and hosting
fees.................. $ 1,419 $ 4,386 $ 5,657 $ 1,244 $ 2,166
Service and transaction
fees.................. -- 424 767 248 365
----------- ---------- ---------- --------- ---------
Total revenues........ 1,419 4,810 6,424 1,492 2,531
Gross profit (loss)..... (557) 1,963 2,475 618 920
Loss from operations.... (6,347) (2,469) (5,464) (651) (2,927)
Net loss................ (6,238) (2,481) (5,515) (669) (2,872)
Net loss applicable to
common stockholders.... (6,621) (2,999) (6,553) (798) (3,374)
Basic and diluted net
loss per share......... $ (1.61) $ (1.00) $ (1.67) $ (0.21) $ (0.71)
Weighted average shares
outstanding used in
basic and diluted net
loss per share
calculation............ 4,102 2,986 3,913 3,813 4,745
Pro forma basic and
diluted net loss per
share (1).............. $ (0.50) $ (0.20)
Weighted average shares
outstanding used in pro
forma basic and diluted
net loss per share
calculations (1)....... 13,150 16,889
</TABLE>

<TABLE>
<CAPTION>
-----------------------------
As of October 31, 1999
-----------------------------
Pro Forma
As
Actual Pro Forma Adjusted
-------- --------- ---------
<S> <C> <C> <C>
In thousands
Balance Sheet Data:
Cash and cash equivalents........................ $ 6,663 $ 8,663 $118,183
Working capital.................................. 2,521 4,521 114,041
Total assets..................................... 11,415 13,415 122,935
Deferred revenue................................. 4,754 4,754 4,754
Capital lease obligations, excluding current
portion......................................... 524 524 524
Redeemable convertible preferred stock and
warrants........................................ 23,655 -- --
Total stockholders' equity (deficit)............. $(19,676) $ 5,979 $115,499
</TABLE>
- ------------------
(1) The pro forma basic and diluted net loss per share reflect the effect of
the conversion of the weighted average number of shares of the redeemable
convertible preferred stock as if the shares were converted as of the date
of issuance.

5
<PAGE>

Risk Factors

Any investment in our common stock involves a high degree of risk. You should
consider carefully the following information about these risks, together with
the other information contained in this prospectus, before you decide to buy
our common stock. If any of the following risks actually occurs, our business,
results of operations or financial condition would likely suffer. In addition,
the market price of our common stock could decline, and you may lose all or
part of the money you paid to buy our common stock.

Risks Related to our Business

Our business is difficult to evaluate because we have a limited operating
history and have been focused on our current business strategy for only
approximately three years.

Our company was founded in October 1995, and our initial revenues were
derived from providing maps, driving directions and directory services. Not
only is our operating history short, we refocused our business strategy on our
Business Finder service in early 1997. Accordingly, we have a limited operating
history from which you can evaluate our present business and future prospects.
As a relatively new entrant to the Internet-based marketing services business,
we face risks and uncertainties relating to our ability to implement our
business plan successfully. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets such as the Internet. If we are unsuccessful in addressing these risks
and uncertainties, our business, results of operations, financial condition and
prospects will be materially adversely affected.

We have a history of losses and negative cash flows and anticipate continued
net losses because we intend to continue to invest in developing our business.

We have not generated enough revenues to exceed the substantial amounts we
have spent to develop our business. We incurred a net loss of approximately
$5.5 million in fiscal 1999, $2.5 million in fiscal 1998 and $6.2 million in
fiscal 1997. As of October 31, 1999, we had an accumulated deficit of
approximately $18.0 million. We expect to continue to lose money for the
foreseeable future because we plan to continue to incur significant expenses as
we expand our sales and marketing resources, including expanding our business
in Europe and Asia, and develop new technologies and products and improve our
technology infrastructure. Moreover, we base current and future expense levels
on our operating plans and our estimates of future revenues. If our revenues
grow at a slower rate than we anticipate, or if our spending exceeds our
expectations or cannot be adjusted to reflect slower revenue growth, we may not
generate sufficient revenues to achieve profitability. If we do achieve
profitability, we may be unable to sustain or increase profitability on a
quarterly or annual basis in the future.

Our business is subject to quarterly fluctuations in operating results which
may negatively impact the price of our common stock.

You should not rely on quarter-to-quarter comparisons of our operating
results as an indication of future performance. It is possible that in some
future periods our quarterly operating results may fall below the expectations
of public market analysts and investors. In this event, the price of our common
stock is likely to fall.

Our quarterly net loss was approximately $2.9 million for the fiscal quarter
ended October 31, 1999, $2.4 million for the fiscal quarter ended July 31,
1999, $1.5 million for the fiscal quarter ended April 30, 1999 and $0.9 million
for the fiscal quarter ended January 31, 1999. We expect our net loss to
increase over the next several quarters because we plan to continue to incur
significant expenses as

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we expand our sales and marketing resources, including expanding our business
in Europe and Asia, and develop new technologies and products and improve our
technology infrastructure. However, our quarterly operating results may
fluctuate significantly in the future due to a variety of factors. These
factors include the following, which are generally outside of our control:

. competition in the markets for our services;

. the demand for Internet-based marketing infrastructure services and
seasonal trends relating to marketing spending;

. our ability to protect our systems from telecommunications failures,
power loss or equipment or software-related system failures; and

. economic conditions specific to the Internet as well as general
economic and market conditions.

Other factors which may cause our quarterly operating results to fluctuate
significantly which are at least partially under our control include:

. the rate of new customer acquisitions;

. whether revenues related to new customer acquisitions are recognized
currently or deferred over future time periods;

. the timing and effectiveness of our development of new services;

. the timing and effectiveness of potential strategic alliances; and

. changes in our operating expenses.

In addition, our operating expenses are based on our expectations of our
future revenues and some of our operating expenses are relatively fixed in the
short term, including personnel costs, data support expenses and the cost of
licensing necessary information. We may be unable to reduce our expenses
quickly enough to offset any revenue shortfall.

If demand for Internet-based marketing services fails to develop or develops
more slowly than we expect, we may not generate sufficient revenues to achieve
profitability.

Our future success is highly dependent on an increase in the use of the
Internet as a marketing medium. If demand for Internet-based marketing services
fails to develop or develops more slowly than we expect, we may not generate
sufficient revenues to achieve profitability. The market for Internet-based
marketing services is new and rapidly evolving, and it cannot yet be compared
with traditional marketing media to gauge its effectiveness. Companies that
have historically relied on traditional marketing methods may be reluctant or
slow to adopt online marketing. As a result, demand and market acceptance for
Internet-based marketing solutions cannot yet be determined. Many of our
current and potential clients have little or no experience using the Internet
for marketing purposes and may allocate only a limited portion of their
marketing budgets to the Internet. Companies that have invested substantial
resources in traditional methods of marketing may be reluctant to reallocate
those resources to online marketing. In addition, companies that have invested
a significant portion of their marketing budget in online marketing may decide
after a time to return to more traditional methods if they find that online
marketing is a less effective method of promoting their products and services
than traditional marketing methods.

7
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We will continue to dedicate significant resources toward developing new
clients in Europe and Asia; any success in these efforts may prove not to have
been worth the associated expense.

Our current business plan includes expanding into Europe and Asia. To date,
we have limited experience in marketing our services internationally, and we
cannot predict our success in these international markets. In order to expand
overseas, we intend to enter into relationships with foreign businesses, and we
cannot predict whether those relationships will be successful. Our plans to
expand internationally are subject to inherent risks, including:

. the impact of economic fluctuations in economies outside of the United
States;

. greater difficulty in accounts receivable collection and longer
collection periods;

. unexpected changes in regulatory requirements, tariffs and other trade
barriers;

. difficulties and costs of staffing and managing foreign operations due
to distance, as well as language and cultural differences;

. political instability, currency exchange fluctuations and potentially
adverse tax consequences; and

. reduced protection for intellectual property rights outside the United
States.

We cannot predict whether the expansion of our business internationally will be
successful. The results of our efforts may prove not to have been worth the
associated expense and opportunity cost.

Historically, we have depended on a limited number of services for most of our
revenues.

Historically, we have derived most of our revenues from our Web Business
Finder, maps, driving directions and directory services, which represented
approximately 78% of our revenues in the fiscal quarter ended October 31, 1999,
86% of our revenues in fiscal 1999 and 91% of our revenues in fiscal 1998. Our
results of operations would be materially and adversely affected by a reduction
in demand or a change in the pricing structure for these services.

We have relied on our ability to sell existing customers additional services to
generate revenue and the continued growth of our business depends on our
ability to continue to do so in the future.

Much of our past sales growth is the result of selling additional services to
existing clients. Our growth strategy depends on the introduction of new
services that we hope to sell to our existing clients. We may not develop any
of these new services in a cost-effective and timely manner, and we have
insufficient experience with these new service offerings to know whether they
will be well received by our clients. Any new service we introduce that is not
favorably received could damage our relationships with our clients. If our
existing clients decide to maintain their current level of service and not
upgrade to additional services, we will fall short of our projected sales and
would have to cultivate new sales opportunities, which may be expensive and
might not materialize. In fiscal 1999 and the fiscal quarter ended October 31,
1999, AutoTrader.com accounted for approximately 11% and 3%, respectively, of
our revenues.

We may be unable to maintain our current pricing structure because our business
is changing rapidly as are the services that we provide.

Our current business model is to provide marketing infrastructure services to
our business clients. We may not achieve an acceptable level of profitability,
or become profitable at all, if our

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clients' marketing executives do not perceive that the use of our services will
improve the effectiveness of their marketing campaigns or if they are otherwise
unable to generate a significant return on investment from using our products
and services. Internet-based marketing services are relatively new and unproven
and may not achieve widespread customer acceptance. To be successful, we must
adapt to our rapidly changing market by continually enhancing the technologies
used in our services and introducing new technology to address the changing
needs of our clients. Under our current pricing structure, clients pay for our
services through set-up and annual fees. There is a risk that competition with
respect to products and services we provide will eventually result in very low
prices for our products and services. If we are unable to maintain an adequate
pricing structure, we will not generate sufficient revenues to achieve and
maintain profitability.

Our business is dependent on the continuous, reliable and secure operation of
our databases and the related services that we provide, and a system failure
could negatively impact our business.

Our operations are dependent on our ability to maintain our databases,
servers and communications equipment in effective working order and to protect
them from fire, natural disaster, sabotage, power loss, telecommunications
failure, human error or similar events. Although we maintain back-up data at a
second site, a system failure or natural disaster could significantly disrupt
our operations. Any system failure, including a network, software or hardware
failure, that causes an interruption in the performance of our products and
services or a decrease in responsiveness of our services could result in lost
clients, reduced revenue and harm to our reputation. Despite the implementation
of security measures and standard operating procedures, our infrastructure may
also be vulnerable to computer viruses, hackers, human error or similar
problems caused by our employees, clients or Internet users. A party who is
able to circumvent our security measures could misappropriate proprietary
database information or cause interruptions in our operations. As a result, we
may be required to expend significant capital and other resources to help
protect against, or to alleviate problems caused by, these security breaches.
Our insurance may not adequately compensate us for any losses that may occur
due to any failure in our system or interruption in our service. In addition,
the growth of our business may strain the capacity of our computers and
telecommunications systems. If we are unable to maintain or upgrade our
systems, they could fail or suffer a degradation in performance. Any damage,
failure or delay that causes significant interruption in our databases or other
systems would adversely affect our operating results and could cause the price
of our common stock to decline.

Our current business plan depends in significant part on third party
relationships, many of which are short-term or terminable.

We presently rely on our arrangements with strategic partners, including
Inktomi and Netopia, to provide key services, marketing opportunities,
technologies, clients and users. These arrangements can be terminated by our
partners in some circumstances. If our relationships with our strategic
partners were terminated, we would have to adapt our operations or business
plan, which may take time and may interrupt the provision of affected services.
In addition, many companies that we may approach for a strategic relationship
in the future may have conflicting relationships with others. As a result,
these companies may be reluctant to enter into strategic relationships with us.
If we do not establish additional, and maintain existing, strategic
relationships on commercially reasonable terms or if our strategic
relationships do not result in an increase in the number of users of our
services, we may be unable to continue to offer existing products or to develop
new products and we may not experience a significant portion of the anticipated
growth in our clients and the number of end-users of our services.

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As a result, we may not generate sufficient revenues to achieve profitability,
and the price of our common stock is likely to fall. In addition, strategic
relationships may be difficult to implement and may not provide the anticipated
benefits.

We are dependent on a limited number of third parties for a significant portion
of our geographic data.

Our products and services rely on the availability and accuracy of geographic
data. We have licensed a significant portion of our geographic data from a
limited number of sources through non-exclusive, short-term contractual
arrangements. If any of these third parties were to merge or be acquired, the
number of sources providing this geographic data would be further reduced.
Given the short terms of our geographic data licenses, we will have to
renegotiate our contracts in the foreseeable future which may result in
contractual terms that are not as favorable to us as our existing data
licenses. If we cannot maintain these data licenses or any other third-party
license arrangement on commercially reasonable terms, the accuracy of our
services may suffer.

If we are unable to generate fast and accurate responses to queries, the
marketability of our services will be reduced.

If we are unable to generate responses quickly or if the responses we
generate are not accurate, the marketability of our services will be reduced
and we may experience a decline in the number of users of our services. The
accuracy of our services is substantially dependent on the accuracy of data
that we license from third parties. We plan to update our geographic databases
periodically. However, in view of the complexity of updating multiple databases
and revising software, and the need to obtain geographic data for address
information from third parties, we may not be able to perform these updates as
planned. This could harm our business, financial condition and results of
operations.

We have recently experienced and currently anticipate rapid growth in our
business, and any inability to manage this growth could harm our business.

In order to execute our business plan, we must grow significantly. The number
of our employees grew from 49 as of October 31, 1998 to 131 as of January 10,
2000. We expect that the number of our employees will continue to increase for
the foreseeable future, in particular with respect to persons engaged in
product development, professional services and sales activities. This growth
has placed, and our anticipated future growth combined with the requirements we
will face as a public company will continue to place, a significant strain on
our management systems and resources. We expect that we will need to continue
to improve our financial and managerial controls and reporting systems and
procedures. We will also need to continue to expand and maintain close
coordination among our technical, finance, sales and marketing groups.

We will not be able to execute our business plan if we cannot increase our
direct and indirect sales channels.

We will need to expand substantially our direct and indirect sales
operations, both domestically and internationally, in order to increase market
awareness and sales of our products. Our products and services require a
sophisticated sales effort targeted at several people within our prospective
clients' organizations. We have recently expanded our direct sales force and
plan to hire additional sales personnel. Competition for qualified sales
personnel is intense, and we might not be able to hire the kind and number of
sales personnel we are targeting. In addition, we believe that our future
success is dependent upon establishing and maintaining productive relationships
with a variety of distribution

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partners, resellers, systems integrators and joint marketing partners. We
cannot be sure that we will be successful in signing up desired partners or
that our partners will devote adequate resources or have the technical and
other sales capabilities to sell our products.

Similarly, the complexity of our products and the difficulty of installing
them require highly trained customer service and support personnel. We
currently have a small customer service and support organization, and we will
need to increase our staff to support new services, new customers and the
expanding needs of existing customers. Competition for customer service and
support personnel is intense in our industry due to the limited number of
people available with the necessary technical skills and understanding of the
Internet.

Acquisitions or strategic investments may disrupt or otherwise have a negative
impact on our business.

We may acquire or make investments in complementary businesses, technologies,
services or products, or enter into strategic partnerships with parties who can
provide access to those assets, if appropriate opportunities arise. From time
to time we have had discussions and negotiations with companies regarding our
acquiring, investing in or partnering with their businesses, products, services
or technologies, and we regularly engage in these discussions and negotiations
in the ordinary course of our business. Some of those discussions also
contemplate the other party making an investment in our company. We may not
identify suitable acquisition, investment or strategic partnership candidates,
or if we do identify suitable candidates, we may not complete those
transactions on commercially acceptable terms or at all. If we acquire another
company, we could have difficulty in assimilating that company's personnel,
operations, technology and software. In addition, the key personnel of the
acquired company may decide not to work for us. If we make other types of
acquisitions, we could have difficulty in integrating the acquired products,
services or technologies into our operations. These difficulties could disrupt
our ongoing business, distract our management and employees and increase our
expenses. Furthermore, we may incur indebtedness or issue equity securities to
pay for any future acquisitions. The issuance of equity securities would dilute
the ownership interests of the holders of our common stock. We are currently in
active discussions with several potential partners in Asia, and although no
formal agreement has yet been reached with these parties, we plan to offer our
services to Japan in the first half of calendar year 2000. If we are unable to
reach agreement with our proposed partners in Asia on terms satisfactory to us,
this may delay our entry into the Japanese market and this could limit or
otherwise adversely affect our ability to sell our services in this market.

We face competition and may face future competition from companies with
different business strategies which could cause us to lower our prices or to
lose a significant portion of our market share.

We may be unable to compete successfully with current or future competitors.
We face competition from many companies, both traditional and online. Increased
competition could result in price reductions for our services, reduced gross
margins and loss of our market share. In fiscal 1998, we lost our then largest
client, Yahoo!, due to price competition with a competitor that continues to
provide map and driving direction services to Yahoo!.

Many of our existing competitors, as well as potential future competitors,
have longer operating histories, greater name recognition, larger customer
bases and significantly greater financial, technical and marketing resources
than our company. These advantages may allow them to respond more quickly and
effectively to new or emerging technologies and changes in customer
requirements. It may also allow them to engage in more extensive research and
development, undertake farther-reaching marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees and strategic partners. One or more of these companies could adopt a
different

11
<PAGE>

business strategy for achieving profitability which could allow them to charge
fees that are lower than ours in order to attract clients. In addition, current
and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our current and prospective
clients.

Online marketing is a rapidly developing industry, and new types of products
and services may emerge that are more attractive to consumers and marketers
than the types of services we offer. As a result, it is possible that new
competitors may emerge and rapidly acquire significant market share. See
"Business--Competition."

Without the continued growth in use of the Internet and wireless devices, we
may not experience a significant portion of the growth currently anticipated.

Our future success is substantially dependent upon continued growth and use
of the Internet and wireless devices such as cellular telephones. Rapid growth
in the use of and interest in the Internet and wireless devices is a relatively
recent phenomenon and may not continue to grow at their current rates. Internet
usage may be inhibited for many reasons, including the following:

. the inability of Web sites to provide security and authentication of
confidential information contained in transmissions over the Internet;
and

. the inability of Web sites to respond to privacy concerns of potential
users, including concerns related to the placement by Web sites of
information, so-called cookies, on a user's hard drive without the
user's knowledge or consent.

Even if the Internet and wireless services continue to experience significant
growth in the number of users and level of use, the Internet and wireless
services infrastructures may not be able to support the demands placed upon
them by this growth. Our success and the viability of the Internet and wireless
services as information media and commercial marketplaces will depend in large
part upon the development of robust telecommunications infrastructure for
providing Internet access and carrying Internet and wireless traffic. If the
use of the Internet and wireless services do not continue to grow, if the
necessary telecommunications infrastructure or complementary products are not
developed or do not effectively support growth that may occur or if the
Internet and wireless services do not become viable information media and
commercial marketplaces, we may not experience a significant portion of the
growth currently anticipated and the price of our common stock is likely to
fall.

We face a competitive labor market for highly skilled employees which we must
attract, retain and motivate in order to execute our growth plan.

Our future success depends on our ability to attract, train, motivate and
retain highly skilled employees. Competition for employees among Internet and
software companies is intense, particularly in the Silicon Valley area in which
our headquarters are located. Market wages for employees include expectations
for significant stock-based compensation. We may be unable to retain our key
employees or attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. The inability to attract
additional qualified personnel could disrupt the implementation of our growth
strategy upon which the success of our business depends.

12
<PAGE>

We are highly dependent on the acceptance and effectiveness of the Internet as
a medium for consumer transactions and on the increased use of the Internet by
consumers to locate our clients' products.

The future success of a number of our products and services is dependent in
large part on an increase in the use of the Internet for business transactions
with consumers and on the increased use of the Internet by consumers to locate
our clients' products. The electronic commerce market is new and rapidly
evolving and the extent of consumer acceptance of the Internet cannot yet be
determined. If a sufficiently broad base of consumers do not accept the use of
the Internet for transacting business or do not use the Internet to locate our
clients' products, our business, financial condition and results of operations
could be materially and adversely affected.

If we fail to protect our intellectual property rights or face a claim of
intellectual property infringement by a third-party, we could lose our
intellectual property rights or be liable for significant damages.

Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our
proprietary rights. Our employees are generally required to execute
confidentiality and assignment agreements which transfer any rights they may
have in copyrightable works or patentable technologies to us. In addition,
prior to entering into discussions with strategic partners, we generally
require that these parties enter into a non-disclosure agreement. If these
discussions result in a license or other business relationship, we also
generally require that the agreement setting forth the parties' respective
rights and obligations include provisions for the protection of our
intellectual property rights. Our failure to enter into these agreements when
appropriate or our inability to enforce our rights under one or more of these
agreements could jeopardize our ability to protect our intellectual property.
This could materially and adversely affect our business.

We have applied for registration of a number of service marks and trademarks,
including "Vicinity," "Business Finder" and "MapBlast!," in the United States
and in other countries, and will seek to register additional service marks and
trademarks, as appropriate. We may be unsuccessful in obtaining the service
marks and trademarks for which we have applied. We may not be granted any
patent with respect to our technology, and any patent which is granted may be
challenged or invalidated. We may not develop proprietary products or
technologies that are patentable, and any issued patent may not provide us with
any competitive advantages or withstand challenges by third parties. In
addition, the patents of others may adversely affect our ability to conduct our
business. Despite our efforts to protect our proprietary rights, unauthorized
parties may copy aspects of our products or services or obtain and use
information that we regard as proprietary. The laws of some foreign countries
do not protect proprietary rights to as great an extent as do the laws of the
United States, and we do not currently have any patents or patent applications
pending in any foreign country. Our means of protecting our proprietary rights
may not be adequate, and our competitors may independently develop similar
technology or duplicate our products or design around patents issued to us or
our other intellectual property rights. Our failure to protect our proprietary
rights adequately or our competitors' successful duplication of our technology
could harm our operating results and cause the price of our common stock to
decline.

13
<PAGE>

Litigation over intellectual property rights could disrupt or otherwise have a
negative impact on our business.

There has been frequent litigation in the computer industry regarding
intellectual property rights. We have in the past been subject to claims
regarding the alleged intellectual property rights of third parties. In fiscal
1999, we entered into a settlement agreement and agreed to pay $440,500 for a
patent license with respect to an intellectual property rights claim. Third
parties may make additional claims of infringement by us with respect to
current or future products, trademarks or other proprietary rights. These
claims could be time-consuming, result in costly litigation, divert our
management's attention, cause product or service release delays, require us to
redesign our products or services or require us to enter into costly royalty or
licensing agreements.

Privacy concerns may adversely affect our ability to implement our Internet
solutions.

Web sites and Internet ad servers typically place a small file commonly known
as a "cookie" on a user's hard drive, generally without the user's knowledge or
consent. In the future, we may introduce products and services that are
dependent on the use of cookies to collect, sort and analyze information about
Internet users. Most currently available Internet browsers allow users to
modify their browser settings to prevent cookies from being stored on their
hard drive or to delete cookies at any time. In addition, some Internet
commentators and privacy advocates have suggested limiting or eliminating the
use of cookies. The effectiveness of future services could be limited by a
significant reduction or limitation in the use of cookies. In addition, privacy
concerns may cause some Web users to be less likely to visit Web sites that use
cookies. If enough Web users choose not to visit sites that use cookies, our
ability to sell our future products and services that are dependent on the use
of cookies would be adversely affected and could require us to alter or adjust
our business plan.

Legislation or regulations may be adopted that could affect our ability to
generate or use information for profiles and may hinder our ability to conduct
business.

The legal and regulatory environment governing the Internet and the use of
information about Internet users is constantly evolving. United States
legislators in the past have introduced a number of bills aimed at regulating
the collection and use of personal data from Internet users and additional
similar bills may be considered during any congressional session. Although we
believe no current legislation has had a material adverse effect on our
business, it is possible that a bill may be enacted into law that negatively
affects our ability to collect and use data about Internet users or that
otherwise affects our business. The European Union has recently adopted a
directive addressing data privacy that may result in limitations on the
collection and use of specific personal information regarding Internet users.
In addition, Germany has imposed its own laws protecting data that can become
personally identifiable through subsequent processing. Other countries may also
enact limitations on the use of personal data.

To date, these regulations have not materially restricted the use of our
products. However, legislation or regulations may in the future be adopted
which may limit our ability to target advertising or collect and use
information in one or more countries. Further, a number of laws and regulations
have been and may be adopted covering issues such as pricing, acceptable
content, taxation and quality of products and services on the Internet. This
legislation could dampen the growth in use of the Internet generally and
decrease the acceptance of the Internet as a communications and commercial
medium. In addition, due to the global nature of the Internet, it is possible
that multiple federal, state or foreign jurisdictions might inconsistently
regulate our activities or the activities of ad networks or Web sites.

14
<PAGE>

Risks Related to this Offering

Our management will have broad discretion in using the proceeds from this
offering and therefore investors will be relying on the judgment of our
management to invest those funds effectively.

We intend to use the net proceeds of this offering to expand our sales and
marketing resources, including expanding our business in Europe and Asia, to
develop new technologies and products and improve our technology infrastructure
and for working capital and other general corporate purposes. The amounts and
timing of these expenditures will vary significantly depending upon a number of
factors, including the amount of cash generated or consumed by our operations,
the progress of our development activities and the market response to the
introduction of any new services. In addition, we may use a portion of the net
proceeds from this offering to acquire or invest in businesses, products,
services or technologies complementary to our current business, through
mergers, acquisitions, joint ventures or otherwise. We are currently in active
discussions with several partners in Asia, and although no formal agreement has
yet been reached with these parties, we plan to offer our services in Japan in
the first half of calendar year 2000. Our management will retain broad
discretion with respect to the expenditure of proceeds. Investors will be
relying on the judgment of our management regarding the application of the
proceeds of this offering.

We may be unable to raise additional financing.

We may need to raise additional funds in the future in order to implement our
business plan, to fund more aggressive marketing programs or to acquire
complementary businesses, technologies or services. Any required additional
financing may be unavailable on terms favorable to us, or at all. If we raise
additional funds by issuing equity securities, you may experience significant
dilution of your ownership interest and these securities may have rights senior
to those of the holders of our common stock. If additional financing is not
available when required or is not available on acceptable terms, we may be
unable to fund our expansion, develop or enhance our products and services,
take advantage of business opportunities or respond to competitive pressures.

Market prices of emerging Internet companies have been highly volatile, and the
market for our stock may exhibit volatility as well.

The financial markets have experienced significant price and volume
fluctuations, and the market prices of technology companies, particularly
Internet-related companies, have been and continue to be extremely volatile.
Volatility in the price of our common stock may be caused by factors outside of
our control and may be unrelated or disproportionate to our operating results.
In the past, following periods of volatility in the market price of a public
company's securities, securities class action litigation has often been
instituted against that company. Securities class action litigation could
result in substantial costs and a diversion of our management's attention and
resources.

We have negative net book value for accounting purposes, and new investors will
suffer immediate and substantial dilution in the tangible net book value of
their shares.

The purchase price of the common stock offered by this prospectus will be
substantially higher than the tangible book value of our outstanding common
stock. Any shares you purchase in this offering will have a post-closing net
tangible book value of $12.82 per share less than the initial public offering
price of $17.00 per share. Investors who purchase common stock in this offering
will therefore experience immediate and significant dilution in the tangible
net book value of their investment. For additional information regarding
dilution to investors in our common stock, please see "Dilution."

15
<PAGE>

The large number of shares eligible for public sale after this offering could
cause our stock price to decline.

The market price of our common stock could decline as a result of sales of a
large number of shares after this offering or the perception that sales could
occur. The large number of shares eligible for sale might make it more
difficult for us to sell common stock in the future at a time and at a price
that we deem appropriate. After this offering, we will have an aggregate of
26,953,007 shares outstanding. Of the outstanding shares, the 7,000,000 shares
sold in this offering will be freely tradable, other than shares purchased by
our affiliates. The remaining shares may be sold only pursuant to a
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act. After the closing of this
offering, holders of 16,682,100 shares of common stock will be entitled to
registration rights with respect to the registration of their shares under the
Securities Act. For additional information regarding these registration rights,
please see "Description of Capital Stock--Registration Rights" and "Shares
Eligible for Future Sale." Each of our directors and executive officers,
several of our current stockholders and, to the extent that it purchases shares
in this offering, Hikari Tsushin, Inc. has agreed not to offer, sell or agree
to sell, directly or indirectly, or otherwise dispose of any shares without the
prior written consent of J.P. Morgan Securities, Inc. for a period of 180 days
or, in the case of Hikari Tsushin, 270 days from the date of this prospectus.
For additional information regarding possible future sales of our securities,
please see "Shares Eligible for Future Sale" and "Underwriting."

We do not plan to pay dividends in the foreseeable future.

We do not anticipate paying cash dividends to the holders of our common stock
in the foreseeable future. Accordingly, investors must rely on sales of their
common stock after price appreciation, which may never occur, as the only way
to realize on their investment. Investors seeking cash dividends should not
purchase our common stock.

A third party's ability to acquire us might be more difficult because of anti-
takeover provisions in our certificate of incorporation and bylaws.

We are authorized to issue five million shares of undesignated preferred
stock. Our Board of Directors has the authority to issue the preferred stock in
one or more series and to fix the price, rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting a series or the designation
of any series, without any further vote or action by our stockholders. The
issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of delaying, deferring or preventing a change in control of our
company without further action by our stockholders and may adversely affect the
market price of our common stock and the voting and other rights of our
stockholders. The issuance of preferred stock with voting and conversion rights
may adversely affect the voting power of the holders of our common stock,
including the loss of voting control to others. We have no current plans to
issue any shares of preferred stock.

Provisions of our Certificate of Incorporation and Bylaws eliminate the right
of stockholders to act by written consent without a meeting, eliminate the
right of stockholders to call a special meeting of stockholders, specify
procedures for nominating directors and submitting proposals for consideration
at stockholder meetings and provide for a staggered Board of Directors, so that
no more than approximately one-third of our directors could be replaced each
year and it would take three successive annual meetings to replace all
directors. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of our Board of Directors and in
the policies

16
<PAGE>

formulated by our Board of Directors and to discourage some transactions which
may involve an actual or threatened change of control of our company. These
provisions are designed to reduce the vulnerability of our company to an
unsolicited acquisition proposal and, accordingly, could discourage potential
acquisition proposals and delay or prevent a change in control of our company.
These provisions are also intended to discourage tactics that may be used in
proxy fights but could, however, have the effect of discouraging others from
making tender offers for our common stock and, consequently, may also inhibit
fluctuations in the market price of our common stock that could result from
actual or rumored takeover attempts. These provisions may also have the effect
of preventing changes in the management of our company.

Many corporate actions will be controlled by officers, directors and affiliated
entities regardless of the opposition of other investors or the desire of other
investors to pursue an alternative course of action.

We anticipate that the executive officers, directors and entities affiliated
with them will, in the aggregate, beneficially own approximately 40% of our
outstanding common stock following the completion of this offering. These
stockholders, if acting together, would be able to significantly influence all
matters requiring approval by our stockholders, including the election of
directors and the approval of mergers or other business combination
transactions. See "Principal Stockholders."

17
<PAGE>

Forward-looking Statements

This prospectus contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "may," "will," "expect," "intend," "anticipate," "believe,"
"estimate" and "continue" or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
condition or state other forward-looking information. We believe that it is
important to communicate our future expectations to our investors. However,
there may be events in the future that we are not able to predict or control.
The factors listed in the sections captioned "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in the "Risk Factors" section and the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section and
elsewhere in this prospectus could have a material adverse effect on our
business, operating results and financial condition.

18
<PAGE>

Use of Proceeds

The net proceeds to us from the sale of the shares offered by this
prospectus, after deducting underwriting discounts and the estimated offering
expenses, are estimated to be approximately $109.5 million ($126.1 million if
the underwriters' over-allotment option is exercised in full), at the initial
public offering price of $17.00 per share. We currently estimate that we will
use the net proceeds of this offering as follows:

. approximately $15-20 million to expand our sales and marketing
resources, including expanding our business in Europe and Asia;

. approximately $15-20 million to develop new technologies and products
and improve our technology infrastructure; and

. the balance of the proceeds of this offering for working capital and
other general corporate purposes.

In addition, we may use a portion of the net proceeds from this offering to
acquire or invest in businesses, products, services or technologies
complementary to our current business through mergers, acquisitions, joint
ventures or otherwise.

In order to expand our sales and marketing resources, we intend to hire and
train significant additional sales and marketing personnel in the United
States, Europe and Japan. We may also make strategic investments or enter into
joint ventures or strategic partnerships in Europe and Japan. In addition, we
plan to increase spending on advertising, marketing and public relations
projects in order to increase awareness of our company and services and to
attract new clients and partners. In order to develop new technologies and
products, we intend to hire and train additional engineering personnel, to
develop and license additional software and technology and to purchase or
license additional information content consistent with our business strategy.
In order to develop our technology infrastructure, we intend to develop or
license new software applications, to purchase additional computer hardware and
to open new data centers to host our clients' data.

We have not yet finalized the amount of net proceeds to be used specifically
for each of the foregoing purposes. Accordingly, our management will have
significant flexibility in applying the net proceeds of this offering. Pending
any use, as described above, we intend to invest the net proceeds in high
quality, interest-bearing securities. See "Risk Factors--Our management will
have broad discretion in using the proceeds from this offering and therefore
investors will be relying on the judgment of our management to invest those
funds effectively."

Dividend Policy

We have not declared or paid any cash dividends on our capital stock since
inception and do not expect to pay any cash dividends for the foreseeable
future. We currently intend to retain future earnings, if any, to finance the
expansion of our business. You should not purchase our common stock with the
expectation of receiving cash dividends.

19
<PAGE>

Capitalization

The following table sets forth, as of October 31, 1999, the cash and cash
equivalents and the capitalization of our company on an actual, pro forma and
pro forma as adjusted basis:

The pro forma data set forth below give effect to the following:

. the conversion of all outstanding shares of our redeemable convertible
preferred stock into 12,163,373 shares of common stock upon the
closing of this offering; and

. the issuance of 952,381 shares of common stock upon the conversion of
shares of Series E Preferred Stock issued to Oak Investment Partners
VIII, L.P. and Oak VIII Affiliates Fund, L.P. in November 1999 upon
the exercise of warrants with an exercise price of $2.10 per share.

The pro forma as adjusted data set forth below are further adjusted to give
effect to the sale by our company of the shares of common stock offered hereby
and the application of the proceeds from this offering at the initial public
offering price of $17.00 per share and after deducting underwriting discounts
and the estimated offering expenses payable by us. This information should be
read in conjunction with our financial statements and the notes relating to our
financial statements appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
--------------------------------
As of October 31, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
In thousands, except per share data -------- --------- -----------
<S> <C> <C> <C>
Cash and cash equivalents...................... $ 6,663 $ 8,663 $118,183
======== ======== ========
Capital lease obligations, excluding current
portion....................................... $ 524 $ 524 $ 524
Redeemable convertible preferred stock; $0.001
par value; 12,520 shares authorized; 11,567
shares issued and outstanding actual; no
shares issued and outstanding pro forma or pro
forma as adjusted............................. 23,655 -- --
Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 5,000
shares authorized; no shares issued and
outstanding actual, pro forma or pro forma
as adjusted................................. -- -- --
Common stock, $0.001 par value, 22,000
shares authorized actual and pro forma;
100,000 shares authorized pro forma as
adjusted; 6,120 shares issued and
outstanding actual; 19,235 shares issued
and outstanding pro forma; and 26,235
shares issued and outstanding pro forma as
adjusted.................................... 6 19 26
Additional paid-in capital................... (432) 26,073 135,586
Deferred stock-based compensation............ (1,897) (1,897) (1,897)
Notes receivable from employees upon
purchase of stock........................... (213) (213) (213)
Accumulated deficit.......................... (18,003) (18,003) (18,003)
-------- -------- --------
Total stockholders' equity (deficit)...... (19,676) 5,979 115,499
-------- -------- --------
Total capitalization.................... $ 4,503 $ 6,503 $116,023
======== ======== ========
</TABLE>

20
<PAGE>

Dilution

Our pro forma net tangible book value as of October 31, 1999 was $6.0 million
or $0.29 per share of common stock. Pro forma net tangible book value per share
is equal to the amount of our total tangible assets (total assets less
intangible assets) less total liabilities, divided by the pro forma number of
shares of common stock outstanding as of October 31, 1999. Assuming the sale by
us of the shares offered by this prospectus at the initial public offering
price of $17.00 per share and after deducting underwriting discounts and the
estimated offering expenses payable by us, our as adjusted pro forma net
tangible book value as of October 31, 1999 would have been $115.5 million, or
$4.18 per share of common stock. This represents an immediate increase in pro
forma net tangible book value of $3.89 per share to existing stockholders and
an immediate dilution in pro forma net tangible book value of $12.82 per share
to new investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share........................... $17.00
Pro forma net tangible book value per share as of October 31,
1999........................................................... $0.29
Pro forma increase in net tangible book value attributable to
new investors.................................................. 3.89
-----
Pro forma net tangible book value per share after this offering... 4.18
------
Pro forma dilution per share to new investors..................... $12.82
======
</TABLE>

The following table summarizes, on a pro forma basis as of October 31, 1999,
the total 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 and by new investors purchasing shares in this offering:

<TABLE>
<CAPTION>
-----------------------------------------------------
Shares Purchased Total Consideration
------------------ -------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 20,661,575 74.7% $ 25,451,805 17.6% $ 1.23
New investors............ 7,000,000 25.3 119,000,000 82.4 $17.00
---------- ---- ------------ ----
Total.................. 27,661,575 100% $144,451,805 100%
========== ==== ============ ====
</TABLE>

The foregoing tables and calculations give effect to the following:

. the issuance of 1,426,250 shares of common stock issuable upon exercise
of stock options outstanding as of October 31, 1999 under our 1995 Stock
Option Plan and 1996 Incentive Stock Option Plan with a weighted average
exercise price of $1.03 per share. Please see "Management--Employee
Benefit Plans" and "Description of Capital Stock."

21
<PAGE>

Selected Financial Data

The following selected financial data should be read in conjunction with the
financial statements and the notes to our financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statement of operations
data for the fiscal years ended July 31, 1997, 1998 and 1999, and the balance
sheet data as of July 31, 1998 and 1999, are derived from our audited financial
statements included elsewhere in this prospectus. The statement of operations
data for the period ended July 31, 1996 and the balance sheet data at July 31,
1996 and 1997 are derived from audited financial statements not included in
this prospectus. The statement of operations data for each of the three-month
periods ended October 31, 1998 and 1999 and the balance sheet data as of
October 31, 1999 are derived from our unaudited interim financial statements
included elsewhere in this prospectus. In management's opinion, the unaudited
financial statements have been prepared on substantially the same basis as the
audited financial statements and include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for these periods. Historical results are not indicative of the
results to be expected in the future.

<TABLE>
<CAPTION>
------------------------------------------------------------------
October 15,
1995 Three Months Ended
(inception) Year Ended July 31, October 31,
to July 31, ------------------------------- --------------------
In thousands, except per 1996 1997 1998 1999 1998 1999
share data ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
License and hosting
fees.................. $ 20 $ 1,419 $ 4,386 $ 5,657 $ 1,244 $ 2,166
Service and transaction
fees.................. -- -- 424 767 248 365
------ --------- --------- --------- --------- ---------
Total revenues........ 20 1,419 4,810 6,424 1,492 2,531
Cost of revenues........ 9 1,976 2,847 3,949 874 1,611
------ --------- --------- --------- --------- ---------
Gross profit (loss)..... 11 (557) 1,963 2,475 618 920
Operating expenses:
Product development.... 285 1,703 1,551 1,748 339 681
Sales and marketing.... 298 2,959 1,676 3,588 568 2,203
General and
administrative........ 297 1,128 1,205 1,995 362 766
Other.................. -- -- -- 441 -- --
Stock-based
compensation.......... -- -- -- 167 -- 197
------ --------- --------- --------- --------- ---------
Total operating
expenses............. 880 5,790 4,432 7,939 1,269 3,847
------ --------- --------- --------- --------- ---------
Loss from operations.... (869) (6,347) (2,469) (5,464) (651) (2,927)
Other expense (income),
net.................... (5) (109) 12 51 18 (55)
------ --------- --------- --------- --------- ---------
Net loss................ (864) (6,238) (2,481) (5,515) (669) (2,872)
Net loss applicable to
common stockholders.... (898) (6,621) (2,999) (6,553) (798) (3,374)
Basic and diluted net
loss per share........ $(0.20) $ (1.61) $ (1.00) $ (1.67) $ (0.21) $ (0.71)
Weighted average shares
outstanding used in
basic and diluted net
loss per share
calculations........... 4,458 4,102 2,986 3,913 3,813 4,745
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------
As of July 31, As of
------------------------------------------ October 31,
1996 1997 1998 1999 1999
In thousands --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 1,015 $ 912 $ 264 $ 9,060 $ 6,663
Working capital......... 931 (106) (2,381) 4,220 2,521
Total assets............ 1,509 1,623 1,821 13,203 11,415
Deferred revenue........ 114 885 2,477 4,955 4,754
Capital lease
obligations, excluding
current portion........ -- -- -- 298 524
Redeemable convertible
preferred stock and
warrants............... 2,094 7,454 7,972 21,403 23,655
Total stockholders'
deficit................ $ (890) $ (7,512) $ (10,287) $ (16,569) $ (19,676)
</TABLE>

23
<PAGE>

Management's Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations
of our company should be read in conjunction with the financial statements and
the notes to those statements included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Please see "Risk Factors."

Overview

We are a leading provider of Internet-based marketing infrastructure
services. Our clients use our services to direct consumers searching for a
specific product or service to the nearest brick-and-mortar store that carries
that product or service. Our company was formed in October 1995, and our
initial revenues were derived from providing maps, driving directions and
directory services to regional telephone companies and large portal companies.
In fiscal 1997, we restructured our company by cutting staff and expenses,
hiring a new chief executive officer and refocusing our strategy on our
Business Finder service.

In fiscal 1998, we grew our clients from 102 companies to 193 companies as a
result of the continued concentration of our efforts on Business Finder. We
continued to increase our revenues in fiscal 1998 despite the loss of our
biggest customer at the time, Yahoo!. In fiscal 1999, we recruited additional
key members of our management team and expanded our product offerings to
include Telephone Business Finder, SiteMaker and Print Maps. Historically, we
have generated substantially all of our revenues from our Web Business Finder,
maps, driving directions and directory services.

We have not achieved profitability on a quarterly or annual basis and expect
to continue to incur net losses for the foreseeable future. We anticipate
incurring significant sales and marketing, product development and
administrative expenses as we continue to expand our product offerings and
attempt to build our customer base.

Revenue Recognition

We primarily derive revenue from license and hosting fees. Revenues are
recognized in accordance with Statement of Position (SOP) No. 97-2, Software
Revenue Recognition. As such, these revenues are recognized ratably over the
life of the contract, which typically has one-year, non-refundable terms.
Service and transaction fees consist of revenue generated from project related
professional services and to a lesser degree from advertising, sponsorship and
e-commerce transactions. These revenues are recognized as the services are
performed. We have no barter agreements, and no revenues have been derived from
barter transactions to date.

Deferred revenue consists of customer payments received and accounts
receivable recorded in advance of recognizing revenue for license and hosting
revenues.

Stock-based Compensation Expense

As of October 31, 1999, we had recorded deferred stock-based compensation
expense aggregating $2.3 million for the difference at the date of grant
between the exercise price and the fair value of the common stock underlying
stock options granted in fiscal 1999 and the first quarter of fiscal 2000. Of
this amount, we recognized $0.2 million in fiscal 1999 and $0.2 million in the
fiscal quarter ended October 31, 1999. In addition, we expect to recognize $0.8
million in the remainder of fiscal 2000, $0.6 million in fiscal 2001 and
$0.5 million in later years. We also presently expect to recognize additional
deferred stock-based compensation related to grants subsequent to October 31,
1999 of approximately $0.6 million to be recognized over four years.

24
<PAGE>

Results of Operations

Comparison of three months ended October 31, 1999 to three months ended October
31, 1998

Revenues. In the three months ended October 31, 1999, we had $2.5 million in
total revenues, compared to $1.5 million for the three months ended October 31,
1998, representing an increase of $1.0 million, or 70%. Revenues associated
with license and hosting fees were $2.2 million in the three months ended
October 31, 1999, compared to $1.2 million in the three months ended October
31, 1998, representing an increase of $1.0 million, or 74%. Our service and
transaction fees were $0.4 million in the three months ended October 31, 1999.
The increase in license and hosting fees revenues was primarily attributable to
growth in our customer base due to increased market acceptance in our targeted
markets.

Deferred revenues as of October 31, 1999 were $4.8 million, compared to $2.7
million as of October 31, 1998, representing an increase of $2.1 million, or
74%.

Cost of Revenues. These costs include salaries and benefits of our operations
personnel, the cost of acquiring data and content, the leasing and depreciation
costs of our computer hosting equipment and Internet connection and data center
charges. Cost of revenues was $1.6 million for the three months ended October
31, 1999, compared to $0.9 million for the three months ended October 31, 1998,
representing an increase of $0.7 million, or 84%. This increase was due to
increases in headcount to support our business growth, the expansion of our
data centers with related increases in equipment costs and additions to our set
of content providers.

Product Development. This expense consists primarily of salaries and
benefits, consulting expenses and equipment costs. To date, we have expensed
all product development costs as incurred. Product development expense was $0.7
million for the three months ended October 31, 1999, compared to $0.3 million
for the three months ended October 31, 1998, representing an increase of $0.4
million, or 100%. This increase was primarily attributable to increases in
personnel and personnel-related costs due to our expanded product offerings. We
expect our product development expense to increase, albeit at a slower rate
than that experienced during the latter half of fiscal 1999, as we continue to
add members to our product development teams.

Sales and Marketing. This expense consists primarily of salaries,
commissions, promotions costs and advertising and travel-related expenses.
Sales and marketing expense was $2.2 million for the three months ended October
31, 1999, compared to $0.6 million for the three months ended October 31, 1998,
representing an increase of $1.6 million, or 288%. This increase was primarily
attributable to increases in personnel, personnel-related costs, promotion and
advertising to support our expanded sales and marketing efforts. We expect our
sales and marketing expense to continue to increase as a result of the
aggressive expansion of our sales and marketing efforts both domestically and
internationally.

General and Administrative. This expense consists primarily of salaries and
related costs of our executive, administrative, finance and human resources
personnel as well as professional services fees. General and administrative
expense was $0.8 million for the three months ended October 31, 1999, compared
to $0.4 million for the three months ended October 31, 1998, representing an
increase of $0.4 million, or 112%. This increase was primarily attributable to
an increase in personnel and personnel-related costs to support and grow our
business including developing our human resources organization and contracting
with recruiters to support our aggressive hiring plans. We expect general

25
<PAGE>

and administrative expenses to grow as additional personnel are hired and
additional expenses are incurred in connection with the growth of our business
and our operation as a public company.

Stock-Based Compensation. Stock-based compensation expense was $0.2 million
for the three months ended October 31, 1999. There was no stock-based
compensation expense in the three months ended October 31, 1998.

Comparison of fiscal 1999 to fiscal 1998

Revenues. In fiscal 1999, we had $6.4 million in total revenues, compared to
$4.8 million for fiscal 1998, representing an increase of $1.6 million, or 34%.
Revenues associated with license and hosting fees were $5.7 million in fiscal
1999, compared to $4.4 million in fiscal 1998, representing an increase of $1.3
million, or 29%. Our service and transaction fees were $0.8 million in fiscal
1999, compared to $0.4 million in fiscal 1998, representing an increase of $0.4
million, or 81%. These increases were primarily attributable to growth in our
customer base due to increased market acceptance in our targeted markets and
the need for customized development work associated with that customer growth.
We grew our clients from 193 companies as of August 1, 1998 to 237 companies as
of July 31, 1999.

Deferred revenues as of July 31, 1999 were $5.0 million, compared to $2.5
million as of July 31, 1998, representing an increase of $2.5 million, or 100%.

Cost of Revenues. Cost of revenues was $3.9 million for fiscal 1999, compared
to $2.8 million for fiscal 1998, representing an increase of $1.1 million, or
39%. This increase was due to increases in each of the elements described above
to support our revenue growth.

Product Development. Product development expense was $1.7 million for fiscal
1999, compared to $1.6 million for fiscal 1998, representing an increase of
$0.1 million, or 13%. This increase was primarily attributable to increases in
personnel and personnel-related costs due to our expanded product offerings.

Sales and Marketing. Sales and marketing expense was $3.6 million for fiscal
1999, compared to $1.7 million for fiscal 1998, representing an increase of
$1.9 million, or 114%. This increase was primarily attributable to increases in
personnel and personnel-related costs to support our expanded sales and
marketing efforts.

General and Administrative. General and administrative expense was $2.0
million for fiscal 1999, compared to $1.2 million for fiscal 1998, representing
an increase of $0.8 million, or 66%. This increase was primarily attributable
to an increase in personnel and personnel-related costs to support and grow our
business.

Other. This expense was $0.4 million for fiscal 1999 representing a charge to
settle a patent infringement claim and obtain a perpetual license. There was no
similar expense for fiscal 1998.

Stock-Based Compensation. Stock-based compensation expense was $0.2 million
for fiscal 1999. There was no stock-based compensation expense in fiscal 1998.

Comparison of fiscal 1998 to fiscal 1997

Revenues. In fiscal 1998, we had $4.8 million in total revenues, compared to
$1.4 million for fiscal 1997, representing an increase of $3.4 million, or
239%. Revenues associated with license and hosting fees were $4.4 million in
fiscal 1998, compared to $1.4 million in fiscal 1997, representing an

26
<PAGE>

increase of $3.0 million, or 209%. Our service and transaction fees were $0.4
million in fiscal 1998. We had no service and transaction fees in fiscal 1997.
The increase in service and transaction fees was primarily attributable to the
change in our business strategy from maps, driving directions and directory
services to Internet-based marketing infrastructure services with the related
need for professional services.

Deferred revenues as of July 31, 1998 were $2.5 million, compared to $0.9
million as of July 31, 1997, representing an increase of $1.6 million, or 178%.

Cost of Revenues. Cost of revenues was $2.8 million for fiscal 1998, compared
to $2.0 million for fiscal 1997, representing an increase of $0.8 million, or
44%. This increase was primarily attributable to an increase in leasing and
depreciation costs of our computer hosting equipment, the cost of acquiring
content and salaries and benefits of operating personnel associated with our
revenue growth.

Product Development. Product development expense was $1.6 million for fiscal
1998, compared to $1.7 million for fiscal 1997, representing a decrease of $0.1
million, or 9%. This decrease was primarily attributable to a decrease in
personnel and personnel-related costs associated with the restructuring of our
business in fiscal 1997 and our refocused business strategy.

Sales and Marketing. Sales and marketing expense was $1.7 million for fiscal
1998, compared to $3.0 million for fiscal 1997, representing a decrease of $1.3
million, or 43%. This decrease was primarily attributable to a decrease in
personnel and personnel-related costs associated with the restructuring of our
business in fiscal 1997 and our refocused business strategy.

General and Administrative. General and administrative expense was $1.2
million for fiscal 1998, compared to $1.1 million for fiscal 1997, representing
an increase of $0.1 million, or 7%. This increase was primarily attributable to
an increase in consulting and professional services costs required to support
our business realignment.

27
<PAGE>

Quarterly Results of Operations Data

The following table sets forth unaudited quarterly statement of operations
data for each of the nine quarters ended October 31, 1999. In the opinion of
management, this data has been prepared substantially on the same basis as the
audited financial statements appearing elsewhere in this prospectus, including
all necessary adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of this data. The quarterly data should be
read in conjunction with our financial statements and the notes to our
financial statements appearing elsewhere in this prospectus. We expect our net
loss to increase over the next several quarters because we plan to continue to
incur significant expenses as we expand our sales and marketing resources,
including expanding our business in Europe and Asia, and develop new
technologies and products and improve our technology infrastructure. In view of
the rapidly evolving nature of our business and our limited operating history,
we believe that period-to-period comparisons of revenues and operating results
are not necessarily meaningful and should not be relied upon as indications of
future performance.

------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended,
--------------------------------------------------------------------------------------------------
October 31, January 31, April 30, July 31, October 31, January 31, April 30, July 31, October 31,
In thousands, except 1997 1998 1998 1998 1998 1999 1999 1999 1999
per share data ----------- ----------- --------- -------- ----------- ----------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Revenues:
License and
hosting fees....... $ 877 $1,107 $1,203 $1,199 $1,225 $1,352 $ 1,336 $1,744 $ 2,166
Service and
transaction fees... 69 103 75 177 267 69 91 340 365
----- ------ ------ ------ ------ ------ ------- ------- -------
Total revenues..... 946 1,210 1,278 1,376 1,492 1,421 1,427 2,084 2,531
----- ------ ------ ------ ------ ------ ------- ------- -------
Cost of revenues..... 603 699 679 866 874 907 1,035 1,133 1,611
----- ------ ------ ------ ------ ------ ------- ------- -------
Gross profit (loss).. 343 511 599 510 618 514 392 951 920
Operating expenses:
Product
development........ 379 420 400 352 339 403 427 578 681
Sales and
marketing.......... 362 362 411 541 568 606 970 1,445 2,203
General and
administrative..... 218 261 257 468 362 425 448 760 766
Other............... -- -- -- -- -- -- -- 441 --
Stock-based
compensation....... -- -- -- -- -- 3 29 135 197
----- ------ ------ ------ ------ ------ ------- ------- -------
Total operating
expenses.......... 959 1,043 1,068 1,361 1,269 1,437 1,874 3,359 3,847
----- ------ ------ ------ ------ ------ ------- ------- -------
Loss from
operations.......... (616) (532) (469) (851) (651) (923) (1,482) (2,408) (2,927)
Interest expense
(income)............ (10) 5 4 14 18 5 8 20 (55)
----- ------ ------ ------ ------ ------ ------- ------- -------
Net loss............. $(606) $ (537) $ (473) $ (865) $ (669) $ (928) $(1,490) $(2,428) $(2,872)
===== ====== ====== ====== ====== ====== ======= ======= =======
</TABLE>

As a result of our limited operating history, we do not have historical
financial data for a significant number of periods on which to base planned
operating expenses. Quarterly revenues and operating results depend
substantially on the rate of new customer acquisitions, whether the related
revenues are recognized immediately or deferred over future time periods, the
timing and effectiveness of our development of new services, the timing and
effectiveness of any strategic alliances into which we enter and changes in our
operating expenses. Accordingly, these factors could have a material adverse
effect on our business, results of operations and financial condition. We may
be unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall, and any significant shortfall in revenue in
relation to our expectations would have an immediate adverse effect on our
business, results of operation and financial condition. Due to the foregoing
factors, it is possible that in some future periods our operating results may
be below the expectations of public market analysts and investors. In this
event, the price of our common stock may underperform or fall.

28
<PAGE>

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through the
private placement of equity securities, raising an aggregate of approximately
$23.2 million, including approximately $10.4 million in July and August 1999.
As of October 31, 1999, we had cash and cash equivalents of $6.7 million. In
fiscal 1998, we obtained a $1.0 million line of credit with a variable interest
rate that was approximately 8.5% as of October 31, 1999. This debt was
guaranteed by CMGI, Inc., an affiliate of our largest stockholder,
CMG@Ventures, and secured by our assets. This line of credit expired in August
1999. We are currently in the process of negotiating a new line of credit. We
currently have $2.4 million in equipment financing outstanding with an
equipment leasing company. In August 1999, we entered into an agreement with
another equipment financing company for an additional $4.0 million equipment
leasing line.

Cash used in operating activities was $5.3 million in fiscal 1997, $1.7
million in fiscal 1998, $3.5 million in fiscal 1999 and $2.6 million in the
three months ended October 31, 1999. These increases in cash used in operating
activities were primarily due to increased net losses. Cash provided by
investing activities was $219,000 in fiscal 1997, and cash used in investing
activities was $8,000 in fiscal 1998, $214,000 in fiscal 1999 and $545,000 in
the three months ended October 31, 1999. These increases in cash used in
investing activities were primarily due to infrastructure expansion to meet our
growth and capital expenditures for computers and other equipment for our data
centers. Cash provided by financing activities was $5.0 million in fiscal 1997,
$1.1 million in fiscal 1998, $12.6 million in fiscal 1999 and $0.7 million in
the three months ended October 31, 1999. The increases in cash provided by
financing activities in fiscal 1997 and fiscal 1999 were primarily related to
the sale of preferred stock. In fiscal 1998, the increase in cash provided by
financing activities primarily reflects bank borrowings and, to a lesser
degree, the sale of common stock warrants. The increase in cash provided by
financing activities in the three months ended October 31, 1999 primarily
reflects the sale of preferred stock offset in large part by the repayment of
our outstanding bank loan balance of $1.0 million.

As part of our business strategy, we intend to invest significant amounts of
capital over the next 12 to 24 months to expand our sales and marketing
resources, including expanding our business in Europe and Asia, and to develop
new technologies and products and improve our technology infrastructure. This
investment could be in the form of direct investment or through the formation
of joint ventures, strategic partnerships or similar arrangements.

Future capital requirements will depend upon many factors, including the rate
of expansion of our sales and marketing resources and the timing and magnitude
of our research and product development efforts. We expect to continue to
expend significant amounts on expansion of facility infrastructure, computers
and related data center equipment, as well as personnel. We believe that our
cash and cash equivalents balances and funds available under our existing line
of credit, together with the proceeds of this offering, will be sufficient to
satisfy our cash requirements for at least the next 12 months. We intend to
invest our excess cash in high quality, interest-bearing securities.

Qualitative and Quantitative Disclosures About Market Risk

We develop products in the United States and market our products in North
America and Europe. As a result, our financial results could be affected by
factors such as changes in foreign currency exchange rates or weak economic
conditions in foreign markets. Since all of our sales are currently

29
<PAGE>

made in U.S. dollars, a strengthening of the dollar could make our products
less competitive in foreign markets.

Our interest income is sensitive to changes in the general level of U.S.
interest rates, particularly since the majority of our investments are in
short-term instruments. Due to the short-term nature of our investments, we
believe that we are not subject to any material market risk exposure.

Impact of the Year 2000

As of February 3, 2000, we had not experienced any Year 2000-related
disruption in the operation of our systems. Although most Year 2000 problems
should have become evident on January 1, 2000, additional Year 2000-related
problems may become evident only after that date. For example, some software
programs may have difficulty resolving the so-called "century leap year"
algorithm which will also occur during the Year 2000.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133, as amended by SFAS No. 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. To date, we have
not entered into any derivative financial instruments or hedging activities.

30
<PAGE>

Business

The following description of our business should be read in conjunction with
the information included elsewhere in this prospectus. This description
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ significantly from the results discussed in these
forward-looking statements as a result of the factors set forth in "Risk
Factors" and elsewhere in this prospectus. The Jupiter Communications,
International Data Corporation, Forrester Research and Harris Interactive
market data presented below and elsewhere in this prospectus are estimates
derived by them from a combination of vendor, user and other market sources and
therefore may differ from numbers claimed by specific vendors using different
market definitions or methods. There can be no assurance that any of these
projected amounts will be achieved.

Overview

We are a leading provider of Internet-based marketing infrastructure
services. Our "clicks-and-mortar" solutions enable our clients to direct
consumers searching for a specific product or service to the nearest brick-and-
mortar location that carries that product or service. Our services are
currently utilized by approximately 300 companies with an aggregate of more
than three million real world locations. Our growing client list includes
leading companies in a number of industry segments such as Barnes & Noble,
Marriott, McDonald's, Mercedes-Benz and Nike.

We use our expertise in designing and maintaining complex databases to
provide a suite of Internet-based marketing infrastructure services, ranging
from store locators for clients with a few hundred locations to the design and
maintenance of complex, multi-attribute databases for clients with millions of
product records that include information such as regularly stocked products and
current promotional offers. Through our strategic relationships with search
engine, portal and wireless companies, we use store location and product data
to offer lead generation services to our clients. Using our services, our
clients are able to direct potential customers to the nearest store location,
introduce those customers to a local retailer's Web site and provide customers
with timely incentives designed to motivate a purchase. Our solutions enable
our clients to take advantage of the marketing potential of the Internet while
recognizing that an estimated 99% of all retail transactions still take place
in traditional brick-and-mortar stores.

Industry Background

The Internet and its Impact on Traditional Retailing

The Internet is a very important element in commerce. Together with other
relatively new communications mediums such as wireless telephones and other
wireless devices, the Internet is reshaping the way consumers and businesses
obtain and disseminate information, purchase goods and transact business.
Jupiter Communications Inc., an industry research firm, estimates that 157
million Americans, representing 56% of the U.S. population, will use the
Internet by the end of 2003. International Data Corporation, or IDC, an
industry research firm, estimates that the total number of Internet users
worldwide will surpass 502 million by 2003. The Internet is accessible from an
increasing range of devices. IDC projects that over 93 million Internet-enabled
appliances will be sold during the four-year period from 1999 to 2002 and that
the annual shipments of Internet appliances will surpass shipments of personal
computers within the next six years.

People frequently go online to research products for possible purchase.
According to Jupiter Communications, 72% of Internet users use the Web to
research products and services, with only electronic mail and search engines
attracting a higher percentage of Internet users. In response,

31
<PAGE>

consumer products companies and national chains have established Web sites to
promote their brands. This has resulted in a proliferation of Web sites where
businesses provide information, market goods and services and conduct business.
To support this growth, Forrester Research, an industry research firm,
estimates that retailers will increase their spending on outsourced Internet-
related services from $10.6 billion in 1999 to $64.8 billion in 2003.

While retailers are increasingly focusing attention on the Internet, the
overwhelming majority of consumer spending still occurs in traditional brick-
and-mortar locations. Forrester Research estimates that $20.2 billion will be
spent online for retail products and services in 1999, representing less than
one percent of estimated total retail spending for the year. Forrester Research
estimates that annual online retail spending will increase to $184 billion by
2004, representing seven percent of the estimated total retail spending for
that year. Thus even with enormous projected growth in online commerce,
Forrester Research predicts that online spending will remain only a small part
of total retail spending. We believe the reasons for consumers' continuing
preference for "real world" shopping include the ability to physically inspect
and compare products, the possibility of same-day fulfillment and the relative
ease with which products can be returned to the store where purchased. In
addition, many merchants, such as restaurants, hotels and gas stations, offer
goods and services that cannot be provided online. These merchants require
customers to visit a physical location to complete a transaction.

Challenge for Retailers

The challenge for retailers and consumer product companies is to determine
how best to respond to the growth of the Internet. Although a large number of
traditional retail brands are on the Web with basic information and
advertising, consumer research has identified the benefits of connecting
individuals who are using the Internet to research products with real world
store locations. A recent consumer survey conducted by Jupiter Communications
reported that 51% of people who research products or services online do not use
the Internet to make purchases. However, Jupiter Communications found that
approximately 83% of consumers who shop online indicated that online research
at least occasionally influences their purchases off-line. Jupiter concluded
that the key to success for retailers in the Internet age will be to find
compelling ways to direct consumers researching products online to the nearest
brick-and-mortar store where they can complete a purchase. Advocates of
integrating a retailer's online presence with its real world presence have
dubbed this approach "clicks-and-mortar."

One clicks-and-mortar strategy for a retailer is to provide product
information to potential customers online and then direct those customers to
convenient store locations that carry a desired product. Existing consumer
awareness of national brands and traditional off-line marketing and advertising
efforts already combine to direct consumers to the Web sites maintained by
these companies. Once on a brand's Web site, consumers can be motivated to make
a purchase and, if a consumer prefers to transact business off-line, directed
to the nearest store carrying the brand's products. In many cases, retailers
prefer that transactions be completed in physical stores where shoppers can be
exposed to other product offerings. According to Harris Interactive, an
industry research firm, Internet shoppers spend twice as much money off-line
when they first browse for specific products online and spend four to nine
times as much money off-line on products which they researched on the Internet.

Retailers are under increasing pressure to develop strategies that will
enable them to capitalize on the opportunities created by the Internet quickly
and effectively. While most established retailers have begun Internet
initiatives, Jupiter Communications found that few retailers have found ways to

32
<PAGE>

allow online and off-line channels to work together with synergy. Forrester
Research estimates that firms seeking to improve their communications with
online consumers will increase spending on outsourced marketing services from
$422 million in 1999 to over $6.2 billion in 2002.

Our Solution

We provide a suite of Internet-based marketing infrastructure services to our
business clients. We host our clients' store location and product information
and deliver that information to potential customers on demand over the
Internet, land-line telephones, wireless telephones or other wireless devices.
Using our services, our clients are able to direct potential customers to the
nearest store location, introduce those consumers to local retailers through
store-specific Web sites, display product and product availability information
and provide a timely incentive to motivate potential customers to make a
purchase.

Our services provide the necessary infrastructure for companies to exploit
the growing potential of Internet marketing while leveraging their real world
presence. Our Internet-based marketing infrastructure services link traditional
off-line marketing programs, such as advertising and direct mail, to online Web
marketing initiatives.

Our services offer the following features and benefits to our clients:

. Clicks-and-Mortar Solution. Our services provide our clients a means
of directing online consumers who are interested in purchasing our
clients' products to local brick-and-mortar stores where the
overwhelming majority of transactions still occur.

. Expanded Lead Generation. Our services extend the reach of our
clients' Internet presence by providing a link through major portals
and search engines to consumers using the Internet to research
products and services prior to making a purchase decision.

. Multiple Platform Access. Our services enable potential customers to
access information regarding our clients' products and services not
only over the Internet, but also via land-line telephones, wireless
telephones and other wireless devices, such as the Palm VII.

. Local Web Marketing with Brand Integrity. Our SiteMaker product allows
each of our clients' locations to create a unique Web presence and
extend local store specific promotions while maintaining national
brand integrity.

. Cost Efficient Outsourced Services. Our automated services provide our
clients' customers with accurate and easy to use location and product
availability information on demand 24 hours per day, seven days per
week.

. Rapid Deployment. We are able to deploy our clicks-and-mortar
infrastructure solutions in an average of three to four weeks.

. Reporting and Feedback. Our record-keeping and reporting features
allow our clients to refine their online marketing approach and
effectively coordinate and evaluate off-line marketing efforts.

Finally, our location and product information provide consumers researching
products and services with the information that they need to choose the most
convenient means of purchasing goods or services. In some cases, our services
offer consumers the option of buying online or buying off-line.

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Strategy

Key elements of our business strategy include:

Expand Our Client Base

We currently target large companies with established consumer brands that
offer their products or services in multiple locations. Our sales channels
include our direct sales force and our international channel partners. We
intend to expand our direct sales force and our network of channel partners
both to refer business to us and to sell our services under private-label
arrangements. We will also continue to maintain strong relationships with
advertising, promotional and Web marketing agencies that often incorporate our
services into the projects they manage for their clients.

Enhance Relationships with Clients

Working closely with our clients and select partners, we have recently
developed several new offerings that are designed to extend the capabilities of
the services that we already provide to our approximately 300 clients. Several
clients utilizing our core Web Business Finder service have recently licensed
our Telephone Business Finder or Wireless Business Finder products. In
September 1999, we launched our SiteMaker product which enables each location
within a national chain to have a unique Web site and to extend local store
specific promotions. In December 1999, we launched our MailMaker product which
enables our clients to deliver customized marketing messages through electronic
mail. These and other product offerings are designed to allow us to enhance our
relationships with clients.

Continue to Develop Relationships with Strategic Partners

Our technology expertise and strong customer base have allowed us to attract
numerous partners with whom we have agreed to co-develop and co-market new
products and services. In June 1999, we entered into an agreement with Inktomi
to provide our services as part of the "local" section of their shopping engine
product. We also recently entered into agreements with a leading wireless
handset manufacturer and a leading wireless carrier to provide versions of our
BrandFinder service on Internet-enabled wireless telephones. These and other
partnerships extend our clients' Web presence beyond their Web sites by
allowing product searches on portals and via Internet-enabled wireless devices
to return local stores that carry our clients' products. We intend to continue
to identify and develop mutually beneficial partnerships with search engines,
portals, wireless data providers and other strategic partners.

Expand International Presence

Our multinational clients have reacted to the world-wide growth in Internet
use by requesting application of our services in markets outside the United
States. We are responding to these requests by making our services available in
markets that support the wide-spread consumer use of Internet and wireless
devices. We launched our services in Europe in June 1999 and, as of January 1,
2000, our services are available in 12 European nations and in nine languages.
As we expand into these new markets, we plan to establish local relationships
and attract local clients. One of our first Europe-based projects was the co-
development of a travel-related Web site covering 12 European countries for
Shell International Petroleum Company Limited. Forrester Research estimates
that the leading European markets will experience rapid growth in Internet
services beginning approximately two years after similar developments in the
United States and that Japan will follow approximately two years behind
Europe's leaders. With respect to wireless services, however, we expect that
Europe and Japan will continue to precede the United States both in deployment
and market acceptance of available

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product offerings, including products such as Wireless Business Finder and
BrandFinder. In preparation for this projected growth, we have selected a
strong group of channel partners in Europe, including Aperto Multimedia in
Germany, Kataweb in Italy and Icon MediaLab which is well established in
several European nations. We are also in active discussions with several
potential partners within Asia, including Hikari Tsushin, Inc., the second
largest wireless telephone company in Japan with over 2,000 retail outlets, and
anticipate offering our services in Japan in the first half of calendar year
2000. Although no agreement has yet been reached with potential partners in
Asia, Hikari Tsushin, Inc. has expressed an indication of interest to purchase
$10.0 million of, or 588,235, shares of our common stock in this offering at
the initial public offering price, and we have requested that the underwriters
reserve these shares for sale to Hikari Tsushin.

Expand Product Offerings

Through internal product development and through partnerships, we have
implemented services that deliver our clients' data to potential customers
through land-line and wireless telephones and through Internet-enabled wireless
devices such as the Palm VII and WAP telephones. We intend to continue to
develop additional products and services, tailored to the needs of large multi-
location retailers and service companies by enhancing our technology,
delivering localized content, expanding our directory services and offering
effective data management capabilities. We intend to continue to develop new
products internally and to build partnerships and work closely with
manufacturers of smart phones, automotive personal computers, and other new
devices to offer our clients' data across any capable device or platform.

Develop Transactional Revenue Model

Historically, we have generated most of our revenue through annual license
fees charged to our clients for hosting and delivery services principally
related to our core Business Finder applications. Recently we commenced
offering distribution of this same data, on behalf of our customers, across
several highly trafficked Web sites and via wireless telephones and other
wireless devices. Additionally, through our partnerships with Internet-based
promotion companies, we are beginning to deploy services that generate
transaction-based fees as a result of driving a consumer from a national
brand's Web site to a participating local merchant's store. We can offer
similar distribution arrangements for advertisers who participate in regional
yellow pages listings.

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Vicinity Services

[GRAPHIC Upper text reads "Vicinity Product Universe." Below that is
an oval containing a five-pointed star. Text in the center of the
graphic reads "Product and Location Data." Names and brief
descriptions of Vicinity's five principal products are arranged
between the points of the star.]

Vicinity Business Finder

Business Finder uses our proprietary proximity search technology to allow a
client's customers to find the store location nearest to an address input by
the customer using the Internet, land line telephones, wireless telephones and
other wireless devices. Because Business Finder is able to search hundreds of
attributes, it can also be used to locate a specific product stocked at a
retailer. For example, Levi Strauss utilizes a version of Web Business Finder
to direct customers from its Web site to the nearest store that carries the
product the customer is searching for, such as a specific style of Levi blue
jeans.

There are currently four search categories employed by Vicinity Business
Finder: proximity, attribute, keyword and custom. These different categories
can be used singly or in combination with each other. For example, we manage
our client AutoTrader.com's database of more than one million used automobiles
that is updated several times per day and which is searchable by location and
attribute. AutoTrader's customers are able to search the database using one or
more selected variables. As an example, an AutoTrader shopper might search for
a four-door Ford Taurus that is less than three years old, costs no more than
$12,000 and is located within five miles of the shopper's home. While we have
not yet been asked to provide the service, Business Finder is also capable of
serving as a real-time outsourced inventory management system.

We refer to our search capabilities as "boundary-less" (i.e., searches for
the nearest items without regard for boundaries such as city, state, zip code,
or latitude-longitude boundaries). This search methodology starts at a
designated point and then spirals outward to find the nearest items. We believe
this methodology to be superior to common zip code matching techniques which
can misdirect consumers to locations that while in the same zip code are more
distant than locations within adjoining zip codes. This process is also
scalable and allows us to support the millions of queries that we receive

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per day. While most Business Finder applications return locations in order of
proximity, some of our clients, such as the United States Air Force, require
other orderings, or require that searches respect recruiter or dealer territory
restrictions. Business Finder has the flexibility to handle these requirements.

Web Business Finder

Web Business Finder is a private-label service incorporated into our clients'
Web sites. Though the pages viewed by customers are often hosted and served by
our servers, the end user is unaware that he has left the branded site he chose
to visit. Using Web Business Finder, our clients' customers can quickly and
easily obtain a listing of our clients' nearest store locations with the
distance to each location provided. Web Business Finder can be customized to
provide information about each location, such as its address, telephone number
and hours of operation. For example, McDonald's uses this service to indicate
whether a particular restaurant features a McDonald's Playland and to allow
customers to locate every McDonald's location along a given route. Another
client, VISX, Inc., uses our telephone and Internet services to help potential
customers interested in laser vision correction to locate VISX-certified
doctors within their community. Our clients have the option of including within
the search results dynamic maps showing a specified number of nearby locations
and customized driving directions to those locations. We currently offer Web
Business Finder services in the United States, 12 European nations and in nine
languages.

Telephone Business Finder

Telephone Business Finder gives potential customers telephone access to the
same database we maintain for each of our client's Web Business Finder service.
Telephone Business Finder provides street addresses automatically and is able
to connect a caller directly to a store or to the client's customer service
representatives. The service uses an interactive voice response system to
provide automated interaction with callers. Caller identification can be used
to instantly recognize the location of a caller and direct him to the nearest
store locations or the service can be set to allow callers to search for stores
in their locality or another area simply by entering in a zip code or telephone
area code. The Wherehouse, a chain of retail music stores, is currently
utilizing Telephone Business Finder. Callers dialing 1-800-WHEREHOUSE can find
nearby Wherehouse locations by inputting their zip code or telephone number.

Wireless Business Finder

Through our partnership with GTE Telecommunications Services, Inc., we are
developing Wireless Business Finder to identify the area in which a wireless
device user is located. Once operational, the caller will be automatically
directed to the client location closest to his current position and, if
desired, connected to that store or transferred to a customer service
representative. This technology can also be used to assist human operators or
to send short text messages to advanced wireless phones and other devices.

Our clients will soon be able to further promote their brands through the use
of vanity telephone numbers whereby consumers will be able to locate nearby
merchants by dialing easy to remember telephone numbers related to the brand
name. One of the key benefits of this service will be our clients' ability to
further extend the reach of the location and product information available
through our Web Business Finder service. Since the penetration of wireless
devices currently surpasses the penetration of personal computers into U.S.
households, we believe this ability to address the wireless market will be a
distinct competitive advantage for participating branded merchants.

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Vicinity SiteMaker

SiteMaker allows each store location of a national branded chain or franchise
to create its own Web site. SiteMaker provides a national brand with increased
visibility through promotions, discounts and other marketing programs at the
local level while allowing national control over brand integrity. These Web
sites can be customized with information such as store hours, calendars and
special promotions. The sites conform to design standards mandated by the
corporate parent. Local store managers can add photographs, product graphics,
unique local content and interactive objects to their SiteMaker sites.
SiteMaker is designed to allow these changes to be made by any authorized
person, regardless of whether he or she is knowledgeable in Internet
programming languages such as HTML. We provide a unique local map for each Web
site. Since the Web sites are hosted by us, the stores are not required to
maintain any server hardware. SiteMaker is fully integrated with our Web
Business Finder. For example, CarClub.com, a comprehensive online source of
automotive information, products and services, uses a customized Business
Finder to allow visitors to its Web site to search for the appropriate
CarClub.com affiliated auto dealers, lenders, insurers or mechanics in their
area. Each participating CarClub.com merchant is able to manage and maintain
its own Web site complete with product descriptions, photographs, pricing and
store location information.

We also offer a secure credit card e-commerce module for franchisees who want
to sell their products and services directly over the Internet. This approach
provides the franchiser with the ability to participate in the growth of direct
to consumer e-commerce while avoiding the channel conflict associated with
selling direct from the its corporate Web site in competition with existing
stores or franchisees.

In July 1999, we began to integrate purchase incentive capabilities into
SiteMaker. With this technology, Vicinity-enabled stores can extend an "Act
Now!" promotional message to potential customers by offering credit on their
MasterCard, American Express or Visa credit cards without requiring the need to
print and submit paper coupons to the merchant. This partnership adds
timeliness to our clicks-and-mortar solution. In addition to directing a
potential customer to a client's retail location, our services enable our
clients to motivate that potential customer to visit a store within a specified
time period in order to redeem a promotional offer.

Vicinity MailMaker

MailMaker is an electronic mail management tool that allows national and
local retailers to create and deliver targeted opt-in electronic mail
campaigns. MailMaker provides our clients with a unique opportunity to tailor
the geographic scope of their electronic mail marketing campaigns to fit their
precise needs. We believe that MailMaker will enable us to service the needs of
many companies which, in order to capitalize on the low cost and high response
rate offered by these campaigns, outsource these services to providers that can
effectively and cost-efficiently manage large or multiple electronic mail lists
and track results. MailMaker allows recipients with a means to opt in or out of
mailings, to specify their preferred electronic mail format and to select
topics or categories in which they are interested.

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Vicinity BrandFinder

BrandFinder is a consumer lead generation tool that we provide to our clients
through Web sites, shopping engines and wireless devices that allows
individuals online to search a designated area for a retailer that carries a
specific branded product. The first implementation of BrandFinder was the
result of a partnership with Inktomi in which we built and host the "local"
portion of the Inktomi shopping engine. More than 20 leading portal and
destination sites, including CNET, CNNfn and American Express have signed up to
utilize the Inktomi shopping engine. In January 2000, we entered into an
agreement to provide our BrandFinder functionality to AltaVista's Shopping.com
service.

[GRAPHIC-- Text above graphic reads "the Clicks-and-Mortar
Process." On the left-hand side are three persons, to the right of
them are pictures of two devices and two Web sites that customers
can use to access our services. To the right of the devices/Web
sites is the text "BrandFinder." To the right of that, text reads
"SiteMaker" with lines pointing to "Incentive" and "E-commerce."
On the far right is a column of five pictures, showing products
consumers can find using our services.]

A consumer may utilize BrandFinder in a number of ways. For example, if an
individual is interested in purchasing a pair of blue jeans, he or she might
start out on an Internet portal by typing in a generic search request, such as
"pants," or a brand-specific request, such as "Levi's." Alternatively, if the
individual did not have current access to a computer, he or she could make a
similar request via a Palm VII, a wireless telephone utilizing the new Wireless
Applications Protocol, or WAP, or through other Internet-enabled devices. With
BrandFinder, users can instantly generate information on a wide array of
businesses from banks and cash machines, to restaurants, gas stations and
hotels.

Once a search has been initiated, BrandFinder returns a list of the stores
that carry the desired product in the area in which the individual is
searching. If the consumer is online, he or she might also be presented the
option to visit a local store's Web site powered by SiteMaker. On the store's
local Web site, the individual might be exposed to promotional incentives from
one of our partners, which, if acted on, would appear as rebates on his or her
credit card statement. BrandFinder is designed to direct consumers to one of
our clients' store locations with the benefit of the following characteristics
or information:

. the storefront offers known national brand products and services;

. the locations are the ones nearest to the address specified;

. the locations identified carry the desired product or service;

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<PAGE>

. which of the locations is running a special offer (e.g., "Save $5!")
through a promotion sponsored by one of our partners;

. when the locations are open; and

. whether each location accepts a specified credit card.

The combination of the access to a large number of shoppers and the ability
to offer each of those shoppers a specific incentive to visit a client's retail
location leaves us well positioned to take advantage of the explosive growth of
Internet and wireless telephone usage. We link shoppers searching for their
preferred brands and the brick-and-mortar stores that carry those brands.

MapBlast! Brand Mapping Service

Our MapBlast! business unit operates a leading consumer destination site that
attracts approximately 1.2 million unique users and regularly serves more than
19 million pages a month. In addition to providing interactive U.S. and
European maps and driving directions, the MapBlast! Web site offers information
on services and products near a user's address or travel route, lodging
information and reservation capabilities, scheduling services, traffic reports
and local points of interest. MapBlast! also provides maps and driving
directions to many small businesses and several Internet portals as well as
notable destination sites including RandMcNally.com. Our partners include
Hilton Hotels, Barnes & Noble, AvantGo, WorldRes, Inc., ShopNow.com and
TimeDance. In August 1999, MapBlast! was selected to provide driving directions
on interactive ATMs located in Texaco service stations nationwide.

Professional Services

While our regular service offerings have been designed for scalability and
ease of implementation, our clients frequently request special features and
applications that must be custom built. In addition, we help design, maintain
and manage large databases that incorporate geographic or location-based
information. For example:

. Network Solutions selected us to build and host their "dot com
directory," a database of registered domain names designed to allow
individuals to search for specific attributes such as location or site
content;

. Prio selected us to host, maintain and deliver all of the
participating store and product data for its Web-based promotions; and

. Shell International Petroleum Company selected us to co-design and
deploy a European Trip Planner Web site.

Because these projects require special skill and attention, we have recently
decided to create a professional services organization within our company to
manage these projects. Our professional services group will apply our
specialized knowledge to specific business problems and develop solutions that
would be impractical for our clients to design or implement themselves.
Services, for which we will charge on an hourly or project basis, will range
from concept development and project design of clicks-and-mortar solutions to
the tracking, data-mining and analysis of Internet users' online activity.

Strategic Relationships

A key contributor to our growth has been the ability to develop strategic
relationships with leaders in other markets. These partnerships provide us with
valuable local content as well as distribution outlets. These relationships
have also enabled us to significantly expand our service offerings.

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<PAGE>

Technology and Infrastructure Partners

We continuously evaluate and enter into relationships with companies who are
leaders in their respective fields when a partnership will create more value
than we can create alone. Through these relationships, we attempt to offer
unique products designed to extend the power of our clicks-and-mortar service
solutions by providing new functionality to our clients, Web sites and
consumers.

Prio, Inc.

Prio is a provider of electronic commerce solutions designed to drive
commerce both online and in traditional retail environments. The Prio platform
presents personalized, valuable promotions to consumers over the Internet. In
July 1999, we entered into an agreement with Prio to integrate Prio's incentive
capabilities into our Business Finder and SiteMaker services. With this
technology, Vicinity-enabled stores can extend an "Act Now!" promotional
message to potential customers by offering credits on their Mastercard,
American Express or Visa credit cards without requiring the need to print and
submit paper coupons to the merchant.

Prio's promotional capabilities can be used to verify that a specific user
that originated on a client's Web site or a portal partner's search engine
later consummated a purchase with a participating local merchant. With this new
infrastructure technology, national brands as well as the local merchant are
presented with the opportunity to generate qualified leads through incentives
directed at consumers using the Internet to research products and services.
Because the Prio system tracks consumers' responsiveness to various incentive
programs, participating merchants can gain valuable insight into their
customer's purchasing behavior. Our company and Prio share in transactional
fees based on the value of the promotion offered by our clients.

In December 1999, InfoSpace.com, an Internet services company, announced that
it planned to acquire Prio. We currently do not believe that InfoSpace's
acquisition of Prio will materially affect our business relationship with Prio
or the integration of Prio's incentive capabilities into our Business Finder
and SiteMaker services in the near term. We cannot predict, however, the long
term-effects of this transaction.

GTE Telecommunications Services, Inc.

GTE TSI provides integrated wireless solutions for more than 180 wireless
operators throughout North America, Latin America and Europe. In February 1999,
we entered into a partnership with GTE TSI to offer GTE's INPosition service
with our Wireless Business Finder. Once this service becomes operational,
callers will be able to locate nearby businesses through a system that is able
to automatically identify the wireless caller's approximate location. Wireless
Business Finder will take advantage of new wireless infrastructure technology
currently being installed to accurately determine an emergency 911 caller's
location.

Phone.com

Phone.com develops, markets and supports infrastructure software and
applications that enable the convergence of the Internet and mobile telephony.
In October 1999, in cooperation with Phone.com, we deployed BrandFinder on WAP
telephones. In addition, as a member of Phone.com's Alliances Program, we have
gained access to wireless equipment vendors around the world who we plan to
work with to distribute our content.

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US West DEX

US West DEX, the directory publishing and Internet yellow pages division of
US West, has contracted with Vicinity to give wider exposure to DEX listings
through geographically oriented search results in its various shopping and
searching services. This distribution provides extremely targeted exposure to
DEX listings.

Distribution Partners

Through our relationships with search engines, Internet portals and other
partners, we enable our clients and partners to reach a wide consumer audience.
This integration of our corporate locator content and services with major
Internet sites provides our national brand clients access to a large online
distribution network.

Inktomi

Inktomi provides search engines, online comparison shopping solutions and
network cache software to some of the world's largest Internet infrastructure
and media companies. In June 1999, we entered into a partnership with Inktomi
in which we agreed to build and host the "local" section of Inktomi's shopping
engine, which gives online shoppers the capability to more easily find a wide
variety of products and services both online and in the real world. This
integration of our corporate locator content and services with Inktomi's
shopping engine provides our national brand clients access to a large online
distribution network while providing Inktomi a large amount of accurate local
content. More than 20 leading portal and destination sites have signed up to
use the Inktomi shopping engine.

AltaVista

AltaVista is one of the Web's leading search engines and a major portal site
known for its particularly wide search breadth and increasing emphasis on
locally-tailored content. AltaVista's Shopping.com service offers a
comprehensive online shopping experience that is referenced throughout the
AltaVista site. In January 2000, we agreed to provide our BrandFinder
functionality to AltaVista so that consumers can have a "go-local" shopping
option in many categories on Shopping.com. As a result, shoppers intending to
buy online will be presented with an in-person option from Vicinity-hosted
brand and product data, giving preference and exposure to Vicinity's corporate
clients and helping to increase traffic to our clients' real-world stores.

Northern Light

Northern Light, one of the world's most comprehensive search engines, prides
itself on the accuracy and usefulness of the search results it gleans from some
5,400 sources. In March 1999, we entered into a technology development and
marketing agreement with Northern Light to deploy our GeoSearch technology
within the Northern Light search engine. GeoSearch allows Northern Light to add
a geographic component to its searches by filtering tens of millions of Web
pages based on the addresses they contain. This technology permits individuals
online to conduct proximity related searches with far greater success than the
alternative of inputting the names of all neighboring towns as keywords in the
search.

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ShopNow.com

ShopNow.com provides shoppers and merchants with an online marketplace and a
broad array of e-commerce and direct marketing solutions by aggregating more
than one million products and services from more than 29,000 merchants at one
Web site that can be rapidly and efficiently searched by category, merchant or
product. ShopNow's mission is to sell anything to anyone at anytime, anywhere.
In July 1999, we entered into an agreement with ShopNow.com in which we will
provide a "go local" capability through our BrandFinder service. In other
words, if a consumer is searching for jeans, ShopNow can now present them with
an array of online jeans merchants from their own database and, with our
services, also offer a selection of relevant real world stores near the
consumer's home. Our clients are prominently featured in this result, bringing
highly-targeted choices and offers to the consumer and valuable leads to our
clients.

Resellers

We operate an active channel partner program encouraging leading companies
worldwide to integrate our services into their own products and service
offerings or refer potential customers to us.

Aperto Multimedia

Aperto Multimedia is one of the leading multimedia agencies in Berlin and
provides Web marketing services to Coca-Cola, Siemens and Sony in Germany. In
June 1999, we signed a partnership establishing Aperto as one of our leading
channel partners for the German market. The companies started conducting joint
sales calls and producing German language marketing materials in July 1999.

Exodus

Exodus is a leading provider of secure communications systems and network
management solutions for enterprises with mission-critical Internet operations.
Both of our existing data centers are located within Exodus facilities. Since
all Exodus customers with real-world stores are candidates for our services,
and because many of our customers may consider Exodus for their Internet
hosting requirements, in October 1999 our company and Exodus joined each
other's alliance partner programs. Under this arrangement, our company and
Exodus will work together to refer each party's existing customers to the
other.

Icon MediaLab

Icon MediaLab is a Web development and consulting firm, headquartered in
Stockholm with offices across Europe and in New York and San Francisco. In June
1999, Icon became a channel partner, promoting our services to its global
clients who operate real world sales locations.

Kataweb

Kataweb is the Internet subsidiary of Gruppo Editoriale L'Espresso S.p.A.,
Italy's largest media company. In April 1999, our company and Kataweb entered
into a partnership in which we will create a searchable online classified ad
site for Gruppo L'Espresso's publishing group and expose the Italian consumer
and business markets to our technology and capabilities. Kataweb also agreed to
become a channel partner and is utilizing its sales force to sell our services
in Italy.

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Clients

We have approximately 300 clients including many of the leading names in the
retail, hospitality, food and beverage, shipping, banking, automotive,
technology and manufacturing industries. Examples of our existing clients
include:

<TABLE>
<CAPTION>
Consumer Brands Retailers Hospitality
--------------- --------- -----------
<S> <C> <C>
Harley-Davidson Barnes & Noble British Airways
Levi Strauss The Gap Choice Hotels
Nike Home Depot Hilton Hotels
Olympus Kmart Marriott
Tommy Hilfiger Nordstrom Starwood

<CAPTION>
Food and Beverage Shipping Banking/Financing
----------------- -------- -----------------
<S> <C> <C>
KFC Airborne Express Edward Jones
McDonald's DHL Fleet Financial/Bank Boston
Pizza Hut FedEx Novus/Discover
Taco Bell United Parcel Service Prudential
Starbucks U-Haul Wells Fargo/Norwest

<CAPTION>
Automotive Technology Manufacturing
---------- ---------- -------------
<S> <C> <C>
Ford Epson America AC Delco
General Motors Hewlett-Packard Avery Dennison
Honda Iomega Bridgestone/Firestone
Mercedes-Benz NEC Technologies John Deere
Toyota Oracle Whirlpool
</TABLE>

Historically, we have been successful in retaining existing clients. Of the
more than 230 Business Finder clients signed since the beginning of fiscal
1998, more than 94% remained as Business Finder clients as of January 10, 2000.
The contract value of the Business Finder clients lost during that period would
have represented approximately three percent of our revenues during fiscal
1999. We believe that our unique service offerings and our ability to provide a
complete outsourced solution for our clients have been significant factors
contributing to our high historical retention rates. In fiscal 1999,
AutoTrader.com accounted for approximately 11% of our revenues.

While we offer a variety of service offerings, all of our clients turn to us
for assistance in implementing a clicks-and-mortar strategy. With each client
relationship, we work with the client to identify ways to leverage the
technology deployed by us. Examples include:

Federal Express

Federal Express maintains tens of thousands of drop-box locations and offices
throughout the United States with additional sites being added or relocated on
a daily basis. The problem Federal Express faced was providing a way for its
customers to conveniently find the nearest location and to do this in a cost
effective manner. Even though Federal Express's business requires mastery of
location information, their internal review of the problem revealed that Web
Business Finder provided the most efficient solution available.

Marriott

Marriott has implemented our clicks-and-mortar services in an effort to
accomplish two goals. First, our services help turn visitors to Marriott's Web
site into reservations at Marriott properties by

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directing users to specific sites that best fit their interests. Whether a
customer is seeking the hotel closest to the convention center or the hotel
that has a heated indoor pool, he can utilize our search and database
capabilities to find the appropriate property. In addition, by utilizing our
reports, Marriott is able to determine which features of a particular property,
such as a pool or business center, are most important to potential visitors to
that property.

Second, Marriott wanted visitors to its Web site to have easy access to local
content and information such as the location of nearby restaurants and popular
nearby tourist attractions. By providing this information, Marriott believes
that visitors to its Web site will spend more time on the site. This objective
is sometimes referred to as making the Web site "sticky." We helped Marriott
accomplish this goal by making available local information for each hotel
location such as restaurants and popular nearby tourist sites. By providing
this information on its site through us, Marriott is able to keep visitors on
its Web site to plan their visits rather than sending them to another travel
planning destination. Marriott's vice president of interactive business
operations estimates 60% of the visitors to the Web site utilize our services.

Shell International Petroleum Company

For several years we have provided Shell with a Web Business Finder solution
for its gas stations located within the U.S. In late 1999, Shell decided to
build a destination Web site incorporating an elaborate Trip Planning Guide to
give Shell customers driving directions and points-of-interest guidance in
local languages across 12 European countries. Shell contracted with Vicinity
and USWeb/CKS to co-develop this site which went live in October 1999.

Eveready Battery Company

Eveready is one of the world's largest manufacturers of dry cell batteries.
Although its Energizer and Eveready brands are known worldwide and sold in more
than 160 countries, consumers frequently do not know which Eveready battery is
the right one for their calculators, toys, watches or other electronic devices.
To solve this problem, Eveready worked with us in 1997 to build and host a
product search engine and store locator for the "Rechargeable" section of
Eveready's Web site. Customers visiting the Web site were able to search a
database of 8,500 cellular phones, camcorders and cordless phones to determine
the right Eveready product to power each device. Customers could type in any or
all of the following information: brand, model number, as well as other useful
information, or click on a picture of the product, and be directed to the
correct Eveready battery and a local store that regularly carries that battery.
In 2000, for budgetary reasons related to its rechargeable battery division,
Eveready decided to discontinue this section of its Web site.

Network Solutions, Inc.

NSI is the world's leading registrar of Internet domain names. In April 1999,
we entered into a partnership in which we are building and hosting significant
portions of the database and search engine for NSI's "dot com directory," a new
search engine that locates businesses through information linked to their
domain name registration. NSI intends the "dot com directory" to be the Web's
definitive source for locating online businesses.

Sales and Marketing

Our services are sold through an in-house direct sales team as well as an
outsourced telemarketing agency. We also utilize our network of channel
partners to both refer business to us and to sell our services under their own
private-labels. Companies with which we have referral or reseller agreements
include Icon MediaLab, Aperto Multimedia, Kataweb, Price Interactive, Inc.,
Agency.com, Netopia, Inc., ClickAction and Prio. We also maintain strong
relationships with advertising,

45
<PAGE>

promotional and Web marketing agencies that often incorporate our services into
projects they manage for their clients. We are working aggressively to expand
our existing internal sales and marketing capabilities as well as the company's
channel partner program.

Our target markets for sale of our clicks-and-mortar services include:

. large companies with an established consumer brand;

. companies with a branded product line sold through retail
distribution;

. companies with a branded chain of stores;

. advertising agencies servicing national brands;

. web development agencies servicing national brands;

. direct marketing agencies servicing national brands;

. franchisers and their franchisees; and

. shopping and search engines.

We build awareness and demand for our services through marketing programs
including direct marketing, print and Internet advertising, trade shows and
events, public relations, international marketing, channel marketing and
telemarketing. Sales are implemented through a team of direct sales
representatives and channel partners. The sales cycle, from identifying a
prequalified lead to the signing of a services contract, is typically two to
four months, though in some cases this cycle is accelerated due to a client's
desire to implement a solution quickly or meet a promotional or season
deadline, such as the holiday shopping season. Frequently with a potential new
client, the initial competitor to our service offering is the client's own in-
house information systems department which may initially believe that it can
duplicate our services at a lower cost. This often delays the sales process,
but we are currently unaware of any retailer or merchant that has decided to
build its own solution after having been exposed to our service offerings.

Technology and Infrastructure

Our core competency is the ability to design, build, implement and manage
projects involving large databases that contain product, location and attribute
information. Our technical expertise spans many software development
specialties including system-level programming, cross-platform solutions, user-
interface and template design, production system operation and localization.
Our most important skill is the development of high performance spatial
databases that are used to manage our location-specific data and to manage
large amounts of client information, including store location and product
availability data. Through an automated process, our customers update this data
set based on their own business rules.

Architecture

The architectural model for our services is a general purpose template
processing engine which handles user events, controls program flow and calls
component sub-servers that manage our Web Business Finder service to handle all
content-specific transactions. The sub-servers handle service requests as
socket-based stateless transaction processors. Since the engine and the various
sub-servers are all continuously running processes, it is not necessary to
start-up any processes in order to handle a request. These processes are
adjusted to respond to system load as well as recovery from the occasional
system error. This architecture allows maximum flexibility of resource
deployment across multiple networked machines.

46
<PAGE>

Service Delivery

We deliver our services to customers through either an application
programming interface, or API, or through our client support organization which
produces a specific template set for an individual customer. The API allows the
customer to control the interface and provide the customer with maximum
flexibility in terms of creative control. Whether delivered via templates
generated by us or using the API, the service is built around customer supplied
data that may be updated in batch mode, net change, or on a transaction basis
depending on customer needs. Our customer service organization maintains
contact with customers to help them work through any issues before, during and
after deployment of their application.

Reporting and Data Mining Capabilities

The usage and reporting data generated by the system are measured in
gigabytes per day and are a valuable tool for customers to understand the
effectiveness of their marketing efforts. We report usage results through
standard secure reports by customer, category, keyword, designated marketing
area or other custom requirements.

Scalability and Stability

We have invested significant resources in the hardware systems that deliver
our services with the objective of 99.9% availability in a fully scalable
environment across multiple data centers. Our front-end Web servers and
database servers are Sun Enterprise systems designed for reliability,
availability and serviceability to support the operation of our customer's
mission-critical applications. We have designed the servers to tolerate power,
cooling, or storage failures without affecting system operation and to recover
from most failures with minimal disruption. These systems are optimized to
provide extremely high throughput.

Our services are monitored on a 24 hours per day, seven days per week basis.
At the present time, our system is generally running at less than 40% of rated
capacity at peak usage to permit quick application response. We do not intend
to permit the production system to exceed 50% of its rated capacity. This
excess capacity is designed to ensure availability despite partial system
failure. In addition, the system is protected by a high performance firewall
and balanced through a state-of-the-art load balancing solution.

We currently operate two geographically separate data centers. A typical data
center configuration has front-end servers processing requests from our
customers through switches connected to a load balancing solution. These front-
end servers make specific requests to multiple back-end database machines as
well as systems that process geographic content such as maps and driving
directions. For security reasons, back-end systems cannot be accessed from the
Internet and process only specially formed queries from the front-end machines.
Each of these sub-systems is fully redundant both in terms of software and
hardware. In the event of a sub-system failure, the load is automatically
transferred to the next available machine. Monitoring software automatically
notifies the on-duty operator of a problem so that immediate action can be
taken.

Competition

The market in which we compete is relatively new and our services are highly
specialized. While competition exists for most of our service offerings, the
number of companies with which we compete is relatively small and we are
unaware of any one company that competes against us across our full range of
services. We expect competition with our services to increase over time as the
market for our services grows. Competition may also increase as a result of
industry consolidation.

47
<PAGE>

In the markets occupied by our higher-end products such as Web Business
Finder, we face competition from companies including InfoNow Corporation, which
provides outsourced Web-based inquiry management services, and Where 2 Get It
Inc., which provides Internet-based dealer locator service. Our SiteMaker
service competes indirectly with companies that provide free or low-cost web
creation and hosting services in conjunction with internet service provider, or
ISP, services. Our MailMaker service competes directly with other Internet
marketing companies, including Post Communications, Digital Impact, and
yesmail.com, which all provide outsourced electronic mail marketing services.
Finally, with many potential new clients, the initial competitor to our service
offerings is the client's own in-house information systems department which may
initially believe that it can duplicate our services at a lower cost. This
often delays the sale process, but we are currently unaware of any retailer or
merchant that has decided to build its own solution after having been exposed
to our service offerings. In each competitive situation that we face, we
believe the factors that cause potential clients to consider our services
include the depth of our service offerings, our ability to integrate our
services into larger marketing initiatives, the quality and reliability of our
services, our speed of implementation and the overall quality of our technology
and client service.

Our MapBlast! business unit focuses on providing maps and driving directions
and faces significant competition from a variety of companies, including
MapQuest.com, Inc. and Switchboard Incorporated, both of which are able to
provide these services at very competitive prices. In December 1999, America
Online announced that it was acquiring MapQuest.com in a stock transaction.
Competitive factors within this marketplace include being the first to offer a
mapping solution to a potential customer, product and service pricing and the
quality of the products and services offered.

We believe that our ability to compete depends upon many factors, including
our ability to provide depth and accuracy of destination information, to
increase our sales force and to implement our sales and marketing initiatives,
in addition to the introduction and acceptance of new and enhanced products and
services developed either by us or our competitors and the ease of use of
products and services developed either by us or our competitors.

Intellectual Property

We have filed several applications for U.S. patents in order to protect
proprietary intellectual property that we believe is important to our business.
These include applications entitled "Method and Apparatus for Efficient
Proximity Searching," "A Method and Apparatus of Expanding Web Searching
Capabilities" and "A Method and System for Providing a Web-Shareable Personal
Database."

Our products and services rely on the availability and accuracy of geographic
data. We have licensed a significant portion of our geographic data from a
limited number of sources through non-exclusive, short-term contractual
arrangements. If any of these third parties were to merge or be acquired, the
number of sources providing this geographic data would be further reduced.
Given the short terms of our geographic data licenses, we will have to
renegotiate our contracts in the foreseeable future which may result in
contractual terms that are not as favorable to us as the existing data
licenses. If we cannot maintain these data licenses or any other third-party
license arrangement on commercially reasonable terms, the accuracy of our
services may suffer.

Government Regulation

We are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. There are currently few laws
or regulations directly applicable to commercial online services or the
Internet. However, due to increasing popularity and use of commercial online
services and the Internet, it is possible that a number of laws and regulations
may be adopted with

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<PAGE>

respect to commercial online services and the Internet. These laws and
regulations may cover issues including, for example, user privacy, liability
for information retrieved from or transmitted over the Internet, online content
regulation, user privacy, taxation and domain name registration. Moreover, the
applicability to the Internet of existing laws governing issues such as
intellectual property ownership and infringement, copyright, patent, trademark,
trade secret, obscenity, libel, employment and personal privacy is uncertain
and developing. Any new legislation or regulation or the application of
existing laws and regulations to the Internet could have a material and adverse
effect on our business.

As our services are available over the Internet anywhere in the world,
multiple jurisdictions may claim that we are required to qualify to do business
as a foreign corporation in each of those jurisdictions. Our failure to qualify
as a foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties for the failure to qualify. It is possible
that state and foreign governments might also attempt to regulate our
transmissions of content on our Web site or on the Web sites of others or
prosecute us for violations of their laws. We cannot assure you that violations
of local laws will not be alleged or charged by state or foreign governments,
that we might not unintentionally violate these laws or that these laws will
not be modified, or new laws enacted, in the future.

Employees

As of January 10, 2000, we had 131 employees, including three hourly
personnel and consultants, employed in engineering, sales, marketing, business
development, customer support and related activities, and general and
administrative functions. None of our employees is represented by a labor
union, and we consider our relations with our employees to be good. See "Risk
Factors--In order to execute our growth plan we must attract, retain and
motivate highly skilled employees."

Facilities

Our headquarters facilities consist of approximately 25,600 square feet
located in Palo Alto, California which we occupy under leases expiring in June
2000. We occupy 11,500 square feet in New Hampshire under a three year lease
which is used for engineering and product development. We also lease
approximately 1,200 square feet in San Francisco, California for satellite
office space. We are seeking replacement space in Northern California and are
currently in negotiations for an eight year lease for a new headquarters
building comprising approximately 55,000 square feet located in Sunnyvale,
California, although no lease has yet been entered into. We also lease space in
a number of data centers in which we locate our equipment.

Legal Proceedings

In May 1999, Eddie Babcock, a founder and former employee of our company,
filed a complaint against us and several of our officers in California Superior
Court for reformation of contract alleging various contract and tort causes of
action, including reformation of contract, breach of contract, fraud and
interference with economic and contractual relations and seeking declaratory
relief. In his complaint, Mr. Babcock seeks, among other things, the issuance
to him of at least 281,250 shares of common stock, an unspecified amount of
compensatory damages and punitive damages, plus attorneys' fees. In November
1999, the court stayed Mr. Babcock's claim and granted our motion to compel
arbitration. As of the date of this prospectus, Mr. Babcock has not taken
action to pursue his claim in arbitration. If and when this claim is pursued in
arbitration, we plan to vigorously defend against these allegations.

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<PAGE>

Management

The following table sets forth, as of December 31, 1999, the name, age and
position of each of our directors and executive officers.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- --- -----------------------------------------------
<S> <C> <C>
Emerick Woods.............. 44 President and Chief Executive Officer, Director
Scott Young................ 41 Senior Vice President, Operations
David Seltzer.............. 45 Vice President and Chief Financial Officer
Gregory Beasley............ 36 Vice President, Business Development
Mary Gavin................. 42 Vice President, Engineering
Elaine Hamilton............ 52 Vice President, Human Resources
Dinesh Wadhawan............ 42 Vice President, Sales
Eric Winkler............... 33 Vice President, Marketing
David Cherner.............. 35 Vice President and General Manager, MapBlast!
Scott Shuda................ 34 General Counsel and Secretary
Herbert M. Dwight, Jr. 69 Chairman of the Board of Directors
(1)(2)....................
Jonathan Callaghan......... 31 Director
James J. Geddes, Jr........ 49 Director
Fred Gibbons (2)........... 50 Director
Peter Mills................ 48 Director
Norman Nie (1)............. 56 Director
Michael Sears (2).......... 43 Director
Peter Ziebelman (1)........ 43 Director
</TABLE>
- -------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Emerick Woods has served as our President and Chief Executive Officer since
August 1997 and as a Director since February 1998. From August 1996 to August
1997, Mr. Woods was the President and Chief Executive Officer of TuneUp.com,
Inc., an Internet based computing updating service. In May 1997, TuneUp.com
filed a voluntary petition for Chapter 11 bankruptcy, after which it was
reorganized and sold to Quarterdeck Corporation, a provider of software
utilities. From November 1994 to June 1997, Mr. Woods was a Vice President and
General Manager of Quarterdeck Corporation. Mr. Woods holds a B.S. in Computer
Science from Yale University and an M.B.A. from Harvard University. Mr. Woods
is also a Director of ClickAction, Inc., a provider of Internet marketing
solutions.

Scott Young has served as our Senior Vice President, Operations since October
1997. From October 1996 to October 1997, Mr. Young was our Director of
Operations. From February 1994 to October 1996, Mr. Young was the Vice
President of Sales and Marketing of Infrastructures for Information, Inc., a
provider of integrated information management systems software. From August
1989 to October 1994, Mr. Young was the Director of Technology and Government
Relations for Semiconductor Equipment and Materials International, an industry
consortium for the semiconductor industry. Mr. Young holds a B.A. and a J.D.
from the University of Kansas.

David Seltzer has served as our Vice President and Chief Financial Officer
since June 1998. From August 1998 to May 1999, Mr. Seltzer also served as our
Secretary. From August 1997 to May 1998, Mr. Seltzer was an independent
financial consultant. From June 1994 to July 1997, Mr. Seltzer was Vice
President and Chief Financial Officer of Portrait Displays, Inc., a developer
of pivoting displays and image rotation software. From April 1992 to May 1994,
Mr. Seltzer was the Corporate

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<PAGE>

Controller for Truevision, formerly known as RasterOps, a provider of digital
video computer products. Mr. Seltzer holds a B.A. in Business Studies from the
College of Technology in Glasgow, Scotland.

Gregory Beasley has served as our Vice President, Business Development since
August 1998. From 1996 to 1998, Mr. Beasley was the Chief Executive Officer of
Skytech, Inc., an Internet business development company. From 1994 to 1996, Mr.
Beasley was Co-Founder, Vice President of Marketing and General Manager of the
Consumer Division of Worlds, Inc., a developer of graphic chat spaces on the
Internet. Mr. Beasley holds a B.A. in Computer Science and Psychology from
Dartmouth College, and an M.B.A. from Harvard University.

Mary Gavin has served as our Vice President, Engineering since August 1999.
From October 1997 to August 1999, Ms. Gavin was our Director of Engineering
Projects. From March 1997 to October 1997, Ms. Gavin was our Project Manager.
In 1996, Ms. Gavin was a Marketing Manager of NetRights, LLC, a start-up
Internet company. In 1995, Ms. Gavin was a Support and Training Manager of
Codman Research Group, a developer of decision support systems for the health
care industry. Ms. Gavin holds a B.A. from Ripon College.

Elaine Hamilton has served as our Vice President, Human Resources since
October 1999. From June 1998 to October 1999, Ms. Hamilton was the Vice
President of Human Resources of Geron Corporation, a biopharmaceutical company
providing therapeutic and diagnostic products for cancer and other age-related
diseases. From April 1995 to June 1998, Ms. Hamilton was the Director of Human
Resources for Metricom, Inc., a provider of wide area wireless data
communications solutions. Ms. Hamilton holds a B.A. in Education and Psychology
from the University of Iowa and an M.S. in Human Resources and Organization
Development from the University of San Francisco.

Dinesh Wadhawan has served as our Vice President, Sales since March 1999.
From October 1995 to March 1999, Mr. Wadhawan was the Director of Operations,
Western North America of Systems Union, Inc., a provider of international
business and financial software. From January 1994 to September 1995, Mr.
Wadhawan was the Global Manager, Oil and Gas, of Systems Union Limited, the
United Kingdom component of Systems Union. Mr. Wadhawan holds a B.S. and a Post
Graduate Diploma in Business Management from the University of Delhi, India.

Eric Winkler has served as our Vice President, Marketing since January 1999.
From 1998 to 1999, Mr. Winkler was a Director of Consumer Marketing for the
consumer software division of IBM. From 1994 to 1998, Mr. Winkler was a
Marketing and Communications Department Manager and then Director for
Broderbund Software, a software publisher. Mr. Winkler holds a B.A. from the
Allen School of Advertising at the University of Oregon.

David Cherner has served as our General Manager, MapBlast! since April 1999.
From October 1997 through April 1999, Mr. Cherner was a management consultant
to several early-stage Internet companies, including Third Age Media, eWork
Exchange and Vicinity. During that time, Mr. Cherner also served as Vice
President of the Panterra Group, a management consulting organization. In
February 1996, Mr. Cherner founded i-Health, Inc., an Internet health content
community, where he served as President and Chief Executive Officer until
September 1997. From 1994 to 1996, Mr. Cherner was a senior manager, business
development of Access Health, Inc., an information services company. Mr.
Cherner holds a B.A. in Economics from Emory University and an M.B.A. from the
Haas School of Business at the University of California, Berkeley.

Scott Shuda has served as our General Counsel and Secretary since May 1999.
From May 1998 to May 1999, Mr. Shuda was a corporate associate in the Silicon
Valley office of the law firm of Latham & Watkins. From September 1996 to May
1998, Mr. Shuda was a corporate associate in the

51
<PAGE>

law firm of O'Sullivan, Graev & Karabell in New York. From September 1994 to
August 1996, Mr. Shuda was a corporate associate in the law firm of Roger &
Wells in New York. Mr. Shuda holds a B.A., an M.B.A. and a J.D. from Georgetown
University.

Herbert M. Dwight, Jr. has served as Chairman of the Board of Directors since
October 1999. Mr. Dwight has served in a number of positions for Optical
Coating Laboratory, Inc., a manufacturer of optical thin films, including
Chairman of the Board since August 1991, President from August 1991 to November
1997, Chief Executive Officer from August 1991 to April 1998 and Chief
Financial Officer from December 1993 to April 1995. Mr. Dwight was Chairman,
President and Chief Executive Officer of Superconductor Technologies, Inc., a
telecommunications technology company, from 1988 through August 1991 and
continued to served as Chairman from 1991 until May 1994. Mr. Dwight holds a
B.S. and an M.S. in Electrical Engineering from Stanford University. Mr. Dwight
is also a Director of Applied Materials, Inc., Applied Magnetics Corporation
and Advanced Fiber Communications, Inc.

Jonathan Callaghan has served as a Director since May 1997. Since May 1997,
Mr. Callaghan has been a General Partner of CMG@Ventures, a venture capital
firm. From June 1991 to June 1995, Mr. Callaghan was an associate of Summit
Partners, a venture capital firm. Mr. Callaghan holds a B.A. from Dartmouth
College and an M.B.A. from Harvard University. Mr. Callaghan is also a Director
of Chemdex Corporation, Hotlinks Corporation, Exp.com, Inc. and several private
companies.

James J. Geddes, Jr. has served as a Director since August 1999. Since
September 1995, Mr. Geddes has been the Managing Director of Trans Cosmos USA,
Inc., an investment management company, which is an affiliate of the EnCompass
Group, Inc. From August 1993 to August 1995, Mr. Geddes was the President and
Chief Executive Officer of InVision Systems Corporation, a provider of
Internet-based desktop video software. Mr. Geddes holds a B.S. in Electrical
Engineering from the University of Maryland.

Fred Gibbons has served as a Director since October 1995. From October 1995
to October 1999, Mr. Gibbons was the Chairman of the Board of Directors. From
1995 to 1999, Mr. Gibbons was a Lecturer at Stanford University's Graduate
School of Engineering. Since 1994, Mr. Gibbons has been the principal of
Venture-Concept.com, a concept stage venture management firm. Mr. Gibbons holds
a B.S. in Science Engineering and a M.S. in Computer Engineering from the
University of Michigan and an M.B.A. from Harvard University. Mr. Gibbons is
also a Director of MIPS technologies, Inc., Inverse Networks, Inc. and several
private companies.

Peter Mills has served as a Director since February 1996. Since March 1995,
Mr. Mills has been a General partner of CMG@Ventures, a venture capital firm.
From March 1992 to March 1994, Mr. Mills was the Chief Executive Officer of the
United States Display Consortium, a non-profit consortium for the development
of flat panel displays. Mr. Mills holds a B.S. in Communications from Ithaca
College and an M.B.A. from Columbia University.

Norman Nie has served as a Director since December 1998. Since 1997, Mr. Nie
has been a Technology Partner of Oak Investments, a venture capital firm. From
1975 to 1991, Mr. Nie was the Chief Executive Officer of SPSS, Inc., a provider
of statistical software and service solutions. Mr. Nie holds a B.A. from the
University of Washington and an M.A. and a Ph.D from Stanford University.
Mr. Nie is also a director of SPSS, Inc. and several private companies.

Michael Sears has served as a Director since June 1998. Mr. Sears is
currently the President and Chief Executive Officer of Black Pearl Software,
Inc., a provider of Internet enterprise software tools. From 1997 to 1999, Mr.
Sears was the General Manager of Spyglass, Inc., a provider of Internet
connectivity solutions. From 1996 to 1997, Mr. Sears was an independent
consultant, and from 1990

52
<PAGE>

to 1996, Mr. Sears was a General Manager of Sun Microsystems, Inc. Mr. Sears
holds a B.S. from the United States Naval Academy, and a J.D. and an M.B.A.
from Stanford University.

Peter Ziebelman has served as a Director since June 1997. Mr. Ziebelman is a
Founding Partner of 21st Century Internet Venture Partners, a venture capital
firm. From 1988 to October 1996, Mr. Ziebelman was a partner of Thompson Clive
Venture Capital, an international venture capital firm. Mr. Ziebelman holds a
B.S. in Computer Science and Psychology from Yale University, and an M.S. in
Management from Stanford Graduate School of Business.

New Officer Appointment

On January 31, 2000, we announced that Mr. Howard Bain would become Executive
Vice President and Chief Financial Officer of Vicinity. Mr Bain is presently
Executive Vice President and Chief Financial Officer of Informix Software,
Inc., a manufacturer of enterprise software, and will remain in that position
until late March 2000. We expect that he will commence his employment with
Vicinity on March 27, 2000. Prior to joining Informix in January 1999, Mr. Bain
was the Chief Financial Officer of Symantec Corporation, a manufacturer of
packaged software products, from October 1991 to December 1998.

Board Composition

We currently have nine authorized directors. In accordance with the terms of
our Restated Certificate of Incorporation which will become effective upon the
closing of this offering, the terms of office of our directors will be divided
into three classes: Class I, whose term will expire at the annual meeting of
our stockholders to be held in 2000; Class II, whose term will expire at the
annual meeting of stockholders to be held in 2001; and Class III, whose term
will expire at the annual meeting of stockholders to be held in 2002. The Class
I directors are Messrs. Callaghan, Geddes and Gibbons; the Class II directors
are Messrs. Nie, Sears and Ziebelman; and the Class III directors are
Messrs. Dwight, Mills and Woods. At each annual meeting of stockholders the
successors to directors whose terms will then expire will be elected to serve
from the time of election and qualification until the third annual meeting
following election or special meeting held in lieu thereof. In addition, our
Restated Certificate of Incorporation provides that the authorized number of
directors may be changed only by a resolution of the Board of Directors or a
super-majority vote of our stockholders. Any additional directorships resulting
from an increase in the number of directors will be distributed among the three
classes so that, as nearly as possible, each class will consist of one-third of
our directors. This classification of our Board of Directors may have the
effect of delaying or preventing changes in control or management of our
company.

Board Committees

Audit Committee

The Audit Committee of the Board of Directors reviews, acts on and reports to
the Board of Directors with respect to various auditing and accounting matters,
including the recommendation of our independent auditors, the scope of the
annual audits, fees to be paid to the independent auditors, the performance of
our independent auditors and our accounting practices. The members of the Audit
Committee are Messrs. Dwight, Gibbons and Sears.

Compensation Committee

The Compensation Committee of the Board of Directors determines the salaries,
benefits and stock option grants for our employees, consultants, directors and
other individuals compensated by our

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<PAGE>

company. The Compensation Committee also administers our stock-based
compensation plans. The members of the Compensation Committee are Messrs.
Dwight, Nie and Ziebelman.

Director Compensation

Historically, we have not paid any cash compensation to our Directors for
serving on our Board of Directors, but have reimbursed them for their out-of-
pocket expenses incurred in connection with attending meetings of our Board of
Directors and, in some instances, granted them options to purchase shares of
our common stock. Our 2000 Equity Participation Plan provides for formula
grants to our non-employee directors of non-statutory stock options to purchase
5,000 shares of common stock on the date of each annual meeting of our
stockholders following which he or she will continue to serve on our Board of
Directors. After the closing of this offering, we anticipate providing
customary compensation to our non-employee directors. However, the amount and
nature of this compensation has not yet been determined. We anticipate that we
will continue to reimburse all Directors for their out-of-pocket expenses
incurred in attending meetings of our Board of Directors.

Compensation Committee Interlocks And Insider Participation

Our Compensation Committee currently consists of Messrs. Dwight, Nie and
Ziebelman. Each is a Director and none is an employee. None of our executive
officers served as a director or member of the Compensation Committee or other
board committee performing equivalent functions of another corporation, one of
whose executive officers served on our Board of Directors or Compensation
Committee.

Employment, Severance And Other Agreements

Employment Agreement with Emerick Woods

Effective February 1998, we entered into an employment agreement with Emerick
Woods pursuant to which Mr. Woods agreed to serve as our President and Chief
Executive Officer. This employment agreement provides that Mr. Woods will
receive an annual base salary of $200,000 and is eligible to receive an annual
incentive bonus of up to $100,000. In addition, we agreed to grant Mr. Woods
options to purchase 955,137 shares of our common stock, 25% of which vested
immediately on the date of grant with a ratable portion of the balance of the
options vesting each month for a three-year period commencing March 1998. In
the event of specified merger or reorganization transactions, an aggregate
additional 50% of these options will become immediately vested, subject to
specified conditions. In July 1999, Mr. Woods exercised all of his options,
subject to vesting. Under the employment agreement, Mr. Woods receives a
housing subsidy and is eligible to participate in employee benefit plans
available to our employees. In the event that Mr. Woods' employment is
terminated without cause or due to death or disability, the contract provides
that the base salary will be continued for up to nine months.

Stock Option Acceleration Rights of Executive Officers

We have entered into agreements with a number of our executive officers
providing that up to 25% of their stock options will become immediately vested
in the event of specified merger or reorganization transactions.

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<PAGE>

Executive Compensation

The following table sets forth all compensation awarded to, earned by or paid
to our Chief Executive Officer and the four other most highly compensated
executive officers of our company whose annual salary and bonus exceeded
$100,000 in fiscal 1999, or Named Executive Officers, for services rendered in
all capacities to us during fiscal 1999.

<TABLE>
<CAPTION>
---------------------------------
Long-Term
Annual Compensation
Compensation(1) Awards
-------------------- ------------
Shares
Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- -------- -------- ------------
<S> <C> <C> <C>
Emerick Woods, President and Chief Executive
Officer..................................... $200,000(2) $100,000 0
Scott Young, Senior Vice President,
Operations.................................. 130,000 30,000 190,000
David Seltzer, Vice President and Chief
Financial Officer........................... 130,000 20,000 0
Gregory Beasley, Vice President, Business
Development................................. 117,468 20,000 180,000
Mary Gavin, Vice President, Engineering...... 92,083 10,000 55,000
</TABLE>
- -------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted for the Named Executive Officers because the aggregate
amount of these perquisites and other personal benefits constituted less
than the lesser of $50,000 or 10% of the total of annual salary and bonuses
for each of our Named Executive Officers in fiscal 1999.

(2) Excludes $33,000 related to housing expenses paid by us on behalf of Mr.
Woods.

Option Grants In Last Year

The following table sets forth information regarding stock options granted to
each of the Named Executive Officers during fiscal 1999. We have not granted
any stock appreciation rights.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Potential Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted to Option Term(1)
Options Employees in Exercise Market Expiration ------------------------------
Name Granted(1) Fiscal Year Price Price Date 5% 10%
- ---- ---------- ------------ -------- ---------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Emerick Woods........... 0 0% -- -- -- -- --
Scott Young............. 0 0 -- -- -- -- --
David Seltzer........... 0 0 -- -- -- -- --
Gregory Beasley......... 180,000 15.4 $0.15 $3,060,000 8/19/08 $ 4,940,437 $ 7,866,821
Mary Gavin.............. 5,000 0.4 0.15 85,000 8/19/08 137,234 218,523
</TABLE>
- -------------------
(1) Potential realizable values are net of exercise price before taxes, and are
based on the assumptions that the initial public offering price of $17.00
per share was the fair market value of the stock on the date of grant and
that our common stock appreciates at the annual rate shown compounded
annually from the date of grant until the expiration of the ten-year term.
These numbers are calculated based on Securities and Exchange Commission
requirements and do not reflect our projection or estimate of future stock
price growth.

55
<PAGE>

Option Exercises and Fiscal Year-End Option Values

The following table sets forth information concerning stock option exercises
in fiscal 1999 and the number and value of unexercised options held by each of
the Named Executive Officers at July 31, 1999.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares July 31, 1999 July 31, 1999(1)
Acquired Value ------------------------------- -------------------------------
Name on Exercise Realized Exercisable(2) Unexercisable(2) Exercisable(2) Unexercisable(2)
- ---- ----------- -------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Emerick Woods........... 955,137 0 0 -- --
Scott Young............. 50,000 190,000 0 $3,211,000 --
David Seltzer........... 130,000 0 0 -- --
Gregory Beasley......... 0 180,000 0 3,033,000 --
Mary Gavin.............. 0 55,000 0 929,250 --
</TABLE>
- -------------------
(1) There was no public trading market for the common stock as of July 31,
1999. Accordingly, these values have been calculated on the basis of the
initial public offering price of $17.00 per share, less the applicable
exercise price per share, multiplied by the number of underlying shares.

(2) All options granted under our stock option plans are immediately
exercisable; unvested shares issued upon exercise are subject to repurchase
by our company.

Employee Benefit Plans

1995 Stock Option Plan

Our 1995 Stock Option Plan was adopted by our Board of Directors in October
1995, and approved by our stockholders in February 1996. Under the 1995 Plan, a
total of 2,000,000 shares of common stock were authorized and 1,362,143 shares
were issued, 1,050,585 of which have subsequently been retired. No further
grants will be made under the 1995 Plan.

The 1995 Plan may be administered by our Board of Directors, or a committee
thereof. Subject to the Act, Delaware corporate and securities laws, the
Internal Revenue Code and the rules of the Nasdaq National Market, our Board of
Directors may adjust the size and composition of the committee, or remove the
committee and administer the 1995 Plan directly. Our Board of Directors may
amend, alter, suspend or discontinue the 1995 Plan at any time. However, this
action will not affect the rights of previously granted options, unless there
is a written agreement to that affect signed by the option holder and our
company.

Upon any changes in our capitalization, such as a stock split or stock
dividend, the number of shares subject to each option and the shares
authorized, as well as the per share exercise price will be adjusted
proportionally. However, issues of any class of stock, or securities
convertible into shares of stock, will not trigger this proportional
adjustment. In the event of our proposed dissolution or liquidation, our Board
of Directors will notify each option holder before any action is taken. All
unexercised options will terminate immediately before the completion of a
dissolution or liquidation transaction. If we merge or sell substantially all
our assets, the outstanding options must be assumed or substituted for by the
successor corporation and/or its affiliates. If the successor corporation
refuses to honor or substitute the outstanding options, they will become
immediately and fully vested and exercisable.

56
<PAGE>

1996 Incentive Stock Option Plan

Our 1996 Incentive Stock Option Plan was adopted by our Board of Directors
and approved by our stockholders in November 1996. Under the 1996 Plan, a total
of 4,216,317 shares of common stock were authorized and 3,892,417 shares were
issued, none of which have subsequently been retired. No further grants will be
made under the 1996 Plan, provided that shares that remain reserved for
issuance as of January 17, 2000, or which become available for issuance as a
result of stock options expiring or becoming unexercisable, under our 1996 Plan
may be issued under our 2000 Equity Participation Plan.

The 1996 Plan may be administered by our Board of Directors, or a committee
thereof. Subject to the Act, Delaware corporate and securities laws, the
Internal Revenue Code and the rules of the Nasdaq National Market, our Board of
Directors may adjust the size and composition of the committee, or remove the
committee and administer the 1996 Plan directly. Our Board of Directors may
amend, alter, suspend or discontinue the 1996 Plan at any time. However, this
action will not affect the rights of previously granted options, unless there
is a written agreement to that affect signed by the option holder and our
company.

2000 Equity Participation Plan

Our 2000 Equity Participation Plan was adopted by our Board of Directors in
December 1999 and by our stockholders in January 2000 as a successor equity
plan to our 1996 Incentive Stock Option Plan. Under the 2000 Plan, a total of
1,823,900 shares of common stock have been reserved for issuance, including
323,900 shares that remained reserved for issuance under our 1996 Plan as of
January 17, 2000. In addition, shares that become available for issuance as a
result of stock options expiring or becoming exercisable under our 1996 Plan
may be issued under our 2000 Plan. As of January 17, 2000, there were
outstanding under our 1996 Plan stock options to purchase an aggregate of
1,185,805 which, if expire or become unexercisable, may be issued under our
2000 Plan. As of January 31, 2000, we had issued options to purchase an
aggregate of 578,750 shares under the 2000 Plan.

The 2000 Plan provides for the discretionary grant of incentive stock options
to employees and for the grant of nonstatutory stock options, stock
appreciation rights, performance awards, dividend equivalents, stock payments
and deferred stock to employees and consultants. The 2000 Plan provides that we
cannot issue options or stock purchase rights after the tenth anniversary of
the date on which the 2000 Plan was adopted by our Board of Directors. The 2000
Plan also provides for formula grants to our non-employee directors of
nonstatutory stock options to purchase 5,000 shares of common stock on the date
of each annual meeting of our stockholders following which he or she will
continue to serve on our Board of Directors.

57
<PAGE>

The 2000 Plan may be administered by our Board of Directors or a committee
thereof. The administrator has the power to determine the terms of the options
or other awards granted, including the exercise price of the options or other
awards, the number of shares subject to each option or other award (up to
1,000,000 per year per participant), the exercisability thereof, and the form
of consideration payable upon exercise. In addition, the administrator has the
authority to amend, suspend or terminate the 2000 Plan, provided that no action
may affect any share of common stock previously issued and sold or any option
previously granted under the 2000 Plan without the consent of the holder. The
exercise price of nonstatutory stock options and other awards granted under the
2000 Plan is determined by the administrator, but with respect to nonstatutory
stock options intended to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Internal Revenue Code, the exercise price
must be at least equal to the fair market value of the common stock on the date
of grant. With respect to any participant who owns stock possessing more than
10% of the voting power of all classes of our outstanding capital stock, the
exercise price of any incentive stock option granted must be at least equal
110% of the fair market value on the grant date and the term must not exceed
five years. The term of all other options granted under the 2000 Plan may not
exceed ten years.

In the case of restricted stock, unless the administrator determines
otherwise, the restricted stock purchase agreement will grant us a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment or consulting relationship with our company for any
reason, including death or disability. The purchase price for shares
repurchased pursuant to a restricted stock purchase agreement must be the
original price paid by the purchaser. The repurchase option will lapse at a
rate determined by the administrator. Options and other awards granted under
the 2000 Plan are generally not transferable by the optionee, and each option
and other award is exercisable during the lifetime of the optionee only by the
optionee. Options granted under the 2000 Plan must generally be exercised
within three months after the end of optionee's status as an employee, director
or consultant, or within one year after the optionee's termination by
disability or death, respectively, but in no event later than the expiration of
the option's term. The 2000 Plan provides that, in the event of a merger of
Vicinity with or into another corporation, the administrator will have the
authority, but not the obligation to accelerate the vesting of each outstanding
option and other award, except that options issued to non-employee directors
will vest in full upon the closing of a merger transaction.

Employee Stock Purchase Plan

The Vicinity Corporation 2000 Employee Stock Purchase Plan was adopted by our
Board of Directors in December 1999 and by our stockholders in January 2000. A
total of 200,000 shares of common stock may be sold under the purchase plan. As
of the date of this prospectus, no shares have been issued under the purchase
plan. The purchase plan, which is intended to qualify under Section 423 of the
Internal Revenue Code, contains consecutive offer periods that are generally
12 months in duration. The offer periods start on March 1 and end on the last
day of February of each year, except for the first offer period, which will
commence on the date immediately preceding the first date on which a share of
common stock is traded on an exchange or quoted on Nasdaq or a successor
quotation system and end on February 28, 2001. Each offer period is comprised
of two consecutive six-month purchase periods. Employees are eligible to
participate if they are customarily employed by us or any participating
subsidiary for at least twenty hours per week. However, no employee may be
granted a right to purchase stock under the purchase plan (1) to the extent
that, immediately after the grant of the right to purchase stock, the employee
would own, or be treated as owning, stock possessing 5% or more of the total
combined voting power or value of all classes of our capital stock or (2) to
the extent that his or her rights to purchase stock under all of our employee
stock purchase plans accrues at a rate which exceed $25,000 worth of stock for
each calendar year.

58
<PAGE>

The purchase plan permits participants to purchase common stock through
payroll deductions of up to 15% of the participant's base compensation. Base
compensation is defined as the participant's total compensation which he or she
receives on each payday as compensation for services to our company. The
maximum number of shares a participant may purchase with respect to a single
purchase period is 5,000 shares. Amounts deducted and accumulated by the
participant are used to purchase shares of common stock at the end of each
purchase period. The price of stock purchased under the purchase plan is 85% of
the lesser of the fair market value of the common stock (1) the first day of
the purchase period or (2) the last day of the purchase period. Participants
may end their participation at any time other than the final 10 days of an
offer period, and they will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with Vicinity.

Rights to purchase stock granted under the purchase plan are not transferable
by a participant other than by will, the laws of descent and distribution, or
as otherwise provided under the purchase plan. The purchase plan provides that,
in the event of a merger of Vicinity with or into another corporation or a sale
of substantially all of our assets, each outstanding right to purchase stock
may be assumed or substituted for by the successor corporation. Our Board of
Directors has the authority to amend or terminate the purchase plan. However,
no action by our Board may adversely affect any outstanding rights to purchase
stock under the purchase plan, except that our Board may terminate an offer
period on any exercise date if our Board determines that the termination of the
purchase plan is in the best interests of Vicinity and our stockholders.

Registration under the Securities Act

We intend promptly after the completion of this offering to register on Form
S-8 all shares of common stock issuable under our compensatory stock plans.

59
<PAGE>

Principal Stockholders

The following table sets forth information with respect to the beneficial
ownership of our common stock as of January 10, 2000, and as adjusted to
reflect the conversion of the preferred stock into common stock immediately
prior to the completion of this offering and sale of the shares of common stock
offered by this prospectus, by:

. each person, or group of affiliated persons, who is known by us to
beneficially own 5% or more of our common stock;

. each of our directors and Named Executive Officers; and

. all of our directors and executive officers as a group.

Share ownership in each case includes shares issuable upon exercise of
outstanding options and warrants that are exercisable within 60 days of January
10, 2000, as described in the footnotes below. Percentage of ownership is
calculated according to SEC Rule 13d-3(d)(1). Percentage ownership calculations
before and after this offering are based on 19,953,007 shares and 26,953,007
shares, respectively, of common stock outstanding. The address for all
executive officers and directors is c/o Vicinity Corporation, 1135A San Antonio
Road, Palo Alto, CA 94303.

<TABLE>
<CAPTION>
-------------------------------------------
Percentage of
Common Stock
Number of Beneficially Owned (1)
Shares ------------------------------
Name and Address of Beneficially Before the After the
Beneficial Owner Owned (1) Offering Offering
- ------------------- ------------ ----------- -----------
<S> <C> <C> <C>
CMG@Ventures (2)............ 5,788,536 29.0% 21.5%
Oak Investment Partners
(3)........................ 4,252,994 21.3 15.8
21st Century Internet Fund,
L.P. (4)................... 1,850,000 9.3 6.9
EnCompass Group, Inc. (5)... 1,332,000 6.7 4.9
Emerick Woods............... 755,137 3.8 2.8
Scott Young................. 240,000 1.2 *
David Seltzer............... 130,000 * *
Gregory Beasley............. 205,000 1.0 *
Mary Gavin.................. 80,000 * *
Herbert M. Dwight, Jr....... 210,000 1.1 *
Jon Callaghan (2)........... 5,788,536 29.0 21.5
Jim J. Geddes, Jr. (5)...... 200,000 1.0 *
Fred Gibbons (6)............ 108,576 * *
Peter Mills (2)............. 5,788,536 29.0 21.5
Norman Nie.................. 31,905 * *
Michael Sears............... 20,000 * *
Peter Ziebelman (4)......... 1,850,000 9.3 6.9
All directors and executive
officers as a group (18
persons)................... 10,174,154 51.0 37.8
</TABLE>
- -------------------
* Less than 1% of total.
(1) Gives effect to the shares of common stock issuable within 60 days of
January 10, 2000 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect
to shares. Unless otherwise indicated, the persons named in the table have
sole voting and sole investment control with respect to all shares
beneficially owned.

60
<PAGE>

(2) Consists of 5,788,536 shares held by CMG@Ventures I, an affiliate of
CMG@Ventures. Guy S. Bradley, Andrew J. Hajducky, III, David S. Wetherell
and Messrs. Callaghan and Mills are each a General Partner of CMG@Ventures
and may be deemed to have voting and investment powers over these shares.
Messrs. Callaghan and Mills disclaim beneficial ownership of these shares,
except to the extent of each of their interests in CMG@Ventures and
CMG@Ventures I.
(3) Excludes 31,905 shares held by Norman Nie, one of our Directors and a
limited partner of Oak VIII Affiliates Fund, L.P. Bandel Carano, Jerry
Gallagher, Ed Glassmeyer, Fred Harmon and Ann Lamont are each a General
Partner of Oak Investment Partners.
(4) Consists of 1,850,000 shares held by 21st Century Internet Fund, L.P., an
affiliate of 21st Century Internet Management Partners, LLC. J. Neil
Weintraut and Mr. Ziebelman are each a General Partner of 21st Century
Internet Fund L.P. Mr. Ziebelman, is a General Partner of 21st Century
Internet Management Partners, LLC, and may be deemed to have voting and
investment powers over these shares. Mr. Ziebelman disclaims beneficial
ownership in these shares, except to the extent of his interest in 21st
Century Internet Management Partners, LLC.
(5) Includes 932,000 shares held by EnCompass Group, Inc., 200,000 shares held
by U.S. Information Technology Financing L.P., 190,000 shares held by Trans
Cosmos USA, Inc., and 10,000 shares held by TCI Club. The executive
officers of EnCompass Group, Inc. are James Doane, Hiroyuki Kohara, Yasuki
Matsumoto and Shozo Okuda. The directors of EnCompass Group, Inc. are
Anindya Bose, Koji Funatsu, Hirofumi Hirano, Kideaki Ishioka, Hiroshi
Kaizuka, Ichizo Nakai, Koki Okuda and Masataka Okuda. Mr. Geddes is
Managing Director of Trans Cosmos USA, Inc., and may be deemed to have
voting and investment powers over the shares held by Trans Cosmos USA, Inc.
and TCI Club. Mr. Geddes disclaims beneficial ownership in these shares,
except to the extent of his interest in Trans Cosmos USA, Inc. and TCI
Club.
(6) All shares are held by a trust with respect to which Mr. Gibbons maintains
sole voting power.

61
<PAGE>

Certain Transactions

We entered into various service agreements with NaviSite Internet Services
Corporation pursuant to which NaviSite agreed to host a portion of our data
center equipment and provide Internet connections and we agreed to pay NaviSite
various setup and service fees. The last of these agreements expired in
December 1999. NaviSite's largest stockholder is CMGI, Inc., an affiliate of
our largest stockholder, CMG@Ventures. In addition, Craig D. Goldman, Andrew J.
Hajducky, III and David S. Wetherell are directors of NaviSite and principals
of CMG@Ventures and Messrs. Hajducky and Wetherell are officers of, and Mr.
Goldman is a director of, CMGI, Inc. We paid NaviSite approximately $246,000,
$149,000 and $190,000 in fiscal 1997, 1998 and 1999, respectively.

In June 1998, we entered into a service agreement with AltaVista pursuant to
which we provided AltaVista with United States and Canadian maps and driving
directions. The agreement expired in May 1999. In fiscal 1998 and 1999, our
revenue related to this agreement was approximately $32,000 and $160,000,
respectively. In January 2000, we entered into an agreement with AltaVista
pursuant to which we agreed to provide our BrandFinder functionality to
AltaVista. During the initial term of this agreement, we will be paid a portion
of the revenues generated from advertising sold by AltaVista on pages
displaying our content and services. We have not yet received any revenue under
this agreement. AltaVista's largest stockholder is CMGI, Inc., an affiliate of
our largest stockholder, CMG@Ventures.

In July 1999, we loaned approximately $96,000 to Emerick Woods, our President
and Chief Executive Officer, to enable Mr. Woods to exercise options to
purchase shares of our common stock. This recourse loan bears interest at a
rate equal to 8 1/4% and is payable by Mr. Woods on the first to occur of the
following:

. 18 months after an initial public offering of our common stock;

. 30 days after the sale of our company;

. 90 days after the termination of Mr. Woods' employment; and

. July 2004.

In October 1999, we loaned approximately $113,000 to Dinesh Wadhawan, our
Vice President, Sales, to enable Mr. Wadhawan to exercise options to purchase
shares of our common stock. In December 1999, we increased the amount of this
loan to approximately $135,000 to assist Mr. Wadhawan in paying taxes relating
to the exercise of his options. This recourse loan bears interest at a rate
equal to 8 1/4% and is payable by Mr. Wadhawan on the first to occur of the
following:

. 18 months after an initial public offering of our common stock;

. 30 days after the sale of our company;

. 90 days after the termination of Mr. Wadhawan's employment; and

. October 2004.

In November 1999, we entered into a license agreement with ClickAction Inc.
pursuant to which we license software from ClickAction. In December 1999, we
paid an aggregate of $250,000 in license fees under this license agreement. Mr.
Woods is a Director of ClickAction.

We believe that each of the foregoing transactions was on terms no less
favorable to us than we could have obtained from independent third parties.

62
<PAGE>

Description of Capital Stock

The following description of our capital stock and related provisions of our
Restated Certificate of Incorporation as will be in effect upon the closing of
this offering, or Certificate, and Bylaws as will be in effect upon the closing
of this offering, or Bylaws, are summaries of these documents and are qualified
by reference to the Certificate and the Bylaws. Copies of these documents have
been filed with the Securities and Exchange Commission as exhibits to our
registration statement, of which this prospectus forms a part. The descriptions
of the common stock and preferred stock reflect changes to our capital
structure that will occur upon the closing of this offering.

The authorized capital stock of our company consists of 100,000,000 shares of
common stock, par value $.001 per share, and 5,000,000 shares of preferred
stock, par value $.001 per share.

Common Stock

As of the date of this prospectus, there were 19,953,007 shares of common
stock outstanding and held of record by approximately 135 stockholders assuming
conversion of all outstanding shares of preferred stock.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and they do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor, subject to any preferential dividend rights of any
outstanding preferred stock. Upon the liquidation, dissolution or winding up of
our company the holders of common stock are entitled to receive ratably our net
assets available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of the
common stock have no preemptive, subscription, redemption or conversion rights.
The rights, preferences and privileges of holders of common stock are subject
to, and may be adversely affected by, the rights of the holders of shares of
any series of preferred stock which we may designate and issue in the future.
Upon the closing of this offering, there will be no shares of preferred stock
outstanding.

Preferred Stock

Upon the closing of this offering, our Board of Directors will be authorized,
without further stockholder approval, to issue from time to time up to an
aggregate of 5,000,000 shares of preferred stock in one or more series and to
fix or alter the designations, preferences, rights and any qualifications,
limitations or restrictions of the shares of any series thereof, including the
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption including sinking fund provisions, redemption price or prices,
liquidation preferences and the number of shares constituting any series or
designations of any series. We have no present plans to issue any shares of
preferred stock. See "Anti-Takeover Effects of Delaware Law and our Certificate
of Incorporation and Bylaws."

Registration Rights

Pursuant to the terms of the Amended and Restated Information and
Registration Rights Agreement, after the closing of this offering the holders
of 16,682,100 shares of common stock will be entitled to demand and piggyback
registration rights with respect to the registration of their shares under the
Securities Act. Please see "Shares Eligible for Future Sale."

63
<PAGE>

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and
Bylaws

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, as amended, or DGCL. Subject to a number of exceptions,
Section 203 of the DGCL prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the interested stockholder attained
status as an interested stockholder with the approval of the board of directors
or unless the business combination is approved in a prescribed manner. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
a corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to our company and, accordingly, may discourage attempts to acquire us.

In addition, a number of provisions of the Certificate and Bylaws, which
provisions will be in effect upon the closing of this offering and are
summarized in the following paragraphs, may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider in its best interest, including those attempts
that might result in a premium over the market price for the shares held by our
stockholders.

Board of Directors. Our Board of Directors will be divided into three classes
of directors serving staggered three-year terms. The Certificate authorizes our
Board of Directors to fill vacant directorships or increase the size of the
Board of Directors. Accordingly, even if a stockholder brings a successful
proxy contest, he or she would likely only be able to elect a minority of our
Board of Directors at any one annual meeting.

Stockholder Action; Special Meeting of Stockholders. The Certificate provides
that stockholders may not take action by written consent, but only at a duly
called annual or special meeting of stockholders. The Certificate further
provides that special meetings of stockholders of our company may be called
only by the Chairman of the Board of Directors or a majority of the Board of
Directors.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at our principal executive offices not less
than 120 days prior to the first anniversary of the date of our notice of
annual meeting provided with respect to the previous year's annual meeting of
stockholders; provided, that if no annual meeting of stockholders was held in
the previous year or the date of the annual meeting of stockholders has been
changed to be more than 30 calendar days from the date contemplated at the time
of our notice of annual meeting provided with respect to the previous year's
annual meeting of stockholders, notice by the stockholder, to be timely, must
be so received not later than the 10th day following the date on which notice
of the date of the meeting is given to stockholders or made public, whichever
first occurs. The Bylaws also specify requirements as to the form and content
of a stockholder's notice. These provisions may preclude stockholders from
bringing matters before an annual meeting of stockholders or from making
nominations for directors at an annual meeting of stockholders.

Authorized But Unissued Shares. The authorized but unissued shares of common
stock and preferred stock are available for future issuance without stockholder
approval, subject to limitations imposed by the Nasdaq National Market. These
additional shares may be utilized for a variety of

64
<PAGE>

corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved common stock and preferred stock could
render more difficult or discourage an attempt to obtain control of our company
by means of a proxy contest, tender offer, merger or otherwise.

The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage. We
have provisions in our certificate and bylaws that require a super-majority
vote of the stockholders to amend, revise or repeal provisions that may have an
anti-takeover effect.

Limitation of Liability and Indemnification Matters

The Certificate includes provisions to (1) eliminate the personal liability
of our Directors for monetary damages resulting from breaches of their
fiduciary duty to the extent permitted by the DGCL and (2) indemnify our
Directors and officers to the fullest extent permitted by the DGCL, including
circumstances in which indemnification is otherwise discretionary.

We have entered into agreements to indemnify our directors and officers, in
addition to the indemnification provided for in the Bylaws. We believe that
these provisions and agreements are necessary to attract and retain qualified
directors and officers. Our Bylaws also permit us to secure insurance on behalf
of any officer, director, employee or other agent for any liability arising out
of his or her actions, regardless of whether the DGCL would permit
indemnification.

Transfer Agent And Registrar

Upon the closing of this offering, the transfer agent and registrar for the
common stock will be American Stock Transfer & Trust Company.

65
<PAGE>

Shares Eligible for Future Sale

Prior to this offering, there has not been any public market for the common
stock, and no prediction can be made as to the effect, if any, that market
sales of shares of common stock or the availability of shares of common stock
for sale will have on the market price of the common stock prevailing from time
to time. Nevertheless, sales of substantial amounts of common stock in the
public market, or the perception that sales could occur, could adversely affect
the market price of the common stock and could impair our company's future
ability to raise capital through the sale of its equity securities. See "Risk
Factors--The large number of shares eligible for public sale after this
offering could cause our stock price to decline."

Upon the closing of this offering, we will have an aggregate of 26,953,007
shares of common stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. Of
the outstanding shares, the shares sold in this offering will be freely
tradable, except that any shares held by our "affiliates," as defined in Rule
144 under the Securities Act, may only be sold in compliance with the
limitations described below. Also, some of these shares will be subject to
lock-up agreements as described below. The remaining 19,953,007 shares of
common stock will be deemed "restricted securities" as defined under Rule 144.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act, which rules are summarized below.

In accordance with the lock-up agreements described below and subject to the
provisions of Rules 144, 144(k) and 701 and, in the case of shares acquired
upon the exercise of options which are not yet fully vested, vesting,
outstanding "restricted securities" will be available for sale in the public
market as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Number of Shares Date
- ---------------- ----------------------------------------------------------------------------------
<S> <C>
177,561 After the date of this prospectus
1,300,671 At various times after 90 days from the date of this prospectus (Rule 144)
18,474,775 After 180 days from the date of this prospectus (subject, in some cases, to volume
limitations)
</TABLE>

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of 1% of the then outstanding
shares of common stock (approximately 269,530 shares immediately after this
offering) or the average weekly trading volume in the common stock during the
four calendar weeks preceding the date on which notice of the sale is filed,
subject to restrictions. In addition, a person who is not deemed to have been
our affiliate at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell these shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from any
of our affiliates, the holding period for the purpose of effecting a sale under
Rule 144 commences on the date of transfer from the affiliate.

Our officers, directors and holders of an aggregate of approximately 18.5
million shares of our common stock have agreed that they will not offer, sell
or agree to sell, directly or indirectly, or otherwise dispose of any shares of
common stock without the prior written consent of J.P. Morgan Securities Inc.
for a period of 180 days from the date of this prospectus. In addition, Hikari
Tsushin,

66
<PAGE>

Inc. has agreed that, to the extent that it purchases shares in this offering,
it will not offer, sell or agree to sell, directly or indirectly, or otherwise
dispose of any shares of common stock without the prior written consent of J.P.
Morgan Securities Inc. for a period of 270 days from the date of this
prospectus. Please see "Underwriting."

Any of our employees or consultants who purchased his or her shares pursuant
to a written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701, which permits nonaffiliates to sell their Rule 701
shares without having to comply with the public information, holding period,
volume limitation or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with the Rule 144 holding
period restrictions, in each case commencing 90 days after the date of this
prospectus. We intend to file one or more registration statements on Form S-8
under the Securities Act to register all shares of common stock subject to
outstanding stock options and common stock issued or issuable under our stock
plans. We expect to file this registration statement within 180 days after the
date of this prospectus, thus permitting the resale of shares by nonaffiliates
in the public market without restriction under the Securities Act.

We have agreed not to sell or otherwise dispose of any shares of common stock
during the 180-day period following the date of the prospectus, except that we
may issue, and grant options to purchase, shares of common stock under the 2000
Equity Participation Plan. In addition, we may issue shares of common stock in
connection with any acquisition or strategic investment if the terms of the
issuance provide that this common stock shall not be resold prior to the
expiration of the 180-day period referenced in the preceding sentence. See
"Risk Factors--The large number of shares eligible for public sale after this
offering could cause our stock price to decline."

Following this offering, holders of 16,682,100 shares of outstanding common
stock will have demand registration rights with respect to their shares of
common stock (subject to the 180-day lock-up arrangement described above) to
require us to register their shares of common stock under the Securities Act,
and they will have specified rights to participate in any future registration
of our securities. These holders are subject to lock-up periods of not more
than 180 days following the date of this prospectus or any subsequent
prospectus. See "Description of Capital Stock--Registration Rights."

67
<PAGE>

Underwriting

Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom J.P. Morgan Securities Inc., Bear, Stearns & Co. Inc. and U.S. Bancorp
Piper Jaffray Inc., are acting as representatives, have severally agreed to
purchase, and we have agreed to sell to them, the respective number of shares
of common stock set forth opposite their names below.

<TABLE>
<CAPTION>
---------
Number of
Underwriters Shares
------------ ---------
<S> <C>
J.P. Morgan Securities Inc...................................... 3,125,000
Bear, Stearns & Co. Inc......................................... 1,875,000
U.S. Bancorp Piper Jaffray Inc.................................. 1,250,000
J.C. Bradford & Co.............................................. 187,500
Chase Securities Inc............................................ 187,500
Dain Rauscher Incorporated...................................... 187,500
Thomas Weisel Partners LLC...................................... 187,500
---------
Total........................................................... 7,000,000
=========
</TABLE>

The underwriters are offering the common stock subject to their acceptance of
the common stock and subject to prior sale. The underwriting agreement provides
that the obligations of the several underwriters to purchase shares of common
stock are subject to receipt of an opinion of their counsel and other
conditions. If any of the shares of common stock are purchased by the
underwriters under the underwriting agreement, all of the shares, other than
the shares covered by the over-allotment option described below, must be
purchased.

The underwriters propose initially to offer the shares of common stock
directly to the public at the public offering price set forth on the cover page
of this prospectus and to dealers at the public offering price less a
concession not in excess of $0.71 per share. The underwriters may allow, and
dealers may reallow, a concession not in excess of $0.10 per share to other
dealers. After the initial public offering of the common stock, the offering
price and other selling terms may be changed from time to time by the
underwriters.

The underwriters have informed us that they do not intend sales to their
customer accounts as to which they have discretionary trading authority to
exceed five percent of the total number of shares offered.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to 1,050,000 additional shares of
common stock, on the same terms and conditions as set forth on the cover page
hereof. The underwriters may exercise the option solely to cover over-
allotments, if any, made in connection with the sale of shares of common stock
offered hereby. If the underwriters' option is exercised in full, the total
price to public would be $136.9 million the total underwriting discounts and
commissions would be $9.6 million, and the total proceeds to us would be $127.3
million, before deducting $1.2 million in estimated expenses payable by
Vicinity.

Vicinity and our officers, directors and holders of an aggregate of
approximately 18.5 million shares of our common stock and, to the extent that
it purchases shares in this offering, Hikari Tsushin, Inc. have agreed that,
without the prior written consent of J.P. Morgan Securities Inc., during the
period beginning from the date of this prospectus and continuing to and
including the date 180 days or, in the case of Hikari Tsushin, 270 days from
the date of this prospectus they will not:

68
<PAGE>

. offer, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares
of common stock or any of our securities which are substantially
similar to the common stock, including but not limited to any
securities that are convertible into or exercisable or exchangeable
for, or that represent the right to receive common stock or any
substantially similar securities; or

. enter into any swap, option, future, forward or other agreement that
transfers, in whole or in part, the economic consequences of ownership
of common stock or any securities substantially similar to the common
stock.

The restrictions described in this paragraph do not apply to:

. the issuance of shares under our employee stock option or stock
purchase plans;

. the grant by us of employee stock options;

. the issuance of shares by us upon exercise of warrants outstanding on
the date of this prospectus;

. the issuance of shares in connection with any acquisition or strategic
investment if the terms of the issuance provide that these shares
shall not be resold prior to the expiration of the 180-day lockup
period; or

. the issuance of common stock in connection with the transactions
described in this prospectus

The underwriters have reserved for sale, at the initial public offering
price, shares of the common stock for some of our directors, officers,
employees, friends and family who, after receiving a preliminary prospectus and
a letter explaining our directed share program, have expressed a non-binding
interest in purchasing shares of common stock in the offering. These persons
are expected to purchase, in the aggregate, not more than five percent of the
common stock offered in the offering. In addition, one of our potential
partners in Asia, Hikari Tsushin, Inc., has expressed a non-binding indication
of interest to purchase $10.0 million of, or 588,235, shares of our common
stock in this offering at the initial public offering price, and we have
requested that the underwriters reserve these shares for sale to Hikari
Tsushin. The number of shares available for sale to the general public in the
offering will be reduced to the extent these persons purchase reserved shares.
Any reserved shares not so purchased will be offered to the general public on
the same basis as the other shares offered by this prospectus.

We have agreed to indemnify the underwriters against liabilities, losses and
expenses, including liabilities under the Securities Act, or to contribute to
payments that the underwriters may be required to make in respect thereof.

It is expected that delivery of the shares will be made to investors on or
about February 14, 2000.

In connection with this offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot in connection with this offering,
creating a syndicate short position. In addition, the underwriters may bid for,
and purchase, shares of common stock in the open market to cover syndicate
short positions or to stabilize the price of the common stock. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the common stock in the offering, if the syndicate repurchases previously
distributed common stock in syndicate covering transactions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities, and may end any of
these activities at any time.

69
<PAGE>

Prior to this offering, there has been no public market for the common stock.
The initial public offering price for the shares of common stock offered hereby
was determined by agreement between us and the underwriters. Among the factors
considered in making this determination were the history of and the prospects
for the industry in which we compete, an assessment of our management, our
present operations, our historical results of operations and the trend of our
revenues and earnings, the prospects for our future earnings, the general
condition of the securities markets at the time of the offering and the prices
of similar securities of generally comparable companies. We cannot assure you
that an active trading market will develop for our common stock or that our
common stock will trade in the public market at or above the initial public
offering price.

70
<PAGE>

Legal Matters

The validity of the shares of common stock offered hereby will be passed upon
for Vicinity Corporation by Latham & Watkins, Menlo Park, California. Davis
Polk & Wardwell, Menlo Park, California has acted as counsel for the
underwriters in connection with this offering.

Experts

The financial statements of Vicinity Corporation as of July 31, 1998 and 1999
and for each of the years in the three-year period ended July 31, 1999, have
been included herein and in the registration statement in reliance on the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of that firm as experts in accounting
and auditing.

Available Information

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including the exhibits, schedules and amendments
thereto, under the Securities Act with respect to the shares of common stock to
be sold in this offering. This prospectus does not contain all the information
set forth in the registration statement. For further information regarding our
company and the shares of common stock to be sold in this offering, please
refer to the registration statement. Statements contained in this prospectus as
to the contents of any contract, agreement or other document referred to are
not necessarily complete, and in each instance reference is made to the copy of
the contract, agreement or other document filed as an exhibit to the
registration statement. These statements are qualified in all respects by these
references.

You may read and copy all or any portion of the registration statement or any
other information that we file at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You
can request copies of these documents, upon payment of a duplicating fee, by
writing to the Securities and Exchange Commission. Please call the Securities
and Exchange Commission at 1-800-732-0330 for further information on the
operation of the public reference rooms. Our Securities and Exchange Commission
filings, including the registration statement, are also available to you on the
Securities and Exchange Commission's Web site located at www.sec.gov.

As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and in accordance
therewith will file periodic reports, proxy statements and other information
with the Securities and Exchange Commission. These reports, proxy and
information statements and other information may also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

71
<PAGE>

Vicinity Corporation

Index to Financial Statements

<TABLE>
<CAPTION>
Page
----

<S> <C>
Independent Auditors' Report............................................. F-2

Balance Sheets........................................................... F-3

Statements of Operations................................................. F-4

Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit)........................................................ F-5

Statements of Cash Flows................................................. F-6

Notes to Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE>

Independent Auditors' Report

The Board of Directors
Vicinity Corporation:

We have audited the accompanying balance sheets of Vicinity Corporation (the
Company) as of July 31, 1998 and 1999, and the related statements of
operations, redeemable convertible preferred stock and stockholders' equity
(deficit) and cash flows for each of the years in the three-year period ended
July 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vicinity Corporation as of
July 31, 1998 and 1999, and the results of its operations and its cash flows
for each of the years in the three-year period ended July 31, 1999 in
conformity with generally accepted accounting principles.

KPMG LLP

Mountain View, California
September 22, 1999, except as to Notes 9 and 12
for which the date is November 16, 1999

F-2
<PAGE>

Vicinity Corporation

Balance Sheets

<TABLE>
<CAPTION>
------------------------------------------------------
July 31, Pro Forma
-------------------------- October 31, October 31,
1998 1999 1999 1999
------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 263,944 $ 9,060,393 $ 6,663,222 $ 8,663,222
Accounts receivable,
net.................. 1,181,302 2,847,372 2,339,081 2,339,081
Prepaid expenses and
other current
assets............... 310,009 382,995 430,017 430,017
------------ ------------ ------------ ------------
Total current
assets.............. 1,755,255 12,290,760 9,432,320 11,432,320
Property and equipment,
net.................... 65,853 912,489 1,982,685 1,982,685
------------ ------------ ------------ ------------
Total assets......... $ 1,821,108 $ 13,203,249 $ 11,415,005 $ 13,415,005
============ ============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Bank note............. $ 800,000 $ 1,000,000 $ -- $ --
Accounts payable...... 484,846 491,290 881,397 881,397
Capital lease
obligations, current
portion.............. -- 379,545 730,082 730,082
Accrued liabilities... 210,775 1,245,234 545,672 545,672
Deferred revenue...... 2,476,988 4,954,878 4,754,421 4,754,421
Payable to related
party................ 163,686 -- -- --
------------ ------------ ------------ ------------
Total current
liabilities......... 4,136,295 8,070,947 6,911,572 6,911,572
Capital lease
obligations, excluding
current portion........ -- 298,009 523,974 523,974
------------ ------------ ------------ ------------
4,136,295 8,368,956 7,435,546 7,435,546
------------ ------------ ------------ ------------
Series A, B, C, D, E and
F redeemable
convertible preferred
stock and Series E
warrants, $0.001 par
value; authorized
10,000,000 at July 31,
1998, 12,519,768 at
July 31 and October 31,
1999; issued and
outstanding 7,137,250
at July 31, 1998,
11,217,387 at July 31,
1999 and 11,567,387 at
October 31, 1999;
aggregate liquidation
preference of
$7,971,578 at July 31,
1998, $32,066,788 at
July 31, 1999 and
$34,994,570 at October
31, 1999; aggregate
redemption amount of
$7,971,578 at July 31,
1998, $22,641,677 at
July 31, 1999 and
$24,857,320 at October
31, 1999............... 7,971,578 21,403,089 23,655,362 --
Commitments
Stockholders' equity
(deficit):
Common stock, $0.001
par value; 22,000,000
shares authorized;
issued and
outstanding 3,760,081
at July 31, 1998,
5,287,667 at July 31,
1999 and 6,119,571 at
October 31, 1999 .... 3,761 5,289 6,120 19,235
Additional paid-in
capital, net of
preferred stock
accretion............ (671,691) (300,941) 431,656 26,073,903
Deferred stock-based
compensation......... -- (1,044,132) (1,897,125) (1,897,125)
Notes receivable from
employees upon
purchase of stock.... (2,138) (97,652) (213,246) (213,246)
Accumulated deficit... (9,616,697) (15,131,360) (18,003,308) (18,003,308)
------------ ------------ ------------ ------------
Total stockholders'
equity (deficit).... (10,286,765) (16,568,796) (19,675,903) 5,979,459
------------ ------------ ------------ ------------
Total liabilities and
stockholders' equity
(deficit)........... $ 1,821,108 $ 13,203,249 $ 11,415,005 $ 13,415,005
============ ============ ============ ============
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>

Vicinity Corporation

Statements of Operations

<TABLE>
<CAPTION>
---------------------------------------------------------------
Three Months Ended
Year Ended July 31, October 31,
------------------------------------- ------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
License and hosting
fees.................. $ 1,419,404 $ 4,386,235 $ 5,656,529 $1,243,810 $ 2,166,479
Service and transaction
fees.................. -- 423,648 767,122 247,958 365,027
----------- ----------- ----------- ---------- -----------
Total revenues........ 1,419,404 4,809,883 6,423,651 1,491,768 2,531,506
----------- ----------- ----------- ---------- -----------
Cost of revenues........ 1,976,653 2,847,089 3,949,081 874,236 1,611,322
----------- ----------- ----------- ---------- -----------
Gross profit (loss)... (557,249) 1,962,794 2,474,570 617,532 920,184
----------- ----------- ----------- ---------- -----------
Operating expenses:
Product development.... 1,703,365 1,550,937 1,747,754 339,482 680,589
Sales and marketing.... 2,958,917 1,676,208 3,588,502 568,010 2,202,967
General and
administrative........ 1,127,471 1,204,240 1,995,384 361,503 765,794
Other.................. -- -- 440,500 -- --
Stock-based
compensation.......... -- -- 166,668 -- 197,432
----------- ----------- ----------- ---------- -----------
Total operating
expenses............. 5,789,753 4,431,385 7,938,808 1,268,995 3,846,782
----------- ----------- ----------- ---------- -----------
Loss from operations.. (6,347,002) (2,468,591) (5,464,238) (651,463) (2,926,598)
Other expense (income),
net.................... (108,907) 12,025 50,425 17,853 (54,648)
----------- ----------- ----------- ---------- -----------
Net loss.............. (6,238,095) (2,480,616) (5,514,663) (669,316) (2,871,950)
Accretion on redeemable
convertible preferred
stock and warrants..... 383,379 517,965 1,038,230 128,658 502,273
----------- ----------- ----------- ---------- -----------
Net loss applicable to
common stockholders.. $(6,621,474) $(2,998,581) $(6,552,893) $ (797,974) $(3,374,223)
=========== =========== =========== ========== ===========
Net loss per common
share--basic and
diluted................ $ (1.61) $ (1.00) $ (1.67) $ (0.21) $ (0.71)
----------- ----------- ----------- ---------- -----------
Weighted average
shares--basic and
diluted................ 4,101,579 2,985,614 3,913,333 3,813,186 4,744,659
=========== =========== =========== ========== ===========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

Vicinity Corporation

Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity
(Deficit)
<TABLE>

<CAPTION>
Additional Notes
paid-in receivable
capital, from
Redeemable convertible net of employees
preferred stock Common stock preferred upon Deferred Total
---------------------- ---------------- stock purchase stock-based Accumulated stockholders'
Shares Amount Shares Amount accretion of stock compensation deficit deficit
---------- ----------- --------- ------ ----------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, July
31, 1997........ 7,137,250 $ 7,453,613 2,465,934 $2,466 $ (376,444) $ (2,138) $ -- $ (7,136,081) $ (7,512,197)
Accretion on
redeemable
preferred
stock........... -- 517,965 -- -- (517,965) -- -- (517,965)
Exercise of
common stock
warrant for
cash............ -- -- 275,512 276 207,918 -- -- -- 208,194
Issuance of
common stock.... -- -- 1,018,635 1,019 14,800 -- -- -- 15,819
Net loss........ -- -- -- -- -- -- -- (2,480,616) (2,480,616)
---------- ----------- --------- ------ ----------- --------- ----------- ------------ ------------
Balances, July
31, 1998........ 7,137,250 7,971,578 3,760,081 3,761 (671,691) (2,138) -- (9,616,697) (10,286,765)
========== =========== ========= ====== =========== ========= =========== ============ ============
Issuance of
preferred stock
and warrants for
cash............ 4,080,137 12,393,281 -- -- -- -- -- -- --
Accretion on
redeemable
preferred stock
and warrants.... -- 1,038,230 -- -- (1,038,230) -- -- -- (1,038,230)
Issuance of
common stock for
cash and note
receivable...... -- -- 1,527,586 1,528 198,180 (95,514) -- -- 104,194
Deferred
compensation
related to
option grants... -- -- -- -- 1,210,800 -- (1,210,800) -- --
Amortization of
stock-based
compensation.... -- -- -- -- -- -- 166,668 -- 166,668
Net loss........ -- -- -- -- -- -- -- (5,514,663) (5,514,663)
---------- ----------- --------- ------ ----------- --------- ----------- ------------ ------------
Balances, July
31, 1999........ 11,217,387 21,403,089 5,287,667 5,289 (300,941) (97,652) (1,044,132) (15,131,360) (16,568,796)
========== =========== ========= ====== =========== ========= =========== ============ ============
Issuance of
preferred stock
for cash
(unaudited)..... 350,000 1,750,000 -- -- -- -- -- -- --
Issuance of
common stock for
cash and notes
receivable
(unaudited)..... -- -- 831,904 831 184,445 (115,594) -- -- 69,682
Accretion on
redeemable
preferred stock
and warrants
(unaudited)..... -- 502,273 -- -- (502,273) -- -- -- (502,273)
Deferred
compensation
related to
option grants
(unaudited)..... -- -- -- -- 1,050,425 -- (1,050,425) -- --
Amortization of
stock-based
compensation
(unaudited)..... -- -- -- -- -- -- 197,432 -- 197,432
Net loss
(unaudited)..... -- -- -- -- -- -- -- (2,871,948) (2,871,948)
---------- ----------- --------- ------ ----------- --------- ----------- ------------ ------------
Balances,
October 31, 1999
(unaudited)..... 11,567,387 $23,655,362 6,119,571 $6,120 $ 431,656 $(213,246) $(1,897,125) $(18,003,308) $(19,675,903)
========== =========== ========= ====== =========== ========= =========== ============ ============
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

Vicinity Corporation

Statements of Cash Flows

<TABLE>
<CAPTION>
----------------------------------------------------------------
Three Months Ended
Year Ended July 31, October 31, 1999
------------------------------------- -------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss............... $(6,238,095) $(2,480,616) $(5,514,663) $ (669,316) $ (2,871,948)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization......... 16,805 13,963 191,338 14,698 177,358
Amortization of stock-
based compensation... -- -- 166,668 -- 197,432
Allowance for doubtful
accounts............. -- -- 80,000 20,000 15,000
Changes in operating
assets and
liabilities:
Accounts receivable.. (165,389) (1,023,207) (1,746,070) (375,085) 493,291
Prepaid expenses and
other current
assets.............. (265,316) 98,870 (72,986) 9,484 (47,022)
Accounts payable..... 325,308 61,530 6,444 185,388 390,107
Accrued liabilities.. 42,655 54,258 1,034,459 92,201 (699,562)
Deferred revenue..... 771,197 1,591,591 2,477,890 536,978 (200,457)
Payable to related
party............... 216,162 (52,476) (163,686) (163,686) --
----------- ----------- ----------- ---------- ------------
Net cash used in
operating
activities......... (5,296,673) (1,736,087) (3,540,606) (349,338) (2,545,801)
----------- ----------- ----------- ---------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of property
and equipment........ (302,334) (105,782) (214,351) (2,532) (544,507)
Proceeds from sale of
property and
equipment............ 520,885 97,296 -- -- --
----------- ----------- ----------- ---------- ------------
Net cash provided by
(used in) investing
activities......... 218,551 (8,486) (214,351) (2,532) (544,507)
----------- ----------- ----------- ---------- ------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
-- (1,000,000)
Proceeds from bank
note.................. -- 800,000 200,000 200,000 --
Proceeds from factoring
receivables........... -- 72,961 -- -- --
Principal payments for
capital lease
obligations........... -- -- (146,069) (6,985) (126,545)
Proceeds from exercise
of common stock
warrant............... -- 208,194 -- -- --
Proceeds from sale of
preferred stock....... 4,975,988 -- 12,393,281 -- 1,750,000
Proceeds from sale of
common stock.......... 1,000 15,819 104,194 6,468 69,682
Repurchase of unvested
common stock.......... (1,867) -- -- -- --
----------- ----------- ----------- ---------- ------------
Net cash provided by
financing
activities......... 4,975,121 1,096,974 12,551,406 199,483 693,137
----------- ----------- ----------- ---------- ------------
Net (decrease) increase
in cash and cash
equivalents............ (103,001) (647,599) 8,796,449 (152,387) (2,397,171)
Cash and cash
equivalents at
beginning of period.... 1,014,544 911,543 263,944 263,944 9,060,393
----------- ----------- ----------- ---------- ------------
Cash and cash
equivalents at end of
period................. $ 911,543 $ 263,944 $ 9,060,393 $ 111,557 $ 6,663,222
=========== =========== =========== ========== ============
Supplemental disclosure
of cash flow
information:
Cash paid during the
period for interest... $ -- $ 23,520 $ 97,205 $ 43 $ 59,741
=========== =========== =========== ========== ============
Schedule of noncash
investing and financing
activities:
Equipment purchased
under capital lease... $ -- $ -- $ 823,623 $ 131,164 $ 708,424
=========== =========== =========== ========== ============
Common stock
repurchased with
forgiveness of notes
receivable............ $ 3,612 $ -- $ -- $ -- $ --
=========== =========== =========== ========== ============
Accretion on redeemable
preferred stock and
warrants.............. $ 383,379 $ 517,965 $ 1,038,230 $ 128,658 $ 502,273
=========== =========== =========== ========== ============
Common stock issued for
note receivable....... $ -- $ -- $ 95,514 $ -- $ 115,594
=========== =========== =========== ========== ============
Deferred compensation
related to stock
option grants......... $ -- $ -- $ 1,210,800 $ -- $ 1,050,425
=========== =========== =========== ========== ============
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>

Vicinity Corporation

Notes to Financial Statements

1. Description of Business and Summary of Significant Accounting Policies

(a) Description of Business

The Company provides a suite of Internet-based marketing infrastructure
services designed to help clients turn Web traffic into store traffic. The
Company hosts clients' store location and product information and delivers that
information to potential customers on demand via the Internet, land-line
telephones, wireless telephones and other wireless devices. The Company can
also provide information to potential customers concerning which items are
regularly stocked at given locations and what promotions are being offered by
participating merchants.

(b) Unaudited Financial Statements

The financial information as of October 31, 1999 and for the three months ended
October 31, 1998 and 1999 is unaudited. In the opinion of management, the
accompanying unaudited financial statements have been prepared on the same
basis as the audited financial statements and include all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial position of the Company at
October 31, 1999 and the operations and cash flows for the three months ended
October 31, 1998 and 1999. Operating results for the three months ended October
31, 1999 are not necessarily indicative of results that may be expected for the
year ending July 31, 2000.

Financial instruments that subject the Company to concentration of credit risk
consist primarily of cash and cash equivalents, and trade accounts receivable.
The Company places its cash and cash equivalents primarily in depository
accounts and money market accounts of recognized financial institutions. To
reduce credit risk with trade accounts receivable, the Company performs
evaluations of the credit worthiness of its customers on an ongoing basis. The
Company does not generally require collateral or other security. The Company
historically has not experienced any significant credit losses. As of July 31,
1998, July 31, 1999 and October 31, 1999, the allowance for bad debt was $0,
$80,000 and $95,000, respectively.

(d) Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If these assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of their carrying cost or fair value less
costs to sell.

(e) Revenue Recognition

The Company primarily derives its revenues from product license and hosting
fees. Revenues are recognized in accordance with Statement of Position (SOP)
No. 97-2, Software Revenue Recognition. As such, these revenues are recognized
ratably over the life of the contract, which typically has one year, non-
refundable terms. Service and transaction fees consist of revenue generated
from project related professional services and to a lesser degree from fees
derived from advertising, sponsorship and e-commerce transactions. These
revenues are recognized as the services are performed. The Company has no
barter agreements, and no revenues have been derived from barter transactions
to date.

Accounts receivable consists of amounts due from customers under signed
contracts where performance on the contract has commenced. Deferred revenue
consists of customer payments received and accounts receivable recorded in
advance of recognizing revenue for license and hosting fees.

(f) Cost of Revenues

Cost of revenues include salaries and benefits of the Company's operations
personnel, the cost of acquiring data and content, the leasing and depreciation
cost of the Company's computer hosting equipment and internet connection and
data center charges.

F-7
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

(g) Cash Equivalents

The Company considers all highly liquid investments purchased with remaining
maturities of three months or less to be cash equivalents.

(h) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the equipment, generally three to five years. Leasehold
improvements are amortized over the lesser of the remaining life of the lease
or five years.

(i) Income Taxes

The Company accounts for income taxes using the asset and liability method. In
accordance with this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using the enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

(j) Software Development Costs

Costs related to the development of new products and enhancements to existing
products are charged to operations as incurred. Software development costs are
required to be capitalized when a product's technological feasibility has been
established by completion of a working model of the product. To date,
completion of a working model of the Company's products and general release
have substantially coincided. As a result, the Company has not capitalized any
software development costs.

(k) Advertising Expense

The cost of advertising is expensed as incurred. Advertising costs totaled
approximately $119,000, $1,200, $287,000, $6,000 and $250,000 for the years
ended July 31, 1997, 1998 and 1999 and the three months ended October 31, 1998
and 1999, respectively.

(l) Unaudited Pro Forma Balance Sheet

If the initial public offering discussed in Note 12 is consummated, all of the
redeemable convertible preferred stock outstanding will automatically be
converted into common stock upon the closing of the offering. The exercise of
the Series E warrants and the conversion of the redeemable convertible
preferred stock have been reflected in the accompanying unaudited pro forma
balance sheet as of October 31, 1999.

(m) Per Share Computations

Basic net loss per share is computed by dividing net loss applicable to common
stockholders by the weighted-average number of common shares outstanding for
the period. Diluted net loss per share is computed by dividing net loss
applicable to common stockholders by the weighted-average number of common and,
when dilutive, potential common equivalent shares outstanding during the
period. Common equivalent shares include the effect of redeemable convertible
preferred stock, outstanding warrants and stock options. All potential common
shares have been excluded from the computation of diluted net loss per share
for all periods presented because the effect would be antidilutive.

F-8
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

Diluted net loss per share does not include the effect of the following
antidilutive common equivalent shares (in thousands):

<TABLE>
<CAPTION>
-------------------------------------------
Three months
Year ended July 31, ended October 31,
------------------- -----------------------
1997 1998 1999 1998 1999
----- ------ ------ ----------- -----------
<S> <C> <C> <C> <C> <C>
(unaudited) (unaudited)
Stock options..................... 995 2,873 2,064 2,799 1,426
Shares of common stock subject to
repurchase....................... -- -- 738 6 1,147
Convertible preferred warrants.... -- -- 952 -- 952
Convertible preferred stock (as if
converted)....................... 6,357 7,733 9,152 7,733 12,163
----- ------ ------ ----------- -----------
7,352 10,606 12,906 10,538 15,688
===== ====== ====== =========== ===========
</TABLE>

The weighted-average exercise prices of stock options were $0.10, $0.11, $0.11,
$0.10 and $0.22 as of July 31, 1997, 1998 and 1999 and October 31, 1998 and
1999, respectively. The weighted-average exercise price of shares of common
stock subject to repurchase was $0.15 and $0.22 as of July 31, 1999 and October
31, 1999, respectively.

(n) Stock-Based Compensation

The Company accounts for its stock-based compensation arrangements for
employees using the intrinsic-value method pursuant to Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees. Compensation
expense is recorded for the Company's stock options on the date of grant, to
the extent the fair value of the underlying common stock exceeds the exercise
price for stock options or the purchase price for common stock. Options granted
to consultants and other nonemployees are considered compensatory and are
accounted for at fair value pursuant to Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. The Company
discloses the pro forma effect of using the fair value method of accounting for
all stock-based compensation arrangements, in accordance with SFAS No. 123.
(See footnote 5(e)). Because the options generally vest ratably over a four
year period, the service period over which compensation is accrued as a charge
to expense is determined separately for each 25 percent portion of the total
award, in accordance with Financial Accounting Standards Board (FASB)
Interpretation No. 28 (FIN 28). The result of applying FIN 28 is that
approximately 52% of the unearned deferred compensation will be amortized in
the first year, 27% in the second year, 15% in the third year and 6% in the
fourth year following the date of grant.

(o) Segment Information

During fiscal 1999, the Company adopted the provisions of SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information. SFAS No.
131 established annual and interim reporting standards for a company's
operating segments. SFAS No. 131 requires disclosures of selected segment-
related financial information about products, major customers and geographic
areas.

(p) Comprehensive Loss

The Company has no significant components of other comprehensive loss, and
accordingly, comprehensive loss is the same as net loss for all periods
presented.

(q) Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

F-9
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

(r) Internal Use Software

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use. SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998. SOP 98-1
provides guidance over accounting for computer software developed or obtained
for internal use, including the requirement to capitalize specified costs and
amortization of these costs. The Company adopted SOP 98-1 on August 1, 1999.

(s) Recent Acounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards for derivative instruments
(including derivative instruments embedded in other contracts) and for hedging
activities. SFAS No. 133, as amended by SFAS No. 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. To date, the
Company has not entered into any derivative financial instruments or hedging
activities.

2. Balance Sheet Components

(a) Cash and Cash Equivalents

Cash and cash equivalents consisted of the following:

<TABLE>
<CAPTION>
--------------------- -----------
July 31,
--------------------- October 31,
1998 1999 1999
---------- ---------- -----------
(unaudited)
<S> <C> <C> <C>
Cash.......................................... $ 261,221 $ 121,444 $ 277,898
Money market funds............................ 2,723 8,938,949 6,385,324
---------- ---------- ----------
$ 263,944 $9,060,393 $6,663,222
========== ========== ==========
</TABLE>

(b) Property and Equipment

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
---------------------- -----------
July 31,
---------------------- October 31,
1998 1999 1999
---------- ---------- -----------
(unaudited)
<S> <C> <C> <C>
Furniture and fixtures................... $ -- $ 14,749 $ 124,949
Computer equipment....................... 8,822 144,418 296,303
Purchased software....................... 68,625 103,506 373,301
Equipment under capital leases........... -- 823,623 1,532,047
Leasehold improvements................... -- 29,125 36,375
---------- ---------- ----------
77,447 1,115,421 2,362,975
Less accumulated depreciation and
amortization............................ (11,594) (202,932) (380,290)
---------- ---------- ----------
$ 65,853 $ 912,489 $1,982,685
========== ========== ==========
</TABLE>

The Company entered into capital lease arrangements for equipment. Accumulated
depreciation on the leased equipment totaled approximately $151,000 and
$277,000 as of July 31, 1999 and October 31, 1999, respectively. Amortization
of assets under capital leases is included in depreciation and amortization
expense.

F-10
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

A summary of accrued liabilities as follows:

<TABLE>
<CAPTION>
--------------------- -----------
July 31,
--------------------- October 31,
1998 1999 1999
---------- ---------- -----------
(unaudited)
<S> <C> <C> <C>
Accrued compensation......................... $ 176,701 $ 433,295 $274,436
Accrued legal settlement..................... -- 440,500 --
Accrued expenses............................. 34,074 371,439 271,236
---------- ---------- --------
$ 210,775 $1,245,234 $545,672
========== ========== ========
</TABLE>

In fiscal 1999, the Company entered into a settlement agreement and agreed to
pay $440,500 for a patent license with respect to an intellectual property
rights claim. The payment was made in August 1999.

3. Line of Credit

In fiscal 1998, the Company entered into a line of credit agreement with a
credit limit of $1,000,000 and a variable interest rate that was approximately
8.5% as of July 31, 1999. The debt was guaranteed by CMGI, Inc., an affiliate
of the Company's largest stockholder, CMGI@Ventures, and was secured by the
assets of the Company. The Company had $800,000 and $1,000,000 outstanding
under the line of credit agreement as of July 31, 1998 and 1999, respectively.

In August 1999, the Company paid the outstanding balance of $1,000,000 and is
currently in the process of negotiating a new line of credit with a major bank.

4. Redeemable Convertible Preferred Stock

A summary of redeemable convertible preferred stock follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares outstanding Liquidation Liquidation Redemption Redemption
-------------------- October 31, preference premium per price per premium
1998 1999 1999 per share share share per share
--------- ---------- ----------- ----------- ----------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Series A................ 1,852,000 1,852,000 1,852,000 $0.270 $0.019 $0.270 $0.019
Series B................ 1,981,250 1,981,250 1,981,250 0.800 0.056 0.800 0.056
Series C................ 3,304,000 3,304,000 3,304,000 1.510 0.110 1.510 0.110
Series D................ -- 2,300,613 2,300,613 4.350 0.152 2.173 0.152
Series E................ -- 59,524 59,524 4.200 0.147 2.100 0.147
Series F................ -- 1,720,000 2,070,000 7.500 -- 5.000 0.350
--------- ---------- ----------
7,137,250 11,217,387 11,567,387
========= ========== ==========
</TABLE>

In the event of any liquidation event, the holders of the Series A, B, C, D and
E preferred stock are entitled to receive the liquidation preference per share
plus the liquidation premium per share per annum from the date of issuance of
these shares, plus all declared but unpaid dividends. Shares of Series F
preferred stock shall have a liquidation preference of $7.50 per share, plus
all declared but unpaid dividends, in the event of a dissolution or winding up,
either voluntary or involuntary, of the Company. Upon the sale of the Company,
shares of Series F preferred stock have a liquidation preference of $5.00 per
share, plus all declared but unpaid dividends.

The holders of the redeemable convertible preferred stock may request
redemption of their shares plus the redemption premium per share per annum from
the date of issuance of these shares, plus all declared but unpaid dividends.
The redemption may be requested on or after January 31, 2003 and must be paid
in cash by the Company within two years and three months from the date that a
written request for redemption is received. The redemption premium is charged
to the statement of operations as accretion on redeemable convertible preferred
stock. For the years ended July 31, 1997, 1998

F-11
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

and 1999 and the three months ended October 31, 1998 and 1999, the amount of
accretion recorded by the Company was $383,379, $517,965, $945,820, $128,658
and $466,082, respectively. The Series D preferred stock was issued at a price
per share less than the redemption price per share. This difference which
amounted to approximately $1.2 million is being charged to the statement of
operations as a component of accretion on redeemable convertible preferred
stock through January 31, 2003.
A summary of the liquidation and redemption amounts follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------
Liquidation Amount Redemption Amount
------------------------------------ -----------------------------------
July 31, July 31,
------------------------ -----------------------
October 31, October 31,
1998 1999 1999 1998 1999 1999
----------- ------------ ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Series A................ $ 576,880 $ 614,185 $ 623,511 $ 576,880 $ 614,185 $ 623,511
Series B................ 1,810,900 1,923,033 1,951,066 1,810,900 1,923,033 1,951,066
Series C................ 5,583,798 5,952,838 6,043,698 5,583,798 5,952,838 6,043,698
Series D................ -- 10,423,520 10,595,895 -- 5,415,853 5,578,714
Series E................ -- 253,212 255,400 -- 128,212 130,400
Series F................ -- 12,900,000 15,525,000 -- 8,607,556 10,529,931
----------- ------------ ----------- ----------- ----------- -----------
$ 7,971,578 $ 32,066,788 $34,994,570 $ 7,971,578 $22,641,677 $24,857,320
=========== ============ =========== =========== =========== ===========
</TABLE>

Each share of Series A, C, D, E and F preferred stock is convertible into 1.0
share of common stock. Each share of Series B preferred stock is convertible
into 1.3 shares of common stock. Upon completion of an initial public offering
(IPO) all shares are automatically converted to common stock and the holders of
these shares will not be paid the redemption premium. The redemption premium
accrued through that date will be credited to additional paid in capital.

Holders of Series A, B, C, D, E and F preferred stock vote equally with holders
of common stock on an as-if-converted basis.

No dividends have been declared or paid on the preferred stock or common stock
since the Company's inception.

5. Stockholder's Deficit

(a) Warrants

In connection with the Series D preferred stock issuance, the Company issued
warrants to a venture capital firm to purchase 952,381 shares of Series E
preferred stock with an exercise price of $2.10 per share. The warrants are
exercisable at any time, but in no case later than the earlier of either
December 9, 1999 or the closing of a firm commitment underwritten IPO, and were
valued at approximately $551,000 using the Black-Scholes option pricing model
with the following assumptions: a risk-free interest rate of approximately
5.6%; a contractual life of one year; no dividends; and an expected volatility
of 65%. The value of these warrants was recorded as a reduction in the value of
the Series D preferred stock. This $551,000 warrant value is being charged to
the statement of operations as a component of accretion on redeemable
convertible preferred stock through January 31, 2003. For the year ended July
31, 1999, and the three months ended October 31, 1999, $92,410 and $36,190,
respectively, of accretion was recorded by the Company.

In addition, in June and July 1999, the Company entered into agreements with
two separate business partners whereby the Company agreed to issue warrants for
the purchase of common stock contingent upon the attainment of performance
milestones. The first agreement, signed in June 1999, provides for the issuance
of warrants exercisable for up to 50,000 shares of common stock at an exercise
price of $0.50 per share as performance milestones are achieved, and expires in
June 2002. Upon issuance of the warrants, the difference between the fair value
and the exercise price at the date of achievement of the performance milestone
will be recorded as an expense.

The second agreement, signed in July 1999, provides for the issuance of
warrants exercisable for up to 275,000 shares of common stock, contingent upon
the attainment of performance milestones and expires in July 2002. The exercise
price for these warrants shall be determined as of the date when a specific
milestone is achieved and shall be equal to the price per share received by the
Company in the most recent private equity financing round of the Company or,
following an IPO, the

F-12
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

average trading price of the Company's common stock over the five trading days
immediately prior to the date of issuance of these warrants. Upon issuance of
the warrants, any difference between the fair value and the exercise price at
the date of achievement of the performance milestone will be recorded as an
expense.

At July 31, 1999, no performance milestones under either agreement had been met
or determined to be probable and, accordingly, no warrants have been issued or
related expense recorded.

(b) Common Stock

The Company has reserved a total of 12,163,373 shares of common stock for the
conversion of preferred stock.

The Company issues stock options which may be exercised by note or by cash to
purchase common stock at any time subsequent to issuance. These shares of
common stock may be subject to vesting. The Company has the right to repurchase
all unvested shares at the original exercise price in the event of employee
termination. The number of shares subject to the repurchase right decreases as
the shares vest under the original option terms, generally four years. As of
July 31, 1999, there were 737,904 shares subject to repurchase at prices
ranging from $0.10 to $0.50, with a weighted-average repurchase price of $0.15
per share. As of October 31, 1999, there were 1,147,024 shares subject to
repurchase at prices ranging from $0.10 to $0.50 with a weighted average
repurchase price of $0.22 per share.

In October 1995, the Company's Board of Directors approved the 1995 Stock
Option Plan (1995 Plan) and reserved 1,000,000 shares of common stock for
issuance under the Plan. In fiscal 1996, an additional 1,000,000 shares of
common stock were approved by the Board of Directors and reserved for issuance
under the 1995 Plan. During fiscal 1997, the Board of Directors elected to
reduce the number of shares of common stock reserved under the 1995 Plan and
1,353,400, 296,448 and 28,281 shares were retired from the 1995 Plan in fiscal
1997, 1998 and 1999, respectively. The 1995 Plan provides for stock options to
be granted to employees, consultants, officers, and directors. Options may be
granted at an exercise price not less than 100% of the estimated fair market
value, as determined by the Company's Board of Directors, for incentive stock
options, and 85% of the estimated fair market value at the date of grant for
nonqualified stock options. All options are granted at the discretion of the
Company's Board of Directors and have a term not greater than ten years from
the date of grant. Options issued generally vest ratably over four years (25%
one year after the grant date and at a rate of 1/48 per month thereafter).

(d) 1996 Incentive Stock Option Plan

In November 1996, the Company's Board of Directors approved the 1996 Incentive
Stock Option Plan (1996 Plan), which is effective for a term of ten years. The
Board of Directors reserved 809,132 shares of common stock for issuance under
the 1996 Plan at that time. During fiscal 1998 and 1999, additional shares of
common stock of 2,482,185 and 600,000, respectively, were approved by the Board
of Directors and reserved for issuance under the 1996 Plan. Options may be
granted at an exercise price not less than 100% of the estimated fair market
value, as determined by the Company's Board of Directors, for incentive stock
options, and 85% of the estimated fair market value at the date of grant for
nonqualified stock options. All options are granted at the discretion of the
Company's Board of Directors and have a term not greater than ten years from
the date of grant. Options issued generally vest ratably over four years (25%
one year after the grant date and at a rate of 1/48 per month thereafter).

(e) Accounting for Stock-Based Compensation

The Company uses the intrinsic-value method prescribed in APB No. 25 in
accounting for its stock-based compensation arrangements with employees. Stock-
based compensation expense is recognized for employee stock option grants in
those instances in which the fair value of the underlying common stock exceeds
the exercise price of the stock options at the date of grant. The Company
recorded deferred stock-based compensation expense before taxes of $1,210,800
and $1,050,425 during the year ended July 31, 1999 and the three months ended
October 31, 1999, respectively. Because the option grants generally vest
ratably over a four-year period, the service period over which compensation is
accrued as a charge to expense is determined separately for each 25 percent
portion of the total award, in accordance with Financial

F-13
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

Accounting Standards Board (FASB) Interpretation No. 28 (FIN 28). The result of
applying FIN 28 is that approximately 52% of the unearned deferred compensation
will be amortized in the first year, 27% in the second year, 15% in the third
year and 6% in the fourth year following the date of the grant. Approximately
$167,000 and $197,000 of stock-based compensation expense was recognized in the
year ended July 31, 1999 and the three months ended October 31, 1999,
respectively.

A summary of all stock option activity follows:

<TABLE>
<CAPTION>
----------------------------------
Options Weighted-
available average
for future Options exercise
grant outstanding price
---------- ----------- ---------
<S> <C> <C> <C>
Balances as of July 31, 1996................ 1,952,400 -- $ --
Authorized................................ 809,132 -- --
Shares retired............................ (1,353,400) -- --
Options granted........................... (1,810,043) 1,810,043 0.10
Options exercised......................... -- (10,000) 0.10
Options canceled.......................... 805,543 (805,543) 0.10
---------- ---------- ---------
Balances as of July 31, 1997................ 403,632 994,500 0.10
Authorized................................ 2,482,185 -- --
Shares retired............................ (296,448) -- --
Options granted........................... (2,530,637) 2,530,637 0.11
Options exercised......................... -- (136,135) 0.10
Options canceled.......................... 516,365 (516,365) 0.11
---------- ---------- ---------
Balances as of July 31, 1998................ 575,097 2,872,637 0.11
Authorized................................ 600,000 -- --
Shares retired............................ (28,281) -- --
Options granted at fair value............. (349,000) 349,000 0.15
Options granted below fair value.......... (822,500) 822,500 0.42
Options exercised......................... -- (1,527,586) 0.13
Options canceled.......................... 452,551 (452,551) 0.10
---------- ---------- ---------
Balances as of July 31, 1999................ 427,867 2,064,000 $ 0.22
========== ========== =========
</TABLE>

There were 692,470 and 547,042 options exercisable as of July 31, 1998 and
1999, respectively.

The following table summarizes information about stock options under the plans
as of July 31, 1999:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Options outstanding Options exercisable
- -------------------------------------------------------- ------------------------
Weighted-
average Weighted- Weighted-
Range of Number of remaining life average Number of average
xerciseeprices shares (in years) exercise price shares exercise price
- --------------- --------- -------------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
$0.10 1,084,500 8.0 $0.10 539,750 $0.09
0.15 424,000 9.1 0.15 7,292 0.15
0.20 76,500 9.6 0.20 -- --
0.50 390,000 9.7 0.50 -- --
0.75 to 1.25 89,000 9.9 0.77 -- --
------------- --------- --- ----- ------- -----
$0.10 to 1.25 2,064,000 8.7 $0.22 547,042 $0.10
============= ========= === ===== ======= =====
</TABLE>

The weighted-average fair value of employee stock options granted at fair value
during fiscal 1997, 1998 and 1999 was $0.02, $0.02, and $0.03, respectively.
The weighted average fair value of employee stock options granted below fair
value during fiscal 1999 was $1.51. The fair value of employee options granted
was estimated on the date of grant using the

F-14
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

Black-Scholes option pricing model. The following weighted-average assumptions
were used in these calculations: a risk-free interest rate of 6.6%, 5.6% and
5.2% for the years ended July 31, 1997, 1998 and 1999, respectively; an
expected life of six years for the years ended July 31, 1997 and 1998 and four
years for the year ended July 31, 1999; dividend yield of 0%; and volatility of
0%.

Had compensation cost for the Company's stock-based compensation plans been
determined consistent with the fair value approach set forth in SFAS No. 123,
the Company's net losses for the years ended July 31, 1997, 1998 and 1999 would
have been as follows:

<TABLE>
<CAPTION>
-------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Net loss applicable to common
stockholders - as reported............ $(6,621,474) $(2,998,581) $(6,552,893)
Pro forma stock-based compensation
expense............................... (4,632) (16,735) (37,045)
----------- ----------- -----------
Net loss applicable to common
stockholders - pro forma.............. $(6,626,106) $(3,015,316) $(6,589,938)
=========== =========== ===========
Basic and diluted net loss per share:
As reported.......................... $ (1.61) $ (1.00) $ (1.67)
=========== =========== ===========
Pro forma............................ $ (1.62) $ (1.00) $ (1.67)
=========== =========== ===========
</TABLE>

6. Income Taxes

The Company incurred no income tax expense for the years ended July 31, 1997,
1998 and 1999. The income tax expense differed from the amounts computed by
applying the U.S. federal income tax rate of 34% to pretax income as a result
of the following:
<TABLE>
<CAPTION>
-----------------------------------
1997 1998 1999
----------- --------- -----------
<S> <C> <C> <C>
Computed expected tax (benefit)........... $(2,121,228) $(839,729) $(1,794,799)
Current year net operating losses and
temporary differences for which no tax
benefit is recognized.................... 2,113,848 833,315 1,782,440
Other..................................... 7,380 6,414 12,359
----------- --------- -----------
$ -- $ -- $ --
=========== ========= ===========
</TABLE>

The effects of temporary differences that give rise to significant portions of
deferred tax assets as of July 31 are as follows:

<TABLE>
<CAPTION>
------------------------
1998 1999
----------- -----------
<S> <C> <C>
Deferred tax assets:
Accruals and reserves............................... $ 1,171,151 $ 2,428,136
Net operating loss carryforwards and credits........ 3,470,201 3,853,027
----------- -----------
Total gross deferred tax assets before valuation
allowance......................................... 4,641,352 6,281,163
Valuation allowance.................................. (4,641,352) (6,281,163)
----------- -----------
Net deferred tax assets............................ $ -- $ --
=========== ===========
</TABLE>

As of July 31, 1999, the Company has available net operating losses for federal
and state income tax purposes of $9,530,784 and $6,929,414, respectively. The
federal net operating loss carryforward will expire, if not utilized, in the
year 2011. The California net operating loss carryforwards will expire, if not
utilized, in the year 2004. The Company has research credit carryforwards for
federal income tax purposes of $181,689. The Company has a valuation allowance
for the full amount of the deferred tax assets as of July 31, 1998 and 1999, as
management does not believe it is more likely than not that the value of the
assets is recoverable.

Federal and state tax laws impose substantial restrictions on the utilization
of net operating loss carryforwards in the event of an "ownership change" as
defined in Section 382 of the Internal Revenue Code. The Company has not yet
determined

F-15
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

whether an ownership change occurred due to significant stock transactions in
each of the reporting years disclosed. If an ownership change has occurred,
utilization of the net operating loss carryforwards could be significantly
deferred.

7. Commitments

(a) Leases

The Company leases equipment and its facilities under noncancelable operating
and capital leases with expiration dates through 2003. Future minimum lease
payments under the Company's noncancelable operating and capital leases as of
October 31, 1999 are as follows:

<TABLE>
<CAPTION>
------------------------
Year Ending Capital Operating
July 31, leases leases
- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
2000.................................................. $ 585,420 $ 712,787
2001.................................................. 672,370 188,362
2002.................................................. 72,905 125,294
2003.................................................. -- 13,238
----------- -----------
Total minimum lease payments......................... 1,330,695 $ 1,039,681
===========
Less amount representing interest..................... (76,639)
-----------
Present value of minimum lease payments............... 1,254,055
Less current portion.................................. (730,082)
-----------
$ 523,974
===========
</TABLE>

Rental expense amounted to approximately $841,000, $771,000, $1,142,000,
$177,000 and $524,000 for the years ended July 31, 1997, 1998 and 1999 and the
three months ended October 31, 1998 and 1999, respectively. Rental expense of
approximately $142,000 during the years ended July 31, 1997, 1998 and 1999 and
$35,000 during the three months ended October 31, 1999 was paid to Navisite, a
subsidiary of CMGI.

(b) License Fees

The Company has entered into agreements with several content providers. As of
July 31, 1999, the terms of such agreements include the following future
minimum license fees.

<TABLE>
<CAPTION>
Year Ending
July 31,
- -----------
<S> <C>
2000................................................................. $ 575,146
2001................................................................. 283,956
2002................................................................. 141,667
2003................................................................. 75,000
2004................................................................. 6,575
----------
$1,082,344
==========
</TABLE>

8. Segment Information

During fiscal 1999, the Company adopted the provisions of SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information. SFAS No.
131 requires disclosures of selected segment-related financial information
about products, major customers and geographic areas.

The Company's chief operating decision maker (CODM) is considered to be the
Company's CEO. The CODM evaluates performance, makes operating decisions and
allocates resources based on financial data consistent with the presentation in
the accompanying financial statements. Therefore, the Company operates in a
single segment for purposes of disclosure under SFAS No. 131.

F-16
<PAGE>

Vicinity Corporation

Notes to Financial Statements--(Continued)

The Company's revenues have been earned from customers in the United States
with the exception of approximately $8,000, $2,000, $50,000, $29,000 and
$137,000 in revenues in fiscal 1997, 1998, and 1999 and the three months ended
October 31, 1998 and 1999, respectively, which were earned from customers in
Europe. During fiscal 1997 and 1998, the Company had sales to one customer that
accounted for 48% and 26%, respectively, of the Company's revenues. During
fiscal 1999, the Company had sales to one customer that accounted for 11% of
revenues.

All of the Company's long-lived assets are located in the United States.

9. Contingencies

In May 1999, a founder and former employee of the Company filed a complaint
against the Company and several of the Company's officers in California
Superior Court for reformation of contract alleging various contract and tort
causes of action, including reformation of contract, breach of contract, fraud
and interference with economic and contractual relations and seeking
declaratory relief. In the complaint, the founder and former employee seeks,
among other things, the issuance of at least 281,250 shares of common stock, an
unspecified amount of compensatory damages and punitive damages, plus
attorneys' fees. In November 1999, the court stayed the claim and granted the
Company's motion to compel arbitration. As of the date of this prospectus, the
founder and former employee has not taken action to pursue his claim in
arbitration. If and when this claim is pursued in arbitration, the Company
plans to vigorously defend against these allegations.

10. Related Party Transaction

As of July 31, 1998, the Company had a noninterest bearing payable to Navisite
Internet Services, a subsidiary of CMGI, for $163,686, relating to the lease of
computer equipment that was paid during fiscal 1999.

In addition to rental expense paid to Navisite, approximately $105,000, $8,000
and $49,000 was paid for data center services during the years ended July 31,
1997, 1998 and 1999.

11. Retirement Plan

Effective March 1997, the Company established a qualified 401(k) plan (the
Plan) available to all employees who meet the Plan's eligibility requirements.
Participants may elect to contribute a percentage of their compensation to the
Plan up to a statutory maximum amount. The Company may make matching
contributions to the Plan on a discretionary basis. The Company did not make
any contributions to the Plan in fiscal 1997, 1998 or 1999.

12. Subsequent Events

In August 1999, the Company signed a $4,000,000 equipment leasing agreement
with a finance company. The facility is cancellable by either party upon thirty
days notice. Equipment leased under this facility will have an initial term of
24 months from the date of equipment acceptance.

In August 1999, the Company issued an additional 350,000 shares of Series F
preferred stock for aggregate proceeds of $1,750,000.

In October 1999, the Board of Directors authorized the filing of a registration
statement with the Securities and Exchange Commission that would permit the
Company to sell shares of the Company's stock in connection with a proposed
initial public offering.

In October 1999, the Board of Directors authorized a reincorporation of the
Company in the State of Delaware.

In November 1999, the Company issued 952,381 shares of preferred stock upon the
exercise of Series E warrants at a per share exercise price of $2.10 for a
total of $2,000,000 received in proceeds.

F-17
<PAGE>

[GRAPHIC--Vicinity logo in the upper left-hand corner. Text in the upper right-
hand corner reads "What Customers Have to Say About Vicinity." The body of the
graphic displays four client testimonials.]
<PAGE>

[LOGO OF VICINITY CORP.]