UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission File Number: 333-72667
MapQuest.com, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-3949110
-------- ----------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
3710 Hempland Road, Mountville, Pennsylvania 17554
--------------------------------------------------
(Address of principal executive offices)
(717) 285-8500
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal
year, if changed since last report)
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
ALTHOUGH THE REGISTRANT HAS FILED All REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PERIOD
THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS, THE REGISTRANT DID NOT
BECOME SUBJECT TO SUCH FILING REQUIREMENTS UNTIL THE REGISTRATION OF CERTAIN
SHARES OF ITS COMMON STOCK PURSUANT TO A REGISTRATION STATEMENT ON FORM S-1 (THE
"REGISTRATION STATEMENT") WAS DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION ON MAY 3, 1999.
The number of shares outstanding of the Registrant's classes of common
stock as of June 30, 1999 was 32,828,576.
2
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MAPQUEST.COM, INC.
INDEX
PAGE
----
INDEX 3
PART I. FINANCIAL INFORMATION: 4
ITEM 1. Financial Statements: 4
Balance Sheets as of December 31, 1998
and June 30, 1999 (unaudited) 4
Unaudited Statements of Operations for
the three months ended June 30, 1998
and 1999 and the six months ended
June 30, 1998 and 1999 7
Unaudited Statements of Cash Flows
for the six months ended
June 30, 1998 and 1999 8
Notes to Unaudited Interim Financial
Statements 10
ITEM 2. Management's Discussion and
Analysis of Financial
Condition and Results of Operations 17
ITEM 3. Quantitative and Qualitative
Disclosure About Market Risk 24
PART II. OTHER INFORMATION: 24
ITEM 1. Legal Proceedings 24
ITEM 2. Changes in Securities and Use of Proceeds 24
ITEM 3. Defaults Upon Senior Securities 25
ITEM 4. Submission of Matters to a Vote of
Security Holders 25
ITEM 5. Other Information 26
ITEM 6. Exhibits and Reports on Form 8-K 26
ITEM 7. Signatures 27
3
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MAPQUEST.COM, INC.
BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31, June 30,
1998 1999
----------- -----------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 564 $ 49,754
Short term investments - 5,969
Accounts receivable, net of
allowance for doubtful
accounts (1998--$470; 1999--$580) 6,647 6,682
Accounts receivable - affiliates 128 219
Inventories 1,365 1,023
Contract work in progress 147 306
Prepaid expenses and other current assets 482 1,111
----------- -----------
Total current assets 9,333 65,064
Property and equipment, net of
accumulated depreciation
(1998--$3,433; 1999--$4,060) 1,844 2,646
Goodwill, net 178 163
Other assets 95 956
----------- -----------
Total assets $11,450 $68,829
=========== ===========
4
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BALANCE SHEET (cont'd)
December 31, June 30,
1998 1999
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) (unaudited)
Current liabilities:
Accounts payable $1,715 $2,515
Current portion of note payable 48 19
Accrued personnel costs 562 774
Advance billings on contracts 498 1,079
Deferred revenue 1,208 1,604
Other accrued liabilities 1,001 1,331
---------------- ----------------
Total current liabilities 5,032 7,322
---------------- ----------------
Convertible Redeemable Preferred Stock
- Series A, voting, $1.00 per share
redemption value, aggregate liquidation
preference of $6,550 in 1998:
Issued and outstanding shares,
6,550,000 in 1998 6,550 -
Cumulative Redeemable Preferred Stock
- Series B, nonvoting, $6.15 per share
redemption value, aggregate liquidation
preference of $8,332 in 1998:
Issued and outstanding shares,
1,354,802 in 1998 8,332 -
Convertible Redeemable Preferred Stock
- Series C, voting, $3.51 per share
redemption value, aggregate liquidation
preference of $12,268 in 1998:
Issued and outstanding shares,
3,495,354 in 1998 11,595 -
Notes receivable arising from issuance
of preferred stock (291) -
5
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BALANCE SHEET (cont'd)
December 31, June 30,
1998 1999
================ ================
Stockholders' equity (deficit):
Preferred Stock - $.01 par value:
Authorized shares 5,000,000 in 1999
Issued and outstanding shares,
none in 1999 - -
Common stock - $.001 par value:
Authorized shares - 100,000,000
Issued and outstanding shares,
336,028 in 1998 and
32,828,576 in 1999 - 33
Notes receivable for common stock - (224)
Additional paid in capital 140 88,493
Retained deficit (19,908) (26,795)
---------------- ----------------
Total stockholders' equity (deficit) (19,768) 61,507
---------------- ----------------
Total liabilities and stockholders'
equity (deficit) $11,450 $68,829
================ ================
See accompanying notes to the financial statements.
6
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MAPQUEST.COM, INC.
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
1998 1999 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Business $ 1,334 $ 2,467 $ 3,054 $ 4,473
Consumer 259 1,513 551 2,535
---------- ---------- ---------- ----------
Total business and consumer revenues 1,593 3,980 3,605 7,008
Digital mapping 4,729 3,430 8,267 6,558
---------- ---------- ---------- ----------
Total revenues 6,322 7,410 11,872 13,566
Cost of revenues
Business and consumer 1,014 2,322 2,144 4,247
Digital mapping 3,604 2,499 6,128 5,039
---------- ---------- ---------- ----------
Total cost of revenues 4,618 4,821 8,272 9,286
---------- ---------- ---------- ----------
Gross profit 1,704 2,589 3,600 4,280
Operating expenses
Sales and marketing 1,067 4,364 2,550 7,173
Product development 813 1,320 1,690 2,104
General and administrative 527 998 992 1,936
---------- ---------- ---------- ----------
Total operating expenses 2,407 6,682 5,232 11,213
---------- ---------- ---------- ----------
Operating loss (703) (4,093) (1,632) (6,933)
Interest income and expense, net 14 317 37 319
Other income 70 58 117 93
---------- ---------- ---------- ----------
Loss before provision for income taxes (619) (3,718) (1,478) (6,521)
Provision for income taxes - - - 1
Net loss $ (619) $ (3,718) $ (1,478) $ (6,522)
Less preferred stock dividends and accretion (38) (70) (330) (378)
Net loss applicable to common stockholders $ (657) $ (3,788) $ (1,808) $ (6,900)
Basic and diluted loss per share $ (2.01) $ (0.18) $ (6.09) $ (0.65)
Shares used to compute basic and diluted loss
per share 326,129 20,886,590 296,753 10,668,182
Pro forma basic and diluted loss per share $ (0.02) $ (0.12) $ (0.05) $ (0.22)
Shares used to compute pro forma basic and
diluted loss per share 27,987,584 30,930,910 27,958,208 29,489,617
========== ========== ========== ==========
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE>
MAPQUEST.COM, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six months ended
June 30
-------
1998 1999
------------ ------------
Operating Activities
Net loss $ (1,478) $ (6,522)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 606 627
Amortization 15 15
Provision for doubtful accounts 96 110
Compensation expense recognized 38 -
Equity in earnings of joint venture (55) (83)
Changes in operating assets and liabilities
Accounts receivable (737) (145)
Accounts receivable - affiliates 20 (91)
Inventories 234 342
Contract work in progress (119) (159)
Prepaid expenses 368 (629)
Other assets (68) (778)
Accounts payable (54) 800
Advance billings on contracts 43 581
Deferred revenue 427 396
Accrued personnel costs and other liabilities (184) 543
------------ ------------
Net cash used in operating activities (848) (4,993)
Investing activities
Purchase of short term investments - (5,969)
Property and equipment purchases (518) (1,429)
------------ ------------
Net cash used in investing activities (518) (7,398)
Financing activities
Principal payments on debt (25) (29)
Principal payments received on notes
receivable arising from issuance of stock - 67
Exercise of common stock options and warrants 5 40
8
<PAGE>
STATEMENTS OF CASH FLOWS (cont'd)
Six months ended
June 30
-------
1998 1999
------------ ------------
Proceeds from issuance of stock,
net of offering costs - 70,163
Redemption of preferred stock - (8,660)
------------ ------------
Net cash provided by (used in)
financing activities (20) 61,581
------------ ------------
Net (decrease) increase in cash and
cash equivalents (1,386) 49,190
Cash and cash equivalents, beginning of period 2,482 564
------------ ------------
Cash and cash equivalents, end of period $ 1,096 $ 49,754
============ ============
Supplemental cash flow information
Stock dividends paid on Preferred Stock Series B $ 254 $ 328
============ ============
See accompanying notes to the financial statements.
9
<PAGE>
MAPQUEST.COM, INC.
Notes to Financial Statements
June 30, 1999
(unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the financial statements and footnotes thereto
for the year ended December 31, 1998 included in MapQuest.com, Inc.'s (MapQuest)
Form S-1 Registration Statement, as declared effective on May 3, 1999 with the
Securities and Exchange Commission in connection with an initial public offering
of MapQuest common stock (Registration Statement).
2. Stockholders' Equity
In May 1999, MapQuest completed an initial public offering of 4,600,000 shares
of its common stock at a public offering price of $15 per share, which generated
approximately $62.1 million in net proceeds to MapQuest.
Upon the closing of MapQuest's initial public offering in May 1999, all of the
outstanding shares of MapQuest's Series A and Series C Preferred Stock were
converted into 27,122,455 shares of common stock and all of the outstanding
shares of MapQuest's Series B Preferred Stock were redeemed for approximately
$8.6 million.
During April 1999, the Board of Directors and the stockholders authorized a 2.7
for 1 split of MapQuest's common stock. In addition, the Board of Directors and
the stockholders authorized and approved the amendment and restatement of
MapQuest's Certificate of Incorporation such that MapQuest has the authority to
issue an aggregate of 105,000,000 shares of capital stock, consisting of
100,000,000 shares of common stock, par value $0.001 per share and 5,000,000
shares of preferred stock, par value $0.01 per share. This amended and restated
Certificate of Incorporation became effective upon the effectiveness of
MapQuest's Registration Statement. All references to common shares, per common
share, and par value per common share in the financial statements have been
restated to give effect to the common stock split and change in par value per
common share. Upon the effectiveness of MapQuest's Registration Statement,
MapQuest has adopted the 1999 Stock Plan pursuant to which 3,645,000 shares of
common stock were reserved for future issuance and established
10
<PAGE>
an employee stock purchase plan under which a total of 1,755,000 shares of
common stock will be made available for sale.
During June 1999, in connection with MapQuest's initial public offering, the
underwriters of the offering exercised an over-allotment option for 597,990
shares of MapQuest's common stock at the initial public offering price of $15
per share, which generated approximately $8.1 million in net proceeds to
MapQuest.
3. Investments
The Company invests certain of its excess cash in debt instruments of the U.S.
Government and its agencies, and of high quality corporate issuers. All highly
liquid instruments with an original maturity of three months or less when
purchased are considered cash equivalents; those with original maturities
greater than three months when purchased are considered short term investments.
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", MapQuest
classifies its investment securities as available-for-sale. Unrealized holding
gains and losses at June 30, 1999 were not significant.
4. Inventories
Inventories are comprised of the following:
December 31, June 30,
1998 1999
--------------- ----------------
(in thousands)
Materials $ 96 $ 247
Work-in-process 336 233
Finished goods 933 543
--------------- ----------------
$ 1,365 $ 1,023
=============== ================
5. Loss Per Share
The following tables set forth the computation of basic and diluted loss per
share:
Three months ended
June 30
------------------------
1998 1999
---------- ----------
(in thousands,
except loss per share)
Numerator:
Net loss.................................... $ (619) $ (3,718)
Preferred stock dividends................... - (57)
Accretion of redeemable preferred stock..... (38) (13)
---------- ----------
Net loss applicable to common stockholders.. $ (657) $ (3,788)
========== ==========
11
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Three months ended
June 30
------------------------
1998 1999
----------- -----------
(in thousands,
except loss per share)
Denominator:
Denominator for basic and diluted loss per share--
weighted average shares....................... 326 20,887
----------- -----------
Basic and diluted loss per common share............ $ (2.01) $ (0.18)
=========== ===========
Six months ended
June 30
------------------------
1998 1999
----------- -----------
(in thousands,
except loss per share)
Numerator:
Net loss........................................... $ (1,478) $ (6,522)
Preferred stock dividends.......................... (254) (328)
Accretion of redeemable preferred stock............ (76) (50)
----------- -----------
Net loss applicable to common stockholders......... $ (1,808) $ (6,900)
=========== ===========
Denominator:
Denominator for basic and diluted loss per share--
weighted average shares....................... 297 10,668
----------- -----------
Basic and diluted loss per common share............ $ (6.09) $ (0.65)
=========== ===========
The following securities and number of shares have been excluded from the
diluted per share computations as they are antidilutive:
Three and
Six months ended
June 30
------------------------
1998 1999
----------- -----------
(in thousands)
Convertible redeemable preferred stock Series A 6,550 -
Convertible redeemable preferred stock Series C 3,495 -
Stock options 3,271 6,344
Stock warrants 2,273 2,270
The following tables set forth the computation of pro forma basic and diluted
loss per share, giving consideration to MapQuest's initial public offering
discussed in Note 2 and assuming conversion of the shares of Series A Preferred
Stock and Series C Preferred Stock to shares of common stock and the redemption
of the shares of Series B Preferred Stock outstanding at June 30, 1998 and the
redemption
12
<PAGE>
date of May 4, 1999, using an initial public offering price of $15 per share and
assuming such conversion and redemption occurred at the beginning of the
respective periods.
Three months ended
June 30
------------------------
1998 1999
----------- -----------
(in thousands,
except loss per share)
Numerator:
Net loss applicable to common stockholders......... $ (657) $ (3,788)
Redeemable preferred stock -- Series C accretion... 38 13
Preferred stock dividends on cumulative
preferred stock--Series B........................ - 57
----------- -----------
Numerator for pro forma basic and diluted loss per
share......................................... $ (619) (3,718)
=========== ===========
Denominator:
Weighted average number of common shares........... 326 20,887
Assumed conversion of preferred shares to common
shares(1)..................................... 27,122 9,835
Assumed issuance of common shares to redeem
Series B Preferred Stock(1)................... 539 209
----------- -----------
Denominator for pro forma basic
and diluted loss per share....................... 27,987 30,931
----------- -----------
Pro forma basic and diluted loss per share......... $ (0.02) $ (0.12)
=========== ===========
13
<PAGE>
Six months ended
June 30
------------------------
1998 1999
----------- -----------
(in thousands,
except loss per share)
Numerator:
Net loss applicable to common stockholders......... $ (1,808) $ (6,900)
Redeemable preferred stock -- Series C accretion... 76 50
Preferred stock dividends on
cumulative preferred stock -- Series B........... 254 328
----------- -----------
Numerator for pro forma basic and
diluted loss per share ....................... $ (1,478) $ (6,522)
=========== ===========
Denominator:
Weighted average number of common shares........... 297 10,668
Assumed conversion of preferred shares to common
shares(1)..................................... 27,122 18,383
Assumed issuance of common shares to redeem
Series B Preferred Stock(1)................... 539 439
----------- -----------
Denominator for pro forma basic and diluted loss per
share......................................... 27,958 29,490
----------- -----------
Pro forma basic and diluted loss per share......... $ (0.05) $ (0.22)
=========== ===========
(1) Shares used for 1999 computations are weighted average amounts considering
the conversion and redemption occurred on May 4, 1999.
6. Segment Information
MapQuest has two reportable segments: MapQuest Business/Consumer and Digital
Mapping Services. The MapQuest Business/Consumer segment provides products and
services to address the web-based destination information needs of both
businesses and consumers. Business and Consumer revenues and costs are combined
for this segment because a significant portion of the costs, primarily
compensation for operations personnel and related operations costs, are common
to both Business and Consumer revenues and are not allocated. The Digital
Mapping Services segment provides non-Internet mapping products and services to
the education, reference, directory, travel and governmental markets as well as
providing customized mapping solutions to various other customers. Revenues are
derived principally from the United States.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies in MapQuest's financial statements
included in the Registration Statement. MapQuest evaluates performance based on
gross profit and does not allocate assets to the reportable segments since
management does not evaluate segment performance based on asset information and
common assets are used in the segments.
14
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MapQuest's reportable segments are strategic business units that offer different
products and services. They are managed separately because each business
requires different technology and marketing strategies.
Three months ended Six months ended
June 30 June 30
------------------ ----------------
1998 1999 1998 1999
------- ------- ------- -------
(in thousands) (in thousands)
Business segment revenues:
MapQuest business/consumer trade. $ 1,593 $ 3,980 $ 3,605 $ 7,008
Digital mapping services trade... 4,729 3,430 8,267 6,558
------- ------- ------- -------
Total 6,322 7,410 11,872 13,566
Business segment profit:
MapQuest business/consumer ...... 579 1,658 1,461 2,761
Digital mapping services......... 1,125 931 2,139 1,519
------- ------- ------- -------
Total segment profit............. 1,704 2,589 3,600 4,280
Reconciling items:
Operating expenses............... (2,407) (6,682) (5,232) (11,213)
Other and interest income........ 84 375 154 412
------- ------- ------- -------
Pre-tax loss....................... $ (619) $ (3,718) $ (1,478) $ (6,521)
======= ======= ======= =======
7. Contingent Matters
On December 14, 1998, Mark Tornetta filed a lawsuit against Moore U.S.A., Inc.
in the United States District Court for the Eastern District of Pennsylvania.
MapQuest is defending this matter pursuant to an indemnity provision in its
contract with Moore U.S.A., Inc. Mr. Tornetta's patent describes a specific
method for searching real estate properties, which Mr. Tornetta alleges is
infringed by Moore U.S.A., Inc.'s online and other real estate services. A
motion to dismiss was filed on behalf of Moore, based on failure to join another
company as the patent owner and real party in interest. Tornetta did not oppose
the motion, and the case was dismissed on April 30, 1999. However, there is a
possibility the action may be refiled naming both Moore and MapQuest as
defendants.
On January 26, 1999, Civix-DDI, LLC filed a lawsuit in the United States
District Court for the District of Colorado against twenty different defendants,
including MapQuest. Eight of these defendants are licensees of MapQuest's
technology and may have rights to indemnification under their respective
agreements or at law. The complaint alleged infringement by MapQuest of two
patents, through, for example, the manufacture, use, sale, and offer to sell
electronic yellow page services systems and products. On May 3, 1999, MapQuest
and Civix entered into a license agreement, dated May 3, 1999, pursuant to which
MapQuest acquired a license under the Civix patents. The license agreement also
provides certain rights to customers and end users of MapQuest products and
services. Pursuant to the license agreement, MapQuest paid a one-time license
fee. In connection with the acquisition of the license, MapQuest and Civix
agreed to settle the lawsuit and to jointly seek entry in
15
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the lawsuit of an agreed-upon order dismissing MapQuest from the lawsuit and
dismissing certain claims against MapQuest's co-defendant customers relating to
their use and sale of MapQuest products and services. The order was entered by
the Court on May 18, 1999.
MapQuest periodically receives notices of claims arising out of the normal
course of business. In the opinion of management, these matters will not have a
material adverse effect on MapQuest's financial position, results of operations,
or liquidity.
16
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following information should be read in conjunction with the
historical financial information and the notes thereto included in Item I of
this quarterly report on Form 10-Q (The "Form 10-Q" or the "Report") and
MapQuest's financial statements and notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in
MapQuest's Registration Statement on Form S-1 (The "Form S-1") as declared
effective by the Securities and Exchange Commission on May 3, 1999.
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF MAPQUEST CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE
EVENTS AND THE FUTURE PERFORMANCE OF MAPQUEST WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1993, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS
INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT
ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS AND OUTCOMES MAY DIFFER
MATERIALLY FROM WHAT IS EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE THOSE SET FORTH IN MAPQUEST'S
FORM S-1, PARTICULARLY UNDER THE SECTION ENTITLED "RISK FACTORS." MAPQUEST
UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
Overview
MapQuest is a leading online provider of mapping and destination
information. MapQuest provides comprehensive online mapping solutions to
businesses and provides customized maps, destination information and driving
directions to consumers. MapQuest has three lines of business: Internet business
products and services, Internet consumer products and services and digital
mapping products and services.
Since 1967, MapQuest has provided traditional cartographic products and
services. In 1989, MapQuest began offering digital mapping products and
services. Beginning in 1991, MapQuest introduced map-generating products and
services which evolved into online mapping and routing applications. During the
first quarter of 1996, MapQuest launched mapquest.com and initiated sales and
marketing efforts to build brand awareness and to generate advertising revenues
from its website. In the third quarter of 1996, MapQuest began providing online
mapping and destination information products and services from its website to
companies with an Internet presence and to high-traffic websites offering users
a wide range of information and services on their websites, which are commonly
referred to as portal websites. In 1997, MapQuest increased its focus on its
Internet business and consumer lines
17
<PAGE>
of business by devoting significant resources to the mapquest.com web site and
to its other Internet products and services. In 1998, MapQuest introduced its
MapQuest Enterprise Server. MapQuest's Enterprise Server is designed to provide
mapping and routing capability to high volume websites.
MapQuest derives its revenues from three lines of business:
Business Products and Services. MapQuest provides Internet products and
services to companies with an Internet presence and to portal web sites. These
companies typically contract for MapQuest's services on an annual basis in
consideration for a service fee based on usage and an initial set-up fee.
MapQuest recognizes service fees ratably over the period of the service.
Revenues from the set-up fee are recognized upon completion of the related
installation services. Revenues for software and data licenses relating to
MapQuest business products are recognized upon delivery of the product. Further,
under those agreements where MapQuest has a maintenance or upgrade obligation,
MapQuest recognizes revenue for these obligations over the period of the
obligation. Revenues from systems integration contracts, typically long-term
fixed-price contracts, are recognized on the percentage-of-completion method.
MapQuest has also historically provided business products and services for
non-Internet applications by licensing software and data and by providing
professional services on a time and material basis or a fixed-fee basis.
Consumer Products and Services. Through mapquest.com, MapQuest derives
revenues primarily from the sale of advertising and sponsorships. Advertising
rates vary depending on whether the advertisements are delivered to a general
audience or a targeted audience based on specific geographic location.
Advertising revenues are typically recognized ratably over the period in which
the advertisements are displayed, provided that no significant obligations
remain and the collection of the resulting receivable is likely. MapQuest may
guarantee its advertisers a pre-set level of impressions on mapquest.com.
Impression refers to a delivery of an advertisement to a user. If the guaranteed
impressions are not met, MapQuest defers recognition of the corresponding
revenue until the guaranteed impressions are achieved. Sponsorship contracts may
have longer terms and may allow sponsors to be exclusive sponsors of portions of
mapquest.com or particular advertising categories.
Digital Mapping Products and Services. MapQuest derives revenues from
providing digital mapping services to businesses and from the sale of mapping
products to distributors, retailers, and corporate customers. MapQuest typically
receives fees and payments on a time and material basis or a fixed fee basis.
Revenues from these services are recognized when the services are rendered. In
addition, revenues from long-term contracts are recognized on the
percentage-of-completion method, measured as the number of hours incurred to
date as a percentage of estimated total labor hours for each contract. MapQuest
also licenses software and data for a license fee and/or royalties. License fees
are recognized upon delivery of the software and data. Royalty revenue is
recognized upon receipt of payment. With respect to the sale of mapping
products, MapQuest is paid negotiated amounts, depending on volume, from
retailers and distributors, subject to minimum sales and return arrangements.
18
<PAGE>
Results of operations
Revenues
Revenues were $7.4 million and $13.6 million for the second quarter and
first half of 1999, respectively, compared to $6.3 million and $11.9 million for
the corresponding periods in 1998. The increases in revenues for the second
quarter and first half of 1999 compared to the same periods in 1998 are
primarily attributable to increased business and consumer Internet related
revenues as a result of both an increase in the number of advertisers on
mapquest.com and an increase in the number of business clients requiring
Internet mapping services. These increases reflected in 1999 were partially
offset by lower digital mapping services volume as compared to the same periods
in 1998. For the three-months ended June 30, 1999, as a percent of total
revenues, business and consumer related revenues and digital mapping revenues
were 54% and 46%, respectively, compared to 25% and 75% respectively for the
three months ended June 30, 1998. MapQuest expects its business and consumer
related revenues to become a greater percentage of its total revenues in the
future and expects a corresponding decrease in its digital mapping revenues as a
percentage of total revenues in the future.
Cost of Revenues
Cost of revenues consists primarily of compensation for operations
personnel and related operations costs, including depreciation of operating
assets, third-party data and royalties, print and paper costs for printed
products, and subcontractor costs. Cost of revenues increased to $4.8 million
and $9.3 million for second quarter and first half of 1999, respectively, as
compared to $4.6 million and $8.3 million, respectively, for the corresponding
periods in 1998. These increases were primarily due to increased costs
associated with adding staff and related expenses to support the expansion of
our Internet products and services as the mapquest.com web site traffic grew and
as the number of business clients grew.
Operating Expenses
Sales and Marketing
Sales and marketing expenses consist primarily of salaries,
commissions, travel-related expenses, sales promotion expenses, public relations
expenses and costs of marketing materials. Sales and marketing expenses were
$4.4 million, or 58.9% of revenues, for the quarter ended June 30, 1999. For the
six months ended June 30, 1999, sales and marketing expenses were $7.2 million,
or 52.9% of revenues. In comparison, the second quarter of 1998 sales and
marketing expenses were $1.1 million, or 16.9% of revenues, and the six months
ended June 30, 1998 sales and marketing expenses were $2.6 million, or 21.5% of
revenues. These period-to-period increases are primarily attributable to
MapQuest's marketing promotions and advertising efforts as well as an increase
to the number of sales and marketing personnel and related expenses. We believe
that sales and marketing expenses will continue to increase in the future as we
expand our direct sales force and further promote our products and services.
19
<PAGE>
Product Development
Product development expenses consist primarily of the costs of
developing new products and services and modifying existing products and
services, including software and data. These costs consist primarily of salaries
for product development personnel and related expenses, contract labor expense
and consulting fees. Product development expenses were $1.3 million and $2.1
million, respectively, for the three months and six months ended June 30, 1999,
and $.8 million and $1.7 million, respectively, for the three months and six
months ended June 30, 1998. As a percentage of revenues, these expenses were
17.8% and 15.5%, respectively, for the three-month and six-month periods ended
June 30, 1999 versus 12.9% and 14.2%, respectively, for the comparable periods
in 1998. These period-to-period increases were primarily attributable to
increased business and consumer product development expenses. We believe that
continued investment in business and consumer product development expenses is
essential to attaining our strategic objectives and as a result, we anticipate
product development expenses to increase in the future.
General and Administrative
General and administrative expenses consist primarily of salaries and
related expenses for general corporate functions, including executive,
accounting and administrative personnel, and legal expenses. General and
administrative expenses were $1.0 million and $1.9 million, respectively, for
the three months and six months, ended June 30, 1999 compared to $ .5 million
and $1.0 million, respectively, for the three months and six months, ended June
30, 1998. As a percentage of revenues, these expenses were 13.5% and 14.3%,
respectively, for the three-month and six-month periods ended June 30, 1999,
compared to 8.3% and 8.4%, respectively, for the three-month and six-month
periods ended June 30, 1998. These period-to-period increases were primarily
attributable to increased salaries and related expenses associated with hiring
additional personnel as a result of company growth. Additional costs were
incurred in 1999, as well, related to being a publicly held entity, including
additional personnel, as well as directors' and officers' liability insurance
and professional services fees.
Income Taxes
MapQuest paid no income taxes for the three months and six months ended
June 30, 1998 and 1999, as MapQuest incurred net operating losses for those
periods. Due to the uncertainty of future profitability, MapQuest has not
recognized any potential future tax benefits of net operating loss
carryforwards.
Liquidity and Capital Resources
MapQuest has financed its operations to date primarily through the sale
of common stock, private placement of equity securities, funds from operations
and bank borrowings. As of June 30, 1999, MapQuest had $49.8 million of cash and
cash equivalents and $6.0 million in short-term investments.
20
<PAGE>
Net cash used in operating activities was $.8 million for the six
months ended June 30,1998, and $5.0 million for the six months ended June 30,
1999. In both periods cash used by operating activities was primarily a result
of net losses.
Net cash used in investing activities was $.5 million for the six
months ended June 30, 1998 and $ 7.4 million for the six months ended June 30,
1999. This increase was due to the purchase of short-term investments of $ 6.0
million with a portion of the initial public offering proceeds and a $.9 million
increase related to property and equipment purchases over 1998 levels.
Net cash used in financing activities was less than $.1 million for the
six months ended June 30,1998, and net cash provided by financing activities was
$61.6 million for the six months ended June 30,1999. In 1999, the net amount of
$61.6 million resulted primarily from the sale of common stock, net of the
redemption of Preferred Stock.
MapQuest's capital commitments for the six month period ended June 30,
1998 and the six month period ended June 30, 1999 consisted of obligations under
facilities and operating leases. Management anticipates that it will experience
an increase in its capital expenditures and lease commitments consistent with
its anticipated growth in operations, infrastructure and personnel, in addition
to committing resources to promoting its brand name and building marketing and
sales forces.
MapQuest has a revolving demand credit facility with First Union Bank,
N.A. in the amount of $5.0 million which bears interest at First Union Bank's
prime rate or fixed rates as offered by First Union Bank or LIBOR plus 1.75%.
Borrowings are secured by MapQuest's accounts receivable and are limited to the
lesser of $5.0 million or 80% of the net eligible accounts receivable which are
within 90 days of invoice. As of June 30, 1999 there were no borrowings under
this facility.
In May 1999, the Company completed an initial public offering of
4,600,000 shares of its common stock at a public offering price of $15 per
share, which generated approximately $62.1 million in net proceeds to MapQuest.
Upon the closing of the Company's initial public offering in May 1999,
all of the outstanding shares of MapQuest's Series A and Series C Preferred
Stock were converted into 27,122,455 shares of common stock and all of the
outstanding shares of MapQuest's Series B Preferred Stock were redeemed for
approximately $8.6 million.
During June 1999, the underwriters of MapQuest's initial public
offering exercised an over-allotment option for 597,990 shares of MapQuest's
common stock at the initial public offering price of $15 per share, which
generated approximately $8.1 million in net proceeds to MapQuest.
MapQuest believes its existing cash and cash equivalents, short-term
investments, and available borrowings will be sufficient to meet its anticipated
cash needs for working capital and capital expenditures for at least the next
twelve months. Our future capital requirements
21
<PAGE>
will depend on many factors, including the level of investment we make in new
technologies and improvements to existing technologies and the levels of monthly
expenses required to launch new products and services.
Year 2000
The Year 2000 issue is the potential for system and processing failures
of date-related data as a result of computer-controlled systems using two digits
rather than four to define the applicable year. For example, computer programs
that have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in system failure or
miscalculations causing disruptions of operations, including, among other
things, an inability to process transactions, send invoices or engage in similar
normal business activities. MapQuest may be affected by Year 2000 issues related
to non-compliant information technology ("IT") systems or non-IT systems
operated by MapQuest or third parties. MapQuest's IT systems consist of software
and data developed either in-house or purchased from third parties, and hardware
purchased from vendors.
State of Readiness. MapQuest has assessed all of its information
technology systems, which include but are not limited to, the hardware and
software necessary to provide and deliver mapquest.com. MapQuest is continuing
to perform assessments of its non-information technology systems, which include
many of the building and office equipment and systems. To date, MapQuest's
assessment has consisted of the following steps:
o establishing a Year 2000 Committee in the third quarter of 1998
consisting of managers from all relevant functional areas of the
Company;
o identifying and evaluating all software and hardware upon which
MapQuest is dependent;
o contacting third-party vendors of hardware, software and services,
including database providers that MapQuest utilizes;
o contacting material non-information technology systems and service
providers;
o developing procedures to inventory, perform system scans, and conduct
research and remediation testing of all computer software and hardware,
digital data, facilities related systems, telecommunications, and other
date sensitive equipment that is under our control; and
o assessing the need for and developing a business contingency plan.
o As of the end of the second quarter of 1999, MapQuest has performed the
following:
o the Committee has reviewed all functional areas of MapQuest and has
identified various systems and software programs that needed to be Year
2000 compliant;
22
<PAGE>
o MapQuest has performed a Year 2000 simulation on a majority of its
proprietary systems, products and services to test system and product
readiness;
o based on the results of its Year 2000 simulation tests, MapQuest has
revised and continues to revise its code as necessary to improve the
Year 2000 compliance of its proprietary systems;
o MapQuest is continuing to upgrade and test all other hardware and
software used in its operations;
o MapQuest's hosting service provider, Qwest, has stated that it has
established a dedicated Year 2000 Program Office to address the
compliance functions of its affected systems and is actively preparing
its systems for the Year 2000;
o accounting and sales tracking systems have been implemented which meet
Y2K standards and a human resource information system is currently
being replaced with Y2K compliant software with implementation by the
end of the third quarter;
o a comprehensive review has been completed of all the suppliers and
vendors critical to MapQuest's operations, facilities, and
administration with contact made by mail requesting information
regarding their Y2K state of readiness or confirmation of their Y2K
compliance;
o all facilities have been reviewed and assessed to determine if any
building systems (i.e. electronic security systems, telephone switches,
voice answering software) are not Y2K compliant. Systems requiring
upgraded software have been identified and necessary installations have
been made; and
o MapQuest continues to assess its non-IT systems.
At this point in its assessment, MapQuest is not currently aware of any
Year 2000 problems relating to these systems which would have a material effect
on its business, financial condition or results of operations, without taking
into account its efforts to avoid such problems. MapQuest plans to complete its
Year 2000 assessment during the summer of 1999.
Cost. To date, MapQuest has not incurred any material costs in
connection with identifying and evaluating Year 2000 compliance issues. Most of
its expenses have been related to, and are expected to continue to relate to,
the operating costs associated with time spent by employees in the evaluation
process and Year 2000 compliance matters generally. At this time, MapQuest does
not possess the information necessary to estimate the potential costs of the
replacement of third party software, hardware or services that are determined
not to be Year 2000 compliant. Although MapQuest does not anticipate those
amounts will be material, such expenses, if higher than anticipated, could have
a material adverse effect on MapQuest's business, financial condition and
operating results.
23
<PAGE>
Risks. Although MapQuest's assessment may be finalized without
identifying any additional material non-compliant IT or systems operated by
MapQuest or by third parties, a systemic failure beyond the control of MapQuest,
such as a prolonged telecommunications or electrical failure is possible. This
type of failure could prevent MapQuest from operating its business, prevent
users from accessing its website, or change the behavior of advertising
customers or persons accessing its website. MapQuest believes that the primary
business risks, in the event of such systemic failure, would include but not be
limited to, lost advertising revenues, lost business revenues, increased
operating costs, loss of customers or persons accessing its website and servers,
or other business interruptions of a material nature, as well as claims of
mismanagement, misrepresentation, or breach of contract.
Contingency Plan. As discussed above, MapQuest is engaged in a number
of Year 2000 activities to attain compliance . The results of MapQuest's further
testing and the responses received from third-party vendors, service providers
and customers will be taken into account in determining the nature and extent of
any contingency plans.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Net proceeds from the initial public offering have been invested in
short-term, interest bearing, investment grade obligations with various
maturities ranging from one day to one year. Therefore, in the near term,
MapQuest's primary exposure to market risk will result from interest rates
associated with these investments.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7 of the Notes to financial statements.
Item 2. Changes in Securities and Use of Proceeds
(c) Recent Sales of Unregistered Securities
During the three months ended June 30, 1999 MapQuest issued an
aggregate of 523,640 options to purchase its common stock to its employees, with
exercise prices ranging from $15.00 per share to $19.25 per share. The issuance
of a significant portion of these securities was made in reliance upon Rule 701
promulgated under the Securities Act. Those issuances that were not made in
reliance upon Rule 701 were exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act.
24
<PAGE>
During the three months ended June 30, 1999, employees and consultants
exercised options to purchase 19,440 shares of common stock of MapQuest at
exercise prices ranging from $.04 to $.37 per share. These shares of common
stock were issued in reliance upon Rule 701 promulgated under the Securities
Act.
During the three months ended June 30, 1999, 44,457 shares of common
stock were issued upon exercise of warrants at prices ranging from $.01 to $1.30
per share in reliance upon Section 4(2) of the Securities Act.
(d) Use of Proceeds from Registered Securities
On May 3, 1999, the Securities and Exchange Commission declared
MapQuest's Registration Statement on Form S-1 (No. 333-72667) effective. On May
7, 1999, MapQuest completed an initial public offering of an aggregate of
4,600,000 shares of MapQuest Common Stock at an offering price of $15.00 per
share. The managing underwriters for the offering were BancBoston Robertson
Stephens, Thomas Weisel Partners, LLC, U.S. Bancorp, Piper Jaffray Inc. and
Volpe Brown Whelan & Company, LLC. Net proceeds to MapQuest, after deducting
underwriting discounts and commissions of $4,830,000 and offering expenses of
approximately $ 2,070,000 were $ 62,100,000. On June 8, 1999, in connection with
the aforementioned initial public offering, the managing underwriters exercised
their over-allotment option for 597,990 shares of MapQuest's Common Stock at the
initial public offering price of $15 per share, which generated approximately
$8.1 million in net proceeds to MapQuest. None of the expenses incurred in the
offering were direct or indirect payments to directors, officers, or general
partners of MapQuest or their associates, to persons owning ten percent or more
of any class of equity securities of the issuer or to affiliates of MapQuest
except in connection with the redemption of the Series B Preferred Stock.
MapQuest used approximately $8,600,000 of these proceeds to redeem all of the
outstanding shares of Series B Preferred Stock. MapQuest has invested the
remainder of the net proceeds in short-term, interest bearing investment grade
obligations with various maturities ranging from one day to one year.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
As of April 12, 1999, in a written consent of the stockholders of
MapQuest, a majority of the holders of all outstanding shares of stock of
MapQuest (which majority included a majority of the holders of all outstanding
shares of the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock) approved (a) the adoption of a recapitalization agreement, to
be effective upon the effectiveness of the registration statement, in respect of
the initial public offering whereby the holders of MapQuest's preferred stock
outstanding prior to the initial public offering agreed to the termination of
certain rights related to such preferred stock, (b) the 2.7 for 1 stock split,
the increase in the authorized share capital of MapQuest to 100,000,000 shares
of common stock, par value $0.001 per share, and 5,000,000
25
<PAGE>
shares of preferred stock, par value $0.01 per share, and the amendment of the
Certificate of Incorporation to reflect such stock split, (c) the adoption of
the Amended and Restated Certificate of Incorporation of MapQuest and the
Amended and Restated Bylaws of MapQuest, both to be effective upon the
effectiveness of the registration statement in respect of the initial public
offering, (d) the adoption of Amendment No. 4 to the 1995 Stock Option Plan, the
1999 Stock Plan, including the reservation of 3,645,000 shares thereunder, and
the Employee Stock Purchase Plan, including the reservation of 1,755,000 shares
thereunder, and (e) the approval of a form of director's indemnification
agreement to be entered into between MapQuest and its directors.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
(a) The following exhibits are filed as part of this report:
2.1 Computation of Basic and Diluted Net Loss per Share:
Refer to Note 5 of the Notes to the Financial
Statements.
27.1 Financial Data Schedule
27.2 Financial Data Schedule
27.3 Financial Data Schedule
(b) MapQuest did not file any reports on Form 8-K during the three
months ended June 30, 1999.
26
<PAGE>
Item 7. Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 16, 1999 MAPQUEST.COM, INC.
By: /s/ James Thomas
--------------------------------
Chief Financial Officer
(Principal Financial Officer)
27
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.1 Financial Data Schedules
<ARTICLE> 5
<LEGEND>
This schedule contains restated summary information extracted from the MapQuest
balance sheet for December 31, 1998 and Statement of Operations for the year
ended December 31, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 564
<SECURITIES> 0
<RECEIVABLES> 7,245
<ALLOWANCES> 470
<INVENTORY> 1,365
<CURRENT-ASSETS> 9,333
<PP&E> 5,278
<DEPRECIATION> 3,433
<TOTAL-ASSETS> 11,450
<CURRENT-LIABILITIES> 5,032
<BONDS> 0
26,186
0
<COMMON> 0
<OTHER-SE> (19,768)
<TOTAL-LIABILITY-AND-EQUITY> 11,450
<SALES> 24,717
<TOTAL-REVENUES> 24,717
<CGS> 17,646
<TOTAL-COSTS> 17,646
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,155)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,155)
<EPS-BASIC> (12.09)
<EPS-DILUTED> (12.09)
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.2 Financial Data Schedules
<ARTICLE> 5
<LEGEND>
This schedule contains restated summary information extracted from the MapQuest
balance sheet (Unaudited) for March 31,1999 and Statement of Operations
(Unaudited) for the three months ended March 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 154
<SECURITIES> 0
<RECEIVABLES> 6,567
<ALLOWANCES> 501
<INVENTORY> 1,175
<CURRENT-ASSETS> 8,163
<PP&E> 5,901
<DEPRECIATION> 3,730
<TOTAL-ASSETS> 10,571
<CURRENT-LIABILITIES> 6,956
<BONDS> 0
26,495
0
<COMMON> 0
<OTHER-SE> (22,880)
<TOTAL-LIABILITY-AND-EQUITY> 10,571
<SALES> 6,156
<TOTAL-REVENUES> 6,156
<CGS> 4,465
<TOTAL-COSTS> 4,465
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,803)
<INCOME-TAX> 1
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,804)
<EPS-BASIC> (9.26)
<EPS-DILUTED> (9.26)
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.3
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the MapQuest balance
sheet (Unaudited) for June 30, 1999 and Statement of Operations (Unaudited) for
the six months ended June 30, 1999 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 49,754
<SECURITIES> 5,969
<RECEIVABLES> 7,481
<ALLOWANCES> 580
<INVENTORY> 1,023
<CURRENT-ASSETS> 65,064
<PP&E> 6,706
<DEPRECIATION> 4,060
<TOTAL-ASSETS> 68,829
<CURRENT-LIABILITIES> 7,322
<BONDS> 0
0
0
<COMMON> 33
<OTHER-SE> 61,474
<TOTAL-LIABILITY-AND-EQUITY> 68,829
<SALES> 13,566
<TOTAL-REVENUES> 13,566
<CGS> 9,286
<TOTAL-COSTS> 9,286
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,521)
<INCOME-TAX> 1
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,522)
<EPS-BASIC> (0.65)
<EPS-DILUTED> (0.65)
</TABLE>
