Prospectus Summary
PROSPECTUS SUMMARY This summary does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, including “Risk Factors,” our consolidated financial statements and the related notes and the other financial information appearing elsewhere in this prospectus, before you decide to invest in our common stock. Unless otherwise indicated, references to “InPhonic,” the “Company,” “we,” “us” and “our” refer to InPhonic, Inc.InPhonic, Inc.
We are a leading online seller of wireless services and devices. We sell these services and devices through private-labeled websites that we create and manage for online businesses, affinity organizations and national retailers, whom we refer to collectively as marketers. We also sell services and devices through our own branded websites, including Wirefly.com. We have developed a proprietary e-commerce platform that integrates merchandising, provisioning, procurement, customer care and billing operations into a single system for the online sale of wireless services and devices. Our five largest sources of customers include Yahoo, Quixtar, MSN and AOL, for whom we create and manage private-labeled websites, and Google, from whom we purchase advertising.
We also operate as a mobile virtual network operator, or MVNO, under our Liberty Wireless brand. As an MVNO, we market and sell to consumers wireless airtime service that we purchase wholesale from a national carrier. This service utilizes the same e-commerce platform, operational infrastructure and marketing relationships we have developed to sell our other products and services resulting in what we believe is a cost effective means of acquiring customers. We plan to expand our MVNO business by offering marketers the ability to sell a branded wireless service to their customers using our e-commerce platform, operational infrastructure and wireless airtime that we purchase. To further leverage the relationships we have established with customers through the sale of wireless services from carriers, as well as our MVNO service, we sell a variety of wireless data services such as unified communications, wireless email and mobile marketing.
In recent years, wireless communication services have grown significantly in the United States fueled by enhanced convenience, mobility and affordability. According to The Yankee Group, an independent research company, the estimated number of wireless subscribers in the United States has more than doubled from 68.7 million in 1998 to 153.9 million in 2003. As wireless carriers face increasing competition, excess network capacity as well as new challenges resulting from wireless local number portability, they are turning to the Internet as a cost-effective and growing channel to acquire customers. In addition, as consumers are faced with an increasingly complex and constantly changing selection of wireless service plans and devices, they are turning to the Internet to find real-time comparative pricing and feature information to help them make an informed choice. Forrester Research, Inc., an independent research company, estimates that online retail sales of consumer electronics, which include sales of wireless devices, will increase from an estimated $4.7 billion in 2003 to $11.7 billion in 2008, representing a compound annual growth rate of 20%. We believe the growing proportion of wireless services and devices sold on the Internet creates a significant market opportunity for us.
Our online business model connects wireless carriers, marketers and consumers of wireless services and devices more effectively and efficiently than traditional retail channels. Our value to wireless carriers is broader access to consumers who shop on the Internet through our marketing relationships with highly-trafficked websites as well as our own branded websites. Our value to marketers is the additional revenue they can generate from selling wireless services and devices through the private-labeled websites we create and manage. Our value to consumers is competitive pricing, broad selection and the convenience of using the Internet for comparing and purchasing wireless services and devices. Through agreements we have with the seven largest U.S. wireless carriers, as well as with several regional carriers, we offer consumers a selection of at least four carriers in each of the top 100 U.S. metropolitan markets. Collectively, these carriers’ networks cover 99.4% of the U.S. population.
Our business is subject to numerous risks, which are highlighted in the section entitled “Risk Factors” immediately following this prospectus summary. In particular, our limited operating history makes it difficult for us to accurately forecast revenues and appropriately plan for our expenses. Furthermore, we have incurred significant operating losses in the past and may incur significant operating losses in the future.
Corporate Information
We were incorporated in Delaware in January 1997 and we began operations in October 1999. Our principal executive offices are located at 1010 Wisconsin Avenue, Suite 600, Washington, DC 20007 and our telephone number is (202) 333-0001. We maintain our technology and operations center in Largo, Maryland. Our website address is located at www.inphonic.com. The information on, or that can be accessed through, our website is not part of this prospectus.
The Offering
Unless specifically stated otherwise, all information contained in this prospectus:
The number of shares of common stock to be outstanding after this offering is based on the pro forma number of shares outstanding as of March 31, 2004. The number of shares of common stock to be outstanding immediately after this offering excludes the following: