Prospectus Summary
You should read the following summary together with the more detailed information regarding our company, the common stock being sold in this offering and our financial statements and the notes relating to these financial statements appearing elsewhere in this prospectus.
This prospectus contains forward-looking statements based on our current expectations, assumptions, estimates and projections about MapQuest and our industry. These forward-looking statements involve risks and uncertainties. MapQuest's actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors described in the "Risk Factors" section and elsewhere in this prospectus. MapQuest undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
MapQuest
We are a leading online provider of mapping and destination information. By leveraging over 30 years of traditional and digital mapping experience together with our proprietary integration and editing of geographic databases, we provide comprehensive online mapping solutions to businesses and customized maps, destination information and driving directions to consumers. During January 1999, we delivered over 70.3 million maps and over 13.5 million driving directions through our website and through third-party websites. According to Media Metrix, Inc., in December 1998 mapquest.com had over 3.3 million unique visitors making it the number one travel/tourism Internet property in terms of audience reach.
Our online products and services enable businesses to:
. Provide customized maps, destination information and driving directions to potential customers;
. Expand the functionality of their websites to attract and retain users;
. Outsource their map-enabling and destination information needs, thereby avoiding a significant portion of the expenses normally associated with establishing and maintaining a map-enabling infrastructure; and . Provide potential customers with proximity information regarding which of a business' multiple locations is closest to the potential customer.
Our online products and services enable consumers to:
. Receive maps and destination information on a real-time basis based on specific geocentric parameters provided by the consumer;
. Generate detailed door-to-door driving directions at any time; and . Create and retrieve customized maps based on the consumer's preferences.
We are also a leading U.S. provider of traditional and digital mapping products and services to the educational, reference, directory, travel and governmental markets. In addition, companies that incorporate call centers, CD- ROMs or driving direction kiosks into their information delivery strategy often require non-Internet customized mapping solutions. We have developed our map- enabling software to provide mapping applications in these environments.
Strategy
Our objective is to be the leading online provider of destination solutions for businesses and consumers. Key elements of our strategy include:
. Building brand awareness by engaging in a number of advertising, public relations and other marketing programs designed to promote our global brand and build loyalty among our business and consumer customers;
. Expanding and enhancing our service by providing comprehensive, cost- effective, accurate and easily accessible destination information and value-added tools and features;
. Growing sales channels aggressively by building our direct field sales force and developing strategic value-added reseller channel relationships to target U.S. and international markets;
. Developing additional advertising opportunities by offering new methods of targeted advertising based on a consumer's geographic information;
. Leveraging our integrated geographic data in developing future services and products; and . Pursuing international opportunities to expand our access to additional business customers seeking to improve the functionality of their websites and consumers seeking online map-related information.
Our headquarters are located at 3710 Hempland Road, Mountville, Pennsylvania 17554. Our telephone number at that location is (717) 285-8500. Our website address is www.mapquest.com. The information on our website is not part of this prospectus.
The Offering
Common stock offered............ shares Common stock to be outstanding after this offering............ shares(1) Over-allotment option........... shares Use of proceeds................. We intend to use $8,332,036 of the net proceeds to redeem all outstanding shares of our Series B Preferred Stock. We intend to use the remaining net proceeds for expansion of sales and marketing capabilities, product development, working capital and other general corporate purposes.
Proposed Nasdaq National Market MQST symbol......................... (1) This information is based on shares of common stock outstanding as of December 31, 1998. It excludes (i) 1,795,426 shares of common stock issuable upon exercise of options outstanding at December 31, 1998, with a weighted average exercise price of $0.69 per share, (ii) 233,750 shares of common stock issuable upon exercise of options outstanding at December 31, 1998 with an exercise price of the per share price of this offering, (iii) 193,500 shares of common stock issuable upon exercise of options granted since December 31, 1998, with an exercise price of the per share price of this offering, (iv) 75,335 shares of common stock reserved for future issuance under MapQuest's stock option plan, (v) 857,264 shares of common stock issuable upon exercise of warrants outstanding at December 31, 1998, with a weighted average exercise price of $1.84, (vi) 1,000,000 shares of common stock that have been reserved for future issuance under our 1999 omnibus stock plan, and (vii) 1,000,000 shares of common stock that have been reserved for future issuance under our 1999 employee stock purchase plan. See "Management--Employee Benefit Plans" and Note 6 to the Financial Statements.
Summary Financial Data (in thousands, except per share data) The following table sets forth our summary financial data. You should read this information together with the 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."
Year Ended December 31, 1996 1997 1998
Statement of Operations Data: Revenues Business...................................... $ 7,020 $ 4,763 $ 6,536 Consumer...................................... 140 1,276 1,376 Digital mapping............................... 12,417 15,377 16,805 Total revenues.............................. 19,577 21,416 24,717 Costs of revenues.............................. 12,320 15,302 17,646 Gross profit................................... 7,257 6,113 7,071 Operating expenses: Sales and marketing........................... 4,455 7,257 5,243 Product development........................... 2,619 5,048 2,955 General and administrative.................... 1,902 1,811 2,326 Total operating expenses.................... 8,976 14,116 10,524 Operating loss ................................ (1,719) (8,002) (3,453) Interest income and expense, net............... 199 136 54 Other income................................... 244 267 244 Loss before provision for income taxes......... (1,276) (7,599) (3,155) Provision for income taxes..................... -- -- -- Net loss....................................... (1,276) (7,599) (3,155) Less preferred stock dividends and accretion... (525) (623) (667) Net loss applicable to common stockholders..... $ (1,802) $ (8,222) $ (3,822) Basic and diluted loss per share............... $ (23.87) $(106.48) $ (32.64) Shares used to compute basic and diluted loss per share(1)................................. 75 77 117 Pro forma basic and diluted loss per share..... $ (0.36) Shares used to compute pro forma basic and diluted loss per share(1).................... 10,162
December 31, 1998
Pro Pro Forma
Actual Forma(2) As Adjusted(3)
Balance Sheet Data: Cash and cash equivalents.................. $ 564 $ 564 $ Working capital............................ 4,301 4,301 Total assets............................... 11,450 11,450 Payment to redeem preferred stock.......... -- 8,322 Redeemable preferred stock................. 26,186 -- Stockholders' equity (deficit)............. (19,768) (1,914)
(1) See the financial statements and the notes to those statements appearing elsewhere in this prospectus for the determination of shares used in computing basic and diluted loss per share and pro forma basic and diluted loss per share. (2) Gives pro forma effect to (i) the redemption of all outstanding shares of our Series B preferred stock upon the closing of this offering and (ii) the automatic conversion of all outstanding shares of our Series A preferred stock and Series C preferred stock into 10,045,354 shares of our common stock upon the closing of this offering. (3) As adjusted to reflect the sale of shares of common stock offered by this prospectus at an assumed initial public offering price of $ per share after deducting underwriting discounts and estimated offering expenses payable by us. See "Use of Proceeds" and "Capitalization." Unless otherwise indicated, all information in this prospectus: (i) reflects a [ ] for [ ] stock split of our common stock to be effected prior to the closing of this offering; (ii) reflects the redemption of all outstanding shares of our Series B preferred stock upon the closing of this offering; (iii) reflects the automatic conversion of all outstanding shares of our Series A preferred stock and Series C preferred stock into 10,045,354 shares of our common stock upon the closing of this offering; and (iv) assumes no exercise of the underwriters' over-allotment option.