Inphonic, Inc. is an online seller of wireless services and devices operating three business segments: wireless activation and services, mobile virtual network operator (MVNO) services and data services. Inphonic sells wireless services and devices to consumers through Websites that it creates and manages for third parties under their own brands. The Company also provides wireless services and devices to consumers through wireless airtime service that it purchases wholesale from Sprint. Inphonic provides such services as MVNO under its Liberty Wireless brand. The Company leverages the relationships it has established with customers through the sale of wireless services from carriers, as well as its MVNO service, to sell wireless data services, such as unified communications, wireless email and mobile marketing. Wireless Activation and Services The Company sells wireless service plans and devices through Websites, which allow marketers to leverage their brands to sell wireless products and services to their customers. Inphonic uses its e-commerce platform to activate, configure and ship wireless services and devices to customers on behalf of these marketers. For each marketer for which it creates and manages a Website, the Company uses that marketer's brand on the Website and throughout the sales and customer support process. Inphonic's customer service representatives answer customer calls with each particular marketer's name, and it ships devices with marketer-specific promotional materials and information. Inphonic also offers customers the ability to purchase wireless services and devices from Websites that it operates under its own brands, such as Wirefly.com. The Company leverages the same e-commerce platform, operational infrastructure and wireless carrier relationships that it uses for marketer-branded Websites to acquire customers through its own branded Websites. The Company competes with Amazon.com, Best Buy, Circuit City, Wal-Mart and Radio Shack. MVNO Services In August 2002, Inphonic launched Liberty Wireless, its MVNO service, to market and sell wireless services to consumers. The Company purchases wireless airtime minutes wholesale from Sprint, which owns and operates the underlying wireless network. Liberty Wireless is marketed to those customers who order wireless and service plans devices through its Websites but do not accept post-paid service on the security deposit terms required by the wireless carriers. Inphonic also sells Liberty Wireless through retail stores. Liberty Wireless offers a service plan that enables a subscriber to purchase bundles of airtime minutes for a specific monthly price and charges the subscriber in advance of the usage. The Company also offers Liberty Wireless to certain customers on a post-paid basis. Inphonic collects fees from customers for device purchases and airtime usage. The Company has begun to utilize the e-commerce platform, operational infrastructure and wireless carrier agreement it has in place for Liberty Wireless to extend its MVNO capabilities to marketers who want to offer branded wireless services to their customers without having to own or operate a wireless network or operational infrastructure. The MVNO services Inphonic offers include wireless airtime minutes that it purchases from Sprint; merchandising, which includes creating, pricing and branding the voice and data service plans to be marketed to potential subscribers; provisioning, which includes determining subscriber credit-worthiness and service activation; procurement, which includes the purchasing, programming, packaging and delivery of wireless devices to subscribers and managing returns; customer care, which includes pre-sale and post-sale customer service, and billing, which may also include collections. Inphonic announced a version of the Liberty Wireless service that is directed to the Hispanic community under the Viva Liberty brand. Inphonic's Liberty Wireless service competes against Boost, TracFone and Virgin Mobile. Data Services To further leverage the

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