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Washington, D.C. 20549
UNDER
THE SECURITIES ACT OF 1933
Delaware | 7389 | 80-0036062 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Brooklyn, NY 11201
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Chief Executive Officer
45 Main St., Suite 800
Brooklyn, NY 11201
(718) 797-0722
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Babak Yaghmaie, Esq. Stephane Levy, Esq. Cooley LLP 1114 Avenue of the Americas New York, NY10036-7798 (212) 479-6000 | Alan Shapiro, Esq. Executive Vice President & General Counsel Everyday Health, Inc. 45 Main St., Suite 800 Brooklyn, NY 11201 (718) 797-0722 | Kirk A. Davenport, Esq. Latham & Watkins LLP 885 Third Avenue New York, NY 10022-4834 (212) 906-1200 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
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The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
![(EVERYDAYHEALTH LOGO)](https://capedge.com/proxy/S-1A/0000950123-10-039331/y80435a3y8043500.gif)
Per Share | Total | |||||||
Initial public offering price | $ | $ | ||||||
Underwriting discounts and commissions | $ | $ | ||||||
Proceeds, before expenses, to Everyday Health | $ | $ | ||||||
Proceeds, before expenses, to the selling stockholders | $ | $ | ||||||
Goldman, Sachs & Co. | J.P. Morgan |
Jefferies & Co. | Needham & Company, LLC |
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Helping consumers:Research symptoms Find treatment options Connect with others Eat healthier Live betterHealth is a journey.And Everyday Health is there to lead the way, providing consumers with the expert guidance and advice they need to make better choices, actively manage their conditions and live healthier lives, every day. www.EverydayHealth.com |
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Because every day counts. Condition Management Prevention Caring Lifestage |
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![()](https://capedge.com/proxy/S-1A/0000950123-10-039331/y80435a3y8043510.jpg)
Everyday Health is a leading provider of online consumer health solutions. Our broad portfolio of over 25 websites span the health spectrum — from caregiving and condition management to fitness, nutrition and personal care, we o er users the tools, community and expert advice they need to live healthier, every day. Treatment Options Connecting Personal Care Fitness and Nutrition |
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EX-99.1 |
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• | developing new and improved offerings to enhance the consumer experience; | |
• | seeking to aggressively grow our advertiser and sponsorship base; | |
• | continuing to build and enhance awareness of theEveryday Healthbrand; | |
• | acquiring complementary businesses; and | |
• | expanding into international markets. |
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Common stock offered by Everyday Health | shares | |
Common stock offered by the selling stockholders | shares | |
Common stock to be outstanding immediately after this offering | shares | |
Use of proceeds | We estimate that we will receive net proceeds from this offering of approximately $ million, based on an assumed public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us. We intend to use the net proceeds from this offering for working capital and general corporate purposes, which may include financing the development of new content and advertising-based services, as well as funding capital expenditures and operating losses. We may also use a portion of the net proceeds to repay borrowings under our credit facilities or acquire complementary businesses, products or technologies. However, we do not have agreements or commitments for any specific repayments or acquisitions at this time. We will not receive any proceeds from the sale of shares by the selling stockholders in this offering. See “Use of Proceeds.” | |
Proposed NASDAQ Global Market symbol | “EVDY” |
Risk Factors | You should read the “Risk Factors” section beginning on page 12 and other information included in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. |
• | 4,945,723 shares of common stock issuable upon exercise of outstanding options with a weighted-average exercise price of $4.53 per share; |
• | 458,686 shares of common stock reserved for future issuance under our 2003 Stock Option Plan; provided, however, that following the completion of this offering, no additional grants will be awarded under our 2003 Stock Option Plan and such shares will become available for issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; |
• | shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; and |
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• | 222,977 shares of common stock issuable upon the exercise of outstanding warrants, which includes warrants to purchase our redeemable convertible preferred stock that will become exercisable for common stock after this offering, at a weighted-average exercise price of $5.47 per share. |
• | gives effect to the completion of the reverse stock split; | |
• | gives effect to the automatic preferred stock conversion; | |
• | assumes no exercise by the underwriters of their option to purchase up to additional shares, consisting of shares to be purchased from us; and | |
• | gives effect to the adoption of our amended and restated certificate of incorporation and our amended and restated bylaws that will occur immediately prior to the consummation of this offering. |
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• | compensation for product development, sales and marketing, and general and administrative personnel who were employed by us for a short period of time following the RHG acquisition; and | |
• | third-party product development expenses, such as content licensing fees, data center costs and other technology-related expenses. |
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Three Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||
2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||
Revenues | $ | 47,363 | $ | 69,412 | $ | 90,111 | $ | 22,672 | $ | 28,618 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenue | 30,111 | 35,229 | 39,453 | 8,442 | 8,696 | |||||||||||||||
Sales and marketing | 7,425 | 14,503 | 20,816 | 6,059 | 6,249 | |||||||||||||||
Product development | 10,753 | 14,874 | 20,192 | 5,566 | 5,115 | |||||||||||||||
General and administrative | 6,859 | 12,906 | 16,239 | 5,488 | 3,681 | |||||||||||||||
Depreciation and amortization | 2,030 | 4,340 | 9,787 | 1,980 | 2,454 | |||||||||||||||
Total operating expenses | 57,178 | 81,852 | 106,487 | 27,535 | 26,195 | |||||||||||||||
Income (loss) from operations | (9,815 | ) | (12,440 | ) | (16,376 | ) | (4,863 | ) | 2,423 | |||||||||||
Interest expense, net | (323 | ) | (455 | ) | (1,314 | ) | (208 | ) | (491 | ) | ||||||||||
Income (loss) before provision for income taxes | (10,138 | ) | (12,895 | ) | (17,690 | ) | (5,071 | ) | 1,932 | |||||||||||
Provision for income taxes | — | (293 | ) | (1,331 | ) | (293 | ) | (497 | ) | |||||||||||
Net income (loss) | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | $ | (5,364 | ) | $ | 1,435 | ||||||
Net income (loss) per common share: | ||||||||||||||||||||
Basic | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | $ | (0.82 | ) | $ | 0.22 | ||||||
Diluted | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | $ | (0.82 | ) | $ | 0.20 | ||||||
Pro forma basic (unaudited)(1) | $ | (0.63 | ) | |||||||||||||||||
Pro forma diluted (unaudited)(1) | $ | (0.63 | ) | |||||||||||||||||
Weighted-average common shares outstanding: Basic | 6,444,696 | 6,559,614 | 6,581,793 | 6,564,654 | 6,617,235 | |||||||||||||||
Diluted | 6,444,696 | 6,559,614 | 6,581,793 | 6,564,654 | 7,321,932 | |||||||||||||||
Pro forma basic (unaudited)(1) | 30,229,627 | |||||||||||||||||||
Pro forma diluted (unaudited)(1) | 30,229,627 | |||||||||||||||||||
(1) | Pro forma weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. |
Three Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||
2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Adjusted EBITDA | $ | (6,795 | ) | $ | (5,104 | ) | $ | (2,664 | ) | $ | (1,858 | ) | $ | 5,598 | ||||||
Stock-based compensation expense included in: | ||||||||||||||||||||
Sales and marketing | $ | 276 | $ | 812 | $ | 815 | $ | 278 | $ | 217 | ||||||||||
Product development | 64 | 492 | 548 | 168 | 106 | |||||||||||||||
General and administrative | 650 | 1,692 | 1,662 | 579 | 398 | |||||||||||||||
Total stock-based compensation expense | $ | 990 | $ | 2,996 | $ | 3,025 | $ | 1,025 | $ | 721 | ||||||||||
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As of December 31, 2009 | ||||||||||||
Pro Forma | ||||||||||||
Actual | Pro Forma | As Adjusted | ||||||||||
(in thousands) | ||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||
Cash and cash equivalents | $ | 16,360 | ||||||||||
Total assets | 129,389 | |||||||||||
Deferred revenue | 6,930 | |||||||||||
Long-term debt (including current portion) | 17,000 | |||||||||||
Total liabilities | 46,203 | |||||||||||
Redeemable convertible preferred stock | 130,420 | |||||||||||
Total stockholders’ equity (deficit) | (47,234 | ) |
• | as a measure of operating performance; | |
• | to allocate resources to enhance the financial performance of our business; | |
• | to evaluate the effectiveness of our business strategies; | |
• | in communications with our board of directors concerning our financial performance; | |
• | for planning purposes, including the preparation of our annual operating budget; and | |
• | as a factor when determining management’s incentive compensation. |
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• | the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations; and | |
• | such expenses can vary significantly between periods as a result of new acquisitions, or the timing of new stock-based awards, as the case may be. |
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• | Adjusted EBITDA does not reflect our future requirements for contractual commitments or our cash expenditures or future requirements for capital expenditures; | |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital; | |
• | Adjusted EBITDA does not reflect interest income or interest expense; | |
• | Adjusted EBITDA does not reflect cash requirements for income taxes; | |
• | Adjusted EBITDA does not reflect the non-cash component of employee compensation; | |
• | although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; and | |
• | other companies in our industry may calculate similarly titled measures differently than we do, limiting their usefulness as comparative measures. |
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Three Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||
2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss): | ||||||||||||||||||||
Net income (loss) | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | $ | (5,364 | ) | $ | 1,435 | ||||||
Interest expense, net | 323 | 455 | 1,314 | 208 | 491 | |||||||||||||||
Income tax expense | — | 293 | 1,331 | 293 | 497 | |||||||||||||||
Depreciation and amortization expense | 2,030 | 4,340 | 9,787 | 1,980 | 2,454 | |||||||||||||||
Stock-based compensation | 990 | 2,996 | 3,025 | 1,025 | 721 | |||||||||||||||
Compensation expense related to acquisition earnout | — | — | 900 | — | — | |||||||||||||||
Adjusted EBITDA | $ | (6,795 | ) | $ | (5,104 | ) | $ | (2,664 | ) | $ | (1,858 | ) | $ | 5,598 | ||||||
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• | changes in our content andadvertising-based service offerings; | |
• | changes in the revenue mix derived from such offerings; | |
• | acquisitions; | |
• | technological changes; and | |
• | changes in the markets in which we compete. |
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• | successfully anticipate and respond to rapidly changing developments and preferences to ensure our content offerings remain appealing to our consumers; | |
• | attract and retain qualified editors, writers and technical personnel; | |
• | license quality content from third parties; | |
• | fund new development projects to further broaden our content offerings; and | |
• | successfully expand our content offerings and advertising-based services into new platforms and delivery mechanisms. |
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• | variations in expenditures by advertisers due to budgetary constraints; | |
• | the cancellation, non-renewal or delay of campaigns; | |
• | advertisers’ internal review process; | |
• | the cyclical and discretionary nature of advertising spending; | |
• | the timing of FDA approvals of prescription drugs and medical devices; | |
• | seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that affect the promotion of specific products; and | |
• | general economic conditions, including those specific to the Internet and media industry. |
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• | traffic levels to the websites in our portfolio; | |
• | our ability to introduce new and appealing content that will drive the growth of our consumer base; | |
• | the spending priorities and advertising budget cycles of specific advertisers; | |
• | the addition or loss of advertisers; | |
• | the addition of new websites and services by us or our competitors; | |
• | changes in our pricing policies or those of our competitors; | |
• | costs relating to our ongoing efforts to improve our content and advertising-based service offerings; and | |
• | seasonal fluctuations in advertising spending. |
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• | websites that provide online healthand/or medical information, such aswww.webmd.com; | |
• | websites that offer specific diet or fitness programs, such aswww.weightwatchers.comandwww.rodale.com, or that focus on a specific medical condition, such aswww.dlife.com for diabetes; | |
• | broad-based public portals that offer health-related content, such aswww.aol.comandwww.yahoo.com; | |
• | non-profit and governmental websites that provide consumer health information, such aswww.fda.gov,www.cdc.govandwww.health.nih.gov; and | |
• | traditional offline media companies, such as magazine and book publishers, as well as distributors of television and video programming. |
• | preference for our competitors’ online content and print offerings; | |
• | desire to utilize other forms of advertising offered by our competitors that are not offered by us; and | |
• | price and reach. |
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• | a desire to reduce discretionary spending; | |
• | a perception that they do not use the service sufficiently; | |
• | a belief that the service is a poor value or that competitive services provide a better value or experience; or | |
• | a feeling that subscriber service issues are not satisfactorily resolved. |
• | cost more than expected; | |
• | take longer than originally expected; | |
• | require more testing than originally anticipated; | |
• | require additional advertising and marketing costs; and | |
• | require the acquisition of additional personnel and other resources. |
• | potential negative impact on our financial results because they may require us to incur charges and substantial debt or liabilities, may require us to amortize, write down or record impairment of amounts related to deferred compensation, goodwill and other intangible assets, or may cause adverse tax consequences, substantial depreciation or deferred compensation charges; | |
• | difficulty in assimilating the operations and personnel of acquired businesses; |
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• | potential disruption of our ongoing businesses and distraction of our management and the management of acquired companies; | |
• | difficulty in incorporating acquired technology and rights into our content offerings and advertising-based services; | |
• | difficulty entering geographic or business markets in which we have little or no prior experience; | |
• | unanticipated expenses related to technology and other integration; | |
• | potential failure to achieve additional sales and enhance our customer base through cross-marketing of the combined company’s products and services to new and existing customers; | |
• | unanticipated expenses relating to implementing or improving internal controls, procedures and policies appropriate for a public company of a business that prior to the acquisition lacked these controls, procedures and policies; | |
• | potential litigation resulting from our business combinations or acquisition activities; and | |
• | potential unknown liabilities associated with the acquired businesses. |
• | strong local competitors that are better attuned to the local culture and preferences; | |
• | the need to adapt our websites and advertising programs to meet local needs and to comply with local legal and regulatory requirements; | |
• | varied, unfamiliar and unclear legal and regulatory restrictions, as well as unforeseen changes in legal and regulatory requirements; | |
• | limitations on our activities in foreign countries; |
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• | more restrictive data protection regulation, which may vary by country; | |
• | difficulties in staffing and managing multinational operations; | |
• | difficulties in finding appropriate foreign licensees or joint venture partners; | |
• | distance, language and cultural differences; | |
• | foreign political and economic uncertainty; | |
• | less extensive adoption of the Internet as an information source and increased restriction on the content of websites; | |
• | different and conflicting intellectual property laws; | |
• | currency exchange-rate fluctuations; and | |
• | potential adverse tax requirements. |
• | the need to hire, integrate, motivate and retain additional sales and sales support personnel; | |
• | the need to train new sales personnel, many of whom lack sales experience when they are hired; and | |
• | competition from other companies in hiring and retaining sales personnel. |
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• | develop non-infringing technology; | |
• | pay damages; | |
• | enter into royalty or licensing agreements; | |
• | cease providing certain content or advertising-based services; or | |
• | take other actions to resolve the claims. |
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• | possible fines, penalties and damages; | |
• | reduced demand for our content offerings and advertising-based services; | |
• | an unwillingness of consumers to provide us with their credit card or payment information; | |
• | an unwillingness of registered users to provide us with personal information; | |
• | harm to our reputation and brand; and | |
• | difficulty in processing subscriber credit card orders. |
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• | government regulation or private initiatives that affect the manner in which healthcare industry participants interact with consumers and the general public; | |
• | consolidation of healthcare industry participants; | |
• | reductions in governmental funding for healthcare; and | |
• | adverse changes in business or economic conditions affecting pharmaceutical companies or other healthcare industry participants. |
• | changes in the design and provision of health insurance plans, including any new regulations that may stem from health reform initiatives that are pending before Congress; | |
• | a decrease in the number of new drugs or pharmaceutical products coming to market; and | |
• | decreases in marketing expenditures by pharmaceutical companies as a result of governmental regulation or private initiatives that discourage or prohibit advertising or sponsorship activities by pharmaceutical companies. |
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• | privacy, data security and use of personally identifiable information; | |
• | copyrights, trademarks and domain names; and | |
• | marketing practices, such ase-mail or direct marketing. |
• | decrease the growth rate of the Internet; | |
• | negatively impact our ability to generate revenues; | |
• | increase our operating expenses; or | |
• | expose us to significant liabilities. |
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• | actual or anticipated fluctuations in our key operating metrics, financial condition and operating results; | |
• | issuance of new or updated research or reports by securities analysts; | |
• | our announcement of actual results for a fiscal period that are higher or lower than projected or expected results, or our announcement of revenue or earnings guidance that is higher or lower than expected; | |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; | |
• | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; | |
• | sales or expected sales of additional common stock; | |
• | announcements from, or operating results of, our competitors; or | |
• | general economic and market conditions. |
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• | authorize our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; | |
• | divide our board of directors into three classes so that only approximately one-third of the total number of directors is elected each year; | |
• | permit directors to be removed only for cause and then only by a two-thirds vote; | |
• | prohibit stockholders from calling a special meeting of stockholders; | |
• | prohibit action by written consent of our stockholders; and | |
• | specify advance notice requirements for stockholder proposals and director nominations. |
• | the transaction is approved by the board of directors before the date the interested stockholder attained that status; | |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or | |
• | on or after the date the business combination is approved by the board of directors and authorized at a meeting of stockholders, and not by written consent by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
• | any merger or consolidation involving the corporation and the interested stockholder; | |
• | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
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• | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or | |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
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• | our financial performance, including our revenues, cost of revenues, operating expenses and ability to achieve and sustain profitability; | |
• | our rate of revenue growth and our ability to generate additional revenues in a cost-effective manner; | |
• | our ability to attract and maintain consumers, advertising customers and partners in a cost-effective manner; | |
• | our ability to produce and acquire content that attracts and maintains consumers; | |
• | our ability to maintain and enhance our brands; | |
• | the volatile and competitive nature of the Internet and the advertising industry; | |
• | our success with respect to any future acquisitions; | |
• | our ability to adequately protect our intellectual property; | |
• | any disruptions in our services; | |
• | the effect of government regulations on our business; and | |
• | our ability to retain and hire necessary employees and appropriately staff our operations. |
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• | increase our visibility in the markets we serve; | |
• | strengthen our balance sheet; | |
• | create a public market for our common stock; | |
• | facilitate our future access to the public capital markets; | |
• | provide liquidity for our existing stockholders; | |
• | improve the effectiveness of our equity compensation plans in attracting and retaining key employees; and | |
• | enhance our ability to acquire complementary businesses or technologies. |
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• | on an actual basis; | |
• | on a pro forma basis to reflect the automatic preferred stock conversion; and | |
• | on a pro forma as adjusted basis to further reflect the filing of our amended and restated certificate of incorporation prior to the closing of this offering and our issuance and sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated price range shown on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses payable by us and the application of the net proceeds therefrom as described in “Use of Proceeds.” |
As of December 31, 2009 | ||||||||||||
Pro Forma | ||||||||||||
Actual | Pro Forma | As Adjusted | ||||||||||
(in thousands, except share | ||||||||||||
and per share data) | ||||||||||||
Cash and cash equivalents | $ | 16,360 | $ | |||||||||
Long-term debt, including current portion | $ | 17,000 | $ | |||||||||
Redeemable convertible preferred stock, $0.01 par value; 23,870,811 shares authorized, 23,647,834 shares issued and outstanding actual; no shares authorized and no shares issued and outstanding, pro forma; no shares authorized and no shares issued and outstanding, pro forma as adjusted | 130,420 | |||||||||||
Stockholders’ equity (deficit): | ||||||||||||
Preferred stock, $0.01 par value, no shares authorized and no shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, pro forma; shares authorized and no shares issued and outstanding, pro forma as adjusted | — | |||||||||||
Common stock, $0.01 par value; 37,000,000 shares authorized, actual and pro forma; 6,618,444 shares issued and outstanding, actual; shares authorized and shares issued and outstanding, pro forma; shares authorized and shares issued and outstanding, pro forma as adjusted | 66 | |||||||||||
Additional paid-in capital | 10,937 | |||||||||||
Accumulated deficit | (58,237 | ) | ||||||||||
Total stockholders’ (deficit) equity | (47,234 | ) | ||||||||||
Total capitalization | $ | 100,186 | $ | |||||||||
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• | 4,751,879 shares of common stock issuable upon exercise of outstanding options with a weighted-average exercise price of $4.52 per share; | |
• | 659,780 shares of common stock reserved for future issuance under our 2003 Stock Option Plan; provided, however, that following the completion of this offering, no additional grants will be awarded under our 2003 Stock Option Plan and such shares will become available for issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; | |
• | shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; and | |
• | 222,977 shares of common stock issuable upon the exercise of outstanding warrants, which includes warrants to purchase our redeemable convertible preferred stock that will become exercisable for common stock after this offering, at a weighted-average exercise price of $5.47 per share. |
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Assumed initial public offering price per share | $ | |||||||
Net tangible book value per share at , 2010, before giving effect to this offering | $ | |||||||
Increase in pro forma net tangible book value per share attributable to the automatic preferred stock conversion | ||||||||
Pro forma net tangible book value per share as of , 2010, before giving effect to this offering | ||||||||
Increase in net tangible book value per share attributable to new investors purchasing shares in this offering | ||||||||
Pro forma as adjusted net tangible book value per share after giving effect to this offering | $ | |||||||
Dilution per share to new investors in this offering | $ | |||||||
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Total | Average | |||||||||||||||||||
Shares Purchased | Consideration | Price | ||||||||||||||||||
Number | Percent | Amount | Percent | per Share | ||||||||||||||||
Existing stockholders | ||||||||||||||||||||
New investors | ||||||||||||||||||||
Total |
• | 4,751,879 shares of common stock issuable upon exercise of outstanding options with a weighted-average exercise price of $4.52 per share; | |
• | 659,780 shares of common stock reserved for future issuance under our 2003 Stock Option Plan; provided, however, that following the completion of this offering, no additional grants will be awarded under our 2003 Stock Option Plan and such shares will become available for issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; | |
• | shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan, which we plan to adopt prior to the consummation of this offering; and | |
• | 222,977 shares of common stock issuable upon the exercise of outstanding warrants, which includes warrants to purchase our redeemable convertible preferred stock that will become exercisable for common stock after this offering, at a weighted-average exercise price of $5.47 per share. |
Total | Average | |||||||||||||||||||
Shares Purchased | Consideration | Price | ||||||||||||||||||
Number | Percent | Amount | Percent | per Share | ||||||||||||||||
Existing stockholders | ||||||||||||||||||||
New investors | ||||||||||||||||||||
Total |
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• | compensation for product development, sales and marketing, and general and administrative personnel who were employed by us for a short period of time following the RHG acquisition; and | |
• | third-party product development expenses, such as content licensing fees, data center costs and other technology-related expenses. |
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Three Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||||||||||
Revenues | $ | 29,687 | $ | 33,421 | $ | 47,363 | $ | 69,412 | $ | 90,111 | $ | 22,672 | $ | 28,618 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Cost of revenue | 18,714 | 21,830 | 30,111 | 35,229 | 39,453 | 8,442 | 8,696 | |||||||||||||||||||||
Sales and marketing | 2,814 | 4,108 | 7,425 | 14,503 | 20,816 | 6,059 | 6,249 | |||||||||||||||||||||
Product development | 5,679 | 8,534 | 10,753 | 14,874 | 20,192 | 5,566 | 5,115 | |||||||||||||||||||||
General and administrative | 3,617 | 4,318 | 6,859 | 12,906 | 16,239 | 5,488 | 3,681 | |||||||||||||||||||||
Depreciation and amortization | 668 | 1,029 | 2,030 | 4,340 | 9,787 | 1,980 | 2,454 | |||||||||||||||||||||
Total operating expenses | 31,492 | 39,819 | 57,178 | 81,852 | 106,487 | 27,535 | 26,195 | |||||||||||||||||||||
Income (loss) from operations | (1,805 | ) | (6,398 | ) | (9,815 | ) | (12,440 | ) | (16,376 | ) | (4,863 | ) | 2,423 | |||||||||||||||
Interest (expense) income, net | 48 | 196 | (323 | ) | (455 | ) | (1,314 | ) | (208 | ) | (491 | ) | ||||||||||||||||
Income (loss) before provision for income taxes | (1,757 | ) | (6,202 | ) | (10,138 | ) | (12,895 | ) | (17,690 | ) | (5,071 | ) | 1,932 | |||||||||||||||
Provision for income taxes | — | — | — | (293 | ) | (1,331 | ) | (293 | ) | (497 | ) | |||||||||||||||||
Net income (loss) | $ | (1,757 | ) | $ | (6,202 | ) | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | $ | (5,364 | ) | $ | 1,435 | ||||||||
Net income (loss) per common share: | ||||||||||||||||||||||||||||
Basic | $ | (0.28 | ) | $ | (0.98 | ) | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | $ | (0.82 | ) | $ | 0.22 | ||||||||
Diluted | $ | (0.28 | ) | $ | (0.98 | ) | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | $ | (0.82 | ) | $ | 0.20 | ||||||||
Pro forma basic (unaudited)(1) | $ | (0.63 | ) | |||||||||||||||||||||||||
Pro forma diluted (unaudited)(1) | $ | (0.63 | ) | |||||||||||||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||||||
Basic | 6,309,013 | 6,347,745 | 6,444,696 | 6,559,614 | 6,581,793 | 6,564,654 | 6,617,235 | |||||||||||||||||||||
Diluted | 6,309,013 | 6,347,745 | 6,444,696 | 6,559,614 | 6,581,793 | 6,564,654 | 7,321,932 | |||||||||||||||||||||
Pro forma basic (unaudited)(1) | 30,229,627 | |||||||||||||||||||||||||||
Pro forma diluted (unaudited)(1) | 30,229,627 | |||||||||||||||||||||||||||
(1) | Pro forma weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. |
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Three Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||
Adjusted EBITDA | $ | (855 | ) | $ | (4,986 | ) | $ | (6,795 | ) | $ | (5,104 | ) | $ | (2,664 | ) | $ | (1,858 | ) | $ | 5,598 | ||||||||
Stock-based compensation expense included in: | ||||||||||||||||||||||||||||
Sales and marketing | $ | 57 | $ | 197 | $ | 276 | $ | 812 | $ | 815 | $ | 278 | $ | 217 | ||||||||||||||
Product development | 152 | 57 | 64 | 492 | 548 | 168 | 106 | |||||||||||||||||||||
General and administrative | 73 | 129 | 650 | 1,692 | 1,662 | 579 | 398 | |||||||||||||||||||||
Total stock-based compensation expense | $ | 282 | $ | 383 | $ | 990 | $ | 2,996 | $ | 3,025 | $ | 1,025 | $ | 721 | ||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 2,096 | $ | 2,573 | $ | 14,249 | $ | 25,050 | $ | 16,360 | ||||||||||||||
Total assets | 6,295 | 9,408 | 32,680 | 135,694 | 129,389 | |||||||||||||||||||
Deferred revenue | 3,264 | 3,628 | 3,095 | 6,001 | 6,930 | |||||||||||||||||||
Long-term debt (including current portion) | — | — | 5,941 | 7,597 | 17,000 | |||||||||||||||||||
Total liabilities | 8,109 | 11,127 | 19,905 | 37,230 | 46,203 | |||||||||||||||||||
Redeemable convertible preferred stock | — | 11,348 | 34,702 | 130,420 | 130,420 | |||||||||||||||||||
Total stockholders’ equity (deficit) | (1,814 | ) | (13,067 | ) | (21,927 | ) | (31,956 | ) | (47,234 | ) |
Three Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss): | ||||||||||||||||||||||||||||
Net income (loss) | $ | (1,757 | ) | $ | (6,202 | ) | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | $ | (5,364 | ) | $ | 1,435 | ||||||||
Interest (income) expense, net | (48 | ) | (196 | ) | 323 | 455 | 1,314 | 208 | 491 | |||||||||||||||||||
Income tax expense | — | — | — | 293 | 1,331 | 293 | 497 | |||||||||||||||||||||
Depreciation and amortization expense | 668 | 1,029 | 2,030 | 4,340 | 9,787 | 1,980 | 2,454 | |||||||||||||||||||||
Stock-based compensation | 282 | 383 | 990 | 2,996 | 3,025 | 1,025 | 721 | |||||||||||||||||||||
Compensation expense related to acquisition earnout | — | — | — | — | 900 | — | — | |||||||||||||||||||||
Adjusted EBITDA | $ | (855 | ) | $ | (4,986 | ) | $ | (6,795 | ) | $ | (5,104 | ) | $ | (2,664 | ) | $ | (1,858 | ) | $ | 5,598 | ||||||||
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | A significant majority of our advertising and sponsorship revenue is derived from sales based on the entireEveryday Healthportfolio, not based on one or a select group of individual websites within the portfolio. This enables us to provide advertisers with a more compelling platform to reach their desired audience. |
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• | We have established marketing, editorial, product management, customer service and technology resources that are deployed across the entireEveryday Health portfolio, which allow us to benefit from economies of scale. | |
• | We actively cross-promote our content offerings to our consumers, which enables us to effectively drive consumers across our portfolio of websites. As a result, we are able to add new websites to theEveryday Healthportfolio and immediately direct a significant volume of traffic to these websites in an expedited and cost-effective manner. |
• | Consumers have become increasingly reliant on the Internet for health information and services, and the consumer health vertical has become one of the largest and fastest growing content categories online. We believe this trend will continue, particularly as current legislative and regulatory initiatives seek to place a greater degree of emphasis on wellness and preventive care as a means of controlling and reducing healthcare costs. | |
• | Advertisers and marketers in the health category, which include pharmaceutical and medical device, manufacturers and retailers ofover-the-counter products and consumer-packaged-goods and healthcare providers, are increasingly shifting a greater portion of their spending online. We believe that the online percentage of the total health-related consumer advertising market is still relatively small, and that a significant opportunity exists to grow our revenues as advertisers allocate more of their marketing expenditures online. | |
• | The Internet has enabled consumers to access a wide variety of premium health-related products and services on a paid subscription basis. We believe consumer demand for personalized and authoritative content and services from trusted brands will continue to increase in the future. |
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• | Monthly Unique Visitors. Monthly unique visitors is the total number of unique consumers that access theEveryday Healthportfolio in a specific calendar month. Average monthly unique visitors is the total number of unique visitors for a specified period divided by the number of months in the period. We use monthly unique visitor metrics to assess the nature and scope of our content offerings, tools and applications, the overall growth and composition of our portfolio of websites and the effectiveness of our marketing efforts. | |
• | Total Brands. Total brands is defined as the approximate number of distinct brands that market their products and services on our portfolio in a specified period. We use this metric to evaluate our success in renewing existing brand contracts and attracting new brands. | |
• | Advertising and Sponsorship Revenue per Brand. Advertising and sponsorship revenue per brand is our total advertising and sponsorship revenue from all brands that marketed their products and services on theEveryday Healthportfolio during a specific period divided by the total number of brands that marketed their products and services on our portfolio in the period. We use revenue per brand to assess our success in expanding our advertising and sponsorship relationships and increasing our market share of advertising dollars from each of our customers. | |
• | Average Paid Subscribers per Month. A paid subscriber is a consumer who has paid for access to a premium content offering on theEveryday Healthportfolio. Average paid subscribers for a specific period is calculated by taking the average of the individual monthly averages of each month for such period. An individual month’s average is calculated by taking the average of the beginning and ending number of subscribers in that month. We use this metric to evaluate the revenue and marketing efforts associated with our premium, subscription-based services. | |
• | Average Revenue per Paid Subscriber per Month. Average revenue per paid subscriber per month is the total revenue earned in a specific period from subscriptions to one or more of the websites in theEveryday Healthportfolio divided by the average paid subscribers per month, as defined above, during that period and further divided by the number of months in the period. We use this metric to evaluate our success in increasing revenue generated by our premium, subscription-based services. |
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Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008(2) | 2009 | ||||||||||
Average monthly unique visitors (in thousands)(1) | 8,852 | 17,466 | 25,277 | |||||||||
Total brands | 323 | 416 | 473 | |||||||||
Advertising and sponsorship revenue per brand (in thousands) | $ | 61 | $ | 92 | $ | 123 | ||||||
Average paid subscribers per month (in thousands) | 121 | 125 | 120 | |||||||||
Average revenue per paid subscriber per month | $ | 19.11 | $ | 19.95 | $ | 18.99 |
(1) | Average monthly unique visitors based on comScore data. | |
(2) | Reflects our acquisition of RHG in October 2008. |
• | display advertisements on websites in theEveryday Health portfolio and in our freee-mail newsletters, which are primarily sold based on a cost-per-impression advertising model; | |
• | interactive brand sponsorships, which consist of our integrated marketing programs and sponsorships that provide advertisers and marketers the opportunity to integrate their brands and relevant information into content and tools across theEveryday Health portfolio, which are primarily sold based on a cost-per-impression advertising model or a cost-per-visitor advertising model, and which frequently include a production fee; | |
• | customer acquisition marketing programs, which are sold based on the number of qualified leads that are provided to our advertisers; and | |
• | stand-alonee-mails that are sent on behalf of our advertising customers to consumers who have opted-in to receive them, which are primarily sold based on a cost-per-impression advertising model. |
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• | media costs associated with generating consumer visits to the websites that we operate, commonly referred to as audience aggregation; | |
• | royalty payments to theEveryday Healthportfolio partners; and | |
• | to a lesser extent, merchant processing transaction costs associated with subscription fees for our premium services, merchandise inventory and fulfillment costs, ad serving and other expenses. |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(dollars in thousands) | ||||||||||||
Revenue | $ | 47,363 | $ | 69,412 | $ | 90,111 | ||||||
Revenue Growth | 41.7% | 46.5% | 29.8% | |||||||||
Cost of Revenue | $ | 30,111 | $ | 35,229 | $ | 39,453 | ||||||
Gross Profit | $ | 17,252 | $ | 34,183 | $ | 50,658 | ||||||
Gross Margin | 36.4% | 49.3% | 56.2% |
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Year Ended | ||||||||
December 31, | ||||||||
2008 | 2009 | |||||||
Volatility | 58.15 | % | 52.79 | % | ||||
Expected life (years) | 6.25 | 6.25 | ||||||
Risk-free interest rate | 2.38 | % | 2.87 | % | ||||
Dividend yield | 0.00 | 0.00 |
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Number of | Common Stock | |||||||||||||||
Shares Subject | Fair Value per | Intrinsic Value per | ||||||||||||||
to Options | Exercise Price | Share at Grant | Share at Grant | |||||||||||||
Grant Date | Granted | Per Share | Date | Date | ||||||||||||
4/11/2008 | 1,003,550 | $ | 6.18 | $ | 5.40 | $ | — | |||||||||
9/3/2008 | 460,600 | 6.18 | 5.64 | — | ||||||||||||
12/9/2008 | 398,550 | 6.18 | 4.28 | — | ||||||||||||
6/15/2009 | 68,850 | 3.55 | 3.03 | — | ||||||||||||
6/15/2009 | 775,150 | 3.33 | 3.03 | — | ||||||||||||
6/15/2009 | 250,000 | 8.00 | 3.03 | — | ||||||||||||
10/5/2009 | 155,900 | 3.06 | 4.11 | 1.05 | ||||||||||||
10/8/2009 | 125,000 | 3.06 | 4.11 | 1.05 | ||||||||||||
12/23/2009 | 254,700 | 4.11 | 4.11 | — | ||||||||||||
2/23/2010 | 248,750 | 4.77 | 4.77 | — |
• | our financial performance; | |
• | the price and other terms for our equity financings; | |
• | our acquisitions and debt financings, as well as any material transaction; and | |
• | general economic and financial conditions, and the trends specific to the Internet markets in which we operate. |
• | the nature and history of our company; | |
• | the financial and economic conditions affecting the general economy, our company and our industry; | |
• | our past results, current operations and our future prospects; | |
• | our earnings capacity and dividend-paying capacity; | |
• | the economic benefit to us of both our tangible and intangible assets; | |
• | the market prices of actively traded interests in public entities engaged in the same or similar lines of business to us, as well as sales of ownership interests in entities similar to us; | |
• | the prices, terms and conditions of past sales of our ownership interests; and | |
• | the impact on the value of ownership interests in us resulting from the existence of buy-sell and option agreements, investment letter stock restrictions, restrictive shareholders agreements or other such agreements. |
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• | compensation for product development, sales and marketing, and general and administrative personnel who were employed by us for a short period of time following the RHG acquisition; and | |
• | third-party product development expenses, such as content licensing fees, data center costs and other technology-related expenses. |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands, except share and per share data) | ||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||
Revenues | $ | 47,363 | $ | 69,412 | $ | 90,111 | ||||||
Operating expenses: | ||||||||||||
Cost of revenue | 30,111 | 35,229 | 39,453 | |||||||||
Sales and marketing | 7,425 | 14,503 | 20,816 | |||||||||
Product development | 10,753 | 14,874 | 20,192 | |||||||||
General and administrative | 6,859 | 12,906 | 16,239 | |||||||||
Depreciation and amortization | 2,030 | 4,340 | 9,787 | |||||||||
Total operating expenses | 57,178 | 81,852 | 106,487 | |||||||||
Loss from operations | (9,815 | ) | (12,440 | ) | (16,376 | ) | ||||||
Interest expense, net | (323 | ) | (455 | ) | (1,314 | ) | ||||||
Loss before provision for income taxes | (10,138 | ) | (12,895 | ) | (17,690 | ) | ||||||
Provision for income taxes | — | (293 | ) | (1,331 | ) | |||||||
Net loss | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | |||
Net income (loss) per common share: | ||||||||||||
Basic | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | |||
Diluted | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | |||
Pro forma basic (unaudited)(1) | $ | (0.63 | ) | |||||||||
Pro forma diluted (unaudited)(1) | $ | (0.63 | ) | |||||||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 6,444,696 | 6,559,614 | 6,581,793 | |||||||||
Diluted | 6,444,696 | 6,559,614 | 6,581,793 | |||||||||
Pro forma basic (unaudited)(1) | 30,229,627 | |||||||||||
Pro forma diluted (unaudited)(1) | 30,229,627 | |||||||||||
(1) | Pro forma weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. |
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Three Months Ended, | ||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 | 2008 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||||||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 9,815 | $ | 11,242 | $ | 11,960 | $ | 14,346 | $ | 14,450 | $ | 15,917 | $ | 16,373 | $ | 22,672 | $ | 18,592 | $ | 20,408 | $ | 22,493 | $ | 28,618 | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenue | 9,211 | 7,650 | 7,316 | 5,934 | 10,121 | 8,910 | 7,756 | 8,442 | 11,400 | 10,092 | 9,265 | 8,696 | ||||||||||||||||||||||||||||||||||||
Sales and marketing | 1,470 | 1,756 | 1,727 | 2,472 | 2,174 | 2,829 | 3,441 | 6,059 | 5,253 | 5,255 | 4,372 | 5,936 | ||||||||||||||||||||||||||||||||||||
Product development | 2,180 | 2,706 | 2,787 | 3,080 | 2,911 | 3,025 | 3,372 | 5,566 | 5,605 | 5,686 | 4,266 | 4,635 | ||||||||||||||||||||||||||||||||||||
General and administrative | 1,291 | 1,607 | 1,491 | 2,470 | 2,208 | 2,594 | 2,616 | 5,488 | 3,907 | 4,214 | 3,644 | 4,474 | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 339 | 492 | 579 | 620 | 660 | 825 | 875 | 1,980 | 2,413 | 2,478 | 2,442 | 2,454 | ||||||||||||||||||||||||||||||||||||
Total operating expenses | 14,491 | 14,211 | 13,900 | 14,576 | 18,074 | 18,183 | 18,060 | 27,535 | 28,578 | 27,725 | 23,989 | 26,195 | ||||||||||||||||||||||||||||||||||||
Income (loss) from operations | (4,676 | ) | (2,969 | ) | (1,940 | ) | (230 | ) | (3,624 | ) | (2,266 | ) | (1,687 | ) | (4,863 | ) | (9,986 | ) | (7,317 | ) | (1,496 | ) | 2,423 | |||||||||||||||||||||||||
Interest (expense) income, net | (5 | ) | (49 | ) | (80 | ) | (189 | ) | 1 | (110 | ) | (138 | ) | (208 | ) | (189 | ) | (185 | ) | (449 | ) | (491 | ) | |||||||||||||||||||||||||
Income (loss) before provision for income taxes | (4,681 | ) | (3,018 | ) | (2,020 | ) | (419 | ) | (3,623 | ) | (2,376 | ) | (1,825 | ) | (5,071 | ) | (10,175 | ) | (7,502 | ) | (1,945 | ) | 1,932 | |||||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | — | (293 | ) | (278 | ) | (278 | ) | (278 | ) | (497 | ) | |||||||||||||||||||||||||||||||
Net income (loss) | $ | (4,681 | ) | $ | (3,018 | ) | $ | (2,020 | ) | $ | (419 | ) | $ | (3,623 | ) | $ | (2,376 | ) | $ | (1,825 | ) | $ | (5,364 | ) | $ | (10,453 | ) | $ | (7,780 | ) | $ | (2,223 | ) | $ | 1,435 | |||||||||||||
Net income (loss) per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | (0.73 | ) | $ | (0.47 | ) | $ | (0.31 | ) | $ | (0.06 | ) | $ | (0.55 | ) | $ | (0.36 | ) | $ | (0.28 | ) | $ | (0.82 | ) | $ | (1.59 | ) | $ | (1.19 | ) | $ | (0.34 | ) | $ | 0.22 | |||||||||||||
Diluted | $ | (0.73 | ) | $ | (0.47 | ) | $ | (0.31 | ) | $ | (0.06 | ) | $ | (0.55 | ) | $ | (0.36 | ) | $ | (0.28 | ) | $ | (0.82 | ) | $ | (1.59 | ) | $ | (1.19 | ) | $ | (0.34 | ) | $ | 0.20 | |||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 6,401,378 | 6,410,099 | 6,431,160 | 6,536,722 | 6,550,604 | 6,558,900 | 6,564,246 | 6,564,654 | 6,564,654 | 6,564,654 | 6,580,644 | 6,617,235 | ||||||||||||||||||||||||||||||||||||
Diluted | 6,401,378 | 6,410,099 | 6,431,160 | 6,536,722 | 6,550,604 | 6,558,900 | 6,564,246 | 6,564,654 | 6,564,654 | 6,564,654 | 6,580,644 | 7,321,932 | ||||||||||||||||||||||||||||||||||||
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Three Months Ended, | ||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 | 2008 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | (4,225 | ) | $ | (2,174 | ) | $ | (1,060 | ) | $ | 664 | $ | (2,463 | ) | $ | (705 | ) | $ | (78 | ) | $ | (1,858 | ) | $ | (6,730 | ) | $ | (3,203 | ) | $ | 1,671 | $ | 5,598 | |||||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 31 | $ | 84 | $ | 84 | $ | 77 | $ | 136 | $ | 199 | $ | 199 | $ | 278 | $ | 219 | $ | 191 | $ | 188 | $ | 217 | ||||||||||||||||||||||||
Product development | 7 | 20 | 20 | 17 | 82 | 121 | 121 | 168 | 162 | 141 | 139 | 106 | ||||||||||||||||||||||||||||||||||||
General and administrative | 74 | 199 | 197 | 180 | 283 | 416 | 414 | 579 | 462 | 404 | 398 | 398 | ||||||||||||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 112 | $ | 303 | $ | 301 | $ | 274 | $ | 501 | $ | 736 | $ | 734 | $ | 1,025 | $ | 843 | $ | 736 | $ | 725 | $ | 721 | ||||||||||||||||||||||||
Three Months Ended, | ||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 | 2008 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (4,681 | ) | $ | (3,018 | ) | $ | (2,020 | ) | $ | (419 | ) | $ | (3,623 | ) | $ | (2,376 | ) | $ | (1,825 | ) | $ | (5,364 | ) | $ | (10,453 | ) | $ | (7,780 | ) | $ | (2,223 | ) | $ | 1,435 | |||||||||||||
Interest (income) expense, net | 5 | 49 | 80 | 189 | (1 | ) | 110 | 138 | 208 | 189 | 185 | 449 | 491 | |||||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | 293 | 278 | 278 | 278 | 497 | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 339 | 492 | 579 | 620 | 660 | 825 | 875 | 1,980 | 2,413 | 2,478 | 2,442 | 2,454 | ||||||||||||||||||||||||||||||||||||
Stock-based compensation | 112 | 303 | 301 | 274 | 501 | 736 | 734 | 1,025 | 843 | 736 | 725 | 721 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to acquisition earnout | — | — | — | — | — | — | — | — | — | 900 | — | — | ||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | (4,225 | ) | $ | (2,174 | ) | $ | (1,060 | ) | $ | 664 | $ | (2,463 | ) | $ | (705 | ) | $ | (78 | ) | $ | (1,858 | ) | $ | (6,730 | ) | $ | (3,203 | ) | $ | 1,671 | $ | 5,598 | |||||||||||||||
• | compensation for product development, sales and marketing, and general and administrative personnel who were employed by us for a short period of time following the RHG acquisition; and | |
• | third-party product development expenses, such as content licensing fees, data center costs and other technology-related expenses. |
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• | the cost of developing new content and advertising-based services; | |
• | the timing and extent of market acceptance of our content offerings and advertising-based services; | |
• | the level of advertising and promotion required to retain and acquire our consumer audience; | |
• | the expansion of our sales and marketing organizations; | |
• | the establishment of additional offices in the U.S. and worldwide and the building of infrastructure necessary to support our growth; and | |
• | our relationships with our vendors and customers. |
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands) | ||||||||||||
Net cash used in operating activities | $ | (10,522 | ) | $ | (20,834 | ) | $ | (10,218 | ) | |||
Net cash (used in) provided by investing activities | (6,875 | ) | 7,541 | (7,850 | ) | |||||||
Net cash provided by financing activities | 29,073 | 24,094 | 9,378 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 11,676 | $ | 10,801 | $ | (8,690 | ) | |||||
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Payments Due by Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-term debt obligations(1) | $ | 17,000 | $ | 142 | $ | 16,858 | — | — | ||||||||||||
Operating lease obligations(2) | 14,648 | 2,649 | 5,108 | $ | 4,086 | $ | 2,805 | |||||||||||||
Minimum guarantees under royalty agreements(3) | 22,560 | 12,135 | 9,492 | 933 | — | |||||||||||||||
Purchase obligations(4) | 10,559 | 4,331 | 6,228 | — | — | |||||||||||||||
Total | $ | 64,767 | $ | 19,257 | $ | 37,686 | $ | 5,019 | $ | 2,805 | ||||||||||
(1) | For a description of our long-term debt obligations, see “— Long-Term Debt” above. | |
(2) | Operating lease obligations totaling $14.6 million do not reflect aggregate sublease rentals of $1.2 million. | |
(3) | Some of the minimum guaranteed payments are subject to reductions if specified performance metrics are not maintained by our partners. | |
(4) | Purchase obligations pertain primarily to fees forthird-party content, technology and other services. |
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• | a trusted source from which to obtain relevant and actionable information; | |
• | a greater variety of thorough and insightful content across the consumer health spectrum; | |
• | expert opinions from leading authorities; | |
• | access to a community of similarly situated consumers; and | |
• | personalized content that enables a more engaging and interactive experience. |
• | a desire to advertise in a trusted environment that will be consistent with the advertiser’s brand value and perception; | |
• | the ability to leverage the unique, interactive nature of the Internet to create a more personalized and engaging interaction with the audience; | |
• | the availability of tools that will enable advertisers to reach a desired demographic audience at a point when the consumer is more likely to be immersed in contextually-relevant content, and therefore, more receptive to a targeted advertisement; and | |
• | the utilization of innovative methods for assessing and benchmarking the effectiveness of marketing dollars spent and a more precise analysis of a campaign’s return on investment. |
• | lack of technical expertise to develop and operate an online presence; | |
• | significant upfront and ongoing capital expenditures and other costs associated with providing a comprehensive andup-to-date online offering; | |
• | difficulties and costs associated with aggregating a sufficiently large consumer audience; | |
• | maintaining a high service quality that will enhance the user’s experience and promote brand value; and | |
• | attracting advertisers. |
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• | consumers to readily access a variety of valuable content, interactive tools and community features across numerous health categories and empower them to better manage their health concerns; | |
• | advertisers to reach a desirable base of consumers in a targeted and contextually-relevant manner; and | |
• | partners to more effectively promote and monetize their content online. |
• | our collection of many well-recognized content providers in the consumer health market; | |
• | our large and engaged audience, both across theEveryday Healthportfolio and within each of our specific consumer health categories; | |
• | our proprietary database of information voluntarily provided to us by over 39 million consumers; | |
• | our ability to cross-promote the content and features of theEveryday Healthportfolio; and | |
• | our integrated operational approach that creates significant efficiencies and economies of scale. |
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• | providing a variety of interactive tools that enable consumers to proactively manage their health and lifestyle needs in a highly-personalized manner, including for example, enabling consumers to research symptoms or create personalized tools such as pregnancy calendars, calorie counters, meal plans and drug alerts; | |
• | utilizing the information that our registered users voluntarily submit to provide them with targeted content, features and tools that are intended to better meet their needs; and | |
• | creating a community environment that empowers consumers to share information and interact with each other. |
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• | adding new websites to theEveryday Healthportfolio to increase the breadth of our content offerings, such as the recent launch ofDaily Glow (www.DailyGlow.com), a website focused on the intersection of health and beauty; | |
• | developing new and innovative services that capitalize on the interactive aspects of the Internet; | |
• | adding a variety of tools and applications across our portfolio of websites to improve the personalization and community features; | |
• | developing new mobile applications, such as our recently launched pregnancy tracker for mobile access which quickly became the most popular iPhone application in the pregnancy category; and | |
• | focusing on search engine optimization so that consumers can more easily access our content offerings. |
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Website | Description | |
www.EverydayHealth.com | Everyday Healthis our flagship website. It is a health information website aimed at a consumer audience and offers content created by experienced medical writers and reviewed by board certified physicians. The content and tools are intended to provide consumers with a daily focus on their health and well-being. | |
www.RevolutionHealth.com | A health-related website with community and social networking tools for creating social groups with shared health goals, community forums, blogs and personal profile pages. | |
www.CarePages.com | A social support website for families experiencing critical care events. The website is an important tool for hospitals that want to provide additional emotional support for patients and their families. The website enables friends and families to get frequent status updates on the patient and to provide words of encouragement. | |
www.DailyGlow.com | A website at the intersection of health and beauty focused on healthy skin and related personal care areas, such as hair care, makeup and cosmetic dentistry. This website also features content from experts in dermatology, makeup and dentistry. |
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Website | Description | |
www.WhattoExpect.com | Based on the best-selling pregnancy book,What to Expect When You’re Expecting, by author Heidi Murkoff, this website contains content written by Ms. Murkoff on conception planning and pregnancy, as well as information on newborns and toddlers. | |
www.JillianMichaels.com | Jillian Michaels is a trainer on the popular NBC show,The Biggest Loser. Subscribers to this website get access to Ms. Michaels’ program for healthy weight loss, which includes a fitness program, menus and meal plans, videos and interactive tools. | |
www.SouthBeachDiet.com | Based on the best-selling diet book written by South Beach preventive cardiologist, Arthur Agatston, theSouth Beach Dietwebsite contains multiple tools for managing diet and measuring weight loss. | |
www.DeniseAustin.com | TheDenise Austinwebsite provides customized meal and fitness plans that are targeted to help individuals meet their personal fitness goals. | |
www.JoyBauer.com | Based on the work of nutritional authority Joy Bauer, this website provides a variety of weight loss content and tools, including a customized meal planner and shopping list creator, customized food plan, food log, calorie and activity calculator and recipe database. | |
www.DukeDiet.com | TheDuke Dietwebsite, based on the work completed at the Duke Diet and Fitness Center, provides content and tools focused on weight loss, including diet, fitness, behavioral strategies and medical expertise. | |
www.SonomaDiet.com | Based on the best-selling diet book,The Sonoma Diet, by author Dr. Connie Guttersen, this website provides content and tools related to dieting and overall health. | |
www.MyOptimumHealthPlan.com | Based on the work of health advisor Dr. Andrew Weil, this website includes content and tools focused on wellness, including a health and lifestyle center, healthy aging strategies and a vitamin advisor. | |
www.DrLauraBerman.com | Based on the work of Dr. Laura Berman, an expert in sex education and therapy, this website contains content and tools designed to improve sex and intimacy for adults of all ages. |
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Website | Description | |
www.HealthyLivingWithEllie.com | From dietitian, author and television host Ellie Krieger, theHealthy Living with Elliewebsite provides content and tools designed to promote a healthier lifestyle, including diet and nutrition, fitness and wellness tips. |
Website | Description | |
www.MayoClinic.com | Produced by a team of Mayo Clinic experts, the Mayo Clinic website gives users access to the expertise and knowledge of the more than 3,300 Mayo Clinic physicians and scientists and offers health information to help users assess symptoms, understand their diagnosis and manage their health. | |
www.SparkPeople.com | This website offers free nutrition, health and fitness tools, support and resources designed to promote the transition to a permanent healthy lifestyle. | |
www.MedHelp.org | This website connects people with medical experts and others who have had similar health-related experiences. Members can also research drugs and health topics and share their knowledge with others in need. | |
www.Drugstore.com | This website is a leading e-commerce provider of health, beauty, vision and pharmacy products. | |
www.PsychCentral.com | This website was created by physicians and licensed psychologists and offers information on more than 100 mental health topics and has more than 150 support groups. | |
www.LocateADoc.com | This website provides a database of physicians and health content that gives prospective patients information and research tools to choose the right doctor or specialist. | |
www.SpineUniverse.com | This website provides information and resources for consumers and professionals interested in back and neck pain. Content is reviewed by a board of spine specialists to ensure reliability. | |
www.EndocrineWeb.com | This website provides patients with information about endocrine diseases, treatments and prevention. |
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Website | Description | |
www.FPNotebook.com | This website is intended to aid primary care and family practice providers in their pursuit of optimal care, well-informed patients and healthy families. The website contains content on more than 4,000 medical topics. | |
www.WebVet.com | This website provides pet owners with medical information, original lifestyle and human interest stories, and breaking news and general wellness information regarding animal care. | |
www.DietsInReview.com | This website is intended to provide constructive information and education by health professionals to inspire users to implement healthy changes, support weight loss efforts and generally live a healthier life. |
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Content Offering | Description | |
Everyday Living Content | Original, medically reviewed content providing daily guidance for better living, including advice on living a healthier life or providing assistance in coping with a chronic condition. The content is sourced to peer-reviewed medical journals and includes interviews with experts. | |
Health Encyclopedia | Health condition definitions, drug information and other encyclopedic information provided by healthcare authorities like Harvard Health, Healthwise, and Multum. | |
Expert Q&As | Consumers’ questions are answered by approximately 50 specialists. Questions range from fitness and weight loss to more serious chronic conditions like multiple sclerosis. | |
Interactive and Video Based Diagnostics | Series of algorithmic based intake exams designed to help a consumer to learn what illness or health issue might be causing a particular symptom or to generate an evaluation of a consumer’s health status. | |
Health Trackers | A health tool that allows consumers to input health data and then generates a graphical record of the consumer’s results over time. For example, diabetics can use a glucose tracker, and consumers interested in weight loss can track pounds lost over time. | |
Interactive Slideshows | Health content created by our editors that is presented in a sequenced, visual format where the consumer clicks to advance each panel to learn more. | |
Groups and Goals | Tool that allows consumers to form virtual communities based on shared health goals. | |
Pregnancy Calendar | Tool that provides week-by-week information on fetal development and changes to the woman’s body as the pregnancy progresses. This tool provides content related to each week of a pregnancy. | |
My Everyday Health | Personalized health profile that allows the consumer to create a customized news feed, easily track calorie intake and calorie burn, and send messages privately to family, friends and otherEveryday Health members. | |
Original Video | Health videos that focus on patients who are coping with and overcoming the limitations of chronic conditions. |
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Content Offering | Description | |
Original Audio Webcasts | Recorded audio programs containing interviews with leading medical researchers who specialize in chronic conditions and answer questions from consumers. | |
Doctor and Hospital Directory | Directory that contains names, addresses and practice information for more than 700,000 physicians and allied health professionals and more than 6,000 hospitals. The directory also contains information on quality measures, such as board certification status of physicians and mortality data for hospitals. | |
Video Symptom Checker | Interactive symptom triage tool featuring a board certified emergency room physician who, through a series of recorded video segments, questions consumers about medical history and presentation of symptoms. The tool provides care recommendations and action plans. | |
My Calorie Counter | Suite of calorie and nutrition tools that provide consumers with the ability to easily track food and nutrient intake and calorie burn based on a database of over 35,000 commonly consumed foods. | |
Meal Planner | Tool that provides a week’s worth of healthy menus for breakfast, lunch and dinner. Tool provides nutrient and calorie information and can be adjusted to accommodate special diets, dietary restrictions and favorite foods. | |
Healthy Recipes | Thousands of recipes across a variety of categories, including low fat, diabetes friendly, low carb, low calorie, low sodium, and gluten free. Recipes are provided by well known publishers such asEating Well andDiabetic Livingmagazines. | |
Ask A Pharmacist | Interactive tool in which licensed pharmacists answer individual questions submitted by users regarding prescription and over-the-counter medications. |
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• | targeted banner display advertisements on theEveryday Healthportfolio and in our newsletters; | |
• | interactive brand sponsorships, which consist of custom-created marketing programs featuring content, tools and other programs; | |
• | sponsorship of targeted stand-alonee-mails to consumers who have opted to receive suche-mails, which we refer to as opt-in consumers; | |
• | customer acquisition, or lead generation, campaigns designed to deliver qualified consumers through the registration process; and | |
• | opportunities for connecting advertisers to consumers through interactive social networking communities. |
• | increasing traffic to the websites we operate in theEveryday Healthportfolio; and | |
• | recruiting consumers to register with or subscribe to our websites and subscription-based premium services. |
• | online display advertising; | |
• | paid search advertising; | |
• | e-mail advertising; and | |
• | television, print and radio advertising. |
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• | the quality, timeliness and reliability of our content offerings; | |
• | the effectiveness of our sales and marketing efforts; | |
• | our ability to keep pace with technological advances and trends; and | |
• | the brand recognition ofEveryday Healthand the websites in our portfolio. |
• | websites that provide online health or medical information, such aswww.webmd.com; | |
• | websites that offer specific diet or fitness programs, such aswww.weightwatchers.com, or that focus on a specific medical condition, such aswww.dlife.comfor diabetes; | |
• | broad-based public portals that offer health-related content, such aswww.aol.comandwww.yahoo.com; and | |
• | non-profit and governmental websites that provide health and wellness information, such aswww.fda.gov,www.cdc.govandwww.health.nih.gov. |
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Name | Age | Position(s) | ||
Benjamin Wolin | 35 | Chief Executive Officer and Director | ||
Michael Keriakos | 34 | President and Director | ||
Brian Cooper | 45 | Executive Vice President and Chief Financial Officer | ||
Gregory Jackson | 40 | Executive Vice President, Marketing & Sales Operations | ||
David Perlman | 57 | Executive Vice President and Chief Technical Officer | ||
Alan Shapiro | 41 | Executive Vice President and General Counsel | ||
Scott Wolf | 55 | Executive Vice President, Sales | ||
Marjorie L. Martin | 50 | Senior Vice President and General Manager | ||
Douglas McCormick | 60 | Chairman of the Board | ||
D. Jarrett Collins | 48 | Director | ||
Donn Davis | 47 | Director | ||
Dana L. Evan | 50 | Director | ||
David Golden | 51 | Director | ||
Habib Kairouz | 43 | Director | ||
William Bo S. Peabody | 38 | Director | ||
Sharon Wienbar | 48 | Director |
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• | Village Ventures Partners Fund, L.P. has the right to designate one director to be elected by the holders of our Series A redeemable convertible preferred stock, voting as a separate class; | |
• | NeoCarta Ventures, L.P. has the right to designate one director to be elected by the holders of our Series C redeemable convertible preferred stock, voting as a separate class; | |
• | Scale Venture Partners II, LP has the right to designate one director to be elected by the holders of our Series D redeemable convertible preferred stock, voting as a separate class; | |
• | WF Holding Company, LLC has the right to designate two directors to be elected by the holders of our Series E redeemable convertible preferred stock, voting as a separate class; | |
• | Rho Ventures VI, L.P. has the right to designate one director to be elected by the holders of our Series F redeemable convertible preferred stock, voting as a separate class; | |
• | Benjamin Wolin and Michael Keriakos have the right to designate two directors to our board of directors to be elected by the holders of a majority of our common stock; and | |
• | the majority of the then-serving members of our board of directors have the right to designate the two directors to be elected by the holders of our common stock and redeemable convertible preferred stock, voting as a single class. |
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Option | Total | |||||||
Awards | Compensation | |||||||
Name | ($)(1) | ($) | ||||||
Douglas McCormick(2)(3) | — | — | ||||||
D. Jarrett Collins | — | — | ||||||
Donn Davis | — | — | ||||||
Dana L. Evan(2) | $307,900 | $307,900 | ||||||
David Golden | — | — | ||||||
Habib Kairouz | — | — | ||||||
William Bo S. Peabody | — | — | ||||||
Sharon Wienbar | — | — |
(1) | This amount represents the compensation expense in respect of an option to purchase 125,000 shares of our common stock awarded to Dana L. Evan and recognized by us for the 2009 fiscal year under the authoritative accounting guidance, rather than amounts paid to or realized by Ms. Evan. There can be no assurance that this option will be exercised (in which case no value will be realized by Ms. Evan) or that the value on exercise will approximate the compensation expense we recognized. This option has an exercise price per share of $3.06 and vests as to 62,500 of the shares on the first anniversary of the grant, and vests as to 62,500 of the shares on the second anniversary of the grant. The grant date fair value per share of this option was $4.11. | |
(2) | The table below sets forth the aggregate number of option awards held by our non-employee directors as of December 31, 2009. |
Option | ||||
Name | Awards | |||
Douglas McCormick | 249,423 | |||
Dana L. Evan | 125,000 |
(3) | Mr. McCormick was granted an option to purchase 50,000 shares of our common stock in February 2010. This option has an exercise price per share of $4.77 and vests as to 25,000 of the shares on the first anniversary of the grant, and vests as to 25,000 of the shares on the second anniversary of the grant. The grant date fair value per share of this option was $4.77. |
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• | $ annual retainer for each member of the audit committee and $ annual retainer for the chairman of the audit committee; |
• | $ annual retainer for each member of the compensation committee and $ annual retainer for the chairman of the compensation committee; and |
• | $ annual retainer for each member of the nominating and corporate governance committee and $ annual retainer for the chairman of the nominating and corporate governance committee. |
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• | base salaries, which are designed to allow us to attract and retain qualified candidates; | |
• | incentive compensation and bonuses, which provide additional cash compensation and are designed to support ourpay-for-performance philosophy and align compensation with business and financial objectives; | |
• | equity compensation, historically in the form of stock options, which are granted to incent executive behavior that results in increased stockholder value; and | |
• | a benefits package that is generally available to all of our employees. |
• | the executive’s skills and experience; | |
• | the executive’s individual performance; | |
• | the importance of the executive’s position to us; |
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• | the executive’s growth in his position; and | |
• | market levels. |
Incentive Compensation | ||||
Named Executive Officer | Target (% of Base Salary) | |||
Benjamin Wolin | 100 | % | ||
Michael Keriakos | 100 | % | ||
Brian Cooper | 100 | % | ||
Gregory Jackson | 40 | % |
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Named Executive Officer | 2009 Incentive Compensation | |||
Benjamin Wolin | $ | 210,000 | ||
Michael Keriakos | $ | 210,000 | ||
Brian Cooper | $ | 175,000 | ||
Gregory Jackson | $ | 90,000 |
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• | provide our executives with a strong link to our long-term performance, including by enhancing their accountability for long-term decision making; | |
• | help balance the short-term orientation of our annual cash incentive compensation program; | |
• | create an ownership culture by aligning the interests of our executives with the creation of value for our stockholders; and | |
• | further our goal of executive retention. |
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Non-Equity | ||||||||||||||||||
Option | Incentive Plan | |||||||||||||||||
Salary | Bonus | Awards | Compensation | Total | ||||||||||||||
Name and Principal Position | ($) | ($)(1) | ($)(2) | ($)(3) | ($) | |||||||||||||
Benjamin Wolin | $ | 300,000 | — | $ | 247,040 | $210,000 | $ | 757,040 | ||||||||||
Chief Executive Officer | ||||||||||||||||||
Brian Cooper | 250,000 | — | 123,520 | 175,000 | 548,520 | |||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||||||
Michael Keriakos | 300,000 | — | 247,040 | 210,000 | 757,040 | |||||||||||||
President | ||||||||||||||||||
Gregory Jackson | 275,000 | — | 117,285 | 90,000 | 482,285 | |||||||||||||
Executive Vice President, Marketing & Sales Operations | ||||||||||||||||||
Scott Wolf | 285,000 | $ | 278,316 | 117,285 | — | 680,601 | ||||||||||||
Executive Vice President, Sales |
(1) | The 2009 bonus for Mr. Wolf reflects commission payments related to amounts earned for sales activity in 2009. | |
(2) | The amounts under “Option Awards” represent the grant date fair value for stock options granted in 2009, calculated in accordance with FASB ASC Topic 718 and exclude the impact of estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining such amounts are described in Note 11 to our consolidated financial statements included elsewhere in this prospectus. | |
(3) | The amounts included in the “Non-Equity Incentive Plan Compensation” column reflect amounts paid pursuant to our cash incentive compensation program for 2009, as described in “— Elements of Compensation — Cash Incentive Compensation/Bonuses” above. For more information, see “— Grants of Plan-Based Awards in 2009” below. |
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Estimated | ||||||||||||||||||||
Future | ||||||||||||||||||||
Payouts | All Other | |||||||||||||||||||
Under | Option | Grant | ||||||||||||||||||
Non-Equity | Awards: | Exercise | Date | |||||||||||||||||
Incentive | Number of | Price of | Fair | |||||||||||||||||
Plan | Securities | Option | Value of | |||||||||||||||||
Awards | Underlying | Awards | Awards | |||||||||||||||||
Name | Grant Date | Target ($)(1) | Options(2) | ($/share)(3) | ($)(4) | |||||||||||||||
Benjamin Wolin | — | $ | 300,000 | — | — | — | ||||||||||||||
6/15/2009 | — | 100,000 | $ | 3.33 | $ | 156,380 | ||||||||||||||
6/15/2009 | — | 100,000 | 8.00 | 90,660 | ||||||||||||||||
Brian Cooper | — | 250,000 | — | — | — | |||||||||||||||
6/15/2009 | — | 50,000 | 3.33 | 78,190 | ||||||||||||||||
6/15/2009 | — | 50,000 | 8.00 | 45,330 | ||||||||||||||||
Michael Keriakos | — | 300,000 | — | — | — | |||||||||||||||
6/15/2009 | — | 100,000 | 3.33 | 156,380 | ||||||||||||||||
6/15/2009 | — | 100,000 | 8.00 | 90,660 | ||||||||||||||||
Gregory Jackson | — | 110,000 | — | — | — | |||||||||||||||
6/15/2009 | — | 75,000 | 3.33 | 117,285 | ||||||||||||||||
Scott Wolf | 6/15/2009 | — | 75,000 | 3.33 | 117,285 |
(1) | Amounts represent the potential 2009 cash incentive compensation payments to the named executive officers assuming our revenue and Adjusted EBITDA equal the specific targets designated by our compensation committee. The compensation committee has the discretion to award less or more than the target amounts set forth above. See “— Elements of Compensation — Cash Incentive Compensation/Bonuses” above. The actual amounts earned for 2009 are set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table above. | |
(2) | Reflects shares of common stock underlying option awards granted in 2009 under the 2003 Stock Option Plan. These options vest over a four-year period as follows: 25% of the shares underlying the option vest on the first anniversary of the date of the grant, and the remainder of the shares underlying the option vest in equal monthly installments over the 36 months thereafter. | |
(3) | For the methodology we used to determine the exercise price of option awards made on June 15, 2009, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Stock-Based Compensation.” | |
(4) | Represents FASB ASC 718 grant date fair value. The valuation assumptions used in determining such amounts are described in Note 11 to our consolidated financial statements included elsewhere in this prospectus. These amounts do not correspond to the actual value that will be recognized by the named executive officers. |
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Number of | Number of | |||||||||||||||
Securities | Securities | |||||||||||||||
Underlying | Underlying | |||||||||||||||
Unexercised | Unexercised | Option | Option | |||||||||||||
Options | Options | Exercise | Expiration | |||||||||||||
Name | Exercisable(#) | Unexercisable(#)(1) | Price ($) | Date | ||||||||||||
Benjamin Wolin | 130,084 | 65,052 | $ | 3.84 | 4/1/2017 | |||||||||||
79,166 | 120,834 | 6.18 | 4/11/2018 | |||||||||||||
— | 100,000 | 3.33 | 6/15/2019 | |||||||||||||
— | 100,000 | 8.00 | 6/15/2019 | |||||||||||||
Brian Cooper | 11,250 | (2) | — | 0.50 | 9/9/2013 | |||||||||||
43,023 | (2) | — | 1.18 | 9/15/2014 | ||||||||||||
100,000 | (2) | — | 1.50 | 9/1/2015 | ||||||||||||
52,033 | 26,021 | 3.84 | 4/1/2017 | |||||||||||||
39,583 | 60,417 | 6.18 | 4/11/2018 | |||||||||||||
— | 50,000 | 3.33 | 6/15/2019 | |||||||||||||
— | 50,000 | 8.00 | 6/15/2019 | |||||||||||||
Michael Keriakos | 130,084 | 65,052 | 3.84 | 4/1/2017 | ||||||||||||
79,166 | 120,834 | 6.18 | 4/11/2018 | |||||||||||||
— | 100,000 | 3.33 | 6/15/2019 | |||||||||||||
— | 100,000 | 8.00 | 6/15/2019 | |||||||||||||
Gregory Jackson | 83,324 | 16,676 | 2.45 | 7/5/2016 | ||||||||||||
19,791 | 30,209 | 6.18 | 4/11/2018 | |||||||||||||
— | 75,000 | 3.33 | 6/15/2019 | |||||||||||||
Scott Wolf | 100,000 | (2) | — | 1.50 | 6/6/2015 | |||||||||||
19,195 | 5,805 | 3.84 | 1/1/2017 | |||||||||||||
35,156 | 14,844 | 3.84 | 6/7/2017 | |||||||||||||
33,723 | 16,277 | 6.18 | 12/31/2017 | |||||||||||||
19,791 | 30,209 | 6.18 | 4/11/2018 | |||||||||||||
— | 75,000 | 3.33 | 6/15/2019 |
(1) | The stock options were granted ten years prior to the expiration date and become vested over a four-year period as follows: 25% of the shares underlying the option vest on the first anniversary of the employment commencement date or date of the grant, and the remainder of the shares underlying the option vest in equal monthly installments over the 36 months thereafter. | |
(2) | These stock options were all fully vested as of December 31, 2009. |
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Severance | Option | Total | ||||||||||
Name | Payments | Acceleration | Benefits | |||||||||
Benjamin Wolin | — | $ | 204,498(1 | ) | $ | 204,498(1 | ) | |||||
Brian Cooper | $ | 125,000 | (2) | 96,200(3 | ) | 221,200(2 | )(3) | |||||
Michael Keriakos | — | 204,498(1 | ) | 204,498(1 | ) | |||||||
Gregory Jackson | 137,500 | (4) | 73,344(5 | ) | 210,844(4 | )(5) | ||||||
Scott Wolf | 213,750 | (4) | 127,204(6 | ) | 340,954(4 | )(6) |
(1) | Messrs. Wolin and Keriakos are each entitled to 100% vesting acceleration of their respective then outstanding stock options upon a change of control transaction. The amount in the table is based on the accelerated vesting of 100% of the unvested portion of each award using the difference between the estimated fair value of our common stock on December 31, 2009 of $4.77 per share and the exercise price of the award. The unvested options for each of Messrs. Wolin and Keriakos consist of the following: (i) 65,052 options exercisable at $3.84 per share; (ii) 120,834 options exercisable at $6.18 per share; (iii) 100,000 options exercisable at $3.33 per share; and (iv) 100,000 options exercisable at $8.00 per share. | |
(2) | Represents amounts payable for termination without cause following a specified change of control pursuant to Mr. Cooper’s employment agreement (as described above in “— Employment Arrangements”). Upon a specified change of control transaction in which we or our stockholders receive consideration in excess of $50 million, Mr. Cooper will be entitled to an additional payment of $50,000 as well as an additional $1,000 for each $1 million received by us or our stockholders above $50 million. | |
(3) | Mr. Cooper is entitled to 100% vesting acceleration of his then outstanding stock options upon a specified change of control transaction. The amount in the table is based on the accelerated vesting of 100% of the unvested portion of each award using the difference between the estimated fair value of our common stock on December 31, 2009 of $4.77 per share and the exercise price of the award. Mr. Cooper’s unvested options consist of the following: (i) 26,021 options exercisable at $3.84 per share; (ii) 60,417 options exercisable at $6.18 per share; (iii) 50,000 options exercisable at $3.33 per share; and (iv) 50,000 options exercisable at $8.00 per share. | |
(4) | Represents amounts payable to Mr. Wolf upon his termination without cause and amounts payable to Mr. Jackson upon a change of control transaction in which his reporting structure or role is reduced as a result. | |
(5) | Mr. Jackson is entitled to a 50% vesting acceleration of his then outstanding stock options upon a change of control transaction. The amount in the table is based on the accelerated vesting of 50% of the unvested portion of each award using the difference between the estimated fair value of our common stock on December 31, 2009 of $4.77 per share and the exercise price of the award. Mr. Jackson’s unvested options consist of the following: (i) 8,338 options exercisable at $2.45 per share; (ii) 15,104 options exercisable at $6.18 per share; and (iii) 37,500 options exercisable at $3.33 per share. | |
(6) | Mr. Wolf is entitled to 100% vesting acceleration of his then outstanding stock options upon a change of control transaction. The amount in the table is based on the accelerated vesting of 100% of the unvested portion of each award using the difference between the estimated fair value of our common stock on December 31, 2009 of $4.77 per share and the exercise price of the |
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award. Mr. Wolf’s unvested options consist of the following: (i) 5,805 options exercisable at $3.84 per share; (ii) 14,844 options exercisable at $3.84 per share; (iii) 16,277 options exercisable at $6.18 per share; (iv) 30,209 options exercisable at $6.18 per share; and (v) 75,000 options exercisable at $3.33 per share. |
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• | shares that are forfeited to or repurchased by us prior to becoming fully vested; | |
• | shares withheld to satisfy income and employment withholding taxes; | |
• | shares used to pay the exercise price of an option in a net exercise arrangement; | |
• | shares tendered to us to pay the exercise price of an option; and | |
• | shares that are cancelled pursuant to an exchange or repricing program. |
• | reduce the exercise price of any outstanding option or the strike price of any outstanding stock appreciation right; | |
• | cancel any outstanding option or stock appreciation right and to grant in exchange one or more of the following: |
• | new options or stock appreciation rights covering the same or a different number of shares of common stock, | |
• | new stock awards, | |
• | cash, and/or | |
• | other valuable consideration; or |
• | engage in any action that is treated as a repricing under generally accepted accounting principles. |
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• | providing that such awards will continue in existence with appropriate adjustments or modifications, if applicable; |
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• | providing that such awards will be assumed, or equivalent awards substituted, by the acquiring or succeeding corporation or an affiliate thereof; | |
• | providing that all unexercised stock options, or other awards to the extent they are unexercised or unvested, will terminate immediately prior to the consummation of such transaction unless exercised within a specified period; | |
• | in the event of a consolidation, merger, combination, reorganization or similar transaction under the terms of which holders of our common stock will receive a cash payment per share surrendered in the transaction, making or providing for an equivalent cash payment in exchange for the termination of such awards; or | |
• | providing that all or any outstanding awards will become vested and exercisable in full or part or any reacquisition or repurchase rights held by us shall immediately lapse in full or part at or immediately prior to such event. |
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• | provide for the assumption, or substitution of a substantially equivalent stock option, by the acquiring or succeeding entity; | |
• | provide, after the provision of notice to the optionee, that the option shall terminate upon the consummation of the transaction unless exercised before that time; | |
• | if our stockholders are receiving a payment for their surrender of our stock is connection with the transaction, provide for a cash payment to the optionee (with respect to any then exercisable portion of the option) equal to the difference between the per share sales price received by our stockholders for their common stock in the transaction and the exercise price of the option; or | |
• | provide for other equitable adjustments as determine by our board of directors. |
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Type of | ||||||||||||||||
Redeemable | ||||||||||||||||
Convertible | Number of | Aggregate | ||||||||||||||
Preferred | Preferred | Purchase | Date of | |||||||||||||
Name | Stock | Shares | Price | Purchase | ||||||||||||
5% Stockholders | ||||||||||||||||
WF Holding Company, LLC(1) | Series E | 8,930,966 | (1 | ) | 10/7/2008 | |||||||||||
Entities affiliated with Rho Ventures(2) | Series D | 393,060 | $ | 2,699,772 | 08/30/2007 | |||||||||||
Series F | 1,970,210 | 14,999,997 | 10/15/2008 | |||||||||||||
Scale Venture Partners II, L.P.(3) | Series D | 2,038,261 | 14,000,000 | 08/30/2007 | ||||||||||||
Series F | 234,974 | 1,788,951 | 10/15/2008 | |||||||||||||
Entities affiliated with NeoCarta Ventures(4) | Series D | 113,860 | 782,059 | 08/30/2007 | ||||||||||||
Series F | 154,049 | 1,172,837 | 10/15/2008 | |||||||||||||
Series F | 318,203 | 2,422,607 | 10/26/2008 | |||||||||||||
Entities affiliated with Foundation Capital(5) | Series D | 727,950 | 4,999,997 | 09/24/2007 | ||||||||||||
Series F | 190,411 | 1,449,675 | 10/15/2008 | |||||||||||||
Entities affiliated with Star Ventures(6) | Series D | 77,719 | 533,821 | 08/30/2007 | ||||||||||||
Time Warner Inc. | Series D | 72,795 | 500,000 | 08/30/2007 |
(1) | David Golden and Donn Davis, members of our board of directors, are two of eleven members of the board of directors of WF Holding Company, LLC. The shares of Series E redeemable convertible preferred stock held by WF Holding Company, LLC were issued in consideration for our purchase of all outstanding units of RHG. | |
(2) | Includes 393,060 shares of Series D redeemable convertible preferred stock held by Rho Management Trust I and 1,970,210 shares of Series F redeemable convertible preferred stock held by Rho Ventures VI, L.P. The investment advisor to Rho Management Trust I is Rho Capital Partners, Inc., a New York corporation. Habib Kairouz, a member of our board of directors, is a Managing Partner and one of the controlling stockholders of Rho Capital Partners, Inc., and in his capacity as such may be deemed to exercise voting and investment power over the shares held by Rho Management Trust I. The general partner of Rho Ventures VI, L.P. is RMV VI, L.L.C., a Delaware limited liability company, and the managing member of RMV VI, L.L.C. is Rho Capital Partners LLC, a Delaware limited liability company. As a managing member of Rho Capital Partners LLC, Habib Kairouz may be deemed to exercise voting and investment power over the shares held by Rho Ventures VI, L.P. Douglas McCormick, a member of our board of directors, is a venture partner at Rho Capital Partners, Inc. but does not have voting or investment power over the shares held by Rho Management Trust I and Rho Ventures VI, L.P. Each of Messrs. Kairouz and McCormick disclaims beneficial ownership of the shares held by Rho Management Trust I and Rho Ventures VI, L.P. | |
(3) | Sharon Wienbar, a member of our board of directors, is one of the five managing members of Scale Venture Management II, LLC, the ultimate general partner of Scale Venture Partners II, LP. |
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(4) | Includes 102,474 shares of Series D redeemable convertible preferred stock and 425,026 shares of Series F redeemable convertible preferred stock held by NeoCarta Ventures, L.P. and 11,386 shares of Series D redeemable convertible preferred stock and 47,226 shares of Series F redeemable convertible preferred stock held by NeoCarta Scout Fund, L.L.C. D. Jarrett Collins, a member of our board of directors, is a managing director of NeoCarta Associates, LLC, which is the general partner of NeoCarta Ventures, L.P. and the manager of NeoCarta Scout Fund, L.L.C. | |
(5) | Includes 712,481 shares of Series D redeemable convertible preferred stock and 186,365 shares of Series F redeemable convertible preferred stock held by Foundation Capital V L.P. and 15,469 shares of Series D redeemable convertible preferred stock and 4,046 shares of Series F redeemable convertible preferred stock held by Foundation Capital V Principals Fund LLC. | |
(6) | Includes 1,981 shares of Series D redeemable convertible preferred stock held by SVM Star Ventures Managementgesellschaft MBH NR. 3 and 75,738 shares of Series D redeemable convertible preferred stock held by SVE Star Ventures Enterprises No. VII, a German Civil Law Partnership. |
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• | each of our directors and each of the executive officers named in the Summary Compensation Table under “Executive Compensation”; | |
• | each of the selling stockholders; | |
• | each person who is a beneficial owner of more than 5% of any class or series of our capital stock; and | |
• | all of our directors and executive officers as a group. |
Shares of Common Stock | Number of | Shares of Common Stock | ||||||||||||||||||
Beneficially Owned Before | Shares Being | Beneficially Owned After | ||||||||||||||||||
This Offering | Offered | This Offering | ||||||||||||||||||
Name and Address of Beneficial Owners and | Number | Percentage | Number | Percentage | ||||||||||||||||
Selling Stockholders(1) | of Shares | of Class | of Shares | of Class | ||||||||||||||||
5% Stockholders | ||||||||||||||||||||
WF Holding Company, LLC(2) 1717 Rhode Island, Ave., NW, Suite 1000 Washington, DC 20036 | 8,930,966 | 29.5 | % | |||||||||||||||||
Entities affiliated with Rho Ventures(3) c/o Rho Capital Partners, Inc. 152 West 57th Street, 23rd Floor New York, NY 10019 | 7,457,577 | 24.6 | ||||||||||||||||||
Entities affiliated with Scale Venture Partners(4) 950 Tower Lane, Suite 700 Foster City, CA 94404 | 2,273,235 | 7.5 | ||||||||||||||||||
Entities affiliated with Foundation Capital(5) 250 Middlefield Rd Menlo Park, CA 94025 | 1,842,117 | 6.1 | ||||||||||||||||||
Entities affiliated with NeoCarta Ventures(6) 45 Fairfield Street, Fourth Floor Boston, MA 02116 | 1,808,534 | 6.0 | ||||||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||
Benjamin Wolin(7)(8) | 1,348,656 | 4.4 | ||||||||||||||||||
Michael Keriakos(7)(9) | 1,328,468 | 4.3 | ||||||||||||||||||
Brian Cooper(10) | 297,311 | 1.0 | ||||||||||||||||||
Gregory Jackson(11) | 143,738 | 0.5 |
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Shares of Common Stock | Number of | Shares of Common Stock | ||||||||||||||||||
Beneficially Owned Before | Shares Being | Beneficially Owned After | ||||||||||||||||||
This Offering | Offered | This Offering | ||||||||||||||||||
Name and Address of Beneficial Owners and | Number | Percentage | Number | Percentage | ||||||||||||||||
Selling Stockholders(1) | of Shares | of Class | of Shares | of Class | ||||||||||||||||
Scott Wolf(12) | 247,261 | 0.8 | ||||||||||||||||||
D. Jarrett Collins(6) | 1,808,534 | 6.0 | ||||||||||||||||||
Donn Davis(2) | — | * | ||||||||||||||||||
Dana L. Evan | — | * | ||||||||||||||||||
David Golden(2) | — | * | ||||||||||||||||||
Habib Kairouz(3) | 7,457,577 | 24.6 | ||||||||||||||||||
Douglas McCormick(3)(13) | 371,672 | 1.2 | ||||||||||||||||||
William Bo S. Peabody(14) | 1,620,214 | 5.4 | ||||||||||||||||||
Sharon Wienbar(4) | 2,273,235 | 7.5 | ||||||||||||||||||
All current directors and executive officers as a group (16 persons) | 17,111,236 | 53.4 | % | |||||||||||||||||
Other Selling Stockholders |
* | Indicates ownership of less than 1%. | |
(1) | Unless otherwise indicated, the address for each beneficial owner isc/o Everyday Health, Inc., 45 Main St., Suite 800, Brooklyn, NY 11201. Shares shown in the table above include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. | |
(2) | David Golden and Donn Davis, members of our board of directors, are two of eleven members of the board of directors of WF Holding Company, LLC. No single member of the board of directors of WF Holding Company, LLC has sole voting or investment power over the shares of our common stock held by WF Holding Company, LLC. Revolution WF Holdings LLC holds a controlling interest in WF Holding Company, LLC. Revolution WF Holdings LLC is indirectly controlled by Stephen M. Case. | |
(3) | Includes 5,222,329 shares held by Rho Management Trust I and 1,970,210 shares held by Rho Ventures VI, L.P. Also includes 265,038 shares held by Rho Management Trust I which are transferable to Benjamin Wolin and Michael Keriakos upon exercise of a performance warrant agreement by them. The investment advisor to Rho Management Trust I is Rho Capital Partners, Inc., a New York corporation. Habib Kairouz, a member of our board of directors, Mark Leschly and Joshua Ruch are the Managing Partners and the controlling stockholders of Rho Capital Partners, Inc., and in their capacity as such may be deemed to share voting and investment power over the shares held by Rho Management Trust I. Each of Messrs. Kairouz, Leschly and Ruch disclaims beneficial ownership of the shares held by Rho Management Trust I, except to the extent of his pecuniary interest therein. The general partner of Rho Ventures VI, L.P. is RMV VI, L.L.C., a Delaware limited liability company, and the managing member of RMV VI, L.L.C. is Rho Capital Partners LLC, a Delaware limited liability company. As the managing members of Rho Capital Partners LLC, Messrs. Kairouz, Leschly and Ruch may be deemed to share voting and investment power over the shares held by Rho Ventures VI, L.P. Each of Messrs. Kairouz, Leschly and Ruch disclaims beneficial ownership of the shares held by Rho Ventures VI, L.P., except to the extent of his pecuniary interest therein. Douglas McCormick, a member of our board of directors, is a venture partner at Rho Capital Partners, Inc. but does not have voting or investment power over the shares held by Rho Management Trust I and Rho Ventures VI, L.P. | |
(4) | Voting and/or disposition of the shares held by Scale Venture Partners II, LP is determined by a majority in interest of the five managing members of Scale Venture Management II, LLC, the ultimate general partner of Scale Venture Partners II, LP. The five managing members of Scale Venture Management II, LLC are Kate Mitchell, Rory O’Driscoll, Louis Bock, Mark Brooks and Sharon Wienbar, a member of our board of directors. Each of Mses. Mitchell and Wienbar and Messrs. O’Driscoll, Bock and Brooks disclaims beneficial ownership of the shares held by Scale Venture Partners II, LP, except to the extent of his or her pecuniary interest therein. |
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(5) | Includes 1,802,973 shares held by Foundation Capital V, L.P. and 39,144 shares held by Foundation Capital V Principals Fund, LLC. Foundation Capital Management Co. V, LLC, or FC5M, is the sole General Partner of Foundation Capital V, L.P., or FC5, and Foundation Capital V Principals Fund, LLC, or FC5P. FC5M exercises sole voting and investment power over the shares held by FC5 and FC5P. William B. Elmore, Adam Grosser, Paul R. Holland, Paul G. Koontz, Charles P. Moldow, Richard A. Redelfs, Michael N. Schuh, and Warren M. Weiss are Managing Members of FC5M. As Managing Members of FC5M, Messrs. Elmore, Grosser, Holland, Koontz, Moldow, Redelfs, Schuh and Weiss may be deemed to share voting and investment control over the shares held by FC5 and FC5P. Each of the Managing Members of FC5M disclaims beneficial ownership of the securities held by FC5 and FC5P, except to the extent of his pecuniary interest therein. | |
(6) | Includes 1,627,680 shares held by NeoCarta Ventures, L.P. and 180,854 shares held by NeoCarta Scout Fund, L.L.C. D. Jarrett Collins, a member of our board of directors, Anthony L. Pantuso and Thomas W. Naughton are the managing directors of NeoCarta Associates, LLC, which is the general partner of NeoCarta Ventures, L.P. and the manager of NeoCarta Scout Fund, L.L.C. Mr. Collins, Mr. Pantuso and Mr. Naughton may be deemed to share dispositive and voting power over the shares, which are, or may be, deemed to be beneficially owned by NeoCarta Ventures, L.P. and NeoCarta Scout Fund, L.L.C. Each of Messrs. Collins, Pantuso and Naughton disclaims beneficial ownership of the shares held by NeoCarta Ventures, L.P. and NeoCarta Scout Fund, L.L.C., except to the extent of his pecuniary interest therein. | |
(7) | Excludes 350,000 shares that each of Benjamin Wolin and Michael Keriakos may acquire from certain of our other stockholders upon exercise of a performance warrant agreement by Messrs. Wolin and Keriakos. |
(8) | Includes 316,972 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(9) | Includes 316,972 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(10) | Includes 297,311 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(11) | Includes 143,738 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(12) | Includes 247,261 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(13) | Includes 139,600 shares held individually and 2,597 shares which are transferable to Benjamin Wolin and Michael Keriakos upon exercise of a performance warrant agreement by them. Also includes 229,475 shares subject to options that are exercisable within 60 days of March 31, 2010. |
(14) | Includes 599,377 shares held by Village Ventures Partners Fund, L.P., 45,379 shares held by Village Ventures Partners Fund A, L.P., 10,189 shares held by VVN, LLC and 701,211 shares held individually by William Bo S. Peabody. Also includes 182,855 shares held individually by Mr. Peabody, 75,489 shares held by Village Ventures Partners Fund, L.P. and 5,714 shares held by Village Ventures Partners Fund A, L.P. which are transferable to Benjamin Wolin and Michael Keriakos upon exercise of a performance warrant agreement by them. Mr. Peabody, a member of our board of directors, is a managing general partner of Village Ventures, Inc. which is the manager of Village Ventures Capital Partners I, LLC, the general partner of Village Ventures Partners Fund, L.P. and Village Ventures Partners Fund A, L.P. Mr. Peabody may be deemed to share dispositive and voting power over these shares, which are, or may be, deemed to be beneficially owned by Village Ventures Partners Fund, L.P. and Village Ventures Partners Fund A, L.P. Mr. Peabody disclaims beneficial ownership of the shares held by Village Ventures Partners Fund, L.P. and Village Ventures Partners Fund A, L.P. except to the extent of his pecuniary interest therein. |
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• | the transaction is approved by the board of directors before the date the interested stockholder attained that status; | |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or | |
• | on or after the date the business combination is approved by the board of directors and authorized at a meeting of stockholders, and not by written consent, by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
• | any merger or consolidation involving the corporation and the interested stockholder; | |
• | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; | |
• | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or | |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
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• | no action can be taken by stockholders except at an annual or special meeting of the stockholders called in accordance with our bylaws, and stockholders may not act by written consent; | |
• | the approval of holders of two-thirds of the shares entitled to vote at an election of directors will be required to adopt, amend or repeal our bylaws or amend or repeal the provisions of our certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; | |
• | our board of directors will be expressly authorized to make, alter or repeal our bylaws; | |
• | stockholders may not call special meetings of the stockholders or fill vacancies on the board of directors; | |
• | stockholders must timely provide advance notice, with specific requirements as to form and content, of nominations of directors or the proposal of business to be voted on at an annual meeting; | |
• | our board of directors will be authorized to issue preferred stock without stockholder approval, as described above; | |
• | our board of directors will be divided into three classes with each director elected for a staggered three-year term; | |
• | the authorized number of directors may be changed only be resolution of the board of directors; | |
• | all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; | |
• | directors may only be removed for cause and then only by a vote of holders of two-thirds of the shares entitled to vote at an election of directors; and | |
• | we will indemnify our directors, and may indemnify officers, employees and other agents, against losses that they may incur in investigations and legal proceedings resulting from their services to us, which may include services in connection with takeover defense measures. |
• | for any breach of the director’s duty of loyalty to us or our stockholders; | |
• | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
• | for unlawful payments of dividends or unlawful stock repurchases or redemptions, as provided under Section 174 of the Delaware General Corporation Law; or | |
• | for any transaction from which the director derived an improper personal benefit. |
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Date Available for Sale | Shares Eligible for Sale | Comment | ||
Date of prospectus | Shares sold in the offering and shares saleable under Rule 144 that are not subject to a lock-up | |||
90 days after date of prospectus | Shares saleable under Rules 144 and 701 that are not subject to a lock-up | |||
180 days after date of prospectus | Lock-up released; shares saleable under Rules 144 and 701 |
• | 1% of the number of shares of common stock then outstanding, which will equal shares immediately after this offering; and |
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• | the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | if, during the last 17 days of the180-day restricted period, we issue an earnings release or announce material news or a material event, the restrictions described in the preceding paragraph will continue to apply until the expiration of the18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event; or | |
• | if, prior to the expiration of the180-day restricted period, we announce that we will release earnings results during the15-day period beginning on the last day of the180-day period, the restrictions described in the preceding paragraph will continue to apply until the expiration of the18-day period beginning on the issuance of the earnings release. |
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• | a citizen or resident of the U.S.; | |
• | a corporation or other entity subject to tax as a corporation for such purposes that is created or organized under the laws of the U.S. or any political subdivision thereof (including the District of Columbia); | |
• | a partnership (including any entity or arrangement treated as a partnership for such purposes); | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust (1) if a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (2) that has made a valid election to be treated as a U.S. person for such purposes. |
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• | thenon-U.S. holder is an individual who holds our common stock as a capital asset, is present in the U.S. for 183 days or more during the taxable year of the disposition and meets certain other conditions; | |
• | the gain is effectively connected with thenon-U.S. holder’s conduct of a trade or business in the U.S. and, if certain income tax treaties apply, is attributable to anon-U.S. Holder’s permanent establishment in the U.S.; or | |
• | we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time within the shorter of the five-year period ending on the date of disposition or the period that thenon-U.S. holder held our common stock. |
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Underwriters | Number of Shares | |||
Goldman, Sachs & Co. | ||||
J.P. Morgan Securities Inc. | ||||
Jefferies & Company, Inc. | ||||
Needham & Company, LLC | ||||
Total | ||||
No Exercise | Full Exercise | |||||||
Per Share | $ | $ | ||||||
Total | $ | $ |
No Exercise | Full Exercise | |||||||
Per Share | $ | $ | ||||||
Total | $ | $ |
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• | to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; | |
• | to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or | |
• | in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and | |
• | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom. |
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144
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145
Everyday Health, Inc.: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Everyday Health, Inc. Unaudited Pro Forma Financial Statements: | ||||
F-28 | ||||
F-30 | ||||
Revolution Health Group LLC: | ||||
F-31 | ||||
F-32 | ||||
F-33 | ||||
F-34 | ||||
F-35 | ||||
F-36 |
F-1
Table of Contents
March 26, 2010
F-2
Table of Contents
December 31, | ||||||||
2008 | 2009 | |||||||
(in thousands, except share and per share data) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 25,050 | $ | 16,360 | ||||
Restricted cash | 2,166 | 2,100 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $1,309 and $1,303 as of December 31, 2008 and 2009, respectively | 18,339 | 22,194 | ||||||
Inventory | 335 | 393 | ||||||
Prepaid expenses and other current assets | 3,249 | 2,817 | ||||||
Total current assets | 49,139 | 43,864 | ||||||
Property and equipment, net | 14,016 | 13,201 | ||||||
Goodwill | 54,126 | 54,870 | ||||||
Intangible assets, net | 17,791 | 15,354 | ||||||
Other assets | 622 | 2,100 | ||||||
Total assets | $ | 135,694 | $ | 129,389 | ||||
Liabilities, redeemable convertible preferred stock and stockholders’ deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,525 | $ | 7,841 | ||||
Accrued expenses | 17,516 | 12,485 | ||||||
Deferred revenue | 6,001 | 6,930 | ||||||
Current portion of long-term debt | 6,632 | 142 | ||||||
Other current liabilities | 298 | 134 | ||||||
Total current liabilities | 35,972 | 27,532 | ||||||
Long-term debt | 965 | 16,858 | ||||||
Deferred taxes | 293 | 1,813 | ||||||
Commitments(Note 13) | ||||||||
Redeemable Convertible Preferred Stock(Series A-F), net of expenses, $0.01 par value: 23,762,039 and 23,870,811 shares authorized at December 31, 2008 and 2009, respectively, 23,647,834 shares issued and outstanding at December 31, 2008 and 2009 (aggregate liquidation value of $77,509 at December 31, 2009) | 130,420 | 130,420 | ||||||
Stockholders’ deficit: | ||||||||
Common stock, $0.01 par value: 37,000,000 shares authorized; 6,564,654 and 6,618,444 shares issued and outstanding at December 31, 2008 and 2009, respectively | 65 | 66 | ||||||
Additional paid-in capital | 7,195 | 10,937 | ||||||
Accumulated deficit | (39,216 | ) | (58,237 | ) | ||||
Total stockholders’ deficit | (31,956 | ) | (47,234 | ) | ||||
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit | $ | 135,694 | $ | 129,389 | ||||
F-3
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Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands, except share | ||||||||||||
and per share data) | ||||||||||||
Revenues | $ | 47,363 | $ | 69,412 | $ | 90,111 | ||||||
Operating expenses: | ||||||||||||
Cost of revenue | 30,111 | 35,229 | 39,453 | |||||||||
Sales and marketing | 7,425 | 14,503 | 20,816 | |||||||||
Product development | 10,753 | 14,874 | 20,192 | |||||||||
General and administrative | 6,859 | 12,906 | 16,239 | |||||||||
Depreciation and amortization | 2,030 | 4,340 | 9,787 | |||||||||
Total operating expenses | 57,178 | 81,852 | 106,487 | |||||||||
Loss from operations | (9,815 | ) | (12,440 | ) | (16,376 | ) | ||||||
Interest expense, net | (323 | ) | (455 | ) | (1,314 | ) | ||||||
Loss before provision for income taxes | (10,138 | ) | (12,895 | ) | (17,690 | ) | ||||||
Provision for income taxes | — | (293 | ) | (1,331 | ) | |||||||
Net loss | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | |||
Net loss per common share — basic and diluted | $ | (1.57 | ) | $ | (2.01 | ) | $ | (2.89 | ) | |||
Weighted average common shares outstanding — basic and diluted | 6,444,696 | 6,559,614 | 6,581,793 | |||||||||
F-4
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Redeemable Convertible | Additional | Total | |||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||||||||
(in thousands, except share data) | |||||||||||||||||||||||||||||
Balance at December 31, 2006 | 7,830,885 | 11,348 | 6,396,861 | 64 | 2,759 | (15,890 | ) | (13,067 | ) | ||||||||||||||||||||
Exercise of stock options | — | — | 139,861 | 1 | 85 | — | 86 | ||||||||||||||||||||||
Warrants issued in connection with Former Credit Facility | — | — | — | — | 202 | — | 202 | ||||||||||||||||||||||
Stock-based compensation expense related to employee stock options | — | — | — | — | 990 | — | 990 | ||||||||||||||||||||||
Issuance of Series D Redeemable Convertible Preferred Stock, net of expenses | 3,643,675 | 23,354 | — | — | — | — | — | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (10,138 | ) | (10,138 | ) | ||||||||||||||||||||
Balance at December 31, 2007 | 11,474,560 | 34,702 | 6,536,722 | 65 | 4,036 | (26,028 | ) | (21,927 | ) | ||||||||||||||||||||
Exercise of stock options | — | — | 27,932 | — | 38 | — | 38 | ||||||||||||||||||||||
Stock-based compensation expense related to employee stock options | — | — | — | — | 3,121 | — | 3,121 | ||||||||||||||||||||||
Issuance of Series D Convertible Preferred Stock | 291,180 | 2,000 | — | — | — | — | — | ||||||||||||||||||||||
Issuance of Series E Convertible Preferred Stock | 8,930,966 | 71,250 | — | — | — | — | — | ||||||||||||||||||||||
Issuance of Series F Convertible Preferred Stock | 2,951,128 | 22,468 | — | — | — | — | — | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (13,188 | ) | (13,188 | ) | ||||||||||||||||||||
Balance at December 31, 2008 | 23,647,834 | 130,420 | 6,564,654 | 65 | 7,195 | (39,216 | ) | (31,956 | ) | ||||||||||||||||||||
Exercise of stock options | — | — | 53,790 | 1 | 203 | — | 204 | ||||||||||||||||||||||
Warrants issued in connection with credit facilities | — | 514 | — | 514 | |||||||||||||||||||||||||
Stock-based compensation expense related to employee stock options | — | — | — | — | 3,025 | — | 3,025 | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (19,021 | ) | (19,021 | ) | ||||||||||||||||||||
Balance at December 31, 2009 | 23,647,834 | $ | 130,420 | 6,618,444 | $ | 66 | $ | 10,937 | $ | (58,237 | ) | $ | (47,234 | ) | |||||||||||||||
F-5
Table of Contents
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net loss | $ | (10,138 | ) | $ | (13,188 | ) | $ | (19,021 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Depreciation and amortization | 2,030 | 4,340 | 9,787 | |||||||||
Provision for doubtful accounts | 710 | 889 | 360 | |||||||||
Stock-based compensation | 990 | 2,996 | 3,025 | |||||||||
Non-cash interest expense | 156 | — | — | |||||||||
Amortization and write-off of deferred financing costs | 86 | 135 | 278 | |||||||||
Non-cash royalty expense | — | 2,000 | — | |||||||||
Provision for deferred income taxes | — | 293 | 1,144 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (7,302 | ) | (3,395 | ) | (4,215 | ) | ||||||
Prepaid expenses and other current assets | (131 | ) | (40 | ) | 432 | |||||||
Inventory | 104 | (113 | ) | (58 | ) | |||||||
Other assets | 136 | — | — | |||||||||
Accounts payable and accrued expenses | 3,370 | (15,186 | ) | (2,715 | ) | |||||||
Deferred revenue | (533 | ) | 465 | 929 | ||||||||
Other current liabilities | — | (30 | ) | (164 | ) | |||||||
Net cash used in operating activities | (10,522 | ) | (20,834 | ) | (10,218 | ) | ||||||
Cash flows from investing activities | ||||||||||||
Additions to property and equipment, net | (4,612 | ) | (6,104 | ) | (6,535 | ) | ||||||
Payment for business purchased | — | (1,665 | ) | — | ||||||||
Cash of acquired business purchased for stock, net | — | 15,302 | — | |||||||||
Additional payments in connection with acquisition | — | — | (368 | ) | ||||||||
Net decrease (increase) in restricted cash | (2,263 | ) | 252 | 66 | ||||||||
Payment of security deposits and other assets | — | (244 | ) | (1,013 | ) | |||||||
Net cash provided by (used in) investing activities | (6,875 | ) | 7,541 | (7,850 | ) | |||||||
Cash flows from financing activities | ||||||||||||
Proceeds from Investor Bridge | 4,000 | — | — | |||||||||
Proceeds from issuance of convertible preferred stock, net of expenses | 19,198 | 22,468 | — | |||||||||
Proceeds from the exercise of stock options | 86 | 38 | 204 | |||||||||
Borrowings under credit facility | 6,000 | 3,000 | 19,000 | |||||||||
Repayment of principal under credit facility | (59 | ) | (1,344 | ) | (9,597 | ) | ||||||
Payments of credit facility financing costs | (152 | ) | (68 | ) | (229 | ) | ||||||
Net cash provided by financing activities | 29,073 | 24,094 | 9,378 | |||||||||
Net increase (decrease) in cash and cash equivalents | 11,676 | 10,801 | (8,690 | ) | ||||||||
Cash and cash equivalents, beginning of year | 2,573 | 14,249 | 25,050 | |||||||||
Cash and cash equivalents, end of year | $ | 14,249 | $ | 25,050 | $ | 16,360 | ||||||
Supplemental disclosure of cash flow information | ||||||||||||
Interest paid | $ | 340 | $ | 567 | $ | 954 | ||||||
Income taxes paid | $ | 26 | $ | 84 | $ | 53 | ||||||
Supplemental disclosure of non-cash financing activities | ||||||||||||
Issuance of convertible preferred stock in lieu of cash royalties | $ | — | $ | 2,000 | $ | — | ||||||
Issuance of convertible preferred stock for acquired business | $ | — | $ | 71,250 | $ | — | ||||||
Warrants issued in connection with credit facilities | $ | 202 | $ | — | $ | 514 | ||||||
Conversion of Investor Bridge to Series D Preferred Stock | $ | 4,156 | $ | — | $ | — | ||||||
F-6
Table of Contents
1. | Business |
2. | Significant Accounting Policies |
F-7
Table of Contents
F-8
Table of Contents
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Balance at beginning of year | $ | 263 | $ | 860 | $ | 1,309 | ||||||
Bad debt provision | 710 | 889 | 360 | |||||||||
Write-offs | (113 | ) | (440 | ) | (366 | ) | ||||||
Balance at end of year | $ | 860 | $ | 1,309 | $ | 1,303 | ||||||
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
3. | Acquisitions |
F-12
Table of Contents
Cash | $ | 15,302 | ||
Accounts receivable | 7,085 | |||
Prepaid expenses and other current assets | 1,857 | |||
Property and equipment | 6,395 | |||
Goodwill | 52,461 | |||
Intangible assets | 18,400 | |||
Accounts payable | (5,901 | ) | ||
Accrued expenses | (20,037 | ) | ||
Deferred revenue | (2,441 | ) | ||
Other current liabilities | (328 | ) | ||
Total consideration paid | $ | 72,793 | ||
Year Ended December 31, | ||||||||
2007 | 2008 | |||||||
Revenue | $ | 52,726 | $ | 87,872 | ||||
Net loss | (91,237 | ) | (59,927 | ) |
F-13
Table of Contents
4. | Prepaid Expenses and Other Current Assets |
December 31, | ||||||||
2008 | 2009 | |||||||
Prepaid royalties | $ | 1,264 | $ | 1,225 | ||||
Prepaid licensed content | 286 | 61 | ||||||
Prepaid insurance | 178 | 157 | ||||||
Prepaid media advertising | 69 | 32 | ||||||
Other | 1,452 | 1,342 | ||||||
$ | 3,249 | $ | 2,817 | |||||
5. | Property and Equipment |
December 31, | ||||||||
2008 | 2009 | |||||||
Computer equipment and purchased software | $ | 6,613 | $ | 6,575 | ||||
Internally developed software | 6,066 | 7,164 | ||||||
Acquired technology | 927 | 927 | ||||||
Furniture, fixtures and office equipment | 1,363 | 1,224 | ||||||
Leasehold improvements | 1,770 | 1,921 | ||||||
Website development costs | 4,993 | 6,177 | ||||||
21,732 | 23,988 | |||||||
Less accumulated depreciation and amortization | (7,716 | ) | (10,787 | ) | ||||
$ | 14,016 | $ | 13,201 | |||||
F-14
Table of Contents
6. | Goodwill and Other Intangible Assets |
Year ending December 31: | ||||
2010 | $ | 2,437 | ||
2011 | 2,437 | |||
2012 | 2,437 | |||
2013 | 1,967 | |||
2014 | 557 | |||
Thereafter | 419 | |||
Total | $ | 10,254 | ||
7. | Accrued Expenses |
December 31, | ||||||||
2008 | 2009 | |||||||
Compensation | $ | 6,540 | $ | 4,058 | ||||
Royalties | 3,477 | 5,229 | ||||||
Accrued lease termination costs | 2,051 | 914 | ||||||
Media and licensed content | 1,964 | 349 | ||||||
Professional fees | 1,059 | 946 | ||||||
Due to seller of RHG | 901 | — | ||||||
Other | 1,524 | 989 | ||||||
$ | 17,516 | $ | 12,485 | |||||
8. | Long-term Debt |
F-15
Table of Contents
2010 | $ | 142 | ||
2011 | 13,828 | |||
2012 | 2,080 | |||
2013 | 950 | |||
$ | 17,000 | |||
F-16
Table of Contents
• | $8,000 revolving credit facility, which had a borrowing base that was determined by a percentage of eligible accounts receivable, as defined (the “Former Revolver”), of which $2,000 and $5,000 was outstanding at December 31, 2007 and 2008, respectively; | |
• | $4,000 delayed-draw term loan (the “Term Loan”) of which and $3,941 and $2,597 was outstanding at December 31, 2007 and 2008, respectively. |
F-17
Table of Contents
9. | Redeemable Convertible Preferred Stock |
F-18
Table of Contents
F-19
Table of Contents
Shares | ||||||||||||||||
Issued and | Stated Value, | Liquidation | ||||||||||||||
Authorized | Outstanding | Net of Expenses | Preference | |||||||||||||
Redeemable convertible preferred stock: | ||||||||||||||||
Series A | 3,450,000 | 3,450,000 | $ | 1,053 | $ | 1,725 | ||||||||||
Series B | 2,547,252 | 2,547,252 | 4,413 | 4,500 | ||||||||||||
Series C | 1,943,651 | 1,833,633 | 5,882 | 6,000 | ||||||||||||
Series D | 3,934,855 | 3,934,855 | 25,354 | 27,027 | ||||||||||||
Series E | 8,930,966 | 8,930,966 | 71,250 | 15,789 | ||||||||||||
Series F | 3,064,087 | 2,951,128 | 22,468 | 22,468 | ||||||||||||
Total redeemable convertible preferred stock | 23,870,811 | 23,647,834 | $ | 130,420 | $ | 77,509 | ||||||||||
10. | Equity |
11. | Stock Options |
F-20
Table of Contents
Weighted- | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||||||
Options | Price | Life (Years) | Value | |||||||||||||
Outstanding at January 1, 2007 | 1,210,532 | $ | 1.41 | |||||||||||||
Granted | 1,157,439 | $ | 4.64 | |||||||||||||
Exercised | (139,486 | ) | $ | 0.62 | ||||||||||||
Cancelled | (221,833 | ) | $ | 1.96 | ||||||||||||
Outstanding at December 31, 2007 | 2,006,652 | $ | 3.27 | |||||||||||||
Granted | 1,862,700 | $ | 6.18 | |||||||||||||
Exercised | (27,932 | ) | $ | 1.38 | ||||||||||||
Cancelled | (182,551 | ) | $ | 2.87 | ||||||||||||
Outstanding at December 31, 2008 | 3,658,869 | $ | 4.78 | 8.50 | $ | 1,271 | ||||||||||
Exercisable at December 31, 2008 | 1,087,686 | $ | 2.76 | 7.06 | $ | 1,152 | ||||||||||
Outstanding at December 31, 2008 | 3,658,869 | $ | 4.78 | |||||||||||||
Granted | 1,629,600 | $ | 4.13 | |||||||||||||
Exercised | (53,790 | ) | $ | 3.78 | ||||||||||||
Cancelled | (482,800 | ) | $ | 5.24 | ||||||||||||
Outstanding at December 31, 2009 | 4,751,879 | $ | 4.52 | 8.11 | $ | 4,631 | ||||||||||
Exercisable at December 31, 2009 | 1,904,703 | $ | 3.98 | 6.86 | $ | 2,654 | ||||||||||
2007 | 2008 | 2009 | ||||||||||
Volatility | 66.12 | % | 58.15 | % | 52.79 | % | ||||||
Expected life (years) | 6.25 | 6.25 | 6.25 | |||||||||
Risk-free interest rate | 4.94 | % | 2.38 | % | 2.87 | % | ||||||
Dividend yield | 0.00 | 0.00 | 0.00 |
F-21
Table of Contents
12. | Income Taxes |
2007 | 2008 | 2009 | ||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | — | — | 187 | |||||||||
Total Current | — | — | 187 | |||||||||
Federal | — | 228 | 865 | |||||||||
State | — | 65 | 279 | |||||||||
Total Deferred | — | 293 | 1,144 | |||||||||
Total Tax Expense | $ | — | $ | 293 | $ | 1,331 | ||||||
F-22
Table of Contents
December 31, | ||||||||
2008 | 2009 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 19,604 | $ | 27,438 | ||||
Allowance for doubtful accounts | 436 | 533 | ||||||
Depreciation | 213 | — | ||||||
Intangible assets | 78 | 390 | ||||||
Deferred revenue | 387 | 846 | ||||||
Stock-based compensation | 1,950 | 3,225 | ||||||
Accrued expenses and other | — | 449 | ||||||
Total deferred tax assets | 22,668 | 32,881 | ||||||
Valuation allowance | (20,228 | ) | (29,970 | ) | ||||
Net deferred tax assets | 2,440 | 2,911 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation | — | (955 | ) | |||||
Goodwill | (265 | ) | (1,263 | ) | ||||
Intangible assets | (2,468 | ) | (2,476 | ) | ||||
Other | — | (30 | ) | |||||
Total deferred tax liabilities | (2,733 | ) | (4,724 | ) | ||||
Net deferred tax liabilities | $ | (293 | ) | $ | (1,813 | ) | ||
F-23
Table of Contents
Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Tax at statutory rate | $ | (3,548 | ) | $ | (4,513 | ) | $ | (6,192 | ) | |||
Permanent items | 51 | 137 | 152 | |||||||||
State taxes | — | 42 | 302 | |||||||||
Changes in valuation allowance | 3,497 | 4,627 | 7,069 | |||||||||
Total provision | $ | — | $ | 293 | $ | 1,331 | ||||||
13. | Commitments |
2010 | $ | 2,649 | ||
2011 | 2,426 | |||
2012 | 1,507 | |||
2013 | 1,175 | |||
2014 | 1,281 | |||
Thereafter | 5,610 | |||
Sublease rentals | (1,205 | ) | ||
Net lease commitments | $ | 13,443 | ||
F-24
Table of Contents
2010 | $ | 12,135 | ||
2011 | 5,026 | |||
2012 | 3,142 | |||
2013 | 1,324 | |||
2014 | 700 | |||
Thereafter | 233 | |||
Total | $ | 22,560 | ||
14. | Benefit Plan |
15. | Related Party Transactions |
16. | Subsequent Events |
F-25
Table of Contents
17. | Quarterly Financial Data (unaudited) |
2008 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
Revenues | $ | 14,450 | $ | 15,917 | $ | 16,373 | $ | 22,672 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 10,121 | 8,910 | 7,756 | 8,442 | ||||||||||||
Sales and marketing | 2,174 | 2,829 | 3,441 | 6,059 | ||||||||||||
Product development | 2,911 | 3,025 | 3,372 | 5,566 | ||||||||||||
General and administrative | 2,208 | 2,594 | 2,616 | 5,488 | ||||||||||||
Depreciation and amortization | 660 | 825 | 875 | 1,980 | ||||||||||||
Total operating expenses | 18,074 | 18,183 | 18,060 | 27,535 | ||||||||||||
Loss from operations | (3,624 | ) | (2,266 | ) | (1,687 | ) | (4,863 | ) | ||||||||
Interest (expense) income, net | 1 | (110 | ) | (138 | ) | (208 | ) | |||||||||
Loss before provision for income taxes | (3,623 | ) | (2,376 | ) | (1,825 | ) | (5,071 | ) | ||||||||
Provision for income taxes | 0 | 0 | 0 | (293 | ) | |||||||||||
Net loss | $ | (3,623 | ) | $ | (2,376 | ) | $ | (1,825 | ) | $ | (5,364 | ) | ||||
Net loss per common share — basic and diluted | $ | (0.55 | ) | $ | (0.36 | ) | $ | (0.28 | ) | $ | (0.82 | ) | ||||
Weighted average common shares outstanding — basic and diluted | 6,550,604 | 6,558,900 | 6,564,246 | 6,564,654 | ||||||||||||
F-26
Table of Contents
2009 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
Revenues | $ | 18,592 | $ | 20,408 | $ | 22,493 | $ | 28,618 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 11,400 | 10,092 | 9,265 | 8,696 | ||||||||||||
Sales and marketing | 5,253 | 5,255 | 4,372 | 5,936 | ||||||||||||
Product development | 5,605 | 5,686 | 4,266 | 4,635 | ||||||||||||
General and administrative | 3,907 | 4,214 | 3,644 | 4,474 | ||||||||||||
Depreciation and amortization | 2,413 | 2,478 | 2,442 | 2,454 | ||||||||||||
Total operating expenses | 28,578 | 27,725 | 23,989 | 26,195 | ||||||||||||
Income (loss) from operations | (9,986 | ) | (7,317 | ) | (1,496 | ) | 2,423 | |||||||||
Interest expense, net | (189 | ) | (185 | ) | (449 | ) | (491 | ) | ||||||||
Income (loss) before provision for income taxes | (10,175 | ) | (7,502 | ) | (1,945 | ) | 1,932 | |||||||||
Provision for income taxes | (278 | ) | (278 | ) | (278 | ) | (497 | ) | ||||||||
Net income (loss) | $ | (10,453 | ) | $ | (7,780 | ) | $ | (2,223 | ) | $ | 1,435 | |||||
Net income (loss) per common share: | ||||||||||||||||
Basic | $ | (1.59 | ) | $ | (1.19 | ) | $ | (0.34 | ) | $ | 0.22 | |||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 6,564,654 | 6,564,654 | 6,580,644 | 6,617,235 | ||||||||||||
F-27
Table of Contents
For the Year Ended December 31, 2008
Historical | ||||||||||||||||
Everyday | Historical | |||||||||||||||
Health, Inc.(1) | RHG(2) | Adjustments | Pro Forma | |||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||
Revenues | $ | 69,412 | $ | 17,669 | $ | (931 | )(4) | $ | 86,150 | |||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 35,229 | — | 10,660 | (6) | 45,889 | |||||||||||
Sales and marketing | 14,503 | 22,668 | (10,660 | )(6) | 26,511 | |||||||||||
Product development | 14,874 | 16,929 | 202 | (6) | 32,005 | |||||||||||
General and administrative | 12,906 | 20,698 | 10 | (6) | 33,614 | |||||||||||
Restructuring expenses | — | 2,805 | (2,805 | )(6) | — | |||||||||||
Loss on investment in affiliated company | — | 416 | — | 416 | ||||||||||||
Depreciation and amortization | 4,340 | 4,685 | (1,381 | )(3) | 7,644 | |||||||||||
Total operating expenses | 81,852 | 68,201 | (3,974 | ) | 146,079 | |||||||||||
Loss from operations | (12,440 | ) | (50,532 | ) | 3,043 | (59,929 | ) | |||||||||
Interest expense, net | (455 | ) | (172 | ) | — | (627 | ) | |||||||||
Loss before provision for income taxes | (12,895 | ) | (50,704 | ) | 3,043 | (60,556 | ) | |||||||||
Provision for income taxes | (293 | ) | — | (800 | )(5) | (1,093 | ) | |||||||||
Net loss | $ | (13,188 | ) | $ | (50,704 | ) | $ | 2,243 | $ | (61,649 | ) | |||||
Net loss per common share — basic and diluted | $ | (2.01 | ) | $ | (9.40 | ) | ||||||||||
Weighted-average common shares outstanding | 6,559,614 | 6,559,614 |
F-28
Table of Contents
(1) | Includes financial data for RHG from the October 7, 2008 acquisition date through December 31, 2008. | |
(2) | Represents the period from January 1, 2008 to October 6, 2008. | |
(3) | Represents the elimination of RHG historical depreciation and amortization of $4,685 for the period from January 1, 2008 to September 30, 2008, offset by RHG depreciation expense of $1,476 for the same period as a result of recording the acquired property and equipment at a fair value of $6,395 with an estimated average remaining useful life of 39 months and amortization expense of $1,828 for the same period as a result of recording intangible assets at fair value. Identifiable long-lived intangible assets with definite lives are amortized on a straight line basis over the expected life of five years for customer relationships and seven years for agreements with certain of the Company’s website partners. | |
(4) | Represents a decrease in revenue of $931 for the period from January 1, 2008 to September 30, 2008, from the adjustment recorded as of October 7, 2008 to reduce the deferred revenue balance on billed but unearned license fees to fair value. | |
(5) | Represents the deferred tax liability related to a basis differences in indefinite lived intangible assets acquired in the acquisition that cannot be offset by deferred tax assets. | |
(6) | Represents the aggregate impact of (i) the reclassification of $10,660 of costs from sales and marketing to cost of revenue to conform to the Company’s presentation, (ii) the reclassification of $202 and $10 of costs from restructuring expense to product development and general and administrative, respectively, to conform to the Company’s presentation, and (iii) the elimination of $2,593 of severance costs from restructuring expenses incurred by RHG prior to the Company’s October 2008 acquisition; assuming a January 1, 2008 pro forma acquisition date, these employees would have been involuntarily terminated by the Company upon acquisition pursuant to an exit plan, thus eliminating this expense and increasing the cost of the acquired entity. |
F-29
Table of Contents
(in thousands, except share and per share data)
Note 1. | Basis of Presentation |
Cash | $ | 15,302 | ||
Accounts receivable | 7,085 | |||
Prepaid expenses and other current assets | 1,857 | |||
Property and equipment | 6,395 | |||
Goodwill | 52,461 | |||
Intangible assets | 18,400 | |||
Accounts payable | (5,901 | ) | ||
Accrued expenses | (20,037 | ) | ||
Deferred revenue | (2,441 | ) | ||
Other current liabilities | (328 | ) | ||
Total consideration paid | $ | 72,793 | ||
F-30
Table of Contents
F-31
Table of Contents
December 31, | September 30, | |||||||||||
2006 | 2007 | 2008 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 11,032 | $ | 5,209 | $ | 16,845 | ||||||
Restricted cash | — | 2,767 | — | |||||||||
Accounts receivable, net | 1,231 | 3,105 | 7,085 | |||||||||
Prepaid expenses and other current assets | 2,359 | 1,815 | 1,857 | |||||||||
Total current assets | 14,622 | 12,896 | 25,787 | |||||||||
Property and equipment, net | 11,568 | 6,562 | 4,568 | |||||||||
Goodwill | 32,716 | 41,566 | 41,768 | |||||||||
Intangible assets, net | 1,664 | 22,496 | 19,992 | |||||||||
Investment in affiliated company | — | 14,732 | — | |||||||||
Other assets | 358 | 1,048 | 750 | |||||||||
Total assets | $ | 60,928 | $ | 99,300 | $ | 92,865 | ||||||
Liabilities and members’ equity | ||||||||||||
Liabilities: | ||||||||||||
Accounts payable | $ | 5,509 | $ | 2,843 | $ | 5,901 | ||||||
Accrued expenses | 6,774 | 5,265 | 10,612 | |||||||||
Due to seller | 741 | 24,052 | 1,000 | |||||||||
Related-party note payable | — | 5,012 | 162 | |||||||||
Deferred revenue | — | 1,776 | 4,203 | |||||||||
Accrued restructuring expenses | — | 1,571 | 632 | |||||||||
Other current liabilities | 578 | 525 | 165 | |||||||||
Total current liabilities | 13,602 | 41,044 | 22,675 | |||||||||
Share-based liability | 3,395 | 5,124 | — | |||||||||
Other liabilities | 479 | 148 | 175 | |||||||||
Total long-term liabilities | 3,874 | 5,272 | 175 | |||||||||
Total liabilities | 17,476 | 46,316 | 22,850 | |||||||||
Minority interest | 6,212 | 99 | — | |||||||||
Members’ equity | 37,240 | 52,885 | 70,015 | |||||||||
Total liabilities and members’ equity | $ | 60,928 | $ | 99,300 | $ | 92,865 | ||||||
F-32
Table of Contents
Nine Months | ||||||||||||||||
Ended | ||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||
2006 | 2007 | 2007 | 2008 | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Revenue | $ | 314 | $ | 6,650 | $ | 3,568 | $ | 17,669 | ||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 7,379 | 24,517 | 16,224 | 22,668 | ||||||||||||
Technology, operations and product development | 30,312 | 41,208 | 34,542 | 16,929 | ||||||||||||
General and administrative | 17,255 | 22,590 | 14,751 | 20,698 | ||||||||||||
Restructuring expenses | — | 3,202 | — | 2,805 | ||||||||||||
Loss on investment in affiliated company | 4,632 | 268 | — | 416 | ||||||||||||
Depreciation and amortization | 1,412 | 4,504 | 2,972 | 4,685 | ||||||||||||
Total operating expenses | 60,990 | 96,289 | 68,489 | 68,201 | ||||||||||||
Loss from operations | (60,676 | ) | (89,639 | ) | (64,921 | ) | (50,532 | ) | ||||||||
Other income (expense), net: | ||||||||||||||||
Interest income (expense), net | 403 | 948 | 672 | (172 | ) | |||||||||||
Other (expense) income, net | 127 | (367 | ) | 77 | — | |||||||||||
Total other income (expense), net | 530 | 581 | 749 | (172 | ) | |||||||||||
Net loss from continuing operations | (60,146 | ) | (89,058 | ) | (64,172 | ) | (50,704 | ) | ||||||||
Minority interest in loss | 107 | 89 | 59 | — | ||||||||||||
Loss before discontinued operations | (60,039 | ) | (88,969 | ) | (64,113 | ) | (50,704 | ) | ||||||||
Discontinued operations | (13,669 | ) | (8,923 | ) | (14,852 | ) | — | |||||||||
Net loss | $ | (73,708 | ) | $ | (97,892 | ) | $ | (78,965 | ) | $ | (50,704 | ) | ||||
F-33
Table of Contents
Capital Units | Total | |||||||||||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class E | Class F | Class G | Class H | Class I | Accumulated | Members’ | |||||||||||||||||||||||||||||||
Units | Units | Units | Units | Units | Units | Units | Units | Deficit | Equity | |||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2005 | $ | 40,000 | $ | 10,000 | $ | 1,100 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (13,625 | ) | $ | 37,475 | |||||||||||||||||||
Member contributions | 40,000 | 10,000 | — | 25,000 | — | — | — | — | — | 75,000 | ||||||||||||||||||||||||||||||
Stock compensation expense related to restricted Class C units | — | — | 888 | — | — | — | — | — | — | 888 | ||||||||||||||||||||||||||||||
Loan to unit holder | — | (220 | ) | — | — | — | — | — | — | — | (220 | ) | ||||||||||||||||||||||||||||
Stock compensation expense related to long-term incentive plans | — | — | — | — | — | — | — | — | 287 | 287 | ||||||||||||||||||||||||||||||
Adjustment due to change in long-term incentive plan | — | — | — | — | — | — | — | — | (480 | ) | (480 | ) | ||||||||||||||||||||||||||||
Adjustment to redemption value for certain minority interest stockholders | — | — | — | — | — | — | — | — | (1,902 | ) | (1,902 | ) | ||||||||||||||||||||||||||||
Subsidiary dividend payment | — | — | — | — | — | — | — | — | (100 | ) | (100 | ) | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (73,708 | ) | (73,708 | ) | ||||||||||||||||||||||||||||
Balance at December 31, 2006 | 80,000 | 19,780 | 1,988 | 25,000 | — | — | — | — | (89,528 | ) | 37,240 | |||||||||||||||||||||||||||||
Member contributions | — | — | — | 25,000 | 25,000 | — | — | — | — | 50,000 | ||||||||||||||||||||||||||||||
Stock compensation expense related to restricted Class C units | — | — | 450 | — | — | — | — | — | — | 450 | ||||||||||||||||||||||||||||||
Gain on sale of RediClinic | — | — | — | — | — | — | — | — | 15,300 | 15,300 | ||||||||||||||||||||||||||||||
Gain on sale of Extend Health | — | — | — | — | — | — | — | — | 18,452 | 18,452 | ||||||||||||||||||||||||||||||
Issuance of Class G units | — | — | — | — | — | 17,061 | — | — | — | 17,061 | ||||||||||||||||||||||||||||||
Issuance of Class H units | — | — | — | — | — | — | 7,500 | — | — | 7,500 | ||||||||||||||||||||||||||||||
Reversal of adjustment to redemption value for minority interests due to sale of subsidiary | — | — | — | — | — | — | — | — | 4,774 | 4,774 | ||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (97,892 | ) | (97,892 | ) | ||||||||||||||||||||||||||||
Balance at December 31, 2007 | 80,000 | 19,780 | 2,438 | 50,000 | 25,000 | 17,061 | 7,500 | — | (148,894 | ) | 52,885 | |||||||||||||||||||||||||||||
Member contributions (unaudited) | — | — | — | 35,000 | — | — | — | 22,700 | — | 57,700 | ||||||||||||||||||||||||||||||
Stock compensation expense related to restricted Class C units (unaudited) | — | — | 792 | — | — | — | — | — | — | 792 | ||||||||||||||||||||||||||||||
Gain on sale of investment in affiliate (unaudited) | — | — | — | — | — | — | — | — | 734 | 734 | ||||||||||||||||||||||||||||||
Issuance of Class G units (unaudited) | — | — | — | — | — | 8,608 | — | — | — | 8,608 | ||||||||||||||||||||||||||||||
Net loss (unaudited) | — | — | — | — | — | — | — | — | (50,704 | ) | (50,704 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2008 (unaudited) | $ | 80,000 | $ | 19,780 | $ | 3,230 | $ | 85,000 | $ | 25,000 | $ | 25,669 | $ | 7,500 | $ | 22,700 | $ | (198,864 | ) | $ | 70,015 | |||||||||||||||||||
F-34
Table of Contents
Nine Months | ||||||||||||||||
Year Ended | Ended | |||||||||||||||
December 31, | September 30, | |||||||||||||||
2006 | 2007 | 2007 | 2008 | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | $ | (73,708 | ) | $(97,892 | ) | $ | (78,965 | ) | $ | (50,704 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | — | |||||||||||||||
Depreciation and amortization | 2,885 | 5,809 | 3,639 | 4,685 | ||||||||||||
Stock compensation expense related to long-term incentive plans | 3,202 | 1,729 | 1,638 | 800 | ||||||||||||
Stock compensation expense for restricted Class C units | 888 | 450 | 338 | 792 | ||||||||||||
Stock compensation gain on termination of long-term incentive plans | — | — | — | (5,924 | ) | |||||||||||
Loss in affiliated company | 4,632 | 268 | — | 416 | ||||||||||||
Loss attributable to minority interest | (4,281 | ) | (2,148 | ) | (1,203 | ) | — | |||||||||
Gain on sale of investment in affiliated company | — | (8,219 | ) | — | — | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (629 | ) | 524 | (808 | ) | (3,980 | ) | |||||||||
Prepaid expenses and other assets | (2,374 | ) | (744 | ) | (803 | ) | 256 | |||||||||
Deferred revenue | — | (772 | ) | 872 | 2,225 | |||||||||||
Accounts payable and accrued expenses | (290 | ) | (1,421 | ) | 520 | 7,382 | ||||||||||
Net cash used in operating activities | (69,675 | ) | (102,416 | ) | (74,772 | ) | (44,052 | ) | ||||||||
Cash flows from investing activities | ||||||||||||||||
Purchases of property and equipment, net | (9,326 | ) | (127 | ) | (87 | ) | 47 | |||||||||
Purchases of businesses, net of cash acquired | (4,044 | ) | (7,809 | ) | (6,588 | ) | — | |||||||||
Acquisition of intangible assets, net | (63 | ) | (446 | ) | (171 | ) | — | |||||||||
Sale of businesses, net of cash disposal | — | 34,212 | 13,796 | — | ||||||||||||
Investment in affiliate | — | (7,500 | ) | — | — | |||||||||||
Proceeds from sale of investment in affiliate | — | — | — | 15,050 | ||||||||||||
Change in restricted cash | — | (2,617 | ) | (3,960 | ) | 2,767 | ||||||||||
Payment due to seller of businesses | — | (400 | ) | (741 | ) | (14,543 | ) | |||||||||
Net cash (used in) provided by investing activities | (13,433 | ) | 15,313 | 2,249 | 3,321 | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Payments on capital leases/deferred rent | (127 | ) | (259 | ) | (174 | ) | (333 | ) | ||||||||
Capital contributions | 75,000 | 50,000 | 50,000 | 17,700 | ||||||||||||
Issuance of related-party note | — | 5,012 | — | 35,000 | ||||||||||||
Proceeds from minority interest holders | — | 26,527 | 26,527 | — | ||||||||||||
Payment of dividend | (100 | ) | — | — | — | |||||||||||
Loan to unit holder | (220 | ) | — | — | — | |||||||||||
Net cash provided by financing activities | 74,553 | 81,280 | 76,353 | 52,367 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (8,555 | ) | (5,823 | ) | 3,830 | 11,636 | ||||||||||
Cash and cash equivalents, beginning of period | 19,587 | 11,032 | 11,032 | 5,209 | ||||||||||||
Cash and cash equivalents, end of period | $ | 11,032 | $ | 5,209 | $ | 14,862 | $ | 16,845 | ||||||||
Supplemental disclosures of cash flow information | ||||||||||||||||
Shares issued as forgiveness of related party note | $ | — | $ | — | $ | — | $ | 40,000 | ||||||||
Adjustment to redemption value of minority interest | $ | 1,902 | $ | (4,774 | ) | $ | — | $ | — | |||||||
Shares issued for purchases of businesses | $ | — | $ | 24,561 | $ | 17,061 | $ | — | ||||||||
Amounts due to sellers | $ | 741 | $ | 23,668 | $ | 5,545 | $ | 8,608 | ||||||||
Acquisition of capital leases | $ | 544 | $ | — | $ | — | $ | — | ||||||||
F-35
Table of Contents
1. | Organization and Description of Business |
2. | Management’s Plan |
F-36
Table of Contents
3. | Summary of Significant Accounting Policies |
Computer hardware and software | 3 — 5 years | |
Furniture and fixtures | 5 years | |
Website development costs | 2 — 3 years | |
Leasehold improvements | Shorter of useful life or lease term |
F-37
Table of Contents
F-38
Table of Contents
F-39
Table of Contents
F-40
Table of Contents
4. | Business combinations and Investment in Affiliated Company |
F-41
Table of Contents
Net assets | $ | 134 | ||
Intangible assets — non-compete | 232 | |||
Intangible assets — customer relationships | 13,456 | |||
Intangible assets — trade name | 4,508 | |||
Goodwill | 24,678 | |||
Total allocation of acquisition costs | $ | 43,008 | ||
Net tangible assets | $ | 756 | ||
Intangible assets — trade name | 5,739 | |||
Goodwill | 4,675 | |||
Net assets acquired | $ | 11,170 | ||
F-42
Table of Contents
Net tangible assets | $ | 300 | ||
Goodwill | 2,675 | |||
Net assets acquired | $ | 2,975 | ||
F-43
Table of Contents
Net assets | $ | 7,927 | ||
Goodwill | 12,944 | |||
Minority interests | (3,361 | ) | ||
Total allocation of purchased interest | $ | 17,510 | ||
5. | Discontinued Operations |
F-44
Table of Contents
Nine Months | ||||||||||||
Year Ended | Ended | |||||||||||
December 31, | September 30, | |||||||||||
2006 | 2007 | 2007 | ||||||||||
(unaudited) | ||||||||||||
Revenues: | ||||||||||||
Revenue | $ | 3,896 | $ | 6,497 | $ | 6,071 | ||||||
Interest and other income | 560 | 143 | 83 | |||||||||
Total revenues | 4,456 | 6,640 | 6,154 | |||||||||
Expenses: | ||||||||||||
Sales and marketing | 7,298 | 6,945 | 6,515 | |||||||||
Technology, operations and product development | 5,207 | 806 | 556 | |||||||||
General and administrative | 8,015 | 16,785 | 14,412 | |||||||||
Depreciation and amortization | 1,473 | 1,305 | 667 | |||||||||
Other expenses | 306 | — | — | |||||||||
Total expenses | 22,299 | 25,841 | 22,150 | |||||||||
Loss from discontinued operations before minority interest | (17,843 | ) | (19,201 | ) | (15,996 | ) | ||||||
Minority interest | 4,174 | 2,059 | 1,144 | |||||||||
Gain on sale | — | 8,219 | — | |||||||||
Loss from discontinued operations | $ | (13,669 | ) | $ | (8,923 | ) | $ | (14,852 | ) | |||
6. | Property and Equipment |
2006 | 2007 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Computer hardware and software | $ | 9,398 | $ | 7,416 | $ | 6,931 | ||||||
Furniture and fixtures and leasehold improvements | 2,857 | 2,196 | 2,157 | |||||||||
Website development costs | 895 | 245 | — | |||||||||
Total property and equipment | 13,150 | 9,857 | 9,088 | |||||||||
Less accumulated depreciation and amortization | (1,582 | ) | (3,295 | ) | (4,520 | ) | ||||||
Property and equipment, net | $ | 11,568 | $ | 6,562 | $ | 4,568 | ||||||
F-45
Table of Contents
7. | Goodwill and Intangible Assets |
2006 | 2007 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Goodwill | $ | 32,716 | $ | 41,566 | $ | 41,768 | ||||||
Trade names | $ | — | $ | 10,247 | $ | 10,247 | ||||||
Domain names | 79 | 225 | 209 | |||||||||
Less accumulated amortization | (27 | ) | (74 | ) | (103 | ) | ||||||
52 | 151 | 106 | ||||||||||
Patents and trademarks | 81 | 86 | — | |||||||||
Less accumulated amortization | (12 | ) | (59 | ) | — | |||||||
69 | 27 | — | ||||||||||
Customer relationships | — | 13,456 | 13,456 | |||||||||
Less accumulated amortization | — | (1,794 | ) | (4,052 | ) | |||||||
— | 11,662 | 9,404 | ||||||||||
Technology and other intangibles | 3,349 | 1,157 | 520 | |||||||||
Less accumulated amortization | (1,806 | ) | (748 | ) | (285 | ) | ||||||
1,543 | 409 | 235 | ||||||||||
Intangible assets, net | $ | 1,664 | $ | 22,496 | $ | 19,992 | ||||||
Goodwill, balance at December 31, 2005 | $ | 17,097 | ||
Additions | 15,619 | |||
Disposals | — | |||
Goodwill, balance at December 31, 2006 | 32,716 | |||
Additions | 29,353 | |||
Disposals | (20,503 | ) | ||
Goodwill, balance at December 31, 2007 | $ | 41,566 | ||
Additions | 202 | |||
Goodwill, balance at September 30, 2008 (unaudited) | $ | 41,768 | ||
8. | Restructuring Activities |
F-46
Table of Contents
9. | Commitments and Contingencies |
2008 | $ | 220 | ||
2009 | 45 | |||
2010 | 14 | |||
2011 | 9 | |||
2012 and thereafter | — | |||
Total | 288 | |||
Less: amounts representing interest | (15 | ) | ||
Present value of net minimum obligations | 273 | |||
Less: current obligations under capital leases | (210 | ) | ||
Noncurrent obligations under capital leases | $ | 63 | ||
2008 | $ | 2,170 | ||
2009 | 1,471 | |||
2010 | 1,428 | |||
2011 | 1,229 | |||
2012 and thereafter | 151 | |||
Total | $ | 6,449 | ||
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10. | Members’ Equity |
11. | Minority Interest and Put and Call Rights |
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12. | Related Party Transactions |
13. | 401(k) Retirement Plan |
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14. | Long-Term Incentive Plans |
Weighted-Average | ||||||||
Exercise Price | ||||||||
Units | Per Unit ($) | |||||||
Outstanding at December 31, 2005 | 9,027,940 | $ | 1.00 | |||||
Units granted | 6,893,800 | $ | 1.08 | |||||
Units forfeited | (1,904,500 | ) | $ | 1.00 | ||||
Outstanding at December 31, 2006 | 14,017,240 | $ | 1.04 | |||||
Units granted | 3,478,667 | $ | 1.50 | |||||
Units forfeited | (4,008,492 | ) | $ | 1.06 | ||||
Outstanding at December 31, 2007 | 13,487,415 | $ | 1.15 | |||||
Vested at December 31, 2007 | 6,231,563 | $ | 1.04 | |||||
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15. | Stock Grants |
16. | Restricted Stock Grant |
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17. | Subsequent Events — Restructuring and Acquisition |
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![()](https://capedge.com/proxy/S-1A/0000950123-10-039331/y80435a3y8043511.jpg)
Helping Consumers Live Healthier Lives Every Day Our daily tools and interactive features are the core of our everyday approach to healthy living. From customized meal plans to condition management tips, from expert blogs to support from an active community of like-minded health enthusiasts, our users turn to us for the support they need to live healthier lives. Virtual Symptom Checker iPhone Applications Blogs Leading Community Experts Tools and Widgets Trackers Meal Trusted Plans Editorial www.EverydayHealth.com |
Table of Contents
![()](https://capedge.com/proxy/S-1A/0000950123-10-039331/y80435a3y8043512.jpg)
Helping Consumers Live Healthier Lives Every Day Our daily tools and interactive features are the core of our everyday approach to healthy living. From customized meal plans to condition management tips, from expert blogs to support from an active community of like-minded health enthusiasts, our users turn to us for the support they need to live healthier lives. Virtual Symptom Checker iPhone Applications Blogs Leading Community Experts Tools and Widgets Trackers Meal Trusted Plans Editorial www.EverydayHealth.com |
Table of Contents
Item 13. | Other Expenses of Issuance and Distribution |
SEC registration fee | $ | 7,130 | ||
Financial Industry Regulatory Authority filing fee | 10,500 | |||
Blue Sky fees and expenses | * | |||
Accounting fees and expenses | * | |||
Legal fees and expenses | * | |||
Printing and engraving expenses | * | |||
Registrar and Transfer Agent’s fees | * | |||
Miscellaneous fees and expenses | * | |||
Total | $ | * | ||
* | To be filed by amendment |
Item 14. | Indemnification of Directors and Officers |
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Item 15. | Recent Sales of Unregistered Securities |
(a) | Issuances of Capital Stock and Warrants |
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(b) | Certain Grants and Exercises of Stock Options |
• | options to purchase 1,385,194 shares of common stock have been canceled or lapsed without being exercised; |
• | options to purchase 295,695 shares of common stock have been exercised; and |
• | options to purchase a total of 4,945,723 shares of common stock are currently outstanding, at a weighted-average exercise price of $4.53 per share. |
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Item 16. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
Number | Description | |||
1 | .1** | Form of Underwriting Agreement. | ||
3 | .1* | Ninth Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect. | ||
3 | .2* | Certificate of Amendment to the Ninth Amended and Restated Certificate of Incorporation of the Registrant. | ||
3 | .3** | Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of the offering. | ||
3 | .4* | Bylaws of the Registrant, as currently in effect. | ||
3 | .5** | Form of Amended and Restated Bylaws of the Registrant, to be effective upon the completion of the offering. | ||
4 | .1** | Form of the Registrant Common Stock Certificate. | ||
4 | .2* | Fifth Amended and Restated Stockholder Rights Agreement, by and between the Registrant and the investors listed on Exhibit A thereto, key holders listed on Exhibit B thereto and other holders listed on Exhibit C thereto, dated as of October 15, 2008. | ||
4 | .3* | First Amendment to the Fifth Amended and Restated Stockholder Rights Agreement, dated as of September 18, 2009. | ||
4 | .4* | Second Amendment to the Fifth Amended and Restated Stockholder Rights Agreement, dated as of October 8, 2009. | ||
4 | .5* | Warrant Agreement to Purchase Shares of the Series C Preferred Stock of the Registrant by and between the Registrant and Hercules Technology Growth Capital, Inc., dated March 22, 2007. | ||
4 | .6* | Warrant to Purchase Stock issued to Square 1 Bank, dated September 18, 2009. | ||
4 | .7* | Warrant to Purchase Shares of Series F Preferred Stock issued to Compass Horizon Funding Company LLC, dated October 8, 2009. | ||
5 | .1** | Opinion of Cooley LLP. | ||
10 | .1* | 2003 Stock Option Plan, as amended, and related documents. | ||
10 | .1.1* | Amendment to 2003 Stock Option Plan, as amended. | ||
10 | .2** | 2010 Equity Incentive Plan and related documents. | ||
10 | .3* | Lease Agreement between the Registrant and the Rector, Church-Wardens and Vestrymen of the Trinity Church in the City of New York, dated as of August 26, 2009. | ||
10 | .3.1* | First Amendment to the Lease between the Registrant and the Rector, Church-Wardens and Vestrymen of the Trinity Church in the City of New York, dated as of February 22, 2010. | ||
10 | .4* | Sublease between the Registrant and CT Corporation System, dated August 26, 2009. | ||
10 | .5** | Form of Indemnification Agreement to be entered into with each director and executive officer of the Registrant. | ||
10 | .6* | Loan and Security Agreement by and among the Registrant, Revolution Health Group LLC, CarePages, Inc. and Square 1 Bank, dated September 18, 2009. | ||
10 | .7* | Venture Loan and Security Agreement by and among the Registrant, Revolution Health Group LLC, CarePages, Inc. and Compass Horizon Funding Company LLC, dated October 8, 2009. |
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Exhibit | ||||
Number | Description | |||
10 | .8* | Employment Agreement between the Registrant and Brian Cooper, dated September 9, 2003. | ||
10 | .9* | Offer Letter between the Registrant and Scott Wolf, dated May 9, 2005. | ||
10 | .10* | Offer Letter between the Registrant and Gregory Jackson, dated June 19, 2006. | ||
10 | .11†* | Letter Agreement between the Registrant and J.M. Athletics, LLC (subsequently assigned to Empowered Media, LLC), dated November 7, 2005, as amended on May 12, 2009 and November 6, 2009. | ||
10 | .12†* | Letter Agreement between the Registrant and SBD/Waterfront Media Limited Partnership, dated February 12, 2008. | ||
21 | .1* | List of Subsidiaries. | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm. | ||
23 | .2 | Consent of Ernst & Young LLP, independent auditors. | ||
23 | .3** | Consent of Cooley LLP (included in Exhibit 5.1). | ||
23 | .4 | Report and Consent of UHY LLP, independent auditors. | ||
23 | .5 | Report and Consent of Stout, Causey and Horning P.A., independent auditors. | ||
24 | .1* | Power of Attorney (seepage II-8 of original filing). | ||
99 | .1 | Consent of Forrester Research, Inc. |
* | Previously filed. | |
** | To be filed by amendment. |
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Item 17. | Undertakings |
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By: | /s/ Benjamin Wolin |
Signature | Title | Date | ||||
/s/ Benjamin Wolin Benjamin Wolin | Chief Executive Officer and Director (Principal Executive Officer) | April 28, 2010 | ||||
/s/ Brian Cooper Brian Cooper | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | April 28, 2010 | ||||
* D. Jarrett Collins | Director | April 28, 2010 | ||||
* Donn Davis | Director | April 28, 2010 | ||||
* Dana L. Evan | Director | April 28, 2010 | ||||
* David Golden | Director | April 28, 2010 | ||||
* Michael Keriakos | Director | April 28, 2010 | ||||
* Habib Kairouz | Director | April 28, 2010 | ||||
* Douglas McCormick | Director | April 28, 2010 | ||||
* William Bo S. Peabody | Director | April 28, 2010 | ||||
* Sharon Wienbar | Director | April 28, 2010 | ||||
*By: | /s/ Benjamin Wolin Benjamin Wolin Attorney-in-Fact |
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Exhibit | ||||
Number | Description | |||
1 | .1** | Form of Underwriting Agreement. | ||
3 | .1* | Ninth Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect. | ||
3 | .2* | Certificate of Amendment to the Ninth Amended and Restated Certificate of Incorporation of the Registrant. | ||
3 | .3** | Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of the offering. | ||
3 | .4* | Bylaws of the Registrant, as currently in effect. | ||
3 | .5** | Form of Amended and Restated Bylaws of the Registrant, to be effective upon the completion of the offering. | ||
4 | .1** | Form of the Registrant Common Stock Certificate. | ||
4 | .2* | Fifth Amended and Restated Stockholder Rights Agreement, by and between the Registrant and the investors listed on Exhibit A thereto, key holders listed on Exhibit B thereto and other holders listed on Exhibit C thereto, dated as of October 15, 2008. | ||
4 | .3* | First Amendment to the Fifth Amended and Restated Stockholder Rights Agreement, dated as of September 18, 2009. | ||
4 | .4* | Second Amendment to the Fifth Amended and Restated Stockholder Rights Agreement, dated as of October 8, 2009. | ||
4 | .5* | Warrant Agreement to Purchase Shares of the Series C Preferred Stock of the Registrant by and between the Registrant and Hercules Technology Growth Capital, Inc., dated March 22, 2007. | ||
4 | .6* | Warrant to Purchase Stock issued to Square 1 Bank, dated September 18, 2009. | ||
4 | .7* | Warrant to Purchase Shares of Series F Preferred Stock issued to Compass Horizon Funding Company LLC, dated October 8, 2009. | ||
5 | .1** | Opinion of Cooley LLP. | ||
10 | .1* | 2003 Stock Option Plan, as amended, and related documents. | ||
10 | .1.1* | Amendment to 2003 Stock Option Plan, as amended. | ||
10 | .2** | 2010 Equity Incentive Plan and related documents. | ||
10 | .3* | Lease Agreement between the Registrant and the Rector, Church-Wardens and Vestrymen of the Trinity Church in the City of New York, dated as of August 26, 2009. | ||
10 | .3.1* | First Amendment to the Lease between the Registrant and the Rector, Church-Wardens and Vestrymen of the Trinity Church in the City of New York, dated as of February 22, 2010. | ||
10 | .4* | Sublease between the Registrant and CT Corporation System, dated August 26, 2009. | ||
10 | .5** | Form of Indemnification Agreement to be entered into with each director and executive officer of the Registrant. | ||
10 | .6* | Loan and Security Agreement by and among the Registrant, Revolution Health Group LLC, CarePages, Inc. and Square 1 Bank, dated September 18, 2009. | ||
10 | .7* | Venture Loan and Security Agreement by and among the Registrant, Revolution Health Group LLC, CarePages, Inc. and Compass Horizon Funding Company LLC, dated October 8, 2009. | ||
10 | .8* | Employment Agreement between the Registrant and Brian Cooper, dated September 9, 2003. | ||
10 | .9* | Offer Letter between the Registrant and Scott Wolf, dated May 9, 2005. | ||
10 | .10* | Offer Letter between the Registrant and Gregory Jackson, dated June 19, 2006. | ||
10 | .11†* | Letter Agreement between the Registrant and J.M. Athletics, LLC (subsequently assigned to Empowered Media, LLC), dated November 7, 2005, as amended on May 12, 2009 and November 6, 2009. | ||
10 | .12†* | Letter Agreement between the Registrant and SBD/Waterfront Media Limited Partnership, dated February 12, 2008. |
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Exhibit | ||||
Number | Description | |||
21 | .1* | List of Subsidiaries. | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm. | ||
23 | .2 | Consent of Ernst & Young LLP, independent auditors. | ||
23 | .3** | Consent of Cooley LLP (included in Exhibit 5.1). | ||
23 | .4 | Report and Consent of UHY LLP, independent auditors. | ||
23 | .5 | Report and Consent of Stout, Causey and Horning P.A., independent auditors. | ||
24 | .1* | Power of Attorney (seepage II-8 of original filing). | ||
99 | .1 | Consent of Forrester Research, Inc. |
* | Previously filed. | |
** | To be filed by amendment. | |
† | Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC. |