As filed with the Securities and Exchange Commission on February 4, 2008

Registration No. 333 - 147102

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

NAMEMEDIA, INC.

(Exact name of registrant as specified in its charter)


Delaware	7389	20-2353759
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

230 Third Avenue

Waltham, MA 02451

(781) 839-2800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Kelly P. Conlin

Chairman and Chief Executive Officer

NameMedia, Inc.

230 Third Avenue

Waltham, MA 02451

(781) 839-2800

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Mark T. Bettencourt, Esq. John B. Steele, Esq. Danielle M. Lauzon, Esq. Goodwin Procter LLP Exchange Place Boston, Massachusetts 02109 (617) 570-1000		Robert Evans III, Esq. Danielle Carbone, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434 please check the following box. o

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.

The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 4, 2008

PRELIMINARY PROSPECTUS

Shares

Common Stock

Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We will apply to list our common stock on The Nasdaq Global Market under the symbol “NAME.”

We are selling shares of common stock and the selling stockholders are selling shares of common stock. We will not receive any of the proceeds from the sale of common stock by the selling stockholders.

The underwriters have an option to purchase a maximum of additional shares from the selling stockholders to cover over-allotments.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 9.

Underwriting

Proceeds to

Price to

Discounts and

Proceeds to

Selling

Public

Commissions

NameMedia

Stockholders

Per Share

Total

Delivery of the shares of common stock will be made on or about , .

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Credit Suisse

Jefferies & Company


Banc of America Securities LLC	RBC Capital Markets

The date of this prospectus is , 2008

TABLE OF CONTENTS


		Page

Prospectus Summary		1
Risk Factors		9
Special Note Regarding Forward Looking Statements		24
Use of Proceeds		25
Dividend Policy		25
Capitalization		26
Dilution		28
Selected Financial Data		30
Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Business		62
Management		74
Executive Compensation		79
Certain Relationships and Related Party Transactions		98
Principal and Selling Stockholders		101
Description of Capital Stock		104
Shares Eligible for Future Sale		108
Underwriting		110
Notice to Canadian Residents		114
Legal Matters		115
Experts		115
Where You Can Find More Information		116
Index to Consolidated Financial Statements		F-1
Ex-23.1 Consent of Ernst & Young LLP
Ex-23.2 Consent of Margolis & Company P.C.

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation

Until , (25 days after commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

The following is a brief summary of selected contents of this prospectus. To understand this offering fully, you should read the following summary together with the entire prospectus, including the more detailed information regarding our business and our financial statements and the related notes appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the section entitled “Risk Factors,” before making an investment decision.

NameMedia, Inc.

Our Company

We operate a leading targeted online media business and a leading online marketplace for domain names. We monetize a high-quality portfolio of more than 2,250,000 domain names, including more than 750,000 domain names that we own and more than 1,500,000 domain names that are owned by third parties. We generate revenue primarily from two sources: online advertising in our media business, and the sale of domain names in our marketplace business.

Our media business enables advertisers to reach highly-targeted online audiences through a network of proprietary and third-party websites. This network of websites, which attracted more than 60,000,000 visitors in September 2007, creates a large amount of highly-targeted traffic which is desirable to performance-based advertisers. Our proprietary website publishing platform, SiteSense, allows us to dynamically generate and manage a variety of websites — from lead-generating websites to premium online communities — to provide the most relevant user experience and most revenue potential for our network.

Our domain name marketplace combines our proprietary portfolio of domain names with those of third-party domain name owners that want to list their domain names for sale, creating what we believe is an efficient and liquid marketplace for high-quality domain names. Like the Multiple Listing Service, or MLS, for residential real estate, our Domain Listing Service, or DLS, aims to have the largest inventory for sale and the broadest distribution to buyers. Our customers can find and purchase these domain names on our sites BuyDomains.com and Afternic.com, or on sites that use our DLS, which include seven of the top ten domain registrars. Our proprietary trading platform, SiteMarket, is used to identify and value high-quality domain names that are most relevant to small and medium-sized businesses seeking online identities.

We generated $61.0 million in revenue in 2006 and $58.3 million in revenue during the nine months ended September 30, 2007. We generated $28.5 million in Adjusted EBITDA in 2006 and $24.1 million in Adjusted EBITDA during the nine months ended September 30, 2007. Our media business accounted for approximately 49% of our revenue in 2006 and 52% of our revenue during the nine months ended September 30, 2007, and our domain name marketplace business accounted for approximately 51% of our revenue in 2006 and 48% of our revenue during the nine months ended September 30, 2007.

Our Industry

Domain names are often referred to as the real estate of the Internet, providing opportunities to buy, sell and develop digital properties. We believe that the value of this online real estate is being positively influenced by several underlying Internet industry trends. According to a 2007 report by International Data Corporation, or IDC, the number of global Internet users is projected to grow from approximately 950 million in 2005 to over 1.5 billion in 2009. We believe that over time, advertising expenditures will follow consumer behavior and businesses will allocate a larger share of their marketing budgets to online advertising. We believe that a significant and increasing amount of Internet traffic is generated by consumers typing a search term directly into the web browser address bar, effectively using the browser address bar as a search engine. By typing a search term directly into the web browser address bar, Internet users indicate an interest in a particular subject, which results in highly-targeted online traffic.

In addition, businesses are increasingly incorporating the Internet into their sales and marketing strategies. According to JupiterResearch, the total Internet advertising market, excluding display advertising, is projected

to grow 15% in 2008 to $14.1 billion, representing 62% of the total U.S. Internet advertising market. Advertisers are seeking to reach specific online audiences, and performance-based online advertising distribution providers, such as Google and Yahoo!, are continually seeking to add more highly-targeted online properties to their networks to satisfy this growing demand for performance-based online advertising.

According to IDC, there were approximately 8.3 million small and medium-sized businesses in the United States in 2007. We believe that businesses, particularly small and medium-sized businesses, will use domain name marketplaces to assess the inventory of available domain names, or digital real estate, like they would review a database of real estate listings to evaluate available properties. In addition, the volume of undeveloped domain name properties is growing. According to VeriSign, there were approximately 65.0 million .com and .net domain names registered as of December 31, 2006, an increase of 30% compared to December 31, 2005. This increase in registered domain names is leading to a need to create the equivalent of the MLS for domain names to make a market in the buying, selling and development of domain names. We believe that as the volume of undeveloped domain names continues to grow, the demand from domain name owners for monetization services will increase.

Our Business

Large and High-Quality Domain Name Portfolio. We believe that our proprietary portfolio of more than 750,000 domain names is among the largest in the world. From this portfolio we have created an extensive network of websites that generates an increasing amount of Internet traffic across approximately 500 content categories.

Leading Website Creation and Management Platform. We use our SiteSense platform to create and manage the websites in our network. This platform’s flexibility allows us to pursue a variety of development approaches, from websites that are focused on generating advertising leads as efficiently as possible, to sites that are enthusiast communities offering a combination of content, commerce and community elements in selected consumer niche categories.

Leading Domain Name Marketplace and Trading Expertise. With an inventory of more than 2,000,000 owned and third-party domain names for sale, we believe that our domain name marketplace is among the largest in the world. We believe that the depth and quality of the inventory we offer makes it a valuable resource and an efficient marketplace for small and medium-sized businesses that are seeking to acquire a particular domain name. We use our SiteMarket platform to value and acquire domain names to continually add inventory to our marketplace.

Our Strategy

Our objective is to enhance our position as a leading targeted online media business and a leading online marketplace for domain names. To achieve this objective, we intend to:


	•	Continue to develop our premium domain names into enthusiast online communities;


	•	Continue to grow our proprietary domain name portfolio;


	•	Enhance our SiteSense platform to optimize the value of our proprietary and affiliate domain name portfolios;


	•	Enhance our SiteMarket domain name trading platform and expand distribution for our DLS; and


	•	Pursue selected acquisitions.

Risks Associated With Our Business

Our business is subject to numerous risks, which are highlighted in the section entitled “Risk Factors.” These risks represent challenges to the successful implementation of our strategy and the growth of our business. Some of these risks are:


	•	We have a limited operating history on which you can base your evaluation of our business;

	•	We operate in a relatively new industry and have an unproven business model;

	•	We depend on the Google, Inc. and Yahoo Search Marketing/Overture, Inc. advertising networks for a significant portion of our revenue and upon the quality of traffic in our network to provide value to online advertisers;

	•	We do not control the means by which Internet users access our websites and technological changes and material changes to navigation or marketing practices could disrupt Internet traffic to our websites; and

	•	We may be unable to acquire or market premium domain names.

For further discussion of these and other risks you should consider before making an investment in our common stock, see the section entitled “Risk Factors” beginning on page 9.

Information About Us

Our principal executive offices are located at 230 Third Avenue, Waltham, Massachusetts 02451 and our telephone number is (781) 839-2800. Our corporate website address is www.namemedia.com. Information contained on our corporate website, or that can be accessed through that website or any of our network of websites, does not constitute a part of this prospectus. Investors should not rely on any such information in making the decision whether to purchase our common stock. Our website address is included in this prospectus as an inactive textual reference only. In this prospectus, the terms “NameMedia,” “we,” “us,” “our” and, with respect to the financial statements and other financial information included in this prospectus, “Successor” refer to NameMedia, Inc., its subsidiaries and any subsidiary that may be acquired or formed in the future.

Our registered servicemarks include Afternic, BuyDomains.com and SmartName. Our servicemarks include ActiveAudience, DavesGarden, NameMedia, SiteMarket and SiteSense. This prospectus includes the registered and unregistered trademarks and servicemarks of other persons.

The Offering

Common stock offered by:


NameMedia		shares

The selling stockholders		shares

Total		shares

Common stock outstanding after this offering		shares

Use of proceeds		We intend to use the net proceeds to us from this offering to repay a portion of the principal and interest outstanding under our term loan and the remainder for working capital and other general corporate purposes, including to finance the expansion of our operations, investment in new product development and strategic initiatives, capital expenditures and the costs of operating as a public company. We may also use a portion of the net proceeds to us for acquisitions of businesses, websites and technologies. We will not receive any proceeds from the sale of common stock by the selling stockholders. See “Use of Proceeds.”

		An investment in our common stock involves a high degree of risk. See “Risk Factors” and other information included in this prospectus for a discussion of some of the factors you should carefully consider before deciding to invest in shares of our common stock.

Proposed Nasdaq Global Market symbol		“NAME”

The number of shares of common stock described above as outstanding immediately after this offering is based on 25,605,071 shares of common stock outstanding as of September 30, 2007, and excludes:


	•	643,750 shares of common stock issuable upon exercise of warrants outstanding as of September 30, 2007, at a weighted-average price of $1.93 per share;

	•	3,224,668 shares of common stock issuable upon the exercise of options outstanding as of September 30, 2007, at a weighted-average exercise price of $3.65 per share;

	•	2,616,462 shares of common stock issuable upon payment of restricted stock units outstanding as of September 30, 2007; and

	•	269,694 shares of common stock reserved for future issuance as of September 30, 2007, under our stock-based compensation plans.

Unless otherwise stated, all information in this prospectus assumes:


	•	an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus;

	•	the conversion of all outstanding shares of our Series A convertible redeemable preferred stock and Series Z convertible redeemable preferred stock into 25,400,000 shares of common stock upon completion of this offering;

	•	no exercise of the over-allotment option granted to the underwriters; and

	•	the filing of our amended and restated certificate of incorporation immediately prior to the completion of this offering.

References to Website Sizes and Audience Measurements

Throughout this prospectus, we use Google analytics measurement services to report our Internet audience metrics. Google analytics measurements are generated by our placement of “tags” on our websites, which are used to count and report audience metrics.

Other third-party services that also measure audiences may provide different data than those reported by our Google analytics deployments. These discrepancies may result from differences in the methodologies applied or the sampling approaches used by third-party services. Since we “tag” each of the pages on our websites, Google analytics measures the number of actual visitors who come to our websites.

The measurement term “monthly visitor,” to which we refer in this prospectus, refers to the total number of user-initiated sessions with our websites within a month. By way of example, if a single user returns to one of our websites more than once per month, each visit is counted as one visitor for this purpose.

Summary Financial Data

The following tables set forth summary financial information for the periods indicated. You should read this information together with our financial statements and related notes and the information under “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


	Predecessor Periods				Successor Periods
			Period From		Period From
	Year Ended		January 1 to		February 22		Year Ended			Nine Months Ended
	December 31,		February 21,		to December 31,		December 31,			September 30,
	2004		2005		2005		2006			2006			2007
	(In thousands, except share and per share data)
										(unaudited)

Statements of Income Data:
Revenue:
Online media	$	3,791	$	939	$	7,532	$	29,843		$	18,544		$	30,419
Domain name sales and related services		15,665		2,778		20,107		31,202			23,515			27,855

Total revenue		19,456		3,717		27,639		61,045			42,059			58,274
Cost of revenue:
Online media		331		55		1,291		9,738			6,851			7,550
Domain name sales and related services		3,798		879		5,959		13,173			9,717			12,207

Total cost of revenue:		4,129		934		7,250		22,911			16,568			19,757
Gross profit		15,327		2,783		20,389		38,134			25,491			38,517
Operating costs:
Product development		472		55		805		2,510			1,572			4,164
Sales and marketing		887		129		2,264		7,480			4,781			10,212
General and administrative(1)		4,979		922		3,100		11,672			8,236			9,575
Amortization of intangible assets		11		2		393		1,584			796			3,436

Total operating costs		6,349		1,108		6,562		23,246			15,385			27,387
Operating income		8,978		1,675		13,827		14,888			10,106			11,130
Interest expense, net		133		11		2,524		6,962			3,252			10,972

Income before income taxes		8,845		1,664		11,303		7,926			6,854			158
Provision (benefit) for income taxes(2)		—		—		4,334		4,414			3,817			(2	)

Income before cumulative effect of change in accounting principle		8,845		1,664		6,969		3,512			3,037			160
Cumulative effect of change in accounting principle		—		—		—		(872	)		(872	)		—

Net income	$	8,845	$	1,664	$	6,969	$	2,640		$	2,165		$	160

Net income (loss) per share(3):
Basic		—		—	$	—	$	(11.24	)	$	(8.24	)	$	(15.05	)

Fully Diluted		—		—	$	0.13	$	(11.24	)	$	(8.24	)	$	(15.05	)

Number of shares used in per share calculations:
Basic		—		—		—		126,492			106,999			191,876

Fully Diluted		—		—		492,581		126,492			106,999			191,876

Other data (unaudited):
Adjusted EBITDA(4)	$	9,885	$	1,893	$	16,919	$	28,484		$	20,428		$	24,129

The pro forma balance sheet in the table below reflects the conversion of our convertible redeemable preferred stock, our receipt of estimated net proceeds from our sale of shares common stock in

this offering at an assumed public offering price of $ per share, which is the midpoint of the range listed on the cover of this prospectus, after deducting the estimated underwriting discount and commissions and estimated offering expenses payable by us, and the repayment of our existing debt and issuance of a new term note.


	September 30, 2007
						Pro Forma
	Actual			Pro Forma		As Adjusted
	(unaudited)
	(In thousands)

Balance Sheet Data
Cash and cash equivalents	$	19,974		$	11,561
Restricted cash		13,026			193
Working capital		(49,488	)		35,238
Total assets		193,129			173,288
Long term obligations		6,202			88,722
Total liabilities		124,382			102,257
Convertible redeemable preferred stock		61,368			—
Total stockholders’ equity		7,379			71,031


(1)		Operating costs of the Predecessor include the compensation charge paid to their owner of approximately $3.9 million and $0 for the year ended December 31, 2004 and for the period from January 1, 2005 to February 21, 2005, respectively. See our audited financial statements beginning on page F-1 of this prospectus.

(2)		From inception in 1999 to February 21, 2005, the Predecessor operated as a subchapter S corporation for tax purposes. For periods following the acquisition of the Predecessor on February 22, 2005, we have operated as a subchapter C corporation for tax purposes.

(3)		As a result of the Predecessor’s status as a subchapter S corporation for the year ended December 31, 2004 and for the period from January 1, 2005 through February 21, 2005, earnings per share information has not been presented for those periods.

(4)		The following table reconciles Net income before cumulative effect of change in accounting principle to Adjusted EBITDA for the periods presented and is unaudited:


	Predecessor				Successor
			Period From		Period From
	Year Ended		January 1		February 22 to		Year Ended		Nine Months Ended
	December 31,		to February 21,		December 31,		December 31,		September 30,
	2004		2005		2005		2006		2006		2007
	(In thousands)

Net income before cumulative effect of change in accounting principle	$	8,845	$	1,664	$	6,969	$	3,512	$	3,037	$	160
Interest expense, net		133		11		2,524		6,962		3,252		10,972
Provision (benefit) for income taxes		—		—		4,334		4,414		3,817		(2	)
Depreciation and amortization		102		18		675		2,355		1,237		5,019
Amortization of registration rights		805		200		2,224		5,934		4,743		4,500

EBITDA	$	9,885	$	1,893	$	16,726	$	23,177	$	16,086	$	20,649
Loss on early extinguishment of debt		—		—		—		717		717		—
Stock-based compensation		—		—		193		4,590		3,625		3,480

Other data:
Adjusted EBITDA	$	9,885	$	1,893	$	16,919	$	28,484	$	20,428	$	24,129

EBITDA and Adjusted EBITDA are each a measurement not in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization of intangible assets and amortization of registration rights. Adjusted EBITDA represents EBITDA plus stock-based compensation expense and non-cash charges related to the early extinguishment of debt. Management believes that the supplemental presentation of EBITDA and Adjusted EBITDA provides useful information to investors regarding our results of operations because such presentation assists in analyzing the operating performance of our business. This supplemental disclosure backs out potential differences caused by differences in capital structure (impacting interest expense), tax strategies (impacting our effective tax rates), the composition of our fixed assets (impacting our relative depreciation rates), the impact of purchase price allocations for acquired companies (impacting amortization of intangible assets expense) and the impact of non-cash stock-based compensation expense and charges related to the early extinguishment of debt. Although we use EBITDA and Adjusted EBITDA as a financial measure to assess the performance of our business, the use of EBITDA and Adjusted EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business.

Adjusted EBITDA is also presented because covenants in our credit facility contain ratios based on this measure. Our credit facility is material to us because it is one of our primary sources of liquidity. If our Adjusted EBITDA was to decline below certain levels, covenants in our credit facility that are based on Adjusted EBITDA may be violated and could cause, among other things, an inability to incur further indebtedness under the credit facility and in certain circumstances a default or mandatory prepayment under our credit facility. See “Management Discussion and Analysis of Financial Condition and Results of Operations — Credit Facility” for additional information on the covenants in our credit facility.

The supplemental presentation of EBITDA and Adjusted EBITDA included in this prospectus should be considered in addition to, and not as a substitute for, net income in accordance with U.S. GAAP as a measure of performance or net cash provided by operating activities as determined in accordance with U.S. GAAP as a measure of liquidity. We understand that although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider these in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are due to the exclusion from Adjusted EBITDA of:


	•	Stock-based compensation expense, a non-cash charge that is a significant component of overall employee costs;

	•	Cash expenditures for the acquisition of registration rights;

	•	Cash expenditures for the acquisition of property and equipment;

	•	Interest expense on our debts;

	•	Income tax expense on our earnings; and

	•	Changes in, or cash requirements for, working capital.

To compensate for these limitations, we evaluate our liquidity by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and other information in this prospectus, including our financial statements, and the related notes to these financial statements included at the end of this prospectus, before making an investment decision. If any of the following risks or uncertainties actually occurs, our business, prospects, financial condition, results of operations or cash flows would likely suffer, possibly materially. In any such case, the trading price of our common stock could decline and you could lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward-Looking Statements” immediately following these risk factors for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.

Risks Related to Our Business

We have a limited operating history on which you can base your evaluation of our business, and our future profitability is uncertain.

We were incorporated in February 2005 to acquire a business which was formed in 1999 and to primarily engage in buying and selling Internet domain names. Accordingly, although the Predecessor commenced operations in 1999, we have a limited operating history and limited financial results that you can use to evaluate our business and prospects. Although we have experienced significant growth in recent periods, we may not be able to sustain this growth. Because we have limited historical financial data upon which to base planned operating expenses and forecast operating results, we cannot be certain that our revenue will grow at rates that will allow us to maintain profitability on a quarterly or annual basis. If we fail to grow our business or maintain profitability, the market price of our common stock will likely fall. You must consider our prospects in light of the risks, expenses and difficulties we face as an early stage company with a limited operating history.

We operate in a relatively new industry and have an unproven business model, which may make it difficult for you to evaluate our business and prospects.

We derive nearly all of our revenue from the sale of domain names and performance-based online advertising, both of which industries are undergoing rapid and dramatic change. Our business model is new and evolving and it may not be successful. Our business and prospects are difficult to evaluate and must be considered in light of the risks and uncertainties often encountered by companies in the early stages of development. Some of these risks and uncertainties relate to our ability to do the following:


	•	continue to grow our revenue and meet anticipated growth targets;

	•	maintain and develop relationships with online advertising providers;

	•	maintain and develop relationships with sources of domain names;

	•	successfully acquire domain names that can be resold profitably;

	•	maintain and increase the number of affiliate websites and domain names;

	•	successfully develop websites that Internet users will visit in increasing numbers;

	•	increase the number of our premium enthusiast websites and the Internet traffic on these websites;

	•	attract and retain qualified management and employees;

	•	continue to identify attractive acquisition candidates;

	•	successfully integrate acquired businesses, websites and technologies;

	•	enhance and build upon our existing technology platforms;

	•	manage our expanding operations and implement and improve our operational, financial and management controls;


	•	respond effectively to competition;

	•	adapt to industry consolidation; and

	•	respond to government regulations relating to the Internet and other aspects of our business.

If we are unable to do any of these successfully, our business, results of operations and prospects could suffer.

Fluctuations in our operating results could make our results of operations difficult to predict or fall short of market expectations, which may cause our stock price to decline.

Our prior quarterly operating results have fluctuated due to changes in our business. Similarly, our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. In addition, because our business is changing and evolving, our historical operating results may not be useful to you in predicting our future operating results. Fluctuations in our operating results could cause our results to be below investors’ expectations, causing the price of our common stock to fall. Factors that may increase the volatility of our operating results include the following:


	•	changes in the number of new websites in our proprietary network;

	•	changes in the number of visitors to existing websites;

	•	changes in demand and pricing for online advertising;

	•	the timing of our introduction of new premium enthusiast websites and the costs we incur to acquire or develop these websites;

	•	the timing and amount of marketing expenses incurred to attract new visitors to our websites;

	•	changes in the online advertising systems of our cost-per click, or CPC, advertisement distribution partners;

	•	changes in the quantity or quality of domain names available for purchase;

	•	changes in the selling prices of domain names and other related services;

	•	changes in the number of third parties using, or the number of websites in, our affiliate network;

	•	changes in the economic prospects of advertisers or the economy generally, which could alter current or prospective online advertisers’ spending priorities;

	•	changes in our charges for stock-based compensation; and

	•	overall Internet usage.

Our quarterly results have also fluctuated in the past and will fluctuate in the future due to seasonal fluctuations in the level of Internet usage. As is typical in our industry, the second and third quarters of the calendar year generally experience relatively lower usage than the first and fourth quarters. The extent to which usage may decrease during these off-peak periods is difficult to predict. As a result of this seasonality and the factors above, we do not believe that period-to-period comparisons of our results of operations are necessarily meaningful, or should be relied upon to predict future results of operations. Also, it is possible that our results of operations may not meet the expectations of investors or analysts in future periods, which may cause the price of our common stock to decline.

We are dependent on Google and Yahoo!, our third-party, cost-per-click advertisement distribution providers, for a significant portion of our revenue. A termination of our agreements with Google or Yahoo! or a decrease in revenue that we derive from these relationships would adversely affect our business.

We derive a significant portion of our revenue from Google, Inc. and Yahoo Search Marketing/Overture, Inc., or Yahoo!. Pursuant to our agreements with these advertisement distribution providers, we deliver advertisements on our network of websites and share a portion of the revenue generated from these

advertisements. For the year ended December 31, 2006, Yahoo! delivered advertising to our entire network of websites, which generated approximately 45% of our total revenue. For the nine months ended September 30, 2007, we generated approximately 38% of our total revenue from advertising delivered to our websites by these advertisement distribution providers.

We use Google exclusively for CPC advertising on our proprietary domain name portfolio, and we use Yahoo! exclusively for CPC advertising on our affiliate network of websites. Our exclusive arrangement with Google expires in the first quarter of 2010 and our exclusive arrangement with Yahoo! expires in the fourth quarter of 2009. These advertisement distribution providers, however, can terminate their respective agreements with us before the expiration of the term upon the occurrence of certain events. There can be no assurances that our agreements with these advertisement distribution providers will be extended or renewed after their respective expirations or that we will be able to extend or renew our agreements with these advertisement distribution providers on terms and conditions favorable to us. If our agreements with these advertisement distribution providers are terminated, we may not be able to enter into agreements with alternative third-party advertisement distribution partners on acceptable terms or on a timely basis or both. Any termination of our relationships with these advertisement distribution providers, and any extension or renewal after the initial term on terms and conditions less favorable to us, would have a material adverse effect on our business, financial condition and results of operations.

Our agreements with these advertisement distribution providers may not continue to generate levels of revenue commensurate with what we have achieved during past periods. Our ability to generate online advertising revenue from these advertisement distribution providers depends on their assessment of the quality of Internet traffic resulting from online advertisements on our network of websites as well as other elements of their advertising technology platforms. We have no control over any of these quality assessments or over their advertising technology platforms. These advertisement distribution providers may from time to time change their existing, or establish new, methodologies and metrics for valuing the quality of Internet traffic and delivering CPC advertisements. Any changes in these methodologies, metrics and advertising technology platforms could decrease the amount of revenue that we generate from online advertisements. In addition, these advertisement distribution providers may at any time change or suspend the nature of the service that they provide to online advertisers and the catalog of advertisers from which online advertisements are sourced. These types of changes or suspensions would adversely impact our ability to generate revenue from CPC advertising. Any decrease in revenue due to lower traffic or a change in the type of services that these advertisement distribution providers provide to us would have a material adverse effect on our business, financial condition and results of operations.

We do not control the means by which Internet users access our websites and material changes to navigation practices, technologies or marketing practices could disrupt Internet traffic to our network of websites.

The success of our business depends in large part upon access to our websites. Internet users access our websites primarily through the following methods: directly by typing descriptive keywords or keyword strings into the web browser’s address bar; by clicking on bookmarked websites; through search engines, such as Google and Yahoo!, and web directories. Each of these methods of access requires the use of a third-party product or service, such as a web browser, search engine or directory. Web browsers may provide alternatives to the URL address box to locate websites, and search engines may from time to time change existing, or establish new algorithms, methodologies or rules relating to the listing of paid and unpaid search results. Product developments and market practices for these means of accessing our websites are not within our control. We may experience a decline in traffic to our websites if web browser technologies or search engine algorithms, methodologies or rules are changed to our disadvantage. Any of these changes could reduce traffic to our network of websites, which would reduce our revenue from online advertising.

We are dependent upon the quality of traffic in our network to provide value to online advertisers, and any failure in our quality control could have a material adverse effect on the value of our websites to our third-party advertisement distribution providers and online advertisers and adversely affect our revenue.

We use certain monitoring processes to monitor the quality of the Internet traffic that we deliver to online advertisers. Among the factors we seek to monitor are sources and causes of low quality clicks such as non-human processes, including robots, spiders or other software; the mechanical automation of clicking; and other types of invalid clicks, click fraud, or click spam, the purpose of which is something other than to view the underlying content. Even with such monitoring in place, there is a risk that a certain amount of low-quality traffic, or traffic that is deemed to be less valuable by online advertisers, will be delivered to such online advertisers, which may be detrimental to our relationships with Google and Yahoo!, our current third-party advertisement distribution providers, and online advertisers, and could adversely affect our revenue.

We generate a significant portion of our revenue from our affiliate network of websites. A decrease in the number of third parties who utilize our affiliate network could have a material adverse impact on our business and operating results.

We generated approximately 18% of our total revenue from our affiliate network of websites for the year ended December 31, 2006 and approximately 21% of our total revenue from such network during the nine months ended September 30, 2007. Our affiliate network is available for use by third parties on an at-will basis. Accordingly, the third parties who utilize our affiliate network to sell or otherwise monetize their domain names may decide, at any time, to no longer use our affiliate network. A decrease in the number of third parties using our affiliate network, a decrease in the number of websites in our affiliate network or both would cause our revenue to decline.

We may need additional funding to support our operations and capital expenditures, which may not be available to us on favorable terms or at all.

For the foreseeable future, we intend to fund our operations and capital expenditures from cash flow from operations, our cash on hand and the net proceeds of this offering. If our capital resources are insufficient, we will need to raise additional funds. We cannot assure you that financing in addition to our revolving line of credit will be available in amounts or on terms acceptable to us, if at all. Furthermore, the sale of additional equity or convertible debt securities may result in dilution to existing stockholders, and incurring additional debt may hinder our operational flexibility. If sufficient additional funds are not available, we may be required to delay, reduce the scope of or eliminate material parts of our business strategy, including growth in our domain name portfolio, development of premium domain names into enthusiast websites and acquisitions of complementary businesses and technologies.

We depend on our senior management team and other key personnel, and if we are unable to retain them we may not be able to effectively manage our operations and meet our strategic objectives.

We depend on the continued services of our senior management team and other key personnel. We are heavily dependent upon the continued services of Kelly P. Conlin, our chairman and chief executive officer, Vincent A. Chippari, our chief financial officer, and Jeffrey S. Bennett, our president and chief operating officer, and the other members of our senior management team. Our ability to retain our senior management team will be a critical factor in determining whether we will be successful in the future. Each member of our senior management team may terminate their employment with us at any time. The loss of any of our senior management team or key personnel could harm our business.

Our potential inability to compete effectively for and retain and recruit qualified personnel could slow the growth of our business.

Competition for experienced personnel in the Internet industry is intense. We may be unable to continue to attract qualified employees or retain those employees who are important to the success of our business. We have experienced, and expect to continue to experience, difficulty in hiring and retaining highly-skilled

employees with appropriate qualifications as a result of our rapid growth and expansion. If we cannot continue to attract new personnel or retain and motivate our current personnel, our business may not succeed.

We may be unable to effectively manage our growth.

As our operations have expanded, we have experienced rapid growth in our headcount. When we acquired the Predecessor in 2005, it had 17 employees. As of September 30, 2007, we had 136 employees. We expect to continue to increase headcount in the future. Our rapid growth has demanded, and will continue to demand, substantial resources and attention from our management. We will need to continue to hire additional qualified personnel for operations and portfolio management, product development, and sales and marketing and improve and maintain our technology to properly manage our growth. If we do not effectively manage our growth, our business could suffer and our costs could increase, which could harm our reputation, increase our expenses, and reduce our profitability.

If we are unable to acquire, renew or sell premium domain names, we may not be able to grow our domain name marketplace business.

The continued growth of our domain name marketplace business depends on our ability to acquire high-quality premium domain names from a variety of sources. These sources include previously registered domain names that are not renewed at the domain name registry by the current owner, private sales of domain names, participation in domain name auctions and registering new names identified by us. Changes in the way expired registrations of domain names are made available for acquisition could make it more difficult to acquire high-quality domain names. Similarly, increasing competition from other potential buyers could make it more difficult for us to acquire high-quality domain names on a cost-effective basis. Any such adverse change in our ability to acquire high-quality, previously-owned domain names, as well as any increase in competition in the domain name reseller market, could have a material adverse affect on our ability to grow our domain name marketplace business. In addition, our failure to renew our domain name registrations or any increase in the cost of renewal could have a material adverse effect on our revenue or profitability.

Our growth strategy includes the development of premium enthusiast website properties, which is a new and unproven business for us.

A major part of our growth strategy includes the development of a network of premium website properties based upon enthusiast communities, such as photography and gardening. We did not generate significant revenue from premium enthusiast websites in 2006, but we expect revenue from premium enthusiast websites to be the fastest growing portion of our business. We do not have significant historical experience to assess the likelihood of achieving the anticipated revenue from premium enthusiast websites, the related costs of development, and whether we will be able to introduce a sufficient number of premium websites to achieve expected revenue growth in the segment. If we fail to launch new premium enthusiast websites as quickly as we expect, our revenue may not meet our expectations and our business may not grow or may grow at a slower pace.

If we are unable to close and integrate suitable future acquisitions, our business may not grow.

A key part of our growth strategy is to acquire additional businesses, websites or technologies. If we are unable to identify a sufficient number of attractive opportunities, or to complete acquisitions on satisfactory terms, our business will grow at a slower pace. Acquisitions involve a high degree of risk. If we complete acquisitions, we may experience:


	•	difficulties in integrating any acquired businesses, personnel, operations, technologies and websites into our existing business;

	•	delays in realizing the benefits of the acquired businesses, technologies and websites;

	•	diversion of financial resources or our management’s time and attention from other business concerns;

	•	higher integration costs than we anticipated;


	•	difficulties in retaining key employees of the acquired business who are necessary to manage these acquisitions; or

	•	difficulties in protecting acquired intellectual property.

For any of these reasons or as a result of other factors, we may not realize the anticipated benefits of acquisitions.

We may incur unforeseen liabilities from our domain names and websites, which could negatively impact our financial results.

We have acquired, and intend to continue to acquire, previously-owned domain names and websites. Any of these previously-owned domain names and websites may have trademark significance that is not readily apparent to us or is not identified by us in the acquisition process. We have in the past faced, and may in the future face, demands by third-party trademark owners asserting infringement or dilution of their rights and seeking transfer of acquired domain names under the Uniform Domain Name Dispute Resolution Policy administered by ICANN or actions under the U.S. Anti-Cybersquatting Consumer Protection Act. We cannot guarantee that we will be able to resolve these disputes without litigation. The potential violation of third-party intellectual property rights and potential causes of action under consumer protection laws may subject us to unforeseen liabilities including injunctions and judgments for money damages.

Our acquisitions of domain names and websites may inadvertently include registered trademarks or company names, vulgar or obscene language, or language associated with any illegal enterprise, which would violate the terms of certain third-party agreements.

We may inadvertently acquire domain names and websites that could include, among others, registered trademarks or company names, vulgar or obscene language or content, or language or content associated with any illegal enterprise. The acquisition of these domain names could violate the terms of our existing credit facility and our agreements with Google and Yahoo!. Any such violation of our credit facility could result in an event of default and any such violation of our agreements with Google and Yahoo! could result in the suspension or termination of these relationships. In addition, our business reputation could suffer and we may experience a loss of advertisers and a decrease in revenue.

We may finance future acquisitions by issuing equity securities which are dilutive to our current stockholders or by incurring additional indebtedness.

Following this offering, we intend to pursue the acquisition of businesses, websites or technologies, and we may finance these acquisitions with substantial portions of our available cash or dilutive issuances of securities. In the event that we use debt to finance an acquisition, the debt may contain financial or other covenants, which could reduce our future operating flexibility. These covenants may also require us to maintain certain levels of financial performance and we may not be able to do so; any such failure may result in the acceleration of such debt and the foreclosure by those creditors on any collateral we used to secure the debt. In the event of a bankruptcy or liquidation of our company, any outstanding debt would rank senior to our outstanding capital stock, including the shares of common stock offered in this offering. In addition, an acquisition could impair our operating results if we are required to recognize acquisition expenses or amortize, depreciate or impair acquired assets.

The failure of online advertising and marketing to grow at projected rates could adversely affect our operating results.

Our operating results will be subject to fluctuations based on the level of online advertising spending. If there were to be a general economic downturn that affected consumer activity in particular, the levels of spending on online advertising and marketing budgets may not increase or may be reduced. We believe that during periods of lower consumer activity, spending on online advertising and marketing is more likely to be reduced, and more quickly, than many other types of business expenses, and such a reduction could adversely affect our operating results.

We rely on third-party technology, server and hardware providers, and if they fail to provide service or if they suffer sustained or repeated system failures, our business and reputation could be adversely affected.

We rely upon third-party co-location providers for our data servers, storage devices and network access. If these providers experience any interruption in operations or cease operations for any reason or if we are unable to agree on satisfactory terms for continued hosting relationships, we would be forced to enter into a relationship with other service providers or assume hosting responsibilities ourselves. If we are forced to switch hosting facilities, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer servers ourselves. We may also be limited in our remedies against these providers in the event of a failure of service. We also rely on third-party providers for components of our technology platform, such as hardware and software providers, and domain name registrars. A failure or limitation of service or available capacity by any of these third-party providers could adversely affect our business and reputation.

Sustained or repeated system failures could significantly impair our operations and reduce the attractiveness of our services and websites to our current and potential users and advertisers. The continuous and uninterrupted performance of our systems is critical to our success. Our advertisers and users may become dissatisfied by any systems disruption or failure that interrupts our ability to provide our services and content to them. Substantial or repeated system disruptions or failures would reduce the attractiveness of our online websites significantly.

We do not presently have any redundant systems or a formal disaster recovery plan. We may be unable to develop or implement adequate protections or safeguards to overcome any of these events. We also may not have anticipated or addressed many of the potential events that could threaten or undermine our technology network such as fire, floods, earthquakes, power loss, natural disasters, network failures, hardware failures, software failures, telecommunications failures, terrorism or war, vandalism and other malicious acts, break-ins and similar events that could damage these systems. In addition, if a person is able to circumvent our security measures, he or she could destroy or misappropriate valuable information or disrupt our operations. In addition, we continue to make investment in and modify our software technology platform. If we fail to accomplish these technology upgrades in a manner which is not disruptive to our business, our business and reputation will likely suffer.

Although we maintain property insurance and business interruption insurance, our insurance may not be adequate to compensate us for all losses that may occur as a result of a catastrophic system failure or other loss, and our insurers may not be able or may decline to do so for a variety of reasons. If we fail to address these issues in a timely manner, we may lose the confidence of our users, online advertisers and our third-party advertisement distribution providers, our revenue may decline and our business could suffer.

We do not rely on patent protection for our proprietary technology, which may make it less difficult for competitors to develop competing technology.

We do not rely on patent protection for our proprietary technology. We rely primarily on trade secrets, servicemarks, common law and registered trademarks and copyrights to protect our proprietary rights. We do not own registrations for the servicemarks SiteSense and SiteMarket; we rely on common law protection for these marks and have filed servicemark applications in the United States for SiteMarket and SiteSense. We routinely enter into confidentiality agreements with our employees and other third parties. In the event these agreements are breached, they may not provide adequate remedies in the event of unauthorized use or disclosure of confidential information. Despite our efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our proprietary information to competitors.

Our confidential and proprietary information and technology might also be independently developed by or otherwise become known by third parties, which may damage our competitive position. If we fail to maintain our trade secrets, or competitors otherwise develop competing technologies, our competitive position could suffer, which could harm our results of operations. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and the outcome is uncertain. If our

competitors independently develop equivalent knowledge, methods and know-how, we would not be able to assert our trade secrets against them and our business could be harmed.

Our services may infringe the intellectual property rights of others and we may be subject to claims of intellectual property infringement.

We may be subject to claims against us alleging infringement of the intellectual property rights of others, including our competitors. Any intellectual property claims, regardless of merit, could be expensive to litigate or settle and could significantly divert our management’s attention from other business concerns. Our technologies and content may not be able to withstand third-party claims of infringement. If we were unable to successfully defend against such claims, we might have to pay significant damages, stop using the technology or content found to be in violation of a third party’s rights, seek a license for the infringing technology or content, or develop alternative non-infringing technology or content. Licenses for such infringing technology or content may not be available on reasonable terms, if at all. In addition, developing alternative non-infringing technology or content could require significant effort and expense. If we cannot license or develop technology or content for any infringing aspects of our business, we may be forced to limit our service offerings. Any of these results could reduce our ability to compete effectively and harm our business.

Expansion of our international operations may require management attention and resources and may be unsuccessful, which could harm our future business development and existing domestic operations.

To date, we have conducted limited international operations, but we may expand into international markets in order to grow our business. Expansion into international markets would require management attention and resources and may be unsuccessful. We have limited experience in conforming our products and services to local cultures, standards and policies. We may have to compete with local companies that understand the local market better than we do. We may not be successful in expanding into any international markets or in generating revenue from foreign operations. In addition, different privacy, censorship and liability standards and regulations and different intellectual property laws in foreign countries may cause our business to be harmed.

We are exposed to risks associated with credit card fraud and credit payment, and we may suffer losses as a result of fraudulent data.

Our failure to control fraudulent credit card transactions adequately could reduce our revenue and gross margin and negatively impact our standing with applicable credit card authorization agencies.

Risks Related to Our Industry

If we are unable to compete in highly competitive markets for domain name sales and performance-based online advertising, we may experience reduced demand for our products and services.

We operate in a highly competitive and changing environment, and we face significant competition in each of our primary markets. We expect competition to increase because of the business opportunities presented by the continued growth of the Internet and online advertising.

Our ability to remain competitive will depend to a great extent upon our ability to maintain and enhance our portfolio of owned domain names and websites, as well as the number of third parties who utilize our platforms to sell or otherwise monetize their domain names through our affiliate network. We cannot assure you that our domain name portfolio or media network will continue to compete favorably or that we will be successful in the face of increasing competition from existing competitors or new companies entering our principal markets.

Many of our current and potential competitors, such as Google, Microsoft, and Yahoo! in the performance-based advertising solution business, have longer operating histories, significantly greater financial, technical and marketing resources, greater name recognition and substantially larger user or customer bases than we have and, therefore, have a significantly greater ability to attract advertisers and Internet users. Many

of our competitors may be able to respond more quickly than we can to new or emerging technologies and changes in Internet user requirements, as well as devote greater resources than we can to the development, promotion and sale of services.

If we are not able to respond to the rapid technological changes in the Internet industry, we may not be competitive.

The market for our services is characterized by rapid change in business models and technological infrastructure, and we will need to constantly adapt to changing markets and technologies to provide new and competitive services. If we are unable to ensure that third-party domain owners and online advertisers and our third-party advertisement distribution providers have a high-quality experience with our services, then they may become dissatisfied and move to competitors’ services. Accordingly, our future success will depend, in part, upon our ability to develop and offer competitive services for both our target markets and in new markets. We may not, however, be able to successfully do so, and our competitors may develop innovations that render our products and services obsolete or uncompetitive.

Our growth depends on the continued growth of the Internet, and any decrease or less than anticipated growth in Internet usage could adversely affect our business prospects.

Our future revenue and profits, if any, depend upon the continued widespread use of the Internet as an effective commercial and business medium. Factors which could reduce the widespread use of the Internet include:


	•	possible disruptions or other damage to the Internet or telecommunications infrastructure;

	•	failure of the networking infrastructures of our online advertisers and third-party advertisement distribution providers to alleviate potential overloading and delayed response times;

	•	a decision by advertisers and consumers to spend less of their marketing dollars online;

	•	increased governmental regulation and taxation; and

	•	actual or perceived lack of security or privacy protection.

In particular, concerns over the privacy of users and security of transactions conducted over the Internet, including the risk of identity theft, may inhibit the growth of the Internet and online services. Any decrease or less than anticipated growth in Internet usage could have a material adverse effect on our business prospects.

Government regulation of the Internet may adversely affect our business and operating results.

The application of existing laws and regulations to the Internet industry is continually evolving and is not entirely settled. For example, we may be subject to the new applications and interpretations of existing laws and regulations relating to a wide variety of issues such as privacy, data security, sweepstakes, promotions, financial market regulation, and intellectual property ownership and infringement. In addition, existing laws that regulate or require advertisers to obtain licenses or permits may be unclear in their application to our business, including those related to insurance and securities brokerage, law offices and pharmacies. Our business may be negatively affected by a variety of new or existing laws and regulations, which may expose us to substantial compliance costs and liabilities and may impede the growth in the use of the Internet.

Companies engaging in online search, e-commerce and related businesses face uncertainty related to future government regulation of the Internet through the enactment of new and/or reinterpretation of existing laws at the international, federal, state, local or foreign level. Due to the rapid growth and widespread use of the Internet, legislatures at the international, federal, state, local and foreign levels have enacted and are considering various laws and regulations relating to the Internet. Individual states may also enact stricter legislation that affects the conduct of our business, particularly as such legislation pertains to consumer protection. State legislation can be particularly burdensome as differences and inconsistencies from state to state may lead to difficult compliance challenges.

Existing federal laws that may impact our business and pose compliance challenges include, among others:


	•	The Children’s Online Privacy Protection Act, which imposes restrictions on the ability of online services to collect user information from minors.

	•	The Protection of Children from Sexual Predators Act of 1998, which requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances.

	•	The CAN-SPAM Act of 2003 and certain state laws, which impose limitations and penalties on the transmission of unsolicited commercial electronic mail via the Internet.

These laws are relatively new and have not been subject to a significant amount of interpretation by the courts. Courts may apply each of these laws in unintended and unexpected ways. We may be subject to an action brought under any of these or future laws governing various aspects of e-commerce and online services.

In addition, several existing and proposed federal laws could have an impact on our ability to conduct our business and the costs involved with conducting our business. Among the types of legislation currently being considered at the federal and state levels are consumer laws regulating the practices for software applications or downloads. These laws may introduce requirements for user consent and other restrictions. These proposed laws are intended to target applications often referred to as spyware, invasiveware or adware, although the scope may also include some software applications currently used in the online advertising industry to serve and distribute advertisements. At the federal level, there have also been proposals for new legislation in areas of data security, online marketing and information brokerage, some of which may have negative implications for the way in which we conduct our business or the costs that are involved with conducting our business.

In operating our business, we may unknowingly be conduits for illegal or prohibited materials, which could subject us to liability. For example, it is possible that courts could find strict liability or impose “know your customer” standards of conduct in some circumstances. Although we may not be directly involved in any of these practices, under current and future regulation, we may ultimately be held responsible for the actions of our online advertisers or third-party advertising distribution providers.

We may also be subject to costs and liabilities with respect to privacy and data security issues. Several companies have incurred costs and paid penalties for violating their privacy policies. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers of unauthorized access to their personal information. In addition, the Federal Trade Commission, or FTC, has commenced enforcement actions against companies for their failure to adequately protect the personal data in their possession. Further, it is anticipated that new legislation will be adopted by federal and state governments with respect to user privacy and data security. Such legislation may result in increased costs for our business, additional compliance obligations and could negatively affect our business.

Additionally, foreign governments may pass laws which could negatively impact our business and/or foreign governmental authorities may commence legal actions against us for claims relating to our products and services based upon existing laws. Any such legal actions and/or costs incurred in addressing compliance with foreign laws and regulations could negatively affect our business or cause us to incur greater expenditures on compliance-related activities.

The restrictions imposed by, and cost of complying with, current and possible future laws and regulations related to our business could impact the way we are permitted to conduct operations, resulting in harm to our business and having a negative impact upon our operating results.

Future regulation of online advertising may adversely affect our ability to generate revenue from our websites.

The FTC has reviewed the way in which search engines disclose paid placements or paid inclusion practices to Internet users. The FTC has issued guidance recommending that all search engine companies ensure that all sponsored links are clearly distinguished from non-sponsored links, that the use of paid

inclusion is clearly and conspicuously explained and disclosed and that other disclosures are made to avoid misleading users about the possible effects of paid placement or paid inclusion listings on search results. If such FTC disclosure reduces the desirability of our websites and “click-throughs” of our sponsored links decrease, our business could be adversely affected.

Changes in regulations or user concerns regarding privacy and protection of user data could harm our business.

Federal, state and international laws and regulations may govern the collection, use, sharing and security of personally identifiable data that we receive from our customers and users. In addition, we have, and post on our website, our privacy policies and practices concerning the collection, use and disclosure of customer and user data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, FTC requirements or other federal, state or international privacy-related laws and regulations could result in proceedings or actions against us by governmental entities or other third parties, including class action lawsuits, which could potentially harm our business. Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation and result in a reduction in Internet traffic to our websites.

We may be sued for information posted on or retrieved from our sites.

Our operations do not involve manual screening and review of all content posted by users on our premium websites. Although our website terms of use specifically require customers to represent that they have the right and authority to reproduce the content they provide and that the content does not infringe the rights of others or otherwise violate laws or regulations, we do not have the ability to determine the accuracy of these representations on a case-by-case basis for all content provided to our websites by users. There is a risk that a user, member or customer may supply an image or other content that is the property of another party used without permission, that infringes the copyright or trademark of another party, or that would be considered to be defamatory, pornographic, hateful, racist, scandalous, obscene or otherwise offensive, objectionable or illegal under the laws or court decisions of the jurisdiction where that user or customer lives. The Digital Millennium Copyright Act is intended to reduce the liability of online service providers for listing or linking to third-party websites that include materials that infringe copyrights or rights of others. If we did not meet the safe harbor requirements of the Digital Millennium Copyright Act, we could be exposed to copyright actions, which could be costly and time-consuming. Further, while the Digital Millennium Copyright Act does provide a limited safe harbor for unintentional copyright infringement, it does not provide protection for other types of claims that may result from materials made available by third parties.

There is, therefore, a risk that customers and users may intentionally or inadvertently access information and content from us that is in violation of the rights of another party or a law or regulation of a particular jurisdiction. If we should become legally obligated in the future to perform manual screening and review all content posted by third parties, we will incur additional expenses and may cease accepting third-party content, each of which could substantially harm our business and results of operations. We may be subject to claims for defamation, negligence, copyright or trademark infringement or personal injury, or claims based on other legal theories, relating to the information we publish on our websites. These types of claims have been brought, sometimes successfully, against online services as well as other print publications in the past. Our insurance, which covers commercial general liability, may not adequately protect us against these types of claims. Any dispute or litigation might result in substantial costs and diversion of resources and management attention and could affect our ability to compete or have a material adverse effect on our business or financial condition.

Risks Related to Our Common Stock and this Offering

There is no public market for our common stock, and an active and liquid trading market may not develop or be sustained after this offering is completed.

Before this offering, there was no public market for shares of our common stock. Following this offering, an active, liquid trading market for our common stock may not develop or be sustained. As a result, you may not be able to sell all or a significant portion of your holdings quickly. The initial public offering price of the shares offered by this prospectus will be determined by negotiations between us and representatives of the underwriters based upon a number of factors, including the history of, and the prospects for, our company and our industry, and may not be indicative of prices that will prevail following completion of this offering. The market price of our common stock may decline below the initial public offering price, and you may not be able to resell your shares of our common stock at or above the initial public offering price.

Our stock price may be volatile, and your investment in our common stock could suffer a decline in value.

There has been significant volatility in the market price and trading volume of equity securities, particularly in the Internet industry. This volatility is often unrelated or disproportionate to the financial performance of particular companies. These broad market fluctuations may negatively affect the market price of our common stock.

Price fluctuations could be in response to various factors, including:


	•	actual or forecasted changes in our quarterly or annual operating results;

	•	our announcements or our competitors’ announcements of new products or services or marketing initiatives;

	•	the market’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission, or SEC;

	•	strategic actions by us or our competitors, involving acquisitions, significant strategic partnerships or restructurings;

	•	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

	•	changes in accounting standards, policies, guidance, interpretations or principles;

	•	the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

	•	the loss of key personnel;

	•	changes in our growth rates or our competitors’ growth rates;

	•	developments regarding our proprietary rights or those of our competitors;

	•	our inability to raise additional capital;

	•	changes in financial markets or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events;

	•	sales of common stock, or the expectation that such sales may occur, by us, our directors, officers or principal stockholders; and

	•	changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or our industry generally or failure to meet or exceed these estimates.

As a result of these and other factors, you may not be able to resell your shares of common stock at or above the initial public offering price. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. We may be the target of

similar litigation in the future. A securities class action suit against us could result in potential liabilities, substantial costs and the diversion of our management’s attention and resources that would otherwise be used to benefit the future performance of our business, regardless of the outcome.

Our directors, officers and current principal stockholders own a large percentage of our common stock and could limit new stockholders’ influence over corporate decisions.

After this offering, our directors, officers and current stockholders holding more than 5% of our common stock collectively will beneficially own, in the aggregate, approximately % of our outstanding common stock, assuming the exercise of all options held by such persons. As a result, these stockholders, if they act together, would be able to control most matters requiring stockholder approval, including the election of directors and approval of mergers or other significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control. The interests of these stockholders may not always coincide with our corporate interests or the interests of our other stockholders, and they may act in a manner with which you may not agree or that may not be in the best interests of our other stockholders.

Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.

Sales of substantial amounts of our common stock in the public market following this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

Upon completion of this offering, we will have outstanding shares of common stock, assuming no exercise of outstanding options or warrants after September 30, 2007. The shares sold pursuant to this offering will be immediately tradable without restriction. Of the remaining shares:


	•	no shares will be eligible for sale immediately upon completion of this offering;

	•	shares will be eligible for sale upon the expiration of lock-up agreements, subject in some cases to volume and other restrictions of Rule 144 and Rule 701 under the Securities Act; and

	•	shares will be eligible for sale upon the exercise of vested options after the expiration of the lock-up agreements.

The lock-up agreements expire 180 days after the date of this prospectus. The representatives of the underwriters may, in their sole discretion and at any time without notice, release all or any portion of the securities subject to lock-up agreements.

Holders of shares of our common stock have contractual rights to require us to register their shares for resale to the public or to include their shares in registration statements that we may file or that we may file for other stockholders. See “Description of Capital Stock — Registration Rights.”

After the closing of this offering, we intend to register approximately shares of common stock that have been issued or reserved for future issuance under our stock incentive plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to some restrictions under the securities laws and the lock-up agreements described above.

If any of these stockholders cause a large number of securities to be sold in the public market, or if there is an expectation that such sales may occur, the sales could cause the trading price of our common stock to decline.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to SEC and Nasdaq compliance rules.

We expect that the obligations of being a public company will require significant additional expenditures and place additional demands on our management, administrative, operational and accounting resources as we

comply with the reporting requirements of a public company. We currently expect an increase of $1.5 million to $2.0 million per year in our general and administrative expenses due to the costs of being a public company. As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and the listing requirements of the Nasdaq Stock Market, Inc. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls over financial reporting and disclosure controls and procedures. In particular, commencing in 2009, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting, the market price of our stock could decline and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities.

We will also need to upgrade our systems, implement additional financial and management controls, reporting systems and procedures, hire an internal audit group and additional accounting, auditing and financial staff with appropriate public company experience and technical accounting knowledge. This will increase our general and administrative expenses and capital expenditures. The rules and regulations applicable to public companies may make it more difficult and more costly for us to obtain directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher premiums.

As a new investor, you will experience immediate and substantial dilution in net tangible book value.

If you purchase common stock in this offering, you will pay more for your shares than the amounts paid by existing stockholders for their shares. As a result, you will incur immediate and substantial dilution of approximately $ per share, representing the difference between the initial public offering price for our shares in this offering and our pro forma net tangible book value per share after giving effect to this offering at an assumed public offering price of $ , the mid-point of the range on the cover page of this prospectus. If the holders of outstanding options to purchase our common stock exercise these options in the future, you will incur further dilution. If we raise additional equity by issuing equity securities or convertible debt, or if we acquire other companies or technologies by issuing equity, the newly issued shares will further dilute your percentage ownership and may reduce the value of your investment.

Provisions of our certificate of incorporation and by-laws and Delaware law could discourage, delay or prevent a change in control of our company.

Provisions in our restated certificate of incorporation and restated bylaws may discourage, delay or prevent an acquisition involving us that our stockholders may consider favorable, including transactions in which you might receive a premium for you shares. In addition, these provisions could make it more difficult for our stockholders to replace or remove our board of directors.

The provisions include:


	•	authorizing the issuance of preferred stock with rights that may be senior to those of the common stock without any further action by the holders of our common stock;

	•	providing for a classified board of directors with staggered terms;

	•	requiring that our stockholders provide advance notice when nominating our directors or proposing matters that can be acted on by stockholders at stockholders meetings;


	•	eliminating the ability of our stockholders to convene a stockholders’ meeting; and

	•	prohibiting our stockholders to act by written consent.

After this offering, we will also be subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.

We do not expect to pay dividends in the future, and any return on your investment in our common stock will be limited to any appreciation in the value of our common stock.

We have never declared or paid cash dividends on our common stock and we do not anticipate paying cash dividends in the foreseeable future. As a result, you should not rely on any investment our stock to provide dividend income as part of your investment return. Any return on your investment in our common stock would result from an increase in the market price of your stock, which is uncertain and unpredictable.

Our management will have broad discretion in the use of certain proceeds from this offering.

Our management will have broad discretion in the application of our net proceeds of this offering in excess of the amounts we owe under our credit facility. We currently intend to use our net proceeds from this offering to repay a portion of the principal and interest outstanding under our credit facility, and to finance our working capital needs and for general corporate purposes. We may also use a portion of our net proceeds to acquire businesses, technologies or websites as described under the heading “Use of Proceeds.” Within those categories, our management will have broad discretion over the use and investment of our net proceeds of this offering, and you will need to rely upon the judgment of our management with respect to the use of proceeds. Our management may spend our net proceeds from this offering in ways that our stockholders may not agree with or that may not result in a significant or any return on your investment.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements contained in this prospectus other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend” and “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to conform these statements to actual results or revised expectations.

This prospectus also contains estimates and other information concerning our industry, including market size and growth rates of the markets in which we participate, that are based on industry publications, surveys and forecasts generated by IDC, JupiterResearch, the National Gardening Association and VeriSign. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications, surveys and forecasts.

You should read this prospectus, the documents to which we refer in this prospectus and those we have filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

We operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

USE OF PROCEEDS

We estimate that we will receive net proceeds of $ from the sale of common stock offered by us in this offering, assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $ increase (decrease) in the assumed initial offering price of $ per share would increase (decrease) the net proceeds to us from this offering by $ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of common stock by the selling stockholders.

We currently estimate that of the net proceeds we receive from this offering we will repay a portion of the principal and interest outstanding under our term loan. As of November 30, 2007 we have approximately $90.2 million in principal and interest outstanding. The term loan currently accrues interest at an annual rate equal to the British Bankers Association LIBOR rate, or BBA LIBOR, two business days prior to the interest period plus 4.00%, which rate was 9.05% as of November 30, 2007. The stated maturity of the term loan is November 21, 2012. Our credit agreement requires that we use the proceeds of this offering to repay the lesser of $25 million, or the balance required to bring our net leverage ratio to 2.0 or below (as further described elsewhere in this prospectus). We used the proceeds we received from the term loan, together with a portion of existing cash and restricted cash on hand, to retire all outstanding debt under a previous credit agreement.

We intend to use the remainder of the net proceeds to us from this offering for working capital and other general corporate purposes, including financing the expansion of our operations, the investment in new product development and strategic initiatives, capital expenditures and the costs of operating as a public company. We may also use a portion of the net proceeds to us for acquisitions of businesses, websites and technologies, although we have no agreements or understandings with respect to any acquisition at this time.

Pending the uses described above, we intend to invest the net proceeds from this offering in short-term, interest-bearing, investment-grade securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock and do not expect to pay any cash dividends for the foreseeable future. We intend to use future earnings, if any, in the operation and expansion of our business. In addition, the terms of our credit facility restrict our ability to pay dividends, and any future indebtedness that we may incur could preclude us from paying dividends.

CAPITALIZATION

The following table sets forth our cash and cash equivalents, short term debt and capitalization as of September 30, 2007, as follows:


	•	on an actual basis; and

	•	on an as adjusted basis to give effect to the conversion of all of our outstanding shares of convertible redeemable preferred stock, the conversion of our Series A convertible redeemable preferred stock warrant to a common stock warrant, the repayment by us of a portion of our outstanding indebtedness, the filing of our amended and restated certificate of incorporation to increase the number of authorized shares of common stock and the sale of shares of common stock by us in this offering at an assumed initial 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 estimated offering expenses payable by us and the application by us of the proceeds to us from this offering.

A $ increase (decrease) in the assumed initial offering price of $ per share would increase (decrease) the net proceeds to us from this offering by $ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes appearing elsewhere in this prospectus.


	As of September 30,
	2007
				Pro Forma
	Actual			As Adjusted
	(In thousands,
	except share data)

Cash and cash equivalents and restricted cash	$	33,000		$

Total long-term debt, including current portion	$	105,000		$

Series A convertible redeemable preferred stock warrant	$	4,105		$	—
Convertible redeemable preferred stock, $.001 par value per share, 5,350,000 shares authorized, 5,080,000 shares issued and outstanding, actual; 5,000,000 shares authorized, no shares issued and outstanding pro forma as adjusted		61,368
Stockholders equity:
Common stock, $.001 par value per share, 74,000,000 shares authorized, 289,176 shares issued and 205,071 shares outstanding actual; 200,000,000 shares authorized, shares issued and outstanding pro forma as adjusted		—
Less: treasury stock, 84,105 shares		(421	)
Additional paid-in capital		8,599
Retained (deficit) earnings		(799	)

Total stockholders’ equity		7,379

Total capitalization	$	72,852

The table above excludes the following shares:


	•	643,750 shares of common stock issuable upon exercise of warrants outstanding as of September 30, 2007, at a weighted-average price of $1.93 per share;

	•	3,224,668 shares of common stock issuable on the exercise of options outstanding as of September 30, 2007, at a weighted-average exercise price of $3.65 per share;

	•	2,616,462 shares of common stock issuable upon payment of restricted stock units outstanding as of September 30, 2007; and

	•	269,694 shares of common stock reserved for future issuance as of September 30, 2007, under our stock-based compensation plans.

DILUTION

If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Pro forma net tangible book value per share represents the amount of our total pro forma stockholders’ equity less total goodwill and intangible assets, divided by the number of shares of common stock outstanding as of September 30, 2007 after giving effect to the assumed conversion of all of our outstanding Series A convertible redeemable preferred stock and Series Z convertible redeemable preferred stock, into an aggregate of 25,400,000 shares of our common stock and the conversion of our Series A convertible redeemable preferred stock warrant into a common stock warrant.

Investors participating in this offering will incur immediate, substantial dilution. Our pro forma net tangible book value was approximately $(35.7) million, computed as total pro forma stockholders’ equity less total goodwill and intangible assets, or $(1.32) per share of common stock as of September 30, 2007. After giving effect to the sale of shares of common stock by us in this offering at the assumed initial public offering price of $ per share, the midpoint of the range on the cover page of this prospectus, after deducting underwriting discounts, commissions and estimated offering expenses we are responsible for paying, our pro forma as adjusted net tangible book value as of September 30, 2007 would have been $ million, or $ per share of common stock. This represents an immediate increase in pro forma net tangible book value of $ per share of common stock to our existing stockholders and an immediate dilution of $ per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price				$
Pro forma net tangible book value per share before this offering at September 30, 2007	$	(1.32	)
Increase in net tangible book value per share attributable to new investors in this offering

Pro forma as adjusted net tangible book value per share after this offering

Dilution per share to new investors				$

A $ increase (decrease) in the assumed initial offering price of $ per share would increase (decrease) the as adjusted net tangible book value by $ and the as adjusted net tangible book value per share after this offering by $ per share and decrease (increase) the dilution per share to new investors by $ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, as of September 30, 2007, on a pro forma as adjusted basis, the total number of shares, the consideration paid to us, and the average price per share paid by existing stockholders and by new investors purchasing shares of common stock in this offering from us at the assumed initial public offering price of $ per share, the midpoint of the range on the cover page of this prospectus, and before deducting the underwriting discounts, commissions and estimated offering expenses we are responsible for paying (dollars in thousands except per share amounts):

Shares Purchased

Total Consideration

Average Price

Number

Percent

Number

Percent

per Share

Existing stockholders

25,605,071

$50,800

$1.98

New investors

Total

100

The number of shares and total consideration of the existing stockholders includes 750,000 shares of Series Z convertible redeemable preferred stock valued at $10 per share that were issued in connection with the acquisition of the Predecessor.

If the underwriters exercise their over-allotment option in full, the following will occur: (1) the number of shares of common stock held by our existing stockholders will represent approximately % of the total number of shares of common stock outstanding; and (2) the number of newly issued shares of common stock held by new investors will be increased to , or approximately % of the total number of shares of our common stock outstanding after this offering.

The discussion and tables above are based on the number of shares of common stock, Series A convertible redeemable preferred stock and Series Z convertible redeemable preferred stock outstanding as of September 30, 2007.

The table above excludes the following shares:


	•	643,750 shares of common stock issuable upon exercise of warrants outstanding as of September 30, 2007, at a weighted-average price of $1.93 per share;

	•	3,224,668 shares of common stock issuable on the exercise of options outstanding as of September 30, 2007, at a weighted-average exercise price of $3.65 per share;

	•	2,616,462 shares of common stock issuable upon payment of restricted stock units outstanding as of September 30, 2007; and

	•	269,694 shares of common stock reserved for future issuance as of September 30, 2007, under our stock-based compensation plans.

SELECTED FINANCIAL DATA

The following statement of income data for the year ended December 31, 2004, the period from January 1, 2005 to February 21, 2005, the period from February 22, 2005 to December 31, 2005 and the year ended December 31, 2006, and the balance sheet data as of December 31, 2005 and 2006 are derived from our audited financial statements included elsewhere in this prospectus. The statements of income data for the year ended December 31, 2002 and balance sheet data as of December 31, 2002 are unaudited. The statements of income data for the year ended December 31, 2003 and balance sheet data as of December 31, 2003 is derived from our audited financial statements for that period, which is not included in this prospectus. The statement of income data for the nine months ended September 30, 2006 and 2007 and the balance sheet data as of September 30, 2006 and September 30, 2007 have been derived from our unaudited consolidated financial statements and related notes, which have been included elsewhere in the prospectus. The selected financial data presented below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus. The historical results are not necessarily indicative of the results to be expected for any future periods.


	Predecessor								Successor
							Period From		Period From
							January 1		February 22					Nine Months
							to		to		Year Ended			Ended
	Year Ended December 31,						February 21,		December 31,		December 31,			September 30,
	2002		2003		2004		2005		2005		2006			2006			2007
	(unaudited)		(In thousands, except share and per share data)											(unaudited)

Statement of Income Data:
Revenue:
Online media	$	226	$	874	$	3,791	$	939	$	7,532	$	29,843		$	18,544		$	30,419
Domain names sales and related services		5,596		8,409		15,665		2,778		20,107		31,202			23,515			27,855

Total revenue		5,822		9,283		19,456		3,717		27,639		61,045			42,059			58,274
Cost of revenue:
Online media		155		160		331		55		1,291		9,738			6,851			7,550
Domain names sales and related services		1,089		1,796		3,798		879		5,959		13,173			9,717			12,207

Total cost of revenue		1,244		1,956		4,129		934		7,250		22,911			16,568			19,757
Gross profit		4,578		7,327		15,327		2,783		20,389		38,134			25,491			38,517
Operating costs(1):
Product development		423		218		472		55		805		2,510			1,572			4,164
Sales and marketing		398		526		887		129		2,264		7,480			4,781			10,212
General and administrative(2)		984		2,041		4,979		922		3,100		11,672			8,236			9,575
Amortization of intangible assets(3)		11		11		11		2		393		1,584			796			3,436

Total operating costs		1,816		2,796		6,349		1,108		6,562		23,246			15,385			27,387
Operating income		2,762		4,531		8,978		1,675		13,827		14,888			10,106			11,130
Interest expense, net		—		6		133		11		2,524		6,962			3,252			10,972

Income before income taxes		2,762		4,525		8,845		1,664		11,303		7,926			6,854			158
Provision (benefit) for income taxes(4)		—		—		—		—		4,334		4,414			3,817			(2	)

Income before cumulative effect of change in accounting principle		2,762		4,525		8,845		1,664		6,969		3,512			3,037			160
Cumulative effect of change in accounting principle		—		—		—		—		—		(872	)		(872	)		—

Net income	$	2,762	$	4,525	$	8,845	$	1,664	$	6,969	$	2,640		$	2,165		$	160


	Predecessor								Successor
							Period From		Period From
							January 1		February 22					Nine Months
							to		to		Year Ended			Ended
	Year Ended December 31,						February 21,		December 31,		December 31,			September 30,
	2002		2003		2004		2005		2005		2006			2006			2007
	(unaudited)		(In thousands, except share and per share data)											(unaudited)

Net income (loss) per share:(5)
Basic		—		—		—		—	$	—	$	(11.24	)	$	(8.24	)	$	(15.05	)

Fully diluted		—		—		—		—	$	0.13	$	(11.24	)	$	(8.24	)	$	(15.05	)

Number of shares used in per share calculations:
Basic		—		—		—		—		—		126,492			106,999			191,876

Fully diluted		—		—		—		—		492,581		126,492			106,999			191,876

Unaudited:
Pro forma net income per share:(6)
Basic											$						$

Fully diluted											$						$

Pro forma number of shares used in per share calculations:
Basic

Fully diluted

Other data:
Adjusted EBITDA (unaudited)(7)	$	2,870	$	4,881	$	9,885	$	1,893	$	16,919	$	28,484		$	20,428		$	24,129


							As of
	As of December 31,						February 21,		As of December 31,				As of September 30,
	2002		2003		2004		2005		2005		2006		2006		2007
	(unaudited)						(unaudited)						(unaudited)
	(in thousands)

Balance Sheet Data:
Cash and cash equivalents	$	503	$	875	$	124	$	1,942	$	9,433	$	15,555	$	4,477	$	19,974
Restricted cash		—		—		—		—		100		34,933		57,021		13,026
Working capital		2,225		4,532		8,722		10,803		19,342		71,149		83,108		(49,488	)
Total assets		2,509		6,127		10,032		12,321		93,716		189,691		183,927		193,129
Long term obligations		—		2,444		2,338		2,130		25,378		110,574		109,689		6,202
Total liabilities		147		3,904		3,435		4,060		35,111		124,593		119,568		124,382
Convertible redeemable preferred stock		—		—		—		—		54,902		58,320		57,104		61,368
Total members or stockholders’ equity		2,362		2,223		6,597		8,261		3,703		6,778		7,255		7,379


(1)	Amounts include stock-based compensation, as follows:


	Predecessor								Successor
							Period From		Period From
							January 1		February 22
							to		to		Year Ended		Nine Months Ended
	Year Ended December 31,						February 21,		December 31,		December 31,		September 30,
	2002		2003		2004		2005		2005		2006		2006		2007
	(unaudited)								(In thousands)				(unaudited)

Cost of Revenue:
Online media cost of revenue		—		—		—		—	$	22	$	97	$	68	$	80
Domain name sales and related services										13		80		41		95
Operating costs:
Product development		—		—		—		—		47		235		137		346
Sales and marketing		—		—		—		—		58		461		288		768
General and administrative		—		—		—		—		53		3,717		3,091		2,191

Total		—		—		—		—	$	193	$	4,590	$	3,625	$	3,480


(2)	Operating costs of the Predecessor include compensation charges paid to the owner of approximately $545,000, $1.5 million, $3.9 million and $0 for the years ended December 31, 2002, 2003 and 2004 and the period from January 1, 2005 to February 21, 2005, respectively. See our audited financial statements beginning on page F-1 of this prospectus.

(3)	Amortization of intangible assets is calculated based on the assets acquired on a straight line basis generally over a two to five year basis. See our audited financial statements beginning on page F-1 of this prospectus.

(4)	From inception in 1999 to February 21, 2005, the Predecessor operated as a subchapter S corporation for tax purposes. Commencing with the acquisition of the Predecessor on February 22, 2005, we have operated as a subchapter C corporation.

(5)	As a result of the Predecessor’s status as a subchapter S corporation for the years ended 2002, 2003 and 2004 and for the period from January 1, 2005 through February 21, 2005, earnings per share information has not been presented for those periods.

(6)	Pro forma to give effect to the conversion of convertible redeemable preferred stock and the conversion of the Series A convertible redeemable preferred stock warrant into a common stock warrant as if such conversion had occurred at the beginning of the period.


(7)	The following table reconciles Net income before cumulative effect of change in accounting principle to Adjusted EBITDA for the periods presented and is unaudited:


	Predecessor								Successor
							Period		Period
							From		From
							January 1		February 22
							to		to		Year Ended		Nine Months Ended
	Year Ended December 31,						February 21,		December 31,		December 31,		September 30,
	2002		2003		2004		2005		2005		2006		2006		2007
					(In thousands)

Net income before cumulative effect of change in accounting principle	$	2,762	$	4,525	$	8,845	$	1,664	$	6,969	$	3,512	$	3,037	$	160
Interest expense, net		—		6		133		11		2,524		6,962		3,252		10,972
Provision (benefit) for income taxes		—		—		—		—		4,334		4,414		3,817		(2	)
Depreciation and amortization		63		67		102		18		675		2,355		1,237		5,019
Amortization of registration rights		45		283		805		200		2,224		5,934		4,743		4,500

EBITDA	$	2,870	$	4,881	$	9,885	$	1,893	$	16,726	$	23,177	$	16,086	$	20,649
Loss on early extinguishment of debt		—		—		—		—		—		717		717		—
Stock-based compensation		—		—		—		—		193		4,590		3,625		3,480

Adjusted EBITDA	$	2,870	$	4,881	$	9,885	$	1,893	$	16,919	$	28,484	$	20,428	$	24,129

EBITDA and Adjusted EBITDA are each a measurement not in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization of intangible assets and amortization of registration rights. Adjusted EBITDA represents EBITDA plus stock-based compensation expense and non-cash charges related to the early extinguishment of debt. We believe that the supplemental presentation of EBITDA and Adjusted EBITDA provides useful information to investors regarding our results of operations because such presentation assists in analyzing the operating performance of our business. This supplemental disclosure backs out potential differences caused by differences in capital structure (impacting interest expense), tax strategies (impacting our effective tax rates), the composition of our fixed assets (impacting our relative depreciation rates), the impact of purchase price allocations for acquired companies (impacting amortization of intangible assets expense) and the impact of non-cash stock-based compensation expense and charges related to the early extinguishment of debt. Although we use EBITDA and Adjusted EBITDA as a financial measure to assess the performance of our business, the use of EBITDA and Adjusted EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business.

Adjusted EBITDA is also presented because covenants in our credit facility contain ratios based on this measure. Our credit facility is material to us because it is one of our primary sources of liquidity. If our Adjusted EBITDA was to decline below certain levels, covenants in our credit facility that are based on Adjusted EBITDA may be violated and could cause, among other things, an inability to incur further indebtedness under the credit facility and in certain circumstances a default or mandatory prepayment under our credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Credit Facility” for additional information on the covenants in our credit facility.

our results as reported under U.S. GAAP. Some of these limitations are due to the exclusion from Adjusted EBITDA of:


	•	Stock-based compensation expense, a non-cash charge that is a significant component of overall employee costs;

	•	Cash expenditures for the acquisition of registration rights;

	•	Cash expenditures for the acquisition of property and equipment;

	•	Interest expense on our debts;

	•	Income tax expense on our earnings; and

	•	Changes in, or cash requirements for, working capital.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with the financial statements and related notes that are included elsewhere in this prospectus. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described under “Risk Factors” or elsewhere in this prospectus. We have prepared our discussion of the results of operations by comparing our results for the year ended December 31, 2006 to the combined results of the Predecessor and Successor for the year ended December 31, 2005 (the “Combined 2005 Results”). The Combined 2005 Results have been compared to the Predecessor’s combined results for the year ended December 31, 2004.

Overview

We operate a leading targeted online media business and a leading online marketplace for domain names. We monetize a high-quality portfolio of more than 2,250,000 domain names, including more than 750,000 domain names that we own and more than 1,500,000 domain names that are owned by third-party affiliates. We generate revenue from online media, primarily through advertising, and from the sale of domain names and related services.

Our media business enables advertisers to reach highly-targeted online audiences through a network of proprietary and third-party websites. This network of owned and affiliate websites, which attracted more than 60,000,000 visitors in September 2007, creates a large amount of highly-targeted traffic which is desirable to performance-based advertisers. Our proprietary website publishing platform, SiteSense, allows us to dynamically update and manage a variety of websites — from lead-generating websites to premium online communities — to provide the most relevant user experience and most revenue potential for our network. The depth of development of an individual website is generally based on the nature of the specific domain name and the category to which it relates.

Our domain name marketplace combines our proprietary portfolio of domain names with those of third-party domain name owners that want to list their domain names for sale, creating what we believe is an efficient and liquid marketplace for high-quality domain names. Like the Multiple Listing Service, or MLS, for residential real estate, our Domain Listing Service, or DLS, aims to have the largest inventory for sale and the broadest distribution to buyers. Our customers can find and purchase these domain names on our websites BuyDomains.com and Afternic.com, or on websites that use our DLS, which include seven of the top ten domain registrars. Our proprietary trading platform, SiteMarket, is used to identify and value high-quality domain names that are most relevant to small and medium-sized businesses seeking online identities. Our objective is to create an efficient, comprehensive marketplace of all available domain names for sale in the secondary market for business owners looking to purchase a premium domain name.

We evaluate our operating results based on the performance of our media business and our domain name marketplace, the two segments described above. In our media business, we strive to increase advertising revenue through improved technology and segmentation of our portfolio, creating a more compelling user experience and delivering more targeted and effective performance-based online advertising messages. We also plan to expand our network of leading online enthusiast communities in categories that have a high degree of consumer engagement, interaction and commerce. To date, we have launched premium enthusiast web properties in the photography, gardening, astrology and automotive categories, and our strategy is to replicate this model across multiple enthusiast categories through internal development and selected acquisitions. In our domain name marketplace, our goal is to create an extensive and efficient domain name marketplace by providing an aggregation point for available domain name inventory. We are undertaking a broad distribution strategy which, along with improvements in the functionality of our SiteMarket platform, are intended to increase the volume of domain names that we sell. We expect that our media business and our domain name marketplace will benefit from continued growth in the size of our domain name portfolio.

History

We were incorporated in Delaware in February 2005 for the purpose of acquiring Rare Names, LLC and Raredomains.com, LLC, which are referred to collectively as the Predecessor. The Predecessor began buying and selling domain names in 1999 and generating advertising revenue from its websites in 2002. In 2003, the Predecessor generated total revenue of $9.3 million, including $8.4 million from the sale of Internet domain names and related services, and in 2004, total Predecessor revenue increased to $19.5 million. Since acquiring the Predecessor, we have developed our SiteSense media platform and our SiteMarket domain name trading platform. We generated total revenue of $27.6 million in 2005 and $61.0 million in 2006.

Acquisitions

Since the acquisition of the Predecessor in February 2005, we have completed eight acquisitions of businesses and technologies and one acquisition of a large, premium domain name portfolio. Aggregate initial consideration for these acquisitions of approximately $62.5 million was funded from operating cash flow and from the proceeds of a debt financing we completed in September 2006. We anticipate the majority of our acquisition activity in the future to be in our media business. Acquisitions have included the following:

SmartName, LLC

In September 2006, we acquired the assets of SmartName, LLC, a provider of affiliate domain name monetization services, for approximately $16.5 million. The acquisition was funded with the proceeds of our debt financing. This acquisition enabled us to market a set of services that complement the domain name monetization services provided by our SiteSense platform.

Premium Domain Name Portfolio

In December 2006, we acquired approximately 40 domain names from an unrelated third party for cash consideration of approximately $13.5 million. The acquisition was funded with the proceeds of our debt financing. Approximately half of these names are being held for development as premium enthusiast websites. The remainder are included in registration rights available for sale.

Visionary Networks, Inc.

In January 2007, we acquired the assets of Visionary Networks, Inc., which provides an online community in astrology and other related subjects. The purchase price of the acquisition was approximately $14.1 million. Terms of the acquisition also provide for future purchase payments, not to exceed $7.5 million, contingent upon achieving certain financial milestones for the years ended December 31, 2007 and 2008.

Other Acquisitions

In addition to the acquisitions detailed above, we completed six additional acquisitions for aggregate initial cash consideration of $18.4 million. Three of these acquisitions provide for potential future purchase payments, not to exceed $2.6 million in the aggregate, contingent upon achievement of financial and other milestones.

Components of Our Statement of Operations

Our revenue is classified into two types: online media, and domain name sales and related services. Revenue from online media accounted for 19.5% of our combined total revenue in 2004, 27.0% of our combined total revenue in 2005, 48.9% of our total revenue in 2006, 44.1% of our total revenue during the nine months ended September 30, 2006 and 52.2% of our total revenue during the nine months ended September 30, 2007. Revenue from domain name sales and related services accounted for 80.5% of our total revenue in 2004, 73.0% of our total revenue in 2005, 51.1% of our total revenue in 2006, 55.9% of our total revenue during the nine months ended September 30, 2006 and 47.8% of our total revenue during the nine months ended September 30, 2007.

Online Media Revenue. Our online media revenue is derived primarily from performance-based advertising. The vast majority of advertising revenue we derive is on a cost-per-click, or CPC, basis. Under this model, we earn revenue when a visitor to one of our websites clicks on a sponsored advertising link. The advertising revenue we generate on our websites is based on agreements with third-party advertising distribution providers that maintain direct relationships with advertisers. These providers pay us a percentage of their net revenue generated from these advertising services. In instances where the CPC advertising is generated by a visit to a website within our affiliate network, we share the revenue that we receive with our affiliate. Because the third-party distribution partners maintain the direct advertiser relationships, we have limited knowledge of increases or decreases in advertising rates between periods. In addition, our revenue share is subject to adjustment based on qualitative and quantitative factors that are not fully disclosed to or controlled by us. Consequently, we cannot accurately determine changes in advertising rates.

Domain Name Sales and Related Services Revenue. Our domain name sales revenue consists primarily of the sale of domain names. Domain name sales are recorded on a transaction basis and are most often paid for at the time of sale by credit card. We also generate a small amount of revenue from other sources, including business services referral fees and commission-based revenue for the sale of domain names owned by our affiliates. Each domain name available for sale or sold by us is individually priced based on the values and qualities assigned to such domain name by our SiteMarket platform tools and our portfolio management staff. As described below in “Business — Products and Services — Marketplace Business”, our SiteMarket platform uses a valuation and ranking process that is supported by a proprietary database containing millions of historical records and data elements on domain names. Each domain name sold is a discrete product and is inherently different than a domain name sold during a prior or subsequent period. Although two domain names sold may have similar attributes, there is no basis to calculate meaningful price changes for domain name sales between different periods.

Cost of Online Media Revenue. Cost of online media revenue consists primarily of performance-based advertising costs, compensation and associated costs related to technology operations and portfolio management personnel and, to a lesser extent, the cost of maintaining the computer systems and technology infrastructure supporting our media network and the amortization of developed software and technology.

Cost of Domain Name Sales and Related Services Revenue. Cost of domain name sale revenue consists primarily of the costs of our domain name portfolio, compensation and associated costs related to technology operations and portfolio management personnel and, to a lesser extent, the cost of maintaining the computer systems and technology infrastructure supporting our domain name portfolio and the amortization of developed software and technology. Our domain name portfolio management team is primarily responsible for identifying, acquiring, analyzing and managing our portfolio of domain names.

Operating Expenses

Product development. Our product development expenses primarily consist of the compensation and associated costs for technology personnel and consultants, as well as costs for other services and supplies. We expect product development expenses to increase as we grow our business and as we expand and upgrade our product offerings and websites.

Sales and marketing. Our sales and marketing expenses primarily consist of the compensation and associated costs for sales, marketing and customer service personnel, certain marketing and advertising activities, general business development activities, and related consulting services. We expect sales and marketing expenses to increase with the growth of our business.

General and administrative. Our general and administrative expenses primarily consist of the compensation and associated costs for management, finance, legal and administrative personnel, facility costs, and other costs such as insurance. We expect that general and administrative expenses will increase as we hire additional personnel and incur costs related to the anticipated growth of our business and our operation as a public company.

Amortization of intangible assets. Amortization of intangible assets consists of amortization of identifiable intangible assets, excluding the amortization of developed software and technology, recorded in connection with our acquisitions. Intangible assets which consist of developed software, developed technology, trade names, customer lists and non-competition agreements, are amortized on a straight-line basis over their useful lives generally ranging from three to five years, with the amortization of developed software and technology included in cost of revenue.

Interest expense, net. Net interest expense includes interest incurred on debt financing, the amortization of debt issuance costs and fair market value adjustments related to convertible redeemable preferred stock warrants, partially offset by interest income earned on our cash and cash equivalents.

Income taxes. We are a subchapter C corporation subject to United States federal and state income taxes. The accounting for income taxes is discussed in more detail in the section below entitled “Critical Accounting Policies and Use of Estimates — Accounting for Income Taxes.”

Stock-Based Compensation Expense

Prior to January 1, 2006, we accounted for stock option grants in accordance with Accounting Principles Board, or APB, Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, and complied with the disclosure provisions of Statement of Financial Accounting Standards, or SFAS, No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under APB 25, deferred stock-based compensation expense is recorded for the intrinsic value of options (the difference between the deemed fair value of our common stock and the option exercise price) at the grant date and is amortized ratably over the option’s vesting period. We also accounted for non-employee option grants on a fair-value basis using the Black-Scholes model and recognized this expense over the applicable vesting period.

On January 1, 2006, we adopted the requirements of SFAS No. 123(R), Share-based Payment, or SFAS No. 123(R). SFAS No. 123(R) requires us to measure the cost of employee services received in exchange for an award of equity instruments, based on the fair value of the award on the date of grant, and to recognize the cost over the period during which the employee is required to provide the services in exchange for the award. We adopted SFAS No. 123(R) using the modified prospective method, which requires us to apply its provisions to non-vested stock-based awards to employees granted prior to January 1, 2006 and all employee awards granted or modified subsequent to January 1, 2006. For the years ended December 31, 2005 and 2006, we recorded expense of approximately $193,000 and approximately $4.6 million, respectively, in connection with share-based payment awards. For the nine months ended September 30, 2007, we recorded expense of approximately $3.5 million in connection with share-based payment awards. As of September 30, 2007, unrecognized stock-based compensation expense for non-vested options and restricted stock units of $11.3 million is expected to be recognized using the straight-line method over a weighted-average period of 2.58 years. The adoption of SFAS No. 123(R) will have no effect on our cash flow for any period.

Critical Accounting Policies and the Use of Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 2 of the notes to our financial statements, and of those policies, we believe that the following accounting policies involve the greatest degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.

Principles of Consolidation

The accompanying consolidated financial statements for the period from February 22, 2005 through December 31, 2005, for the year ended December 31, 2006, and for the nine month periods ended September 30, 2006 and 2007 include our accounts and those of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The accompanying combined financial statements, for the year ended December 31, 2004 and for the period from January 1, 2005 through February 22, 2005 include the accounts of Raredomains.com, LLC and Rare Names, LLC. The Predecessor had substantially similar member ownership and interrelated operations. Accordingly, combining Raredomains.com, LLC and Rare Names, LLC into a single combined financial statement presentation is considered by management to be most meaningful. All significant intercompany accounts and transactions have been eliminated.

Revenue Recognition

We recognize revenue when the price is fixed or determinable, persuasive evidence of an arrangement exists, the product is delivered or the services are performed, and collectibility of the resulting receivable is reasonably assured.

We recognize the components of our online media revenue as follows:

Advertising Revenue. Advertising revenue is generated through our relationship with third-party advertising distribution providers that pay us a fee based on the number of advertisement-related clicks, actions or impressions on our network of proprietary and affiliate websites. Revenue is recognized in the period in which the click, action or impression occurs. On our owned websites, we recognize revenue net of our advertising distribution providers’ share. On our affiliated websites, we recognize revenue net of our advertising distribution providers’ share and net of our affiliates’ share.

We recognize the components of our domain name marketplace revenue as follows:


	•	Sales of our Domain Name Registration Rights. Revenue from sales of our domain name registration rights is recognized upon reaching an agreement as to the terms of the sale and the receipt of payment.

	•	Business Services Revenue. Business Services revenue consists of commissions received from affiliates selling their domain name registration rights through our SiteMarket platform and from partners that provide business services to our customers, such as domain name registration and website-hosting. This revenue is recognized when the sale is completed or a referral is transmitted.

Domain Name Registration Rights

Substantially all of our domain name registration rights are both held for sale and used to generate advertising revenue. Domain name registration rights are carried at the lower of unamortized cost or net realizable value. Cost includes the fees paid to initially register or acquire the rights to use a domain name registration right. We aggregate monthly purchases of domain names and such costs are charged to cost of revenue based on the greater of (a) the percentage of the number of domain names sold during the period compared to the number of names estimated to be sold over the estimated life of the domain names or (b) the straight-line amortization of domain name registration rights over their estimated economic life. The economic life of the domain name registration rights is estimated to be seven years based on several factors including the projected traffic and sales pattern for acquired domain names. The estimate of the number of domain names to be sold in a period is based upon historical sales trends, current and projected sales staffing levels, the number of domain name acquisitions, market conditions, seasonality and sales strategies.

We periodically assess our costing model to ensure that our projections are a reasonable basis for the rate at which the cost of our acquired domain name registration rights is expensed. We assess our sales volume assumptions assigned to our domain name registration rights collection on at least an annual basis or when facts and circumstances indicate to management that sales trends may materially differ from our projections.

This assessment is based on a comparison of the actual sales rate to the projected sales rate by acquisition year.

A small number of domain name registration rights are held solely for our own use and are classified as long term assets. These domain name registration rights, which represent less than one percent of our total registration rights, are held primarily for development of websites and are not currently offered for sale. The economic life of the domain name registration rights held for use is estimated to be seven years, consistent with the useful life of registration rights available for sale.

At least at each balance sheet date, we compare the unamortized costs to the net realizable value of the domain name registration rights by acquisition year, taking into consideration estimated future revenue from sales of the domain name registration rights and advertising revenue, and we record a reserve if necessary to reduce the carrying value of the names to net realizable value.

Domain Name Registration Rights Renewal Costs

Following the initial domain name registration period, in order to retain the rights of a domain name, we are required to renew annually the domain name registration right. These renewal fees, which are typically between six to eight dollars per domain name per year, are recorded as a prepaid asset and are expensed on a straight-line basis over the one-year renewal period.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed in business combinations accounted for under the purchase method. Purchase price is assigned to the acquired assets and liabilities based on their estimated fair value as determined by management, generally with the assistance of an independent appraiser.

Intangible assets other than goodwill are carried at cost less accumulated amortization. Intangible assets are generally amortized on a straight-line basis over the useful lives of the respective assets, generally three to five years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

We apply the provisions of the Financial Accounting Standards Board’s, or FASB, SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS No. 142. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment on a reporting unit basis in accordance with the provisions of SFAS No. 142.

We perform impairment tests of goodwill assigned to reporting units on an annual basis or when facts and circumstances indicate to management that impairment may exist. Impairment tests are based on a comparison of the fair value of the reporting unit to the carrying value of the assets assigned to that reporting unit. In instances where impairment exists, goodwill is written down to fair value.

We review long-lived assets when facts and circumstances indicate to management that the carrying value of those assets may not be fully realizable over the remainder of their useful lives. If impairment exists, we compare the fair value of the asset, based on a discounted cash flow projection or other method as deemed appropriate by management, to the carrying value. If fair value is determined to be less than the carrying value, we record an impairment charge to reduce the carrying value to fair value.

Income Taxes

The Predecessor elected to be taxed under the provisions of subchapter S of the Internal Revenue Code. Therefore, no provision or benefit for federal income taxes has been included in the Predecessor financial statements since taxable income or losses pass through to, and are reportable by, its members individually. The Predecessor made distributions to members to fund income tax payments. Upon our incorporation in February 2005, we elected to be taxed under the provisions of subchapter C of the Internal Revenue Code, and are

subject to federal and state income taxes. We account for income taxes in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes, or SFAS No. 109. SFAS No. 109 requires us to account for income taxes using an asset and liability approach, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred income taxes have been provided for the differences between the financial reporting carrying values and the income tax reporting basis of our assets and liabilities. These temporary differences consist of differences between the timing of the deduction of certain amounts for income tax and financial statement reporting purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which those temporary differences become deductible.

Accounting for Stock-Based Compensation

Through December 31, 2005, we accounted for our stock-based compensation awards to employees using the intrinsic value method prescribed in APB 25 and related interpretations. Under the intrinsic value method, compensation expense is measured on the date of grant as the difference between the deemed fair value of our common stock and the option exercise price multiplied by the number of options granted.

On December 16, 2004, the FASB issued SFAS No. 123(R), which requires all share-based payments to employees, including grants of employee stock options and restricted stock units, to be recognized in the income statement based on their fair values. We adopted SFAS No. 123(R) effective January 1, 2006. SFAS No. 123(R) allows companies that used the fair value method under SFAS No. 123 for either recognition or pro forma disclosures to apply SFAS No. 123(R) using the modified prospective-transition method. Effective with our adoption of SFAS No. 123(R) on January 1, 2006, we have elected to use the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. In accordance with SFAS No. 123(R), we will recognize the compensation cost of share-based awards on a straight-line basis over the vesting period of the award.

The volatility factor used for the computation of fair value of equity awards has been determined using an average of the historical volatility measures of a peer group of companies for a period equal to the expected life of the option. The expected volatility for equity awards during the period from February 22, 2005 to December 31, 2005 was 71%, for the year ended December 31, 2006 was 71% and during the nine months ended September 30, 2007 was 71%. The expected life of equity awards issued to employees has been determined utilizing the “simplified” method as prescribed by the Staff Accounting Bulletin No. 107, Share-Based Payment. The expected life of equity awards during the period from February 22, 2005 to December 31, 2005 was 6.13 years, the year ended December 31, 2006 was 6.02 years and during the nine months ended September 30, 2007 was 6.16 years. For the period from February 22, 2005 to December 31, 2005, the weighted average risk free interest rate used ranged from 3.76% to 4.49%, the year ended December 31, 2006 ranged from 4.33% to 5.02% and for the nine months ended September 30, 2007 ranged from 4.82% to 4.92%. The risk-free interest rate is based on a zero coupon United States treasury instrument with a term that is consistent with the expected life of the stock options. We have not paid and do not anticipate paying cash dividends on our shares of common stock. Therefore, the expected dividend yield is assumed to be zero. In addition, SFAS No. 123(R) requires companies to utilize an estimated forfeiture rate when calculating the expense for the period. SFAS No. 123 permitted companies to record forfeitures based on actual forfeitures, which was our historical policy under SFAS No. 123. As a result, we applied an estimated forfeiture rate, based on our limited historical forfeiture experience, of 3.75% in the period from February 22, 2005 to December 31, 2005, of 3.75% in the year ended December 31, 2006 and of 2.52% in the nine months ended September 30, 2007 in determining the expense recorded in our consolidated statements of income.

We have historically granted stock options at exercise prices equal to the fair value of our common stock as of the date of grant, as determined by our board of directors. Because there has been no public market for our common stock, in determining the fair value of our common stock, our board of directors considered a number of objective and subjective factors, including our operating and financial performance and corporate milestones, the prices at which we sold shares of convertible redeemable preferred stock, the superior rights

and preferences of securities senior to our common stock at the time of each grant, and the risk and non-liquid nature of our common stock. For all equity awards during the period from October 1, 2006 through September 30, 2007, including stock option grants and awards of restricted stock units, our board of directors has also considered contemporaneous valuations of the fair value of our common stock in determining the fair value thereof.

In 2006, in connection with the preparation of our 2005 and first quarter 2006 financial statements, we retrospectively reassessed the fair value of our common stock during the period from September 2005 through February 2006. For both retrospective and contemporaneous assessments of the fair value of the common stock underlying the equity awards granted during this period, we followed guidelines set forth in the AICPA’s Practice Aid Valuation of Privately-Held Company Equity Securities Issued as Compensation, or the AICPA Practice Aid.

Significant Factors, Assumptions, and Methodologies Used in Determining Fair Value.

We estimated our enterprise value under the guideline public company method by comparing our company to publicly-traded companies in our industry group. In determining our enterprise value under this method, we utilized certain revenue and EBITDA multiples of publicity traded firms in similar lines of business.

The companies used for comparison under the guideline public company method were selected based on a number of factors, including but not limited to, the similarity of their industry, business model, financial risk and other factors. We applied a 50%-60% weighting to the revenue multiple and 40%-50% weighting to the EBITDA in determining the guideline public company fair market value estimate. The discounted future cash flow method involves applying appropriate risk-adjusted discount rates of 18-20% to estimated debt-free cash flows, based on forecasted revenue and costs. The projections used in connection with these valuations were based on our expected operating performance over the forecast period. There is inherent uncertainty in these estimates. If the Company had used different discount rates or assumptions, the valuation would have been different.

We also estimated our enterprise value under the discounted future cash flow method, which involves applying appropriate discount rates to estimated cash flows that are based on forecasts of revenue and costs. Our revenue forecasts are based on expected market growth rates as well as assumptions about our future costs during the next five years. There is inherent uncertainty in making these estimates. These assumptions underlying the estimates are consistent with the plans and estimates that we use to manage the business. The risks associated with achieving our forecasts were assessed in selecting the appropriate discount rates. If different discount rates had been used, the valuations would have been different.

In order to allocate the enterprise value determined under the guideline public company method and the discounted future cash flow method to our common stock, we used the probability-weighted expected return method. Under the probability-weighted expected return method, the fair market value of the common stock is estimated based upon an analysis of future values for our company assuming various future outcomes. The anticipated timing of these future outcomes is based on the plans of our board and management. Share value is based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us as well as the rights of each class of stock.

The fair market value of our common stock was estimated using a probability-weighted analysis of the present value of the returns afforded to our stockholders under each of four possible future scenarios. Three of the scenarios assume a stockholder exit, through our initial public offering, sale or dissolution. The fourth scenario assumes operations continue as a private company and no exit transaction occurs.

For each of the first three scenarios, estimated future and present values for our common stock were calculated using assumptions including: the expected pre-money valuation (pre-offering or pre-sale); the expected dates of the future expected initial public offering or sale; and an appropriate risk-adjusted discount rate. An estimated present value for our common stock was calculated for the fourth scenario (private company with no exit scenario) using a weighted average of the discounted cash flow method and the guideline public

company method. For the private company with no exit scenario we used a marketability discount of 30%. Finally, the present values calculated for our common stock under each scenario were weighted based our management’s estimates of the probability of occurrence of each of the scenarios. The resulting value indications represent the estimated fair market value of our common stock at each valuation date.

In addition, in connection with the retrospective reassessment of the fair value of our common stock made in connection with our 2005 and first quarter 2006 financial statements, in 2006, we offered the holders of then outstanding stock options granted during the period from September 2005 through February 2006 the opportunity to amend the terms of their stock option agreements to increase the exercise price of such stock options to reflect the retrospectively reassessed fair values of our common stock during the period from September 2005 through February 2006. Although we believe that all of the affected options were granted with an exercise price per share equal to the fair value of our common stock as of the date of original grant, our board of directors determined that it was in our best interest and in the best interest of the optionees to increase the exercise price of affected options to avoid potential penalties under Section 409A of the Internal Revenue Code. The number of shares covered by each amended stock option were decreased to ensure that the aggregate exercise price of that affected option remained unchanged. In addition, for those holders who agreed with us to amend their affected options, we awarded affected optionees restricted stock units covering that number of shares of our common stock as was equal to the number of shares by which his or her affected options were reduced.

Based on this retrospective reassessment, we will recognize additional compensation expense of $1.6 million to reflect the difference between the value calculated using the Black-Scholes option pricing model with the initial assessment of fair value of common stock and the value calculated using the Black-Scholes option pricing model with the reassessed fair value of common stock for the stock-based awards granted in July 2006 which are accounted for under the fair value method of SFAS No. 123(R). The compensation expense will be recognized over the vesting schedule of the awards. As a result of the reassessment, we recognized compensation expense under APB 25 of approximately $193,000 during the year ended December 31, 2005. Including stock-based compensation expense related to the retrospective reassessment of the fair value of our common stock, we recorded stock-based compensation expense of approximately $4.6 million for the year ended December 31, 2006 and approximately $3.5 million for the nine months ended September 30, 2007. As of September 30, 2007, a future expense of $11.3 million related to our unvested stock option and restricted stock unit awards is expected to be recognized over a weighted-average period of 2.58 years. The fair value of all outstanding stock options and restricted stock unit awards as of September 30, 2007, based on the difference between $ , which is the midpoint of the price range set forth on the cover page of this prospectus, and the weighted-average exercise price thereof, was $ .

Significant factors contributing to the difference between the fair value determined as of the date of each grant.


	Number of
Period of Grant	Options Granted		Exercise Price

Three months ended December 31, 2006		793,059	$	4.89
Three months ended March 30, 2007		642,000	$	6.15
Three months ended June 30, 2007		66,000	$	6.15
Three months ended September 30, 2007		—		n/a

The determination of the deemed fair value of our common stock has involved significant judgments, assumptions, estimates and complexities that impact the amount of deferred stock-based compensation recorded and the resulting amortization in future periods. If we had made different assumptions, the amount of our deferred stock-based compensation, stock-based compensation expense, operating loss, net loss attributable to common stockholders and net loss per share attributable to common stockholders amounts could have been significantly different. We believe that we have used reasonable methodologies, approaches and assumptions to determine the fair value of our common stock and that stock-based deferred compensation and related amortization have been recorded properly for accounting purposes.

In the first quarter of 2007 we granted options at an exercise price of $6.15. The value of the options granted increased from the previous grant made in the fourth quarter of 2006 of $4.89 due to improved operating results, the acquisition of Visionary Networks, and initial discussions with an underwriter and the related increased likelihood and valuation ascribed to an initial public offering.

In the second quarter of 2007 we granted options at an exercise price of $6.15. The value of the options granted remained consistent with the previous grant made in the first quarter of 2007. There were offsetting factors that affected the valuation for the first quarter of 2007. Factors increasing the value of our common stock include further discussions and valuations with an underwriter, and discussion by the board of directors of a private sale and the resulting change in our valuation assumptions from continuing as a going concern to a private sale.

The primary factor offsetting these factors was the financial performance of our affiliate websites. As discussed in “— Quarterly Results of Operations”, online media revenue for the month ended March 31, 2007 declined sequentially as a result of changing our exclusive CPC advertisement distribution partner in March 2007. We continued to see a further decline in April 2007. Due to the nature and extent of this decrease, we decreased the cash flows attributable to the affiliate websites in the financial forecast used in the March 31, 2007 valuation.

Results of Operations

The following Management’s Discussion and Analysis of Results of Operations is presented on a combined basis, in which we and the Predecessor are viewed as one. We have prepared our discussion of the results of operations by comparing our results for the year ended December 31, 2006 to the results of the Successor for the period from February 22, 2005 to December 31, 2005. The period from February 22, 2005 to December 31, 2005 has been compared to the Predecessor’s combined results for the year ended December 31, 2004. The Predecessor financial statements do not reflect the application of purchase accounting relating to our acquisition of the Predecessor. Upon the acquisition in February 2005, an independent third party assessed the fair value of our domain name registration rights to be $15.0 million, an increase of more than $7.0 million over book value. In addition, we recorded $3.1 million of intangible assets which are being amortized over three to five years from the date of acquisition. Subsequent to our acquisition of the Predecessor, we are subject to the payment of income taxes whereas the Predecessor was not. The following table sets forth the items in our historical statements of income for the periods indicated:


	Predecessor				Successor
			Period		Period
			From		From
			January 1		February 22					Nine Months
	Year Ended		to		to		Year Ended			Ended
	December 31,		February 21,		December 31,		December 31,			September 30,
	2004		2005		2005		2006			2006			2007
										(unaudited)
	(in thousands)

Statements of Income Data:
Revenue:
Online media	$	3,791	$	939	$	7,532	$	29,843		$	18,544		$	30,419
Domain name sales and related services		15,665		2,778		20,107		31,202			23,515			27,855

Total revenue		19,456		3,717		27,639		61,045			42,059			58,274
Cost of revenue:
Online media		331		55		1,291		9,738			6,851			7,550
Domain name sales and related services		3,798		879		5,959		13,173			9,717			12,207

Total cost of revenue		4,129		934		7,250		22,911			16,568			19,757
Gross profit		15,327		2,783		20,389		38,134			25,491			38,517
Operating costs:
Product development		472		55		805		2,510			1,572			4,164
Sales and marketing		887		129		2,264		7,480			4,781			10,212
General and administrative		4,979		922		3,100		11,672			8,236			9,575
Amortization of intangible assets		11		2		393		1,584			796			3,436

Total operating costs		6,349		1,108		6,562		23,246			15,385			27,387
Operating income		8,978		1,675		13,827		14,888			10,106			11,130
Interest expense, net		133		11		2,524		6,962			3,252			10,972

Income before income taxes		8,845		1,664		11,303		7,926			6,854			158
Provision (benefit) for income taxes		—		—		4,334		4,414			3,817			(2	)

Income before cumulative effect of change in accounting principle		8,845		1,664		6,969		3,512			3,037			160
Cumulative effect of change in accounting principle		—		—		—		(872	)		(872	)		—

Net income	$	8,845	$	1,664	$	6,969	$	2,640		$	2,165		$	160

In the preceding table, cost of revenue and operating costs include stock-based compensation expense as follows:


	Predecessor				Successor
			Period		Period
			From		From
	Year		January 1		February 22		Year
	Ended		to		to		Ended		Nine Months Ended
	December 31,		February 21,		December 31,		December 31,		September 30,
	2004		2005		2005		2006		2006		2007
					(in thousands)				(unaudited)

Online media cost of revenue		—		—	$	22	$	97	$	68	$	80
Domain name sale cost of revenue		—		—		13		80		41		95
Operating costs:
Product development		—		—		47		235		137		346
Sales and marketing		—		—		58		461		288		768
General and administrative		—		—		53		3,717		3,091		2,191

Total		—		—	$	193	$	4,590	$	3,625	$	3,480

The following table sets forth income statement data for the year ended December 31, 2004, the period from January 1, 2005 to February 21, 2005, the period from February 22 to December 31, 2005, the year ended December 31, 2006 and the nine month periods ended September 30, 2006 and 2007 as a percentage of total revenue.


	Predecessor						Successor
				Period From			Period From
				January 1			February 22						Nine Months
	Year Ended			to			to			Year Ended			Ended
	December 31,			February 21,			December 31,			December 31,			September 30,
	2004			2005			2005			2006			2006			2007
	(unaudited)												(unaudited)

Statements of Income Data:
Revenue:
Online media		19.5	%		25.3	%		27.3	%		48.9	%		44.1	%		52.2	%
Domain name sales and related services		80.5			74.7			72.7			51.1			55.9			47.8

Total revenue		100.0			100.0			100.0			100.0			100.0			100.0
Cost of revenue:
Online media		1.7			1.5			4.7			16.0			16.3			13.0
Domain name sales and related services		19.5			23.6			21.6			21.6			23.1			20.9

Total cost of revenue		21.2			25.1			26.3			37.6			39.4			33.9
Gross profit		78.8			74.9			73.7			62.4			60.6			66.1
Operating costs:
Product development		2.4			1.5			2.9			4.1			3.7			7.1
Sales and marketing		4.6			3.5			8.2			12.3			11.4			17.5
General and administrative		25.6			24.8			11.2			19.1			19.6			16.4
Amortization of intangible assets		0.1			0.1			1.4			2.6			1.9			5.9

Total operating costs		32.7			29.9			23.7			38.1			36.6			46.9
Operating income		46.1			45.0			50.0			24.3			24.0			19.2
Interest expense, net		0.7			0.3			9.1			11.4			7.7			18.8

Income before income taxes		45.4			44.7			40.9			12.9			16.3			0.4
Provision (benefit) for income taxes		—			—			15.7			7.2			9.1			0.0

Income before cumulative effect of change on accounting principle		45.4			44.7			25.2			5.7			7.2			0.4
Cumulative effect of change on accounting principle		—			—			—			(1.4	)		(2.1	)		—

Net income		45.4	%		44.7	%		25.2	%		4.3	%		5.1	%		0.4	%

Comparison of the Nine Months Ended September 30, 2006 and 2007

Revenue


	Nine Months Ended
	September 30,						Percent
	2006		2007		Increase		Change
	(dollars in thousands)
	(unaudited)

Online media	$	18,544	$	30,419	$	11,875		64.0	%
Domain name sales and related services		23,515		27,855		4,340		18.5	%

Total revenue	$	42,059	$	58,274	$	16,215		38.6	%

Online media. The increase in online media revenue was attributable primarily to an increase of $4.4 million in cost-per-click advertising and to $6.2 million in revenue derived from newly-acquired or -launched premium enthusiast websites. This increase in cost-per-click advertising resulted from our acquisitions of domain names and businesses and technical improvements to our SiteSense platform which produced more targeted advertising. The increase in premium enthusiast website revenue was due to acquisitions completed in 2007. We anticipate that our online media revenue will increase as a percentage of total revenue as we continue to increase the number of developed websites and particularly premium enthusiast websites.

Domain name sales and related services. In the nine months ended September 30, 2006, we recognized revenue of approximately $1.4 million associated with the implementation of a policy not to own domain names that include, among others, registered trademarks or company names, regular or obscene language, or content or language associated with any illegal enterprises. Excluding the impact of these sales, domain name sales and related services increased by $5.7 million. This increase was primarily attributable to an increase in the volume of our domain names sold due to the increased size of our domain name portfolio, number of domain name sales personnel and use of resellers. We expect domain name sales revenue to continue to grow as we continue to invest in our domain name marketplace business to maintain our position as one of the largest domain name marketplaces on the Internet.

Cost of revenue


	Nine Months Ended
	September 30,								Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

Online media	$	6,851		$	7,550		$	699		10.2	%
Domain name sales and related services		9,717			12,207			2,490		25.6	%

Total cost of revenue	$	16,568		$	19,757		$	3,189		19.2	%
Percentage of revenue		39.4	%		33.9	%

Online media cost of revenue. The increase in online media cost of revenue was primarily attributable to a $477,000 increase in royalties and other product-related costs for premium enthusiast websites, a $408,000 increase in amortization of intangible assets related to acquired software and technologies, and a $407,000 increase in hosting costs, offset by a $796,000 decrease in marketing costs. We anticipate that online media costs will decrease as a percentage of online media revenue as result of our focus on increasing non-paid sources of Internet traffic, such as Direct Search and referral links.

Domain name sales and related services cost of revenue. The increase in domain name sales and related services cost of revenue is primarily attributable to a $814,000 increase in amortization of domain name renewal fees, a $764,000 increase in the marketing costs and a $661,000 increase in commissions paid to our marketplace affiliates, offset by a $390,000 decrease in amortization and specific identification costs related to the sale of registration rights. We anticipate our domain name sales and related services cost of revenue to decrease as a percentage of total domain name sales and related services revenue as we realize expected efficiencies from our domain name portfolio management and network operations staff.

Product development


	Nine Months Ended
	September 30,								Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

Product development expense	$	1,572		$	4,164		$	2,592		164.9	%
Percentage of revenue		3.7	%		7.1	%

The increase in product development expenses was primarily attributable to a $1.6 million increase related to hiring additional technology personnel and a $674,000 increase in consulting costs, both related to personnel involved in the development of new and upgraded product offerings. We anticipate our product development expenses to increase in absolute dollar amounts and as a percentage of revenue as we continue to make planned investments in additional product and technology professionals and in the capabilities to provide additional services to our customers.

Sales and marketing


	Nine Months Ended
	September 30,								Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

Sales and marketing expense	$	4,781		$	10,212		$	5,431		113.6	%
Percentage of revenue		11.4	%		17.5	%

The increase in sales and marketing expenses was primarily attributable to a $3.0 million increase related to hiring additional sales and marketing personnel, a $692,000 increase in consulting costs, a $481,000 increase in stock-based compensation and increases in travel, bad debt expense and other items. We anticipate our sales and marketing expenses to increase in absolute dollar amounts as we continue to build and acquire new premium enthusiast websites, hire additional sales professionals and expand our business services offerings. These sales and marketing expense increases will be driven largely by the full-year impact of acquisitions completed in 2006 as well as by any acquisitions completed subsequent to 2006.

General and administrative


	Nine Months Ended
	September 30,								Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

General and administrative expense	$	8,236		$	9,575		$	1,339		16.3	%
Percentage of revenue		19.6	%		16.4	%

The increase in general and administrative expenses was primarily attributable to an increase of $1.6 million in legal and accounting costs, including approximately $1.2 million of costs related to a dispute settled in June 2007, a $681,000 increase in salary expenses related to hiring additional management and executive professionals, a $637,000 increase in facilities costs and higher depreciation costs, offset by a $900,000 decrease in stock-based compensation expense related to grants made in the first quarter of 2006 and a $717,000 loss on early extinguishment of debt, incurred in September 2006. We anticipate our general and administrative expenses will increase in absolute dollar amounts as we continue to expand our accounting, legal, human resources and finance teams, and incur additional costs relating to operating as a public company, including a significant increase in our directors’ and officers’ insurance premiums.

Amortization of intangible assets


	Nine Months Ended
	September 30,								Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

Amortization of intangible assets expense	$	796		$	3,436		$	2,640		331.7	%
Percentage of revenue		1.9	%		5.9	%

The increase in amortization of intangible assets expense was primarily due to identified intangible assets arising from our acquisitions. We anticipate our amortization of intangibles expenses to increase in absolute dollar amounts and as a percentage of revenue as a result of the full-year impact of amortization of acquisitions completed prior to September 30, 2007 as well as any acquisitions completed subsequent to September 30, 2007.

Interest expense, net


	Nine Months Ended
	September 30,
									Percent
	2006			2007			Increase		Change
	(dollars in thousands)
	(unaudited)

Interest expense, net	$	3,252		$	10,972		$	7,720		237.4	%
Percentage of revenue		7.7	%		18.8	%

Our interest expense, net increased as a percentage of revenue from 7.7% in 2006 to 18.8% in 2007. This increase was primarily due to our September 2006 debt financing and the adoption of a new accounting policy related to our Series A convertible redeemable preferred stock warrant, offset by interest earned on average cash balances in our money market accounts.

Provision (benefit) for income taxes. Provision for income taxes decreased from $3.8 million for the nine months ended September 30, 2006 to a benefit of $2 for the nine months ended September 30, 2007, due to a decrease in pre-tax income of $6.7 million. We anticipate that our effective tax rate for 2007 will be 80.47%. We expensed approximately $3.6 million and $3.5 million in stock-based compensation during in the nine months ended September 2006 and 2007, respectively which is not deductible for taxes.

Comparison of the Period From February 22, 2005 to December 31, 2005 and the Year Ended December 31, 2006

Revenue


	Period Ended December 31,						Percent
	2005		2006		Increase		Change
	(dollars in thousands)

Online media	$	7,532	$	29,843	$	22,311		296.2	%
Domain name sales and related services		20,107		31,202		11,095		55.2	%

Total revenue	$	27,639	$	61,045	$	33,406		120.9	%

Online media. The increase in online media revenue was primarily attributable to increased cost-per-click advertising. This increase in cost-per-click advertising resulted from our acquisitions of domain names and businesses, increased marketing, and technical improvements to our SiteSense platform which produced more targeted advertising. We also received a higher revenue share from our primary third-party advertising distribution provider based on the full-year impact in 2006 of a contract signed in December 2005.

Domain name sales and related services. For the year ended December 31, 2006, we recognized revenue of approximately $1.4 million from the sale of domain names in association with the implementation of a policy not to own domain names that include, among others, registered trademarks or company names, vulgar or obscene language, or content or language associated with any illegal enterprises. Excluding the impact of these sales, domain name sales and related services increased by $9.7 million. This increase was

primarily attributable to an increase in the volume of our domain names sold due to the increased size of our domain name portfolio, number of domain name sales personnel and use of resellers.

Cost of revenue


	Period Ended
	December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

Online media	$	1,291		$	9,738		$	8,447		654.3	%
Domain name sales and related services		5,959			13,173			7,214		121.1	%

Total cost of revenue	$	7,250		$	22,911		$	15,661		216.0	%
Percentage of revenue		26.3	%		37.6	%

Online media cost of revenue. The increase in online media cost of revenue was primarily attributable to an increase in marketing programs designed to generate Internet traffic to our websites.

Domain name sales and related services cost of revenue. The increase in domain name sales and related services cost of revenue is primarily attributable to a $3.4 million increase in the amortization of domain name registration rights and a $1.3 million increase in domain name renewal costs, resulting in each case primarily from the growth of our domain name portfolio. There was also an increase of $556,000 related to the net book value of domain names sold during the period, primarily due to increased domain name sales volume. This increase was also attributable to an $829,000 increase in marketing costs.

Product development


	Period Ended
	December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

Product development expense	$	805		$	2,510		$	1,705		211.8	%
Percentage of revenue		2.9	%		4.1	%

The increase in product development expenses was primarily attributable to a $1.3 million increase related to hiring additional technology personnel, and small increases in consulting costs and stock-based compensation, all related to personnel involved in the development of new and upgraded product offerings.

Sales and marketing


	Period Ended
	December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

Sales and marketing expense	$	2,264		$	7,480		$	5,216		230.4	%
Percentage of revenue		8.2	%		12.3	%

The increase in sales and marketing expenses was primarily attributable to a $2.6 million increase related to hiring additional sales and marketing personnel, an increase of sales commissions of $802,000, consulting and market research of $742,000, an increase of credit card fees and commissions paid to third-party domain name resellers of $536,000, and a $402,000 increase in stock-based compensation.

General and administrative


	Period Ended
	December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

General and administrative expense	$	3,100		$	11,672		$	8,572		276.5	%
Percentage of revenue		11.2	%		19.1	%

The increase in general and administrative expenses was primarily attributable to a $3.7 million increase in stock-based compensation expense related to the hiring of several senior executives, $1.6 million increase in salary expenses related to hiring additional management and executive professionals, a $671,000 increase in legal costs, a $717,000 expense related to the early extinguishment of debt in connection with our September 2006 debt financing and a $647,000 increase in office costs related to our expansion into new facilities.

Amortization of intangible assets


	Period Ended December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

Amortization of intangible assets expense	$	393		$	1,584		$	1,191		303.1	%
Percentage of revenue		1.4	%		2.6	%

The increase in amortization of intangible assets expense was primarily due to identified intangible assets arising from our acquisitions.

Interest expense, net


	Period Ended
	December 31,								Percent
	2005			2006			Increase		Change
	(dollars in thousands)

Interest expense, net	$	2,524		$	6,962		$	4,438		175.8	%
Percentage of revenue		9.1	%		11.4	%

Our interest expense, net increased as a percentage of revenue from 9.1% in 2005 to 11.4% in 2006. This increase was primarily due to our September 2006 debt financing and the adoption of a new accounting policy in 2006 related to our Series A convertible redeemable preferred stock warrant, offset by interest earned on average cash balances in our money market accounts.

Provision for income taxes. Provision for income taxes increased from $4.3 million for the Successor, an effective tax rate of 38.4%, for the period from February 22, 2005 to December 31, 2005, to $4.4 million, an effective tax rate of 55.7%, in 2006. The increase in our 2006 effective tax rate was primarily related to permanent differences between book expenses and tax expenses. Significant permanent differences in 2006 include $1.0 million in stock-based compensation and a $1.5 million fair market value adjustment on a Series A convertible redeemable preferred stock warrant.

Comparison of the Year Ended December 31, 2004 and the Period From February 22, 2005 to December 31, 2005

Revenue


	Period Ended
	December 31,						Percent
	2004		2005		Increase		Change
	(dollars in thousands)

Online media	$	3,791	$	7,532	$	3,741		98.7	%
Domain name sales and related services		15,665		20,107		4,442		28.4	%

Total revenue	$	19,456	$	27,639	$	8,183		42.1	%

Online media. The increase in online media revenue was primarily attributable to increased cost-per-click advertising derived from acquisitions of domain names and technical improvements to our SiteSense platform which produced more targeted advertising.

Domain name sales and related services. The increase in revenue from our domain name marketplace was primarily attributable to an increase in the number of domain names sold, due to the increased size of our domain name portfolio, and a higher average sales price.

Cost of revenue


	Period Ended
	December 31,								Percent
	2004			2005			Increase		Change
	(dollars in thousands)

Online media	$	331		$	1,291		$	960		290.0	%
Domain name sales and related services		3,798			5,959			2,161		56.9	%

Total cost of revenue	$	4,129		$	7,250		$	3,121		75.6	%
Percentage of revenue		21.2	%		26.3	%

Online media cost of revenue. The increase in online media cost of revenue was primarily attributable to an increase of $884,000 in marketing programs designed to generate Internet traffic.

Domain name sales and related services cost of revenue. The increase in domain name sales and related services cost of revenue is primarily attributable to a $1.3 million increase in the amortization of domain name registration rights and a $665,000 increase in domain name renewal costs, resulting in each case primarily from the growth of our domain name portfolio.

Product development


	Period Ended December 31,								Percent
	2004			2005			Increase		Change
	(dollars in thousands)

Product development expense	$	472		$	805		$	333		70.6	%
Percentage of revenue		2.4	%		2.9	%

The increase in product development expenses was primarily attributable to a $613,000 increase related to hiring additional technology personnel, offset by a $328,000 decrease in third-party website development costs.

Sales and marketing


	Period Ended
	December 31,								Percent
	2004			2005			Increase		Change
	(dollars in thousands)

Sales and marketing expense	$	887		$	2,264		$	1,377		155.2	%
Percentage of revenue		4.6	%		8.2	%

The increase in sales and marketing expenses was primarily attributable to a $699,000 increase related to hiring additional sales and marketing personnel and a $355,000 increase in sales commissions.

General and administrative


	Period Ended
	December 31,									Percent
	2004			2005			Decrease			Change
				(dollars in thousands)

General and administrative expense	$	4,979		$	3,100		$	(1,879	)		(37.7	)%
Percentage of revenue		25.6	%		11.2	%

The decrease in general and administrative costs was primarily due to a $3.9 million decrease in payments to members of the Predecessor, partially offset by a $957,000 increase in professional fees such as legal, accounting and recruiting, a $546,000 increase related to the hiring of finance and management personnel, $276,000 in office related costs, and $110,000 in franchise taxes.

Amortization of intangible assets


	Period Ended
	December 31,								Percent
	2004			2005			Increase		Change
	(dollars in thousands)

Amortization of intangible assets expense	$	11		$	393		$	382		3,472.7	%
Percentage of revenue		0.1	%		1.4	%

The increase in amortization of intangible assets expense was primarily due to identified intangible assets arising from the acquisition of the Predecessor in February 2005.

Interest expense, net


	Period Ended
	December 31,								Percent
	2004			2005			Increase		Change
	(dollars in thousands)

Interest expense, net	$	133		$	2,524		$	2,391		1,797.7	%
Percentage of revenue		0.7	%		9.1	%

Interest expense, net increased from $133,000 in 2004 to $2.5 million in 2005. Our interest expense, net increased as a percentage of revenue from 0.7% in 2004 to 9.1% in 2005. This increase was primarily due to our debt financing in connection with our acquisition of the Predecessor in February 2005, offset by interest earned on average cash balances in our money market accounts.

Provision for income taxes. A comparison to the Predecessor is not meaningful because the Predecessor was a subchapter S corporation and, as such, did not record any income taxes.

Quarterly Results of Operations

The following table sets forth unaudited quarterly income statement data for the eleven quarters ended September 30, 2007. This data has been derived from the unaudited interim financial statements prepared on the same basis as the audited financial statements contained in this prospectus and, in our opinion, includes all adjustments consisting only of normal recurring adjustments that we consider necessary for a fair presentation of such information. This data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto appearing elsewhere in this prospectus. The operating results for any quarter should not be considered indicative of results for any future period.


	Three Months Ended,
	Mar 31,		June 30,		Sept. 30,		Dec. 31,		Mar 31,			June 30,		Sept. 30,		Dec. 31,		Mar. 31,		June 30,			Sept. 30,
	2005(1)		2005		2005		2005		2006			2006		2006		2006		2007		2007			2007
	(dollars in thousands)
	(unaudited)

Statements of Income Data:
Revenue:
Online media	$	641	$	1,751	$	2,064	$	3,076	$	4,027		$	6,159	$	8,358	$	11,299	$	10,273	$	8,732		$	11,414
Domain name sales and related services		2,284		5,526		5,849		6,448		7,559			7,936		8,020		7,687		8,809		9,454			9,592

Total revenue		2,925		7,277		7,913		9,524		11,586			14,095		16,378		18,986		19,082		18,186			21,006
Cost of revenue:
Online media		40		109		161		981		1,222			2,547		3,082		2,887		1,825		3,077			2,648
Domain name sales and related services		626		1,658		1,785		1,890		2,291			2,549		4,877		3,456		3,913		4,219			4,075

Total cost of revenue		666		1,767		1,946		2,871		3,513			5,096		7,959		6,343		5,738		7,296			6,723
Gross profit		2,259		5,510		5,967		6,653		8,073			8,999		8,419		12,643		13,344		10,890			14,283
Operating costs:
Product development		23		112		227		443		472			397		703		938		1,476		1,275			1,413
Sales and marketing		113		548		625		978		1,281			1,613		1,887		2,699		3,304		3,344			3,564
General and administrative		211		813		886		1,190		2,837			2,189		3,210		3,436		2,939		3,492			3,144
Amortization of intangible assets		48		115		115		115		143			282		371		788		1,017		1,199			1,220

Total operating costs		395		1,588		1,853		2,726		4,733			4,481		6,171		7,861		8,736		9,310			9,341
Operating income		1,864		3,922		4,114		3,927		3,340			4,518		2,248		4,782		4,608		1,580			4,942
Interest expense, net		309		752		756		707		794			586		1,872		3,710		3,201		4,134			3,637

Income (loss) before income taxes		1,555		3,170		3,358		3,220		2,546			3,932		376		1,072		1,407		(2,554	)		1,305
Provision (benefit) for income taxes		591		1,204		1,275		1,264		1,421			2,190		206		597		1,003		(2,056	)		1,051

Income (loss) before cumulative effect of change in accounting principle		964		1,966		2,083		1,956		1,125			1,742		170		475		404		(498	)		254
Cumulative effect of change in accounting principle		—		—		—		—		(872	)		—		—		—		—		—			—

Net income (loss)	$	964	$	1,966	$	2,083	$	1,956	$	253		$	1,742	$	170	$	475	$	404	$	(498	)	$	254


(1)		Represents the period from February 22, 2005 to March 31, 2005.

The following table sets forth unaudited quarterly income statement data for the eleven quarters ended September 30, 2007 as a percentage of revenue.


	Three Months Ended,
	Mar 31,			June 30,			Sept. 30,			Dec. 31,			Mar. 31,			June 30,			Sept. 30,			Dec. 31,			Mar. 31,			June 30,			Sept. 30,
	2005(1)			2005			2005			2005			2006			2006			2006			2006			2007			2007			2007
	(unaudited)

Statements of Income Data:
Revenue:
Online media		21.9	%		24.1	%		26.1	%		32.3	%		34.8	%		43.7	%		51.0	%		59.5	%		53.8	%		48.0	%		54.3	%
Domain name sales and related services		78.1			75.9			73.9			67.7			65.2			56.3			49.0			40.5			46.2			52.0			45.7

Total revenue		100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0
Cost of revenue:
Online media		1.4			1.5			2.0			10.3			10.5			18.1			18.8			15.2			9.6			16.9			12.6
Domain name sales and related services		21.4			22.8			22.6			19.8			19.8			18.1			29.8			18.2			20.5			23.2			19.4

Total cost of revenue		22.8			24.3			24.6			30.1			30.3			36.2			48.6			33.4			30.1			40.1			32.0
Gross profit		77.2			75.7			75.4			69.9			69.7			63.8			51.4			66.6			69.9			59.9			68.0
Operating costs:
Product development		0.8			1.5			2.9			4.7			4.1			2.8			4.3			4.9			7.7			7.0			6.7
Sales and marketing		3.9			7.5			7.9			10.3			11.1			11.4			11.5			14.2			17.3			18.4			17.0
General and administrative		7.2			11.2			11.2			12.5			24.5			15.5			19.6			18.1			15.4			19.2			15.0
Amortization of intangible assets		1.6			1.6			1.4			1.2			1.2			2.0			2.3			4.2			5.3			6.6			5.8

Total operating costs		13.5			21.8			23.4			28.6			40.9			31.7			37.7			41.4			45.7			51.2			44.5
Operating income		63.7			53.9			52.0			41.2			28.8			32.1			13.7			25.2			24.2			8.7			23.5
Interest expense, net		10.5			10.3			9.6			7.4			6.9			4.2			11.4			19.5			16.8			22.7			17.3

Income (loss) before income taxes		53.2			43.6			42.4			33.8			21.9			27.9			2.3			5.7			7.4			(14.0	)		6.2
Provision (benefit) for income taxes		20.2			16.5			16.1			13.3			12.3			15.5			1.3			3.1			5.3			(11.3	)		5.0

Income (loss) before cumulative effect of change in accounting principle		33.0			27.1			26.3			20.5			9.6			12.4			1.0			2.6			2.1			(2.7	)		1.2
Cumulative effect of change in accounting principle		—			—			—			—			(7.5	)		—			—			—			—			—			—

Net income (loss)		33.0	%		27.1	%		26.3	%		20.5	%		2.1	%		12.4	%		1.0	%		2.6	%		2.1	%		(2.7	)%		1.2	%


(1)		Represents the period from February 22, 2005 to March 31, 2005.

Except for the three months ended June 30, 2007, our total revenue increased in each quarter primarily from an increase in the number of paid advertisements delivered across our media network as well as an increase in the number of domains names sold. Our total revenue decreased in the quarter ended June 30, 2007 as a result of a decrease in our online media revenue, as described below. Our costs of revenue generally increased each quarter as a result of the increase in our performance-based marketing initiatives as well as higher costs related to our collection of domain names.

Our online media revenue for each of the three months ended March 31, 2007 and June 30, 2007 declined sequentially as a result of changing our exclusive CPC advertisement distribution partner in March 2007. As a result of this change, online media revenue from our affiliate network declined by $1.1 million in the three months ended March 31, 2007 compared to the three months ended December 31, 2006, and by $2.3 million in the three months ended June 30, 2007 compared to the three months ended March 31, 2007. These declines were due to decreased revenue realized per affiliate website as a result of lower levels of monetization that resulted from our transition to a new CPC advertisement distribution partner. This lower level of monetization also resulted in a decrease in the number of affiliate network customers. In May 2007, we began using a dual-

source arrangement for CPC advertisements. Since that time, we have engaged an exclusive CPC advertisement distribution partner for our proprietary network of websites and another exclusive CPC advertisement distribution partner for our affiliate network. Online media revenue from our affiliate network began to increase after implementing this dual-source arrangement, due both to increasing revenue per website and an increase in the number of affiliate network customers.

Additional significant quarterly changes include the following:


	•	The results of SmartName LLC are included from the acquisition date of September 7, 2006, which positively impacted our online media revenue for the three months ended December 31, 2006.

	•	The quarter ended September 30, 2006 reflects a charge of $717,000 in general and administrative expenses related to the early extinguishment of debt.

	•	The quarter ended September 30, 2006 includes revenue of approximately $1.1 million and related cost of revenue from the sale of a portfolio of domain names associated with the implementation of our company policy not to own domain names that include, among others, registered trademarks or company names, vulgar or obscene language or content, or language or content associated with any illegal enterprise.

	•	We incurred approximately $675,000 during the quarter ended December 31, 2006, approximately $190,000 during the quarter ended March 31, 2007, approximately $950,000 during the quarter ended June 30, 2007, and approximately $20,000 during the quarter ended September 30, 2007 in general and administrative expenses in connection with the settlement of litigation and related legal fees.

	•	The quarter ended March 31, 2006 includes a change of approximately $872,000 as a result of a change in accounting principles related to our Series A convertible redeemable preferred stock warrant effective as of January 1, 2006.

	•	We adopted the provisions of SFAS No. 123(R) on January 1, 2006, resulting in an increase in the amount of stock-based compensation reflected in our statements of income.

Seasonality and Cyclicality

Seasonal fluctuations in overall Internet usage has affected, and will likely continue to affect, our business. Overall Internet usage generally declines during the summer months, which could result in lower Internet traffic to our network and therefore lower revenue primarily during the third fiscal quarter. In addition, domestic advertising spending generally is cyclical in reaction to overall conditions in the U.S. economy. Our rapid historical growth rate has masked the impact of seasonality on our business. We expect the seasonal pattern of our business to become more pronounced.

Liquidity and Capital Resources

We were incorporated in February 2005 for the purpose of acquiring the Predecessor. At that time, we issued $50.6 million of Series A and Z convertible redeemable preferred stock, as well as $30.0 million of debt securities. None of the net proceeds from the sale of our Series A and Z convertible redeemable preferred stock and the debt securities was available to fund our initial operations. In September 2006, we entered into a credit agreement providing for $105.0 million of term debt financing and for a $10.0 million revolving line of credit which expired in September 2007. A portion of the net proceeds of this financing was used to repay our original debt financing used to fund the acquisition of the Predecessor. The balance of the term debt financing after repayment of our original debt financing, approximately $73.3 million, was available for limited purposes, including permitted purchases of domain names and acquisitions of businesses. As of September 30, 2007, we had used approximately $61.6 million for such permitted purchases. The remaining funds were recorded on our balance sheet as restricted cash. At September 30, 2007, we had approximately $33.0 million of cash, cash equivalents and restricted cash on our balance sheet, of which approximately $13.0 million was restricted cash. In November 2007, we entered into a new $125.0 million credit agreement which consists of a $90.0 million term loan and a $35.0 million revolving line of credit. The term loan was fully drawn in

November 2007. The proceeds from the term loan, together with a portion of cash and restricted cash on hand, were used to repay the full balance outstanding on our prior credit facility. As of November 30, 2007, we had no borrowings under the revolving line of credit. Our principal sources of liquidity are our cash and cash equivalents and the cash flow that we generate from our operations.

Operating Activities

Our net cash provided by operating activities was $10.1 million for the nine months ended September 30, 2007. Our net cash provided by operating activities was $8.4 million in 2006, compared to $9.2 million in 2005 and $4.2 million in 2004. Increases in the balance of domain name registration rights is a use of cash within our cash from operations and totaled $2.0 million in the nine months ended September 30 2007, $6.1 million in 2006, $3.4 million in 2005 and $4.4 million in 2004.

Our net cash provided by operating activities for the nine months ended September 30, 2007 was derived from a net income of $0.2 million, plus non-cash charges of $18.2 million, less changes in operating assets and liabilities of $8.3 million. Our most significant non-cash charges included amortization of domain name registration rights of $4.5 million, representing charges to cost of revenues based on an estimated seven-year useful life; amortization of domain name renewal fees of $3.2 million, representing charges to cost of revenues based on the life of the renewal period which is generally one year, stock-based compensation of $3.5 million and amortization of intangible assets of $4.4 million associated with identified intangible assets arising from business acquisitions. Amortization of domain name registration rights and domain name renewal fees are likely to increase as we increase the size of our domain name portfolio. Amortization of intangible assets is also expected to increase based on the full-year impact of acquisitions completed in 2006 and 2007, and as a result of any acquisitions completed subsequent to September 30, 2007. The increase in net operating assets related primarily to the increase in domain name registration rights discussed above and an increase in prepaid domain name renewal fees. The $2.0 million increase in domain name registration rights includes domain name acquisitions of $2.7 million, partially offset by a reduction of $0.7 million reflecting charges to cost of revenues for domain name registration rights sold in the period. In addition, we had increased prepaid expenses of $1.6 million, primarily related to income taxes, largely offset by a decrease in accounts receivable and other receivables, primarily due to timing of collections. The decrease of $1.2 million in accounts receivable was due primarily to favorable timing of collections from our third-party advertising distribution providers.

Our net cash provided by operating activities in 2006 was derived from net income of $2.6 million, plus non-cash charges of $17.9 million, less changes in operating assets and liabilities of $12.2 million. Our most significant non-cash charges included amortization of domain name registration rights of $5.9 million, amortization of domain name renewal fees of $3.5 million, stock-based compensation of $4.6 million and amortization of intangible assets of $1.9 million. Amortization of domain name registration rights and domain name renewal fees are likely to increase as we increase the size of our domain name portfolio. Amortization of intangible assets is also expected to increase based on the full-year impact of acquisitions completed in 2006, and as a result of any acquisitions completed subsequent to 2006. The 2006 increase in net operating assets related primarily to the increase in domain name registration rights discussed above and the increase in prepaid domain name renewal fees. The $6.1 increase in domain name registration rights includes domain name acquisitions of $7.2 million, partially offset by a reduction of $1.1 million reflecting charges to cost of revenues for domain name registration rights sold in the period. In addition, our accounts receivable increased by approximately $9.1 million in 2006, due primarily to the increasing percentage of revenue derived from our media business. A significant amount of this increase relates to advertising revenue in our affiliate network. This increase in accounts receivable was offset by an increase of $9.5 million in accrued liabilities, including $5.4 million related to payments due to affiliate network participants for their share of advertising revenue and $2.9 million of interest payable. We expect continued growth in net operating assets, due primarily to increases in our domain name portfolio.

Our net cash generated from operations for the period February 22, 2005 through December 31, 2005 resulted from net income of $7.0 million, plus non-cash charges of $6.0 million, less changes in operating assets and liabilities of $3.8 million. Our most significant non-cash charges were amortization of domain name

registration rights of $2.2 million and amortization of domain name renewal fees of $2.2 million. Changes in our net operating assets included an increase in domain name registration rights of $3.4 million and an increase in prepaid domain name renewal fees of $2.4 million, partially offset by an increase in taxes payable of $1.7 million. The Predecessor generated net cash from operations for the period January 1, 2005 through February 21, 2005 from net income of $1.7 million plus non-cash charges of $0.5 million, less changes in operating assets and liabilities of $0.3 million. The most significant non-cash charges of the Predecessor were amortization of domain name registration rights and amortization of domain name renewal fees.

Net cash generated from Predecessor operations in 2004 resulted from net income of $8.8 million, plus non-cash charges of $2.4 million, less changes in operating assets and liabilities of $7.1 million. The most significant non-cash charges were amortization of domain name registration rights of $0.8 million and amortization of domain name renewal fees of $1.5 million. Changes in net operating assets included an increase in domain name registration rights of $4.4 million and an increase in prepaid domain name renewal fees of $2.3 million.

Investing Activities

Our net cash used in investing activities was $5.7 million for the nine months ended September 30, 2007, comprised primarily of acquisitions of businesses of $23.8 million and an increase in registration rights held for use of $1.7 million, partially offset by a decrease in restricted cash of $21.9 million. The decrease in restricted cash relates to amounts funded from escrow under our credit facility to fund permitted acquisitions of businesses and domain names. Capitalized development costs and purchases of property and equipment were $2.2 million in the aggregate in the period.

Our net cash used in investing activities was $72.6 million in 2006, comprised primarily of acquisitions of $23.7 million, an increase in domain name registration rights held for use of $12.6 million and an increase in restricted cash of $34.8 million. The increase in restricted cash relates to amounts available under our credit facility to fund permitted purchases of domain names and acquisitions of businesses. Our acquisitions of domain name registration rights held for use included the acquisition of a portfolio of premium domain names in a single transaction for approximately $11.4 million. We do not currently expect to enter into similar transactions in the foreseeable future and, accordingly, we expect acquisitions of domain name registration rights to decrease below 2006 levels. Our purchases of property and equipment were $1.3 million in 2006. Our property and equipment needs are expected to increase modestly in the near future.

Our net cash used in investing activities was $72.9 million for the period February 22, 2005 through December 31, 2005, including the acquisition of the Predecessor for $72.5 million. Net cash used in Predecessor investing activities was not significant for the period January 1, 2005 through February 21, 2005 and the year ended December 31, 2004.

Financing Activities

Our net cash provided by financing activities was not significant for the nine months ended September 30, 2007. Net cash provided by financing activities was $70.4 million in 2006, including net proceeds of $100.6 million from our debt financing discussed above, less repayment of $30.3 million of our original debt financing use to fund the acquisition of the Predecessor.

Our net cash provided by financing activities was $73.1 million for the period February 22, 2005 through December 31, 2005 from the issuance of convertible redeemable preferred stock and debt financing related to the acquisition of the Predecessor. Net cash used in Predecessor investing activities was not significant for the period January 1, 2005 through February 21, 2005. Net cash used in Predecessor financing activities was $4.7 million in 2004, including a $3.4 million distribution to the members of the Predecessor.

We believe that our current cash and cash equivalents, availability under our new revolving line of credit and cash flow from operations will be sufficient to meet our anticipated cash needs for working capital purposes and purchases of domain names and equipment for the foreseeable future. We may require additional cash resources due to changed business conditions or other future developments, including any investments or

acquisitions we may decide to pursue. If these sources of cash are insufficient to satisfy our cash requirements, we may seek to sell debt securities or additional equity securities or to obtain a new credit facility. The sale of convertible debt securities or additional equity securities could result in additional dilution to our stockholders. The incurrence of additional indebtedness would result in incurring debt service obligations and could result in operating and financial covenants that would restrict our operations. In addition, there can be no assurance that any additional financing will be available on acceptable terms, if at all.

A portion of the net proceeds to us from this offering will provide us additional liquidity for use in the expansion of our operations and for acquisitions of domain names, businesses and technologies. After repayment of a portion our existing term debt obligations as described below, we expect to invest a portion of these net proceeds in short term interest-bearing, investment-grade securities, which will result in additional interest income.

Credit Facility

In November 2007, we entered into a $125.0 million credit facility which consists of a $90.0 million term loan and a $35.0 million revolving line of credit. The term loan was fully drawn in November 2007 and, together with a portion of existing cash and restricted cash on hand, was used to retire all outstanding debt under a previous credit agreement. We are required to pay interest every one, two, or three months, based on interest period elections made by us. As of November 23, 2007, we elected to pay interest for the first loan period at the end of two months. The term loan, which requires repayment quarterly at varying rates beginning March 31, 2008, with the final payment due on November 21, 2012, currently accrues interest at an annual rate equal to the British Bankers Association LIBOR rate, or BBA LIBOR, as published two business days prior to the commencement of such interest period plus 4.00%. As of November 23, 2007, this rate was 9.05%. We have not drawn on the revolving line of credit. Borrowings under the credit facility are secured by all of our assets. Our credit agreement requires that we use the proceeds of an initial public offering of equity securities to repay the lesser of $25 million, or the balance required to bring the leverage ratio described below to 2.0 or less.

Our credit facility contains certain affirmative covenants for us, including provision of financial statements, preservation of existence, maintenance of properties and insurance, compliance with laws, and restrictions on the use of proceeds from the term loan.

Our credit facility also contains certain financial covenants, including the following:


	•	Consolidated Net Leverage Ratio, which requires our ratio of net indebtedness to Consolidated Adjusted EBITDA for the most recently completed twelve months not to exceed certain thresholds. The Consolidated Net Leverage Ratio is tested on a quarterly basis. As of November 30, 2007, our leverage ratio was required to be no greater than 3.50:1.00.

	•	Consolidated Fixed Charge Coverage Ratio, which requires our ratio of (a) the sum of (i) Consolidated Adjusted EBITDA for the most recently completed twelve months less (ii) capital expenditures for such period to (b) consolidated fixed charges for the most recently completed twelve month period, to be no less than 1.30:1.00. Consolidated fixed charges include cash taxes, the cash portion of consolidated interest charges, scheduled debt principal payments, cash dividends and other distributions, and the amount of any repurchases and/or redemptions of equity interests.

In addition, the credit facility restricts our ability, among other things, to:


	•	incur or guaranty additional indebtedness;

	•	create liens;

	•	make loans or investments;

	•	pay dividends or make distributions on our stock;

	•	sell assets;

	•	consolidate or merge with other entities; or

	•	enter into transactions with affiliates.

These financial and operating covenants may restrict our ability to finance our operations, engage in business activities or expand or pursue our business strategies. To the extent we are unable to satisfy those covenants in the future, we will need to obtain waivers to avoid being in default of the terms of this credit facility. In addition to a covenant default, other events of default under our credit facility include any material breach of a representation or warranty or attachment of funds or a material judgment against us. If a default occurs, we may be required to repay all then outstanding amounts. After this offering, we expect that we will have sufficient resources to fund any amounts which may become due under this credit facility as a result of a default by us or otherwise.

Contractual Obligations

Our major outstanding contractual obligations relate to our long-term debt obligations and operating lease obligations. We have no contractual obligations of more than five years. We have summarized in the table below our fixed contractual cash obligations as of September 30, 2007.


Contractual	Payments Due By Period
Obligations	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
	(In thousands)

Long-term debt obligations	$	105,000	$	105,000		—		—		—
Operating lease obligations		1,301		657		592		52		—

Total	$	106,301	$	105,657	$	592	$	52		—

The $105.0 million in long-term debt obligations summarized above was retired in November 2007 in connection with our new $125.0 million credit facility. The above summary does not reflect our contingent obligations, incurred in connection with completed acquisitions, to pay up to approximately $7.3 million in the first quarter of 2008, up to approximately $1.3 million in the second quarter of 2008, and up to approximately $2.5 million in the first quarter of 2009, based upon achievement of financial milestones.

On November 21, 2007, we entered into a $125.0 million credit facility which consists of a $90.0 million term loan, which was used to retire the $105.0 million outstanding term loan related to our September 2006 financing, and a $35.0 million revolving line of credit. Under the terms of the new credit facility, we are required to make the following payments:


	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
	(In thousands)

Long-term debt obligations	$	90,000	$	3,375	$	27,000	$	45,563	$	14,063

Total	$	90,000	$	3,375	$	27,000	$	45,563	$	14,063

Off-Balance Sheet Arrangements

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions, foreign currency forward contracts or any other off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

Our exposure to adverse movements in foreign currency exchange rates is primarily related to nominal payments to international website publishers. A hypothetical change of 10% in foreign currency exchange rates would not have a material impact on our financial statements or results of operations. All of our sales are denominated in U.S. Dollars.

Interest Rate Risk

Our exposure to market risks for changes in interest rates relates primarily to borrowings under our term loan facility and our revolving line of credit. As of November 30, 2007, we had $90.2 million of indebtedness outstanding under our term loan facility, all of which was locked at a fixed rate of interest until January 28, 2008. Based on our assets and liabilities as of November 30, 2007, and assuming the balance of these assets and liabilities remain unchanged until November 30, 2008, a one percent increase or decrease in BBA LIBOR would change our net income by approximately $521,000. We anticipate that we will repay a portion of the outstanding indebtedness under our term loan facility with the proceeds to us from this offering. See “Use of Proceeds.”

Recently Issued Accounting Standards

In July 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of SFAS 109. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006 with the cumulative effect of a change in accounting principle recorded as an adjustment to opening retained earnings. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption of this standard. FIN 48 requires that we recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained upon audit, based on the technical merits of the position. FIN 48 also provides guidance on the derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition attributable to the tax position. Our adoption of this interpretation in January 1, 2007 did not have a material impact on our financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS 157 addresses how companies should measure the fair value of assets and liabilities when fair value recognition or disclosure is required. Additionally, SFAS 157 formally defines fair value as the amount the company would receive if it sold an asset or transferred a liability to another company operating in the same market. The guidance of SFAS 157 shall be applied to the first reporting period beginning after November 15, 2007. The adoption of SFAS 157 is not expected to have a material impact on our financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. SFAS No. 159 permits companies to choose to measure certain financial instruments and other items at fair value. Unrealized gains and losses on items for which fair value measurement has been elected will be recognized in the income statement at each reporting date. The guidance of SFAS No. 159 shall be applied to the first reporting period beginning after November 15, 2007. The adoption of SFAS No. 159 is not expected to have a material impact on our financial position, results of operations, or cash flows.

BUSINESS

Overview

Our media business enables advertisers to reach highly-targeted online audiences through a network of proprietary and third-party websites. This network of owned and affiliate websites, which attracted more than 60,000,000 visitors in September 2007, creates a large amount of highly-targeted traffic which is desirable to advertisers. Our proprietary website publishing platform, SiteSense, allows us to dynamically generate and manage a variety of websites — from lead-generating websites to premium online communities — to provide the most relevant user experience and the most revenue potential for our network. The depth of development of an individual website is generally based on the nature of the specific domain name and the category to which it relates. We currently have three levels of domain name development:


	•	Highly-targeted websites such as TennisClinics.com and ParentingBooks.com, where consumers can find links to related websites. The specificity of the domain name allows us to generate revenue from highly relevant cost-per-click, or CPC, advertising links featured on these websites.

	•	Lead-generating websites such as CellularPlans.com and LowRate.com, that provide relevant content and comparison information on certain products or services and give consumers the opportunity to take a specific action, such as completing an application. We generate revenue from these websites on a cost-per-action, or CPA, basis.

	•	Premium enthusiast websites such as Photography.com and Gardens.com, that represent the development of online social networking communities around specific niche consumer categories. For these websites, we employ an editorial model that uses expertise and content provided by the community itself, complemented by our SiteSense platform, to create a compelling user experience. We generate revenue from these websites through a combination of advertising, subscriptions and e-commerce sales.

Our domain name marketplace combines our proprietary portfolio of domain names with those of third-party domain name owners that want to list their domain names for sale, creating what we believe is an efficient and liquid marketplace for high-quality domain names. Like the MLS for residential real estate, our Domain Listing Services, or DLS, aims to have the largest inventory for sale and the broadest distribution to buyers. Our customers can find and purchase these domain names on our sites BuyDomains.com and Afternic.com, or on sites that use our DLS, which includes seven of the top ten domain registrars. Our proprietary trading platform, SiteMarket, is used to identify and value high-quality domain names that are most relevant to small and medium-sized businesses seeking online identities. Our objective is to create an efficient, comprehensive, global marketplace for business owners looking to purchase premium domain names in the secondary market.

We generated $61.0 million in revenue in 2006 and $58.3 million in revenue during the nine months ended September 30, 2007. We generated $28.5 million in Adjusted EBITDA in 2006 and $24.1 million in Adjusted EBITDA during the nine months ended September 30, 2007. Our media business accounted for approximately 49% of our revenue in 2006 and approximately 52% of our revenue during the nine months ended September 30, 2007, and our domain name marketplace business accounted for approximately 51% of our revenue in 2006 and approximately 48% of our revenue during the nine months ended September 30, 2007.

Industry Background

Growth of Online Advertising and Internet Audience

According to a 2007 report by IDC, the number of global Internet users is projected to grow from approximately 950 million in 2005 to over 1.5 billion in 2009. In addition, increasing broadband access to the Internet is growing the number of Internet users and the amount of time consumers are spending online. While U.S. online advertising budgets are large and growing, online marketing expenditures represent a relatively small portion of the total advertising market. According to JupiterResearch, the U.S. online advertising market was projected to be $19.9 billion in 2007, representing approximately 8% of the total U.S. advertising market. JupiterResearch found that in 2006, online users devoted approximately 14 hours per week to consume each of television and Internet media, as compared with approximately four hours per week to radio and one hour per week to each of newspapers and magazines. We believe that over time, advertising expenditures will follow consumer behavior and businesses will allocate a larger share of their marketing budgets to online advertising.

Growth in Direct Search Internet Traffic

We believe that a significant and increasing amount of Internet traffic is generated by consumers who are effectively using the web browser address bar as a search engine. We refer to this type of online activity as Direct Search. For example, a consumer could type photography.com directly into their web browser address bar and be directed to the website associated with the term, in this case www.photography.com, rather than looking for information on photography using a search engine. By typing a search term directly into their web browser address bar, Internet users indicate an interest in a particular subject, which results in more highly-targeted online traffic when compared to typical search results.

Increasing Value of Targeted Online Audiences

The value of targeted Internet traffic has increased as advertisers continue to shift spending from offline media, such as magazines and television, to online media while they increase their adoption of performance-based online advertising strategies. Advertisers are attracted to the performance-based advertising models enabled by the Internet, where they pay for advertising only when a consumer takes a specific action, such as clicking on an advertising link, completing an application form or making an online purchase. According to JupiterResearch, the total Internet advertising market, excluding display advertising, is projected to grow 15% in 2008 to $14.1 billion, representing 62% of the total U.S. Internet advertising market. The continued growth in performance-based advertising depends on the ability to effectively intersect consumers’ interests with advertising targeted precisely to their expressed needs to produce a desired consumer action. Consequently, advertisers are seeking to reach specific online audiences, and performance-based online advertising distribution providers, such as Google and Yahoo!, are continually seeking to add more highly-targeted online properties to their networks to satisfy this growing demand for performance-based online advertising.

Growing Importance for Businesses to Establish a Meaningful Online Presence

According to IDC, there were approximately 8.3 million small and medium-sized businesses in the United States in 2007. As these companies look to establish online identities and develop websites, they will need to acquire domain names that accurately reflect their businesses. We believe that businesses, particularly new and small and medium-sized businesses, will use domain name marketplaces to assess the inventory of available domain names, or digital real estate, like they would review a database of real estate listings to evaluate available properties.

Growth in the Volume of Undeveloped Domain Name Properties

The volume of undeveloped domain name properties is growing, creating opportunities to make a market in the buying, selling and development of domain names. According to VeriSign, there were approximately 65.0 million .com and .net domain names registered as of December 31, 2006, an increase of 30% compared to December 31, 2005. VeriSign also estimates that as of December 31, 2006, there were 15.4 million domain names with a single-page website, which represented 23% of all .com and .net domain names. Many of the owners of these domain names seek services to generate revenue from their domain name either by selling the domain names or by deriving advertising revenue from the targeted traffic that the domain names generate. The models for generating revenue from undeveloped websites are evolving. In addition to the sale of their domain name registration rights, owners of domain names have several options for monetizing their online properties, including creating simple websites featuring advertising links related to the subject matter of the domain name; websites providing information, offers and incentives to purchase a product or complete an application for a particular service; and premium websites providing compelling content on an area of particular consumer interest. We believe that as the volume of undeveloped domain names continues to grow, the demand for domain name monetization providers will increase.

NameMedia Domain Name Monetization Solution

We provide a leading domain name monetization solution that is comprised of our media business, which generates advertising revenue from the domain names that we develop into websites, and our domain name marketplace, which generates revenue through our selling of domain names. We use our high-quality portfolio of more than 2,250,000 domain names, including more than 750,000 domain names that we own, to provide value to multiple constituencies including Internet users, advertisers, small and medium-sized businesses, and third-party domain name owners. Internet users can benefit from the relevant content and information that we provide through our extensive network of websites generated by our SiteSense platform. Advertisers benefit from access to large volumes of highly-targeted Internet traffic and performance-based online advertising opportunities. Small and medium-sized businesses benefit from access to our comprehensive listing of more than 2,000,000 domain names available for sale through our BuyDomains.com and Afternic.com websites and our DLS, as they seek the right domain names to establish online identities. Third-party domain name owners benefit from the ability to generate advertising revenue through our affiliate network, as well as from the ability to sell their domain names through our SiteMarket platform.

Key attributes of our business include:

Large and High-Quality Portfolio. We believe that our proprietary portfolio of more than 750,000 domain names is among the largest in the world. From this portfolio we have created an extensive network of websites that generates an increasing amount of Internet traffic across approximately 500 content categories. In addition to its breadth, we believe our domain name portfolio is differentiated by its quality. We have a policy not to own categories of domain names that include, among other things, registered trademarks or company names, vulgar or obscene language or content, or language or content associated with any illegal enterprise. We believe our domain name portfolio contains a significant number of high-quality domain names that will enable us to develop multiple premium websites that offer a compelling user experience. The size and quality of our domain name portfolio also enhances our marketplace business and enables us to create a more liquid secondary market. We believe that, as a result, we offer a wider selection of domain names for sale, making our marketplace more valuable to its users.

Leading Website Creation and Management Platform. We use our SiteSense platform to create and manage the websites in our network. This platform’s flexibility allows us to pursue a variety of development approaches, from websites that are focused on generating advertising leads as efficiently as possible, to websites that are enthusiast communities offering a combination of content, commerce and community elements in selected consumer niche categories.

Leading Marketplace and Trading Expertise. With an inventory of more than 2,000,000 owned and affiliate domain names for sale, we believe that our domain name marketplace is among the largest in the

world. We believe that the depth and quality of the inventory we offer makes it a valuable resource and an efficient marketplace for small and medium-sized businesses that are seeking to acquire a particular domain name that is owned by us or one of our third-party affiliates. SiteMarket uses our proprietary database of over seven years of records on domain names, which, due to the span of these records, we believe is the only database of its kind in the industry. We use SiteMarket to assist us in assigning a domain name value and quality ranking when we are evaluating the purchase of domain names, which we believe enables us to acquire domain names that have a high probability of resale on a cost-effective basis. We consider SiteMarket to be a competitive advantage for us as it allows us to make more informed domain name purchase and sale decisions.

The NameMedia Strategy

Our objective is to enhance our position as a leading targeted online media business and a leading online marketplace for domain names. To achieve this objective we intend to:

Continue to develop our premium domain names into enthusiast online communities. We intend to continue to develop our premium domain names to create a network of leading enthusiast, online communities in categories that have a high degree of consumer engagement, interaction and commerce. To date, we have launched premium enthusiast web properties in the photography, gardening, astrology and automotive categories and our strategy is to replicate this model across multiple enthusiast categories through internal development and selected acquisitions. We intend to apply our social networking technology across multiple categories to create a network of compelling enthusiast web properties.

Continue to grow our proprietary domain name portfolio. We intend to continue to grow and enhance the quality of our proprietary domain name portfolio. We plan to continue to acquire new high-quality domain names through multiple sources including previously registered names whose registration has expired, selected domain name portfolio acquisitions, participation in domain name auctions and the registration of new domain names.

Enhance our SiteSense platform to optimize the value of our proprietary and affiliate domain name portfolios. We will continue to enhance our technology platform that dynamically generates and manages websites in our network. We intend to enhance our ability to optimize the value of domain names by improving the technology features and functionality of our SiteSense platform. We plan to implement platform improvements to better segment our domain name portfolio, create a more relevant and compelling user experience, deliver more targeted and effective performance-based online advertising messages, and create compelling premium online communities.

Enhance our SiteMarket domain name trading platform. Our goal is to establish an extensive and efficient domain name marketplace that provides an aggregation point for available domain name inventory, much like the MLS for residential real estate. With our DLS, we intend to extend our distribution channels beyond our BuyDomains.com and Afternic.com websites to selected domain name resellers to ensure that our inventory is broadly available through channels where small and medium-sized businesses and consumers may shop for premium domain names. This broader distribution strategy, along with improvements in the functionality of our SiteMarket platform, are intended to increase the volume of domain names that we sell.

Pursue selected acquisitions. We will continue to evaluate potential opportunities to acquire businesses and technologies. Our strategy will focus on acquiring domain name portfolios, developed websites that supplement our consumer enthusiast websites, and companies that offer technology features or functionality that complement our existing products and services.

Products and Services

Media Business

We have developed a network of websites that enables consumers to find relevant content and product information across a wide range of categories. Our network of websites has been developed from our proprietary portfolio of more than 750,000 domain names and our affiliate network of more than 250,000 websites that use our SiteSense technology and website publishing platform. SiteSense automatically

assigns the domain name to one of approximately 500 categories, selects a website template from more than 500,000 variations for website design and layout, generates relevant related keywords for the domain name that enable targeted advertising, incorporates original articles and news feeds and delivers relevant advertising, resulting in a website populated with targeted content, commerce and advertising.

Our SiteSense platform also includes proprietary social networking functionality, including user-generated content publishing and media sharing modules that can be added to our premium enthusiast websites. This functionality powers the formation of robust online communities around common visitor interests.

The SiteSense platform efficiently generates websites for more than 1,000,000 domain names, generating a significant amount of targeted user traffic and creating the opportunity to deliver a large volume of performance-based online advertising. We believe that, collectively, our proprietary and affiliate website networks received more than 60,000,000 visitors in September 2007. Historically, most of our Internet traffic has come from non-paid sources, such as Direct Search and referral links.

Given the size of our domain name portfolio, our network of websites covers a wide variety of vertical content and consumer interest categories. We divide our domain name portfolio into approximately 500 individual categories that roll-up to 16 general categories, such as travel, business, technology, education, health, home, shopping, and sports, with no one general category constituting more than 15% of our domain name portfolio.

We also offer third-party domain owners the ability to generate advertising revenue from their domains through use of the SiteSense platform. This service is offered through three brands, SmartName.com, ActiveAudience.com and Goldkey.com, which are differentiated primarily by features and functions associated with the portfolio size and quality of domain names to be monetized.

One of the key elements of our SiteSense platform is its ability to automatically segment domain names and develop websites using the appropriate amount of content and most relevant online advertising format and message. The level of development of a given website is generally dependent on the particular domain name and the nature of the category to which it relates. We currently have three broad levels of website development:

Highly-Targeted Websites

We use our SiteSense platform to dynamically generate the majority of our websites and display advertising that relates to the topic of the domain name. This performance-based advertising includes CPC-sponsored links, which generate revenue to us when a visitor to one of our websites clicks on the link. Examples of websites that we own in this category include: GolfShop.com, LeatherLuggage.com, GreatDate.com, TennisClinics.com, CoolPhones.com, DiamondWatch.com, CouplesResorts.com, ComicBooks.com, Puzzle.com and ParentingBooks.com. We also allow third-party domain name owners to use our SiteSense platform through our affiliate network. The CPC links presented on the websites in our network are provided under our agreements with Google and Yahoo!. We receive a share of the net revenue that Google and Yahoo! receive from their advertisers when a user clicks on a CPC sponsored link.

Lead-Generating Websites

Our CPA websites feature useful content and comparison information on certain products and services and include CPA performance-based advertising that requires the website visitor to perform an action, such as completing a credit card application, submitting a form requesting information or making a purchase. We typically earn revenue when the customer completes the action. CPA advertising is designed to produce valuable leads for advertisers. The revenue we earn from a given CPA transaction is generally significantly higher than the revenue we receive from a given CPC advertisement. In addition to CPA advertising, some of these websites also provide display advertising for which we are paid on a cost per thousand-impressions basis. Examples of websites that we own that generate CPA advertising revenue include: CellularPlans.com, LowRate.com, CreditCardClub.com, EducationalCentral.com, AutomotiveLoans.com, ConsolidateYourDebts.com, AutomotiveCenter.com and MortgageApprovals.com.

Premium Enthusiast Websites

We are developing online communities that utilize our portfolio of domain names and our SiteSense technology platform. These websites offer a combination of content, commerce and community elements designed to produce comprehensive destination websites in selected consumer niche categories. We believe that we can create a network of online communities that are highly relevant to consumers and targeted to their interests. Unlike the model of early-generation websites, which relied on editors to publish content to readers, our strategy for developing our premium enthusiast websites utilizes social networking functionality where the expertise and experiences of the community generate the majority of the website content through discussion forums, blogs, media sharing and other user connectivity and self-expression tools. Enabling this model is our proprietary social networking functionality, including our Pixamo media-sharing technology, that allows us to rapidly develop and introduce new communities with a robust set of tools for the community to use, engage, connect, and communicate. While social networking first took hold among a young audience, we believe social networking functionality is applicable across broader audiences, particularly in areas of consumer interest where Internet users hold lifelong, passionate interests in a specific avocation.

Based on our experience in developing our premium enthusiast properties, we have found that adding content and community website features can significantly increase Internet user traffic volume to these websites. By expanding and enhancing content, these websites are more likely to be indexed by major search engines such as Google or Yahoo! and benefit from the incremental Internet traffic that can be generated by being included in search results.

Photography. We believe that with the introduction of affordable digital camera equipment, consumers have shown growing interest in photography. According to a 2007 report by IDC, it is estimated that $37.4 billion will be spent on over 122 million digital cameras in 2007. We own photography.com, a photography enthusiast website, photo.net, a leading online photography community, and more than 6,000 other photography-related websites, including photography-related domain names, such as familyphotos.com, rarephoto.com, and photographersforum.com. Before we developed our photography.com website, the majority of its user traffic was generated by consumers who used Direct Search and were directed to the website upon typing the domain name into their browser address bar. Because the website had no editorial content prior to its development, it was not indexed by the major search engines and therefore, the website did not appear prominently, if at all, in the search results provided by these services. After we launched the developed photography.com website with content and commerce features, the website regularly appears on the first page among the top Google search results in response to searching on the term photography, increasing the visits to the website from search engines. Our photography-related websites now attract more than 5,000,000 monthly visitors, with approximately 300,000 registered members who have uploaded more than 2,000,000 photos and participated in more than 45 discussion forums.

Gardening. According to a report by the National Gardening Association, gardening is a pastime enjoyed in 2006 by 85,000,000 households in the United States that spent more than $34.1 billion on gardening-related equipment, supplies and plants annually, highlighting the high degree of consumer engagement and spending associated with the category. We own Gardens.com, DavesGarden.com, a leading online gardening community, and more than 2,000 other gardening-related websites, such as landscaping.com, gardeneducation.com, and asiangardens.com. Our garden-related websites attract more than 1,500,000 monthly visitors with approximately 275,000 registered members who have uploaded more than 750,000 gardening-related images and who have participated in more than 200 active online discussion forums.

In addition to the photography and gardening categories, we have developed enthusiast categories such as Astrology (Tarot.com and DailyHoroscope.com) and Automotive (Driving.com), and are developing enthusiast categories, such as Biking (Biking.com) and Boating (Boating.com). We generate revenue from these websites through a combination of advertising, subscriptions and e-commerce sales. While our premium enthusiast websites did not generate a significant percentage of our revenue in 2006, we expect them to be a significant component of our revenue going forward.

Marketplace Business

Domain Name Sales

Through our online domain name marketplace, we sell Internet domain names owned by us or third parties primarily to small and medium-sized businesses that are establishing or expanding their online presence. We derive revenue from domain name sales primarily by acquiring domain names that we believe are well suited for resale and marketing and selling those domain names through our BuyDomains.com and Afternic.com websites and through selected resellers that use our DLS. We currently own more than 750,000 domain names, over two-thirds of which are .com domain names and nearly all of which we offer for sale. We acquire our owned domain names through multiple sources, including the following:


	•	Registering new names identified by us. For the nine months ended September 30, 2007, this source represented 43% of the domain names we acquired.

	•	Previously registered domain names that are not renewed at the domain name registry by the current owner. Each day a significant number of names become available through the registry in what is known as the daily drop. For the nine months ended September 30, 2007, this source represented 38% of the domain names we acquired.

	•	Private sales of domain names, whereby domain name owners offer to sell individual domain names or portfolios of domain names in negotiated transactions. For the nine months ended September 30, 2007, this source represented 14% of the domain names we acquired.

	•	Participation in domain name auctions, in which one of several online domain name auction companies offers domain names for sale in an auction process. For the nine months ended September 30, 2007, this source represented 5% of the domain names we acquired.

By combining our owned portfolio with that of third-party domain owners that want to sell their domains, we operate what we believe is an efficient and liquid domain name marketplace. Marketed as the DLS, our objective is to have the largest inventory of high-quality domains for sale and the broadest distribution to buyers, much like the MLS for residential real estate. Beyond listing the domain inventory on our own websites, BuyDomains.com and Afternic.com, we have agreements with more than 50 distribution partners, including seven of the top ten registrars, such as GoDaddy.com and Register.com. To date, we have sold domain names to customers in more than 100 countries.

We use our SiteMarket platform to assign values and quality rankings to domain names, a valuation and ranking process that is supported by a proprietary database that contains millions of historical records and data elements on domain names, including purchase and sales history, and third-party data. Our database and valuation criteria have been continually updated and refined since 1999.

BuyDomains.com

We offer nearly all of our owned domain names for sale directly on our BuyDomains.com website and through selected resellers that use our DLS. Many of our domain names carry a fixed price and can be purchased directly on our website through an online checkout system. Certain domain names require the customer to request pricing information by email or by calling our sales representatives. BuyDomains.com customers are primarily small and medium-sized businesses that are establishing or expanding their online presences. Recent domain names sold that illustrate this approach include BargainCity.com, BeautifulBride.com, CargoCarriers.com, FilmRentals.com, FitnessStore.com, GeneticTests.com, HistoricalProperties.com, MrMortgage.com, NewsForum.com, and WindTechnologies.com. The sales prices for our domain names range from several hundreds to tens of thousands of dollars.

Afternic.com

We also offer a service and technology platform that enables third-party domain name owners to sell their names through our Afternic.com website. To use Afternic.com, third-party domain name owners must register as a member and pay a membership fee. Domain names listed for sale on Afternic.com are auctioned, meaning

a domain name is listed with a minimum bid price and customers can bid on a domain name over a period of time. Domain names listed on Afternic.com may also include an asking price which enables a customer to buy the domain name immediately at that price. The domain names are permitted to stay on the Afternic.com website until they are sold. We receive a commission based on the sale value of domain names sold through this platform. For an additional commission, members may choose an expanded distribution option and participate in our DLS. As of September 30, 2007, there were more than 1,000,000 domain names listed for sale on Afternic.com.

Business Services

Customers that buy domain names often also need business services such as domain name registration, website hosting services and online marketing tools, among others. BuyDomains.com features a business resources section that provides links to providers of these business services and for which we are generally paid on a CPA basis when we refer a lead to a service provider.

Our Afternic.com website also offers additional services for domain name owners including escrow services, where we manage the transfer of domain names to ensure that a transaction is completed successfully; domain name appraisal services, in which we assist domain name owners in establishing valuations for their domain names; domain name hosting services through a third party; and assisted offer services for buyers. In addition, we offer our SiteSense platform to enable third-party domain name owners to generate advertising revenue while their domain names are listed for sale.

Sales and Marketing

The majority of our online media revenue is CPC advertising, meaning we deliver online advertisements provided by Google and Yahoo! and share a portion of the revenue generated from those advertisements. In 2004, 2005 and 2006, we derived more than 10% of our total revenue from Yahoo!. Google and Yahoo! maintain the direct relationships with the advertisers and provide us with CPC advertising services. We use Google for CPC advertising on our proprietary domain name portfolio, and we use Yahoo! for CPC advertising on our affiliate network of websites. Google and Yahoo! can terminate their respective agreements with us before the expiration of the term upon the occurrence of certain events. For example, our agreement with Yahoo! can be terminated by Yahoo! for our repeated abuse of the Yahoo! service or our failure to cure a material breach within the applicable cure period. Similarly, Google can terminate its agreement with us if our service has been suspended for more than six months as a result of our failure to cure a material breach in the applicable cure period or our engaging in certain prohibited actions. See “Risk Factor — We are dependent on Google and Yahoo!, our third-party, cost-per-click advertisement distribution providers, for a significant portion of our revenue. A termination of our agreements with Google or Yahoo! or a decrease in revenue that we derive from these relationships would adversely affect our business.” As of September 30, 2007, we had three sales and business development professionals that were responsible for CPA and display advertising arrangements, and five people responsible for qualifying and adding affiliate websites to our media network.

In our domain name marketplace, we generate the majority of revenue through a direct sales force. As of September 30, 2007, we had 16 account executives that sell premium domain names, primarily by responding to online and telephone-based pricing requests. Domain name sales are also made through selected resellers, the majority of which are domain name registrars. We also had two business development professional responsible for developing third-party relationships in the business services area.

In both our online media and domain name marketplace businesses, we purchase keyword advertising to generate a modest amount of our Internet traffic. As of September 30, 2007, we had two people dedicated to our keyword advertising strategy and purchasing.

We operate principally in domestic markets with respect to our online media business or domain name marketplace business and do not currently generate significant revenue from international geographic regions.

Technology

We have developed technologies and platforms throughout our business that we believe provide us with a competitive advantage. Significant technologies used in our business include those associated with valuing, acquiring and maintaining our domain names; systems used for automatically generating and dynamically updating and managing websites and reporting on advertising performance; and technologies used within our premium enthusiast websites.

We use our SiteMarket platform to evaluate and rank large numbers of domain names based on multiple proprietary and third-party sources. Our SiteMarket platform analyzes our proprietary database of over seven years of records on domain names, including purchase and sales history, and third-party data, to assist us in assigning a domain name value and quality ranking. Our platform provides statistical outputs, such as risk/return factors and risk adjusted value, which serve as a screening tool for our domain name portfolio management team. Our platform also partially automates the process of acquiring expired domain names, bidding on names in auctions and registering and transferring newly-acquired names. We intend to continue to invest in our domain name valuation and acquisition technologies, as well as the underlying database of historical domain name purchase and sale activity.

With respect to our media business, we use our SiteSense platform to dynamically generate and manage websites for our large portfolio of domain names. Our SiteSense platform includes the following features:


	•	Template engine that dynamically generates and manages 500,000 variations of website designs and layouts to optimize revenue potential


	•	Content library that contextually selects from original articles and dynamic news feeds from third-party sources

	•	Reporting and analytics engine that facilitates the management of large portfolios of domain names and continually reviews statistical performance of individual websites

	•	Ad serving technology that delivers category-specific advertisements

Our premium enthusiast websites rely on extensions to our SiteSense platform that are particularly applicable to community building and social networking, including:


	•	Registration functionality to establish user accounts and password management

	•	e-commerce and user subscription capabilities

	•	Online discussion forums

	•	Collaborative community dictionaries

	•	Blog hosting

	•	A media module with extensive content tagging and community features, incorporating our proprietary Pixamo media-sharing technology

We rely on third-party providers for co-location of our data servers, storage devices and network access.

As of September 30, 2007, we had 33 dedicated product development professionals. We also use independent contractors within the United States and abroad on an as-needed basis.

Competition

We have competitors in each of our product areas. As the Internet continues to develop, we expect additional competitors to arise.

Our current and potential future competitors in our media business include:


	•	Domain name portfolio owners whose primary business is online advertising, such as Demand Media, Marchex and Oversee.net

	•	Large Internet companies that provide performance-based advertising solutions directly to advertisers, such as Google, Microsoft and Yahoo!

	•	Large category-specific websites that could potentially overlap with some of our existing or future premium websites, such as CNET and WebMD

	•	Large media companies that offer advertising on their websites that could develop or acquire Internet assets competitive with our offerings

We also compete with traditional media companies for a share of advertisers’ overall marketing spending.

Our current and potential future competitors in our domain name marketplace include:


	•	Aftermarket domain name resellers, such as Sedo, whose business provides a marketplace for the resale of domain names

	•	Registrars, whose primary business is domain name registration and management of domain names, such as Demand Media, GoDaddy and Register.com

	•	Domain name auction companies, such as NameJet and SnapNames, which acquire domain names from similar sources as we do and sell them in an auction process

	•	Media and online advertising businesses that have portfolios of domain names, but do not currently offer them for sale

We believe we compete favorably in our principal markets based on factors including the following:


	•	Our substantial portfolio of owned domain names oriented towards small and medium-sized businesses

	•	Our experience with domain name transactions

	•	Our media network that exceeds one million websites

	•	Our relationships with domain name sellers and buyers, and online advertising industry participants

	•	Our technology assets and capabilities

Many of our current and potential competitors have longer operating histories, significantly greater financial, technical and marketing resources, greater name recognition and substantially larger user or customer bases than we have, and, therefore, have a significantly greater ability to attract advertisers and Internet users. See “Risk Factors — Risks Related to Our Industry — If we are unable to compete in highly competitive markets for domain name sales and performance-based online advertising, we may experience reduced demand for our products and services.”

Our ability to remain competitive will depend to a great extent upon our ability to maintain and enhance our portfolio of owned domain names and websites as well as the continued service of our senior management team. We cannot assure you that our media business or domain name marketplace will continue to compete favorably or that we will be successful in the face of increasing competition from existing competitors or new companies entering our principal markets.

Intellectual Property

We do not rely on patent protection for proprietary technology. Instead, we rely primarily on a combination of trade secrets, servicemarks, common law and registered trademarks and copyrights to protect our proprietary rights. We strategically pursue the registration of some of our trademarks and servicemarks and have obtained registration in the United States and other countries for some of our trademarks and

servicemarks, including “NameMedia.” We have obtained registration for one international trademark, “Afternic.”

Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop technology that is similar to ours. Our existing legal protections afford only limited protection for our technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Enforcement of claims that a third party has illegally obtained and is using our proprietary rights is expensive, time consuming and the outcome is uncertain. In addition, if any of our products or services or the technology underlying our products or services is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions. We cannot assure you that our products and services, or the technology underlying such products and services, do not infringe patents or proprietary rights held by others or that they will not in the future. We have in the past faced, and may in the future face, demands by third-party trademark owners asserting infringement or dilution of their rights and seeking transfer of acquired domain names under the Uniform Domain Name Dispute Resolution Policy administered by ICANN or actions under the U.S. Anti-Cybersquatting Consumer Protection Act. If we were unable to successfully defend against such third-party claims of infringement, we might have to pay significant damages, stop using the technology or content found to be in violation of a third party’s rights, seek a license for the infringing technology or content, or develop alternative non-infringing technology or content. Any required licenses may not be available to us on acceptable terms, if at all. In addition, developing alternative non-infringing technology could require significant effort and expense. If we cannot license or develop technology or content for any infringing aspects of our business, we may be forced to limit our service offerings. Any of these results could reduce our ability to compete effectively and harm our business.

Government Regulation

The legal and regulatory environment applicable to the Internet is continuing to evolve in the United States and elsewhere. The manner in which existing laws and regulations will be applied to the Internet in general, and how they will relate to our business in particular, has not yet been definitively settled in many cases. For example, we often cannot be certain how existing laws will apply in the online context, including, without laws relating to topics such as privacy, defamation, credit card fraud, advertising, taxation, content regulation, quality of products and services and intellectual property ownership and infringement. In addition, advertising and Internet commerce trade and industry associations have in the past and will continue to adopt guidelines and standards for Internet advertising and commerce, some of which may be applicable to parts of our business.

While we pay close attention to the shifting regulatory and industry environments, we cannot predict the impact of future changes in those environments, and we anticipate that it may be necessary in the future to adapt our business in response to such changes. Any changes in existing legislation or enactment of new legislation applicable to us could expose us to substantial liability. Such changes could also cause us to incur significant expenses as a result of our compliance obligations. Furthermore, such changes could dampen the growth in use of the Internet in general, which, in turn, can have an overall negative impact on our business and our revenue.

Laws that could have an impact on our business have already been adopted. The CAN-SPAM Act of 2003 and similar laws adopted by a number of states and foreign countries are intended to regulate unsolicited commercial e-mails, create criminal penalties for unmarked sexually-oriented material and e-mails containing fraudulent headers and control other abusive online marketing practices. The Children’s Online Privacy Protection Act imposes additional restrictions on the ability of online services to collect user information from minors.

The foregoing legislation may impose significant additional costs on our business or subject us to additional liabilities if we were not to comply fully with their terms, whether intentionally or not. Each of the Children’s Online Privacy Protection Act and the CAN-SPAM Act of 2003 impose fines and penalties to persons and operators that are not fully compliant with their requirements. We intend to comply with the laws

and regulations that govern our industry, and we employ internal resources and incur outside professional fees to establish, review and maintain policies and procedures to reduce the risk of noncompliance.

In addition to legislation, our business may also be impacted by our ability to comply with our own privacy policies and to provide adequate security to the personal data within our possession. We post our privacy policy and practices concerning the use and disclosure of any user data on our websites. Any failure by us to comply with posted privacy policies, Federal Trade Commission, or FTC, requirements or other domestic or international privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies, or actions by our customers or other affected third parties, all of which could potentially harm our businesses, results of operations and have a negative impact upon our overall financial condition. In addition, if we, or service providers acting on our behalf, fail to adequately secure the personal data that we collect from consumers, we could be subject to enforcement actions by the FTC and other governmental agencies. Such enforcement actions can result in fines, mandatory changes to our business practices and negative publicity.

In addition to existing legislation and regulatory enforcement actions, there are a large number of legislative proposals before the United States Congress and various state legislative bodies regarding consumer protection and privacy issues which relate to our businesses. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm our business by resulting in a decrease in user registrations for our services and a resulting decline in revenue. These decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before users can utilize our services.

Employees

As of September 30, 2007, we had 136 employees, all located in the United States, including 14 in operations, portfolio management and online keyword advertising, 33 in product development, 75 in sales and marketing, and 14 in general and administration. We have never had a work stoppage and none of our employees is represented by a labor organization or under any collective bargaining arrangements. We consider our employee relations to be good.

Facilities

Our principal executive offices are located in Waltham, Massachusetts, where we lease one property with approximately 19,931 square feet under a lease that expires in May 2009. We also lease server space in Sterling, California; Ashburn, Virginia; Dallas, Texas and Portland, Oregon. We believe that our space will be adequate for our needs and that suitable additional or substitute space in the future will be available to accommodate the foreseeable expansion of our operations.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims of alleged infringement, misuse or misappropriation of intellectual property rights of third parties. In addition, in the normal course of business, we may also be subject to claims arising out of our operations, and may file collection claims against delinquent advertisers. As of the date of this prospectus, there are no claims or actions pending or threatened against us that, if adversely determined, would have a material adverse effect on us.

MANAGEMENT

Executive Officers and Directors

The following table sets forth information about our executive officers and directors and as of the date of this prospectus:


Name	Age		Position

Kelly P. Conlin		47	Chairman and Chief Executive Officer
Vincent A. Chippari		47	Executive Vice President and Chief Financial Officer
Jeffrey S. Bennett		44	President and Chief Operating Officer and Director
Brian L. Farrey		47	Chief Technology Officer
Brian G. Carr		42	Senior Vice President and General Manager, Direct Search Network
Peter T. Lamson		44	Senior Vice President and General Manager, Domain Marketplace
Brian D. Lucy		41	Senior Vice President of Finance, Treasurer and Secretary
Hugh O’Neill, Jr.		53	Senior Vice President and General Manager, Portfolio Management
Maria A. Cirino (1)(2)		44	Director
Robert J. Davis (3)		51	Director
D. Richard de Silva		34	Director
Russell S. Lewis (1)(3)		53	Director
Martin J. Mannion (2)		47	Director
Joseph S. Tibbetts, Jr. (1)		55	Director


(1)	Member of the audit committee
(2)	Member of the compensation committee
(3)	Member of the nominating and corporate governance committee

Provided below are biographies for each of our executive officers and directors listed in the table above.

Kelly P. Conlin has served as our Chief Executive Officer since January 2006 and as our Chairman since March 2007. Prior to joining NameMedia, Mr. Conlin was President and Chief Executive Officer and a director of Primedia, Inc., a special interest consumer media company, from October 2003 to October 2005. From September 1989 to September 2002, Mr. Conlin was employed by International Data Group, or IDG, a technology media, research and event company, serving as President and Chief Executive Officer from March 1999 to September 2002, as President from October 1995 to September 2002 and in other executive roles from September 1989 to October 1995. From January 2003 to September 2003, Mr. Conlin was an advisor to Providence Equity Partners, a private investment firm specializing in equity investments in communication and media companies. He has a B.A. from Carleton College and an M.B.A. from Harvard Business School.

Vincent A. Chippari has served as our Executive Vice President and Chief Financial Officer since September 2006. Prior to joining NameMedia, Mr. Chippari was Chief Strategy Officer of Thomson Healthcare, a provider of information solutions to professionals in the healthcare industry, from May 2005 to September 2006. From January 1998 to May 2005, he served as Executive Vice President and Chief Financial Officer of Information Holdings Inc., a provider of information solutions to intellectual property and regulatory professionals. Mr. Chippari holds a B.S.B.A. from Bryant University and an M.B.A. from the University of Connecticut. Mr. Chippari is a Certified Public Accountant.

Jeffrey S. Bennett has served as our President and Chief Operating Officer and as a director since February 2005. Prior to joining NameMedia, Mr. Bennett was Executive Vice President of Corporate Development for Terra Lycos, a wholly-owned subsidiary of Terra Networks, S.A., a global Internet portal and access provider, from October 2000 to December 2002. From December 1996 to October 2000, Mr. Bennett

served in various executive roles that included General Manager of e-commerce, Vice President of Business Development and Senior Vice President of Corporate Development for Lycos, Inc., an Internet web portal. From January 2003 to December 2004, Mr. Bennett was an independent consultant. Mr. Bennett holds a B.S. from Bentley College.

Brian L. Farrey has served as our Chief Technology Officer since October 2006. Prior to joining NameMedia, Mr. Farrey was employed by Monster Worldwide, Inc., a global online career and recruitment resource, as President of Monster Techologies from March 2002 to October 2006. Prior to holding that position, Mr. Farrey was Group President of Monster.com from March 2001 to February 2002. Mr. Farrey holds a B.A. from the Rochester Institute of Technology and an M.C.S. from Worcester State College.

Brian G. Carr has served as our Senior Vice President and General Manager of Direct Search Network since February 2007. Mr. Carr also served as our Vice President of Affiliate Network from October 2006 to February 2007 and our Senior Director of Affiliate Services from March 2005 through October 2006. Prior to joining NameMedia, Mr. Carr served as General Manager of Business Operations for Terra Lycos, from March 2001 to February 2005. Mr. Carr holds a B.S. from Babson College.

Peter T. Lamson has served as our Senior Vice President and General Manager, Domain Marketplace since October 2005. Prior to joining NameMedia, Mr. Lamson served as Chief Operating Officer of DirectoryM, a provider of Internet business directories, from July 2004 to October 2005. From June 2000 to April 2004, Mr. Lamson was employed by MonsterMoving, a division of Monster Worldwide that provides online consumer relocation assistance, serving as Vice President of Products and Operations from June 2000 to June 2001 and as Chief Operating Officer from June 2001 to April 2004. Prior to its sale to MonsterMoving, Mr. Lamson served as Vice President of Product and Operations of MoveCentral from 1998 to 2000. Mr. Lamson holds a B.A. from Middlebury College and an M.B.A. from Harvard Business School.

Brian D. Lucy has served as our Senior Vice President of Finance, Treasurer and Secretary since September 2006. Mr. Lucy also served as our Vice President, Chief Financial Officer, Treasurer and Secretary from February 2005 to September 2006. Prior to joining NameMedia, Mr. Lucy served as Vice President and Chief Financial Officer of United States Operations for Terra Lycos, from February 2001 to October 2004. Mr. Lucy holds a B.A. from Villanova University and a B.S. from Salem State College. Mr. Lucy is a Certified Public Accountant.

Hugh O’Neill, Jr. has served as our Senior Vice President and General Manager of Portfolio Management since May 2006. Prior to joining NameMedia, Mr. O’Neill was employed by Sun Life Financial, Inc., where he was responsible for worldwide derivatives and served as Vice President of Derivatives and Investment Strategies from February 2003 to May 2006, and as Assistant Vice President of Derivatives and Investment Strategies from October 2001 to February 2003. Mr. O’Neill holds a B.S. from West Chester University, an M.S. from Drexel University and has completed doctoral level work in Physics at Tufts University.

Maria A. Cirino has served as a director since December 2005. Since March 2006, Ms. Cirino has served as a Partner at .406 Ventures, a venture capital firm. From February 2005 until March 2006, Ms. Cirino served as Senior Vice President of VeriSign Managed Security Services, a division of VeriSign, Inc., a provider of infrastructure services for Internet and telecommunications networks. From February 2000 until February 2005, Ms. Cirino served as Chief Executive Officer and Chairman of Guardent, Inc., a managed security services corporation. Ms. Cirino served as a board member of Keane, Inc., a public company that provides information technology and business process services, from May 2000 until June 2007, and has also served on the board of a number of private companies. Ms. Cirino holds a B.A. from Mount Holyoke College.

Robert J. Davis has served as a director since February 2005. Since February 2001 to present, Mr. Davis has been with Highland Capital Partners, a venture capital firm, where he is presently Managing General Partner. From October 2000 to February 2001, Mr. Davis served as Chief Executive Officer of Terra Lycos. From 1995 to October 2000, Mr. Davis served as Chief Executive Officer of Lycos, an Internet web portal. Mr. Davis also serves as a board member of several private companies. Mr. Davis holds a B.S. from Northeastern University and an M.B.A. from Babson College.

D. Richard de Silva has served as a director since February 2006. Since December 2007, Mr. de Silva has served as a General Partner at Highland Capital Partners. Mr. de Silva initially joined Highland Capital Partners in April 2003 and served as a Principal from December 2004 to December 2006 and as a Partner from December 2006 through November 2007. From May 2000 to December 2002, Mr. de Silva served as President of SiteBurst, Inc., an enterprise software vendor of channel management solutions, which he co-founded. Mr. de Silva holds an A.B. in History from Harvard College, an M.Phil. in International Relations from Cambridge University and an M.B.A. from Harvard Business School.

Russell S. Lewis has served as a director since January 2006. Since August 2007, Mr. Lewis has served as Senior Vice President of Strategic Development of VeriSign, Inc., a provider of infrastructure services for Internet and telecommunications networks. From January 2005 to August 2007, Mr. Lewis served as Senior Vice President of Corporate Development at VeriSign. From February 2002 to January 2005, Mr. Lewis served as the General Manager of VeriSign Naming and Directory Services Group. Prior to joining VeriSign, Mr. Lewis ran TransCore, a wireless transportation systems integration company. Mr. Lewis has also served on the board of Delta Petroleum Corporation since June 2002 and has served on the boards of a number of private companies. Mr. Lewis holds a B.A. in Economics from Haverford College and an M.B.A. from Harvard Business School.

Martin J. Mannion has served as a director since February 2005. Since April 2001, Mr. Mannion has served as Managing Partner and Managing Member of various entities affiliated with Summit Partners, a private equity and venture capital firm. Mr. Mannion has been employed at Summit Partners since August 1985 and has been a General Partner since January 1987. Mr. Mannion also has served on the board of American Dental Partners, Inc., a public company that assists dental practices manage their operations, since 1996 and has served on the board of a number of private companies. Mr. Mannion holds an A.B. from Princeton University and an M.B.A. from Harvard Business School.

Joseph S. Tibbetts, Jr. has served as a director since December 2006. Since October 2006, Mr. Tibbetts has served as Senior Vice President and Chief Financial Officer of Sapient, Inc., a technology consulting services company. From February 2003 to June 2006, Mr. Tibbetts served as Senior Vice President and Chief Financial Officer of Novell, Inc., an enterprise software company. From March 2000 to June 2002, Mr. Tibbetts served as a General Partner at Charles River Ventures, a venture capital firm. From May 1998 to February 2000, Mr. Tibbetts was Chief Financial Officer of Lightbridge, Inc., a wireless telecommunications software and services provider, and from June 1996 to March 1998, he held the same position at SeaChange International, Inc., a digital video systems provider. Mr. Tibbetts holds a B.S. from the University of New Hampshire.

Composition of the Board of Directors after this Offering

Our board of directors currently consists of eight members, of whom Mr. Davis and Mr. Mannion were elected as directors under the board composition provisions of a stockholders agreement. The board composition provisions of the stockholders agreement will be terminated upon the consummation of this offering. Upon the termination of these provisions, there will be no further contractual obligations regarding the election of our directors. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal. Our by-laws permit our board of directors to establish by resolution the authorized number of directors, and our amended and restated certificate of incorporation provides that the authorized number of directors may be changed only by resolution of the board of directors.

Following the offering, the board of directors will be divided into three classes with members of each class of directors serving for staggered three-year terms. The board of directors will consist of Class I directors (currently and ), Class II directors (currently , and ) and Class III directors (currently , and ), whose initial terms will expire at the annual meetings of stockholders held in 2008, 2009 and 2010, respectively. Our classified board could have the effect of making it more difficult for a third party to acquire control of us.

Our board of directors has considered the relationships of all directors and, where applicable, the transactions involving them described below under “Certain Relationships and Related Party Transactions” and

determined that each of the directors, with the exception of Mr. Conlin, our Chairman and Chief Executive Officer, and Mr. Bennett, our President and Chief Operating Officer, qualifies as an “independent director” under the applicable rules of the Nasdaq Global Market and the SEC.

Board Committees

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and function of each of our committees complies with the rules of the SEC and the Nasdaq Global Market that will be applicable to us, and we intend to comply with additional requirements to the extent that they become applicable to us.

Audit Committee. Joseph S. Tibbetts, Jr., Maria A. Cirino and Russell S. Lewis currently serve on the audit committee. Mr. Tibbetts is the chairman of our audit committee. The audit committee’s responsibilities include:


	•	appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;

	•	pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

	•	reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

	•	coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;

	•	establishing policies and procedures for the receipt and retention of accounting related complaints and concerns; and

	•	preparing the audit committee report required by Securities and Exchange Commission rules to be included in our annual proxy statement.

Our board of directors has determined that Mr. Tibbetts qualifies as an “audit committee financial expert” as defined under the Securities Exchange Act of 1934 and the applicable rules of the Nasdaq Global Market.

Compensation Committee. Martin J. Mannion and Maria A. Cirino currently serve on the compensation committee. Mr. Mannion is the chairman of our compensation committee. The compensation committee’s responsibilities include, but are not limited to:


	•	annually reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer;

	•	evaluating the performance of our chief executive officer in light of such corporate goals and objectives and determining the compensation of our chief executive officer;

	•	reviewing and approving the compensation of our other executive officers;

	•	overseeing and administering our compensation, welfare, benefit and pension plans and similar plans; and

	•	reviewing and making recommendations to the board with respect to director compensation.

Nominating and Corporate Governance Committee. Robert J. Davis and Russell S. Lewis currently serve on the nominating and corporate governance committee. Mr. Davis is the chairman of our nominating and corporate governance committee. The nominating and corporate governance committee’s responsibilities include, but are not limited to:


	•	developing and recommending to the board criteria for board and committee membership;

	•	establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders;


	•	identifying individuals qualified to become board members;

	•	recommending to the board the persons to be nominated for election as directors and to each of the board’s committees;

	•	developing and recommending to the board a code of business conduct and ethics and a set of corporate governance guidelines; and

	•	overseeing the evaluation of the board and management.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee. None of the current members of our compensation committee has ever been one of our employees.

Corporate Governance

We will adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics will be available on our website at www.namemedia.com. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website.

Executive Officers

Each of our executive officers has been elected by our board of directors and serves until his or her successor is duly elected and qualified.

EXECUTIVE COMPENSATION

Named Executive Officers

Our named executive officers, or NEOs, are:


	•	Kelly P. Conlin, Chief Executive Officer;

	•	Vincent A. Chippari, Executive Vice President and Chief Financial Officer;

	•	Jeffrey S. Bennett, President and Chief Operating Officer;


	•	Brian L. Farrey, Chief Technology Officer; and


	•	Peter T. Lamson, Senior Vice President and General Manager, Domain Marketplace.

Compensation Discussion and Analysis

Evolution of our Compensation Approach

Our compensation approach is tied to our stage of development as a company with a limited operating history. Historically, our board of directors reviewed and approved all of our compensation packages, including executive officer salaries, annual cash incentive bonuses and equity incentive grants. Our board of directors determined the appropriate level of each compensation component for each executive officer based upon compensation data and surveys regarding private venture capital-backed companies collected from research informally conducted and supplied by board members. Our board of directors has also relied on its members’ business judgment and collective experience in the technology industry. Although it did not benchmark our executive compensation program and practices, our board of directors has historically aimed to set our executive compensation at levels that it believes are necessary to attract, retain and motivate our executive officers. For determining an executive officer’s target compensation, other than our Chief Executive Officer, our board of directors considered input from our Chief Executive Officer regarding an executive officer’s responsibilities, performance and compensation and our Chief Executive Officer’s recommendation for such executive officer’s compensation. Our board of directors meets in executive session, and our Chief Executive Officer is not permitted to attend during board director determinations regarding his compensation. Our board of directors has the ability to materially increase or decrease the recommendations made by our Chief Executive Officer with regard to the compensation provided to our executive officers. For all of our NEOs, each of their base salary, annual cash incentive bonus target levels and equity incentive grants were determined pursuant to written agreements negotiated at the time of their employment or subsequently renegotiated. In setting the amount and mix of compensation elements for our NEOs, our board of directors did not apply any quantitative formula. Rather, our board of directors relied upon its judgment and considered the following:


	•	the board’s understanding of the compensation paid by other companies with which we believe we compete for executive officers;

	•	the seniority and responsibility levels of such executive officer;

	•	our ability to replace the executive officer; and

	•	the total cash compensation of the executive officer at his or her prior employment.

Beginning with 2008 compensation decisions, our recently formed compensation committee will review and approve all of our compensation programs and packages, including executive officer salaries, annual cash incentive bonuses and equity incentive grants. As we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve. For example, over time, we expect to reduce our reliance upon informal research and surveys in favor of a more empirically-based approach that uses benchmarks as a tool to establish executive salary and compensation levels commensurate with our industry. Our compensation committee expects, on an annual basis, to set base salaries and annual cash incentive bonus targets for the following year, as well as to determine equity incentive awards for our executive officers.

Overview

We believe that the compensation of our executive officers should reinforce a sense of ownership and overall entrepreneurial spirit and focus executive behavior on the achievement of our annual financial targets as well as long-term business objectives and strategies. Accordingly, our executive officer compensation packages are designed to achieve the following objectives:


	•	to provide competitive compensation that attracts, motivates and retains talented and experienced executive officers with the skills necessary for us to achieve our business plan; and

	•	to align an executive officer’s interest with stockholders’ value creation by:


	•	linking a significant portion of the total cash compensation paid to our NEOs to the achievement of our annual corporate performance objectives, or annual performance objectives for a division of our business for which an executive has management responsibility, by basing annual cash incentive compensation to corresponding financial targets, primarily revenue and Adjusted EBITDA; and

	•	utilizing appropriate performance goals and long-term incentives for our equity awards.

We use a mix of short-term compensation (base salaries and annual cash incentive compensation) and long-term compensation (primarily stock options and, in certain cases, restricted stock units) to provide a total compensation structure that is designed to reward our executive officers for past performance, provide cash incentives to motivate and reward our executive officers for future performance and align the interests of management and stockholders by providing management with incentives through equity ownership. In addition, we provide our executive officers a variety of benefits that are available generally to all salaried employees. We view these compensation components as related but distinct.

The compensation policy described above is applied to all of our NEOs in the same manner. All of our NEOs total compensation is comprised of the same elements which are base salary, annual cash incentives, long-term incentive awards and benefits. Any differences in the amounts of compensation actually paid to our NEOs upon application of our compensation policy is based upon our board of directors’ judgment and application of the factors described above. In October 2007, our board of directors authorized the entry into and execution of the executive agreements with Messrs. Conlin, Chippari and Bennett, which among other things, includes their annual base salary and annual cash incentive bonus target levels. For additional information regarding these executive agreements, see “— Executive Agreements and Change of Control Arrangements” below. Our board of directors entered into executive agreements with only these NEOs because it determined that the seniority and responsibility levels of these NEOs as the Chief Executive Officer, Executive Vice President and Chief Financial Officer and President and Chief Operating Officer, were significantly higher than our other NEOs.

Executive Compensation Components

Our compensation program consists of the following components:


	•	base salary;

	•	an annual cash incentive program;

	•	long-term incentive awards, primarily in the form of stock options and restricted stock units; and

	•	benefits.

Although each element of compensation described below is considered separately, our board of directors and our compensation committee takes into account the aggregate compensation package for each individual in its determination of each individual component of that package. Our compensation philosophy is to put significant weight on those aspects of compensation tied to performance, such as long-term incentives in the form of stock options and restricted stock units and annual cash incentives based on measurable performance objectives, such as corporate and divisional revenue and Adjusted EBITDA.

Base Salary

Our board of directors has fixed executive officer base salaries at a level it believes enables us to hire and retain individuals in a competitive environment and to reward satisfactory individual performance and contribution to our overall business goals. Base salaries for our executive officers have been initially set in an offer letter or employment agreement with the executive officer at the outset of employment and were negotiated with our board of directors taking into account the factors described above.

We hired Mr. Conlin as our Chief Executive Officer in January 2006 and established his base salary at $275,000 per year. We hired Mr. Chippari as our Executive Vice President and Chief Financial Officer in September 2006 and established his base salary at $275,000 per year. In February 2006, we appointed Mr. Bennett as our President and Chief Operating Officer and established his base salary at $275,000 per year. Our board of directors determined these 2006 base salary amounts were appropriate after negotiations with each NEO. In each instance our board of directors placed significant weight on what they believed was a competitive salary for chief executive officers, presidents and chief financial officers in the technology industry. Additionally our board of directors determined that the base salary for Messrs. Conlin, Chippari and Bennett should be higher than our other NEOs because they are the most senior officers and therefore would have the most responsibility.

Messrs. Farrey’s and Lamson’s base salaries reflect the initial base salaries that we negotiated with each of them at the time of their initial employment in October 2006 and September 2005, respectively, and our subsequent adjustments to their base salaries to reflect market increases, our growth and development, their individual performance and experience, changes in the cost of living, and changes in their individual roles and responsibilities.

The base salaries of all executive officers are reviewed annually and may be adjusted based on the factors described above. We may also increase the base salary of an executive officer at other times if a change in the scope of the officer’s responsibilities justifies such a change or in order to maintain salary equity among executive officers. Historically we have not applied specific formulas to set base salary or to determine salary increases, nor have we sought to formally benchmark base salary against similarly situated companies. The following table sets forth base salaries of our NEOs for 2006 and 2007 and the percentage increase for each NEO.


					% Increase
Executive	2006 Salary(1)		2007 Salary(1)		(2006-2007)

Kelly P. Conlin		275,000		275,000		0	%
Vincent A. Chippari		275,000		275,000		0	%
Jeffrey S. Bennett		275,000		275,000		0	%
Brian L. Farrey		225,000		227,100		0.9	%
Peter T. Lamson		200,000		265,000		4.0	%


(1)		Represents base salary during 2006 and 2007 on an annualized basis. For amounts actually paid during 2006, see “— Summary Compensation Table — 2006 and 2007” below.

In 2007, our board of directors determined that since Messrs. Conlin’s, Chippari’s and Bennett’s negotiated base salaries remained competitive, no increase was necessary to motivate and retain them. In October 2007, we entered into executive agreements with each of Messrs. Conlin, Chippari and Bennett pursuant to which such NEO’s base salary remained at $275,000. For additional information regarding these executive agreements, see “— Executive Agreements and Change of Control Arrangements” below. Mr. Farrey’s salary increased to $227,100 which reflected an annual merit increase over his 2006 base salary. Mr. Lamson’s salary initially increased to $208,000 which reflected an annual merit increase over his 2006 base salary. In September 2007, our board of directors increased Mr. Lamson’s salary to $265,000 as a result of his increasing importance to our future strategic success.

Annual Cash Incentive Program

We maintain an annual cash incentive program in which each of our executive officers participates. We designed our annual cash incentive program to motivate our executives to achieve key corporate financial objectives and to reward substantial achievement of these company financial objectives. Our board of directors based annual cash incentives on both operational revenue and Adjusted EBITDA. Adjusted EBITDA represents EBITDA plus stock-based compensation expense and non-cash charges related to the early extinguishment of debt. For more information regarding our Adjusted EBITDA calculation see Footnote 4 in “Summary Financial Data.” For purposes of calculating Adjusted EBITDA for the determination of 2007 annual cash incentives, Adjusted EBITDA also excluded the impact of certain litigation costs. Our board of directors believes that establishing corporate financial goals as targets for the annual cash incentives appropriately encourages our executive officers’ success as a team. Our board of directors chose operational revenue because it believed that, as a growth-oriented company, we should reward revenue growth. Our board of directors chose Adjusted EBITDA because it believed that Adjusted EBITDA is a measure of our efficiency and our board of directors wants to promote cost effectiveness.

Under our annual cash incentive program, bonuses are paid based on the aggregate percentage attainment against these goals, with 100% attainment resulting in a payment of 100% of the target cash incentive bonus. No bonus is paid if the aggregate attainment falls below certain minimum thresholds, and at such minimum thresholds only 50% of the target cash incentive bonus is paid. If we overachieve against our goals, the plan also provides for bonus payments of up to 150% of target bonuses. The target percentage is adjustable up or down on a pro rata basis based on our corporate performance as measured against the attainment of these goals.

For 2007, operational revenue and Adjusted EBITDA targets, for all of our NEOs other than Mr. Lamson, were based on the company’s overall performance. For Mr. Lamson, operational revenue and Adjusted EBITDA targets were based on our overall performance as well as our marketplace division’s contributions to the company’s performance. Our board of directors felt that it was more appropriate to structure Mr. Lamson’s cash incentives this way because he manages and oversees the domain marketplace division. Each NEOs bonus target amount was set by our board of directors, and the overall weighting for each NEO as set forth below:


													Target
										Marketplace			Bonus At
				Corporate			Marketplace			Divisional			100%
	Corporate			Adjusted			Divisional			Adjusted			Achievement
	Revenue			EBITDA			Revenue			EBITDA			of
Executive	Goal			Goal			Goal			Goal			Goals ($)

Kelly P. Conlin		35	%		65	%		—			—		$	225,000
Vincent A. Chippari		35	%		65	%		—			—			75,000
Jeffrey S. Bennett		35	%		65	%		—			—			125,000
Brian L. Farrey		35	%		65	%		—			—			56,250
Peter T. Lamson		10	%		15	%		25	%		50	%		66,250

The target and maximum payout amounts were set at levels our board of directors determined were appropriate in order to motivate performance at or above the levels necessary for us to achieve our business plan. Messrs. Conlin’s and Chippari’s target and maximum payout amounts were determined at the time of their hire in 2006. Mr. Bennett’s target and maximum payout amounts were determined at the time of his appointment as President and Chief Operating Officer in 2006. Our board of directors determined these amounts were appropriate after negotiations with each NEO for the same reasons discussed above in “— Base Salary.” Further details about the annual cash incentive program and the payments made to our executive officers in 2007 are provided below in the “— Summary Compensation Table” and “— Grants of Plan-Based Awards-2007” table and the corresponding footnotes.

For 2007, corporate revenue was % of our $ million target and the corporate Adjusted EBITDA was % of our $ million target, and our marketplace divisional revenue was % of its $ million target and its divisional Adjusted EBITDA was % of its $ million target. Based on the targeted thresholds discussed previously, for our NEOs other than Mr. Lamson, annual cash incentive bonuses were

awarded based on a % achievement of the bonus target. Mr. Lamson’s annual cash incentive bonus was awarded based on a % achievement of his bonus target.

The above-referenced performance targets and results were determined using our unaudited financial results and thus differ from the actual results as reported in our audited consolidated financial statements included elsewhere in this prospectus. You should read these consolidated financial statements, the related notes to these financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The above-referenced performance targets should not be interpreted as a prediction of how we will perform in future periods. As described above, the purpose of these targets was to establish a method for determining the payment of cash based incentive compensation. You are cautioned not to rely on these performance goals as a prediction of our future performance.

Long Term Incentive Awards

The purpose of our equity-based long-term incentives are to attract and retain talented employees, further align employee and stockholder interests, and continue to closely link employee compensation with company performance. Our equity-based long-term incentive program provides an essential component of the total compensation package offered to employees, reflecting the importance that we place on motivating and rewarding superior results with long-term and performance-based incentives. Our board of directors believes that stock options are an effective tool in achieving our objective of tying equity incentives to corporate achievement and, moreover, align our executives’ interests with stockholder value creation. Our board of directors has not applied specific formulas to determine equity award grants, nor has it sought to formally benchmark equity award grants against similarly situated companies.

Our board of directors granted restricted stock units to certain of our executives officers in connection with the amendment of some of the stock options held by these individuals. As discussed in greater detail in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Accounting for Stock-Based Compensation,” in 2006 our board of directors determined that, in order to preserve the value of previously granted stock options which were granted with the intent of aligning our executives’ incentives with stockholder value creation, it was in our best interest and the best interest of our optionees to increase the exercise price of certain options to avoid potential penalties under Section 409A of the Internal Revenue Code. Our board of directors felt that the potential for such penalties significantly diminished the intended purpose of these equity awards. The number of shares covered by each amended stock option was decreased to ensure that the aggregate exercise price of the affected option remained unchanged. In addition, our board of directors awarded affected optionees who agreed with us to amend their affected options, including Messrs. Conlin, Bennett and Lamson, restricted stock units covering that number of shares of our common stock as equal to the number of shares by which their affected options were reduced. Our board believes that these restricted stock unit grants helped preserve the intended objective of the original option award. Our board of directors has not subsequently granted any restricted stock units. Equity incentive awards are made under our 2005 Equity Incentive Plan, which is discussed in more detail below in “Benefit Plans — 2005 Equity Incentive Plan.”

We do not have any program, plan or obligation that requires us to grant equity compensation on specified dates and, because we have not been a public company, we have not made equity grants in connection with the release or withholding of material non-public information. We expect that our compensation committee will establish an equity grant policy.

The primary form of long-term equity incentives granted by our board has been stock options, however, our board of directors has granted restricted stock units in limited circumstances as described above. Our board of directors has granted stock options and restricted stock units under our equity award plans at exercise prices equal to the fair market value of the underlying common stock on the date of grant. For information on the determination of the per share grant date fair value for prior stock option and restricted stock unit awards, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Accounting for Stock-Based Compensation”. The stock options granted to our executive officers have an exercise price equal to the fair market value of our common stock on

the date of grant, and will expire ten years after the date of grant. Stock options and restricted stock units will vest over 4 years, with 25% of the underlying shares vesting on the one-year anniversary of the vesting start date, and the remainder vesting thereafter in 36 equal monthly installments. Such vesting will be determined by the compensation committee as the administrator of our equity award plans. We believe that these time-based vesting provisions reward longevity and commitment of our executive officers and encourage retention.

If we experience a change of control and our executive officer’s employment is terminated, however, then all or a portion of their unvested options or shares underlying the restricted stock units, as applicable, will become fully vested and immediately exercisable. Our board of directors determined that providing such acceleration in those circumstances is necessary in order to enable our executives to remain focused on our business and the execution of a change in control transaction, in the event one occurred, without being distracted by any uncertainty regarding their unvested equity awards. For additional information on the acceleration of vesting for executive officer’s upon a change of control refer to “Executive Agreements and Change of Control Arrangements” and “Potential Payments Upon Termination and Change in Control” below. For more information regarding the terms of our 2005 Equity Incentive Plan, see “Benefit Plans — 2005 Equity Incentive Plan” below.

In 2007, Messrs. Conlin, Chippari, Bennett, Farrey and Lamson were not granted any new long-term incentive awards. As discussed above, in 2006, we agreed with Messrs. Conlin, Bennett and Lamson to amend their existing stock option agreements and in connection with those amendments entered into stock option agreements with each of them under which they were issued stock options to purchase 341,931, 209,848 and 61,599 shares of our common stock, respectively and restricted stock unit award agreements with each of them under which 1,210,255, 780,607 and 166,964 shares of our common stock in respect of restricted stock units, respectively, were issued. In 2006, we also granted Mr. Chippari options to purchase 470,505 shares of our common stock pursuant to his offer letter. Our board of directors determined this award was appropriate after negotiations with Mr. Chippari based on the factors described above.

Benefits

All of our executive officers are also eligible for the following benefits offered to employees generally:


	•	life insurance;

	•	health and dental insurance;

	•	disability insurance; and

	•	401(k) plan.

Consistent with our compensation philosophy, we intend to continue to maintain our current benefits for our executive officers. There were no special benefits or perquisites provided to any executive officer in 2007. The compensation committee in its discretion may revise, amend or add to the officer’s executive benefits if it deems it advisable.

Our executive officers are also parties to severance or employment agreements which provide for certain benefits that may be triggered as a result of the termination of the executive officer’s employment under certain circumstances. Our board of directors decided that it was appropriate to enter into such agreements in order to provide each named executive officer with sufficient cash continuity protection such that each officer’s full time and attention will focus on the requirements of the business rather than the potential implication for his or her position. We also wanted to negotiate the terms of any severance package with our named executive officers in advance because we prefer to have certainty regarding the potential severance amounts payable under certain circumstances, rather than negotiating severance at the time that a named executive officer’s employment terminates. Our board of directors determined that providing such severance benefits to our executive officers is aligned with our compensation philosophy. For additional information on severance benefits upon a change of control refer to “—Executive Agreements and Change of Control Arrangements” and “—Potential Payments upon Termination and Change in Control” below.

Tax Considerations

Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation that public companies may deduct in any one year with respect to certain of its named executive officers. Certain performance-based compensation approved by stockholders is not subject to this deduction limit. Our compensation committee’s strategy in this regard is to be cost and tax efficient. Therefore, the compensation committee intends to preserve corporate tax deductions, while maintaining the flexibility in the future to approve arrangements that it deems to be in our best interests and the best interests of our stockholders, even if such arrangements do not always qualify for full tax deductibility.

Executive Agreements and Change of Control Arrangements

In October 2007, we entered into executive agreements with each of Messrs. Conlin, Chippari and Bennett.


	•	Kelly P. Conlin. Mr. Conlin’s agreement provides that he will serve as our Chief Executive Officer with an annual base salary of $275,000, subject to redetermination by our board of directors, and an annual cash incentive bonus of up to $225,000, subject to redetermination by our board of directors, based on the achievement of performance criteria as determined by our board of directors or compensation committee.

	•	Vincent A.Chippari. Mr. Chippari’s agreement provides that he will serve as our Executive Vice President and Chief Financial Officer with an annual base salary of $275,000, subject to redetermination by our board of directors, and an annual cash incentive bonus of up to $75,000, subject to redetermination by our board of directors, based on the achievement of performance criteria as determined by our board of directors or compensation committee.

	•	Jeffrey S. Bennett. Mr. Bennett’s agreement provides that he will serve as our President and Chief Operating Officer with an annual base salary of $275,000, subject to redetermination by our board of directors, and an annual cash incentive bonus of up to $125,000, subject to redetermination by our board of directors, based on the achievement of performance criteria as determined by our board of directors or compensation committee. Mr. Bennett’s executive agreement also provides that he shall receive a bonus of $239,928 in 2008.

The executive agreements provide that Messrs. Conlin, Chippari and Bennett are “at will” employees. The term of each of the executive agreements is one year, subject to an automatic renewal of one additional year unless we or the executive provide notice of termination at least 90 days prior to the expiration of then current term. Each of Messrs. Conlin, Chippari and Bennett is eligible to participate in our employee benefit plans on the same terms as our other executive officers. Each executive agreement may be terminated upon the executive’s death or disability, the termination of the executive’s employment by us for “cause,” the termination of the executive’s employment by us without “cause” if approved by our board of directors or our chief executive officer, as applicable, and the termination of the executive’s employment by him for “good reason.” If we terminate the executive’s employment without “cause” or he terminates his employment for “good reason,” then, subject to such executive delivering a release to us, he is entitled to receive severance payments in an amount equal to his earned but unpaid base salary, unpaid expense reimbursement, accrued but unused vacation, and 50% of his annual base salary. Each of Messrs. Conlin, Chippari and Bennett will also receive certain benefits, including health, dental and vision insurance, for twelve months following the date of termination in such instances. Additionally, each of these NEOs is entitled to certain payments upon a change in control. For more information on these payments, see “— Potential Payments Upon Termination and Change in Control” below. For purposes of the executive agreements, “cause” means:


	•	failure to perform a substantial portion of the executive’s duties and responsibilities, which failure continues after written notice given to the executive and the executive’s failure to cure such failure to perform within thirty days receipt of such notice;


	•	gross negligence, dishonesty, breach of fiduciary duty or material breach of the terms of the executive agreement or such executive’s non-competition, non-solicitation, proprietary information and inventions agreement;

	•	the commission by the executive of an act of fraud, embezzlement or willful disregard of our rules or policies, the commission by the executive of any other action which injures the Company, or his misappropriation of any money or other assets or property (whether tangible or intangible);

	•	the conviction or indictment of the executive for a felony or any misdemeanor involving moral turpitude, deceit, or dishonesty;

	•	the commission of an act which constitutes unfair competition with us or which induces any of our customers or suppliers to breach a contract with us; or

	•	willful failure to cooperate with a bona fide internal investigation or any investigation by regulatory or law enforcement authorities, after being instructed by us to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials.

For purposes of the executive agreements, the term “good reason” shall mean a termination of employment by the executive for one or more of the following reasons:


	•	a material breach of the executive agreement by us;

	•	a material and permanent diminution in such executive’s duties and responsibilities as set forth in the executive agreement without his consent;

	•	a material reduction in such executive’s base salary without his consent; or

	•	a material change in such executive’s permanent place of employment.

We do not have employment agreements with Mr. Farrey or Mr. Lamson. The initial compensation of Messrs. Farrey and Lamson was set forth in an offer letter that we executed with each of them at the time their employment with us commenced. Each offer letter provides that such NEO’s employment with us is on an “at-will” basis. In addition, we executed a severance agreement with Mr. Farrey which provides that if we terminate his employment other than for “cause” or he terminates his employment for “good reason,” he, subject to his delivery of a release to us, is entitled to a severance payment equal to six months of annual base salary and continued payment of health, dental and vision insurance coverage for six months. Our severance agreement with Mr. Lamson provides that if we terminate his employment other than for “cause,” the executive, subject to his delivery of a release to us, is entitled to a severance payment equal to three months of annual base salary. For purposes of these severance arrangements, “cause” and “good reason” have substantially the same meaning as is set forth in the executive agreements above.

As a condition to each NEO’s employment, each NEO entered into a non-competition, non-solicitation agreement, proprietary information and inventions agreement. Under these agreements, each NEO has agreed not to compete with us or to solicit our employees during their employment and for a period of twelve months after the termination of their employment and to protect our confidential and proprietary information and to assign intellectual property developed during the course of their employment to us.

Equity Benefit Plans

Our 2008 Stock Option and Incentive Plan, or 2008 Stock Option Plan, was adopted by our board of directors and approved by our stockholders in . The 2008 Option Plan permits us to make grants of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, performance shares, unrestricted stock awards, dividend equivalent rights and cash-based awards. We reserved shares of our common stock for the issuance of awards under the 2008 Option Plan. This number is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. Generally, shares that are forfeited or canceled from awards under the 2008 Option Plan also will be available for future awards. As of 2008, no awards had been granted under the 2008 Option Plan.

The 2008 Option Plan may be administered by either a committee of at least two non-employee directors or by our full board of directors, in either case referred to herein as the administrator. The administrator has full power and authority to select the participants to whom awards will be granted, to make any combination of awards to participants, to accelerate the exercisability or vesting of any award and to determine the specific terms and conditions of each award, subject to the provisions of the 2008 Option Plan.

All full-time and part-time officers, employees, non-employee directors and other key persons (including consultants and prospective employees) are eligible to participate in the 2008 Option Plan, subject to the discretion of the administrator. There are certain limits on the number of awards that may be granted under the 2008 Option Plan. For example, no more than shares of common stock may be granted in the form of stock options or stock appreciation rights to any one individual during any one-calendar-year period.

The exercise price of stock options awarded under the 2008 Option Plan may not be less than the fair market value of our common stock on the date of the option grant and the term of each option may not exceed ten years from the date of grant. The administrator will determine at what time or times each option may be exercised and, subject to the provisions of the 2008 Option Plan, the period of time, if any, after retirement, death, disability or other termination of employment during which options may be exercised.

To qualify as incentive options, stock options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options which first become exercisable in any one calendar year, and a shorter term and higher minimum exercise price in the case of certain large stockholders.

Stock appreciation rights may be granted under our 2008 Option Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. The administrator determines the terms of stock appreciation rights, including when such rights become exercisable.

Restricted stock awards may be granted under our 2008 Option Plan. Restricted stock awards are shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee. The administrator may impose whatever conditions to vesting it determines to be appropriate. For example, the administrator may set restrictions based on the achievement of specific performance goals. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Deferred and unrestricted stock awards may be granted under our 2008 Option Plan. Deferred stock awards are units entitling the recipient to receive shares of stock paid out on a deferred basis, and are subject to such restrictions and conditions as the administrator shall determine. Our 2008 Option Plan also gives the administrator discretion to grant stock awards free of any restrictions.

Performance share awards entitle the recipient to receive shares of stock upon attainment of pre-established performance goals. The administrator determines the terms of such awards, including the establishment of the performance goals.

Dividend equivalent rights may be granted under our 2008 Option Plan. Dividend equivalent rights are awards entitling the grantee to current or deferred payments equal to dividends on a specified number of shares of stock. Dividend equivalent rights may be settled in cash or shares and are subject to other conditions as the administrator shall determine.

Cash-based awards may be granted under our 2008 Option Plan. Each cash-based award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the administrator. Payment, if any, with respect to a cash-based award may be made in cash or in shares of stock, as the administrator determines.

Unless the administrator provides otherwise, our 2008 Option Plan does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

In the event of a merger, sale or dissolution, or a similar “sale event,” unless assumed or substituted, all stock options and stock appreciation rights granted under the 2008 Option Plan will automatically become fully exercisable, all other awards granted under the 2008 Option Plan will become fully vested and non-

forfeitable and awards with conditions and restrictions relating to the attainment of performance goals may become vested and non-forfeitable in connection with a sale event in the administrator’s discretion. In addition, upon the effective time of any such sale event, the 2008 Option Plan and all awards will terminate unless the parties to the transaction, in their discretion, provide for appropriate substitutions or assumptions of outstanding awards. Any award so assumed or continued or substituted shall be deemed vested and exercisable in full upon the date on which the grantee’s employment or service relationship with us terminates if such termination occurs (i) within 18 months after such sale event and (ii) such termination is by us or a successor entity without cause or by the grantee for good reason.

No awards may be granted under the 2008 Option Plan after 2018. In addition, our board of directors may amend or discontinue the 2008 Option Plan at any time and the administrator may amend or cancel any outstanding award for the purpose of satisfying changes in law or for any other lawful purpose. No such amendment may adversely affect the rights under any outstanding award without the holder’s consent. Other than in the event of a necessary adjustment in connection with a change in our stock or a merger or similar transaction, the administrator may not “reprice” or otherwise reduce the exercise price of outstanding stock options or stock appreciation rights. Further, amendments to the 2008 Option Plan will be subject to approval by our stockholders if the amendment (i) increases the number of shares available for issuance under the 2008 Option Plan, (ii) expands the types of awards available under, the eligibility to participate in, or the duration of, the plan, (iii) materially changes the method of determining fair market value for purposes of the 2008 Option Plan, (iv) is required by the Nasdaq Global Market rules, or (v) is required by the Internal Revenue Code of 1986, as amended, or the Code, to ensure that incentive options are tax-qualified.

2005 Equity Incentive Plan

Our 2005 Amended and Restated Stock Option and Grant Plan, or our 2005 Equity Incentive Plan, was adopted by our board of directors and approved by our stockholders in February 2007. Currently, there are a maximum of 6,400,000 shares of our common stock reserved for issuance under the 2005 Equity Incentive Plan. As of September 30, 2007, there were outstanding options to purchase 3,224,668 shares of our common stock and restricted stock units in respect of 2,616,462 shares of our common stock. After completion of this offering, no additional awards will be made under out 2005 Equity Incentive Plan.

Our 2005 Equity Incentive Plan is administered by our compensation committee. The board of directors has full power and authority to select the individuals to whom awards will be granted, to make any combination of awards to participants, to accelerate the exercisability or vesting of any award, to provide substitute awards and to determine the specific terms and conditions of each award, subject to the provisions of the 2005 Equity Incentive Plan.

Our 2005 Equity Incentive Plan permits us to make grants of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and unrestricted stock awards to officers, employees, directors, consultants and other key persons. Stock options granted under the 2005 Equity Incentive Plan have a maximum term of ten years from the date of grant and incentive stock options have an exercise price of no less than the fair market value of our common stock on the date of grant.

Upon a sale event in which all awards are not assumed, continued or substituted by the successor entity, all stock options and the 2005 Equity Incentive Plan will terminate upon the effective time of such sale event following an exercise period. Restricted stock and restricted stock units shall be treated as provided in the relevant award agreement. Under the 2005 Equity Incentive Plan, a sale event is defined as the consummation of (i) a dissolution or liquidation, (ii) a sale of all or substantially all of the assets on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares are converted into or exchanged for securities of the successor entity and the holders of the outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, (iv) the sale of all or a majority of the outstanding capital stock to an unrelated person or entity or (v) any other transaction in which the owners of the outstanding voting power prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of the transaction.

Summary Compensation Table — 2006 and 2007(1)

The following table summarizes the compensation earned during 2006 and 2007 by our principal executive officer, our principal financial officer and our other three most highly compensated executive officers who were serving as executive officers as of December 31, 2007. We refer to these individuals as our named executive officers.


										Option		Non-Equity
								Stock Awards		Awards ($)		Incentive Plan
Name And Principal Position	Year		Salary ($)			Bonus		($)(2)		(3)		Compensation ($)(4)			Total ($)

Kelly P. Conlin Chief Executive Officer		2007	$	275,000			—		—		—				$	275,000
		2006	$	259,135	(5)		—	$	3,366,475	$	951,124	$	206,605	(5)		4,783,339
Vincent A. Chippari Executive Vice President And Chief Financial Officer		2007	$	275,000			—		—		—					275,000
		2006		88,846	(6)		—		—		1,783,360		23,560	(6)		1,895,766
Jeffrey S. Bennett (7) President And Chief Operating Officer		2007	$	275,000			—		—		—					275,000
		2006		275,000			—		2,100,852		567,054		122,500			3,065,406	(8)
Brian L. Farrey Chief Technology Officer		2007	$	227,100			—		—		—					227,100

Peter T. Lamson Senior Vice President And General Manager, Domain Marketplace		2007	$	227,000			—		—		—					227,000
		2006		200,000			15,500		473,867		174,824		33,500			897,691

(1)

Columns disclosing compensation under the headings “Change In Pension Value And Nonqualified Deferred Compensation Earnings” and “All Other Compensation” are not included because no compensation in any of these categories was paid to our named executive officers in 2007. The compensation in this table also does not include certain perquisites and other personal benefits received by the named executive officers that did not exceed $10,000 in the aggregate during 2007.


(2)	These amounts represent stock-based compensation expense for restricted stock unit awards recognized in 2006 for financial statement reporting purposes. Stock-based compensation expense for these awards was calculated in accordance with SFAS No. 123(R) and is being amortized over the vesting period of the related awards. As of December 31, 2006, this unamortized amount was $479,512 for Mr. Conlin, $135,373 for Mr. Bennett and $66,152 for Mr. Lamson. These amounts exclude the estimate of forfeitures applied by us under SFAS No. 123(R) when recognizing stock-based compensation expense for financial statement reporting purposes. For additional information regarding the assumptions used in these calculations refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and the Use of Estimates — Accounting for Stock-Based Compensation” and Note 12 in the financial statements.

(3)	These amounts represent stock-based compensation expense for stock option grants recognized in 2006 for financial statement reporting purposes. Stock-based compensation expense for these awards was calculated in accordance with SFAS No. 123(R) and is being amortized over the vesting period of the related awards. As of December 31, 2006, this unamortized amount was $3,215,743 for Mr. Conlin, $1,361,722 for Mr. Chippari, $1,103,830 for Mr. Bennett, $99,853 for Mr. Lucy and $345,851 for Mr. Lamson. The amounts reflected in this table exclude the estimate of forfeitures applied by us under SFAS No. 123(R) when recognizing stock-based compensation expense for financial statement reporting purposes in fiscal 2006. For additional information regarding the assumptions used in these calculations refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and the Use of Estimates — Accounting for Stock-Based Compensation” and Note 12 in the financial statements. All option awards granted prior to 2006 were expensed in accordance with APB Opinion No. 25. Accordingly, there was no stock-based compensation expense associated with the awards prior to 2006.


(4)	2007 annual cash incentive awards for our NEOs are not calculable at this time. The compensation committee is expected to determine such awards for our NEOs on or about February 29, 2008, and we will file a Current Report on Form 8-K with this information when those amounts are determined.


(5)	Mr. Conlin became our principal executive officer on January 23, 2006. This amount represents amounts earned from commencement of employment on January 23, 2006 through December 31, 2006.


(6)	Mr. Chippari became our principal financial officer on September 5, 2006. This amount represents amounts earned from commencement of employment on September 5, 2006 through December 31, 2006.


(7)	Mr. Bennett served as our principal executive officer from January 1, 2006 until January 22, 2006.


(8)	Excludes a $239,928 bonus we agreed to pay Mr. Bennett in 2008 or upon a change in control, if earlier.

Grants of Plan-Based Awards — 2007 (1)(2)

The following table sets forth certain information regarding the terms of non-equity incentive plan awards made by us to the named executive officers during 2007.


			Estimated Possible Payouts Under
			Non-Equity Incentive Plan
			Awards (3)
			Threshold		Target		Maximum
Name	Grant Date		($)		($)		($)

Kelly P. Conlin		—		—		225,000		337,500
Vincent A. Chippari		—		—		75,000		112,500
Jeffrey S. Bennett		—		—		125,000		187,500
Brian L. Farrey		—		—		56,250		84,375
Peter T. Lamson		—		—		66,250		99,375

(1)

Column disclosing grants of plan-based awards under the heading “Estimated Possible Payouts Under Equity Incentive Plan Awards”, “All Other Stock Awards: Number of Shares of Stock or Units”, “All Option Awards: Number of Securities Underlying Options”, “Exercise or Base Price of Option Awards” and “Grant Date Fair Value of Stock and Option Awards” are not included in this table because no plan-based grants in this category was paid to our named executive officers in 2007.


(2)	All stock, restricted stock unit and option awards were made under our 2005 Equity Incentive Plan and are subject to related award agreements.

(3)

Represents target and maximum bonuses potentially available to our named executive officers under our annual cash incentive plan. See the section entitled “Executive Compensation — Compensation Discussion and Analysis — Annual Cash Incentive Plan” for a description of the program and the “Summary Compensation Table” above for actual bonuses earned by our named executive officers in 2007.

Outstanding Equity Awards At Fiscal Year End — 2007 (1)

The following table sets forth certain information regarding equity awards to our named executive officers at the end of 2007.


	Option awards										Stock Awards
	Number of			Number of							Number of
	Securities			Securities							Shares or			Market Value of
	Underlying			Underlying							Units of			Shares or Units
	Unexercised			Unexercised			Option		Option		Stock That			of Stock That
	Options(#)			Options(#)			Exercise		Expiration		Have Not			Have Not Vested
Name	Exercisable			Unexercisable			Price ($)		Date		Vested(#)			($)(2)

Kelly P. Conlin		163,842			178,089	(3)	$	3.45		1/30/16		630,341	(4)
Vincent A. Chippari		147,033			323,472	(5)	$	4.89		11/10/16		—
Jeffrey S. Bennett		89,852	(6)		—		$	3.54		7/27/16		—
		65,805			54,192	(7)	$	3.54		7/27/16		198,228	(8)
Brian L. Farrey		68,557			166,497	(9)	$	4.89		10/10/16		—
Peter T. Lamson		33,366			28,233	(10)	$	2.82		10/19/15		76,525	(11)


	(1)	Columns disclosing outstanding equity awards at fiscal year end under the headings “Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options,” “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” and “Equity Incentive Plan Awards: Market or Payout of Unearned Shares, Units or Other Rights That Have Not Vested” are not included in this table because no equity awards were outstanding in these categories for the fiscal year ending 2007.


	(2)	There was no public market for our common stock in 2007. We have estimated the market value of the restricted stock unit awards that have not vested based on an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.


	(3)	25% of the shares in this grant vested on January 23, 2007 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.


	(4)	25% of the units in this award vested on January 23, 2007 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.


	(5)	25% of the shares in this grant vested on September 5, 2007 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.


	(6)	100% of the shares in this grant vested on July 27, 2006.

	(7)	3.225806% of the shares in this grant vested on August 22, 2006 and the remainder vest monthly at the rate of 3.225806% per month on the last day of each month for 30 months.

	(8)	3.225806% of the units in this award vested on August 22, 2006 and the remainder vest monthly at the rate of 3.225806% per month on the last day of each month for 30 months.


	(9)	25% of the shares in this grant vested on October 10, 2007 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.


(10)	25% of the shares in this grant vested on October 17, 2006 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.

(11)	25% of the units in this award vested on October 17, 2006 and the remainder vest monthly at the rate of 2.083333% per month on the last day of each month for 36 months.

Option Exercises and Stock Vested — 2007 (1)

The following table summarizes the outstanding equity award holdings held by our NEOs as of December 31, 2007.


	Stock Awards
	Number of Shares		Value Realized on
Name	Acquired on Vesting (#)		Vesting ($)(2)

Kelly P. Conlin		—		—
Vincent A. Chippari		—		—
Jeffrey S. Bennett		169,910	$		(3)
Brian L. Farrey		—		—
Peter T. Lamson		41,741	$		(3)


(1)	Columns disclosing option awards under the headings “Number of Shares Acquired on Exercise” and “Value Realized On Exercise” are not included in this table because no shares were issued upon exercise of stock options to our named executive officers in 2007.


(2)	There was no public market for our common stock in 2007. We have estimated the market value of the vested restricted stock unit awards based on an assumed initial public offering price of $ per share; the midpoint of the price range set forth on the cover of this prospectus.


(3)	In accordance with their respective terms, these vested restricted stock units will be paid upon the earliest of November 15, 2008, a change of control or termination of the recipient’s employment with us, and therefore no amount has been realized by the named executive officers with respect to these awards.

Pension Benefits

None of our NEOs participate in or have account balances in qualified or non-qualified defined benefit plans sponsored by the company at December 31, 2007 and, as a result, there is not a pension benefits table included in this prospectus.

Nonqualified Deferred Compensation

None of our NEOs participate in or have account balances in non-qualified defined contribution plans maintained by the company at December 31, 2007 and, as a result, there is not a nonqualified deferred compensation table included in this prospectus.

Potential Payments Upon Termination and Change in Control

The following summaries set forth potential payments payable to our NEOs in connection with both a “change in control” (as defined below) and upon termination of his employment following a “change in control”.

Messrs. Conlin, Chippari and Bennett. If we terminate Messr. Conlin’s, Chippari’s or Bennett’s employment without “cause” (as defined above) or any of these executive officers terminates his employment for “good reason” (as defined above) within twelve months following a “change in control,’’ then such executive is entitled to receive payments equal to 50% of his respective annual base salary. Each executive will also receive certain benefits, including health, dental and vision insurance, for twelve months following the date of such “change in control.” In addition, upon a “change in control,” all stock options and other equity-based awards granted to each such executive will immediately accelerate and become fully exercisable as of the effective date of the “change in control.” If a change in control occurs during the term of the executive agreement, the term shall continue for not less than twelve months beyond the month in which the change in control occurred. For additional information on the terms and provisions of the executive agreements, see “— Executive Agreements and Change in Control Arrangements” above.

Under the executive agreements with Messrs. Conlin, Chippari and Bennett, a change in control would include any of the following events:


	•	any “person,” as defined in the Securities Exchange of 1934, as amended, acquires 50% or more of our voting securities;

	•	majority of our current directors are replaced;

	•	the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of our assets in which our stockholders would beneficially own less than 50% of our voting securities after such transaction; or

	•	our stockholders approve a plan or proposal for our liquidation or dissolution.

In the event that, prior to October 31, 2009, any payments to these executive officers made in connection with a change in control would be subjected to the excise tax impose by Section 4999 of the Internal Revenue Code, each executive is entitled to a “gross-up payment” that, on an after-tax basis, is equal to the taxes imposed on the severance payments under the executive agreements in the event any payment or benefit to the executive is considered an “excess parachute payment” and subject to an excise tax under the Internal Revenue Code.

Messrs. Farrey and Lamson. In the event of a change in control, 50% stock options granted to Mr. Farrey will immediately accelerate and become fully exercisable as of the effective date of the change in control. In addition, in the event of the termination of Mr. Farrey’s employment without “cause” (as defined above) or for “good reason” (as defined above) within 12 months following a change of control, all remaining stock options and other equity-based awards will immediately accelerate and become fully exercisable as of the date of his termination. In the event of the termination of Mr. Lamson’s employment without “cause” (as defined above) or for “good reason” (as defined above), within 12 months following a change in control, 50% of Mr. Lamson’s stock options and other equity-based awards will immediately accelerate and become fully exercisable as of the effective date of his termination.

The table below summarizes the potential payments to each of our NEOs, both upon a “change in control”, and if he were to be terminated without “cause” or terminate his employment for “good reason” following a “change in control” on December 31, 2007, the last business day of our most recently completed fiscal year.

Value of Additional

Vested Option and

Severance

Value of Benefits

Restricted Stock

Estimated Tax Gross Up

Total Amount

Name

Amount ($)

($)(1)

Awards(2) ($)

($)

Kelly P. Conlin

Change in Control

—

NameMedia, Inc. S-1/A