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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the Fiscal Year Ended December 31, 2005
 Commission File Number 000-26929
 
 INTERNET CAPITAL GROUP, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    23-2996071(State of other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)690 Lee Road, Suite 310, Wayne, PA
    
    19087(Address of principal executive offices)
    
    (Zip Code)
 (610) 727-6900
(Registrants telephone number, including area code)
 
 o þ
 o þ
 þ o
 þ
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



INTERNET CAPITAL GROUP, INC.
FORM 10-K
DECEMBER 31, 2005
INDEX
 PageNumberPART I
    
    
    4ITEM 1. Business
    
    
    4ITEM 1A. Risk Factors
    
    
    10ITEM 1B. Unresolved Staff Comments
    
    
    19ITEM 2. Properties
    
    
    19ITEM 3. Legal Proceedings
    
    
    20ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    21PART II
    
    
    22ITEM 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    22ITEM 6. Selected Consolidated Financial Data
    
    
    23ITEM 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    24ITEM 7A. Quantitative and Qualitative Disclosures About Market
Risk
    
    
    35ITEM 8. Financial Statements and Supplementary Data
    
    
    36ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures
    
    
    74ITEM 9A. Controls and Procedures
    
    
    74ITEM 9B. Other Information
    
    
    75PART III
    
    
    76ITEM 10. Directors and Executive Officers of the Registrant
    
    
    76ITEM 11. Executive Compensation
    
    
    76ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    76ITEM 13. Certain Relationships and Related Transactions
    
    
    76ITEM
14. Principal Accountant Fees and Services
    
    
    76PART IV
    
    
    77ITEM 15. Exhibits and Financial Statement Schedules
    
    
    77SIGNATURES
    
    
    83EXHIBITSLetter Agreement date December 16, 2005 by and between ICG Holdings, Inc. and Credit Suisse First Boston Capital LLCLetter Agreement dated July 28, 2005 between Internet Capital Group and Douglas AlexanderSubsidiaries of Internet Capital Group, Inc.Consent of KPMG LLP regarding Internet Capital Group, Inc.Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of the Chief Executive Officer required by Section 906Certification of the Chief Financial Officer required by Section 906
  2




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Forward-Looking Statements
   
    
    development of the e-commerce and information technology markets;
    
    capital spending by enterprises and customers;
    
    our partner companies collective ability to compete successfully against their
respective competitors;
    
    rapid technological developments in the respective markets in which our partner
companies operate and our partner companies collective ability to respond to such changes
in a timely and effective manner;
    
    our ability to deploy capital effectively and on acceptable terms;
    
    our ability to maximize value in connection with divestitures;
    
    our ability to retain key personnel; and
    
    our ability to effectively manage existing capital resources.
  3




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PART I
   
 ITEM 1. Business
 Business Overview
     4




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Industry Overview
   
    
    Expand access to new and existing customers and suppliers;
    
    Increase efficiency and reduce cost; and
    
    Focus on core competencies and outsource non-core, non-strategic processes.
 Expand access to new and existing customers and suppliers
  Increase efficiency and reduce cost
  Focus on core competencies and outsource non-core, non-strategic processes
   5




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Our Solution and Strategy
    
    
    Identifying key markets and owning stakes in potential leaders in e-commerce;
    
    Aggregating companies into a network to share knowledge and promote growth; and
    
    Prioritizing resources to accelerate development of those partner companies that
we believe are the most likely to create value for our stockholders.
 Identifying key markets and owning stakes in potential leaders
     6




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Aggregating companies into a network to promote growth
  Strategic Guidance
 Operational Support
 Exchange of Best Practices and Economies of Scale.
 Prioritize resources to accelerate development of most promising companies
   ICG Commerce Holdings, Inc. (ICG Commerce)
  7




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Investor Force Holdings, Inc. (Investor Force)
  StarCite, Inc. (StarCite)
   CreditTrade Inc. (CreditTrade)
  Freeborders, Inc. (Freeborders)
  Marketron International, Inc. (Marketron)
  Metastorm Inc. (Metastorm)
  8




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Qcorps Residential, Inc. (d/b/a WhiteFence) (WhiteFence)
  Concentration of Customer Base and Credit Risk
   Competition
 Competition Facing our Partner Companies
  
    
    purchasing budget for technology solutions, services, materials and supplies
with other similar providers and traditional distribution channels; and
    
    dollars spent on consulting services with many established information systems
and management consulting firms.
   Competition From Within our Network
  Employees
  9




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Financial Information About Segments and Geographic Areas
  Availability of Reports and Other Information
  
 ITEM 1A. Risk Factors
  If general economic conditions are unfavorable our partner companies may be unable to attract or
retain customers and our ability to grow our business may be adversely affected.
  We may not be able to deploy capital effectively and on acceptable terms.
  Our stock price has been volatile in the past and may continue to be volatile in the future.
   
    
    general economic conditions, such as a recession or interest rate or currency rate
fluctuations, and the reluctance of enterprises to increase spending on new
technologies;
    
    actual or anticipated variations in our quarterly results and those of our partner
companies;
    
    changes in the market valuations of our partner companies and other technology and
internet companies;
    
    conditions or trends in the information technology and e-commerce industries;
    
    negative public perception of the prospects of information technology companies;
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
    
    changes in our financial estimates and those of our partner companies by securities
analysts;
    
    new products or services offered by us, our partner companies and their
competitors;
    
    announcements by our partner companies and their competitors of technological
innovations;
    
    announcements by us or our partner companies or our competitors of significant
acquisitions, strategic partnerships or joint ventures;
    
    additional sales of our securities;
    
    additions to or departures of our key personnel or key personnel of our partner
companies; and
    
    our debt obligations.
  Fluctuations in our quarterly results may adversely affect our stock price.
  
    
    the operating results of our partner companies;
    
    significant fluctuations in the financial results of information technology and
e-commerce companies generally;
    
    changes in equity losses or income;
    
    the acquisition or divestiture of interests in partner companies;
    
    changes in our methods of accounting for our partner company interests, which may
result from changes in our ownership percentages of our partner companies;
    
    sales of equity securities by our partner companies, which could cause us to
recognize gains or losses under applicable accounting rules;
    
    the pace of development or a decline in growth of the information technology and
e-commerce markets;
    
    competition for the goods and services offered by our partner companies; and
    
    our ability to effectively manage our growth and the growth of our partner companies.
  Approximately 4.1 million shares of our common stock could be sold in the public market in
connection with the conversion of our senior convertible debt, and future sales of our common
stock, or the perception that such future sales may occur, may cause our stock price to decline.
  11




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Fluctuation in the price of the common stock of our publicly-traded partner companies may affect
the price of our common stock.
  Our business depends upon the performance of our partner companies, which is uncertain.
  
    
    fluctuations in the market price of the common stock of Blackboard, GoIndustry and
Traffic.com, our publicly-traded partner companies, which are likely to affect the
price of our common stock;
    
    many of our partner companies have limited operating histories, have not yet
attained significant revenues and are operating at or near break-even and may not
achieve profitability in the future;
    
    lack of the widespread commercial use of the internet, decreased spending on
information technology software and services and elongated sales cycles which may
prevent our partner companies from succeeding;
    
    intensifying competition for the products and services our partner companies offer,
which could lead to the failure of some of our partner companies; and
    
    the inability of our partner companies to secure additional financing, which may
force some of our partner companies to cease or scale back operations.
  The success of our partner companies depends on the development of the e-commerce market, which is
uncertain.
  12




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
    
    the unwillingness of businesses to shift from traditional processes to e-commerce
processes;
    
    the network necessary for enabling substantial growth in usage of e-commerce may not be
adequately developed;
    
    increased government regulation or taxation, which may adversely affect the viability
of e-commerce;
    
    insufficient availability of telecommunication services or changes in telecommunication
services which could result in slower response times for the users of e-commerce; and
    
    concern and adverse publicity about the security of e-commerce transactions.
 The companies that we have identified as Core partner companies may not succeed.
  We have had a general history of losses and expect continued losses in the foreseeable future.
  Certain of our partner companies have a limited operating history and may never be profitable.
  Even if a number of our partner companies achieve profitability, we may not be able to extract cash
from such companies, which could have a negative impact on our operations.
  13




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Our partner companies may not be able to successfully compete.
  
    
    purchasing budget for information technology and services, materials and supplies with
other online providers and traditional distribution channels; and
    
    dollars spent on consulting services with many established information systems and
management consulting firms.
   Our partner companies may fail to retain significant customers.
  The inability of our partner companies customers to pay their obligations to them in a timely
manner, if at all, could have an adverse effect on our partner companies.
  When we divest partner company interests, we may be unable to obtain maximum value for such
interests.
  14




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We may not be able to increase our ownership stakes in select partner companies.
  We may have to buy, sell or retain assets when we would otherwise choose not to in order to avoid
registration under the Investment Company Act, which would impact our investment strategy.
  Our accounting estimates with respect to the ultimate recoverability of our basis in our partner
companies could change materially in the near term.
  15




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The loss of any of our or our partner companies executive officers or other key personnel or our
or our partner companies inability to attract additional key personnel could disrupt our business
and operations.
  Our partner companies could make business decisions that are not in our best interests or that we
do not agree with, which could impair the value of our partner company interests.
   Our stakes in some partner companies have been and are likely to be diluted, which could materially
reduce the value of our stake in such partner companies.
  Our outstanding indebtedness could negatively impact our future prospects.
  16




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We may compete with some of our partner companies, and our partner companies may compete with each
other, which could deter companies from partnering with us and may limit future business
opportunities.
  We have implemented certain anti-takeover provisions that could make it more difficult for a third
party to acquire us.
  Some of our partner companies may be unable to protect their proprietary rights and may infringe on
the proprietary rights of others.
  Government regulation of the internet and e-commerce may harm our partner companies businesses.
  17




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Our partner companies that publish or distribute content over the internet may be subject to legal
liability.
  Our partner companies computer and communications systems may fail, which may discourage parties
from using our partner companies systems.
  Our partner companies businesses may be disrupted if they are unable to upgrade their systems to
meet increased demand.
  Our partner companies may be unable to acquire or maintain easily identifiable website addresses or
prevent third parties from acquiring website addresses similar to theirs.
  18




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If public and private capital markets are not favorable for the information technology and
e-commerce sectors, we may not be able to execute on our strategy.
  Our operations and growth could be impaired by limitations on our and our partner companies
ability to raise money.
  Because we have limited resources to dedicate to our partner companies, some of our partner
companies may not be able to raise sufficient capital to sustain their operations.
  
 ITEM 1B. Unresolved Staff Comments
  
 ITEM 2. Properties
  Corporate Offices
  Partner Company Properties
  19




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ITEM 3. Legal Proceedings
    20




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ITEM 4. Submission of Matters to a Vote of Security Holders
  21




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PART II
 
 ITEM
5. Market For Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
  2005
    
    2004March 31
    
    June 30
    
    Sept. 30
    
    Dec. 31
    
    March 31
    
    June 30
    
    Sept. 30
    
    Dec. 31(1st)
    
    (2nd)
    
    (3rd)
    
    (4th)
    
    (1st)
    
    (2nd)
    
    (3rd)
    
    (4th)High
    
    $
    9.37
    
    
    $
    7.71
    
    
    $
    8.96
    
    
    $
    9.39
    
    
    $
    12.20
    
    
    $
    8.20
    
    
    $
    7.85
    
    
    $
    9.68Low
    
    $
    6.85
    
    
    $
    5.34
    
    
    $
    6.59
    
    
    $
    7.53
    
    
    $
    6.60
    
    
    $
    4.00
    
    
    $
    4.80
    
    
    $
    5.90
  Holders
 Dividends
 22




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ITEM 6. Selected Consolidated Financial Data
  Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands, except per share data)Consolidated Statements of Operations Data:Revenue
    
    $
    50,576
    
    
    $
    41,857
    
    
    $
    57,915
    
    
    $
    67,762
    
    
    $
    89,477Operating ExpensesCost of revenue
    
    
    28,609
    
    
    
    21,464
    
    
    
    33,565
    
    
    
    43,716
    
    
    
    68,906Selling, general and administrative
    
    
    41,954
    
    
    
    31,239
    
    
    
    43,138
    
    
    
    73,257
    
    
    
    232,545Research and development expenses
    
    
    12,271
    
    
    
    8,660
    
    
    
    13,705
    
    
    
    23,031
    
    
    
    43,411Amortization of goodwill and other intangibles
    
    
    2,126
    
    
    
    2,711
    
    
    
    7,955
    
    
    
    10,115
    
    
    
    123,564Impairment related and other
    
    
    3,044
    
    
    
    758
    
    
    
    (1,777
    )
    
    
    10,195
    
    
    
    851,070Total operating expenses
    
    
    88,004
    
    
    
    64,832
    
    
    
    96,586
    
    
    
    160,314
    
    
    
    1,319,496(37,428
    )
    
    
    (22,975
    )
    
    
    (38,671
    )
    
    
    (92,552
    )
    
    
    (1,230,019
    )Other income (loss), net
    
    
    135,489
    
    
    
    (106,178
    )
    
    
    (58,706
    )
    
    
    91,526
    
    
    
    (110,044
    )Interest income (expense), net
    
    
    523
    
    
    
    (3,630
    )
    
    
    (15,301
    )
    
    
    (19,393
    )
    
    
    (25,541
    )Income (loss) before income taxes, minority
interest and equity loss
    
    
    98,584
    
    
    
    (132,783
    )
    
    
    (112,678
    )
    
    
    (20,419
    )
    
    
    (1,365,604
    )Income tax (expense) benefit
    
    
    (18,640
    )
    
    
    
    
    
    
    
    
    
    
    (179
    )
    
    
    12,584Minority interest
    
    
    2,282
    
    
    
    771
    
    
    
    2,384
    
    
    
    15,228
    
    
    
    107,787Equity loss
    
    
    (6,703
    )
    
    
    (5,893
    )
    
    
    (14,540
    )
    
    
    (81,114
    )
    
    
    (1,048,860
    )Income (loss) from continuing operations
    
    
    75,523
    
    
    
    (137,905
    )
    
    
    (124,834
    )
    
    
    (86,484
    )
    
    
    (2,294,093
    )Income (loss) on discontinued operations
    
    
    (3,005
    )
    
    
    2,588
    
    
    
    (11,050
    )
    
    
    (15,735
    )
    
    
    (36,751
    )Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,886
    )Net income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )
    
    $
    (102,219
    )
    
    $
    (2,338,730
    )Diluted Income (loss) Per Share:Income (loss) from continuing operations per share
    
    $
    1.80
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )
    
    $
    (6.45
    )
    
    $
    (164.84
    )Income (loss) on discontinued operations per share
    
    
    (0.07
    )
    
    
    0.07
    
    
    
    (0.73
    )
    
    
    (1.18
    )
    
    
    (2.64
    )Cumulative effect of change in accounting
principle per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.57
    )Net income (loss) per share diluted
    
    $
    1.73
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )
    
    $
    (7.63
    )
    
    $
    (168.05
    )Weighted average shares outstandingdiluted
    
    
    43,670
    
    
    
    35,713
    
    
    
    15,130
    
    
    
    13,400
    
    
    
    13,917Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments
    
    $
    148,344
    
    
    $
    86,951
    
    
    $
    77,590
    
    
    $
    121,716
    
    
    $
    243,551Working capital (deficit)
    
    $
    138,320
    
    
    $
    72,932
    
    
    $
    (124,479
    )
    
    $
    76,365
    
    
    $
    179,433Total assets
    
    $
    346,532
    
    
    $
    277,606
    
    
    $
    231,163
    
    
    $
    366,246
    
    
    $
    655,047Other long-term debt, net of current portion
    
    $
    4,294
    
    
    $
    11
    
    
    $
    30
    
    
    $
    7,290
    
    
    $
    9,919Senior convertible notes
    
    $
    37,000
    
    
    $
    60,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Convertible subordinated notes
    
    $
    
    
    
    $
    
    
    
    $
    173,919
    
    
    $
    283,114
    
    
    $
    446,061Total stockholders equity (deficit)
    
    $
    256,245
    
    
    $
    165,107
    
    
    $
    (19,294
    )
    
    $
    (51,646
    )
    
    $
    34,737
 23




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ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Introduction
    Executive Summary
    24




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Liquidity and Capital Resources
  Summary of Liquidity
 December 31, 2005
    
    
    December 31, 2004Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedCorporate
    
    
    Subsidiaries
    
    
    Total
    
    
    Corporate
    
    
    Subsidiaries
    
    
    Total(in thousands)Cash and cash equivalents
    
    $
    129,555
    
    
    $
    13,104
    
    
    $
    142,659
    
    
    $
    9,345
    
    
    $
    19,548
    
    
    $
    28,893Restricted Cash (1)
    
    
    
    
    
    
    685
    
    
    
    685
    
    
    
    
    
    
    
    118
    
    
    
    118Short-term investments
    
    
    
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    57,940
    
    
    
    
    
    
    
    57,940$
    129,555
    
    
    $
    18,789
    
    
    $
    148,344
    
    
    $
    67,285
    
    
    $
    19,666
    
    
    $
    86,951Marketable
securities
    
    $
    63,425
    
    
    $
    
    
    
    $
    63,425
    
    
    $
    54,082
    
    
    $
    
    
    
    $
    54,082Senior convertible notes due April 2009
    
    $
    (37,000
    )
    
    $
    
    
    
    $
    (37,000
    )
    
    $
    (60,000
    )
    
    $
    
    
    
    $
    (60,000
    )
 
 (1)
    
    Restricted cash at December 31, 2005 and 2004 does not include $264 and $200,
respectively, of long-term restricted cash included in Other assets on the Companys Consolidated
balance sheets.   25




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Summary of Statements of Cash Flows
 Year Ended December 31,2005
    
    2004
    
    2003(in thousands)Cash used in operating activities
    
    $
    (49,433
    )
    
    $
    (22,564
    )
    
    $
    (41,043
    )Cash provided by (used in) investing activities
    
    $
    192,693
    
    
    $
    (34,243
    )
    
    $
    6,502Cash provided by (used in) financing activities
    
    $
    (29,179
    )
    
    $
    12,781
    
    
    $
    (6,977
    )
     Contractual Cash Obligations and Commercial Commitments
  Payments due by periodLessthan 1
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    Year
    
    

2-3 Years
    
    

4-5 Years
    
    
    5 years(in thousands)Senior convertible notes
    
    $
    37,000
    
    
    $
    
    
    
    $
    
    
    
    $
    37,000
    
    
    $
    Operating leases
    
    
    6,058
    
    
    
    1,723
    
    
    
    2,479
    
    
    
    1,474
    
    
    
    382Other borrowings
    
    
    5,411
    
    
    
    1,117
    
    
    
    1,245
    
    
    
    3,049
    
    
    
    $
    48,469
    
    
    $
    2,840
    
    
    $
    3,724
    
    
    $
    41,523
    
    
    $
    382
 Off-Balance Sheet Arrangements
  26




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Our Partner Companies
  CORE PARTNER COMPANIES (%Voting Interest)Consolidated
    
    Equity
    
    
    CostICG Commerce (76%)
    
    CreditTrade (27%)Investor Force (80%)
    
    Freeborders (33%)StarCite (61%)
    
    Marketron (38%)Metastorm (41%)WhiteFence (39%)
 OTHER HOLDINGS COMPANIES (%Voting Interest)Consolidated
    
    Equity
    
    
    CostComputerJobs.com (46%)
    
    Anthem Ventures Fund, L.P. (9%)eCredit (29%)
    
    Blackboard (1)GoIndustry (54%)  (3)
    
    Captive Capital Corporation (5%)Emptoris, Inc. (7%)Entegrity Solutions (2%)FoodLink Online LLC (Foodlink Online) (13%)Jamcracker, Inc. (2%)Tibersoft Corporation (5%)Traffic.com (2)
 
 (1)
 (2)
 (3)
 Results of Operations
   27




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Segment Information(in thousands)Reconciling ItemsOther
    
    
    Total
    
    
    Discontinued
    
    
    
    
    
    
    
    
    
    
    ConsolidatedOperationsCore
    
    
    Holdings
    
    
    Segment
    
    
    and Dispositions
    
    
    Corporate
    
    
    Other
    
    
    ResultsFor The Year Ended
December 31, 2005Revenues
    
    
    
    
    
    $
    50,576
    
    
    $
    
    
    
    $
    50,576
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,576Net income (loss)
    
    
    
    
    
    $
    (20,099
    )
    
    $
    (5,597
    )
    
    $
    (25,696
    )
    
    $
    (861
    )
    
    $
    (18,473
    )
    
    $
    117,548
    
    
    $
    72,518For The Year Ended
December 31, 2004Revenues
    
    
    
    
    
    $
    41,857
    
    
    $
    
    
    
    $
    41,857
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    41,857Net income (loss)
    
    
    
    
    
    $
    (11,770
    )
    
    $
    (3,496
    )
    
    $
    (15,266
    )
    
    $
    3,999
    
    
    $
    (18,116
    )
    
    $
    (105,934
    )
    
    $
    (135,317
    )For The Year Ended
December 31, 2003Revenues
    
    
    
    
    
    $
    56,895
    
    
    $
    1,020
    
    
    $
    57,915
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    57,915Net income (loss)
    
    
    
    
    
    $
    (29,173
    )
    
    $
    (5,587
    )
    
    $
    (34,760
    )
    
    $
    (14,939
    )
    
    $
    (25,964
    )
    
    $
    (60,221
    )
    
    $
    (135,884
    )
 For the Year Ended December 31, 2005 vs. 2004 vs. 2003
 Results of Operations  Core Companies
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Selected data:
    
    (in thousands)Revenue
    
    $
    50,576
    
    
    $
    41,857
    
    
    $
    56,895Cost of revenue
    
    
    (28,609
    )
    
    
    (21,464
    )
    
    
    (33,071
    )Selling, general and administrative
    
    
    (23,175
    )
    
    
    (17,194
    )
    
    
    (25,008
    )Research and development
    
    
    (12,271
    )
    
    
    (8,660
    )
    
    
    (12,883
    )Amortization of intangibles
    
    
    (2,126
    )
    
    
    (2,711
    )
    
    
    (7,955
    )Impairment related and other
    
    
    (347
    )
    
    
    (282
    )
    
    
    (2,373
    )Operating expenses
    
    
    (66,528
    )
    
    
    (50,311
    )
    
    
    (81,290
    )Interest and other
    
    
    (897
    )
    
    
    492
    
    
    
    850Equity loss
    
    
    (3,250
    )
    
    
    (3,808
    )
    
    
    (5,628
    )Net loss
    
    $
    (20,099
    )
    
    $
    (11,770
    )
    
    $
    (29,173
    )
 Revenue
   28




---



##### Table of Contents



Operating Expenses
   Equity Loss
       29




---



##### Table of Contents



Results
of Operations  Other Holdings Companies
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Selected data:
    
    (in thousands)Revenue
    
    $
    
    
    
    $
    
    
    
    $
    1,020Operating expenses
    
    
    
    
    
    
    
    
    
    
    (3,003
    )Interest and other
    
    
    
    
    
    
    
    
    
    
    38Equity loss
    
    
    (5,597
    )
    
    
    (3,496
    )
    
    
    (3,642
    )Net loss
    
    $
    (5,597
    )
    
    $
    (3,496
    )
    
    $
    (5,587
    )
    Results
of Operations  Reconciling Items
 Discontinued Operations and Dispositions
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Discontinued operations
    
    $
    (3,005
    )
    
    $
    2,588
    
    
    $
    (11,050
    )Equity income (loss) of partner
companies sold/disposed of
    
    
    2,144
    
    
    
    1,411
    
    
    
    (3,889
    )Net income (loss)
    
    $
    (861
    )
    
    $
    3,999
    
    
    $
    (14,939
    )
   30




---



##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Share of income (loss)
    
    $
    2,144
    
    
    $
    1,411
    
    
    $
    (3,889
    )Impairments of these equity method companies
    
    
    
    
    
    
    
    
    
    
    (1,381
    )$
    2,144
    
    
    $
    1,411
    
    
    $
    (5,270
    )
 Corporate
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)General and administrative
    
    $
    (18,779
    )
    
    $
    (14,045
    )
    
    $
    (16,443
    )Impairment related and other
    
    
    
    
    
    
    (476
    )
    
    
    5,094Interest income (expense), net
    
    
    306
    
    
    
    (3,595
    )
    
    
    (14,615
    )Net loss
    
    $
    (18,473
    )
    
    $
    (18,116
    )
    
    $
    (25,964
    )
 General and Administrative
   Impairment Related and Other
  Interest Income/Expense
  31




---



##### Table of Contents



Other
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Other income (loss) (Note 15)
    
    $
    136,603
    
    
    $
    (105,438
    )
    
    $
    (56,792
    )Income tax expense
    
    
    (18,640
    )
    
    
    
    
    
    
    Impairments
    
    
    (2,697
    )
    
    
    (1,267
    )
    
    
    (5,813
    )Minority interest
    
    
    2,282
    
    
    
    771
    
    
    
    2,384Net income (loss)
    
    $
    117,548
    
    
    $
    (105,934
    )
    
    $
    (60,221
    )
 Other Income (Loss), Net
  Income Tax
   Impairment Charges
  Critical Accounting Policies
  32




---



##### Table of Contents



Valuation of Goodwill, Intangible Assets and Ownership Interests in Partner Companies
  Revenue
    33




---



##### Table of Contents



Deferred Income Taxes
  Commitments and Contingencies
  Recent Accounting Pronouncements
   34




---



##### Table of Contents



ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
     35




---



##### Table of Contents



ITEM 8. Financial Statements and Supplementary Data
  PageNumberReport of Independent Registered Public Accounting Firm
    
    
    37Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    38Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
    
    
    39Consolidated Statements of Stockholders Equity (Deficit) for the years ended December
31, 2005, 2004 and 2003
    
    
    40Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31,
2005, 2004 and 2003
    
    
    41Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    42Notes to Consolidated Financial Statements
    
    
    43
 36




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal
ControlIntegrated Framework
  
 37




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2005
    
    
    2004(in thousands, except per share data)AssetsCurrent AssetsCash and cash equivalents
    
    $
    142,659
    
    
    $
    28,893Restricted cash
    
    
    685
    
    
    
    118Short-term investments
    
    
    5,000
    
    
    
    57,940Accounts
receivable, net of allowance ($599-2005; $776-2004)
    
    
    9,480
    
    
    
    14,598Prepaid expenses and other current assets
    
    
    15,399
    
    
    
    3,529Assets held for sale
    
    
    9,038
    
    
    
    11,409Total current assets
    
    
    182,261
    
    
    
    116,487Marketable securities
    
    
    63,425
    
    
    
    54,082Fixed assets, net
    
    
    1,886
    
    
    
    1,939Ownership interests in Partner Companies
    
    
    71,453
    
    
    
    49,794Goodwill
    
    
    20,383
    
    
    
    45,196Intangibles, net
    
    
    3,407
    
    
    
    4,512Other
    
    
    3,717
    
    
    
    5,596Total Assets
    
    $
    346,532
    
    
    $
    277,606Liabilities and Stockholders EquityCurrent LiabilitiesCurrent maturities of other long-term debt
    
    $
    1,117
    
    
    $
    37Accounts payable
    
    
    6,181
    
    
    
    13,370Accrued expenses
    
    
    9,552
    
    
    
    6,455Accrued compensation and benefits
    
    
    7,141
    
    
    
    6,943Deferred revenue
    
    
    11,190
    
    
    
    7,079Liabilities held for sale
    
    
    8,760
    
    
    
    9,671Total current liabilities
    
    
    43,941
    
    
    
    43,555Senior convertible notes
    
    
    37,000
    
    
    
    60,000Other long-term debt
    
    
    4,294
    
    
    
    11Long-term deferred revenue
    
    
    1,490
    
    
    
    2,243Other liabilities
    
    
    640
    
    
    
    2,286Minority interest
    
    
    2,922
    
    
    
    4,40490,287
    
    
    
    112,499Stockholders EquityPreferred stock, $0.01 par value; 10,000 shares authorized, none issued or
outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 2,000,000 shares authorized, 39,314 (2005) and
38,388 (2004) issued and outstanding
    
    
    39
    
    
    
    38Additional paid-in capital
    
    
    3,535,646
    
    
    
    3,525,596Accumulated deficit
    
    
    (3,332,719
    )
    
    
    (3,405,237
    )Unamortized deferred compensation
    
    
    (6,684
    )
    
    
    (3,634
    )Notes receivable-stockholders
    
    
    (300
    )
    
    
    (300
    )Accumulated other comprehensive income
    
    
    60,263
    
    
    
    48,644Total stockholders equity
    
    
    256,245
    
    
    
    165,107Total Liabilities and Stockholders Equity
    
    $
    346,532
    
    
    $
    277,606
  38




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Revenue
    
    $
    50,576
    
    
    $
    41,857
    
    
    $
    57,915Operating expensesCost of revenue
    
    
    28,609
    
    
    
    21,464
    
    
    
    33,565Selling, general and administrative
    
    
    41,954
    
    
    
    31,239
    
    
    
    43,138Research and development
    
    
    12,271
    
    
    
    8,660
    
    
    
    13,705Amortization of intangibles
    
    
    2,126
    
    
    
    2,711
    
    
    
    7,955Impairment related and other
    
    
    3,044
    
    
    
    758
    
    
    
    (1,777
    )Total operating expenses
    
    
    88,004
    
    
    
    64,832
    
    
    
    96,586(37,428
    )
    
    
    (22,975
    )
    
    
    (38,671
    )Other income (loss), net
    
    
    135,489
    
    
    
    (106,178
    )
    
    
    (58,706
    )Interest income
    
    
    3,890
    
    
    
    1,295
    
    
    
    1,262Interest expense
    
    
    (3,367
    )
    
    
    (4,925
    )
    
    
    (16,563
    )Income (loss) before income taxes,
minority interest and equity loss
    
    
    98,584
    
    
    
    (132,783
    )
    
    
    (112,678
    )Income tax
expense
    
    
    (18,640
    )
    
    
    
    
    
    
    Minority interest
    
    
    2,282
    
    
    
    771
    
    
    
    2,384Equity loss
    
    
    (6,703
    )
    
    
    (5,893
    )
    
    
    (14,540
    )Income (loss) from continuing operations
    
    
    75,523
    
    
    
    (137,905
    )
    
    
    (124,834
    )Income (loss) on discontinued operations
    
    
    (3,005
    )
    
    
    2,588
    
    
    
    (11,050
    )Net income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Basic income (loss) per share:Income (loss) from continuing operations
    
    $
    2.03
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations
    
    
    (0.08
    )
    
    
    0.07
    
    
    
    (0.73
    )$
    1.95
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Shares used in computation of basic
income (loss) per share
    
    
    37,109
    
    
    
    35,713
    
    
    
    15,130Diluted income (loss) per share:Income (loss) from continuing operations
    
    $
    1.80
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations
    
    
    (0.07
    )
    
    
    0.07
    
    
    
    (0.73
    )$
    1.73
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Shares used in computation of diluted
income (loss) per share
    
    
    43,670
    
    
    
    35,713
    
    
    
    15,130
  39




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 AccumulatedAdditional
    
    
    
    
    
    
    Unamortized
    
    
    Notes
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Deferred
    
    
    Receivable-
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Compensation
    
    
    Stockholders
    
    
    Income
    
    
    Total(in thousands)Balance as of December 31, 2002
    
    
    14,336
    
    
    $
    14
    
    
    $
    3,085,505
    
    
    $
    (3,134,036
    )
    
    $
    (2,968
    )
    
    $
    (460
    )
    
    $
    299
    
    
    $
    (51,646
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,328
    
    
    
    
    
    
    
    
    
    
    
    2,328Compensation charge in connection with
the acceleration of vesting
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368Issuance of common stock to Board of
Directors
    
    
    10
    
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    (72
    )
    
    
    
    
    
    
    
    
    
    
    Stockholder loans principal payments
    
    
    
    
    
    
    
    
    
    
    476
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476Issuance of common stock upon exercise
of options
    
    
    59
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320Issuance of common stock in exchange for
convertible subordinated notes
    
    
    7,353
    
    
    
    8
    
    
    
    163,590
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163,598Issuance of common stock to third parties
    
    
    81
    
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    737Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    409
    
    
    
    409Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,884
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,884
    )Balance as of December 31, 2003
    
    
    21,839
    
    
    
    22
    
    
    
    3,251,068
    
    
    
    (3,269,920
    )
    
    
    (712
    )
    
    
    (460
    )
    
    
    708
    
    
    
    (19,294
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,413
    
    
    
    
    
    
    
    
    
    
    
    1,413Issuance of common stock in payment of
bonuses
    
    
    33
    
    
    
    
    
    
    
    273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    273Issuance of common stock in exchange for
convertible subordinated notes
    
    
    15,887
    
    
    
    16
    
    
    
    267,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    267,623Impact of Partner Company equity
transactions (Note 14)
    
    
    
    
    
    
    
    
    
    
    2,313
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,313Issuance of restricted stock
    
    
    640
    
    
    
    
    
    
    
    4,412
    
    
    
    
    
    
    
    (4,412
    )
    
    
    
    
    
    
    
    
    
    
    Forfeiture of restricted stock
    
    
    (11
    )
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    Stockholder loans principal payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    160Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,936
    
    
    
    47,936Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,317
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,317
    )Balance as of December 31, 2004
    
    
    38,388
    
    
    
    38
    
    
    
    3,525,596
    
    
    
    (3,405,237
    )
    
    
    (3,634
    )
    
    
    (300
    )
    
    
    48,644
    
    
    
    165,107Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,507
    
    
    
    
    
    
    
    
    
    
    
    3,507Impact of Partner Company equity
transactions (Note 14)
    
    
    
    
    
    
    
    
    
    
    2,271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,271Issuance of restricted stock
    
    
    819
    
    
    
    1
    
    
    
    6,013
    
    
    
    
    
    
    
    (6,014
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock appreciation rights
    
    
    
    
    
    
    
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    824Issuance of deferred stock units to
Board of Directors
    
    
    109
    
    
    
    
    
    
    
    809
    
    
    
    
    
    
    
    (543
    )
    
    
    
    
    
    
    
    
    
    
    266Repurchase of common stock from former
employees
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation tax benefit
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,619
    
    
    
    11,619Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,518Balance as of December 31, 2005
    
    
    39,314
    
    
    $
    39
    
    
    $
    3,535,646
    
    
    $
    (3,332,719
    )
    
    $
    (6,684
    )
    
    $
    (300
    )
    
    $
    60,263
    
    
    $
    256,245
  40




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Net income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Other comprehensive income (loss)Unrealized holding gains in marketable
securities
    
    
    25,940
    
    
    
    47,552
    
    
    
    77Reclassification adjustments/realized net
(gains) losses on marketable securities
    
    
    (14,567
    )
    
    
    630
    
    
    
    332Other accumulated other comprehensive income
(loss)
    
    
    246
    
    
    
    (246
    )
    
    
    Sub-total
    
    
    11,619
    
    
    
    47,936
    
    
    
    409Comprehensive income (loss)
    
    $
    84,137
    
    
    $
    (87,381
    )
    
    $
    (135,475
    )
  41




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in
thousands)(Revised-See Note 2)Operating ActivitiesNet income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Adjustments to reconcile net loss to cash used in operating
activities(Income) loss from discontinued operations
    
    
    3,005
    
    
    
    (2,588
    )
    
    
    11,050Depreciation and amortization
    
    
    3,829
    
    
    
    3,748
    
    
    
    12,994Impairment related and other
    
    
    3,044
    
    
    
    758
    
    
    
    (1,862
    )Stock-based compensation
    
    
    4,339
    
    
    
    1,413
    
    
    
    2,725Equity loss
    
    
    6,703
    
    
    
    5,893
    
    
    
    14,540Other (income) loss
    
    
    (135,489
    )
    
    
    106,401
    
    
    
    58,566Minority interest
    
    
    (2,282
    )
    
    
    (771
    )
    
    
    (2,384
    )Changes in assets and liabilities, net of effect of acquisitions:Restricted cash
    
    
    339
    
    
    
    170
    
    
    
    8,327Accounts receivable, net
    
    
    (2,984
    )
    
    
    4,345
    
    
    
    3,587Prepaid expenses and other assets
    
    
    867
    
    
    
    3,292
    
    
    
    2,964Accounts payable
    
    
    (5,325
    )
    
    
    (6,989
    )
    
    
    (934
    )Accrued expenses
    
    
    1,088
    
    
    
    (2,559
    )
    
    
    (11,918
    )Deferred revenue
    
    
    765
    
    
    
    (1,590
    )
    
    
    (6,739
    )Other liabilities
    
    
    (675
    )
    
    
    276
    
    
    
    4,701Cash flows from operating activities of discontinued operations
    
    
    825
    
    
    
    954
    
    
    
    (776
    )Cash used in operating activities
    
    
    (49,433
    )
    
    
    (22,564
    )
    
    
    (41,043
    )Investing ActivitiesCapital expenditures, net
    
    
    (965
    )
    
    
    (1,003
    )
    
    
    (609
    )Purchases of short-term investments
    
    
    (10,597
    )
    
    
    (85,219
    )
    
    
    Proceeds of short-term investments
    
    
    63,537
    
    
    
    27,288
    
    
    
    6,986Proceeds from sales of marketable securities
    
    
    19,153
    
    
    
    7,798
    
    
    
    9,935Proceeds from sales of Partner Company ownership interests
    
    
    141,719
    
    
    
    25,668
    
    
    
    7,019Acquisitions of ownership interests in Partner Companies, net
    
    
    (22,471
    )
    
    
    (8,669
    )
    
    
    (13,342
    )Other acquisitions, net
    
    
    
    
    
    
    
    
    
    
    (1,595
    )Increase in cash due to consolidation of Partner Companies
    
    
    4,529
    
    
    
    
    
    
    
    Reduction in cash due to deconsolidation of Partner Company
    
    
    (2,198
    )
    
    
    
    
    
    
    (1,759
    )Cash flows from investing activities of discontinued operations
    
    
    (14
    )
    
    
    (106
    )
    
    
    (133
    )Cash provided by (used in) investing activities
    
    
    192,693
    
    
    
    (34,243
    )
    
    
    6,502Financing ActivitiesIssuance of senior convertible notes, net
    
    
    
    
    
    
    58,215
    
    
    
    Repurchase of senior convertible notes
    
    
    (28,405
    )
    
    
    
    
    
    
    Repurchase of convertible subordinated notes
    
    
    
    
    
    
    (39,541
    )
    
    
    (5,529
    )Long term debt and capital lease obligations, net
    
    
    (283
    )
    
    
    (6,278
    )
    
    
    (2,658
    )Line of credit borrowings
    
    
    
    
    
    
    216
    
    
    
    642Line of credit repayments
    
    
    (491
    )
    
    
    
    
    
    
    (89
    )Repayment of advances and loans to employees/stockholders
    
    
    
    
    
    
    160
    
    
    
    476Exercises of stock options
    
    
    
    
    
    
    
    
    
    
    320Issuance of stock by subsidiary
    
    
    
    
    
    
    9
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    36Cash flows
from financing activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (175
    )Cash provided by (used in) financing activities
    
    
    (29,179
    )
    
    
    12,781
    
    
    
    (6,977
    )Net increase (decrease) in Cash and Cash Equivalents
    
    
    114,081
    
    
    
    (44,026
    )
    
    
    (41,518
    )Effect of exchange rates on cash
    
    
    496
    
    
    
    (274
    )
    
    
    (1,368
    )Change in
Cash and Cash Equivalents included in discontinued operations
    
    
    (811
    )
    
    
    (848
    )
    
    
    1,084Cash and Cash Equivalents at the beginning of year
    
    
    28,893
    
    
    
    74,041
    
    
    
    115,843Cash and Cash Equivalents at the end of year
    
    $
    142,659
    
    
    $
    28,893
    
    
    $
    74,041
  42




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. The Company
 Description of the Company
   2. Significant Accounting Policies
 Basis of Presentation
  Year Ended December 31,2005
    
    2004
    
    2003ICG Commerce
    
    ICG Commerce
    
    ICG CommerceCommerceQuest (3)
    
    CommerceQuest
    
    CommerceQuestInvestor Force (1)
    
    
    
    Captive Capital (4)StarCite (2)
    
    
    
    eCredit (4)Freeborders (5)
  December 31,2005
    
    2004ICG Commerce
    
    ICG CommerceInvestor Force
    
    CommerceQuestStarCite
 
 (1)
    
    Investor Force became a consolidated Partner Company on January 1, 2005.(2)
    
    StarCite became a consolidated Partner Company on June 8, 2005. The
results of operations of StarCite from June 8, 2005 to June 30, 2005 were not material and were not
included in the Consolidated
 43




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
  (3)
 (4)
 (5)
 Principles of Accounting for Ownership Interests in Partner Companies
  Consolidation.
  Equity Method.
 44




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
  Cost Method.
   Ownership Interests in Partner Companies, Goodwill and Intangibles, net
    Revenue Recognition
  45




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
    Use of Estimates
   46




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
 Cash and Cash Equivalents
  Restricted Cash
  Short-term Investments
  Marketable Securities
  Financial Instruments
  Deferred Revenue
  Research and Development
  Income Taxes
  47




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##### Table of Contents





INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


2.
Significant Accounting Policies  (Continued)




Net Income (Loss) Per Share






Issuances of Stock By Partner Companies
  Concentration of Customer Base and Credit Risk
   Accounts Receivable/Accounts Payable
  48




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
 Stock Based Compensation
     Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Net income (loss), as reported
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Stock-based employee compensation expense
included in reported net income (loss)
    
    
    4,339
    
    
    
    1,583
    
    
    
    2,725Total stock-based employee compensation expense
determined under fair-value-based method for
all awards
    
    
    (8,305
    )
    
    
    (8,123
    )
    
    
    (18,292
    )Pro forma net income (loss)
    
    $
    68,552
    
    
    $
    (141,857
    )
    
    $
    (151,451
    )Net income (loss) per basic share, as reported
    
    $
    1.95
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Net income (loss) per diluted share, as reported
    
    $
    1.73
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Pro forma net income (loss) per basic share
    
    $
    1.85
    
    
    $
    (3.97
    )
    
    $
    (10.01
    )Pro forma net income (loss) per diluted share
    
    $
    1.64
    
    
    $
    (3.97
    )
    
    $
    (10.01
    )
   2005
    
    2004
    
    2003Volatility
    
    
    60-70
    %
    
    
    70-132.99
    %
    
    
    134.69-138.38
    %Average expected option life
    
    6.25 years
    
    3 years
    
    3 yearsRisk-free interest rate
    
    
    3.91-4.26
    %
    
    
    2.26-2.88
    %
    
    
    1.99-2.26
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
  49




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2.
Significant Accounting Policies  (Continued)
  Other Recent Accounting Pronouncements
  Comprehensive Income (Loss)
  Reclassifications and Revisions
   50




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership interests in Partner Companies, Goodwill and Intangibles, net
  December 31,
    
    
    December 31,2005
    
    
    2004(in thousands)Goodwill
    
    $
    20,383
    
    
    $
    45,196Intangibles, net
    
    $
    3,407
    
    
    $
    4,512Ownership interests in Partner
Companies  Equity Method
    
    $
    67,617
    
    
    $
    45,451Ownership interests in Partner
Companies  Cost Method
    
    
    3,836
    
    
    
    4,343$
    71,453
    
    
    $
    49,794
 51




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3.
Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
  Goodwill at December 31, 2004
    
    $
    45,196Acquisitions
    
    
    4,691Dispositions
    
    
    (25,345
    )Impairments
    
    
    (1,839
    )Translation/Other
    
    
    (2,320
    )Goodwill at December 31, 2005
    
    $
    20,383
   As
of December 31, 2005(in thousands)Useful
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingIntangible Assets
    
    Life
    
    
    Amount
    
    
    Amortization
    
    
    AmountTechnology
    
    1.5-5 years
    
    $
    18,105
    
    
    $
    (17,229
    )
    
    $
    876Customer lists
    
    3 years
    
    
    2,599
    
    
    
    (247
    )
    
    
    2,352Tradename
    
    Indefinite
    
    
    179
    
    
    
    
    
    
    
    179$
    20,883
    
    
    $
    (17,476
    )
    
    $
    3,407
 As of December 31, 2004(in thousands)Useful
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingIntangible Assets
    
    Life
    
    
    Amount
    
    
    Amortization
    
    
    AmountTechnology
    
    2-5 years
    
    $
    20,071
    
    
    $
    (16,305
    )
    
    $
    3,766Tradename
    
    Indefinite
    
    
    746
    
    
    
    
    
    
    
    746$
    20,817
    
    
    $
    (16,305
    )
    
    $
    4,512
  2006
    
    $
    1,6062007
    
    
    1,0612008
    
    
    561$
    3,228
 52




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3.
Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Acquisitions
  Investor Force
    
    
    StarCite(in thousands)Net Assets Acquired:Goodwill
    
    $
    2,589
    
    
    $
    2,102Customer base
    
    
    
    
    
    
    2,513Technology
    
    
    11
    
    
    
    75Tradename
    
    
    
    
    
    
    179Other net assets (liabilities)
    
    
    (670
    )
    
    
    (1,659
    )$
    1,930
    
    
    $
    3,210
  Dispositions/Impairments
   Equity Method Companies
  53




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
  Balance Sheets (Unaudited)
 As of December 31, 2005OtherCore (1)
    
    
    Holdings (2)
    
    
    Total(in thousands)Cash, cash equivalents and short-term investments
    
    $
    42,633
    
    
    $
    8,525
    
    
    $
    51,158Other current assets
    
    
    28,657
    
    
    
    26,121
    
    
    
    54,778Other non-current assets
    
    
    65,010
    
    
    
    54,419
    
    
    
    119,429Total assets
    
    $
    136,300
    
    
    $
    89,065
    
    
    $
    225,365Current liabilities
    
    $
    50,514
    
    
    $
    38,712
    
    
    $
    89,226Non-current liabilities
    
    
    274
    
    
    
    1,714
    
    
    
    1,988Long-term debt
    
    
    5,129
    
    
    
    14,147
    
    
    
    19,276Stockholders equity
    
    
    80,383
    
    
    
    34,492
    
    
    
    114,875Total liabilities and stockholders equity
    
    $
    136,300
    
    
    $
    89,065
    
    
    $
    225,365Total carrying value
    
    $
    66,678
    
    
    $
    939
    
    
    $
    67,617
 
 (1)
    
    Includes (voting ownership): CreditTrade (27%), Freeborders (33%), Marketron (38%), Metastorm (41%) and WhiteFence (39%).(2)
    
    Includes ComputerJobs (46%), eCredit (29%) and GoIndustry (54%). As of December 31, 2004Other
    
    
    Dispositions/Core (3)
    
    
    Holdings (4)
    
    
    Other (5)
    
    
    Total(in thousands)Cash, cash equivalents and short-term investments
    
    $
    23,027
    
    
    $
    11,708
    
    
    $
    20,712
    
    
    $
    55,447Other current assets
    
    
    17,785
    
    
    
    21,155
    
    
    
    16,735
    
    
    
    55,675Other non-current assets
    
    
    45,452
    
    
    
    58,875
    
    
    
    4,941
    
    
    
    109,268Total assets
    
    $
    86,264
    
    
    $
    91,738
    
    
    $
    42,388
    
    
    $
    220,390Current liabilities
    
    $
    34,370
    
    
    $
    33,666
    
    
    $
    13,759
    
    
    $
    81,795Non-current liabilities
    
    
    904
    
    
    
    
    
    
    
    6
    
    
    
    910Long-term debt
    
    
    6,933
    
    
    
    23,154
    
    
    
    983
    
    
    
    31,070Stockholdersequity
    
    
    44,057
    
    
    
    34,918
    
    
    
    27,640
    
    
    
    106,615Total liabilities and stockholders equity
    
    $
    86,264
    
    
    $
    91,738
    
    
    $
    42,388
    
    
    $
    220,390Total carrying value
    
    $
    27,739
    
    
    $
    3,734
    
    
    $
    13,978
    
    
    $
    45,451
 
 (3)
    
    Includes CreditTrade (30%), Freeborders (48%), InvestorForce (38%), Marketron (38%) and StarCite (37%).(4)
    
    Includes ComputerJobs (46%), eCredit (32%), Foodlink Online (20%) and GoIndustry (54%).(5)
    
    Includes Co-nect (36%) and LinkShare (40%). 54




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3.
Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Results of Operations (Unaudited)
 Year Ended December 31, 2005Other
    
    
    Dispositions/Core (1)
    
    
    Holdings (2)
    
    
    Other (3)
    
    
    Total(in thousands)Revenue
    
    $
    114,813
    
    
    $
    49,679
    
    
    $
    46,147
    
    
    $
    210,639Net income (loss)
    
    $
    (5,737
    )
    
    $
    (7,693
    )
    
    $
    4,916
    
    
    $
    (8,514
    )Total equity income (loss)
    
    $
    (3,250
    )
    
    $
    (5,597
    )
    
    $
    2,144
    
    
    $
    (6,703
    )
 
 (1)
    
    Includes CreditTrade, Freeborders, Marketron for full year
2005; Metastorm and WhiteFence from the time of acquisition and StarCite for six months ended June 30, 2005.(2)
    
    Includes ComputerJobs, eCredit and GoIndustry for full year 2005.(3)
    
    Includes Co-nect and LinkShare for nine months ended September 30, 2005. Year Ended December 31, 2004Other
    
    
    Dispositions/Core (4)
    
    
    Holdings (5)
    
    
    Other (6)
    
    
    Total(in thousands)Revenue
    
    $
    88,906
    
    
    $
    48,591
    
    
    $
    50,391
    
    
    $
    187,888Net income (loss)
    
    $
    (11,885
    )
    
    $
    (17,098
    )
    
    $
    1,512
    
    
    $
    (27,471
    )Total equity income (loss)
    
    $
    (3,808
    )
    
    $
    (3,496
    )
    
    $
    1,411
    
    
    $
    (5,893
    )
 
 (4)
    
    Includes CreditTrade, Freeborders, InvestorForce, Marketron and StarCite for full year 2004.(5)
    
    Includes ComputerJobs, eCredit, Foodlink Online and GoIndustry for full year 2004.(6)
    
    Includes primarily Co-nect and LinkShare for full year 2004. Year Ended December 31, 2003Other
    
    
    Dispositions/Core (7)
    
    
    Holdings (8)
    
    
    Other (9)
    
    
    Total(in thousands)Revenue
    
    $
    70,731
    
    
    $
    46,568
    
    
    $
    160,148
    
    
    $
    277,447Net income (loss)
    
    $
    (24,009
    )
    
    $
    (13,543
    )
    
    $
    (36,572
    )
    
    $
    (74,124
    )Total equity income (loss)$
    (5,628
    )
    
    $
    (3,642
    )
    
    $
    (5,270
    )
    
    $
    (14,540
    )
 
 (7)
    
    Includes CreditTrade, InvestorForce, Marketron and StarCite for full year 2003; Freeborders for nine months ended December 31, 2003.(8)
    
    Includes ComputerJobs, Foodlink Online and GoIndustry for full year 2003; eCredit for nine months ended December 31, 2003.(9)
    
    Includes primarily Co-nect and LinkShare for full year 2003; Universal Access and Verticalnet for nine months ended September 30, 2003. Other
Equity Company Information
   55




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3.
Ownership Interests in Partner Companies, Goodwill and Intangibles,
net  (Continued)
  Warrants
  4. Marketable Securities
  UnrealizedCommon Shares
    
    
    
    
    
    
    HoldingOwned
    
    
    Cost
    
    
    Gains/(Losses)
    
    
    Fair Value(in thousands, except shares)December 31, 2005Blackboard
    
    
    2,187,060
    
    
    $
    3,162
    
    
    $
    60,219
    
    
    $
    63,381Other
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    44$
    3,162
    
    
    $
    60,263
    
    
    $
    63,425December 31, 2004Blackboard
    
    
    2,923,777
    
    
    $
    775
    
    
    $
    42,526
    
    
    $
    43,301Arbinet
    
    
    231,128
    
    
    
    1,175
    
    
    
    4,564
    
    
    
    5,739Verticalnet
    
    
    2,917,794
    
    
    
    3,135
    
    
    
    1,563
    
    
    
    4,698Other
    
    
    
    
    
    
    107
    
    
    
    237
    
    
    
    344$
    5,192
    
    
    $
    48,890
    
    
    $
    54,082
   56




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 4.
Marketable Securities  (Continued)
    5. Debt
 Senior Convertible Notes
     57




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Debt  (Continued)
 Convertible Subordinated Notes
   Year Ended December 31,2004
    
    
    2003(in thousands)Cash repurchases of convertible debtFace value of convertible subordinated
notes repurchased/redeemed
    
    $
    39,111
    
    
    $
    12,000Cash paid
    
    
    (39,541
    )
    
    
    (5,529
    )Other expenses
    
    
    (169
    )
    
    
    (68
    )Gain (loss) recorded
    
    $
    (599
    )
    
    $
    6,403
 Year Ended December 31,2004
    
    
    2003(in thousands)Debt for equity exchangesFace value of convertible subordinated
notes exchanged
    
    $
    134,808
    
    
    $
    97,195Shares of common stock issued for debt
exchange
    
    
    15,887
    
    
    
    7,353Fair value of common stock issued
    
    $
    (133,264
    )
    
    $
    (66,762
    )Fair value of common stock issued-original
terms
    
    
    449
    
    
    
    360Accrued interest
    
    
    790
    
    
    
    1,599Other expenses
    
    
    (534
    )
    
    
    (897
    )Expense recorded
    
    $
    (132,559
    )
    
    $
    (65,700
    )Net income (expense) included in Other
income (loss), net in the
Consolidated Statements of
Operations
    
    $
    (133,158
    )
    
    $
    (59,297
    )
   58




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5.
Debt  (Continued)
 Other Long-Term Debt
  As of December 31,Interest Rates
    
    
    2005
    
    
    2004(in thousands)Notes payable
    
    
    6.0
    %
    
    $
    3,049
    
    
    $
    Commercial loan payable
    
    
    7.7
    %
    
    
    
    
    
    
    18Capital leases
    
    
    12.0-15.7
    %
    
    
    382
    
    
    
    30Other Debt
    
    
    5.0
    %
    
    
    1,980
    
    
    
    5,411
    
    
    
    48Current maturities
    
    
    
    
    
    
    (1,117
    )
    
    
    (37
    )Long term debt
    
    
    
    
    
    $
    4,294
    
    
    $
    11
   Loan and Credit Agreements
  6. Fixed Assets
  As of December 31,Useful Life
    
    
    2005
    
    
    2004(in thousands)Computer equipment and software,
office equipment and furniture
    
    3-10 years
    
    $
    16,270
    
    
    $
    18,482Leasehold improvements
    
    1-5 years
    
    
    289
    
    
    
    2,42616,559
    
    
    
    20,908Less: accumulated depreciation
and amortization
    
    
    
    
    
    
    (14,673
    )
    
    
    (18,969
    )$
    1,886
    
    
    $
    1,939
   59




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 7. Discontinued Operations
     8. Segment Information
    60




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 8.
Segment Information  (Continued)
  Segment Information
 Reconciling ItemsDiscontinuedOperationsOther
    
    Total
    
    and
    
    
    
    
    
    
    
    
    
    ConsolidatedCore
    
    Holdings
    
    Segment
    
    Dispositions
    
    Corporate
    
    Other
    
    ResultsYear Ended
December 31, 2005Revenues
    
    $
    50,576
    
    
    $
    
    
    
    $
    50,576
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,576Net income (loss)
    
    $
    (20,099
    )
    
    $
    (5,597
    )
    
    $
    (25,696
    )
    
    $
    (861
    )
    
    $
    (18,473
    )
    
    $
    117,548
    *
    
    $
    72,518Assets
    
    $
    123,608
    
    
    $
    4,775
    
    
    $
    128,383
    
    
    $
    9,038
    
    
    $
    209,111
    
    
    $
    
    
    
    $
    346,532Capital Expenditures
    
    $
    (738
    )
    
    $
    
    
    
    $
    (738
    )
    
    $
    
    
    
    $
    (135
    )
    
    $
    
    
    
    $
    (873
    )Year Ended
December 31, 2004Revenues
    
    $
    41,857
    
    
    $
    
    
    
    $
    41,857
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    41,857Net income (loss)
    
    $
    (11,770
    )
    
    $
    (3,496
    )
    
    $
    (15,266
    )
    
    $
    3,999
    
    
    $
    (18,116
    )
    
    $
    (105,934)
    *
    
    $
    (135,317
    )Assets
    
    $
    114,611
    
    
    $
    7,570
    
    
    $
    122,181
    
    
    $
    25,894
    
    
    $
    129,531
    
    
    $
    
    
    
    $
    277,606Capital Expenditures
    
    $
    (843
    )
    
    $
    
    
    
    $
    (843
    )
    
    $
    
    
    
    $
    (160
    )
    
    $
    
    
    
    $
    (1,003
    )Year Ended
December 31, 2003Revenues
    
    $
    56,895
    
    
    $
    1,020
    
    
    $
    57,915
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    57,915Net income (loss)
    
    $
    (29,173
    )
    
    $
    (5,587
    )
    
    $
    (34,760
    )
    
    $
    (14,939
    )
    
    $
    (25,964
    )
    
    $
    (60,221)
    *
    
    $
    (135,884
    )Assets
    
    $
    127,874
    
    
    $
    10,539
    
    
    $
    138,413
    
    
    $
    27,663
    
    
    $
    65,087
    
    
    $
    
    
    
    $
    231,163Capital Expenditures
    
    $
    (451
    )
    
    $
    
    
    
    $
    (451
    )
    
    $
    
    
    
    $
    (158
    )
    
    $
    
    
    
    $
    (609
    )
 
 *
    
    Other reconciling items to net income (loss) are as follows: Year Ended December 31,2005
    
    
    2004
    
    
    2003Other income (loss) (Note 15)
    
    $
    136,603
    
    
    $
    (106,705
    )
    
    $
    (60,280
    )Taxes
    
    
    (18,640
    )
    
    
    
    
    
    
    Minority interest
    
    
    2,282
    
    
    
    771
    
    
    
    2,384Impairment of consolidated Partner Companies
    
    
    (2,697
    )
    
    
    
    
    
    
    (944
    )Impairment of equity method Partner Companies
    
    
    
    
    
    
    
    
    
    
    (1,381
    )$
    117,548
    
    
    $
    (105,934
    )
    
    $
    (60,221
    )
 61




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9. Parent Company Financial Information
  Parent Company Balance Sheets
 As of December 31, 2005
    
    
    As of December 31, 2004(in thousands)AssetsCash and cash equivalents
    
    $
    129,555
    
    
    $
    9,345Short-term investments
    
    
    
    
    
    
    57,940Other current assets
    
    
    14,226
    
    
    
    2,746Current assets
    
    
    143,781
    
    
    
    70,031Ownership interests in Partner Companies
    
    
    94,639
    
    
    
    105,428Marketable securities
    
    
    63,425
    
    
    
    54,082Other
    
    
    2,815
    
    
    
    5,498Total assets
    
    $
    304,660
    
    
    $
    235,039Liabilities and stockholders equityCurrent liabilities
    
    $
    11,415
    
    
    $
    9,932Senior convertible notes
    
    
    37,000
    
    
    
    60,000Stockholders equity
    
    
    256,245
    
    
    
    165,107Total liabilities and stockholders equity
    
    $
    304,660
    
    
    $
    235,039
 Parent Company Statements of Operations
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expensesGeneral and administrative
    
    
    18,779
    
    
    
    14,074
    
    
    
    16,443Impairment related and other
    
    
    2,697
    
    
    
    476
    
    
    
    (5,094
    )Total operating expenses
    
    
    21,476
    
    
    
    14,550
    
    
    
    11,349(21,476
    )
    
    
    (14,550
    )
    
    
    (11,349
    )Other income (loss), net
    
    
    136,603
    
    
    
    (103,705
    )
    
    
    (58,605
    )Interest income (expense), net
    
    
    306
    
    
    
    (3,595
    )
    
    
    (14,615
    )Income (loss) before income taxes and equity loss
    
    
    115,433
    
    
    
    (121,850
    )
    
    
    (84,569
    )Income tax expense
    
    
    (18,640
    )
    
    
    
    
    
    
    Equity loss
    
    
    (24,275
    )
    
    
    (13,467
    )
    
    
    (51,315
    )Net income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )
 62




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9.
Parent Company Financial Information  (Continued)
 Parent Company Statements of Cash Flows
 Year Ended December 312005
    
    
    2004
    
    
    2003(in thousands)Operating ActivitiesNet income (loss)
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Adjustments to reconcile net loss to cash used in operating activitiesDepreciation and amortization
    
    
    144
    
    
    
    71
    
    
    
    1,283Impairment related and other
    
    
    2,697
    
    
    
    476
    
    
    
    (5,094
    )Stock-based compensation
    
    
    4,331
    
    
    
    1,413
    
    
    
    2,327Equity loss
    
    
    24,275
    
    
    
    13,467
    
    
    
    51,315Other income (loss)
    
    
    (136,603
    )
    
    
    103,705
    
    
    
    58,605Changes in assets and liabilities, net of effect of acquisitions:Restricted cash
    
    
    
    
    
    
    850
    
    
    
    8,330Taxes receivable
    
    
    (8,392
    )
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    (73
    )
    
    
    1,176
    
    
    
    3,143Accounts payable
    
    
    62
    
    
    
    (189
    )
    
    
    211Accrued expenses
    
    
    1,362
    
    
    
    869
    
    
    
    (7,605
    )Cash used in operating activities
    
    
    (39,679
    )
    
    
    (13,479
    )
    
    
    (23,369
    )Investing ActivitiesCapital expenditures, net
    
    
    (135
    )
    
    
    (172
    )
    
    
    (158
    )Proceeds from disposals of fixed assets
    
    
    
    
    
    
    12
    
    
    
    Proceeds from sales of marketable securities
    
    
    19,153
    
    
    
    7,798
    
    
    
    9,935Proceeds from sales of ownership interests in Partner Companies
    
    
    141,719
    
    
    
    25,668
    
    
    
    6,327Acquisitions of ownership interests in Partner Companies, net
    
    
    (30,383
    )
    
    
    (21,147
    )
    
    
    (27,092
    )Purchase of short-term investments
    
    
    (4,922
    )
    
    
    (85,219
    )
    
    
    Proceeds from maturities of short-term investments
    
    
    62,862
    
    
    
    27,279
    
    
    
    6,986Cash provided by (used in) investing activities
    
    
    188,294
    
    
    
    (45,781
    )
    
    
    (4,002
    )Financing ActivitiesIssuance of senior convertible notes, net
    
    
    
    
    
    
    58,215
    
    
    
    Repurchase of senior convertible notes
    
    
    (28,405
    )
    
    
    
    
    
    
    Repurchase of convertible subordinated notes
    
    
    
    
    
    
    (39,541
    )
    
    
    (5,529
    )Repayment of loans from employees
    
    
    
    
    
    
    160
    
    
    
    476Exercises of stock options
    
    
    
    
    
    
    
    
    
    
    320Cash provided by (used in) financing activities
    
    
    (28,405
    )
    
    
    18,834
    
    
    
    (4,733
    )Net
increase (decrease) in cash and cash equivalents
    
    
    120,210
    
    
    
    (40,426
    )
    
    
    (32,104
    )Cash and cash equivalents at beginning at year
    
    
    9,345
    
    
    
    49,771
    
    
    
    81,875Cash and cash equivalents at end of year
    
    $
    129,555
    
    
    $
    9,345
    
    
    $
    49,771
 10. Stockholders Equity
   63




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 10.
Stockholders Equity  (Continued)
 Stockholder Rights Plan
    Common Stock Issued in Exchange for Convertible Debt
  Common Stock Issued to Third Parties
  64




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans
   WeightedAverageShares
    
    
    Exercise PriceOutstanding at December 31, 2002
    
    
    1,098,865
    
    
    $
    86.40Options granted
    
    
    30,900
    
    
    $
    8.40Options exercised
    
    
    (58,784
    )
    
    $
    15.00Options canceled/forfeited
    
    
    (245,887
    )
    
    $
    182.60Outstanding at December 31, 2003
    
    
    825,094
    
    
    $
    61.60Options granted
    
    
    55,100
    
    
    $
    7.90Options canceled/forfeited
    
    
    (89,365
    )
    
    $
    244.15Outstanding at December 31, 2004
    
    
    790,829
    
    
    $
    37.19Options granted
    
    
    12,000
    
    
    $
    7.73Options canceled/forfeited
    
    
    (75,942
    )
    
    $
    32.10Outstanding at December 31, 2005
    
    
    726,887
    
    
    $
    37.24
   2005Weighted AverageShares
    
    
    Shares
    
    
    Remaining Contractual LifeExercise Price
    
    Outstanding
    
    
    Exercisable
    
    
    (in Years)$4.59  $8.00
    
    
    137,224
    
    
    
    78,491
    
    
    7.3$8.01  $12.00
    
    
    186,233
    
    
    
    160,324
    
    
    7.1$12.01  $20.00
    
    
    127,199
    
    
    
    119,907
    
    
    5.6$20.01  $2,210.00
    
    
    276,231
    
    
    
    276,226
    
    
    5.0726,887
    
    
    
    634,948
 65




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11.
Stock Option Plans  (Continued)
 2004Weighted AverageShares
    
    
    Shares
    
    
    Remaining Contractual LifeExercise Price
    
    Outstanding
    
    
    Exercisable
    
    
    (in Years)$4.59  $8.00
    
    
    125,724
    
    
    
    56,700
    
    
    8.1$8.01  $12.00
    
    
    196,701
    
    
    
    102,500
    
    
    7.9$12.01   $20.00
    
    
    127,408
    
    
    
    97,544
    
    
    6.6$20.01   $2,210.00
    
    
    340,996
    
    
    
    327,007
    
    
    6.1790,829
    
    
    
    583,751
 2003Weighted AverageShares
    
    
    Shares
    
    
    Remaining Contractual LifeExercise Price
    
    Outstanding
    
    
    Exercisable
    
    
    (in Years)$4.59  $8.00
    
    
    105,975
    
    
    
    16,711
    
    
    8.8$8.01  $12.00
    
    
    171,238
    
    
    
    72,221
    
    
    8.7$12.01   $20.00
    
    
    127,507
    
    
    
    71,602
    
    
    7.6$20.01   $2,210.00
    
    
    420,374
    
    
    
    335,214
    
    
    7.1825,094
    
    
    
    495,748
       66




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11.
Stock Option Plans  (Continued)
        67




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12. Income Taxes
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Income from continuing operations
    
    $
    18,640
    
    
    $
    
    
    
    $
    Total
    
    $
    18,640
    
    
    $
    
    
    
    $
    
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Current
    
    $
    18,640
    
    
    $
    
    
    
    $
    Deferred
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    18,640
    
    
    $
    
    
    
    $
    
      As of December 31,2005
    
    
    2004(in thousands)Net operating loss carry forward
    
    $
    153,414
    
    
    $
    152,666Capital loss carry forward
    
    
    267,018
    
    
    
    253,414Other comprehensive income
    
    
    (21,092
    )
    
    
    (18,089
    )Reserves and accruals
    
    
    3,277
    
    
    
    2,786Other, net
    
    
    96
    
    
    
    1,096Partner Company basis difference
    
    
    214,044
    
    
    
    236,367Valuation allowance
    
    
    (616,757
    )
    
    
    (628,240
    )Net deferred tax asset (liability)
    
    $
    
    
    
    $
    
 68




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12.
Income Taxes  (Continued)
  As of December 31,2005
    
    2004
    
    2003Tax expense (benefit) at statutory rate
    
    
    35.0
    %
    
    
    (35.0
    )%
    
    
    (35.0
    )%Debt for equity exchanges
    
    
    
    
    
    
    35.0
    %
    
    
    25.0
    %Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    0.1
    %Non-deductible expenses and other
    
    
    1.6
    %
    
    
    
    
    
    
    3.7
    %Valuation allowance
    
    
    (16.2
    )%
    
    
    
    
    
    
    6.2
    %20.4
    %
    
    
    0.0
    %
    
    
    0.0
    %
 13. Related Parties
    69




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 14. Other supplemental non-cash financing and investing activities
      15.
Other Income (Loss)
 Other Income (Loss), net
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Sales/distributions of ownership interests in Partner Companies
    
    $
    125,255
    
    
    $
    22,553
    
    
    $
    3,664Gains (losses) on debt extinguishment (Note 5)
    
    
    (5,881
    )
    
    
    (133,158
    )
    
    
    (59,297
    )Realized gains on marketable securities (Note 4)
    
    
    15,911
    
    
    
    6,213
    
    
    
    340Other than temporary impairment of marketable securities (Note 4)
    
    
    (1,342
    )
    
    
    (2,869
    )
    
    
    Cost method Partner Company impairment charges
    
    
    
    
    
    
    (1,267
    )
    
    
    (3,488
    )Gain
(loss) on warrants (Note 3)
    
    
    2,596
    
    
    
    1,191
    
    
    
    (135
    )Gain on settlement of debt of Consolidated Partner Company (Note
5)
    
    
    
    
    
    
    1,593
    
    
    
    Other
    
    
    64
    
    
    
    (961
    )
    
    
    (1,364
    )$
    136,603
    
    
    $
    (106,705
    )
    
    $
    (60,280
    )Total other
income (loss) for Consolidated Partner Companies
    
    
    (1,114
    )
    
    
    527
    
    
    
    1,574$
    135,489
    
    
    $
    (106,178
    )
    
    $
    (58,706
    )
  70




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 16. Commitments and Contingencies
    2006
    
    $
    1,7232007
    
    $
    1,4462008
    
    $
    1,0332009
    
    $
    9122010
    
    $
    562Thereafter
    
    $
    382
   71




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 17. Net Income (Loss) per Share
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Basic and Diluted:Income (loss) from continuing operations
    
    $
    75,523
    
    
    $
    (137,905
    )
    
    $
    (124,834
    )Income (loss) on discontinued operations
    
    
    (3,005
    )
    
    
    2,588
    
    
    
    (11,050
    )Net income (loss)  Basic
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Interest
expense  convertible debt
    
    
    3,104
    
    
    
    
    
    
    
    Net income (loss)  Diluted
    
    $
    75,622
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Basic:Income (loss) from continuing operations per share
    
    $
    2.03
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations per share
    
    
    (0.08
    )
    
    
    0.07
    
    
    
    (0.73
    )Net income (loss) per share
    
    $
    1.95
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Diluted:Income (loss) from continuing operations per share
    
    $
    1.80
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations per share
    
    
    (0.07
    )
    
    
    0.07
    
    
    
    (0.73
    )Net income (loss) per share
    
    $
    1.73
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Basic weighted average common shares outstanding
    
    
    37,108,750
    
    
    
    35,712,555
    
    
    
    15,130,135Incremental Diluted Shares Impact:Stock options
    
    
    42,177
    
    
    
    
    
    
    
    Restricted stock
    
    
    338,110
    
    
    
    
    
    
    
    Warrants
    
    
    2,466
    
    
    
    
    
    
    
    SARs
    
    
    30,957
    
    
    
    
    
    
    
    Convertible debt
    
    
    6,147,253
    
    
    
    
    
    
    
    Diluted weighted average common shares outstanding
    
    
    43,669,713
    
    
    
    35,712,555
    
    
    
    15,130,135
  Weighted AverageShares
    
    
    price per shareYear ended December 31, 2005Stock options
    
    
    602,913
    
    
    $
    43.88Stock options (exercised with partial recourse loans)
    
    
    754,135
    
    
    $
    41.70Warrants
    
    
    9,450
    
    
    $
    100.00Year Ended December 31, 2004Stock options
    
    
    790,829
    
    
    $
    37.19Stock options (exercised with partial recourse loans)
    
    
    756,128
    
    
    $
    41.70Restricted stock
    
    
    627,828
    
    
    $
    Senior convertible notes
    
    
    6,587,621
    
    
    $
    9.11Warrants
    
    
    26,521
    
    
    $
    189.27Year Ended December 31, 2003Stock options
    
    
    825,094
    
    
    $
    61.60Stock options (exercised with partial recourse loans)
    
    
    756,128
    
    
    $
    41.70Restricted stock
    
    
    627,828
    
    
    $
    Convertible subordinated notes
    
    
    68,235
    
    
    $
    2,548.80Warrants
    
    
    26,521
    
    
    $
    189.27
 72




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 18. Selected Quarterly Financial Information (Unaudited)
  Fiscal 2005 Quarter Ended
    
    
    Fiscal 2004 Quarter EndedMar.31
    
    
    Jun.30
    
    
    Sep.30
    
    
    Dec.31
    
    
    Mar.31
    
    
    Jun.30
    
    
    Sep.30
    
    
    Dec.31(in thousands, except per share data)Revenue
    
    $
    11,891
    
    
    $
    10,506
    
    
    $
    15,394
    
    
    $
    12,785
    
    
    $
    9,791
    
    
    $
    10,019
    
    
    $
    9,959
    
    
    $
    12,088Operating ExpensesCost of revenue
    
    
    6,152
    
    
    
    6,485
    
    
    
    8,284
    
    
    
    7,688
    
    
    
    5,619
    
    
    
    5,232
    
    
    
    5,321
    
    
    
    5,292Selling, general & administrative
    
    
    9,445
    
    
    
    8,720
    
    
    
    12,157
    
    
    
    11,632
    
    
    
    7,903
    
    
    
    7,485
    
    
    
    8,534
    
    
    
    7,317Research and development
    
    
    3,150
    
    
    
    2,887
    
    
    
    4,077
    
    
    
    2,157
    
    
    
    2,222
    
    
    
    2,223
    
    
    
    2,072
    
    
    
    2,143Amortization of other intangibles
    
    
    572
    
    
    
    367
    
    
    
    609
    
    
    
    578
    
    
    
    786
    
    
    
    708
    
    
    
    689
    
    
    
    528Impairment related and other
    
    
    11
    
    
    
    (6
    )
    
    
    2,718
    
    
    
    321
    
    
    
    630
    
    
    
    (14
    )
    
    
    8
    
    
    
    134(7,439
    )
    
    
    (7,947
    )
    
    
    (12,451
    )
    
    
    (9,591
    )
    
    
    (7,369
    )
    
    
    (5,615
    )
    
    
    (6,665
    )
    
    
    (3,326
    )Other income (loss), net
    
    
    5,056
    
    
    
    9,880
    
    
    
    119,961
    
    
    
    592
    
    
    
    (113,666
    )
    
    
    3,348
    
    
    
    1,799
    
    
    
    2,341Interest income
    
    
    475
    
    
    
    613
    
    
    
    752
    
    
    
    2,050
    
    
    
    214
    
    
    
    326
    
    
    
    354
    
    
    
    401Interest expense
    
    
    (910
    )
    
    
    (857
    )
    
    
    (901
    )
    
    
    (699
    )
    
    
    (1,630
    )
    
    
    (1,573
    )
    
    
    (855
    )
    
    
    (867
    )Income (loss) before minority interest and equity loss
    
    
    (2,818
    )
    
    
    1,689
    
    
    
    107,361
    
    
    
    (7,648
    )
    
    
    (122,451
    )
    
    
    (3,514
    )
    
    
    (5,367
    )
    
    
    (1,451
    )Income tax (expense)benefit
    
    
    
    
    
    
    
    
    
    
    (20,349
    )
    
    
    1,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    680
    
    
    
    267
    
    
    
    709
    
    
    
    626
    
    
    
    437
    
    
    
    503
    
    
    
    184
    
    
    
    (353
    )Equity loss
    
    
    (475
    )
    
    
    (477
    )
    
    
    (681
    )
    
    
    (5,070
    )
    
    
    (1,185
    )
    
    
    (1,625
    )
    
    
    (1,845
    )
    
    
    (1,238
    )Income (loss) from continuing operations
    
    
    (2,613
    )
    
    
    1,479
    
    
    
    87,040
    
    
    
    (10,383
    )
    
    
    (123,199
    )
    
    
    (4,636
    )
    
    
    (7,028
    )
    
    
    (3,042
    )Income (loss) on discontinued operations
    
    
    (505
    )
    
    
    (403
    )
    
    
    254
    
    
    
    (2,351
    )
    
    
    (596
    )
    
    
    2,783
    
    
    
    (81
    )
    
    
    482Net income (loss)
    
    $
    (3,118
    )
    
    $
    1,076
    
    
    $
    87,294
    
    
    $
    (12,734
    )
    
    $
    (123,795
    )
    
    $
    (1,853
    )
    
    $
    (7,109
    )
    
    $
    (2,560
    )Basic income (loss) per share(1)Income (loss) from continuing operations
    
    $
    (0.07
    )
    
    $
    0.04
    
    
    $
    2.34
    
    
    $
    (0.28
    )
    
    $
    (3.87
    )
    
    $
    (0.13
    )
    
    $
    (0.19
    )
    
    $
    (0.08
    )Discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    (0.06
    )
    
    
    (0.02
    )
    
    
    0.08
    
    
    
    
    
    
    
    0.01$
    (0.08
    )
    
    $
    0.03
    
    
    $
    2.35
    
    
    $
    (0.34
    )
    
    $
    (3.89
    )
    
    $
    (0.05
    )
    
    $
    (0.19
    )
    
    $
    (0.07
    )Shares used in computation of basic income
(loss) per share (1)
    
    
    37,012
    
    
    
    37,040
    
    
    
    37,109
    
    
    
    37,274
    
    
    
    31,853
    
    
    
    37,003
    
    
    
    37,003
    
    
    
    37,004Diluted income (loss) per share(1)Income (loss) from continuing operations
    
    $
    (0.07
    )
    
    $
    0.04
    
    
    $
    1.96
    
    
    $
    (0.28
    )
    
    $
    (3.87
    )
    
    $
    (0.13
    )
    
    $
    (0.19
    )
    
    $
    (0.08
    )Discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    (0.06
    )
    
    
    (0.02
    )
    
    
    0.08
    
    
    
    
    
    
    
    0.01$
    (0.08
    )
    
    $
    0.03
    
    
    $
    1.97
    
    
    $
    (0.34
    )
    
    $
    (3.89
    )
    
    $
    (0.05
    )
    
    $
    (0.19
    )
    
    $
    (0.07
    )Shares used in computation of diluted income (loss) per
share (1)
    
    
    37,012
    
    
    
    38,565
    
    
    
    44,386
    
    
    
    37,274
    
    
    
    31,853
    
    
    
    37,003
    
    
    
    37,003
    
    
    
    37,004
 
 (1)
    
    The sum of quarterly income (loss) per share differs from the full year amount due to
changes in the number of shares outstanding during the year. 73




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##### Table of Contents



ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 ITEM 9A. Controls and Procedures
 Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
   Internal
Control-Integrated Framework.
  74




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal
ControlIntegrated Framework
  
 
 ITEM 9B. Other Information
  75




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##### Table of Contents



PART III
 
 ITEM 10. Directors and Executive Officers of the Registrant
   
 ITEM 11. Executive Compensation
  
 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 ITEM 13. Certain Relationships and Related Transactions
  
 ITEM 14. Principal Accountant Fees and Services
  76




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##### Table of Contents



PART IV
 
 ITEM 15. Exhibits and Financial Statement Schedules
 1. Consolidated Financial Statements
  2. Financial Statement Schedule
 Report of Independent Registered Public Accounting Firm
 
    
  INTERNET CAPITAL GROUP
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2003, 2004 and 2005
(in thousands)
 Balance at thebeginning of the
    
    Charged to costs
    
    
    
    
    
    Balance at the endyear
    
    and expenses
    
    Write-offs
    
    of the yearAllowance for
Doubtful Accounts:December 31, 2003
    
    $
    2,738
    
    
    $
    303
    
    
    $
    (1,022
    )(a)
    
    $
    2,019December 31, 2004
    
    $
    2,019
    
    
    $
    (489
    )
    
    $
    (754
    )
    
    $
    776December 31, 2005
    
    $
    776
    
    
    $
    241
    (b)
    
    $
    (418
    )(c)
    
    $
    599
 
 (a)
    
    Reserve of $209 was eliminated upon deconsolidation of partner companies during 2003.(b)
    
    Reserve of $138 was established upon acquisitions of partner companies during 2005.(c)
    
    Reserve of $221 was eliminated upon deconsolidation of partner company during 2005. 
 77




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##### Table of Contents



3. List of Exhibits
  Exhibit Index
  Exhibit Number
    
    Document2.1
    
    Agreement of Merger dated February 2, 1999 between Internet
Capital Group, L.L.C. and Internet Capital Group, Inc.
(incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form S-1 filed by the Company on
May 11, 1999 (Registration No. 333-78193) (the IPO
Registration Statement)).3.1
    
    Restated Certificate of Incorporation (incorporated by
reference to Exhibit 2.1 to the Registration Statement on
Form 8-A filed by the Company on August 4, 1999
(Registration No. 000-26989) (the 8-A Registration
Statement)).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 2.2 to the 8-A Registration Statement).3.3
    
    Certificate of Amendment of Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.3 to
the Companys Annual Report on Form 10-K for the year ended
December 31, 2002 (the 10-K Annual Report for 2002)).3.4
    
    Second Amendment of Restated Certificate of Incorporation
of Internet Capital Group, Inc. (incorporated by reference
to Exhibit 3.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).4.1
    
    Specimen Certificate for Internet Capital Groups Common
Stock (incorporated by reference to Exhibit 4.1 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2004 (the 10-K Annual Report for 2004)).4.2
    
    Form of 5% Senior Convertible Notes due 2009 of Internet
Capital Group, Inc. (Senior Convertible Notes)
(incorporated by reference to Exhibit 10.2 to the Companys
Current Report on Form 8-K filed on April 1, 2004).4.2.1
    
    Amendment No. 1 to Senior Convertible Notes. (incorporated
by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K filed on October 27, 2005).4.2.2
    
    Amendment No. 2 to Senior Convertible Notes. (incorporated
by reference to Exhibit 10.3 to the Companys Current
Report on Form 8-K filed on October 27, 2005).4.3
    
    Rights Agreement, dated as of November 22, 2000, between
Internet Capital Group, Inc. and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, which includes as
Exhibit B thereto the Form of Rights Certificate,
incorporated by reference to Exhibit 1.1 to Internet
Capital Group, Inc.s Registration Statement on Form 8-A,
dated December 1, 2000 (incorporated by reference to the
Companys Current Report on Form 8-K filed December 1, 2000
(File No. 0-26929)).
 78




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##### Table of Contents



Exhibit Number
    
    Document10.1
    
    Internet Capital Group, Inc. 1999 Equity Compensation Plan as
Amended and Restated July 25, 2001 (the Internet Capital Group,
Inc. 1999 Equity Compensation Plan) (incorporated by reference to
Exhibit 10.1.4 to the Companys Annual Report on Form 10-K filed on
April 1, 2002 (the 10-K Annual Report for 2001)).10.1.1
    
    Amendment No. 1 to the Internet Capital Group, Inc. 1999 Equity
Compensation Plan (incorporated by reference to Exhibit 10.1.2 to
the Companys 10-K Annual Report for 2002).10.1.2
    
    Amendment No. 2 to the Internet Capital Group, Inc. 1999 Equity
Compensation Plan (incorporated by reference to Exhibit 10.1.3 to
the Companys 10-K Annual Report for 2002).10.1.3
    
    Amendment No. 3 to the Internet Capital Group, Inc. 1999 Equity
Compensation Plan. (incorporated by reference to Exhibit 10.1.3 to
the Companys 10-K Annual Report for 2004).10.2
    
    Internet Capital Group, Inc. Executive Deferred Compensation Plan,
amended and restated effective September 1, 2002 (incorporated by
reference to Exhibit 10.2.2 to the Companys 10-K Annual Report for
2002).10.3
    
    Logistics.com, Inc. 2001 Equity Compensation Plan (incorporated by
reference to Exhibit 10.3 to the Companys 10-K Annual Report for
2002).10.3.1
    
    Amendment No. 1 to the Logistics.com, Inc. 2001 Equity Compensation
Plan (incorporated by reference to Exhibit 10.3.1 to the Companys
10-K Annual Report for 2002).10.4
    
    Internet Capital Group, L.L.C. Membership Profit Interest Plan
(incorporated by reference to Exhibit 10.3 to the IPO Registration
Statement).10.5
    
    Internet Capital Group, Inc. 2005 Equity Compensation Plan
(incorporated by reference to Appendix B of the Companys
Definitive Proxy Statement filed on April 28, 2005).10.6
    
    Letter of Credit Agreement dated as of September 30, 2002, by and
between Comerica Bank-California and Internet Capital Group, Inc.,
ICG Holdings, Inc. and Internet Capital Group Operations, Inc.
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002).10.6.1
    
    First Amendment to Letter of Credit Agreement dated as of October
20, 2003 by and between Comerica Bank, Internet Capital Group,
Inc., ICG Holdings, Inc. and Internet Capital Group Operations,
Inc. (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ending September 30,
2003).10.6.2
    
    Second Amendment to Letter of Credit Agreement dated as of December
15, 2004 by and between Comerica Bank, ICG Holdings, Inc. and
Internet Capital Group, Inc. (incorporated by reference to Exhibit
10.14.2 to the Companys 10-K Annual Report for 2004).10.6.3
    
    Third Amendment to Letter of Credit Agreement dated as of December
15, 2005 by and between Comerica Bank, ICG Holdings, Inc. and
Internet Capital Group, Inc. (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed December 15,
2005).
 79




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##### Table of Contents



Exhibit Number
    
    Document10.7
    
    Form of Promissory Note (Option Loan) by and between Internet
Capital Group Operations, Inc. and certain of its officers
(incorporated by reference to Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002).10.8
    
    Form of Share Pledge Agreement by and between Internet Capital
Group Operations, Inc. and certain of its officers (incorporated
by reference to Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2002).10.9
    
    Form of Promissory Note (Tax Loan) by and between Internet Capital
Group Operations, Inc. and certain of its officers (incorporated
by reference to Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2002).10.10
    
    Agreement of Lease between FV Office Partners, L.P. and Internet
Capital Group Operations, Inc. dated June 30, 2003 (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ending June 30, 2003).10.10.1
    
    First Amendment to Lease between FV Office Partners, L.P. and
Internet Capital Group Operations, Inc. dated November 20, 2003
(incorporated by reference to Exhibit 10.37 to the Companys 10-K
Annual Report for 2003).10.11
    
    Employment Agreement among Internet Capital Group Operations,
Inc., Walter W. Buckley, III and Internet Capital Group, Inc.
dated as of March 9, 2004 (incorporated by reference to Exhibit
10-40 to the Companys 10-K Annual Report for 2003).10.12
    
    Securities Purchase Agreement dated as of March 31, 2004, by and
among Internet Capital Group, Inc. and the investors listed on the
Schedule of Buyers attached as Schedule I thereto (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form
8-K filed on April 1, 2004).10.13
    
    Registration Rights Agreement dated as of April 8, 2004 by and
among Internet Capital Group, Inc. and the investors listed on the
Schedule of Buyers attached as Schedule I thereto (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on Form
8-K filed on April 1, 2004).10.14
    
    Independent Contractor Agreement by and between Internet Capital
Group Operations, Inc., Wayne Strategy Consultants, Inc. and Dr.
Michael D. Zisman dated August 17, 2004 (incorporated by reference
to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004).10.14.1
    
    First Amendment to Independent Contractor Agreement dated January
18, 2005 by and among Internet Capital Group Operations, Inc.,
Wayne Strategy Consultants, Inc. and Dr. Michael Zisman
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on January 19, 2005).
 80




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##### Table of Contents



Exhibit Number
    
    Document10.15
    
    Internet Capital Group, Inc. Non-Management Director Compensation
Plan (incorporated by reference to Exhibit 10.3 to the Companys
Current Report on Form 8-K filed on March 3, 2005).10.16
    
    Internet Capital Group, Inc. Deferred Stock Unit Program as amended
and restated effective as of January 1, 2005 (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form
8-K filed on December 15, 2005).10.17
    
    Form of Restricted Stock Grant Without Performance Acceleration
(incorporated by reference to Exhibit 10.32 to the Companys 10-K
Annual Report for 2004).10.18
    
    Form of Restricted Stock Grant With Performance Acceleration
(incorporated by reference to Exhibit 10.33 to the Companys 10-K
Annual Report for 2004).10.19
    
    Form of Stock Option Grant Without Performance Acceleration
(incorporated by reference to Exhibit 10.34 to the Companys 10-K
Annual Report for 2004).10.20
    
    Form of Stock Option Grant With Performance Acceleration
(incorporated by reference to Exhibit 10.35 to the Companys 10-K
Annual Report for 2004).10.21
    
    Form of Non-Employee Director Initial Stock Option Grant
(incorporated by reference to Exhibit 10.36 to the Companys 10-K
Annual Report for 2004).10.22
    
    Form of Non-Employee Director Annual Stock Option Grant
(incorporated by reference to Exhibit 10.37 to the Companys 10-K
Annual Report for 2004).10.23
    
    Internet Capital Group Specimen Stock Units Award Agreement
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on July 26, 2005).10.24
    
    Internet Capital Group Specimen Stock Appreciation Rights
Certificate (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K filed on July 28, 2005).10.25
    
    Letter Agreement dated July 28, 2005 between Internet Capital Group
and Anthony P. Dolanski (incorporated by reference to Exhibit 10.3
to the Companys Current Report on Form 8-K filed on July 28, 2005).10.26
    
    Form of Restrictive Covenant Agreement (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on Form 8-K filed on
July 28, 2005).10.27
    
    Note Purchase Agreement dated October 25, 2005, by and among the
Company, Langley Partners, L.P., Bear Stearns Securities Corp.
Custodian for Jeffrey Thorp IRA Rollover, JMG Capital Partners, LP
and JMG Triton Offshore Fund, Ltd. (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed on
October 27, 2005).10.28
    
    Letter Agreement dated February 21, 2006 between Internet Capital
Group, Inc. and R. Kirk Morgan (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on February
22, 2006).10.29
    
    2005 Bonus Plan (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on March 3, 2005).
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Exhibit Number
    
    Document10.30
    
    2006 Bonus Plan (incorporated by reference to Exhibit 10.1 of the
Companys Current Report on Form 8-K filed February 28, 2006).10.31
    
    Letter Agreement dated December 16, 2005 by and between ICG
Holdings, Inc. and Credit Suisse First Boston Capital LLC.10.32
    
    Letter Agreement dated July 28, 2005 between Internet Capital Group,
Inc. and Douglas Alexander.11.1
    
    Statement Regarding Computation of Per Share Earnings (included
herein at Note 2-Significant Accounting Policies in the subsection
Net Income (Loss) Per Share to the Consolidated Financial
Statements and Note 17-Net Income (Loss) Per Share to the
Consolidated Financial Statements).21.1
    
    Subsidiaries of Internet Capital Group, Inc.23.1
    
    Consent of KPMG LLP regarding Internet Capital Group, Inc.31.1
    
    Certification of Chief Executive Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  Date: March 15, 2006
    
    INTERNET CAPITAL GROUP, INC.By:
    
    /s/ R. KIRK MORGANName:
    
    R. Kirk MorganTitle:
    
    Chief Financial Officer
  Signature
    
    Title/s/ WALTER W. BUCKLEY, III
    
    Chief Executive Officer, President and Chairman of the BoardWalter W. Buckley, III
    
    of Directors (Principal Executive Officer)/s/ R. KIRK MORGAN
    
    Chief Financial OfficerR. Kirk Morgan
    
    (Principal Financial and Accounting Officer)/s/ DAVID J. BERKMAN
    
    DirectorDavid J. Berkman/s/ THOMAS A. DECKER
    
    DirectorThomas A. Decker/s/ DAVID K. DOWNES
    
    DirectorDavid K. Downes/s/ THOMAS P. GERRITY
    
    DirectorThomas P. Gerrity/s/ ROBERT E. KEITH, JR.
    
    DirectorRobert E. Keith, Jr./s/ WARREN V. MUSSER
    
    DirectorWarren V. Musser/s/ PHILIP J. RINGO
    
    DirectorPhilip J. Ringo/s/ MICHAEL D. ZISMAN
    
    DirectorMichael D. Zisman
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Exhibit Number
    
    Document2.1
    
    Agreement of Merger dated February 2, 1999 between Internet
Capital Group, L.L.C. and Internet Capital Group, Inc.
(incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form S-1 filed by the Company on
May 11, 1999 (Registration No. 333-78193) (the IPO
Registration Statement)).3.1
    
    Restated Certificate of Incorporation (incorporated by
reference to Exhibit 2.1 to the Registration Statement on
Form 8-A filed by the Company on August 4, 1999
(Registration No. 000-26989) (the 8-A Registration
Statement)).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 2.2 to the 8-A Registration Statement).3.3
    
    Certificate of Amendment of Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.3 to
the Companys Annual Report on Form 10-K for the year ended
December 31, 2002 (the 10-K Annual Report for 2002)).3.4
    
    Second Amendment of Restated Certificate of Incorporation
of Internet Capital Group, Inc. (incorporated by reference
to Exhibit 3.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).4.1
    
    Specimen Certificate for Internet Capital Groups Common
Stock (incorporated by reference to Exhibit 4.1 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2004 (the 10-K Annual Report for 2004)).4.2
    
    Form of 5% Senior Convertible Notes due 2009 of Internet
Capital Group, Inc. (Senior Convertible Notes)
(incorporated by reference to Exhibit 10.2 to the Companys
Current Report on Form 8-K filed on April 1, 2004).4.2.1
    
    Amendment No. 1 to Senior Convertible Notes. (incorporated
by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K filed on October 27, 2005).4.2.2
    
    Amendment No. 2 to Senior Convertible Notes. (incorporated
by reference to Exhibit 10.3 to the Companys Current
Report on Form 8-K filed on October 27, 2005).4.3
    
    Rights Agreement, dated as of November 22, 2000, between
Internet Capital Group, Inc. and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, which includes as
Exhibit B thereto the Form of Rights Certificate,
incorporated by reference to Exhibit 1.1 to Internet
Capital Group, Inc.s Registration Statement on Form 8-A,
dated December 1, 2000 (incorporated by reference to the
Companys Current Report on Form 8-K filed December 1, 2000
(File No. 0-26929)).10.1
    
    Internet Capital Group, Inc. 1999 Equity Compensation Plan
as Amended and Restated July 25, 2001 (the Internet
Capital Group, Inc. 1999 Equity Compensation Plan)
(incorporated by reference to Exhibit 10.1.4 to the
Companys Annual Report on Form 10-K filed on April 1, 2002
(the 10-K Annual Report for 2001)).10.1.1
    
    Amendment No. 1 to the Internet Capital Group, Inc. 1999
Equity Compensation Plan (incorporated by reference to
Exhibit 10.1.2 to the Companys 10-K Annual Report for
2002).10.1.2
    
    Amendment No. 2 to the Internet Capital Group, Inc. 1999
Equity Compensation Plan (incorporated by reference to
Exhibit 10.1.3 to the Companys 10-K Annual Report for
2002).
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##### Table of Contents



Exhibit Number
    
    Document10.1.3
    
    Amendment No. 3 to the Internet Capital Group, Inc. 1999
Equity Compensation Plan (incorporated by reference to
Exhibit 10.1.3 to the Companys 10-K Annual Report for
2004).10.2
    
    Internet Capital Group, Inc. Executive Deferred
Compensation Plan, amended and restated effective September
1, 2002 (incorporated by reference to Exhibit 10.2.2 to the
Companys 10-K Annual Report for 2002).10.3
    
    Logistics.com, Inc. 2001 Equity Compensation Plan
(incorporated by reference to Exhibit 10.3 to the Companys
10-K Annual Report for 2002).10.3.1
    
    Amendment No. 1 to the Logistics.com, Inc. 2001 Equity
Compensation Plan (incorporated by reference to Exhibit
10.3.1 to the Companys 10-K Annual Report for 2002).10.4
    
    Internet Capital Group, L.L.C. Membership Profit Interest
Plan (incorporated by reference to Exhibit 10.3 to the IPO
Registration Statement).10.5
    
    Internet Capital Group, Inc. 2005 Equity Compensation Plan
(incorporated by reference to Appendix B of the Companys
Definitive Proxy Statement filed on April 28, 2005).10.6
    
    Letter of Credit Agreement dated as of September 30, 2002, by and
between Comerica Bank-California and Internet Capital Group, Inc.,
ICG Holdings, Inc. and Internet Capital Group Operations, Inc.
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002).10.6.1
    
    First Amendment to Letter of Credit Agreement dated as of October
20, 2003 by and between Comerica Bank, Internet Capital Group,
Inc., ICG Holdings, Inc. and Internet Capital Group Operations,
Inc. (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ending September 30,
2003).10.6.2
    
    Second Amendment to Letter of Credit Agreement dated as of
December 15, 2004 by and between Comerica Bank, ICG Holdings, Inc.
and Internet Capital Group, Inc. (incorporated by reference to
Exhibit 10.14.2 to the Companys 10-K Annual Report for 2004).10.16.3
    
    Third Amendment to Letter of Credit Agreement dated as of December
15, 2005 by and between Comerica Bank, ICG Holdings, Inc. and
Internet Capital Group, Inc. (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed December
15, 2005).10.7
    
    Form of Promissory Note (Option Loan) by and between Internet
Capital Group Operations, Inc. and certain of its officers
(incorporated by reference to Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002).10.18
    
    Form of Share Pledge Agreement by and between Internet Capital
Group Operations, Inc. and certain of its officers (incorporated
by reference to Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2002).10.9
    
    Form of Promissory Note (Tax Loan) by and between Internet Capital
Group Operations, Inc. and certain of its officers (incorporated
by reference to Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2002).
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Exhibit Number
    
    Document10.10
    
    Agreement of Lease between FV Office Partners, L.P. and Internet
Capital Group Operations, Inc. dated June 30, 2003 (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ending June 30, 2003).10.10.1
    
    First Amendment to Lease between FV Office Partners, L.P. and
Internet Capital Group Operations, Inc. dated November 20, 2003
(incorporated by reference to Exhibit 10.37 to the Companys 10-K
Annual Report for 2003).10.11
    
    Employment Agreement among Internet Capital Group Operations,
Inc., Walter W. Buckley, III and Internet Capital Group, Inc.
dated as of March 9, 2004 (incorporated by reference to Exhibit
10.40 to the Companys 10-K Annual Report for 2003).10.12
    
    Securities Purchase Agreement dated as of March 31, 2004, by and
among Internet Capital Group, Inc. and the investors listed on the
Schedule of Buyers attached as Schedule I thereto (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form
8-K filed on April 1, 2004).10.13
    
    Registration Rights Agreement dated as of April 8, 2004 by and
among Internet Capital Group, Inc. and the investors listed on the
Schedule of Buyers attached as Schedule I thereto (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on Form
8-K filed on April 1, 2004).10.14
    
    Independent Contractor Agreement by and between Internet Capital
Group Operations, Inc., Wayne Strategy Consultants, Inc. and Dr.
Michael D. Zisman dated August 17, 2004 (incorporated by reference
to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004).10.14.1
    
    First Amendment to Independent Contractor Agreement dated January
18, 2005 by and among Internet Capital Group Operations, Inc.,
Wayne Strategy Consultants, Inc. and Dr. Michael Zisman
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on January 19, 2004).10.15
    
    Internet Capital Group, Inc. Non-Management Director Compensation
Plan (incorporated by reference to Exhibit 10.3 to the Companys
Current Report on Form 8-K filed on March 3, 2005).10.16
    
    Internet Capital Group, Inc. Deferred Stock Unit Program as
amended and restated effective as of January 1, 2005 (incorporated
by reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K filed on December 15, 2005).10.17
    
    Form of Restricted Stock Grant Without Performance Acceleration
(incorporated by reference to Exhibit 10.32 to the Companys 10-K
Annual Report for 2004).10.18
    
    Form of Restricted Stock Grant With Performance Acceleration
(incorporated by reference to Exhibit 10.33 to the Companys 10-K
Annual Report for 2004).10.19
    
    Form of Stock Option Grant Without Performance Acceleration
(incorporated by reference to Exhibit 10.34 to the Companys 10-K
Annual Report for 2004).10.20
    
    Form of Stock Option Grant With Performance Acceleration
(incorporated by reference to Exhibit 10.35 to the Companys 10-K
Annual Report for 2004).
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Exhibit Number
    
    Document10.21
    
    Form of Non-Employee Director Initial Stock Option Grant
(incorporated by reference to Exhibit 10.36 to the Companys 10-K
Annual Report for 2004).10.22
    
    Form of Non-Employee Director Annual Stock Option Grant
(incorporated by reference to Exhibit 10.37 to the Companys 10-K
Annual Report for 2004).10.23
    
    Internet Capital Group Specimen Stock Units Award Agreement
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on July 26, 2005).10.24
    
    Internet Capital Group Specimen Stock Appreciation Rights
Certificate (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K filed on July 28, 2005).10.25
    
    Letter Agreement dated July 28, 2005 between Internet Capital Group
and Anthony P. Dolanski (incorporated by reference to Exhibit 10.3
to the Companys Current Report on Form 8-K filed on July 28, 2005).10.26
    
    Form of Restrictive Covenant Agreement (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on Form 8-K filed on
July 28, 2005).10.27
    
    Note Purchase Agreement dated October 25, 2005, by and among the
Company, Langley Partners, L.P., Bear Stearns Securities Corp.
Custodian for Jeffrey Thorp IRA Rollover, JMG Capital Partners, LP
and JMG Triton Offshore Fund, Ltd. (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed on
October 27, 2005).10.28
    
    Letter Agreement dated February 21, 2006 between Internet Capital
Group, Inc. and R. Kirk Morgan (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on February
22, 2006).10.29
    
    2005 Bonus Plan (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on March 3, 2005).10.30
    
    2006 Bonus Plan (incorporated by reference to Exhibit 10.1 of the
Companys Current Report on Form 8-K filed February 28, 2006).10.31
    
    Letter Agreement dated December 16, 2005 by and between ICG
Holdings, Inc. and Credit Suisse First Boston Capital LLC.10.32
    
    Letter Agreement dated July 28, 2005 between Internet Capital Group
and Douglas Alexander.11.1
    
    Statement Regarding Computation of Per Share Earnings (included
herein at Note 2-Significant Accounting Policies in the subsection
Net Income (Loss) Per Share to the Consolidated Financial
Statements and Note 17-Net Income (Loss) Per Share to the
Consolidated Financial Statements).21.1
    
    Subsidiaries of Internet Capital Group, Inc.23.1
    
    Consent of KPMG LLP regarding Internet Capital Group, Inc.31.1
    
    Certification of Chief Executive Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002.
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Exhibit Number
    
    Document31.2
    
    Certification of Chief Financial Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.
 88