##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-50879
 PLANETOUT INC.
  DELAWARE
    
    94-3391368(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 1355 SANSOME STREET, SAN FRANCISCO,CALIFORNIA
    
    94111(Address of Principal Executive Offices)
    
    (Zip Code)
 (415) 834-6500
 þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ  o þ




---



##### 



PlanetOut Inc.
INDEX
Form 10-Q
For the Quarter ended March 31, 2008
 PAGEPART I  FINANCIAL INFORMATION
    
    
    1Item 1 Financial Statements
    
    
    1Unaudited Condensed Consolidated Balance Sheets as of December 31, 2007 and March 31, 2008
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2007 and 2008
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2008
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 4T Controls and Procedures
    
    
    20PART II  OTHER INFORMATION
    
    
    20Item 1 Legal Proceedings
    
    
    20Item 1A Risk Factors
    
    
    20Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3 Defaults Upon Senior Securities
    
    
    30Item 4 Submission of Matters to a Vote of Security Holders
    
    
    30Item 5 Other Information
    
    
    30Item 6 Exhibits
    
    
    30SIGNATURES
    
    
    32EXHIBIT INDEX
    
    
    33EXHIBIT 10.35EXHIBIT 12.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  i




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
PlanetOut Inc.
 
 Item 1. Financial Statements
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 December 31,
    
    
    March 31,2007
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,534
    
    
    $
    6,441Restricted cash
    
    
    167
    
    
    
    168Accounts receivable, net
    
    
    3,679
    
    
    
    2,400Prepaid expenses and other current assets
    
    
    937
    
    
    
    1,040Current assets of discontinued operations
    
    
    7,348
    
    
    
    6,809Total current assets
    
    
    20,665
    
    
    
    16,858Property and equipment, net
    
    
    7,821
    
    
    
    7,283Goodwill
    
    
    2,988
    
    
    
    2,988Other assets
    
    
    523
    
    
    
    405Long-term assets of discontinued operations
    
    
    9,355
    
    
    
    3,246Total assets
    
    $
    41,352
    
    
    $
    30,780LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    845
    
    
    $
    505Accrued expenses and other liabilities
    
    
    1,888
    
    
    
    1,468Deferred revenue, current portion
    
    
    4,042
    
    
    
    3,930Capital lease obligations, current portion
    
    
    815
    
    
    
    852Deferred rent, current portion
    
    
    264
    
    
    
    265Current liabilities of discontinued operations
    
    
    4,513
    
    
    
    5,204Total current liabilities
    
    
    12,367
    
    
    
    12,224Capital lease obligations, less current portion
    
    
    880
    
    
    
    716Deferred rent, less current portion
    
    
    1,401
    
    
    
    1,343Long-term liabilities of discontinued operations
    
    
    1,795
    
    
    
    1,749Total liabilities
    
    
    16,443
    
    
    
    16,032Commitments and contingencies (Note 4)Stockholders equity:Common stock: $0.001 par value, 100,000 shares authorized, 4,096
and 4,094 shares issued and outstanding at December 31, 2007
and March 31, 2008, respectively
    
    
    40
    
    
    
    40Additional paid-in capital
    
    
    114,406
    
    
    
    114,623Accumulated other comprehensive loss
    
    
    (85
    )
    
    
    (85
    )Accumulated deficit
    
    
    (89,452
    )
    
    
    (99,830
    )Total stockholders equity
    
    
    24,909
    
    
    
    14,748Total liabilities and stockholders equity
    
    $
    41,352
    
    
    $
    30,780
  1




---



##### Table of Contents



PlanetOut Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 Three months ended March 31,2007
    
    
    2008Revenue:Advertising services
    
    $
    1,906
    
    
    $
    1,067Subscription services
    
    
    4,182
    
    
    
    3,694Transaction services
    
    
    179
    
    
    
    77Total revenue
    
    
    6,267
    
    
    
    4,838Operating costs and expenses: (*)Cost of revenue
    
    
    2,714
    
    
    
    2,444Sales and marketing
    
    
    2,476
    
    
    
    1,597General and administrative
    
    
    3,259
    
    
    
    2,038Depreciation and amortization
    
    
    1,236
    
    
    
    1,115Total operating costs and expenses
    
    
    9,685
    
    
    
    7,194Loss from operations
    
    
    (3,418
    )
    
    
    (2,356
    )Interest expense
    
    
    (369
    )
    
    
    (43
    )Other income, net
    
    
    160
    
    
    
    67Loss from continuing operations before income taxes
    
    
    (3,627
    )
    
    
    (2,332
    )Provision for income taxes
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (3,627
    )
    
    
    (2,332
    )Loss from discontinued operations, net of taxes
    
    
    (3,247
    )
    
    
    (8,046
    )Net loss
    
    $
    (6,874
    )
    
    $
    (10,378
    )Loss per share from continuing operations:Basic and diluted
    
    $
    (2.08
    )
    
    $
    (0.58
    )Loss per share from discontinued operations:Basic and diluted
    
    $
    (1.86
    )
    
    $
    (1.99
    )Net loss per share:Basic and diluted
    
    $
    (3.94
    )
    
    $
    (2.56
    )Weighted-average shares used to compute net loss
per share  basic and diluted
    
    
    1,745
    
    
    
    4,048(*)   Stock-based compensation is allocated as follows (see Note 1):Cost of revenue
    
    $
    65
    
    
    $
    33Sales and marketing
    
    
    26
    
    
    
    2General and administrative
    
    
    159
    
    
    
    92Total stock-based compensation
    
    $
    250
    
    
    $
    127
  2




---



##### Table of Contents



PlanetOut Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Three months ended March 31,2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (6,874
    )
    
    $
    (10,378
    )Net loss from discontinued operations, net of tax
    
    
    3,247
    
    
    
    8,046Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    1,236
    
    
    
    1,115Non-cash services expense
    
    
    
    
    
    
    90Provision for doubtful accounts
    
    
    4
    
    
    
    4Stock-based compensation
    
    
    250
    
    
    
    127Amortization of debt discount
    
    
    50
    
    
    
    Amortization of deferred rent
    
    
    (17
    )
    
    
    (57
    )Loss on disposal or write-off of property and equipment
    
    
    17
    
    
    
    Changes in operating assets and liabilities, net of acquisition effects:Accounts receivable
    
    
    2,232
    
    
    
    1,275Prepaid expenses and other assets
    
    
    (119
    )
    
    
    15Accounts payable
    
    
    315
    
    
    
    (340
    )Accrued expenses and other liabilities
    
    
    540
    
    
    
    (420
    )Deferred revenue
    
    
    (23
    )
    
    
    (112
    )Net cash provided by (used in) operating activities of continuing operations
    
    
    858
    
    
    
    (635
    )Net cash used in operating activities of discontinued operations
    
    
    (2,418
    )
    
    
    (753
    )Net cash used in operating activities
    
    
    (1,560
    )
    
    
    (1,388
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (986
    )
    
    
    (497
    )Purchases of short-term investments
    
    
    (2,746
    )
    
    
    Changes in restricted cash
    
    
    2,690
    
    
    
    (1
    )Net cash used in investing activities of continuing operations
    
    
    (1,042
    )
    
    
    (498
    )Net cash used in investing activities of discontinued operations
    
    
    (169
    )
    
    
    Net cash used in investing activities
    
    
    (1,211
    )
    
    
    (498
    )Cash flows from financing activities:Proceeds from exercise of common stock and warrants
    
    
    3
    
    
    
    Principal payments under capital lease obligations and notes payable
    
    
    (664
    )
    
    
    (207
    )Net cash used in financing activities
    
    
    (661
    )
    
    
    (207
    )Effect of exchange rate on cash and cash equivalents
    
    
    30
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (3,402
    )
    
    
    (2,093
    )Cash and cash equivalents, beginning of period
    
    
    9,674
    
    
    
    8,534Cash and cash equivalents, end of period
    
    $
    6,272
    
    
    $
    6,441Supplemental disclosure of noncash investing and financing activities:Property and equipment and related maintenance acquired under capital leases
    
    $
    231
    
    
    $
    80
  3




---



##### Table of Contents



PlanetOut Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1
    
      The Company and Summary of Significant Accounting Policies
 The Company
    Unaudited Interim Financial Information
  Principles of Consolidation and Basis of Presentation
  Reclassifications
  Use of Estimates
  Cash Equivalents
  4




---



##### Table of Contents



Restricted Cash
  Property and Equipment
  Internal Use Software and Website Development Costs
 Accounting for Costs of Computer Software Developed or
Obtained for Internal Use Accounting for Web Site Development Costs
 Goodwill
 Goodwill and Other Intangible Assets
    5




---



##### Table of Contents



Intangible Assets and Other Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Revenue Recognition
    Advertising
  Stock-Based Compensation
 Share-Based
Payment
 Segment Reporting
  6




---



##### Table of Contents



" "
 Disclosures about
Segments of an Enterprise and Related Information
 Income Taxes
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
   Net Income (Loss) Per Share
   7




---



##### Table of Contents



Three months ended March 31,2007
    
    
    2008Numerator:Net loss
    
    $
    (6,874
    )
    
    $
    (10,378
    )Denominator for basic and diluted net loss per share:Weighted-average shares used to compute Basic
and Diluted EPS
    
    
    1,745
    
    
    
    4,048Net loss per share  Basic and Diluted
    
    $
    (3.94
    )
    
    $
    (2.56
    )
  Three months ended March 31,2007
    
    2008Common stock options and warrants
    
    
    180
    
    
    
    207
 Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51 .
 The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Fair Value Measurements
 Note 2
    
      Goodwill and Intangible Assets
 Goodwill
  8




---



##### Table of Contents



Intangible Assets
  December 31, 2007
    
    
    March 31, 2008Gross Carrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountCustomer lists and
user bases
    
    $
    3,278
    
    
    $
    3,278
    
    
    $
    
    
    
    $
    3,278
    
    
    $
    3,278
    
    
    $
    Tradenames
    
    
    2,340
    
    
    
    2,340
    
    
    
    
    
    
    
    2,340
    
    
    
    2,340
    
    
    
    Other intangible assets
    
    
    726
    
    
    
    726
    
    
    
    
    
    
    
    726
    
    
    
    726
    
    
    
    $
    6,344
    
    
    $
    6,344
    
    
    $
    
    
    
    $
    6,344
    
    
    $
    6,344
    
    
    $
    
   9




---



##### Table of Contents



Note 3
    
      Other Balance Sheet Components
 December 31,
    
    
    March 31,2007
    
    
    2008(In thousands)Accounts receivable:Trade accounts receivable
    
    $
    3,694
    
    
    $
    2,417Less: Allowance for doubtful accounts
    
    
    (15
    )
    
    
    (17
    )$
    3,679
    
    
    $
    2,400
  December 31,
    
    
    March 31,2007
    
    
    2008(In thousands)Property and equipment:Computer equipment and software
    
    $
    9,661
    
    
    $
    9,718Furniture and fixtures
    
    
    992
    
    
    
    992Leasehold improvements
    
    
    1,971
    
    
    
    1,971Website development costs
    
    
    6,453
    
    
    
    6,67319,077
    
    
    
    19,354Less: Accumulated depreciation and amortization
    
    
    (11,256
    )
    
    
    (12,071
    )$
    7,821
    
    
    $
    7,283
  December 31,
    
    
    March 31,2007
    
    
    2008(In thousands)Accrued expenses and other liabilities:Accrued payroll and related liabilities
    
    $
    1,110
    
    
    $
    836Other accrued liabilities
    
    
    778
    
    
    
    632$
    1,888
    
    
    $
    1,468
 Note 4
    
      Commitments and Contingencies
 Retention and Severance Plan
  10




---



##### Table of Contents



Contingencies
  Note 5
    
      Issuance of Warrant
  Note 6
    
      Stock-Based Compensation
 Stock Options
  SharesOutstanding at January 1, 2008
    
    
    129Forfeited/expired/cancelled
    
    
    (9
    )Outstanding at March 31, 2008
    
    
    120
  Restricted Stock
  SharesUnvested at January 1, 2008
    
    
    49Granted
    
    
    1Vested
    
    
    (4
    )Forfeited
    
    
    (1
    )Unvested at March 31, 2008
    
    
    45
  11




---



##### Table of Contents



Year Ending December 31,2008 (remaining nine months)
    
    
    152009
    
    
    172010
    
    
    1345
 Note 7   Discontinued Operations
    Three months ended March 31, 2007LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    4,518
    
    
    $
    1,577
    
    
    $
    4,395
    
    
    $
    2
    
    
    $
    10,492Operating costs and expenses:Cost of revenue
    
    
    3,175
    
    
    
    962
    
    
    
    5,414
    
    
    
    
    
    
    
    9,551Sales and marketing
    
    
    1,236
    
    
    
    394
    
    
    
    689
    
    
    
    37
    
    
    
    2,356General and administrative
    
    
    902
    
    
    
    146
    
    
    
    147
    
    
    
    1
    
    
    
    1,196Depreciation and amortization
    
    
    255
    
    
    
    126
    
    
    
    80
    
    
    
    
    
    
    
    461Total operating costs and expenses
    
    
    5,568
    
    
    
    1,628
    
    
    
    6,330
    
    
    
    38
    
    
    
    13,564Loss from operations
    
    
    (1,050
    )
    
    
    (51
    )
    
    
    (1,935
    )
    
    
    (36
    )
    
    
    (3,072
    )Other income (expense), net
    
    
    (126
    )
    
    
    (56
    )
    
    
    7
    
    
    
    
    
    
    
    (175
    )Loss from discontinued operations
    
    $
    (1,176
    )
    
    $
    (107
    )
    
    $
    (1,928
    )
    
    $
    (36
    )
    
    $
    (3,247
    )
  12




---



##### Table of Contents



Three months ended March 31, 2008LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    TotalTotal revenue
    
    $
    4,005
    
    
    $
    1,133
    
    
    $
    
    
    
    $
    5,138Operating costs and expenses:Cost of revenue
    
    
    3,488
    
    
    
    952
    
    
    
    (12
    )
    
    
    4,428Sales and marketing
    
    
    1,368
    
    
    
    318
    
    
    
    1
    
    
    
    1,687General and administrative
    
    
    621
    
    
    
    115
    
    
    
    2
    
    
    
    738Depreciation and amortization
    
    
    52
    
    
    
    2
    
    
    
    
    
    
    
    54Impairment of goodwill and intangible assets
    
    
    1,978
    
    
    
    4,294
    
    
    
    
    
    
    
    6,272Total operating costs and expenses
    
    
    7,507
    
    
    
    5,681
    
    
    
    (9
    )
    
    
    13,179Income (loss) from operations
    
    
    (3,502
    )
    
    
    (4,548
    )
    
    
    9
    
    
    
    (8,041
    )Other income (expense), net
    
    
    (6
    )
    
    
    1
    
    
    
    
    
    
    
    (5
    )Income (loss) from discontinued operations
    
    $
    (3,508
    )
    
    $
    (4,547
    )
    
    $
    9
    
    
    $
    (8,046
    )
  December 31, 2007
    
    
    March 31, 2008LPI
    
    
    SpecPub
    
    
    Total
    
    
    LPI
    
    
    SpecPub
    
    
    TotalCurrent assets of discontinued operations:Accounts receivable, net
    
    $
    3,189
    
    
    $
    977
    
    
    $
    4,166
    
    
    $
    2,728
    
    
    $
    941
    
    
    $
    3,669Inventory
    
    
    1,113
    
    
    
    314
    
    
    
    1,427
    
    
    
    1,120
    
    
    
    292
    
    
    
    1,412Prepaid expenses and other current assets
    
    
    1,251
    
    
    
    504
    
    
    
    1,755
    
    
    
    1,299
    
    
    
    429
    
    
    
    1,728$
    5,553
    
    
    $
    1,795
    
    
    $
    7,348
    
    
    $
    5,147
    
    
    $
    1,662
    
    
    $
    6,809Long-term assets of discontinued operations:Property and equipment, net
    
    $
    620
    
    
    $
    54
    
    
    $
    674
    
    
    $
    567
    
    
    $
    52
    
    
    $
    619Goodwill
    
    
    1,427
    
    
    
    2,708
    
    
    
    4,135
    
    
    
    
    
    
    
    
    
    
    
    Intangible assets, net
    
    
    1,870
    
    
    
    2,567
    
    
    
    4,437
    
    
    
    1,319
    
    
    
    981
    
    
    
    2,300Other assets
    
    
    58
    
    
    
    51
    
    
    
    109
    
    
    
    276
    
    
    
    51
    
    
    
    327$
    3,975
    
    
    $
    5,380
    
    
    $
    9,355
    
    
    $
    2,162
    
    
    $
    1,084
    
    
    $
    3,246Current liabilities of discontinued operations:Accounts payable
    
    $
    494
    
    
    $
    74
    
    
    $
    568
    
    
    $
    512
    
    
    $
    159
    
    
    $
    671Accrued expenses and other liabilities
    
    
    603
    
    
    
    161
    
    
    
    764
    
    
    
    675
    
    
    
    191
    
    
    
    866Deferred revenue, current portion
    
    
    1,717
    
    
    
    1,434
    
    
    
    3,151
    
    
    
    1,925
    
    
    
    1,711
    
    
    
    3,636Capital lease obligations, current portion
    
    
    23
    
    
    
    7
    
    
    
    30
    
    
    
    24
    
    
    
    7
    
    
    
    31$
    2,837
    
    
    $
    1,676
    
    
    $
    4,513
    
    
    $
    3,136
    
    
    $
    2,068
    
    
    $
    5,204Long-term liabilities of discontinued operations:Deferred revenue, less current portion
    
    $
    1,089
    
    
    $
    578
    
    
    $
    1,667
    
    
    $
    1,054
    
    
    $
    576
    
    
    $
    1,630Capital lease obligations, less current portion
    
    
    104
    
    
    
    24
    
    
    
    128
    
    
    
    97
    
    
    
    22
    
    
    
    119$
    1,193
    
    
    $
    602
    
    
    $
    1,795
    
    
    $
    1,151
    
    
    $
    598
    
    
    $
    1,749
 Note 8   Subsequent Events
  13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the financial statements and
related notes which appear elsewhere in this document. This discussion contains forward-looking
statements that involve risks and uncertainties. In some cases, you can identify forward-looking
statements by terminology including would, could, may, will, should, expect, intend,
plan, anticipate, believe, estimate, predict, potential or continue, the negative of
these terms or other comparable terminology. These statements are only predictions. Forward-looking
statements include statements about our business strategy, future operating performance and
prospects. You should not place undue reliance on these forward-looking statements. Our actual
results could differ materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed below and elsewhere in this document and in
our Form 10-K filed for the year ended December 31, 2007.
 Overview
     Accounting for the Impairment or Disposal of Long-Lived Assets
  Executive Operating and Financial Summary
   14




---



##### Table of Contents



Results of Operations
 Revenue
 Advertising Services.
  Subscription Services.
  Transaction Services.
  Operating Costs and Expenses
 Cost of Revenue.
 15




---



##### Table of Contents



Sales and Marketing.
  General and Administrative.
  Depreciation and Amortization.
  Other Income and Expenses
 Interest Expense.
 Other Income, Net.
 16




---



##### Table of Contents



Discontinued Operations
    Three months ended March 31, 2007LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    4,518
    
    
    $
    1,577
    
    
    $
    4,395
    
    
    $
    2
    
    
    $
    10,492Operating costs and expenses:Cost of revenue
    
    
    3,175
    
    
    
    962
    
    
    
    5,414
    
    
    
    
    
    
    
    9,551Sales and marketing
    
    
    1,236
    
    
    
    394
    
    
    
    689
    
    
    
    37
    
    
    
    2,356General and administrative
    
    
    902
    
    
    
    146
    
    
    
    147
    
    
    
    1
    
    
    
    1,196Depreciation and amortization
    
    
    255
    
    
    
    126
    
    
    
    80
    
    
    
    
    
    
    
    461Total operating costs and expenses
    
    
    5,568
    
    
    
    1,628
    
    
    
    6,330
    
    
    
    38
    
    
    
    13,564Loss from operations
    
    
    (1,050
    )
    
    
    (51
    )
    
    
    (1,935
    )
    
    
    (36
    )
    
    
    (3,072
    )Other income (expense), net
    
    
    (126
    )
    
    
    (56
    )
    
    
    7
    
    
    
    
    
    
    
    (175
    )Loss from discontinued operations
    
    $
    (1,176
    )
    
    $
    (107
    )
    
    $
    (1,928
    )
    
    $
    (36
    )
    
    $
    (3,247
    )
  17




---



##### Table of Contents



Three months ended March 31, 2008LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    TotalTotal revenue
    
    $
    4,005
    
    
    $
    1,133
    
    
    $
    
    
    
    $
    5,138Operating costs and expenses:Cost of revenue
    
    
    3,488
    
    
    
    952
    
    
    
    (12
    )
    
    
    4,428Sales and marketing
    
    
    1,368
    
    
    
    318
    
    
    
    1
    
    
    
    1,687General and administrative
    
    
    621
    
    
    
    115
    
    
    
    2
    
    
    
    738Depreciation and amortization
    
    
    52
    
    
    
    2
    
    
    
    
    
    
    
    54Impairment of goodwill and intangible assets
    
    
    1,978
    
    
    
    4,294
    
    
    
    
    
    
    
    6,272Total operating costs and expenses
    
    
    7,507
    
    
    
    5,681
    
    
    
    (9
    )
    
    
    13,179Income (loss) from operations
    
    
    (3,502
    )
    
    
    (4,548
    )
    
    
    9
    
    
    
    (8,041
    )Other income (expense), net
    
    
    (6
    )
    
    
    1
    
    
    
    
    
    
    
    (5
    )Income (loss) from discontinued operations
    
    $
    (3,508
    )
    
    $
    (4,547
    )
    
    $
    9
    
    
    $
    (8,046
    )
 Liquidity and Capital Resources
        18




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodRemainder ofTotal
    
    
    2008
    
    
    2009-2010
    
    
    2011-2012Contractual obligations:Capital leases
    
    $
    1,751
    
    
    $
    747
    
    
    $
    976
    
    
    $
    28Operating leases
    
    
    6,313
    
    
    
    1,261
    
    
    
    3,324
    
    
    
    1,728Total contractual obligations
    
    $
    8,064
    
    
    $
    2,008
    
    
    $
    4,300
    
    
    $
    1,756
 Capital Leases.
 Operating Leases.
 Critical Accounting Policies
    Seasonality and Inflation
   Recent Accounting Pronouncements
 Business Combinations
 19




---



##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51 .
 The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Fair Value Measurements
 
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 We have a history of significant losses. If we do not regain and sustain profitability, our
financial condition and stock price could suffer.
 20




---



##### Table of Contents



If we are unable to generate revenue from advertising or if we were to lose our existing
advertisers, our business will suffer.
        Our success depends, in part, upon the growth of Internet advertising and upon our ability to
accurately predict the cost of customized campaigns.
  21




---



##### Table of Contents



If our efforts to attract and retain subscribers are not successful, our revenue will decrease.
     Our core revenue-generating software applications are written on a technology platform that has
become increasingly difficult to support. As we convert our applications onto more stable,
supportable platformsa process that requires time and financial investmentwe face the risk of
not being able to maintain or enhance the functionality of our websites. As a result we may lose
market share and our revenue may further decline.
 22




---



##### Table of Contents



We expect our operating results to fluctuate, which may lead to volatility in our stock price.
  Our limited operating history makes it difficult to evaluate our business.
  Recent and potential future divestitures could result in operating difficulties and unanticipated
liabilities.
  
    
    potential goodwill write downs associated with acquisitions of businesses where the previously
anticipated synergies of the combined entities have not been realized. For example, during
fiscal 2007, we recorded impairment charges of $21.5 million and
$4.0 million in discontinued operations due to
lower revenue than expected related to our publishing and travel
businesses, respectively;
    
    the potential diversion of significant management attention and significant financial resources
from the ongoing development of our business during the implementation of a divestiture;
    
    the potential impairment of relationships with and difficulty in attracting and retaining
employees as a result of the divestiture of certain businesses;
    
    the potential impairment of relationships with our subscribers, advertisers, customers and
partners as a result of the divestiture of certain businesses; and
    
    the difficulty in attracting and retaining qualified management to lead the retained businesses.
  If we do not continue to attract and retain qualified personnel, our business may suffer.
  23




---



##### Table of Contents



We may need additional capital and may not be able to raise additional funds on favorable terms or
at all, which could limit our ability to continue operations, dilute the ownership interests of
existing stockholders, cause us to seek business dispositions on unfavorable terms, or cause us to
consider curtailing or ceasing operations.
   Any significant disruption in service on our websites or in our computer and communications
hardware and software systems could harm our business.
  If we are unable to compete effectively, we may lose market share and our revenue may decline.
   24




---



##### Table of Contents



If we are unable to protect our domain names, our reputation and brand could be harmed if third
parties gain rights to, or use, these domain names in a manner that would confuse or impair our
ability to attract and retain customers.
   If we fail to adequately protect our trademarks and other proprietary rights, or if we get involved
in intellectual property litigation, our revenue may decline and our expenses may increase.
    25




---



##### Table of Contents



Existing or future government regulation in the United States and other countries could limit our
growth and result in loss of revenue.
  
    
    comply with a law passed in New Jersey in January 2008, or other
similar laws which may be passed in the future, requiring us to
conduct background checks on our members prior to allowing them to
interact with other members on our websites or, alternatively, provide
notice on our websites that we have not conducted background checks on
our members, which may result in our members canceling their
membership or failing to subscribe or renew their subscription,
resulting in reduced revenue;
    
    provide advance notice of any changes to our privacy policies or to
our policies on sharing non-public information with third parties, and
if our members or subscribers disagree with these policies or changes,
they may wish to cancel their membership or subscription, which will
reduce our revenue;
    
    with limited exceptions, give consumers the right to prevent sharing
of their non-public personal information with unaffiliated third
parties, and if a significant portion of our members choose to request
that we dont share their information, our advertising revenue that we
receive from renting our mailing list to unaffiliated third parties
may decline;
    
    provide notice to residents in some states if their personal
information was, or is reasonably believed to have been, obtained by
an unauthorized person such as a computer hacker, which may result in
our members or subscribers deciding to cancel their membership or
subscription, reducing our membership base and subscription revenue;
    
    comply with current or future anti-spam legislation by limiting or
modifying some of our marketing and advertising efforts, such as email
campaigns, which may result in a reduction in our advertising revenue;
for instance, two states have passed legislation creating a do not
contact registry for minors that would make it a criminal violation
to send an email message to an address on that states registry if the
email message contained an advertisement for or even a link to a
website that offered products or services that minors are prohibited
from accessing;
    
    comply with the European Union privacy directive and other
international regulatory requirements by modifying the ways in which
we collect and share our users personal information; if these
modifications render our services less attractive to our members or
subscribers, for example, by limiting the amount or type of personal
information our members or subscribers could post to their profiles,
they may cancel their memberships or subscriptions, resulting in
reduced revenue;
    
    qualify to do business in various states and countries, in addition to
jurisdictions where we are currently qualified, because our websites
are accessible over the Internet in multiple states and countries,
which if we fail to so qualify, may prevent us from enforcing our
contracts in these states or countries and may limit our ability to
grow our business;
    
    limit our domestic or international expansion because some
jurisdictions may limit or prevent access to our services as a result
of the availability of some content intended for mature viewing which
may render our services less attractive to our members or subscribers
and result in a decline in our revenue; and
    
    limit or prevent access, from some jurisdictions, to some or all of
the member-generated content available through our websites, which may
render our services less attractive to our members or subscribers and
result in a decline in our revenue. For example, in June 2005, the
United States Department of Justice (the DOJ) adopted regulations
purporting to implement the Child Protection and Obscenity Act of
1988, as amended (the CPO Act), by requiring primary and secondary
producers, as defined in the regulations, of certain adult materials
to obtain, maintain and make available for inspection specified
records, such as a performers name, address and certain forms of
photo identification as proof of a performers age. Failure to
properly obtain, maintain or make these records available for
inspection upon request of the DOJ could lead to an imposition of
penalties, fines or imprisonment. We could be deemed a secondary
producer under the CPO Act because we allow our members to display
photographic images on our websites as part of member profiles. In
addition, we may be deemed a
 26




---



##### Table of Contents



primary producer under the CPO Act
because a portion of one of the businesses we acquired in the LPI
acquisition is involved in production of adult content. Enforcement of
these regulations as to secondary producers was stayed pending
resolution of a legal challenge on the grounds that the regulations
exceed the DOJs statutory authority to regulate secondary producers,
among other grounds. In July 2006, the Adam Walsh Child Protection and
Safety Act of 2006 (the Walsh Act) became law, amending the CPO Act
by expanding the definition of the adult materials covered by the CPO
Act and by requiring secondary producers to maintain and make
available specified records under the CPO Act. Additionally, in July
2006, the FBI began conducting CPO Act record inspections, including
inspections of businesses that allegedly were secondary producers
under the CPO Act. In March 2007, the court hearing the legal
challenge to the CPO Act issued partial summary judgment in favor of
the DOJ and requested further briefing on how the Walsh Act affected
the stay on enforcement of the CPO Act against secondary producers.
In April 2007, the court lifted the stay on enforcement against
secondary producers. Additionally, in June 2007, the DOJ issued new
proposed regulations to implement the Walsh Act and amended CPO Act.
The public comment period for the proposed regulations closed in
September 2007. It is anticipated that these new proposed regulations
will be challenged in court on various constitutional grounds and that
another stay against enforcement of these regulations will be sought.
In October 2007, the Sixth Circuit Court of Appeals ruled that the CPO
Act was unconstitutional. The DOJ appealed that decision in January
2008. If the FBI continues to inspect businesses that are allegedly
secondary producers and there are no legal challenges to the CPO Act,
the Walsh Act or the new regulations purporting to implement these
acts, or if these challenges are unsuccessful, we may be subject to
significant and burdensome recordkeeping compliance requirements and
we will have to evaluate and implement additional registration and
recordkeeping processes and procedures, each of which would result in
additional expenses to us. If our members and subscribers feel these
additional restrictions or registration and recordkeeping processes
and procedures are too burdensome, this is likely to result in an
adverse impact on our subscriber growth which, in turn, will have an
adverse effect on our financial condition and results of operations.
Alternatively, if we determine that the recordkeeping and compliance
requirements would be too burdensome, we may be forced to limit the
type of content that we allow our members to post to their profiles,
which will result in a loss of features that we believe our members
and subscribers find attractive, and in turn could result in a decline
in our subscriber growth.
  The risks of transmitting confidential information online, including credit card information, may
discourage customers from subscribing to our services or purchasing goods from us.
  If we are unable to provide satisfactory customer service, we could lose subscribers.
  We may be the target of negative publicity campaigns or other actions by advocacy groups that could
disrupt our operations because we serve the LGBT community.
  27




---



##### Table of Contents



Adult content in our media properties may be the target of negative publicity campaigns or subject
us to restrictive or costly regulatory compliance.
   If one or more states or countries successfully assert that we should collect sales or other taxes
on the use of the Internet or the online sales of goods and services, our expenses will increase,
resulting in lower margins.
    We are exposed to pricing and production capacity risks associated with our magazine publishing
business, which could result in lower revenues and profit margins.
 The Advocate, Out, The Out Traveler HIVPlus,
  28




---



##### Table of Contents



In the event of an earthquake, other natural or man-made disaster, or power loss, our operations
could be interrupted or adversely affected, resulting in lower revenue.
  In the event we are unable to satisfy regulatory requirements relating to internal control over
financial reporting, or if these internal controls are not effective, our business and our stock
price could suffer.
  Our stock price may be volatile and you may lose all or a part of your investment.
   The sales of common stock by our stockholders could depress the price of our shares.
  Our Stockholder Rights Plan, along with provisions in our charter documents and under Delaware law,
could discourage a takeover that stockholders may consider favorable.
  
    
    authorize our board of directors, without stockholder approval, to issue up to 5,000,000 shares of undesignated
preferred stock;
 29




---



##### Table of Contents




    
    provide for a classified board of directors;
    
    prohibit our stockholders from acting by written consent;
    
    establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings; and
    
    prohibit stockholders from calling a special meeting of stockholders.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   (c) Total Number
    
    
    (d) Maximum Number(a) Total
    
    
    
    
    
    
    of
    
    
    (or ApproximateNumber of
    
    
    (b) Average
    
    
    Shares Purchased
    
    
    Dollar Value) ofShares
    
    
    Price Paid
    
    
    as Part of Publicly
    
    
    Shares that MayPurchased
    
    
    per
    
    
    Announced
    
    
    Yet Be Purchased UnderPeriod
    
    (1)
    
    
    Share
    
    
    Plans or Programs
    
    
    the Plans or ProgramsJanuary 1, 2008  January 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February 1, 2008  February 29, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1, 2008  March 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
 
 (1)
    
    PlanetOut does not have any publicly announced plans or programs to repurchase shares of its common stock. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 (a)
    
    Exhibits
 30




---



##### Table of Contents



ExhibitNumber
    
    Description of Documents3.1
    
    Amended and Restated Certificate of Incorporation, as amended by Certificate of
Amendment, dated October 1, 2007 and as currently in effect (filed as Exhibit 3.1
to our Current Report on Form 8-K, File No. 000-50879, filed on October 4, 2007,
and incorporated herein by reference).3.2
    
    Amended and Restated Bylaws, as currently in effect (filed as Exhibit 3.4 to our
Registration Statement on Form S-1, File No. 333-114988, initially filed on April
29, 2004, declared effective on October 13, 2004, and incorporated herein by
reference).4.1
    
    Specimen of Common Stock Certificate (filed as Exhibit 4.1 to our Current Report on
Form 8-K, File No. 000-50879, filed on October 4, 2007, and incorporated herein by
reference).4.2
    
    Form of Senior Debt Indenture (filed as Exhibit 4.5 to our Registration Statement
on Form S-3, File No. 333-133536, filed on April 25, 2006 and incorporated herein
by reference).4.3
    
    Form of Subordinated Debt Indenture (filed as Exhibit 4.6 to our Registration
Statement on Form S-3, File No. 333-133536, filed on April 25, 2006 and
incorporated herein by reference).4.4
    
    Rights Agreement dated as of January 4, 2007 among PlanetOut Inc. and Wells Fargo
Bank, N.A. (filed as Exhibit 99.2 to our Current Report on Form 8-K, File No.
000-50879, filed on January 8, 2007 and incorporated herein by reference).4.5
    
    Form of Rights Certificate (filed as Exhibit 99.3 to our Current Report on Form
8-K, File No. 000-50879, filed on January 8, 2007 and incorporated herein by
reference).4.7
    
    Amendment to Rights Agreement among PlanetOut Inc. and Wells Fargo Bank, N.A. dated
June 28, 2007 (filed as Exhibit 4.7 to our Quarterly Report on Form 10-Q, File No.
000-50879, filed on August 3, 2007 and incorporated herein by reference).4.8
    
    Common Stock Warrant to Allen & Company, LLC dated January 14, 2008 (filed as
Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed on
January 17, 2008 and incorporated herein by reference).10.35
    
    Description of Management Retention and Severance Plan adopted January 11, 2008.10.36
    
    Letter of Intent by and between PlanetOut Inc. and Regent Releasing, L.L.C., dated
as of April 7, 2008 (filed as Exhibit 99.1 to our Current Report on Form 8-K, File
No. 000-50879, filed on April 9, 2008 and incorporated herein by reference).12.1
    
    Computation of Ratio of Earnings to Fixed Charges.31.1
    
    Certification of Chief Executive Officer pursuant to the Securities Exchange Act
Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to the Securities Exchange Act
Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 18 U.S.C section 1350.32.2
    
    Certification of Chief Financial Officer pursuant to Section 18 U.S.C. section 1350.
 31




---



##### Table of Contents



SIGNATURES
  Date: May 14, 2008
    PLANETOUT INC.By:
    /s/ DANIEL E. STEIMLEDaniel E. SteimleInterim Chief Financial Officer
(Principal Financial and Accounting Officer) 32




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents3.1
    
    Amended and Restated Certificate of Incorporation, as amended by Certificate of
Amendment, dated October 1, 2007 and as currently in effect (filed as Exhibit 3.1
to our Current Report on Form 8-K, File No. 000-50879, filed on October 4, 2007,
and incorporated herein by reference).3.2
    
    Amended and Restated Bylaws, as currently in effect (filed as Exhibit 3.4 to our
Registration Statement on Form S-1, File No. 333-114988, initially filed on April
29, 2004, declared effective on October 13, 2004, and incorporated herein by
reference).4.1
    
    Specimen of Common Stock Certificate (filed as Exhibit 4.1 to our Current Report on
Form 8-K, File No. 000-50879, filed on October 4, 2007, and incorporated herein by
reference).4.2
    
    Form of Senior Debt Indenture (filed as Exhibit 4.5 to our Registration Statement
on Form S-3, File No. 333-133536, filed on April 25, 2006 and incorporated herein
by reference).4.3
    
    Form of Subordinated Debt Indenture (filed as Exhibit 4.6 to our Registration
Statement on Form S-3, File No. 333-133536, filed on April 25, 2006 and
incorporated herein by reference).4.4
    
    Rights Agreement dated as of January 4, 2007 among PlanetOut Inc. and Wells Fargo
Bank, N.A. (filed as Exhibit 99.2 to our Current Report on Form 8-K, File No.
000-50879, filed on January 8, 2007 and incorporated herein by reference).4.5
    
    Form of Rights Certificate (filed as Exhibit 99.3 to our Current Report on Form
8-K, File No. 000-50879, filed on January 8, 2007 and incorporated herein by
reference).4.7
    
    Amendment to Rights Agreement among PlanetOut Inc. and Wells Fargo Bank, N.A. dated
June 28, 2007 (filed as Exhibit 4.7 to our Quarterly Report on Form 10-Q, File No.
000-50879, filed on August 3, 2007 and incorporated herein by reference).4.8
    
    Common Stock Warrant to Allen & Company, LLC dated January 14, 2008 (filed as
Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed on
January 17, 2008 and incorporated herein by reference).10.35
    
    Description of Management Retention and Severance Plan adopted January 11, 2008.10.36
    
    Letter of Intent by and between PlanetOut Inc. and Regent Releasing, L.L.C., dated
as of April 7, 2008 (filed as Exhibit 99.1 to our Current Report on Form 8-K, File
No. 000-50879, filed on April 9, 2008 and incorporated herein by reference).12.1
    
    Computation of Ratio of Earnings to Fixed Charges.31.1
    
    Certification of Chief Executive Officer pursuant to the Securities Exchange Act
Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to the Securities Exchange Act
Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 18 U.S.C section 1350.32.2
    
    Certification of Chief Financial Officer pursuant to Section 18 U.S.C. section 1350.
 33