##### 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: June 30, 2007
 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
  o þ o
  o þ




---



##### 



PlanetOut Inc.
INDEX
Form 10-Q
For the Quarter ended June 30, 2007
 PAGEPART I  FINANCIAL INFORMATION
    
    
    1Item 1 Financial Statements
    
    
    1Unaudited Condensed Consolidated Balance Sheets as of December 31, 2006 and June 30, 2007
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2006 and
2007 and the Six Months Ended June 30, 2006 and 2007
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2007
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4 Controls and Procedures
    
    
    28PART II  OTHER INFORMATION
    
    
    28Item 1 Legal Proceedings
    
    
    28Item 1A Risk Factors
    
    
    28Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 3 Defaults Upon Senior Securities
    
    
    39Item 4 Submission of Matters to a Vote of Security Holders
    
    
    39Item 5 Other Information
    
    
    39Item 6 Exhibits
    
    
    40SIGNATURE
    
    
    41EXHIBIT INDEX
    
    
    42EXHIBIT 4.7EXHIBIT 10.32EXHIBIT 10.33EXHIBIT 12.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




---



##### 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,
    
    
    June 30,2006
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,674
    
    
    $
    7,016Short-term investments
    
    
    2,050
    
    
    
    Restricted cash
    
    
    2,854
    
    
    
    166Accounts receivable, net
    
    
    9,337
    
    
    
    6,085Inventory
    
    
    1,690
    
    
    
    1,124Prepaid expenses and other current assets
    
    
    11,336
    
    
    
    8,763Current assets held for sale
    
    
    
    
    
    
    2,744Total current assets
    
    
    36,941
    
    
    
    25,898Property and equipment, net
    
    
    10,923
    
    
    
    10,031Goodwill
    
    
    32,572
    
    
    
    7,720Intangible assets, net
    
    
    12,132
    
    
    
    8,853Long-term assets held for sale
    
    
    
    
    
    
    2,737Other assets
    
    
    1,021
    
    
    
    643Total assets
    
    $
    93,589
    
    
    $
    55,882LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,782
    
    
    $
    2,297Accrued expenses and other liabilities
    
    
    3,707
    
    
    
    3,712Deferred revenue, current portion
    
    
    14,569
    
    
    
    14,151Capital lease obligations, current portion
    
    
    694
    
    
    
    819Notes payable, current portion net of discount
    
    
    8,817
    
    
    
    13,745Deferred rent, current portion
    
    
    228
    
    
    
    265Current liabilities related to assets held for sale
    
    
    
    
    
    
    2,565Total current liabilities
    
    
    29,797
    
    
    
    37,554Deferred revenue, less current portion
    
    
    1,474
    
    
    
    950Capital lease obligations, less current portion
    
    
    1,504
    
    
    
    1,412Notes payable, less current portion and discount
    
    
    8,100
    
    
    
    Deferred rent, less current portion
    
    
    1,569
    
    
    
    1,489Long-term liabilities related to assets held for sale
    
    
    
    
    
    
    630Total liabilities
    
    
    42,444
    
    
    
    42,035Commitments and contingencies (Note 8)Stockholders equity:Common stock: $0.001 par value, 100,000 shares authorized, 17,629 and
18,001 shares issued and outstanding at December 31, 2006 and
June 30, 2007, respectively
    
    
    17
    
    
    
    17Additional paid-in capital
    
    
    89,532
    
    
    
    90,085Accumulated other comprehensive loss
    
    
    (122
    )
    
    
    (98
    )Accumulated deficit
    
    
    (38,282
    )
    
    
    (76,157
    )Total stockholders equity
    
    
    51,145
    
    
    
    13,847Total liabilities and stockholders equity
    
    $
    93,589
    
    
    $
    55,882
  1




---



##### Table of Contents



PlanetOut Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Revenue:Advertising services
    
    $
    7,318
    
    
    $
    6,742
    
    
    $
    12,665
    
    
    $
    12,067Subscription services
    
    
    6,321
    
    
    
    5,695
    
    
    
    12,591
    
    
    
    11,341Transaction services
    
    
    2,656
    
    
    
    6,074
    
    
    
    8,612
    
    
    
    11,862Total revenue
    
    
    16,295
    
    
    
    18,511
    
    
    
    33,868
    
    
    
    35,270Operating costs and expenses: (*)Cost of revenue
    
    
    6,872
    
    
    
    13,640
    
    
    
    16,302
    
    
    
    25,905Sales and marketing
    
    
    4,427
    
    
    
    4,572
    
    
    
    8,371
    
    
    
    9,404General and administrative
    
    
    3,078
    
    
    
    4,073
    
    
    
    6,158
    
    
    
    8,528Restructuring
    
    
    834
    
    
    
    
    
    
    
    834
    
    
    
    Depreciation and amortization
    
    
    1,300
    
    
    
    1,845
    
    
    
    2,524
    
    
    
    3,542Impairment of goodwill
    
    
    
    
    
    
    24,900
    
    
    
    
    
    
    
    24,900Total operating costs and expenses
    
    
    16,511
    
    
    
    49,030
    
    
    
    34,189
    
    
    
    72,279Loss from operations
    
    
    (216
    )
    
    
    (30,519
    )
    
    
    (321
    )
    
    
    (37,009
    )Interest expense
    
    
    (201
    )
    
    
    (597
    )
    
    
    (398
    )
    
    
    (1,148
    )Other income, net
    
    
    110
    
    
    
    115
    
    
    
    280
    
    
    
    282Loss before income taxes and minority interest
    
    
    (307
    )
    
    
    (31,001
    )
    
    
    (439
    )
    
    
    (37,875
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest in gain of consolidated affiliate
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )
    
    
    Net loss
    
    $
    (354
    )
    
    $
    (31,001
    )
    
    $
    (486
    )
    
    $
    (37,875
    )Net loss per share   basic and diluted
    
    $
    (0.02
    )
    
    $
    (1.77
    )
    
    $
    (0.03
    )
    
    $
    (2.17
    )Weighted-average shares used to compute net loss
per share  basic and diluted
    
    
    17,315
    
    
    
    17,507
    
    
    
    17,288
    
    
    
    17,479
 
 (*)
    
    Includes stock-based compensation (benefit) as follows (see Note 2): Cost of revenue
    
    $
    1
    
    
    $
    51
    
    
    $
    6
    
    
    $
    131Sales and marketing
    
    
    1
    
    
    
    3
    
    
    
    2
    
    
    
    42General and administrative
    
    
    (101
    )
    
    
    108
    
    
    
    (22
    )
    
    
    294Total stock-based compensation (benefit)
    
    $
    (99
    )
    
    $
    162
    
    
    $
    (14
    )
    
    $
    467
  2




---



##### Table of Contents



PlanetOut Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six months ended June 30,2006
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (486
    )
    
    $
    (37,875
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    2,524
    
    
    
    3,542Impairment of goodwill
    
    
    
    
    
    
    24,900Non-cash services expense
    
    
    
    
    
    
    69Provision for doubtful accounts
    
    
    226
    
    
    
    94Restructuring
    
    
    41
    
    
    
    Stock-based compensation expense (benefit)
    
    
    (14
    )
    
    
    467Amortization of debt discount
    
    
    
    
    
    
    171Amortization of deferrred rent
    
    
    (40
    )
    
    
    (43
    )Loss on disposal or write-off of property and equipment
    
    
    21
    
    
    
    375Minority interest
    
    
    47
    
    
    
    Changes in operating assets and liabilities, net of acquisition effects
and classification of assets and liabilities related to assets held for sale:Accounts receivable
    
    
    (1,774
    )
    
    
    2,081Inventory
    
    
    (41
    )
    
    
    (447
    )Prepaid expenses and other assets
    
    
    (3,216
    )
    
    
    1,890Accounts payable
    
    
    216
    
    
    
    681Accrued expenses and other liabilities
    
    
    1,321
    
    
    
    390Deferred revenue
    
    
    (1,311
    )
    
    
    1,667Net cash used in operating activities
    
    
    (2,486
    )
    
    
    (2,038
    )Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (5,403
    )
    
    
    Purchases of property and equipment
    
    
    (1,554
    )
    
    
    (1,681
    )Maturities of short-term investments
    
    
    
    
    
    
    2,050Changes in restricted cash
    
    
    (4,793
    )
    
    
    2,688Net cash provided by (used in) investing activities
    
    
    (11,750
    )
    
    
    3,057Cash flows from financing activities:Proceeds from exercise of common stock and warrants
    
    
    306
    
    
    
    17Proceeds from repayment of note receivable from stockholder
    
    
    843
    
    
    
    Principal payments under capital lease obligations and notes payable
    
    
    (484
    )
    
    
    (3,718
    )Net cash provided by (used in) financing activities
    
    
    665
    
    
    
    (3,701
    )Effect of exchange rate on cash and cash equivalents
    
    
    (13
    )
    
    
    24Net decrease in cash and cash equivalents
    
    
    (13,584
    )
    
    
    (2,658
    )Cash and cash equivalents, beginning of period
    
    
    18,461
    
    
    
    9,674Cash and cash equivalents, end of period
    
    $
    4,877
    
    
    $
    7,016Supplemental disclosure of noncash investing and financing activities:Property and equipment and related maintenance acquired under capital leases
    
    $
    651
    
    
    $
    461
  3




---



##### Table of Contents



PlanetOut Inc.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  The Company
  The Advocate, Out, The Out Traveler HIVPlus
 Note 2  Summary of Significant Accounting Policies
 Unaudited Interim Financial Information
  Principles of Consolidation and Basis of Presentation
  Reclassifications
  Use of Estimates
  4




---



##### Table of Contents



Cash Equivalents and Short-Term Investments
  Restricted Cash
  Inventory
  Property and Equipment
  Website Development Costs and Internal Use Software
 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



Revenue Recognition
 Revenue Arrangements with Multiple Deliverables
  Reporting Revenue Gross as a Principal Versus
Net as an Agent,
 6




---



##### Table of Contents



Advertising
  Stock-Based Compensation
 Share-Based
Payment
 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 June 30,
    
    
    Six months ended June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Numerator:Net loss
    
    $
    (354
    )
    
    $
    (31,001
    )
    
    $
    (486
    )
    
    $
    (37,875
    )Denominator for basic and diluted net loss
per share:Weighted-average shares
    
    
    17,315
    
    
    
    17,507
    
    
    
    17,288
    
    
    
    17,479Net loss per share:Basic and diluted
    
    $
    (0.02
    )
    
    $
    (1.77
    )
    
    $
    (0.03
    )
    
    $
    (2.17
    )
  Six months ended June 30,2006
    
    2007Common stock options and warrants
    
    
    2,008
    
    
    
    2,499
 Variable Interest Entity
 Consolidation of Variable Interest Entities,
  Recent Accounting Pronouncements
 The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Fair Value Measurements
 8




---



##### Table of Contents



Note 3  Goodwill and Intangible Assets
 Goodwill
    December 31,
    
    
    
    
    
    
    
    
    
    
    June 30,2006
    
    
    Adjustments
    
    
    Impairment
    
    
    2007Reportable segment:Online
    
    $
    3,403
    
    
    $
    
    
    
    $
    
    
    
    $
    3,403Publishing
    
    
    25,187
    
    
    
    48
    
    
    
    (21,100
    )
    
    
    4,135Travel and Events
    
    
    3,982
    
    
    
    
    
    
    
    (3,800
    )
    
    
    182$
    32,572
    
    
    $
    48
    
    
    $
    (24,900
    )
    
    $
    7,720
  Intangible Assets
  December 31, 2006
    
    
    June 30, 2007Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountCustomer lists and user bases
    
    $
    10,488
    
    
    $
    4,996
    
    
    $
    5,492
    
    
    $
    8,568
    
    
    $
    4,975
    
    
    $
    3,593Tradenames
    
    
    8,980
    
    
    
    2,340
    
    
    
    6,640
    
    
    
    7,600
    
    
    
    2,340
    
    
    
    5,260Other intangible assets
    
    
    726
    
    
    
    726
    
    
    
    
    
    
    
    726
    
    
    
    726
    
    
    
    $
    20,194
    
    
    $
    8,062
    
    
    $
    12,132
    
    
    $
    16,894
    
    
    $
    8,041
    
    
    $
    8,853
  9




---



##### Table of Contents



Fiscal Years:2007 (remaining six months)
    
    $
    4912008
    
    
    9792009
    
    
    9572010
    
    
    8432011
    
    
    2772012
    
    
    46$
    3,593
 Note 4  Assets and Liabilities Related to Assets Held for Sale
 Accounting for the Impairment or Disposal of Long-Lived Assets
  10




---



##### Table of Contents



Current assets held for sale:Accounts receivable, net
    
    $
    1,077Inventory
    
    
    1,013Prepaid expenses and other current assets
    
    
    654$
    2,744Long-term assets held for sale:Property and equipment, net
    
    $
    108Intangible assets, net
    
    
    2,567Other assets
    
    
    62$
    2,737Current liabilities related to assets held for sale:Accounts payable
    
    $
    166Accrued expenses and other liabilities
    
    
    385Deferred revenue, current portion
    
    
    2,007Capital lease obligations, current portion
    
    
    7$
    2,565Long-term liabilities related to assets held for sale:Deferred revenue, less current portion
    
    $
    602Capital lease obligations, less current portion
    
    
    28$
    630
 Note 5  Other Balance Sheet Components
 December 31,2006
    
    

June
30,2007Accounts receivable:Trade accounts receivable
    
    $
    10,906
    
    
    $
    6,662Less: Allowance for doubtful accounts
    
    
    (520
    )
    
    
    (199
    )Less: Provision for returns
    
    
    (1,049
    )
    
    
    (378
    )$
    9,337
    
    
    $
    6,085
   11




---



##### Table of Contents



December 31,
    
    
    June 30,2006
    
    
    2007(In thousands)Inventory:Materials for future publications
    
    $
    370
    
    
    $
    273Work in process
    
    
    
    
    
    
    13Finished goods available for sale
    
    
    1,386
    
    
    
    8691,756
    
    
    
    1,155Less: reserve for obsolete inventory
    
    
    (66
    )
    
    
    (31
    )$
    1,690
    
    
    $
    1,124
  December 31,
    
    
    June 30,2006
    
    
    2007(In thousands)Prepaid expenses and other current assets:Prepaid expenses and other current assets
    
    $
    4,183
    
    
    $
    3,169Deposits on leased voyages and vacations
    
    
    7,153
    
    
    
    5,594$
    11,336
    
    
    $
    8,763
 December 31,
    
    
    June 30,2006
    
    
    2007(In thousands)Property and equipment:Computer equipment and software
    
    $
    13,857
    
    
    $
    9,963Furniture and fixtures
    
    
    1,239
    
    
    
    5,917Leasehold improvements
    
    
    2,269
    
    
    
    1,195Website development costs
    
    
    6,855
    
    
    
    2,28324,220
    
    
    
    19,358Less: Accumulated depreciation and amortization
    
    
    (13,297
    )
    
    
    (9,327
    )$
    10,923
    
    
    $
    10,031
  December 31,
    
    
    June 30,2006
    
    
    2007(In thousands)Accrued expenses and other liabilities:Accrued payroll and related liabilities
    
    $
    1,499
    
    
    $
    1,683Other accrued liabilities
    
    
    2,208
    
    
    
    2,028$
    3,707
    
    
    $
    3,711
 12




---



##### Table of Contents



Note 6  Related Party Transactions
  Note 7  Notes Payable
  December 31,
    
    
    June 30,2006
    
    
    2007Notes payable to vendors
    
    $
    47
    
    
    $
    LPI note
    
    
    7,075
    
    
    
    4,716Orix term loan
    
    
    7,187
    
    
    
    6,250Orix revolving loan
    
    
    3,000
    
    
    
    3,00017,309
    
    
    
    13,966Less: discount
    
    
    (392
    )
    
    
    (221
    )16,917
    
    
    
    13,745Less: current portion, net of discount
    
    
    8,817
    
    
    
    13,745Notes payable, less current portion and discount
    
    $
    8,100
    
    
    $
    
  
   13




---



##### Table of Contents



 
 Note 8  Commitments and Contingencies
 Deposit Commitments
  Contingencies
  www.fr.gay.com www.ooups.com
  14




---



##### Table of Contents



Note 9  Stock-Based Compensation
 Stock Options
  SharesOutstanding at January 1, 2007
    
    
    1,747Exercised
    
    
    (14
    )Forfeited/expired/cancelled
    
    
    (104
    )Outstanding at June 30, 2007
    
    
    1,629
  Restricted Stock
  SharesUnvested at January 1, 2007
    
    
    215Granted
    
    
    416Vested
    
    
    (100
    )Forfeited
    
    
    (30
    )Unvested at June 30, 2007
    
    
    501
   Year Ending December 31,2007 (remaining six months)
    
    
    322008
    
    
    1812009
    
    
    1652010
    
    
    123501
  Note 10  Issuance of Warrant
  15




---



##### Table of Contents



Note 11  Segment Information
     Three months ended June 30, 2006
    
    
    Three months ended June 30, 2007Travel
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Traveland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    andOnline
    
    
    Publishing
    
    
    Events
    
    
    Total
    
    
    Online
    
    
    Publishing
    
    
    Events
    
    
    TotalRevenue:Advertising services
    
    $
    2,748
    
    
    $
    4,569
    
    
    $
    
    
    
    $
    7,317
    
    
    $
    2,543
    
    
    $
    4,199
    
    
    $
    
    
    
    $
    6,742Subscription services
    
    
    4,684
    
    
    
    1,637
    
    
    
    
    
    
    
    6,321
    
    
    
    4,241
    
    
    
    1,454
    
    
    
    
    
    
    
    5,695Transaction services
    
    
    578
    
    
    
    1,441
    
    
    
    638
    
    
    
    2,657
    
    
    
    317
    
    
    
    984
    
    
    
    4,773
    
    
    
    6,074Total revenue
    
    
    8,010
    
    
    
    7,647
    
    
    
    638
    
    
    
    16,295
    
    
    
    7,101
    
    
    
    6,637
    
    
    
    4,773
    
    
    
    18,511Direct operating costs and expenses:Cost of revenue
    
    
    2,294
    
    
    
    4,475
    
    
    
    103
    
    
    
    6,872
    
    
    
    3,847
    
    
    
    4,172
    
    
    
    5,621
    
    
    
    13,640Sales and marketing
    
    
    2,569
    
    
    
    1,298
    
    
    
    560
    
    
    
    4,427
    
    
    
    2,405
    
    
    
    1,660
    
    
    
    507
    
    
    
    4,572Total direct operating costs
and expenses
    
    
    4,863
    
    
    
    5,773
    
    
    
    663
    
    
    
    11,299
    
    
    
    6,252
    
    
    
    5,832
    
    
    
    6,128
    
    
    
    18,212Contribution margin (loss)
    
    $
    3,147
    
    
    $
    1,874
    
    
    $
    (25
    )
    
    
    4,996
    
    
    $
    849
    
    
    $
    805
    
    
    $
    (1,355
    )
    
    
    299Other operating costs and expenses:General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,073Restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    834
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,845Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,900Total other operating costs
and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,818Loss from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (216
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,519
    )Other expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (482
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (354
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (31,001
    )
 16




---



##### Table of Contents



Six months ended June 30, 2006
    
    
    Six months ended June 30, 2007Travel
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Traveland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    andOnline
    
    
    Publishing
    
    
    Events
    
    
    Total
    
    
    Online
    
    
    Publishing
    
    
    Events
    
    
    TotalRevenue:Advertising services
    
    $
    4,595
    
    
    $
    8,069
    
    
    $
    
    
    
    $
    12,664
    
    
    $
    4,449
    
    
    $
    7,616
    
    
    $
    2
    
    
    $
    12,067Subscription services
    
    
    9,512
    
    
    
    3,079
    
    
    
    
    
    
    
    12,591
    
    
    
    8,510
    
    
    
    2,831
    
    
    
    
    
    
    
    11,341Transaction services
    
    
    1,170
    
    
    
    2,671
    
    
    
    4,772
    
    
    
    8,613
    
    
    
    679
    
    
    
    2,015
    
    
    
    9,168
    
    
    
    11,862Total revenue
    
    
    15,277
    
    
    
    13,819
    
    
    
    4,772
    
    
    
    33,868
    
    
    
    13,638
    
    
    
    12,462
    
    
    
    9,170
    
    
    
    35,270Direct operating costs and expenses:Cost of revenue
    
    
    4,948
    
    
    
    8,236
    
    
    
    3,118
    
    
    
    16,302
    
    
    
    6,925
    
    
    
    7,945
    
    
    
    11,035
    
    
    
    25,905Sales and marketing
    
    
    5,334
    
    
    
    2,321
    
    
    
    716
    
    
    
    8,371
    
    
    
    4,894
    
    
    
    3,277
    
    
    
    1,233
    
    
    
    9,404Total direct operating costs
and expenses
    
    
    10,282
    
    
    
    10,557
    
    
    
    3,834
    
    
    
    24,673
    
    
    
    11,819
    
    
    
    11,222
    
    
    
    12,268
    
    
    
    35,309Contribution margin (loss)
    
    $
    4,995
    
    
    $
    3,262
    
    
    $
    938
    
    
    
    9,195
    
    
    $
    1,819
    
    
    $
    1,240
    
    
    $
    (3,098
    )
    
    
    (39
    )Other operating costs and expenses:General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,528Restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    834
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,542Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,900Total other operating costs
and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,970Loss from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,009
    )Other expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (866
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (486
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (37,875
    )
 Note 12  Restructuring
  Note 13  Subsequent Events
 Equity Financing and Loan Payoff
  17




---



##### Table of Contents



International Restructuring
  18




---



##### 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, 2006.
 Overview
  The Advocate Out The Out Traveler HIVPlus
 Executive Operating and Financial Summary
    19




---



##### Table of Contents



Results of Operations
  Online Segment
  Three months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Online revenue:Advertising services
    
    $
    2,748
    
    
    $
    2,543
    
    
    $
    (205
    )
    
    
    (7
    %)Subscription services
    
    
    4,684
    
    
    
    4,241
    
    
    
    (443
    )
    
    
    (9
    %)Transaction services
    
    
    578
    
    
    
    317
    
    
    
    (261
    )
    
    
    (45
    %)Total online revenue
    
    
    8,010
    
    
    
    7,101
    
    
    
    (909
    )
    
    
    (11
    %)Online direct operating costs and expenses:Cost of revenue
    
    
    2,294
    
    
    
    3,847
    
    
    
    1,553
    
    
    
    68
    %Sales and marketing
    
    
    2,569
    
    
    
    2,405
    
    
    
    (164
    )
    
    
    (6
    %)Total online direct operating costs and expenses
    
    
    4,863
    
    
    
    6,252
    
    
    
    1,389
    
    
    
    29
    %Online contribution margin
    
    $
    3,147
    
    
    $
    849
    
    
    $
    (2,298
    )
    
    
    (73
    %)
  Six months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Online revenue:Advertising services
    
    $
    4,595
    
    
    $
    4,449
    
    
    $
    (146
    )
    
    
    (3
    %)Subscription services
    
    
    9,512
    
    
    
    8,510
    
    
    
    (1,002
    )
    
    
    (11
    %)Transaction services
    
    
    1,170
    
    
    
    679
    
    
    
    (491
    )
    
    
    (42
    %)Total online revenue
    
    
    15,277
    
    
    
    13,638
    
    
    
    (1,639
    )
    
    
    (11
    %)Online direct operating costs and expenses:Cost of revenue
    
    
    4,948
    
    
    
    6,925
    
    
    
    1,977
    
    
    
    40
    %Sales and marketing
    
    
    5,334
    
    
    
    4,894
    
    
    
    (440
    )
    
    
    (8
    %)Total online direct operating costs and expenses
    
    
    10,282
    
    
    
    11,819
    
    
    
    1,537
    
    
    
    15
    %Online contribution margin
    
    $
    4,995
    
    
    $
    1,819
    
    
    $
    (3,176
    )
    
    
    (64
    %)
 20




---



##### Table of Contents



Publishing Segment
  Three months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Publishing revenue:Advertising services
    
    $
    4,569
    
    
    $
    4,199
    
    
    $
    (370
    )
    
    
    (8
    %)Subscription services
    
    
    1,637
    
    
    
    1,454
    
    
    
    (183
    )
    
    
    (11
    %)Transaction services
    
    
    1,441
    
    
    
    984
    
    
    
    (457
    )
    
    
    (32
    %)Total publishing revenue
    
    
    7,647
    
    
    
    6,637
    
    
    
    (1,010
    )
    
    
    (13
    %)Publishing direct operating costs and expenses:Cost of revenue
    
    
    4,475
    
    
    
    4,172
    
    
    
    (303
    )
    
    
    (7
    %)Sales and marketing
    
    
    1,298
    
    
    
    1,660
    
    
    
    362
    
    
    
    28
    %Total publishing direct operating costs and expenses
    
    
    5,773
    
    
    
    5,832
    
    
    
    59
    
    
    
    1
    %Publishing contribution margin
    
    $
    1,874
    
    
    $
    805
    
    
    $
    (1,069
    )
    
    
    (57
    %)
  Six months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Publishing revenue:Advertising services
    
    $
    8,069
    
    
    $
    7,616
    
    
    $
    (453
    )
    
    
    (6
    %)Subscription services
    
    
    3,079
    
    
    
    2,831
    
    
    
    (248
    )
    
    
    (8
    %)Transaction services
    
    
    2,671
    
    
    
    2,015
    
    
    
    (656
    )
    
    
    (25
    %)Total publishing revenue
    
    
    13,819
    
    
    
    12,462
    
    
    
    (1,357
    )
    
    
    (10
    %)Publishing direct operating costs and expenses:Cost of revenue
    
    
    8,236
    
    
    
    7,945
    
    
    
    (291
    )
    
    
    (4
    %)Sales and marketing
    
    
    2,321
    
    
    
    3,277
    
    
    
    956
    
    
    
    41
    %Total publishing direct operating costs and expenses
    
    
    10,557
    
    
    
    11,222
    
    
    
    665
    
    
    
    6
    %Publishing contribution margin
    
    $
    3,262
    
    
    $
    1,240
    
    
    $
    (2,022
    )
    
    
    (62
    %)
 21




---



##### Table of Contents



Travel and Events Segment
  Three months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Travel and events revenue:Advertising services
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    0
    %Transaction services
    
    
    638
    
    
    
    4,773
    
    
    
    4,135
    
    
    
    648
    %Total travel and events revenue
    
    
    638
    
    
    
    4,773
    
    
    
    4,135
    
    
    
    648
    %Travel and events direct operating costs and expenses:Cost of revenue
    
    
    103
    
    
    
    5,621
    
    
    
    5,518
    
    
    
    5357
    %Sales and marketing
    
    
    560
    
    
    
    507
    
    
    
    (53
    )
    
    
    (9
    %)Total travel and events direct operating costs and expenses
    
    
    663
    
    
    
    6,128
    
    
    
    5,465
    
    
    
    824
    %Travel and events contribution loss
    
    $
    (25
    )
    
    $
    (1,355
    )
    
    $
    (1,330
    )
    
    
    5320
    %
  Six months ended June 30,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Travel and events revenue:Advertising services
    
    $
    
    
    
    $
    2
    
    
    $
    2
    
    
    
    0
    %Transaction services
    
    
    4,772
    
    
    
    9,168
    
    
    
    4,396
    
    
    
    92
    %Total travel and events revenue
    
    
    4,772
    
    
    
    9,170
    
    
    
    4,398
    
    
    
    92
    %Travel and events direct operating costs and expenses:Cost of revenue
    
    
    3,118
    
    
    
    11,035
    
    
    
    7,917
    
    
    
    254
    %Sales and marketing
    
    
    716
    
    
    
    1,233
    
    
    
    517
    
    
    
    72
    %Total travel and events direct operating costs and expenses
    
    
    3,834
    
    
    
    12,268
    
    
    
    8,434
    
    
    
    220
    %Travel and events contribution margin (loss)
    
    $
    938
    
    
    $
    (3,098
    )
    
    $
    (4,036
    )
    
    
    (430
    %)
 22




---



##### Table of Contents



Other Operating Costs and Expenses
  General and Administrative.
  Restructuring.
  Depreciation and Amortization.
 23




---



##### Table of Contents



Impairment of Goodwill.
  Other Income and Expenses
 Interest Expense.
 Other Income, Net.
 Liquidity and Capital Resources
      24




---



##### Table of Contents



Off-Balance Sheet Arrangements
  25




---



##### Table of Contents



Contractual Obligations
  Payments Due by PeriodRemainder ofTotal
    
    
    2007
    
    
    2008-2009
    
    
    2010-2011
    
    
    2012 & AfterContractual obligations:Capital leases
    
    $
    2,748
    
    
    $
    536
    
    
    $
    1,831
    
    
    $
    379
    
    
    $
    2Operating leases
    
    
    14,191
    
    
    
    1,511
    
    
    
    5,848
    
    
    
    5,766
    
    
    
    1,066Deposit commitments
    
    
    2,673
    
    
    
    1,672
    
    
    
    1,001
    
    
    
    
    
    
    
    Notes payable
    
    
    14,090
    
    
    
    14,090
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    33,702
    
    
    $
    17,809
    
    
    $
    8,680
    
    
    $
    6,145
    
    
    $
    1,068
 Capital Leases.
 Operating Leases.
 Deposit Commitments.
 Notes Payable.
  Critical Accounting Policies
   Income Taxes
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109
    26




---



##### Table of Contents



Seasonality and Inflation
   Recent Accounting Pronouncements
 The Fair Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115
 Fair Value Measurements
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Risk
    Foreign Currency Risk
  27




---



##### Table of Contents



Item 4. 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.
  28




---



##### 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.
   If our efforts to attract and retain subscribers are not successful, our revenue will decrease.
  29




---



##### Table of Contents



If we are unable to successfully market our 2007 RSVP larger ship itineraries, our business will
suffer.
    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.
  30




---



##### Table of Contents



If we fail to manage our growth, our business will suffer.
  Recent and potential future acquisitions and 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 had not been realized. For example, during the second quarter of fiscal 2007,
we recorded an estimated impairment charge of $24.9 million due to lower revenue than expected related to our
travel business as well as our advertising business;
    
    the difficulty of integrating the acquired assets and personnel of the acquired businesses into our operations;
    
    the potential absorption of significant management attention and significant financial resources for the ongoing
development of our business;
    
    the potential impairment of relationships with and difficulty in attracting and retaining employees of the
acquired companies or our employees as a result of the integration of acquired businesses;
    
    the difficulty of integrating the acquired companys accounting, human resources and other administrative systems;
    
    the potential impairment of relationships with subscribers, customers and partners of the acquired companies or
our subscribers, customers and partners as a result of the integration of acquired businesses or the divestiture
of our prior businesses;
    
    the difficulty in attracting and retaining qualified management to lead the combined or retained businesses;
    
    the potential difficulties associated with entering new lines of business with which we have little experience,
such as some of the businesses we have acquired from LPI and RSVP;
    
    the difficulty of complying with additional regulatory requirements that may become applicable to us as the
result of an acquisition; and
    
    the impact of known or unknown liabilities associated with the acquired businesses. For example, in our RSVP
business, should some of the third parties with whom we contract in connection with arranging our travel
itineraries fail to perform their obligations for any reason, as a third party Austrian riverboat tour operator
with whom we contracted did in August 2006, we may be forced to cancel or reschedule planned trips, lose deposits
we have made to vendors, refund customer deposits, reimburse other costs to our customers and lose customers for
those and other travel itineraries as a result.
 31




---



##### Table of Contents



If we do not continue to attract and retain qualified personnel, our business may suffer.
  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 and dilute the ownership interests of
existing stockholders.
   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 will decline.
  Any significant disruption in service on our websites or in our computer and communications
hardware and software systems could harm our business.
  32




---



##### Table of Contents



If we are unable to compete effectively, we may lose market share and our revenue may decline.
   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.
  33




---



##### Table of Contents



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.
   Existing or future government regulation in the United States and other countries could limit our
growth and result in loss of revenue.
  
    
    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 recently 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;
 34




---



##### Table of Contents




    
    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 on some of our websites and through some
of the businesses we acquired from LPI 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 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. 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.
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 and
churn 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 subscribers 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.
  35




---



##### Table of Contents



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.
  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.
    36




---



##### Table of Contents



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,
 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.
  Recent regulations related to equity compensation could adversely affect our ability to attract and
retain key personnel.
  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.
  37




---



##### Table of Contents



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;
    
    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
   38




---



##### Table of Contents







(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 ProgramsApril 1, 2007  April 30, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    May 1, 2007  May 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2007  June 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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






Number of VotesNominee
    
    For
    
    WithheldJerry Colonna
    
    
    11,131,177
    
    
    
    2,728,469






Number of Votes
    
    
    BrokerFor
    
    
    Against
    
    
    Abstain
    
    
    Non-VotesRatification of appointment of auditors
    
    
    13,460,035
    
    
    
    65,728
    
    
    
    333,833
    
    
    
    
 
 Item 5. Other Information
  39




---



##### Table of Contents



Item 6. Exhibits
 (a) Exhibits
 ExhibitNumber
    
    Description of Documents3.1
    
    Amended and Restated Certificate of Incorporation, as currently in effect (filed as Exhibit 4.1
to our Current Report on Form 8-K, File No. 000-50879, filed on January 8, 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 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).4.2
    
    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).4.6
    
    Warrant Certificate issued to Allen & Company, LLC dated May 15, 2007 (filed as Exhibit 99.1 to
our Current Report on Form 8-K, File No. 000-50879, filed on May 18, 2007 and incorporated herein
by reference).4.7
    
    Amendment to Rights Agreement among PlanetOut Inc. and Wells Fargo Bank, N.A. dated June 28, 2007.10.30
    
    Purchase Agreement by and among PlanetOut Inc. and certain purchasers dated June 29, 2007 (filed
as Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed on July 3, 2007 and
incorporated herein by reference).10.31
    
    Form of Registration Rights Agreement (filed as Exhibit 99.2 to our Current Report on Form 8-K,
File No. 000-50879, filed on July 3, 2007 and incorporated herein by reference).10.32
    
    Amendment No. 1 to Limited Waiver to Loan and Security Agreement and Consent dated June 29, 2007
by and between PlanetOut Inc., PlanetOut USA Inc., LPI Media Inc., SpecPub, Inc., RSVP
Productions, Inc. and ORIX Venture Finance, LLC.10.33
    
    Summary of Amended Terms in Employment Agreement by and between PlanetOut Inc. and Karen Magee.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.
 40




---



##### Table of Contents



SIGNATURE
  PLANETOUT INC.Date: August 3, 2007
    By:
    /s/ DANIEL J. MILLERDaniel J. MillerSenior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer) 41




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents3.1
    
    Amended and Restated Certificate of Incorporation, as currently in effect (filed as Exhibit 4.1
to our Current Report on Form 8-K, File No. 000-50879, filed on January 8, 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 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).4.2
    
    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).4.6
    
    Warrant Certificate issued to Allen & Company, LLC dated May 15, 2007 (filed as Exhibit 99.1 to
our Current Report on Form 8-K, File No. 000-50879, filed on May 18, 2007 and incorporated herein
by reference).4.7
    
    Amendment to Rights Agreement among PlanetOut Inc. and Wells Fargo Bank, N.A. dated June 28, 2007.10.30
    
    Purchase Agreement by and among PlanetOut Inc. and certain purchasers dated June 29, 2007 (filed
as Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed on July 3, 2007 and
incorporated herein by reference).10.31
    
    Form of Registration Rights Agreement (filed as Exhibit 99.2 to our Current Report on Form 8-K,
File No. 000-50879, filed on July 3, 2007 and incorporated herein by reference).10.32
    
    Amendment No. 1 to Limited Waiver to Loan and Security Agreement and Consent dated June 29, 2007
by and between PlanetOut Inc., PlanetOut USA Inc., LPI Media Inc., SpecPub, Inc., RSVP
Productions, Inc. and ORIX Venture Finance, LLC.10.33
    
    Summary of Amended Terms in Employment Agreement by and between PlanetOut Inc. and Karen Magee.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.
 42