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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number: 000-50879
 PLANETOUT INC.
 (Exact name of registrant as specified in its charter)
 DELAWARE(State or other jurisdiction of 
Incorporation or organization)
    
    94-3391368(I.R.S. Employer
Identification No.)1355 Sansome Street, 
San Francisco CA(Address of principal executive offices)
    
    94111(Zip Code)
 (415) 834-6500  (Registrants telephone number, including area code)  Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock,
    
    The NASDAQ Stock Market LLC$0.001 Par Value Per Share
 Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 þ o
 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
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PlanetOut Inc.
Form 10-K
For The Fiscal Year Ended December 31, 2008
Table of Contents
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    6Item 1B.
    
    Unresolved Staff Comments
    
    
    13Item 2.
    
    Properties
    
    
    13Item 3.
    
    Legal Proceedings
    
    
    14Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    14PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    15Item 6.
    
    Selected Financial Data
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 8.
    
    Financial Statements and Supplementary Data
    
    
    27Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    53Item 9A.
    
    Controls and Procedures
    
    
    53Item 9B
    
    Other Information
    
    
    53PART IIIItem 10.
    
    Directors and Executive Officers and Corporate Governance
    
    
    53Item 11.
    
    Executive Compensation
    
    
    53Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    54Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    54Item 14.
    
    Principal Accounting Fees and Services
    
    
    54PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    54Signatures
    
    
    
    
    58EX-4.10EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  Special Note Regarding Forward-Looking Statements




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PART I
 
 Item 1. Business
 Company Overview
        Advertising Services
  1




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Online Subscription Services
      Transaction Services
  Product Development and Technology
    2




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Competitive Strengths
 Strong Community Affinity.
 Critical Mass.
 Diversified Revenue Streams.
 Scalable Business Model.
 Compelling Content.
 Niche Market Focus
 
    
    Focused Advertising.We believe we deliver access to one of the
largest audiences of self-identified gay and lesbian people in the
world. Our advertising programs allow both large national and
international advertisers as well as smaller, local advertisers to
reach the LGBT audience in a cost-effective manner.
    
    Targeted Campaigns.In addition to offering advertisers the
opportunity to reach the broader LGBT audience, we offer the
opportunity to more closely target specific audiences. For example,
advertisers have the potential to reach our entire online user base
with run-of-site advertisements or to target only those members who
share certain common attributes such as age, gender, geographic
location or online behaviors. By dividing our online content
offerings into topic sections within channels, we provide our
advertisers with the ability to target their marketing efforts
further, by sponsoring topic sections or running individual
advertisements in channels specifically relevant to their particular
products and services or brand strategy.
    
    Research and Analysis.We engage third parties to conduct independent
research on member panels assembled from our online membership base
regarding the effectiveness of specific campaigns as well as other
matters of interest to our advertisers. Campaign studies examine the
effect the campaign had on brand awareness, brand attributes, message
association, brand favorability, purchase intent and advertisement
recall and can include an analysis of the research and recommendations
for future advertising campaigns. In addition to benefiting the
advertiser, this type of research helps educate us on how to more
effectively position and manage campaigns for our advertisers.
 3




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Growth Strategy
  Growing Our User Base.
 Capitalizing on Advertising Growth and Relationships.
 Competition
   Intellectual Property
  Regulatory Compliance
  
    
    comply with a law enacted 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;
 4




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
    
    provide advance notice of any changes to our privacy policies or to our policies on
sharing non-public information with third parties;
    
    with limited exceptions, give consumers the right to prevent sharing of their
non-public personal information with unaffiliated third parties;
    
    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;
    
    comply with current or future anti-spam legislation by limiting or modifying some of
its marketing and advertising efforts, such as email campaigns;
    
    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;
    
    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
those states and countries;
    
    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; and
    
    limit or prevent access, from some jurisdictions, to some or all of the
member-generated content available through our websites. For example, regulations adopted
by the United States Department of Justice (the DOJ) under the Child Protection and
Obscenity Act of 1988 (the CPO Act) require primary and secondary producers, as defined
in the regulations, of certain adult materials to obtain 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. 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. While the CPO Act and related regulations have been
the subject of extensive litigation challenging their constitutionality, they remain in
effect in modified form. We may accordingly be subject to significant and burdensome
recordkeeping compliance requirements and will have to evaluate and implement additional
registration and recordkeeping processes and procedures, each of which would result in
additional expenses or in fines or other sanctions in the event of noncompliance.
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.
 Employees
   Executive Officers
  Name
    
    Age
    
    PositionExecutive officersDaniel E. Steimle
    
    
    60
    
    
    Chief Executive Officer and Chief Financial Officer
 5




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Daniel E. Steimle
 Available Information
 http://www.planetoutinc.com
 
 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 will continue to suffer.
  While our proposed merger with Here Networks LLC and Regent Entertainment Media Inc. is pending, we
will be subject to business uncertainties and contractual restrictions that could adversely affect
our business.
   Failure to complete the proposed business combination with Here Networks LLC and Regent
Entertainment Media Inc. could negatively affect our business.
  
    
    we may not realize the benefits expected from becoming part of a combined company,
including a potentially enhanced competitive and financial position;
    
    current and prospective employees may experience uncertainty about their future roles
with us, which may adversely affect our ability to attract and retain key management,
marketing and technical personnel;
    
    in preparation for the proposed business combination, we may take additional actions
with respect to our business that we would not have taken if we were continuing to operate
on a stand-alone basis;
 6




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
    
    costs related to the proposed business combination which we incur, such as legal,
accounting and some financial advisory fees, must be paid even if the proposed business
combination is not completed; and
    
    we may be required to raise additional capital to continue operating as a stand-alone
company, which could result in substantial dilution to our existing stockholders or
increased interest and other costs, and such additional capital may not be available on
acceptable terms, or at all, especially in view of the current market conditions.
 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.
   7




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If we encounter technical difficulties, such as outages and slow or non-responsive system
performance, with our Gay.com website or if the website lacks the functionality desired by our
users, members and subscribers, our revenue will decline.
  If our efforts to attract and retain subscribers are not successful, our revenue will decrease.
    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.
  If we do not regain and maintain compliance with Nasdaq minimum market value of publicly held
shares requirement or other listing requirements, we may be forced to transfer to the Nasdaq
Capital Market or our common stock may be delisted.
  8




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We expect our operating results to fluctuate, which may lead to volatility in our stock price.
  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 goodwill impairment charges of $21.1 million and $4.0 million in
discontinued operations due to lower revenue than expected related to our Publishing and Travel
and Events 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.
  9




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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.
   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.
  10




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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.
  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.
  11




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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 online service 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.
    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.
  12




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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;
    
    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 1B. Unresolved Staff Comments
  
 Item 2. Properties
  13




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  14




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information
  High
    
    Low2007First Quarter
    
    $
    51.90
    
    
    $
    33.00Second Quarter
    
    
    35.20
    
    
    
    8.60Third Quarter
    
    
    23.30
    
    
    
    11.80Fourth Quarter
    
    
    13.24
    
    
    
    5.412008First Quarter
    
    $
    6.28
    
    
    $
    2.56Second Quarter
    
    
    3.50
    
    
    
    1.65Third Quarter
    
    
    2.80
    
    
    
    1.86Fourth Quarter
    
    
    2.75
    
    
    
    0.25
     Repurchases of Equity Securities
 (d) Maximum Number(c) Total Number
    
    
    (or Approximate(a) Total
    
    
    
    
    
    
    of
    
    
    Dollar Value) ofNumber of
    
    
    (b) Average
    
    
    Shares Purchased
    
    
    Shares that MayShares
    
    
    Price Paid
    
    
    as Part of Publicly
    
    
    Yet Be PurchasedPurchased
    
    
    per
    
    
    Announced
    
    
    UnderPeriod
    
    (1)
    
    
    Share
    
    
    Plans or Programs
    
    
    the Plans or ProgramsOctober 1, 2008  October 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    November 1, 2008  November 30,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 1, 2008  December 31,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
 
 (1)
    
    PlanetOut does not have any publicly announced plans or programs to repurchase shares of its common stock. 
 Item 6.
    
    Selected Financial Data
  15




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Year Ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008(In thousands, except per share amounts)Revenue:Advertising services
    
    $
    6,541
    
    
    $
    11,724
    
    
    $
    10,683
    
    
    $
    9,361
    
    
    $
    6,150Subscription services
    
    
    16,775
    
    
    
    21,135
    
    
    
    18,040
    
    
    
    16,130
    
    
    
    13,413Transaction services
    
    
    1,646
    
    
    
    2,732
    
    
    
    1,021
    
    
    
    470
    
    
    
    257Total revenue
    
    
    24,962
    
    
    
    35,591
    
    
    
    29,744
    
    
    
    25,961
    
    
    
    19,820Operating costs and expenses: (*)Cost of revenue
    
    
    8,068
    
    
    
    11,964
    
    
    
    9,491
    
    
    
    11,422
    
    
    
    9,877Sales and marketing
    
    
    8,806
    
    
    
    11,088
    
    
    
    10,142
    
    
    
    9,191
    
    
    
    6,651General and administrative
    
    
    5,182
    
    
    
    7,036
    
    
    
    7,868
    
    
    
    11,433
    
    
    
    7,238Restructuring
    
    
    
    
    
    
    
    
    
    
    737
    
    
    
    630
    
    
    
    Depreciation and amortization
    
    
    2,457
    
    
    
    3,460
    
    
    
    3,786
    
    
    
    5,455
    
    
    
    3,908Impairment of goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415
    
    
    
    Total operating costs and expenses
    
    
    24,513
    
    
    
    33,548
    
    
    
    32,024
    
    
    
    38,546
    
    
    
    27,674Income (loss) from operations
    
    
    449
    
    
    
    2,043
    
    
    
    (2,280
    )
    
    
    (12,585
    )
    
    
    (7,854
    )Interest expense
    
    
    (1,077
    )
    
    
    (238
    )
    
    
    (481
    )
    
    
    (1,610
    )
    
    
    (131
    )Other income, net
    
    
    116
    
    
    
    1,142
    
    
    
    568
    
    
    
    513
    
    
    
    178Income (loss) from continuing operations before income taxes
    
    
    (512
    )
    
    
    2,947
    
    
    
    (2,193
    )
    
    
    (13,682
    )
    
    
    (7,807
    )Provision (benefit) for income taxes
    
    
    25
    
    
    
    207
    
    
    
    45
    
    
    
    (6
    )
    
    
    Income (loss) from continuing operations
    
    
    (537
    )
    
    
    2,740
    
    
    
    (2,238
    )
    
    
    (13,676
    )
    
    
    (7,807
    )Accretion on redeemable convertible preferred stock
    
    
    (1,402
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (1,472
    )
    
    
    (37,494
    )
    
    
    (9,880
    )Net earnings (loss) attributable to common stockholders
    
    $
    (1,939
    )
    
    $
    2,740
    
    
    $
    (3,710
    )
    
    $
    (51,170
    )
    
    $
    (17,687
    )Net earnings (loss) per share:Basic
    
    $
    (4.01
    )
    
    $
    1.60
    
    
    $
    (2.14
    )
    
    $
    (17.79
    )
    
    $
    (4.36
    )Diluted
    
    $
    (4.01
    )
    
    $
    1.51
    
    
    $
    (2.14
    )
    
    $
    (17.79
    )
    
    $
    (4.36
    )Weighted-average shares used to compute net earnings:Basic
    
    
    484
    
    
    
    1,712
    
    
    
    1,733
    
    
    
    2,876
    
    
    
    4,054Diluted
    
    
    484
    
    
    
    1,819
    
    
    
    1,733
    
    
    
    2,876
    
    
    
    4,054(*) Stock-based compensation is allocated as follows (see Note 9):Cost of revenue
    
    $
    565
    
    
    $
    177
    
    
    $
    61
    
    
    $
    186
    
    
    $
    121Sales and marketing
    
    
    556
    
    
    
    254
    
    
    
    37
    
    
    
    33
    
    
    
    6General and administrative
    
    
    1,013
    
    
    
    568
    
    
    
    173
    
    
    
    478
    
    
    
    345Total stock-based compensation
    
    $
    2,134
    
    
    $
    999
    
    
    $
    271
    
    
    $
    697
    
    
    $
    472
 As of December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008(In thousands)Consolidated balance sheet data:Cash and cash equivalents
    
    $
    43,128
    
    
    $
    18,461
    
    
    $
    9,674
    
    
    $
    8,534
    
    
    $
    4,943Working capital
    
    
    39,209
    
    
    
    14,761
    
    
    
    7,144
    
    
    
    8,298
    
    
    
    683Total assets
    
    
    59,208
    
    
    
    77,338
    
    
    
    93,589
    
    
    
    41,352
    
    
    
    16,878Long-term liabilities
    
    
    2,241
    
    
    
    10,636
    
    
    
    12,647
    
    
    
    4,076
    
    
    
    1,366Stockholders equity
    
    $
    48,764
    
    
    $
    53,052
    
    
    $
    51,145
    
    
    $
    24,909
    
    
    $
    7,977
 16




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following Managements Discussion and Analysis of Financial Condition and Results of
Operations summarizes the significant factors affecting our consolidated operating results,
financial condition and liquidity for the three-year period ended December 31, 2008, should be read
in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial
Statements included elsewhere in this Form 10-K , and contains forward-looking statements regarding
future events and our future results that are subject to the safe harbors created under the
Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the
Exchange Act). These statements are based on current expectations, estimates, forecasts, and
projections about the industries in which we operate and the beliefs and assumptions of our
management. Words such as anticipate, believe, continue, could, estimate, expect,
goal, intend, may, plan, potential, predict, project, seek, should, target,
will, would, variations of such words, and similar expressions are intended to identify such
forward-looking statements. In addition, any statements that refer to projections of our future
financial performance, our anticipated growth and trends in our businesses, and other
characterizations of future events or circumstances are forward-looking statements. Readers are
cautioned that these forward-looking statements are only predictions and are subject to risks,
uncertainties, and assumptions that are difficult to predict, including those identified below and
under Risk Factors, and elsewhere in this Annual Report on Form 10-K . Therefore, actual results
may differ materially and adversely from those expressed in any forward-looking statements. We
undertake no obligation to revise or update any forward-looking statements for any reason.
 Overview
  Accounting for the Impairment or Disposal of Long-Lived
Assets
  Executive Operating and Financial Summary
   Results of Operations
   17




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Year Ended December 31,
    
    
    Increase (decrease)2007
    
    
    2008
    
    
    $
    
    
    %Online revenue:Advertising services
    
    $
    9,361
    
    
    $
    6,150
    
    
    $
    (3,211
    )
    
    
    (34
    %)Subscription services
    
    
    16,130
    
    
    
    13,413
    
    
    
    (2,717
    )
    
    
    (17
    %)Transaction services
    
    
    470
    
    
    
    257
    
    
    
    (213
    )
    
    
    (45
    %)Total online revenue
    
    
    25,961
    
    
    
    19,820
    
    
    
    (6,141
    )
    
    
    (24
    %)Online direct operating costs and expenses:Cost of revenue
    
    
    11,422
    
    
    
    9,877
    
    
    
    (1,545
    )
    
    
    (14
    %)Sales and marketing
    
    
    9,191
    
    
    
    6,651
    
    
    
    (2,540
    )
    
    
    (28
    %)Total online direct
operating costs and
expenses
    
    
    20,613
    
    
    
    16,528
    
    
    
    (4,085
    )
    
    
    (20
    %)Online contribution margin
    
    $
    5,348
    
    
    $
    3,292
    
    
    $
    (2,056
    )
    
    
    (38
    %)
    Year Ended December 31,
    
    
    Increase (decrease)2006
    
    
    2007
    
    
    $
    
    
    %Online revenue:Advertising services
    
    $
    10,683
    
    
    $
    9,361
    
    
    $
    (1,322
    )
    
    
    (12
    %)Subscription services
    
    
    18,040
    
    
    
    16,130
    
    
    
    (1,910
    )
    
    
    (11
    %)Transaction services
    
    
    1,021
    
    
    
    470
    
    
    
    (551
    )
    
    
    (54
    %)Total online revenue
    
    
    29,744
    
    
    
    25,961
    
    
    
    (3,783
    )
    
    
    (13
    %)Online direct operating costs and expenses:Cost of revenue
    
    
    9,491
    
    
    
    11,422
    
    
    
    1,931
    
    
    
    20
    %Sales and marketing
    
    
    10,142
    
    
    
    9,191
    
    
    
    (951
    )
    
    
    (9
    %)Total online direct
operating costs and
expenses
    
    
    19,633
    
    
    
    20,613
    
    
    
    980
    
    
    
    5
    %Online contribution margin
    
    $
    10,111
    
    
    $
    5,348
    
    
    $
    (4,763
    )
    
    
    (47
    %)
 18




---



##### Table of Contents



O ther Operating Costs and Expenses
  General and Administrative.
   Restructuring.
   Depreciation and Amortization.
 19




---



##### Table of Contents



Impairment of Goodwill and Intangible Assets.
 Other Income and Expenses
 Interest Expense.
 Other Income, Net.
 Discontinued Operations
      20




---



##### Table of Contents



Year ended December 31, 2006LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    22,108
    
    
    $
    6,904
    
    
    $
    9,158
    
    
    $
    730
    
    
    $
    38,900Operating costs and expenses:Cost of revenue
    
    
    13,071
    
    
    
    4,182
    
    
    
    8,369
    
    
    
    92
    
    
    
    25,714Sales and marketing
    
    
    4,680
    
    
    
    770
    
    
    
    1,317
    
    
    
    435
    
    
    
    7,202General and administrative
    
    
    3,192
    
    
    
    630
    
    
    
    890
    
    
    
    131
    
    
    
    4,843Restructuring
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Depreciation and amortization
    
    
    895
    
    
    
    506
    
    
    
    419
    
    
    
    
    
    
    
    1,820Impairment of goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating costs and expenses
    
    
    21,892
    
    
    
    6,088
    
    
    
    10,995
    
    
    
    658
    
    
    
    39,633Income (loss) from operations
    
    
    216
    
    
    
    816
    
    
    
    (1,837
    )
    
    
    72
    
    
    
    (733
    )Other income (expense), net
    
    
    (482
    )
    
    
    (221
    )
    
    
    8
    
    
    
    (44
    )
    
    
    (739
    )Income (loss) from discontinued operations
    
    $
    (266
    )
    
    $
    595
    
    
    $
    (1,829
    )
    
    $
    28
    
    
    $
    (1,472
    )
 Year ended December 31, 2007LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    20,249
    
    
    $
    6,803
    
    
    $
    17,033
    
    
    $
    2
    
    
    $
    44,087Operating costs and expenses:Cost of revenue
    
    
    13,835
    
    
    
    4,629
    
    
    
    18,737
    
    
    
    
    
    
    
    37,201Sales and marketing
    
    
    5,514
    
    
    
    1,561
    
    
    
    1,525
    
    
    
    37
    
    
    
    8,637General and administrative
    
    
    3,118
    
    
    
    571
    
    
    
    262
    
    
    
    1
    
    
    
    3,952Restructuring
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Depreciation and amortization
    
    
    1,015
    
    
    
    253
    
    
    
    286
    
    
    
    
    
    
    
    1,554Impairment of goodwill and intangible assets
    
    
    20,099
    
    
    
    5,400
    
    
    
    4,400
    
    
    
    
    
    
    
    29,899Total operating costs and expenses
    
    
    43,581
    
    
    
    12,414
    
    
    
    25,229
    
    
    
    38
    
    
    
    81,262Loss from operations
    
    
    (23,332
    )
    
    
    (5,611
    )
    
    
    (8,196
    )
    
    
    (36
    )
    
    
    (37,175
    )Other income (expense), net
    
    
    (241
    )
    
    
    (103
    )
    
    
    25
    
    
    
    
    
    
    
    (319
    )Loss from discontinued operations
    
    $
    (23,573
    )
    
    $
    (5,714
    )
    
    $
    (8,171
    )
    
    $
    (36
    )
    
    $
    (37,494
    )
 Year ended December 31, 2008LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    TotalTotal revenue
    
    $
    12,569
    
    
    $
    2,885
    
    
    $
    
    
    
    $
    15,454Operating costs and expenses:Cost of revenue
    
    
    9,213
    
    
    
    2,282
    
    
    
    (23
    )
    
    
    11,472Sales and marketing
    
    
    3,346
    
    
    
    686
    
    
    
    (21
    )
    
    
    4,011General and administrative
    
    
    1,621
    
    
    
    211
    
    
    
    10
    
    
    
    1,842Restructuring
    
    
    1,132
    
    
    
    97
    
    
    
    
    
    
    
    1,229Depreciation and amortization
    
    
    327
    
    
    
    31
    
    
    
    
    
    
    
    358Impairment of goodwill and intangible assets
    
    
    1,978
    
    
    
    4,294
    
    
    
    
    
    
    
    6,272Total operating costs and expenses
    
    
    17,617
    
    
    
    7,601
    
    
    
    (34
    )
    
    
    25,184Income (loss) from operations
    
    
    (5,048
    )
    
    
    (4,716
    )
    
    
    34
    
    
    
    (9,730
    )Other income (expense), net
    
    
    (15
    )
    
    
    1
    
    
    
    
    
    
    
    (14
    )Income (loss) from discontinued operations
    
    
    (5,063
    )
    
    
    (4,715
    )
    
    
    34
    
    
    
    (9,744
    )Gain (loss) on sale of discontinued operations
    
    
    (787
    )
    
    
    651
    
    
    
    
    
    
    
    (136
    )Income (loss) from and gain (loss) on sale of discontinued operations
    
    $
    (5,850
    )
    
    $
    (4,064
    )
    
    $
    34
    
    
    $
    (9,880
    )
  21




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##### Table of Contents



December 31, 2007LPI
    
    
    SpecPub
    
    
    TotalCurrent assets of discontinued operations:Accounts receivable
    
    $
    3,189
    
    
    $
    977
    
    
    $
    4,166Inventory
    
    
    1,113
    
    
    
    314
    
    
    
    1,427Prepaid expenses and other current assets
    
    
    1,251
    
    
    
    504
    
    
    
    1,755$
    5,553
    
    
    $
    1,795
    
    
    $
    7,348Long-term assets of discontinued operations:Property and equipment, net
    
    $
    620
    
    
    $
    54
    
    
    $
    674Goodwill
    
    
    1,427
    
    
    
    2,708
    
    
    
    4,135Intangible assets, net
    
    
    1,870
    
    
    
    2,567
    
    
    
    4,437Other assets
    
    
    58
    
    
    
    51
    
    
    
    109$
    3,975
    
    
    $
    5,380
    
    
    $
    9,355Current liabilities of discontinued operations:Accounts payable
    
    $
    495
    
    
    $
    73
    
    
    $
    568Accrued expenses and other liabilities
    
    
    603
    
    
    
    161
    
    
    
    764Deferred revenue, current portion
    
    
    1,717
    
    
    
    1,434
    
    
    
    3,151Capital lease obligations, current portion
    
    
    23
    
    
    
    7
    
    
    
    30$
    2,838
    
    
    $
    1,675
    
    
    $
    4,513Long-term liabilities of discontinued
operations:Deferred revenue, less current portion
    
    $
    1,089
    
    
    $
    578
    
    
    $
    1,667Capital lease obligations, less current portion
    
    
    104
    
    
    
    24
    
    
    
    128Deferred rent, less current portion
    
    
    157
    
    
    
    178
    
    
    
    335$
    1,350
    
    
    $
    780
    
    
    $
    2,130
 Critical Accounting Policies
    Revenue recognition. Revenue Arrangements with Multiple Deliverables
  22




---



##### Table of Contents



Advertising Costs.
 Valuation Allowances.
  Goodwill and Other Long-lived Assets. st
  Capitalized Website Development Costs.
 Stock-based compensation. Share-Based Payment
  Income Taxes Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
  23




---



##### Table of Contents



Liquidity and Capital Resources
   Year Ended December 31,2006
    
    
    2007
    
    
    2008(In thousands, except percentage of total assets)Net cash provided by (used in):Operating activities
    
    $
    (4,621
    )
    
    $
    (14,917
    )
    
    $
    458Investing activities
    
    
    (14,867
    )
    
    
    796
    
    
    
    (3,183
    )Financing activities
    
    
    10,700
    
    
    
    12,952
    
    
    
    (857
    )Effect of exchange rate on cash and cash equivalents
    
    
    1
    
    
    
    29
    
    
    
    (9
    )Net decrease in cash and cash equivalents
    
    $
    (8,787
    )
    
    $
    (1,140
    )
    
    $
    (3,591
    )Cash, cash equivalents and short-term investmentsCash and cash equivalents
    
    $
    9,674
    
    
    $
    8,534
    
    
    $
    4,943Short-term investments
    
    
    2,050
    
    
    
    
    
    
    
    Total cash, cash equivalents and short-term investments
    
    $
    11,724
    
    
    $
    8,534
    
    
    $
    4,943Percentage of total assets
    
    
    12.5
    %
    
    
    20.6
    %
    
    
    29.3
    %
     24




---



##### Table of Contents



Off-Balance Sheet Liabilities
  25




---



##### Table of Contents



Other Contractual Commitments
  Payments Due by PeriodTotal
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012-2013(In thousands)Contractual obligations:Capital lease obligations
    
    $
    1,063
    
    
    $
    733
    
    
    $
    272
    
    
    $
    58
    
    
    $
    Operating leases
    
    
    7,813
    
    
    
    2,463
    
    
    
    2,386
    
    
    
    2,392
    
    
    
    572Total contractual obligations
    
    $
    8,876
    
    
    $
    3,196
    
    
    $
    2,658
    
    
    $
    2,450
    
    
    $
    572
 Capital Lease Obligations.
 Operating Leases.
 Seasonality and Inflation
   Recent Accounting Pronouncements
 The Hierarchy of Generally Accepted Accounting Principles
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51 .
 Fair Value Measurements
 26




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 PlanetOut Inc.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 PageConsolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    28Consolidated Balance Sheets
    
    
    29Consolidated Statements of Operations
    
    
    30Consolidated Statements of Stockholders Equity
    
    
    31Consolidated Statements of Cash Flows
    
    
    32Notes to Consolidated Financial Statements
    
    
    33Supplementary Financial Data (unaudited):Selected Quarterly Financial Data for each of the years ended December 31, 2007 and 2008
    
    
    51Financial Statement Schedule:Valuation and Qualifying Accounts for each of the years ended December 31, 2006, 2007 and 2008
    
    
    52
 27




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         28




---



##### Table of Contents



PlanetOut Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 December 31,2007
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,534
    
    
    $
    4,943Restricted cash
    
    
    167
    
    
    
    1,432Accounts receivable, net
    
    
    3,679
    
    
    
    847Prepaid expenses and other current assets
    
    
    937
    
    
    
    996Current assets of discontinued operations
    
    
    7,348
    
    
    
    Total current assets
    
    
    20,665
    
    
    
    8,218Property and equipment, net
    
    
    7,821
    
    
    
    5,275Goodwill
    
    
    2,988
    
    
    
    2,988Other assets
    
    
    523
    
    
    
    397Long-term assets of discontinued operations
    
    
    9,355
    
    
    
    Total assets
    
    $
    41,352
    
    
    $
    16,878LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    845
    
    
    $
    695Accrued expenses and other liabilities
    
    
    1,888
    
    
    
    2,927Deferred revenue
    
    
    4,042
    
    
    
    2,830Capital lease obligations, current portion
    
    
    815
    
    
    
    763Deferred rent, current portion
    
    
    264
    
    
    
    320Current liabilities of discontinued operations
    
    
    4,513
    
    
    
    Total current liabilities
    
    
    12,367
    
    
    
    7,535Capital lease obligations, less current portion
    
    
    880
    
    
    
    117Deferred rent, less current portion
    
    
    1,066
    
    
    
    949Other long-term liabilities
    
    
    
    
    
    
    300Long-term liabilities of discontinued operations
    
    
    2,130
    
    
    
    Total liabilities
    
    
    16,443
    
    
    
    8,901Commitments and contingencies (Note 6)Stockholders equity:Common stock: $0.001 par value, 100,000 shares authorized, 4,096 and 4,089
shares issued and outstanding at December 31, 2007 and 2008, respectively
    
    
    40
    
    
    
    40Additional paid-in capital
    
    
    114,406
    
    
    
    115,170Accumulated other comprehensive loss
    
    
    (85
    )
    
    
    (94
    )Accumulated deficit
    
    
    (89,452
    )
    
    
    (107,139
    )Total stockholders equity
    
    
    24,909
    
    
    
    7,977Total liabilities and stockholders equity
    
    $
    41,352
    
    
    $
    16,878
  29




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##### Table of Contents



PlanetOut Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 Year Ended December 31,2006
    
    
    2007
    
    
    2008Revenue:Advertising services
    
    $
    10,683
    
    
    $
    9,361
    
    
    $
    6,150Subscription services
    
    
    18,040
    
    
    
    16,130
    
    
    
    13,413Transaction services
    
    
    1,021
    
    
    
    470
    
    
    
    257Total revenue
    
    
    29,744
    
    
    
    25,961
    
    
    
    19,820Operating costs and expenses: (*)Cost of revenue
    
    
    9,491
    
    
    
    11,422
    
    
    
    9,877Sales and marketing
    
    
    10,142
    
    
    
    9,191
    
    
    
    6,651General and administrative
    
    
    7,868
    
    
    
    11,433
    
    
    
    7,238Restructuring
    
    
    737
    
    
    
    630
    
    
    
    Depreciation and amortization
    
    
    3,786
    
    
    
    5,455
    
    
    
    3,908Impairment of goodwill and intangible assets
    
    
    
    
    
    
    415
    
    
    
    Total operating costs and expenses
    
    
    32,024
    
    
    
    38,546
    
    
    
    27,674Loss from operations
    
    
    (2,280
    )
    
    
    (12,585
    )
    
    
    (7,854
    )Interest expense
    
    
    (481
    )
    
    
    (1,610
    )
    
    
    (131
    )Other income, net
    
    
    568
    
    
    
    513
    
    
    
    178Loss from continuing operations before income taxes
    
    
    (2,193
    )
    
    
    (13,682
    )
    
    
    (7,807
    )Provision (benefit) for income taxes
    
    
    45
    
    
    
    (6
    )
    
    
    Loss from continuing operations
    
    
    (2,238
    )
    
    
    (13,676
    )
    
    
    (7,807
    )Loss from discontinued operations, net of taxes
    
    
    (1,472
    )
    
    
    (37,494
    )
    
    
    (9,880
    )Net loss
    
    $
    (3,710
    )
    
    $
    (51,170
    )
    
    $
    (17,687
    )Net loss per share from continuing operations Basic and diluted
    
    $
    (1.29
    )
    
    $
    (4.76
    )
    
    $
    (1.93
    )Loss per share from discontinued operations Basic and diluted
    
    $
    (0.85
    )
    
    $
    (13.04
    )
    
    $
    (2.44
    )Net loss per share Basic and diluted
    
    $
    (2.14
    )
    
    $
    (17.79
    )
    
    $
    (4.36
    )Weighted-average shares used to compute loss per share Basic and diluted
    
    
    1,733
    
    
    
    2,876
    
    
    
    4,054(*) Stock-based compensation is allocated as follows (see Note 9):Cost of revenue
    
    $
    61
    
    
    $
    186
    
    
    $
    121Sales and marketing
    
    
    37
    
    
    
    33
    
    
    
    6General and administrative
    
    
    173
    
    
    
    478
    
    
    
    345Total stock-based compensation
    
    $
    271
    
    
    $
    697
    
    
    $
    472
  30




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##### Table of Contents



PlanetOut Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands)
 Year Ended December 31,2006
    
    
    2007
    
    
    2008Common stock:Balance, beginning of year
    
    $
    17
    
    
    $
    17
    
    
    $
    40Equity financing
    
    
    
    
    
    
    23
    
    
    
    Balance, end of year
    
    
    17
    
    
    
    40
    
    
    
    40Additional paid-in-capital:Balance, beginning of year
    
    
    88,333
    
    
    
    89,532
    
    
    
    114,406Issuance of common stock for cash on exercise of options and warrants
    
    
    461
    
    
    
    71
    
    
    
    Stock-based compensation, net of cancellations and tax effects of
disqualifying dispositions
    
    
    293
    
    
    
    761
    
    
    
    472Issuance of common stock warrants in connection with debt issuance
    
    
    445
    
    
    
    
    
    
    
    Issuance of common stock warrants in connection with financial advisory
services
    
    
    
    
    
    
    185
    
    
    
    310Restricted stock withheld for taxes
    
    
    
    
    
    
    (137
    )
    
    
    (18
    )Equity financing
    
    
    
    
    
    
    23,994
    
    
    
    Balance, end of year
    
    
    89,532
    
    
    
    114,406
    
    
    
    115,170Note receivable from stockholder:Balance, beginning of year
    
    
    (603
    )
    
    
    
    
    
    
    Repayment of note receivable from stockholder
    
    
    603
    
    
    
    
    
    
    
    Balance, end of year
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss:Balance, beginning of year
    
    
    (123
    )
    
    
    (122
    )
    
    
    (85
    )Foreign currency translation adjustment
    
    
    1
    
    
    
    37
    
    
    
    (9
    )Balance, end of year
    
    
    (122
    )
    
    
    (85
    )
    
    
    (94
    )Accumulated deficit:Balance, beginning of year
    
    
    (34,572
    )
    
    
    (38,282
    )
    
    
    (89,452
    )Net loss
    
    
    (3,710
    )
    
    
    (51,170
    )
    
    
    (17,687
    )Balance, end of year
    
    
    (38,282
    )
    
    
    (89,452
    )
    
    
    (107,139
    )Total stockholders equity
    
    $
    51,145
    
    
    $
    24,909
    
    
    $
    7,977Number of sharesCommon stock:Balance, beginning of year
    
    
    1,725
    
    
    
    1,763
    
    
    
    4,096Issuance of common stock upon exercise of options and warrants
    
    
    16
    
    
    
    14
    
    
    
    Issuance of restricted stock
    
    
    22
    
    
    
    48
    
    
    
    2Forfeitures of restricted stock grants
    
    
    
    
    
    
    (4
    )
    
    
    (2
    )Restricted stock withheld for taxes
    
    
    
    
    
    
    (3
    )
    
    
    (7
    )Equity financing
    
    
    
    
    
    
    2,278
    
    
    
    Balance, end of year
    
    
    1,763
    
    
    
    4,096
    
    
    
    4,089
  31




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##### Table of Contents



PlanetOut Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,2006
    
    
    2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (3,710
    )
    
    $
    (51,170
    )
    
    $
    (17,687
    )Net loss from discontinued operations, net of tax
    
    
    1,472
    
    
    
    37,494
    
    
    
    9,880Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,786
    
    
    
    5,455
    
    
    
    3,908Impairment of goodwill and intangible assets
    
    
    
    
    
    
    415
    
    
    
    Non-cash services expense
    
    
    
    
    
    
    185
    
    
    
    310Provision for doubtful accounts
    
    
    32
    
    
    
    (35
    )
    
    
    69Restructuring
    
    
    (22
    )
    
    
    203
    
    
    
    Stock-based compensation, net of cancellation and tax effects
    
    
    271
    
    
    
    697
    
    
    
    472Amortization of debt discount
    
    
    55
    
    
    
    392
    
    
    
    Amortization of deferred rent
    
    
    (201
    )
    
    
    (227
    )
    
    
    (270
    )Loss on disposal or write-off of property and equipment
    
    
    46
    
    
    
    916
    
    
    
    Changes in operating assets and liabilities, net of acquisition effects and restructuring:Accounts receivable
    
    
    (1,133
    )
    
    
    1,235
    
    
    
    3,050Inventory
    
    
    48
    
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    109
    
    
    
    612
    
    
    
    135Accounts payable
    
    
    231
    
    
    
    (328
    )
    
    
    (150
    )Accrued expenses and other liabilities
    
    
    696
    
    
    
    (599
    )
    
    
    1,333Deferred revenue
    
    
    362
    
    
    
    (647
    )
    
    
    (1,212
    )Net cash provided by (used in) operating activities of continuing operations
    
    
    2,042
    
    
    
    (5,402
    )
    
    
    (162
    )Net cash provided by (used in) operating activities of discontinued operations
    
    
    (6,663
    )
    
    
    (9,515
    )
    
    
    620Net cash provided by (used in) operating activities
    
    
    (4,621
    )
    
    
    (14,917
    )
    
    
    458Cash flows from investing activities:Acquisitions of discontinued operations, net of cash acquired
    
    
    (5,403
    )
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (4,103
    )
    
    
    (3,653
    )
    
    
    (1,918
    )(Purchases) sales of short-term investments
    
    
    (2,050
    )
    
    
    2,050
    
    
    
    Changes in restricted cash
    
    
    (2,854
    )
    
    
    2,687
    
    
    
    (1,265
    )Net cash provided by (used in) investing activities
    
    
    (14,410
    )
    
    
    1,084
    
    
    
    (3,183
    )Net cash used in investing activities of discontinued operations
    
    
    (457
    )
    
    
    (288
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    (14,867
    )
    
    
    796
    
    
    
    (3,183
    )Cash flows from financing activities:Proceeds from exercise of common stock and preferred stock options and warrants
    
    
    461
    
    
    
    71
    
    
    
    Proceeds from equity financing, net of transaction costs
    
    
    
    
    
    
    24,017
    
    
    
    Proceeds from repayment of note receivable from stockholder
    
    
    843
    
    
    
    
    
    
    
    Tax withholding payments reimbursed by restricted stock
    
    
    
    
    
    
    (137
    )
    
    
    (18
    )Principal payments under capital lease obligations and notes payable
    
    
    (1,104
    )
    
    
    (10,999
    )
    
    
    (839
    )Proceeds from issuance of notes payable
    
    
    10,500
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    10,700
    
    
    
    12,952
    
    
    
    (857
    )Effect of exchange rate on cash and cash equivalents
    
    
    1
    
    
    
    29
    
    
    
    (9
    )Net decrease in cash and cash equivalents
    
    
    (8,787
    )
    
    
    (1,140
    )
    
    
    (3,591
    )Cash and cash equivalents, beginning of period
    
    
    18,461
    
    
    
    9,674
    
    
    
    8,534Cash and cash equivalents, end of period
    
    $
    9,674
    
    
    $
    8,534
    
    
    $
    4,943Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    481
    
    
    $
    1,610
    
    
    $
    131Cash paid (refund received) for taxes
    
    $
    177
    
    
    $
    (59
    )
    
    $
    (2
    )Supplemental disclosure of noncash flow investing and financing activities:Property and equipment and related maintenance acquired under capital leases
    
    $
    2,393
    
    
    $
    369
    
    
    $
    80Issuance of common stock warrants in connection with debt issuance
    
    $
    445
    
    
    $
    
    
    
    $
    
  32




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##### Table of Contents



PlanetOut Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  The Company and Summary of Significant Accounting Policies
 The Company
    Principles of Consolidation and Basis of Presentation
   Reverse Stock Split
  Reclassifications
  33




---



##### Table of Contents



Use of Estimates
  Cash Equivalents and Short-Term Investments
  Restricted Cash
  Fair Value of Financial Instruments
  Concentration of Credit Risk
   Foreign Currency Translation
  Property and Equipment
  34




---



##### Table of Contents



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 st
     Intangible Assets and Other Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 35




---



##### Table of Contents



Revenue Recognition
    Advertising
  Allowance for Doubtful Accounts
  Stock-Based Compensation
 Share-Based Payment
  Income Taxes
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
 36




---



##### Table of Contents



Comprehensive Loss
 
 Loss Per Share
   Year Ended December 31,2006
    
    
    2007
    
    
    2008Numerator:Net loss
    
    $
    (3,710
    )
    
    $
    (51,170
    )
    
    $
    (17,687
    )Denominator
for basic and diluted net loss per share:Weighted-average shares outstanding
    
    
    1,733
    
    
    
    2,876
    
    
    
    4,054Net loss per share:Basic and diluted
    
    $
    (2.14
    )
    
    $
    (17.79
    )
    
    $
    (4.36
    )
  Year Ended December 31,2006
    
    2007
    
    2008Common stock options and warrants
    
    
    187
    
    
    
    216
    
    
    
    109
 Recent Accounting Pronouncements
 The Hierarchy of Generally Accepted Accounting Principles
 Business Combinations
 37




---



##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51 .
 Fair Value Measurements
 Note 2  Segment Information
  Disclosures about
Segments of an Enterprise and Related Information
 Note 3  Goodwill and Intangible Assets
 Goodwill
 st
  38




---



##### Table of Contents



Intangible Assets
  December 31, 2007
    
    
    December 31, 2008Gross
    
    
    
    
    
    
    Net
    
    
    GrossCarrrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrrying
    
    
    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
    
    
    $
    
   Note 4   Other Balance Sheet Components
  December 31,2007
    
    
    2008Accounts receivable:Trade accounts receivable
    
    $
    3,694
    
    
    $
    913Less: Allowance for doubtful accounts
    
    
    (15
    )
    
    
    (66
    )$
    3,679
    
    
    $
    847
  39




---



##### Table of Contents



December 31,2007
    
    
    2008(In thousands)Property and equipment:Computer equipment and software
    
    $
    9,661
    
    
    $
    9,321Furniture and fixtures
    
    
    992
    
    
    
    875Leasehold improvements
    
    
    1,971
    
    
    
    1,686Website development costs
    
    
    6,453
    
    
    
    7,73819,077
    
    
    
    19,620Less: Accumulated depreciation
and amortization
    
    
    (11,256
    )
    
    
    (14,345
    )$
    7,821
    
    
    $
    5,275
  December 31,2007
    
    
    2008(In thousands)Accrued expenses and other liabilities:Accrued payroll and related liabilities
    
    $
    1,110
    
    
    $
    1,270Other accrued liabilities
    
    
    778
    
    
    
    1,657$
    1,888
    
    
    $
    2,927
 Note 5   Notes Payable
      40




---



##### Table of Contents



Note 6   Commitments and Contingencies
 Operating Leases
   Year Ending December 31,
    
    Operating Leases2009
    
    $
    2,4632010
    
    
    2,3862011
    
    
    2,3922012
    
    
    572$
    7,813
 Capital Leases
  Year Ending December 31,
    
    Capital Leases2009
    
    $
    7332010
    
    
    2722011
    
    
    58Total minimum lease payments
    
    
    1,063Less: Amount representing interest
    
    
    (183
    )Present value of capital lease obligations
    
    
    880Less: Current portion
    
    
    (763
    )Long-term portion of capital lease obligations
    
    $
    117
  Co-location Facility Agreement
  41




---



##### Table of Contents



Contingencies
  Note 7   Related Party Transactions
 Note Receivable
  Note 8   Stockholders Equity
 Stockholder Rights Plan
  Preferred Stock
  Equity Financing
  Warrants
   42




---



##### Table of Contents



Note 9   Stock-Based Plans
 Stock Option Plans
   43




---



##### Table of Contents



Options OutstandingWeightedWeighted-
    
    
    AverageShares
    
    
    
    
    
    
    Average
    
    
    Remaining
    
    
    AggregateAvailable
    
    
    Number of
    
    
    Exercise
    
    
    Contractual Term
    
    
    Intrinsicfor grant
    
    
    Shares
    
    
    Price
    
    
    (in years)
    
    
    ValueBalances at December 31, 2005
    
    
    69
    
    
    
    211
    
    
    
    50.30Additional shares reserved
    
    
    55
    
    
    
    
    
    
    
    Restricted stock granted
    
    
    (22
    )
    
    
    
    
    
    
    Options granted
    
    
    (5
    )
    
    
    5
    
    
    
    90.80Options exercised
    
    
    
    
    
    
    (16
    )
    
    
    28.90Options cancelled
    
    
    2
    
    
    
    (25
    )
    
    
    89.20Balances at December 31, 2006
    
    
    99
    
    
    
    175
    
    
    
    47.72Additional shares reserved
    
    
    55
    
    
    
    
    
    
    
    Restricted stock granted
    
    
    (48
    )
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    (14
    )
    
    
    4.60Options cancelled
    
    
    15
    
    
    
    (32
    )
    
    
    81.30Balances at December 31, 2007
    
    
    121
    
    
    
    129
    
    
    
    45.00Additional shares reserved
    
    
    55
    
    
    
    
    
    
    
    Restricted stock granted
    
    
    (1
    )
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    Options cancelled
    
    
    11
    
    
    
    (107
    )
    
    
    37.57Balances at December 31, 2008
    
    
    186
    
    
    
    22
    
    
    $
    73.66
    
    
    
    5.2
    
    
    $
    Vested and expected to vest at December 31, 2008
    
    
    
    
    
    
    22
    
    
    $
    73.66
    
    
    
    5.2
    
    
    $
    Options exercisable at December 31, 2008
    
    
    
    
    
    
    22
    
    
    $
    73.65
    
    
    
    5.2
    
    
    $
    
   Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageNumber
    
    Contractual
    
    Exercise
    
    Number
    
    ExerciseRange of Exercise Price
    
    of Shares
    
    Life (Years)
    
    Price
    
    of Shares
    
    Price$0.00  $14.66
    
    
    2
    
    
    
    3.9
    
    
    $
    5.50
    
    
    
    2
    
    
    $
    5.50$14.67  $29.32
    
    
    3
    
    
    
    0.7
    
    
    
    22.60
    
    
    
    3
    
    
    
    22.60$29.32  $58.64
    
    
    1
    
    
    
    3.3
    
    
    
    40.70
    
    
    
    1
    
    
    
    40.70$58.65  $73.30
    
    
    1
    
    
    
    6.4
    
    
    
    70.70
    
    
    
    1
    
    
    
    70.70$73.31  $87.96
    
    
    7
    
    
    
    6.5
    
    
    
    82.92
    
    
    
    7
    
    
    
    82.92$87.97  $117.28
    
    
    6
    
    
    
    5.6
    
    
    
    94.50
    
    
    
    6
    
    
    
    94.50$117.29  $146.30
    
    
    2
    
    
    
    4.1
    
    
    
    132.40
    
    
    
    2
    
    
    
    132.4022
    
    
    
    5.2
    
    
    $
    73.66
    
    
    
    22
    
    
    $
    73.65
  44




---



##### Table of Contents



Restricted Stock Grants
   Weighted AverageGrant-DateShares
    
    Fair ValueUnvested at January 1, 2006
    
    
    
    
    
    $
    Granted
    
    
    22
    
    
    
    63.70Vested
    
    
    (1
    )
    
    
    66.70Unvested at December 31, 2006
    
    
    21
    
    
    
    63.70Granted
    
    
    48
    
    
    
    17.13Vested
    
    
    (16
    )
    
    
    46.89Forfeited
    
    
    (4
    )
    
    
    52.44Unvested at December 31, 2007
    
    
    49
    
    
    
    24.17Granted
    
    
    2
    
    
    
    3.18Vested
    
    
    (20
    )
    
    
    23.62Forfeited
    
    
    (2
    )
    
    
    24.00Unvested at December 31, 2008
    
    
    29
    
    
    $
    23.55
 Stock-Based Compensation
   Year EndedDecember 31,2006Common stock options:Expected lives (in years)
    
    
    7.0Risk free interest rates
    
    
    4.32 - 4.57
    %Dividend yield
    
    
    0
    %Volatility
    
    
    75
    %
  45




---



##### Table of Contents



Option Cancellation and Regrant Program
   Note 10  Defined Contribution Plan
  Note 11   Restructuring
   Note 12  Income Taxes
  46




---



##### Table of Contents



Year Ended December 31,2006
    
    2007
    
    2008Provision at statutory rate
    
    
    34.00
    %
    
    
    34.00
    %
    
    
    34.00
    %State taxes, net of federal benefit
    
    
    (0.52
    )
    
    
    
    
    
    
    Permanent differences
    
    
    (1.26
    )
    
    
    (0.09
    )
    
    
    (12.31
    )Change in valuation allowance
    
    
    (33.48
    )
    
    
    (34.03
    )
    
    
    (21.68
    )Other
    
    
    0.03
    
    
    
    0.13
    
    
    
    (0.01
    )Net tax provision
    
    
    (1.23
    )%
    
    
    0.01
    %
    
    
    
    %
  Year Ended December 31,2006
    
    
    2007
    
    
    2008Deferred tax assets:Net operating loss carryforwards
    
    $
    13,400
    
    
    $
    24,502
    
    
    $
    37,172Accruals, depreciation and amortization
    
    
    2,106
    
    
    
    12,147
    
    
    
    1,667Other
    
    
    (289
    )
    
    
    (632
    )
    
    
    91315,217
    
    
    
    36,017
    
    
    
    39,752Less: Valuation allowance
    
    
    (15,217
    )
    
    
    (36,017
    )
    
    
    (39,752
    )$
    
    
    
    $
    
    
    
    $
    
    Note 13   Discontinued Operations
    47




---



##### Table of Contents



Year ended December 31, 2006LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    22,108
    
    
    $
    6,904
    
    
    $
    9,158
    
    
    $
    730
    
    
    $
    38,900Operating costs and expenses:Cost of revenue
    
    
    13,071
    
    
    
    4,182
    
    
    
    8,369
    
    
    
    92
    
    
    
    25,714Sales and marketing
    
    
    4,680
    
    
    
    770
    
    
    
    1,317
    
    
    
    435
    
    
    
    7,202General and administrative
    
    
    3,192
    
    
    
    630
    
    
    
    890
    
    
    
    131
    
    
    
    4,843Restructuring
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Depreciation and amortization
    
    
    895
    
    
    
    506
    
    
    
    419
    
    
    
    
    
    
    
    1,820Total operating costs and expenses
    
    
    21,892
    
    
    
    6,088
    
    
    
    10,995
    
    
    
    658
    
    
    
    39,633Income (loss) from operations
    
    
    216
    
    
    
    816
    
    
    
    (1,837
    )
    
    
    72
    
    
    
    (733
    )Other income (expense), net
    
    
    (482
    )
    
    
    (221
    )
    
    
    8
    
    
    
    (44
    )
    
    
    (739
    )Income (loss) from discontinued operations
    
    $
    (266
    )
    
    $
    595
    
    
    $
    (1,829
    )
    
    $
    28
    
    
    $
    (1,472
    )
 Year ended December 31, 2007LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    DSW
    
    
    TotalTotal revenue
    
    $
    20,249
    
    
    $
    6,803
    
    
    $
    17,033
    
    
    $
    2
    
    
    $
    44,087Operating costs and expenses:Cost of revenue
    
    
    13,835
    
    
    
    4,629
    
    
    
    18,737
    
    
    
    
    
    
    
    37,201Sales and marketing
    
    
    5,514
    
    
    
    1,561
    
    
    
    1,525
    
    
    
    37
    
    
    
    8,637General and administrative
    
    
    3,118
    
    
    
    571
    
    
    
    262
    
    
    
    1
    
    
    
    3,952Restructuring
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Depreciation and amortization
    
    
    1,015
    
    
    
    253
    
    
    
    286
    
    
    
    
    
    
    
    1,554Impairment of goodwill and intangible assets
    
    
    20,099
    
    
    
    5,400
    
    
    
    4,400
    
    
    
    
    
    
    
    29,899Total operating costs and expenses
    
    
    43,581
    
    
    
    12,414
    
    
    
    25,229
    
    
    
    38
    
    
    
    81,262Loss from operations
    
    
    (23,332
    )
    
    
    (5,611
    )
    
    
    (8,196
    )
    
    
    (36
    )
    
    
    (37,175
    )Other income (expense), net
    
    
    (241
    )
    
    
    (103
    )
    
    
    25
    
    
    
    
    
    
    
    (319
    )Loss from discontinued operations
    
    $
    (23,573
    )
    
    $
    (5,714
    )
    
    $
    (8,171
    )
    
    $
    (36
    )
    
    $
    (37,494
    )
 48




---



##### Table of Contents



Year ended December 31, 2008LPI
    
    
    SpecPub
    
    
    RSVP
    
    
    TotalTotal revenue
    
    $
    12,569
    
    
    $
    2,885
    
    
    $
    
    
    
    $
    15,454Operating costs and expenses:Cost of revenue
    
    
    9,213
    
    
    
    2,282
    
    
    
    (23
    )
    
    
    11,472Sales and marketing
    
    
    3,346
    
    
    
    686
    
    
    
    (21
    )
    
    
    4,011General and administrative
    
    
    1,621
    
    
    
    211
    
    
    
    10
    
    
    
    1,842Restructuring
    
    
    1,132
    
    
    
    97
    
    
    
    
    
    
    
    1,229Depreciation and amortization
    
    
    327
    
    
    
    31
    
    
    
    
    
    
    
    358Impairment of goodwill and intangible assets
    
    
    1,978
    
    
    
    4,294
    
    
    
    
    
    
    
    6,272Total operating costs and expenses
    
    
    17,617
    
    
    
    7,601
    
    
    
    (34
    )
    
    
    25,184Income (loss) from operations
    
    
    (5,048
    )
    
    
    (4,716
    )
    
    
    34
    
    
    
    (9,730
    )Other income (expense), net
    
    
    (15
    )
    
    
    1
    
    
    
    
    
    
    
    (14
    )Income (loss) from discontinued operations
    
    
    (5,063
    )
    
    
    (4,715
    )
    
    
    34
    
    
    
    (9,744
    )Gain (loss) on sale of discontinued operations
    
    
    (787
    )
    
    
    651
    
    
    
    
    
    
    
    136
    )Income (loss) from and gain (loss) on sale of discontinued operations
    
    $
    (5,850
    )
    
    $
    (4,064
    )
    
    $
    34
    
    
    $
    (9,880
    )
  December 31, 2007LPI
    
    
    SpecPub
    
    
    TotalCurrent assets of discontinued operations:Accounts receivable
    
    $
    3,189
    
    
    $
    977
    
    
    $
    4,166Inventory
    
    
    1,113
    
    
    
    314
    
    
    
    1,427Prepaid expenses and other current assets
    
    
    1,251
    
    
    
    504
    
    
    
    1,755$
    5,553
    
    
    $
    1,795
    
    
    $
    7,348Long-term assets of discontinued operations:Property and equipment, net
    
    $
    620
    
    
    $
    54
    
    
    $
    674Goodwill
    
    
    1,427
    
    
    
    2,708
    
    
    
    4,135Intangible assets, net
    
    
    1,870
    
    
    
    2,567
    
    
    
    4,437Other assets
    
    
    58
    
    
    
    51
    
    
    
    109$
    3,975
    
    
    $
    5,380
    
    
    $
    9,355Current liabilities of discontinued operations:Accounts payable
    
    $
    495
    
    
    $
    73
    
    
    $
    568Accrued expenses and other liabilities
    
    
    603
    
    
    
    161
    
    
    
    764Deferred revenue, current portion
    
    
    1,717
    
    
    
    1,434
    
    
    
    3,151Capital lease obligations, current portion
    
    
    23
    
    
    
    7
    
    
    
    30$
    2,838
    
    
    $
    1,675
    
    
    $
    4,513Long-term liabilities of discontinued
operations:Deferred revenue, less current portion
    
    $
    1,089
    
    
    $
    578
    
    
    $
    1,667Capital lease obligations, less current portion
    
    
    104
    
    
    
    24
    
    
    
    128Deferred rent, less current portion
    
    
    157
    
    
    
    178
    
    
    
    335$
    1,350
    
    
    $
    780
    
    
    $
    2,130
 Note 14   Subsequent Events
 Proposed Business Combination
  49




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##### Table of Contents



Issuance of Warrant
  Restructuring
  Change in Executive Officers
    50




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##### Table of Contents



Supplementary Data  Selected Quarterly Financial Data (Unaudited)
  Three Months EndedMar 31,
    
    
    Jun 30,
    
    
    Sep 30,
    
    
    Dec 31,
    
    
    Mar 31,
    
    
    Jun 30,
    
    
    Sep 30,
    
    
    Dec 31,2007
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008(In thousands except per share amounts)Revenue:Advertising services
    
    $
    1,906
    
    
    $
    2,540
    
    
    $
    2,441
    
    
    $
    2,474
    
    
    $
    1,067
    
    
    $
    1,829
    
    
    $
    1,725
    
    
    $
    1,529Subscription services
    
    
    4,182
    
    
    
    4,151
    
    
    
    3,924
    
    
    
    3,873
    
    
    
    3,694
    
    
    
    3,571
    
    
    
    3,313
    
    
    
    2,835Transaction services
    
    
    179
    
    
    
    106
    
    
    
    95
    
    
    
    90
    
    
    
    77
    
    
    
    59
    
    
    
    80
    
    
    
    41Total revenue
    
    
    6,267
    
    
    
    6,797
    
    
    
    6,460
    
    
    
    6,437
    
    
    
    4,838
    
    
    
    5,459
    
    
    
    5,118
    
    
    
    4,405Operating costs and expenses: (*)Cost of revenues
    
    
    2,714
    
    
    
    3,473
    
    
    
    2,577
    
    
    
    2,658
    
    
    
    2,444
    
    
    
    2,130
    
    
    
    2,309
    
    
    
    2,994Sales and marketing
    
    
    2,476
    
    
    
    2,392
    
    
    
    2,103
    
    
    
    2,220
    
    
    
    1,597
    
    
    
    1,548
    
    
    
    1,511
    
    
    
    1,995General and administrative
    
    
    3,259
    
    
    
    2,877
    
    
    
    2,787
    
    
    
    2,510
    
    
    
    2,038
    
    
    
    1,681
    
    
    
    1,726
    
    
    
    1,793Restructuring
    
    
    
    
    
    
    
    
    
    
    581
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    1,236
    
    
    
    1,384
    
    
    
    1,453
    
    
    
    1,382
    
    
    
    1,115
    
    
    
    1,032
    
    
    
    1,010
    
    
    
    751Impairment of goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating costs and expenses
    
    
    9,685
    
    
    
    10,126
    
    
    
    9,501
    
    
    
    9,234
    
    
    
    7,194
    
    
    
    6,391
    
    
    
    6,556
    
    
    
    7,533Loss from operations
    
    
    (3,418
    )
    
    
    (3,329
    )
    
    
    (3,041
    )
    
    
    (2,797
    )
    
    
    (2,356
    )
    
    
    (932
    )
    
    
    (1,438
    )
    
    
    (3,128
    )Interest expense
    
    
    (369
    )
    
    
    (445
    )
    
    
    (750
    )
    
    
    (46
    )
    
    
    (43
    )
    
    
    (37
    )
    
    
    (29
    )
    
    
    (22
    )Other income, net
    
    
    160
    
    
    
    94
    
    
    
    158
    
    
    
    101
    
    
    
    67
    
    
    
    44
    
    
    
    46
    
    
    
    21Loss from continuing operations before income
taxes
    
    
    (3,627
    )
    
    
    (3,680
    )
    
    
    (3,633
    )
    
    
    (2,742
    )
    
    
    (2,332
    )
    
    
    (925
    )
    
    
    (1,421
    )
    
    
    (3,129
    )(Benefit) provision for income taxes
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (3,627
    )
    
    
    (3,680
    )
    
    
    (3,627
    )
    
    
    (2,742
    )
    
    
    (2,332
    )
    
    
    (925
    )
    
    
    (1,421
    )
    
    
    (3,129
    )Loss from discontinued operations, net of taxes
    
    
    (3,247
    )
    
    
    (27,321
    )
    
    
    (1,628
    )
    
    
    (5,298
    )
    
    
    (8,046
    )
    
    
    (668
    )
    
    
    (787
    )
    
    
    (379
    )Net loss
    
    $
    (6,874
    )
    
    $
    (31,001
    )
    
    $
    (5,255
    )
    
    $
    (8,040
    )
    
    $
    (10,378
    )
    
    $
    (1,593
    )
    
    $
    (2,208
    )
    
    $
    (3,508
    )Net loss per share:Basic
    
    $
    (3.94
    )
    
    $
    (17.70
    )
    
    $
    (1.34
    )
    
    $
    (1.99
    )
    
    $
    (2.56
    )
    
    $
    (0.39
    )
    
    $
    (0.54
    )
    
    $
    (0.86
    )Diluted
    
    $
    (3.94
    )
    
    $
    (17.70
    )
    
    $
    (1.34
    )
    
    $
    (1.99
    )
    
    $
    (2.56
    )
    
    $
    (0.39
    )
    
    $
    (0.54
    )
    
    $
    (0.86
    )Weighted-average shares used to compute net loss
per share:Basic
    
    
    1,745
    
    
    
    1,751
    
    
    
    3,920
    
    
    
    4,048
    
    
    
    4,048
    
    
    
    4,051
    
    
    
    4,061
    
    
    
    4,059Diluted
    
    
    1,745
    
    
    
    1,751
    
    
    
    3,920
    
    
    
    4,048
    
    
    
    4,048
    
    
    
    4,051
    
    
    
    4,061
    
    
    
    4,059(*) Stock-based compensation is
allocated as follows:Cost of revenues
    
    $
    65
    
    
    $
    51
    
    
    $
    36
    
    
    $
    34
    
    
    $
    33
    
    
    $
    32
    
    
    $
    28
    
    
    $
    28Sales and marketing
    
    
    26
    
    
    
    2
    
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    1General and administrative
    
    
    159
    
    
    
    101
    
    
    
    129
    
    
    
    89
    
    
    
    92
    
    
    
    86
    
    
    
    84
    
    
    
    83$
    250
    
    
    $
    154
    
    
    $
    167
    
    
    $
    126
    
    
    $
    127
    
    
    $
    120
    
    
    $
    113
    
    
    $
    112
 51




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##### Table of Contents



PlanetOut Inc.
 FINANCIAL STATEMENT SCHEDULE
  Balance at
    
    Charged or
    
    ChargesBeginning
    
    Credited to
    
    Utilized
    
    Balance atof Period
    
    Net Loss
    
    Write-offs
    
    End of Period(In thousands)Allowance for Doubtful
AccountsYear ended December
31, 2006
    
    $
    35
    
    
    $
    32
    
    
    $
    (61
    )
    
    $
    6Year ended December
31, 2007
    
    
    6
    
    
    
    (35
    )
    
    
    44
    
    
    
    15Year ended December
31, 2008
    
    
    15
    
    
    
    69
    
    
    
    (18
    )
    
    
    66Tax Valuation AllowanceYear ended December
31, 2006
    
    
    13,991
    
    
    
    1,226
    
    
    
    
    
    
    
    15,217Year ended December
31, 2007
    
    
    15,217
    
    
    
    20,800
    
    
    
    
    
    
    
    36,017Year ended December
31, 2008
    
    
    36,017
    
    
    
    3,735
    
    
    
    
    
    
    
    39,752
 52




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
 Internal
Control-Integrated Framework
   Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors and Executive Officers and Corporate Governance
 www.planetoutinc.com www.planetoutinc.com
  
 Item 11. Executive Compensation
  53




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##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accounting Fees and Services
  
 PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
    ExhibitNumber
    
    Description of Documents2.1
    
    Asset Purchase Agreement dated November 8, 2005, by and among: LPI Media Inc. and SpecPub, Inc.,
each a Delaware corporation; Triangle Marketing Services, Inc., a Delaware corporation and a wholly
owned subsidiary of LPI Media Inc.; PlanetOut Inc., a Delaware corporation; and Vulcan Acquisition
Corp. and SpecPub Acquisition Corp., each a Delaware corporation and a wholly owned subsidiary of
PlanetOut Inc. (filed as Exhibit 2.1 to our Current Report on Form 8-K, File No. 000-50879, filed
on November 14, 2005, and amended as disclosed in our current report on Form 8-K/A, File No.
000-50879, filed on January 20, 2006, each of which is incorporated herein by reference). Certain
schedules (and similar attachments) to Exhibit 2.1 have been omitted in accordance with Item
601(b)(2) of Regulation S-K. PlanetOut will furnish a supplemental copy of any omitted schedule (or
similar attachment) to the Commission upon request.2.2
    
    Asset Purchase Agreement dated January 19, 2006, by and among: RSVP Productions, Inc., a Minnesota
corporation; PlanetOut Inc., a Delaware corporation; Shuttlecraft Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of PlanetOut; and Paul Figlmiller, an individual (filed
as Exhibit 2.1 to our Current Report on Form 8-K, File No. 000-50879, filed on January 24, 2006,
and incorporated herein by reference). Certain schedules (and similar attachments) to Exhibit 2.2
have been omitted in accordance with Item 601(b)(2) of Regulation S-K. PlanetOut will furnish a
supplemental copy of any omitted schedule (or similar attachment) to the Commission upon request.2.3
    
    Business Purchase and Sale Agreement by and among RSVP Productions, Inc., PlanetOut Inc., Atlantis
Events, Inc. and RSVP Vacations, LLC dated on October 10, 2007 (filed as Exhibit 2.1 to out Current
Report on Form 8-K, file No 000-50879, filed on December 19, 2007, and incorporated herein by
reference). Certain schedules (and similar attachments) to Exhibit 2.3 have been omitted in
accordance with Item 601(b)(2) of Regulation S-K. PlanetOut will furnish a supplemental copy of any
omitted schedule (or similar attachment) to the Commission upon request.2.4
    
    Put/Call Agreement among Regent Releasing, L.L.C., Regent Entertainment Media Inc., PlanetOut Inc.,
LPI Media Inc. and SpecPub, Inc. dated as of August 12, 2008 (filed as Exhibit 2.1 to our Current
Report on Form 8-K, File No. 000-50879, filed on August 13, 2008, and incorporated herein by
reference).2.5
    
    Marketing Agreement between Regent Releasing, L.L.C. and PlanetOut Inc. entered into as August 12,
2008 (filed as Exhibit 2.2 to our Current Report on Form 8-K, File No. 000-50879, filed on August
13, 2008 and incorporated herein by reference).
 54




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##### Table of Contents



ExhibitNumber
    
    Description of Documents2.6
    
    Agreement and Plan of Merger by and among PlanetOut Inc., Here Media Inc., HMI Merger Sub, the HMI
Owners and the HMI Entities Referred to in the Agreement dated as of January 8, 2009 (filed as
Exhibit 2.1 to our Current Report on Form 8-K, File No. 000-50879, filed on January 14, 2009 and
incorporated herein by reference).3.1
    
    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).4.6
    
    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). Replaced and superseded by Exhibit 4.8.4.7
    
    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 issued 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). Replaced and superseded by Exhibit 4.9.4.9
    
    Common Stock Warrant issued to Allen & Company, LLC dated January 8, 2009 (filed as Exhibit 99.1 to
our Current Report on Form 8-K, File No. 000-50879, filed on January 14, 2009 and incorporated
herein by reference).4.10
    
    Amendment to Rights Agreement among PlanetOut Inc. and Wells Fargo Bank, N.A. dated January 8, 2009.10.1
    
    1996 Stock Option Plan of PlanetOut Corporation (filed as Exhibit 10.1 to our Registration
Statement on Form S-1, File No. 333-114988, initially filed on April 29, 2004 and incorporated
herein by reference).10.2
    
    1996 Equity Incentive Plan of PlanetOut Corporation (filed as Exhibit 10.2 to our Registration
Statement on Form S-1, File No. 333-114988, initially filed on April 29, 2004 and incorporated
herein by reference).10.3
    
    Online Partners.com, Inc. 1997 Stock Plan (filed as Exhibit 10.5 to our Registration Statement on
Form S-1, File No. 333-114988, initially filed on April 29, 2004 and incorporated herein by
reference).10.4
    
    PlanetOut Partners, Inc. 2001 Equity Incentive Plan (filed as Exhibit 10.6 to our Registration
Statement on Form S-1, File No. 333-114988, initially filed on April 29, 2004 and incorporated
herein by reference).10.5
    
    PlanetOut Inc. 2004 Equity Incentive Plan (filed as Exhibit 10.7 to our Registration Statement on
Form S-1, File No. 333-114988, initially filed on April 29, 2004 and incorporated herein by
reference).10.6
    
    PlanetOut Inc. 2004 Executive Officers and Directors Equity Incentive Plan (filed as Exhibit 10.8
to our Registration Statement on Form S-1, File No. 333-114988, initially filed on April 29, 2004
and incorporated herein by reference).
 55




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##### Table of Contents



ExhibitNumber
    
    Description of Documents10.7
    
    Form of PlanetOut Inc. 2004 Equity Incentive Plan Stock Option Grant Notice and Agreement (filed as
Exhibit 99.7 to our Registration Statement on Form S-8, File No. 333-121633, initially filed on
December 23, 2004 and incorporated herein by reference).10.8
    
    Form of PlanetOut Inc. 2004 Equity Incentive Plan Restricted Stock Award Agreement (filed as
Exhibit 99.2 to our Current Report on Form 8-K, File No. 000-50879, filed on December 23, 2005, and
incorporated herein by reference).10.9
    
    Office lease dated July 1, 2004 by and between Blue Jean Equities West and PlanetOut Inc. (filed as
Exhibit 10.12 to our Registration Statement on Form S-1, File No. 333-114988, initially filed on
April 29, 2004 and incorporated herein by reference).10.10
    
    Form of directors and officers indemnification agreement (filed as Exhibit 10.22 to our
Registration Statement on Form S-1, File No. 333-114988, initially filed on April 29, 2004 and
incorporated herein by reference).10.11
    
    Amended and Restated Investors Rights Agreement by and among the registrant and the parties
identified on Schedule A thereto (filed as Exhibit 10.23 to our Registration Statement on Form S-1,
File No. 333-114988, initially filed on April 29, 2004 and incorporated herein by reference).10.12
    
    Form of Stock Option Agreement for Non-Employee Directors under the PlanetOut Inc. 2004 Equity
Incentive Plan (filed as Exhibit 99.2 to our Current Report on Form 8-K, File No. 000-50879, filed
on May 23, 2005, and incorporated herein by reference).10.13
    
    Outside Director Compensation Program (a description of which is filed as Exhibit 99.1 to our
Current Report on Form 8-K, File No. 000-50879, filed on December 23, 2005, and amended as
described in Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed January 31,
2006, each of which is incorporated herein by reference).10.14
    
    Employment Agreement, dated as of June 20, 2006 by and between Karen Magee and PlanetOut Inc.
(filed as Exhibit 99.1 to our Current Report on Form 8-K, File No. 000-50879, filed on June 23,
2006 and incorporated herein by reference).10.15
    
    Loan and Security Agreement dated September 28, 2006, by and among: PlanetOut Inc. and its direct
subsidiaries PlanetOut USA Inc., LPI Media Inc., SpecPub, Inc. and RSVP Productions, Inc. as
Borrowers; and ORIX Venture Finance LLC as Lender (filed as Exhibit 99.1 to our Current Report on
Form 8-K, File No. 000-50879, filed on October 3, 2006 and incorporated herein by reference).10.16
    
    Common Stock Warrant dated September 28, 2006 issued to ORIX Venture Finance LLC (filed as Exhibit
99.2 to our Current Report on Form 8-K, File No. 000-50879, filed on October 3, 2006 and
incorporated herein by reference).10.17
    
    Amendment No. 2, dated February 14, 2007 and effective as of December 30, 2006, to Loan and
Security Agreement by and between PlanetOut Inc., PlanetOut USA Inc., LPI Media Inc., SpecPub,
Inc., RSVP Productions, Inc. and ORIX Venture Finance, LLC (filed as Exhibit 99.1 to our Current
Report on Form 8-K, File No. 000-50879, filed on February 20, 2007 and incorporated herein by
reference).10.18
    
    Employment Agreement, dated February 14, 2007, by and between William Bain and PlanetOut Inc.
(filed as Exhibit 99.2 to our Current Report on Form 8-K, File No. 000-50879, filed on February 20,
2007 and incorporated herein by reference).10.19
    
    Limited Waiver to Loan and Security Agreement and Amendment No. 3 dated May 9, 2007 to Loan and
Security Agreement by and between PlanetOut Inc., PlanetOut USA Inc., LPI Media Inc., SpecPub,
Inc., RSVP Productions, Inc. and ORIX Venture Finance, LLC (filed as Exhibit 10.29 to our Quarterly
Report on Form 10-Q, File No. 000-50879, filed on May 10, 2007 and incorporated herein by
reference).10.20
    
    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).10.21
    
    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).
 56




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##### Table of Contents



ExhibitNumber
    
    Description of Documents10.22
    
    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 (filed as Exhibit 10.32 to our Quarterly Report on Form 10-Q,
File No. 000-50879, filed on August 3, 2007 and incorporated herein by reference).10.23
    
    Summary of Amended Terms in Employment Agreement by and between PlanetOut Inc. and Karen Magee
(filed as Exhibit 10.33 to our Quarterly Report on Form 10-Q, File No. 000-50879, filed on August
3, 2007 and incorporated herein by reference).10.24
    
    Summary of Compensation Terms for Daniel Steimle (filed as Exhibit 99.1 to our Current Report on
Form 8-K, File No. 000-50879, filed on October 4, 2007, and incorporated herein by reference).10.25
    
    Description of Management Retention and Severance Plan adopted January 11, 2008 (filed as Exhibit
10.35 to our Quarterly Report on Form 10-Q, File No. 000-50879, filed on May 15, 2008, and
incorporated herein by reference).10.26
    
    Letter of Intent by and between PlanetOut Inc. and Regent Releasing, L.L.C., dates 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).16.1
    
    Letter Regarding Change in Accountants dated June 29, 2005 from PricewaterhouseCoopers LLP to the
Securities and Exchange Commission (filed as Exhibit 16.1 to our Current Report on Form 8-K, File
No. 000-50879, filed on June 30, 2005 and incorporated herein by reference).21.1
    
    List of subsidiaries.23.1
    
    Consent of Storefield Josephson,
Inc., Independent Registered Public Accounting, Firm.24.1
    
    Power of Attorney (see the signature page of this Annual Report on Form 10-K)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.
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##### Table of Contents



SIGNATURES
 rd
 PLANETOUT INC.By:
    /s/ DANIEL E. STEIMLEDaniel E. SteimleChief Executive Officer and Chief Financial Officer POWER OF ATTORNEY
    Signature
    
    Title
    
    DateDirector/s/ DANIEL E. STEIMLE

Daniel E. Steimle
    
    Chief Executive Officer
(Principal Executive Officer) and Chief Financial
Officer (Principal Financial
and Accounting Officer)
    
    March 3, 2009/s/ PHILLIP S. KLEWENO

Phillip S. Kleweno
    
    Chairman of the Board
    
    March 3, 2009/s/ H. WILLIAM JESSE, JR.

H. William Jesse, Jr.
    
    Director
    
    March 3, 2009/s/ JERRY COLONNA

Jerry Colonna
    
    Director
    
    March 3, 2009/s/ JOHN E. MARCOM, JR.

John E. Marcom, Jr.
    
    Director
    
    March 3, 2009/s/ STEPHEN B. DAVIS

Stephen B. Davis
    
    Director
    
    March 3, 2009
 58