================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________TO__________.
COMMISSION FILE NUMBER 0-22212
ONHEALTH NETWORK COMPANY
(Exact name of registrant as specified in its charter)
WASHINGTON 41-1686038
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
808 HOWELL STREET, SUITE 400
SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 583-0100
-----------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares outstanding of the registrant's common stock as of
May 11, 1999: 16,111,686
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements............................................3
Balance Sheets at March 31, 1999 (Unaudited) and
December 31, 1998...........................................3
Statements Of Operations (Unaudited) for the
three month period ended March 31, 1999 and 1998............4
Statements Of Cash Flows (Unaudited) for the
three month period ended March 31, 1999 and 1998............5
Notes To Financial Statements (Unaudited).....................6
ITEM 2. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations.....................................8
PART II. other information
ITEM 2. Changes in Securities and Use of Proceeds......................11
ITEM 6. Exhibits And Reports On Form 8-K...............................11
Signature .............................................................14
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONHEALTH NETWORK COMPANY
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,751 $ 2,119
Accounts receivable, net of allowances of $275 (1999)
and $256 (1998) 231 509
Other current assets 2,284 409
---------------- ---------------
Total current assets 16,266 3,037
Furniture and equipment:
Computers and software 1,282 1,218
Office equipment 291 291
---------------- ---------------
1,573 1,509
Accumulated depreciation (843) (774)
---------------- ---------------
Furniture and equipment, net 730 735
Other non-current assets 41 122
================ ===============
Total assets $ 17,037 $ 3,894
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,984 $ 1,526
Other accrued expenses 1,740 2,669
---------------- ---------------
Total current liabilities 3,724 4,195
Other non-current liabilities 31 -
Shareholders' equity:
Preferred stock, $0.01 par value; authorized, 1,000; issued and
outstanding, none - -
Common stock, $0.01 par value; authorized, 29,000; issued
and outstanding, 16,050 (1999) and 12,800 (1998) 160 132
Additional paid-in-capital 106,797 89,082
Accumulated deficit (93,675) (89,515)
---------------- ---------------
Total shareholders' equity (deficit) 13,282 (301)
---------------- ---------------
Total liabilities and shareholders' equity $ 17,037 $ 3,894
================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
ONHEALTH NETWORK COMPANY
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------
1999 1998
------------------- ----------------
<S> <C> <C>
Net revenue $ 200 $ 330
Cost of revenue 30 407
------------------- ----------------
Gross margin 170 (77)
Operating expenses:
Product development, editorial and design 1,185 728
Sales and marketing 2,366 436
General and administrative 886 743
------------------- ----------------
Total operating expenses 4,437 1,907
------------------- ----------------
Loss from operations (4,267) (1,984)
Interest income 107 12
Other expense - (281)
------------------- ----------------
Total interest income and other expense 107 (269)
------------------- ----------------
Net loss applicable to common shareholders $ (4,160) $ (2,253)
Net loss per common share-
Basic and diluted $ (0.28) $ (0.22)
=================== ================
Weighted average number of common shares
Outstanding 14,930 10,150
=================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
ONHEALTH NETWORK COMPANY
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,160) $ (2,253)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 69 195
Provision for (recoveries of) doubtful
accounts and returns 19 (20)
Compensation from stock grants 12 -
Common stock issued for services 164 -
Other 5
Changes in assets and liabilities:
Decrease in accounts receivable 259 292
Decrease in inventories - 104
(Increase) decrease in other current assets (73) 69
Decrease in other non-current assets 81 -
Increase (decrease) in accounts payable 458 (194)
Decrease in other accrued expenses (900) (176)
---------------- ---------------
Net cash used in operating activities (4,066) (1,983)
Cash flows from investing activities:
Capital expenditures (64) (18)
---------------- ---------------
Net cash used in investing activities (64) (18)
Cash flows from financing activities:
Proceeds from issuance of common stock:
Private placement 14,278 -
Exercise of options 860 84
Exercise of warrants 624 -
---------------- ---------------
Net cash provided by financing activities 15,762 84
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 11,632 (1,917)
Cash and cash equivalents at beginning of year 2,119 2,488
================ ===============
Cash and cash equivalents at end of year $ 13,751 $ 571
================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
ONHEALTH NETWORK COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS
OnHealth Network Company, formerly known as IVI Publishing, Inc., (the
"Company"), is an internet-based provider of high quality health and medical
information and applications to a broad base of consumers. Through the Company's
Internet site, onhealth.com, the Company produces and distributes original,
relevant health content including in-depth reports, personalized information
retrieval, specific guides to healthcare services and information, editorials
and interactive community environments.
NOTE 2. BASIS OF PRESENTATION
The accompanying unaudited financial statements of OnHealth Network Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three months ended March 31, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. The accompanying unaudited financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the OnHealth Network Company report to the Securities and Exchange
Commission on Form 10-K, as amended, for the year ended December 31, 1998.
NOTE 3. RECLASSIFICATIONS
Certain reclassifications have been made for consistent financial statement
presentation.
NOTE 4. LOSS PER COMMON SHARE
Basic earnings per share ("EPS") excludes any dilutive effects of common stock
equivalents - options, warrants and convertible securities - and is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding during the period. Diluted EPS is computed by
dividing income available to common shareholders by the weighted-average number
of common stock equivalent shares outstanding.
The effects of common stock equivalents are excluded from the computation for
the periods presented as their effects are anti-dilutive.
The components of basic and diluted loss per common share are as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------
1999 1998
---------------- --------------
(In thousands, except per share data)
<S> <C> <C>
Net loss applicable to common shareholders
(numerator) $ (4,160) $ (2,253)
================ ==============
Weighted average common shares outstanding
(denominator) 14,930 10,150
================ ==============
Loss per share:
Basic and diluted $ (0.28) $ (0.22)
================ ==============
</TABLE>
6
<PAGE>
NOTE 5. COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS
March 31, December 31,
1999 1998
--------------- ----------------
(In thousands)
Other current assets:
Prepaid advertising $ 1,960 $ 197
Other 324 212
=============== ================
Total $ 2,284 $ 409
=============== ================
Furniture and equipment:
Computer hardware 1,095 1,032
Software 187 186
Furniture & fixtures 220 220
Equipment - -
Leasehold improvements 71 71
--------------- ----------------
1,573 1,509
Less accumulated depreciation (843) (774)
=============== ================
Total $ 730 $ 735
=============== ================
Other accrued expenses:
Litigation loss $ 677 $ 677
Advertising - 609
Severance 45 90
Royalties 200 338
Payroll taxes 55 358
Deferred revenue 255 95
Other 508 502
--------------- ----------------
Total $ 1,740 $ 2,669
=============== ================
NOTE 6. EQUITY TRANSACTION
During January 1999, the Company completed a $14,278,000 private placement,
which resulted in the issuance of 2,596,000 shares of the Company's common
stock at $5.50 per share.
NOTE 7. SUPPLEMENTAL CASH FLOW INFORMATION
Three months ended March 31,
---------------------------
(In thousands) 1999 1998
----------- -----------
Cash paid during the periods for:
Income taxes $ - $ 7
Non-cash investing and financing transactions:
Common stock issued for services 1,969 -
NOTE 8. LEGAL PROCEEDINGS
In February 1996, an action in the District Court of Hennepin County (Minnesota)
was brought by T. Randal Productions et al. against the Company and one current
and two former employees. The plaintiffs made various allegations, including
misappropriation of corporate opportunities and trade secrets by the Company and
its employees and sought award of monetary damages, exemplary damages and
royalties substantially in excess of $10.0 million. In November 1997, a jury
found that there was no joint venture between T. Randal and the company and/or
any of its employees but awarded T. Randal $480,000 plus interest for damages
sustained to its business. Plaintiffs moved for a new trial, amended findings
and for judgment notwithstanding the verdict. The jury verdict was upheld by the
trial court. The plaintiffs appealed this decision to the Minnesota Court of
Appeals. In March 1999, the Minnesota Court of Appeals affirmed the decision of
the trial court. The Company believes the plaintiffs will petition for a
rehearing which Company counsel believes will not be successful. The plaintiffs
also have an action pending against certain affiliates of the Company on the
same grounds on which the action against the Company was based. The Company has
indemnified these affiliates against any damages arising out of these claims.
Counsel has advised the Company that the jury verdict in the action against the
Company should be controlling in this action against the affiliates. As of
December 31, 1998, the Company has accrued $480,000 plus estimated court costs.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUE
Revenue for the three months ended March 31, 1999 and 1998 was as follows:
Three months ended March 31,
(In thousands)
-------------------------------
1999 1998
-------------- --------------
Online revenue $ 146 $ 89
Contract development revenue and other 35 197
Product sales and licensing revenue 19 44
============== ==============
Net revenues $ 200 $ 330
============== ==============
Net revenue in the three month period ended March 31, 1999 decreased by
$130,000, or 39%, to $200,000 from $330,000 in the same period in 1998. The
decrease was primarily due to the reduction in contract development revenue and
other of $162,000, or 82% and product sales and licensing revenue of $25,000, or
57%, which were partially offset by an increase in online revenues of $57,000,
or 64%. The decrease in both contract development revenue and other and product
sales and licensing revenue generally reflects the Company's shift toward online
efforts. The Company does not anticipate receiving any significant revenue from
contract development and other or product sales and licensing in the future. The
increase in online revenue reflects increased site sponsorship and advertising
revenue from the Company's onhealth.com web site, which was redesigned and
re-launched in July 1998.
GROSS MARGIN
Gross margin as a percentage of net revenues was 85% in the first quarter of
1999 compared to a negative gross margin of 23% for the same period in the
previous year. The improvement in gross margin in 1999 was primarily due to the
high margins of online revenue in relation to the gross margin achieved in the
first quarter of 1998 for CD-ROM revenue. In the first quarter of 1999, cost of
revenue consists primarily of third-party royalties relating to content sales
and advertising and sponsorship revenue.
OPERATING EXPENSES
Total operating expenses in the first quarter of 1999 increased $2,530, or 133%,
to $4,437 from $1,907 in the first quarter of 1998. The increase was primarily
due to increased sales and marketing efforts related to the Company's
onhealth.com web site and increased product development, editorial and design
expenses.
Product development, editorial and design. The increase in product development,
editorial and design expenses during the first quarter of 1999 of $457,000, or
63%, over the first quarter of 1998 reflects an increase in headcount to 23 at
March 31, 1999, up from 14 at March 31, 1998, as well as an increase in the use
of outside contractors. Product development, editorial and design expenses
consist primarily of compensation, consulting fees, third-party content
acquisition costs and web site maintenance and enhancement costs related to the
Company's onhealth.com web site.
Sales and marketing. The increase in sales and marketing expenses of $1,930, or
443%, from the first quarter of 1998 was primarily the result of increased
advertising expenses related to the Company's onhealth.com web site.
General and administrative. The increase in general and administrative expenses
during the first quarter of 1999 of $143,000, or 19%, from the first quarter of
1998 was due primarily to an increase in investment banking fees.
INTEREST INCOME
The increase in interest income, to $107,000 in the first quarter of 1999 from
$12,000 in the same period of the previous year, is due to the greater
availability of funds in the first quarter of 1999.
OTHER EXPENSE
Other expense for the three months ended March 31, 1998 includes $281,000
related to cable television licensing royalties.
8
<PAGE>
INCOME TAXES
The Company has not recorded a current or deferred provision for Federal income
taxes for the periods presented due to the history of losses incurred.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had positive working capital of $12,542,000
compared with negative working capital of $1,158,000 at December 31, 1998. At
March 31, 1999, the Company had cash and cash equivalents of $13,751,000. During
the first quarter of 1999, total cash used by operating activities was
$4,066,000, an increase in the use of cash of $2,083,000 over the first quarter
of 1998. The increase in the use of cash was due primarily to the increased
sales and marketing efforts for the Company's onhealth.com web site. Investing
activities used net cash of $64,000 for purchases of computer equipment,
compared with $18,000 in the first quarter of 1998. Financing activities
provided cash of $15,762,000 from the January private placement of common stock,
$14,278,000; the exercise of stock options, $860,000; and the exercise of
warrants, $624,000.
The Company believes that its cash and cash equivalents will be sufficient to
fund its operations through December 31, 1999. The Company expects a significant
use of cash in 1999 as it markets and expands the onhealth.com web site. Any
material unforeseen increase in expenses or reductions in projected revenues
will likely require the Company to seek additional debt or equity financing. If
additional cash is required, the Company may need to reduce its expenditures or
curtail certain operations. There can be no assurance that additional capital,
on a debt or equity basis, will be found, or if found that it will be on
economically viable terms.
YEAR 2000
The Year 2000 issue is the potential for system and processing failures of
date-related data and the result of computer-controlled systems using two digits
rather than four to define the applicable year. For example, computer programs
that have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.
We could be affected by Year 2000 issues related to non-compliant information
technology ("IT") systems or non-IT systems that we operate or that are operated
by third parties. We have substantially completed assessment of our internal and
external (third-party) IT systems and non-IT systems. At this point in our
assessment, we are not currently aware of any Year 2000 problems relating to
systems we operate or that are operated by third parties that would have a
material effect on our business, results of operations or financial condition,
without taking into account our efforts to avoid such problems. Based on our
assessment to date, we do not anticipate that costs associated with remediating
our non-compliant IT systems or non-IT systems to exceed $100,000, although
there can be no assurance to such effect, and any such cost will be funded
through operating cash flows. To date the Company has incurred no significant
costs related to the assessment of, and preliminary efforts in connection with,
its Year 2000 project and the development of a remediation plan. Management does
not currently expect the Company's financial condition or results of operations
will be materially adversely affected by the Year 2000 issue. There can be no
guarantee that the systems of other companies on which the Company's systems
rely will be timely converted, or that a failure to convert by another company,
or a conversion that is incompatible with the Company's systems, would not have
a material adverse effect on the Company.
To the extent that our assessment is finalized without identifying any
additional material non-compliant IT systems we operate or that are operated by
third parties, the most reasonably likely worst case Year 2000 scenario is a
systemic failure beyond our control, such as a prolonged telecommunications or
electrical failure. Such a failure could prevent us from operating our business,
prevent users from accessing our web site, or change the behavior of advertising
customers or persons accessing our web site. We believe that the primary
business risks, in the event of such failure, would include, but not be limited
to, lost advertising revenues, increased operating costs, loss of customers or
persons accessing our web site, or other business interruptions of a material
nature, as well as claims of mismanagement, misrepresentation, or breach of
contract, any of which could have a material adverse effect on our business,
results of operations and financial condition. We have not made any contingency
plans to address such risks.
FORWARD-LOOKING STATEMENTS
Certain statements made in this Form 10-Q, are forward-looking statements that
involve risk and uncertainties, and actual results may be materially different.
There are several important factors that could cause actual results to differ,
which include, but are not limited to:
o THE EXPECTATION THAT THE COMPANY WILL SEE A GROWTH IN REVENUES AND POSITIVE
NET INCOME AS A RESULT OF ITS SHIFT IN FOCUS TO ITS ON-LINE HEALTH NETWORK
DEPENDS ON CUSTOMER INTEREST, THE ABILITY TO OBTAIN SUCCESSFUL REVENUE
SOURCES FROM ADVERTISERS, AS WELL AS OTHER GENERAL MARKET AND COMPETITIVE
CONDITIONS WITHIN THE ON-LINE HEALTH NETWORK MARKET.
9
<PAGE>
Additional information on other risk factors which could affect the Company's
financial results are included in the Company's Annual Report for the fiscal
year ended December 31, 1998 on Form 10-K, as amended, on file with the
Securities and Exchange Commission.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
On January 29, 1999, the Company sold 2,596,000 shares of
common stock raising approximately $14,278,000. As an issuance to sophisticated
investors not involving any public offering, the sale of the shares of common
stock was exempt under Section 4(2) of the Securities Act and Regulation D
thereunder. The Company is using the proceeds from such offering to further its
marketing efforts, increase distribution, forge strategic relationships, to
develop an e-commerce element of the Company's web site and for general
corporate purposes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit listing.
Certain exhibits have been previously filed with the
Commission and are incorporated herein by reference.
ONHEALTH NETWORK COMPANY
EXHIBIT INDEX
MARCH 31, 1999
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ------------------------------------------------------------------------------------------ -----
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the Company. (A)
3.2 Bylaws of the Company. (A)
4.1 Form of Stock Certificate. (B)
4.2 Statement of Registration Rights - Preferred Stock. (B)
4.3 Warrant Agreement, dated as of July 17, 1992, between the Company and Medical Innovation
Fund. (B)
4.4 Warrant Agreement, dated as of November 30, 1992, between the Company and Ronald
Eibensteiner. (B)
4.5 Warrant Agreement, dated as of December 20, 1992, between the Company and Wayne Mills. (B)
4.7 Registration Rights Agreement, dated January 29, 1999, among the Company and certain
investors named therein. (K)
10.1 License Agreement, dated April 24, 1991, among the Company, William Morrow Company and Mayo
Foundation for Medical Education and Research, as amended. (B)
10.2 Electronic Publishing License, Development and Marketing Agreement, dated April 28, 1993,
between the Company and Mayo Foundation for Medical Education and Research. (B)
10.3 401(k) Savings and Investment Plan. (B)
10.4 1997 Stock Option Plan, as amended. (C)
10.5 IVI Publishing, Inc. Director Stock Option Plan, as amended. (D)
10.6 License Agreement, dated February 9, 1994, between the Company and Time Life, Inc. and
First Amendment to Titles Development Agreement, dated as of February 9, 1994 between
the Company and Time Life, Inc. (D)
10.7 Lease Agreement, dated March 30, 1994, between the Company and Ryan/Wilson Limited
Partnership. (D)
10.8 License, Development and Marketing Agreement, dated September 28, 1994, between the Company
and Time Life, Inc.* (E)
10.9 1994 License, Development and Marketing Agreement, dated September 27, 1994, between the
Company and Mayo Foundation for Medical Education and Research.* (E)
11
<PAGE>
10.10 License Agreement, dated November 10, 1994, between the Company and Massachusetts Medical
Society.* (E)
10.11 Sublicense Agreement, dated December 31, 1994, between the Company and Georg von
Holtzbrinck GmbH & Co.* (E)
10.12 Agreement between America's Health Network, Inc. and the Company, dated May 25, 1995. (F)
10.13 Amendment No. 2 to License Agreement among William Morrow Company, Mayo Foundation for
Medical Education and Research and the Company, dated December 29, 1995. (F)
10.14 Financial Advisor and Consulting Agreement with Frazier & Company LP, dated July 14, 1994,
as amended by a letter agreement, dated June 28, 1995.** (G)
10.15 First Amendment dated June, 27, 1994 and Second Amendment dated October 10, 1995 to Lease
Agreement between the Company and Ryan/Wilson Limited Partnership. (G)
10.16 Agreement dated April 1995 among Ryan/Wilson Limited Partnership, Wilson Learning
Corporation the Company regarding a certain lease. (G)
10.17 Distribution on Consignment Agreement, dated February 29, 1996 between the Company and
Davidson & Associates, Inc.* (F)
10.22 Sublease Agreement, dated September 17, 1996, between the Company and Reality Interactive,
Inc. for the fourth floor portion of the Main Lease between the Company and Ryan/Wilson
Limited Partnership, Wilson Learning Corporation. (H)
10.24 Settlement Agreement and Mutual Release dated September 12, 1997 between the Company and
Mayo Foundation for Medical Education and Research. (I)
10.25 Sublicense Agreement dated September 12, 1997 between the Company and Mayo Foundation for
Medical Education and Research. (I)
10.26 Separation Agreement and Release of Claims dated January 26, 1998 between the Company and
Joy A. Solomon** (J)
10.27 Letter Agreement dated November 9, 1997 between the Company and Robert Goodman.** (J)
10.28 Subscription Agreement, dated January 29, 1999, among the Company and certain investors
named therein (K)
27 Financial Data Schedule (electronic version only)
- -------------
<FN>
(A) Incorporated herein by reference to the Company's Registration
Statement on Form S-3, No. 333-69989, (file number 0-22212) filed
with the Securities and Exchange Commission.
(B) Incorporated herein by reference to the Company's Registration
Statement on Form S-1, No. 33-67064, (file number 0-22212) filed
with the Securities and Exchange Commission in 1993.
(C) Incorporated herein by reference to the Company's Preliminary
Proxy Statement for the Annual Meeting of Shareholders held June
16, 1998 on Form PRE 14A, (file No. 0000-22212) filed with the
Securities and Exchange Commission on May 6, 1998.
(D) Incorporated herein by reference to the Company's Registration
Statement on Form S-1, No. 33-76496, (file number 0-22212) filed
with the Securities and Exchange Commission in 1994.
(E) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1994 (file number 0-22212), filed with the
Securities and Exchange Commission.
(F) Incorporated by reference to Exhibit 10.14 to the Company's Form
10-K/A for the year ended December 31, 1995 (file number 0-22212)
filed with the Securities and Exchange Commission on October 4,
1996.
(G) Incorporated by reference to Exhibit 10.19 to the Company's Form
10-K for the year ended December 31, 1995 (file number 0-22212)
filed with the Securities and Exchange Commission .
(H) Incorporated herein by reference to the Company's Form 10-K for
the year ended December 31, 1996, (file number 0-22212) filed
with the Securities and Exchange Commission on March 28, 1997.
(I) Incorporated herein by reference to Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended September 30, 1997 (file number
0-22212) filed with the Securities and Exchange Commission on
November 12, 1997.
(J) Incorporated herein by reference to the Company's Form 10-K for
the year ended December 31, 1997, (file number 0-22212) filed
with the Securities and Exchange Commission on April 15, 1998.
12
<PAGE>
(K) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1998, (file number 0-22212) filed March 31,
1999.
* Portions of the Exhibit have been omitted pursuant to the Company's
request for confidential treatment pursuant to Rule 24b-2 promulgated
under the Securities Act of 1933, as amended.
** Management Agreement or Compensatory Plan or Arrangement
</FN>
</TABLE>
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the registrant during
the quarter ended March 31,1999.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Seattle, Washington, on the 14th day
of May, 1999.
ONHEALTH NETWORK COMPANY
By: /S/ MICHAEL D. CONWAY
------------------------------
Michael D. Conway
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ONHEALTH
NETWORK COMPANY'S FORM 10-Q FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 13,751
<SECURITIES> 0
<RECEIVABLES> 506
<ALLOWANCES> 275
<INVENTORY> 0
<CURRENT-ASSETS> 16,266
<PP&E> 1,573
<DEPRECIATION> 843
<TOTAL-ASSETS> 17,037
<CURRENT-LIABILITIES> 3,724
<BONDS> 0
0
0
<COMMON> 160
<OTHER-SE> 13,122
<TOTAL-LIABILITY-AND-EQUITY> 17,037
<SALES> 200
<TOTAL-REVENUES> 200
<CGS> 30
<TOTAL-COSTS> 30
<OTHER-EXPENSES> 4,437
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,160)
<INCOME-TAX> 0
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</TABLE>
