================================================================================
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 JUNE 30, 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
June 30, 1999: 16,222,420
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<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
PAGE
----
ITEM 1. Financial statements.............................................3
Balance Sheets as of June 30, 1999 and December 31, 1998.........3
Statements of Operations for the three and six month periods
ended June 30, 1999 and 1998...................................4
Statements of Cash Flows for the six month period ended
June 30, 1999 and 1998.........................................5
Notes to Financial Statements (unaudited)........................6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation........................................8
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds.......................11
ITEM 4. Submission of Matters to a Vote of Security Holders.............11
ITEM 6. Exhibits and reports on Form 8-K................................12
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONHEALTH NETWORK COMPANY
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------------- ---------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,854 $ 2,119
Accounts receivable, net of allowances of $286 (1999) and
$256 (1998) 488 509
Other current assets 1,791 409
---------------- ---------------
Total current assets 11,133 3,037
Furniture and equipment:
Computers and software 1,750 1,218
Office equipment 291 291
---------------- ---------------
2,041 1,509
Accumulated depreciation (921) (774)
---------------- ---------------
Furniture and equipment, net 1,120 735
Other non-current assets 44 122
================ ===============
Total assets $ 12,297 $ 3,894
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 3,735 $ 1,526
Other accrued expenses 1,259 2,669
---------------- ---------------
Total current liabilities 4,994 4,195
Other non-current liabilities 34 -
Shareholders' equity:
Preferred stock, $0.01 par value; authorized, 1,000; issued and
outstanding, none - -
Common stock, $0.01 par value; authorized, 100,000; issued
and outstanding, 16,222 (1999) and 12,800 (1998) 162 132
Additional paid-in-capital 107,765 89,082
Accumulated deficit (100,658) (89,515)
---------------- ---------------
Total shareholders' equity (deficit) 7,269 (301)
---------------- ---------------
Total liabilities and shareholders' equity (deficit) $ 12,297 $ 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 Six Months Ended
June 30, June 30,
----------------------------- ---------------------------------
1999 1998 1999 1998
------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Net revenue $ 581 $ 155 $ 781 $ 485
Cost of revenue 67 334 99 741
------------- ------------ -------------- --------------
Gross margin 514 (179) 682 (256)
Operating expenses:
Product development, editorial and design 1,864 830 3,048 1,558
Sales and marketing 4,645 995 7,011 1,431
General and administrative 1,111 490 1,997 1,233
------------ ------------ ------------- --------------
Total operating expenses 7,620 2,315 12,056 4,222
------------ ------------ ------------- --------------
Loss from operations (7,106) (2,494) (11,374) (4,478)
Interest income 121 42 229 54
Other income 2 563 2 282
------------ ------------ ------------- --------------
Total interest and other income 123 605 231 336
------------ ------------ ------------- --------------
Net loss (6,983) (1,889) (11,143) (4,142)
Preferred stock dividends - (56) - (56)
Preferred stock accretion - (154) - (154)
------------ ------------ ------------- --------------
Net loss applicable to common shareholders $ (6,983) $ (2,099) $ (11,143) $ (4,352)
============ ============ ============= ==============
Net loss per common share-
Basic and diluted $ (0.43) $ (0.21) $ (0.72) $ (0.43)
============= ============ ============== ==============
Weighted average number of common shares
outstanding 16,150 10,146 15,544 10,131
============= ============ ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
ONHEALTH NETWORK COMPANY
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (11,143) $ (4,142)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 147 429
Provision for (recoveries of) doubtful
accounts and returns 29 (753)
Compensation associated with stock option
grants 24 -
Amortization of prepaid advertising and
promotional agreements 646 -
Other 11 -
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (8) 981
Decrease in inventories - 150
Decrease in other current assets (95) 223
Decrease in other non-current assets 78 -
Increase (decrease) in accounts payable 2,209 (516)
(Decrease) in other accrued expenses (1,381) (864)
---------------- ---------------
Net cash used in operating activities (9,483) (4,492)
Cash flows from investing activities:
Capital expenditures (532) (219)
---------------- ---------------
Net cash used in investing activities (532) (219)
Cash flows from financing activities:
Proceeds from issuance of convertible preferred
stock - 5,000
Net proceeds from issuance of common stock:
Private placements 14,092 -
Exercise of options 1,072 176
Exercise of warrants 1,586 -
---------------- ---------------
Net cash provided by financing activities 16,750 5,176
---------------- ---------------
Net increase in cash and cash equivalents 6,735 465
Cash and cash equivalents at beginning of year 2,119 2,488
================ ===============
Cash and cash equivalents at end of year $ 8,854 $ 2,953
================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
ONHEALTH NETWORK COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 web 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 six months ended June 30, 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 net income available to common shareholders by the weighted-average
number of shares of common stock and 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 Six Months Ended
June 30, June 30,
--------------------------------- --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net loss applicable to common shareholders
(numerator) $ (6,983) $ (2,099) $ (11,143) $ (4,352)
============== ============== ============== ==============
Weighted average common shares outstanding
(denominator) 16,150 10,146 15,544 10,131
============== ============== ============== ==============
Loss per share:
Basic and diluted
$ (0.43) $ (0.21) $ (0.72) $ (0.43)
============== ============== ============== ==============
</TABLE>
6
<PAGE>
NOTE 5. COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS
<TABLE>
<CAPTION>
June 30, 1999 December 31,1998
--------------- -----------------
(In thousands)
<S> <C> <C>
Other current assets:
Prepaid advertising $ 1,309 $ 197
Other 482 212
=============== ================
Total $ 1,791 $ 409
=============== ================
Furniture and equipment:
Computer hardware 1,563 1,032
Software 187 186
Furniture & fixtures 220 220
Leasehold improvements 71 71
--------------- ----------------
2,041 1,509
Less accumulated depreciation (921) (774)
=============== ================
Total $ 1,120 $ 735
=============== ================
Other accrued expenses:
Litigation loss $ - $ 677
Advertising - 609
Royalties 176 338
Payroll taxes 2 358
Other 1,081 687
--------------- ----------------
Total $ 1,259 $ 2,669
=============== ================
</TABLE>
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
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------------
1999 1998
-------------- ---------------
(In thousands)
<S> <C> <C>
Cash paid during the periods for:
Income taxes $ 3 $ 7
Non-cash investing and financing transactions:
Common stock issued for advertising and
promotional agreements 1,939 -
Preferred stock/warrant discount - 600
Preferred stock/warrant discount accretion - (154)
Stock options and warrants issued for services - 60
</TABLE>
NOTE 8. LEGAL PROCEEDINGS
On June 1, 1999, the Company made a payment of $950,000 to T. Randal Productions
in full satisfaction of a judgment against the Company. As of December 31, 1998,
the Company had accrued $677,000. The remaining $273,000 was recorded in the
quarter ended June 30, 1999.
In June 1999, Jon Fisse, the Company's newly named Chief Operating Officer,
resigned from the Company before the Company and Mr. Fisse were able to agree on
the terms of his employment agreement. The Company has filed a declaratory
judgement action in the Unites States District Court for the Western District of
Washington seeking to declare that Mr. Fisse terminated his employment and that
the Company owes him no future remuneration or stock option benefits. On the
same day, Mr. Fisse filed a lawsuit in the United States District Court for the
Southern District of New York, asserting that the Company violated his rights in
connection with his separation from the Company, seeking damages which, among
other things, include severance compensation and stock option benefits. No
answer has been filed in either lawsuit. The Company believes they have valid
defenses against Mr. Fisse's claims and intend to defend against such claims
vigorously, however the outcome of the lawsuit may have a material adverse
affect on the Company's financial position and results of operations.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET REVENUE
Net revenue for the three and six month periods ended June 30, 1999 and 1998 was
as follows:
<TABLE>
<CAPTION>
(In thousands) Three Months Ended June 30, Six Months Ended June 30,
----------------------------- ------------------------------
1999 1998 1999 1998
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Online $ 417 $ 57 $ 563 $ 146
E-commerce 150 - 150 -
Contract development and other 14 213 49 410
Product sales and licensing - (115) 19 (71)
============= ============= ============== ==============
Net revenue $ 581 $ 155 $ 781 $ 485
============= ============= ============== ==============
</TABLE>
Net revenue for the three month period ended June 30, 1999 increased by
$426,000, or 275%, to $581,000, from $155,000 for the same period in 1998. Net
revenue for the six month period ended June 30, 1999 increased by $296,000, or
61%, to $781,000, from $485,000 for the same period in 1998. The increase in
revenue is primarily due to increased online revenue generated by our
onhealth.com web site, which was redesigned and relaunched in July 1998,
partially offset by a reduction in contract development and other revenue. An
increase in user traffic and the number of site sponsorship and advertising
clients over the same three and six month periods in the prior year accounted
for the increase in online revenue. E-commerce revenue is the result of new
contracts entered into during 1999. The decrease in contract development revenue
and other 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 negative
product sales and licensing revenue in 1998 is a result of CD-ROM product
returns.
GROSS MARGIN
Gross margin as a percentage of net revenue for the three and six month periods
ended June 30, 1999 was 88% and 87%, respectively, compared to negative gross
margins of 115% and 53% for the same periods in the previous year. The
improvement in gross margin in the first and second quarters of 1999 was
primarily due to the high margins of online revenue in relation to the gross
margins achieved in the first and second quarters of 1998 for CD-ROM revenue.
The negative gross margins in 1998 are the result of CD-ROM royalty expenses,
CD-ROM inventory write-offs and royalty expenses related to cable television
licensing revenue. In 1999, cost of revenue consists primarily of third-party
royalties relating to content sales and advertising and sponsorship and
e-commerce revenue.
OPERATING EXPENSES
Total operating expenses for the three month period ended June 30, 1999
increased $5,305,000, or 229%, to $7,620,000 from $2,315,000 for the same period
in 1998. Total operating expenses for the six month period ended June 30, 1999
increased $7,834,000, or 186%, to $12,056,000 from $4,222,000 for the same
period in 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 three and six month periods ended June
30, 1999 of $1,034,000, or 125%, and $1,490,000 or 96%, respectively, from the
same periods in 1998 was primarily due to an increase in the use of outside
contractors and headcount. 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 for the three
and six month periods ended June 30, 1999 of $3,650,000, or 367%, and
$5,580,000, or 390%, respectively, from the same periods in 1998 was primarily
the result of increased advertising expenses related to the Company's
onhealth.com web site and increased headcount. Marketing expenses include costs
related to the launch of a broad-based consumer targeted advertising campaign
expected to commence in the third quarter of 1999.
GENERAL AND ADMINISTRATIVE. The increase in general and administrative expenses
for the three and six month periods ended June 30, 1999 of $621,000, or 127%,
and $764,000, or 62%, respectively, from the same periods in 1998 was primarily
due to an increase in legal fees and settlements, travel and headcount . Legal
fees and settlements include $273,000 for settlement and legal costs related to
the final settlement of the T. Randal Productions lawsuit, which is in addition
to the $677,000 which had been accrued at December 31, 1998.
8
<PAGE>
INTEREST INCOME
The increase in interest income for the three and six month periods ended June
30, 1999 of $79,000, or 188%, and $175,000, or 324%, respectively, from the same
periods in 1998 is due to the interest earned on cash received from the private
placement completed during the first quarter of 1999.
OTHER INCOME
Other income for the three month period ended June 30, 1998 includes a $562,000
gain related to the collection of a previously reserved receivable and $1,000 of
other income. Other income for the six month period ended June 30, 1998 also
includes a $281,000 expense related to cable television licensing royalties.
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 June 30, 1999, the Company had positive working capital of $6,139,000
compared with negative working capital of $1,158,000 at December 31, 1998. At
June 30, 1999, the Company had cash and cash equivalents of $8,854,000. During
the first six months of 1999, total cash used by operating activities was
$9,483,000, which was principally due to our net loss for the period partially
offset by an increase in current liabilities. Investing activities used net cash
of $532,000 for purchases of computer equipment, compared with $219,000 during
the first six months of 1998, due to the growth in the number of personnel.
Financing activities provided cash of $16,750,000 through the January private
placement of common stock, net of financing costs, $14,092,000; the exercise of
warrants, $1,586,000; and the exercise of stock options, $1,072,000.
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.
9
<PAGE>
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.
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. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 15, 1999, at the Company's Annual Meeting of Shareholders, the
shareholders approved the following proposals by the margins indicated:
1. Election of the Board of Directors. All directors
nominated were elected by the shareholders:
<TABLE>
<CAPTION>
Number of Shares
-------------------------------------------------------
Director For Against Withheld
------------------------ --------------- --------------- -----------------
<S> <C> <C> <C>
Michael A. Brochu 13,559,113 658,728 -
Robert N. Goodman 13,559,113 658,728 -
Ann Kirschner 13,559,113 658,728 -
Ram Schriram 13,559,113 658,728 -
Rick R. Thompson 13,559,113 658,728 -
</TABLE>
2. Approval of an Amendment to the Company's Articles of
Incorporation. The purpose of the Amendment to the Articles of
Incorporation is to increase the number of shares of the
Company's common stock authorized for issuance from 29,000,000
shares, as currently authorized to, 100,000,000 shares. The
Amendment will increase the number of authorized and unissued
shares of the Company's common stock which may be used by the
Company for any proper corporate purpose.
Number of Shares
----------------------
For: 13,022,207
Against: 1,168,113
Withheld: -
Abstain: 27,521
3. Approval of Amendment to 1997 Stock Option Plan. The
purpose of the Amendment to the 1997 Stock Option Plan is to
increase, by 3,000,000, the number of shares that may be
issued under the 1997 plan (to 4,750,000). The purpose of the
1997 Plan is to promote Company success by aligning employee
financial interest with long-term shareholder value. Since all
1,750,000 of the options originally approved under the 1997
Plan have been granted, the Compensation and Stock Option
Committee of the Board of Directors believes that an increase
in the number of shares available for issuance is necessary in
order to achieve the purpose of the 1997 Plan.
Number of Shares
-------------------
For: 7,646,340
Against: 1,208,012
Withheld: 5,324,962
Abstain: 38,527
11
<PAGE>
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
JUNE 30, 1999
<TABLE>
<CAPTION>
Exhibit
Number Description Ref.
-------- ------------- ----
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the Company. (L)
3.2 Bylaws of the Company. (A)
4.1 Form of Stock Certificate. (B)
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)
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)
12
<PAGE>
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, filed with the Securities
and Exchange Commission on December 31, 1998.
(B) Incorporated herein by reference to the Company's Registration
Statement on Form S-1, No. 33-67064, 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, 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, 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, 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 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 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, 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 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, filed with the Securities and
Exchange Commission on April 15, 1998.
(K) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1998, filed with the Securities and Exchange
Commission on March 31, 1999.
(L) Incorporated herein by reference to the Company's Registration
Statement on Form S-3, No. 333-81321, filed with the Securities
and Exchange Commission on June 22, 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 June 30,1999.
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 19th day
of July, 1999.
ONHEALTH NETWORK COMPANY
By: /S/ MICHAEL D. CONWAY
------------------------------
Michael D. Conway
Vice President of Finance
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 SIX MONTH PERIOD ENDED JUNE 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1999
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0
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