Unassociated Document
As
filed
with the U.S. Securities and Exchange Commission on November 13,
2006
Registration
No. 333-[__________]
U.S.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
REGISTRATION
STATEMENT
UNDER THE
SECURITIES
ACT OF 1933
ANSWERS
CORPORATION
(Exact
Name of Registrant as Specified in Its charter)
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Delaware
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98-0202855
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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Jerusalem
Technology Park
The
Tower
Jerusalem
Israel 91481
+972-2-64-95000
(Address,
including Zip Code, and Telephone Number, Including Area Code of Principal
Executive Offices)
Answers
Corporation 2005 Incentive Compensation Plan
(Full
Title of the Plan)
Robert
S. Rosenschein
Chief
Executive Officer,
President, and Chairman of the Board
Jerusalem
Technology Park
The
Tower
Jerusalem
Israel 91481
+972-2-64-95000
(Name,
Address, including Zip Code, and Telephone Number, including Area Code, of
Agent
for Service)
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Copies
to:
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Jeffrey
J. Fessler, Esq.
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Sichenzia
Ross Friedman Ference LLP
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1065
Avenue of the Americas, 21st
Floor
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New
York, New York 10018
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Tel:
(212) 930-9700
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Fax:
(212) 930-9725
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class Of
Securities
To Be Registered
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Amount
To Be
Registered
(1)
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Proposed
Maximum
Offering
Price
Per
Security
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
Of
Registration
Fee
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Common
Stock, par value $0.001 per share
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396,650
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(2)
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$
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13.175
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(3(i))
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$
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5,225,863.75
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$
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559.20
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Common
Stock, par value $0.001 per share
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703,350
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(4)
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$
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12.45
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(3(ii))
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$
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8,756,707.75
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$
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937.00
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| |
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|
|
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|
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Total:
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1,100,000
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$
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13,982,571.50
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$
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1,496.20
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(1)
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Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities
Act”), this registration statement shall also cover any additional shares
of common stock that shall become issuable by reason of any stock
dividend, stock split, recapitalization or other similar
transaction.
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(2)
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Represents
shares of common stock reserved for issuance and available
for grant under our 2005 Incentive Compensation Plan.
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(3)
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The
Proposed Maximum Offering Price Per Share is calculated in accordance
with
Rule 457(h) of the Securities Act, based upon: (i) the average of
the high
and low prices of our common stock on November 10, 2006, being $13.175
per
common share, with respect to the 396,650 common shares that have
been
reserved for issuance pursuant to awards that may be granted under
our
2005 Incentive Compensation Plan and that are registered pursuant
to this
registration statement and (ii) the average exercise price of $12.45
per
common share of outstanding options to purchase 703,350 common shares
that
have been issued to date pursuant to our 2005 Incentive Compensation
Plan.
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(4)
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Represents
shares of common stock reserved for issuance and granted under our
2005
Incentive Compensation Plan.
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PART
I
INFORMATION
REQUIRED IN THE SECTION 10(A) PROSPECTUS
This
Registration Statement relates to two separate prospectuses.
Section
10(a) Prospectus:
Items 1
and 2, from this page, and the documents incorporated by reference pursuant
to
Part II, Item 3 of this prospectus, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities
Act of 1933,
as
amended (the "Securities Act").
Reoffer
Prospectus:
The
material that follows Item 2, beginning on Page P-1 through P-29, up to but
not
including Part II of this Registration Statement, beginning on Page II-1, of
which the reoffer
prospectus
is a
part, constitutes a "reoffer
prospectus,"
prepared in accordance with the requirements of Part I of Form S-3 under the
Securities Act. Pursuant to Instruction C of Form S-8, the reoffer
prospectus
may be
used for reoffers or resales of common shares which are deemed to be "control
securities" or "restricted securities" under the Securities Act that have been
acquired by the selling shareholders named in the reoffer
prospectus.
Item
1. Plan Information.
The
documents containing the information specified in Item 1 will be sent or given
to participants in the Answers Corporation 2005
Incentive Compensation Plan as
specified by Rule 428(b)(1) of the Securities Act. Such documents are not
required to be and are not filed with the Securities and Exchange Commission
(the "SEC") either as part of this Registration Statement or as prospectuses
or
prospectus supplements pursuant to Rule 424. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3
of
Part II of this Form S-8, taken together, constitute a prospectus that meets
the
requirements of Section 10(a) of the Securities Act.
Item
2. Registrant Information and Employee Plan Annual
Information.
Upon
written or oral request, any of the documents incorporated by reference in
Item
3 of Part II of this Registration Statement (which documents are incorporated
by
reference in this Section 10(a) Prospectus), other documents required to be
delivered to eligible employees, non-employee directors and consultants,
pursuant to Rule 428(b) are available without charge by
contacting:
Robert
S.
Rosenschein
Chief
Executive Officer,
President, and Chairman of the Board
Jerusalem
Technology Park
The
Tower
Jerusalem
Israel 91481
+972-2-64-95000
REOFFER
PROSPECTUS
Answers
Corporation
293,050
Shares
Common
Stock
Answers
Corporation 2005 Incentive Compensation Plan
This
Prospectus relates to the reoffer and resale of up to 293,050 shares of our
common stock by certain selling stockholders who may be deemed to be our
affiliates (the “Selling Stockholders”). These shares (the “Shares”) have been
or may in the future be acquired by the Selling Stockholders upon the exercise
of stock options, rights or other awards which have been granted under the
Answers Corporation 2005 Incentive Compensation Plan (the “2005 Plan”). If and
when such options, rights or other awards are granted to persons required to
use
this Prospectus to reoffer and resell the Shares underlying such options, rights
or other awards we will distribute a prospectus supplement. The Shares are
being
reoffered and resold for the account of the Selling Stockholders and we will
not
receive any of the proceeds from the resale of the Shares.
The
Selling Stockholders have advised us that the resale of their Shares may be
effected from time to time in one or more transactions on the Nasdaq Global
Market, in negotiated transactions, through the writing of options on the
Shares, or a combination of such methods of sale at fixed prices which may
be
changed, at market prices prevailing at the time of sale, at prices related
to
such prevailing market prices or at negotiated prices. The Selling Stockholders
may effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the holders or the purchasers of the Shares
for
whom such broker-dealers may act as agent or to whom they sell as principal,
or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). The Selling Stockholders and participating brokers
and
dealers may be deemed to be “underwriters” within the meaning of the Securities
Act, in which event any profit on the sale of Shares by those Selling
Stockholders and any commissions or discounts received by those brokers or
dealers may be deemed to be underwriting compensation under the Securities
Act.
See “Plan of Distribution.”
All
expenses of the registration of securities covered by this Prospectus are to
be
borne by Answers, except that the Selling Stockholders will pay underwriting
discounts, selling commissions, and fees and the expenses, if any, of counsel
or
other advisers to the Selling Stockholders.
Our
common stock is traded on the Nasdaq Global Market under the symbol “ANSW.” On
November 10, 2006, the closing price for our common stock, as reported by the
Nasdaq Global Market, was $12.70.
Our
principal executive offices are located at Jerusalem Technology Park, The Tower,
Jerusalem, Israel, 91481 and our telephone number there is +972-2-649-5000.
The
common stock offered hereby involves a high degree of risk. You should not
invest in our company unless you can afford to lose your entire investment.
See
“Risk Factors” beginning on page 4 of this Prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this Prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date of this Prospectus is November 13, 2006
TABLE
OF CONTENTS
You
may
only rely on the information contained in this Prospectus or that we have
referred you to. We have not authorized anyone to provide you with different
information. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the common stock
offered by this Prospectus. This Prospectus does not constitute an offer to
sell
or a solicitation of an offer to buy any common stock in any circumstances
in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made in connection with this Prospectus shall, under
any
circumstances, create any implication that there has been no change in our
affairs since the date of this Prospectus or that the information contained
by
reference to this Prospectus is correct as of any time after its
date.
This
summary highlights information contained elsewhere in this Prospectus. You
should read the entire Prospectus carefully, including, the section entitled
"Risk Factors" before deciding to invest in our common stock. Answers
Corporation is referred to throughout this Prospectus as "Answers," "we" or
"us."
Answers.com
We
own,
operate and provide an online answer-based information-retrieval service that
offers Internet users conveniently formatted snapshot, multi-faceted definitions
and explanations, integrated into a single consolidated browser view. Our
flagship site, Answers.comTM,
is a
leading aggregator of information and reference content, on almost 4 million
topics, covering general reference, business, arts and culture, legal, medical,
science and technology, people, places, music and many others. Our topic library
contains more than 100 reference titles from brand-name publishers.
Additionally, we offer 1-Click AnswersTM
- a
software tool that facilitates more efficient access to Answers.com by allowing
users working in almost any application such as e-mail, spreadsheet or word
processing to click on a word or phrase within a document and access
Answers.com’s online library via an instant, pop-up AnswerTipTM.
In
January 2005, we launched Answers.com. The launch of the Website represented
our
migration to a new ad-based revenue model, as opposed to our previous
subscription-based model. Prior to January 2005, we sold subscriptions to our
answer engine product, GuruNet. Prior to December 2003, we sold lifetime
subscriptions to GuruNet, generally for $40. In December 2003, we decided to
alter our pricing model and moved to an annual subscription model, generally,
$30 per year. A desire to grow revenues led to our current implementation,
in
January 2005, of a free-to-customer product, Answers.com and 1-Click Answers
software. Since the January 2005 launch, we have ceased offering new
subscriptions to GuruNet.
Answers.com
Traffic and Monetization
Our
revenue is primarily driven by the query traffic generated by Answers.com and
our ability to effectively monetize that traffic. Our current traffic is
primarily based on: (i) Search
engines
(currently the vast majority of which is provided by Google), meaning, when
our
pages rank very high in the search engines’ algorithmic systems, Answers.com
results are more likely to be accessed by users; (ii) Google’s
definition link
: our
informal, non-contractual relationship, in which Google links to our pages
for
definitions; and (iii) Answers.com
direct users
: users
visiting our site directly or via “1-Click Answers”. Our primary revenue model
for Answers.com traffic is based on advertising. Most of our ad revenue is
earned from performance-based ads, whereby we earn revenue based on number
of
clicks associated with such ads (e.g., sponsored links), and paid-per-impression
advertising, whereby revenues are derived from the display of ads (e.g., graphic
ads). Through the date of this Prospectus, it has generally been our practice
not to contract directly with advertisers, but rather, to obtain advertisements
through the efforts of third parties that contract with advertisers seeking
to
advertise in their network of web sites, including our web site. We refer to
such third parties as “Monetization Partners”. Monetization Partners generally
compensate us by paying Answers a portion of the revenue they earn from
advertisers for our provision of promotional space on our web site. We recently
hired a vice president who has been tasked with developing direct ad sales
capabilities within our organization. Therefore, we expect that commencing
Q4
2006, and more so in Q1 2007 and onward, direct ad sales will become a more
significant part of our ad sales strategy.
The
more
users to whom we deliver answer-based search services results, the more revenues
we can potentially earn. Thus, we approach third-party sites and incentivize
them for traffic they send to Answers.com or co-branded sub-domains of
Answers.com. The fees we pay to such partners are calculated based upon a
percentage of the revenue we earn from such traffic.
Licensing
of Answers Services
We
also
earn revenues from partners that pay us for providing them with our answer-based
services that they then use in their own products, via co-branded web pages.
These arrangements are based on various formulas, including a percentage of
the
revenues they earn by delivering our services to their users, fees based on
the
number of user queries and fixed periodic fees.
Content
Displayed on Answers.com
Answers.com’s
collection of nearly four million answers is drawn from over one-hundred
reference titles, many from brand-name publishers, as well as original content
created by Answers.com’s own editorial team. Among the titles we currently
license from third-party sources, are:
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AccuWeather
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All
Media Guide
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The
American Heritage Dictionary (Fourth Edition); from Houghton
Mifflin
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CIA
World Factbook 2005, prepared by the Central Intelligence
Agency
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Columbia
University Electronic Encyclopedia (Sixth Edition)
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Computer
Desktop Encyclopedia
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Gale
Encyclopedia of Cancer
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The
History of Science and Technology, from Houghton
Mifflin
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MarketWatch,
Inc. (from Dow Jones)
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Taylor's
Dictionary for Gardeners, from Houghton Mifflin
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·
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West’s
Encyclopedia of American Law (First Edition); and
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Wikipedia
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By
attributing the data source of each piece of our information on each web page,
we enable our users to make an independent evaluation as to the credibility
of
our data.
Corporate
Information
We
were
incorporated as a Texas corporation in December 1998 and reorganized as a
Delaware corporation in April 1999. In January 2004, we changed our name from
Atomica Corporation to GuruNet Corporation. On October 17, 2005, we changed
our
name from GuruNet Corporation to Answers Corporation. Our principal executive
office is located at Jerusalem Technology Park, The Tower, Jerusalem 91481,
Israel, and our telephone number is +972-2-649-5000. Our U.S. office is located
at 237 West 35th
Street,
Suite 1101, New York, NY 10001, telephone: 646-502-4777. Our executive officer
in charge of investor relations is a resident of the U.S. office. Our corporate
Website is located at http://www.answers.com
and our
investor relations section of such website can be found at http://ir.answers.com.
Information contained in our Website shall not be deemed to be a part of this
Prospectus.
This
Offering
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Shares
of common stock outstanding prior to this offering
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7,784,946 (1)
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Shares
of common stock issuable upon exercise of outstanding options which
may be
offered pursuant to this Prospectus
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293,050
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Use
of proceeds
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We
will not receive any proceeds from the sale of the shares of common
stock
offered in this Prospectus. We will receive proceeds to the extent
that
currently outstanding options are exercised for cash. We will use
the
exercise proceeds, if any, for working capital and general corporate
purposes.
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Risk
Factors
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The
purchase of our common stock involves a high degree of risk. You
should
carefully review and consider "Risk Factors" beginning on page
4.
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NASDAQ
Trading Symbol
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ANSW
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(1)
As of
November 9, 2006.
An
investment in our shares involves a high degree of risk. Before making an
investment decision, you should carefully consider all of the risks described
in
this Prospectus. If any of the risks discussed in this Prospectus actually
occur, our business, financial condition and results of operations could be
materially and adversely affected. If this were to happen, the price of our
shares could decline significantly and you may lose all or a part of your
investment. Our forward-looking statements in this Prospectus are subject to
the
following risks and uncertainties. Our actual results could differ materially
from those anticipated by our forward-looking statements as a result of the
risk
factors below. See "Forward-Looking Statements." Note that the risks and
uncertainties described below are not the only ones facing us.
RISKS
RELATED TO OUR BUSINESS
Our
current business model, based on increasing visitor traffic to our Website,
and
monetizing such traffic, through sponsored links and paid advertisements, was
initiated in the beginning of January 2005 and is still in a relatively early
stage. Our limited experience executing on our new business model and the
relatively short history of metrics available to us, make it difficult to
evaluate our future prospects and the risk of success or failure of our
business.
Implementation
of our current business model, announced on January 3, 2005, is in a relatively
early stage. Under the new model, introduced nearly two years ago, we are
focused on increasing our visitor traffic and monetizing such traffic by
utilizing sponsored links and advertisements to generate revenues. This model
is
still based on limited operating history on which to evaluate potential for
future success. Additionally, at the present we have limited experience in
growing our traffic and effectively monetizing Answers.com. The combination
of
the foregoing factors makes it difficult to evaluate the potential for success
or failure of our business.
We
have experienced significant and continuing net losses since our inception.
If
such losses continue, the value of your entire investment could decline
significantly.
We
incurred net losses of $6,013,502, and $6,590,519 for the years ended
December 31, 2005 and 2004, respectively. As of December 31, 2005, we had
an accumulated deficit of $46,609,619. We cannot assure you that we will be
able
to achieve net income on a quarterly or annual basis. If our revenues do not
increase, or if our operating expenses exceed expectations or cannot be reduced,
we will continue to suffer substantial losses which could have an adverse effect
on our business and adversely affect your investment in our company
.
If
search engines were to alter their algorithms or methods or otherwise restrict
the flow of users visiting our Website, our financial results would
suffer.
Search
engines serve as origination Websites for end-users in search of information.
Our topic pages, which are rich in content, often appear as one of the top
links
on the pages returned by search engines in response to users’ search queries and
are subsequently accessed by Internet users. As a result, we rely heavily on
search engines for a substantial portion of the users visiting our Website.
According
to our unaudited internal statistical tools, our traffic originating from search
engines (excluding Google-directed “definition link traffic” discussed
immediately below) during recent months approximated between 50% - 60% of our
Website’s overall traffic.
Further,
the vast majority of our search engine sourced traffic emanates from Google.
Search engines may, at any time, decide to change the algorithms responsible
for
directing search queries to the web pages that are most likely to contain the
information being sought by Internet users. Further, search engines could
restrict the flow of users visiting our Website. A change in the algorithms
used
by search engines to identify web pages towards which traffic will ultimately
be
directed or a decision to otherwise restrict the flow of users visiting our
Website, for any reason whatsoever, could cause a significant decrease in
traffic and revenues which would in turn adversely affect our financial
condition.
If
Google, Inc. decides to discontinue directing user traffic to Answers.com
through its “definition link”, we will lose a significant portion of our
traffic, which would result in a reduction in our advertising revenues and
adversely affect our financial condition.
A
significant percentage of our direct query traffic is directed to Answers.com
by
the “definition link” appearing on Google’s Website result pages. This
arrangement is not based on a contractual relationship and can be discontinued
by Google at its sole discretion, at any given time. Further, as a result of
this arrangement, we obtain a significant amount of secondary traffic (i.e.
users who visit our site via the “definition link” and perform additional
searches on Answers.com.) According to our internal unaudited statistical tools,
the primary and secondary traffic from the Google definition link amounted
to
approximately 30% of our overall traffic over the course of the last several
months. If Google ceases to direct traffic to Answers.com through its
“definition link”, we will experience a significant reduction in our advertising
revenues, which would adversely affect our financial condition.
If
our Google Services Agreement, or GSA, is terminated by Google, for any reason,
with little or no advance notice, we would be forced to immediately seek an
alternative provider of listings and advertisements, in which case we would
be
susceptible to a certain transition period during which we may experience a
material reduction in our advertising revenues and, in turn, an adverse effect
on our financial condition.
Our
business is depended to a certain extent on the GSA pursuant to which we obtain
most of the advertisements displayed on our Website and earn most of our ad
revenues. Google is afforded the right to terminate the GSA with no advance
notice with respect to breaches of specific provisions of the GSA such as
a
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·
|
breach
of certain prohibited actions by us including, among other things,
(i)
editing or modifying the order of search results, (ii) redirecting
end
users, producing or distributing any software which prevents the
display of ads by Google, (iii) modifying or adapting or otherwise
attempting to source code from Google technology, content, software
and
documentation or (iv) engaging in any action or practice that reflects
poorly on Google or otherwise disparages or devalues Google’s reputation
or goodwill;
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·
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a
breach of the grant of a license to us by Google of certain trade
names,
trademarks, service marks, logos, domain names and other distinctive
brand
features of Google;
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·
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a
breach of the confidentiality provisions of the GSA;
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·
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a
breach of the exclusivity provisions of the GSA; or
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·
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a
material breach of the GSA more than two times irrespective of any
cure to
such breaches,
|
While
there are many companies in the market that provide Internet ad services similar
to those provided by Google, and we do not believe that our ad revenue strategy
is dependent on any one such provider, Google’s early termination of the GSA
would translate into an immediate need to replace the GSA and obtain listings
and advertisements from alternative providers. If we fail to quickly locate,
negotiate and finalize alternative advertising arrangements, with terms as
favorable as those provided for by the GSA, we may experience a material
reduction in our advertising revenues and, in turn, an adverse affect on our
financial condition.
If
we are unable to retain current Internet users or attract new Internet users,
our ability to generate revenues will be adversely impacted, which would
adversely affect our financial condition.
In
addition to search engine sourced traffic, and traffic directed by the Google
definition link, a significant portion of our traffic originates from Internet
users arriving at our Website directly
, by
typing www.answers.com
into
their web browser. Given the wide availability of free search engines and
reference sites, we may not be able to retain current Internet users or attract
additional Internet users in this direct fashion. If we are unable to retain
such direct Internet users or attract new direct Internet users, our ability
to
generate revenues will be adversely impacted, which would adversely affect
our
financial condition.
If
we do not continue to innovate, develop and provide content, products and
services that are useful to users, we may not remain competitive, and our
revenues and operating results could suffer.
Our
success depends on innovating, developing and providing products and services
used by individuals for a high quality Internet experience. Several of our
competitors continue to develop innovations in web search and online information
retrieval. As a result, we must continue to invest resources in research and
development in order to enhance our web search technology and introduce
innovative, easy-to-use products and services. If we are unable to develop
useful and innovative products and services, users may become dissatisfied
and
use our competitors’ products.
If
our co-branding partnerships and revenue-sharing arrangements with third-party
Websites and service providers are not renewed or continued, we could lose
advertising revenue, which would have an adverse effect on our
business.
We
have
entered into, and plan to further enter into additional co-branding agreements
and revenue-sharing arrangements with third party partners. To date, such
agreements and arrangements have not had a substantial impact on revenues.
Notwithstanding, these agreements and arrangements may result in significant
revenues in the future, and has provided us with third-party validation of
our
product offering. These agreements and arrangements may be terminated or
discontinued by our co-branding partners and third-party Websites. If these
agreements and arrangements impact our revenues substantially in the future,
then termination of such agreements and arrangements will result in the loss
of
advertising revenue and may negatively affect our financial condition. Further,
termination of these agreements could impact our credibility in the
marketplace.
We
may not be able to expand our business through acquisitions and joint ventures
and, even if we are successful, our operations may be adversely affected as
a
result of an acquisition or joint venture.
Our
business strategy includes potential growth through business combinations,
acquisitions and joint ventures. Our business could be harmed if we are unable
to implement this business strategy. Our ability to implement this business
strategy depends in large part on our ability to compete successfully with
other
entities for acquisition candidates and joint venture partners. Factors
affecting our ability to compete successfully in this regard
include:
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our
financial condition relative to the financial condition of our
competitors
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our
ability to obtain additional financing from investors
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the
attractiveness of our common stock as potential consideration for
entering
into these types of transactions as compared to the common stock
of other
entities competing for these opportunities
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our
available cash, which in turn depends upon our results of operations
and
the cash demands of our business
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Many
of
the entities with which we compete for acquisition candidates and joint venture
partners have greater financial resources than we do.
If,
despite these factors, we are successful in entering into additional business
combinations, acquisitions and joint ventures, our business, financial condition
and results of operations could be materially and adversely affected if we
are
unable to integrate the operations of the acquired companies or joint ventures.
Our ability to integrate the operations of the acquired companies or joint
ventures will depend, in part, on our ability to overcome or
address:
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the
difficulties of assimilating the operations and personnel of the
acquired
companies and the potential disruption of our ongoing
business
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the
need to incorporate successfully the acquired or shared technology
or
content and rights into our products and services
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the
difficulties of establishing a new joint venture, including the need
to
attract and retain qualified personnel and the need to attract customers
and advertisers
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the
potential impairment of relationships with employees and customers
as a
result of any integration of new management personnel or reduction
of
personnel
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the
difficulties of maintaining uniform standards, controls, procedures
and
policies
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In
addition, completing acquisitions could require use of a significant amount
of
our available cash. Furthermore, we may have to issue equity or equity-linked
securities to pay for future acquisitions, and any of these issuances could
be
dilutive to existing and future stockholders. Acquisitions and investments
may
also have negative effects on our reported results of operations due to
acquisition-related charges, amortization of acquired technology and other
intangibles, and/or actual or potential liabilities, known and unknown,
associated with the acquired businesses or joint ventures. Any of these
acquisition-related risks or costs could adversely affect our business,
financial condition and results of operations.
Our
long-term financial viability may depend upon the growth and acceptance of
Internet advertising as an effective alternative to traditional advertising
media. If the market for Internet advertising does not continue to grow, our
revenues and operating results could suffer.
Because
our revenues are derived from advertisements, we compete with traditional media
including television, radio and print, in addition to other Websites, for a
share of advertisers’ total advertising expenditures. We may face the risk that
advertisers might find Internet advertising to be less effective than
traditional media at promoting their products or services and may further reduce
or eliminate their expenditures on Internet advertising. Many advertisers and
advertising agencies have only limited experience advertising on the Internet
and have not devoted a significant portion of their advertising expenditures
to
Internet advertising. Acceptance of the Internet among advertisers will depend,
to a large extent, on the perceived effectiveness of Internet advertising and
the continued growth of commercial usage of the Internet. Filter software
programs that limit or prevent advertising from being displayed on a user’s
computer are available. It is unclear whether this type of software will become
widely accepted, but if it does, it would negatively affect Internet-based
advertising. Our business could be seriously harmed if the market for Internet
advertising does not continue to grow.
Our
business depends on our ability to strengthen our brand. If we are not able
to
enhance public awareness of our answer engine product, we will be unable to
increase user traffic and will fail to attract advertisers, which will result
in
lost revenues.
Expanding
and strengthening public awareness of our brand is critical to achieving
widespread acceptance of our services and to the success of our business.
Strengthening our brand may require us to make substantial investments and
these
investments may not be successful. We have positioned ourselves as an answer
engine rather than a traditional search engine, however, in order to maintain
and strengthen the brand, we must continue to develop our reference information
and continue to provide quality services. If we are unable to continuously
deliver quality services, our brand name will suffer.
We
face risks relating to the duration of, and our dependence on, our content
provider agreements. Our failure to maintain commercially acceptable content
provider relationships would result in a less attractive product to users,
and
therefore subject us to lost revenue as a result of a loss of users and
advertisers.
We
are
heavily dependent on license agreements with our content providers. There can
be
no assurance that we will be able to renew these contracts at all or on
commercially acceptable terms or that our costs with respect to these contracts
will not increase prohibitively following any renewal. If we are unable to
contain the costs of these agreements or, if renewal is not possible, or we
are
unable to develop relationships with alternative providers of content or
maintain and enhance our existing relationships, our product will be less
attractive to Internet users, which could result in decreased advertising
revenues.
Failure
to provide users with quality reference information could result in a less
attractive product to users, and therefore subject us to lost revenues as a
result of a loss of consumers and advertisers.
The
attractiveness and popularity of our Website depends heavily on our ability
to
offer users quality content. If we are not successful in identifying and
licensing quality content comprised of reliable current information from third
party content providers, the utility of our product to the user will be reduced,
which could deter Internet users from using our search engine. The inability
of
retaining and attracting new Internet users would lead to a loss of revenues
and
adversely affect our business.
We
are dependent upon maintaining and expanding our computer and communications
systems. Failure to do so could result in interruptions and failures of our
product that would make our product less attractive to consumers, and therefore
subject us to lost revenue as a result of a loss of consumers and
advertisers.
Our
ability to provide high quality user experience depends on the efficient and
uninterrupted operation of our computer and communications systems to
accommodate the consumers and advertisers using our products. Our failure to
maintain high capacity data transmission without system downtime and improve
our
network infrastructure would adversely affect our business and results of
operations. We believe that our current network infrastructure is insufficient
to support a significant increase in the use of our products. We have
experienced periodic interruptions and failures including problems associated
with users downloading our products, which we believe will continue to occur.
We
will need to enhance and expand our network infrastructure in order to
accommodate the users and advertisers using our products.
If
we were to lose the services of our key personnel, we may not be able to execute
our business strategy that could result in the failure of our
business.
Our
future ability to execute our business plan depends upon the continued service
of our executive officers and other key technology, marketing, sales and support
personnel. Except for Robert S. Rosenschein, our Chief Executive Officer, our
employment agreements with our officers and key employees are terminable by
either party upon 30-90 days notice. If we lost the services of one or more
of
our key employees, or if one or more of our executive officers or employees
joined a competitor or otherwise competed with us, our business may be adversely
affected and our stock price may decline. In particular, the services of key
members of our research and development team would be difficult to replace.
We
cannot assure you that we will be able to retain or replace our key personnel.
We have key person life insurance in the amount of $1,000,000 for Robert
Rosenschein, but not for any of our other officers.
We
face risks relating to our limited use of framing third party Websites inside
our GuruNet product, predecessor to Answers.com. If our framing functionality
is
challenged, we may be subject to litigation which could require us to either
cease framing or pay the third party Website owner, either of which could
decrease the value of our product to users resulting in lost
revenues.
Unauthorized
“framing” creates potential copyright and trademark issues as well as potential
false advertising claims. Framing occurs when we bring to our Website someone
else’s Website that is being viewed by an Internet user and the other Website
becomes “framed” by our site. Though some lawsuits on framing have been filed
against certain entities in the market, to our knowledge none so far has
resulted in fully litigated opinions. There can be no assurance that our limited
framing functionality used within our GuruNet product will not be challenged.
In
the event of a challenge, we may be required to cease this functionality, seek
a
license from the Website owner, pay damages or royalties or otherwise be
required to change the way we connect to certain Websites. Any of these actions
could have an adverse effect on our business.
The
goal of our acquisition of Brainboost Technology, LLC and the intellectual
property rights associated with the Brainboost Answer Engine is the integration
of the Brainboost technology into our existing products and technologies. If
we
are not successful in this integration process and are not able to leverage
the
advantages that the Brainboost technology has to offer, our ability to grow
our
business will suffer and our opportunity for continued business growth will
be
adversely affected.
As
a
result of the Brainboost acquisition, we own the assets belonging to Brainboost
Technology, LLC, the primary asset of which is comprised of the software and
all
other intellectual property rights associated with a functionality known as
the
Brainboost Answer Engine, an artificial intelligence technology targeting
natural language search on the World-Wide-Web. Failure on our part to
successfully integrate the Brainboost Answer Engine into our products and
technologies and to take full advantage of the acquired technology’s potential
could harm our ability to grow our business and adversely affect our ability
to
improve our service.
The
Brainboost technology may not achieve broad public
acceptance.
The
success of Brainboost’s natural language search capabilities largely depends on
the degree of public acceptance of this technology and its innovative solution
to a difficult area in Internet search. The technology we acquired may not
develop a broad audience. Potential new users of our products, once the
Brainboost technology has been incorporated into our products and services,
may
view the Brainboost solution as unattractive relative to other services of
competitors, in existence now or currently under development. This could harm
our ability to maintain or grow our business.
Our
Purchase Agreement with Brainboost Partnership contains certain price protection
rights with respect to the shares of common stock issued to Brainboost
Partnership, which could result in additional cash being paid to Brainboost
Partnership.
As
part
of the Purchase Agreement with Brainboost Partnership pursuant to which we
purchased the entire limited liability interests of Brainboost Technology,
LLC,
we agreed that in the event that the Average Closing Price of our common stock
on December 1, 2006 is less than $10.2575, at our option we will either
repurchase the common stock held by Brainboost Partnership and/or its partners
at such date for $10.2575 per share or pay Brainboost Partnership the difference
between $10.2575 per share and the Average Closing Price subject to certain
conditions in the Purchase Agreement. In the event that the Average Closing
Price of our common stock is substantially below $10.2575 on December 1, 2006
and Brainboost Partnership and/or its partners have not sold a substantial
amount of the common stock issued to them, we may be obligated to pay Brainboost
Partnership a significant amount of additional cash, which could have an adverse
effect on our financial position.
RISKS
RELATED TO OUR INDUSTRY
Third
parties could claim that our company is infringing on their intellectual
property rights, which could result in substantial costs, diversion of
significant managerial resources and significant harm to the company's
reputation.
The
industry in which our company operates is characterized by the existence of
a
large number of patents and frequent litigation based on allegations of patent
infringement. We expect that Internet technologies, software products and
services may be increasingly subject to third-party infringement claims as
the
number of competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. From time to time, third
parties may assert patent, copyright, trademark and other intellectual property
rights to technologies and software products in various jurisdictions that
are
important to our business. Additionally, third parties may assert claims of
copyright infringement with respect to the content displayed on our Website.
For
example, a third party may claim that data displayed on our Website pursuant
to
a licensing arrangement with our content provider is in violation of a
legitimate copyright.
A
successful infringement claim against us by any third party, could subject
the
company to:
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substantial
liability for damages and litigation costs, including attorneys'
fees;
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lawsuits
that prevent the company from further use of its intellectual property
and
require the company to permanently cease and desist from selling
or
marketing products that use such intellectual property;
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having
to license the intellectual property from a third party, which could
include significant licensing and royalty fees not presently paid
by us
and add materially to the our costs of operations;
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having
to develop as a non-infringing alternative, new intellectual property
which could delay projects and add materially to our costs of operations,
or may not be accepted by our users, which, in turn, could significantly
adversely affect our traffic and revenues; and
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having
to indemnify third parties who have entered into agreements with
the
company with respect to losses they incurred as a result of the
infringement, which could include consequential and incidental damages
that are material in amount.
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Even
if
we are not found liable in a claim for intellectual property infringement,
such
a claim could result in substantial costs, diversion of significant resources
and management attention, termination of customer contracts and the loss of
customers and significant harm to the reputation of the company.
Misappropriation
of our intellectual property could harm our reputation, affecting our
competitive position and costing us money.
Our
ability to compete with other software companies depends in part upon the
strength of our proprietary rights in our technologies. We believe that our
intellectual property will be critical to our success and competitive position.
We rely on a combination of U.S. and foreign patents, copyrights, trademark
and
trade secret laws to establish and protect our proprietary rights. If we are
unable to protect our intellectual property against unauthorized use by third
parties, our reputation could be damaged and our competitive position adversely
affected.
Attempts
may be made to copy aspects of our products or to obtain and use information
that we regard as proprietary. Accordingly, we may not be able to prevent
misappropriation of our technology or deter others from developing similar
technology. Our strategy to deter misappropriation could be undermined
if:
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the
proprietary nature or protection of our methodologies are not recognized
in the United States or foreign countries;
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third
parties misappropriate our proprietary methodologies and such
misappropriation is not detected; and
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competitors
create applications similar to ours but which do not technically
infringe
on our legally protected rights.
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If
these
risks materialize, the company could be required to spend significant amounts
to
defend its rights and divert critical managerial resources. In addition, the
company's proprietary methodologies may decline in value or its rights to them
may become unenforceable. If any of the foregoing were to occur, our business
could be materially adversely affected.
Government
regulation and legal uncertainties may require us to incur significant expenses
in complying with any new regulations.
The
laws
and regulations applicable to the Internet and our products are evolving and
unclear and could damage our business. There are currently few laws or
regulations directly applicable to access to, or commerce on, the Internet.
Due
to the increasing popularity and use of the Internet, it is possible that laws
and regulations may be adopted, covering issues such as user privacy, pricing,
taxation, content regulation, quality of products and services, and intellectual
property ownership and infringement. This legislation could expose us to
substantial liability as well as dampen the growth in use of the Internet,
decrease the acceptance of the Internet as a communications and commercial
medium, or require us to incur significant expenses in complying with any new
regulations. Because the increased use of the Internet has burdened the existing
telecommunications infrastructure and many areas with high Internet usage have
begun to experience interruptions in phone services, local telephone carriers
have petitioned the FCC to regulate the Internet and to impose access fees.
Increased regulation or the imposition of access fees could substantially
increase the costs of communicating on the Internet, potentially decreasing
the
demand for our products. A number of proposals have been made at the federal,
state and local level that would impose additional taxes on the sale of goods
and services through the Internet. Such proposals, if adopted, could
substantially impair the growth of electronic commerce and could adversely
affect us. Moreover, the applicability to the Internet of existing laws
governing issues such as property ownership, copyright, defamation, obscenity
and personal privacy is uncertain. We may be subject to claims that our products
violate such laws. Any new legislation or regulation in the United States or
abroad or the application of existing laws and regulations to the Internet
could
damage our business and cause our stock price to decline.
Due
to
the global nature of the Internet, it is possible that the governments of other
states and foreign countries might attempt to regulate its transmissions or
prosecute us for violations of their laws. We might unintentionally violate
these laws. Such laws may be modified, or new laws may be enacted, in the
future. Any such development could damage our business.
Our
business is adversely affected by anything that causes our users to spend less
time on their computers, including seasonal factors and national events, and
events that are not in our control, such as disasters.
Anything
that diverts our users from their customary level of usage of our Website,
such
as the events of September 11, 2001, could adversely affect our business.
Further, our results of operations historically have been seasonal because
many
of our users reduce their activities on our Website with the onset of good
weather during the summer months, and on and around national holidays. Such
patterns of seasonality may become more pronounced as our Website gains
acceptance by a broader base of mainstream users. Additionally, increased usage
of competitor websites and social networking sites may decrease the usage volume
on our Websites, which could adversely affect our financial
results.
RISKS
RELATED TO OUR COMMON STOCK
Our
common stock may be affected by limited trading volume and may fluctuate
significantly.
Our
common stock is traded on the Nasdaq Global Market. There can be no assurance
that an active trading market for our common stock will be sustained. Failure
to
maintain an active trading market for our common stock may adversely affect
our
shareholders' ability to sell our common stock in short time periods, or at
all.
Our common stock has experienced, and may experience in the future, significant
price and volume fluctuations, which could adversely affect the market price
of
our common stock.
There
may be substantial sales of our common stock after the expiration of lock-up
periods, which could cause our stock price to fall.
All
of
our issued and outstanding shares are immediately available for sale in the
public market without registration under Rule 144. Sales of a substantial number
of shares of our common stock could cause the price of our securities to fall
and could impair our ability to raise capital by selling additional
securities.
We
could issue “ blank check ” preferred stock without stockholder approval with
the effect of diluting then current stockholder interests.
Our
certificate of incorporation authorizes the issuance of up to 1,000,000 shares
of “blank check” preferred stock with designations, rights and preferences as
determined from time to time by our board of directors. Accordingly, our board
is empowered, without stockholder approval, to issue a series of preferred
stock
with dividend, liquidation, conversion, voting or other rights which could
dilute the interest of, or impair the voting power of, our common stockholders.
The issuance of a series of preferred stock could be used to discourage, delay
or prevent a change in control. Although we do not presently intend to issue
any
shares of preferred stock, we may do so in the future.
Provisions
in our charter documents and under Delaware law could discourage a takeover
that
stockholders may consider favorable.
Provisions
of our Amended and Restated Certificate of Incorporation and Bylaws could make
it more difficult for a third party to acquire us, even if doing so would be
beneficial to our stockholders. For example, our board of directors is divided
into three classes, with one class being elected each year by our stockholders,
which generally makes it more difficult for stockholders to replace a majority
of directors and obtain control of our board. In addition, stockholder meetings
may be called only by our board of directors, the chairman of the board and
the
president, advance notice is required prior to stockholder proposals and
stockholders may not act by written consent. Further, we have authorized
preferred stock that is undesignated, making it possible for our board of
directors to issue preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control of Answers
Corporation.
Delaware
law also could make it more difficult for a third party to acquire us.
Specifically, Section 203 of the Delaware General Corporation Law, to which
our
company is subject, may have an anti-takeover effect with respect to
transactions not approved in advance by our board of directors, including
discouraging attempts that might result in a premium over the market price
for
the shares of common stock held by our stockholders.
We
are at risk of securities class action litigation.
In
the
past, securities class action litigation has often been brought against a
company following a decline in the market price of its securities. This risk
is
especially relevant for us because Internet companies have experienced
significant stock price volatility in recent years. If we faced such litigation,
it could result in substantial costs and diversion of management’s attention and
resources, which could adversely affect our business.
Our
stock price has been and may continue to be extremely
volatile.
The
trading price of our common stock has been and is likely to be extremely
volatile and could fluctuate in response to a variety of factors, including
the
following:
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actual
or anticipated variations in our quarterly operating results and
expected
future results;
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changes
in, or failure to meet, financial estimates by securities
analysts;
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unscheduled
system downtime;
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announcements
by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures, new products or capital
commitments;
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Additions
or departures of key personnel;
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announcements
of technological innovations or new services by us or our
competitors;
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initiation
of or developments in litigation affecting us;
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conditions
or trends in the Internet and online commerce
industries;
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changes
in the market valuations of other Internet, online commerce, or technology
companies; and
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developments
in regulation.
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The
trading prices of Internet stocks in general, and ours in particular, have
experienced extreme price and volume fluctuations in recent periods. These
fluctuations can often be unrelated or disproportionate to the operating
performance of these companies. Negative changes in the public’s perception of
the prospects of Internet or e-commerce or technology companies have in the
past
and may in the future depress our stock price regardless of our results. Other
broad market and industry factors may decrease the market price of our common
stock, regardless of our operating performance.
RISKS
RELATED TO OUR LOCATION IN ISRAEL
Conditions
in Israel may limit our ability to produce and sell our product, which would
lead to a decrease in revenues.
Because
our principal offices and sole research and development facilities are located
in Jerusalem, Israel, our operations are directly affected by economic,
political and military conditions affecting Israel. Specifically, we could
be
adversely affected by:
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any
major hostilities involving Israel;
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a
full or partial mobilization of the reserve forces of the Israeli
army;
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the
interruption or curtailment of trade between Israel and its present
trading partners;
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risks
associated with the fact that a number of our employees and a key
officer
reside in what are commonly referred to as occupied territories;
and
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a
significant downturn in the economic or financial conditions in Israel.
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Since
the
establishment of the State of Israel in 1948, a number of armed conflicts have
taken place between Israel and its Arab neighbors and a state of hostility,
varying in degree and intensity, has led to security and economic problems
for
Israel. Despite negotiations to effect peace between Israel and its Arab
neighbors, the future of these peace efforts is uncertain. Since October 2000,
there has been a significant increase in violence, civil unrest and hostility,
including armed clashes between the State of Israel and the Palestinians, and
acts of terror have been committed inside Israel and against Israeli targets
in
the West Bank and Gaza Strip. There is no indication as to how long the current
hostilities will last or whether there will be any further escalation. Any
further escalation in these hostilities or any future conflict, political
instability or violence in the region may have a negative effect on our
business, harm our results of operations and adversely affect our share
price.
Furthermore,
there are a number of countries that restrict business with Israel or with
Israeli companies, which may limit our ability to further our business in those
countries.
We
may not be able to enforce covenants not-to-compete under current Israeli law
that might result in added competition for our products.
We
have
non-competition agreements with all of our employees, almost all of which are
governed by Israeli law. These agreements prohibit our employees from competing
with or working for our competitors, generally during and for up to 12 months
after termination of their employment. However, Israeli courts are reluctant
to
enforce non-compete undertakings of former employees and tend, if at all, to
enforce those provisions for relatively brief periods of time in restricted
geographical areas and only when the employee has obtained unique value to
the
employer specific to that employer’s business and not just regarding the
professional development of the employee.
The
Israeli government tax benefits program in which we currently participate and
from which we receive benefits requires us to meet several conditions. These
programs or benefits may be terminated or reduced in the future, which may
result in an increase in our tax liability.
Our
Israeli subsidiary receives tax benefits authorized under Israeli law for
capital investments that are designated as “Approved Enterprises.” To be
eligible for these tax benefits, we must meet certain conditions. If we fail
to
meet such conditions, these tax benefits could be cancelled, and we could be
required to pay increased taxes or refund the amount of tax benefits we
received, together with interest and penalties. Israeli governmental authorities
have indicated that the government may in the future reduce or eliminate the
benefits of such programs. The termination or reduction of these programs and
tax benefits could increase our Israeli tax rates, and thereby reduce our net
profits or increase our net losses.
The
Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by us or on our behalf. We and our
representatives may from time to time make written or oral statements that
are
"forward-looking," including statements contained in this Prospectus and other
filings with the Securities and Exchange Commission, reports to our stockholders
and news releases. All statements that express expectations, estimates,
forecasts or projections are forward-looking statements within the meaning
of
the Act. In addition, other written or oral statements which constitute
forward-looking statements may be made by us or on our behalf. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
"projects," "forecasts," "may," "should," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in or suggested by such forward-looking statements. Among the important factors
on which such statements are based are assumptions and uncertainties associated
with our ability to increase the number of users visiting our Website, our
ability to increase the number of partners who will generate increased traffic
to our Website, our ability to improve the monetization of our products, the
risk of a decision by Google, Inc. to stop directing user traffic to Answers.com
through its definition link, the risk of a decision by Google, Inc., currently
the provider of the vast majority of our search engine traffic, and other search
engines, to change the algorithms responsible for directing search queries
to
the web pages that are most likely to contain the information being sought
by
Internet users or restrict the flow of users visiting our Website, our ability
to renew current contracts with content providers on commercially acceptable
terms or that our costs with respect to these contracts will not increase
prohibitively following any renewal, the risks of litigation relating to our
intellectual property, the risks associated with dependence upon key personnel
and the need for additional financing.
We
will
not receive any proceeds upon the sale or other disposition of the shares of
our
common stock being offered through this Prospectus by the Selling Stockholders.
We will, however, receive the exercise price, if any, to be paid upon the
exercise of any stock options granted to the Selling Stockholders.
The
shares of our common stock to which this Prospectus relates may be reoffered
and
resold from time to time by the persons listed below as “Selling Stockholders”.
The shares to be reoffered and resold by the Selling Stockholders have been
or
may in the future be acquired by the Selling Stockholders upon the exercise
of
stock options, rights or other awards which have been or may in the future
be
granted under the 2005 Plan.
The
table
below identifies each Selling Stockholder and his relationship to us. The table
also sets forth, as of November 9, 2006, for each Selling Stockholder: (i)
the
number of shares of common stock beneficially owned prior to this offering,
(ii)
the number of shares of common stock that may be reoffered and resold through
this Prospectus, and (iii) the number of shares of common stock and the
percentage of the class represented by such shares to be owned by each such
Selling Stockholder, assuming the sale of all of the registered shares. There
is
no assurance that any of the Selling Stockholders will sell any or all of their
shares of common stock. Except as otherwise noted, all shares of common stock
are beneficially owned and the sole investment and voting power is held by
the
person named, and such person’s address is c/o Answers Corporation, Jerusalem
Technology Park, The Tower, Jerusalem, Israel, 91481.
|
|
|
Beneficial
Ownership Prior to
|
|
Shares
That May be Reoffered and
|
|
Beneficial
Ownership After this Offering
|
|
|
Selling
Stockholder
|
|
this
Offering(1)
|
|
|
|
Number
of Shares(3)
|
|
Percent
of Class(4)
|
|
|
Robert
S. Rosenschein(5)
|
|
|
482,433
|
|
|
80,000
|
|
|
482,433
|
|
|
6.06
|
%
|
|
Steven
Steinberg(6)
|
|
|
52,528
|
|
|
55,000
|
|
|
52,528
|
|
|
*
|
|
|
Jeff
Schneiderman(7)
|
|
|
47,538
|
|
|
65,000
|
|
|
47,538
|
|
|
*
|
|
|
Jeffrey
S. Cutler(8)
|
|
|
87,500
|
|
|
20,000
|
|
|
87,500
|
|
|
1.11
|
%
|
|
Bruce
D. Smith (9)
|
|
|
31,562
|
|
|
30,000
|
|
|
31,562
|
|
|
*
|
|
|
Mark
A. Tebbe(10)
|
|
|
54,382
|
|
|
7,175
|
|
|
54,382
|
|
|
*
|
|
|
Edward
G. Sim(11)
|
|
|
24,960
|
|
|
7,175
|
|
|
24,960
|
|
|
*
|
|
|
Yehuda
Sternlicht(12)
|
|
|
20,478
|
|
|
7,175
|
|
|
20,478
|
|
|
*
|
|
|
Jerry
Colonna(13)
|
|
|
20,478
|
|
|
7,175
|
|
|
20,478
|
|
|
*
|
|
|
Lawrence
S. Kramer(14)
|
|
|
13,901
|
|
|
7,175
|
|
|
13,901
|
|
|
*
|
|
|
Mark
B. Segall(15)
|
|
|
16,891
|
|
|
7,175
|
|
|
16,891
|
|
|
*
|
|
*
Represents less than 1%.
|
(1)
|
Consists
of (i) all shares of Answers’ common stock owned by the Selling
Stockholder and (ii) all shares of common stock which the Selling
Stockholder has the right to acquire through the exercise of options,
including those granted under the Plan, warrants or other rights
to
purchase shares of common stock, exercisable within 60 days after
November
9, 2006.
|
| |
|
|
(2)
|
Consists
of all shares of Answers’ common stock which the Selling Stockholder has
the right to acquire through the exercise of options granted under
the
Plan, whether or not such right has yet become exercisable or will
become
exercisable within 60 days after November 9, 2006.
|
| |
|
|
(3)
|
Consists
of (i) shares of Answers’ common stock owned by the Selling Stockholder
and (ii) shares of common stock which the Selling Stockholder has
the
right to acquire through the exercise of options, other than those
granted
under the Plan, warrants or other rights to purchase shares of common
stock, exercisable within 60 days after November 9,
2006.
|
| |
|
|
(4)
|
Percentage
calculated on the basis of 7,784,946 shares
of common stock outstanding on November 9, 2006.
|
| |
|
|
(5)
|
Robert
S. Rosenschein has
been Chairman of the Board and President of Answers since he founded
Answers in December 1998. From December 1998 to April 2000 and since
May
2001, Mr. Rosenschein has served as Answers’ Chief Executive Officer. From
May 2000 to April 2001, Mr. Rosenschein served as Answers’ Chairman.
|
|
(6)
|
Steven
Steinberg joined
Answers in December 2002 as Vice President of Finance and became
Answers’
Chief Financial Officer and Secretary in January 2004.
|
| |
|
|
(7)
|
Jeff
Schneiderman has been Answers’ Chief Technical Officer since March 2003.
From January 1999 until February 2003, Mr. Schneiderman was Answers’ Vice
President of Research and Development.
|
| |
|
|
(8)
|
Jeffrey
S. Cutler has been Answers’ Chief Revenue Officer since March 15, 2005.
|
| |
|
|
(9)
|
Bruce
D. Smith has been Answers’ Vice President of Strategic Development since
July 2005.
|
| |
|
|
(10)
|
Mark
A. Tebbe has served as a director of Answers since December 1998.
He
currently serves as a member of Answers’ Audit Committee and Compensation
Committee.
|
| |
|
|
(11)
|
Edward
G. Sim has served as a director of Answers since August 1999. He
currently
serves as a member of Answers’ Audit Committee, and Chairman of the
Compensation Committee.
|
| |
|
|
(12)
|
Yehuda
Sternlicht has served as a director of Answers since June 2004. He
currently serves as the Chairman of Answers’ Audit Committee and a member
of Answers' Finance Committee.
|
| |
|
|
(13)
|
Jerry
Colonna has served as a director of Answers since June 2004. He currently
serves as the Chairman of the Nominations / Corporate Governance
Committee
and a member of Answers’ Compensation Committee.
|
| |
|
|
(14)
|
Lawrence
S. Kramer has served as a director of Answers since May 2005. He
currently
serves as a member of the Nominations / Corporate Governance Committee
and
the Finance Committee.
|
| |
|
|
(15)
|
Mark
B. Segall has served as a director of Answers since December 2004.
He
currently serves as the Chairman of the Finance Committee and a member
of
the Nominations / Corporate Governance
Committee
|
The
shares being offered by the selling stockholders will be sold from time to
time
in one or more transactions (which may involve block transactions) that may
take
place in The Nasdaq Global Market, including ordinary brokers’ transactions,
privately negotiated transactions or through sales to one or more dealers for
resale of such securities as principals, at market prices prevailing at the
time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the selling stockholders. The shares may also be
sold
pursuant to Rule 144 under the Securities Act. The selling stockholders have
the
sole and absolute discretion not to accept any purchase offer or make any sale
of shares if they deem the purchase price to be unsatisfactory at any particular
time.
The
selling stockholders may also sell the shares directly to market makers acting
as principals and/or broker-dealers acting as agents for themselves or their
customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or
the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and
at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market
price.
The
selling stockholders and intermediaries through whom such securities are sold
may be deemed “underwriters” within the meaning of the Securities Act, with
respect to the securities offered hereby, and any profits realized or
commissions received may be deemed underwriting compensation. We have agreed
to
indemnify the selling stockholders against certain liabilities, including
liabilities under the Securities Act.
The
selling stockholders, alternatively, may sell all or any part of the shares
offered by this Prospectus through an underwriter. To our knowledge, no selling
stockholder has entered into an agreement with a prospective underwriter. If
any
selling stockholder notifies us that it has entered into an agreement or
agreements with a broker-dealer or underwriter for the resale of the common
stock, the relevant details will be set forth in a supplement or revision to
this Prospectus.
The
selling stockholders and any other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations thereunder,
including, without limitation, Regulation M, which may restrict certain
activities of, and limit the timing of purchases and sales of any of the shares
by the selling stockholders or any other such person. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities
with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions. All of these limitations may affect the marketability of the
shares.
The
validity of the common stock will be passed upon by our counsel, Sichenzia
Ross
Friedman Ference LLP, New York, New York.
This
Prospectus is part of a Registration Statement on Form S-8 that we filed with
the SEC. Certain information in the Registration Statement has been omitted
from
this prospectus in accordance with the rules of the SEC. We file annual,
quarterly and special reports, proxy statements and other information with
the
SEC. You can inspect and copy the Registration Statement as well as reports,
proxy statements and other information we have filed with the SEC at the public
reference room maintained by the SEC at 100 F Street N.E. Washington, D.C.
20549, You can obtain copies from the public reference room of the SEC at 100
F
Street N.E. Washington, D.C. 20549, upon payment of certain fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. No dealer, salesperson or other person is authorized to
give
any information or to make any representations other than those contained in
this Prospectus, and, if given or made, such information or representations
must
not be relied upon as having been authorized by us. This Prospectus does not
constitute an offer to buy any security other than the securities offered by
this Prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction where such offer or solicitation
is
not authorized or is unlawful. Neither delivery of this Prospectus nor any
sale
hereunder shall, under any circumstances, create any implication that there
has
been no change in the affairs of our company since the date hereof.
The
SEC
allows us to 'incorporate by reference' the information into this Prospectus.
This means that we can disclose important information to you by referring you
to
another document filed separately with the SEC. The information that we
incorporate by reference is considered to be part of this Prospectus. Because
we
are incorporating by reference our future filings with the SEC, this Prospectus
is continually updated and those future filings may modify or supersede some
or
all of the information included or incorporated in this Prospectus. This means
that you must look at all of the SEC filings that we incorporate by reference
to
determine if any of the statements in this Prospectus or in any document
previously incorporated by reference have been modified or superseded. This
Prospectus incorporates by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of
the Securities Exchange Act of 1934 until the selling stockholders sell all
of
our common stock registered under this Prospectus.
Answers
Corporation (File
No.
001-32325)
|
·
|
our
annual report on Form 10-KSB for the fiscal year ended December 31,
2005
filed with the SEC on March 20, 2006;
|
|
|
|
|
·
|
our
annual report on Form 10-KSB/A for the fiscal year ended December
31, 2005
filed with the SEC on April 13, 2006;
|
|
|
|
|
·
|
our
annual report on Amendment No.2 to Form 10-KSB for the fiscal year
ended
December 31, 2005 filed with the SEC on May 19, 2006;
|
| |
|
|
·
|
our
annual report on Amendment No.3 to Form 10-KSB for the fiscal year
ended
December 31, 2005 filed with the SEC on June 7, 2006;
|
|
|
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended March 31, 2006
filed
with the SEC on May 12, 2006;
|
| |
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended June 30, 2006
filed
with the SEC on August 10, 2006;
|
| |
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended September 30,
2006
filed with the SEC on November 13, 2006;
|
| |
|
|
·
|
our
current reports on Form 8-K filed with the SEC on February 16, 2006,
May
8, 2006, May 9, 2006, July 31, 2006, September 19, 2006, September
26,
2006, November 7, 2006 and November 9, 2006; and
|
| |
|
|
·
|
the
description of our common stock contained in Item 1 of our Registration
Statement on Form 8-A, filed with the SEC on August 1,
2005.
|
The
information about us contained in this Prospectus should be read together with
the information in the documents incorporated by reference. You may request
a
copy of any or all of these filings, at no cost, by writing or telephoning
us at
Jerusalem Technology Park, The Tower, Jerusalem 91481 Israel, +972-2-649-5000
or
at 237 West 35 th
Street,
Suite 1101, New York, NY 10001, 646-502-4777.
Our
Certificate of Incorporation provides that to the fullest extent permitted
by
the Delaware General Corporation Law, a director of the company shall not be
personally liable to the company or its stockholders for monetary damages for
breach of fiduciary duty as a director. Under current Delaware law, liability
of
a director may not be limited (i) for any breach of the director's duty of
loyalty to the company or its stockholders, (ii) for acts or omissions not
in
good faith or that involve intentional misconduct or a knowing violation of
law,
and (iii) for any transaction from which the director derives an improper
personal benefit.
The
effect of the provision of our Certificate of Incorporation is to eliminate
the
rights of the company and its stockholders (through stockholders' derivative
suits on behalf of the company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in the situations
described in clauses (i) through (iii) above. This provision does not limit
or
eliminate the rights of the company or any stockholder to seek nonmonetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. In addition, our Certificate of Incorporation provides
that the company shall indemnify to the fullest extent permitted by law its
directors, officers and employees and any other persons to which Delaware law
permits a corporation to provide indemnification against losses incurred by
any
such person by reason of the fact that such person was acting in such
capacity.
We
have
an insurance policy that insures our directors and officers, within the limits
and subject to the limitations of the policy, against certain expenses in
connection with the defense of actions, suits or proceedings, and certain
liabilities that might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been
directors or officers.
Answers
Corporation
293,050 SHARES OF COMMON STOCK
PROSPECTUS
November
13, 2006
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
Item
3. Incorporation of Documents by Reference.
The
Registrant hereby incorporates by reference into this Registration Statement
the
documents listed below. In addition, all documents subsequently filed pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the
date
of filing of such documents:
Answers
Corporation (File No. 001-32325)
|
·
|
our
annual report on Form 10-KSB for the fiscal year ended December 31,
2005
filed with the SEC on March 20, 2006;
|
|
|
|
|
·
|
our
annual report on Form 10-KSB/A for the fiscal year ended December
31, 2005
filed with the SEC on April 13, 2006;
|
|
|
|
|
·
|
our
annual report on Amendment No.2 to Form 10-KSB for the fiscal year
ended
December 31, 2005 filed with the SEC on May 19, 2006;
|
| |
|
|
·
|
our
annual report on Amendment No.3 to Form 10-KSB for the fiscal year
ended
December 31, 2005 filed with the SEC on June 7, 2006;
|
|
|
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended March 31, 2006
filed
with the SEC on May 12, 2006;
|
| |
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended June 30, 2006
filed
with the SEC on August 10, 2006;
|
| |
|
|
·
|
our
quarterly report on Form 10-QSB for the quarter ended September 30,
2006
filed with the SEC on November 13, 2006;
|
| |
|
|
·
|
our
current reports on Form 8-K filed with the SEC on February 16, 2006,
May
8, 2006, May 9, 2006, July 31, 2006, September 19, 2006, September
26,
2006, November 7, 2006 and November 9, 2006; and
|
| |
|
|
·
|
the
description of our common stock contained in Item 1 of our Registration
Statement on Form 8-A, filed with the SEC on August 1,
2005.
|
Item
4. Description of Securities.
Not
Applicable.
Item
5. Interests of Named Experts and Counsel.
No
expert
or counsel named in this Registration Statement as having prepared or certified
any part of this Registration Statement or having given an opinion upon the
validity of the securities being registered or upon other legal matters in
connection with the registration or offering of the common stock was employed
on
a contingency basis, or had, or is to receive, in connection with the offering,
a substantial interest, direct or indirect, in the Registrant, nor was any
such
person connected with the Registrant as a promoter, managing or principal
underwriter, voting trustee, director, officer or employee.
Item
6. Indemnification of Directors and Officers.
Answers
Corporation’s Certificate of Incorporation provides that to the fullest extent
permitted by the Delaware General Corporation Law, a director of the company
shall not be personally liable to the company or its stockholders for monetary
damages for breach of fiduciary duty as a director. Under current Delaware
law,
liability of a director may not be limited (i) for any breach of the director's
duty of loyalty to the company or its stockholders, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law, and (iii) for any transaction from which the director derives an
improper personal benefit.
The
effect of the provision of Answers’ Certificate of Incorporation is to eliminate
the rights of the company and its stockholders (through stockholders' derivative
suits on behalf of the company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in the situations
described in clauses (i) through (iii) above. This provision does not limit
or
eliminate the rights of the company or any stockholder to seek nonmonetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. In addition, Answers’ Certificate of Incorporation
provides that the company shall indemnify to the fullest extent permitted by
law
its directors, officers and employees and any other persons to which Delaware
law permits a corporation to provide indemnification against losses incurred
by
any such person by reason of the fact that such person was acting in such
capacity.
Answer
has an insurance policy that insures its directors and officers, within the
limits and subject to the limitations of the policy, against certain expenses
in
connection with the defense of actions, suits or proceedings, and certain
liabilities that might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been
directors or officers.
Item
7. Exemption from Registration Claimed.
Not
Applicable.
Item
8. Exhibits.
|
EXHIBIT
NUMBER
|
|
EXHIBIT
|
|
4.1
|
|
Answers
Corporation 2005 Incentive Compensation Plan
(1)
|
|
|
|
|
|
5.1
|
|
Opinion
of Sichenzia Ross Friedman Ference LLP.
|
|
|
|
|
|
23.1
|
|
Consent
of Sichenzia Ross Friedman Ference LLP is contained in Exhibit
5.1.
|
|
|
|
|
|
23.2
|
|
Consent
of KPMG Somekh Chaikin, an Independent Registered Public Accounting
Firm
|
|
|
|
|
|
24.1
|
|
Power
of Attorney (included on signature
page).
|
(1)
Previously
filed as Annex B to the Registrant’s Definitive Proxy Statement filed May 31,
2005, and incorporated herein by reference.
Item
9. Undertakings.
(a)
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
Provided,
however
, that
paragraphs (1)(i), and (1)(ii) do not apply if the Registration Statement is
on
Form S-8 and if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished
to
the Commission by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide
offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for purposes of determining any liability under the Securities Act of 1933,
each
filing of the registrant’s annual report pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide
offering
thereof.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and
is, therefore, unenforceable.
In
the
event that a claim for indemnification against such liabilities (other than
the
payment by the registrant of expenses incurred or paid by a director, officer
or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and
will be governed by the final adjudication of such issue.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, as amended,
the
registrant certifies that it has reasonable grounds to believe that it meets
all
of the requirements for filing on Form S-8 and has duly caused this Form
S-8 to be signed on its behalf by the undersigned, thereunto duly authorized,
in
Jerusalem, Israel, on November 13, 2006.
| |
|
|
| |
ANSWERS
CORPORATION
|
|
|
|
| |
By: |
/s/
Robert S. Rosenschein |
| |
Robert
S. Rosenschein
|
| |
Chief
Executive Officer, President
and
Chairman of the Board
|
| |
|
|
|
|
By: |
/s/ Steven Steinberg |
| |
Steven
Steinberg
Chief
Financial Officer
|
| |
(Principal Financial
and Accounting Officer)
|
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS,
that
each person whose signature appears below constitutes and appoints Robert S.
Rosenschein and Steven Steinberg, and each of them his true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign
any
and all amendments (including post-effective amendments) to this Registration
Statement, and any subsequent registration statements pursuant to Rule 462
of
the Securities Act of 1933 and to file the same, with all exhibits thereto,
and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorney-in-fact or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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SIGNATURE
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TITLE
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DATE
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/s/
Robert S. Rosenschein
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Robert
S. Rosenschein
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Chief
Executive Officer, President and
Chairman
of the Board
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November
13, 2006
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/s/
Steven Steinberg
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Steven
Steinberg
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Chief
Financial Officer and Secretary
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November
13, 2006
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/s/
Jerry Colonna
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Jerry
Colonna
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Director
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November
13, 2006
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/s/
Lawrence S. Kramer
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|
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Lawrence
S. Kramer
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Director
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November
13, 2006
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/s/
Mark B. Segall
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|
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Mark
B. Segall
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Director
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November
13, 2006
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/s/
Edward G. Sim
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Edward
G. Sim
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Director
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November
13, 2006
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/s/
Yehuda Sternlicht
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Yehuda
Sternlicht
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Director
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November
13, 2006
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/s/
Mark A. Tebbe
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|
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Mark
A. Tebbe
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Director
|
|
November
13, 2006
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