shmolton
17 years ago
Think Partnership 4th Quarter and FY2006 Financial Results
Thursday March 29, 4:05 pm ET
Q4 2006 Revenues up 95% over same year ago period
4th Consecutive Year of Record Revenue of $71.9 million, up 78% over 2005
Record Annual EBITDA of $8.8 million in 2006, up 267% over 2005
CLEARWATER, Fla.--(BUSINESS WIRE)--Think Partnership Inc. (AMEX:THK - News), an international leader in interactive performance-based marketing and related Internet technologies, reported financial results for the fourth quarter and year ended December 31, 2006.
Q4 2006 Financial Results
As compared to the previous quarter and same period a year ago:
Revenues totaled $19.0 million, a decrease of 12% from $21.6 million in the previous quarter and up 96% from $9.7 million a year ago.
Net Income from operations was $0.3 million, a decrease of 68% from $0.9 million in the previous quarter and up from a loss of ($1,743,249) a year ago.
Basic and fully diluted earnings per common share totaled a loss of $(0.14), a decrease from a loss of ($0.01) in the previous quarter, and a decrease from a loss of ($0.03) per share in the same period a year ago. The loss per common share is primarily due to charges relating to the Series A Convertible Preferred Stock of $7.2 million and $10.2 million for the quarter ended and year ended December 31, 2006 respectively.
Earnings before interest, taxes, depreciation and amortization expenses ("EBITDA") was $2.7 million, down 30% from $3.8 million reported in the previous quarter, and up from a loss of ($1.0 million) reported the same period a year ago. A reconciliation of EBITDA to income from operations is included at the end of this release.
Full Year 2006 Financial Results
Revenues totaled a record $71.9 million, an increase of 78% from $40.4 million in 2005.
Income before taxes was $1.4 million, an increase from $33 thousand in 2005.
Basic and fully diluted earnings per common share totaled a loss of $(0.20), compared to $0.00 in 2005. The loss is primarily due to preferred stock charges of $10.2 million.
Earnings before interest, taxes, depreciation and amortization expenses ("EBITDA") was a record $8.8 million, up 272% from $2.4 million reported in 2005.
"While we have enjoyed another year of record revenue and EBITDA, this has also been a period of substantial investment in new technologies and products designed to fuel our growth in the coming year," said Think Partnership's president and CEO, Scott P. Mitchell. "Think Partnership has generated almost $72 million in revenue and $9 million in EBITDA in 2006. Although our fourth and first quarter results were impacted by certain operating challenges, we strongly believe these issues have been permanently resolved and are nonrecurring. As we anticipate healthy industry-wide expansion also contributing to accelerated organic growth, we reiterate our revenue forecast to top $100 million in 2007, with EBITDA margin ranging from 20-22% of revenue."
Other Q4 2006 Highlights
Think Partnership initiated conversion of all outstanding preferred stock to common, which was completed in the first quarter 2007. The conversion eliminated $19.1 million of preferred stock from the balance sheet, as well as eliminated an estimated $5.9 million in annual preferred dividend payments and accretion in 2007. The company expects the conversions to increase net income applicable to common share holders by approximately $0.11 per share.
Intuit Inc. selected Think's KowaBunga!® MyAffiliateProgram(TM) (MYAP(TM)) affiliate tracking and management solution for Intuit's Quicken and QuickBooks affiliate programs.
Introduced Second Bite, an automated solution that offers online merchants the ability to recover lost sales and revenue attributed to online shopping cart abandonment.
Released ValidClick DirectAds(TM), an advanced private-label pay-per-click (PPC) platform featuring Think Partnership's highly accurate, patent-pending click fraud prevention technology.
Financial Details
Beginning in the third quarter of 2006, the company aligned its subsidiaries along four market segments, Think Network, Think Direct, Think Advertising, and Think Consumer, and reports its financial results accordingly:
Think Network
PrimaryAds, Ozline, Litmus Media, and Kowabunga! marketing subsidiaries comprise this segment, which is primarily engaged in performance-based Internet ad distribution using proprietary technology. Network revenues for the quarter totaled $3.9 million, down 26% from $5.3 million in the previous quarter and up 177% from $1.4 million a year ago. This contributed 21% of total revenues, down from 24% in the previous quarter, and up from 15% in the same quarter a year ago. Network EBITDA was $1.5 million, down 31% from $2.1 million reported in the previous quarter and up from a loss reported a year ago.
For the full year 2006, revenue from the Network segment increased 228% to $16.7 million. The acquisitions of Litmus Media, Inc. contributed approximately $7.0 million in revenue during the current year. The remaining growth was due to increased revenue derived from the company's affiliate networks and affiliate software licensing.
Think Direct
iLead Media and Morex comprise this segment, and are primarily engaged in interactive direct marketing of internally generated and 3rd party offers. Direct revenues for the quarter totaled $6.1 million, down 4% from $6.3 million in the previous quarter. This contributed 32% of total revenues, which was up from 29% in the previous quarter. Direct EBITDA was $1.8 million, down 25% from $2.4 million reported in the previous quarter.
For the full year 2006, the Direct segment contributed revenue of $17.7 million. There are no comparable periods because the company entered this segment in January 2006 with the acquisition of Morex Marketing Group, LLC and expanded further in May with the acquisition of iLead Media, Inc.
Think Advertising
MarketSmart Interactive, MarketSmart Advertising, and Web Diversity comprise this segment, and offer traditional advertising agency services (online and offline). Advertising revenues for the quarter totaled $6.3 million, down 10% from $7.0 million in the previous quarter and up 5% from $6.0 million a year ago. This contributed 33% of total revenues, the same as the previous quarter and a decrease from 62% in the same quarter a year ago. Advertising EBITDA was a loss of $0.2 million, down 202% from $0.2 million in the previous quarter, and up 59% from a loss of $0.5 million reported a year ago.
For the full year 2006, revenue from the Advertising segment decreased 7% to $25.3 million. Revenue from the company's MarketSmart Interactive business decreased by approximately $8.8 million during 2006 as compared to 2005. This was offset by increased revenue from the addition of Web Diversity Ltd. in April 2006 of approximately $6.2 million and increased revenue from our advertising agency of approximately $0.8 million in 2006 as compared to 2005.
Think Consumer
Cherish, Inc., Vintacom Media Group, Personals Plus, Inc., and Real Estate School Online, Inc. comprise various online destinations for consumers in this segment. Consumer revenues for the quarter totaled $2.8 million, down 14% from $3.2 million in the previous quarter and up 8% from $2.6 million a year ago. Consumer EBITDA was $0.6 million, no change from $0.6 million reported in the previous quarter, and up 18% from $0.5 million reported a year ago.
The full year 2006 revenue from this segment increased approximately 49% from the previous year to $12.9 million. The increase was primarily due to the addition of three companies in 2005 that contributed approximately $5.6 million of revenue in 2006. This was offset by a decrease in revenue at the company's Cherish division of approximately $1.6 million.
EBITDA, other
There were certain costs that occurred on the corporate level that were factored into the company's total EBITDA. These costs amounted to $1.0 million for the fourth quarter, down from $1.5 million in the previous quarter, and virtually unchanged from the same year-ago quarter. For the full year 2006, this amounted to $5.2 million, up 110% from 2005.
2007 Guidance
Management maintains its currently issued forecasts for revenue in 2007 to exceed $100 million, with EBITDA margin to range between 20%-22%.
Conference Call
The company will hold a conference call later today to discuss its fourth quarter and year-end 2006 financial results. Think Partnership CEO Scott Mitchell and CFO Jody Brown will host the presentation, which will be followed by a question and answer period.
Date: Thursday, March 29, 2007
Time: 4:30 pm Eastern (1:30 pm Pacific)
Toll-Free Dial-In Number: (800) 922-9655
Toll/International: (973) 935-2407
Conference ID#: 8571307
Internet Simulcast: http://viavid.net/dce.aspx?sid=00003CA0
(Windows Media Player needed for simulcast)
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at (949) 574-3860.
A replay of the conference call will be available starting at 7:30 PM Eastern and until midnight, April 12, 2007:
Toll-free replay number: (877) 519-4471
Toll/International replay number: (973) 341-3080
Replay PIN Number: 8571307
About Think Partnership
Think Partnership Inc. is an international leader in interactive performance-based marketing and related Internet technologies. Think provides a comprehensive and integrated set of scalable and cost-effective marketing solutions for both advertisers and publishers. These solutions increase customer retention and revenues through a diverse set of related marketing channels, including affiliate marketing, click-fraud-protected pay-per-click advertising, lead generation, interactive direct marketing, integrated offline advertising, campaign management, public relations, and branding. Think also operates several direct-to-consumer services including online dating, online education, and home business opportunities. High-profile brands include ValidClick(TM), PrimaryAds(TM), iLead Media, KowaBunga!®, BabyToBee, Second Bite(TM) and MarketSmart. For more information, visit www.thinkpartnership.com.
Regarding Forward-Looking Statements
Statements made in this press release that express the company's or management's intentions, plans, beliefs, expectations or predictions of future events, are forward-looking statements. Those statements are based on many assumptions and are subject to many known and unknown risks, uncertainties and other factors that could cause the company's actual activities, results or performance to differ materially from those anticipated or projected in such forward-looking statements. For a discussion of these risks, see the company's report, as filed with the Securities and Exchange Commission on Form 10-K, filed March 29, 2007, under the section headed "Risk Factors." The company cannot guarantee future financial results, levels of activity, performance or achievements; and investors should not place undue reliance on the company's forward-looking statements.
Financial Tables
THINK PARTNERSHIP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Years Ended December 31, 2006, 2005 and 2004
2006 2005 2004
------------ ------------ ------------
Net Revenue $71,882,328 $40,440,729 $17,621,100
Cost of Revenue 27,692,914 13,853,863 4,091,939
------------ ------------ ------------
Gross Profit 44,189,414 26,586,866 13,529,161
Operating Expenses
Selling, General and
Administrative 39,111,579 24,922,388 10,585,315
Amortization of Purchased
Intangibles 3,451,372 1,546,859 108,489
------------ ------------ ------------
Income from Operations 1,626,463 117,619 2,835,357
Other Income(Expense)
Interest Income 15,495 78,140 22,164
Interest Expense (908,439) (172,704) (44,603)
Other Income, Net 671,538 10,299 24,863
------------ ------------ ------------
Income Before Income Taxes 1,405,057 33,354 2,837,781
Income Tax Expense 839,866 36,975 1,063,793
------------ ------------ ------------
Net Income (Loss) 565,191 (3,621) 1,773,988
Other Comprehensive Income
Unrealized Gain on
Securities 78,675 94,004 0
------------ ------------ ------------
Comprehensive Income 643,866 $90,383 $1,773,988
------------ ------------ ------------
Net (Loss) Income Per Common
Share
Basic(see Note 12) ($0.20) $0.00 $0.07
------------ ------------ ------------
Fully Diluted(see Note 12) ($0.20) $0.00 $0.06
------------ ------------ ------------
Weighted Average Shares (Basic) 48,722,284 33,809,371 24,332,967
------------ ------------ ------------
Weighted Average Shares (Fully
Diluted) 48,722,284 39,467,062 30,264,304
------------ ------------ ------------
The accompanying notes to the condensed consolidated financial statements available in the company quarterly statement for the period ended December 31, 2006, as filed with the Securities and Exchange Commission, are an integral part of these statements.
THINK PARTNERSHIP INC.
CONSOLIDATED BALANCE SHEET
December 31, 2006 and 2005
2006 2005
------------- ------------
Assets
Current Assets
Cash and Cash Equivalents $3,031,488 $2,609,114
Restricted Cash 1,164,216 828,804
Accounts Receivable 11,466,681 4,256,879
Allowance for Doubtful Accounts (68,920) (33,280)
Notes Receivable - Related Party 0 280,175
Refundable Corporate Income Taxes 715,814 1,526,968
Deferred Tax Asset 0 205,361
Prepaid Expenses and Other Current Assets 856,726 734,544
------------- ------------
Total Current Assets 17,166,005 10,408,565
Property And Equipment, Net 4,010,647 3,253,078
------------- ------------
Other Assets
Goodwill 79,140,787 32,959,252
Intangible Assets 19,819,652 10,300,248
Other Assets 260,048 573,176
------------- ------------
Total Other Assets 99,220,487 43,832,676
------------- ------------
Total Assets $120,397,139 $57,494,319
------------- ------------
Liabilities And Shareholders' Equity
Current Liabilities
Notes Payable - Current Portion $208,333 $5,262
Notes Payable - Related Party 37,326 429,761
Accounts Payable 6,335,623 3,443,603
Deferred Revenue 2,076,537 2,831,656
Client Prepaid Media Buys 168,002 774,877
Accrued Expenses 1,206,776 1,305,322
Deferred Tax Liabilities 613,965 0
Other Current Liabilities 496,731 3,979
------------- ------------
Total Current Liabilities 11,143,293 8,794,460
Long-Term Liabilities 15,930,020 10,052,329
Series A Redeemable Preferred -- 26,500
shares authorized, 5,000 issued and
outstanding 3,859,785 0
------------- ------------
Shareholders' Equity
Preferred Stock, $.001 Par Value:
Authorized Shares - 5,000,000 - None
Issued Or Outstanding 0 0
Common Stock, $.001 Par Value:
Authorized Shares - 200,000,000
Issued Shares - 66,876,794 in 2006 and
38,222,030 In 2005
Outstanding Shares - 64,228,120 In 2006
and 35,722,030 In 2005 66,877 38,222
Additional Paid In Capital 103,055,090 42,375,320
Accumulated Deficit (12,986,723) (3,320,016)
Accumulated Other Comprehensive Income 172,678 94,004
Treasury Stock (843,881) (540,000)
------------- ------------
Total Shareholders' Equity 89,464,041 38,647,530
------------- ------------
Total Liabilities And Shareholders' Equity $120,397,139 $57,494,319
------------- ------------
The accompanying notes to the condensed consolidated financial statements available in the company quarterly statement for the period ended December 31, 2006, as filed with the Securities and Exchange Commission, are an integral part of these statements.
Revenue and Reconciliation of Pre-Tax Income to Adjusted EBITDA by Segment
In addition to other measures, management evaluates the operating results of each of its segments based upon revenue and "EBITDA," which is defined as net income before depreciation and amortization, interest expense and income taxes, each of which is presented on the company's Consolidated Statements of Operations. The company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. It is not practical to provide a reconciliation of forecasted EBITDA margin for the full year 2007 to the most directly comparable GAAP measure, pre-tax income, because certain items cannot be reasonably estimated or predicted at this time. Any of these items could be significant to the company's financial results. The following tables summarize revenues and EBITDA for reportable segments, as well as reconcile EBITDA to pre-tax income, for the last eight quarterly periods:
2006
Quarters Ended
---------------------------------------------------
March 31 June 30 September 30 December 31
---------------------------------------------------
Revenue by Segment
Network $1,762,926 $5,730,807 $5,264,785 $3,898,977
Direct 1,339,689 3,910,549 6,319,560 6,096,065
Advertising 5,318,811 6,666,458 7,023,294 6,300,977
Consumer 3,793,214 3,125,640 3,233,813 2,794,971
Elimination (164,246) (131,818) (280,731) (121,413)
---------------------------------------------------
Total Revenue $12,050,394 $19,301,636 $21,560,721 $18,969,577
---------------------------------------------------
EBITDA
Reconciliation
---------------------------------------------------
Pre tax ($1,155,133) $125,094 $1,483,589 $951,507
Amortization 781,634 1,243,778 1,510,157 1,628,089
Amortization-
Stock Options 162,534 138,506 192,100 (179,027)
Depreciation 278,007 297,272 326,360 362,529
Net Interest
Expense 241,521 190,156 230,717 230,550
Derivative
Adjustment 0 24,940 36,656 (340,966)
---------------------------------------------------
TOTAL EBITDA $308,563 $2,019,746 $3,779,579 $2,652,682
---------------------------------------------------
EBITDA By Segment
Network $341,063 $1,741,963 $2,118,252 $1,458,719
Direct 844,443 1,686,777 2,390,968 1,796,325
Advertising 181,315 27,054 207,080 (211,147)
Consumer 227,840 (17,673) 577,065 603,578
Corporate (1,286,098) (1,418,375) (1,513,786) (994,793)
---------------------------------------------------
Total EBITDA $308,563 $2,019,746 $3,779,579 $2,652,682
---------------------------------------------------
2005
Quarters Ended
--------------------------------------------------
March 31 June 30 September 30 December 31
--------------------------------------------------
Revenue by Segment
Network $193,236 $1,526,928 $1,942,160 $1,409,220
Direct 0 0 0 0
Advertising 7,152,012 6,919,853 7,068,655 5,977,075
Consumer 1,869,944 1,934,949 2,327,007 2,581,640
Elimination (42,713) (66,924) (88,583) (263,729)
--------------------------------------------------
Total Revenue $9,172,479 $10,314,806 $11,249,239 $9,704,206
--------------------------------------------------
EBITDA
Reconciliation
--------------------------------------------------
Pre tax $543,373 $373,098 $941,681 ($1,824,798)
Amortization 178,346 385,204 477,252 506,057
Amortization- Stock
Options 0 0 0 0
Depreciation 114,354 148,801 191,466 224,982
Net Interest
Expense (43,562) 815 55,704 81,607
Derivative
Adjustment 0 0 0 0
--------------------------------------------------
TOTAL EBITDA $792,511 $907,918 $1,666,103 ($1,012,152)
--------------------------------------------------
EBITDA By Segment
Network $23,768 $527,913 $634,737 ($16,315)
Direct 0 0 0 0
Advertising 770,843 224,835 548,177 (512,689)
Consumer 520,251 679,772 924,625 510,610
Corporate (522,351) (524,602) (441,436) (993,758)
--------------------------------------------------
Total EBITDA $792,511 $907,918 $1,666,103 ($1,012,152)
--------------------------------------------------
Contact:
Think Partnership Inc.
Jody Brown, CFO, 727-324-0046, ext. 123
jody.brown@thinkpartnership.com
or
The Liolios Group, Inc.
Eric Souders or Geoffrey Plank, 949-574-3860
scott@liolios.com
--------------------------------------------------------------------------------
Source: Think Partnership Inc.
Golden Cross
18 years ago
Think Partnership Acquires Litmus Media and Closes Sale of $26.5 Million of Convertible Preferred Stock
Thursday April 6, 9:03 am ET
Litmus Media's unique click fraud prevention and abandoned shopping cart re-marketing technologies promise to maximize value to advertising clients
NORTHBROOK, Ill.--(BUSINESS WIRE)--April 6, 2006--In a move designed to address the pervasive click fraud problem plaguing interactive advertising and to help advertising clients market online more effectively, Think Partnership Inc.("THK") (AMEX:THK - News; the "Company") today announced that it has successfully closed e acquisition of Litmus Media, Inc., a Missouri corporation ("Litmus"). In a related transaction, the Company also announced today that it has closed on its sale of $26.5 million of convertible preferred stock.
ADVERTISEMENT
Based in Kansas City, Missouri, Litmus has built click fraud protected advertising distribution technologies for the performance-based advertising, search marketing, and e-retailing industries. The ValidClick Search Network (http://www.validclick.com) serves pay-per-click search advertising, local search advertising, shopping comparison and coupon content to over 1,000 search engines and web directories processing over 90 million searches per month. The company's real-time click fraud prevention technologies allow Litmus to deliver high quality conversions for pay per click advertisers, and in turn, allow Litmus to provide higher revenues-per-click to search publishers. Litmus has also leveraged its proprietary technologies to develop and operate a profitable portfolio of web properties including online yellow page services, local city directories, a meta-shopping search engine, product/coupon search sites, and an affinity-based web search engine.
In the merchant solutions arena, Litmus provides online merchants with a unique patent-pending order abandonment recovery technology, called Second Bite, helping online retailers increase sales by automatically following up with abandoned shoppers to help them complete their purchases. Litmus generated over $2 million dollars of pre-tax earnings in the twelve-month period ending September 30, 2005 and management expects Litmus to grow to approximately $4 million in pre- tax earnings in the twelve-month period ending December 31, 2006.
In the acquisition, the Company paid $6,500,000 in cash, and issued 3,250,000 shares of THK common stock valued at $2.00 per share. Further, the shareholders of Litmus may receive earnout payments of up to $19,950,000 in the aggregate based on the aggregate pre-tax earnings of Litmus for the first 12 calendar quarters following the closing. To the extent earned, up to $10,500,000 of the earnout payment will be paid in shares of the Company's common stock valued at the average closing price per share of the 30 trading days prior to issuance and up to $9,450,000 will be paid in cash. In addition, in the event the shareholders of Litmus are entitled to any earnout payments, the Company has agreed to capitalize a bonus pool for the pre-acquisition employees of Litmus in an amount not to exceed $1,050,000. Further, the Company has issued to certain shareholders of Litmus warrants to purchase an aggregate of 90,000 shares of the Company's common stock, and has established a pool of warrants to purchase up to 40,000 shares of the Company's common stock to be issued to certain employees of Litmus.
Litmus President and General Counsel Tobias Teeter stated, "After considering term sheets from several top tier venture capital firms, we chose to merge with Think Partnership because of the value the merger will add to our businesses. Combining Litmus and THK core assets and industry expertise will further accelerate the growth of our two operating companies: ValidClick, Inc. and Second Bite, LLC. We look forward to integrating our technology-based advertising platforms and networks as part of Think Partnership's full-service, comprehensive portfolio of interactive advertising solutions."
Litmus Chief Executive Officer John Linden stated, "Now that our merger with Think Partnership is complete, we look forward to integrating our business and technologies into the Think family. Both click fraud and shopping cart abandonment are huge issues facing the online advertising industry and we are excited to be able to offer our technologies through all the Think companies to address these issues for advertisers. There are many ways to integrate our patent-pending click fraud protection and shopping cart abandonment recovery technologies with other Think products increasing the overall services Think Partnership can provide to advertisers."
Both Teeter and Linden will continue to run Litmus Media as General Counsel and CEO, respectively.
Think Partnership Chief Executive Officer Gerard M. Jacobs, stated, "Litmus Media's click fraud technology is growing and highly profitable because it helps restore transparency and integrity to online commerce. John Linden and Toby Teeter will play a big role in the technological integration and growth of Think Partnership and we are very excited to have them join us."
T. Benjamin Jennings, chairman of Think Partnership, stated, "The underlying talent, vision and experience of the Litmus organization, combined with their proprietary technology, makes this opportunity one of the most dynamic business combinations of the interactive advertising space. The quality of our integrated service offerings and the capabilities of our network will set a new standard of relevance, effectiveness and integrity for our industry."
Scott P. Mitchell, president of Think Partnership, added, "As click fraud continues to artificially increase the cost of online advertising, erode the return on investment to advertisers, and continues to reach beyond search marketing into affiliate marketing and display advertising, we feel that Litmus' reliable solution to protect our advertising clients' investment is a key ingredient to being more effective in maximizing the ROI from their online advertising spend and provides us with a competitive, proprietary, competitive advantage in the marketplace. Additionally, the Second Bite abandoned shopping cart re-marketing technology will enable us to enhance the conversion ratio and further improve the effectiveness of our network for our clients. In addition to Litmus Media's impressive technologies, we are also very excited about the distribution of the ValidClick search network and we intend to immediately expand and further monetize the 90 million searches per month by introducing our direct advertiser relationships."
The Company also announced today that it has successfully sold, in a private placement, $26.5 million of Series A Convertible Preferred Shares to institutional investors. As described below, the preferred stock is convertible into shares of the Company's common stock upon the occurrence of certain events. If not converted, the Company will be required to redeem the preferred stock on the second anniversary of its issuance. The holders of the preferred stock will initially be paid dividends on the preferred stock equal to 10% of the face value of the preferred stock. The holders of the preferred stock have the right to convert their holdings into shares of common stock at a price of $2.00 per share subject to possible adjustments from time to time. In connection with the preferred stock offering, the Company also issued warrants to the institutional investors, exercisable for five years, to purchase up to 5,300,000 shares of common stock at an initial exercise price of $2.50 per share, subject to adjustments from time to time if the Company issues common stock, other than in connection with acquisitions or pursuant to a shareholder-approved incentive plan, at a price less than $2.50 per share.
The Company is obligated to file, within 45 business days following the closing, a registration statement covering the shares of common stock issuable upon conversion of the preferred stock, and the shares of common stock issuable upon the exercise of the warrants. If the registration statement does not become effective within 120 days following the closing, then the dividend rate on the preferred stock will increase to 15%. The maximum potential damages payable by the Company in regard to a default, including the increase in the amount of the dividends payable if the registration statement does not become effective within 120 days following the closing, are capped at 10% of the amount of the preferred stock, or $2.65 million. If the registration statement does not become effective within 180 days following the closing, the Company will be deemed to be in default and the preferred stock will be subject to mandatory redemption at the option of the holders. If the registration statement becomes effective within the required timeframe, the dividend rate on the preferred stock will be reduced to 6% per annum. The preferred stock is subject to mandatory conversion at the option of the Company, if among other things, the registration statement is effective, and the closing price of the Company's common stock is $5 or higher for 20 consecutive trading days with an average daily trading volume of at least 100,000 shares traded per day during the twenty day period.
The Company has used $6.5 million of the net proceeds, estimated to be approximately $24.8 million, to complete the previously announced purchase of Litmus Media, Inc. and the remainder for general corporate purposes.
The offering and sale of the securities described herein is being made by the Company pursuant to exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). None of the securities have been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
Think Partnership Inc. is based in Northbrook, Ill. and provides online and off-line marketing, advertising, public relations, branding, and shopping evaluation services; search engine optimization and marketing services, opt-in email marketing, and pay-per-click campaign management; online dating; web design, custom web-based applications, database systems, managed and shared hosting solutions, e-commerce and high-speed business Internet access; software for affiliate marketing and affiliate marketing services; online education; and marketing to expectant parents (see www.thinkpartnership.com).