INSWEB CORPORATION

(in thousands)

(unaudited)

		June 30, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents		$	5,772		$	9,238
Accounts receivable, net		1,977			1,450
Prepaid expenses and other current assets		453			711
Restricted cash		2,105			—
Total current assets		10,307			11,399
Related party receivables		307			304
Property and equipment, net		179			249
Other assets		269			329
Total assets		$	11,062		$	12,281
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	2,064		$	2,138
Accrued expenses		769			1,014
Deferred revenue		465			437
Total current liabilities		3,298			3,589
Commitments and contingencies
Stockholders’ equity:
Common stock		8			8
Paid-in capital		206,889			206,719
Treasury stock		(6,334		)	(6,334		)
Unrealized gain on available-for-sale securities		—			1
Accumulated deficit		(192,799		)	(191,702		)
Total stockholders’ equity		7,764			8,692
Total liabilities and stockholders’ equity		$	11,062		$	12,281

See accompanying notes.

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INSWEB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months  Ended June 30,							Six Months  Ended June 30,
	2009				2008			2009				2008
Revenues:
Transaction fees	$	7,941			$	8,751		$		17,425		$		21,722
Other	42				58			84				119
Total revenues	7,983				8,809			17,509				21,841
Operating expenses:
Direct marketing	5,334				6,238			11,879				15,543
Sales and marketing	1,671				1,433			3,441				2,728
Technology	901				811			1,859				1,627
General and administrative	643				1,373			1,446				2,399
Total operating expenses	8,549				9,855			18,625				22,297
Income from operations	(566			)	(1,046		)	(1,116			)	(456			)
Interest income	6				60			20				149
Loss before income taxes	(560			)	(986		)	(1,096			)	(307			)
Income tax provision (benefit)	35				(9		)	—				—
Net loss	$		(595	)	$	(977	)	$	(1,096		)	$		(307	)
Net income (loss) per share:
Basic	$		(0.12	)	$	(0.21	)	$	(0.23		)	$	(0.07		)
Diluted	$		(0.12	)	$	(0.21	)	$	(0.23		)	$	(0.07		)
Weighted-average shares used in computing per share amounts
Basic and diluted	4,791				4,689			4,789				4,665

See accompanying notes.

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INSWEB CORPORATION

(in thousands)

(unaudited)

		Six Months Ended  June 30,
		2009			2008
Cash flows from operating activities:
Net loss		$	(1,096	)	$	(307	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Share-based compensation		148			412
Depreciation and amortization		95			74
Related party receivables		(3		)	—
Net changes in operating assets and liabilities:
Accounts receivable		(527		)	69
Prepaid expenses and other current assets		258			126
Other assets		35			—
Accounts payable		(74		)	170
Accrued expenses		(245		)	168
Deferred revenue		28			(7		)
Net cash provided (used) by operating activities		(1,381		)	705
Cash flows from investing activities:
Change in restricted cash		(2,105		)	—
Purchases of intangible assets		—			(225		)
Purchases of property and equipment		(3		)	(80		)
Net cash used in investing activities		(2,108		)	(305		)
Cash flows from financing activities:
Settlement of equity awards		—			(850		)
Proceeds from issuance of common stock through stock plans		23			347
Net cash provided (used) by financing activities		23			(503		)
Net decrease in cash and cash equivalents		(3,466		)	(103		)
Cash and cash equivalents, beginning of period		9,238			10,777
Cash and cash equivalents, end of period		$	5,772		$	10,674

See accompanying notes.

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INSWEB CORPORATION

(unaudited)

1. Business of InsWeb

InsWeb operates an online insurance marketplace that electronically matches consumers and providers of automobile, homeowners and term life insurance. InsWeb has combined knowledge of the insurance industry, technological expertise and close relationships with insurance companies, agents and other providers to develop an integrated online marketplace. InsWeb’s marketplace enables consumers to research insurance-related topics, search for, analyze and compare insurance products, and apply for and receive quotes for coverage for automobile, homeowners and term life insurance. Management believes that InsWeb provides insurance providers with pre-qualified consumers at attractive acquisition costs, with the scalable, cost-efficient distribution capabilities of InsWeb’s Internet-based model.

For the automobile and homeowners insurance products, InsWeb’s principal source of revenues is transaction fees from participating insurance providers. While quotes obtained through InsWeb’s online insurance marketplace are provided to consumers free of charge, InsWeb earns revenues when a qualified lead is delivered to a participating insurance provider or local agent. In certain instances, consumers are provided the opportunity to link directly to a third party insurance provider’s website. In these situations, InsWeb will be paid a fee for that consumer link or click-through.

For term life insurance, the majority of InsWeb’s revenues prior to April 2007 consisted of commissions earned by InsWeb’s insurance agency subsidiary, InsWeb Insurance Services, Inc., upon the sale of a term life insurance policy. InsWeb discontinued the term life agency operation in April 2007 but continued to earn commissions throughout 2007 (in decreasing amounts) on a limited number of policies written prior to the discontinuation of the agency operations. Beginning in 2008, substantially all of InsWeb’s term life insurance revenues were being generated by the sale of leads to third parties and to local agents.

Beginning in 2008, InsWeb began generating both subscription and display advertising revenues from sales of advertising on its Agent Directory pages. These pages display listings of insurance companies and local agents for the consumer to contact.

Beginning in 2009, InsWeb’s health and small business insurance revenues were being generated by the sale of leads to third parties or agents.

InsWeb is subject to all of the risks inherent in the electronic commerce industry and special risks related to the online insurance industry. These risks include, but are not limited to, uncertain economic conditions which could result in lower growth rates, the changing nature of the electronic commerce industry, variations in the availability and cost of acquiring consumer traffic, unpredictability of future revenues, reliance on key customers —insurance carriers, agents and other providers – who are themselves subject to volatility in their operating cycles, and reliance on a third party intermediaries who provide leads to local insurance agents on InsWeb’s behalf. These risks and uncertainties, among others, could cause InsWeb’s actual results to differ materially from historical results or those currently anticipated. In light of InsWeb’s ongoing modifications to its business model to better capitalize on its position as a leading insurance portal, InsWeb believes that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as an indication of future performance. Moreover, there is no assurance that InsWeb will be able to attain or sustain profitability.

2. Basis of Presentation

The condensed consolidated financial statements include the accounts of InsWeb Corporation and its wholly-owned subsidiaries, InsWeb Insurance Services, Inc. and Goldrush Insurance Services, Inc. (“InsWeb” or the “Company”). All significant inter-company accounts and transactions have been eliminated in the consolidated financial statements.

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INSWEB CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

 

None.

ITEM 4T.

CONTROLS AND PROCEDURES

(a)

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

(b)

There has been no change in our internal control over financial reporting during the three months ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II:

OTHER INFORMATION

See Part I, Item 1, “Financial Statements — Note 12 — Commitments and Contingencies.”

ITEM 1A.

RISK FACTORS.

Our future business, operating results and financial condition are subject to various risks and uncertainties, including those disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the U.S. Securities and Exchange Commission. There have been no material changes to the risk factors as so disclosed.

Exhibit Number		Description of Document
31.1		Certification of Chief Executive Officer, pursuant to Exchange Act Rule 13a-14(a).
31.2		Certification of Chief Financial Officer, pursuant to Exchange Act Rule 13a-14(a).
32		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.

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In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 11, 2009	INSWEB CORPORATION
	(Registrant)
	/s/ STEVEN J. YASUDA
	Steven J. Yasuda
	Chief Accounting Officer

 

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EXHIBIT 31.1

INSWEB CORPORATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Hussein A. Enan, Chairman and Chief Executive Officer of InsWeb Corporation, certify that:

(1)

I have reviewed this quarterly report on Form 10-Q of InsWeb Corporation;

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), for the registrant and we have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ HUSSEIN A. ENAN
Dated: August11, 2009	Hussein A. Enan
	Chairman and Chief Executive Officer

 

 

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