UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-16249

INTERNET CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		23-2996071 (I.R.S. Employer Identification Number)
690 Lee Road, Suite 310, Wayne, PA (Address of principal executive offices)		19087 (Zip Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of the Company’s Common Stock, $0.001 par value per share, outstanding as of August 2, 2010 was 36,444,195 shares.

 

 

INTERNET CAPITAL GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q

INDEX

ITEM		PAGE NO.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets — June 30, 2010 (unaudited) and December 31, 2009			6
Consolidated Statements of Operations (unaudited) — Three and Six Months Ended June 30, 2010 and 2009			7
Consolidated Statements of Cash Flows (unaudited) — Six Months Ended June 30, 2010 and 2009			8
Notes to Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			45
Item 4. Controls and Procedures			46
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			47
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49
Item 3. Defaults Upon Senior Securities			49
Item 4. (Removed and Reserved)			49
Item 5. Other Information			49
Item 6. Exhibits			50
Signatures			51
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Although we refer in this Quarterly Report on Form 10-Q (this “Report”) to companies in which we have acquired a convertible debt or an equity ownership interest as our “partner companies” and indicate that we have a “partnership” with these companies, we do not act as an agent or legal representative for any of our partner companies, we do not have the power or authority to legally bind any of our partner companies, and we do not have the types of liabilities in relation to our partner companies that a general partner of a partnership would have.

Our Internet website address is www.icg.com. Unless this Report explicitly states otherwise, neither the information on our website, nor the information on the website of any of our partner companies, is incorporated by reference into this Report.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed by us with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are accessible free of charge through our website as soon as reasonably practicable after we electronically file those documents with, or otherwise furnish them to, the SEC.

The public may read and copy any of the reports that are filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Forward-Looking Statements

Forward-looking statements made with respect to our financial condition, results of operations and business in this Report, and those made from time to time by us through our senior management, are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations and projections about future events but are subject to known and unknown risks, uncertainties and assumptions about us and our partner companies that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

Factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those anticipated in forward-looking statements include, but are not limited to:

	•		economic conditions generally;
	•		capital spending by our partner companies’ customers;
	•		our partner companies’ collective ability to compete successfully against their respective competitors;
	•		rapid developments in the respective markets in which our partner companies operate and our partner companies’ collective ability to respond to such changes in a timely and effective manner;
	•		our ability to deploy capital effectively and on acceptable terms;
	•		our ability to maximize value in connection with divestitures;
	•		our ability to retain key personnel; and
	•		our ability to have continued access to capital and to manage capital resources effectively.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue” or the negative of such terms or other similar expressions. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Report might not occur. For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009, as well as other reports and registration statements filed by us with the SEC.

Our Partner Companies

The results of operations of our partner companies are reported within two segments: the “core” reporting segment and the “venture” (formerly “other holdings”) reporting segment. The core reporting segment includes those partner companies accounted for under the consolidation and equity methods in which ICG owns a principal controlling equity voting interest (54% on average as of June 30, 2010) and in which ICG’s management takes a very active role in providing strategic direction and management assistance. We expect to devote relatively large initial amounts of capital to acquire our core partner companies. The venture reporting segment includes partner companies to which we generally devote less capital than we do to our core companies and, therefore, in which we hold relatively smaller ownership stakes than we do in our core companies (28% on average as of June 30, 2010) and have less influence over their strategic direction and management decisions than we do over those of our core companies.

At June 30, 2010, our consolidated core partner companies consisted of:

GovDelivery Holdings, Inc. (“GovDelivery”)

GovDelivery is a provider of government-to-citizen communication solutions. GovDelivery’s digital subscription management software as a service (SaaS) platform enables government organizations to provide citizens with access to relevant information by delivering new information through e-mail, mobile text alerts, RSS and social media channels from U.S. and U.K. government entities at the national, state and local levels.

ICG Commerce Holdings, Inc. (“ICG Commerce”)

ICG Commerce is a procurement services provider delivering total procurement cost savings through a combination of deep expertise and hosted technology. ICG Commerce provides a comprehensive range of solutions to help companies identify savings through sourcing, realize savings through implementation of purchase-to-pay automation and drive continuous improvements through ongoing category management.

Investor Force Holdings, Inc. (“InvestorForce”)

InvestorForce is a financial software company specializing in the development of online applications for the financial services industry. InvestorForce provides pension consultants and other financial intermediaries with a Web-based enterprise platform that integrates data management with robust analytic and reporting capabilities in support of their institutional and other clients. InvestorForce’s applications provide investment consultants with the ability to conduct real-time analysis and research into client, manager and market movement and to produce timely, automated client reports.

At June 30, 2010, our equity method core partner companies consisted of:

Channel Intelligence, Inc. (“Channel Intelligence”)

Channel Intelligence is a data solutions company that provides innovative suites of services for manufacturers, retailers and publishers that help consumers work with retailers to find and buy products, whether they start at retailer sites, manufacturer sites or destination shopping sites, through the use of Channel Intelligence’s patented optimization technology and data solutions.

Freeborders, Inc. (“Freeborders”)

Freeborders is a provider of technology solutions and outsourcing from China. Freeborders provides industry expertise to North American and European companies specializing in financial services, technology, retail/consumer goods, manufacturing and transportation and logistics. Freeborders’ offerings help companies seeking cost-effective technology solutions.

Metastorm Inc. (“Metastorm”)

Metastorm is a software and service provider of enterprise architecture modeling, business process analysis and business process management software for commercial enterprises and federal and state government organizations. Metastorm’s comprehensive suite of software products enables customers to understand, analyze, automate and continually improve their business processes.

StarCite, Inc. (“StarCite”)

StarCite provides a comprehensive suite of software applications and services to the meeting and events industry. StarCite helps drive efficiencies and cost savings to both corporate buyers and suppliers. Corporate, association and third-party meeting buyers rely on StarCite’s enterprise meeting solutions for workflow, procurement, supply chain management, spend analysis and attendee management. Thousands of industry suppliers rely on the StarCite online marketplace, supplier marketing programs and enabling technologies to increase meeting revenues. StarCite’s international division represents destination management companies and other premier international travel suppliers.

WhiteFence, Inc. (“WhiteFence”)

WhiteFence is a Web services provider used by household consumers to compare and purchase essential home services, such as electricity, natural gas, telephone and cable/satellite television. WhiteFence reaches customers directly through company-owned websites and through its network of exclusive channel partners that integrate the Web services applications into their own business processes and websites.

At June 30, 2010, our venture partner companies consisted of:

Acquirgy, Inc. (“Acquirgy”)

Acquirgy specializes in Search Engine Marketing (SEM) and Direct Response Television (DRTV) services and provides comprehensive account services, as well as creative and production expertise with integrated multichannel software platforms. SEM services include outsourced paid search management, SEM Performance Consulting (SEMpc^TM) for clients managing search internally and search engine optimization. DRTV services include comprehensive script-to-screen DRTV creative, production and media services.

ClickEquations, Inc. (f/k/a Commerce360, Inc.) (“ClickEquations”)

ClickEquations is a software-based search marketing company that improves paid and organic search campaign performance for its clients, which include Internet Retailer 500 and Fortune 100 companies. Its proprietary technology uses advanced mathematics and statistical analysis to optimize campaigns across the entire search chain and deliver improved campaign efficiency and performance.

GoIndustry-DoveBid plc (“GoIndustry”) (LSE.AIM:GOI)

GoIndustry is a leader in auction sales and valuations of used industrial machinery and equipment. GoIndustry combines traditional asset sales experience with innovative e-commerce technology and advanced direct marketing to service the needs of multi-national corporations, insolvency practitioners, dealers and asset-based lenders around the world.

SeaPass Solutions Inc. (“SeaPass”)

SeaPass develops and markets processing solutions that enable insurance carriers, agents and brokers to transmit and receive data in real time by leveraging existing systems to interact automatically. The company’s technology allows access to information in real time, which increases efficiency across all lines of the insurance business.

PART I – FINANCIAL INFORMATION

ITEM 1.		Financial Statements

INTERNET CAPITAL GROUP, INC.

		June 30,				December 31,
		2010				2009
		(Unaudited)
		(in thousands, except per share data)
Assets
Current Assets
Cash and cash equivalents		$	80,757			$	55,481
Restricted cash			54				47
Accounts receivable, net of allowance ($599-2010; $590-2009)			21,306				19,411
Deferred tax assets			8,114				8,147
Income tax receivable			6,422				11,071
Prepaid expenses and other current assets			1,947				2,183
Total current assets			118,600				96,340
Marketable securities			9,333				73,512
Hedges of marketable securities			185				—
Fixed assets, net of accumulated depreciation and amortization ($13,365-2010; $12,086-2009)			4,989				4,177
Ownership interests in partner companies			87,201				97,777
Goodwill			20,588				20,588
Intangibles, net			15,612				15,940
Deferred tax assets			19,371				20,724
Other assets, net			1,046				1,029
Total Assets		$	276,925			$	330,087
Liabilities
Current Liabilities
Current maturities of long-term debt		$	641			$	381
Accounts payable			1,939				1,656
Accrued expenses			2,657				4,464
Accrued compensation and benefits			9,167				12,227
Deferred revenue			8,255				5,912
Total current liabilities			22,659				24,640
Long-term debt)			806				645
Hedges of marketable securities			—				547
Deferred revenue			—				83
Other			923				1,010
Total Liabilities			24,388				26,925
Equity
Internet Capital Group, Inc.’s Stockholders’ Equity
Preferred Stock, $0.01 par value; 10,000 shares authorized, none issued or outstanding			—				—
Common Stock, $0.001 par value; 2,000,000 shares authorized, 38,864 (2010) and 38,796 (2009) issued			39				39
Additional paid-in capital			3,547,532				3,573,347
Treasury Stock, at cost, 2,440 (2010) and 2,440 (2009) shares			(12,031	)			(12,031	)
Accumulated deficit			(3,307,356	)			(3,351,888	)
Accumulated other comprehensive income			9,033				71,198
Total Internet Capital Group, Inc.’s Stockholders’ Equity			237,217				280,665
Noncontrolling Interest			15,320				22,497
Total Equity			252,537				303,162
Total Liabilities and Equity		$	276,925			$	330,087

See accompanying Notes to Consolidated Financial Statements.

INTERNET CAPITAL GROUP, INC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
		(in thousands, except per share data)
Revenues		$	27,377			$	22,077			$	53,671			$	43,729
Operating expenses
Cost of revenue			17,892				14,598				34,824				27,803
Selling, general and administrative			11,011				9,158				21,730				18,374
Research and development			2,645				2,592				5,069				5,240
Amortization of intangible assets			364				77				728				154
Impairment related and other			96				3,790				168				3,820
Total operating expenses			32,008				30,215				62,519				55,391
			(4,631	)			(8,138	)			(8,848	)			(11,662	)
Other income (loss), net			24,627				3,246				64,923				999
Interest income			138				98				199				240
Interest expense			(25	)			(73	)			(69	)			(157	)
Income (loss) before income taxes, equity loss and noncontrolling interest			20,109				(4,867	)			56,205				(10,580	)
Income tax (expense) benefit			411				(421	)			(205	)			(368	)
Equity loss			(4,580	)			(2,924	)			(10,915	)			(7,877	)
Net income (loss)			15,940				(8,212	)			45,085				(18,825	)
Less: Net income attributable to the noncontrolling interest			179				337				553				729
Net income (loss) attributable to Internet Capital Group, Inc.		$	15,761			$	(8,549	)		$	44,532			$	(19,554	)
Basic income (loss) per share:
Net income (loss) attributable to Internet Capital Group, Inc.		$	0.43			$	(0.23	)		$	1.23			$	(0.53	)
Shares used in computation of basic income (loss) per share			36,346				36,666				36,326				36,671
Diluted income (loss) per share:
Net income (loss) attributable to Internet Capital Group, Inc.		$	0.43			$	(0.23	)		$	1.22			$	(0.53	)
Shares used in computation of diluted income (loss) per share			37,074				36,666				36,518				36,671

See accompanying Notes to Consolidated Financial Statements.

INTERNET CAPITAL GROUP, INC.

		Six Months Ended
		June 30,
		2010				2009
		(in thousands)
Operating Activities
Net income (loss)		$	45,085			$	(18,825	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization			1,895				948
Impairment related and other			168				3,820
Equity-based compensation			1,703				2,595
Equity loss			10,915				7,877
Other (income) loss			(64,913	)			(1,053	)
Deferred income taxes			1,386				—
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable, net			(2,039	)			1,657
Tax receivable			4,649				—
Prepaid expenses and other assets			225				765
Accounts payable			283				(204	)
Accrued expenses			(1,982	)			(1,756	)
Accrued compensation and benefits			(3,129	)			(1,481	)
Deferred revenue			2,261				(1,844	)
Other liabilities			(79	)			(18	)
Cash flows provided by (used in) operating activities			(3,572	)			(7,519	)
Investing Activities
Capital expenditures, net			(1,815	)			(1,755	)
Advanced deposits for acquisition of fixed assets			26				(205	)
Change in restricted cash			(7	)			7
Proceeds from sales of marketable securities			64,866				604
Proceeds from sales of partner company ownership interests			1,836				2,177
Acquisitions of ownership interests in partner companies			(434	)			(5,545	)
Cash flows provided by (used in) investing activities			64,472				(4,717	)
Financing Activities
Acquisition of noncontrolling interest in subsidiary equity			(35,253	)			—
Long-term debt and capital lease obligations, net			(147	)			(87	)
Purchase of treasury stock			—				(370	)
Other financing activities			6				(67	)
Cash flows provided by (used in) financing activities			(35,394	)			(524	)
Net increase (decrease) in Cash and Cash Equivalents			25,506				(12,760	)
Effect of exchange rates on cash			(230	)			427
Cash and Cash Equivalents at beginning of period			55,481				89,295
Cash and Cash Equivalents at the end of period		$	80,757			$	76,962

Supplemental noncash investing activities:

A capital lease obligation of $0.6 million was incurred when ICG Commerce entered into a lease for computer software during 2010.

See accompanying Notes to Consolidated Financial Statements.

INTERNET CAPITAL GROUP, INC.

1. The Company

Description of the Company

Internet Capital Group, Inc. (the “Company”) acquires and builds SaaS, technology-enabled business process outsourcing (BPO) and Internet marketing companies that improve the productivity and efficiency of their business customers. Founded in 1996, the Company devotes its expertise and capital to maximizing the success of these companies.

Although the Company refers to companies in which it has acquired a convertible debt or an equity ownership interest as its “partner companies” and indicates that it has a “partnership” with these companies, it does not act as an agent or legal representative for any of its partner companies, it does not have the power or authority to legally bind any of its partner companies, and it does not have the types of liabilities in relation to its partner companies that a general partner of a partnership would have.

2. Significant Accounting Policies

Basis of Presentation

The accompanying Consolidated Financial Statements are unaudited and, in the opinion of management, include all adjustments consisting only of normal and recurring adjustments necessary for a fair presentation of the results for these interim periods. These Consolidated Financial Statements should be read in connection with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Results of operations for the three-and six-month periods ended June 30, 2010 are not necessarily indicative of the results of operations expected for the full year.

The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. The Consolidated Financial Statements also include the following majority-owned subsidiaries for all or a portion of the periods indicated, each of which has been consolidated since the date the Company acquired majority voting control (collectively, the “Consolidated Subsidiaries”).

The Consolidated Balance Sheets include the financial position of GovDelivery, ICG Commerce and Investor Force at June 30, 2010 and December 31, 2009.

The Consolidated Statements of Operations include the results of the following majority-owned subsidiaries:

Three and Six Months Ended June 30,
2010		2009
GovDelivery (1)		ICG Commerce
ICG Commerce		InvestorForce
InvestorForce		Vcommerce (2)

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Significant Accounting Policies — (Continued)

Principles of Accounting for Ownership Interests in Partner Companies

The various interests that the Company acquires in its partner companies are accounted for under one of three methods: the consolidation method, the equity method and the cost method. The applicable accounting method is generally determined based on the Company’s voting interest in a partner company.

Consolidation. Partner companies in which the Company directly or indirectly owns more than 50% of the outstanding voting securities, and for which other stockholders do not possess the right to affect significant management decisions, are generally accounted for under the consolidation method of accounting. Under this method, a partner company’s balance sheet and results of operations are reflected within the Company’s Consolidated Financial Statements, and all significant intercompany accounts and transactions have been eliminated. Participation of other partner company stockholders in the net assets and in the earnings or losses of a consolidated partner company is reflected in the caption “Noncontrolling Interest” in the Company’s Consolidated Balance Sheets and Statements of Operations. Noncontrolling interest adjusts the Company’s consolidated results of operations to reflect only the Company’s share of the earnings or losses of the consolidated partner company. The results of operations and cash flows of a consolidated partner company are generally included through the latest interim period in which the Company owned a greater than 50% direct or indirect voting interest for the entire interim period or otherwise exercised control over the partner company. Upon a reduction of the Company’s ownership interest to below 50% of the outstanding voting securities, the accounting method is generally adjusted to the equity or cost method of accounting, as appropriate, for subsequent periods.

Equity Method. Partner companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to a partner company depends on an evaluation of several factors, including, among others, representation on the partner company’s board of directors and equity ownership level, which is generally between a 20% and a 50% interest in the voting securities of the partner company, as well as voting rights associated with the Company’s holdings in common stock, preferred stock and other convertible instruments in the partner company. Under the equity method of accounting, a partner company’s accounts are not reflected within the Company’s Consolidated Balance Sheets and Statements of Operations. The Company’s share of the earnings or losses of the partner company, as well as any adjustments resulting from prior period finalizations of equity income/losses, are reflected in the caption “Equity loss” in the Company’s Consolidated Statements of Operations. For the three and six months ended June 30, 2010, those prior period finalizations are not material. The carrying values of the Company’s equity method partner companies are reflected in “Ownership interests in partner companies” in the Company’s Consolidated Balance Sheets.

When the Company’s interest in an equity method partner company is reduced to zero, no further losses are recorded in the Company’s Consolidated Financial Statements, unless the Company has guaranteed obligations of the partner company or has committed to additional funding. When the partner company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Cost Method. Partner companies not accounted for under either the consolidation method or equity method of accounting are accounted for under the cost method of accounting. The Company’s share of the earnings or losses of cost method companies is not included in the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations. However, cost method partner company impairment charges are recognized in the Company’s Consolidated Statements of Operations. If circumstances suggest that the value of the partner company has subsequently recovered, such recovery is not recorded.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Significant Accounting Policies — (Continued)

When a cost method partner company qualifies for use of the equity method, the Company’s interest is adjusted retroactively for its share of the past results of its operations. Therefore, prior losses could significantly decrease the Company’s carrying value balance at the time of any such retroactive adjustment.

The Company records its ownership interest in equity securities of partner companies accounted for under the cost method at cost, unless these securities have readily determinable fair values based on quoted market prices, in which case these interests are valued at fair value and classified as marketable securities or some other classification in accordance with guidance for ownership interests in debt and equity securities.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These estimates include evaluation of the Company’s holdings in its partner companies, holdings in marketable securities, asset impairment, revenue recognition, income taxes and commitments and contingencies. These estimates and assumptions are based on management’s best judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, such as the current economic environment, that management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Volatile equity markets and reductions in information technology spending have combined to increase the uncertainty inherent in such estimates and assumptions. It is reasonably possible that the Company’s accounting estimates with respect to the useful life of intangible assets and the ultimate recoverability of ownership interests in partner companies and goodwill could change in the near term and that the effect of such changes on the Company’s financial statements could be material. The Company believes the recorded amount of ownership interests in partner companies and goodwill is not impaired at June 30, 2010.

Ownership Interests in Partner Companies, Goodwill and Intangibles, net

The Company evaluates its equity method ownership interests in partner companies continuously to determine whether an other than temporary decline in the value of a partner company exists and should be recognized. The Company considers the achievement of business plan objectives and milestones, the fair value of each ownership interest in the partner company relative to carrying value, the financial condition and prospects of the partner company, and other relevant factors. The business plan objectives and milestones the Company considers include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as obtaining key business partnerships or the hiring of key employees. Impairment charges are determined by comparing the estimated fair value of our ownership interest in a partner company with its carrying value. Fair value is determined by using a combination of estimating the cash flows related to the relevant asset, including estimated proceeds on disposition, and an analysis of market price multiples of companies engaged in lines of business similar to the company being evaluated. For any partner companies listed on a public stock exchange, the Company compares the stock price of the partner company with its carrying value to determine whether impairment exists.

During the three months ended March 31, 2010 and 2009, the Company recorded impairment charges of $2.9 million and $0.5 million, respectively, due to declines in the fair value of the Company’s equity holdings in GoIndustry that the Company believes are other than temporary. These charges were recorded as reductions to the Company’s basis in GoIndustry during the relevant periods. Accordingly, impairment charges of $2.9 million and $0.5 million are included in “Equity loss” on the Company’s Consolidated Statements of Operations for the six months ended June 30, 2010 and 2009, respectively.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Significant Accounting Policies — (Continued)

The Company tests goodwill for impairment annually during the fourth quarter of each year, or more frequently as conditions warrant, and intangible assets when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company is not aware of any impairment indicators related to goodwill or intangible assets as of June 30, 2010. The Company recorded $4.9 million of goodwill impairment charges associated with Vcommerce during the year ended December 31, 2009. Of this amount, $3.8 million and $1.1 million were recorded during the three months ended June 30, 2009 and the three months ended September 30, 2009, respectively, and included in “Impairment related and other” on the Company’s Consolidated Statement of Operations in the respective period.

At June 30, 2010, the Company’s carrying value of its ownership interests in partner companies totaled $87.2 million, goodwill totaled $20.6 million and intangibles, net totaled $15.6 million. At December 31, 2009, the Company’s carrying value of its ownership interests in partner companies totaled $97.8 million, goodwill totaled $20.6 million and intangibles, net totaled $15.9 million. See Note 3, “Ownership Interest in Partner Companies, Goodwill and Intangibles, net” for additional information regarding our ownership interests in partner companies, goodwill and net intangible assets, as well as related impairment charges.

Revenue Recognition

During the three and six months ended June 30, 2010, the Company’s consolidated revenues were attributable to ICG Commerce, GovDelivery and InvestorForce. During the three and six months ended June 30, 2009, the Company’s consolidated revenues were attributable to ICG Commerce, InvestorForce and Vcommerce.

ICG Commerce generates revenue from strategic sourcing and procurement outsourcing services. Procurement outsourcing services generally include a combination of services and technology designed to help companies achieve unit cost savings and process efficiencies. ICG Commerce earns fees for implementation services, start-up services, content and category management (which may include sourcing as described below), hosting fees, buying center management fees, and certain transaction fees. ICG Commerce estimates the total contract value under these arrangements and generally recognizes revenue under these arrangements, excluding transaction fees and gain-share fees, on a straight-line basis over the term of the contract, which approximates the life of the customer relationship. Additionally, performance-based fees are deferred until the contingency is achieved or it is determined from existing data and past experience that the savings will be achieved, and then generally recognized on a straight-line basis over the life of the contract, which approximates the life of the customer relationship. Sourcing programs are engagements in which ICG Commerce negotiates prices from certain suppliers on behalf of its customers in certain categories in which ICG Commerce has sourcing expertise. Under sourcing programs, either the customer pays a fixed-fee or a gain-share amount for use of the negotiated rates. In fixed-fee sourcing arrangements, revenue is recognized on a proportional performance basis, provided that there is no uncertainty as to ICG Commerce’s ability to fulfill its obligations under the contract or other services that are to be rendered under the contract.

GovDelivery revenues generally consist of nonrefundable setup fees and monthly maintenance and hosting fees. These fees are deferred and recognized as the services are performed, which is typically over the service term. Costs related to performing set-up services are expensed as incurred. Revenue from labor law posters are recognized upon delivery provided a purchase order has been received, the price to the buyer is fixed or determinable and collectibility is reasonably assured. Revenues from update and subscription services for labor law posters are deferred and recognized ratably over the service term.

Investor Force generates revenue from license fees earned in connection with hosted services, setup fees and support and maintenance fees. Hosted services primarily consist of data aggregation, performance calculation, real-time analysis and automated production of performance reports for the institutional investment community. Generally, a minimum quarterly base fee is charged for hosted services. These minimum fees are recognized on a pro rata basis over the service term. As the volume of client accounts increases, additional fees apply. These additional fees are recognized in the period in which account volumes exceed the contract minimum. Set-up and support and maintenance fees are deferred and recognized ratably over the service term.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Significant Accounting Policies — (Continued)

Vcommerce generated revenue from service fees earned in connection with the development and operation of its clients’ e-commerce businesses. Service fee revenue primarily consisted of transaction fees, implementation fees and professional services, as well as access and maintenance fees. Vcommerce recognized revenue from services provided when the following revenue recognition criteria were met: persuasive evidence of an arrangement existed, services had been rendered, the fee was fixed or determinable and collectibility was reasonably assured. Generally, Vcommerce recognized revenue related to implementation as well as access and maintenance services over the term of the customer contract, and it recognized revenue from transaction fees and professional services fees as services were rendered.

Concentration of Customer Base and Credit Risk

For the three months ended June 30, 2010, two customers of ICG Commerce, The Hertz Corporation (“Hertz”) and Kimberly-Clark Corporation (“Kimberly-Clark”), each represented approximately 11% of the Company’s consolidated revenue. For the six months ended June 30, 2010, those customers each represented approximately 11% of the Company’s consolidated revenue. For the three months ended June 30, 2009, Hertz and Kimberly-Clark represented approximately 14% and 13%, respectively, of the Company’s consolidated revenue. For the six months ended June 30, 2009, those customers each represented approximately 14% of the Company’s consolidated revenue. Accounts receivable from Hertz and Kimberly-Clark as of June 30, 2010 were $1.8 million and $1.1 million, respectively. Accounts receivable from Hertz and Kimberly-Clark as of December 31, 2009 were $1.7 million and $1.5 million, respectively. The accounts receivable balances as of June 30, 2010 for these customers included $0.5 million and $0.1 million, respectively, of unbilled accounts receivable. The accounts receivable balances as of December 31, 2009 for these customers included $0.2 million and $0.1 million, respectively, of unbilled accounts receivable.

Reclassifications

Certain amounts in the prior-year financial statements have been reclassified to conform with the current presentation. The impact of these changes is not material and did not affect net income (loss).

Recent Accounting Pronouncements

In February 2010, the FASB issued amended guidance that requires an SEC reporting company to evaluate subsequent events through the date that the financial statements are issued, but no longer requires the SEC reporting company to disclose the date through which subsequent events are evaluated. This guidance became effective for the Company upon issuance and did not have a significant impact on its consolidated financial statements.

In January 2010, the FASB issued amended guidance requiring additional fair value disclosures related to inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers between levels in the hierarchy of fair value measurement. This guidance became effective for the Company beginning on January 1, 2010 and did not have a significant impact on its consolidated financial statements.

In October 2009, the FASB issued accounting guidance related to revenue recognition for transactions with multiple deliverables, which impacts the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. This guidance is effective for the Company beginning on January 1, 2011. The Company is currently evaluating the effect this guidance will have on its consolidated financial statements.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Significant Accounting Policies — (Continued)

In October 2009, the FASB issued accounting guidance related to certain revenue arrangements that include software elements, which amends the scope of pre-existing software revenue guidance. This guidance is effective for the Company beginning on January 1, 2011. The Company is currently evaluating the effect this guidance will have on its consolidated financial statements.

In June 2009, the FASB issued accounting guidance that requires former “qualifying special-purpose entities” to be evaluated for consolidation, changes the approach to determining a variable interest entity’s primary beneficiary and revises the frequency with which reassessments of this determination should be made, and requires additional disclosures related to these items. This guidance became effective for the Company beginning on January 1, 2010 and did not have a significant impact on its consolidated financial statements.

3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net

The Company’s ownership interests in partner companies accounted for under the equity method were $87.2 million and $97.8 million as of June 30, 2010 and December 31, 2009, respectively. The Company had no ownership interests in partner companies accounted for under the cost method that are not public companies (marketable securities) as of June 30, 2010 and December 31, 2009.

The following table summarizes the Company’s goodwill in consolidated partner companies:

		(in thousands)
Goodwill as of December 31, 2009		$	20,588
Activity during the six months ended June 30, 2010			—
Goodwill as of June 30, 2010		$	20,588

As of June 30, 2010 and December 31, 2009, all of the Company’s goodwill was allocated to the core reporting segment.

The following table summarizes the Company’s intangible assets (in thousands):

						As of June 30, 2010
						Gross Carrying				Accumulated				Net Carrying
Intangible Assets		Useful Life				Amount				Amortization				Amount
Customer relationships		11 years				$	13,910			$	(632	)		$	13,278
Trademarks/trade names		11 years					1,320				(60	)			1,260
Technology		10 years					710				(36	)			674
							15,940				(728	)			15,212
Other intellectual property		Indefinite					400				—				400
						$	16,340			$	(728	)		$	15,612

						As of December 31, 2009
						Gross Carrying				Accumulated				Net Carrying
Intangible Assets		Useful Life				Amount				Amortization				Amount
Customer relationships		11 years				$	13,910			$	—			$	13,910
Trademarks/trade names		11 years					1,320				—				1,320
Technology		10 years					710				—				710
						$	15,940			$	—			$	15,940

Amortization expense for the three and six months ended June 30, 2010 was $0.4 million and $0.7 million, respectively. Amortization expense for the three and six months ended June 30, 2009 was $0.1 million and $0.2 million, respectively. The Company amortizes intangible assets using the straight-line method.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net — (Continued)

Remaining estimated amortization expense is as follows:

		(in thousands)
2010 (remaining six months)		$	728
2011			1,456
2012			1,456
2013			1,456
2014			1,456
Thereafter			8,660
Remaining amortization expense		$	15,212

Acquisitions — Consolidated Companies

On December 31, 2009, the Company acquired 89% of the equity of GovDelivery, which was accounted for under the acquisition method. The Company allocated the purchase price to the assets and the liabilities based upon their respective fair values at the date of acquisition, which were as follows:

		GovDelivery
		(in thousands)
Net assets acquired:
Goodwill		$	3,644
Customer lists (11-year life)			13,910
Trademarks/trade names (11-year life)			1,320
Technology (10-year life)			710
Other net assets (liabilities)			1,506
			21,090
Noncontrolling interest (1)			(1,420	)
		$	19,670

The Company completed its acquisition of GovDelivery on December 31, 2009. Therefore, results of GovDelivery’s operations are not included in the Company’s Consolidated Statement of Operations for the six months ended June 30, 2009. Also, the Company acquired an additional 12% voting equity interest in ICG Commerce on May 5, 2010. Accordingly, 76% of ICG Commerce’s results are included in the Company’s Consolidated Statement of Operations beginning on May 5, 2010, compared with 64% prior to that date. Revenue, net income (loss) attributable to Internet Capital Group, Inc. and net income (loss) per diluted share attributable to Internet Capital Group, Inc. would have been $53.7 million, $44.8 million and $1.23 per diluted share, respectively, for the six months ended June 30, 2010, had the Company owned 76% of ICG Commerce for that entire period. Revenue, net income (loss) attributable to Internet Capital Group, Inc. and net income (loss) per diluted share attributable to Internet Capital Group, Inc. would have been $24.1 million, $(8.7) million and $(0.24) per diluted share, respectively, for the three months ended June 30, 2009, had the Company owned 89% and 76% of GovDelivery and ICG Commerce, respectively, for that entire period. Revenue, net income (loss) attributable to Internet Capital Group, Inc. and net income (loss) per diluted share attributable to Internet Capital Group, Inc. would have been $48.0 million, $(19.7) million and $(0.54) per diluted share, respectively, for the six months ended June 30, 2009, had the Company owned 89% and 76% of GovDelivery and ICG Commerce, respectively, for that entire period.

During the quarter ended June 30, 2010, the Company acquired an additional 12% equity voting interest in ICG Commerce from an existing stockholder of ICG Commerce for aggregate cash consideration of $35.3 million. As a result of this acquisition, which was consummated on May 5, 2010, the Company increased its voting ownership interest in ICG Commerce from 64% to 76%. This increase in the Company’s controlling interest in ICG Commerce resulted in a reduction to the noncontrolling interest balance related to ICG Commerce to reflect the decrease in the noncontrolling interest ownership. Accordingly, the Company recorded a decrease of $7.6 million to “Noncontrolling Interest” and recorded the remaining purchase price of $27.6 million as a decrease to “Additional paid-in capital” on the Company’s Consolidated Balance Sheets. See Note 9, “Equity” for further discussion of the effects of the changes in the Company’s ownership interest in ICG Commerce on the Company’s equity.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net — (Continued)

On July 1, 2010, the Company acquired an additional equity voting interest in ICG Commerce pursuant to a tender offer that the Company made to all of the stockholders of ICG Commerce other than ICG Commerce employees and the holders of ICG Commerce’s Series F Preferred Stock. The aggregate cash consideration paid for the additional equity voting interest, which represents approximately 5% of ICG Commerce, was $14.4 million. As a result of this transaction, the Company increased its ownership interest in ICG Commerce from 76% to 81%. The Company will account for this transaction by recording additional reductions to the noncontrolling interest balance related to ICG Commerce and Internet Capital Group, Inc.’s additional paid-in capital during the quarter ending September 30, 2010.

Dividends — Consolidated Companies

On August 4, 2010, ICG Commerce paid a cash dividend in the aggregate amount of $27.0 million on its Series E and E-1 Preferred Stock. The Company received its share of this dividend, $25.4 million, on that date.

Impairments — Consolidated Companies

During the three months ended June 30, 2009, the Company concluded that the estimated value of Vcommerce had declined. Accordingly, the Company performed its goodwill impairment testing as described in Note 2, “Significant Accounting Policies,” and determined that an impairment of goodwill of $3.8 million was required. This impairment charge is included in “Impairment related and other” on the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2009.

Equity Method Companies

The following unaudited summarized financial information relates to the Company’s partner companies accounted for under the equity method of accounting as of June 30, 2010 and December 31, 2009. This aggregate information has been compiled from the financial statements and capitalization tables of the Company’s individual equity method partner companies.

Balance Sheets (Unaudited) ⁽¹⁾

		June 30, 2010				December 31, 2009
		(in thousands)
Cash, cash equivalents and short-term investments		$	52,194			$	71,961
Other current assets			58,353				59,943
Other non-current assets			159,300				157,639
Total assets		$	269,847			$	289,543
Current liabilities		$	111,383			$	121,352
Non-current liabilities			26,271				12,337
Long-term debt			10,728				14,014
Stockholders’ equity			121,465				141,840
Total liabilities and stockholders’ equity		$	269,847			$	289,543
Total carrying value		$	87,201			$	97,777

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net — (Continued)

At June 30, 2010, the Company’s aggregate carrying value in equity method partner companies exceeded the Company’s share of net assets of these equity partner companies by $49.2 million. Of this excess, $36.5 million has been allocated to goodwill, which is not amortized, and $12.7 million has been allocated to intangibles, which are generally amortized over a range of three to seven years. Amortization expense associated with these intangibles was $0.7 million and $1.4 million for the three and six months ended June 30, 2010, respectively. Amortization expense associated with these intangibles was $0.5 million and $0.9 million for the three and six months ended June 30, 2009, respectively. This amortization expense is included in the line item “Amortization of intangible assets” in the following table and in the line item “Equity loss” on the Company’s Consolidated Statements of Operations.

Results of Operations (Unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2010 (1)				2009 (2)				2010 (1)				2009 (2)
		(in thousands)								(in thousands)
Revenue		$	58,357			$	57,363			$	115,509			$	112,615
Net income (loss)		$	(9,853	)		$	(7,296	)		$	(18,119	)		$	(18,469	)
Equity loss excluding impairments and amortization of intangible assets		$	(3,882	)		$	(2,429	)		$	(6,596	)		$	(6,385	)
Impairment charge of GoIndustry			—				—				(2,914	)			(544	)
Amortization of intangible assets			(698	)			(495	)			(1,405	)			(948	)
Total equity loss		$	(4,580	)		$	(2,924	)		$	(10,915	)		$	(7,877	)

Other Equity Company Information

In January 2009, the Company purchased $1.4 million of convertible long-term notes from GoIndustry. In September 2009, in conjunction with a financing transaction, these long-term notes were converted to 569,526 shares of GoIndustry common stock, and the Company purchased an additional 638,888 shares of GoIndustry common stock for approximately $1.9 million. In February 2010, GoIndustry issued shares of common stock as contingent consideration in connection with an acquisition in February 2008. As a result of this issuance, the Company’s ownership interest in GoIndustry was reduced slightly. The reduction in the Company’s ownership in GoIndustry was accounted for as a disposition of shares and resulted in a dilution loss of $0.1 million during the six months ended June 30, 2010, which was recorded in “Other income (loss), net” on the Company’s Consolidated Statements of Operations. After a 100-for-1 reverse stock split that occurred during the three months ended June 30, 2010, the Company owns 2,546,743 shares of GoIndustry common stock, which represents 26% of the outstanding shares as of June 30, 2010. Adjusting for the 100-for-1 reverse stock split, the Company owned 2,546,743 shares of GoIndustry common stock, or 26% of the outstanding shares as of December 31, 2009, as compared to 1,338,328 shares of GoIndustry common stock, or 29% of the outstanding shares, as of June 30, 2009. Given the Company’s 26% ownership, GoIndustry continues to be accounted for under the equity method.

During the six months ended June 30, 2010 and 2009, the Company determined that its equity holdings in GoIndustry common stock experienced other-than-temporary declines in fair market value. As a result, the Company recorded impairment charges of $2.9 million and $0.5 million during the six months ended June 30, 2010 and 2009, respectively, to reduce the Company’s carrying value to GoIndustry’s fair market value based on the fair value “Level 1” observation, as defined in Note 5, “Financial Instruments.” The carrying value of the Company’s equity holdings in GoIndustry was $2.5 million and $5.7 million as of June 30, 2010 and December 31, 2009, respectively.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net — (Continued)

During the three months ended June 30, 2010, the Company purchased $0.4 million of convertible long-term notes from ClickEquations. This transaction did not change the Company’s equity ownership in ClickEquations.

In February 2009, the Company entered into certain arrangements to guarantee approximately $3.6 million of debt for StarCite. This amount, which had been placed in an escrow account at the time of the arrangement, was classified as restricted cash as of March 31, 2009. The Company repaid the underlying debt in full in May 2009, and received additional ownership interest in StarCite. Accordingly, the Company’s ownership in the partner company increased to 35% as of June 30, 2009 from 34% as of March 31, 2009. In addition, the Company recorded a decrease to restricted cash by the amount paid.

Escrow Information

On June 10, 2010, the Company received a distribution of $1.8 million of previously escrowed funds, which was the final escrow release related to the sale of the Company’s former partner company, Marketron International, Inc. (“Marketron”). This distribution included $0.1 million of interest, which is recorded in “Interest income” on the Company’s Consolidated Statements of Operations. On March 1, 2010, 46,751 shares of IntercontinentalExchange, Inc. (“ICE”) common stock were released from escrow to the Company. These shares related to sale consideration that was set aside to satisfy potential purchase price adjustments and/or potential indemnity claims in connection with the sale of Creditex Group, Inc. (“Creditex”) to ICE on August 29, 2008. The Company recorded a gain of $5.0 million related to the release of these shares from escrow based on the closing stock price of ICE’s common stock on March 1, 2010. On May 5, 2010, the Company received 305 shares of ICE common stock in connection with the resolution of an outstanding indemnity claim. Based on the closing price of ICE’s common stock on May 5, 2010, the Company recorded a gain of less than $0.1 million during the three months ended June 30, 2010 as a result of such receipt. The gains related to these escrow distributions are recorded in “Other income (loss), net” on the Company’s Consolidated Statements of Operations. Immediately following each receipt of the ICE shares from escrow, the Company sold the shares for proceeds of less than $0.1 million and $5.2 million during the three and six months ended June 30, 2010, respectively. The Company recognized an incremental gain of $0.1 million during the three months ended March 31, 2010, which was also recorded in “Other income (loss), net” on the Company’s Consolidated Statements of Operations for the six months ended June 30, 2010.

As of June 30, 2010, the Company had 13,069 outstanding shares of ICE common stock, valued at $1.5 million based on the June 30, 2010 closing stock price of ICE’s common stock, remaining in escrow. Additionally, the Company had outstanding aggregate cash proceeds, subject to indemnity claims, of $1.2 million associated with escrowed proceeds from sales of former equity method partner companies. The release of additional escrowed proceeds, if any, to the Company would result in additional gains at the time the Company is entitled to such proceeds, the amount is fixed or determinable and realization is assured, which events are anticipated to occur at various times through August 2012.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Marketable Securities and Related Derivatives

Marketable securities represent the Company’s holdings in publicly-traded equity securities accounted for as available-for-sale securities. At June 30, 2010, the Company held a noncontrolling interest in Blackboard, Inc. (“Blackboard”), which is traded on the NASDAQ Global Market (NASDAQ: BBBB). The cost, unrealized holding gains/(losses), and fair value of marketable securities at June 30, 2010 and December 31, 2009 were as follows:

		Blackboard								Unrealized
		Common Shares								Holding
		Owned				Cost				Gains/(Losses)				Fair Value
						(in thousands, except shares)
June 30, 2010			250,000			$	362			$	8,971			$	9,333
December 31, 2009			1,619,571			$	2,342			$	71,170			$	73,512

The amounts reflected as the Company’s cost for Blackboard include the carrying value on the date the partner company converted to marketable securities and the value of warrants exercised.

The table above does not reflect the Company’s holdings of ICE common stock, which were both obtained and sold during the three and six months ended June 30, 2010. See Note 3, “Ownership Interests in Partner Companies, Goodwill and Intangibles, net.”

During the three and six months ended June 30, 2010, the Company sold 581,866 shares and 1,369,571 shares, respectively, of Blackboard common stock at average prices per share of $40.97 and $43.76, respectively. The Company received total proceeds of $23.8 million and $57.9 million during the three and six months ended June 30, 2010, respectively, and recognized a gain on the sale of these securities in the amount of $23.0 million and $59.9 million in those respective periods. These gains are included in “Other income (loss), net” on the Company’s Consolidated Statements of Operations. Subsequent to June 30, 2010, the Company sold 121,587 shares of Blackboard common stock at an average price of $40.17 per share. The Company received total proceeds of $4.9 million and will record a gain on the sale of these securities in the amount of $4.7 million during the three months ended September 30, 2010. As of the time of the filing of this Report, the Company holds 128,413 shares of Blackboard common stock.

As of June 30, 2010, the Company managed its exposure to and benefits from price fluctuations of Blackboard common stock by using derivative securities or hedges. Although these instruments were derivative securities, their economic risks were similar to, and managed on the same basis as, the risks associated with the Blackboard shares the Company holds. As of June 30, 2010, the Company was party to cashless collar contracts with expiration dates between September 15, 2010 and October 15, 2010 to hedge 250,000 shares, its total holdings of Blackboard common stock, at weighted average minimum and maximum prices per share of $29.82 and $67.31, respectively. During the six months ended June 30, 2010, the Company incurred costs of $0.2 million to terminate three cashless collar contracts related to a total of 375,000 shares and recorded a loss of this amount, which is included in “Other income (loss), net” on the Company’s Consolidated Statements of Operations. Additionally, two cashless collar contracts related to a total of 375,000 shares of Blackboard common stock matured during the six months ended June 30, 2010. Since Blackboard’s stock price on the maturity date was within the weighted average minimum and maximum prices per share, the value of the matured hedges were zero and there was no gain or loss associated with the maturity of these contracts. Subsequent to June 30, 2010, the Company terminated the remaining two cashless collar contracts related to a total of 250,000 shares of Blackboard common stock.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Marketable Securities and Related Derivatives — (Continued)

In accordance with applicable accounting rules, the cashless collar contracts are marked to market through earnings each period. The mark-to-market impact is reflected in “Other income (loss), net” for the appropriate period on the Company’s Consolidated Statements of Operations as follows:

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
		(in thousands)
Unrealized gain (loss) on mark-to-market of hedges		$	30			$	894			$	732			$	(2,557	)

The income or loss is primarily driven by the change in the closing price of Blackboard common stock from the beginning of the quarter to the end of the quarter. The mark-to-market impact was generally an expense if Blackboard’s stock price rose, or income if Blackboard’s stock price declined, during the relevant quarter. The price per share is reflected in the table below as reported by the NASDAQ Global Market:

		Dec 31,				Mar 31,				Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,
		2008				2009				2009				2009				2009				2010				2010
Blackboard closing stock price		$	26.23			$	31.74			$	28.86			$	37.78			$	45.39			$	41.66			$	37.33

The fair value of these instruments was an asset of $0.2 million at June 30, 2010 and a liability of $0.5 million at December 31, 2009, and is included in “Hedges of marketable securities” on the Company’s Consolidated Balance Sheets for each period. See Note 5, “Financial Instruments.”

5. Financial Instruments

Derivative Financial Instruments

The Company utilizes derivative financial instruments, primarily forward exchange contracts and, as of June 30, 2010, Blackboard security hedges, to manage its exposure to and benefits from foreign currency risk and price fluctuations of Blackboard common stock, respectively. During the three and six months ended June 30, 2010, ICG Commerce utilized put options to mitigate the risk of currency fluctuations at ICG Commerce’s operations in the United Kingdom and Europe. The net mark-to-market adjustments recognized by ICG Commerce are detailed in the below table and represent the premiums paid for the options by ICG Commerce, as well as the change in value of the options related to the fluctuation of exchange rates during the respective period. The cashless collar contracts related to Blackboard common stock are discussed in Note 4, “Marketable Securities and Related Derivatives.” These adjustments were recognized in “Other income (loss), net,” on the Company’s Consolidated Statements of Operations.

The following table presents the classifications and fair values of our derivative instruments as of June 30, 2010 and December 31, 2009:

Consolidated Balance Sheets
				June 30,				December 31,
Derivative		Classification		2010				2009
				(in thousands)
Cashless collar contracts		Hedges of marketable securities		$	185			$	(547	)
Foreign exchange put option		Other assets, net		$	77			$	—

The following table presents the mark-to-market impact on earnings resulting from our hedging activities for the periods ended June 30, 2010 and 2009:

Consolidated Statements of Operations
						Three months ended								Six months ended
Derivatives		Classification				June 30,								June 30,
										(in thousands)
							2010				2009				2010				2009
Cashless collar contracts		Other income (loss), net				$	30			$	894			$	732			$	(2,557	)
Foreign exchange put option		Other income (loss), net				$	64			$	(28	)		$	16			$	(28	)

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5. Financial Instruments — (Continued)

Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value; they are as follows:

Level 1 – Observable inputs such as quoted market prices for identical assets and liabilities in active public markets.

Level 2 – Observable inputs other than Level 1 prices based on quoted prices in markets with insufficient volume or infrequent transactions, or valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs to the valuation techniques that are significant to the fair value of the asset or liability.

The fair values of the Company’s financial assets measured at fair value on a recurring basis were as follows:

		Balance at
		June 30,
		2010				Level 1				Level 2				Level 3
		(in thousands)
Cash equivalents (money market accounts)		$	72,524			$	72,524			$	—			$	—
Marketable securities (see Note 4)			9,333				9,333				—				—
Hedges of marketable securities (see Note 5)			185				—				185	(1)			—
Hedges of foreign currency risk (see Note 5)			77				—				77	(1)			—
		$	82,119			$	81,857			$	262			$	—

		Balance at
		December 31,
		2009				Level 1				Level 2				Level 3
		(in thousands)
Cash equivalents (money market accounts)		$	49,972			$	49,972			$	—			$	—
Marketable securities (see Note 4)			73,512				73,512				—				—
Hedges of marketable securities (see Note 5)			(547	)			—				(547	) (1)			—
		$	122,937			$	123,484			$	(547	)		$	—

6. Debt

Long-Term Debt

The Company’s long-term debt of $1.4 million and $1.0 million as of June 30, 2010 and December 31, 2009, respectively, relates to its consolidated partner companies in the respective periods. The long-term debt as of June 30, 2010 is due as follows: $0.6 million is classified as current and is due within one year, and the remaining $0.8 million is due through 2014. The long-term debt as of December 31, 2009 was due as follows: $0.4 million was classified as current and was due within one year, and the remaining $0.6 million was due through 2013.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Debt — (Continued)

Loan and Credit Agreements

On December 18, 2009, the Company entered into an amended and restated loan agreement with Comerica Bank (the “Loan Agreement”) that provides for the issuance of letters of credit of up to $10.0 million, subject to a cash-secured borrowing base as defined by the Loan Agreement. The Loan Agreement expires on December 17, 2010 and replaces the Letter of Credit Agreement, as amended, between the same parties, which expired on December 12, 2009. Issuance fees of 0.50% per annum of the face amount of each letter of credit will be paid to Comerica Bank subsequent to issuance. The Loan Agreement is also subject to a 0.25% per annum unused commitment fee payable to the bank on a quarterly basis. No amounts were outstanding under these agreements at June 30, 2010 or December 31, 2009.

On May 8, 2008, the Company entered into a series of loan agreements with Credit Suisse Capital LLC. Pursuant to these agreements, the Company could, from time to time, borrow funds secured by the cashless collar contracts that the Company previously entered into with respect to its shares of Blackboard common stock. The loans bore interest, which was payable quarterly in arrears, at the three-month U.S. dollar LIBOR rate, computed on the basis of a 30-day month and a 360-day year. This interest rate reset on the first day of each calendar quarter. The maturity of each of the loans corresponded with the expiration of the underlying cashless collar contract. Accordingly, the maturity dates of the loans ranged from March 15, 2010 to October 15, 2010. The maximum borrowing capacity under each of the loan agreements equaled the present value of the minimum value of the underlying cashless collar contract, computed using the three month U.S. dollar LIBOR rate. The Company did not draw any amounts under the loan agreements. Subsequent to June 30, 2010, the Company terminated the remaining cashless collar contracts, which were set to mature by October 15, 2010. Accordingly, these loan agreements were also terminated subsequent to June 30, 2010.

In August 2008, ICG Commerce and a number of its wholly-owned subsidiaries entered into a loan agreement with PNC Bank, pursuant to which ICG Commerce and such subsidiaries were able to borrow up to $10.0 million under a revolving line of credit. The original line of credit matured on December 31, 2009 and was subsequently extended to December 31, 2010. On August 3, 2010, the original line of credit was replaced with a new revolving line of credit that provided for, among other things, an increased $15.0 million total available borrowing amount and a new maturity date of August 2, 2013. Also on August 3, 2010, ICG Commerce and the other borrowing companies under the line of credit received a term loan from PNC Bank in the amount of $20.0 million. ICG Commerce paid a nonrefundable $0.2 million commitment fee to PNC Bank upon the consummation of the new line of credit and term loan.

Both the new line of credit and the term loan are secured by a first priority lien on the assets of the borrowing companies. Interest on any outstanding amounts under the line of credit and/or the term loan is computed at a rate to be selected by ICG Commerce from the following three options: (1) the highest of PNC Bank’s prime rate, the sum of the Federal Funds Open Rates plus 0.5% and the sum of the daily LIBOR rate plus 1.0%, (2) a fixed LIBOR rate, as determined two business days prior to a specified period, plus a margin ranging from 1.75% to 2.5%, depending on the then-current debt-to-EBITDA ratio of the borrowing companies and (3) the daily LIBOR rate, plus a margin ranging from 1.75% to 2.5%, depending on the then-current debt-to-EBITDA ratio of the borrowing companies. ICG Commerce has initially selected option (2) with respect to $10.0 million and option (3) with respect to the remaining $10.0 million that it has borrowed under the term loan. Any outstanding principal and interest under the line of credit will become due and payable periodically through August 2, 2013. The principal under the term loan is payable in $0.3 million monthly installments through August 1, 2015, and any outstanding interest under the term loan will become due and payable periodically through August 1, 2015. Both the line of credit and the term loan are subject to a number of financial and other covenants that are specified in the loan documents. The line of credit provides for the issuance by the bank of up to $5.0 million of letters of credit, subject to specified fees and other terms. The line of credit is also subject to a 0.25% per annum unused commitment fee that is payable to the bank quarterly.

There were no amounts (including letters of credit) outstanding under the original line of credit as of June 30, 2010 or December 31, 2009. Additionally, there were no amounts (including letters of credit) outstanding under the new line of credit as of the time of the filing of this Report. The proceeds from the term loan (which was entered into following the quarter ended June 30, 2010) were used to fund a cash dividend paid to holders of ICG Commerce Series E and E-1 Preferred Stock, including ICG, on August 4, 2010.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. Segment Information

The Company’s reportable segments consist of two reporting segments, the “core” segment and the “venture” segment. All of the Company’s partner companies are included in either the core or venture segment, while companies with respect to which the Company’s equity interests have been designated as marketable securities are considered “corporate” assets. At June 30, 2010, the core segment includes the results of the Company’s consolidated partner companies, records the Company’s share of earnings and losses of certain partner companies accounted for under the equity method of accounting and captures the Company’s basis in the assets of its core segment partner companies. At June 30, 2010, the venture segment records the Company’s share of earnings and losses of certain partner companies accounted for under the equity method of accounting and captures the Company’s basis in the assets of its venture segment partner companies.

The core reporting segment includes those consolidated and equity method partner companies in which ICG owns a principal controlling equity voting interest (54% on average as of June 30, 2010) and in which ICG’s management takes a very active role in providing strategic direction and management assistance. The Company expects to devote relatively large initial amounts of capital to acquire core partner companies. The venture reporting segment includes partner companies in which the Company generally devotes less capital than it does to its core companies and, therefore, in which it holds relatively smaller ownership stakes than it does in its core companies (28% on average as of June 30, 2010) and has less influence over their strategic direction and management decisions than it does over those of its core companies.

Approximately 8% of the Company’s consolidated revenues for both the three and six months ended June 30, 2010 relate to sales generated in the United Kingdom. Approximately 10% of the Company’s consolidated revenues for both the three and six months ended June 30, 2009 relate to sales generated in the United Kingdom. The remaining consolidated revenues for the three and six months ended June 30, 2010 and 2009 primarily relate to sales generated in the United States. As of June 30, 2010 and December 31, 2009, the Company’s assets were located primarily in the United States.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. Segment Information — (Continued)

The following summarizes selected information related to the Company’s segments for the respective periods. All significant intersegment activity has been eliminated. Assets are owned or allocated assets used by each reporting segment.

Segment Information
(in thousands)
										Total				Reconciling Items								Consolidated
		Core				Venture				Segment				Corporate				Other(1)				Results
Three Months Ended June 30, 2010
Revenues		$	27,377			$	—			$	27,377			$	—			$	—			$	27,377
Net income (loss) attributable to Internet Capital Group, Inc.		$	(3,977	)		$	(1,289	)		$	(5,266	)		$	(4,667	)		$	25,694			$	15,761
Three Months Ended June 30, 2009
Revenues		$	22,077			$	—			$	22,077			$	—			$	—			$	22,077
Net income (loss) attributable to Internet Capital Group, Inc.		$	(1,725	)		$	(635	)		$	(2,360	)		$	(4,215	)		$	(1,974	)		$	(8,549	)
Six Months Ended June 30, 2010
Revenues		$	53,671			$	—			$	53,671			$	—			$	—			$	53,671
Net income (loss) attributable to Internet Capital Group, Inc.		$	(6,906	)		$	(2,468	)		$	(9,374	)		$	(9,139	)		$	63,045			$	44,532
Six Months Ended June 30, 2009
Revenues		$	43,729			$	—			$	43,729			$	—			$	—			$	43,729
Net income (loss) attributable to Internet Capital Group, Inc.		$	(4,298	)		$	(1,760	)		$	(6,058	)		$	(8,691	)		$	(4,805	)		$	(19,554	)

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Corporate other income (loss) (Note 11)		$	24,762			$	2,113			$	65,401			$	218
Noncontrolling interest			(179	)			(337	)			(553	)			(729	)
Impairment of Vcommerce (Core) (Note 3)			—				(3,750	)			—				(3,750	)
Impairment of GoIndustry (Venture) (Note 3)			—				—				(2,914	)			(544	)
Corporate income tax benefit			1,111				—				1,111				—
		$	25,694			$	(1,974	)		$	63,045			$	(4,805	)

										Total												Consolidated
		Core				Venture				Segment				Corporate				Other				Results
Assets as of:
June 30, 2010		$	186,835			$	16,830			$	203,665			$	73,260			$	—			$	276,925
Assets as of:
December 31, 2009		$	192,786			$	21,832			$	214,618			$	115,469			$	—			$	330,087

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Parent Company Financial Information

Parent company financial information is provided to present the financial position and results of operations of the Company and its wholly-owned subsidiaries as if the partner companies accounted for under the consolidation method of accounting were accounted for under the equity method of accounting for all applicable periods presented. The Company’s share of the consolidated partner companies’ losses is included in “Equity loss” in the Parent Company Statements of Operations for all periods presented based on the Company’s ownership percentage in each period. The carrying value of the consolidated companies as of June 30, 2010 and December 31, 2009 is included in “Ownership interests in partner companies” in the Parent Company Balance Sheets set forth below.

Parent Company Balance Sheets

		As of June 30, 2010				As of December 31, 2009
		(unaudited) (in thousands)
Assets
Cash and cash equivalents		$	55,854			$	29,443
Income tax receivable			6,314				11,071
Other current assets			256				562
Current assets			62,424				41,076
Ownership interests in partner companies			167,344				170,498
Marketable securities			9,333				73,512
Hedges of marketable securities			185				—
Intangible assets			400				—
Other			918				881
Total assets		$	240,604			$	285,967
Liabilities and stockholders’ equity
Current liabilities		$	3,131			$	4,433
Hedges of marketable securities			—				547
Non-current liabilities			300				350
Stockholders’ equity			237,173				280,637
Total liabilities and stockholders’ equity		$	240,604			$	285,967

Parent Company Statements of Operations

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
		(unaudited)
		(in thousands)
Revenues		$	—			$	—			$	—			$	—
Operating expenses
General and administrative			4,797				4,305				9,321				8,905
Impairment related and other			—				3,750				—				3,750
Total operating expenses			4,797				8,055				9,321				12,655
			(4,797	)			(8,055	)			(9,321	)			(12,655	)
Other income (loss), net			24,762				2,113				65,401				218
Interest income (expense), net			130				90				182				214
Income (loss) before income taxes and equity loss			20,095				(5,852	)			56,262				(12,223	)
Equity loss			(5,445	)			(2,697	)			(12,841	)			(7,331	)
Income tax benefit (expense)			1,111				—				1,111				—
Net income (loss)		$	15,761			$	(8,549	)		$	44,532			$	(19,554	)

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Parent Company Financial Information — (Continued)

Parent Company Statements of Cash Flows

		Six Months Ended June 30,
		2010				2009
		(unaudited) (in thousands)
Operating Activities
Net income (loss)		$	44,532			$	(19,554	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization			31				55
Equity-based compensation			1,330				2,226
Equity loss			12,841				7,331
Other (income) loss			(65,390	)			(218	)
Impairment related and other			—				3,750
Changes in assets and liabilities, net of effect of acquisitions:
Income tax receivable			4,757				—
Prepaid expenses and other assets			306				737
Accounts payable			2				(5	)
Accrued expenses			(628	)			162
Accrued compensation and benefits			(744	)			(1,481	)
Other liabilities			(50	)			(50	)
Cash provided by (used in) operating activities			(3,013	)			(7,047	)
Investing Activities
Capital expenditures, net			(441	)			(7	)
Proceeds from sales of marketable securities			64,866				604
Proceeds from sales of ownership interests in partner companies			1,836				2,177
Acquisitions of ownership interests in partner companies, net			(1,584	)			(10,045	)
Cash provided by (used in) investing activities			64,677				(7,271	)
Financing Activities
Acquisition of noncontrolling interest in subsidiary equity			(35,253	)			—
Purchase of treasury stock			—				(370	)
Cash provided by (used in) financing activities			(35,253	)			(370	)
Net increase (decrease) in cash and cash equivalents			26,411				(14,688	)
Cash and cash equivalents at beginning of period			29,443				73,208
Cash and cash equivalents at end of period		$	55,854			$	58,520

Parent Company Dividend Receipt

On August 4, 2010, the Company received a cash dividend of $25.4 million from ICG Commerce.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. Equity

The following details the activity related to equity attributable to Internet Capital Group, Inc., equity attributable to the noncontrolling interest and total equity for the six months ended June 30, 2010, including the effects of the changes in the Company’s ownership interest in ICG Commerce on the Company’s equity.

		Six months ended June 30, 2010
		Internet
		Capital Group,
		Inc.’s
		Stockholders’				Noncontrolling				Total
		Equity				Interest				Equity
Balance at December 31, 2009		$	280,665			$	22,497			$	303,162
Net income			44,532				553				45,085
Net reclassification adjustment and unrealized depreciation in marketable securities			(62,199	)			—				(62,199	)
Net equity-based compensation plans activity			1,261				—				1,261
Net impact of ICG Commerce equity transaction — May 5, 2010			(27,621	)			(7,632	)			(35,253	)
Net impact of partner company equity transactions — other			579				(98	)			481
Balance at June 30, 2010		$	237,217			$	15,320			$	252,537

As discussed in Note 3, “Ownership Interests in Partner Companies, Goodwill and Intangibles, net,” the Company’s acquisition of an additional 12% equity voting interest in ICG Commerce during the three months ended June 30, 2010 resulted in a reduction to both the noncontrolling interest balance related to ICG Commerce and the additional paid-in capital of Internet Capital Group, Inc.’s Stockholders’ Equity of $7.6 million and $27.6 million, respectively. This activity is reflected in “Net impact of ICG Commerce equity transaction — May 5, 2010” in the above table.

Also as discussed in Note 3, “Ownership Interests in Partner Companies, Goodwill and Intangibles, net,” the Company acquired an additional 5% equity voting interest in ICG Commerce on July 1, 2010. This transaction will result in a reduction to both the noncontrolling interest balance related to ICG Commerce and Internet Capital Group, Inc.’s additional paid-in capital for the three months ended September 30, 2010.

10. Equity-Based Compensation

Equity-based compensation for the three and six months ended June 30, 2010 and 2009 is primarily included in “Selling, general and administrative” on the Company’s Consolidated Statements of Operations for the relevant periods. The following table provides additional information related to the Company’s equity-based compensation:

																						Weighted
																						Average Years
																		Unrecognized				Remaining of
																		Equity-Based				Equity-Based
		Three Months Ended								Six Months Ended								Compensation				Compensation
		June 30,								June 30,								at June 30,				Expense at
		2010				2009				2010				2009				2010				June 30, 2010
		(in thousands, except weighted average years)
SARs(1)		$	529			$	993			$	1,043			$	1,986			$	6,354				3.4
Stock Options			—				—				—				3				1				2.5
Restricted Stock			38				18				76				36				349				3.1
DSUs(2)			51				36				97				101				141				0.7
Equity-Based Compensation		$	618			$	1,047			$	1,216			$	2,126			$	6,845
Equity-Based Compensation for Consolidated Partner Companies			234				150				373				369				1,290				3.1
Equity-Based Compensation		$	852			$	1,197			$	1,589			$	2,495			$	8,135

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Equity-Based Compensation — (Continued)

SARs

SARs represent the right of the holder to receive, upon exercise of each SAR, shares of Common Stock equal to the amount by which the fair market value of a share of common stock on the date of exercise of the SAR exceeds the base price of the SAR. During the three months ended June 30, 2010, the Company granted 25,000 SARs to a non-management director at a weighted-average base price of $8.76 per share and a weighted-average fair value of $4.69 per share. During the six months ended June 30, 2010, the Company granted 1,406,940 SARs to employees and non-employee directors at a weighted-average base price of $6.79 per share and a weighted-average fair value of $3.96 per share. There were no SAR grants during the three or six months ended June 30, 2009. During the three and six months ended June 30, 2010, 55,000 SARs were exercised. There were no SARs exercised in the three or six months ended June 30, 2009. There were 5,322,310 and 3,970,370 SARs outstanding at June 30, 2010 and December 31, 2009, respectively. The aggregate intrinsic values of the SARs outstanding at June 30, 2010 and December, 31, 2009 were $2.1 million and $0, respectively.

SARs Fair Value Assumptions

The following assumptions were used to determine the fair value of SARs granted to employees by the Company:

		Three Months Ended June 30,				Six Months Ended June 30,
		2010		2009		2010		2009
Expected volatility		60%		—		60%		—
Average expected life of SAR (in years)		5.25		—		2.75-6.25		—
Risk-free interest rate		2.12%		—		1.55-2.92%		—
Dividend yield		0.0%		—		0.0%		—

The Company estimates the grant date fair value of SARs using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions. These assumptions include estimating the expected life of the award and the estimated volatility of our stock price over the expected term. Expected volatility is based on historical volatility of our Common Stock over the period commensurate with the expected term of the award. The expected term calculation for SARs granted is based on an average of the SAR vest term and the life of the award. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the award. Changes in these assumptions, the estimated forfeitures and the requisite service period can materially affect the amount of equity-based compensation recognized in the Company’s Consolidated Statements of Operations.

INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Equity-Based Compensation — (Continued)