UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K/A

(Mark One)

þ		ANNUAL 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.

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)

Securities registered pursuant to Section 12(b) of the Act: Common stock, par value $.001 per share (Title of Class)		The NASDAQ Stock Market LLC (The NASDAQ Global Market) (Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 the 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 Exchange Act Rule 12b-2). Yes o No þ

The aggregate market value of the 35,329,064 shares of Common Stock held by non-affiliates of the registrant as of March 1, 2010 was $237.8 million, based upon the closing price of $6.73 on the NASDAQ Global Market on June 30, 2009. (For this computation, the registrant has excluded the market value of all shares of its Common Stock held by its executive officers and directors; such exclusion shall not be deemed to constitute an admission that any such person is an “affiliate” of the Registrant.)

As of March 1, 2010, there were 36,423,789 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission (the “SEC”) relative to the Company’s 2010 Annual Meeting of Stockholders (the “Definitive Proxy Statement”) are incorporated by reference into Part III of this Report.

 

 

EXPLANATORY NOTE REGARDING THIS FORM 10-K/A

In accordance with Exchange Act Rule 12b-15, Internet Capital Group, Inc. (the “Registrant”) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2009, which was initially filed with the Securities and Exchange Commission on March 16, 2010 (the “Original Filing”), to include audited financial statements of StarCite, Inc. (“StarCite”), a subsidiary of the Registrant accounted for under the equity method, with respect to the years ended December 31, 2009, 2008 and 2007 that were not available at the time of the Original Filing, along with related materials.

This Amendment No. 1 amends Part IV, Item 15, “Exhibits and Financial Statement Schedules,” to reflect (1) the inclusion of the consolidated financial statements of StarCite as Exhibit 99.2 hereto, (2) the inclusion of the Consent of KPMG LLP regarding the consolidated financial statements of StarCite as Exhibit 23.3 hereto and (3) the inclusion of updated certifications from the Registrant’s principal executive officer and principal financial officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended. This Form 10-K/A restates the Original Filing in its entirety by presenting the relevant text of these amended items, as amended.

Except for the amended information referred to above, this Form 10-K/A continues to describe conditions as of the date of the Original Filing, and the Registrant has not modified or updated any other disclosures presented in the Original Filing. Accordingly, except as specifically referenced herein, this Amendment No. 1 does not restate the Registrant’s financial statements previously filed in the Original Filing, does not reflect events occurring after the filing of the Original Filing and does not modify or update those disclosures in the Original Filing affected by subsequent events. Information not affected by this Amendment No. 1 is unchanged and reflects the disclosures made at the time of the Original Filing on March 16, 2010.

INTERNET CAPITAL GROUP, INC.
FORM 10-K/A
DECEMBER 31, 2009
INDEX

		Page
		Number
PART I			4
ITEM 1. Business			4
ITEM 1A. Risk Factors			9
ITEM 1B. Unresolved Staff Comments			16
ITEM 2. Properties			17
ITEM 3. Legal Proceedings			17
ITEM 4. (Removed and Reserved)			18
PART II			19
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			19
ITEM 6. Selected Financial Data			22
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk			34
ITEM 8. Financial Statements and Supplementary Data			35
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures			77
ITEM 9A. Controls and Procedures			77
ITEM 9B. Other Information			79
PART III			79
ITEM 10. Directors, Executive Officers and Corporate Governance			79
ITEM 11. Executive Compensation			79
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			79
ITEM 13. Certain Relationships and Related Transactions, and Director Independence			79
ITEM 14. Principal Accountant Fees and Services			79
PART IV			80
ITEM 15. Exhibits and Financial Statement Schedules			80
SIGNATURES			85
Exhibit 21.1
Exhibit 23.1
Exhibit 23.2
Exhibit 23.3
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 99.1
Exhibit 99.2

Forward-Looking Statements

Forward-looking statements made with respect to our financial condition and results of operations and business in this Annual Report on Form 10-K/A (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, factors discussed elsewhere in this Report and include, among other things:

	•		economic conditions generally;
	•		capital spending by our partner companies’ customers;
	•		our partner companies’ collective ability to compete successfully against their respective competitors;
	•		rapid technological 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.

PART I

Although we refer in this Report to companies in which we have acquired a convertible debt interest 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.

ITEM 1.		Business

Overview

Internet Capital Group, Inc. (referred to in this Report as “ICG,” the “Company,” “we,” “our,” or “us”) was formed on March 4, 1996 and is headquartered in Wayne, Pennsylvania. Since our inception, we have focused on acquiring and building Internet software and services companies that improve the productivity and efficiency of their business customers. We call these companies our “partner companies.”

As of December 31, 2009 and the date of this Report, we hold ownership interests in 13 companies that we consider our partner companies. Additionally, we hold marketable securities in other companies, which, as of December 31, 2009 and the date of this Report, consist primarily of Blackboard, Inc. common stock (NASDAQ: BBBB) (“Blackboard”). 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 consolidated and equity method partner companies in which ICG owns a principal controlling equity voting interest (53% on average as of December 31, 2009) 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 (24% on average as of December 31, 2009) and have less influence over their strategic direction and management decisions than we do over those of our core companies. At the end of 2009, ICG began implementing a shift in its business strategy, under which the Company is focusing on acquiring and holding majority voting equity stakes in a relatively smaller number of operating companies that would be included in our core segment. For information regarding the results of operations of our reporting segments, as well as their respective contributions to ICG's consolidated results of operations, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8—Financial Statements and Supplementary Data,” including Note 8, “Segment Information,” to our Consolidated Financial Statements. Such information is incorporated herein by reference.

Over the past decade, businesses have increasingly looked to realize increased productivity and efficiency through Internet-based software and services and other services that streamline, automate or otherwise improve their business processes. Moreover, it is our view that businesses will rely increasingly on these solutions in times of both economic growth and economic decline. We believe that these factors create a compelling opportunity for companies that are able to deliver these solutions and services, thereby expanding their customers’ access to new and existing customers and suppliers, increasing their customers’ efficiency, reducing their customers’ costs and/or allowing their customers to focus on their core competencies and outsource their non-core, non-strategic processes. In some cases, this outsourcing will be to labor-based firms that provide deep expertise, and in some cases, this outsourcing will be to technology-intensive firms that provide platforms to automate functions.

We feel that the expertise we have developed in connection with our fourteen-year active involvement with Internet software and services companies allows us to identify companies that are positioned to succeed and to accelerate the growth of these companies. We intend to continue to expand our network of partner companies and allocate our financial and human resources to partner companies that we believe have significant long-term value potential. In particular, we seek to acquire interests in software as a service (“SaaS”), technology-enabled business process outsourcing (“BPO”) and Internet marketing companies, which offer solutions that:

	•		automate complex workflow processes, with focus on the “white space” between companies;
	•		are comprehensive, meaning that they include software, content data and transaction capabilities (with content being a long-term differentiator);
	•		have the ability to generate recurring revenue streams and allow their providers to retain fixed costs;
	•		are delivered to clients through long-term relationships; and
	•		have the potential to evolve into ecosystems.

After we identify a potential partner company, we negotiate the acquisition of an equity stake in that company, typically seeking an interest as the principal controlling equity holder. We generally require representation on the partner company’s board of directors to ensure our ability to provide active guidance to the partner company. We place an extremely high value on quality, motivated management teams and, accordingly, seek to structure acquisitions to permit the partner company’s management and key personnel to retain a meaningful equity stake in the company. During our negotiations with potential partner companies, we emphasize the value of our network and resources and our focus on long-term value, which we believe give us a competitive advantage over other potential funding sources when we seek to acquire partner companies.

Our focus on the software and services markets, particularly SaaS, technology-enabled BPO and Internet marketing companies and the knowledge base of our partner companies, our management and our Board of Directors give us valuable experience that we share with our partner companies. Once we acquire an interest in a partner company, we work to assume an active role in the development and growth of the company, providing both strategic guidance and operational support. We provide strategic guidance to our partner companies relating to, among other things, market positioning, business model and product development, strategic capital expenditures, mergers and acquisitions and exit opportunities. Additionally, we provide operational support to help our partner companies manage day-to-day business and operational issues and implement best practices in the areas of finance, sales and marketing, business development, human resources and legal services. Once a company joins our partner company network, our collective expertise is leveraged to help position that company to produce high-margin, recurring and predictable earnings and generate long-term value that we believe can ultimately be captured for our stockholders through continued ownership by ICG, an initial public offering, or a strategic sale.

Our Partner Companies

At December 31, 2009, our 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 in financial services, technology, retail/consumer goods, manufacturing and transportation and logistics. Freeborders’ offerings help companies seeking cost-effective technology solutions.

GovDelivery Holdings, Inc. (“GovDelivery”)

GovDelivery is a leading provider of government-to-citizen communication solutions. GovDelivery’s digital subscription management 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.

Metastorm Inc. (“Metastorm”)

Metastorm is an enterprise software and service provider that enables its customers to turn business strategies into business processes by fully integrating the work that people do with software systems that optimize business performance. Metastorm delivers a complete set of scalable business process management solutions that leverage existing information technology investments to unite people, processes and technology in a service-based architecture.

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, using both technology and traditional means.

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 which integrate the Web services applications into their own business processes and websites.

At December 31, 2009, 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.

Anthem Ventures Fund, L.P. (“Anthem”)

Anthem provides resources to enhance the development of emerging technology companies by providing financial investment, operational and management advice, as well as access to a network of professional relationships.

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. With the company’s technology, information accessed in real-time allows for increased efficiency across all lines of the insurance business.

Concentration of Customer Base and Credit Risk

In each of the years ended December 31, 2009 and 2008, two customers of ICG Commerce, which is a consolidated core partner company, accounted for more than 10% of our consolidated revenue. The Hertz Corporation and Kimberly-Clark Corporation each represented approximately 13% and 17% of our consolidated revenue for the years ended December 31, 2009 and 2008, respectively. Accounts receivable, including unbilled amounts, from The Hertz Corporation and Kimberly-Clark Corporation as of December 31, 2009 were $1.7 million and $1.5 million, respectively. Accounts receivable, including unbilled amounts, from the Hertz Corporation and Kimberly-Clark Corporation as of December 31, 2008 were $2.9 million and $1.4 million, respectively.

Competition Facing Our Partner Companies

Competition for information technology and Internet products and services is intense. As the market for e-commerce continues to grow, we expect that competition will continue to intensify. Barriers to entry are minimal, and competitors can offer products and services at a relatively low cost. Our partner companies compete with established information systems and management consulting firms, as well as with traditional distribution channels and other online providers, for shares of their customers’ purchasing budgets for information technology and consulting services.

Many companies offer information technology solutions and other solutions that compete with our partner companies. We expect that additional companies will offer competing solutions in the future. Furthermore, our partner companies’ competitors may develop information technology and Internet products or other services that are superior to, or have greater market acceptance than, the solutions offered by our partner companies. Many of our partner companies’ competitors have greater brand recognition and greater financial, marketing and other resources than our partner companies. This may place our partner companies at a disadvantage in responding to their competitors’ pricing strategies, technological advances, advertising campaigns, strategic partnerships and other initiatives. If our partner companies are unable to compete successfully against their competitors, our partner companies may fail.

We may compete with our partner companies to acquire interests in software and services companies and our partner companies may compete with each other for these opportunities. This competition may deter companies from partnering with us and may limit our business opportunities.

Employees

Corporate headcount at ICG as of March 1, 2010 was 27. Headcount at our consolidated partner companies as of March 1, 2010 was 648.

Financial Information About Geographic Areas

Financial information regarding geographic areas is contained in Note 8, “Segment Information,” to our Consolidated Financial Statements included in “Item 8—Financial Statements and Supplementary Data” and is incorporated herein by reference.

Availability of Reports and Other Information

Our Internet website address is www.internetcapital.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 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 site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

ITEM 1A.		Risk Factors

Our business involves a number of risks, some of which are beyond our control. You should carefully consider each of the risks and uncertainties we describe below and all of the other information in this Report before deciding to invest in our Common Stock. The risks and uncertainties we describe below are not the only ones we face. Additional risks and uncertainties about which we currently do not know or that we currently believe to be immaterial may also adversely affect our business, financial condition or operating results.

Numerous external forces, including ongoing weak economic conditions, have negatively affected our and our partner companies’ respective businesses, results of operations and financial condition and continued weak economic conditions could result in additional declines in our revenues and operating results.

Numerous external forces, including the state of global financial markets and general economic conditions, lack of consumer confidence, lack of availability of credit, interest rate and currency rate fluctuations and national and international political circumstances (including wars and terrorist acts) have negatively affected our and our partner companies’ respective businesses, results of operations and financial condition. Our and our partner companies’ businesses may also be negatively impacted by ongoing weak economic conditions affecting the banking system, financial markets and financial institutions, which have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets and extreme volatility in credit and equity markets. The length of time or severity with which these conditions may persist is unknown. As a consequence, our and our partner companies’ respective operating results for a particular period are difficult to predict and, therefore, prior results are not necessarily indicative of expected results in future periods. In response to current financial conditions, many customers and potential customers of our partner companies may forgo, delay or reduce technology and other purchases. In connection with these conditions, our partner companies may experience reductions in the sales of their products and services, extended sales cycles, difficulties in collecting (or the inability to collect) accounts receivable, slower adoption of new technologies, increased price competition and difficulties in obtaining (or the inability to obtain) financing. The current volatility in the financial markets and overall economic uncertainty increase the risk that the value of our partner companies and our other assets will be impaired and that the value to be captured in the future in connection with the disposition of our partner companies will be significantly lower than we initially expected.

If we are not able to deploy capital effectively and on acceptable terms, we may not be able to execute our business strategy.

Our strategy includes effectively deploying capital by acquiring interests in new partner companies. We may not be able to identify attractive acquisition candidates that fit our strategy. Even if we are able to identify acquisition candidates, we may not be able to acquire interests in those companies due to an inability to reach mutually acceptable financial or other terms with those companies or due to competition from other potential acquirers that may have greater resources, brand name recognition, industry contacts or flexibility of structure than we do. The recent turmoil in the global economy has caused significant declines and fluctuations in the valuations of publicly-traded companies and privately-held companies. Uncertainty regarding the extent to which valuations of companies that fit our acquisition criteria will continue to fluctuate may affect our ability to accurately value potential acquisition candidates. Additionally, ongoing weak economic conditions may make it more difficult for us to obtain capital needed to deploy to new and existing partner companies. If we are unable to effectively deploy capital to partner companies on acceptable terms, we may not be able to execute on our strategy, and our business may be adversely impacted.

If our partner companies are unable to attract new customers or retain customers, including certain significant customers, our and our partner companies’ respective businesses, results of operations and financial conditions could be negatively affected.

Our partner companies may not be able to attract or retain customers due to a variety of reasons, including increased competition, the unwillingness of customers and potential customers to spend money on products and services during periods of economic turmoil and uncertainty, insolvency and the unavailability of credit. If our partner companies are unable to attract new customers or retain existing customers, our and our partner companies’ respective businesses, results of operations and financial conditions could be negatively affected.

During the year ended December 31, 2009, two customers of ICG Commerce, The Hertz Corporation and Kimberly-Clark Corporation, each represented approximately 13% of our consolidated revenue. For the year ended December 31, 2008, these two customers each represented approximately 17% of our consolidated revenue. If our partner companies are not able to retain significant customers, such partner companies and our respective businesses, results of operations and financial positions could be negatively affected.

The inability of our partner companies’ customers to pay their obligations to them in a timely manner, or at all, could have an adverse effect on our partner companies.

The financial resources of our partner companies’ customers may be negatively affected by the continuing economic downturn. As a result, these customers may have inadequate financial resources to meet all their obligations to our partner companies and may not make payments in a timely manner or at all. Additionally, if our partner companies’ customers do not have adequate financial resources, they may attempt to terminate or renegotiate existing contracts with our partner companies and may refrain from purchasing additional products and services from our partner companies. These factors may cause our partner companies’ results of operations and financial condition to be adversely affected.

Our partner companies may not be able to compete successfully.

If our partner companies are unable to compete successfully against their competitors, our partner companies may fail. Competition for Internet software and services is intense and is expected to intensify. Our partner companies’ competitors may develop products or services that are superior to, or have greater market acceptance than, the solutions offered by our partner companies. Many of our partner companies’ competitors have greater brand recognition and greater financial, marketing and other resources than our partner companies. This may place our partner companies at a disadvantage in responding to their competitors’ pricing strategies, technological advances, marketing campaigns, strategic partnerships and other initiatives.

The Internet software and services industry is characterized by evolving industry standards, coupled with frequent and related new service and product introductions and enhancements. The development of new service and product introductions and enhancements in response to evolving industry standards requires significant time and resources, and our partner companies may not be able to adapt quickly enough and/or in a cost-effective manner to these changes, and our partner companies’ failure to do so could adversely affect our partner companies’ businesses, financial condition and results of operations.

We may compete with some of our partner companies, and our partner companies may compete with each other, which could deter companies from partnering with us and may limit future business opportunities.

We may compete with our partner companies to acquire interests in new partner companies, and our partner companies may compete with each other for business opportunities. This competition may deter potential acquisition targets from partnering with us and may limit our business opportunities.

Our operations and growth and that of our partner companies could be impaired by limitations on our and/or their ability to raise capital or borrow money on favorable terms.

We and our partner companies may need to raise additional capital or borrow money in order to sustain operations or to grow. If we or our partner companies are unable to raise capital or obtain credit on favorable terms, our ability and the ability of our partner companies to operate and grow may be impaired. This may require us or our partner companies to take other actions, such as borrowing money on terms that may be unfavorable, or divesting of assets prematurely to raise capital. If we or our partner companies need capital and are unable to raise it, then we or they may need to limit or cease operations.

Adverse changes in economic conditions and reduced information technology spending may adversely impact our business.

Our and our partner companies’ respective businesses depend on the overall demand for information technology, and in particular for Internet software and services that improve the productivity of our customers’ businesses. In addition, the acquisition of our partner companies’ Internet software and services is often discretionary and may require customers to make significant initial contributions of capital and other resources. During the recent global financial crisis, business spending on technology infrastructure decreased dramatically. Continued weak economic conditions or, even if general economic conditions improve, a reduction in information technology spending, could adversely impact our business and the businesses of our partner companies in a number of ways that negatively impact our operating results and financial condition.

Acquisitions by our partner companies could result in operating difficulties, dilution and other harmful consequences.

As part of their growth strategies, our partner companies have and may continue to strategically acquire other companies, business and technologies. The process of integrating an acquired company, business or technology involves numerous risks, including difficulties in the integration of the operations, technologies, services and products of the acquired company or business and the diversion of management’s attention from other business concerns. Although we and our partner companies will endeavor to evaluate the risks inherent in any particular acquisition transaction, there can be no assurance that we or our partner companies will properly ascertain all such risks. In addition, acquisitions may result in the incurrence of substantial additional indebtedness and other expenses for our partner companies; they may also result in potentially dilutive issuances of a partner company’s equity securities. Accordingly, difficulties encountered with acquisitions may have a material adverse effect on our or our partner companies’ businesses, financial condition and results of operations.

Our inability to maintain or be able to increase our ownership stakes in partner companies with significant growth opportunities could negatively impact our ability to execute our strategy.

One of our strategies is to maintain and increase our ownership in those partner companies that we believe have major growth opportunities such that we would have consolidated stakes in those companies. We may not be able to achieve this goal because of limited resources and/or the unwillingness of such companies and/or the stockholders of such companies to enter into a transaction that would result in an increase in our ownership stake. Moreover, certain transactional growth opportunities, such as mergers and consolidations, may arise with respect to any of these partner companies that would result in potentially dilutive issuances of such partner companies’ equity securities. In the event that any of these select partner companies enters into such a transaction, with or without our support, we may have a decreased ability to direct the policies and affairs of the partner company or the surviving entity following the consummation of the transaction.

If we do not participate in follow-on financings at our partner companies, our stakes in such companies will be diluted, which could materially reduce the value of those stakes.

From time to time our partner companies raise capital by issuing and selling additional equity. We generally have preemptive rights to participate in these follow-on rounds of financing; however, we may elect not to participate in such rounds or may be required to waive our preemptive rights in whole or in part so that outside investors can participate. If we do not participate in a follow-on round of a partner company, our ownership interest in such company will be diluted. Additionally, in connection with new rounds of financing, our partner companies may issue preferred stock with liquidation preferences that are senior to existing preferred stock and common stock. If we do not participate in a follow-on round at a partner company, our ownership stake will decrease and our rights to receive proceeds in connection with the sale of that partner company will be diminished, which could result in a material reduction in the value of our stake in that partner company. Moreover, in the event that we pay a control premium in connection with our acquisition of a majority stake in a partner company, we would not be able to command a similar premium upon the disposition of that stake if, through dilutive events, the stake becomes a minority interest.

We may have to buy, sell or retain assets when we would otherwise choose not to buy, sell or retain in order to avoid registration under the Investment Company Act, which would impact our business strategy.

Under the Investment Company Act of 1940, as amended (the “Investment Company Act”), a company is considered to be an investment company if, among other things, it is primarily engaged in the business of investing, reinvesting, owning, holding or trading in securities. It is not feasible for us to be regulated as an investment company because the Investment Company Act rules are inconsistent with our strategy of actively managing, operating and promoting collaboration among our network of partner companies. On August 23, 1999, the SEC granted our request for an exemption under Section 3(b)(2) of the Investment Company Act, declaring us to be primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities. This exemptive order reduces, but does not eliminate, the risk that we may have to take action to avoid registration as an investment company. For example, we might be considered to be in violation of our exemptive order if more than a certain percentage of our total assets consist of, or more than certain percentages of our income/loss and revenue over the last four quarters is derived from, ownership interests in companies that we do not primarily control. Because we do not have primary control of many of our partner companies, changes in the value of our interests in such partner companies and the income/loss and revenue attributable to such partner companies could subject us to regulation under the Investment Company Act unless we take precautionary steps. For example, we may retain interests in partner companies we would otherwise want to sell and we may sell stakes in non-controlled partner companies that we would otherwise want to retain. In order to ensure that the requisite percentage of our total assets relates to partner companies that we primarily control, we may participate in follow-on financings at our controlled partner companies and refrain from participating in such financings at our non-controlled partner companies. In addition, we may have to acquire additional income or loss generating majority-owned or controlled interests that we might not otherwise have acquired and may not be able to acquire “non-controlling” interests in companies that we would otherwise want to acquire.

Our partner companies could make financial or other business decisions that are not in our best interests or that we do not agree with, which could impair the value of our partner company interests.

Although we generally seek to acquire a controlling equity interest and participate in the management of our partner companies, we may not acquire or maintain a controlling interest in each partner company. If we lack control or share control in a partner company we may not be able to control significant financial or other business decisions of such partner company. Management or other stockholders of a partner company could have economic or business interests or objectives that are different from ours or disagree with our advice regarding financial or operating decisions, which could impair the value of our interest, prevent us from monetizing our interest at a time or at a price that is favorable to us or negatively affect our operating results. Additionally, our inability to prevent dilution of our ownership interests in a partner company or our inability to otherwise have a controlling influence over the management and operations of a partner company could have an adverse impact on our status under the Investment Company Act.

We may not be able to extract cash from those partner companies that achieve profitability and may need to continue to rely on existing cash, liquidity events and additional capital raises to fund our operations.

We currently rely on existing cash, partner company liquidity events and the issuance and sale of additional securities in order to fund our operations. One of our goals is to help our partner companies achieve profitability so that we can access their cash flow. Moreover, we are focusing on acquiring majority voting stakes in an increasing number of partner companies in part so that we have increased access to the cash flow of our partner companies. However, even if certain of our partner companies do meet that goal, we may not be able to access cash generated by such partner companies to fund our operations due to a number of factors, including the needs of such companies to reinvest in their own businesses and our inability to control the significant business or financial decisions of such companies. Our inability to access the cash of our partner companies could have a negative impact on our operations.

We may be unable to obtain maximum value in connection with the divesture of partner company and marketable security interests.

From time to time, we may divest of interests in partner companies or marketable securities to generate cash or for strategic reasons. The timing of such divestures, particularly with respect to our privately-held partner companies, may not be within our control. If we need to quickly divest partner company interests to satisfy immediate cash requirements or to avoid registration as an investment company under the Investment Company Act, we may be forced to sell our assets prior to canvassing the market or at a time when market conditions valuations are unfavorable. We also may not be able to identify buyers for certain of our assets, particularly given the difficulty that potential acquirers may currently face in obtaining financing. Furthermore, in connection with the sale of a private partner company, we may not receive the full amount of proceeds to which we would otherwise be entitled under such company’s certificate of incorporation if additional payments to management and/or other stockholders are made to secure the approval and/or execution of such transaction. We may be unable to sell our interests in publicly-traded companies at then-quoted market prices, if at all, because low trading volumes of these companies may limit our ability to sell a significant amount of such companies’ stock in the open market. Registration and other requirements under applicable securities laws may also adversely affect our ability to dispose of our interests on a timely basis. Based on the foregoing factors, when we divest of an interest in a partner company or a marketable security, we may not receive maximum value for that asset and the realizable value of our interest in such asset may ultimately be lower than the carrying value currently reflected in our consolidated financial statements and/or the expectations our investors or securities analysts.

In addition, the market for initial public offerings has experienced significant weakness in connection with recent market volatility. If this market is weak, we may not be able to capture stockholder value by taking our partner companies public.

Our accounting estimates with respect to the ultimate recoverability of our basis in our partner companies could change materially in the near term.

Our accounting estimates with respect to the useful life and ultimate recoverability of our carrying basis, including goodwill, in our partner companies could change in the near term, and the effect of those changes on our consolidated financial statements could be significant. During the years ended December 31, 2009 and 2008 we recorded impairment charges of $5.4 million and $23.2 million, respectively. It is possible that a significant write-down or write-off of our carrying basis in our partner companies, including goodwill, may be required in the future, or that a significant loss will be recorded in the future upon the sale of one or more partner companies. Any write-down or write-off of this type could cause a decline in the price of our Common Stock.

Our stock price has been volatile in the past and may continue to be volatile in the future.

Our stock price has historically been volatile. This volatility may continue in the future, particularly in light of the current uncertainty about global economic conditions.

The following factors, among others, may add to our Common Stock price’s volatility:

	•		general economic conditions, such as a recession or interest rate or currency rate fluctuations;
	•		the reluctance of enterprises to increase spending on new products or services;
	•		actual or anticipated variations in our quarterly results and those of our partner companies;
	•		changes in the market valuations of our partner companies and other similar companies;
	•		conditions or trends related to Internet software and services companies;
	•		changes in our financial estimates and those of our partner companies by securities analysts;
	•		new products or services offered by us, our partner companies and their competitors;
	•		announcements by our partner companies and their competitors of technological innovations;
	•		announcements by us, our partner companies or our competitors of significant acquisitions, strategic partnerships or joint ventures;
	•		additional sales or repurchases of our securities; and
	•		additions to or departures of our key personnel or the key personnel of our partner companies.

Many of these factors are beyond our control. These factors may decrease the market price of our Common Stock.

Fluctuations in our quarterly results may adversely affect our stock price.

We expect that our quarterly results will fluctuate significantly due to many factors, including:

	•		the acquisition of interests in partner companies;
	•		the operating results of our partner companies;
	•		sales of our ownership interests in our partner companies, which could cause us to recognize gains or losses under applicable accounting rules;
	•		significant fluctuations in the financial results of Internet software and services companies generally;
	•		changes in estimated quarterly equity losses or income;
	•		changes in our methods of accounting for our partner company interests, which may result from changes in our ownership percentages of our partner companies;
	•		the pace of development or a decline in growth of the Internet software and services markets; and
	•		competition for the goods and services offered by our partner companies.

If our operating results in one or more quarters do not meet securities analysts’ or investors’ expectations, the price of our Common Stock could decrease.

Fluctuations in the price of the common stock of our publicly-traded holdings may affect the price of our Common Stock.

Currently, we hold stock of Blackboard and GoIndustry, each of which is a publicly-traded entity. Fluctuations in the price of the common stock of Blackboard, GoIndustry or any other publicly-traded holdings we may hold from time to time are likely to affect the price of our Common Stock. The price of these publicly-traded companies’ common stock has been highly volatile. As of December 31, 2009, the market value of our interest in these publicly-traded companies was $79.4 million, which was based upon a $45.39 per share closing price for Blackboard and a $0.02 per share closing price for GoIndustry. The results of operations and, accordingly, the price of the stock of Blackboard and GoIndustry may be adversely affected by the occurrence of the risk factors contained in this Report. In addition, the results of operations and stock price of Blackboard may be adversely affected by the risk factors in Blackboard’s SEC filings, which are publicly available at www.sec.gov, and the results of operations and common stock price of GoIndustry may be adversely affected by the factors set forth in GoIndustry’s submissions on the AIM market of the London Stock Exchange, which are publicly available at www.londonstockexchange.com.

We have had a general history of operating losses and expect continued operating losses in the foreseeable future.

We have had significant operating losses and, excluding the effect of any future non-operating gains, such as from the sale of interests in partner companies, we expect to continue incurring operating losses in the future. As a result, we may not have sufficient resources to expand or maintain our operations in the future. We can give no assurances as to when or whether we will achieve profitability, and if we ever have profits, we may not be able to sustain them.

Certain of our partner companies have a limited operating history and may never be profitable.

Certain of our partner companies have limited operating histories. As a result, they have only short operating histories to aid in assessing future prospects. Additionally, certain of our partner companies have significant historical losses and may never be profitable. Many of our partner companies have incurred substantial costs to develop and market their products and expand operations, have incurred net losses and cannot fund their cash needs from operations. Operating expenses of these companies could increase in the foreseeable future as they continue to develop products, increase sales and marketing efforts and expand operations.

The loss of our or our partner companies’ executive officers or other key personnel or our or our partner companies’ inability to attract additional key personnel could disrupt our business and operations.

If one or more of our executive officers or key personnel, or our partner companies’ executive officers or key personnel, including highly trained information technology personnel, were unable or unwilling to continue in their present positions, or if we or our partner companies were unable to hire qualified personnel, our business and operations could be disrupted and our operating results and financial condition could be seriously harmed.

Our partner companies’ success depends on the integrity of their systems and infrastructure. Interruptions in their information systems may adversely affect their businesses.

To succeed, our partner companies’ systems and infrastructure must perform well on a consistent basis. From time to time, our partner companies may experience occasional system interruptions that make some or all of their systems or data unavailable or prevent them from providing services, which could adversely affect their businesses. Moreover, as traffic to their various websites and the related number of uses and customers increase and the number products and services that they introduce continues to grow, they will need to upgrade their systems, infrastructure and technologies generally to facilitate this growth. If our partner companies do not do so or if they experience inefficiencies and/or operational failures in connection with current or future upgrades, third parties with which they do business may not be able to access their services on an intermittent or prolonged basis and the quality of experience that users and customers encounter with their products and services generally could diminish. The occurrence of any of these events could adversely affect their businesses, financial condition and results of operations.

We and our partner companies may be subject to litigation proceedings or government regulation that could harm our respective businesses.

We and our partner companies may be subject to legal claims involving stockholder, consumer, competition and other matters. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or, in cases for which injunctive relief is sought, an injunction prohibiting one of our partner companies from performing a critical activity, such as selling its software and services. If we or one of our partner companies were to receive an unfavorable ruling in a litigation matter, our and our partner companies’ respective businesses, financial condition and results of operations could be materially harmed. Even if legal claims brought against us or our partner companies are without merit, defending lawsuits may take significant time, be expensive and divert our or our partner companies’ management attention from other business concerns.

Our partner companies’ software and services offerings are subject to government regulation domestically and internationally in many areas, including regulation of the Internet regarding user privacy, telecommunications, data protection and online content. The application of these laws and regulations to our partner companies’ businesses is often unclear and sometimes may conflict. Compliance with these regulations may involve significant costs or require changes in business practices that result in reduced revenue. Noncompliance could result in monetary penalties being imposed on our partner companies or orders that our partner companies cease performing a critical activity, such as selling their software and services.

We have implemented certain anti-takeover provisions that could make it more difficult for a third party to acquire us.

Provisions of our amended certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. Our amended certificate of incorporation provides that our board of directors may issue preferred stock without stockholder approval and also provides for a staggered board of directors. We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which restricts certain business combinations with interested stockholders. Additionally, we have a rights agreement which has the effect of discouraging any person or group from beneficially owning more than 15% of our outstanding Common Stock unless our board has amended the plan or redeemed the rights. The combination of these provisions may inhibit a non-negotiated merger or other business combination.

ITEM 1B.		Unresolved Staff Comments

None.

ITEM 2.		Properties

The location and general description of our properties as of March 1, 2010 are as follows:

Corporate Offices

Our corporate headquarters are located at 690 Lee Road, Suite 310 in an office facility located in Wayne, Pennsylvania, where we lease approximately 11,000 square feet.

Partner Company Properties

Our consolidated partner companies lease approximately 128,229 square feet of office, administrative, sales and marketing, operations and data center space, principally in Georgia, Minnesota, New York, Pennsylvania, Texas and Washington, D.C. in the United States and administrative offices in China, India and the United Kingdom.

ITEM 3.		Legal Proceedings

In May and June 2001, certain of the Company’s present directors, along with the Company, certain of its former directors, certain of its present and former officers and its underwriters, were named as defendants in nine class action complaints filed in the United States District Court for the Southern District of New York. The plaintiffs and the putative classes they seek to represent include present and former stockholders of the Company. The complaints generally allege violations of Sections 11 and 12 of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 10b-5 promulgated under the Exchange Act, based on, among other things, the dissemination of statements allegedly containing material misstatements and/or omissions concerning the commissions received by the underwriters of the initial public offering and follow-on public offering of the Company as well as failure to disclose the existence of purported agreements by the underwriters with some of the purchasers in these offerings to buy additional shares of the Company’s stock subsequently in the open market at pre-determined prices above the initial offering prices. The plaintiffs seek for themselves and the alleged class members an award of damages and litigation costs and expenses. The claims in these cases have been consolidated for pre-trial purposes (together with claims against other issuers and underwriters) before one judge in the Southern District of New York federal court. In April 2002, a consolidated, amended complaint was filed against these defendants which generally alleges the same violations and also refers to alleged misstatements or omissions that relate to the recommendations regarding the Company’s stock by analysts employed by the underwriters. In June and July 2002, defendants, including the Company defendants, filed motions to dismiss plaintiffs’ complaints on numerous grounds. The Company’s motion was denied in its entirety in an opinion dated February 19, 2003. In July 2003, a committee of the Company’s Board of Directors approved a proposed settlement with the plaintiffs in this matter, which was preliminarily approved by the District Court overseeing the litigation in February 2005. A final fairness hearing on the settlement was held on April 24, 2006. On December 5, 2006, however, the Second Circuit Court of Appeals reversed the certification of plaintiff classes in six actions related to other issuers that had been designated as test cases with respect to the non-settling defendants in those matters (the “Focus Cases”) and made other rulings that drew into question the legal viability of the claims in the Focus Cases. The Court of Appeals later rejected the plaintiffs’ request that it reconsider that decision. As a result, on June 25, 2007, the District Court approved a stipulation and order terminating the proposed settlement. While the Court of Appeals decision did not automatically apply to the case against the Company, the defendants moved for, and the Court granted, an order that would apply the decision to all cases, including the consolidated action against the Company. On August 14, 2007, the plaintiffs filed an amended “master” complaint containing allegations purportedly common to all defendants in all actions and filed amended complaints containing specific allegations against the six issuer defendants in the Focus Cases. In addition, on September 27, 2007, the plaintiffs again moved to certify classes in each of the Focus Cases. The defendants in the Focus Cases moved to dismiss the amended complaints. Rulings on both the motion to certify the Focus Cases as class actions and to dismiss those cases remain outstanding. The District Court has approved a stipulation extending the time within which the plaintiffs must file amended pleadings containing specific allegations against the other issuer defendants, including the Company, and the time within which those defendants must move, answer or otherwise respond to those specific allegations.

On April 2, 2009, the plaintiffs filed a motion for preliminary approval of a proposed global settlement of all claims asserted in the coordinated class action securities litigation on behalf of the class plaintiffs in the respective actions against the various issuer and underwriter defendants, including all claims asserted against the Company. The motion further seeks certification of settlement classes as to each action against the defendants, including the Company. The Company has assented to the proposed settlement, which does not require any monetary contribution from the Company and would be funded by various underwriter defendants and the defendants’ insurers. On June 10, 2009, the District Court granted preliminary approval of the proposed settlement and of the form of notice of the proposed settlement to be provided to members of the proposed settlement class. The District Court scheduled a hearing for September 10, 2009 to determine whether to approve the proposed settlement.

The final hearing was held on September 10, 2009. On October 5, 2009, the District Court granted final approval of the proposed global settlement, subject to the rights of the parties to appeal the settlement within 30 days of such approval. Pursuant to the terms of the approved settlement, the Company is not required to make any monetary contribution to fund the required settlement payments, which are being funded by various underwriter defendants and the defendants’ insurers.

On or about October 23, 2009, three members of the settlement class who had been shareholders of an issuer other than the Company filed a petition seeking leave to appeal the District Court’s final approval to the Second Circuit Court of Appeals on an interlocutory basis. No judicial ruling or action has been taken on the motion. On or before November 6, 2009, three notices of appeal were filed with respect to the District Court’s order granting final approval of the global settlement. No further action has been taken with respect to such notices. On December 14, 2009, the District Court entered a final judgment approving and giving effect to the global settlement as it related to the consolidated actions against the Company. The final judgment created a settlement class of plaintiffs comprised of persons who purchased or otherwise acquired the common stock and call options of the Company during the period of August 4, 1999 through December 6, 2000, provided for the distribution of settlement proceeds to the members of the class and approval of attorneys’ fees to class counsel consistent with the terms of the global settlement, barred prosecution of all settled claims by members of the class and their representatives, released the defendants and other protected persons from such claims and dismissed all claims against the Company and other defendants in the consolidated amended action with prejudice. No notices of appeal have been filed with respect to the December 14, 2009 final judgment.

ITEM 4.		(Removed and Reserved)

PART II

ITEM 5.		Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information. Our Common Stock is currently traded on the NASDAQ Global Market under the symbol “ICGE.” The price range per share reflected in the table below is the highest and lowest sale price for our Common Stock as reported by the NASDAQ Global Market during each quarter period of our two most recent fiscal years.

		2009																2008
		March 31				June 30				Sept. 30				Dec. 31				March 31				June 30				Sept. 30				Dec. 31
		(1st)				(2nd)				(3rd)				(4th)				(1st)				(2nd)				(3rd)				(4th)
High		$	5.95			$	6.85			$	8.62			$	8.43			$	11.82			$	11.35			$	9.84			$	8.00
Low		$	3.25			$	3.85			$	6.17			$	5.76			$	7.66			$	7.71			$	6.79			$	3.04

Holders. As of March 1, 2010, there were approximately 818 holders of record of our Common Stock, although there is a much larger number of beneficial owners.

Dividends. We have never declared or paid cash dividends on our capital stock and we do not intend to pay cash dividends in the foreseeable future. We plan to retain any earnings for use in the operation of our business and to fund future growth.

Stock Performance Graph

The following graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.

The following graph presents a comparison of the Company’s stock performance with that of the NASDAQ Composite Index and the Goldman Sachs Technology Internet Index from December 31, 2004 to December 31, 2009.

COMPARISON OF CUMULATIVE TOTAL RETURN* SINCE DECEMBER 31, 2004
AMONG INTERNET CAPITAL GROUP, INC.,
THE NASDAQ COMPOSITE INDEX AND
THE GSTI INTERNET INDEX

Issuer Purchases of Equity Securities

In 2008, the Company announced the approval by its Board of Directors of a share repurchase program under which the Company could repurchase, from time to time, up to $25 million of shares of its Common Stock in the open market, in privately negotiated transactions or pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act. The table below contains information relating to the repurchases of Company Common Stock that occurred during the year ended December 31, 2009 and through the date of the filing of this Report.

										Total Number of				Approximate Dollar
										Shares Purchased as				Value That May Yet
										Part of Publicly				Be Purchased
		Total Number of				Average Price Paid				Announced				Under the
Monthly Period		Shares Purchased(1)				per Share(2)				Program(1)				Program
Repurchased as of 12/31/08			1,948,158			$	4.75				1,948,158			$	15.7 million
1/1/09 to 1/31/09			25,042			$	3.98				25,042			$	15.6 million
2/1/09 to 2/28/09			67,200			$	3.96				67,200			$	15.4 million
3/1/09 to 3/31/09			0				—				0			$	15.4 million
4/1/09 to 4/30/09			0				—				0			$	15.4 million
5/1/09 to 5/31/09			0				—				0			$	15.4 million
6/1/09 to 6/30/09			0				—				0			$	15.4 million
7/1/09 to 7/31/09			0				—				0			$	15.4 million
8/1/09 to 8/30/09			0				—				0			$	15.4 million
9/1/09 to 9/30/09			0				—				0			$	15.4 million
10/1/09 to 10/31/09			0				—				0			$	15.4 million
11/1/09 to 11/30/09			0				—				0			$	15.4 million
12/1/09 to 12/31/09			400,000			$	5.79				400,000			$	13.1 million
1/1/10 to 1/31/10			0				—				0			$	13.1 million
2/1/10 to 2/28/10			0				—				0			$	13.1 million
3/1/10 to 3/15/10			0				—				0			$	13.1 million
Total			2,440,400			$	4.89				2,440,400			$	13.1 million

ITEM 6.		Selected Financial Data

The following table summarizes certain selected historical consolidated financial information of ICG that has been derived from our audited Consolidated Financial Statements for each one-year period for the five years ended December 31, 2009, 2008, 2007, 2006 and 2005. The financial information may not be indicative of our future performance. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the related Notes thereto included in this Report.

		Year Ended December 31,
		2009				2008				2007				2006(1)				2005(1)
		(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues		$	90,252			$	71,181			$	52,923			$	64,749			$	47,568
Operating expenses
Cost of revenue			56,920				46,400				39,523				42,439				28,460
Selling, general and administrative			34,578				36,165				32,781				42,108				40,795
Research and development			9,015				10,212				6,033				8,755				12,276
Impairment related and other			5,397				10,052				188				1,873				5,571
Total operating expenses			105,910				102,829				78,525				95,175				87,102
			(15,658	)			(31,648	)			(25,602	)			(30,426	)			(39,534	)
Other income (loss), net			16,578				43,225				6,830				34,605				135,489
Interest income (expense), net			230				1,516				5,062				7,345				523
Income (loss) from continuing operations before income taxes and equity loss			1,150				13,093				(13,710	)			11,524				96,478
Income tax benefit (expense)			39,510				(357	)			3,992				40				(18,640	)
Equity loss			(12,131	)			(33,702	)			(14,416	)			(5,461	)			(6,703	)
Income (loss) from continuing operations			28,529				(20,966	)			(24,134	)			6,103				71,135
Income (loss) on discontinued operations			—				—				995				8,289				(1,130	)
Net income (loss)			28,529				(20,966	)			(23,139	)			14,392				70,005
Less: Net income (loss) attributable to non-controlling interest			12,995				1,960				468				(1,232	)			(2,513	)
Net income (loss) attributable to Internet Capital Group, Inc.		$	15,534			$	(22,926	)		$	(23,607	)		$	15,624			$	72,518
Basic Income (loss) Per Share Attributable to Internet Capital Group, Inc.:
Income (loss) from continuing operations		$	0.42			$	(0.60	)		$	(0.64	)		$	0.20			$	1.98
Income (loss) on discontinued operations			—				—				0.02				0.22				(0.03	)
Basic income (loss) per share		$	0.42			$	(0.60	)		$	(0.62	)		$	0.42			$	1.95
Shares used in computation of basic income (loss) per share			36,660				38,106				37,916				37,570				37,109
Diluted Income (loss) Per Share Attributable to Internet Capital Group, Inc.:
Income (loss) from continuing operations		$	0.42			$	(0.60	)		$	(0.64	)		$	0.19			$	1.76
Income (loss) on discontinued operations			—				—				0.02				0.22				(0.03	)
Diluted income (loss) per share		$	0.42			$	(0.60	)		$	(0.62	)		$	0.41			$	1.73
Shares used in computation of diluted income (loss) per share			36,705				38,106				37,916				38,106				43,670
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments		$	55,528			$	89,527			$	82,031			$	120,808			$	147,912
Working capital		$	71,700			$	83,285			$	78,749			$	78,939			$	140,504
Total assets		$	330,087			$	285,580			$	332,431			$	354,427			$	346,532
Other long-term debt, net of current portion		$	645			$	3,916			$	191			$	544			$	4,407
Senior convertible notes		$	—			$	—			$	—			$	26,590			$	37,000
Total Internet Capital Group, Inc.’s stockholders’ equity		$	280,665			$	247,509			$	304,658			$	298,538			$	256,245

ITEM 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Report and the risks discussed in our other SEC filings. The following discussion should be read in conjunction with our audited Consolidated Financial Statements and the related Notes thereto included in this Report.

Although we refer in 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.

The Consolidated Financial Statements include the consolidated accounts of Internet Capital Group, Inc., a company incorporated in Delaware, and its subsidiaries, both wholly-owned and consolidated (Internet Capital Group, Inc. and all such subsidiaries, are hereinafter referred to as “we,” “us,” “our,” “ICG,” the “Company” or “Internet Capital Group”), and have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”).

Executive Summary

Since our inception in 1996, we have focused on acquiring and building Internet software and services companies that improve the productivity and efficiency of their business customers. We call these companies our “partner companies.” As of December 31, 2009 and the date of this Report, we hold ownership interests in 13 companies that we consider our partner companies. Additionally, from time to time we hold marketable securities in other companies, which, including amounts held in escrow, as of December 31, 2009 and the date of this Report, consist of Blackboard common stock and common stock of Intercontinental Exchange, Inc. (“ICE”). The results of operations of our partner companies are reported within two segments: the “core” reporting segment and the “venture” reporting segment. The core reporting segment includes those consolidated and equity method partner companies in which ICG owns a principal controlling equity voting interest (53% on average as of December 31, 2009) 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 in 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 (24% on average as of December 31, 2009) and have less influence over their strategic direction and management decisions than we do over those of our core companies.

The various interests that we acquire in our partner companies are accounted for under one of three accounting methods: the consolidation method, the equity method and the cost method. The applicable accounting method is generally determined based on our voting interest in a partner company. Generally, if we own more than 50% of the outstanding voting securities of a partner company, and other stockholders do not possess the right to affect the significant operational management decisions of that partner company, the partner company’s accounts are reflected within our Consolidated Financial Statements. Generally, if we own between 20% and 50% of the outstanding voting securities of a partner company, that partner company’s accounts are not reflected within our Consolidated Financial Statements, but our share of the earnings or losses of the partner company is reflected in the caption “Equity loss” in our consolidated statements of operations. Partner companies not accounted for under either the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, our share of the earnings or losses of these companies is not included in our consolidated statements of operations.

Because we own significant interests in software and services companies, many of which have generated net losses, we have experienced, and expect to continue to experience, significant volatility in our results. While many of our partner companies have consistently reported losses, we have recorded net income in certain periods and experienced significant volatility from period-to-period due to infrequently occurring transactions and other events relating to our ownership interests in partner companies. These transactions and events are described in more detail in our Notes to Consolidated Financial Statements included herein and include dispositions of, changes to and impairment of our partner company ownership interests, dispositions of our holdings of marketable securities and debt repurchases.

Liquidity and Capital Resources

The following table summarizes our and our consolidated subsidiaries’ cash and cash equivalents, restricted cash and marketable securities as of December 31, 2009 and 2008:

		December 31, 2009												December 31, 2008
						Consolidated												Consolidated
		Corporate				Subsidiaries				Total				Corporate				Subsidiaries				Total
		(in thousands)
Cash and cash equivalents		$	29,443			$	26,038			$	55,481			$	73,208			$	16,087			$	89,295
Restricted Cash			—				47				47				—				232				232
		$	29,443			$	26,085			$	55,528			$	73,208			$	16,319			$	89,527
Marketable securities (1)		$	72,965			$	—			$	72,965			$	63,918			$	—			$	63,918

We believe existing cash and cash equivalents and proceeds from the potential sales of all or a portion of our interests in certain marketable securities and partner companies to be sufficient to fund our cash requirements for the foreseeable future, including any future commitments to partner companies, debt obligations and general operations requirements. As of the date of this filing, we were not obligated for any material funding and guarantee commitments to existing partner companies. We will continue to evaluate acquisition opportunities and may acquire additional ownership interests in new and existing partner companies in the next twelve months; however, such acquisitions will generally be made at our discretion.

ICG Commerce and InvestorForce have funded their operations through a combination of cash flow from operations, borrowings and equity issuances. ICG Commerce expects that its existing cash balance and cash flow from operations will be sufficient to fund its operations through 2010, while InvestorForce is likely to require additional borrowings and/or equity issuances to fund its operations through 2010. We acquired a majority interest in GovDelivery through a merger transaction that was consummated on December 31, 2009. GovDelivery expects that its existing cash balance will be sufficient to fund its operations through 2010.

Our consolidated working capital decreased $11.6 million, from $83.3 million as of December 31, 2008 to $71.7 million as of December 31, 2009. The reduction to working capital in 2009 primarily relates to acquisitions of ownership interests in partner companies, partially offset by sales of marketable securities.

Summary of Statements of Cash Flows

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Cash used in operating activities		$	(8,979	)		$	(12,385	)		$	(16,174	)
Cash provided by (used in) investing activities		$	(22,245	)		$	28,964			$	15,428
Cash used in financing activities		$	(2,935	)		$	(8,593	)		$	(37,960	)

The $3.4 million decrease in cash used in operating activities from 2008 to 2009 is primarily due to the increase to net income of $15.5 million in 2009 compared to net loss of $(22.9) million in 2008, a decrease in other income (loss) of $26.7 million and an increase in income attributable to noncontrolling interests of $11.0 million from 2008 to 2009. These items were partially offset by a deferred tax benefit recorded in 2009 and a reduction in equity loss of $28.9 million and $21.6 million, respectively. Additionally, net changes in working capital components decreased $14.6 million from 2008 to 2009, primarily driven by income tax receivables of $10.6 million in 2009.

The change from cash provided by investing activities in 2008 to cash used in investing activities in 2009 is primarily related to decreased proceeds of $38.6 million from sales of marketable securities from 2008 to 2009, as well as a $11.2 million increase in acquisitions of ownership interests in partner companies during that period.

The decrease in cash used in financing activities from 2008 to 2009 primarily relates to a $6.6 million decrease in our common stock repurchases under the Share Repurchase Program discussed in the subsection entitled, “Issuer Purchases of Equity Securities,” in “Item 5—Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

The decrease in cash used in operating activities from 2007 to 2008 was due to an improved net loss position, other income from sales of partner companies and the receipt of a $4.9 million federal income tax refund in 2008, offset by greater equity loss and impairment charges in 2008.

The increase in cash provided by investing activities from 2007 to 2008 was primarily related to proceeds received from the sale of marketable securities, partially offset by greater net acquisitions of ownership interests in partner companies in 2008 versus 2007.

The decrease in cash used in financing activities from 2007 to 2008 was the result of the repurchases of the Company’s Common Stock in 2008 being less than the repurchase of all outstanding senior convertible notes that occurred in 2007.

We and our consolidated subsidiaries are involved in various claims and legal actions arising in the ordinary course of business. We do not expect any ultimate liability with respect to these actions will materially affect our financial position or cash flows.

Contractual Cash Obligations and Commercial Commitments

The following table summarizes our contractual cash obligations and commercial commitments as of December 31, 2009:

		Payments due by period
						Less than				1-3				3-5				More than
		Total				1 year				years				years				5 years
		(in thousands)
Operating leases		$	12,658			$	2,536			$	4,376			$	2,774			$	2,972
Capital leases			241				117				109				15				—
Other debt			785				264				521				—				—
		$	13,684			$	2,917			$	5,006			$	2,789			$	2,972

Off-Balance Sheet Arrangements

We are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Our Partner Companies

As of December 31, 2009, we owned interests in 13 partner companies that are categorized below based on segment and method of accounting.

CORE PARTNER COMPANIES (%Voting Interest)
Consolidated		Equity		Cost
GovDelivery (89%)		Channel Intelligence (50%)(1)		(none)
ICG Commerce (64%)		Freeborders (31%)
InvestorForce (81%)		Metastorm (33%)
		StarCite (36%)
		WhiteFence (36%)
VENTURE PARTNER COMPANIES (%Voting Interest)
Consolidated		Equity		Cost
(none)		Acquirgy (25%)			Anthem (9	%)
		ClickEquations (33%)
		GoIndustry (26%) (2)
		SeaPass (26%)

Results of Operations

The following table summarizes the unaudited selected financial information related to our segments. Each segment includes the results of our consolidated partner companies and records our share of the earnings and losses of partner companies accounted for under the equity method of accounting. The partner companies included within the segments are consistently the same partner companies for 2009, 2008 and 2007. GovDelivery was acquired on December 31, 2009; therefore, only balance sheet information as of December 31, 2009 is included in our consolidated financial information. Additionally, Acquirgy and SeaPass, the partner companies in which we acquired an interest during 2009, are included in the venture segment from their respective acquisition dates, and ClickEquations is included in the venture segment beginning on March 7, 2008, at which time we acquired more than 20% of its voting securities and began to record our share of the earnings and losses of ClickEquations under the equity method of accounting. The method of accounting for any particular partner company may change based on our ownership interest.

“Discontinued Operations and Dispositions” are those partner companies that have been sold or ceased operations and are no longer included in a segment for the periods presented. “Corporate” expenses represent the general and administrative expenses of our business operations, which include supporting our partner companies and operating as a public company. The measure of segment net loss reviewed by us does not include items such as gains on the disposition of partner company ownership interests and marketable securities holdings, losses on convertible note repurchases and transactions, income taxes, accounting changes and impairment charges associated with partner companies, which are reflected in “Other” reconciling items in the information that follows.

Segment Information
(in thousands)

														Reconciling Items
														Discontinued
										Total				Operations and												Consolidated
		Core				Venture				Segment				Dispositions				Corporate				Other				Results
For the Year Ended December 31, 2009
Revenues		$	90,252			$	—			$	90,252			$	—			$	—			$	—			$	90,252
Net income (loss) attributable to Internet Capital Group, Inc.		$	26,049			$	(2,845	)		$	23,204			$	—			$	(15,858	)		$	8,188			$	15,534
For the Year Ended December 31, 2008
Revenues		$	71,181			$	—			$	71,181			$	—			$	—			$	—			$	71,181
Net income (loss) attributable to Internet Capital Group, Inc.		$	(23,758	)		$	(4,381	)		$	(28,139	)		$	—			$	(18,966	)		$	24,179			$	(22,926	)
For the Year Ended December 31, 2007
Revenues		$	52,923			$	—			$	52,923			$	—			$	—			$	—			$	52,923
Net income (loss) attributable to Internet Capital Group, Inc.		$	(18,194	)		$	(856	)		$	(19,050	)		$	1,849			$	(17,022	)		$	10,616			$	(23,607	)

For the Years Ended December 31, 2009, 2008 and 2007

Results of Operations — Core Partner Companies

The following presentation of our Results of Operations — Core Partner Companies includes the results of our consolidated core partner companies and our share of the results of our equity method core partner companies.

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Selected data:
Revenues		$	90,252			$	71,181			$	52,923
Cost of revenue			(56,920	)			(46,400	)			(39,523	)
Selling, general and administrative			(18,321	)			(16,390	)			(11,101	)
Research and development			(9,015	)			(10,212	)			(6,033	)
Impairment related and other			(521	)			(994	)			(188	)
Operating expenses			(84,777	)			(73,996	)			(56,845	)
Interest and other			433				(1,139	)			451
Income tax benefit (expense)			28,883				(687	)			(309	)
Equity loss			(8,742	)			(19,117	)			(14,414	)
Net income (loss)		$	26,049			$	(23,758	)		$	(18,194	)

Revenues

Revenue increased from $71.2 million in 2008 to $90.3 million in 2009, an increase of $19.1 million. The majority of this increase is attributable to continued revenue growth at ICG Commerce. ICG Commerce’s revenue increased 28% in 2009 from 2008 due to significant new customers, as well as an increase in revenues from existing customers. The majority of ICG Commerce’s contracts are terminable by the customer on short notice or without notice, sometimes without financial penalty. Accordingly, we do not believe it is appropriate to characterize the total contract value of these long-term relationships as backlog. Increased revenues at InvestorForce in 2009 also contributed to the annual increase in consolidated revenue, while revenues of Vcommerce Corporation (“Vcommerce”) from January 2009 through the date of its deconsolidation in August 2009 decreased slightly from the eight months of revenue consolidated in 2008.

Revenue increased from $52.9 million in 2007 to $71.2 million in 2008, an increase of $18.3 million. $11.9 million of the increase is attributable to ICG Commerce. ICG Commerce’s revenue increased 23% in 2008 over 2007 due to its expanding customer base and the continuation of long-term relationships. The consolidation of Vcommerce beginning in May 2008 contributed the majority of the residual increase.

Operating Expenses

Operating expenses increased from $74.0 million in 2008 to $84.8 million in 2009, an increase of $10.8 million. This increase is the result of increases in the cost of revenues and selling, general and administrative expenses, primarily expenses related to an increase in headcount of approximately 100 employees in 2009 needed to service new customers at ICG Commerce. An increase in selling, general and administrative expenses at InvestorForce also contributed to the increase in operating expenses from 2008 to 2009 and is related to the hiring of certain additional key personnel in late 2008 and early 2009. The decrease in research and development costs from 2008 to 2009 is related to cost reduction efforts at Vcommerce in the first half of 2009.

Operating expenses increased from $56.8 million in 2007 to $74.0 million in 2008, an increase of $17.2 million. This increase is the result of the consolidation of Vcommerce beginning in May 2008, which contributed $9.5 million, as well as an increase in operating expenses related to ICG Commerce’s increased revenues in 2008.

Income Tax

ICG Commerce recorded an income tax benefit of $28.9 million for the year ended December 31, 2009 related to the reduction of a portion of ICG Commerce’s valuation allowance. Based on ICG Commerce’s recent history of profitability and estimates of continued profitability, ICG Commerce now believes it is more likely than not that the majority of its available net deferred tax assets will be realized.

Income tax expense increased $0.4 million from 2007 to 2008 due to an increase in net income at ICG Commerce.

Equity Loss

A portion of our net results from our core partner companies is derived from those partner companies in which we hold a substantial noncontrolling ownership interest. Our share of the net income or net losses of these partner companies is recorded in our Consolidated Statements of Operations under “Equity loss.”

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Selected data:
Total revenues		$	184,309			$	193,328			$	160,985
Total net loss		$	(15,733	)		$	(44,928	)		$	(40,973	)
Our share of total net loss		$	(6,653	)		$	(17,705	)		$	(14,160	)
Amortization of intangible assets			(2,089	)			(1,412	)			(254	)
Equity loss		$	(8,742	)		$	(19,117	)		$	(14,414	)

Revenue from our core partner companies accounted for under the equity method of accounting decreased from $193.3 million in 2008 to $184.3 million in 2009, a decrease of $9.0 million, primarily due to decreases in revenue at Metastorm, StarCite and WhiteFence. These decreases were driven by the difficult macroeconomic conditions that began in late 2008 and continue through 2009. Despite the decrease in aggregate revenue, net results at each of our equity method core companies improved from 2008 to 2009 due to improved cost management and the absence of one-time charges recorded in 2008, resulting in a decrease in aggregate net loss in 2009 compared to 2008 and a significant decrease in our share of this aggregate net loss.

Revenue from our equity-method core partner companies increased from $161.0 million in 2007 to $193.3 million in 2008, an increase of $32.3 million. This increase relates to increases in revenue at Metastorm partially as the result of an acquisition, as well as at many of our other core partner companies. Aggregate net loss also increased from 2007 to 2008, which was primarily the result of increased net losses at Metastorm and StarCite. Metastorm’s net loss increased as the result of increased amortization expense associated with an acquisition, litigation expenses and expenses associated with an initial public offering that was not consummated. StarCite’s net loss increased as the result of severance and merger integration expenses. Accordingly, our share of the total net loss also increased during this period.

Results of Operations — Venture Partner Companies

The following presentation of our Results of Operations — Venture Partner Companies includes our share of the results of our equity method venture partner companies. There are currently no consolidated partner companies that we consider to be part of our venture reporting segment. Accordingly, our share of the results of our venture partner companies is recorded in our Consolidated Statements of Operations under “Equity loss.”

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Selected data:
Our share of total net loss (“Equity loss”)		$	(2,845	)		$	(4,381	)		$	(856	)

Equity loss related to our venture partner companies decreased from 2008 to 2009 due to the improvement of GoIndustry’s net results in 2009, partially offset by a full year of equity loss related to ClickEquations in 2009 compared with ten months in 2008 and the acquistions of Acquirgy and SeaPass in 2009.

Equity loss related to our venture partner companies increased from 2007 to 2008 as a result of GoIndustry recording more net losses in the 2008 period and the addition of ClickEquations as an equity method company in 2008.

Results of Operations — Reconciling Items

Discontinued Operations and Dispositions

The following is a summary of the components included in “Discontinued Operations and Dispositions,” a reconciling item for segment reporting purposes:

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Discontinued operations		$	—			$	—			$	995
Equity income (loss) of partner companies sold/disposed of			—				—				854
Net income		$	—			$	—			$	1,849

In 2007, InvestorForce received $1.0 million from an escrow release related to its sale of its database division to Morningstar, Inc. (“Morningstar”), which we recorded as a gain in that period. The operating activities for InvestorForce’s database division for 2007 was a loss of $0.2 million. Also in 2007, we received $0.2 million of additional proceeds from the sale of the assets of Delphion, Inc., which was recorded as a gain during the year ended December 31, 2007. In accordance with accounting guidance for the presentation of financial statements, these operations have been treated as discontinued operations. Accordingly, the operating results of these discontinued operations have been presented separately from continuing operations and include the gains or losses recognized on disposition. See Note 15, “Discontinued Operations” to our Consolidated Financial Statements.

The impact to our consolidated results of equity method partner companies in which we disposed of our ownership interest, or which have ceased operations, during 2007 is also included in the caption “Dispositions” for segment reporting purposes. Equity income primarily relates to Marketron International, Inc. (“Marketron”) in 2007.

Corporate

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
General and administrative		$	(16,257	)		$	(19,775	)		$	(21,680	)
Impairment related and other			—				(794	)			—
Interest income (expense), net			399				1,603				4,658
Net loss		$	(15,858	)		$	(18,966	)		$	(17,022	)

General and Administrative

The decrease of $3.5 million in general and administrative expenses from 2008 to 2009 is primarily due to a decrease of $3.1 million in equity based compensation, coupled with decreases of $0.3 million in consulting fees, $0.2 million in financial reporting costs and $0.2 million in insurance premiums, partially offset by an increase in employee-related expenses of $0.3 million primarily related to increased headcount.

Our general and administrative expenses decreased $1.9 million from 2007 to 2008, primarily due to decreases in employee-related expenses associated with our annual bonus program of $1.4 million and stock-based compensation of $0.7 million, partially offset by other outside services of $0.2 million.

Impairment-Related and Other

Our impairment related and other expenses in 2008 of $0.8 million related to severance charges. Those charges primarily related to cash payments of $0.7 million paid in January 2009. The residual balance is associated with related benefits, which were paid during 2009.

Interest Income/Expense

The net decrease of $1.2 million and $3.1 million in our interest income (expense) from 2008 to 2009 and 2007 to 2008, respectively, is attributable to the decrease in our average cash balances compounded with decreases in interest rates.

Other

		Year Ended December 31,
		2009				2008				2007
		(in thousands)
Other income (loss), net (excluding impairments of cost method partner companies)		$	15,976			$	49,012			$	6,783
Impairments of cost method partner companies			—				(4,735	)			—
Other income (loss), net			15,976				44,277				6,783
Impairment of carrying value of GoIndustry (venture) (equity method partner company)			(544	)			(10,204	)			—
Impairment of goodwill related to Vcommerce (core) (consolidated partner company)			(4,876	)			(8,264	)			—
Income tax benefit (expense)			10,627				330				4,301
Noncontrolling interest			(12,995	)			(1,960	)			(468	)
Net income		$	8,188			$	24,179			$	10,616

Other Income (Loss), Net

Other income (loss), net of $16.0 million in 2009 relates primarily to a gain on the sale of marketable securities of $21.3 million, coupled with gains totaling $2.6 million related to the sale of interests in partner companies. These gains are offset by unrealized losses related to the mark-to-market impact of marketable securities hedges of $7.6 million and a $0.3 million net dilution loss resulting from equity transactions at certain of our partner companies during 2009, which affected our ownership in those partner companies.

Other income (loss), net of $44.3 million in 2008 relates primarily to the sale of interests in partner companies of $38.0 million and unrealized gains related to the mark-to-market impact of marketable securities hedges of $10.2 million.

Other income (loss), net of $(0.2) million in 2007 relates primarily to the loss on the repurchases of our senior convertible notes of $3.8 million, partially offset by an $8.8 million gain on the sale of Marketron.

See Note 13, “Other Income (Loss),” to our Consolidated Financial Statements.

Impairment Charges

We recorded impairment charges of $5.4 million in 2009. Of this amount, $4.9 million related to the impairment of goodwill associated with Vcommerce, and the remaining $0.5 million was an impairment charge related to our carrying value of GoIndustry.

We recorded impairment charges of $23.2 million in 2008. Of this amount, $8.3 million related to the impairment of goodwill associated with our partner companies, and $14.9 million was a reduction to our basis in certain cost and equity method partner companies.

See Note 3, “Ownership Interests in Partner Companies, Goodwill and Intangibles, net,” to our Consolidated Financial Statements.

Corporate Income Tax

The income tax benefit recorded in 2009 and 2008 represents amounts that can now be carried back to 2005 as a result of newly-enacted legislation, as well as, the results of the Internal Revenue Service examination of the Company’s federal income tax returns for the years 2005, 2006 and 2007.

See Note 14, “Income Taxes,” to our Consolidated Financial Statements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to our interests in our partner companies, marketable securities, revenues, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies are important to the presentation of our financial statements and require the most difficult, subjective and complex judgments.

Valuation of Goodwill, Intangible Assets and Ownership Interests in Partner Companies

We test goodwill for impairment annually, 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. Additionally, we perform ongoing business reviews to evaluate our ownership interests in partner companies accounted for under the equity and cost methods of accounting to determine whether an other than temporary decline in the value of a partner company should be recognized. We use quantitative and qualitative measures to assess the need to record impairment losses on goodwill, intangible assets and ownership interests in our partner companies when impairment indicators are present. Where impairment indicators are present, we determine the amount of the impairment charge as the excess of the carrying value over the fair value. We determine fair value using a combination of the discounted cash flow methodology, which is based upon converting expected future cash flows to present value, and the market approach, which includes analysis of market price multiples of companies engaged in lines of business similar to the company being evaluated. The market price multiples are selected and applied to the company based on relative performance, future prospects and risk profile of the company in comparison to the guideline companies. Significant assumptions relating to future operating results must be made when estimating the future cash flows associated with these companies. Significant assumptions relating to the achievement of business plan objectives and milestones must be made when evaluating whether impairment indicators are present. Should unforeseen events occur or should operating trends change significantly, additional impairment losses could occur.

Revenue Recognition

ICG Commerce may assume all or a part of a customer’s procurement function as part of sourcing arrangements. Typically, in these engagements, ICG Commerce is paid a fixed fee agreed upon in advance and/or a fee based on a percentage of the amount spent by its customers’ respective purchasing departments in the specified areas ICG Commerce manages. Additionally, in some cases, ICG Commerce has the opportunity to earn additional fees based on the level of savings achieved for customers. ICG Commerce recognizes revenue and any additional fees as earned, which is typically over the life of the customer contract, which approximates the life of the customer relationship.

Vcommerce was a consolidated company from May 2008, when our ownership stake increased to 53%, through August 2009, at which time it sold substantially all of its assets and liabilities. Vcommerce generated revenue from service fees earned by it in connection with the development and operations of its clients’ e-commerce businesses. Service fee revenue primarily consisted of transaction fees, implementation fees and professional services fees, as well as access and maintenance fees. Vcommerce recognized revenue from services provided in accordance with general revenue recognition criteria either over the term of the customer contract or as services were rendered, depending on the type of revenue.

Equity Income/Loss

We record our share of the net income/loss of our partner companies’ that are accounted for under the equity method of accounting as equity income/loss. Since we do not control these companies, this equity income/loss is based on unaudited results of operations of our partner companies and may require adjustment in the future when the audits of our partner companies are complete. The compilation and review of these results of operations require significant judgment and estimates by management.

Deferred Income Taxes

We record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. We consider future taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets, an adjustment to the deferred tax assets would be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that the net deferred tax assets would be realized, the previously provided valuation allowance would be reversed.

Commitments and Contingencies

From time to time, we are a defendant or plaintiff in various legal actions that arise in the normal course of business. From time to time, we are also a guarantor of various third-party obligations and commitments. We are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves required for these contingencies, if any, which would be charged to earnings, is made after careful analysis of each individual matter. The required reserves may change in the future due to new developments in each matter or changes in circumstances, such as a change in settlement strategy. Changes in required reserves could increase or decrease our earnings in the period the changes are made.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued amended guidance requiring additional fair value disclosures about 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 is effective for us beginning on January 1, 2010, and is not expected to have a significant impact on our consolidated financial statements.

In October 2009, the FASB issued accounting guidance for revenue recognitions 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 us beginning on January 1, 2011. We are currently evaluating the effect this guidance will have on our consolidated financial statements.

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 us beginning on January 1, 2011. We are currently evaluating the effect this guidance will have on our 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 is effective for us beginning on January 1, 2010, and is not expected to have a significant impact on our consolidated financial statements.

ITEM 7A.		Quantitative and Qualitative Disclosures About Market Risk

We are exposed to equity price risks on the marketable portion of our equity securities. Our public holdings at December 31, 2009 include equity positions in companies in sectors that have experienced significant historical volatility in their stock prices. A 20% adverse change in equity prices, based on a sensitivity analysis of our public holdings as of December 31, 2009, would result in approximately a $14.5 million decrease in the fair value of our public holdings. At December 31, 2009, the Company was party to cashless collar contracts with various expiration dates in 2010 to hedge 1,000,000 shares of its total holdings of 1,619,571 shares of Blackboard common stock at weighted average minimum and maximum prices per share of $25.44 and $57.60, respectively. In January 2010, the Company reduced the amount of hedged shares by 250,000 by settling those hedge contracts with the counterparty. As of the end of January 2010 and March 1,2010, the Company remains a party to cashless collar contracts with various expiration dates in 2010 to hedge 750,000 shares of its total holdings of 831,866 shares of Blackboard common stock at weighted average minimum and maximum prices per share of $25.96 and $58.09, respectively. Each of these contracts limits the Company’s exposure to price declines in the underlying equity securities. Additionally, each of these contracts limits the Company’s maximum benefits from price increases in the underlying equity securities.

Cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments. Marketable securities are carried at fair value.

We have historically had very low exposure to changes in foreign currency exchange rates and, as such, have not used derivative financial instruments to manage foreign currency fluctuation risk.

ITEM 8.		Financial Statements and Supplementary Data

The following Consolidated Financial Statements, and the related Notes thereto, of Internet Capital Group, Inc. and the Report of Independent Registered Public Accounting Firm are filed as a part of this Annual Report on Form 10-K/A.

		Page
		Number
Report of Independent Registered Public Accounting Firm			36
Consolidated Balance Sheets as of December 31, 2009 and 2008			37
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007			38
Consolidated Statements of Changes in Equity for the years ended December 31, 2009, 2008 and 2007			39
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 2007			40
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007			41
Notes to Consolidated Financial Statements			42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Internet Capital Group, Inc.:

We have audited the accompanying consolidated balance sheets of Internet Capital Group, Inc. and subsidiaries (the Company) as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in equity, comprehensive income (loss) and cash flows for each of the years in the three-year period ended December 31, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Internet Capital Group, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U. S. generally accepted accounting principles.

As discussed in Note 7 to the consolidated financial statements, the Company retrospectively changed its method of accounting for convertible debt instruments that may be settled in cash upon conversion due to the adoption of a new accounting standard issued by the Financial Accounting Standards Board, as of January 1, 2009.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Internet Capital Group, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 16, 2010 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Philadelphia, Pennsylvania
March 16, 2010

INTERNET CAPITAL GROUP, INC.

		December 31,				December 31,
		2009				2008
		(in thousands, except per share data)
Assets
Current Assets
Cash and cash equivalents		$	55,481			$	89,295
Restricted cash			47				232
Accounts receivable, net of allowance ($590-2009; $721-2008)			19,411				14,526
Deferred tax assets			8,147				—
Income tax receivable			11,071				444
Prepaid expenses and other current assets			2,183				2,624
Total current assets			96,340				107,121
Marketable securities			73,512				57,367
Hedges of marketable securities			—				6,551
Fixed assets, net			4,177				1,783
Ownership interests in partner companies			97,777				83,751
Goodwill			20,588				26,658
Intangibles, net			15,940				713
Deferred tax assets			20,724				—
Other			1,029				1,636
Total Assets		$	330,087			$	285,580
Liabilities
Current Liabilities
Current maturities of other long-term debt		$	381			$	318
Accounts payable			1,656				2,026
Accrued expenses			4,464				4,461
Accrued compensation and benefits			12,227				10,385
Deferred revenue			5,912				6,646
Total current liabilities			24,640				23,836
Long-term debt			645				3,916
Hedges of marketable securities			547				—
Deferred revenue			83				1,910
Other			1,010				1,092
Total Liabilities			26,925				30,754
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, 38,796 (2009) and 38,703 (2008) issued			39				39
Additional paid-in capital			3,573,347				3,569,919
Treasury stock, at cost, 2,440 shares (2009) and 1,948 shares (2008)			(12,031	)			(9,329	)
Accumulated deficit			(3,351,888	)			(3,367,422	)
Accumulated other comprehensive income			71,198				54,302
Total Internet Capital Group, Inc.’s Stockholders’ Equity			280,665				247,509
Noncontrolling Interest			22,497				7,317
Total Equity			303,162				254,826
Total Liabilities and Equity		$	330,087			$	285,580

See accompanying notes to Consolidated Financial Statements.

INTERNET CAPITAL GROUP, INC.

		Year Ended December 31,
		2009				2008				2007
		(in thousands, except per share data)
Revenues		$	90,252			$	71,181			$	52,923
Operating expenses
Cost of revenue			56,920				46,400				39,523
Selling, general and administrative			34,578				36,165				32,781
Research and development			9,015				10,212				6,033
Impairment related and other			5,397				10,052				188
Total operating expenses			105,910				102,829				78,525
			(15,658	)			(31,648	)			(25,602	)
Other income (loss), net			16,578				43,225				6,830
Interest income			446				1,850				5,338
Interest expense			(216	)			(334	)			(276	)
Income (loss) from continuing operations before income taxes and equity loss			1,150				13,093				(13,710	)
Income tax benefit (expense)			39,510				(357	)			3,992
Equity loss			(12,131	)			(33,702	)			(14,416	)
Income (loss) from continuing operations			28,529				(20,966	)			(24,134	)
Income (loss) on discontinued operations			—				—				995
Net income (loss)			28,529				(20,966	)			(23,139	)
Less: Net income attributable to the noncontrolling interest			12,995				1,960				468
Net income (loss) attributable to Internet Capital Group, Inc.		$	15,534			$	(22,926	)		$	(23,607	)
Basic income (loss) per share attributable to Internet Capital Group, Inc.:
Income (loss) from continuing operations		$	0.42			$	(0.60	)		$	(0.64	)
Income (loss) on discontinued operations			—				—				0.02
Net income (loss)		$	0.42			$	(0.60	)		$	(0.62	)
Shares used in computation of basic income (loss) per share			36,660				38,106				37,916
Diluted income (loss) per share attributable to Internet Capital Group, Inc.:
Income (loss) from continuing operations		$	0.42			$	(0.60	)		$	(0.64	)
Income (loss) on discontinued operations			—				—				0.02
Net income (loss)		$	0.42			$	(0.60	)		$	(0.62	)
Shares used in computation of diluted income (loss) per share			36,705				38,106				37,916

See accompanying notes to Consolidated Financial Statements.

INTERNET CAPITAL GROUP, INC.

		Internet Capital Group, Inc. Stockholders’ Equity
																		Additional								Accumulated Other
		Common Stock								Treasury Stock, at cost								Paid-In				Accumulated				Comprehensive				Noncontrolling
		Shares				Amount				Shares				Amount				Capital				Deficit				Income				Interest				Total
Balance as of December 31, 2006			38,598			$	39				—			$	—			$	3,552,681			$	(3,317,095	)		$	62,913			$	4,123			$	302,661
Cumulative effect of change in accounting principle for convertible debt			—				—				—				—				8,361				(3,794	)			—				—				4,567
Balance at December 31, 2006, as adjusted			38,598				39				—				—				3,561,042				(3,320,889	)			62,913				4,123				307,228
Reacquisition of equity (Note 7)			—				—				—				—				(11,588	)			—				—				—				(11,588	)
Share-based compensation expense related to restricted stock			—				—				—				—				2,334				—				—				—				2,334
Impact of partner company equity transactions (Note 3)			—				—				—				—				7,309				—				—				533				7,842
Issuance of restricted stock			15				—				—				—				—				—				—				—				—
Forfeitures of restricted stock			(36	)			—				—				—				—				—				—				—				—
Share-based compensation related to stock appreciation rights and stock options			—				—				—				—				4,031				—				—				—				4,031
Issuance of deferred stock units to Board of Directors			74				—				—				—				808				—				—				—				808
Equity-based compensation tax benefit			—				—				—				—				332				—				—				—				332
Noncontrolling owners share of AOCI of consolidated subsidiary			—				—				—				—				—				—				(19	)			19				—
Net unrealized appreciation in marketable securities and reclassification adjustments			—				—				—				—				—				—				21,953				—				21,953
Net income (loss)			—				—				—				—				—				(23,607	)			—				468				(23,139	)
Balance as of December 31, 2007			38,651				39				—				—				3,564,268				(3,344,496	)			84,847				5,143				309,801
Share-based compensation expense related to restricted stock			—				—				—				—				1,577				—				—				—				1,577
Impact of partner company equity transactions (Note 3)			—				—				—				—				(629	)			—				—				331				(298	)
Issuance of restricted stock			36				—				—				—				—				—				—				—				—
Surrenders of restricted stock			(17	)			—				—				—				(87	)			—				—				—				(87	)
Share-based compensation related to stock appreciation rights and stock options			—				—				—				—				4,167				—				—				—				4,167
Exercise of stock appreciation rights, net of surrenders			3				—				—				—				(6	)			—				—				—				(6	)
Issuance of deferred stock units to Board of Directors			30				—				—				—				616				—				—				—				616
Repurchase of common stock			—				—				(1,948	)			(9,329	)			—				—				—				—				(9,329	)
Noncontrolling owners share of AOCI of consolidated subsidiary			—				—				—				—				—				—				117				(117	)			—
2008 LP capital contribution			—				—				—				—				13				—				—				—				13
Net unrealized depreciation in marketable securities and reclassification adjustments			—				—				—				—				—				—				(30,662	)			—				(30,662	)
Net income (loss)			—				—				—				—				—				(22,926	)			—				1,960				(20,966	)
Balance as of December 31, 2008			38,703				39				(1,948	)			(9,329	)			3,569,919				(3,367,422	)			54,302				7,317				254,826
Share-based compensation expense related to restricted stock			—				—				—				—				256				—				—				—				256
Impact of partner company equity transactions (Note 3)			—				—				—				—				331				—				—				2,115				2,446
Issuance of restricted stock			24				—				—				—				—				—				—				—				—
Surrenders of restricted stock			(1	)			—				—				—				(8	)			—				—				—				(8	)
Share-based compensation related to stock appreciation rights and stock options			—				—				—				—				2,633				—				—				—				2,633
Issuance of deferred stock units to Board of Directors			70				—				—				—				202				—				—				—				202
Repurchase of common stock			—				—				(492	)			(2,702	)			—				—				—				—				(2,702	)
Noncontrolling owners share of AOCI of consolidated subsidiary			—				—				—				—				—				—				(70	)			70				—
2009 LP capital contribution			—				—				—				—				14				—				—				—				14
Net unrealized depreciation in marketable securities and reclassification adjustments			—				—				—				—				—				—				16,966				—				16,966
Net income (loss)			—				—				—				—				—				15,534				—				12,995				28,529
Balance as of December 31, 2009			38,796			$	39				(2,440	)		$	(12,031	)		$	3,573,347			$	(3,351,888	)		$	71,198			$	22,497			$	303,162