EHTH » Topics » Note 8 - Subsequent Event

This excerpt taken from the EHTH 10-Q filed Nov 14, 2007.

Note 8 – Subsequent Event

On November 6, 2007, we entered into an amendment to an operating lease to extend our lease on approximately 28,813 square feet of existing office space located in Gold River, California, and to lease an additional 10,084 square feet of office space in the same building. Pursuant to the lease amendment, the lease expires on December 31, 2012. As a result of the lease amendment, our future minimum operating lease payments are expected to increase $3.1 million over the amounts in the tabular presentation of future minimum lease payments under non-cancellable operating leases in Note 6 – Commitments and Contingencies – Leases. The following table shows the increase in our future minimum operating lease obligations as a result of this amendment (in thousands):

 

Year Ending December 31,

   Increase in
Operating
Lease
Obligations
as a Result
of the
Amendment

2007 (remaining 3 months)

   $ 24

2008

     292

2009

     292

2010

     653

2011

     924

Thereafter

     947
      

Total

   $ 3,132
      

 

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Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, among other things, statements concerning expectations regarding the impact of an increase in submitted applications resulting from marketing partner referrals; existence of an opportunity to accelerate application growth through additional marketing and advertising spending; fluctuation in the cost of acquiring new members and related factors; increased focus on technology development; enhancement of our ecommerce platform; potential expansion of our pilot program to market insurance in China; increases in technology and content expenses, general and administrative expenses, marketing expenses and customer care and enrollment expenses; fluctuation in other income, net; estimate of our allowance for forfeitures; increases in commission revenue as a result of growth in our membership base and our continued spending on marketing initiatives; timing of the introduction and projected benefits of new product or service offerings such as a platform to market health insurance products in combination with health savings accounts, and factors that could impact the success of any such offering; plans to evaluate new strategies and opportunities in other segments of the health insurance market and the related projected benefits; increases in our investment of time and resources in additional revenue sources and increases in sponsorship, licensing and other revenue; plans to increase spending in the marketing partner and online advertising channels and to increase testing and pilot work in the traditional media area; expectations regarding increases in cost of acquisition and marketing expenses as a percentage of revenue; our future effective income tax rate and factors that could affect such tax rate and our valuation allowance; our expectation that we will not pay federal and state taxes in 2007; sufficiency of current cash and cash generated from operations and factors that impact future capital requirements; investments in, or acquisitions of, complementary businesses, products or technologies; the impact of recent accounting pronouncements; exposure to adverse changes in exchange rates; issues with collection; adequacy of resources and expertise to comply with the Sarbanes-Oxley Act of 2002; the growing number of small businesses and increasing number of self-employed; employers seeking to reduce costs associated with providing health insurance; demand in the individual and family health insurance market; increases in stock-based compensation expense; estimates of volatility and forfeiture rates for purposes of SFAS 123R; factors that will impact the successful promotion of our brand; factors that could influence the rate at which we convert consumers visiting our ecommerce platform into members, including the effectiveness of any integration of our technology with our carrier partners and implementation of instant electronic underwriting and membership with a major carrier partner; factors that could influence the success of our relationship with our marketing partners; plans to expand our Chinese operations; our intellectual property providing us a competitive advantage in the distribution of individual, family and small business health insurance; factors that could influence the success of establishing an insurance business in China; our ability to obtain any necessary approvals in China as a result of our subsidiary being wholly foreign owned or otherwise; the date of completion of implementation of our commission accounting system; factors that will influence the success of our sponsorship advertising and technology licensing businesses; introduction of a new sponsorship advertising platform and the utilization or success of such platform; changes to existing insurance regulations and the impact of those changes; factors that will affect our future success and growth; as well as other statements regarding our future operations, financial condition, prospects and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A of this report and those discussed in our other Securities and Exchange Commission filings. The following discussion should be read in conjunction with our Annual Report on Form 10-K as filed with the Securities and Exchange Commission in March 2007, and the audited consolidated financial statements and related notes contained therein. We undertake no obligation to update or revise any of these forward-looking statements whether as a result of new information, future events or otherwise. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.

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