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MIVA, Inc.

5220 Summerlin Commons Boulevard
Fort Myers, Florida 33907
Telephone: (239) 561-7229
Toll Free: (888) 882-3178
Fax: (239) 561-7224
Web site: http://www.miva.com

Public Company
1998 as BeFirst Internet Corp.
Employees: 477
Sales: $194.62 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: MIVA
NAIC: 541890 Other Services Related to Advertising; 518112 Web Search Portals; 518210 Data Processing, Hosting, and Related Services

MIVA, Inc., provides online advertising services in which a small fee is charged each time an Internet user "clicks" on a sponsored listing to view a client's web site. Such advertisements can appear in the results on a search engine, in an email, or when a cursor is moved over a word of text on a web page. The firm also helps clients generate phone calls from online ads and send ads via cell phone text messages. Before taking the name MIVA in mid-2005 the company operated as FindWhat.com in the United States and as Espotting in Europe.


MIVA traces its beginnings to March 1998, when Be-First Internet Corp. was founded in New York by Courtney Jones, Craig Pisaris-Henderson, and Robert Brahms. The trio, who had backgrounds in advertising, marketing, and Internet businesses, launched the new company to market a service called BeFirst RankPro which helped clients improve their positioning in Internet search results. The following June BeFirst merged with a publicly traded sports card retailer, Collectibles America, Inc., which then changed its name to BeFirst.com.

In September 1999 the FindWhat.com search engine debuted. FindWhat.com performed Internet searches that gave its advertising clients a high placing in the results, charging them a small fee each time a user clicked on their listing. Advertisers could choose the words that best represented their business or were likely to be used by potential customers, and could modify the words over time to improve results. They would specify an amount they were willing to pay for each word, and the results of an online search would list any advertisers who had bid on the words used in descending order of bid amount ahead of unpaid findings. After the search engine's introduction, the firm changed its name to FindWhat.com.

The company soon began a promotional campaign that included partnering with Los Angeles-based KIIS-FM to give away $2 million, and giving another $1 million away to users of its web site. In January 2000 Beasley Broadcast Group agreed to give the company an additional $3 million worth of radio and Internet advertising in exchange for 600,000 shares of stock. Other affiliated firms would receive a commission for each user who clicked from their site to FindWhat.com. Early clients included eBay, TheStreet.com, and Wine.com.

In February 2000 Andrew Lessman's Winning Combination, a direct response and nutritional supplement firm, paid $2 million for 500,000 shares of FindWhat.com stock, also receiving help in launching its YourVitamins.com web site. In the spring a new plain-text search function was added and both Go2Net and Dogpile added FindWhat.com to their "metacrawler" search engines, which combined results from multiple sources including Google, Excite, and AltaVista. In April the growing FindWhat.com's stock moved from the over-the-counter bulletin board to the NASDAQ SmallCap market.

By May the number of advertisers since the start of the year had tripled, more than 10,000 distribution partners' sites featured the firm's ads, and searches using FindWhat.com were topping two million per day. In September the company raised another $2.6 million in a private stock sale.

The dot-com bubble was bursting, however, and in October FindWhat.com offered struggling e-commerce firms a limited amount of free advertising, garnering much publicity for itself in the process. The company's own stock price had fallen from over $18 in March to $1.25 by October, and for 2000 FindWhat.com reported a loss of $8.8 million on income of $2.9 million. The firm now had 50 employees.


In early 2001 FindWhat.com's sponsored search results began appearing on Excite@Home's search pages underneath a list of the top ten results and several sponsored links from Excite advertisers. In the spring the firm's leadership was shuffled, with cofounder Craig Pisaris-Henderson taking the title of CEO in addition to his job of president and Robert Brahms named vice-chairman, with Courtney Jones continuing to serve as board chair. In June, the company announced its first profitable quarter.

In December 2001 FindWhat.com's results were dropped from Excite, costing the firm 7.5 percent of its revenues, and the company was accused by pay-per-click industry leader Overture Services, Inc. (formerly known as GoTo.com) of infringing on its patent for click-through advertisements. Overture offered FindWhat.com a license for the technology at a rate the firm called "economically and structurally oppressive," and in January 2002 it filed suit in Federal Court to challenge the enforceability and validity of the patent.

Some advertisers were unhappy with the results they received from pay-per-click listings, and a suit was filed against the company and several other firms by the owner of the Body Solutions nutritional supplement line, which alleged that searches for its name led users to paid ads from rival businesses. For the fiscal year the firm's revenues shot up to $20.4 million, and its net loss fell to $398,000. FindWhat.com claimed more than 15,000 active advertising accounts.

In August 2002 President and CEO Craig Pisaris-Henderson was named chairman of the board, with Courtney Jones moving to the post of vice-chair, and in September the firm unveiled a new "private label" version of its services that was marketed to large Internet portals and search engine operators such as Terra Lycos.

In late 2002 the company relocated to a new 32,000-square-foot headquarters in Fort Myers, Florida and upgraded its technical infrastructure at a second facility in Atlanta. It also maintained an advertising sales office in midtown Manhattan. In December, a private stock placement brought in an additional $5.8 million. 2002 proved to be the company's first profitable year, with earnings of $10.7 million recorded on sales of $43 million.

The spring of 2003 saw new services AdAnalyzer and AutoBid introduced. The former helped clients determine the return on investment for their advertisements through tracking of Internet users' click-throughs, while the latter was designed to automatically manage the rates they paid for specific keywords. They were also bundled in a software suite called Cruise Control that included ad scheduling and replenishing products.


MIVA is all about helping your business grow through performance marketing services. From setting up storefronts to delivering customers to your website, MIVA can help in multiple ways.

In June 2003 the firm announced plans to merge with Espotting Media of the United Kingdom. Founded in 2000, Espotting offered pay-per-click and other Internet advertising services to over 16,000 customers in 11 European countries, with roughly the same annual revenues as FindWhat.com, though it was not yet profitable. Soon after the announcement was made, another private stock placement added $20.3 million to the firm's coffers.

In September the company began offering paid listings in Japan via Mitsui, and in December a private label contract was signed with Verizon Information Services, providers of an online yellow pages. Another major private label client, Applied Semantics, had been lost during the year when it was acquired by rival Google.


In January 2004 FindWhat.com bought Miva Corp. of San Diego, California, for $8 million. The seven-year-old Miva provided e-commerce software and services to small and midsized businesses. In March a $33.5 million deal was reached to purchase Comet Systems, Inc., a seven-year-old maker of computer desktop search and email systems including AdZapper, which blocked pop-up ads, and Privacy Manager, which allowed use of a web browser without leaving a record of sites visited. Much of Comet's software was offered for free, and the millions of users that had installed it on their computers were seen as ripe subjects for advertising.

In March a new private label relationship with Thomas Global Register LLC was announced that would put FindWhat.com ads on the online Thomas Register business-to-business yellow pages, and in the summer a similar deal was reached with the Canada-based Yellow Pages Group.

A small advertising firm, B&B Enterprises, was acquired in the spring, and on July 1 the long-delayed merger with Espotting was finalized. FindWhat.com had renegotiated the deal after more closely examining the British firm's finances, with the final purchase price set at approximately $170 million.

In September the firm launched a pay-per-call service for online advertisers that did not have web sites or preferred to work with customers over the phone. Using software developed by Ingenio of San Francisco, the system used a unique toll-free number that appeared in each ad, with FindWhat.com collecting a fee each time a call was made. During the month the firm's Miva unit bought MvCool, a web site that sold its software, and also launched an expanded sales site at MivaCentral.com. The firm reincorporated in Delaware and became known as FindWhat.com, Inc. in September, as well.

To improve the quality of its advertisers, in the fall the company began removing gambling web sites as distribution partners as well as others that were not following guidelines banning sub-partnerships and the secret downloading of "adware" programs onto users' computers. The latter practice had angered consumer advocates and lawmakers. The move took a bite out of earnings, and Wall Street analysts downgraded the company's stock which caused its price to fall.

In early 2005 auditor Ernst & Young resigned over disagreements about a $1.2 million writedown, and the company's chief financial officer subsequently quit. A series of class-action lawsuits were filed by shareholders upset about the revelations, while other suits from advertisers who believed they had been charged for fraudulent "clicks" on their ads were filed as well. Some firms in the industry had allegedly programmed computers to click on ads repeatedly to boost revenue, though FindWhat.com denied it had done so.

MIVA: 2005

In June the company rebranded itself as MIVA, Inc. The reconfigured firm would operate through three divisions: MIVA Media (the former FindWhat.com and Espotting operations); MIVA Small Business (previously Miva Corp.); and MIVA Direct (formerly Comet Systems). The company trumpeted the change with direct mail, online ads, and print ads in the New York Times, Ad-Week, Advertising Age, and other publications. Six new web sites were also launched in the United States and Europe. At this time two of the firm's applications were redesigned to better handle accounts and a new algorithmic search function was added in France and Germany through licensing deals with Fast Search and Transfer.


BeFirst Internet Corp. is founded.
Merger with Collectibles America Inc. takes firm public; new pay-per-click search engine debuts; company becomes FindWhat.com.
Private label service is introduced.
Acquisitions of Miva, B&B, Comet, and Es-potting double firm's size.
Company is rebranded as MIVA, Inc.; Overture lawsuit is settled.
Ads in text messages, emails, downloads are added; new CEO, chairman is appointed.

After a mistrial had been declared in May, in August 2005 MIVA resolved its three-year legal dispute with Overture (now a part of Yahoo!). It had spent more than $1 million per year on legal fees, and, to settle, paid $8 million plus royalties on future use of the patent. Industry leader Google had settled a similar suit for $90 million plus royalties.

Also during the summer, MIVA's European branch signed Scandinavian Internet search engine firm Eniro AB as its first private label customer and sold its assets in that geographic region to Eniro. In the fall a new email-based pay-per-click marketing program was launched, and the firm enhanced its pay-per-click service on search engines to include near matches.

For 2005 MIVA reported sales of $194.6 million and a loss of $131 million, which was largely tied to goodwill lost when the firm's share price fell below its recorded equity value, as well as the settlement payment to Yahoo! In early 2006 the company hired Deutsche Bank to explore strategic alternatives including a possible sale. Its share price had fallen from a high of $17 a few months earlier to less than $6, and MIVA management was seeking to enhance shareholder value.

In February a new service called Agency Center debuted which allowed ad agencies to more easily access and manage multiple accounts at once. A Pay-per-Text service was also launched in the United Kingdom that let advertisers embed ads in text messages sent from directory assistance to cell phones, while the company partnered with Data Depth to place contextual ads on downloaded, printed, or emailed web pages using the latter firm's iCopyright platform.

In April MIVA Chairman and CEO Craig Pisaris-Henderson and President Phillip Thune resigned, though they would remain on the board of directors. Chief Operating Officer Peter A. Corrao was appointed CEO and Director Larry Weber was named non-executive chair, while Espotting cofounder Seb Bishop was named president. A review of the firm's business plan and its objectives for growth was subsequently undertaken to help streamline operations and cut costs, with a reduction in annual expenses of $6 million targeted.

In May a $10 million stock buyback plan was announced, while the firm suspended its relationship with distribution partner Golog of France, which was suspected of pay-per-click fraud. In September a new service called MIVA InLine was introduced that allowed pay-per-click advertisements to appear on web pages when a mouse was rolled across a specific keyword on the page.

In a few short years MIVA, Inc. had grown to become one of the leading pay-per-click advertising companies. From sponsored ads found in Internet searches to those embedded in text and email messages and pay-per-call, the firm offered a wide range of options for businesses seeking to connect with customers. Future growth would depend to a large extent on MIVA's ability to deal with both the volatile financial markets and the efforts of more powerful rivals to dominate the industry.

Frank Uhle


B&B Advertising, Inc.; MIVA Direct, Inc.; MIVA Small Business Solutions, Inc.; Who Midco Corp.; Miva Media International, Inc.; MIVA (UK) Ltd. (United Kingdom); Espotting Media Ireland Ltd. (Ireland); Espotting Scandinavia (Sweden); Miva France S.a.r.l.; MIVA Media S.L. (Spain); MIVA (Deutschland) GmbH (Germany); MIVA (Italia) S.r.l. (Italy).


Yahoo!, Inc.; Google, Inc.; MSN and Personal Services Group; IAC/InteractiveCorp; InfoSpace, Inc.; Interchange Corp.; LookSmart, Ltd.; Marchex, Inc.; ValueClick, Inc.; Feedster, Inc.; Kanoodle.com, Inc.; Tacoda, Inc.; Quigo Technologies, Inc.; Ad On Network; eBay, Inc.


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