Livestrong.com, Demand IPO exposed

[BotanyBay]

At least the existence is now news fodder:

http://www.businessinsider.com/lance-armstrong-poised-to-make-a-killing-on-demand-medias-ipo-2011-1

My big question: Is there a mandatory 180-day lockup in the IPO agreement? Who's underwriting it?

 

[theswordsman]

Even they can't keep it straight:

UPDATE: A quick clarification. Livestrong.com is not the website of the Lance Armstrong Foundation. (That's Livestrong.ORG.)

The partnership mentioned below was actually licensing deal between the Foundation and Demand Media, which was given the rights to create a health and fitness website called, Livestrong.com.

same link

And the article is by the same writer, same website that recently brought us:

Here's The Problem With The Lance Armstrong Doping Investigation: There's No Proof!

http://www.businessinsider.com/the-problem-with-the-lance-armstrong-doping-investigation-2011-1

 

[BotanyBay]

The article is good in one aspect. Without "going there", they made sure everyone knows that the situation is a smelly one. And people will take it further from there. This is a teeny snowball that just started rolling.

10, 9, 8, ....

 

[TERMINATOR]

At least the existence is now news fodder:

http://www.businessinsider.com/lance-armstrong-poised-to-make-a-killing-on-demand-medias-ipo-2011-1

My big question: Is there a mandatory 180-day lockup in the IPO agreement? Who's underwriting it?

A health & fitness website? PUH-LEEZ. What a dump stock. This sounds like any number of the dot-com bombs that imploded during the tech bubble in 2000, melting billions in venture capital funding - most of it acquired through outright fraudulent representations by the tech companies themselves.

I guess Livestrong.com figures they should push this IPO before the kingpin and his cartel gets indicted and the stock tanks. Another IPO scam no doubt arranged by The Weasel (Thom Weisel). Thomas Weisel is known for these type of pump and dump stock schemes. See:

http://www.jdsupra.com/post/documentViewer.aspx?fid=5159001f-27b7-47dc-8c4b-eade424096e1

"56. defendants [including Weisel] made false and misleading statements by means of concealment and obfuscation of critical clinical trial data and engaged in a scheme to deceive the market. This artificially inflated Rigel’s stock price and operated as a fraud or deceit on the Class. Later, when defendants’ prior misrepresentations and fraudulent conduct became apparent to the market, Rigel’s stock price fell precipitously, as the prior artificial inflation came out of the stock price over time. As a result of their purchases of Rigel securities during the Class Period, plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal securities laws."

 

[la.margna]

incredible. building his livestrong.org charity and selling the livestrong charity brand with a .com to profiteer from... outrageous... some people really have not the slightest scruple...

 

[kurtinsc]

incredible. building his livestrong.org charity and selling the livestrong charity brand with a .com to profiteer from... outrageous... some people really have not the slightest scruple...

Technically, the LAF sold the .com brand and got stock ownership from it.

Lance piggy-backed on that and got ownership as payment for services to promote, provide content, and "advise" demand on the site.

That's how he profits from the LAF (at least the stuff that is proven). The LAF licenses the livestrong brand to someone, then Lance get's paid to advertise the product.

 

[BotanyBay]

A health & fitness website? PUH-LEEZ. What a dump stock. This sounds like any number of the dot-com bombs that imploded during the tech bubble in 2000, melting billions in venture capital funding - most of it acquired through outright fraudulent representations by the tech companies themselves.

I guess Livestrong.com figures they should push this IPO before the kingpin and his cartel gets indicted and the stock tanks. Another IPO scam no doubt arranged by The Weasel (Thom Weisel). Thomas Weisel is known for these type of pump and dump stock schemes. See:

http://www.jdsupra.com/post/documentViewer.aspx?fid=5159001f-27b7-47dc-8c4b-eade424096e1

"56. defendants [including Weisel] made false and misleading statements by means of concealment and obfuscation of critical clinical trial data and engaged in a scheme to deceive the market. This artificially inflated Rigel’s stock price and operated as a fraud or deceit on the Class. Later, when defendants’ prior misrepresentations and fraudulent conduct became apparent to the market, Rigel’s stock price fell precipitously, as the prior artificial inflation came out of the stock price over time. As a result of their purchases of Rigel securities during the Class Period, plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal securities laws."

Three words:

Webistics...

 

[D-Queued]

A health & fitness website? PUH-LEEZ. What a dump stock. ... Thomas Weisel is known for these type of pump and dump stock schemes. See:

http://www.jdsupra.com/post/documentViewer.aspx?fid=5159001f-27b7-47dc-8c4b-eade424096e1

"56. defendants [including Weisel] made false and misleading statements by means of concealment and obfuscation of critical clinical trial data and engaged in a scheme to deceive the market. This artificially inflated Rigel’s stock price and operated as a fraud or deceit on the Class. Later, when defendants’ prior misrepresentations and fraudulent conduct became apparent to the market, Rigel’s stock price fell precipitously, as the prior artificial inflation came out of the stock price over time. As a result of their purchases of Rigel securities during the Class Period, plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal securities laws."

Thanks for the tip. I know just who to send this to... someone will make some money from this. Other guys, not so much.

Dave.

 

[Dr. Maserati]

Technically, the LAF sold the .com brand and got stock ownership from it.

Lance piggy-backed on that and got ownership as payment for services to promote, provide content, and "advise" demand on the site.

That's how he profits from the LAF (at least the stuff that is proven). The LAF licenses the livestrong brand to someone, then Lance get's paid to advertise the product.

"Technically" and "piggy-banked".......hmmm.

Altogether they received 2,500,000 warrant at $6/share, of that the LAF got 50%, Lance got 42.5% and his management company CSE got 7.5%.

Why does Lance and his buddies get half?

http://www.docstoc.com/docs/49541881/Demand-Media-S-1---IPO-Filing

 

[Ferminal]

"Technically" and "piggy-banked".......hmmm.

Altogether they received 2,500,000 warrant at $6/share, of that the LAF got 50%, Lance got 42.5% and his management company CSE got 7.5%.

Why does Lance and his buddies get half?

http://www.docstoc.com/docs/49541881/Demand-Media-S-1---IPO-Filing

For the same reason Lance takes a cut from most "LiveSTRONG" merchandise.

Greed?

 

[Race Radio]

"Technically" and "piggy-banked".......hmmm.

Altogether they received 2,500,000 warrant at $6/share, of that the LAF got 50%, Lance got 42.5% and his management company CSE got 7.5%.

Why does Lance and his buddies get half?

http://www.docstoc.com/docs/49541881/Demand-Media-S-1---IPO-Filing

And Armstrong got $3,000,000 in cash. How does the guy "Piggybacking" earn more? Why was I not allowed to "Piggyback"? I love bacon as much as Lance

 

[kurtinsc]

"Technically" and "piggy-banked".......hmmm.

Altogether they received 2,500,000 warrant at $6/share, of that the LAF got 50%, Lance got 42.5% and his management company CSE got 7.5%.

Why does Lance and his buddies get half?

http://www.docstoc.com/docs/49541881/Demand-Media-S-1---IPO-Filing

While we all know it was a package deal, that's not what the document says.

That's why I say "technically".

The document says Lance's shares came from "services" and a "spokesperson agreement".

The LAF's shares came from a "licensing agreement".

By the letter of the law... the two are separate agreements. Lance's share wasn't taken from the LAF... the LAF was paid a set price to license the use of "livestrong.com", and Lance was paid a set price for being a spokesperson and providing other "services". They refer to the agreement to pay the LAF as "The LAF Warrant" and the one to pay Lance as "The Livestrong Warrant".


It's a neat little trick, as legally he's NOT taking anything from the LAF. The LAF is getting money from licensing the livestrong brand which they own. Lance just "happens" to get paid to be a spokesperson for the same organization. He does the exact same thing with almost every company that the livestrong brand is licensed to. Nothing comes out of the Livestrong coffers, and nothing is ever put in writing saying that the companies HAVE to employ Lance (even though everyone knows it's understood).

It's not even necessarily something he'd have to force (though I'm willing to be he did force it). Let's face it... if you're going to pay to use the Livestrong brand... you probably WANTED to use Lance to market it.

 

[D-Queued]

When you are on both sides of a transaction, you cannot faithfully represent the best interests of one side or the other. In securities situations, this is typically declared due to the inherent conflict of interest.

Lance profits from Livestrong.org through appearance fees.

Lance profits from Livestrong.org if 'Livestrong' helps Livestrong.com and Demand Media.

Livestrong.org is leveraged by for-profit Lance Armstrong, Livestrong.com and Demand Media. This should be fully disclosed so that humans can read and understand it.

Dave.

 

[Velocentric]

When you are on both sides of a transaction, you cannot faithfully represent the best interests of one side or the other. In securities situations, this is typically declared due to the inherent conflict of interest.

Lance profits from Livestrong.org through appearance fees.

Lance profits from Livestrong.org if 'Livestrong' helps Livestrong.com and Demand Media.

Livestrong.org is leveraged by for-profit Lance Armstrong, Livestrong.com and Demand Media. This should be fully disclosed so that humans can read and understand it.

Dave.

As previously discussed in other threads this is just one of the examples where Lance has used the goodwill associated with the Livestrong brand to personally profit.

The Demand deal stinks of shady practice and the question I keep asking everyone involved (and constantly get "No comment" replies to is why Stapleton & Knaggs should be included in the stock option? OK, Lance 'is' Livestrong, at a push I can almost swallow the justification behind him getting the profit if IPO goes ahead but not those two leeches.

The only reason I can see for those two being included is because Stapleton handles all licensing deals related to the Livestrong brand and thought this was far too good an opportunity to pass up.

But if you thinnk this is bad, you should look into the deal with Nike

 

[Benotti69]

As previously discussed in other threads this is just one of the examples where Lance has used the goodwill associated with the Livestrong brand to personally profit.

The Demand deal stinks of shady practice and the question I keep asking everyone involved (and constantly get "No comment" replies to is why Stapleton & Knaggs should be included in the stock option? OK, Lance 'is' Livestrong, at a push I can almost swallow the justification behind him getting the profit if IPO goes ahead but not those two leeches.

The only reason I can see for those two being included is because Stapleton handles all licensing deals related to the Livestrong brand and thought this was far too good an opportunity to pass up.

But if you thinnk this is bad, you should look into the deal with Nike

is this what he means when he says "he's done too much good for too many people"

 

[Velocentric]

And for the record I've just emailed Dashiel Bennet (author of the Business Insider 'story') to point out an error regarding this statement:

"The exact amount of Armstrong's equity is not known"

Yes it is: Armstrong has 1,062,500 stock options. Anybody with the patience to read through the Demand IPO documents would see that. Surely something a Journo would do?

 

[Shortleg]

[/QUOTE]Armstrong has 1,062,500 stock options. Anybody with the patience to read through the Demand IPO documents would see that. Surely something a Journo would do?[/QUOTE]

Velo: Just curious re your calculation of LA's "1,062,500 options." At p 189 of the iPO LA is listed as having 106,250 'beneficially held' options - curious as to how that figure ramps up to over a million as I can see no reference in that section, as is common in other parts of the IPO, to all "numbers being in thousands" etc.

Between LA & LAF I note a total of 1,387,500 shares, split as follows:

P. 189 "beneficially held" options
LA: 106,250
LAF: 125,000

P. 197 "Preferred Stock"
LA: 531,250
LAF: 625,000

I'm unfamiliar with IPOs and share dealings generally - let alone in the US - so have sought some assistance from some finance types here to unpick some of these threads.

I'm particularly curious to work out a value for the total of 61,523 shares that LA & LAF have put up for offer - with an exercise price of $6 and assuming that the proposed price of $15 a share is met on my reckoning that leaves $9 profit per share=$554,067.
But Google's announcement re content farms and the generally negative comment in the press may queer the deal a tad...

 

[BroDeal]

But Google's announcement re content farms and the generally negative comment in the press may queer the deal a tad...

LOL. Found this choice paragraph in ZDNet's story about Google's announcement.

"Now the Livestrong.com site, also owned by Demand Media, has been a useless stray link on damn near anything health related I’ve researched. So I’d give permission to Google to just kill that site.

http://www.zdnet.com/blog/btl/google-content-farms-and-one-slippery-slope/43898

 

[BotanyBay]

People, having been through an IPO myself (as an insider), the two weeks before the IPO launches, they quite often split the stock numerous times, depending on how big the demand seems to be. So 100k shares can often become more than a million.

And BTW, if you don't think a bunch of puds on a cycling forum can make a difference, think hard once this IPO goes out the gate. 2 weeks ago, this dog was a diamond.

 

[Colm.Murphy]

When you are on both sides of a transaction, you cannot faithfully represent the best interests of one side or the other. In securities situations, this is typically declared due to the inherent conflict of interest.

Lance profits from Livestrong.org through appearance fees.

Lance profits from Livestrong.org if 'Livestrong' helps Livestrong.com and Demand Media.

Livestrong.org is leveraged by for-profit Lance Armstrong, Livestrong.com and Demand Media. This should be fully disclosed so that humans can read and understand it.

Dave.

Really interesting stuff.

May I just point out that back when news of Landis' confession and the subsequent follow-up into some of the accusations, it became known that the Feds were subpoenaing documents from, essentially, Lance's sponsors: Trek, Nike, Oakley, Giro, etc. It seemed at the time that they were looking for some evidence that would support the Landis claim of "Trek Bikes-for-Drugs".

Given the better understanding of this arrangement between the parties for the Demand media IPO, perhaps the Feds were also looking into all of the "Livestrong" arrangements that lance had with all these sponsors?

 

[D-Queued]

LOL. Found this choice paragraph in ZDNet's story about Google's announcement.

"Now the Livestrong.com site, also owned by Demand Media, has been a useless stray link on damn near anything health related I’ve researched. So I’d give permission to Google to just kill that site.

http://www.zdnet.com/blog/btl/google-content-farms-and-one-slippery-slope/43898

A picture tells a thousand words:

As does the rationale:

Google acknowledged its critics who argue that search results are becoming more spam filled and declared war on content farms and “low-quality content.”

Dave.

 

[BotanyBay]

It's like this:

Not to say that the usual gamblers won't ride this IPO like a mechanical bull for a day, but I know that Lance probably has a 180-day lockup restriction.

He'll only make $ on his "friends and family" shares.

I hope someone drops a huge PR bomb on him that morning so he can't keep his eye on the ticker.

 

[petethedrummer]

I only just found out that Demand Media are responsible for that expert village rubbish on youtube. This being a fine example of their work: http://www.youtube.com/watch?v=2lJEslVrLRY

 

[kurtinsc]

When you are on both sides of a transaction, you cannot faithfully represent the best interests of one side or the other. In securities situations, this is typically declared due to the inherent conflict of interest.

Lance profits from Livestrong.org through appearance fees.

Lance profits from Livestrong.org if 'Livestrong' helps Livestrong.com and Demand Media.

Livestrong.org is leveraged by for-profit Lance Armstrong, Livestrong.com and Demand Media. This should be fully disclosed so that humans can read and understand it.

Dave.

Officially I'm not sure what Lance's relationship is with Livestrong.

I say "officially" because we all know he has a lot of pull. But he's not on the board and doesn't seem to have any official management role with the charity.

It's a sweet setup, but by the letter of the law I'm not sure he's doing anything different then someone who say was a volunteer spokesperson for the American Diabetes Association getting paid to sell test strips for Lifescan or insulin for Eli Lilly.

 

[D-Queued]

Here is some more 'buzz':

1. The company's content (created mainly through its Demand Studios arm) has been a subject of controversy for some time, but they've insisted that they've dedicated themselves to improving quality.

2. Demand Media plans to sell 4.5 million shares while stockholders will sell an additional 3 million shares ... A December amendment to its filing to clarify the unique way it expenses the cost of creating videos and text recently drew attention to the planned IPO

3. A few weeks ago, Demand Media published its eagerly-awaited prospectus. It wasn’t exactly received rapturously. Several commentators noted the absence of profits, which sat oddly with co-founder Richard Rosenblatt’s public pronouncements over the years.

Rosenblatt has been describing Demand Media as profitable for a long time. The earliest reference I’ve come across dates back to March 2007, when he told one interviewer: “We’re very profitable, and we could go public now if we wanted to.” The following year, Rosenblatt described Demand as “highly profitable.” In late 2009, Wired was induced to describe Demand Media as “profitable as hell”.

This simply wasn’t true

4. Mind you, there does seem to be some obfuscation in the numbers. As is true with other domain registrars, eNom will often run ads on domains with no content ... In either case, you have to wonder about the transparency of the numbers and why Demand felt that it had to stress non-GAAP financials to try and make itself look profitable when it clearly isn’t.


5. Financial gray areas plague Demand Media IPO bid

6. Demand Media: Worst IPO of the year
Content crap farm ready to crap on investors with crappy public offering
...
Demand traffic had plummeted 71% in the days after the IPO filing

Dave.