Unassociated Document

0001019056-11-000235.txt : 20110216 0001019056-11-000235.hdr.sgml : 20110216 20110216141433 ACCESSION NUMBER: 0001019056-11-000235 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20110216 DATE AS OF CHANGE: 20110216 GROUP MEMBERS: JOHN H. LEWIS GROUP MEMBERS: OSMIUM CAPITAL II, LP GROUP MEMBERS: OSMIUM CAPITAL, LP GROUP MEMBERS: OSMIUM PARTNERS, LLC GROUP MEMBERS: OSMIUM SPARTAN, LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Answers CORP CENTRAL INDEX KEY: 0001283073 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 FISCAL YEAR END: 0610 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80429 FILM NUMBER: 11617001 BUSINESS ADDRESS: STREET 1: 237 W. 35TH STREET STREET 2: SUITE 1101 CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 646-502-4777 MAIL ADDRESS: STREET 1: 237 W. 35TH STREET STREET 2: SUITE 1101 CITY: NEW YORK STATE: NY ZIP: 10001 FORMER COMPANY: FORMER CONFORMED NAME: GuruNet CORP DATE OF NAME CHANGE: 20050715 FORMER COMPANY: FORMER CONFORMED NAME: GURUNET CORP DATE OF NAME CHANGE: 20040309 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Osmium Partners, LLC CENTRAL INDEX KEY: 0001316729 IRS NUMBER: 550793716 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 388 MARKET, SUITE 920 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 415.362.4484 MAIL ADDRESS: STREET 1: 388 MARKET, SUITE 920 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 SC 13D 1 answ_13d.htm Unassociated Document

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

(Amendment No. _________)*

Answers Corporation

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

03662X100

(CUSIP Number)

Osmium Partners, LLC

388 Market Street, Suite 920

San Francisco, CA 94111

Attention: John H. Lewis

Telephone: (415) 362-4485

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

February 16, 2011

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box x.

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes.)

Page 1 of 11 pages

CUSIP No.: 03662X100

1.	NAME OF REPORTING PERSON
	S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

	John H. Lewis

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) x

3	SEC USE ONLY

4	SOURCE OF FUNDS

	PF

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o

6.	CITIZENSHIP OR PLACE OF ORGANIZATION

	United States

NUMBER OF

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON WITH

7 SOLE VOTING POWER - 0

8 SHARED VOTING POWER - 486,307

9 SOLE DISPOSITIVE POWER - 0

10 SHARED DISPOSITIVE POWER - 486,307

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	486,307

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	6.0%

14	TYPE OF REPORTING PERSON

	IN

Page 2 of 11 pages

CUSIP No.: 03662X100

1	NAME OF REPORTING PERSON
	S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

	Osmium Partners, LLC

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) x

3	SEC USE ONLY

4	SOURCE OF FUNDS

	AF

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON WITH

7 SOLE VOTING POWER - 0

8 SHARED VOTING POWER - 486,307

9 SOLE DISPOSITIVE POWER - 0

10 SHARED DISPOSITIVE POWER - 486,307

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	486,307

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	6.0%

14	TYPE OF REPORTING PERSON

	IA, OO

Page 3 of 11 pages

CUSIP No.: 03662X100

1	NAME OF REPORTING PERSON
	S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

	Osmium Capital, LP

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) x

3	SEC USE ONLY

4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON WITH

7 SOLE VOTING POWER - 0

8 SHARED VOTING POWER - 110,345

9 SOLE DISPOSITIVE POWER - 0

10 SHARED DISPOSITIVE POWER - 110,345

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	110,345

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	1.4%

14	TYPE OF REPORTING PERSON

	PN

Page 4 of 11 pages

CUSIP No.: 03662X100

1	NAME OF REPORTING PERSON
	S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

	Osmium Capital II, LP

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) x

3	SEC USE ONLY

4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON WITH

7 SOLE VOTING POWER - 0

8 SHARED VOTING POWER - 316,103

9 SOLE DISPOSITIVE POWER - 0

10 SHARED DISPOSITIVE POWER - 316,103

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	316,103

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.9%

14	TYPE OF REPORTING PERSON

	PN

Page 5 of 11 pages

CUSIP No.: 03662X100

1	NAME OF REPORTING PERSON
	S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

	Osmium Spartan, LP

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) x

3	SEC USE ONLY

4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON WITH

7 SOLE VOTING POWER - 0

8 SHARED VOTING POWER - 44,959

9 SOLE DISPOSITIVE POWER - 0

10 SHARED DISPOSITIVE POWER - 44,959

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	44,959

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	0.6%

14	TYPE OF REPORTING PERSON

	PN

Page 6 of 11 pages

EXPLANATORY NOTE

This Statement on Schedule 13D reflects, that as of February 16, 2011, the Reporting Persons are disclosing their beneficial ownership in Answers Corporation on Schedule 13D instead of Schedule 13G.

ITEM 1. Security and Issuer.

The class of equity securities to which this Statement on Schedule 13D (this “Statement”) relates is the common stock, par value $0.001 per share (the “Common Stock”), of Answers Corporation (the “Issuer”), with its principal executive offices located at 237 West 35th Street, Suite 1101, New York, New York 10001.

ITEM 2. Identity and Background.

(a)-(c) and (f) The names of the persons filing this statement on Schedule 13D (the “Reporting Persons”) are: (1) Osmium Capital, LP, a Delaware limited partnership (“Fund I”); (2) Osmium Capital II, LP, a Delaware limited partnership (“Fund II”); (3) Osmium Spartan, LP, a Delaware limited partnership (“Fund III”, together with Fund I and Fund II, “Funds”); (4) Osmium Partners, LLC, a Delaware limited liability company (“Osmium Partners”); and (5) John H. Lewis, a United States Citizen (“Lewis”). Osmium Partners serves as the general partner of Fund I, Fund II and Fund III. Mr. Lewis is the controlling member of Osmium Partners.

The principal business of each of Fund I, Fund II and Fund III is that of a private investment vehicle engaged in investing and trading in a wide variety of securities and financial instruments for its own account. The principal business of Osmium Partners is providing investment management services and serving as the general partner of Fund I, Fund II and Fund III. Osmium Partners also manages other accounts on a discretionary basis (“Other Accounts”). Mr. Lewis’ principal occupation is serving as the Managing Member of Osmium Partners.

(d)–(e) During the last five years, none of the Reporting Persons have been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

ITEM 3. Source and Amount of Funds or Other Consideration

The source and amount of funds (excluding commissions) used by the Funds in making their purchase of the shares of Common Stock owned by each of them in aggregate was $3,597,920 from working capital.

The source and amount of funds (excluding commissions) used by the Other Accounts in making their purchase of the shares of Common Stock owned by the Other Accounts was $121,165 from personal funds.

One or more of the Reporting Persons effect purchases of securities through margin accounts which may extend margin credit to the Reporting Persons as and when required to open or carry positions in the margin accounts, subject to applicable federal margin regulations, stock exchange rules and brokers’ credit policies. In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.

ITEM 4. Purpose of Transaction.

On February 16, 2011, Osmium Partners issued a press release expressing its belief that AFCV Holdings’ offer is grossly inadequate relative to the Issuer’s growth prospects, extremely high incremental margins, and significant underperformance of the Issuer’s shares relative to appropriate market indices over the last two years. A copy of the press release is attached hereto as Exhibit 2.

All of the shares of Common Stock reported herein as being beneficially owned by the Reporting Persons were acquired for investment purposes. Except as set forth herein, none of the Reporting Persons has any plans or proposals that relate to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Page 7 of 11 pages

Also, consistent with their investment purpose, the Reporting Persons may engage in communications with one or more shareholders of the Issuer, one or more officers or employees of the Issuer, one or more members of the board of directors of the Issuer, and/or one or more representatives of the Issuer regarding the Issuer, including but not limited to its management, operations, business, results, plans, and prospects. The Reporting Persons may discuss ideas that, if effected, may result in any of the following: the acquisition by persons of additional Common Stock or other securities of the Issuer, an extraordinary corporate transaction involving the Issuer, and/or changes in the board of directors or management of the Issuer.

ITEM 5. Interest in Securities of the Issuer.

(a) The Reporting Persons beneficially own:

	(i)	Fund I directly owns 110,345 shares of Common Stock representing 1.4% of all of the outstanding shares of Common Stock.

	(ii)	Fund II directly owns 316,103 shares of Common Stock representing 3.9% of all of the outstanding shares of Common Stock.

	(iii)	Fund III directly owns 44,959 shares of Common Stock representing 0.6% of all of the outstanding shares of Common Stock.

	(iv)	Osmium Partners, as the general partner of each of the Funds and the investment manager of the Other Accounts, may be deemed to beneficially own the 486,307 shares of Common Stock held by them, representing 6.0% of all of the outstanding shares of Common Stock.

	(v)	Mr. Lewis may be deemed to be the beneficial owner of the shares of Common Stock beneficially owned by Osmium Partners.

	(vi)	Collectively, the Reporting Persons beneficially own 486,307 shares of Common Stock representing 6.0% of all of the outstanding shares of Common Stock.

Each Reporting Person disclaims beneficial ownership with respect to any shares of Common Stock other than the shares owned directly and of record by such Reporting Person.

The percentages set forth in this response are based on the 8,133,269 shares of Common Stock outstanding as of February 2, 2011, as reported by the Issuer in the Merger Agreement filed as Exhibit 2.1 to its Current Report on Form 8-K dated February 2, 2011 and filed with the SEC on February 7, 2011.

(b) Osmium Partners and Mr. Lewis may be deemed to share with Fund I, Fund II, Fund III and the Other Accounts (and not with any third party) the power to vote or direct the vote of and to dispose or direct the disposition of the 110,345, 316,103, 44,959 and 14,900 shares of Common Stock reported herein, respectively.

Page 8 of 11 pages

(c) The following Reporting Persons engaged in the following transactions on the open market with respect to the Issuer’s Common Stock:

Osmium Capital, LP

Transaction Date	Number of Shares	Price per Share		Type of Transaction
12/21/2010	1,264	$	7.95	Purchase
12/22/2010	775	$	7.85	Purchase
12/31/2010	1,000	$	7.75	Purchase
1/5/2011	6,129	$	8.06	Purchase
1/6/2011	4,102	$	8.04	Purchase
1/7/2011	6,820	$	8.07	Purchase
1/10/2011	3,895	$	8.22	Purchase
1/13/2011	2,897	$	8.44	Purchase
1/14/2011	5,336	$	8.57	Purchase
1/18/2011	2,998	$	8.52	Purchase
1/19/2011	3,133	$	8.40	Purchase
1/21/2011	941	$	8.36	Purchase
1/25/2011	1,104	$	8.24	Purchase
1/26/2011	552	$	8.29	Purchase
2/1/2011	244	$	9.00	Purchase
2/3/2011	272	$	10.38	Purchase
2/4/2011	1,048	$	10.45	Purchase

Osmium Capital II, LP

Transaction Date	Number of Shares	Price per Share		Type of Transaction
12/21/2010	3,736	$	7.95	Purchase
12/22/2010	2,225	$	7.85	Purchase
1/5/2011	16,871	$	8.06	Purchase
1/6/2011	11,898	$	8.04	Purchase
1/7/2011	17,980	$	8.07	Purchase
1/10/2011	11,105	$	8.22	Purchase
1/13/2011	8,503	$	8.44	Purchase
1/14/2011	16,164	$	8.57	Purchase
1/18/2011	7,944	$	8.52	Purchase
1/19/2011	8,967	$	8.40	Purchase
1/21/2011	2,559	$	8.36	Purchase
1/25/2011	896	$	8.24	Purchase
1/26/2011	1,448	$	8.29	Purchase
2/1/2011	756	$	9.00	Purchase
2/3/2011	728	$	10.38	Purchase
2/4/2011	2,952	$	10.45	Purchase

Spartan Capital, LP

Transaction Date	Number of Shares	Price per Share		Type of Transaction
12/20/2010	2,459	$	7.61	Purchase
1/5/2011	2,000	$	8.06	Purchase
1/6/2011	4,000	$	8.04	Purchase
1/7/2011	7,500	$	8.07	Purchase
1/10/2011	4,000	$	8.22	Purchase
1/20/2011	4,000	$	8.24	Purchase
1/21/2011	1,000	$	8.36	Purchase
1/26/2011	3,000	$	8.29	Purchase

Other Accounts

Transaction Date	Number of Shares	Price per Share		Type of Transaction
1/7/2011	1,000	$	8.07	Purchase
1/10/2011	6,000	$	8.22	Purchase
2/4/2011	1,000	$	10.45	Purchase

Page 9 of 11 pages

Other than the foregoing, no transactions in the Common Stock have been effected by the Reporting Persons in the last sixty (60) days.

(d) Not applicable.

(e) Not applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Not applicable.

ITEM 7. Material to be Filed as Exhibits.

	Exhibit 1		Joint Filing Agreement

	Exhibit 2		Press Release dated February 16, 2011

Page 10 of 11 pages

SIGNATURE

After reasonable inquiry and to the best of its knowledge and belief, the undersigned each certifies that the information with respect to it set forth in this Statement is true, complete and correct.

Dated: February 16, 2011

	John H. Lewis
	Osmium Partners, LLC
	Osmium Capital, LP
	Osmium Capital II, LP
	Osmium Spartan, LP

	By:	/s/ John H. Lewis
	John H. Lewis, for himself and as Managing Member of Osmium Partners, LLC, for itself and as General Partner of Osmium Capital, LP, Osmium Capital II, LP, and Osmium Spartan, LP

Page 11 of 11 pages

EXHIBIT INDEX

	Exhibit 1		Joint Filing Agreement

	Exhibit 2		Press Release dated February 16, 2011

EX-1 2 ex_1.htm EXHIBIT 1 Unassociated Document

EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock, par value $0.001 per share, of Answers Corporation, and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filing. In evidence thereof, the undersigned hereby execute this Agreement.

Dated: February 16, 2011

	John H. Lewis
	Osmium Partners, LLC
	Osmium Capital, LP
	Osmium Capital II, LP
	Osmium Spartan, LP

	By:	/s/ John H. Lewis
	John H. Lewis, for himself and as Managing Member of Osmium Partners, LLC, for itself and as General Partner of Osmium Capital, LP, Osmium Capital II, LP, and Osmium Spartan, LP

EX-2 3 ex_2.htm EXHIBIT 2 Unassociated Document

EXHIBIT 2

Osmium Partners considers AFCV Holdings’ $10.50 offer for Answers.com grossly inadequate

Osmium believes that Answers.com’s business is materially undervalued by the stock market as a going concern, and that AFCV Holdings’ offer does not come close to representing fair value.

Point 1: Answers.com’s CEO and CSO recently made the following public comments about the company’s exceptional growth, market share gains, product enhancements, and expectations for imminent margin improvement at the company.

	●	CEO Bob Rosenschein stated on November 8, 2010, “We are confident that Q4 2010 revenue will be materially better than Q3 2010 revenue, and we expect that our 2011 revenue will also exhibit healthy growth over 2010.”

	●	CEO Bob Rosenschein stated on November 8, 2010, “We are also reaching audience scale in a number of the most desirable and highest monetizing advertising verticals, and our plan is to exploit this potential in 2011.”

	●	At a conference on January 13, 2011, CSO Bruce Smith characterized Answers.com’s industry as a “Large, important, & growing market” and specifically highlighted that Answers.com has “gained significant share over the last three years” with the fastest growing US Domain from 2007-09 and with unique visitor growth accelerating from the top 1500 to top the 50.

	●	CSO Bruce Smith stated on January 13, 2011, that growth in market share has led to the “2nd most active user generated content answer site.”

	●	CSO Bruce Smith stated on January 13, 2011, “Direct ad sales effort will capture significant monetization upside and better capitalize on Answers.com highly sought after young demographic” This effort will begin in the first half of 2011.

	●	On November 8, 2010, CEO Bob Rosenschein discussed the significant monetization opportunities the company is about to embark on given the significant ramp up in site traffic which will allow the company to hire a direct advertising sales force. “Over the last two years, from 3Q08 to 3Q10, our traffic has jumped 86%, and this volume changes everything.”

Point 2: According to data from wikianswers.com and recent presentations from Answers.com, Wikianswers.com has recently been adding approximately 1 million new answers every sixty days and has seen its answers database grow from 2 million to 11.5 million answers over the last three years. Additionally, the Wikianswers site has just crossed the 6 millionth registered user mark. It is very clear the business’s key monetization drivers are scaling successfully and AFCV’s offer fails to capture this success.

Simply put, if Answers.com continues to add approximately 1 million answers every sixty days and revenue per thousand impressions (RPM) improves modestly with current traffic trends, within two years revenue should reach $50 million with very significant margins. The enormous scalability of this business model is illustrated in the 46% revenue growth and 378% adjusted EBITDA growth (from $1.6 to $7.7mn) from 2008 to 2009, representing a 94% incremental margin. AFCV’s offer fails to capture: a) current growth trends and b) operating leverage in Answers.com business model.

Long term shareholders like Osmium should not be penalized by management’s failure at this juncture to attract an appropriate shareholder base or Wall Street coverage, or to attain an appropriate social media valuation.

Point 3: Osmium Partners believes that management has agreed to sell at the worst possible time:

Nearly two years ago on February 2, 2009, near the bottom of the financial crisis Answers.com’s stock closed at $9.20 a share. In the two years since then, the NASDAQ, Russell 2000, and Russell Microcap Index have returned on average +79%, while Answers.com’s share price actually declined by 3% over the same period. Said another way, if ANSW performed in line with applicable market averages, ANSW’s share price would have been $16.43 on February 2, 2011, not $8.90.

	2/2/2009		2/2/2011		% Change
NASDAQ	$	1,494.43	$	2,749.56		84	%
Russell 2000	$	449.61	$	796.16		77	%
IWC (Russell Microcap Index)	$	28.83	$	50.38		75	%
Average						79	%

ANSW (Actual)	$	9.20	$	8.90		-3	%
ANSW (Average Performance)	$	9.20	$	16.43		79	%

	·	In October 2010, we assumed that management must have believed that their share price was significantly undervalued because the company hired both a Public Relations and Investor Relations firm to help the company gain more attention from investors and presumably a higher share price. Management stated its intention to utilize these firms after 4Q 2010 results were released. Those results are scheduled to be released at the end of February.

	·	We are surprised that the board of directors accepted AFCV’s offer when it did. Earnings for Q4 were expected within three weeks of the announcement of the deal, and AFCV and the insiders clearly know the results, which should be consistent with the prior public statements of management. Plus, the deal was announced only one week after the highly successful IPO of competitor Demand Media (DMD), which has a current valuation of 35x EBITDA. By contrast, AFCV’s deal values the company at 12 times EV/EBITDA based on 2009 results when the company averaged approximately 4.5 million answers, versus 11.5 million currently, an increase of 155%. While 2010 was a transition year given significant investments in the business and short term/temporary monetization issues (per management’s comments/actions), we believe the underlying earnings power has increase materially.

The company’s small market capitalization in a highly attractive market segment has been overlooked by sell side analysts, as the company has not a single Wall Street Analyst writing research on the company, and this has resulted in a depressed valuation.

Osmium Partners believes the offer by AFCV Holdings fails by a wide margin to capture the intrinsic value of the business. We have received numerous unsolicited calls from other shareholders who all share in our outrage with the AFCV offer.

Given the difference between AFCV’s offer and our estimate of fair value as a going concern, we intend to use all legal means to protect our interests.

Sincerely,

John H. Lewis

Managing Partner

Certain factual and statistical (both historical and projected) industry and market data and other information contained herein was obtained by Osmium Partners from independent, third-party sources that it deems to be reliable. However, Osmium Partners has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained herein reflect the belief of Osmium Partners, which belief may be based in whole or in part on such data and other information. Osmium Partners recognizes that there may be confidential or otherwise non-public information in the possession of the companies discussed in this letter that could lead these companies or others to disagree with Osmium Partners’ conclusions.

The analyses provided may include certain statements, assumptions, estimates and projections prepared with respect to, among other things, the historical and anticipated operating performance of the companies. Such statements, assumptions, estimates, and projections reflect various assumptions by Osmium Partners concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, assumptions, estimates or projections or with respect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein. Osmium Partners disclaims any obli gation to update this letter.

Funds and separately managed accounts managed by Osmium Partners own Answers.com common stock. Osmium Partners manages funds that are in the business of actively trading - buying and selling - securities and other financial instruments. Osmium Partners in the future may change its investment position in Answers.com and possibly increase, decrease, dispose of, or change the form of its investment for any or no reason.

This letter should not be considered a recommendation to buy, sell, or hold any investment. In addition, this letter is neither an offer to purchase nor a solicitation of an offer to sell any securities of Answers.com or any of the other companies mentioned in this letter.