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                                                      As filed with the United States Securities and Exchange Commission on April 17, 2008

                                                                                                                                                                         Registration No. 333-




                                            UNITED STATES
                                SECURITIES AND EXCHANGE COMMISSION
                                                                                        Washington, D.C. 20549


                                                                                      FORM S-1
                                                                                   REGISTRATION STATEMENT
                                                                                           UNDER
                                                                                  THE SECURITIES ACT OF 1933


                                                                          EPOCRATES, INC.
                                                                           (Exact name of registrant as specified in its charter)

                           Delaware                                                               7375                                                           94-3326769
                 (State or other jurisdiction of                                     (Primary Standard Industrial                                             (I.R.S. Employer
                incorporation or organization)                                       Classification Code Number)                                             Identification No.)


                                                                                  1100 Park Place, Suite 300
                                                                                 San Mateo, California 94403
                                                                                       (650) 227-1700
                                        (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

                                                                                        KIRK M. LOEVNER
                                                               CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                                                                         EPOCRATES, INC.
                                                                                   1100 PARK PLACE, SUITE 300
                                                                                SAN MATEO, CALIFORNIA 94403
                                                                                            (650) 227-1700
                                                   (Name, address, including zip code, and telephone number, including area code, of agent for service)




                                                                                               Copies to:
                             Matthew B. Hemington, Esq.                                                                                  Alan F. Denenberg, Esq.
                                  Sally A. Kay, Esq.                                                                                      Davis Polk & Wardwell
                            Cooley Godward Kronish LLP                                                                                     1600 El Camino Real
                                Five Palo Alto Square                                                                                   Menlo Park, California 94025
                                3000 El Camino Real                                                                                           (650) 752-2000
                             Palo Alto, California 94306
                                   (650) 843-5000


       Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following
box. 

       If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. 

       If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. 

       If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering. 

      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 definitions of "large
accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


 Large accelerated filer                                  Accelerated filer                               Non-accelerated filer                        Smaller reporting company 
                                                                                                    (Do not check if a smaller
                                                                                                      reporting company)

                                                                    CALCULATION OF REGISTRATION FEE

                                                                                                                            Proposed Maximum
                                                                                                                                Aggregate                        Amount of
Title of Each Class of Securities to be Registered                                                                           Offering Price (1)                Registration Fee
Common Stock, $0.001 par value                                                                                              $75,000,000.00                       $2,947.50
(1)

         Estimated solely for the purpose of calculating the amount of the registration in accordance with Rule 457(o) under the Securities Act of
         1933, as amended.



        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further
amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or
until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange
Commission is effective.
This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.


                                                    SUBJECT TO COMPLETION, DATED APRIL 17, 2008

PROSPECTUS




                                                                                                   Shares

                                                                  Epocrates, Inc.
                                                                        Common Stock
                                                                   $                       per share

     We are selling                shares of common stock and the selling stockholders are selling         shares of common stock. We will
not receive any of the proceeds from the shares of common stock sold by the selling stockholders. We have granted the underwriters an option
to purchase up to               additional shares of common stock to cover over-allotments.

    This is the initial public offering of our common stock. We currently expect the initial public offering price to be between $ and
$    per share. We have applied to have the common stock included for quotation on The NASDAQ Global Market under the symbol
"EPOC."

       Investing in our common stock involves risks. See "Risk Factors" beginning on page 11.
     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


                                                                                                                   Per Share                                   Total

Public Offering Price                                                                                          $                                         $
Underwriting Discount                                                                                          $                                         $
Proceeds to Epocrates, Inc. (before expenses)                                                                  $                                         $
Proceeds to the Selling Stockholders (before expenses)                                                         $                                         $

      The underwriters expect to deliver the shares to purchasers on or about                                      , 2008.

                                                                                      Citi

                                                                              Piper Jaffray

William Blair & Company                                                                                                          Needham & Company, LLC


                   , 2008
      You should rely only on the information contained in this prospectus and any related free writing prospectuses. Neither we nor
the underwriters have authorized anyone to provide you with different information. We are not making an offer of these securities in
any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate
as of any date other than the date on the front of this prospectus.



                                                             TABLE OF CONTENTS

                                                                                                                                                Page

Summary                                                                                                                                             1
Risk Factors                                                                                                                                       11
Special Note Regarding Forward-Looking Statements and Industry Data                                                                                35
Use of Proceeds                                                                                                                                    36
Dividend Policy                                                                                                                                    36
Capitalization                                                                                                                                     37
Dilution                                                                                                                                           39
Selected Financial Data                                                                                                                            41
Management's Discussion and Analysis of Financial Condition and Results of Operations                                                              44
Business                                                                                                                                           67
Management                                                                                                                                         87
Executive Compensation                                                                                                                             93
Certain Relationships and Related Party Transactions                                                                                              118
Principal and Selling Stockholders                                                                                                                121
Description of Capital Stock                                                                                                                      124
Certain United States Federal Tax Consequences for Non-United States Holders                                                                      127
Shares Eligible for Future Sale                                                                                                                   130
Underwriting                                                                                                                                      132
Legal Matters                                                                                                                                     136
Experts                                                                                                                                           136
Where You Can Find Additional Information                                                                                                         136
Index to Financial Statements                                                                                                                     F-1


     Until                          , 2008 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether
or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or subscriptions.

                                                                          i
                                                                  SUMMARY

       After you read the following summary, you should read and consider carefully the more detailed information and financial statements
and related notes that we include in this prospectus. If you invest in our common stock, you are assuming a high degree of risk. See the section
of this prospectus entitled "Risk Factors."


                                                                 Our Business

     Epocrates is a leading provider of clinical information and decision support tools to healthcare professionals, as well as interactive
information services to the healthcare industry. Most commonly used on mobile devices at the point of care, our subscription-based services
enable healthcare professionals to make more informed medical decisions, reduce medical errors and practice more efficiently. We believe
Epocrates is the leading electronic source of medical information for primary care physicians at the point of care, based in part on the
combination of frequency of use and minutes of usage as determined in a 2007 study conducted by PERQ/HCI, part of The Nielsen Company.
According to this study of primary care physicians, respondents reported using Epocrates on an annual basis more than any other electronic
resource included in the survey and more often than Medscape, Skyscape and Mobile PDR combined.

      Our brand recognition and strong reputation have helped us cultivate a large number of active subscribers, including more than one in four
U.S. physicians and more than one in three U.S. medical students. We believe that healthcare professionals have come to rely on us as a part of
their daily clinical workflow, enabling them to enhance patient safety, comply with clinical standards of care, improve practice productivity and
manage their information burden. Our worldwide subscriber base currently consists of over 500,000 healthcare professionals and includes
physicians, nurses, medical students, pharmacists and physician assistants. The majority of these subscribers use our free clinical products.

      Our clinical information and decision support tools provide healthcare professionals with convenient access to information they need to
treat patients at the point of care. For example, our subscribers are able to access dosing, drug interaction, pricing and insurance coverage
information for over 3,300 drugs, as well as disease, diagnostic, coding and symptom assessment tools. Our clinical information is available for
use on individual mobile devices, such as personal digital assistants, or PDAs, and smartphones operating the Palm®, Windows Mobile® or
BlackBerry® operating systems, as well as laptops, desktops and Tablet PCs via the Internet. In addition, a customized version of our content is
available for the iPhone® Safari browser and we recently began development with Apple Inc. of a version for the iPhone operating system.

     Through our interactive information services, we provide healthcare companies targeted access to our subscriber base to more effectively
reach significant numbers of healthcare professionals. These services enable pharmaceutical, market research, managed care and medical
education organizations to more effectively communicate with healthcare professionals. For example, our messaging service allows us to
deliver important news and alerts, such as new product approvals, formulary status changes and clinical studies, directed to specific groups of
our subscribers. We believe the efficacy of our targeted communication and promotional activities will capture an increasing proportion of the
annual pharmaceutical promotional spending directed to healthcare professionals, which totaled over $14 billion in 2006. We believe the size
of our subscriber network makes us one of the few electronic communication channels of scale available for the healthcare industry to reach
healthcare professionals.

     We generate revenue by providing healthcare companies targeted access to our network of subscribers and selling subscriptions to our
premium clinical information and decision support tools. Our interactive information services generate revenue in a number of ways, including
through sponsorship of clinical messaging, continuing medical education programs and recruiting participants for market research surveys. The
majority of our paid subscriptions have a one year term and are

                                                                       1
purchased by individual healthcare professionals for their own use. Consistent with our corporate strategy of promoting our free subscription
products, we expect revenue from user subscriptions to our paid products to decrease. We are increasing our focus on product development and
marketing in order to further enhance our free products and are increasing our emphasis on generating indirect revenue from healthcare
companies. In 2007, we generated total revenue of $65.6 million, a 33% increase over 2006. Cash provided by operating activities for the year
ended December 31, 2007 was $23.4 million, compared with $7.1 million for the year ended December 31, 2006. Our income before taxes for
the year ended December 31, 2007 was $4.6 million, compared with a loss of $1.4 million for the year ended December 31, 2006.


                                                              Market Opportunity

      Physicians are increasingly adopting technology solutions that can improve the quality of patient care, reduce medical errors and increase
practice productivity while easily integrating into their daily clinical workflow. At the same time, healthcare companies are seeking to increase
their ability to improve the quality and frequency of their interaction with physicians and other healthcare professionals. We believe these
broad trends will continue to create demand for our clinical information and interactive information services.

Adoption of Technology Solutions by Healthcare Professionals

     Use of technology among healthcare professionals has grown considerably in recent years. In particular, utilization of mobile technology
platforms has increased substantially as a result of advances in operating software and hardware devices, as well as the reduced cost and
complexity of mobile technology. According to a 2007 Manhattan Research report, over 50% of U.S. physicians use PDAs or smartphones, an
increase from approximately 30% in 2001. Through the adoption of technology solutions, healthcare professionals are better able to:

     •
            enhance patient safety;

     •
            comply with clinical standards of care;

     •
            improve practice productivity; and

     •
            manage their information burden.

Increasing Ability to Communicate through Electronic Communication Channels

    Increased adoption of information technology solutions has created substantial opportunities for healthcare companies to leverage the use
of mobile devices and the Internet to reach clinicians. These electronic channels are cost-effective and enable the delivery of highly targeted
messages to healthcare professionals. Accordingly, use of these channels has become a rapidly growing component of overall healthcare
company spending to reach healthcare professionals.

Growth in Electronic Marketing by Pharmaceutical Companies

     The pharmaceutical industry faces increasing challenges, such as declining product pipelines, increasing regulatory requirements and
constraints, generic and biotech competition and pricing pressures. According to a report by Verispan, an independent research organization,
pharmaceutical industry spending on electronic marketing to physicians approximately doubled from 2004 to 2006, with pharmaceutical
companies spending over $14 billion in 2006 on overall promotional activities directed towards healthcare professionals. A significant portion
of those marketing dollars continues to be spent on drug representatives visiting physician offices at an estimated cost of $150 to $200 per visit.
However, according to a white paper published by Unisys Corporation in 2004, a drug representative fails to make contact with a physician
approximately 50% of the time and 87% of contacts when made last less than two minutes. Further, medical groups are more frequently
denying drug representatives

                                                                         2
access entirely. As a result, we believe pharmaceutical companies are seeking better and more cost-effective access to physicians.

Growth in Online Healthcare Market Research

     Based on data compiled by Inside Research, the amount spent by U.S. healthcare companies on market research from 2004 to 2006
increased by 23%, to $1.2 billion. Historically, most general market research has taken place offline, through interviews, surveys and focus
groups; however online surveys are increasing in popularity and in 2006, 36% of all market research survey spending was allocated towards
online surveys, an increase from 9% in 2000. We believe the percentage of healthcare market research that is conducted online is growing
along with the growth of the broader market for online research.

Growth in Electronic Continuing Medical Education (CME)

      Most U.S. physicians are required to complete continuing medical education, or CME, in order to maintain their medical licenses. In 2006,
nearly $2.4 billion was spent on CME activities, including content development, advertising and registration fees. Online and mobile CME is
the fastest-growing CME channel, representing over 26% of activities in 2006. In 2007, Ambient Insights projected that online and
mobile-based CME will grow by 11% and 40%, respectively, between 2006 and 2011. As reported by Verispan in its 2005 ePromotion Annual
Study, 87% of physicians surveyed reported earning CME credits online. We expect this growth to continue as sponsors of CME look for more
effective ways to reach and attract increasingly busy healthcare professionals.


                                                                  Our Strengths

     We believe that we have the following key competitive strengths:

Recognized and Trusted Brand with Healthcare Professionals

     We have built a brand that is widely recognized among healthcare professionals as a trusted source of clinical information. In the Pri-Med
2006 Healthcare Solutions Annual Report published in January 2007, physicians ranked Epocrates the second most recognized brand behind
Microsoft among 18 healthcare information technology companies evaluated. Healthcare professionals have come to depend on us as a
trustworthy source for objective, concise, accurate and clinically useful information and decision support tools, resulting in frequent use of our
services.

Large Subscriber Base

     We currently have over 500,000 active subscribers worldwide, including more than one in four U.S. physicians and more than one in three
U.S. medical students. Consistent with our core strategy, the majority of these subscribers rely on our free clinical products. In addition, we
believe Epocrates has become an integral part of the daily clinical workflow of many of our subscribers. In a 2006 survey of over 1,500 of our
subscriber physicians commissioned by Epocrates and conducted by researchers at Brigham and Women's Hospital, a teaching affiliate of
Harvard Medical School, 83% of respondents reported using the Epocrates drug reference an average of six times per day. We believe the
breadth and loyalty of our subscriber base are not easily replicated.

Powerful Business Model

     Our subscriber base is composed of clinicians who access our free drug reference information, as well as users who purchase one or more
of our premium clinical decision support tools. Regardless of whether a healthcare professional pays for a subscription or uses the free version,
our network of subscribers provides a base for generating multiple high margin revenue streams from our healthcare industry clients. We
generally receive cash payments prior to providing the related services and recognizing revenue, which we believe gives us increased revenue
visibility and greater cash provided by

                                                                        3
operating activities. We believe the power of our business model will continue to grow as our clients shift more of their spending to electronic
communications media. We are increasing our focus on providing free content and services to clinicians in order to grow our user base and
capture an increasing amount of spending by healthcare clients on electronic communications.

Proprietary Clinical Content and Decision Support Tools

      We have selected and formatted our content and decision support tools specifically to provide healthcare professionals with information
that they need, when they need it, at the point of care. For example, our drug content is developed and continually updated by a team of
physicians and pharmacists to ensure accuracy and relevance, and is designed expressly to fit within the clinician's workflow. In the 2006
Brigham and Women's Hospital survey referenced above, over 60% of physicians believed that their use of Epocrates clinical reference
prevented adverse drug events or medical errors three or more times in the prior month. We believe the quality, relevance and ease of use of
our content drives our ability to attract and retain subscribers.

Proven Technology Architecture

      For a majority of our users, our decision support tools reside directly on the handheld device and have been refined based on years of use
by healthcare professionals. As a result, access to our clinical information by these users at the point of care is not subject to interruption or lags
in Internet or telecommunication service, and therefore is fast and reliable. In addition, we have designed our network architecture to be highly
scalable with high volume data synchronization capabilities, allowing for simple and efficient download and update of our clinical information.
We believe these attributes are significant advantages in supporting our large subscriber base.

Extensive Industry Relationships

     We have developed relationships with key participants in the healthcare industry, including leading medical schools and associations such
as Harvard Medical School, the American Psychiatric Association and the California Medical Association. We have worked with 19 of the 20
largest pharmaceutical companies based on global sales and have contracted with over 200 pharmaceutical brands. Over 150 market research
firms have used our services to recruit healthcare professionals for market research surveys on behalf of the healthcare and financial services
industries.

Experienced Management Team

      Our management team includes healthcare and information technology veterans and experienced industry executives. We benefit from
their operational experience, thorough understanding of the strategic landscape and extensive relationships with pharmaceutical companies and
other existing and potential customers.


                                                                    Our Strategy

     Our goal is to be the leading provider of electronic clinical information and decision support tools to physicians and other healthcare
professionals. Helping healthcare professionals improve quality of care, reduce medical errors and save time is central to the success of our
business and is our highest priority. Another key component of our business is offering targeted access to our subscriber base with the goal of
offering programs that are relevant and useful to both our clients and our subscribers. Key elements of our strategy include:

Strengthening our Subscriber Base

     We believe that our focus on the needs of healthcare professionals is the foundation of our success and is critical for the creation of
long-term value through growth in subscription and interactive information services revenue. We plan to continue to invest significant clinical,
product development

                                                                          4
and marketing resources to strengthen our subscriber base and increase subscriber usage. A key element of our strategy is to continually
enhance the clinical functionality of our free products through new content and features. Additionally, our large subscriber base and established
technology could allow us to develop applications that enhance physician workflow and allow physicians to access patient medical data.

Developing for New Technology Platforms

     We believe it is critical that healthcare professionals have access to important clinical information, wherever and whenever they need it.
For example, we announced the launch of Epocrates Rx on the BlackBerry operating system in late 2007 and in March 2008, we announced
that we are working with Apple to develop a version of our software for the iPhone operating system. Our goal is to continue to expand our
product and services offerings on new mobile platforms as well as expand the breadth and depth of information we offer on Web-based
platforms such as desktops, laptops and Tablet PCs.

Expanding our Sponsorship Offerings

     We believe we can provide greater value to our subscribers and clients by expanding our interactive information services. This includes
adding new features to our existing services as well as offering completely new services. In addition, we expect to expand the resources we
devote to growing our client base, including hiring additional sales, marketing and account management personnel. Our efforts are directed at
both new and existing clients and focused on the pharmaceutical, biotechnology and medical device industries.

Engaging in Strategic Alliances, Partnerships and Acquisitions

     In executing the strategies above, we plan to supplement our internal development efforts with strategic alliances, partnerships and
acquisitions. For example, in December 2007, we entered into a referral agreement with Hudson Street Services, a Goldman, Sachs & Co.
business, to co-market our market research products and services to its institutional investing clients. Future alliances might include working
with leading clinical content providers to develop integrated products and services, extending our integration/interoperability capabilities with
healthcare information technology vendors, and working with medical associations and healthcare institutions to provide our content to their
members. We currently have no agreements or commitments regarding any strategic acquisitions.


                                                             Company Information

     We were incorporated in California in August 1998 as nCircle Communications, Inc. In September 1999, we changed our name to
Epocrates, Inc., and in May 2006, we reincorporated in Delaware. Our principal executive offices are located at 1100 Park Place, Suite 300,
San Mateo, California 94403, and our telephone number is (650) 227-1700. Our website address is http://www.epocrates.com. The information
contained in, or that can be accessed through, our website is not part of this prospectus. Unless the context indicates otherwise, as used in this
prospectus, the terms "Epocrates," "we," "us" and "our" refer to Epocrates, Inc., a Delaware corporation. We use DocAlert®, DocMemo®,
Epocrates®, Epocrates Honors®, Epocrates ID®, Epocrates Lab™, Epocrates MedTools®, Epocrates Rx®, Epocrates Rx Pro®, MultiCheck®,
PharmFlash®, Epocrates Dx®, Epocrates QuickSurvey®, Epocrates QuickRecruit®, Epocrates MobileResearch™, MobileCME® and
Epocrates SxDx® as trademarks in the United States and other countries. All other trademarks and tradenames mentioned in this prospectus are
the property of their respective owners.

                                                                        5
                                                                THE OFFERING


Common stock offered by us                                         shares

Common stock offered by selling stockholders                        shares

Common stock to be outstanding after this offering                 shares

Use of proceeds                                            We plan to use the net proceeds of this offering to pay approximately $22.0 million
                                                           of cumulative dividends (accrued through March 31, 2008) to the holders of our
                                                           Series B preferred stock and the remainder for general corporate purposes, including
                                                           working capital, research and development, sales and marketing and capital
                                                           expenditures. We may also use a portion of the net proceeds for the acquisition of, or
                                                           investment in, businesses, products and technologies that are complementary to our
                                                           business. We will not receive any of the proceeds from the sale of shares by the
                                                           selling stockholders.

Risk factors                                               See the section of this prospectus entitled "Risk Factors" and other information
                                                           included in this prospectus for a discussion of factors you should carefully consider
                                                           before deciding to invest in shares of our common stock.

Proposed NASDAQ Global Market symbol                       EPOC

     The foregoing information regarding the number of shares of our common stock to be outstanding immediately after this offering is based
on 24,066,195 shares outstanding as of December 31, 2007, on an as-converted basis, and excludes:

     •
               4,623,691 shares of common stock issuable upon the exercise of outstanding options under our 1999 Stock Option Plan as of
               December 31, 2007, which will be amended and restated as our 2008 Equity Incentive Plan effective immediately upon the signing
               of the underwriting agreement for this offering, with a weighted average exercise price of $3.01 per share;

     •
               85,814 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan as of
               December 31, 2007;

     •
               2,396,382 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan, which
               were authorized by our Board of Directors in January and March 2008;

     •
               1,100,000 additional shares of common stock to be reserved and available for future issuance under our 2008 Employee Stock
               Purchase Plan, which will become effective immediately upon the signing of the underwriting agreement for this offering; and

     •
               21,044 additional shares of common stock, on an as-converted basis, issuable upon the exercise of an outstanding warrant to
               purchase Series B preferred stock with an exercise price of $5.71 per share.

                                                                         6
Except as otherwise indicated, all information in this prospectus assumes:

•
       the conversion of all outstanding shares of our preferred stock into 14,108,410 shares of common stock immediately prior to the
       closing of this offering;

•
       the payment of approximately $22.0 million of cumulative dividends (accrued through March 31, 2008) due to the holders of our
       Series B preferred stock with a portion of the net proceeds of this offering;

•
       the filing of our amended and restated certificate of incorporation immediately prior to the closing of this offering; and

•
       no exercise of the underwriters' over-allotment option.

                                                                   7
                                                       SUMMARY FINANCIAL DATA

      The following tables summarize our historical financial data. The statements of operations and statements of cash flows data for the years
ended December 31, 2005, 2006 and 2007, and the balance sheet data as of December 31, 2007 are derived from our audited financial
statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of our operating results or financial
condition to be expected in the future. You should read this data together with the financial statements and related notes included elsewhere in
this prospectus and the information under the sections of this prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Statements of Operations Data

                                                                                                             Years Ended December 31,

                                                                                                   2005                  2006                 2007

                                                                                                              (in thousands, except per
                                                                                                                     share data)


Revenues, net                                                                                 $       32,536      $         49,517        $     65,611
Cost of revenues(1)                                                                                   12,369                17,371              22,805

Gross profit                                                                                          20,167                32,146              42,806
Operating expenses(1):
   Sales and marketing                                                                                11,725                14,975              16,887
   Research and development                                                                            6,483                 8,748              10,519
   General and administrative                                                                          5,119                10,725              11,983

Total operating expenses                                                                              23,327                34,448              39,389

Income (loss) from operations                                                                         (3,160 )              (2,302 )             3,417
Interest and other income (expense), net                                                                 307                   889               1,196

Income (loss) before income taxes                                                                     (2,853 )              (1,413 )             4,613
Benefit (provision) for income taxes                                                                     (57 )                 (28 )            21,126

Net income (loss)                                                                                     (2,910 )              (1,441 )            25,739

Less: accretion of Series B mandatorily redeemable preferred stock dividends                           2,824                 2,840               2,840

Less: allocation of net income to participating preferred stockholders                                      —                     —             15,582

Net income (loss) available to common stockholders                                            $       (5,734 ) $            (4,281 ) $           7,317


Net income (loss) per common share—basic                                                      $           (1.05 ) $             (0.62 ) $            0.96


Net income (loss) per common share—diluted                                                    $           (1.05 ) $             (0.62 ) $            0.72


Weighted average shares used in computing net loss per common share—basic                              5,449                 6,888               7,592


Weighted average shares used in computing net loss per common share—diluted                            5,449                 6,888              10,135


Proforma net income per share—basic (unaudited)                                                                                           $          1.08


Proforma net income per share—diluted (unaudited)                                                                                         $          0.98
Proforma weighted average common shares outstanding—basic                                           23,780


Proforma weighted average common shares outstanding—diluted                                         26,332

(1)
          Includes stock-based compensation in the following amounts:


      Cost of revenues                                                      $    31   $    58   $      178
      Sales and marketing                                                       275       503        1,127
      Research and development                                                  225       334          747
      General and administrative                                                434       374        1,135

                                                                        8
Balance Sheet Data

                                                                                                                    As of December 31, 2007

                                                                                                                                       Proforma As
                                                                                                              Actual                  Adjusted (1)(2)

                                                                                                                        (in thousands)


Cash, cash equivalents and short-term investments(3)                                                    $          72,620
Working capital                                                                                                     9,774
Total assets                                                                                                      135,565
Deferred revenue                                                                                                   58,250
Financing liability(4)                                                                                             20,314
Other long-term obligations                                                                                           694
Mandatorily redeemable convertible preferred stock                                                                 64,822
Accumulated deficit                                                                                               (51,522 )
Stockholders' deficit                                                                                             (48,381 )


(1)
       The proforma as adjusted summary balance sheet data as of December 31, 2007 has been adjusted to give effect to the conversion of all
       outstanding shares of our preferred stock into an aggregate of 14,108,410 shares of common stock upon the closing of this offering and
       the payment of approximately $22.0 million of cumulative dividends to the holders of our Series B preferred stock (accrued through
       March 31, 2008), and to give further effect to the sale of             shares of our common stock at an assumed initial public offering
       price of $       per share, after deducting underwriting discounts and estimated offering expenses payable by us.

(2)
       A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) cash, cash
       equivalents and short-term investments, total assets and stockholders' deficit by $        million, assuming that the number of shares
       offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and
       estimated offering expenses payable by us.

(3)
       Cash, cash equivalents and short-term investments excludes a book overdraft for certain of our disbursement cash accounts of
       $28.4 million as of December 31, 2007. Please refer to the section of this prospectus entitled "Management's Discussion and Analysis
       of Financial Condition and Results of Operations—Financial Operations Overview" and Note 1 of our audited financial statements
       included elsewhere in this prospectus for more information.

(4)
       Represents a financing liability incurred in connection with the build-out of our existing office space. Please refer to the section of this
       prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
       Policies and Estimates" and Note 5 of our audited financial statements included elsewhere in this prospectus for more information.



Other Financial Data

                                                                                                              Years Ended December 31,

                                                                                                       2005              2006                  2007

                                                                                                                    (in thousands)


Adjusted EBITDA(1)                                                                               $       (1,688 ) $              50      $         8,510
Net cash provided by operating activities                                                                11,901               7,130               23,366


(1)
       Adjusted EBITDA represents net income (loss) before interest income, interest expense, other income (expense), net, cumulative effect
       of change in accounting principle, benefit (provision) for income taxes, depreciation and amortization and stock-based compensation.

                                                                         9
     Adjusted EBITDA is not a measure of liquidity calculated in accordance with U.S. generally accepted accounting principles, or GAAP,
and should be viewed as a supplement to—not a substitute for—our results of operations presented on the basis of GAAP. Adjusted EBITDA
does not purport to represent cash flow provided by, or used in, operating activities as defined by GAAP. Our statement of cash flows presents
our cash flow activity in accordance with GAAP. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures
reported by other companies.

     We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating
performance because it provides them with an additional tool to compare business performance across companies and across periods. We
believe that:

         •
                 EBITDA is widely used by investors to measure a company's operating performance without regard to such items as interest
                 expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon
                 accounting methods and book value of assets, capital structure and the method by which assets were acquired; and

         •
                 investors commonly adjust EBITDA information to eliminate the effect of stock-based compensation expenses and other
                 charges, which can vary widely from company to company and impair comparability.

    Our management uses Adjusted EBITDA:

         •
                 as a measure of operating performance to assist in comparing performance from period to period on a consistent basis;

         •
                 as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations;

         •
                 in communications with the board of directors, stockholders, analysts and investors concerning our financial performance;
                 and

         •
                 as a significant performance measurement included in our bonus plan.

    The table below sets forth a reconciliation of net income (loss) to Adjusted EBITDA:

                                                                                                        Years Ended December 31,

                                                                                               2005                2006              2007

                                                                                                               (in thousands)
Net income (loss)                                                                         $       (2,910 ) $           (1,441 ) $       25,739
Interest income                                                                                     (440 )             (1,078 )         (1,714 )
Interest expense                                                                                      —                    —               285
Other income (expense), net                                                                          130                  189              233
Cumulative effect of change in accounting principle                                                   (3 )                 —                —
Benefit (provision) for income taxes                                                                  57                   28          (21,126 )
Depreciation and amortization                                                                        513                1,083            1,906
Stock-based compensation                                                                             965                1,269            3,187

Adjusted EBITDA                                                                           $       (1,688 ) $                50   $          8,510


                                                                      10
                                                                 RISK FACTORS

       Investing in our common stock involves a high degree of risk. This section describes circumstances or events that could have a negative
effect on our business. You should carefully consider the following risk factors and all other information contained in this prospectus before
purchasing our common stock. If any of the following risks occur, our business, financial condition or results of operations could be materially
and adversely affected. In these circumstances, the market price of our common stock could decline and you may lose some or all of your
investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations.

Risks Related to Our Business

If we are unable to retain our existing subscribers and attract new subscribers, especially physician subscribers, our subscription revenue
and other services revenue will decline and our business will suffer.

     A necessary condition to our long-term success will be our ability to retain our existing subscribers and attract new subscribers, especially
physician subscribers, to our clinical interactive information services and decision support tools. If we are unable to do so, our subscription and
interactive information services revenue could decline materially.

     Most of the subscriptions to our services have a term of one year and our subscribers have no obligation to renew their subscriptions when
such subscriptions expire. Under certain circumstances, our subscribers may cancel their subscriptions prior to expiration.

     Factors that may affect the renewal rate of our existing subscribers and the rate at which we attract new subscribers for our clinical
information and decision support tools include:

     •
            our ability to provide accurate and up-to-date, high-quality healthcare content, decision support tools, formulary hosting and other
            services that meet the needs of healthcare professionals and physicians;

     •
            our ability to provide reliable, error-free applications and to enhance the functionality, availability, performance and features of our
            existing and future services to meet the evolving requirements and expectations of our existing and future subscribers;

     •
            the availability, price, performance and functionality of competing products and services, including competing PDA-based,
            Web-based and traditional products and services; and

     •
            the ability of the developers of mobile operating systems and mobile devices with which our clinical information is compatible to
            remain competitive in the marketplace and to be adopted into medical practice and practice workflow, particularly in the face of
            the increased use of Internet-connected computers within physician offices.

     In addition to the loss of subscription revenue, our inability to attract or retain subscribers, especially physician subscribers, may cause an
even more significant decline in revenue from our interactive information services. Revenue from such services is tied directly to our ability to
maintain a large subscriber network of healthcare professionals that is attractive to our industry clients. Often, these clients are often seeking
access to physician subscribers with particular specialties.

     Moreover, as part of our strategy to grow our network of subscribers and leverage this base to generate high margin revenue streams from
healthcare industry clients, we plan to devote significant resources to expanding our free product and service offerings. In addition, we plan to
more actively focus our marketing efforts on increasing awareness and adoption of our free products and services and on increasing our
emphasis on generating indirect revenue from healthcare companies. As a result, we expect our revenues from subscriptions to our paid
products to decrease in the future.

                                                                         11
     From 2006 to 2007, our total number of U.S. physician subscribers remained essentially flat. Currently, we are not able to determine
whether this is a trend or merely a temporary fluctuation. Any decrease in the number of our physician subscribers, especially those with
particular specialties, could have a negative effect on our revenues.

If we have an insufficient number of subscribers, especially physician subscribers, with desired characteristics for some of our interactive
information services or those subscribers do not synchronize their mobile devices with sufficient frequency, we may become unable to
timely fulfill the demand for some of our interactive information services from healthcare companies.

      Our ability to meet the demand for delivering clinical messages, CME, formularies and other sponsored content to subscribers' mobile
devices is dependent upon our having a sufficient number of subscribers, especially physician subscribers, with desired characteristics
synchronizing their mobile devices to our servers through the Internet using our AutoUpdate feature with sufficient frequency during the period
for delivery of the service. In addition, we have established business rules and structured our technology to limit the number of clinical
messages and sponsored, promotional clinical messages delivered during any single AutoUpdate by a subscriber in order to promote the quality
of the subscriber's experience with the clinical messaging service. It is possible that an insufficient number of subscribers will use the
AutoUpdate feature during a given service period for our interactive information services, or that demand for promotional clinical messaging
sponsorship will exceed the available supply for all or a subset of our subscriber base. In either of these events, our healthcare clients could
become dissatisfied with our service. On occasion, for some subsets of our subscribers we have encountered situations in which the demand to
send sponsored clinical messages exceeded our ability to deliver the messages to subscribers at historical rates, and we have taken measures to
begin to address this situation, including implementing the ability to provide more frequent updates/messages for wireless users and making it
easier and faster for users to read our messages. However, we may be unable to grow our interactive information services revenue beyond the
bounds of our business rules and technology structure, and changes to such business rules or technology structure could cause our subscribers'
satisfaction with and response to our interactive information services to decrease, which could make such changes ineffective in addressing
such inability to grow these revenues.

If the response of our subscribers, especially physician subscribers, to our interactive information services decreases, the value of these
services will be reduced and our revenue will decline.

     In the past, we have obtained a positive response from our subscribers to our interactive information services, which include CME
offerings, offers to participate in market research studies, sponsored clinical messaging and other forms of communication. If, however, our
subscribers, particularly physician subscribers, become less responsive or non-responsive to receiving communications or participating in such
services, the value of these interactive information services will likely decline, thereby causing slower growth or a decline in sales of these
types of services, which in turn would cause our revenue to decline.

If we are unable to continue to provide reliable, accurate, up-to-date and high-quality healthcare content, decision support tools and
interactive information services, we will be unable to retain and attract subscribers to our services.

     Interest in our clinical information and interactive information services is based upon our ability to make available accurate, up-to-date,
high-quality healthcare content, decision-support tools, formulary hosting and other services that meet the needs of our subscribers. Our ability
to do so depends on our ability to:

     •
            hire and retain qualified physician and pharmacist editors and authors;

                                                                       12
     •
            license quality content from third parties;

     •
            partner with health plans and insurers to host formulary information; and

     •
            monitor and respond to changes in user interest in specific topics.

     For several of the clinical references included in our Epocrates Essentials/Essentials Deluxe product, we are particularly dependent on
third-party content providers. For example, we license Stedman's Medical Dictionary® 28 th Edition and information regarding ICD-9 and
CPT® codes from third parties.

     We cannot assure you that we will be able to continue to develop or acquire needed content at a reasonable cost, that there will not be
errors or omissions in our developed or licensed content as it is displayed to our subscribers, or that our competitors will not obtain exclusive
access to, or develop content that our target subscriber base considers superior to ours. If we are unable to do so for any reason, the value of the
content and services that we offer would diminish. As a result, we may be unable to attract and retain subscribers.

     To keep pace with technological developments, satisfy increasingly sophisticated customer requirements and sustain market acceptance,
we will need to continue to deploy new tools and features for our clinical information and interactive information services and develop new
offerings with enhanced performance and functionality at competitive prices. Accordingly, we will need to properly identify customer needs
and anticipate technological advances.

     The development and application of new technologies involve time, substantial costs and risks. Our inability, for technological or other
reasons, to enhance, develop and introduce services in a timely manner, or at all, in response to changing market conditions or customer
requirements could result in our services losing market acceptance, and therefore adversely affect our operating results. The new technologies
may be significant and expensive, and we cannot assure you that we will be able to implement them quickly and efficiently, or at all. Failure to
do so could inhibit our ability to attract or retain subscribers.

     Our software applications and systems may contain defects or errors which could negatively affect our reputation and impair our ability to
retain and attract subscribers to our applications and clients purchasing our services. While we test our applications and systems for defects and
errors prior to release, defects or errors have been identified from time to time by our internal team and by our subscribers and clients after
release. Such defects or errors may occur in the future.

     Any defects or errors that cause interruptions to the availability of our services could result in:

     •
            lost or delayed market acceptance and sales of our applications and services;

     •
            loss of subscribers and clients;

     •
            product liability or breach of contract suits against us;

     •
            diversion of development resources;

     •
            injury to our brand and reputation; and

     •
            increased maintenance and warranty costs.

      While our application subscription and interactive information services agreements typically contain limitations of liability and
disclaimers that purport to limit our liability for damages related to defects in our software, such limitations and disclaimers may not be
enforced by a court or other tribunal or otherwise effectively protect us from such claims. We maintain liability insurance coverage, including
coverage for errors and omissions. However, it is possible that claims could exceed the amount of our applicable insurance coverage, if any, or
that this coverage may not continue to be available on

                                                                          13
acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them could be
expensive and time consuming and could divert management's attention away from our operations. In addition, negative publicity caused by
these events may delay or hinder market acceptance of our services, including unrelated services.

If we are unable to maintain our brand recognition and credibility, our business and financial condition could suffer.

      We believe that maintaining the quality of our brand is critical to achieving widespread acceptance of our existing and future services and
is an important element in attracting new subscribers. Furthermore, we believe that the importance of brand recognition and credibility will
increase as competition in our market intensifies. Successful promotion of our brand will depend in large part on our ability to continue to
provide high-quality and useful services at competitive prices to our subscribers.

     In addition, the credibility of our brand is dependent in large part on the medical community's continued perception of us as independent
from our healthcare industry clients, particularly pharmaceutical companies. If healthcare professionals and physicians believe that we are too
closely associated with such clients as a result of the revenue we receive from their purchase or sponsorship of our interactive information
services, the credibility of our brand will diminish. Although we take precautions to remain independent from our healthcare industry clients,
including the establishment of our clinical oversight board, separating the development of our application content from our commercial
dealings with such clients and clearly labeling the source and responsibility of sponsored messages, programs and activities, we cannot assure
you that the medical community will view our content as sufficiently unbiased. If the credibility of our brand is damaged, it will be difficult and
expensive to restore the quality of our brand with healthcare professionals and physicians and our business could suffer.

The healthcare information market is highly competitive and we face significant competition for our clinical information, decision support
tools and interactive information services.

    The markets in which we participate are competitive, dynamic and subject to developments in technology and the healthcare industry.
Currently, we compete with other companies for subscribers to the types of clinical information we offer and for budget dollars from our
pharmaceutical, managed care, market research and medical education clients.

      We compete within a broad industry of healthcare content providers for the attention of healthcare professionals, who can choose to use
mobile, online and/or print media to reference clinical information. Our mobile clinical information faces competition from Skyscape and
Thomson Healthcare, among others. Other competitors provide clinical information which healthcare professionals may use online or offline.
Companies providing online clinical content include Medscape, a division of WebMD Health, and UpToDate. Companies providing traditional
offline print publications include Reed Elsevier, Thomson Healthcare and Lippincott Williams & Wilkins. Competition from each of these
sources of clinical reference content may lead to a reduction in the renewal rate of our existing subscribers and the rate at which we attract new
subscribers for our clinical information.

    Our primary competition for the limited budget dollars available from our clients in the area of interactive information services is from
companies, including Medscape, that help pharmaceutical companies market their products, programs and services to healthcare professionals.
These competitors include or may include in the future:

     •
            healthcare-related online portals and other websites that attract physicians with clinical information;

                                                                        14
     •
            online CME programs, offline medical conferences and symposia;

     •
            electronic newsletter and other electronic marketing companies, as well as those companies providing pharmaceutical information
            and promotional materials to healthcare professionals using technologies such as the Internet, PDAs, CD-ROM and other video
            and audio capabilities, also known as electronic detailing; and

     •
            new technologies such as electronic medical records and prescription systems which may incorporate clinical information.

     In addition, our market research business competes with companies such as Medefield and DoctorDirectory.com, Inc., both of which
recruit physicians to participate in surveys, often by phone, fax, email or surface mail. We also compete with the recruitment arms of market
research companies that have assembled their own survey panels of healthcare professionals. To the extent competing channels are available to
access healthcare professionals and physicians, the value of our interactive information services to our clients is reduced.

     Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These
organizations may be better known than we are and may have more clients or subscribers than we do. They may also be better able to develop
and deploy new products and services or to take advantage of new technologies than we are. Our inability, for technological or other reasons, to
enhance, develop and introduce services in a timely manner, or at all, in response to changing market conditions, technology or customer
requirements could result in our services losing market acceptance, and therefore adversely affect our operating results. New technologies may
be significant and expensive, and we cannot assure you that we will be able to implement them quickly and efficiently, or at all. We cannot
assure you that we will be able to compete successfully against these organizations or any alliances they have formed or may form.

If we are required to reduce our prices to compete successfully, our margins and operating results could be adversely affected.

     The competitive market in which we participate may require us to reduce the prices of our services or the rates we charge our clients. If
our competitors offer discounts on certain applications or services, we may be required to reduce prices or offer our clinical information and
decision support tools on less favorable terms to compete successfully. Several of our larger competitors have significantly greater resources
than we have and are better able to absorb short-term losses. A reduction in the prices of our services would reduce our margins. Some of our
competitors may bundle product offerings that compete with ours for promotional purposes or as a long-term pricing strategy. These practices
could, over time, limit the prices that we can charge for our services. If we cannot offset price reductions with a corresponding increase in sales
volume, our operating results would be adversely affected.

We are dependent on the limited number of mobile operating systems and mobile devices that are compatible with our applications
remaining competitive in the marketplace.

     Our mobile clinical information is compatible with a limited number of mobile operating systems, specifically Palm, Windows Mobile and
BlackBerry operating systems. While we offer online services, the majority of our subscribers, and the majority of our interactive information
services, are on mobile devices. We depend on the continuing compatibility of our clinical information and services with such operating
systems and mobile devices and with evolving industry standards and protocols to run our mobile clinical information.

    In addition, we are dependent on the ability of the developers of the limited number of mobile operating systems and mobile devices with
which our clinical information is compatible to remain competitive in the medical community and the general marketplace. To remain
competitive, developers

                                                                        15
of such mobile operating systems and mobile devices may need to timely enhance their products, develop new operating systems or devices or
take other actions which are outside of our control. If a mobile operating system or mobile device that is incompatible with our clinical
reference application achieves widespread use and acceptance in the medical community, or if the use of Internet resources or other non-mobile
device resources becomes more attractive than what is offered for mobile devices and operating systems, we may be unable to retain or attract
subscribers to our applications. In particular, while our online application can be accessed through most Internet browsers or microbrowsers,
including the browser incorporated into the iPhone, our native application is not compatible with Symbian-based devices or Apple products,
including its iPhone product, any of which may lead to a loss of subscribers.

We have identified material weaknesses in our internal control over financial reporting that, if not corrected, could result in material
misstatements in our financial statements.

     In connection with the preparation of our financial statements for the years ended December 31, 2005, 2006 and 2007, we have identified
certain matters involving our internal control over financial reporting that constitute material weaknesses under standards established by the
Public Company Accounting Oversight Board, or PCAOB.

      The PCAOB defines a material weakness as a significant deficiency, or combination of significant deficiencies, that results in more than a
remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected by our employees.
A significant deficiency is defined as a control deficiency, or a combination of control deficiencies, that adversely affects the company's ability
to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such
that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than
inconsequential will not be prevented or detected. A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

     The material weaknesses identified were in the areas of financial reporting, where inadequate staffing, supervision, systems, processes and
controls resulted in untimely identification and resolution of certain accounting matters, and revenue recognition, where there were inadequate
internal controls regarding concessions granted to customers.

     In 2006 and 2007, we took steps to to address these material weaknesses by hiring additional personnel with technical accounting
expertise and by implementing systems, processes and controls designed to improve our revenue recognition and financial reporting processes.
We intend to continue to improve our revenue recognition and financial reporting processes in 2008 by identifying, recruiting and training
personnel with the appropriate accounting skills, identifying manual processes which can be better controlled by automating those processes
and upgrading existing or implementing new financial reporting systems and controls. However, we will not be able to make a determination
that we have remediated these material weaknesses until the procedures that we put in place have been working for a sufficient period of time
for us to determine that they are effective. As a result of this and similar activities, management's attention may be diverted from other business
concerns, which could have a material adverse effect on our business, financial condition and results of operations.

                                                                        16
If we are unable to create efficiencies in our financial reporting processes, we will be unable to produce accurate financial statements in a
timely manner and our operating results, our ability to operate our business and our stock price will be adversely affected and could result
in our being delisted from The NASDAQ Global Market.

     Historically, our financial reporting process has required a substantial amount of time to complete. For example, we were not able to issue
financial statements for the years ended December 31, 2004, 2005 and 2006 until the fourth quarter of 2007. The protracted length of time
required to issue such financial statements was due in large part to the following:

     •
            Data integrity. Our inability to generate contemporaneous data required us to reconstruct our historical records from
            disorganized and incomplete historical data.

     •
            Incorrect initial accounting judgments. Several initial accounting judgments made by us were later determined to be incorrect.
            In particular, our accounting was found to be incorrect which required us to do a material amount of accounting rework in
            connection with the corrected conclusions in the areas of revenue recognition when concessions exist, lease accounting and
            capitalization of internal use software.

     •
            Heavy reliance on the use of spreadsheets. Prior to implementing more efficient software and systems, we relied heavily on
            spreadsheets in our accounting. Spreadsheets tend to be cumbersome, error prone and subject to software failure due to the volume
            of data requiring processing.

     •
            Lack of appropriate staffing of internal accounting personnel. Historically we have not had the necessary internal accounting
            staffing levels with the appropriate skills and levels of expertise.

     Although we are in the process of remediating our material weaknesses and have made a number of changes and additions with respect to
internal and external staffing, we have not yet gone through a year-end financial reporting process since having made such changes and cannot
be certain that our financial reporting processes in the future will be more efficient than they have been historically. Any failure by us to
implement or maintain required new or improved controls could cause us to fail to meet our periodic reporting obligations or result in material
misstatements in our financial statements. Any such failure could also adversely affect management's assessment of our disclosure controls and
procedures, required with the filing of our quarterly and annual reports after our initial public offering, and the results of periodic management
evaluations and annual auditor attestation reports regarding the effectiveness of our internal controls over financial reporting that will be
required pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. The existence of a material weakness could result in errors in our financial
statements that could result in a restatement of our financial statements, cause us to fail to meet our reporting obligations and cause investors to
lose confidence in our reported financial information. In addition, during the periods in which our reports may be late, we would not be in
compliance with the continued listing requirements of The NASDAQ Global Market. We will be required to comply with these rules as a
condition of the continued listing of our stock on The NASDAQ Global Market. If we are unable to timely file these reports in the future, it
may impede your access to important information about us and, in the case of a prolonged delay in filing, result in our common stock being
delisted from The NASDAQ Global Market. Delisting could result in our common stock no longer being traded on any securities exchange or
over-the-counter market and could impact its liquidity and price.

We have incurred and may continue to incur losses.

     We have incurred losses in all but four of our fiscal quarters since our inception. We achieved income before taxes of $4.6 million for the
year ended December 31, 2007; however, we experienced a loss before income taxes of $6.2 million, $2.9 million and $1.4 million for the
years ended

                                                                        17
December 31, 2004, 2005 and 2006, respectively. As of December 31, 2007, our accumulated deficit was $51.5 million. In reviewing the
financial information contained in this prospectus, you should not consider our recent growth in quarterly or annual revenue as necessarily
indicative of our future performance. We expect our sales, marketing, research and development and other operating expenses to increase in the
future as we expand our business. In addition, we expect to incur significant legal, accounting and other expenses as a public company that we
did not incur as a private company. If our revenue does not grow to offset any increased expenses, we may be unable to sustain our
profitability. Our ability to achieve and maintain profitability will depend on, among other things, our ability to successfully market our clinical
reference services in order to retain and attract subscribers, enhance our services or create new products and services, respond to competitive
developments and attract and retain qualified sales, technical and management employees. Even if we are able to sustain profitability, we may
not be able to maintain or increase profitability on a quarterly or annual basis.

Our operating results have fluctuated and are likely to continue to fluctuate, which might make our quarterly results difficult to predict and
could cause our stock price to decline or exhibit volatility.

     Our operating results are likely to fluctuate as a result of a variety of factors, many of which are outside of our control. As a result,
comparing our operating results on a period-to-period basis may not be meaningful and you should not rely on our past results as an indication
of future performance. Each of the following factors, among others, could cause our operating results to fluctuate from quarter to quarter:

     •
            demand for and market acceptance of our services;

     •
            factors relating to client budget cycles and other factors that may affect the timing of promotional campaigns for specific products
            or demand for our services by our clients;

     •
            changes in client demand as a result of delays or changes in product approvals, changes in marketing strategies, modifications of
            client budgets and similar matters;

     •
            the length of sales cycles and fulfillment periods of our services to large pharmaceutical companies, health insurers, CME
            providers and other segments of the healthcare industry;

     •
            expansion of marketing and support operations; and

     •
            the timing of new product introductions and product enhancements by us or our competitors.

     The majority of our clinical information subscriptions have terms of one year and our contracts with our other healthcare industry clients
for our interactive information services range from one to three years. We cannot assure you that our current subscribers and other clients will
continue to participate in our existing programs beyond the terms of their existing contracts or that they will enter into any additional contracts
for new programs that we offer.

      As part of our strategy to grow our network of subscribers and leverage this base to generate high margin revenue streams from healthcare
industry clients, we plan to devote significant resources to expanding our free product and service offerings. In addition, we plan to more
actively focus our marketing efforts on increasing awareness and adoption of our free products and services and on increasing our emphasis on
generating indirect revenue from healthcare companies. As a result, we expect our revenues from subscriptions to our paid products to decrease
in the future.

     In addition, the time between the date of the signing of the contract with a client for a program, the actual fulfillment of the services under
such contract and the revenue recognition associated with such revenues may be lengthy, especially for larger contracts with multiple
deliverables, and may be subject to delays over which we have little or no control, including those that result from the client's

                                                                         18
need for internal approvals. Other factors that could affect the timing of our interactive information services revenue include:

     •
            variations in the marketing budgets allocated for the types of services we offer;

     •
            the timing of Federal Food and Drug Administration, or FDA, approval for new products or for new approved uses for existing
            products;

     •
            factors that may affect the timing of promotional campaigns for specific products;

     •
            the scheduling of conferences for physicians and other healthcare professionals; and

     •
            a client's desire to bundle programs.

Because we recognize revenue from our clinical information subscriptions and certain of our interactive information services over the term
or at the end of the service period, a significant downturn in our business may not be reflected immediately in our operating results, which
makes it more difficult to evaluate our prospects.

     We recognize revenue from subscription agreements monthly over the terms of these agreements, which are typically one year. In most
cases, we recognize revenue from our interactive information services at the end of the service period or upon delivery of the final service
element. As a result, a significant portion of the revenue we report in each quarter is generated from subscription and service agreements
entered into during prior periods. Consequently, a decline in new or renewed subscriptions or service agreements in any one quarter may not
affect our financial performance in that quarter but will negatively affect our revenue in future quarters. In addition, we may be unable to adjust
our costs, many of which are fixed, in response to reduced revenue. Accordingly, the effect of significant declines in sales and market
acceptance of our services may not be reflected in our short-term results of operations, which would make our reported results less indicative of
our future prospects.

Our business will suffer if we fail to successfully integrate businesses and technologies we may acquire in the future or to sufficiently assess
the risks in particular transactions.

     We may in the future acquire businesses, technologies, services, product lines and other assets. The successful integration of any such
acquisitions into our operations on a cost-effective basis, can be critical to our future performance. The amount and timing of the expected
benefits of any acquisition, including potential synergies between us and the acquired business, are subject to significant risks and uncertainties
including, but not limited to, those relating to:

     •
            our ability to maintain relationships with the clients of the acquired business;

     •
            our ability to retain or replace key personnel;

     •
            potential conflicts in sponsor or advertising relationships;

     •
            our ability to coordinate organizations that are geographically diverse and may have different business cultures;

     •
            dilution to our stockholders if we issue stock to finance an acquisition;

     •
            increased leverage if we incur debt to finance an acquisition;

     •
            decreased liquidity if we use cash to finance an acquisition; and

     •
            compliance with regulatory requirements.

     We cannot guarantee that any acquisition will be successfully integrated with our operations in a timely or cost-effective manner, or at all.
Failure to successfully integrate acquisitions or to achieve

                                                                        19
anticipated operating synergies, revenue enhancements or cost savings could have a negative effect on our business.

     Although our management will attempt to evaluate the risks inherent in each transaction and to value acquisition candidates appropriately,
we cannot assure you that we will properly ascertain all such risks or that acquired businesses and assets will perform as we expect or enhance
the value of our company as a whole. In addition, acquired companies or businesses may have larger than expected liabilities that are not
covered by the indemnification, if any, we are able to obtain from the sellers.

Developments in the healthcare industry could negatively affect our business.

     Most of our revenue is derived from the healthcare industry and could be reduced by changes affecting healthcare spending. General
reductions in expenditures by healthcare industry participants could result from, among other things:

     •
            government regulation or private initiatives that affect the manner in which healthcare providers interact with patients, payors or
            other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services;

     •
            consolidation of healthcare industry participants;

     •
            reductions in governmental funding for healthcare; and

     •
            adverse changes in business or economic conditions affecting healthcare payors or providers, pharmaceutical companies or other
            healthcare industry participants.

     We are particularly dependent upon pharmaceutical companies for our interactive information services revenue. Our business will be
harmed if business or economic conditions result in the reduction of purchases by such clients or the non-renewal of our agreements with such
clients.

     Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in
reduced spending in some or all of the specific segments of the market we serve or are planning to serve. For example, purchase of our services
could be affected by:

     •
            changes in the design of health insurance plans;

     •
            a decrease in the number of, or the market exclusivity available to, new drugs coming to market;

     •
            decreases in marketing expenditures by pharmaceutical companies as a result of governmental regulation or private initiatives that
            discourage or prohibit advertising or sponsorship activities by pharmaceutical companies; and

     •
            state or federal legislation requiring the disclosure of, or otherwise regulating, honorarium payments to physicians for participation
            in market research activities.

    In addition, our clients' expectations regarding pending or potential industry developments may also affect their budgeting processes and
spending plans with respect to services of the types we provide.

      The healthcare industry has changed significantly in recent years and we expect that significant changes will continue to occur. However,
the timing and impact of developments in the healthcare industry are difficult to predict. We cannot assure you that the markets for our services
will continue to exist at current levels or that we will have adequate technical, financial and marketing resources to react to changes in those
markets.

                                                                       20
If we do not effectively manage our growth, our existing infrastructure may become strained and we will be unable to increase sales or
generate significant revenue growth.

     Our future revenue and operating results will depend on our ability to manage the anticipated growth of our business. We have
experienced significant growth in the scope of our operations and the number of our employees. This growth has placed significant demands on
our management, as well as on our financial and operational resources. In order to achieve our business objectives, we will need to continue to
grow. However, continued growth presents numerous challenges, including:

     •
            implementing appropriate operational and financial systems and controls;

     •
            expanding technological infrastructure to support the flow of information to and from subscribers;

     •
            expanding our sales and marketing infrastructure and capabilities;

     •
            identifying, attracting and retaining qualified personnel; and

     •
            training, managing and supervising our personnel worldwide.

      If we are unable to effectively manage these challenges, or if we underestimate our future growth, we may not have the capability to
satisfy market demand and our business will be harmed.

We are dependent upon our senior executive management and other highly specialized personnel and the loss or failure to identify, hire,
motivate and retain additional highly specialized personnel could negatively impact our ability to grow our business.

     Our success and the execution of our growth strategy depend largely on the continued service of our senior executive management team.
The loss of any of our senior executive officers could have a negative impact on our ability to manage and grow our business effectively. We
cannot assure you that in such an event we would be able to replace any member of senior executive management in a timely manner, or at all,
on acceptable terms.

     Our future success and the execution of our growth strategy also depend largely on our continuing ability to identify, hire, develop,
motivate and retain highly specialized personnel, including software engineers, physician authors and other technical, sales and marketing
personnel. Our competitors, employers in other industries, healthcare providers, academic institutions and governmental entities and
organizations also often seek persons with similar qualifications. We cannot assure you that we will be able to hire or retain a sufficient number
of qualified personnel to meet our requirements, or that we will be able to do so at salary and benefit costs that are acceptable to us.

We may be subject to claims brought against us as a result of the services we provide.

      Healthcare professionals and physicians access information through our clinical information and interactive information services,
including information regarding particular medical conditions and the use of particular medications. If our content, or content we obtain from
third parties, contains inaccuracies, it is possible that patients, physicians, employees, health plan members or others may sue us if they are
harmed as a result of such inaccuracies. We have editorial procedures in place to provide quality control of the information that we publish or
provide. However, we cannot assure you that our editorial and other quality control procedures will be sufficient to ensure that there are no
errors or omissions in particular content. Although our agreements for the performance of our services contain terms and conditions, including
disclaimers of liability, that are intended to reduce or eliminate our liability, the law governing the validity and enforceability of online
agreements and other electronic transactions is evolving. We could be subject to claims by subscribers or third parties that our online
agreements are unenforceable. A finding by a court that these agreements are invalid and that we are

                                                                        21
subject to liability could harm our business and financial condition and require costly changes to our business.

     In addition, third parties may assert claims against us alleging infringement of copyrights, trademark rights, or other proprietary rights, or
alleging unfair competition or violations of privacy rights. We could also be subject to claims for indemnification resulting from infringement
claims made against our clients and third-party service providers for third-party products and content that are incorporated into our clinical
information if they are found to infringe the intellectual property rights of others, which could increase our defense costs and potential
damages. Any of these events could be expensive and time consuming to resolve or defend, may require us to change our business practices
and could have a negative effect on our business and financial condition.

     For example, one of our competitors, WebMD, has made assertions about our business and our business practices. WebMD has retained
outside counsel and has asserted that they are prepared to pursue claims against us including claims under the Lanham Act and state laws
regarding unfair competition and false advertising. They have also asserted their rights to contact governmental agencies to investigate our
business practices. Although we believe that their claims are without merit and that our business practices are both legal and ethical, WebMD
may nevertheless choose to pursue legal action.

     We could be required to spend significant amounts of time and money to defend ourselves against any such claims. If any of these claims
were to prevail, we could be forced to pay damages, comply with injunctions, or stop distributing our products and services while we
re-engineer them or seek licenses to necessary technology, which might not be available on reasonable terms, or at all. Even if potential claims
do not result in liability to us, investigating and defending against these claims could be expensive and time consuming and could divert
management's attention away from our operations. We maintain general liability insurance coverage, including coverage for errors and
omissions, however this coverage may not be sufficient to cover one or more large claims against us or otherwise continue to be available on
acceptable terms. Further, the insurer could disclaim coverage as to any future claim. In addition, our business is based on establishing the
reputation of our services as trustworthy and dependable sources of healthcare information. Allegations of impropriety or inaccuracy, even if
unfounded, could therefore harm our reputation and business.

Healthcare and consumer protection regulations and legislation create risks and challenges with respect to our compliance efforts and our
business strategies.

      The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory and other influences. Existing and
new laws and regulations affecting the healthcare industry could create unexpected liabilities for us, cause us to incur additional costs and
restrict our operations. Many healthcare laws are complex and their application to specific products and services may not be clear. In particular,
many existing healthcare laws and regulations, when enacted, did not contemplate the clinical information and interactive information services
that we provide. However, these laws and regulations may nonetheless be applied to our services. We are also subject to various federal and
state consumer protection laws. Our failure to accurately anticipate the application of these laws and regulations, or other failure to comply
with them, could create liability for us, result in adverse publicity and negatively affect our businesses. Some of the risks we face from
healthcare and consumer protection regulations are as follows:

          Regulation of drug and medical device advertising and promotion. We provide services involving promotion of prescription and
over-the-counter drugs and medical devices. Any increase in regulation of these areas by the FDA, the Federal Trade Commission, or FTC, or
other governmental bodies at the federal, state or local level, could make it more difficult for us to contract for certain of our interactive
information services. Physician groups and others have criticized the FDA's current policies

                                                                         22
and have called for restrictions on advertising of prescription drugs and for increased FDA enforcement. We cannot predict what actions the
FDA or industry participants may take in response to these criticisms. It is also possible that new laws would be enacted that impose
restrictions on such marketing and advertising. In fact, a number of bills have been proposed at both the state and federal levels addressing
pharmaceutical marketing and advertising practices, and some of these bills have been enacted by a handful of states. Our interactive
information services revenues could be materially reduced by additional restrictions on the marketing or advertising of prescription drugs and
medical devices, whether imposed by law or regulation or by policies adopted by industry members.

     If the FDA, the FTC or another governmental body finds that any information available on our website or distributed by us violates FDA,
FTC or other laws or regulations, they may take regulatory or judicial action against us or the advertiser or sponsor of that information. State
attorneys general may also take similar action based on their state's consumer protection statutes or other new or existing laws.

           Anti-kickback laws. There are federal and state laws that govern patient referrals, physician financial relationships and
inducements to healthcare providers and patients. The federal healthcare anti-kickback law prohibits any person or entity from offering, paying,
soliciting or receiving anything of value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal
healthcare programs or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good,
facility or service covered by these programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or
services for which payment is made by a federal healthcare program. These laws are applicable to manufacturers and distributors and,
therefore, may restrict how we and some of our clients market products to healthcare providers. Also, in 2002, the Office of the Inspector
General of the U.S. Department of Health and Human Services, or HHS, the federal government agency responsible for interpreting the federal
anti-kickback law, issued an advisory opinion that concluded that the sale of advertising and sponsorships to healthcare providers and vendors
by Web-based information services implicates the federal anti-kickback law. However, the advisory opinion suggests that enforcement action
will not result if the fees paid represent fair market value for the advertising/sponsorship arrangements, the fees do not vary based on the
volume or value of business generated by the advertising and the advertising/sponsorship relationships are clearly identified as such to
subscribers. The laws in this area are broadly written and it is often difficult to determine precisely how the laws will be applied in specific
circumstances. Penalties for violating the federal anti-kickback laws include imprisonment, fines and exclusion from participating, directly or
indirectly, in Medicare, Medicaid and other federal healthcare programs. Any determination by a state or federal regulatory agency that any of
our practices violate any of these laws could subject us to civil or criminal penalties and require us to change or terminate some portions of our
operations, which could harm our business. Even an unsuccessful challenge by regulatory authorities of our practices could result in negative
publicity and it could be costly for us to respond.

           Legislation relating to payments to physicians. Recent legislation enacted or pending in several states and introduced in Congress
at the federal level mandates public disclosure of, or otherwise regulates or limits the providing of, certain gifts and payments by
pharmaceutical companies to physicians. These state laws may be interpreted to cover honorarium payments made to physicians for
participation in market research activities sponsored by pharmaceutical companies. Because we currently provide market research services
involving participants from our subscriber base, the increased adoption and enforcement of these laws and the application of any public
disclosure requirements or other limitations may have a negative impact on the ability of pharmaceutical companies to sponsor these activities
or the willingness of physicians to participate in the market research. To date, we have not experienced a significant reduction in our market
research services business as a result of these laws in the few jurisdictions in which they have been enacted. However, we cannot predict how

                                                                       23
pharmaceutical companies or physicians will respond if such legislation becomes more widespread or is enacted at the federal level. A
significant decline in the sponsorship of our market research services by pharmaceutical companies or the agencies that represent such
companies, or a significant decline in physicians' willingness to participate in such studies could negatively impact our operating results.

           Medical professional regulation. The practice of most healthcare professions requires licensing under applicable state law. In
addition, the laws in some states prohibit business entities from practicing medicine. We do not believe that we engage in the practice of
medicine and we have attempted to structure our services, strategic relationships and other operations to avoid violating these state licensing
and professional practice laws. We do not believe we provide professional medical advice, diagnosis, or treatment. We employ and contract
with physicians who provide only medical information to subscribers, some of whom may be consumers, and we do not intend to provide
medical care or advice. A state, however, may determine that some portion of our business violates these laws and may seek to have us
discontinue those portions or subject us to penalties or licensure requirements. Any determination that we are a healthcare provider and acted
improperly as a healthcare provider may result in liability to us.

           Anti-spam regulation. In addition to specific healthcare regulations, we may also be required to comply with current or future
anti-spam legislation by limiting or modifying some of our interactive information services, such as our clinical messaging, which may result in
a reduction in our revenue. One such law, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or
CAN-SPAM, became effective in the United States on January 1, 2004. CAN-SPAM imposes complex and often burdensome requirements in
connection with the sending of commercial e-mail. The language of CAN-SPAM contains ambiguities, and there is limited case law
interpreting CAN-SPAM. Depending on how it is interpreted, CAN-SPAM or similar laws may impose burdens on our subscriber
communication practices and on certain of our services, which in turn could harm our ability to attract new clients and increase revenues.

           Other consumer protection regulation. The Children's Online Privacy Protection Act, or COPPA, applies to operators of
commercial websites and online services directed to U.S. children under the age of 13 that collect personal information from children and
operators of general audience sites with actual knowledge that they are collecting information from U.S. children under the age of 13. Our sites
are not directed at children and we employ a kick-out procedure whereby anyone identifying themselves as being under the age of 13 during
the registration process is not allowed to register to obtain our clinical information or participate in our services. COPPA, however, is a
relatively new law, can be applied broadly and is subject to interpretation by courts and other governmental authorities. The failure to
accurately anticipate the application or interpretation of this law could create liability for us, result in adverse publicity and negatively affect
our business.

     The FTC and many state attorneys general are applying federal and state consumer protection laws to require that the online collection,
use and dissemination of data, and the presentation of website or other electronic content, comply with certain standards for notice, choice,
security and access. Courts may also adopt these developing standards. A number of states, including California, have enacted laws or are
considering the enactment of laws governing the release of credit card or other personal information received from consumers. In many cases,
the specific limitations imposed by these standards are subject to interpretation by courts and other governmental authorities. We believe that
we are in compliance with these consumer protection standards, but a determination by a state or federal agency or court that any of our
practices do not meet these standards could result in liability and adversely affect our business. New interpretations of these standards could
also require us to incur additional costs and restrict our business operations.

      In addition, several foreign governments have regulations dealing with the collection and use of personal information obtained from their
citizens. Those governments may attempt to apply such laws extraterritorially or through treaties or other arrangements with U.S. governmental
entities. We might unintentionally violate such laws, such laws may be modified and new laws may be enacted in the future which may
increase the chance that we violate them unintentionally. Any such developments, or developments stemming from enactment or modification
of other laws, or the failure to accurately anticipate the application or interpretation of these laws could create liability to us, result in adverse
publicity and negatively affect our business.

                                                                         24
We rely on bandwidth providers, co-location data center providers, other third parties and our own systems for key aspects of the process of
providing and updating content to our subscribers and performing services for our clients, and any failure or interruption in the services
provided by these third parties or our own systems could harm our business.

      Our subscribers expect to be able to update our applications and access our services 24 hours a day, seven days a week, without
interruption. However, we have experienced and expect that we will in the future experience interruptions and delays in services and
availability from time to time. We rely on internal systems, as well as third-party vendors, including a co-location service provider and
bandwidth providers, to provide our online services.

     We have computing and communications hardware operations located at our facilities in San Mateo, California, and in a co-location
service administered by AT&T, Inc. in Palo Alto, California. In the event of a catastrophic event at one of these sites, we may experience an
extended period of system unavailability which could negatively impact our relationship with subscribers and adversely affect our brand and
our business. In particular, both of our co-location facilities are located in the same seismically active location in the San Francisco Bay Area.

     To operate without interruption, both we and our service providers must guard against:

     •
             damage from fire, power loss and other natural disasters;

     •
             communications failures;

     •
             software and hardware errors, failures and crashes;

     •
             security breaches, computer viruses and similar disruptive problems; and

     •
             other potential interruptions.

     Any disruption in the network access or co-location services provided by these third-party providers or any failure of or by these
third-party providers or our own systems to handle current or higher volume of use could significantly harm our business. We exercise little
control over these third-party vendors, which increases our vulnerability to problems with services they provide.

     Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and interactive information
services or our own systems could negatively impact our relationships with subscribers and clients, adversely affect our brand and our business
and potentially expose us to liability to third parties. Although we maintain insurance for our business, the coverage under our policies
generally only covers losses due to our negligence, and therefore may not be adequate to compensate us for all losses that may occur. In
addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost.

If the systems we use to provide our services experience security breaches or are otherwise perceived to be insecure, our business could
suffer.

      We retain and transmit confidential information in the processing centers and other facilities we use to provide online services. It is critical
that such facilities and infrastructure remain secure and be perceived by the marketplace as secure. A security breach could damage our
reputation or result in liability. We may be required to expend significant capital and other resources to protect against security breaches and
hackers or to alleviate problems caused by breaches. Despite the implementation of security measures, this infrastructure or other systems that
we interface with, including the Internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or
contractor access, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Any compromise of our
security, whether as a result of our own systems or the systems that they interface with, could reduce demand for our services and could subject
us to legal claims from our

                                                                         25
clients and subscribers, including claims for breach of contract or breach of warranty, or regulatory enforcement actions against us by the
government.

We may not be successful in protecting our intellectual property and proprietary rights.

      Our success depends to a significant degree on our proprietary technology and other intellectual property. We rely on a combination of
copyright, trade secret, patent and other intellectual property laws and confidentiality procedures to protect our proprietary rights. We believe
that our non-patented proprietary technologies and business processes are protected under trade secret, contractual and other intellectual
property rights. However, those rights do not afford the statutory exclusivity provided by patented processes. We also enter into confidentiality
and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom
we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access
to and distribution of our clinical and other proprietary information. Further, these agreements do not prevent our competitors from
independently developing technologies that are substantially equivalent or superior to ours and our clinical information.

      Our pending patent and trademark registration applications may not be allowed, and our competitors and others may challenge the validity
or scope of our patents or trademark registrations. If we do not receive the patents or trademark registrations we seek, or if other problems arise
with our intellectual property, our competitiveness could be significantly impaired and our business, operations and prospects may suffer. In
addition, we will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of
our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our clinical information and use
information that we regard as proprietary to create products and services that compete with ours. Some license provisions protecting against
unauthorized use, copying, transfer and disclosure of our licensed clinical information may be unenforceable under the laws of certain
jurisdictions and foreign countries in which we operate. Further, the laws of some countries do not protect proprietary rights to the same extent
as the laws of the United States. To the extent we expand our international activities, our exposure to unauthorized copying and use of our
clinical and other proprietary information may increase. Litigation may be necessary in the future to enforce our intellectual property rights and
to protect our trade secrets. Litigation, whether successful or unsuccessful, could result in substantial costs and diversion of management
resources, either of which could seriously harm our business.

We may be subject to claims by third parties that we are infringing their intellectual property, we may be prevented from selling certain
services and we may incur significant expenses in resolving these claims.

     We may receive claims of infringement from third parties or otherwise become aware of relevant patents or other intellectual property
rights of third parties that may lead to disputes and litigation. Any claims made against us regarding patents or other intellectual property rights
could be expensive and time consuming to resolve or defend and could have a negative effect on our business. We expect that software
application developers will increasingly be subject to infringement claims as the number of products and competitors grows and the
functionality of products in different industry segments overlaps. Our competitors or other third parties may challenge the validity or scope of
our intellectual property rights. A claim may also be made relating to technology that we acquire or license from third parties. If we were
subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

     •
            require costly litigation to resolve, as well as the payment of substantial damages;

     •
            require significant management time;

     •
            cause us to enter into costly royalty or license agreements;

                                                                         26
     •
            require us to discontinue the sale of our clinical information and decision support tools;

     •
            require us to indemnify our clients or third-party service providers; or

     •
            require us to expend additional development resources to redesign our applications.

     We may also be required to indemnify our clients and third-party service providers for third-party products and content that are
incorporated into our clinical information if they are found to infringe the intellectual property rights of others. Although many of these third
parties are obligated to indemnify us if their products infringe the rights of others, this indemnification may not be effective or adequate to
protect us.

     Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote
additional research and development resources to change our products. If such claims are asserted, there can be no assurance that we would
prevail, be able to successfully modify our clinical information or be able to acquire any necessary licenses on acceptable terms, if at all. We
may also be subject to potentially significant damages or injunctions against the sale of certain applications or use of certain technologies, and
there can be no assurance that any such litigation can be avoided or successfully concluded. There can be no assurance that our technologies or
products do not infringe the proprietary rights of third parties or that such parties will not initiate infringement actions against us.

Our use of "open source" software could adversely affect our ability to sell our products and subject us to possible litigation.

     A significant portion of the products or technologies licensed or developed by us may incorporate so-called "open source" software, and
we may incorporate open source software into other products in the future. Such open source software is generally licensed by its authors or
other third parties under open source licenses, including, for example, the GNU General Public License, the GNU Lesser General Public
License, "Apache-style" licenses, "Berkeley Software Distribution," "BSD-style" licenses and other open source licenses. We attempt to
monitor our use of open source software in an effort to avoid subjecting our products to conditions we do not intend; however, there can be no
assurance that our efforts have been or will be successful. There is little or no legal precedent governing the interpretation of many of the terms
of certain of these licenses, and therefore the potential impact of these terms on our business is somewhat unknown and may result in
unanticipated obligations regarding our products and technologies. For example, we may be subjected to certain conditions, including
requirements that we offer our products that use particular open source software at no cost to the user; that we make available the source code
for modifications or derivative works we create based upon, incorporating or using the open source software; and/or that we license such
modifications or derivative works under the terms of the particular open source license.

     If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of
one or more of these licenses, we could be required to incur significant legal costs defending ourselves against such allegations. If our defenses
were not successful, we could be subject to significant damages, be enjoined from the distribution of our products that contained the open
source software and be required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our products.
In addition, if we combine our proprietary software with open source software in a certain manner, under some open source licenses we could
be required to release the source code of our proprietary software, which could substantially help our competitors develop products that are
similar to or better than ours.

                                                                        27
We face potential liability related to the privacy and security of personal information we collect from healthcare professionals and
physicians through our applications.

      Online user privacy has become a major issue both in the United States and abroad. The European Union, or EU, recently adopted the
Data Protection Directive, or DPD, imposing strict regulations and establishing a series of requirements regarding the collection and use of
personally identifiable information online. DPD provides for specific regulations requiring all non-EU countries doing business with EU
member states to provide adequate data privacy protection when receiving personal data from any of the EU member states. Similarly,
Canada's Personal Information and Protection of Electronic Documents Act provides Canadian residents with privacy protections in regard to
transactions with businesses and organizations in the private sector and sets out ground rules for how private sector organizations may collect,
use or disclose personal information in the course of commercial activities. We have privacy policies posted with our services that we believe
comply with applicable laws requiring notice to subscribers about our information collection, use and disclosure practices. However, whether
and how existing local and international privacy and consumer protection laws in various jurisdictions apply to the Internet and other online
technologies is still uncertain and may take years to resolve. United States and international privacy laws and regulations, if drafted or
interpreted broadly, could be deemed to apply to the technology we use, and could restrict our information collection methods or decrease the
amount and utility of the information that we would be permitted to collect. Any legislation or regulation in the area of privacy of personal
information could affect the way we operate our online services and could harm our business. The costs of compliance with, and the other
burdens imposed by, these and other laws or regulatory actions may prevent us from selling our products or increase the costs associated with
selling our products, and may affect our ability to invest in or jointly develop products in the United States and in foreign jurisdictions. Further,
we cannot assure you that the privacy policies and other statements on our applications or our practices will be found sufficient to protect us
from liability or adverse publicity relating to the privacy and security of personal information.

     The Privacy Standards under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, establish a set of basic national
privacy standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses, healthcare
providers and their business associates. While we do not currently handle patient-identifiable information and these Privacy Standards do not
apply directly to us, we may develop new products or services that would expose us to patient-identifiable information, in which case we may
become subject to HIPAA and other similar state and federal laws governing the collection, dissemination, use, access to and confidentiality of
patient-identifiable information.

Changes in industry guidelines or government regulation could adversely affect our continuing medical education offerings.

      Accredited CME activities are subject to industry guidelines and government regulation. The CME activities that our medical education
clients provide through us are planned and implemented in accordance with the Essential Areas and Policies of the Accreditation Council for
Continuing Medical Education, or ACCME, which oversees providers of CME credit and other applicable accreditation quality and standards
in the United States. Although we are not an accredited ACCME provider, changes in ACCME accreditation standards may affect our business
by affecting our CME provider clients. In September 2004, ACCME revised its standards for commercial support of CME. The revised
standards are intended to ensure, among other things, that CME activities of ACCME-accredited providers are independent of providers of
healthcare goods and services that fund the development of CME. ACCME required accredited providers to implement these standards by May
2005. Implementation has required additional disclosures to CME participants about those in a position to influence content and other
adjustments to the management and operations of our CME programs. We

                                                                         28
believe we have modified our procedures as appropriate so that our CME provider sponsors may meet the revised standards. However, we
cannot be certain whether these adjustments will ensure that they meet the new standards or predict whether ACCME will impose additional
requirements.

    CME activities may also be subject to government regulation by the FDA, the Office of the Inspector General of HHS and state regulatory
agencies.

     During the past several years, educational programs directed toward physicians, including CME, have been subject to increased scrutiny to
ensure that sponsors do not influence or control the content of the program. In response to governmental and industry initiatives,
pharmaceutical companies have been developing and implementing internal controls and procedures that promote adherence to applicable
regulations and requirements. In implementing these controls and procedures, different clients may interpret the regulations and requirements
differently and may implement procedures or requirements that vary from client to client. These controls and procedures:

     •
            may discourage pharmaceutical companies from engaging in educational activities;

     •
            may slow their internal approval for such programs;

     •
            may reduce the volume of sponsored educational programs implemented through us to levels that are lower than in the past; and

     •
            may require us to make changes to the way we offer or provide educational programs, including CME.

     In addition, future changes to existing regulations or accreditation standards, or to the internal compliance programs of clients or potential
clients, may further discourage or prohibit clients or potential clients from engaging in educational activities with us, or may require us to make
further changes in the way we offer or provide educational programs.

Governmental and private initiatives to support the adoption of healthcare information technology or to otherwise improve the availability
of healthcare information may encourage additional companies or governmental agencies to compete with us.

      There are currently numerous federal, state and private initiatives and studies seeking ways to increase the use of information technology
in healthcare or otherwise improve the availability of healthcare information as a means of improving care and reducing costs. For example, the
HHS issued a report in 2004 entitled "The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich
Healthcare." The report was followed up by a Request for Information and, in June 2005, several Requests for Proposals. In addition, several
bills were introduced in 2006 and 2007 in both the U.S. Senate and the U.S. House of Representatives reflecting various approaches to
fostering the use of information technology in healthcare. Public and private healthcare payors have also implemented "pay-for-performance"
programs that frequently create financial incentives for healthcare providers to adopt healthcare information technology. These initiatives may
encourage more companies to develop products and services that compete with us. It is difficult to predict the effect that these initiatives may
have on our business, and we cannot assure you that we will adequately address the risks created by these initiatives or that we will be able to
take advantage of any resulting opportunities.

                                                                        29
We provide some of our clinical information internationally and may in the future establish international operations and, as a result, face
diverse risks related to engaging in international business.

    Although the substantial majority of our subscribers are located in the United States, we currently have subscribers in numerous other
countries. We are subject to the risks of conducting business internationally, including:

     •
            unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;

     •
            exposure to a broader, more diverse set of regulations;

     •
            more stringent regulations relating to data privacy and the unauthorized use of, or access to, commercial and personal information,
            particularly in Europe and Canada;

     •
            changes in a specific country's or region's political or economic conditions;

     •
            unfavorable currency exchange rates;

     •
            exposure to competitors who are more familiar with local markets;

     •
            limited or unfavorable intellectual property protection; and

     •
            restrictions on repatriation of earnings.

     In addition, in the future, we may expand geographically through product development and strategic alliances. However, our products and
services may not be accepted in international markets and any potential international operations involve a variety of risks. We have limited
experience in marketing, selling and supporting our services abroad. In addition, while Symbian is the most widely used mobile operating
system in Europe, our clinical information and interactive information services are not compatible with Symbian-based devices. If we invest
substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business
and operating results will suffer.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote
substantial time to new compliance initiatives.

     As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In
addition, the Sarbanes-Oxley Act of 2002, and rules of the Securities and Exchange Commission, or SEC, and The NASDAQ Global Market,
have imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and
financial controls. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more
time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain
director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage.

     The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal control over financial reporting and
disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over
financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal
control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, beginning with our annual report on Form 10-K for the
fiscal year ending December 31, 2009. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial
accounting expense and expend significant management efforts. If we are not able to comply with the requirements of Section 404 in a timely
manner, or if we or our independent registered public accounting firm

                                                                       30
identify additional deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of
our stock could decline and we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which
would require additional financial and management resources.

     Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate
financial statements. We expect that we will need to continue to improve existing, and implement new operational and financial systems,
procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or
enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over
financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the
Sarbanes-Oxley Act. Moreover, we cannot be certain that these measures would ensure that we implement and maintain adequate controls over
our financial processes and reporting in the future. Even if we were to conclude, and our auditors were to concur, that our internal control over
financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over
financial reporting may not prevent or detect fraud or misstatements. This, in turn, could have an adverse impact on trading prices for our
common stock, and could adversely affect our ability to access the capital markets.

Business interruptions due to natural disasters and other events could adversely affect our business.

      Our operations can be subject to natural disasters and other events beyond our control, such as earthquakes, fires, power failures,
telecommunication losses, terrorist attacks and acts of war. For example, the majority of our operations are based in Northern California near
major earthquake faults that are considered seismically active. Such events, whether natural or manmade, could cause severe destruction or
interruption to our operations, and as a result, our business could suffer serious harm.

      Although we carry business interruption insurance, it only covers some, but not all, of these potential events, and even for those events
that are covered, may not be sufficient to compensate us fully for losses or damages that may occur as a result of such events, including, for
example, loss of market share and diminution of our brand, reputation and customer loyalty.

Risks Related to Ownership of Our Common Stock and this Offering

As our common stock has not been publicly traded, we expect that the price of our common stock may fluctuate substantially.

     Before this offering, there has been no public market for our common stock. An active public trading market may not develop after
completion of this offering or, if developed, may not be sustained. The price of our common stock sold in this offering will not necessarily
reflect the market price of our common stock after this offering. The market price for our common stock after this offering will be affected by a
number of factors, including:

     •
            quarterly variations in our operating results, or the operating results of our competitors;

     •
            the timing of revenue recognition;

     •
            the volume and timing of orders from our clients and subscribers;

     •
            the announcement of new products or service enhancements by us or our competitors;

     •
            announcements related to litigation;

                                                                        31
     •
            changes in earnings estimates, investors' perceptions, recommendations by securities analysts or our failure to achieve analysts'
            earning estimates;

     •
            the depth and liquidity of the market for our common stock;

     •
            changing legal or regulatory requirements;

     •
            developments in our industry or the medical or pharmaceutical industries generally; and

     •
            general market conditions and other factors unrelated to our operating performance or the operating performance of our
            competitors.

      In addition, the stock market in general, and The NASDAQ Global Market in particular, have experienced substantial price and volume
volatility that is often seemingly unrelated to the operating performance of particular companies. These broad market fluctuations may cause
the trading price of our common stock to decline. In the past, securities class action litigation has often been brought against a company after a
period of volatility in the market price of its common stock. We may become involved in this type of litigation in the future. Any securities
litigation claims brought against us could result in substantial expense and the diversion of our management's attention from our business.

Securities analysts may not initiate coverage of our common stock or may issue negative reports, and this may have a negative impact on
the market price of our common stock.

     Securities analysts may elect not to provide research coverage of our common stock after the completion of this offering. If securities
analysts do not cover our common stock after the completion of this offering, the lack of research coverage may adversely affect the market
price of our common stock. In addition, the trading market for our common stock may be affected in part by the research and reports that
industry or financial analysts do publish about us or our business. If one or more of the analysts who elect to cover us downgrades our stock,
our stock price may decline. If one or more of these analysts ceases coverage of us, we could lose visibility in the market, which in turn could
cause our stock price to decline. It may be difficult for companies such as ours, with smaller market capitalizations, to attract independent
financial analysts that will cover our common stock. This could have a negative effect on the market price of our stock.

New investors in our common stock will experience immediate and substantial dilution after this offering.

     The assumed initial public offering price is substantially higher than the book value per share of our outstanding common stock. If you
purchase common stock in this offering, you will incur immediate dilution of $          per share based on the assumed initial public offering price
of $     per share. This dilution is due in large part to earlier investors in our company having paid substantially less than the assumed initial
public offering price when they purchased their shares. Investors who purchase shares of common stock in this offering will contribute
approximately         % of the total amount we have raised to fund our operations, but will own only approximately              % of our common
stock, based upon the number of shares outstanding as of December 31, 2007. The exercise of outstanding options and a warrant and other
future equity issuances, including future public offerings or private placements of equity securities and any additional shares issued in
connection with acquisitions may result in further economic dilution to investors. For a further description of dilution that you will experience
immediately after this offering, see the section of this prospectus entitled "Dilution."

                                                                         32
Sales of a substantial number of shares of our common stock may cause the price of our common stock to decline.

      If our stockholders sell substantial amounts of our common stock in the public market after this offering or the public market perceives
that existing stockholders might sell shares of common stock, the market price of our common stock could decline. After this offering, we will
have          shares of common stock outstanding based on the number of shares outstanding as of December 31, 2007. All of the                shares
offered under this prospectus will be freely tradable without restriction or further registration under the federal securities laws, unless purchased
by our "affiliates" as that term is defined in Rule 144 under the Securities Act of 1933. Of the remaining shares outstanding upon the closing of
this offering, 21,093,418 shares may be sold pursuant to Rule 144 and 701 upon the expiration of lock-up agreements that expire 180 days after
the date of this prospectus unless otherwise extended or waived as described in "Shares Eligible for Future Sale."

     Following this offering, existing stockholders holding an aggregate of approximately 14,995,448 shares of common stock on an
as-converted basis, including 21,044 shares of common stock issuable upon the exercise of an outstanding warrant, will have rights, subject to
some conditions, that permit them to require us to file a registration statement with the SEC or include their shares in registration statements
that we may file for ourselves or other stockholders. If we register the sale of their shares of common stock following the expiration of the
lock-up agreements, they can sell those shares in the public market. Promptly following this offering, we intend to register approximately
8,205,887 shares of common stock for issuance under our stock plans. As of December 31, 2007, 4,623,691 shares were subject to outstanding
options, with a weighted average exercise price of $3.01 per share, of which approximately 2,163,262 were vested. Once we register these
shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements referred to above and the restrictions
imposed on our affiliates under Rule 144.

Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of
our other stockholders.

     After this offering, our officers, directors and principal stockholders each holding more than 5% of our common stock collectively will
control approximately            % of our outstanding common stock, without giving effect to the purchase of shares by any such persons in this
offering. As a result, these stockholders, if they act together, will be able to control our management and affairs and most matters requiring
stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership
may have the effect of delaying or preventing a change of control and might adversely affect the market price of our common stock. This
concentration of ownership may not be in the best interests of our other stockholders.

We have broad discretion in the use of proceeds of this offering for working capital and general corporate purposes.

     The net proceeds of this offering will be used to pay approximately $22.0 million of aggregate cumulative dividends (accrued through
March 31, 2008) due to the holders of our Series B preferred stock, with the balance to be used for general corporate purposes. Other than the
repayment of cumulative dividends, we have not determined the specific allocation of the net proceeds of this offering. Our management will
have broad discretion over the use and investment of the net proceeds of this offering, and accordingly investors in this offering will need to
rely upon the judgment of our management with respect to the use of proceeds, with only limited information concerning management's
specific intentions. Our management may spend a portion or all of the net proceeds from this offering in ways that our stockholders may not
desire or that may not yield a favorable return. The failure of our management to apply the net proceeds of this offering effectively could harm
our business, financial condition and results of operations.

                                                                         33
Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated bylaws, and Delaware law,
contain provisions that could discourage a takeover.

     In addition to the effect that the concentration of ownership by our officers, directors and significant stockholders may have, our amended
and restated certificate of incorporation and our amended and restated bylaws contain provisions that may enable our management to resist a
change of control. These provisions may discourage, delay or prevent a change in our ownership or a change in our management. In addition,
these provisions could limit the price that investors would be willing to pay in the future for shares of our common stock. Such provisions, to
be set forth in our amended and restated certificate of incorporation or amended and restated bylaws effective upon the completion of this
offering, include:

     •
            our board of directors will be authorized, without prior stockholder approval, to create and issue preferred stock, commonly
            referred to as "blank check" preferred stock, with rights senior to those of common stock;

     •
            advance notice requirements for stockholders for nominations to serve on our board of directors or for proposals that can be acted
            upon at stockholder meetings;

     •
            stockholder action by written consent will be prohibited;

     •
            special meetings of the stockholders will be permitted to be called only by a majority of our board of directors, the chairman of our
            board of directors or our chief executive officer;

     •
            stockholders will not be permitted to cumulate their votes for the election of directors;

     •
            newly created directorships resulting from an increase in the authorized number of directors or vacancies on our board of directors
            will be filled only by majority vote of the remaining directors, even though less than a quorum is then in office;

     •
            our board of directors will be expressly authorized to modify, alter or repeal our amended and restated bylaws; and

     •
            stockholders will be permitted to amend our amended and restated bylaws only upon receiving at least a majority of the votes
            entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as
            a single class.

      We are also subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business
combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our amended and restated
certificate of incorporation, our amended and restated bylaws and Delaware law could make it more difficult for stockholders or potential
acquirors to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including
delaying or impeding a merger, tender offer or proxy contest involving us. Any delay or prevention of a change of control transaction or
changes in our board of directors could cause the market price of our common stock to decline.

                                                                         34
                   SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

     This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information
currently available to our management. The forward-looking statements are contained principally in the sections entitled "Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." Forward-looking
statements include, but are not limited to, statements about:

     •
            expectations of future operating results or financial performance;

     •
            introduction of new products and services; and

     •
            plans for growth and future operations.

     In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "can," "continue," "could,"
"estimates," "expects," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to
identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our
actual results, performance time frames or achievements to be materially different from any future results, performance, time frames or
achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this
prospectus in greater detail in the section of this prospectus entitled "Risk Factors." Given these risks, uncertainties and other factors, you
should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and
assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we have filed as exhibits to the
registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially
different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements.

     Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual
results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the
future.

     This prospectus also contains statistical data and estimates that we obtained from industry publications and reports. These industry
publications and reports generally indicate that the information contained therein was obtained by sources believed to be reliable, but do not
guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are reliable, we have not
independently verified the data.

                                                                        35
                                                              USE OF PROCEEDS

      We estimate that we will receive approximately $       million in net proceeds from this offering, or $     million if the underwriters'
over-allotment option is exercised in full, based upon an assumed initial public offering price of $     per share, after deducting underwriting
discounts and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of shares by the selling
stockholders. A $1.00 increase (decrease) in the assumed initial public offering price of $      per share would increase (decrease) net proceeds
by $      million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and
after deducing the underwriting discounts and estimated offering expenses payable by us.

     We expect to use our net proceeds from this offering as follows:

     •
            approximately $22.0 million to pay the aggregate cumulative dividends (accrued through March 31, 2008) due to the holders of
            our Series B preferred stock; and

     •
            the balance for general corporate purposes, including working capital, research and development, sales and marketing and capital
            expenditures.



     We will retain broad discretion in the allocation of a substantial portion of the net proceeds of this offering. In addition, we may use a
portion of the net proceeds to acquire or invest in complementary businesses, technologies, services or products. We have no current plans,
agreements or commitments with respect to any such acquisition or investment, and we are not currently engaged in any negotiations with
respect to any such transaction. Pending such uses, we will invest the net proceeds of this offering in short-term, interest-bearing,
investment-grade securities.


                                                              DIVIDEND POLICY

      Other than the aggregate cumulative dividends of approximately $22.0 million (accrued through March 31, 2008) that we will pay to the
holders of our Series B preferred stock with a portion of the net proceeds from this offering, we have not declared or paid any cash dividends
on our capital stock. We currently intend to retain any future earnings to finance the growth and development of our business, and therefore do
not anticipate paying any other cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the
discretion of our board of directors and will depend upon our financial condition, operating results, capital requirements, any contractual
restrictions and such other factors that our board of directors deems appropriate.

                                                                        36
                                                                    CAPITALIZATION

      The following table sets forth our capitalization as of December 31, 2007:

      •
               on an actual basis;

      •
               on a proforma as adjusted basis to give effect to:

      •
               the conversion of all outstanding shares of our preferred stock into an aggregate of 14,108,410 shares of common stock upon the
               closing of this offering;

      •
               the payment of approximately $22.0 million of cumulative dividends (accrued through March 31, 2008) to the holders of our
               Series B preferred stock; and

      •
               the sale by us of      shares of our common stock at an assumed initial public offering price of $          per share, after deducting
               underwriting discounts and estimated offering expenses payable by us.

    You should read this table together with the section of this prospectus entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our financial statements and related notes appearing elsewhere in this prospectus.

                                                                                                                           December 31, 2007

                                                                                                                                          Proforma As
                                                                                                                  Actual                  Adjusted(1)

                                                                                                             (in thousands, except share and per share data)


Mandatorily redeemable convertible preferred stock, $0.001 par value per share; 15,303,866 shares
authorized, 13,142,352 issued and outstanding, actual;         shares authorized, issued or
outstanding, proforma as adjusted                                                                            $         64,822      $
Preferred stock, $0.001 par value per share; no shares authorized, issued or outstanding,
actual;           authorized,         shares issued and outstanding, proforma as adjusted                                   —                             —
Common stock, $0.001 par value per share; 38,332,575 shares authorized, 9,957,785 shares issued
and outstanding, actual;           shares authorized,              shares issued and outstanding,
proforma as adjusted                                                                                                       10                             —
Additional paid-in capital                                                                                              3,290
Deferred stock-based compensation                                                                                        (168 )
Accumulated other comprehensive income                                                                                      9
Accumulated deficit                                                                                                   (51,522 )

                  Total capitalization                                                                       $        (48,381 ) $

(1)
          A $1.00 increase (decrease) in the assumed initial public offering price of $       per share would increase (decrease) each of additional
          paid-in capital, total stockholders' equity (deficit) and total capitalization by $    million, assuming that the number of shares offered
          by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and estimated
          offering expenses payable by us.



     The foregoing information regarding the number of shares of our common stock to be outstanding immediately after this offering is based
on 24,066,195 shares outstanding as of December 31, 2007, on an as-converted basis, and excludes:

      •
               4,623,691 shares of common stock issuable upon the exercise of outstanding options under our 1999 Stock Option Plan as of
               December 31, 2007, which will be amended and restated as the
37
    2008 Equity Incentive Plan effective immediately upon the signing of the underwriting agreement for this offering, with a weighted
    average exercise price of $3.01 per share;

•
      85,814 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan as of
      December 31, 2007, which will be amended and restated as the 2008 Equity Incentive Plan effective immediately upon the signing
      of the underwriting agreement for this offering;

•
      2,396,382 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan, which
      were authorized by our Board of Directors in January and March 2008;

•
      1,100,000 additional shares of common stock to be reserved and available for future issuance under our 2008 Employee Stock
      Purchase Plan which will become effective immediately upon the signing of the underwriting agreement for this offering; and

•
      21,044 additional shares of common stock, on an as-converted basis, issuable upon the exercise of an outstanding warrant to
      purchase Series B preferred stock, with an exercise price of $5.71 per share.

                                                               38
                                                                     DILUTION

      If you invest in our common stock in this offering, your ownership will be diluted to the extent of the difference between the initial public
offering price per share of our common stock in this offering and the net tangible book value per share of our common stock immediately after
this offering.

     Net tangible book value per share represents total tangible assets less total liabilities, divided by the number of shares of common stock
outstanding. Our historical net tangible book value as of December 31, 2007 was approximately $16.4 million, or approximately $0.68 per
share of common stock. After giving effect to the sale by us of                 shares of common stock in this offering at an assumed initial
public offering price of $     per share, after deducting underwriting discounts and estimated offering expenses payable by us, including the
payment of approximately $22.0 million of cumulative dividends (accrued through March 31, 2008) to the holders of our Series B preferred
stock with a portion of the net proceeds of this offering, our net tangible book value as of December 31, 2007 would have been approximately
$     million, or approximately $       per share of common stock. This represents an immediate increase in net tangible book value of
$     per share to existing stockholders and an immediate dilution of $        per share to new investors.

     The following table illustrates this dilution on a per share basis:

                    Assumed initial public offering price per share                                                   $
                       Historical net tangible book value per share as of December 31, 2007             $    0.68
                       Proforma increase in net tangible book value per share attributable to the
                       conversion of all outstanding shares of preferred stock as of December 31,
                       2007                                                                             $

                       Proforma net tangible book value per share as of December 31, 2007               $
                       Increase in proforma net tangible book value per share attributable to this
                       offering                                                                         $

                    As adjusted proforma net tangible book value per share after this offering                        $

                    Dilution per share to new investors                                                               $

     A $1.00 increase (decrease) in the assumed initial public offering price of $     per share would increase (decrease) our as adjusted
proforma net tangible book value by $       million, or $    per share, and the dilution in as adjusted proforma net tangible book value per
share to new investors by $     per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus,
remains the same and after deducting underwriting discounts and estimated offering expenses payable by us.

     If the underwriters exercise their over-allotment option to purchase               additional shares from us, our as adjusted proforma net
tangible book value per share as of December 31, 2007 would have been $          per share, representing an immediate increase in net tangible
book value to our existing stockholders of $       per share and an immediate dilution of $     per share to new investors in this offering.

     The following table summarizes as of December 31, 2007, on the as adjusted proforma basis described above, the number of shares of our
common stock purchased from us, the total consideration paid to us and the average price per share paid to us by existing stockholders and to
be paid by new investors purchasing shares of our common stock in this offering. The table assumes an initial public

                                                                           39
offering price of $     per share, before deducting underwriting discounts and estimated offering expenses payable by us.

                                                                             Shares Purchased                   Total Consideration

                                                                                                                                              Average Price
                                                                                                                                               Per Share

                                                                           Number               Percent        Amount          Percent

Existing stockholders                                                      24,066,195                     %$                             %$
New investors                                                                                              $                              $

     Total                                                                                          100 % $                           100 %


     A $1.00 increase (decrease) in the assumed initial public offering price of $   per share would increase (decrease) total consideration
paid by new investors by $      million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus,
remains the same and after deducting underwriting discounts and estimated offering expenses payable by us.

     If the underwriters' over-allotment option to purchase         additional shares from us in this offering is exercised in full, the following
will occur:

     •
             the percentage of shares of common stock held by existing stockholders after the completion of this offering will be
             approximately       % of the total number of shares of our common stock outstanding after this offering; and

     •
             the number of shares held by new investors after the completion of this offering will be          , or approximately         % of the total
             number of shares of our common stock outstanding after this offering.

    The foregoing information as to the number of shares of our common stock to be outstanding immediately after this offering is based on
24,066,195 shares outstanding as of December 31, 2007, on an as-converted basis, and excludes:

     •
             4,623,691 shares of common stock issuable upon the exercise of outstanding options under our 1999 Stock Option Plan as of
             December 31, 2007, which will be amended and restated as the 2008 Equity Incentive Plan effective immediately upon the signing
             of the underwriting agreement for this offering, with a weighted average exercise price of $3.01 per share;

     •
             85,814 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan as of
             December 31, 2007;

     •
             2,396,382 additional shares of common stock reserved and available for future issuance under our 1999 Stock Option Plan, which
             were authorized by our Board of Directors in January and March 2008;

     •
             1,100,000 additional shares of common stock to be reserved and available for future issuance under our 2008 Employee Stock
             Purchase Plan which will become effective immediately upon the signing of the underwriting agreement for this offering; and

     •
             21,044 additional shares of common stock, on an as-converted basis, issuable upon the exercise of an outstanding warrant to
             purchase Series B preferred stock, with an exercise price of $5.71 per share.

     Assuming the exercise in full of all of our outstanding options, the inclusion of 180,631 shares of restricted common stock issued upon the
early exercise of stock options and our issuance of 21,044 shares of common stock, on an-as converted basis, upon exercise of an outstanding
warrant to purchase Series B preferred stock at December 31, 2007, proforma net tangible book value before this offering at December 31,
2007 would be $         per share, representing an immediate dilution of $     per share to our existing stockholders and, after giving effect to the
sale of        shares of common stock in this offering, there would be an immediate dilution of            per share to purchasers of our common
stock in this offering.
40
                                                        SELECTED FINANCIAL DATA

     The selected statements of operations data for the years ended December 31, 2005, 2006 and 2007 and the balance sheet data as of
December 31, 2006 and 2007 are derived from our audited financial statements included elsewhere in this prospectus. The statement of
operations data for the year ended December 31, 2004 and the balance sheet data as of December 31, 2004 and 2005 are derived from our
audited financial statements that are not included in this prospectus. The selected statement of operations data for the year ended December 31,
2003 and the balance sheet data as of December 31, 2003 are derived from our unaudited financial statements that are not included in this
prospectus. Our historical results are not necessarily indicative of our operating results or financial condition to be expected in the future. The
following selected financial data should be read in conjunction with the financial statements and related notes included elsewhere in this
prospectus and the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

     Proforma basic net income per share attributable to common stockholders has been calculated assuming the conversion of all outstanding
shares of our preferred stock into 14,108,410 shares of our common stock upon completion of this offering. Proforma diluted net income per
share attributable to common stockholders further includes the incremental shares of common stock issuable upon the exercise of stock options
and warrants outstanding as of the dates thereof.

                                                                        41
                                                                                            Years Ended December 31,

                                                                  2003               2004               2005                  2006             2007

                                                                                      (in thousands, except per share data)


Statements of Operations Data:
Revenues, net                                                 $      9,236      $     19,520       $      32,536       $       49,517      $    65,611
Cost of revenues(1)                                                  4,744             7,712              12,369               17,371           22,805

Gross profit                                                         4,492            11,808              20,167               32,146           42,806
Operating expenses(1):
   Sales and marketing                                               5,330              8,099             11,725               14,975           16,887
   Research and development                                          5,907              5,712              6,483                8,748           10,519
   General and administrative                                        2,503              4,255              5,119               10,725           11,983

Total operating expenses                                            13,740            18,066              23,327               34,448           39,389

Income (loss) from operations                                       (9,248 )           (6,258 )            (3,160 )             (2,302 )          3,417
Interest income                                                         53                 90                 440                1,078            1,714
Interest expense                                                        —                  —                   —                    —              (285 )
Other income (expense), net                                            (16 )              (72 )              (130 )               (189 )           (233 )

Income (loss) before income taxes and cumulative effect
of change in accounting principle                                   (9,211 )           (6,240 )            (2,850 )             (1,413 )         4,613
Benefit (provision) for income taxes                                    (3 )               (3 )               (57 )                (28 )        21,126

Income (loss) before cumulative effect of change in
accounting principle                                                (9,214 )           (6,243 )            (2,907 )             (1,441 )        25,739
Cumulative effect of change in accounting principle, net of
taxes(2)                                                                   —                 —                  (3 )                 —                 —

Net income (loss)                                                   (9,214 )           (6,243 )            (2,910 )             (1,441 )        25,739
Less: accretion of Series B mandatorily redeemable
preferred stock dividends                                            2,800              2,800               2,824                2,840            2,840
Less: allocation of net income to participating preferred
stockholders                                                               —                 —                  —                    —          15,582

Net income (loss) available to common stockholders            $    (12,014 ) $         (9,043 ) $          (5,734 ) $           (4,281 ) $        7,317

Net income (loss) per common share—basic                      $          (2.86 ) $      (1.90 ) $           (1.05 ) $            (0.62 ) $            0.96

Net income (loss) per common share—diluted                    $          (2.86 ) $      (1.90 ) $           (1.05 ) $            (0.62 ) $            0.72

Weighted average shares used in computing net loss per
common share—basic                                                   4,205              4,749               5,449                6,888            7,592

Weighted average shares used in computing net loss per
common share—diluted                                                 4,205              4,749               5,449                6,888          10,135


Proforma net income per share—basic (unaudited)                                                                                            $          1.08

Proforma net income per share—diluted (unaudited)                                                                                          $          0.98

Proforma weighted average common shares
outstanding—basic                                                                                                                               23,780

Proforma weighted average common shares
outstanding—diluted                                                                                                                             26,332
(1)
       As discussed in greater detail in Note 11 of our audited financial statements included elsewhere in this prospectus, we changed the
       manner in which we account for stock-based compensation in 2006. Stock-based compensation is included in cost of revenue and
       operating expenses in the following amounts:


Cost of revenues                                                            $     —     $       19    $       31    $       58    $            178
Sales and marketing                                                               —            144           275           503               1,127
Research and development                                                          —            114           225           334                 747
General and administrative                                                        —            292           434           374               1,135

                                                                      42
(2)
       As discussed in greater detail in Note 8 of our audited financial statements included elsewhere in this prospectus, we changed the
       manner in which we account for freestanding warrants for redeemable convertible preferred stock in 2005 which resulted in this
       cumulative change in accounting principle.


                                                                                             As of December 31,

                                                                2003               2004              2005              2006              2007

                                                                                               (in thousands)


Balance Sheet Data:
Cash, cash equivalents and short-term investments(1)       $        6,813 $           9,803 $           20,135 $         25,804 $          72,620
Total assets                                                       10,924            18,806             30,693           42,688           135,565
Deferred revenue                                                   13,953            25,150             35,458           45,821            58,250
Financing liability(2)                                                 —                 —                  —                —             20,314
Other long-term obligations                                           220               155                174              181               694
Mandatorily redeemable convertible preferred stock                 55,596            58,773             62,026           64,866            64,822
Accumulated deficit                                               (60,545 )         (67,982 )          (72,464 )        (75,584 )         (51,522 )


(1)
       Cash, cash equivalents and short-term investments excludes a book overdraft for certain of our disbursement cash accounts of
       $28.4 million as of December 31, 2007. Please refer to the section of this prospectus entitled "Management's Discussion and Analysis
       of Financial Condition and Results of Operations—Financial Operations Overview" and Note 2 of our audited financial statements
       included elsewhere in this prospectus for more information.

(2)
       Represents a financing liability incurred in connection with the build-out of our existing office space. Please refer to the section of this
       prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
       Policies and Estimates" and Note 5 of our audited financial statements included elsewhere in this prospectus for more information.

                                                                        43
                                        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The following discussion and analysis of our financial condition and results of operations should be read together with our financial
statements and related notes appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions, such as statements of our plans, objectives, expectations and intentions. The cautionary
statements made in this prospectus should be read as applying to all related forward-looking statements wherever they appear in this
prospectus. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors,
including but not limited to those set forth under the section of this prospectus entitled "Risk Factors" and elsewhere in this prospectus.

Business Overview

     Epocrates is a leading provider of clinical information and decision support tools to healthcare professionals, as well as interactive
information services to the healthcare industry. Most commonly used on mobile devices at the point of care, our subscription-based services
enable healthcare professionals to make more informed medical decisions, reduce medical errors and practice more efficiently. Our brand
recognition and strong reputation have helped us cultivate a large number of active subscribers, including more than one in four U.S. physicians
and more than one in three U.S. medical students. Our worldwide subscriber base currently consists of over 500,000 healthcare professionals
and includes physicians, nurses, medical students, pharmacists and physician assistants. As part of our corporate strategy, the majority of these
subscribers use our free clinical products. Through our interactive information services, we provide healthcare companies targeted access to our
subscriber base to more effectively reach significant numbers of healthcare professionals.

      Our clinical information and decision support tools provide healthcare professionals with convenient access to information they need to
treat patients at the point of care. For example, our subscribers are able to access dosing, drug interaction, pricing and insurance coverage
information for over 3,300 drugs, as well as disease, diagnostic, coding and symptom assessment tools. Our clinical information is available for
use on individual mobile devices such as personal digital assistants, or PDAs, and smartphones operating the Palm, Windows Mobile or
BlackBerry operating systems, as well as laptops, desktops and Tablet PCs via the Internet. In addition, a customized version of our content is
available for the iPhone Safari browser and we recently began development with Apple Inc. of a version for the iPhone operating system.

     Our interactive information services enable pharmaceutical, market research, managed care and medical education organizations to more
effectively communicate with healthcare professionals. For example, our messaging service allows us to deliver important news and alerts,
such as new product approvals, formulary status changes and clinical studies, targeted to specific groups of our subscribers.

     We generate revenue from selling subscriptions to our premium clinical information and decision support tools, or Subscriptions, and by
providing healthcare companies targeted access to our network of subscribers, or Interactive Services. Our Interactive Services generate
revenue in a number of ways, including through sponsorship of clinical messaging, hosting of drug formularies, continuing medical education
programs and recruiting participants for market research surveys. The majority of our paid Subscriptions have a one year term and are
purchased by individual healthcare professionals for their own use. Consistent with our corporate strategy of promoting our free Subscription
products, we expect revenue from user Subscriptions to decrease.

Financial Operations Overview

     For the year ended December 31, 2007, we generated total revenue of $65.6 million, a 33% increase from 2006, and we generated cash
flow from operations of $23.4 million. Deferred revenue

                                                                       44
increased from $45.8 million at December 31, 2006 to $58.3 million at December 31, 2007. The timing of our revenue has been affected by
seasonal factors, primarily as a result of the annual budget approval process of many of our customers in the pharmaceutical industry. As a
result, our bookings are usually highest in the fourth quarter of each calendar year, and due to our typical fulfillment cycle our recognized
revenue is usually highest in the first and fourth quarters of each calendar year.

      We have generated positive cash flow from operations since the year ended December 31, 2003. Cash, cash equivalents and short-term
investments increased from $25.8 million at December 31, 2006 to $72.6 million at December 31, 2007. This significant increase was due in
part to a book overdraft for certain of our disbursement cash accounts of $28.4 million as of December 31, 2007 for which the bank had no
legal right of offset. The majority of this overdraft was due to checks written in the last week of the year in connection with the $41.7 million
tender offer for our common stock. The balance of the book overdraft is reported as part of accrued liabilities and the change in the book
overdraft is reported as cash flows from financing activities. The checks that caused this book overdraft subsequently cleared the bank in
January 2008. We believe that this book overdraft was a one-time event and do not anticipate incurring such items in the future.

     We are not a capital-intensive business. Most of our expenditures have been related to sales and product development and we expect this
to continue. However, during 2007, we spent approximately $5.3 million in construction costs and for furniture and fixtures for our new
headquarters facility. Approximately $2.7 million of these expenditures were reimbursed by our landlord as dictated by the terms of our lease.

     As revenues have grown, operating expenses have also increased in absolute dollars, but have decreased as a percentage of revenue. We
expect this trend will continue to the extent that we are successful in growing our business. Our costs as a percentage of revenue have
decreased over time, with the exception of general and administrative costs, which increased from $5.1 million, or 16% of revenue, in 2005 to
$10.7 million, or 22% of revenue, in 2006 and to $12.0 million, or 18% of revenue, in 2007.

     Our operating results will be subject to fluctuations, in part, due to variable accounting resulting from the repricing of certain stock options
in 2003. Assuming that none of these outstanding options are exercised or canceled, each $1.00 increase or decrease in the fair market value of
our common stock would result in a corresponding increase or decrease in stock-based compensation of $0.2 million. As a result, our operating
results may experience fluctuations due to factors unrelated to our financial performance.

     In connection with the preparation of our financial statements for the years ended December 31, 2004, 2005, 2006 and 2007, we have
identified certain matters involving our internal control over financial reporting that constitute material weaknesses under standards established
by the Public Company Accounting Oversight Board, or PCAOB. The material weaknesses identified were in the areas of financial reporting,
where inadequate staffing, supervision, systems, processes and controls resulted in untimely identification and resolution of certain accounting
matters, and revenue recognition, where there were inadequate internal controls regarding concessions granted to customers.

     As a result of these material weaknesses, we incurred significant expenses to establish controls and processes to enable us to accurately
present our financial position and results of operations for the years ended December 31, 2003, 2004, 2005, 2006 and 2007. Specifically, we
incurred consulting fees of approximately $2.2 million and $1.7 million for the years ended December 31, 2006 and 2007, respectively,
compared to $0.8 million for the year ended December 31, 2005. In addition, we incurred external audit and tax consulting fees of
approximately $2.2 million and $2.5 million for the years ended December 31, 2006 and 2007, respectively, compared to $0.2 million for the
year ended December 31, 2005. In 2008, we expect general and administrative expense to increase in absolute dollars due to significant costs
we expect to incur as we continue to build and maintain the

                                                                         45
infrastructure necessary to comply with the regulatory requirements of being a public company. However general and administrative expense
as a percentage of revenue is expected to decrease to the extent that we are successful in growing our business.

     In 2006 and 2007, we took steps to address these material weaknesses by hiring additional personnel with technical accounting expertise
and by implementing systems, processes and controls designed to improve our revenue recognition and financial reporting process. We intend
to continue to improve our revenue recognition and financial reporting processes in 2008 by identifying, recruiting and training personnel with
the appropriate accounting skills, identifying manual processes which can be better controlled by automating those processes and upgrading
existing or implementing new financial reporting systems and controls.

     The following table sets forth our statements of operations data based on the amounts and percentage relationship of the items listed to
revenue for each period presented (in thousands):

                                                                                          Years Ended December 31,

                                                               2005                                  2006                                  2007

                                                      Amount          % Revenue             Amount          % Revenue             Amount          % Revenue

Revenues, net                                     $      32,536           100.0       $         49,517           100.0        $      65,611           100.0
Cost of revenues                                         12,369            38.0                 17,371            35.1               22,805            34.8

Gross profit                                             20,167              62.0               32,146               64.9            42,806            65.2
Operating expenses:
  Sales and marketing                                    11,725              36.0               14,975               30.2            16,887            25.7
  Research and development                                6,483              19.9                8,748               17.7            10,519            16.0
  General and administrative                              5,119              15.7               10,725               21.7            11,983            18.3

       Total operating expenses                          23,327              71.7               34,448               69.6            39,389            60.0

Income (loss) from operations                             (3,160 )           (9.7 )             (2,302 )             (4.6 )           3,417              5.2
Interest income                                              440              1.4                1,078                2.2             1,714              2.6
Interest expense                                              —                —                    —                  —               (285 )           (0.4 )
Other income (expense), net                                 (130 )           (0.4 )               (189 )             (0.4 )            (233 )           (0.4 )

Income (loss) before income taxes and
cumulative effect of change in accounting
principle                                                 (2,850 )           (8.8 )             (1,413 )             (2.9 )           4,613             7.0
Benefit (provision) for income taxes                         (57 )           (0.2 )                (28 )             (0.1 )          21,126            32.2

Income (loss) before cumulative effect of
change in accounting principle                            (2,907 )           (8.9 )             (1,441 )             (2.9 )          25,739            39.2
Cumulative effect of change in accounting
principle, net of taxes                                        (3 )           —                      —                —                    —             —

Net income (loss)                                         (2,910 )           (8.9 )             (1,441 )             (2.9 )          25,739            39.2
Less: accretion of Series B mandatorily
redeemable preferred stock dividends                      2,824               8.7                2,840                5.7             2,840              4.3
Less: allocation of net income to participating
preferred stockholders                                         —              —                      —                —              15,582            23.7

Net income (loss) available to common
stockholders                                      $       (5,734 )        (17.6 ) $             (4,281 )             (8.6 ) $         7,317            11.2


                                                                        46
Critical Accounting Policies and Estimates

     Our Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements and
notes to our financial statements, which were prepared in conformity with U.S. generally accepted accounting principles, or GAAP. The
preparation of the financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.

     We evaluate our estimates on an ongoing basis, including those related to revenue recognition, stock-based compensation, sales tax
accrual, the build-out of our new headquarters facility and the provision for income taxes. We base our estimates and judgments on our
historical experience, knowledge of current business factors and our belief as to what could occur in the future considering available
information and assumptions that are believed to be reasonable under the circumstances.

     The accounting estimates used in the preparation of our financial statements will change as new events occur, more experience is acquired,
additional information is obtained and our operating environment changes. Changes in estimates are made when circumstances warrant. Such
changes in estimates and refinements in estimation methodologies are reflected in our reported results of operations and, if material, the effects
of changes in estimates are disclosed in the notes to our financial statements. By their nature, these estimates and judgments are subject to an
inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.

     While our significant accounting policies are more fully described in Note 2 of our financial statements included elsewhere in this
prospectus, we believe the following reflect our critical accounting policies and our more significant judgments and estimates used in the
preparation of our financial statements.

     Revenue Recognition and Deferred Revenue

     Stand Alone Sales of Subscriptions Services. We generate revenue from the sale of Subscriptions. Subscriptions include subscription
services which allow a customer access to our decision support tools using a handheld device or the Internet and license codes which can be
redeemed for a subscription, as well as site licenses which allow a customer Internet access to our decision support tools. Subscription services
and license codes contain elements of software code that are essential to the functionality of the service being provided. For these services, we
recognize revenue in accordance with the American Institute of Certified Public Accountants, or AICPA, Statement of Position, or SOP,
No. 97-2, Software Revenue Recognition , or SOP 97-2. Site licenses do not contain any software elements that are essential to the services
being provided; therefore, site license revenue is recognized in accordance with SEC Staff Accounting Bulletin, or SAB, No. 104, Revenue
Recognition , or SAB 104. Subscriptions are recognized as revenue ratably over the term of the subscription as services are delivered. Billings
for Subscriptions typically occur in advance of services being performed; therefore these amounts are recorded as deferred revenue when
billed.

     If a paid subscriber is unsatisfied for any reason during the first 30 days of the Subscription and wishes to cancel the subscription, we
provide a full refund. We record a revenue reserve for future returns based on historical data.

     Stand Alone Sales of Other Services. We also generate revenue by providing healthcare companies with Interactive Services that
provide targeted access to our network of subscribers. Interactive Services include our clinical messaging, formulary, market research and
medical education services. Interactive Services do not contain any software elements that are more than incidental; therefore, revenue is
recognized in accordance with SAB 104.

                                                                        47
     For market research services, we receive a single payment from our customer, a portion of which is paid to survey participants as
compensation for their participation. We considered Emerging Issues Task Force, or EITF, 99-19, Reporting Revenue Gross as a Principal
versus Net as an Agent , and concluded that we act as the primary obligor. Accordingly, we recognize the entire fee paid by our customers as
revenue upon confirmation of completion of the survey by the customer, and the compensation paid by us to survey participants is recorded as
a cost of revenue in the period in which the survey is completed by the survey participant.

     All Services.   For all services, we recognize revenue only when there is:

     •
            persuasive evidence that an arrangement exists, which generally is in the form of a written contract, amendments to that contract,
            or purchase orders from a third party;

     •
            delivery has occurred or services have been rendered;

     •
            price is fixed or determinable after evaluating the risk of concession; and

     •
            collectibility is probable and/or reasonably assured based on customer creditworthiness and past history of collection.

      Determining whether and when some of these criteria have been satisfied often involves judgments that can have a significant impact on
the timing and amount of revenue we report. For example, our assessment of the likelihood of collection is a critical element in determining the
timing of revenue recognition. If we do not believe that collection is probable and/or reasonably assured, revenue will be deferred until cash is
received.

     Allowances are established for uncollectible amounts and potential returns based on historical experience.

     Multiple Element Arrangements. We often enter into arrangements that contain both Subscriptions and Interactive Services. In such
arrangements, we have concluded that Subscriptions are not essential to the functionality of the Interactive Services because Interactive
Services function independently and are frequently delivered without Subscriptions. In accordance with EITF 03-05, Applicability of AICPA
Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software , or EITF 03-05, in
multiple element arrangements where some of the services in the bundle contain elements of software and some of the services do not contain
any elements of software, consideration is allocated among the various elements in accordance with EITF 00-21, Revenue Arrangements With
Multiple Deliverables , or EITF 00-21. Revenue is then recognized in accordance with SOP 97-2 for the software elements and in accordance
with SAB 104 for the non-software elements.

      Vendor specific objective evidence, or VSOE, of fair value has been established for subscription services and license codes and represents
the price charged when that element is sold separately. Vendor objective evidence, or VOE, of fair value for site licenses and Interactive
Services is established based on the price paid when such services are sold separately. To date, VOE of fair value has not been established for
site licenses and Interactive Services due to the wide variability in the pricing of most Interactive Services.

      We have had a customary business practice and historical pattern of making concessions that were not required under the original
provisions of our Interactive Services and site license arrangements. These concessions have generally been in the form of providing our
Interactive Services and site license customers with a limited number of license codes which can be redeemed for free Subscriptions. Because
of this historical pattern of making concessions in association with these arrangements, all revenue has been deferred for such arrangements
until the risk of concession has passed, which is generally when delivery of the last item in the contract has been completed.

                                                                       48
     Commencing on April 1, 2007, we began including language in our standard Interactive Services contracts that provides customers with
the option to receive up to a specified number of license codes at any time during the term of the agreement at the customer's request. These
license codes may be redeemed for a one-year subscription within six months of issuance. If they are not redeemed within the six-month
period, the codes automatically expire. In addition, we established controls to prevent the delivery of any item not specified in the contract and
thus, as of April 1, 2007, we no longer have a policy or pattern of making concessions.

    Due to this change in practice, for those Interactive Services arrangements in which the customer requests one or more Subscriptions, such
Subscriptions are often the last items to complete delivery. Revenues for those arrangements are deferred until Subscriptions remain the only
undelivered element.

    If VSOE or VOE of fair value exists for the last undelivered element, we apply the residual method whereby only the fair value of the
undelivered element is deferred and the remaining residual fee is recognized. If VSOE or VOE of fair value does not exist for the only
undelivered element, the entire fee is recognized over the period of delivery of the undelivered element.

      Our ability to establish VSOE or VOE of fair value for our deliverables has a significant impact on revenue recognition in multiple
element arrangements. Each of our deliverables is analyzed to determine if fair value exists on a quarterly basis. The methodology we employ
to establish VOE and VSOE of fair value requires significant judgment based on an analysis of our stand-alone sales history. If we were no
longer able to establish fair value for a deliverable for which we previously had established fair value, or if we were able to establish fair value
for a deliverable that we previously had not established fair value, our revenue recognition could change materially.

    Stock-Based Compensation. The following table summarizes stock-based compensation charges for the years ended December 31,
2005, 2006 and 2007 (in thousands):

                                                                                                                  Years Ended December 31,

                                                                                                           2005            2006              2007

Employee stock-based compensation expense in accordance with FAS 123(R)                                $       —      $           295   $       1,782
Amortization of employee deferred stock-based compensation                                                    269                 286             221
Stock-based compensation associated with outstanding repriced options                                         680                 659           1,184
Non-employee stock-based compensation expense                                                                  16                  29              —

Total stock-based compensation                                                                         $      965     $       1,269     $       3,187

     Prior to the adoption of Statement of Financial Accounting, or SFAS, 123(R), Accounting for Stock-Based Compensation , or FAS 123(R),
we accounted for stock-based employee compensation arrangements in accordance with of Accounting Principles Board No. 25, Accounting
for Stock Issued to Employees , or APB 25, and we complied with the disclosure provisions of SFAS No. 123, Accounting for Stock-Based
Compensation , and SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure . Compensation cost was
recognized based on the difference, if any, on the date of grant between the fair value of our common stock and the amount an employee must
pay to acquire the stock. We also comply with Financial Accounting Standards Board, or FASB, Interpretation No. 28, Accounting for Stock
Appreciation Rights and other Variable Stock Option or Award Plans , or FIN 28, with respect to grants of stock to non-employees and with
respect to any stock options that are subject to variable accounting.

     Effective January 1, 2006, we adopted FAS 123(R), using the prospective application transition method. Accordingly, stock-based
compensation cost is measured at grant date based on the fair value of the award and is expensed over the requisite service period. We adopted
FAS 123(R) using the prospective transition method, which requires that for nonpublic entities that used the minimum value method for either
proforma or financial statement recognition purposes, FAS 123(R) shall be applied

                                                                         49
only to options granted after the required effective date. For options granted prior to the FAS 123(R) effective date for which the requisite
service period had not been performed as of January 1, 2006, we will continue to recognize compensation expense on the remaining unvested
awards under the intrinsic-value method of APB 25. In addition, we continue amortizing those awards valued prior to January 1, 2006 utilizing
an accelerated amortization schedule while all option grants valued after January 1, 2006 will be expensed on a straight-line basis.

     Compensation expense is recognized ratably over the requisite service period. At December 31, 2007, there was $7.1 million of
unrecognized compensation cost related to options being accounted for under FAS 123(R), which we expect to be recognized over a
weighted-average period of 3.2 years.

     We use the Black-Scholes option pricing model to estimate the fair value of options. This model requires the input of assumptions, some
of which are highly subjective, including the expected term of the option, expected stock price volatility and expected forfeitures. We
determined the assumptions used in this pricing model at each grant date. We determined the expected term of our options based upon
historical exercises, post-vesting cancellations and the contractual term of the option. We concluded that it was not practicable to calculate the
volatility of our share price due to the fact that our securities are not publicly traded and therefore there is no readily determinable market value
for our stock. Therefore, we based expected volatility on the historical volatility of a peer group of publicly traded entities for the same
expected term of our options. We based the risk-free rate for the expected term of the option on the U.S. Treasury Constant Maturity Rate as of
the grant date. We determined the forfeiture rate based upon our historical experience with pre-vesting option cancellations.

      Certain employees have received grants for which the ultimate number of shares that will be subject to vesting is dependent upon the
achievement of certain financial targets for the year, and such determination is not made until our audited financial statements are available, or
the Vesting Determination Date. The grant is initially recorded for that number of shares that is most likely to be subject to vesting based on
available financial forecasts as of the date of grant. This amount is adjusted on a quarterly basis as new financial forecasts become available.
Stock-based compensation expense for these grants is recorded over the requisite service period, generally four years. Such options generally
vest ratably for 36 months from the Vesting Determination Date.

      Given the lack of an active public market for our outstanding common and preferred stock, our board of directors established an estimate
of fair value for these securities as well as for options and warrants to purchase shares of our common stock. The fair value of our stock as used
in the determination of grant price was estimated by our board of directors based in part on a market capitalization analysis of comparable
public companies and other metrics, including revenue multiples and price/earnings multiples, as well as the following:

     •
             the prices for our convertible preferred stock sold to outside investors in arms-length transactions;

     •
             the rights, preference and privileges of preferred stock relative to those of our common stock;

     •
             our operating and financial performance;

     •
             the hiring of key personnel;

     •
             the introduction of new services;

     •
             our stage of development and revenue growth;

     •
             the fact that the options grants involved illiquid securities in a private company;

     •
             the risks inherent in the development and expansion of our services; and

                                                                         50
     •
            the likelihood of achieving a liquidity event, such as an initial public offering or sale of all or a portion of the company.

     During the period from January 1, 2004 through December 31, 2007, we granted options to employees to purchase a total of 6.4 million
shares of common stock at exercise prices ranging from $0.25 to $10.35 per share using the fair value established by our board of directors.
Subsequently, with the benefit of hindsight, management determined that some of these exercise prices were below the fair value of our
common stock at the date of grant. We retrospectively estimated the fair value of our common stock based upon several factors, including our
operating and financial performance, progress and milestones attained in our business, recent transactions for the purchase and sale of our
common stock from and by independent third parties, and the estimated valuation that we would obtain in an initial public offering.

     Our original estimate of the fair value of our common stock was not conducted in accordance with the AICPA Practice Guide, Valuation
of Privately-Held-Company Equity Securities Issued as Compensation, because at the time the stock options were issued our efforts were
focused on sales, marketing, and product development, and our financial and managerial resources were limited.

      During 2007, we performed retrospective valuations of our common stock as of December 31, 2003, 2004, 2005, 2006 and 2007. These
valuations used a probability-weighted combination of the market comparable approach and the income approach to estimate our aggregate
enterprise value at each valuation date. The market comparable approach estimates the fair value of a company by applying to that company
market multiples of publicly traded firms in similar lines of business. The use of the market comparable approach requires judgments regarding
the comparability of companies that offer services similar to ours. If different comparable companies had been used, the market multiples and
resulting estimates of the fair value of our stock would have also been different. The income approach involves applying appropriate
risk-adjusted discount rates to estimated debt-free cash flows, based on forecasted revenue and costs. The projections used in connection with
this valuation were based on our expected operating performance over the forecast period. There is inherent uncertainty in these estimates. If
different discount rates or other assumptions had been used, the valuations would have been different.

      We applied a 50% weighting to the market comparable approach and a 50% weighting to the income approach in our valuations for the
years ended December 31, 2003, 2004, 2005 and 2006. For the year ended December 31, 2007, we applied a 25% weighting to the income
approach and a 75% weighting to the market approach due as we anticipated filing this prospectus within three months. We allocated the
aggregate implied enterprise value to the shares of preferred and common stock using the option-pricing method at each valuation date. The
option-pricing method involves making assumptions regarding the anticipated timing of a potential liquidity event, such as an initial public
offering, and estimates of the volatility of our equity securities. The anticipated timing was based on the plans of our board of directors and
management. Estimating the volatility of the share price of a privately held company is complex because there is no readily available market
for the shares. We estimated the volatility of our stock based on available information on the volatility of stocks of publicly traded companies
in our industry. Had different estimates of volatility and anticipated timing of a potential liquidity event been used, the allocations between the
shares of preferred and common stock would have been different and would have resulted in a different value being determined for our
common stock as of each valuation date. Due to the contemplated timing of a potential initial public offering, we reduced the non-marketability
discount applied to our stock from 20% at December 31, 2003 to 15% at December 31, 2004, to 10% at December 31, 2005, to 5% at
December 31, 2006 and at December 31, 2007.

     On December 20, 2007, we completed a tender offer for the purchase of approximately 4.0 million shares of our common stock for an
aggregate purchase price of approximately $41.7 million and

                                                                        51
immediately thereafter issued approximately 3.8 million shares of common stock to The Goldman Sachs Group, Inc., an accredited investor, for
an aggregate sale price of approximately $40.0 million. The tender offer was made to then-existing holders of common stock that were not
current employees of Epocrates and to holders of our Series A preferred stock, or Series A Stock, and our Series C preferred stock, or Series C
Stock, who were required to first convert such preferred shares into shares of common stock in order to participate in the tender offer. The
holders of approximately 0.8 million shares of Series A Stock and approximately 1.3 million shares of Series C Stock converted their shares
into common stock. The approximately 0.2 million of shares repurchased pursuant to the tender offer that were not subsequently issued to the
new investor were retired.

     The new investor paid $10.42 per share for 3.8 million shares, or 13%, of the fully diluted shares of our then-outstanding, capital stock,
resulting in a valuation of Epocrates of $300 million. This transaction provided further evidence supporting the value of our common stock as
of December 31, 2007.

     Also on December 20, 2007, we entered into an agreement with Hudson Street Services, a Goldman, Sachs & Co. business, to co-market
our market research services to its institutional investing clients. No revenue was recognized pursuant to this agreement in 2007.

                                                                       52
     We have reviewed key factors and events between each date below and have determined that the combination of the factors and events
described above reflect a true measurement of the fair value of Epocrates over an extended period of time and believe that the fair value of our
common stock is appropriately reflected in the chart below.

                                                                            Options                              Reassessed          Intrinsic
                                                                            Granted             Exercise         Fair Value            Value
Date of Grant                                                           (in Thousands)           Price           Per Share           Per Share

January 21, 2004                                                                       46   $         0.25   $            0.48   $           0.23
April 21, 2004                                                                        402             0.25                0.55               0.30
June 28, 2004                                                                       1,182             0.25                0.61               0.36
July 21, 2004                                                                         735             0.25                0.63               0.38
October 13, 2004                                                                       86             0.25                0.70               0.35
November 17, 2004                                                                      51             0.35                0.73               0.38
January 21, 2005                                                                      131             0.45                0.83               0.38
April 13, 2005                                                                        157             0.65                1.07               0.42
July 20, 2005                                                                         344             0.95                1.36               0.41
September 8, 2005                                                                      40             0.95                1.46               0.51
October 18, 2005                                                                       40             0.95                1.58               0.63
October 21, 2005                                                                      124             1.65                1.63                 —
November 16, 2005                                                                      47             1.65                1.71               0.06
January 9, 2006                                                                       348             3.21                1.91                 —
January 25, 2006                                                                      182             3.37                2.03                 —
April 12, 2006                                                                        126             3.84                2.60                 —
July 18, 2006                                                                         297             4.68                3.32                 —
October 18, 2006                                                                      109             4.26                4.01                 —
November 15, 2006                                                                     415             4.32                4.22                 —
March 1, 2007                                                                          97             4.32                6.01               1.69
April 13, 2007                                                                        828             4.32                7.04               2.72
April 30, 2007                                                                        319             4.32                7.45               3.13
June 12, 2007                                                                          96             4.56                8.49               3.93
July 18, 2007                                                                          16             5.50                9.36               3.86
August 16, 2007                                                                        35             6.50                9.92               3.42
November 6, 2007                                                                      153            10.35               10.35                 —
December 11, 2007                                                                      28            10.35               10.35                 —

     For the years ended December 31, 2004 and 2005, we recorded deferred stock-based compensation for the difference between the
reassessed fair value of our stock and the amount the employee must pay to acquire the stock. We amortize this deferred stock-based
compensation using the straight-line method over the vesting periods of the stock options, which is generally four years.

     From January 1, 2004 through December 31, 2005, we recorded unearned stock-based compensation of $1.2 million. Deferred stock-based
compensation amortized to expense was $0.3 million during the years ended December 31, 2005 and 2006 and $0.2 million during the year
ended December 31, 2007. At December 30, 2007, we had a total of $0.2 million related to these options remaining to be amortized over the
vesting periods of the stock options. Deferred stock-based compensation is reduced in future periods to the extent that options are canceled
prior to full vesting.

    For the years ended December 31, 2006 and 2007, we considered the fair value of the stock and the exercise price as variables in the
Black-Scholes option pricing model to determine employee stock-based compensation.

                                                                       53
     If we had made different assumptions and estimates than those described in the paragraphs above, the amount of our recognized and to be
recognized stock-based compensation expense, net loss and net loss per share amounts could have been materially different. We believe that we
have used reasonable methodologies, approaches and assumptions consistent with the AICPA Practice Guide, Valuation of
Privately-Held-Company Equity Securities Issued as Compensation, to determine the fair value of our common stock.

     In November 2003, our board of directors approved a stock option repricing program. Under this program, eligible employees could elect
to exchange certain outstanding stock options with an exercise price greater than or equal to $1.00 for a new option to purchase the same
number of shares of common stock. As of the cancellation date, we had accepted 0.9 million shares for exchange and 0.9 million stock options
were granted six months and one day after they were exchanged for an average exercise price of $0.25.

     Because of the subsequent reassessment of the fair market value of our common stock, the options repriced became subject to variable
accounting, which requires all such vested options repriced be marked to market until such options are cancelled, expire, or are exercised.
Vesting is calculated in accordance with FIN 28. Stock-based compensation expensed for this repricing during the years ended December 31,
2005, 2006 and 2007 was $0.7 million, $0.7 million and $1.2 million, respectively.

     Assuming that none of these options that are outstanding are exercised or canceled, each $1.00 increase or decrease in the fair market
value of our common stock would result in a corresponding increase or decrease in stock-based compensation of $0.2 million. This amount
would be reduced to the extent that any of these shares are exercised or canceled. As a result, our operating results may experience fluctuations
due to factors unrelated to our financial performance.

     Sales Tax Accrual. Since inception, we have neither charged nor remitted sales tax on any of our sales. We recorded expense of
$0.6 million, $0.7 million and $0.8 million related to uncollected and unremitted sales tax including estimated penalties and interest of
$0.1 million, $0.2 million and $0.2 million for the years ended December 31, 2005, 2006 and 2007, respectively. The expense related to sales
tax was recorded to cost of revenue and the expense related to penalties and interest was recorded to other expense.

    The accumulated liability for uncollected and unremitted sales tax including penalty and interest was $1.8 million and $2.6 million as of
December 31, 2006 and 2007, respectively.

     These estimates are based on subjective factors including the following:

     •
            in which states we have a nexus for sales tax purposes;

     •
            the potential penalty and interest that would be charged by each state;

     •
            whether certain of our products would be considered subject to sales tax and in which states; and

     •
            treatment of multiple element arrangements where only some of the items in the arrangement are subject to sales tax.

      Our management believes it has made reasonable estimates of the liability given all of the facts and circumstances. We have begun the
process of registering and paying current and past sales tax, penalties and interest due. We expect to begin collecting sales tax from customers
in states where we have a nexus and remitting this tax to the respective states beginning in the third quarter of 2008. Any changes to the
estimates booked above will be recorded as a change in accounting estimate if and when circumstances arise that result in a material change to
the estimates.

    Build-Out of Our New Headquarters Facility. In April 2007, we began a build-out of existing office space which is now our new
headquarters facility. From April 2007 through September 2007, we

                                                                       54
incurred approximately $4.0 million in construction costs. Per the terms of the lease with the sublandlord of the property, the sublandlord has
reimbursed $2.7 million of these construction costs. Because certain improvements constructed by us were considered structural in nature and
because we were responsible for any cost overruns, we are considered to be the owner of the construction project for accounting purposes
under EITF 97-10, The Effect of Lessee Involvement in Asset Construction , or EITF 97-10.

     Therefore, in accordance with EITF 97-10, we have capitalized the fair value of the portion of the building that we occupy as
$17.6 million with a corresponding credit to financing liability. The fair value was determined as of May 2007 using an average of the sales
comparison and income approaches. Both approaches considered the highest and best use of the property in an orderly transaction between
willing market participants. In addition, we have capitalized approximately $4.0 million in construction costs from April 2007 through
September 2007. The reimbursement from the sublandlord of approximately $2.7 million has also been recorded as a financing liability as of
December 31, 2007. The total amount recorded as a financing liability was $20.3 million.

      Subsequent to the completion of construction, we did not qualify for sale-leaseback accounting under FAS 98, Accounting for Leases .
Therefore, we expect the building to remain on our books throughout the term of the lease. Interest expense on the building is recorded on a
straight-line basis over the term of the lease and the building will be depreciated on a straight-line basis over 40 years.

     In addition, we are required to record interest expense on the fair value of the land on which the building is located. We expect to incur
interest expense of approximately $0.2 million per quarter, rent expense on the land of $38,500 and depreciation expense on the building and
capitalized construction costs of approximately $0.1 million per quarter.

      At the end of the lease term in April 2011, we have an option to renew the lease for an additional 44 months with rent to be paid at fair
market value. Should we decide not to renew the lease, we would reverse the net book value of the building and the corresponding financing
liability with the difference to be recorded as a gain. We expect this gain will be approximately $0.7 million.

     Valuation Allowance. Our deferred tax assets are comprised primarily of net operating loss carryforwards and research and
development credits. At December 31, 2007, we had federal and state tax net operating loss carryforwards of approximately $31.5 million and
$17.2 million, respectively. The federal and state net operating losses will begin to expire in 2020 and 2010, respectively. At December 31,
2007, we had federal and state research tax credit carryforwards of approximately $1.3 million and $1.4 million, respectively. The federal
research credit carryforward begins to expire in 2020. The state research credit carryforwards do not expire.

      A valuation allowance of $25.6 million at December 31, 2006 had been recorded to offset net deferred tax assets as we were unable to
conclude that it is more likely than not that such deferred tax assets will be realized. During the fourth quarter of 2007, we determined that it
would be more likely than not that the cumulative net operating loss and other deferred tax benefits would be recoverable by us, creating a
$21.1 million income tax benefit due to the deferred tax asset recorded on our balance sheet at the end of 2007. The determination of when to
adjust the valuation allowance requires significant judgment on the part of management based on our historical experience, knowledge of
current business factors and our belief of what could occur in the future. Although realization is not assured, we have concluded that it is more
likely than not that the deferred tax assets at December 31, 2007 for which a valuation allowance was determined to be unnecessary will be
realized in the ordinary course of operations based on the available positive and negative evidence, primarily our projected earnings. The
amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future earnings are lower than
estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

                                                                        55
     The future utilization of our net operating loss and research and development credit carryforwards to offset future taxable income may be
subject to an annual limitation as a result of ownership changes. We have had two change of ownership events that limit the utilization of net
operating loss and credit carryforwards. The change of ownership events occurred in September 1999 and August 2000. As a result, utilization
of net operating loss and tax credits prior to the change of ownership events will be significantly limited. The limitation will result in the
expiration of unused federal and state tax net operating loss and federal tax credit carryforwards of approximately $4.3 million, $4.2 million
and $0.1 million, respectively.

Results of Operations

     Year ended December 31, 2006 vs. December 31, 2007

    The following table summarizes our results of operations for the year ended December 31, 2006 compared to the year ended
December 31, 2007 (in thousands):

                                                                                  Years Ended December 31,

                                                                                                                        Increase/         Increase/
                                                                                                                       (Decrease)        (Decrease)
                                                                                                                            $                %

                                                                                  2006                2007

Revenues, net                                                                 $      49,517     $       65,611     $          16,094             32.5
Cost of revenues                                                                     17,371             22,805                 5,434             31.3

Gross profit                                                                         32,146             42,806                10,660             33.2
Operating expenses:
  Sales and marketing                                                                14,975             16,887                 1,912             12.8
  Research and development                                                            8,748             10,519                 1,771             20.2
  General and administrative                                                         10,725             11,983                 1,258             11.7

       Total operating expenses                                                      34,448             39,389                 4,941             14.3

Income (loss) from operations                                                        (2,302 )            3,417                 5,719                *
Interest income                                                                       1,078              1,714                   636             59.0
Interest expense                                                                         —                (285 )                (285 )              *
Other income (expense), net                                                            (189 )             (233 )                 (44 )           23.3

Income (loss) before income taxes                                                    (1,413 )            4,613                 6,026                  *
Benefit (provision) for income taxes                                                    (28 )           21,126                21,154                  *

Net income (loss)                                                                    (1,441 )           25,739                27,180                  *
Less: accretion of Series B mandatorily redeemable preferred stock
dividends                                                                             2,840              2,840                    —                   —
Less: allocation of net income to participating preferred stockholders                   —              15,582                15,582                  *

Net income (loss) available to common stockholders                            $      (4,281 ) $          7,317     $          11,598                  *



* not meaningful

    Revenues. We generate revenue by providing healthcare companies with our Interactive Services through targeted access to our
network of subscribers. Our Interactive Services enable pharmaceutical, market research, managed care and medical education organizations to
more effectively communicate with healthcare professionals and include clinical messaging, hosting of drug formularies, continuing medical
education programs and market research surveys.

     In addition, we generate revenue from Subscriptions. Subscriptions include subscriptions services which allow a customer access to our
decision support tools using a handheld device or the Internet

                                                                         56
and license codes which can be redeemed for a subscription, as well as site licenses which allow a customer internet access to our decision
support tools. The majority of our subscribers rely on our free subscription products; however, we also sell premium subscriptions with features
and functionality that are not offered in our free products. Our Subscriptions provide healthcare professionals with convenient access to
information they need to treat patients at the point of care, allowing our subscribers to access dosing, drug interaction, pricing and insurance
coverage information for over 3,300 drugs, as well as disease, diagnostic, coding and symptom assessment tools. The majority of our paid
subscriptions have a term of one year and are purchased by individual healthcare professionals for their own use. Subscription sales are
recognized as revenue ratably over the subscription term. Payments for Subscriptions received in advance of services performed are recorded as
deferred revenue.

     VSOE of fair value has been established for sales of subscriptions services and license codes and represents the price charged when that
element is sold separately. VOE of fair value for site licenses and Interactive Services is established based on the price paid when such are sold
separately. To date, VOE of fair value for site licenses has not been established nor has VOE of fair value been established for any Interactive
Services except for market research due to the wide variability in the pricing of most Interactive Services.

     Often, our Interactive Services are sold as part of a multiple element arrangement which includes both Subscriptions and Interactive
Services. If fair value has not been established for all elements in a multiple element arrangement, revenue recognition is dependent upon the
order of the deliverables. In many of our arrangements, the last item to complete its delivery is the only item for which fair value has been
established. As a result, revenue for the entire arrangement is often deferred until there is only one undelivered element. Our revenue
recognition policy for multiple element arrangements is discussed in more detail in "Critical Accounting Policies and Estimates" above.

     Currently, our customer base is located almost entirely within the United States. No one customer accounted for more than 10% of our
revenue in 2006 or 2007. The timing of our revenue is affected by seasonal factors, primarily as a result of the annual budget approval process
of many of our customers in the pharmaceutical industry. As a result, our bookings are usually highest in the fourth quarter of each calendar
year, and due to our typical fulfillment cycle our recognized revenue is usually highest in the first and fourth quarters of each calendar year. We
expect this pattern to continue but to become less pronounced as we continue to introduce new service offerings.

     The following is a breakdown of revenue from subscriptions and interactive services for the years ended December 31, 2006 and 2007 (in
thousands):

                                                                                                  Years Ended December 31,

                                                                                                   2006              2007

                      Subscriptions                                                           $      17,706     $      19,732
                      Interactive Services                                                           31,811            45,879

                                                                                              $      49,517     $      65,611

      Total revenues increased $16.1 million, or 33%, in 2007 compared to 2006. There was an increase in Subscription revenue of $2.0 million,
or 11%, and an increase in Interactive Services revenue of $14.1 million, or 44%. The $2.0 million increase in Subscription revenue was driven
by moderate growth in our paid subscriber base. The $14.1 million increase in Interactive Services revenue was driven by increases in our
clinical messaging services of $8.8 million, market research services of $4.2 million and formulary services of $1.1 million.

                                                                        57
      The majority of our subscribers use our free subscription services and do not purchase any of our premium subscriptions. A core element
of our strategy is to continually enhance the clinical functionality of our free services through adding new content and features. We also plan to
continue to shift content from our paid subscription offerings to our free services to encourage new users to adopt our services. As part of our
strategy to grow our network of subscribers and leverage this base to generate high margin revenue streams from healthcare industry clients, we
plan to devote significant resources to expanding our free service offerings. In addition, we plan to more actively focus our marketing efforts on
increasing awareness and adoption of our free services. As a result, we expect revenues from subscriptions to our premium services to decrease
in the future.

     Our Interactive Services revenue is growing at a much faster rate than Subscriptions and we expect this trend to continue because we
believe the use of electronic services as a medium to communicate with healthcare providers will continue to gain acceptance within the
pharmaceutical industry.

      Cost of Revenues. Cost of revenues consists of the costs related to our providing services to customers. These costs include salaries and
related personnel expenses, stock-based compensation, service support costs, payments to participants in market research surveys we conduct
for our customers, third party royalties and allocated overhead. Royalty costs are expensed as incurred. Contracts with certain licensors include
minimum guaranteed royalty payments, which are payable regardless of ultimate sales. We record these minimum payments as cost of revenue
when incurred.

     We allocate overhead expenses such as rent, occupancy charges and information technology costs to all departments based on headcount.
As a result, such expenses are reflected in costs of revenues, as well as in the research and development, sales and marketing and general and
administrative expense categories.

      Cost of revenues increased $5.4 million, or 31%, in 2007 compared to 2006. This increase was primarily due to increased compensation
paid to participants in our market research programs of $2.2 million, increased costs for customer support personnel of $1.1 million, an increase
in third-party royalties for content used in our subscription services of $0.8 million and increased overhead costs of $0.8 million. Cost of
revenues as a percentage of revenue was 35% in both 2006 and 2007. In the short term, we expect that cost of sales will increase in absolute
dollars and will continue to represent a similar percentage of revenue or even slightly increase as a percentage of revenue as we introduce new
products which carry higher third-party royalties fees and due to costs associated with our new headquarters facility.

    Sales and Marketing Expense. Sales and marketing expense consists primarily of salaries and related personnel expenses, sales
commissions, stock-based compensation, trade show, promotional and public relations expenses and allocated overhead. Commissions are
expensed as follows: 60% upon customer collection and 40% upon delivery by us of the last item in the contract.

     Sales and marketing expense increased $1.9 million, or 13%, in 2007 compared to 2006. This increase was primarily due to increased
employee stock-based compensation of $0.6 million and an increase in salary and other personnel costs of $1.6 million for the additional
headcount needed to support our revenue growth. Sales and marketing expense represented 30% and 26% of revenues in 2006 and 2007,
respectively. Sales and marketing expense increased in absolute dollars but decreased in terms of percentage of revenue due to our ability to
increase revenue with a less-than-proportional increase in sales and marketing expense. We expect sales and marketing expense to continue to
increase in absolute dollars but to decrease as a percentage of revenue to the extent we are successful in growing our business.

     Research and Development Expense. Research and development expense consists primarily of salaries and related personnel expenses,
stock-based compensation, allocated overhead, consultant fees and expenses related to the design, development, testing and enhancements of
our services.

                                                                       58
     Research and development expense increased $1.8 million, or 20%, in 2007 compared to 2006. This increase was primarily due to
increased employee stock-based compensation of $0.4 million, an increase in salary and other personnel costs of $0.8 million for additional
personnel needed to develop new service offerings during 2007 and an increase in third-party consulting costs of $0.2 million. Research and
development expense represented 18% and 16% of revenues in 2006 and 2007, respectively. We expect research and development expense to
increase in absolute dollars as we continue to develop new services, but to decrease as a percentage of revenue to the extent we are successful
in growing our business.

    General and Administrative Expense. General and administrative expense consists primarily of salaries and related personnel
expenses, stock-based compensation, consulting, audit and legal fees, allocated overhead and other general corporate expenses.

     General and administrative expense increased $1.3 million, or 12%, in 2007 compared to 2006. This increase was primarily due to
increased employee stock-based compensation of $0.8 million, increased salary and other personnel expenses of $0.8 million and increased
audit and tax fees of $0.3 million, partially offset by a decrease in consulting fees of $0.5 million. General and administrative expense
represented 22% and 18% of revenues in 2006 and 2007, respectively. We expect general and administrative expense to increase in absolute
dollars due to significant costs we expect to incur as we continue to build and maintain the infrastructure necessary to comply with the
regulatory requirements of being a public company, but to decrease as a percentage of revenue to the extent we are successful in growing our
business.

     In connection with the audit of our financial statements for the years ended December 31, 2004, 2005, 2006 and 2007, we identified
certain matters involving our internal control over financial reporting that constitute material weaknesses under standards established by the
PCAOB. The material weaknesses identified were in the areas of financial reporting where inadequate staffing, supervision, systems, processes
and controls lead to untimely identification and resolution of certain accounting matters and revenue recognition where there were inadequate
internal controls regarding concessions granted to customers.

     As a result of these material weaknesses, we incurred significant expenses in establishing controls and processes to enable us to accurately
present our financial position and results of operation for the years ended December 31, 2004, 2005, 2006 and 2007. Specifically, we incurred
consulting fees of approximately $2.2 million and $1.7 million for the years ended December 31, 2006 and 2007, respectively, compared to
$0.8 million for the year ended December 31, 2005. In addition, we incurred external audit and tax consulting fees of approximately
$2.2 million and $2.5 million for the years ended December 31, 2006 and 2007, respectively, compared to $0.2 million for the year ended
December 31, 2005. In 2008, we expect general and administrative expense to increase in absolute dollars due to significant costs we expect to
incur as we continue to build and maintain the infrastructure necessary to comply with the regulatory requirements of being a public company.
However, general and administrative expense as a percentage of revenue is expected to decrease to the extent we are successful in growing our
business.

     In 2007, we began to address these material weaknesses by hiring additional personnel with technical accounting expertise and by
implementing systems, processes and controls designed to improve our revenue recognition and financial reporting process. We intend to
continue to improve our revenue recognition and financial reporting process in 2008 by identifying, recruiting and training personnel with the
appropriate accounting skills, identifying manual processes which can be better controlled by automating those processes and upgrading
existing or implementing new financial reporting systems and controls.

                                                                       59
     Interest Income. Interest income increased $0.6 million, or 59%, in 2007 compared to 2006. Although average interest rates decreased
slightly in 2007 compared to 2006, interest income increased due to higher average cash balances throughout 2007 compared to 2006.

     Interest Expense. We incurred interest expense of $0.3 million in 2007 and none in 2006. Interest expense relates to rent payments on
our new headquarters building which we have capitalized in accordance with EITF 97-10 as discussed above. We have occupied our new
headquarters since September 2007. Interest expense related to the headquarters building is expected to be $0.9 million per year through the
expiration of the lease in April 2011.

     Other Income (Expense), Net. Other expense was $0.2 million in both 2007 and 2006. Historically, we did not charge nor remit sales
tax on any of our sales. The expenses charged to other expense primarily consist of estimated interest and penalties related to the
non-remittance of sales tax in the states where we believe we have a nexus. We have begun the process of registering and paying sales tax,
penalties and interest due and we expect to begin collecting sales tax from customers in states where we have a nexus and remitting this tax to
the respective states beginning in the third quarter of 2008.

      Provision for Income Taxes. We incurred a benefit for income taxes of $21.1 million for the year ended December 31, 2007 compared
to a provision for income taxes of $28,000 for the year ended December 31, 2006. During the fourth quarter of 2007, we reversed the entire
valuation allowance against our deferred tax asset of $21.1 million on December 31, 2007. While we utilized some of our net operating losses
in both years to offset any taxable income, we were subject to alternative minimum tax for federal income tax purposes as well as for certain
states in which we file income tax returns.

     The determination of when to adjust the valuation allowance requires significant judgment on the part of management based on our
historical experience, knowledge of current business factors and our belief of what could occur in the future. We concluded that it was more
likely than not that our deferred tax assets would be realized before they expire. Management made this determination based on management's
projections of pretax profitability in the future, and because in the fourth quarter of 2007, for the first time we had achieved cumulative
profitability net of permanent tax differences for the last twelve cumulative quarters.

     The future utilization of our net operating loss and research and development credit carryforwards to offset future taxable income may be
subject to an annual limitation as a result of ownership changes. We have had two change of ownership events that limit the utilization of net
operating loss and credit carryforwards. The change of ownership events occurred in September 1999 and August 2000. As a result, utilization
of net operating loss and tax credits prior to the "change of ownership" events will be significantly limited. The limitation will result in the
expiration of unused federal and state tax net operating loss and federal tax credit carryforwards of approximately $4.3 million, $4.2 million
and $0.1 million, respectively.

      Accretion of Series B Mandatorily Redeemable Preferred Stock. Holders of our Series B preferred stock, or Series B Stock, are
entitled to receive cumulative dividends at the rate of 8% of the original issue price of $5.71 on each outstanding share of Series B Stock.
Accretion of Series B Stock was $2.8 million for both 2006 and 2007. The total amount of cumulative dividends will be paid in cash and all
outstanding shares of Series B Stock will be converted into shares of our common stock following the completion of this offering.

    Allocation of Net Income to Participating Preferred Stockholders. All preferred stockholders may participate in net income in the
same proportion as their relative percentage of fully diluted shares outstanding. When calculating basic net income per common share, the net
income available to common stockholders is net of the net income allocated to the preferred stockholders.

                                                                       60
     Year ended December 31, 2005 vs. December 31, 2006

    The following table summarizes of our results of operations for the year ended December 31, 2005 compared to the year ended
December 31, 2006 (in thousands).

                                                                               Years Ended December 31,

                                                                                                                      Increase/            Increase/
                                                                                                                     (Decrease)           (Decrease)
                                                                                                                          $                   %

                                                                               2005                2006

Revenues, net                                                              $      32,536     $       49,517      $           16,981               52.2
Cost of revenues                                                                  12,369             17,371                   5,002               40.4

Gross profit                                                                      20,167             32,146                  11,979               59.4
Operating expenses:
  Sales and marketing                                                             11,725             14,975                   3,250              27.7
  Research and development                                                         6,483              8,748                   2,265              34.9
  General and administrative                                                       5,119             10,725                   5,606             109.5

       Total operating expenses                                                   23,327             34,448                  11,121               47.7

Loss from operations                                                              (3,160 )            (2,302 )                    858            27.2
Interest income                                                                      440               1,078                      638           145.0
Other income (expense), net                                                         (130 )              (189 )                    (59 )          45.4

Loss before income taxes and cumulative effect of change in
accounting principle                                                              (2,850 )            (1,413 )                1,437               50.4
Provision for income taxes                                                           (57 )               (28 )                   29               50.9

Loss before cumulative effect of change in accounting principle                   (2,907 )            (1,441 )                1,466               50.4
Cumulative effect of change in accounting principle, net of taxes                     (3 )                —                       3                  *

Net loss                                                                          (2,910 )            (1,441 )                1,469               50.5
Less: accretion of Series B mandatorily redeemable preferred stock
dividend                                                                           2,824              2,840                        16              0.6

Net loss available to common stockholders                                  $      (5,734 ) $          (4,281 ) $              1,453               25.3



* not meaningful

     Revenues. The following is a breakdown of revenue from subscriptions and interactive services for the years ended December 31, 2005
and 2006 (in thousands):

                                                                                                  Years Ended December 31,

                                                                                                   2005              2006

                     Subscriptions                                                            $      13,177      $     17,706
                     Interactive Services                                                            19,359            31,811

                                                                                              $      32,536      $     49,517

     Net revenues increased $17.0 million, or 52%, in 2006 compared to 2005. There was an increase in Subscription revenue of $4.5 million,
or 34%, and an increase in Interactive Services revenue of $12.5 million, or 64%. The $4.5 million increase in Subscription revenue was driven
by the growth in our paid subscriber base. The $12.5 million increase in Interactive Services revenue was driven by increases in our clinical
messaging services of $7.6 million, market research services of $3.8 million and formulary services of $1.1 million.

                                                                      61
     Cost of Revenues. Cost of revenues increased $5.0 million, or 40%, in 2006 compared to 2005 primarily due to increased compensation
paid to participants in our market research programs of $2.3 million, $0.9 million in increased costs for customer support personnel,
$0.8 million in increased costs to operate our information technology infrastructure to support our growing subscriber base, an increase in
third-party royalties of $0.6 million for content used in our subscription services and $0.3 million in amortization of internally developed
software. Cost of revenues represented 38% and 35% of revenues for 2005 and 2006, respectively.

     Sales and Marketing Expense. Sales and marketing expense increased $3.3 million, or 28%, in 2006 compared to 2005 due to
increased salary and other personnel costs of $2.2 million for the additional headcount needed to drive revenue growth, increased consulting
costs of $0.3 million and increased travel costs of $0.2 million. Sales and marketing expense represented 36% and 30% of revenues for 2005
and 2006, respectively.

     Research and Development Expense. Research and development expense increased $2.3 million, or 35%, in 2006 compared to 2005
due to increased salary and other personnel expense for additional personnel to develop new services offerings that were made available during
2006. Research and development expense represented 20% and 18% of revenues for 2005 and 2006, respectively.

     General and Administrative Expense. General and administrative expense increased $5.6 million, or 110%, in 2006 compared to 2005
due to increased audit fees of $2.0 million, increased consulting fees of $1.5 million and increased salary and other personnel expenses of
$1.6 million. General and administrative expense represented 16% and 22% of revenues for 2005 and 2006, respectively.

     Interest Income. Interest income increased $0.6 million, or 145%, in 2006 compared to 2005. The increase was due to higher average
cash balances and higher prevailing interest rates throughout 2006 compared to 2005.

      Other Income (Expense), Net. Other expense was $130,000 and $189,000 in 2005 and 2006, respectively. Historically, we did not
charge nor remit sales tax on any of our sales. The expenses charged to other expense primarily consist of estimated interest and penalties
related to the non-remittance of sales tax in the states where we believe we have a nexus.

      Provision for Income Taxes. We incurred income tax expense of $57,000 for the year ended December 31, 2005 and $28,000 for the
year ended December 31, 2006. While we utilized some of our net operating losses in both years to offset any taxable income, we were subject
to alternative minimum tax for federal income tax purposes as well as for certain states in which we file income tax returns. As of
December 31, 2006, we had a full valuation allowance on our deferred tax asset because we could not conclude as of this date that it was more
likely than not that these deferred tax assets would be realized.

     Accretion of Series B Mandatorily Redeemable Preferred Stock. Holders of our Series B Stock are entitled to receive cumulative
dividends at the rate of 8% of the original issue price of $5.71 on each outstanding share of Series B Stock. Accretion of Series B Stock
remained consistent at $2.8 million for both of the years ended December 31, 2005 and 2006. The total amount of cumulative dividends will be
paid in cash and all outstanding shares of Series B Stock will be converted into shares of our common stock following the completion of this
offering.

Liquidity and Capital Resources

    We have generated cash provided by operating activities since 2003. Most of our expenditures are for personnel, facility costs and sales
and marketing. As revenues have grown, operating expenses have also increased. However, spending as a percentage of revenue has decreased.
We expect this trend will continue to the extent we are successful in growing our business.

                                                                      62
     Cash, cash equivalents and short-term investments increased from $20.1 million at December 31, 2005 to $25.8 million at December 31,
2006 to $72.6 million at December 31, 2007. One of the primary contributors to this significant increase was a book overdraft for certain of our
disbursement cash accounts of $28.4 million as of December 31, 2007 for which the bank had no legal right of offset. The majority of this
overdraft was due to checks written in the last week of the year in connection with the $41.7 million tender offer of our common stock. The
balance of the book overdraft is reported as part of accrued liabilities and the change in the book overdraft is reported as cash flows from
financing activities. The checks that caused this book overdraft subsequently cleared the bank in January 2008. We believe that this book
overdraft was a one-time event and do not anticipate incurring such items in the future.

     Cash provided by operating activities was $23.4 million in 2007, which was primarily attributable to net income of $25.7 million plus the
following non-cash items: employee stock-based compensation of $3.2 million, an increase in deferred revenue of $12.4 million and an
increase in other accrued liabilities and other payables of $2.8 million, partially offset by an increase in our deferred tax asset of $21.6 million.

     Cash provided by operating activities was $7.1 million in 2006, which was primarily attributable to a net loss of $1.4 million plus an
increase in deferred revenue of $10.4 million.

     In 2007, we purchased property and equipment totaling $6.3 million. Historically, we have not been a capital-intensive business; however,
during 2007, we spent approximately $5.3 million in construction costs and furniture and fixtures for our new headquarters facility.
Approximately $2.7 million of these expenditures were reimbursed by our landlord as dictated by the terms of our lease. Prior to 2007, we held
only cash and cash equivalents. In 2007, we invested $3.1 million in short-term available-for-sale securities, of which $0.6 million matured
during 2007, leaving a balance of $2.5 million in short-term available-for-sale securities as of December 31, 2007.

     Our policy is to invest only in fixed income instruments denominated and payable in U.S. dollars. Investment in obligations of the U.S.
government and its agencies, money market instruments, commercial paper, certificates of deposit, bankers' acceptances, corporate bonds of
U.S. companies, municipal securities and asset backed securities are allowed. We do not invest in auction rate securities, futures contracts, or
hedging instruments. Securities of a single issuer valued at cost at the time of purchase, should not exceed 5% of the market value of the
portfolio or $1 million, whichever is greater, but securities issued by the U.S. Treasury and U.S. government agencies are specifically exempted
from these restrictions. Issue size should normally be greater than $50 million for corporate bonds. No single position in any issue should equal
more than 10% of that issue. The final maturity of each security within the portfolio should not exceed 24 months.

     In 2006, investing activities consisted exclusively of purchases of property and equipment of $1.7 million.

     Cash provided by financing activities in 2007 was $29.8 million and consisted primarily of the $28.4 million book overdraft described
above, and $40.0 million received in connection with the sale of shares of our common stock, offset by $41.7 million paid to acquire common
stock pursuant to a tender offer of our common stock to certain of our existing stockholders.

     Cash provided by financing activities in 2006 was $0.2 million and consisted exclusively of proceeds from the exercise of employee stock
options.

     We will be receiving the net proceeds of the shares we sell in this offering, but none of the proceeds from the shares sold by the selling
stockholders. Some of our proceeds will be used to pay the cumulative dividend on our Series B Stock, which totaled $20.8 million as of
December 31, 2007. With the remainder of the proceeds, we plan to continue to enhance our services and expect to invest in product
development, infrastructure, strategic relationships and acquisitions, as appropriate.

                                                                         63
     We believe that the net proceeds from this offering, together with our available cash resources and anticipated future cash flow from
operations, will provide sufficient cash resources to meet our contractual obligations and our currently anticipated working capital and capital
expenditure requirements for at least the next 12 months. However, prior to such time, we may seek to sell additional equity or debt securities
or obtain a credit facility. The sale of additional equity or convertible securities may result in additional dilution to our stockholders. If we raise
additional funds through the issuance of debt securities, these securities could have rights senior to those of our common stock and could
contain covenants that could restrict our operations. Any required additional capital may not be available on reasonable terms, if at all.

     Our future liquidity and capital requirements will depend upon numerous factors, including retention of customers at current volume and
revenue levels, our existing and new application and service offerings, competing technological and market developments and potential future
acquisitions. In addition, our ability to generate cash flow is subject to numerous factors beyond our control, including general economic,
regulatory and other matters affecting our customers and us.

Contractual Obligations

      The following table summarizes our contractual obligations as of December 31, 2007 (in thousands):

                                                       Total          2008            2009         2010         2011         2012         Thereafter

Operating Leases(1)                                $     1,616    $       293     $      315   $      321   $      327   $      332   $                28
Minimum Royalty Commitments(2)                           1,474          1,258            116          100           —            —                     —

Total                                              $     3,090    $     1,551     $      431   $      421   $      327   $      332   $                28

(1)
        Relates to our facility in East Windsor, New Jersey.

(2)
        Relates to medical information licensed from third parties for use in our subscription services.

Legal Matters

      From time to time, we may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property,
commercial, employment and other matters, which arise in the ordinary course of business. In accordance with FAS 5, Accounting for
Contingencies , we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be
reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling,
advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any
unfavorable ruling were to occur in any specific period, there exists the possibility of a material adverse impact on the results of operations of
that period or on our cash and/or liquidity. Currently, we are not involved in any litigation; however, one of our competitors, WebMD, has
made assertions about our business and our business practices. WebMD has retained outside counsel and has asserted that they are prepared to
pursue claims against us including claims under the Lanham Act and state laws regarding unfair competition and false advertising. They have
also asserted their rights to contact governmental agencies to investigate our business practices. Although we believe that their claims are
without merit and that our business practices are both legal and ethical, WebMD may nevertheless choose to pursue legal action. Nothing has
been accrued for this contingent liability as of December 31, 2007 because the amount is not estimable.

                                                                             64
Off-Balance Sheet Arrangements

     We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured
finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. We do not have any outstanding derivative financial instruments, off-balance sheet guarantees,
interest rate swap transactions, or foreign currency forward contracts.

Sarbanes-Oxley Compliance and Corporate Governance

     As a public company, we will be subject to the reporting requirement of the Sarbanes-Oxley Act of 2002. Beginning with our fiscal year
ending December 31, 2009, we will be required to establish and regularly evaluate the effectiveness of internal controls over financial
reporting. In order to maintain and improve the effectiveness of disclosure controls and procedures and internal control over financial reporting,
significant resources and management oversight will be required. We also must comply with all corporate governance requirements of The
NASDAQ Global Market, including independence of our audit committee and independence of a majority of our board of directors.

Quantitative and Qualitative Disclosures About Market Risk

     The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we invest in highly liquid equity securities and high quality debt securities. Our investments in debt
securities are subject to interest rate risk. To minimize the exposure due to an adverse shift in interest rates, we invest in short term securities
and maintain an average portfolio duration of one year or less.

     Our operations predominately consist of research and development and sales activities in the United States. As a result, our financial
results are not affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets.

Recent Accounting Pronouncements

     In September 2006, the FASB issued FAS No. 157, Fair Value Measurements , or FAS 157, which defines fair value, establishes a
framework for measuring fair value in GAAP and expands disclosures about fair value measurements. FAS 157 does not require any new fair
value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the
information. FAS 157 became effective for Epocrates beginning January 1, 2008. In February 2008 the FASB issued FSP No. FAS 157-2,
Effective Date of FASB Statement No. 157, which delays the effective date of FAS 157, Fair Value Measurements, by one year for nonfinancial
assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. We are
currently evaluating whether adoption of FAS 157 will result in a change to our fair value measurements.

     In February 2007, the FASB issued FAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an
amendment of FASB Statement No. 115 , or FAS 159. FAS 159 permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.
FAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB's long-term measurement objectives for
accounting for financial instruments. FAS 159 became effective for Epocrates beginning January 1, 2008. We are currently evaluating whether
adoption of FAS 159 will result in a change to our fair value measurements.

                                                                         65
     In December 2007, the FASB issued FAS No. 141(R), Business Combinations , or FAS 141(R), which replaces FAS 141, Business
Combinations , or FAS 141. FAS 141(R) retains the fundamental requirements in FAS 141 that the acquisition method of accounting which
FAS 141 called the "purchase method" be used for all business combinations and for an acquirer to be identified for each business combination.
FAS 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the
acquisition date as the date that the acquirer achieves control. FAS 141(R) will become effective for Epocrates beginning January 1, 2009. We
do not expect the adoption of FAS 141(R) to have a material impact on our results of operations, financial position, or cash flows.

    In December 2007, the FASB issued FAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of
ARB No. 51 , or FAS 160. FAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that
should be reported as equity in the consolidated financial statements. FAS 160 will become effective for Epocrates beginning January 1, 2009.
We do not expect the adoption of FAS 160 to have a material impact on our results of operations, financial position, or cash flows.

                                                                         66
                                                                   BUSINESS

Overview

     Epocrates is a leading provider of clinical information and decision support tools to healthcare professionals, as well as interactive
information services to the healthcare industry. Most commonly used on mobile devices at the point of care, our subscription-based services
enable healthcare professionals to make more informed medical decisions, reduce medical errors and practice more efficiently. We believe
Epocrates is the leading electronic source of medical information for primary care physicians at the point of care, based in part on the
combination of frequency of use and minutes of usage as determined in a 2007 study conducted by PERQ/HCI, part of The Nielsen Company.
According to this study of primary care physicians, respondents reported using Epocrates on an annual basis more than any other electronic
resource included in the survey and more often than Medscape, Skyscape and Mobile PDR combined.

     Our brand recognition and strong reputation have helped us cultivate a large number of active subscribers. Based on self-reported
registration information, our network includes more than one in four U.S. physicians and more than one in three U.S. medical students. We
believe that healthcare professionals have come to rely on us as a part of their daily clinical workflow, enabling them to enhance patient safety,
comply with clinical standards of care, improve practice productivity and manage their information burden. Our worldwide subscriber base
currently consists of over 500,000 healthcare professionals and includes more than 200,000 U.S. physicians, as well as nurses, medical
students, pharmacists and physician assistants. We define active subscribers as individuals who satisfy at least one of the following:

     •
            subscribers to our free clinical mobile services who have downloaded our product or synchronized their mobile devices within the
            last 180 days;

     •
            subscribers who have purchased a premium mobile or online clinical subscription that has not expired;

     •
            subscribers who have accessed our free online services within the last 30 days; or

     •
            registered users who have completed a market research survey within the last 12 months.

      Our clinical information and decision support tools provide healthcare professionals with convenient access to information they need to
treat patients at the point of care. For example, our subscribers are able to access dosing, drug interaction, pricing and insurance coverage
information for over 3,300 drugs, as well as disease, diagnostic, coding and symptom assessment tools. We believe that healthcare
professionals have come to rely on us as a part of their daily clinical workflow. Our clinical information is available for use on individual
mobile devices such as personal digital assistants, or PDAs, and smartphones operating the Palm, Windows Mobile or BlackBerry operating
systems, as well as laptops, desktops and Tablet PCs via the Internet. In addition, a customized version of our content is available for the
iPhone Safari browser and we recently began development with Apple Inc. of a version for the iPhone operating system.

     Our interactive information services enable pharmaceutical, market research, managed care and medical education organizations to more
effectively communicate with healthcare professionals. For example, our messaging service allows us to provide important news and alerts,
such as new product approvals, formulary status changes and clinical studies, directed to specific groups of our subscribers. We believe the
efficacy of our targeted communication and promotional activities will capture an increasing proportion of the annual pharmaceutical
promotional spending directed to healthcare professionals, which totaled over $14 billion in 2006. We believe the size of our subscriber
network makes us one of the few electronic communication channels of scale available for the healthcare industry to reach healthcare
professionals.

                                                                        67
     We generate revenue from selling subscriptions to our premium clinical information and decision support tools and by providing
healthcare companies targeted access to our network of subscribers. The majority of our paid subscriptions have a one year term and are
purchased by individual healthcare professionals for their own use. Our interactive information services generate revenue in a number of ways,
including through sponsorship of clinical messaging, continuing medical education programs and recruiting for market research surveys. In
2007, we generated total revenue of $65.6 million, a 32.5% increase over 2006. Cash provided by operating activities for the year ended
December 31, 2007 was $23.4 million, compared with $7.1 million for the year ended December 31, 2006. Our income before taxes for the
year ended December 31, 2007 was $4.6 million, compared with a loss of $1.4 million for the year ended December 31, 2006.

Market Opportunity

      Physicians are increasingly adopting technology solutions that can improve the quality of patient care, reduce medical errors, increase
practice productivity and easily integrate into their daily clinical workflow. At the same time, healthcare companies are seeking to increase
their ability to improve the quality and frequency of their interaction with physicians and other healthcare professionals. We believe these
broad trends will continue to create demand for our clinical information and interactive information services.

     Adoption of Technology Solutions by Healthcare Professionals

     Use of technology among healthcare professionals has grown considerably in recent years. In particular, utilization of mobile technology
platforms has increased substantially as a result of advances in operating software and hardware devices, as well as the reduced cost and
complexity of mobile technology. According to a 2007 Manhattan Research report, over 50% of U.S. physicians use PDAs or smartphones, an
increase from approximately 30% in 2001. Through the adoption of technology solutions, healthcare professionals are better able to:

           Enhance patient safety. A November 1999 report from the Institute of Medicine, or IOM, indicated that medical errors are among
the top ten causes of death in the United States, killing as many as 98,000 people each year. In a 2006 follow up, the IOM reported that
1.5 million Americans are harmed each year by drug errors, all of which are preventable. Our clinical reference and decision support tools
enable healthcare providers to check for indicated prescribing information, including drug interactions and appropriate dosing information, as
well as disease and diagnostic treatment information. This information should reduce the likelihood of adverse drug events and medical errors.

          Comply with clinical standards of care. There is a growing focus among healthcare payors and providers to adhere to clinical
guidelines that could reduce complications or future healthcare utilization. Measures that blend quality of care, cost control and patient-specific
elements are often used by payors to determine appropriate reimbursement levels for services. These "pay-for-performance" programs, which
link financial incentives to a healthcare provider's ability to deliver high-quality, cost-effective care, are changing the way many insurers and
providers look at healthcare economics. Our clinical information enables healthcare providers to access clinical standards and make more
informed decisions at the point of care.

          Improve practice productivity. The delivery of healthcare in the United States is predominantly dependent on manual and
paper-based methods, resulting in a highly fragmented, complex and inefficient workflow. In addition, most physicians contract with multiple
health insurance plans, each of which has distinct practice guidelines and drug formularies governing the care of their members. In part, due to
the time required to fulfill the administrative duties of their practice, physicians are able to spend on average only ten minutes with each
patient. Our clinical information and formulary reference tools facilitate immediate access to relevant information at the point of care, thereby
improving

                                                                        68
physician productivity by reducing the time required to determine appropriate, cost-effective prescriptions and decreasing the number of
pharmacy call-backs.

          Manage their information burden. Healthcare professionals face increasing challenges in staying current with advances in
medicine. In 2006, over 600,000 references were added to Medline, the National Library of Medicine's online repository of medical articles.
Adding to the information burden, the Center for Drug Evaluation and Research, a division of the FDA, approved 101 new products in 2006.
The clinical information, clinical messaging services and continuing education programs that we deliver provide healthcare professionals with
mobile access to relevant and reliable medical information and current developments.

     Increasing Ability to Communicate through Electronic Communication Channels

    Increased adoption of information technology solutions has created substantial opportunity for healthcare companies to leverage the use of
mobile devices and the Internet to reach clinicians. These electronic channels are cost-effective and enable the delivery of highly targeted
messages to healthcare professionals. Accordingly, use of these channels has become a rapidly growing component of overall healthcare
company communication spending to reach healthcare professionals.

     Growth in Electronic Marketing by Pharmaceutical Companies

     The pharmaceutical industry faces increasing challenges, such as dwindling product pipelines, increasing regulatory requirements and
constraints, generic and biotech competition and pricing pressures. According to a report by Verispan, an independent research organization,
pharmaceutical industry spending on electronic marketing to physicians alone has increased to approximately $390 million, more than doubling
from 2004 to 2006, and is expected to continue growing. Pharmaceutical companies spent over $14 billion in 2006 on promotional activities
directed toward healthcare professionals. A significant portion of those marketing dollars continues to be spent on drug representatives visiting
physician offices at an estimated cost of $150 to $200 per visit. However, according to a white paper published by Unisys Corporation in 2004,
a drug representative fails to make contact with a physician approximately 50% of the time and 87% of contacts when made last less than two
minutes. Further, medical groups are more frequently denying drug representatives access entirely. As a result, we believe pharmaceutical
companies are seeking better and more cost-effective access to physicians. Our interactive information services enable pharmaceutical
companies to achieve returns on their marketing investments, increase the reach and frequency of interactions with prescribing physicians and
more effectively support low revenue products and underserved geographic markets.

     Growth in Online Healthcare Market Research

     Based on data compiled by Inside Research, the amount spent by U.S. healthcare companies on market research increased from 2004 to
2006 by 23%, to $1.2 billion. Historically, most general market research has taken place offline, through interviews, surveys and focus groups;
however, online surveys are increasing in popularity. In 2006, 36% of all market research survey spending was allocated towards online
surveys, an increase from 9% in 2000. We believe the percentage of healthcare market research that is conducted online is growing along with
the growth of the broader market for online research. Online market research is more convenient for the study subjects and is typically more
time- and cost-effective for the research sponsors. Moreover, it may yield more accurate results, due to the elimination of the bias introduced
by a live interviewer, and it provides results more quickly than traditional market research programs. As the demand for online market research
grows, we expect market research companies will face increasing challenges in recruiting healthcare professionals to participate in online
surveys. Our subscriber base provides market research companies with online access to a large number of potential respondents.

                                                                       69
     Growth in Electronic Continuing Medical Education (CME)

      Most U.S. physicians are required to complete continuing medical education, or CME, in order to maintain their medical licenses. In 2006,
nearly $2.4 billion was spent on CME activities, including content development, advertising and registration fees. This increase is being driven
in large part by pharmaceutical manufacturers, who indirectly finance a significant portion of CME courses, shifting their marketing budget
dollars to CME programs in the face of increased costs, new industry guidelines and regulatory restrictions limiting the effectiveness of
traditional channels. Historically, most CME credits were earned by physicians while attending conferences, lectures and grand rounds;
however, there has been a growing trend among physicians to take CME courses electronically due to the lower cost and greater convenience
of such programs. Online and mobile CME is the fastest-growing CME channel, representing over 26% of activities in 2006. In 2007, Ambient
Insights projected online and mobile-based CME will grow by 11% and 40%, respectively, between 2006 and 2011. As reported by Verispan in
its 2005 ePromotion Annual Study, 87% of physicians surveyed reported earning CME credits online. We expect this growth to continue as
sponsors look for more effective ways to reach and attract increasingly busy healthcare professionals.

Our Strengths

     We believe that we have the following key competitive strengths:

     Recognized and Trusted Brand with Healthcare Professionals

     We have built a brand that is widely recognized among healthcare professionals as a trusted source of clinical information. In the Pri-Med
2006 Healthcare Solutions Annual Report published in January 2007, in a survey of physicians, Epocrates was the second most recognized
brand behind Microsoft among 18 healthcare information technology companies evaluated. Healthcare professionals have come to depend on
us as a trustworthy source for objective, concise, accurate and clinically useful information and decision support tools, resulting in frequent use
of our services. We believe our trusted brand has contributed significantly to the growth of our subscriber base.

     Large Subscriber Base

     We currently have over 500,000 active subscribers worldwide, including over one in four U.S. physicians and more than one in three U.S.
medical students. Consistent with our corporate strategy, the majority of our subscribers rely on our free clinical products. We believe
Epocrates has become an integral part of the daily clinical workflow of many of our subscribers. In a 2006 survey of over 1,500 of our
subscriber physicians commissioned by Epocrates and conducted by researchers at Brigham and Women's Hospital, a teaching affiliate of
Harvard Medical School, 83% of respondents reported using the Epocrates drug reference an average of six times per day. Our current
subscribers play an important role in driving user growth. For example, our Epocrates Advocate Program includes hundreds of our subscribers
who have agreed to participate in various public relations and marketing activities on our behalf without monetary compensation. Similarly, in
a 2006 Epocrates newsletter poll, 80% of the respondents reported being referred to Epocrates by a colleague or friend. We believe our
subscriber base is not easily replicated.

     Powerful Business Model

     Our subscriber base is primarily composed of clinicians who access our free drug reference and decision support information. A smaller
percentage of our users purchase one or more of our premium clinical decision support tools. Moving forward, we expect to see a decrease in
our subscription revenue from clinicians as we focus more product development and marketing resources on our free products and services.
Regardless of whether a healthcare professional pays for a subscription or uses our free version, our network of subscribers provides a base for
generating multiple high margin revenue

                                                                        70
streams from our healthcare industry clients. We believe this gives us increased revenue visibility and greater cash provided by operating
activities. By providing our health care industry clients controlled access to our network of physicians and other healthcare professionals, we
further monetize our subscriber base while incurring limited incremental expenses. In addition, these revenue generating interactive
information services enhance the offering to our subscriber base by providing additional free content and services that our users may elect to
download or participate in. For example, over 130,000 physicians whom we have verified against the American Medical Association database,
have opted-in to be informed of market research opportunities. We believe the power of our business model will continue to grow as our
subscriber base expands and as our clients shift more of their spending to electronic communications media.

     Proprietary Clinical Content and Decision Support Tools

      We have selected and formatted our content and decision support tools specifically to provide healthcare professionals with information
that they need, when they need it, at the point of care. For example, our drug content is developed and continually updated by a team of
physicians and pharmacists to ensure accuracy and relevance, and is designed expressly to fit within the clinician's workflow. In the 2006
Brigham and Women's Hospital survey referenced above, over 60% of physicians believed that using Epocrates clinical references prevented
adverse drug events or medical errors three or more times in the prior month. We believe the quality, relevance and ease of use of our content
drives our ability to attract and retain subscribers.

     Proven Technology Architecture

      For a majority of our users, our decision support tools reside directly on the handheld device and have been refined based on years of use
by healthcare professionals. As a result, access to our clinical information by these users at the point of care is not subject to interruption or lags
in Internet or telecommunication service, and therefore is fast and reliable. In addition, we have designed our network architecture to be highly
scalable with high volume data synchronization capabilities, allowing for simple and efficient download and update of our clinical information.
We believe these attributes continue to be significant advantages in supporting our large subscriber base.

     Extensive Industry Relationships

     We have developed relationships with key participants in the healthcare industry, including:

     •
             Pharmaceutical companies. All of the top 15 and 19 of the 20 largest pharmaceutical companies based on 2007 global sales
             have worked with us to communicate with physicians and other healthcare professionals. To date, we have contracted with over
             200 pharmaceutical brands.

     •
             Medical schools and associations. Nine of the leading medical schools, including Harvard Medical School, distribute our
             premium software for free to their students and we currently have marketing arrangements with over 15 leading state and national
             specialty associations, including the California Medical Association and the American Psychiatric Association.

     •
             Market research companies. Over 150 market research firms have used our services to recruit healthcare professionals for
             market research surveys on behalf of the healthcare and financial services industries. In addition, in December 2007, we entered
             into an agreement with Hudson Street Services, a Goldman, Sachs & Co. business, to co-market our market research products and
             services to its institutional investing clients.

     •
             Medical education companies. A growing number of medical education providers use our services to distribute their accredited
             medical education programs through our Epocrates MobileCME channel. As of January 31, 2008, our subscribers have completed
             over 750,000 MobileCME courses.

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     •
            Payors. Over 120 commercial and Medicaid health insurance plan clients, covering approximately 140 million lives, use our
            service to disseminate information about their covered medications. In addition, we work with the Centers for Medicare and
            Medicaid Services, or CMS, to provide clinicians with insurance coverage information for all Medicare Part D plans.

Our large client base provides us diversification across the healthcare industry and, in 2007, no one client represented more than 10% of our
revenue.

     Experienced Management Team

      Our management team includes healthcare and information technology veterans and experienced industry executives. We benefit from
their operational experience, thorough understanding of the strategic landscape and extensive relationships with pharmaceutical companies and
other existing and potential customers.

Our Strategy

     Our goal is to be the leading provider of electronic clinical information and decision support tools to physicians and other healthcare
professionals. Helping healthcare professionals improve quality of care, reduce medical errors and save time is central to the success of our
business and is our highest priority. Another key component of our business is offering targeted access to our subscriber base with the goal of
offering programs that are relevant and useful to both our clients and our subscribers. Key elements of our strategy include:

     Strengthening our Subscriber Base

      We believe that our focus on the needs of healthcare professionals is the foundation of our success and is critical for the creation of
long-term value through growth in subscription and interactive information services revenue. We plan to continue to invest significant clinical,
product development and marketing resources to strengthen our subscriber base and increase subscriber usage. A core element of our strategy
is to continually enhance the clinical functionality of our free products through new content and features. Additionally, our large subscriber
base and established technology could allow us to develop applications that enhance physician workflow and allow physicians to access patient
medical data.

     Developing for New Technology Platforms

     We believe it is critical that healthcare professionals have access to important clinical information, wherever and whenever they need it.
Historically, the majority of healthcare professionals have used standalone Palm OS mobile devices to access clinical information and could
only download and update via cable connection through a desktop computer. However, over the past several years, there has been increased
usage of smartphones utilizing the Palm, Blackberry and iPhone operating systems. As a result, we announced the launch of Epocrates Rx on
the Blackberry operating system in late 2007, and in March 2008, we announced that we are working with Apple to develop a version of our
software for the iPhone operating system. In the first quarter of 2008, over 100,000 of our subscribers connected wirelessly to our servers. With
continued growth in the adoption of smartphones using the Palm, Blackberry and iPhone operating systems, we expect the number of clinicians
connecting wirelessly to our servers to increase. Our goal is to expand our product and services offerings on new mobile platforms as well as
expand the breadth and depth of information we offer on Web-based platforms such as desktops, laptops and Tablet PCs.

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     Expanding our Sponsorship Offerings

     We believe we can provide greater value to our subscribers and clients by expanding our interactive information services. This includes
adding new features to our existing services as well as offering completely new services. In addition, we expect to expand the resources we
devote to growing our client base, including hiring additional sales, marketing and account management personnel. Our efforts are directed at
both new and existing clients and focused on the pharmaceutical, biotechnology and medical device industries.

     Engaging in Strategic Alliances, Partnerships and Acquisitions

      In executing the strategies above, we plan to supplement our internal development efforts with strategic alliance, partnerships and
acquisitions. For example, in December 2007, we entered into an agreement with Hudson Street Services, a Goldman, Sachs & Co. business, to
co-market our market research products and services to its institutional investing clients. Future alliances might include working with leading
clinical content providers to develop integrated products and services, extending our integration/interoperability capabilities with health
information technology vendors and working with medical associations and health care institutions to provide our content to their members.
We currently have no agreements or commitments regarding any strategic acquisitions.

Clinical Information and Interactive Information Services

     We provide clinical information and decision support tools to healthcare professionals, as well as interactive information services to the
healthcare industry. We believe our clinical information enables healthcare professionals to both improve patient safety and save time. Our
interactive information services help our clients more effectively communicate with their target audiences.

     Clinical Information

      We are a trusted source of objective, concise, accurate and clinically useful information and decision support tools. Our content is
continually updated to ensure that healthcare professionals have access to the current clinical information available. Our clinical information
and decision support tools are available for use on mobile devices, as well as through Internet browsers, allowing subscribers convenient access
to information they need when and where they need it.

     Our medical information team of physicians and pharmacists works to ensure that the most objective and reliable information is provided
to subscribers in our network. For content developed internally, our team researches and reviews information from the primary literature,
specialty society recommendations, evidence-based medicine, clinical guidelines, manufacturer labeling, standard medical references and more.
The medical information team also evaluates potential content to license and works with third-party authors in the development of new content.
Through the development of proprietary content, and in collaboration with our content partners, we have created valuable clinical applications
for use at the bedside, in the exam room and in the field.

      Our clinical offerings include both free and premium subscriptions. Our premium subscriptions can be purchased via credit card on our
website for single or multi-year subscription periods. In addition, license codes enabling the activation of subscriptions to Epocrates clinical
information can be purchased on our website for six month, one year and two year subscription periods. Subscribers who are not satisfied with
their premium subscriptions can request a full refund within 30 days.

     As part of our strategy to grow our network of subscribers and leverage this base to generate high margin revenue streams from healthcare
industry clients, we plan to devote significant resources to expanding our free product and service offerings. In addition, we plan to more
actively focus our

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marketing efforts on increasing awareness and adoption of our free products and services. As a result, we expect revenues from subscriptions to
our premium products to decrease in the future.

    Mobile Clinical Information and Decision Support Tools

    Free Reference Service

       Epocrates Rx. This product is available for free download and serves to help healthcare professionals quickly access information for
over 3,300 drugs, including dosing, drug interaction, adverse reaction, contraindication, mechanism of action and pricing information. Our
MultiCheck feature allows subscribers to simultaneously check for interactions among up to 30 drugs at once. Subscribers also have the option
to include formulary information for commercial managed care plans, Medicaid plans and all the Medicare Part D plans, including coverage
status, co-pay levels, quantity limits and prior authorization requirements. In addition, Epocrates Rx displays alternatives to the medication
being considered, allowing subscribers to view less expensive treatment options for their patients. We work with our clients to update the
formulary information on a regular basis.

    Premium Subscription Reference Services

      Epocrates Rx Pro. Our enhanced drug reference guide includes all the content available in our free reference application plus
additional features and functionality. Premium features include the Epocrates ID infectious disease treatment guide with information on over
300 diagnoses, hundreds of alternative medicine (herbal) monographs including drug interaction information, integrated medical dosing
calculators, clinical guidelines and commonly used medical equations.

     Epocrates Essentials. Epocrates Essentials, is an all-in-one guide to drugs, diseases and diagnostics. In addition to Epocrates Rx Pro,
Epocrates Essentials includes the following additional clinical content:

         Epocrates SxDx. Our integrated disease diagnosis reference and symptom assessment tool includes information on approximately
         675 diseases, including signs and symptoms, causes, reimbursement codes and treatment recommendations. This tool serves to
         refresh a clinician's memory about the details of a disease, and provides diagnosis and treatment guidance based on gender, age and
         symptoms. The resulting list is based on a combination of a unique set of algorithms developed by and licensed from Massachusetts
         General Hospital's Laboratory of Computer Science coupled with additional content developed by and licensed from Lippincott
         Williams & Wilkins.

         Epocrates Lab. Our proprietary diagnostic and laboratory test reference includes information on hundreds of diagnostic tests and
         panels, including test descriptions, normal value reference ranges, interpretations, follow-up recommendations and reimbursement
         coding information. The product helps clinicians interpret lab results and determine which lab tests are appropriate for a disease,
         symptom or other circumstance. A differential diagnosis is provided for abnormal results, as well as suggestions for the steps to take
         next in clarifying the diagnosis.

      Epocrates Essentials Deluxe. Our most comprehensive product, a subscription to Epocrates Essentials Deluxe, includes access to all
our premium mobile content. In addition to Epocrates Essentials, Epocrates Essentials Deluxe includes the following:

         Epocrates Medical Dictionary. Our complete guide includes over 100,000 medical terms including prefixes and suffixes,
         eponyms, procedures and protocols. The content is sourced from Stedman's Medical Dictionary 28 th Edition and developed to
         integrate seamlessly within the Epocrates user interface. We update the content of our medical dictionary on a regular basis.

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          Epocrates Coder. Our comprehensive guide helps clinicians find information for more than 20,000 ICD-9 and CPT codes. ICD-9
          codes for diagnoses and CPT codes for procedures are used by clinicians in order to complete documentation following patient
          encounters in order to get accurately reimbursed for their services. Users can look up codes by keyword, category or specific code
          and can create a favorites list for the codes they need to refer to most often.

     Online Clinical Information

     Free Reference Service

      Epocrates Online. Our free Internet product includes the same drug and formulary information found in the Epocrates Rx free mobile
product plus additional features such as full color pill pictures and patient education information available in English and Spanish. Subscribers
can access our free online clinical information and decision support tools in a variety of ways. Users can click on a link from our website and
log in after registration to access the product. Users may also access the information online without registering with us, however these users
will not have access to certain additional information, such as the MultiCheck drug interaction checker or formulary information. To access this
additional information, users simply complete a one-time registration with us.

Premium Subscription Reference Service

      Epocrates Online Premium. Our enhanced Internet drug reference guide includes all the content available in our free online reference
service plus additional features and functionality. This additional content enables healthcare professionals and their staffs to make more
confident prescribing decisions and better support patient education efforts. The additional content includes a pill identifier application, over
400 alternative medicine monographs and hundreds of medical equations, clinical criteria and unit/dose converters.

     Interactive Information Services

     With our ability to reach over 500,000 healthcare professionals, including over one in four U.S. physicians, we provide an effective
channel for the healthcare industry to communicate with its target audience. We offer a variety of interactive information services connecting
our clients and subscribers, including:

      DocAlert Messaging. DocAlert messages are short clinical alerts delivered to our subscribers when they synchronize their devices. We
have delivered over two million DocAlert headlines to U.S. healthcare professionals each month since January 2007. Approximately 70% of
the messages delivered to U.S. healthcare professionals since December 2002 are non-sponsored and include clinical news and public service
content such as clinical and safety alerts from the FDA and the Agency for Healthcare Research and Quality, as well as new clinical studies,
practice management information and Epocrates product information. Messages are targeted to increase the value of these clinical alerts to our
subscribers. The balance of the DocAlert messages is sponsored by our clients. We work with clients to ensure that the messages are of high
quality and interest to our subscribers and are clearly marked as commercial in nature to the reader. We then target these messages to all or a
subset of our subscribers based on message relevance and client need. Depending on the alert, subscribers may have the option to view
additional information on their mobile devices, save the messages or request additional information via email, which may include clinical
abstracts, CME or conference notifications, clinical guidelines or links to relevant websites.

      MobileCME on-the-go learning system. This service, free to subscribers who choose to download the application, offers the ability to
learn about various clinical topics via short educational courses on their mobile devices and receive CME credits. Subscribers select a topic of
interest, read the course material and answer a series of short questions. Offering credits on a mobile platform in small, easily

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completed units helps busy clinicians with fragmented schedules more effectively and efficiently complete their continuing medical education
requirements without having to travel to conferences or sit in front of a computer. While physicians and other healthcare professionals receive
continuing educational credit for these courses, many other healthcare professionals complete the courses simply to keep current on new
clinical advances. Following completion of each CME course, subscribers who are eligible to earn credit receive a follow up email with their
course completion certificate.

     We collaborate with leading accredited CME providers including the University of Pennsylvania, Massachusetts Medical Society, the
American Urological Association and the National Kidney Foundation, to deliver high quality CME programs on mobile devices. Our
educational clients, with support from a growing number of pharmaceutical companies, provide program content specifically developed for the
mobile platform. We believe we offer a unique, valuable opportunity for our clients to extend the reach of their educational programs beyond
conferences and paper-based systems. As of January 31, 2008, our subscribers had completed nearly 750,000 MobileCME courses. A survey
commissioned by Epocrates and conducted by Outcomes, Inc. demonstrated that physicians who completed at least one of two MobileCME
courses for a specific disease were more likely to apply the recommended treatment for that disease as compared to mobile users who did not
complete the CME courses.

      Mobile Resource Centers. This information, available free to subscribers who choose to download the applications, allows health care
professionals to stay current with new clinical developments on a variety of clinical topics. Each resource center is developed in conjunction
with a key opinion leader for that specific disease or condition. The content is updated on a regular basis and includes information such as news
abstracts, conference highlights, continuing medical education and commentary on new medical advances in the field. These centers are sold on
an annual sponsorship basis and clients have the opportunity to sponsor one or more centers across a variety of disease areas.

       Epocrates Honors Market Research. Our opt-in market research program offers healthcare professionals the ability to participate in
online market research studies, for which they are compensated. The Epocrates panel, which includes over 130,000 U.S.-based, opted-in
physicians, whom we have verified against the American Medical Association database, and nearly 400,000 other healthcare professionals, is
the largest opted-in, verified physician panel in the industry. We believe the size and responsiveness of our panel offer advantages over our
competitors. We work with our clients to ensure that we reach the appropriate subscribers and recruit participants based on one or more
variables including occupation, specialty, years in practice, practice setting and geography. Following survey completion, respondents receive a
cash honorarium payment.

      Formulary Hosting. This information, available free to subscribers, offers healthcare professionals the ability to download one or
more health plan formularies for their geographic area. We provide formulary hosting services for over 120 large national health insurance
plans, regional plans and Medicaid plans, covering approximately 140 million lives. In addition, we also work with CMS to offer formulary
information for all Medicare Part D plans. For each plan, we integrate coverage information, including co-pay levels, quantity limits and prior
authorization requirements, into our core drug reference products. In addition, we display alternatives to the medication being considered,
allowing subscribers to view less expensive treatment options for their patients. We work with our clients to update the formulary information
on a regular basis.

     We believe our formulary hosting service benefits our clients by helping them manage rising drug and administrative costs through
increased utilization of generic and preferred medications, increasing member satisfaction and strengthening physician and provider relations.

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User Privacy and Trust

      We have internal policies and practices relating to, among other things, content standards and user privacy, designed to foster our
relationships with our subscribers. In addition, we are a licensee of the TRUSTe Privacy Program. TRUSTe is an independent, non-profit
organization whose goal is to build users' trust and confidence in the Internet. We have also provided certification to the U.S. Department of
Commerce to qualify for the safe harbor exception to the European Union Data Protection Directive established for U.S.-based corporations.
Our privacy policies are posted on our website and tell visitors and Epocrates subscribers what information we collect about them and about
their use of our portals and our services, as well as explaining the choices they have about how their personal information is used and how we
protect that information.

      In addition, we maintain sole discretion for determining the types of advertising that we accept, and under no circumstances would we
accept advertising that, in our opinion, is not factually accurate or is not undertaken in good taste. We also separate the advertising content and
clinical content that we publish, and take meaningful steps to ensure that subscribers can easily distinguish between sponsored content and our
news reporting and other clinical content.

     We include conflict of interest disclosures, employ editorial standards and separate personnel responsible for clinical content from those
involved in advertising content. As part of our ongoing commitment to content integrity and objectivity, we established the Epocrates Clinical
Oversight Board. This board consists of five prominent clinicians who meet periodically to review our clinical content and privacy policies.

Sales and Support

     Clinical Information and Decision Support Tools

     Subscribers can purchase, access and download our free and premium Internet and mobile clinical information and decision support tools
directly from our website. Online subscriptions to our premium clinical information are available for one year and two years. When current
payment information is available, subscriptions to premium clinical information automatically renew unless the subscriber opts out of the
renewal. We currently market to individual subscribers through word of mouth and traditional marketing programs, and do not rely on a sales
force to drive awareness. However, we do have a dedicated sales team that targets institutional clients such as hospitals, large group practices,
medical schools and others.

     Interactive Information Services

     To reach and support our healthcare industry clients, including pharmaceutical, market research, managed care and medical education
companies, we rely on a team of sales professionals and account managers. Our direct sales organization is client-based and deployed across all
of our interactive information services businesses. A key to the success of our sales team is its ability to work closely with current and potential
clients to create programs that best leverage our interactive service offerings. With the exception of formulary hosting, our services are
contracted on a project basis (e.g., per DocAlert message or market research survey), and priced based on a variety of criteria, including the
targeted audience. These service agreements generally expire after a period of one year at which point our obligations are considered fulfilled
whether or not the services have been completed. Formulary hosting agreements are priced based on the number of lives covered by the health
plan and the duration of the formulary hosting with most formulary agreements running for a term of two or three years. Except for market
research, payments for services are typically received prior to the performance of the services.

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Marketing

     The Epocrates network of healthcare professionals has grown over the years primarily through word-of-mouth, or viral marketing, as well
as more traditional activities such as journal advertising, direct mail, email and attendance at key specialty conferences. The primary focus of
our marketing activities has been and will continue to be attracting new subscribers to our free clinical reference and decision support tools.

     A core component of our marketing strategy is leveraging our subscriber base to promote the value of our products and services. We
believe using our subscribers to tell their friends and colleagues about the benefits and value of our clinical information is a highly effective,
low cost way to increase our brand awareness within the healthcare community. For example, our Epocrates Advocate Program includes
hundreds of our subscribers who have agreed to participate in various public relations and marketing activities on our behalf without cash
compensation.

      Another highly effective component of our marketing strategy is working with medical associations to generate brand and clinical
information awareness. These associations are looking to offer valuable member benefits, as well as promote the use of technology to improve
patient care and practice efficiency. We currently have marketing arrangements with over 15 leading state and national specialty associations,
including the California Medical Association, Pennsylvania Medical Society, Illinois State Medical Society, American College of Emergency
Physicians and the American Psychiatric Association, and plan to expand our association programs in the future. Through our marketing
relationships with these associations, we are able to reach up to 300,000 association members through email, direct mail, conferences, journal
advertising and more.

      In addition to leveraging the marketing resources of these associations, we also work closely with many of our interactive information
services clients to promote our services to their members. These clients, such as managed care organizations, work with thousands of
physicians and can help us reach and recruit new subscribers into the Epocrates network. Our clients benefit by being able to communicate
their messages to an even greater number of users via our interactive information services.

     We believe that our programs targeting the medical student market are also critical to our success and represent a pipeline for future
growth. More than one in three U.S. medical students currently use Epocrates services, with higher penetration among students in their third
and fourth years when their studies become more clinical in nature. As part of our medical school efforts, nine of the leading medical schools in
the country, including Harvard Medical School, the University of Pennsylvania School of Medicine, Baylor College of Medicine, Duke
University School of Medicine and the Yale School of Medicine, distribute our premium software for free to their students.

     We use a variety of advertising channels to communicate with our current subscribers, as well as attract new users. We rely primarily on
email and DocAlert messages to reach our current subscribers. In addition, we publish a monthly newsletter to increase awareness of new
services, as well as develop a sense of community among our subscribers. To attract new users, we promote our services via online channels
such as email, banner advertising and search advertising. Our offline advertising activities include direct mail campaigns, journal advertising
and specialty conference promotion.

    We also plan to continue to invest in our public relations and media outreach efforts. Over the last several years, we have been included in
numerous articles on the adoption of technology and the administrative and clinical challenges facing healthcare professionals.

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Competition

     We believe no one company exactly replicates our services or our business model. However, the markets we participate in are competitive
and dynamic and subject to developments in technology and the healthcare industry. Currently, we compete with other companies in two
areas—for subscribers to the types of clinical information we offer and for budget dollars from our pharmaceutical, managed care, market
research and medical education clients. According to a 2007 study of primary care physicians conducted by PERQ/HCI, part of The Nielsen
Company, respondents reported using Epocrates on an annual basis more than any other electronic resource surveyed, and more often than
Medscape, Skyscape and Mobile PDR combined.

     Clinical Information and Decision Support Tools

      Healthcare professionals can choose to use mobile, online and/or print media to reference clinical information. All of these media compete
for the attention of healthcare professionals. Our mobile clinical information and decision support tools face competition from Skyscape and
Thomson Healthcare, among others. Companies providing online content include Medscape, a division of WebMD Health, and UpToDate.
Companies providing traditional offline print publications include Reed Elsevier, Thomson Healthcare and Lippincott Williams & Wilkins.

     Interactive Information Services

      Our primary competition in the area of interactive information services is from companies that help pharmaceutical companies market
their products, programs and services to healthcare professionals. These competitors include Medscape and others that provide:

     •
             healthcare-related online portals and other websites that attract physicians with clinical information;

     •
             online CME programs, offline medical conferences and symposia; and

     •
             electronic detailing, electronic newsletters and other electronic marketing companies.

     In addition, our market research business competes with companies such as Medefield and DoctorDirectory.com, Inc., both of which
recruit physicians to participate in surveys, often by phone, fax, email or surface mail. We also compete with the recruitment divisions of
market research companies that have assembled their own survey panels of healthcare professionals.

     One of our competitors, WebMD, has made assertions about our business and our business practices. WebMD has retained outside
counsel and has asserted that they are prepared to pursue claims against us including claims under the Lanham Act and state laws regarding
unfair competition and false advertising. They have also asserted their rights to contact governmental agencies to investigate our business
practices. Although we believe that their claims are without merit and that our business practices are both legal and ethical, WebMD may
nevertheless choose to pursue legal action.

Technology

      We have built proprietary, leading-edge technologies supporting the rapid development and reliable deployment and update of our
integrated, cross-platform and high performance clinical information and decision support tools applications. We have developed efficient
mechanisms to synchronize content updates and reliably retrieve user responses. Our systems are built on industry-standard, open-source
technologies for cost-effectiveness and flexibility, and are hosted in a world class co-location facility on pooled commodity servers for
fault-tolerance and scalability. These technologies serve key business needs for our mobile and online services, e-commerce facilities and
content management capabilities.

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     Mobile Applications

     Our mobile clinical applications are used by over 500,000 healthcare professionals worldwide. Currently, we support these applications on
mobile devices operating the Palm, Windows Mobile and BlackBerry operating systems, including wireless personal digital assistants and
smartphones. Our applications take advantage of a proprietary, object-oriented framework that enables rapid development of new applications
on multiple platforms, efficient maintenance and extension of our applications, and easier porting to new platforms. We believe our years of
experience deploying mobile applications has allowed us to develop content and highly usable, high-performance applications that are
well-tuned to the needs of healthcare professionals at the point of care. Our mobile applications employ a user interface that is very intuitive.

     In addition, we have developed our AutoUpdate synchronization technology on the mobile platform and on Internet servers that enables us
to update our software applications seamlessly during a user's sync operation, either via cable or wirelessly. Our AutoUpdate technology runs
on both the mobile platform and our Internet servers. This technology uses http as the transport protocol, and runs either wirelessly or via cable
to the device. This same technology allows us to transmit clinical messaging, CME activities, application updates and other information
customized to users' needs, thus enabling us to build a more valuable and persistent relationship with users. Finally we deploy proprietary
technology that allows for cable based, over-the-air or wireless installation of our applications, depending on platform, providing customers a
more convenient and reliable means of downloading our applications onto their mobile devices.

     Online Applications

      We also offer a set of Web-based clinical applications, including Epocrates Online, a browser-based version of our leading drug reference.
Epocrates Online is delivered both as a free Web application and a premium subscription service. The free application is designed to optimize
its visibility to and ranking by Internet search engines such as Google®, while the premium subscription service offers valuable additional
content and capabilities, such as a visual pill identifier feature. The performance and functionality of both the free and premium services are
optimized via use of the Web client technologies that underlie leading-edge Web 2.0 applications.

     eCommerce

      We use a Java-based technology to develop an eCommerce site for marketing, selling and deploying applications to customers. Our
payment gateway is PayPal®, and we use Chase Merchant Services for payment processing. Our site has a facility for caching transactions for
later completion if external payment processing is interrupted for any reason. Our credit card data and other sensitive customer information are
encrypted in our Oracle production database and protected by rigorous access and internal data-management controls. Epocrates complies with
the Payment Card Industry standard for payment account data security, is a certified licensee of the TRUSTe Privacy Program and abides by
the EU Safe Harbor Framework.

     Content Management

     To allow for efficient content creation, editing and publication from any location, we have created a Web-based content management
center, or CMC, that is tuned to our specific forms of content. The CMC system, used by both our clinical team and partner content developers,
exploits leading-edge, Java-based facilities for access control and security, as well as content entry, editing, scheduling and publication.

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     Application Implementation

     For high performance and minimized memory requirements, our mobile reference guides are implemented as native C++ applications on
the Palm and the Windows Mobile family of operating systems and Java on the BlackBerry operating system. Our synchronization server
applications, online applications and eCommerce facilities are implemented in Java and execute in an environment based on industry-standard,
open-source systems and components such as Linux, Apache and Tomcat.

     We employ quality assurance teams in San Mateo, California and in India via our development partner, GlobalLogic. Both teams use
highly effective tools and best practices for both manual and automated testing of Epocrates applications.

     Infrastructure

     Our infrastructure is built on industry standard, highly fault tolerant and scalable components resulting in high performance, site
availability and security. Our Web and application servers are in a load-balanced configuration capable of delivering a wide range of content
types to a large number of users. On average, we transmit more than 3.5 terabytes of clinical information and software updates per month to our
users. Also, because our server pools may be scaled by adding commodity computer hardware, we should be able to handle significant growth
in data transmission volume as our network expands.

      We designed our architecture to be highly reliable and built it upon robust industry standard components. Co-located at AT&T's facility in
Palo Alto, California, our production network is comprised of servers from both Dell® and Hewlett-Packard® running Red Hat Linux in a
pooled configuration. We use Oracle for our database management system running in a clustered configuration. Our disk architecture is built on
an EMC storage area network in a highly fault tolerant configuration resulting in high performance and availability. In addition the co-location
facility has redundant network feeds, power distribution units and cooling units supporting our production systems. Our network infrastructure
is built on fault tolerant components from Cisco and Foundry Networks in a clustered configuration.

     The result of this combination of capabilities is that our site availability has been greater than 99.99% as measured over the three-year
period ended December 31, 2007. We are able to maximize our scheduled availability by providing virtually uninterrupted service during
routine maintenance periods.

     Our infrastructure is highly secure. Our firewall and other security services are built on industry standard applications from Checkpoint
Technologies. Access to the co-location facility and our production infrastructure is limited and guarded 24 hours a day, seven days a week.
Also the facility has generators and fuel that can sustain the site and its security systems for three days.

     Our infrastructure, security and access controls have withstood third-party verification and validation. In addition, we routinely perform
our own internal security testing of our systems and applications. Our infrastructure is both PCI compliant and TRUSTe certified.

     Customer and Technical Support

      Our customer and technical support team is available 11 hours a day, Monday through Friday, excluding holidays, with additional limited
support on Saturdays and Sundays. Our support teams reside primarily in San Mateo, California and East Windsor, New Jersey. The
geographic distribution of the teams allows us to take advantage of time zone differences. The sites use a unified, customizable platform to
field, handle and track all customer inquiries and interactions.

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     We offer customer and technical support in English. Customers can contact us via email, chat, Web and telephone. In addition, physicians
and premium product subscribers can take advantage of enhanced phone support via our toll free support line. Our website hosts a
frequently-asked-questions self-service section for all subscribers and is available free of charge 24 hours per day, seven days a week.

     Our support team works in close conjunction with our marketing, engineering and product management teams to provide continuous and
timely feedback from our customer interactions. We track and analyze customer satisfaction information in a constant effort to improve our
products and services and identify new areas for growth.

Intellectual Property

    We rely upon a combination of trade secret, copyright, trademark and patent laws, license agreements, confidentiality procedures,
employee and client nondisclosure agreements to protect the intellectual property used in our business. We currently have two issued patents
which expire in 2022 and 2024 and two pending patent applications.

     We use trademarks, trade names and service marks for healthcare information services and technology solutions, including DocAlert®,
DocMemo®, Epocrates®, Epocrates Honors®, Epocrates ID®, Epocrates Lab™, Epocrates MedTools®, Epocrates Rx®, Epocrates Rx Pro®,
MultiCheck®, PharmFlash®, Epocrates Dx®, Epocrates QuickSurvey®, Epocrates QuickRecruit®, Epocrates MobileResearch™,
MobileCME® and Epocrates SxDx®. We also use other registered and unregistered trademarks and service marks for our various services. In
addition to our trademark registrations and applications, we have registered the domain names that either are or may be relevant to conducting
our business, including "www.epocrates.com." We also rely on a variety of intellectual property rights that we license from third parties,
including various software and healthcare content used in our services.

Government Regulation

     Most of our revenue is derived either directly from the healthcare industry or from other sources that could be affected by changes
affecting healthcare spending. The healthcare industry is highly regulated and is subject to changing political, regulatory and other influences.
These factors affect the purchasing practices and operations of healthcare organizations, as well as the behavior and attitudes of our subscriber
customers. Federal and state legislatures and agencies periodically consider programs to reform or revise aspects of the U.S. healthcare system.
These programs may contain proposals to increase governmental involvement in healthcare or otherwise change the environment in which
healthcare industry participants operate. Healthcare industry participants may respond by reducing their investments or postponing investment
decisions, including investments in our products and services. We are unable to predict future proposals with any certainty or to predict the
effect they would have on our businesses.

     Laws and regulations have been also been adopted, and may be adopted in the future, that address Internet-related issues, including online
content, privacy, online marketing, unsolicited commercial email, taxation, pricing and quality of services. Many laws are complex and their
application to specific services may not be clear. In particular, many existing healthcare and other laws and regulations, when enacted, did not
anticipate the clinical information and interactive information services that we provide. However, these laws and regulations may nonetheless
be applied to our services.

     Regulation of Drug and Medical Device Advertising and Promotion

     We provide services involving promotion of prescription and over-the-counter drugs and medical devices. The FDA and the FTC regulate
the form, content and dissemination of labeling, advertising and promotional materials prepared by, or for, pharmaceutical or medical device
companies, including

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direct-to-consumer prescription drug and medical device advertising. The FTC regulates over - the - counter, or OTC, drug advertising and, in
some cases, medical device advertising, as well as general product or service advertising. Generally, based on FDA requirements, regulated
companies must limit advertising and promotional materials to discussions of FDA-approved uses and claims. Information that promotes the
use of pharmaceutical products or medical devices that we disseminate on behalf of our clients is subject to the full array of the FDA and FTC
requirements and enforcement actions. Information in our services that is not disseminated on behalf of clients is not subject to such regulatory
oversight. However, products or services that discuss use of an FDA-regulated product or that the regulators believe may lack editorial
independence from the influence of sponsoring pharmaceutical or medical device companies may become a focus of regulatory scrutiny.

     The Federal Food, Drug and Cosmetic Act, or FDC Act, requires that prescription drugs, including biological products, be approved for a
specific medical indication by the FDA prior to marketing. It is a violation of the FDC Act and of FDA regulations to market, advertise or
otherwise commercialize such products prior to approval. The FDA does allow for preapproval exchange of scientific information, provided it
is nonpromotional in nature and does not draw conclusions regarding the ultimate safety or efficacy of the unapproved drug. Upon approval,
the FDA's regulatory authority extends to the labeling and advertising of prescription drugs offered in interstate commerce. Such products may
only be promoted and advertised for approved indications. In addition, the labeling and advertising can be neither false nor misleading, and
must present all material information, including risk information, in a balanced manner. Labeling and advertising that violate these legal
standards are subject to FDA enforcement action.

     The FDA regulates the safety, efficacy and labeling of OTC drugs under the FDC Act, either through specific product approvals or
through regulations that define approved claims for specific categories of such products. The FTC regulates the advertising of OTC drugs under
the section of the FTC Act that prohibits unfair or deceptive trade practices. Together, the FDA and FTC regulatory framework requires that
OTC drugs be formulated and labeled in accordance with FDA approvals or regulations and promoted in a manner that is truthful, adequately
substantiated and consistent with the labeled uses. OTC drugs that do not meet these requirements are subject to FDA or FTC enforcement
action depending on the nature of the violation. In addition, state attorneys general can also bring enforcement actions for alleged unfair or
deceptive advertising.

      Any increase in FDA regulation of the Internet or other media for advertisements of prescription drugs could make it more difficult for us
to obtain advertising and sponsorship revenue. In January 2007, the FDA published a report announcing the formation of a new advisory
committee of experts and consumer representatives that will monitor the FDA's policies for risk communication. Intended to improve
communication to patients of important safety information about drug products, the advisory committee may become a forum for addressing
concerns about direct-to-consumer advertising. Congress has also shown interest in the issue and in FDA reform more generally with several
bills relating to such matters introduced during 2007. There is a reasonable possibility that Congress, the FDA or the FTC may alter its present
policies on the advertising of prescription drugs or medical devices in a material way. We cannot predict what effect any such changes would
have on our business.

     Physician Education Programs

      Activities and information provided in the context of a medical or scientific educational program, including CME, are not regulated by the
FDA if they are non-promotional. The FDA does, however, evaluate such activities to determine whether they are independent of the
promotional influence of the drug or medical device sponsor or whether they are promotional activities subject to the FDA's advertising and
labeling requirements. To the extent that the FDA concludes that such activities are not independent from a manufacturer, such content must
fully comply with the FDA's requirements. During the past several years, educational programs, including CME, that are directed toward
physicians have

                                                                       83
been subject to increased scrutiny to ensure that sponsors do not influence or control the content of the program. In implementing controls and
procedures that promote adherence to applicable regulations and requirements, our clients may implement varying procedures or requirements.
In addition, future changes to existing laws, regulations or accreditation standards, or to the internal compliance programs of our clients and
potential clients, may further discourage, significantly limit, or prohibit clients or potential clients from engaging in educational activities with
us, or may require us to make further changes in the way we offer or provide educational programs.

     Medical Professional Regulation

      A license under applicable state law is required to practice most healthcare professions. In addition, some state laws prohibit business
entities from practicing medicine. We believe that we do not practice medicine and we have attempted to structure our services, strategic
relationships and other operations to avoid violating any such state licensing and professional practice laws.

     Anti-Kickback Laws

     There are federal and state laws that govern patient referrals, physician financial relationships and inducements to healthcare providers and
patients. The federal healthcare anti-kickback law prohibits any person or entity from offering, paying, soliciting or receiving anything of
value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcare programs or the leasing,
purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or service covered by these
programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a
federal healthcare program. These laws are applicable to manufacturers and distributors and, therefore, may restrict how we and some of our
clients market products to or otherwise interact with healthcare providers. Also, in 2002, the Office of the Inspector General of HHS, the
federal government agency responsible for interpreting the federal anti-kickback law, issued an advisory opinion that concluded that the sale of
advertising and sponsorships to healthcare providers and vendors, and payments of fees for services such as market research implicate the
federal anti-kickback law.

     HIPAA Privacy Standards

     The Privacy Standards under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, establish a set of basic national
privacy standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses, healthcare
providers and their business associates. These Privacy Standards do not apply directly to us. Only covered entities are directly subject to
potential civil and criminal liability under the Privacy Standards. However, depending on the facts and circumstances, we could be subject to
criminal liability for aiding and abetting or conspiring with a covered entity to violate the Privacy Standards. We do not believe that we are
involved in any activities that would be interpreted as aiding and abetting a covered entity to violate the standards.

     Consumer Protection Regulations

      We are also subject to a number of foreign and domestic laws that affect companies conducting business on the Internet. Advertising and
promotional activities presented to visitors on our website and in our emails and other promotional communications are subject to federal and
state consumer protection laws which regulate unfair and deceptive practices. We are also subject to various federal and state consumer
protection laws. For example, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act,
regulates commercial emails and provides a right on the part of the recipient to request the sender to stop sending messages, and establishes
penalties for the sending of email messages which are intended to deceive the recipient as to source or content.

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     Although our sites are not directed at children and we do not allow children to obtain our clinical information or participate in our
services, we may be subject to the Children's Online Privacy Protection Act, or COPPA, which restricts the distribution of materials considered
harmful to children and imposes additional restrictions on the ability of online services to collect information from U.S. children under the age
of 13. Our sites are not directed at children and we employ a kick-out procedure whereby anyone identifying themselves as being under the age
of 13 during the registration process is not allowed to register to obtain our clinical information or participate in our services.

     The federal Deceptive Mail Prevention and Enforcement Act and certain state prize, gift or sweepstakes statutes may apply to contests and
sweepstakes we run from time to time, and other federal and state consumer protection laws applicable to online collection, use and
dissemination of data, and the presentation of website or other electronic content, may require us to comply with certain standards for notice,
choice, security and access. In addition, several foreign governments have regulations dealing with the collection and use of personal
information obtained from their citizens. Those governments may attempt to apply such laws extraterritorially or through treaties or other
arrangements with U.S. governmental entities.

     Recently, Congress passed the Fair and Accurate Credit Transactions Act, or FACTA, to reduce the risk of identity theft from the
improper disposal of consumer information. FACTA requires businesses that collect consumer data, such as our business, to take reasonable
measures to prevent unauthorized access to such information. FACTA's disposal standards are flexible and allow businesses discretion in
determining what measures are reasonable based upon the sensitivity of the information, the costs and benefits of different disposal methods
and relevant changes in technology.

     Regulation of Payments to Physicians

     Recent legislation enacted or pending in several states and in Congress mandates disclosure of certain gifts and payments by
pharmaceutical companies to physicians. These laws may be interpreted to require disclosure or other regulation or limitation of honorarium
payments made to physicians for participation in market research activities sponsored by pharmaceutical companies. Although these laws are
not directed at our company, because we provide market research services involving participants from our subscriber base, these laws may have
a negative impact on the continued sponsorship by pharmaceutical companies of these activities or the willingness of physicians to participate
in such activities and may result in a decrease in this segment of our business.

Legal Proceedings

     From time to time, we may be involved in litigation relating to claims arising out of our operations. We are not currently involved in any
material legal proceedings, however, in a letter dated June 8, 2007, one of our competitors, WebMD, has made assertions about our business
and our business practices. WebMD has retained outside counsel and has asserted that they are prepared to pursue claims against us including
claims under the Lanham Act and state laws regarding unfair competition and false advertising. They have also asserted their rights to contact
governmental agencies to investigate our business practices. Although we believe that their claims are without merit and that our business
practices are both legal and ethical, WebMD may nevertheless choose to pursue legal action.

Employees

     As of December 31, 2007, we had 191 full-time employees and three part-time employees which was comprised of 61 employees in
research and development activities or direct support thereof, 62 employees in sales and marketing, 10 employees in information technology,
35 employees in client

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services and 23 employees in general and administrative. None of our employees is covered by a collective bargaining agreement.

Facilities

      Our corporate headquarters is located in San Mateo, California and consists of approximately 59,236 square feet of office space pursuant
to a lease that is set to expire on April 30, 2011. In addition to our space in San Mateo, California, we also lease office space in East Windsor,
New Jersey. As our business expands, we may require additional space.

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                                                                MANAGEMENT

Executive Officers, Key Employees and Directors

       Our current executive officers, key employees and directors and their respective ages and positions as of March 31, 2008 are:

Name                                                                    Age                                    Position

Kirk M. Loevner(1)                                                        50      Chairman of the Board, President and Chief Executive Officer
Richard H. Van Hoesen(1)                                                  52      Senior Vice President, Finance and Chief Financial Officer
Paul F. Banta(1)                                                          47      Senior Vice President, Law, Policy and Content, General
                                                                                  Counsel and Secretary
Robert J. Quinn(1)                                                        55      Senior Vice President, Engineering and Chief Technology
                                                                                  Officer
Jeffrey A. Tangney(1)                                                     35      Executive Vice President, Sales and Marketing
Joseph B. Kleine                                                          44      Senior Vice President, Healthcare Sales
Philippe O. Chambon, M.D., Ph.D.(2)(3)                                    49      Director
John D. Halamka, M.D.                                                     45      Director
Thomas L. Harrison(2)                                                     60      Director
Patrick S. Jones(3)(4)                                                    63      Director
Gilbert H. Kliman, M.D.(2)                                                49      Director
David C. Nagel, Ph.D.(4)                                                  62      Lead Independent Director
John E. Voris(3)(4)                                                       60      Director
Mark A. Wan(5)                                                            42      Director


(1)
         Executive officer of Epocrates.

(2)
         Member of our compensation committee.

(3)
         Member of our corporate governance and nominating committee.

(4)
         Member of our audit committee.

(5)
         Mr. Wan will be resigning from our board of directors concurrent with the closing of this offering.

Executive Officers and Key Employees

      Kirk M. Loevner has served as our President and Chief Executive Officer and has been a member of our board of directors since June
2004. In July 2005, Mr. Loevner was elected Chairman of our board of directors. From December 2001 to January 2004, Mr. Loevner was the
Chairman and Chief Executive Officer of Pinnacor, Inc., previously Screaming Media Inc., a business information company. In November
1998, Mr. Loevner founded PublishOne, an online publishing company, where he served as its Chief Executive Officer until August 2001.
From June 1996 to August 1998, Mr. Loevner served as Chief Executive Officer of Internet Shopping Network Inc., an online retailer. From
November 1993 to April 1996, Mr. Loevner served as Vice President, Software Applications, for Silicon Graphics, Inc., a computer company.
From June 1984 to October 1993, Mr. Loevner held various management positions with Apple Inc., a personal computer company, including
Vice President of the Apple Software Division. Mr. Loevner currently serves on the Board of Overseers for Tufts University College of
Engineering. Mr. Loevner holds a B.S.E. from Tufts University and an M.B.A. from Harvard Business School.

     Richard H. Van Hoesen has served as our Senior Vice President, Finance and Chief Financial Officer since November 2006. From
February 2003 to June 2006, Mr. Van Hoesen was Senior Vice

                                                                        87
President, Finance of NetIQ Corporation, an enterprise software company, was appointed their Chief Accounting Officer in April 2004 and
their Senior Vice President and Chief Financial Officer in September 2004. From February 2000 until February 2003, Mr. Van Hoesen was
Vice President and Chief Financial Officer of Xacct Technologies, Inc., a network-mediation software company. From January 1999 to January
2000, Mr. Van Hoesen held the position of Senior Vice President and General Manager of the Micro Focus business unit of Merant, Inc., a
software company which was formed as a merger between Micro Focus PLC and Intersolv, Inc. From March 1998 until January 2000, Mr. Van
Hoesen was Senior Vice President and Chief Financial Officer of Micro Focus PLC, a software company. From October 1996 to March 1998,
Mr. Van Hoesen was Vice President Finance and Chief Financial Officer of Wall Data, Inc., a network connectivity software company.
Mr. Van Hoesen holds a B.S. from Lehigh University and an M.B.A. from the Wharton School of the University of Pennsylvania.

      Paul F. Banta is our Senior Vice President, Law, Policy and Content and has served as our General Counsel since September 2000 and
our Secretary since January 2001. From September 1997 to August 2000, Mr. Banta served as Senior Vice President of PCS Health Systems, a
health solutions company, and as its Assistant General Counsel from February 1995 to August 1997. From June 1987 to January 1995,
Mr. Banta was employed by Eli Lilly and Company, a pharmaceutical company, serving as corporate counsel from June 1989 to January 1995.
Mr. Banta holds an A.B. from Bowdoin College and both a J.D. and an M.B.A. from Columbia University.

      Robert J. Quinn has served as our Senior Vice President, Engineering and Chief Technology Officer since July 2005, having joined
Epocrates in June 2002 as our Vice President, Engineering and Chief Technology Officer. From November 2001 to March 2002, Dr. Quinn
served as Vice President of Engineering for iDini Corporation, a wireless software company. From October 1998 to October 2001, Dr. Quinn
served as Vice President of Engineering of Parametric Technology Corporation, a product development software company. Prior to that,
Dr. Quinn held a number of positions at IBM and was a Research Fellow at Harvard University. Dr. Quinn holds a B.A. from Dartmouth
College and a Ph.D. from the University of Colorado.

      Jeffrey A. Tangney co-founded Epocrates in August 1998 and has held various management positions at Epocrates since then, serving as
our Executive Vice President, Sales and Marketing since September 2005. From June 1999 to September 1999, Mr. Tangney also served as an
associate in the healthcare group of Goldman, Sachs & Co., an investment banking firm. From June 1993 to August 1997, Mr. Tangney served
as a manager with ZS Associates, a consulting firm. Mr. Tangney holds a B.S. from the University of Wisconsin and an M.B.A. from the
Stanford Graduate School of Business.

      Joseph B. Kleine joined Epocrates in January 2001 and has led our pharmaceutical industry sales effort for most of his tenure with us. In
January 2008, he was named Senior Vice President, Healthcare Sales. From July 2000 to December 2000, Mr. Kleine served as Vice President
of Sales and Marketing for PharmaPRN, a pharmaceutical services company. From October 1999 to July 2000, Mr. Kleine served as Senior
Vice President of Strategic Planning and Business Development at Lyons Lavey Nickel Swift Inc., a full service advertising agency within the
Omnicom network. From June 1988 to September 1999, Mr. Kleine served in various sales and marketing capacities at Eli Lilly and Company.
Mr. Kleine holds a B.A. from Dickinson College and an M.B.A. from Duke University's Fuqua School of Business.

Non-Employee Directors

      Philippe O. Chambon, M.D., Ph.D. has served on our board of directors since August 2000. Since July 2005, Dr. Chambon has served as
a Managing Director of New Leaf Venture Partners, a venture capital firm spun off from Sprout Group, the venture capital affiliate of Credit
Suisse. Dr. Chambon joined Sprout Group in May 1995 and became a General Partner in January 1997. From May 1993 to April 1995,
Dr. Chambon served as Manager in the healthcare practice of The Boston Consulting

                                                                      88
Group, a consulting firm. From September 1987 to April 1993, Dr. Chambon served as Executive Director of New Product Management for
Sandoz Pharmaceutical, Inc., a pharmaceutical company. Dr. Chambon holds an M.D. and a Ph.D. from the University of Paris and an M.B.A.
from Columbia University. Dr. Chambon also serves as a director of Auxilium Pharmaceuticals, Inc., NxStage Medical, Inc. and several private
biotechnology companies.

      John D. Halamka, M.D. has served on our board of directors since August 2005. Dr. Halamka has been the Associate Dean for
Educational Technology at Harvard Medical School since January 2000, Chief Information Officer of Harvard Medical School since January
2001 and Chief Information Officer of CareGroup Health Systems, a healthcare company, since December 1998. Dr. Halamka holds a B.A. and
a B.S. from Stanford University, an M.D. from the University of California, San Francisco, and an M.S. from Harvard Medical School.

      Thomas L. Harrison has served on our board of directors since January 2002. Since May 1998, Mr. Harrison has served as Chairman
and Chief Executive Officer of the Diversified Agency Services division of Omnicom Group, Inc., an advertising and marketing company.
Mr. Harrison holds an honorary doctorate and an M.S. from West Virginia University. Mr. Harrison also serves as a director of The Morgan's
Hotel Group.

      Patrick S. Jones has served on our board of directors since October 2005. Mr. Jones has been a private investor since March 2001. From
June 1998 to March 2001, Mr. Jones was the Senior Vice President and Chief Financial Officer of Gemplus International S.A., a manufacturer
of smart cards for banking, retail, security, and telecommunications. From 1992 to May 1998, Mr. Jones was Vice President, Finance and
Corporate Controller for Intel Corporation. Mr. Jones holds a B.A. from the University of Illinois and an M.B.A. from St. Louis University.
Mr. Jones also serves as Chairman of the Board of Lattice Semiconductor, Inc. and serves as a director of Novell, Inc., Genesys
Conferencing Inc., Openwave Systems Inc. and several private companies.

      Gilbert H. Kliman, M.D. has served on our board of directors since September 1999. Dr. Kliman has been a partner at InterWest
Partners, a venture capital firm, since 1996 and has been a managing director there since 1999. From November 1995 to November 1996,
Dr. Kliman was an investment manager at Norwest Venture Partners, a venture capital firm. From July 1989 to September 1992, Dr. Kliman
served as an associate at TA Associates, a private equity investment firm. Dr. Kliman holds a B.A. from Harvard University, an M.D. from the
University of Pennsylvania and an M.B.A. from the Stanford Graduate School of Business. Dr. Kliman also serves as a director of several
private life science companies.

      David C. Nagel, Ph.D. has served on our board of directors since January 2006 and is our lead independent director. From December
2001 to May 2005, Dr. Nagel served as President and Chief Executive Officer of PalmSource, Inc., a company that provides operating system
software platforms for mobile devices. From September 2001 to December 2001, Dr. Nagel served as Chief Executive Officer of Platform
Solutions Group at Palm, Inc. From April 1996 to September 2001, Dr. Nagel was Chief Technology Officer of AT&T Corp., a
communications services corporation, President of AT&T Labs, a corporate research and development unit of AT&T, and Chief Technology
Officer of Concert, a partnership between AT&T and British Telecom. Dr. Nagel holds a B.S., an M.S. and a Ph.D. from the University of
California, Los Angeles. Dr. Nagel also serves as a director of LeapFrog Enterprises, Inc. and Tessera Technologies, Inc. and several private
companies.

      John E. Voris has served on our board of directors since June 2000. Mr. Voris is the former Chief Executive Officer and a director of
HAPC, Inc., a company formed for the purpose of acquiring operating businesses in the healthcare sector. From June 2000 to June 2004,
Mr. Voris served as the President and Chief Executive Officer of Epocrates. He was also the Chairman of the Board of Epocrates from 2004 to
2005. Prior to joining Epocrates, Mr. Voris spent nearly three decades at Eli Lilly and Company, serving in a variety of leadership roles.
Mr. Voris holds a B.A. and an M.B.A. from

                                                                      89
the Kelley School of Business at Indiana University. Mr. Voris also serves as a director of Oscient Pharmaceuticals Corporation, InfuSystem
Holdings, Inc. and a privately held company.

       Mark A. Wan has served on our board of directors since September 1999. Mr. Wan co-founded Three Arch Partners, a venture capital
firm, in 1993. Mr. Wan holds a B.S. in engineering and a B.A. in economics from Yale University and an M.B.A. from the Stanford Graduate
School of Business. Mr. Wan also serves as a director of Biosensors International Group, Ltd. and several private medical companies.

Executive Officers

     Our executive officers are elected by, and serve at the discretion of, our board of directors. There are no family relationships among our
directors and executive officers.

Board Composition

     Our bylaws permit our board of directors to establish by resolution the authorized number of directors. Our board of directors currently
consists of nine directors, with one vacancy. Each director serves until the expiration of the term for which such director was elected or
appointed, or until such director's death, resignation or removal. At each annual meeting of stockholders, the successors to directors whose
terms then expire will be elected to serve from the time of election and qualification until the next annual meeting following election. Our
amended and restated certificate of incorporation provides that the authorized number of directors may be changed only by resolution of the
board of directors.

    We believe that the composition of our board of directors meets the requirements for independence under the current requirements of The
NASDAQ Global Market. As required by The NASDAQ Global Market, we anticipate that our independent directors will meet in regularly
scheduled executive sessions at which only independent directors are present. We intend to comply with future requirements to the extent they
become applicable to us.

Voting Agreement

     The election of our directors is governed by an amended and restated voting agreement, as amended, that we entered into with certain
holders of our common stock and holders of our preferred stock and related provisions of our certificate of incorporation, as amended. The
holders of a majority of our Series A Stock, voting as a single class, have designated Dr. Kliman and Mr. Wan for election to our board of
directors. The holders of a majority of our Series B Stock, voting as a single class, have designated Dr. Chambon for election to our board of
directors. The holders of a majority of our common stock and preferred stock, voting together as a single class, have designated the remainder
of our directors for election to our board of directors. Upon the closing of this offering, the voting agreement will terminate in its entirety and
none of our stockholders will have any special rights regarding the election or designation of our board members.

Committees of the Board of Directors

   Our board of directors currently has an audit committee, a compensation committee and a corporate governance and nominating
committee, each of which will have the composition and responsibilities described below.

     Audit Committee

     Our audit committee is comprised of Messrs. Jones and Voris and Dr. Nagel, each of whom is a non-employee member of our board of
directors. Mr. Jones is the chairman of the audit committee.

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The board of directors has determined that Mr. Jones is an "audit committee financial expert" as defined under SEC rules and regulations. We
believe that the composition of our audit committee meets the requirements for independence and financial sophistication under the current
requirements of the NASDAQ listing standards and SEC rules and regulations. In addition, our audit committee has the specific responsibilities
and authority necessary to comply with the current requirements of the NASDAQ listing standards and SEC rules and regulations. We intend to
comply with future requirements to the extent they become applicable to us.

    Our audit committee is responsible for, among other things:

    •
            overseeing the accounting and financial reporting processes and audits of our financial statements;

    •
            appointing an independent registered public accounting firm to audit our financial statements;

    •
            overseeing and monitoring:

    •
            the integrity of our financial statements;

    •
            our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

    •
            our independent registered public accounting firm's qualifications, independence and performance; and

    •
            our internal accounting and financial controls;

    •
            preparing the report that SEC rules require be included in our annual proxy statement;

    •
            providing the board of directors with the results of its monitoring and recommendations; and

    •
            providing to the board of directors additional information and materials as it deems necessary to make the board of directors aware
            of significant financial matters that require the attention of the board of directors.

    Our independent registered public accounting firm and internal financial personnel have unrestricted access to our audit committee and
meet privately with our audit committee on a regular basis.

    Compensation Committee

     Our compensation committee is currently comprised of Drs. Chambon and Kliman and Mr. Harrison, each of whom is a non-employee
member of our board of directors. Dr. Kliman is the chairman of the compensation committee. Each member of our compensation committee is
an "outside director" as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, and a
"non-employee director" within the meaning of Rule 16b-3 of the rules promulgated under the Securities Exchange Act of 1934, as amended.
We believe that the composition of our compensation committee meets the requirements for independence under the current requirements of
the NASDAQ listing standards and SEC rules and regulations. We intend to comply with future requirements to the extent they become
applicable to us.

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    Our compensation committee is responsible for, among other things:

    •
            reviewing and approving for our chief executive officer and other executive officers:

    •
            annual base salary;

    •
            annual incentive bonus, including the specific goals and amount;

    •
            equity compensation;

    •
            any other benefits, compensations, compensation policies or arrangements; and

    •
            employment agreements, severance arrangements and change of control agreements/provisions;

    •
            reviewing and making recommendations to the board of directors regarding general compensation goals and guidelines for
            employees and the criteria by which bonuses to employees are determined;

    •
            preparing a report to be included in our annual proxy statement;

    •
            determining the criteria for the compensation paid to our chief executive officer for the last completed fiscal year and the
            relationship of such compensation to our performance;

    •
            establishing the committee's executive compensation policies applicable to executive officers; and

    •
            acting as administrator of our current benefit plans.

    Corporate Governance and Nominating Committee

      Our corporate governance and nominating committee is currently comprised of Messrs. Jones and Voris and Dr. Chambon, each of whom
is a non-employee member of our board of directors. Mr. Jones is the chairman of the corporate governance and nominating committee. We
believe that the composition of our corporate governance and nominating committee meets the requirements for independence under the current
requirements of the NASDAQ listing standards.

    Our nominating and corporate governance committee is responsible for, among other things:

    •
            reviewing board structure, composition and practices, and making recommendations on these matters to the board of directors;

    •
            reviewing, soliciting and making recommendations to the board of directors and stockholders with respect to candidates for
            election to the board of directors; and

    •
            overseeing compliance by employees with our Code of Business Conduct and Ethics.



Compensation Committee Interlocks and Insider Participation
     During the last fiscal year, none of the members of our compensation committee was one of our officers or employees. None of our
executive officers serves, or has served in the past year, as a member of the board of directors or compensation committee of any entity that has
one or more executive officers who have served on our board of directors or compensation committee.

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                                                       EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

     Overview

     Our executive compensation program is designed to help us attract talented individuals to manage and operate all aspects of our business,
to reward those individuals fairly over time, and to retain those individuals who continue to meet our high expectations. The goals of our
executive compensation program are to align our executive officers' compensation with our business objectives and the interests of our
stockholders, to incentivize and reward our executive officers for our success, and to reflect the teamwork philosophy of our executive
management team.

     As discussed in further detail below, our executive compensation program consists primarily of annual base salary, cash bonus and equity
awards. Our compensation committee has not adopted any formal policies for allocating compensation among salary, bonus and equity awards,
but seeks to combine short and long-term components, cash and equity, in the proportions that it believes are the most appropriate to
incentivize and reward our executive officers for achieving our objectives. Our executive compensation program is also intended to make us
competitive in the San Francisco Bay Area, where there is significant competition for talented employees. We believe that we must provide
competitive compensation packages to attract and retain executives over the longer term.

     Role of the Compensation Committee in Setting Executive Compensation

     Our compensation committee determines the salary, annual cash and equity compensation for our executive officers other than Kirk M.
Loevner, our Chief Executive Officer, whose compensation is determined by the full board of directors based upon recommendations made by
the compensation committee. The compensation committee considers recommendations from Mr. Loevner in determining compensation for
our other executive officers. While Mr. Loevner discusses his recommendations with the compensation committee and the full board of
directors, he does not participate in determining his own compensation. In making his recommendations, Mr. Loevner receives input from our
Human Resources department and has access to third party compensation surveys and compensation data of publicly-traded companies. This
information is also available to our compensation committee. Paul F. Banta, our Senior Vice President, Law, Policy and Content and General
Counsel, and John Owens, our Vice President, Human Resources, may participate in compensation committee meetings, but do not participate
in any discussions of their own compensation. None of our other executive officers participates in the compensation committee's executive
compensation discussions. The compensation committee does not delegate any of its functions to others in determining executive
compensation.

     Historically, the compensation committee has considered several different data sources in determining our annual cash and equity
compensation, including input from the independent members of our board of directors based on general experience with companies in their
investment portfolios, compensation surveys such as the Radford High-Tech Industry Executive Survey and the CompensationPro Pre-IPO
Compensation Database, peer company public filings and external compensation consultants.

     In the fall of 2006, Compensia, Inc., a compensation consulting firm, provided the compensation committee with compensation data for 15
publicly-traded companies in the healthcare and information technology industries, some smaller than our company, some of similar size, and
some larger, including Greenfield Online, Phase Forward and Saba Software. The companies in the survey were chosen because they were
generally similar to ours in terms of industry, capital structure, financial attributes, geographic location and/or competition for talent. However,
because certain aspects of our business and management team are unique, the compensation committee used the peer company data as one
resource in determining executive compensation and not as a stand-alone tool. In determining compensation for our executive officers for the
year ended December 31, 2007, the compensation

                                                                        93
committee reviewed the data provided by Compensia, along with other publicly-available compensation data such as the Radford High-Tech
Industry Executive Survey and peer company public filings, and discussed it with Compensia and Mr. Loevner.

     Benchmarking of Compensation

      For the year ended December 31, 2007, Compensia again served as an independent consultant to the compensation committee to assist in
developing our executive compensation program, including identifying companies for competitive analysis and benchmarking. As part of its
engagement, Compensia identified comparable peer companies, provided the compensation committee with a report summarizing a comparison
of our compensation with such peer companies and provided an assessment of the specific elements of our compensation components in
relation to the peer companies. The compensation committee believes benchmarking of executive compensation is crucial to maintaining
compensation levels competitive with other leading technology companies with which we compete for personnel. Additionally, benchmarking
provides guideposts which the compensation committee uses to determine the size, mix and components of executive compensation.

      Most of our direct industry competitors are significantly larger than we are, and as a result, it is challenging to find appropriately-sized
industry competitors for comparison. Therefore, Compensia developed a group of 16 comparable companies based on such factors as revenues
between $50 million and $130 million per year, market capitalization and, to the extent possible, industry similarity. Specifically, the
companies identified were: Actuate Corporation, Applix, Inc. (subsequently acquired by Cognos ULC, an IBM company), Callidus Software,
Inc., Chordiant Software, Inc., CyberSource Corporation, DivX, Inc., Double-Take Software, Inc., Glu Mobile, Inc., Greenfield Online, Inc.,
Guidance Software, Inc., OpenTV Corporation, PDF Solutions, Inc., Phase Forward Incorporated, Taleo Corporation, Unica Corporation and
Visual Sciences, Inc. (subsequently acquired by Omniture, Inc.). We believe that this group provides a meaningful cross-section from which to
benchmark executive compensation.

     Elements of Compensation

     Our executive compensation program consists of the following principal components: base salary, annual cash bonuses (if approved by
our board of directors), long-term incentive compensation in the form of stock options, benefit plans generally available to all employees and
change of control and other severance benefits.

     Base Salary. Each of our named executive officers entered into an employment agreement or offer letter with us at the commencement
of their employment, several of which have been subsequently amended, that provides for an initial base salary, subject to annual increases. We
review company and individual performance annually. As discussed above, Mr. Loevner reviews the executive officers' salaries with the
compensation committee in connection with that annual performance review. For the year ended December 31, 2007, our executive officers'
base salaries were set by reviewing their 2006 salaries against company and individual performance, base salary benchmarking against
comparable companies, as well as general economic factors.

     Our compensation committee targets our executives' base salaries at or near the median of salaries for executive officers in similar
positions with similar responsibilities at companies of similar size in the healthcare and information technology industries and which are
otherwise similarly situated. Our compensation committee believes this is appropriate for several reasons, including the following:

     •
            We have a complex business model and are pursuing multiple commercial opportunities simultaneously in relatively specialized
            markets;

     •
            Competition for executive talent is intense in our industry and in our geographic area; and

                                                                        94
     •
            Our executives have many years of valuable experience in the healthcare and information technology industries, and their
            continued leadership is critical to our short-term and long-term success.

     For the year ended December 31, 2007, the compensation committee established a target of total cash compensation for each executive
officer at the 50 th percentile of executive officers at comparable companies identified in the report from Compensia. Our actual total cash
compensation for 2007 was, on average, approximately 90% of the 50 th percentile for comparable executive officers identified in the report
from Compensia.

     For the year ending December 31, 2008, after reviewing the most recent benchmarking data with Compensia and considering the
performance of certain executive officers, the performance of the company overall and achievement of performance goals in 2007, our
compensation committee recommended to our board of directors in January 2008 that it was appropriate to raise the base salaries of our chief
executive officer and chief financial officer to $340,000 and $255,000, respectively, effective January 1, 2008, representing increases of 13%
and 2%, respectively, and increases in the salaries of our other named executive officers ranging from 2% to 4.5%. In determining the salary
increases for our other named executive officers, our compensation committee also considered the fact that the bonus potential for our other
executives remained unchanged for 2008 as a percentage of the base salary for each such officer for 2008. As in the prior year, our
compensation committee targeted total cash compensation for each executive officer at the 50 th percentile of officers at comparable companies
identified by Compensia in its most recent report.

      Cash Bonuses. We have an annual management bonus plan under which cash bonuses may be paid annually to all of our executive
officers and other members of management, shortly after the end of the calendar year. Target bonus levels under the plan are assigned based on
the level of the employee. For the year ended December 31, 2007, the target bonus level for our chief executive officer was 50% of base salary,
for our executive vice president, the target was $40,000, for senior vice presidents, 30% to 35% of base salary. The actual bonus awarded in
any year, if any, may be more or less than the target, depending on the achievement of our corporate objectives as established by our
compensation committee and board of directors. Our executives' bonuses are targeted at or near the median of bonuses for executive officers in
similar positions with similar responsibilities at companies of similar size in the healthcare and information technology industries. Whether or
not a bonus is paid for any year is determined in connection with our performance against the milestones and metrics determined by the board
of directors for that year's bonus program. In addition to his participation in the management bonus plan.

     For the year ended December 31, 2007, the corporate objectives upon which the management bonus program was based were the
achievement of specified levels of three key business metrics. 40% of the bonus was based on the achievement of designated new customer
orders, which we refer to as sales bookings, a non-GAAP measurement, 20% was based on the achievement of designated revenue and 40%
was based on a designated non-GAAP measurement of earnings we refer to as Adjusted EBITDA, as described in detail on page 9 of this
prospectus. The board of directors believes these measurements of the performance of the business are appropriate because together they
provide a balance of metrics the results of which are significantly influenced by management's actions and which are important to our success.
The board of directors believes the bookings results measure our current sales performance and growth prospects, the revenue results measure
our ability to deliver on the sales we have made, and our Adjusted EBITDA measures our ability to grow profitably.

     The target performance levels for these metrics for 2007 were: sales bookings of $76.3 million, revenue of $64.0 million and Adjusted
EBITDA of $2.4 million. Adjusted EBITDA is calculated by starting with GAAP operating profit and adding back non-cash charges such as
stock-based compensation, depreciation and amortization. Provided both bookings and revenue exceed 90% of their target performance levels,
the bonus payout for each component could vary from 0% to 150% of the

                                                                       95
target bonus for that component based on the actual over- or under-achievement of that metric according to the parameters in the following
tables:

                                                   Bookings (40% of overall bonus target)

% Attainment                                                 <90 %               90 %             100 %              108 %                120 %
Bonus % Payout                                                 0%                50 %              95 %              100 %                 150 %

                                                    Revenue (20% of overall bonus target)

% Attainment                                                                 <90 %              90 %               100 %                  120 %
Bonus % Payout                                                                 0%               50 %               100 %                   150 %

                                           Adjusted EBITDA ($M) (40% of overall bonus target)

$ Attainment                                                             <$0.5                 $1.0                  $2.5                   >$4.0
Bonus % Payout                                                             0%                  50%                  100%                    150%

     The actual results for these management bonus metrics for 2007 were: sales bookings of $83.0 million, revenue of $65.6 million and
Adjusted EBITDA of $8.5 million. In accordance with the terms of the plan, our board of directors determined the management bonus payout
for 2007 to be 122.6% of target.

     The above-referenced performance targets and results were determined using our unaudited financial results and thus differ from the
actual results as reported in our audited financial statements included elsewhere in this prospectus. You should read these consolidated financial
statements, the related notes to these financial statements and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The above-referenced performance targets should not be interpreted as a prediction of how
we will perform in future periods. As described above, the purpose of these targets was to establish a method for determining the payment of
cash-based incentive compensation. You are cautioned not to rely on these performance goals as a prediction of our future performance.

     For the year ending December 31, 2008, our compensation committee recommended to our board of directors that management cash
bonus targets remain unchanged at 50% of base salary for our chief executive officer, $40,000 for our executive vice president and at 30% to
35% of base salary for our senior vice presidents. The corporate objectives upon which the 2008 management bonus program is based remain
the achievement of specified levels of sales bookings, revenue and Adjusted EBITDA. However, in 2008 each component is equally weighted.
The board of directors determined that revenue should assume an equal weighting to bookings and Adjusted EBITDA in our current stage of
development. Our compensation committee set the 2008 targets at levels moderately in excess of the operating plan approved by our board of
directors for fiscal 2008 as an incentive for superior performance. In establishing the targets, our compensation committee considered
management's historic performance relative to prior operating plans, as well as the board of directors' view of the prospects for our business in
2008. As a result of its review, our compensation committee believes the targets identified are attainable, but acknowledges that they will
require significant management attention and growth in our business in 2008. Our compensation committee believes that the most likely
outcome will be attainment of a bonus in the 90% to 110% range of the target bonus, which our compensation committee believes will then
keep the total targeted cash compensation for our executive officers near the 50 th percentile range on average of compensation for executive
officers at comparable companies.

                                                                       96
      Provided bookings and revenue exceed specified threshold levels, the bonus payout for each component could vary from 0% to 200% of
the target bonus for that component based on the actual over- or under-achievement of that metric according to the parameters in the following
tables. If the minimum threshold for any of the metrics is not met, no bonus will be payable for any of the metrics.

                                                 Bookings (One third of overall bonus target)

% Attainment                                                     92 %                95 %            100 %              105 %              110 %
Bonus % Payout                                                    0%                 50 %            100 %              120 %              200 %

                                                 Revenue (One third of overall bonus target)

% Attainment                                                     92 %                96 %            100 %              104 %              108 %
Bonus % Payout                                                    0%                 80 %            100 %              120 %              200 %

                                            Adjusted EBITDA (One third of overall bonus target)

                                                                    Bonus %
                                         % Attainment                Payout

                                            <50%                               0%
                                        50% and <70%                         50 %
                                        70% and <85%                         70 %
                                        85% and <100%                        90 %
                                      100% and <115%                        110 %
                                      115% and <130%                        130 %
                                      130% and <140%                        150 %
                                      140% and <150%                        175 %
                                            150%                            200 %

     In addition to his participation in the executive bonus plan described above.

     The compensation committee has not determined whether it would attempt to recover bonuses from our executive officers if the
performance objectives that led to the bonus determination were to be restated, or found not to have been met to the extent originally believed
by the compensation committee. However, as a public company subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, if
we are required as a result of misconduct to restate our financial results due to our material noncompliance with any financial reporting
requirements under the federal securities laws, our chief executive officer and chief financial officer may be legally required to reimburse us for
any bonus or other incentive-based or equity-based compensation they receive.

      Long-term Equity Compensation. Our equity incentive program is intended to reward longer-term performance and to help align the
interests of our executive officers with those of our stockholders. We believe long-term performance can be enhanced through the use of equity
incentives. Our current long-term incentives consist solely of stock option grants under our 1999 Stock Option Plan, or the 1999 Option Plan.
The compensation committee believes that the use of stock options offers the best approach to achieve our compensation goals with respect to
long-term compensation, serving as an important retention tool for our employees. Our compensation committee and our board of directors
target our executives' stock option grants between the 50 th and 75 th percentiles of equity compensation for executive officers in similar
positions with similar responsibilities at companies of similar size in the healthcare and information technology industries, while also ensuring
that sufficient unvested options remain to provide a continuing incentive. With respect to determining the size of stock option grants, our
compensation committee has approved target ranges of stock options for new employees, and it reviews those ranges at least annually. The
target ranges are intended to set appropriate stock option

                                                                        97
incentive levels for the various levels of responsibility. Stock options granted under this plan typically vest over four years and expire ten years
from the date of grant, hereinafter described as Standard Stock Options.

      For the year ended December 31, 2007, our compensation committee established a target of total equity compensation for each executive
officer between the 50 th and 75 th percentile of executive officers at comparable companies identified in the Compensia report. Our actual
total equity compensation as measured by total equity ownership, at the end of 2007 was, on average, within the target range when compared
with comparable executive officers as identified in the Compensia report.

     Our executive officers were granted Standard Stock Options under the 1999 Option Plan at the time each commenced employment with
us, and each (except for Mr. Van Hoesen) also has received subsequent grants of Standard Stock Options under the 1999 Option Plan. In
connection with its compensation review for the year ended December 31, 2007, our compensation committee also granted performance-based
stock options to each of our named executive officers in April 2007 as described in more detail in the table below entitled "2007 Grants of
Plan-Based Award." Each such executive officer was assigned a target number of such options, and a grant of 120% of such target number was
made in April 2007. The actual vesting of the 2007 performance-based options was contingent upon the achievement by us in 2007 of
corporate goals relating to revenue and Adjusted EBITDA, with each of the two metrics weighted equally. The actual number of shares to vest
could range from 0% to 120% of the target assigned, depending on our performance with respect to these two metrics as follows:

                                               Revenue (One half of overall performance target)

% Attainment                                                    92 %              95 %                100 %                 104 %           108 %
% of Target Shares to Vest                                       0%               50 %                100 %                 110 %            120 %

                                         Adjusted EBITDA (One half of overall performance target)

% Attainment                                                    0%               50 %                100 %                 150 %            200 %
% of Target Shares to Vest                                      0%               30 %                 75 %                 100 %             120 %

      The actual results for these metrics in 2007 were: revenue of $65.6 million and Adjusted EBITDA of $8.5 million. In accordance with the
terms of the 2007 performance-based options, the board of directors determined that approximately 113% of the target number of options
would commence vesting effective January 1, 2008. Such options vest ratably over the ensuing 45 months. The remaining options from the
initial grant were cancelled and returned to the option pool of the 1999 Option Plan.

     In connection with its compensation review for the year ending December 31, 2008, our compensation committee granted
performance-based stock options to each of our named executive officers in January 2008 as follows:

                                                                                         Shares Granted           Exercise Price
                     Name                                                                      (#)                   ($/Sh)

                     Kirk M. Loevner                                                            144,000       $               10.42
                     Richard H. Van Hoesen                                                       84,000       $               10.42
                     Paul F. Banta                                                               60,000       $               10.42
                     Robert J. Quinn                                                             84,000       $               10.42
                     Jeffrey A. Tangney                                                          84,000       $               10.42

    Each executive officer was assigned a target number of such options, and a grant of 120% of the target number was made in January 2008.
The actual vesting of the 2008 performance-based options will depend upon our achievement in 2008 of corporate goals relating to sales
bookings, revenue and Adjusted EBITDA, with each of the three metrics weighted equally. The actual number of shares to

                                                                         98
vest could range from 0% to 120% of the target assigned depending on the performance of Epocrates with respect to these three metrics as
follows:

                                              Bookings (One third of overall performance target)

% Attainment                                                                     92 %              95 %               100 %                105 %
% of Target Shares to Vest                                                         0%               50 %               100 %                 120 %

                                              Revenue (One third of overall performance target)

% Attainment                                                                     92 %              96 %               100 %                104 %
% of Target Shares to Vest                                                         0%               80 %               100 %                 120 %

                                        Adjusted EBITDA (One third of overall performance target)

% Attainment                                                                     50 %              80 %               100 %                120 %
% of Target Shares to Vest                                                         0%               80 %               100 %                 120 %

      Following the 2008 fiscal year, the board of directors will determine, based on our results, the percent of the target number of options that
will commence vesting effective January 1, 2009. Such options will vest ratably over the ensuing 36 months. Any remaining options from the
initial grant will be cancelled and returned to the option pool of the 1999 Option Plan.

      As with the bonus targets for cash bonuses, our compensation committee believes the targets identified are attainable, but acknowledges
that they will require significant management attention and growth in our business in 2008. The compensation committee believes that the most
likely outcome will be attainment of vested shares in the 80% to 110% range of the targets, which will then keep the total equity compensation
for our executive officers, on average, within the targeted 50 th to 75 th percentile range of equity compensation, as measured by equity
ownership, for executive officers at comparable companies.

     In determining the number of standard stock options and performance-based stock options granted to the executive officers, our
compensation committee took into account each executive officer's position, scope of responsibility, ability to affect stockholder value and the
individual's historic and recent performance.

      In connection with this offering, our board of directors has adopted new equity benefit plans described under "Employee Benefit Plans"
below. The 2008 Equity Incentive Plan, or 2008 Incentive Plan, will amend and restate our existing 1999 Stock Option Plan immediately upon
the signing of the underwriting agreement for this offering. In connection with our transition to a publicly-traded company, the compensation
committee intends to evaluate an annual stock option grant program for executive officers to continue aligning the interests of our executive
officers with those of our stockholders. Participation in our 2008 Employee Stock Purchase Plan, or 2008 Purchase Plan, that we have adopted
and that will become effective immediately upon the signing of the underwriting agreement for this offering will also be available to all
executive officers following this offering on the same basis as our other employees.

     Severance and Change of Control Benefits. Certain of our named executive officers are entitled to severance and/or change of control
benefits, the terms of which are described in detail below under "Executive Employment and Severance Agreements." With respect to change
of control benefits, we provide severance compensation if an executive officer is terminated in connection with or subsequent to a change of
control transaction to further promote the ability of our executive officers to act in the best interests of our stockholders even though they could
be terminated following such a transaction.

                                                                         99
Change of control vesting acceleration benefits are structured on a "double-trigger" basis, meaning that the executive officer must experience a
constructive termination or a termination without cause in connection with a change of control in order for the benefits to become due, which is
directly tied to our goal of eliminating, or at least reducing, any reluctance of our named executive officers to diligently consider and pursue
potential change of control transaction notwithstanding the risk to their own job positions. We also believe that the other severance benefits are
appropriate, particularly with respect to a termination by us without cause since, in that scenario, we and the executive have a
mutually-agreed-upon severance package that is in place prior to any termination event which provides us with more flexibility to make a
change in executive management if such a change is in our stockholders' best interests. We believe that these severance and changes of control
benefits are an essential element in our executive compensation packages and assist us in recruiting and retaining talented individuals. The
severance and changes in control benefits do not influence and are not influenced by other elements of compensation, as these benefits serve
different objectives than the other elements of compensation.

      Other Benefits. We have a 401(k) plan in which substantially all of our employees are entitled to participate. Employees contribute
their own funds, as salary deductions, on a pre-tax basis. Contributions may be made up to plan limits, subject to government limitations. The
plan permits us to make matching contributions if we choose; however, to date we have not made any matching contributions. We provide
health care, dental and vision benefits to all full-time employees, including our executive officers. We also have a flexible benefits healthcare
plan and a flexible benefits childcare plan under which employees can set aside pre-tax funds to pay for qualified health care expenses and
qualified dependent care expenses not reimbursed by insurance. These benefits are available to all employees, subject to applicable laws.

Additional Compensation Factors for Executive Vice President of Sales and Marketing

     In addition to his participation in the compensation programs described above, Mr. Tangney is eligible to earn additional bonuses. For the
year ended December 31, 2007, Mr. Tangney was eligible to receive a bonus based on the achievement of specified quarterly revenue and
bookings targets, or 2007 Metrics. Mr. Tangney's target bonus for each of these 2007 Metrics was $10,000 per calendar quarter. The actual
bonus for each 2007 Metric was adjusted pro-rata up or down based on the actual achievement of the 2007 Metrics. In 2007, Mr. Tangney's
compensation with respect to the quarterly revenue and bookings targets was $82,654. For the year ending December 31, 2008, Mr. Tangney is
again eligible to receive a bonus based on the achievement of specified quarterly revenue and bookings targets, or 2008 Metrics. Mr. Tangney's
target bonus for each of these 2008 Metrics is again $10,000 per calendar quarter. The actual bonus for each 2008 Metric will be adjusted
pro-rata up or down based on the actual achievement of each of the 2008 Metrics. For example, if the actual bookings in a calendar quarter are
95% of the specified target, then Mr. Tangney's bonus with respect to bookings for that quarter will be $9,500.

Accounting and Tax Considerations

      Effective January 1, 2006, we adopted the fair value provisions of Financial Accounting Standards Board Statement No. 123(R) (revised
2004), "Share-Based Payment," or SFAS 123(R). Under SFAS 123(R), we are required to estimate and record an expense for each award of
equity compensation (including stock options) over the vesting period of the award. Our compensation committee has determined to retain for
the foreseeable future our stock option program a component of its long-term compensation program, and, therefore, to record this expense on
an ongoing basis according to SFAS 123(R). Our compensation committee has considered, and may in the future consider, the grant of
restricted stock to our executive officers in lieu of stock option grants in light of the accounting impact of SFAS 123(R) with respect to stock
option grants and other considerations.

                                                                       100
Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

     Section 162(m) of the Internal Revenue Code of 1986 limits our deduction for federal income tax purposes to not more than $1 million of
compensation paid to certain executive officers in a calendar year. Compensation above $1 million may be deducted if it is "performance-based
compensation." Our compensation committee has not yet established a policy for determining which forms of incentive compensation awarded
to our executive officers shall be designed to qualify as "performance-based compensation." To maintain flexibility in compensating our
executive officers in a manner designed to promote our objectives, the compensation committee has not adopted a policy that requires all
compensation to be deductible. However, the compensation committee intends to evaluate the effects of the compensation limits of
Section 162(m) on any compensation it proposes to grant, and the compensation committee intends to provide future compensation in a manner
consistent with our best interests and those of our stockholders.

Executive Compensation Tables

     The following table presents compensation information for the year ended December 31, 2007 paid to or accrued for our chief executive
officer, our chief financial officer and each of our three other most highly compensated executive officers whose total compensation for 2007
was more than $100,000. We refer to these executive officers as our "named executive officers" elsewhere in this prospectus.

                                                                      101
                                                            2007 Summary Compensation

                                                                                        Non-Equity
                                                                     Option            Incentive Plan             All Other
                                                   Salary            Awards            Compensation             Compensation
Name and Principal Position           Year          ($)               ($)(1)                ($)                     ($)(2)               Total($)



Kirk M. Loevner,                      2007     $    300,000      $     247,313     $            110,217 (3) $                  360   $     657,890
Chairman of the Board, President
and Chief Executive Officer

Richard H. Van Hoesen,                2007     $    251,201      $     236,511     $             10,918 (3) $                  360   $     498,990
Senior Vice President, Finance
and Chief Financial Officer

Paul F. Banta,                        2007     $    250,001      $        74,851   $             58,250 (3) $                  360   $     383,462
Senior Vice President, Law,
Policy and Content, General
Counsel and Secretary

Robert J. Quinn,                      2007     $    225,000      $        98,925   $             58,480 (3) $                  288   $     382,693
Senior Vice President,
Engineering and Chief
Technology Officer

Jeffrey A. Tangney,                   2007     $    220,001      $     115,346     $            117,343 (4) $                  260   $     452,950
Executive Vice President, Sales
and Marketing


(1)
        The dollar amounts in this column represent the compensation expense recognized for the year ended December 31, 2007 for stock
        option awards granted in the year ended December 31, 2007 and in prior fiscal years. These amounts have been calculated in
        accordance with SFAS 123(R) for options granted in the year ended December 31, 2007 and FASB Statement No. 123, "Accounting for
        Share-Based Compensation," or SFAS 123, using the Black-Scholes option pricing model. Pursuant to SEC rules, the amounts shown
        exclude the impact of estimated forfeiture related to service-based vesting conditions. For a discussion of valuation assumptions, see
        Note 11 to our financial statements included elsewhere in this prospectus.

(2)
        Represents costs related to group term life insurance premiums.

(3)
        Represents cash bonus paid in 2007 for performance in 2006.

(4)
        Represents cash bonus of (i) $55,822 paid in 2007 for performance in 2006 and (ii) $61,521 paid in 2007 for performance in 2007.

                                                                       102
                                                      2007 Grants of Plan Based Awards

    The following table sets forth certain information regarding grants of plan-based awards to the named executive officers during the year
ended December 31, 2007.

                                                         Estimated
                                                      Possible Payouts
                                                       Under Equity
                                                       Incentive Plan
                                                        Awards(1)(2)

                                                                                    All Other
                                                                                  Option Awards:
                                                                                    Number of
                                                                                    Securities
                                                                                   Underlying
                                                                                     Options
                                                                                       (#)(3)

                                                                                                                                    Grant Date Fair
                                                                                                                                    Value of Stock
                                                                                                                                      and Option
                                                                                                                                       Awards
                                                                                                                                         $(5)

                                                                                                        Exercise or Base
                                                                                                        Price of Option
                                                                                                            Awards
                                                                                                           ($/Sh)(4)

Name

                                  Grant Date     Target(#)     Maximum(#)

Kirk M. Loevner                     04/13/07       150,000          180,000               150,000 $                        4.32 $           1,447,513

Richard H. Van Hoesen               04/13/07        35,000               42,000                    —                       4.32               179,045

Paul F. Banta                       04/13/07        35,000               42,000             40,000                         4.32               360,425

Robert J. Quinn                     04/13/07        60,000               72,000             60,000                         4.32               579,006

Jeffrey A. Tangney                  04/13/07        60,000               72,000             60,000                         4.32               579,006


(1)
       Represents all awards granted under our 2007 executive bonus plan in 2007, which were determined based on performance in 2007.
       This table shows the awards that are possible at the target and maximum levels of performance. The "2007 Summary Compensation"
       table above shows the actual awards earned by our named executive officers under the 2007 executive bonus plan. The option grants
       were made under our 1999 Option Plan.

(2)
       The maximum number of options were granted, but the number of options actually earned is subject to reduction based on achievement
       of 2007 corporate goals relating to revenue and Adjusted EBITDA, with each of the two metrics weighted equally. Once determined,
       the shares subject to the option vests in 45 equal monthly installments, subject in each case to the recipient's continued service. For a
       description of the terms of stock options granted under our 1999 Option Plan, please refer to the section of this prospectus entitled
       "Employee Benefit Plans—1999 Stock Option Plan."

(3)
       The stock options were granted under our 1999 Option Plan. The shares subject to each stock option vest over 48 equal monthly
       installments, subject in each case to the recipient's continued service. For a description of the terms of stock options granted under our
       1999 Option Plan, please refer to the section of this prospectus entitled "Employee Benefit Plans—1999 Stock Option Plan."

(4)
       Represents the per share fair market value of our common stock, as determined by our board of directors in good faith on the grant date.
       For a discussion of the factors considered by our board of directors in determining the fair market value of our common stock on the
       date of grant, please refer to the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and
      Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation."

(5)
      Represents the grant date fair value for options ultimately granted based on achievement of performance criteria as determined in
      accordance with SFAS 123(R).

                                                                    103
                                            2007 Outstanding Equity Awards at Fiscal Year-End

      The following table sets forth certain information regarding outstanding equity awards at fiscal year end for our named executive officers
for the year end December 31, 2007.

                                                                                           Option Awards

                                                            Number of                        Number of
                                                       Securities Underlying            Securities Underlying           Option
                                                       Unexercised Options              Unexercised Options             Exercise       Option
                                                                 (#)                              (#)                    Price        Expiration
Name                                                      Exercisable(1)                   Unexercisable                  ($)           Date

Kirk M. Loevner                                                            2,084                         50,000 (1) $         3.21       01/08/16
                                                                              —                         150,000 (1)           4.32       04/12/17
                                                                              —                         180,000 (2)           4.32       04/12/17

Richard H. Van Hoesen                                                   350,978 (3)                            —              4.32       11/14/16
                                                                             —                             42,000 (2)         4.32       04/12/17

Paul F. Banta                                                             20,000 (4)                           —              0.95       07/19/15
                                                                          15,000                           15,000 (1)         3.21       01/08/16
                                                                          30,000 (4)                           —              4.68       07/17/16
                                                                              —                            40,000 (1)         4.32       04/12/17
                                                                              —                            42,000 (2)         4.32       04/12/17

Robert J. Quinn                                                           35,500 (3)                           —              0.16       07/09/12
                                                                          15,105 (3)                           —              0.16       05/06/13
                                                                          35,000 (4)                           —              0.25       07/20/14
                                                                          30,000 (4)                           —              0.95       07/19/15
                                                                          20,000                           20,000 (1)         3.21       01/08/16
                                                                              —                            60,000 (1)         4.32       04/12/17
                                                                              —                            72,000 (2)         4.32       04/12/17

Jeffrey A. Tangney                                                        20,000                           20,000 (1)         3.21       01/08/16
                                                                          40,000 (4)                           —              4.68       07/17/16
                                                                              —                            60,000 (1)         4.32       04/12/17
                                                                              —                            72,000 (2)         4.32       04/12/17


(1)
       The shares subject to this stock option vest monthly in equal installments over a four year period, subject to recipient's continued
       service.

(2)
       The maximum number of options were granted, but the number of options actually earned is subject to reduction based on 2007
       corporate goals relating to revenue and Adjusted EBITDA, with each of the two metrics weighted equally. Once determined, the shares
       subject to the option vest in 45 equal monthly installments, subject in each case to the recipient's continued service.

(3)
       The shares subject to this stock option vest as to 25% of the shares subject to the option after one year, with the remaining shares
       subject to the stock option vesting on an equal monthly basis over the following 36 months. Vesting is contingent upon continued
       service and the stock option may be early exercised, subject to our right to repurchase unvested shares in the event the named executive
       officer's employment terminates.

(4)
       The shares subject to this stock option vest monthly in equal installments over a four year period. Vesting is contingent upon continued
       service and the stock option may be early exercised, subject to our right to repurchase unvested shares in the event the named executive
       officer's employment terminates.

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                                                     2007 Option Exercises and Stock Vested

       The following table sets forth certain information regarding option awards exercised by our named executive officers during 2007

                                                                                                                 Option Awards

                                                                                           Number of Shares                      Value Realized on
Name                                                                                      Acquired on Exercise                      Exercise(1)

Kirk M. Loevner                                                                                             47,916       $
Richard H. Van Hoesen                                                                                           —                                    —
Paul F. Banta                                                                                                   —                                    —
Robert J. Quinn                                                                                                 —                                    —
Jeffrey A. Tangney                                                                                         100,000       $


(1)
         The value realized on exercise is determined assuming an initial public offering price of $        per share, the mid-point of the range
         set forth on the cover page of this prospectus, multiplied by the number of shares that were exercised, without taking into account any
         taxes that may be payable in connection with the transaction.

Pension Benefits

     Our named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by
us during 2007.

Nonqualified Deferred Compensation

       We do not currently maintain nonqualified defined contribution plans or other deferred compensation plans.

Executive Employment and Severance Agreements

     Kirk M. Loevner. In June 2004, we entered into an offer letter with Kirk M. Loevner, our President and Chief Executive Officer, as
amended by an additional letter agreement executed in March 2008. The offer letter provides for an initial annualized base salary of $250,000
and an annual bonus of up to $75,000 based upon achievement of milestones determined by our board of directors or our compensation
committee. Pursuant to the offer letter, Mr. Loevner was granted an option to purchase 1,182,207 shares of our common stock under our 1999
Option Plan with a per share exercise price of $0.25, the fair market value of our common stock on the date of grant, as determined by our
board of directors. Such grant represented approximately 5% of our fully diluted outstanding capitalization as of the date of the offer letter. The
stock option vested as to 25% of the shares on the first annual anniversary of the vesting commencement date and the remainder vests monthly
thereafter over three years, such that on the fourth anniversary of the vesting commencement date of the stock option, the shares shall be fully
vested. The offer letter specifies that Mr. Loevner's employment is at-will.

     Pursuant to the amended offer letter, if Mr. Loevner's employment is terminated without cause or if Mr. Loevner resigns for good reason,
subject to his general release of all known and unknown claims, Mr. Loevner shall be entitled to receive severance pay equal to 12 months of
his base salary in effect as of the termination date (less required deductions and withholdings) to be paid in the form of salary continuation on
our standard payroll dates following such termination, and if he timely elects continued group health insurance coverage through COBRA, we
will be obligated to pay his COBRA premiums necessary to continue his group health insurance coverage at the same level as in effect as of the
termination date for 12 months after his termination or until he becomes eligible for group health insurance coverage through a new employer,
whichever occurs first. In addition, under the terms of the

                                                                        105
offer letter, in connection with such termination of employment, the vesting of Mr. Loevner's stock options shall accelerate on the date of
termination as to that number of shares that would have become vested if he had remained employed by us until the date 12 months following
the employment termination date.

       In the event that such employment termination occurs within 12 months after a change of control of Epocrates, subject to his general
release of all known and unknown claims, Mr. Loevner shall be entitled to receive severance pay equal to 18 months of his base salary in effect
as of the termination date (less required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll
dates following such termination, and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to
pay his COBRA premiums necessary to continue his group health insurance coverage at the same level as in effect as of the termination date
for 18 months after his termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs
first. In addition, under the terms of the offer letter, in connection with such termination of employment, the vesting of Mr. Loevner's stock
options shall accelerate in full on the date of termination and his options shall be exercisable for one year following the termination date.

      Richard H. Van Hoesen. In October 2006, we entered into an offer letter with Richard H. Van Hoesen, our Senior Vice President,
Finance and Chief Financial Officer. The offer letter provides for an initial annualized base salary of $250,000 and an annual bonus of up to
35% of Mr. Van Hoesen's annual earnings, based upon our performance against our management bonus plan. Mr. Van Hoesen must remain
employed during the entire year to earn and be eligible to receive a bonus under the management bonus plan. Mr. Van Hoesen was granted an
option to purchase 350,978 shares of our common stock under our 1999 Option Plan, with a per share exercise price of $4.32, the fair market
value of our common stock on the date of grant, as determined by our board of directors. The stock option vested as to 25% of the shares on the
first annual anniversary of the vesting commencement date and the remainder will vest monthly thereafter over 3 years, such that on the fourth
anniversary of the vesting commencement date of the stock option, the shares shall be fully vested. The offer letter specifies that Mr. Van
Hoesen's employment is at-will.

     Pursuant to the offer letter with Mr. Van Hoesen described above, if Mr. Van Hoesen's employment is terminated without cause or if
Mr. Van Hoesen resigns for good reason, subject to his general release of all known and unknown claims, Mr. Van Hoesen shall be entitled to
receive, in addition to the payment of his annual bonus pro rated based on the employment termination date, severance pay equal to nine
months of his base salary in effect as of the termination date (less required deductions and withholdings) to be paid in the form of salary
continuation on our standard payroll dates following such termination, and provided that he timely elects continued group health insurance
coverage through COBRA, we will be obligated to pay his COBRA premiums sufficient to continue his group health insurance coverage at the
same level as in effect as of the termination date for nine months after his termination or until he becomes eligible for group health insurance
coverage through a new employer, whichever occurs first.

     In addition, under the terms of the offer letter, if Mr. Van Hoesen's employment is terminated without cause or if he resigns for good
reason, each within 12 months after a change of control or an acquisition transaction of Epocrates, and subject to his general release of all
known and unknown claims, the vesting of his stock options shall accelerate in full.

                                                                       106
     Paul F. Banta. In August 2000, we entered into an offer letter with Paul F. Banta, our Senior Vice President, Law, Policy and Content,
General Counsel and Secretary, as amended by an additional letter agreement executed in March 2008. The offer letter provides for an initial
annualized base salary of $210,000 plus a one time hire-on bonus of $75,000. Pursuant to the offer letter, Mr. Banta was granted an option to
purchase 70,000 shares of our common stock under our 1999 Option Plan, with a per share exercise price of $1.00, the fair market value of our
common stock on the date of grant, as determined by our board of directors. This initial grant was cancelled on December 1, 2003 and on
June 2, 2004, Mr. Banta was granted a new option to purchase 70,000 shares of our common stock under our 1999 Option Plan, with a per
share exercise price of $0.25, the fair market value of our common stock on the date of grant, as determined by our board of directors, and a
vesting commencement date of September 18, 2000. This stock option is now fully vested. The offer letter specifies that Mr. Banta's
employment is at-will.

      Pursuant to the amended offer letter, if Mr. Banta's employment is terminated without cause, subject to his general release of all known
and unknown claims, Mr. Banta shall be entitled to receive severance pay equal to six months of his base salary in effect as of the termination
date (less required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates following such
termination, and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his COBRA
premiums necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for six months after
his termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first.

     The amended offer letter further provides, in the event that, within 12 months after a change of control of Epocrates, Mr. Banta's
employment is terminated without cause or if Mr. Banta resigns for good reason, subject to his general release of all known and unknown
claims, Mr. Banta shall be entitled to receive severance pay equal to nine months of his base salary in effect as of the termination date (less
required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates following such termination,
and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his COBRA premiums
necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for nine months after his
termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first. In addition, in
connection with such termination of employment, the vesting of Mr. Banta's stock options shall accelerate in full.

     Robert J. Quinn. In May 2002, we entered into an offer letter with Robert J. Quinn, our Senior Vice President, Engineering and Chief
Technology Officer, as amended by an additional letter agreement executed in March 2008. The offer letter provides for an initial annualized
base salary of $170,000 plus an annual bonus of up to $50,000 under our bonus plan based upon successful completion of the objectives set
forth in the plan, as established by our president and chief executive officer. Pursuant to the offer letter, Dr. Quinn was granted an option to
purchase 120,000 shares of our common stock under our 1999 Option Plan, with a per share exercise price of $0.16, the fair market value of
our common stock on the date of grant, as determined by our board of directors. The stock option is now fully vested. The offer letter specifies
that Dr. Quinn's employment is at-will.

     Pursuant to the amended offer letter, if Dr. Quinn's employment is terminated without cause, subject to his general release of all known
and unknown claims, Dr. Quinn shall be entitled to receive severance pay equal to six months of his base salary in effect as of the termination
date (less required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates following such
termination, and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his COBRA
premiums necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for six months after

                                                                       107
his termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first.

     The amended offer letter further provides, in the event that, within 12 months after a change of control of Epocrates, Dr. Quinn's
employment is terminated without cause or if Dr. Quinn resigns for good reason, subject to his general release of all known and unknown
claims, Dr. Quinn shall be entitled to receive severance pay equal to nine months of his base salary in effect as of the termination date (less
required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates following such termination,
and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his COBRA premiums
necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for nine months after his
termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first. In addition, in
connection with such termination of employment, the vesting of Dr. Quinn's stock options shall accelerate in full.

     Jeffrey A. Tangney. In June 1999, we entered into an offer letter with Jeffrey A. Tangney, our Executive Vice President, Sales and
Marketing, as amended by an additional letter agreement executed in March 2008. The offer letter provides for an initial annualized base salary
of $90,000. The offer letter specifies that Mr. Tangney's employment is at-will.

     Pursuant to the amended offer letter, if Mr. Tangney's employment is terminated without cause, subject to his general release of all known
and unknown claims, Mr. Tangney shall be entitled to receive severance pay equal to six months of his base salary in effect as of the
termination date (less required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates
following such termination, and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his
COBRA premiums necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for six
months after his termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first.

     The amended offer letter further provides, in the event that, within 12 months after a change of control of Epocrates, Mr. Tangney's
employment is terminated without cause or if Mr. Tangney resigns for good reason, subject to his general release of all known and unknown
claims, Mr. Tangney shall be entitled to receive severance pay equal to nine months of his base salary in effect as of the termination date (less
required deductions and withholdings) to be paid in the form of salary continuation on our standard payroll dates following such termination,
and if he timely elects continued group health insurance coverage through COBRA, we will be obligated to pay his COBRA premiums
necessary to continue his group health insurance coverage at the same level as in effect as of the termination date for nine months after his
termination or until he becomes eligible for group health insurance coverage through a new employer, whichever occurs first. In addition, in
connection with such termination of employment, the vesting of Mr. Tangney's stock options shall accelerate in full.

                                                                       108
       Potential Payments Upon Termination of Employment

      The following table estimates the potential payments and benefits payable upon employment termination for each named executive officer
as if his employment had been terminated on December 31, 2007, the last business day of our prior fiscal year.

                                                 No Change of Control                                               Change of Control

                                            Termination without Cause or                                       Termination without Cause or
                                                for Good Reason ($)                                                for Good Reason ($)

                                                   Cobra                      Vesting                                Cobra                       Vesting
Name                          Base Salary         Premiums                 Acceleration(1)       Base Salary        Premiums                  Acceleration(1)

Kirk M. Loevner           $      300,000 (2) $         11,192 (5) $                          $      450,000 (9) $       16,788 (10) $
Richard H. Van            $      187,500 (3) $         13,157 (6) $                          $      187,500 (3) $       13,157 (6) $
Hoesen
Paul F. Banta             $      125,000 (4) $          8,771 (7)                            $      187,500 (3) $       13,157 (6)
Robert J. Quinn           $      112,500 (4) $          8,771 (7)                            $      168,750 (3) $       13,157 (6)
Jeffrey A. Tangney        $      110,000 (4) $          5,578 (8)                            $      165,000 (3) $        8,366 (11)


(1)
         The value of vesting acceleration is calculated assuming a price per share of $        , which is the mid-point of the range reflected on
         the cover pages of this prospectus, with respect to unvested option shares subject to acceleration minus the exercise price of the
         unvested option shares.

(2)
         Represents a single lump sum payment equal to 12 months of base salary.

(3)
         Represents a single lump sum payment equal to nine months of base salary.

(4)
         Represents a single lump sum payment equal to six months of base salary.

(5)
         Represents payment of 12 months of continued COBRA premiums for medical, dental and vision coverage, calculated at $932.67 per
         month for the twelve month period ended December 31, 2007.

(6)
         Represents payment of nine months of continued COBRA premiums for medical, dental and vision coverage, calculated at $1,461.90
         per month for the twelve month period ended December 31, 2007.

(7)
         Represents payment of six months of continued COBRA premiums for medical, dental and vision coverage, calculated at $1,461.90 per
         month for the twelve month period ended December 31, 2007.

(8)
         Represents payment of six months of continued COBRA premiums for medical, dental and vision coverage calculated at $929.59 per
         month for the twelve month period ended December 31, 2007.

(9)
         Represents a single lump sum payment equal to 18 months of base salary.

(10)
         Represents payment of 18 months of continued COBRA premiums for medical, dental and vision coverage, calculated at $932.67 per
         month for the twelve month period ended December 31, 2007.

(11)
         Represents payment of nine months of continued COBRA premiums for medical, dental and vision coverage calculated at $929.59 per
         month for the twelve month period ended December 31, 2007.
Non-Employee Director Compensation

    Cash Compensation Arrangements

     To date, we have not provided cash compensation to the members of our board of directors for serving on our board of directors or for
attendance at committee meetings. The non-employee members of our board of directors are reimbursed for travel, lodging and other
reasonable expenses

                                                                     109
incurred in attending board or committee meetings. Following the completion of this offering, we will pay each of our non-employee directors
$20,000 per year plus $1,500 for each board meeting attended in person and $1,000 for each board meeting attended telephonically or by
videoconference. Members of our audit committee, our compensation committee and corporate governance and nominating committee will
receive $1,000 for each meeting of such committee they attend. In addition, we will pay the chair of each of our audit committee and
compensation committee an additional $5,000 per year for his or her service as chair of such committee and we will pay the chair of our
corporate governance and nominating committee an additional $2,500 per year for his or her service as chair of such committee. Our lead
independent director will receive an additional $5,000 per year. Non-employee members of our board of directors will continue to be
reimbursed for certain expenses in connection with attendance at board and committee meetings. In no event shall any non-employee director
receive more than $50,000 in fees for board service in any calendar year, exclusive of expense reimbursement, without the approval of our
compensation committee.

     Equity Compensation Arrangements

     In March 2007 and April 2007, we granted options to purchase 20,000 shares of our common stock at an exercise price of $4.32 per share
to Mr. Harrison and Dr. Nagel, respectively. In August 2007, we granted an option to purchase 20,000 shares of our common stock at an
exercise price of $6.50 per share to Mr. Voris and in November 2007, we granted options to purchase 20,000 shares of our common stock at an
exercise price of $10.35 to each of Dr. Halamka and Mr. Jones. Each of the options were granted to the individuals in their capacity as a
non-employee director and vests in 12 equal monthly installments, subject in each case to the recipient's continued service as a director.

     Following the completion of this offering, each non-employee director will be eligible to participate in our 2008 Incentive Plan and will
receive a series of stock awards over their period of service which are described in detail in the section of this prospectus entitled "Employee
Benefit Plans—2008 Equity Incentive Plan—Non-Discretionary Grant Program."

Employee Benefit Plans

     1999 Stock Option Plan

     Our board of directors adopted, and our stockholders approved, the 1999 Stock Option Plan, or the 1999 Option Plan, in August 1999. As
of December 31, 2007, an aggregate of 9,782,903 shares of common stock was reserved for issuance under the 1999 Option Plan. The 1999
Option Plan provides for the grant of incentive stock options and nonstatutory stock options. As of December 31, 2007, options to purchase
4,623,691 shares of common stock at a weighted average exercise price per share of $3.01 remained outstanding under the 1999 Option Plan.
As of December 31, 2007, 85,814 shares of common stock remained available for future issuance. In January and March 2008, our board of
directors approved increases of an aggregate of 2,396,382 shares under the 1999 Option Plan for a total of 12,179,285 shares authorized and the
stockholders approved such increases in         2008.

      Our board of directors has the authority to construe and interpret the terms of the 1999 Option Plan and the options granted under it. Upon
the signing of the underwriting agreement for this offering, no further awards will be granted under the 1999 Option Plan, but all outstanding
options will continue to be governed by their existing terms.

                                                                       110
     Stock Options. The 1999 Option Plan provides for the grant of incentive stock options under the federal tax laws and the grant of
nonstatutory stock options. Only employees may receive incentive stock options, but nonstatutory stock options may be granted to employees,
non-employee directors and consultants. The exercise price of incentive stock options may not be less than 100% of the fair market value of our
common stock on the date of grant. The exercise price of nonstatutory stock options may not be less than 85% of the fair market value of our
common stock on the date of grant. Shares subject to options under the 1999 Option Plan generally vest in a series of installments over a
specified period of service, typically four years.

     In general, the term of options granted under the 1999 Option Plan may not exceed ten years. Unless the terms of an optionee's stock
option agreement provide otherwise, if an optionee's service relationship with us, or any of our affiliates, ceases for any reason other than
disability or death, the optionee may exercise the vested portion of any options for three months after the date of such termination. If an
optionee's service relationship with us, or any of our affiliates, ceases due to disability or death (or an optionee dies within a certain period
following cessation of service), the optionee or a beneficiary may exercise any vested options for a period of 12 months in the event of
disability, and 18 months in the event of death. In no event, however, may an option be exercised beyond the expiration of its term.

      Merger or Asset Sale. In the event of a merger or asset sale, the surviving or acquiring corporation may assume or substitute
substantially equivalent options for the outstanding options granted under the 1999 Option Plan. If the surviving or acquiring corporation elects
not to assume or substitute for outstanding options granted under the 1999 Option Plan, then options held by individuals whose service has not
terminated prior to the merger or asset sale will be accelerated in full. Upon consummation of the merger or asset sale, all outstanding options
will terminate to the extent not exercised or assumed by the surviving or acquiring corporation.

     2008 Equity Incentive Plan

     Our board of directors adopted the 2008 Equity Incentive Plan, or the 2008 Incentive Plan, in March 2008 and our stockholders approved
the 2008 Incentive Plan in        2008. The 2008 Incentive Plan is an amendment and restatement of our 1999 Option Plan. The 2008
Incentive Plan, as an amendment and restatement of the 1999 Option Plan, will become effective immediately upon the signing of the
underwriting agreement for this offering. The 2008 Incentive Plan will terminate in March 2018, unless sooner terminated by our board of
directors.

      Stock Awards. The 2008 Incentive Plan provides for the grant of incentive stock options, nonstatutory stock options, stock bonus
awards, stock unit awards, stock appreciation rights, performance stock awards and other forms of equity compensation, referred to collectively
as stock awards, which may be granted to employees, including officers, non-employee directors, and consultants. However, only
non-employee directors are eligible to receive stock awards under the non-discretionary grant program described below.

     Share Reserve. Following this offering, the aggregate number of shares of common stock that may be issued initially pursuant to stock
awards under the 2008 Incentive Plan is 12,179,285 shares. The number of shares of common stock reserved for issuance will automatically
increase on January 1 st of each year, from January 1, 2009 through January 1, 2018, by the lesser of (a) 4% of the total number of shares of
common stock outstanding on December 31 st of the preceding calendar year or (b) 2,500,000 shares. The maximum number of shares that
may be issued pursuant to the exercise of incentive stock options under the 2008 Incentive Plan is equal to the total share reserve, as increased
from time to time pursuant to the annual increase.

                                                                         111
      No person may be granted stock options or stock appreciation rights covering more than 1,500,000 shares of common stock under the
2008 Incentive Plan during any calendar year. Such limitation is designed to help assure that any deductions to which we would otherwise be
entitled upon the exercise of such stock options and stock appreciation rights or upon the subsequent sale of shares acquired under such stock
awards, will not be subject to the $1.0 million limitation on the income tax deductibility of compensation paid per covered executive officer
imposed by Section 162(m) of the Code.

      If a stock award granted under the 2008 Incentive Plan expires or otherwise terminates without being exercised in full, the shares of
common stock not acquired pursuant to the stock award again become available for subsequent issuance under the 2008 Incentive Plan. In
addition, the following types of shares under the 2008 Incentive Plan will become available for the grant of new stock awards under the 2008
Incentive Plan: (a) shares that are forfeited to or repurchased by us prior to becoming fully vested, (b) shares subject to stock awards that are
settled in cash, (c) shares withheld to satisfy income and employment withholding taxes, (d) shares used to pay the exercise price of an option
in a net exercise arrangement, (e) shares tendered to us to pay the exercise price of an option and (f) shares that are cancelled pursuant to an
exchange or repricing program. Shares issued under the 2008 Incentive Plan may be previously unissued shares or reacquired shares, including
shares bought on the open market. As of the date hereof, no shares of common stock have been issued under the 2008 Incentive Plan.

      Administration. Our board of directors has delegated its authority to administer the 2008 Incentive Plan (except the non-discretionary
grant program) to our compensation committee. Subject to the terms of the 2008 Incentive Plan, our board of directors or an authorized
committee, referred to as the plan administrator, determines recipients, dates of grant, the numbers and types of stock awards to be granted, and
the terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the limitations set forth below,
the plan administrator will also determine the exercise price of options granted and the strike price of stock appreciation rights.

     The plan administrator has the authority to:

     •
            reduce the exercise price of any outstanding option or the strike price of any outstanding stock appreciation right;

     •
            cancel any outstanding option or stock appreciation right and to grant in exchange one or more of the following:

     •
            new options or stock appreciation rights covering the same or a different number of shares of common stock;

     •
            new stock awards;

     •
            cash and/or other valuable consideration; and

     •
            engage in any action that is treated as a repricing under generally accepted accounting principles.

     Stock Options. Incentive and nonstatutory stock options are granted pursuant to incentive and nonstatutory stock option agreements
adopted by the plan administrator. The plan administrator determines the exercise price for a stock option provided that the exercise price of an
incentive stock option and nonstatutory stock option cannot be less than 100% of the fair market value of our common stock on the date of
grant. Options granted under the 2008 Incentive Plan vest at the rate specified by the plan administrator.

     Generally, the plan administrator determines the term of stock options granted under the 2008 Incentive Plan, up to a maximum of ten
years (except in the case of certain incentive stock options, as

                                                                       112
described below). Unless the terms of an optionee's stock option agreement provide otherwise, if an optionee's relationship with us, or any of
our affiliates, ceases for any reason other than disability, death or termination for cause, the optionee may exercise any vested options for a
period of three months following the cessation of service. If an optionee's service relationship with us, or any of our affiliates, ceases due to
disability or death (or an optionee dies within a certain period following cessation of service), the optionee or a beneficiary may exercise any
vested options for a period of 12 months in the event of disability, and 18 months in the event of death. The option term may be extended in the
event that exercise of the option following termination of service is prohibited by applicable securities laws. In the event the optionee's service
relationship is terminated for cause, the term of the stock option expires immediately. In no event, however, may an option be exercised beyond
the expiration of its term.

     Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option will be determined by the plan
administrator and may include (a) cash or check, (b) a broker-assisted cashless exercise, (c) the tender of common stock previously owned by
the optionee, (d) a net exercise of the option and (e) other legal consideration approved by the plan administrator.

      Unless the plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and
distribution, or pursuant to a domestic relations order. An optionee may designate a beneficiary, however, who may exercise the option
following the optionee's death.

      Tax Limitations on Incentive Stock Options. Incentive stock options may be granted only to our employees. The aggregate fair market
value, determined at the time of grant, of shares of our common stock with respect to incentive stock options that are exercisable for the first
time by an optionee during any calendar year under all of our stock plans may not exceed $100,000. No incentive stock option may be granted
to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or
that of any of our affiliates unless (a) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the
date of grant and (b) the term of the incentive stock option does not exceed five years from the date of grant.

     Stock Bonus Awards. Stock bonus awards are granted pursuant to stock bonus award agreements adopted by the plan administrator. A
stock bonus award may be granted in consideration for the recipient's past or future services rendered to us or our affiliates or any other form of
legal consideration. Shares of common stock acquired under a stock bonus award may, but need not, be subject to forfeiture to us in accordance
with a vesting schedule to be determined by the plan administrator. Rights to acquire shares under a stock bonus award may be transferred only
upon such terms and conditions as set by the plan administrator.

     Stock Unit Awards. Stock unit awards are granted pursuant to stock unit award agreements adopted by the plan administrator. Stock
unit awards may be granted in consideration for any form of legal consideration. A stock unit award may be settled by cash, delivery of stock, a
combination of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the stock unit
award agreement. Additionally, dividend equivalents may be credited in respect to shares covered by a stock unit award. Except as otherwise
provided in the applicable award agreement, stock units that have not vested will be forfeited upon the participant's cessation of continuous
service for any reason.

     Stock Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation rights agreements adopted by the plan
administrator. The plan administrator determines the strike price for a stock appreciation right, except that the strike price of a stock
appreciation right granted as a stand-alone or tandem stock award cannot be less than 100% of the fair market value of the common stock
equivalents on the date of grant. Upon the exercise of a stock appreciation right, we will pay the

                                                                         113
participant an amount equal to the product of (a) the excess of the per share fair market value of our common stock on the date of exercise over
the strike price, multiplied by (b) the number of shares of common stock with respect to which the stock appreciation right is exercised. A stock
appreciation right granted under the 2008 Incentive Plan vests at the rate specified by the plan administrator.

     The plan administrator determines the term of stock appreciation rights granted under the 2008 Incentive Plan up to a maximum of ten
years. If a participant's service relationship with us, or any of our affiliates, ceases, then the participant, or the participant's beneficiary, may
exercise any vested stock appreciation right for three months (or such longer or shorter period specified in the stock appreciation right
agreement) after the date such service relationship ends. In no event, however, may a stock appreciation right be exercised beyond the
expiration of its term.

     Performance Stock Awards. The 2008 Incentive Plan permits the grant of performance stock awards that may qualify as
performance-based compensation that is not subject to the $1.0 million limitation on the income tax deductibility of compensation paid per
covered executive officer imposed by Section 162(m) of the Internal Revenue Code. To assure that the compensation attributable to one or
more performance stock awards will so qualify, our compensation committee can structure one or more such awards so that stock will be issued
or paid pursuant to such award only upon the achievement of certain pre-established performance goals during a designated performance
period. The maximum benefit to be received by a participant in any calendar year attributable to performance stock awards may not exceed
1,500,000 shares of common stock.

     Other Stock Awards. The plan administrator may grant other awards based in whole or in part by reference to our common stock. The
plan administrator will set the number of shares under the award and all other terms and conditions of such awards.

     Non-Discretionary Grant Program

     Pursuant to the non-discretionary grant program in effect under the 2008 Incentive Plan, our non-employee directors will automatically
receive a series of stock awards over their period of service.

      Non-Discretionary Grants. Each person serving as a non-employee director immediately following the signing of the underwriting
agreement for this offering and each person thereafter who is first elected or appointed as a non-employee director will automatically receive an
initial grant (as described below). Each person who is serving as a non-employee director on the date of an annual meeting of our stockholders,
commencing with the annual meeting in 2009, will automatically receive an annual grant (as described below), provided the person has served
on the board of directors for at least six months.

      Form of Initial Grants and Annual Grants. Before the end of each fiscal year, the board will determine whether all initial grants and
annual grants to be made in the subsequent fiscal year will be in the form of nonstatutory stock options, stock bonus awards, stock unit awards
or stock appreciation rights. If the board of directors does not make such a determination by the end of a fiscal year, all initial grants and annual
grants in the subsequent fiscal year will be in the form of nonstatutory stock options.

    Initial Grants as Options. If the initial grant is in the form of an option, each non-employee director will automatically be granted a
nonstatutory stock option to purchase 25,000 shares of common stock. The shares subject to each initial grant vest in a series of 12 successive
equal monthly installments measured from the date of grant. Such initial grants will have the same terms as nonstatutory stock options granted
under the 2008 Incentive Plan. All other remaining terms and conditions will be set forth in a stock option agreement adopted by the plan
administrator.

                                                                          114
    Annual Grants as Options. If the annual grant is in the form of an option, each non-employee director will automatically be granted a
nonstatutory stock option to purchase 15,000 shares of common stock. The shares subject to each annual grant vest in a series of 12 successive
equal monthly installments measured from the date of grant. Such annual grants will have the same terms as nonstatutory stock options granted
under the 2008 Incentive Plan. All other remaining terms and conditions will be set forth in a stock option agreement adopted by the plan
administrator.

      Initial Grants and Annual Grants as Other Stock Awards. If the board of directors determines that the initial grant and annual grant
will be in the form of stock bonus awards, stock unit awards or stock appreciation rights, all terms and conditions of such stock awards will be
set forth in a stock award agreement adopted by the plan administrator.

      Changes to Capital Structure. In the event that there is a specified type of change in our capital structure, such as a stock split,
appropriate adjustments will be made to (a) the number of shares reserved under the 2008 Incentive Plan, (b) the maximum number of shares
by which the share reserve may increase automatically each year, (c) the maximum number of shares that may be issued pursuant to the
exercise of incentive stock options, (d) the maximum number of stock options, stock appreciation rights, and performance stock awards that
can be granted in a calendar year, (e) the number of shares for which stock awards are to be subsequently granted to new and continuing
eligible directors and (f) the number of shares and exercise price or strike price, if applicable, of all outstanding stock awards.

      Corporate Transactions. In the event of certain significant corporate transactions, outstanding stock awards under the 2008 Incentive
Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring
entity (or its parent company) elects not to assume, continue or substitute for such stock awards, then (a) with respect to any such stock awards
that are held by individuals whose service with us or our affiliates has not terminated prior to the effective date of the corporate transaction, the
vesting and exercisability provisions of such stock awards will be accelerated in full and such awards will be terminated if not exercised prior
to the effective date of the corporate transaction, and (b) all other outstanding stock awards will terminate if not exercised prior to the effective
date of the corporate transaction. Our board of directors may also provide that the holder of an outstanding stock award not assumed in the
corporate transaction will surrender such stock award in exchange for a payment equal to the excess of (a) the value of the property that the
stock award would have received upon exercise of the stock award, over (b) the exercise price otherwise payable in connection with the stock
award.

     Change of Control. Our board of directors has the discretion to provide that a stock award under the 2008 Incentive Plan will
immediately vest as to all or any portion of the shares subject to the stock award (a) immediately upon the occurrence of certain specified
change of control transactions, whether or not such stock award is assumed, continued, or substituted by a surviving or acquiring entity in the
transaction, or (b) in the event a participant's service with us or a successor entity is terminated actually or constructively within a designated
period following the occurrence of certain specified change of control transactions. Stock awards held by participants under the 2008 Incentive
Plan will not vest on such an accelerated basis unless specifically provided by the participant's applicable award agreement.

     2008 Employee Stock Purchase Plan

    Our board of directors adopted our 2008 Employee Stock Purchase Plan, or the 2008 Purchase Plan, in March 2008, and our stockholders
approved the 2008 Purchase Plan in             2008. The 2008 Purchase Plan will become effective immediately upon the signing of the
underwriting agreement for this offering.

                                                                         115
     Share Reserve. Following this offering, the 2008 Purchase Plan authorizes the issuance of 1,100,000 shares of common stock pursuant
to purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of common stock
reserved for issuance will automatically increase on January 1 st of each year, from January 1, 2009 through January 1, 2018, by the lesser of
(a) 1% of the total number of shares of common stock outstanding on December 31 st of the preceding calendar year, or (b) 600,000 shares.
The 2008 Purchase Plan is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code. As of the date hereof, no shares of common stock have been purchased under the 2008 Purchase Plan.

      Administration. Our board of directors has delegated its authority to administer the 2008 Purchase Plan to our compensation
committee. The 2008 Purchase Plan is implemented through a series of offerings of purchase rights to eligible employees. Under the 2008
Purchase Plan, we may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each
offering. Each offering will have one or more purchase dates on which shares of common stock will be purchased for employees participating
in the offering.

     Payroll Deductions. Generally, all regular employees, including executive officers, employed by us or by any of our affiliates may
participate in the 2008 Purchase Plan and may contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of
common stock under the 2008 Purchase Plan. Unless otherwise determined by our board of directors, common stock will be purchased for
accounts of employees participating in the 2008 Purchase Plan at a price per share equal to the lower of (a) 85% of the fair market value of a
share of our common stock on the first date of an offering, or (b) 85% of the fair market value of a share of our common stock on the date of
purchase.

     Reset Feature. Our board of directors may specify that if the fair market value of a share of our common stock on any purchase date
within a particular offering period is less than the fair market value on the start date of that offering period, then the employees in that offering
period will automatically be transferred and enrolled in a new offering period which will begin on the next day following such a purchase date.

     Limitations. Employees may have to satisfy one or more of the following service requirements before participating in the 2008
Purchase Plan, as determined by our board of directors: (a) customarily employed for more than 20 hours per week, (b) customarily employed
for more than five months per calendar year, or (c) continuous employment with us or one of our affiliates for a period of time not to exceed
two years. No employee may purchase shares under the 2008 Purchase Plan at a rate in excess of $25,000 worth of our common stock valued
based on the fair market value per share of our common stock at the beginning of an offering for each year such a purchase right is outstanding.
Finally, no employee will be eligible for the grant of any purchase rights under the 2008 Purchase Plan if immediately after such rights are
granted, such employee has voting power over 5% or more of our outstanding capital stock measured by vote or value.

     Changes to Capital Structure. In the event that there is a specified type of change in our capital structure, such as a stock split,
appropriate adjustments will be made to (a) the number of shares reserved under the 2008 Purchase Plan, (b) the maximum number of shares by
which the share reserve may increase automatically each year and (c) the number of shares and purchase price of all outstanding purchase
rights.

     Corporate Transactions. In the event of certain significant corporate transactions, any then-outstanding rights to purchase our stock
under the 2008 Purchase Plan will be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the
surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such purchase

                                                                         116
rights, then the participants' accumulated contributions will be used to purchase shares of our common stock within ten business days prior to
such corporate transaction, and such purchase rights will terminate immediately thereafter.

Limitations of Liability and Indemnification of Officers and Directors

     Our amended and restated certificate of incorporation, which will become effective upon the completion of this offering, includes
provisions that limit the liability of our directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a
corporation will not be personally liable for monetary damages for breach of their fiduciary duties except for:

     •
            any breach of the director's duty of loyalty to us or to our stockholders;

     •
            acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

     •
            unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General
            Corporation Law; or

     •
            any transaction from which a director derived an improper personal benefit.

     Our amended and restated bylaws provide that we must indemnify our directors and executive officers and may indemnify our officers,
employees and other agents to the fullest extent permitted by law. Our amended and restated bylaws also permit us to advance expenses, as
incurred by an indemnified party in connection with the defense of any action or proceeding arising out of his or her status or service as a
director, officer, employee or other agent of us upon an undertaking by him or her to repay any advances if it is ultimately determined that he or
she is not entitled to indemnification.

     We have entered into separate indemnification agreements with our directors and executive officers. These agreements require us to,
among other things, indemnify the director or executive officer against expenses, including attorney's fees, judgments, fines and settlements
paid by the individual in connection with any action, suit or proceeding arising out of the individual's status or service as our director or
executive officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to
advance expenses incurred by the individual in connection with any proceeding against him or her individually with respect to which he or she
may be entitled to indemnification by us. We believe that the provisions of our amended and restated certificate of incorporation and amended
and restated bylaws and the indemnification agreements are necessary to attract and retain qualified persons as directors and executive officers.
We also maintain directors' and officers' liability insurance, including coverage for public securities matters.

     At present we are not aware of any pending litigation or proceeding involving any of our directors, officers, employees or agents where
indemnification will be required or permitted. Furthermore, we are not aware of any threatened litigation or proceeding that might result in a
claim for indemnification.

                                                                        117
                               CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In addition to the executive and director compensation arrangements, including the employment, termination of employment and change
of control arrangements, discussed above under "Management—Executive Compensation," and "Employee Agreements and Arrangements,"
the following is a description of transactions since January 1, 2005 (unless otherwise specified) to which we have been a party, in which the
amount involved in the transaction exceeds or will exceed $120,000 and in which any of our directors, executive officers or beneficial holders
of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had
or will have a direct or indirect material interest.

Sales of Securities

     Since our inception through December 31, 2007, the following executive officers, directors and holders of 5% or more of our outstanding
stock have purchased securities in the amounts and as of the dates set forth below.

                                                                                                            Warrants to
                                                                                                             Purchase
                                                                   Series A              Series B             Series B             Series C
                                                                  Preferred             Preferred            Preferred            Preferred
                                           Common Stock             Stock                 Stock              Stock(1)               Stock

Directors and Executive Officers
Jeffrey A. Tangney                               1,600,000                    —                     —                     —                 —
Kirk M. Loevner                                         —                     —                     —                     —            236,441

Entities Affiliated with Directors
Sprout Capital IX, L.P.(2)                                —                —              2,977,233                   —              1,032,149 (3)
InterWest Partners VII, L.P.(4)                           —         1,750,000               788,091               32,941               891,327 (5)
Three Arch Partners II, L.P.(6)                           —         1,750,000 (7)           350,263               32,942               739,541

Other 5% Securityholders
The Goldman Sachs Group, Inc.                    3,838,771                    —                     —                     —                   —
Draper Fisher Jurvetson Fund
V, L.P.(8)                                                —         1,150,000               612,960               21,654               618,691
The Bay City Capital Fund
II, L.P.(9)                                               —                   —           1,401,051                       —            485,717 (10)

Price Per Share                        $     0.004-$10.42     $           1.00      $           5.71    $         0.0005      $         1.5926
Date(s) of Purchase                           03/99-12/07                09/99                 08/00               05/00           07/02-09/04


(1)
       The exercise price of the warrants to purchase Series B Stock is $5.71 per share. Each of the warrants were subsequently exercised.

(2)
       Represents shares held by Sprout Capital IX, L.P., DLJ ESC II, L.P., DLJ Capital Corporation and Sprout Entrepreneurs' Fund, L.P.
       Dr. Chambon, one of our directors, is a managing director of New Leaf Venture Partners, a venture capital firm spun out from Sprout
       Group.

(3)
       Includes 380,891 shares repurchased by us on December 20, 2007 at $10.35 per share.

(4)
       Represents shares held by InterWest Partners VII, L.P. and InterWest Investors VII, L.P. Dr. Kliman, one of our directors, is a
       managing director of InterWest Management Partners VII, LLC, the general partner of the InterWest Funds.

(5)
       Includes 538,490 shares repurchased by us on December 20, 2007 at $10.35 per share.

(6)
      Mr. Wan, one of our directors, is a managing member of Three Arch Management II, L.L.C, the general partner of Three Arch Partners
      II, L.P.

(7)
      Includes 454,624 shares repurchased by us on December 20, 2007 at $10.35 per share.

(8)
      Represents shares held by Draper Fisher Jurvetson Fund V, L.P. and Draper Fisher Jurvetson Partners V, LLC.

                                                                  118
(9)
       Represents shares held by The Bay City Capital Fund II, L.P. and The Bay City Capital Fund II Co-Investment Fund, L.P.

(10)
       Includes 354,644 shares repurchased by us on December 20, 2007 at $10.35 per share.

     Each share of our Series A Stock and Series C Stock will convert into one share of our common stock and our Series B Stock will convert
into 1.15538724 shares of our common stock immediately prior to the closing of this offering.

Investor Rights Agreement

      We have entered into an agreement with a certain purchaser of common stock, purchasers of our preferred stockholders and a warrant to
purchase our preferred stock, including our chief executive officer and our principal stockholders with which certain of our directors are
affiliated, pursuant to which these securityholders will have, among other things, registration rights with respect to their shares of common
stock following this offering. Upon the closing of this offering, all shares of our outstanding preferred stock will be automatically converted
into common stock. See the section of this prospectus entitled "Description of Capital Stock—Registration Rights" for a further description of
the terms of this agreement.

Employment Agreements

     We have entered into employment agreements with our executive officers. For more information regarding these agreements, see the
section of this prospectus entitled "Management—Executive Employment and Severance Agreements."

Director and Officer Indemnification

     Our amended and restated certificate of incorporation contains provisions limiting the liability of directors. In addition, we have entered
into agreements to indemnify our directors and executive officers to the fullest extent permitted under Delaware law and have entered into
indemnification agreements with each of our directors and executive officers. See the section of this prospectus entitled
"Management—Limitation of Liability and Indemnification of Officers and Directors."

Other Agreements

     In October 2003, we entered into an independent contractor services agreement with Richard Fiedotin, then a member of our board of
directors, whereby Dr. Fiedotin provided certain consulting services regarding the promotion of our formulary hosting services to certain of our
customers. Under the independent contractor services agreement, Dr. Fiedotin's fee structure was based upon the number of patients covered by
agreements negotiated by Dr. Fiedotin with certain of our customers, the rate charged per member per year under and the duration of such
agreements. In addition, we agreed to reimburse Dr. Fiedotin for reasonable travel and office expenses. The agreement was terminated in
December 2006. We recorded expense related to the services provided by Dr. Fiedotin under the agreement of approximately $139,581 and
$135,320 during the years ended December 31, 2005 and 2006, respectively. We did not have expense related to such services during the year
ended December 31, 2007.

     In December 2005, we entered into a master services agreement with Reliant Pharmaceuticals, Inc., or Reliant, whereby we provide
certain creative development, implementation and reporting and project management services through our DocAlert channel. One of our
stockholders, The Bay City Capital Fund II, L.P. and its related entities, holds greater than a 10% equity interest in Reliant and, as such, may
have a material direct or indirect interest in our transactions with Reliant. We recorded revenue from Reliant of approximately $523,088,
$350,000 and $385,000 for the years ended December 31, 2005, 2006 and 2007, respectively.

                                                                       119
     In November 2004, we entered into an engagement agreement with FischerHealth, Inc., or Fischer, whereby Fischer implemented a
marketing communication program on our behalf. Thomas L. Harrison, a member of our board of directors, is the Chief Executive Officer of
Diversified Agency Services, Inc., or DAS, one of Fischer's parent companies. Pursuant to the engagement agreement, we were billed hourly
for Fischer's services, and we agreed to pay a minimum monthly retainer of $20,000 in addition to a held retainer of $20,000. The engagement
agreement was terminated in November 2005. We recorded expense related to the services under the engagement agreement of approximately
$380,450 for the year ended December 31, 2005. We did not have expense under the engagement agreement for the years ended December 31,
2006 and 2007.

     In August 2004, we entered into an agreement with Health Science Center for Continuing Medical Education, or HSC, whereby HSC
disseminates accredited continuing medical education and training activities via our handheld software. Thomas L. Harrison, a member of our
board of directors, is the Chief Executive Officer of DAS, HSC's parent company. Pursuant to the agreement, HSC has agreed to pay us a flat
fee of $300,000 per year in four equal quarterly installments of $75,000 to be used to develop the handheld software for the dissemination of
HSC's education and training activities. We charge HSC on a per activity basis, ranging from $10,000 to $25,000 per activity based on the
number of activities disseminated. Any additional purchases of our products by HSC count as payment towards the yearly flat fee. We recorded
revenue from HSC of $300,000 for the year ended December 31, 2007. We did not record revenues under the agreement for the years ended
December 31, 2005 and 2006.

    In 2005, 2006 and 2007, we entered into various agreements with Cline Davis & Mann, Inc. whereby we provide various marketing,
educational, media and creative services through our DocAlert channel. Thomas L. Harrison, a member of our board of directors, is the chief
executive officer of DAS, Cline Davis & Mann's parent company. We recorded revenue from Cline Davis & Mann, Inc. of approximately
$968,995, $670,459 and $1,843,798 for the years ended December 31, 2005, 2006 and 2007, respectively.

     In February 2008, we entered into our standard form of agreement with Oscient Pharmaceuticals Corporation, or Oscient, whereby we
provide services and messages through our DocAlert channel to certain customers specified by Oscient. John E. Voris, a member of our board
of directors, is a member of the board of directors of Oscient. Under the agreement, Oscient has agreed to pay us a total amount of $225,000, of
which 50% was invoiced on the date we executed the agreement and the remaining 50% will be invoiced 90 days thereafter.

Review, Approval or Ratification of Transactions with Related Parties

      The charter of our audit committee adopted by our board of directors require that any transaction with a related party must be reviewed
and approved by our audit committee. The audit committee has not yet adopted policies or procedures for review of, or standards for approval
of, these transactions but intends to do so in the future.

                                                                      120
                                              PRINCIPAL AND SELLING STOCKHOLDERS

    The following table sets forth, as of December 31, 2007, information regarding beneficial ownership of our capital stock by the following:

    •
            each person or entity who beneficially owns more than 5% of our common stock;

    •
            each of our directors;

    •
            all of our directors and executive officers as a group;

    •
            each of our other named executive officers; and

    •
            each of our stockholders selling shares in this offering.

     Beneficial ownership is determined according to the rules of the SEC and generally means that a person possesses sole or shared voting or
investment power of that security, and includes shares underlying options and warrants that are currently exercisable or exercisable within
60 days. Information with respect to beneficial ownership has been furnished to us by each director, executive officer or 5% or more
stockholder, as the case may be. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed below, based
on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community
property laws may apply.

     Unless otherwise indicated, options and warrants to purchase shares of our common stock that are exercisable within 60 days of
December 31, 2007 are deemed to be beneficially owned by the persons holding these options and warrants for the purpose of computing
percentage ownership of that person, but are not treated as outstanding for the purpose of computing any other person's ownership percentage.

     This table lists applicable percentage ownership based on 24,066,195 shares of common stock outstanding as of December 31, 2007,
including shares of preferred stock, on an as-converted basis, assuming an initial public offering price of $ per share, and also lists
applicable percentage ownership based on                 shares of common stock outstanding after the closing of this offering.

                                                                        121
    Unless otherwise indicated, the address for each of the stockholders in the table below is c/o Epocrates, Inc., 1100 Park Place, Suite 300,
San Mateo, California 94403.

                                                                                         Shares
                                                                                        Issuable
                                                                                       Pursuant to
                                                                                        Options
                                                                                       Exercisable
                                                                                        Within 60
                                                                                         Days of
                                                                                      December 31,
                                                                                          2007

                                                                     Shares
                                                                   Subject to a
                                                                    Right of
                                                                   Repurchase
                                                                    Within 60
                                                                     Days of
                                                                  December 31,
                                                                      2007

                                                                                                                               Percent of
                                                                                                                             Common Stock

                                                  Shares of
                                                  Common
                                                   Stock
                                                 Beneficially
                                                  Owned(1)

                                                                                                         Shares Being
                                                                                                          Sold in the     Before         After
Name and Address of Beneficial Owner                                                                      Offering(2)    Offering       Offering

5% Securityholders
Entities affiliated with Sprout Capital
IX, L.P.(3)                                         4,091,113                     —                  —      1,022,777         17.0 %
The Goldman Sachs Group Inc.(4)                     3,838,771                     —                  —             —          16.0
Entities affiliated with InterWest Partners
VII, L.P.(5)                                        3,051,446                     —                  —        600,000         12.7
Entities affiliated with Draper Fisher
Jurvetson Fund V, L.P.(6)                           2,501,915                     —                  —             —          10.4
Three Arch Partners II, L.P.(7)                     2,477,667                     —                  —      1,000,000         10.3
Entities affiliated with The Bay City
Capital Fund II, L.P.(8)                            1,749,828                     —                  —        350,000          7.3
Directors and Executive Officers
Kirk M. Loevner                                     1,475,939             98,518              9,375                —           6.1
Richard H. Van Hoesen                                 350,978                 —             350,978                —           1.4
Paul F. Banta                                         237,083              3,125             67,083                —           1.0
Robert J. Quinn(9)                                    232,916                 —             138,521                —           1.0
Jeffrey A. Tangney                                  1,752,916             10,417             62,916                —           7.3
Philippe O. Chambon, M.D., Ph.D.(3)                 4,091,113                 —                  —          1,022,777         17.0
John D. Halamka, M.D.                                  28,333                 —              28,333                —             *
Thomas L. Harrison                                    135,000                 —             135,000                —             *
Patrick S. Jones                                       66,666                 —              66,666                —             *
Gilbert H. Kliman, M.D.(5)                          3,051,446                 —                  —            600,000         12.7
David C. Nagel, Ph.D.                                  60,000                 —              60,000                —             *
John E. Voris(10)                                   1,079,389                 —              55,416                —           4.5
Mark A. Wan(7)                                      2,477,667                 —                  —          1,000,000         10.3
All directors and executive officers as a
group (13 persons)                                15,039,446            112,060             974,288         2,622,777         60.1 %


*
        Less than one percent (1%)

(1)
      Includes shares of common stock subject to a right of repurchase within 60 days of December 31, 2007 and shares issuable pursuant to
      options exercisable within 60 days of December 31, 2007.

(2)
      Includes shares of common stock that may be sold in the event the underwriters' over-allotment option is exercised.

(3)
      Represents 3,766,200 shares held by Sprout Capital IX, L.P., 245,658 shares held by DLJ ESC II, L.P., 51,588 shares held by DLJ
      Capital Corporation, or DLJCC, and 27,667 shares held by Sprout Entrepreneurs' Fund, L.P., collectively, the Sprout Funds.
      Dr. Chambon is a managing director of New Leaf Venture Partners, L.L.C. or NLVP, and is a limited partner of DLJ Associates
      IX, L.P., a general partner of Sprout Capital IX, L.P. NLVP has entered into a sub-management agreement with DLJCC whereby NLVP
      and its principals, including Dr. Chambon, provide DLJCC with investment management services on the investments held by various of
      the Sprout Group venture capital funds, including Sprout Capital IX, L.P., DLJ ESC II, L.P. and Sprout Entrepreneurs' Fund, L.P.
      Dr. Chambon disclaims beneficial ownership of the shares held by the Sprout Funds, except to the extent of his pecuniary interest
      therein. The address for Sprout Group is 11 Madison Avenue, 13 th Floor, New York, NY 10010.

                                                                    122
(4)
       The address for The Goldman Sachs Group, Inc. is 85 Broad Street, 4 th Floor, New York, NY 10004.

(5)
       Represents 2,916,700 shares held by InterWest Partners VII, L.P. and 134,746 shares held by InterWest Investors VII, L.P.,
       collectively, the InterWest Funds. InterWest Management Partners VII, LLC is the general partner of the InterWest Funds and thereby
       has sole voting and investment control over the shares owned by the InterWest Funds. Dr. Kliman, one of our directors, Harvey B.
       Cash, Philip T. Gianos, W. Scott Hedrick, W. Stephen Holmes, Thomas L. Rosch and Arnold L. Oronsky are managing directors of
       InterWest Management Partners VII, LLC and have shared voting and investment control over the shares owned by the InterWest
       Funds. The managing directors and members of InterWest Management Partners VII, LLC disclaim beneficial ownership of the shares
       owned by the InterWest Funds, except to the extent of their respective pecuniary interest therein. The address for InterWest Partners is
       2710 Sand Hill Road, Second Floor, Menlo Park, California 94025.

(6)
       Represents 2,314,272 shares held by Draper Fisher Jurvetson Fund V, L.P. and 187,643 shares held by Draper Fisher Jurvetson Partners
       V, LLC. The address for Draper Fisher Jurvetson is 2882 Sand Hill Road, Suite 150, Menlo Park, California 94025.

(7)
       Three Arch Management II, L.L.C., or TAM II, is the general partner of Three Arch Partners II, L.P., or Three Arch, and thereby has
       sole voting and investment control over the shares owned by the Three Arch. Mr. Wan, one of our directors, Wilfred E. Jaeger and
       Barclay Nicholson are managing members of TAM II and have shared voting and investment control over the shares owned by Three
       Arch. Mr. Wan disclaims beneficial ownership of the shares held by Three Arch except to the extent of his pecuniary interest therein.
       The address for Three Arch Partners is 3200 Alpine Road, Portola Valley, California 94028.

(8)
       Represents 1,642,418 shares held by The Bay City Capital Fund II, L.P. and 107,410 shares held by The Bay City Capital Fund II
       Co-Investment Fund, L.P. The address for Bay City Capital is 750 Battery Street, Suite 400, San Francisco, California 94111.

(9)
       Includes 12,000 shares held in The Quinn Wascoe Living Trust.

(10)
       Includes 679,973 shares held in the John E. and Karen P. Voris Trustees, Voris Trust Dated 9-17-97, 172,000 shares in the John Edward
       Voris Grantor Retained Annuity Trust I and 172,000 shares held in the Karen Prah Voris Grantor Retained Annuity Trust I.

                                                                      123
                                                    DESCRIPTION OF CAPITAL STOCK

     Upon the closing of this offering and the filing of our amended and restated certificate of incorporation, our authorized capital stock will
consist of               shares of common stock, $0.001 par value per share, and                  shares of undesignated preferred stock, $0.001
par value per share. The following description of our capital stock does not purport to be complete and is subject to, and qualified in its entirety
by, our amended and restated certificate of incorporation and bylaws, which are exhibits to the registration statement of which this prospectus
forms a part.

Common Stock

      As of December 31, 2007, 24,066,195 shares of our common stock were outstanding and held of record by 149 stockholders. This amount
assumes the conversion of all outstanding shares of our preferred stock into common stock, which will occur immediately prior to the closing
of this offering. In addition, as of December 31, 2007, 4,623,691 shares of our common stock were subject to outstanding options and 21,044
shares of our common stock, on an as-converted basis, were subject to an outstanding warrant. Upon the closing of this offering,       shares
of our common stock will be outstanding, assuming no exercise of outstanding stock options or warrants or the underwriters' over-allotment
option.

     Each share of our common stock entitles its holder to one vote on all matters to be voted upon by our stockholders. Subject to preferences
that may apply to any of our outstanding preferred stock, holders of our common stock will receive ratably any dividends our board of directors
declares out of funds legally available for that purpose. If we liquidate, dissolve or wind up, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and any liquidation preference of any of our outstanding preferred stock. Our
common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions. The shares of
our common stock to be issued upon the closing of this offering will be fully paid and non-assessable.

Preferred Stock

      After the filing of our amended and restated certificate of incorporation, our board of directors will have the authority, without further
action by our stockholders, to issue up to               shares of our preferred stock in one or more series. Our board of directors may designate
the rights, preferences, privileges and restrictions of our preferred stock, including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preference, sinking fund terms and number of shares constituting any series. The issuance of our preferred stock could
have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights
of our common stock, or delaying or preventing a change of control. Even the ability to issue preferred stock could delay or impede a change of
control. Immediately after the closing of this offering, no shares of our preferred stock will be outstanding, and we currently have no plan to
issue any shares of our preferred stock.

Warrants

     As of December 31, 2007, 21,044 shares of our common stock, on an as-converted basis, were issuable upon exercise of an outstanding
warrant to purchase Series B Stock with an exercise price of $5.71 per share. This warrant was issued in connection with the execution of a
credit facility we entered into with a lender. This warrant is immediately exercisable and will expire on the later of June 2, 2010 or seven years
from the closing of this offering. This warrant has a net exercise provision under which the holder may, in lieu of payment of the exercise price
in cash, surrender the warrant and receive a net amount of shares based on the fair market value of our common stock at the time of exercise of
the warrant after deduction of the aggregate exercise price. The warrant contains provisions for the

                                                                        124
adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of stock dividends, stock splits,
reorganizations and reclassifications and consolidations.

Registration Rights

      Commencing 180 days after the effective date of the registration statement of which this prospectus is a part, the holders of 14,995,448
shares of our common stock or certain transferees, including 21,044 shares of common stock issuable upon the exercise of an outstanding
warrant, will be entitled to require us to register these shares under the Securities Act, subject to limitations and restrictions. Also, if at any
time, we propose to register any of our securities under the Securities Act, either for our own account or for the account of other securities
holders, the holders of these shares will be entitled to notice of the registration and, subject to certain exceptions, will be entitled to include, at
our expense, their shares of our common stock in the registration. In addition, the holders of these shares may require us, at our expense and on
not more than two occasions in any twelve month period, to file a registration statement on Form S-3 under the Securities Act, if we become
eligible to use such form, covering their shares of our common stock, and we will be required to use our reasonable efforts to have the
registration statement declared effective. These rights shall terminate on the earlier of three years after the closing of this offering, or, with
respect to an individual holder, if such holder holds less than 1% of our then issued and outstanding shares of capital stock and such shares may
be immediately sold under Rule 144 during any 90-day period. These registration rights are subject to conditions and limitations, including the
right of the underwriters to limit the number of shares of our common stock included in the registration statement.

Anti-Takeover Provisions of Delaware Law and Charter Provisions

     Upon the closing of this offering we will be subject to Section 203 of the Delaware General Corporation Law. In general, the statute
prohibits a publicly-held Delaware corporation from engaging in any business combination with any interested stockholder for a period of three
years following the date that the stockholder became an interested stockholder unless:

     •
             prior to that date, our board of directors approved either the business combination or the transaction that resulted in the stockholder
             becoming an interested stockholder;

     •
             upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
             stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
             excluding those shares owned by persons who are directors and also officers, and by employee stock plans in which shares held
             subject to the plan will be tendered in a tender or exchange offer; or

     •
             on or subsequent to that date, the business combination is approved by our board of directors and is authorized at an annual or
             special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting
             stock not owned by the interested stockholder.

Section 203 defines business combination to include:

     •
             any merger or consolidation involving the corporation and the interested stockholder;

     •
             any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

     •
             subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to
             the interested stockholder;

                                                                         125
    •
            any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series
            of the corporation beneficially owned by the interested stockholder; and

    •
            the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
            provided by or through the corporation.

     In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

    On the closing of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will include a
number of provisions that may deter or impede hostile takeovers or changes of control or management. These provisions include:

    •
            Issuance of undesignated preferred stock. After the filing of our amended and restated certificate of incorporation, our board of
            directors will have the authority, without further action by the stockholders, to issue up to           shares of undesignated
            preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. The
            existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to
            discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.

    •
            Board of directors vacancies. Our amended and restated certificate of incorporation and amended and restated bylaws authorize
            only our board of directors to fill vacant directorships. In addition, the number of directors constituting our board of directors may
            be set only by resolution adopted by a majority vote of our entire board of directors. These provisions prevent a stockholder from
            increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its
            own nominees.

    •
            Stockholder action; special meetings of stockholders. Our amended and restated certificate of incorporation provides that our
            stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders.
            Stockholders will not be permitted to cumulate their votes for the election of directors. Our amended and restated bylaws further
            provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our
            board of directors, our chief executive officer or our president.

    •
            Advance notice requirements for stockholder proposals and director nominations. Our amended and restated bylaws provide
            advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominate
            candidates for election as directors at our annual meeting of stockholders. Our bylaws also specify certain requirements as to the
            form and content of a stockholder's notice. These provisions may preclude our stockholders from bringing matters before our
            annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.

    These provisions may have the effect of delaying or preventing a change of control.

Transfer Agent and Registrar

    The transfer agent and registrar for the common stock is Computershare Trust Company, N.A. The transfer agent and registrar's address is
250 Royall Street, Canton, Massachusetts 02021.

NASDAQ Global Market Listing

    We have applied for listing of our common stock on The NASDAQ Global Market under the proposed trading symbol "EPOC."

                                                                       126
                                     CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
                                             FOR NON-UNITED STATES HOLDERS

     The following is a general discussion of certain United States federal income and estate tax consequences of the ownership and disposition
of our common stock for a non-United States holder. For purposes of this discussion, a non-United States holder is any beneficial owner that,
for United States federal income tax purposes, is not a United States person; the term United States person means:

     •
            an individual citizen or resident of the United States;

     •
            a corporation (or other entity taxable as a corporation) or a partnership (or entity taxable as a partnership) created or organized in
            the United States or under the laws of the United States or any political subdivision thereof;

     •
            an estate whose income is subject to United States federal income tax regardless of its source; or

     •
            a trust (i) whose administration is subject to the primary supervision of a United States court and that has one or more United
            States persons who have the authority to control all substantial decisions of the trust, or (ii) that has made an election to be treated
            as a United States person.

     If a partnership or other pass-through entity holds our common stock, the tax treatment of a partner or member in the partnership or other
entity will generally depend on the status of the partner or member and upon the activities of the partnership or other entity. Accordingly, we
urge partnerships or other pass-through entities which hold our common stock and partners or members in such partnerships or other entities to
consult their tax advisors regarding the United States federal income and estate tax consequences of the ownership and disposition of our
common stock.

     This discussion assumes that non-United States holders will hold our common stock issued pursuant to this offering as a capital asset
(generally, property held for investment). This discussion does not address all aspects of United States federal income taxation that may be
relevant in light of a non-United States holder's special tax status or special tax situations. United States expatriates, life insurance companies,
tax-exempt organizations, dealers in securities or currency, banks or other financial institutions, pension funds and investors that hold common
stock as part of a hedge, straddle or conversion transaction are among those categories of potential investors that are subject to special rules not
covered in this discussion. This discussion does not address any tax consequences arising under the laws of any state, local or non-United
States taxing jurisdiction. Furthermore, the following discussion is based on current provisions of the Internal Revenue Code, and Treasury
Regulations and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change,
possibly with retroactive effect. Accordingly, we urge each non-United States holder to consult a tax advisor regarding the United States
federal, state, local and non-United States income and other tax consequences of acquiring, holding and disposing of shares of our common
stock.

Dividends

      We have not made any distributions on our common stock and we do not plan to pay any distributions for the foreseeable future.
However, if we do pay distributions on our common stock, those payments will constitute dividends for United States tax purposes to the
extent paid from our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the
extent those distributions exceed our current and accumulated earnings and profits, the distributions will constitute a return of capital that will
first reduce a holder's basis in its stock, but not below zero, and then will be treated as gain from the sale of the stock.

    Any dividends (out of earnings and profits) paid to a non-United States holder of common stock generally will be subject to United States
withholding tax either at a rate of 30% of the gross amount

                                                                        127
of the dividend or such lower rate as may be specified by an applicable tax treaty. In order to receive a reduced treaty rate, a non-United States
holder must provide us or our paying agent with an IRS Form W-8BEN certifying its qualification for the reduced rate.

      Dividends received by a non-United States holder that are effectively connected with a United States trade or business conducted by the
non-United States holder (and dividends attributable to a non-United States holder's permanent establishment in the United States if a tax treaty
applies) are exempt from this withholding tax. In order to obtain this exemption, a non-United States holder must provide us or our paying
agent with an IRS Form W-8ECI properly certifying this exemption. Effectively connected dividends (and dividends attributable to a
permanent establishment if a tax treaty applies), although not subject to this withholding tax, are taxed at the same graduated rates applicable to
United States persons, net of certain deductions and credits. In addition, dividends received by a corporate non-United States holder that are
effectively connected with a United States trade or business of the corporate non-United States holder (and dividends attributable to a corporate
non-United States holder's permanent establishment in the United States if a tax treaty applies) may also be subject to a branch profits tax at a
rate of 30% (or such lower rate as may be specified in an applicable tax treaty).

     A non-United States holder of common stock that is eligible for a reduced rate of withholding tax pursuant to a tax treaty may obtain a
refund of any excess amounts currently withheld if an appropriate claim for refund is timely filed with the Internal Revenue Service, or IRS.

Gain on Disposition of Common Stock

     A non-United States holder generally will not be subject to United States federal income tax on gain realized upon the sale or other
disposition of our common stock unless:

     •
            the gain is effectively connected with a United States trade or business of the non-United States holder (or attributable to a
            permanent establishment in the United States if a tax treaty applies), which gain, in the case of a corporate non-United States
            holder, must also be taken into account for branch profits tax purposes;

     •
            the non-United States holder is an individual is present in the United States for a period or periods aggregating 183 days or more
            during the taxable year in which the sale or disposition occurs and certain other conditions are met; or

     •
            our common stock constitutes a United States real property interest by reason of our status as a "United States real property
            holding corporation" for United States federal income tax purposes at any time within the shorter of the five-year period preceding
            the disposition or the holder's holding period for our common stock.

     We believe that we are not currently, and that we will not become, a "United States real property holding corporation" for United States
federal income tax purposes.

Backup Withholding and Information Reporting

     Generally, we must report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any,
of tax withheld. A similar report will be sent to each holder of our common stock. Pursuant to tax treaties or other agreements, the IRS may
make its reports available to tax authorities in the recipient's country of residence.

    Payments of dividends or of proceeds on the disposition of stock made to a non-United States holder may be subject to backup
withholding (currently at a rate of 28%) unless the non-United States holder establishes an exemption, for example, by properly certifying its
non-United States status on a Form W-8BEN or another appropriate version of Form W-8. Notwithstanding the foregoing, backup

                                                                       128
withholding may apply if the payor has actual knowledge, or reason to know, that the holder is a United States person.

     Backup withholding is not an additional tax. Rather, the United States income tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the
required information is timely furnished to the IRS.

Federal Estate Tax

     An individual non-United States holder who is treated as the owner, or who has made certain lifetime transfers, of an interest in our
common stock will be required to include the value thereof in his or her gross estate for United States federal estate tax purposes, and may be
subject to United States federal estate tax, unless an applicable estate tax treaty provides otherwise.

                                                                      129
                                                   SHARES ELIGIBLE FOR FUTURE SALE

     Prior to this offering, no public market existed for our common stock. Market sales of shares of our common stock after this offering and
from time to time, and the availability of shares for future sale, may reduce the market price of our common stock. Sales of substantial amounts
of our common stock, or the perception that these sales could occur, could adversely affect prevailing market prices for our common stock and
could impair our future ability to obtain capital, especially through an offering of equity securities.

     Based on shares outstanding on December 31, 2007, upon the closing of this offering,                shares of common stock will be outstanding,
assuming no outstanding options are exercised prior to the closing of this offering, and no outstanding warrants will be exercised prior to the
closing of this offering. All of the shares sold in this offering will be freely tradable without restrictions or further registration under the
Securities Act (assuming no exercise of the underwriters' over-allotment option), unless held by our affiliates as that term is defined under
Rule 144 under the Securities Act.

     The remaining 21,093,418 shares of common stock outstanding upon the closing of this offering are restricted securities as defined under
Rule 144 of the Securities Act. Restricted securities may be sold in the U.S. public market only if registered or if they qualify for an exemption
from registration, including by reason of Rule 144 or 701 under the Securities Act, which rules are summarized below. These remaining shares
will be available for sale as follows:

     •
             no restricted shares of common stock will be eligible for immediate sale upon the completion of this offering; and

     •
             21,093,418 restricted shares of common stock will be eligible for sale in the public market under Rule 144 or Rule 701 upon
             expiration or earlier waiver of lock-up agreements with the underwriters no earlier than the 91st day after the effective date of the
             registration statement of which this prospectus is a part, subject, in the case of our affiliates, to the volume, manner of sale and
             other limitations under those rules.



      Additionally, of the 4,623,691 shares of common stock issuable upon exercise of options outstanding as of December 31, 2007,
approximately           of the shares subject to these options will be vested and eligible for exercise and sale upon expiration or earlier waiver of
the lock-up agreements as described above.

Rule 144

      In general, under Rule 144 under the Securities Act of 1933, as in effect on the date of this prospectus, beginning 90 days after the
effective date of this offering, a person who is not one of our affiliates who has beneficially owned shares of our common stock for at least six
months may sell shares without restriction, provided the current public information requirements of Rule 144 continue to be satisfied. In
addition, any person who is not one of our affiliates at any time during the three months preceding a proposed sale, and who has beneficially
owned shares of our common stock for at least one year would be entitled to sell an unlimited number of shares without restriction. Our
affiliates who have beneficially owned shares of our common stock for at least six months are entitled to sell within any three-month period a
number of shares that does not exceed the greater of:

     •
             one percent of the number of shares of our common stock then outstanding, which will equal approximately                        shares
             immediately after this offering; and

     •
             the average weekly trading volume of our common stock on The NASDAQ Global Market during the four calendar weeks
             preceding the filing of a notice on Form 144 with respect to the sale.

                                                                         130
      Sales of restricted shares under Rule 144 are also subject to requirements regarding the manner of sale, notice, and the availability of
current public information about us. Rule 144 also provides that affiliates relying on Rule 144 to sell shares of our common stock that are not
restricted shares must nonetheless comply with the same restrictions applicable to restricted shares, other than the holding period requirement.

Rule 701

     Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but
without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers,
directors or consultants who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of
Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling their shares. All of
the Rule 701 shares are subject to lock-up agreements as described and under "Underwriting" and will become eligible for sale at the expiration
of those agreements.

Form S-8 Registration Statements

     We intend to file one or more registration statements on Form S-8 under the Securities Act after the closing of this offering to register the
shares of our common stock subject to outstanding options or reserved for future issuance under our stock plans. These registration statements
are expected to become effective upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets,
subject to any applicable lock-up agreements and to Rule 144 limitations applicable to affiliates.

Lock-up Agreements

      Our officers and directors and holders of substantially all of our outstanding securities have agreed, subject to customary exceptions, not
to, among other things, offer, sell, contract to sell, or otherwise dispose of any shares of our common stock, or any security convertible into or
exchangeable or exercisable for our common stock, without the prior written consent of Citigroup Global Markets Inc. for a period of 180 days
after the date of this prospectus. The 180-day lock-up period will be automatically extended, unless waived by Citi, if: (1) during the last
17 days of the 180-day period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the
180-day period, we announce that we will release earnings results during the 16-day period following the last day of the 180-day period, in
which case the restrictions will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or
the announcement of the material news or event. The lock-up agreements signed by our security holders generally permit them, among other
customary exceptions, to make bona fide gifts, by will or intestate to transfer securities to their immediate family or to a trust for their or their
immediate family's benefit and, if the security holder is a partnership, limited liability company or corporation, to transfer securities to its
general or limited partners, members or stockholders. However, the recipients of these transfers must agree to be bound by the lock-up
agreement for the remainder of the lock-up period. Citigroup Global Markets Inc., may, in its sole discretion, at any time, and without notice,
release for sale in the public market all or any portion of the shares subject to the lock-up agreements. Substantially all of the shares that are not
subject to the underwriters' lock-up agreements are subject to similar contractual lock-up restrictions with us.

                                                                         131
                                                                 UNDERWRITING

     Citigroup Global Markets Inc. is acting as sole bookrunning manager of this offering, and Citigroup Global Markets Inc., Piper
Jaffray & Co., William Blair & Company, L.L.C. and Needham & Company, LLC are acting as representatives of the underwriters named
below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named
below has agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter's name.

                                                                                                               Number of
                            Underwriter                                                                         Shares

                            Citigroup Global Markets Inc.
                            Piper Jaffray & Co.
                            William Blair & Company, L.L.C.
                            Needham & Company, LLC

                                   Total

     The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to
the approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the shares (other than those
covered by the over-allotment option described below) if they purchase any of the shares.

     The underwriters propose to offer some of the shares directly to the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to dealers at the public offering price less a concession not to exceed $        per share. The underwriters may
allow, and dealers may reallow, a concession not to exceed $       per share on sales to other dealers. If all of the shares are not sold at the initial
offering price, the representatives may change the public offering price and the other selling terms. The representatives have advised us that the
underwriters do not intend sales to discretionary accounts to exceed five percent of the total number of shares of our common stock offered by
them.

     We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to         additional
shares of common stock at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the
purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must
purchase a number of additional shares approximately proportionate to that underwriter's initial purchase commitment.

     We, our officers, directors and substantially all of our stockholders have agreed that for a period of 180 days from the date of this
prospectus, we and they will not, without the prior written consent of Citi, offer, sell, contract to sell, or otherwise dispose of any of the shares
of our common stock or any securities convertible into or exchangeable for our common stock, subject to certain exceptions set forth in the
section of this propectus entitled "Shares Eligible for Future Sale—Lock-Up Agreements." The 180-day lock-up period will be automatically
extended, unless waived by Citi, if: (1) during the last 17 days of the 180-day period we issue an earnings release or announce material news or
a material event; or (2) prior to the expiration of the 180-day period, we announce that we will release earnings results during the 16-day period
following the last day of the 180-day period, in which case the restrictions will continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the announcement of the material news or event. Citi in its sole discretion may release any
of the securities subject to these lock-up agreements at any time without notice.

    Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price for the shares
was determined by negotiations among us and the

                                                                          132
representatives. Among the factors considered in determining the initial public offering price were our record of operations, our current
financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete,
our management and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly
traded companies considered comparable to our company. We cannot assure you, however, that the prices at which the shares will sell in the
public market after this offering will not be lower than the initial public offering price or that an active trading market in our common stock
will develop and continue after this offering.

     We have applied to have our common stock approved for listing on The NASDAQ Global Market under the symbol "EPOC."

     The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this
offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of
common stock.

                                                                                                    No Exercise       Full Exercise

                    Per share                                                                   $                 $
                    Total to be paid by Epocrates                                               $                 $
                    Total to be paid by the selling stockholders                                $                 $

      In connection with this offering, Citi, on behalf of the underwriters, may purchase and sell shares of common stock in the open market.
These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of
common stock in excess of the number of shares to be purchased by the underwriters in this offering, which creates a syndicate short position.
"Covered" short sales are sales of shares made in an amount up to the number of shares represented by the underwriters' over-allotment option.
In determining the source of shares to close out the covered syndicate short position, the underwriters will consider, among other things, the
price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the
over-allotment option. Transactions to close out the covered syndicate short involve either purchases of the common stock in the open market
after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make "naked" short sales of
shares in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock
in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure
on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing
transactions consist of bids for or purchases of shares in the open market while this offering is in progress.

    The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate
member when Citi repurchases shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing
purchases.

     Any of these activities may have the effect of preventing or retarding a decline in the market price of the common stock. They may also
cause the price of the common stock to be higher than the price that would otherwise exist in the open market in the absence of these
transactions. The underwriters may conduct these transactions on The NASDAQ Global Market or in the over-the-counter market, or
otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

     We estimate that the total expenses of this offering payable by us will be $    million.

     The underwriters have performed investment banking and advisory services for us from time to time for which they have received
customary fees and expenses. The underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary
course of their business.

                                                                       133
     A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters. The
representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. The representatives
will allocate shares to underwriters that may make Internet distributions on the same basis as other allocations. In addition, shares may be sold
by the underwriters to securities dealers who resell shares to online brokerage account holders.

     We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the underwriters may be required to make because of any of those liabilities.

Notice to Prospective Investors in the European Economic Area

      In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member
state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant
implementation date), an offer of common stock described in this prospectus may not be made to the public in that relevant member state prior
to the publication of a prospectus in relation to the common stock that has been approved by the competent authority in that relevant member
state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all
in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities
may be offered to the public in that relevant member state at any time:

     •
            to any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose
            corporate purpose is solely to invest in securities or

     •
            to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance
            sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or
            consolidated accounts or

     •
            in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive.

    Each purchaser of common stock described in this prospectus located within a relevant member state will be deemed to have represented,
acknowledged and agreed that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive.

     For purposes of this provision, the expression an "offer to the public" in any relevant member state means the communication in any form
and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to
purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus
Directive in that member state, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing
measure in each relevant member state.

     The sellers of the common stock have not authorized and do not authorize the making of any offer of common stock through any financial
intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the common stock as
contemplated in this prospectus. Accordingly, no purchaser of the common stock, other than the underwriter, is authorized to make any further
offer of the common stock on behalf of the sellers or the underwriter.

Notice to Prospective Investors in the United Kingdom

    This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the
meaning of Article 2(1)(e) of the Prospectus Directive

                                                                        134
or Qualified Investors, that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, or Order, or (ii) high net worth entities, and other persons to whom it may lawfully be communicated,
falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This prospectus and its
contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other
persons in the United Kingdom. Any person in the United Kingdom that is not a relevant persons should not act or rely on this document or any
of its contents.

Notice to Prospective Investors in France

     Neither this prospectus nor any other offering material relating to the common stock described in this prospectus has been submitted to the
clearance procedures of the Autorité des Marchés Financiers or by the competent authority of another member state of the European Economic
Area and notified to the Autorité des Marchés Financiers. The common stock have not been offered or sold and will not be offered or sold,
directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the common stock has been or
will be

     •
            released, issued, distributed or caused to be released, issued or distributed to the public in France or

     •
            used in connection with any offer for subscription or sale of the common stock to the public in France.

     Such offers, sales and distributions will be made in France only

     •
            to qualified investors ( investisseurs qualifiés ) and/or to a restricted circle of investors ( cercle restreint d'investisseurs ), in each
            case investing for their own account, all as defined in, and in accordance with, Article L.411-2, D.411-1, D.411-2, D.734-1,
            D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier or

     •
            to investment services providers authorized to engage in portfolio management on behalf of third parties or

     •
            in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article
            211-2 of the General Regulations ( Règlement Général ) of the Autorité des Marchés Financiers, does not constitute a public offer (
            appel public à l'épargne ).

    The common stock may be resold directly or indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through
L.261-8-3 of the French Code monétaire et financier .

                                                                          135
                                                              LEGAL MATTERS

     The validity of the issuance of the shares of common stock offered by this prospectus will be passed upon for us by our counsel, Cooley
Godward Kronish LLP, Palo Alto, California. Davis Polk & Wardwell, Menlo Park, California, is counsel for the underwriters in connection
with this offering.


                                                                   EXPERTS

      The financial statements as of December 31, 2006, 2007 and for each of the three years in the period ended December 31, 2007 included
in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.


                                        WHERE YOU CAN FIND ADDITIONAL INFORMATION

      We have filed with the SEC a registration statement on Form S-1, including all amendments and supplements thereto, under the Securities
Act that registers the shares of our common stock to be sold in this offering. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about us and our capital stock. The rules and regulations of the SEC allow us to omit from
this prospectus certain information included in the registration statement. For further information about us and our common stock, you should
refer to the registration statement and the exhibits and schedules filed with the registration statement. With respect to the statements contained
in this prospectus regarding the contents of any agreement or any other document, in each instance, the statement is qualified in all respects by
the complete text of the agreement or document, a copy of which has been filed as an exhibit to the registration statement. In addition, upon the
closing of this offering, we will file reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934,
as amended. You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, NE, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers that
file electronically with the SEC. The address of that site is www.sec.gov.

     We intend to provide our stockholders with annual reports containing consolidated financial statements that have been examined and
reported on, with an opinion expressed by an independent registered public accounting firm, and to file with the SEC quarterly reports
containing unaudited consolidated financial data for the first three quarters of each year.

                                                                       136
                                                 INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm                                                                       F-2

Balance Sheets as of December 31, 2006 and 2007                                                                               F-3

Statements of Operations for each of the three years in the period ended December 31, 2007                                    F-4

Statements of Changes in Mandatorily Redeemable Convertible Preferred Stock and Stockholders' Deficit for each of the three
years in the period ended December 31, 2007                                                                                   F-5

Statements of Cash Flows for each of the three years in the period ended December 31, 2007                                    F-7

Notes to Financial Statements                                                                                                 F-8

                                                                    F-1
                             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Epocrates, Inc.

     In our opinion, the accompanying balance sheets and the related statements of operations, changes in mandatorily redeemable convertible
preferred stock and stockholders' deficit and cash flows present fairly, in all material respects, the financial position of Epocrates, Inc. at
December 31, 2007 and 2006 and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the
accompanying financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction
with the related financial statements. These financial statements and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements 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, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     As discussed in Note 6 of the financial statements, the Company changed the manner in which it accounts for uncertainty in income taxes
in 2007.

     As discussed in Note 11 of the financial statements, the Company changed the manner in which it accounts for stock-based compensation
in 2006.

     As discussed in Note 8 of the financial statements, the Company changed the manner in which it accounts for freestanding warrants for
redeemable convertible preferred stock in 2005.

/s/ PRICEWATERHOUSECOOPERS LLP
San Jose, California
April 15, 2008

                                                                     F-2
                                                            EPOCRATES, INC.

                                                           BALANCE SHEETS

                                                   (in thousands, except per share data)

                                                                                           December 31,

                                                                                                                       Proforma
                                                                                                                      December 31,
                                                                                                                          2007

                                                                                    2006                  2007

                                                                                                                      (unaudited)


Assets
Current assets
  Cash and cash equivalents                                                     $      25,804     $          70,116
  Short-term investments                                                                   —                  2,504
  Accounts receivable, net of allowance for doubtful accounts of $57 and
  $38, respectively                                                                    10,144                11,665
  Deferred tax asset                                                                       —                  5,884
  Prepaid expenses and other current assets                                             2,132                 1,567

      Total current assets                                                             38,080                91,736
Property and equipment, net                                                             3,260                25,926
Deferred tax asset, long-term                                                              —                 15,742
Other assets                                                                            1,348                 2,161

      Total assets                                                              $      42,688     $         135,565


Liabilities, Mandatorily Redeemable Convertible Preferred Stock and
Stockholders' Equity (Deficit)
Current liabilities
   Accounts payable                                                             $         763     $           1,782
   Book overdraft                                                                          —                 28,412
   Deferred revenue                                                                    37,521                42,096
   Other accrued liabilities                                                            7,048                 9,672

      Total current liabilities                                                        45,332                81,962
Financing liability                                                                        —                 20,314
Deferred revenue, less current portion                                                  8,300                16,154
Other liabilities                                                                         181                   694                  562

      Total liabilities                                                                53,813               119,124

Commitments and contingencies (Note 7)

Mandatorily redeemable convertible preferred stock $0.001 par value; 15,304
shares authorized; 15,271 and 13,142 shares issued and outstanding at
December 31, 2006 and 2007, respectively (aggregate liquidation preference at
December 31, 2007: $64,853); no shares issued and outstanding proforma
(unaudited)                                                                            64,866                64,822                   —


Stockholders' equity (deficit)
   Common stock: $0.001 par value; 38,333 shares authorized; 7,687 and
   9,958 shares issued and outstanding at December 31, 2006 and 2007,
   respectively 24,066 issued and outstanding proforma (unaudited) at
   December 31, 2007                                                                         8                   10                   24
   Additional paid-in capital                                                                 —               3,290        68,230
   Deferred stock-based compensation                                                        (415 )             (168 )        (168 )
   Accumulated other comprehensive income                                                     —                   9             9
   Accumulated deficit                                                                   (75,584 )          (51,522 )     (51,522 )

      Total stockholders' equity (deficit)                                               (75,991 )          (48,381 ) $   16,573

Total liabilities, mandatorily redeemable convertible preferred stock and
stockholders' equity (deficit)                                                    $       42,688     $      135,565


                                   The accompanying notes are an integral part of these financial statements.

                                                                      F-3
                                                             EPOCRATES, INC.

                                                             BALANCE SHEETS

                                                    (in thousands, except per share data)


                                                             EPOCRATES, INC.

                                                     STATEMENTS OF OPERATIONS

                                                    (in thousands, except per share data)

                                                                                                          Years Ended December 31,

                                                                                                2005                2006                 2007

Revenues, net                                                                               $     32,536       $       49,517        $     65,611
Cost of revenues(1)                                                                               12,369               17,371              22,805

Gross profit                                                                                      20,167               32,146              42,806


Operating expenses(1):
   Sales and marketing                                                                            11,725               14,975              16,887
   Research and development                                                                        6,483                8,748              10,519
   General and administrative                                                                      5,119               10,725              11,983

         Total operating expenses                                                                 23,327               34,448              39,389

Income (loss) from operations                                                                     (3,160 )             (2,302 )             3,417
   Interest income                                                                                   440                1,078               1,714
   Interest expense                                                                                   —                    —                 (285 )
   Other income (expense), net                                                                      (130 )               (189 )              (233 )

Income (loss) before income taxes and cumulative effect of change in accounting
principle                                                                                         (2,850 )             (1,413 )             4,613
Benefit (provision) for income taxes                                                                 (57 )                (28 )            21,126

Income (loss) before cumulative effect of change in accounting principle                          (2,907 )             (1,441 )            25,739
Cumulative effect of change in accounting principle, net of taxes                                     (3 )                 —                   —

Net income (loss)                                                                                 (2,910 )             (1,441 )            25,739

Less: Accretion of Series B mandatorily redeemable preferred stock dividends                       2,824                2,840               2,840

Less: Allocation of net income to participating preferred stockholders                                   —                   —             15,582

Net income (loss) available to common stockholders                                          $     (5,734 ) $           (4,281 ) $           7,317


Net income (loss) per common share—basic                                                    $          (1.05 ) $           (0.62 ) $            0.96

Net income (loss) per common share—diluted                                                  $          (1.05 ) $           (0.62 ) $            0.72


Weighted average common shares outstanding—basic                                                   5,449                6,888               7,592

Weighted average common shares outstanding—diluted                                                 5,449                6,888              10,135


Proforma net income per share—basic (unaudited)                                                                                      $          1.08
Proforma net income per share—diluted (unaudited)                                                                           $         0.98


Proforma weighted average common shares outstanding—basic                                                                           23,780

Proforma weighted average common shares outstanding—diluted                                                                         26,332



(1)
          Includes stock-based compensation in the following amounts:

      Cost of revenues                                                                               $       31   $    58       $       178
      Sales and marketing                                                                                   275       503             1,127
      Research and development                                                                              225       334               747
      General and administrative                                                                            434       374             1,135

                                   The accompanying notes are an integral part of these financial statements.

                                                                        F-4
                                                                                EPOCRATES, INC.

                STATEMENTS OF CHANGES IN MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
                                          AND STOCKHOLDERS' DEFICIT

                                                                                     (in thousands)

                            Mandatorily
                            Redeemable
                             Convertible
                           Preferred Stock

                                                 Common Stock

                                                                                  Additional         Deferred             Other                              Total
                                                                     Treasury      Paid-In         Stock-Based        Comprehensive   Accumulated        Stockholders'       Comprehensive
                                                                      Stock        Capital        Compensation        Income (Loss)      Deficit            Deficit          Income (Loss)

                           Shares   Amount       Shares     Amount

Balance at January 1,
2005                       15,184 $ 58,773        5,815 $        6 $        — $            — $             (762 ) $               — $      (67,982 ) $           (68,738 )
Issuance of Series B
redeemable convertible
preferred stock upon
exercise of warrants           87       500                                                                                                                           —
Reclassification of
preferred stock warrants
to liability upon
adoption of FSP 150-5                    (71 )                                                                                                                        —
Issuance of common
stock upon exercise of
stock options                                     1,213          1                        299                                                                        300
Non-employee
stock-based
compensation expense                                                                       16                                                                         16
Stock compensation
associated with
outstanding repriced
options                                                                                   680                                                                        680
Deferred stock-based
compensation                                                                              300              (300 )                                                     —
Amortization of
employee deferred
stock-based
compensation                                                                                                269                                                      269
Adjustment to deferred
stock-based
compensation for
terminated employees                                                                      (43 )              43                                                       —
Accrued dividend on
Series B mandatorily
redeemable convertible
preferred stock                        2,824                                           (1,252 )                                             (1,572 )              (2,824 )
Net loss                                                                                                                                    (2,910 )              (2,910 )            (2,910 )

Comprehensive loss                                                                                                                                                           $        (2,910 )

Balance at
December 31, 2005          15,271     62,026      7,028          7          —              —               (750 )                 —        (72,464 )             (73,207 )
Issuance of common
stock upon exercise of
stock options                                       763          1                        253                                                                        254
Repurchase of unvested
exercised options for
terminated employees                               (104 )                                 (26 )                                                                      (26 )
Non-employee
stock-based
compensation expense                                                                       29                                                                         29
Employee stock-based
compensation expense                                                                      295                                                                        295
Stock compensation
associated with
outstanding repriced
options                                                                                   659                                                                        659
Amortization of
employee deferred
stock-based
compensation                                                                                                286                                                      286
Adjustment to deferred                                                                    (49 )              49                                                       —
stock-based
compensation for
terminated employees
Accrued dividend on
Series B mandatorily
redeemable convertible
preferred stock                    2,840                   (1,161 )                  (1,679 )    (2,840 )
Net loss                                                                             (1,441 )    (1,441 )       (1,441 )

Comprehensive loss                                                                                          $   (1,441 )

Balance at
December 31, 2006        15,271   64,866   7,687   8   —       —       (415 )   —   (75,584 )   (75,991 )


                                                                 F-5
                                                                                    EPOCRATES, INC.

               STATEMENTS OF CHANGES IN MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
                                    AND STOCKHOLDERS' DEFICIT (Continued)

                                                                                        (in thousands)

                          Mandatorily
                          Redeemable
                           Convertible
                         Preferred Stock

                                                  Common Stock

                                                                                    Additional         Deferred             Other                                   Total
                                                                      Treasury       Paid-In         Stock-Based        Comprehensive       Accumulated         Stockholders'           Comprehensive
                                                                       Stock         Capital        Compensation        Income (Loss)          Deficit             Deficit              Income (Loss)

                         Shares      Amount       Shares     Amount

Balance at
December 31, 2006        15,271        64,866      7,687          8          —               —               (415 )                 —             (75,584 )             (75,991 )
Issuance of common
stock upon exercise of
stock options                                        370                                    391                                                                             391
Repurchase of
unvested exercised
options for terminated
employees                                            (33 )                                  (15 )                                                                           (15 )
Employee stock-based
compensation expense                                                                      1,782                                                                           1,782
Stock compensation
associated with
outstanding repriced
options                                                                                   1,184                                                                           1,184
Amortization of
employee deferred
stock-based
compensation                                                                                                  221                                                           221
Adjustment to deferred
stock-based
compensation for
terminated employees                                                                        (26 )              26                                                            —
Unrealized gain on
available for sale
securities                                                                                                                              9                                       9                       9
Preferred stock
converted to common
stock                     (2,129 )     (2,884 )    2,129          2                       2,882                                                                           2,884
Purchase of treasury
stock                                                                   (41,745 )                                                                                       (41,745 )
Sale of treasury stock                                                   40,000                                                                                          40,000
Retirement of treasury
stock                                               (195 )                1,745            (145 )                                                  (1,600 )                  —
Accrued dividend on
Series B mandatorily
redeemable
convertible preferred
stock                                   2,840                                            (2,763 )                                                    (77 )              (2,840 )
Net income                                                                                                                                        25,739                25,739                  25,739

Comprehensive loss                                                                                                                                                                  $           25,748

Balance at
December 31, 2007        13,142 $ 64,822           9,958 $       10 $        — $          3,290 $            (168 ) $                   9 $       (51,522 ) $           (48,381 )



                                                  The accompanying notes are an integral part of these financial statements.

                                                                                                  F-6
                                                              EPOCRATES, INC.

                                                      STATEMENTS OF CASH FLOWS

                                                                 (in thousands)

                                                                                                        Years Ended December 31,

                                                                                               2005               2006                 2007

Cash flows from operating activities
Net income (loss)                                                                          $      (2,910 ) $         (1,441 ) $          25,739
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
  Stock-based compensation                                                                            965             1,269               3,187
  Depreciation and amortization                                                                       513             1,083               1,906
  Allowance for doubtful accounts and sales returns reserve                                            (1 )              57                 (19 )
  Cumulative effect of change in accounting principle                                                   3                —                   —
  Change in carrying value of preferred stock liability                                                23                58                 (23 )
  Loss on fixed assets write-off                                                                       —                 —                   20
  Changes in assets and liabilities:
      Accounts receivable                                                                           124              (3,856 )            (1,502 )
      Deferred tax asset, current and noncurrent                                                     —                   —              (21,626 )
      Prepaid expenses and other assets                                                             178              (1,921 )              (229 )
      Accounts payable                                                                              202                  48                 729
      Deferred revenue                                                                           10,308              10,363              12,429
      Other accrued liabilities and other payables                                                2,496               1,470               2,755

         Net cash provided by operating activities                                               11,901               7,130              23,366


Cash flows from investing activities
Purchase of property and equipment                                                                (2,369 )           (1,689 )             (6,309 )
Purchase of short-term investments                                                                    —                  —                (3,108 )
Maturity of short-term investments                                                                    —                  —                   600

         Net cash used in investing activities                                                    (2,369 )           (1,689 )             (8,817 )

Cash flows from financing activities
Proceeds from exercise of Series B preferred stock warrants                                           500                 —                  —
Book overdraft                                                                                         —                  —              28,412
Construction costs financed by sublandlord                                                             —                  —               2,720
Acquisition of common stock                                                                            —                  —             (41,745 )
Reissuance of treasury stock                                                                           —                  —              40,000
Repurchase of early exercised stock options                                                            —                 (26 )              (15 )
Proceeds from exercise of common stock options                                                        300                254                391

         Net cash provided by financing activities                                                    800                228             29,763

        Net increase in cash and cash equivalents                                                10,332               5,669              44,312
Cash and cash equivalents at beginning of period                                                  9,803              20,135              25,804

Cash and cash equivalents at end of period                                                 $     20,135       $      25,804        $     70,116


Supplemental Disclosures
  Cash paid for income taxes                                                               $           2      $          552       $           57
  Cash paid for interest                                                                               —                  —                   165

Non-Cash Investing and Financing Activities
  Unearned stock-based compensation                                                                   300                 —                    —
  Reclassification of preferred stock warrants to liability                                            71                 —                    —
Financing liability in accordance with EITF 97-10                                                 —          —     17,594
Conversion of preferred stock to common stock                                                     —          —      2,884
Retirement of treasury stock                                                                      —          —      1,745
Unrealized gain on available for sale securities, net of tax effect                               —          —          9
Unpaid accrued dividend on Series B mandatorily redeemable convertible preferred
stock                                                                                          2,824       2,840    2,840

                              The accompanying notes are an integral part of these financial statements.

                                                                 F-7
                                                              EPOCRATES, INC.

                                                  NOTES TO FINANCIAL STATEMENTS

1. Background

     Epocrates, Inc. (the "Company") was incorporated in California in August 1998 as nCircle Communications, Inc. In September 1999, the
Company changed its name to Epocrates, Inc. In May 2006, the Company reincorporated in Delaware. The Company is located in San Mateo,
California.

     Epocrates sells subscription services and site licenses for mobile and Web-based clinical information. Through its interactive information
services, including clinical messaging, formulary content hosting, market research and medical education, the Company provides its customers
with access to its subscriber base so they may reach healthcare professionals.

2. Summary of Significant Accounting Policies

Accounting Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
The Company is subject to uncertainties such as the impact of future events, economic and political factors and changes in the Company's
business environment, therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation
of the Company's financial statements will change as new events occur, as more experience is acquired, as additional information is obtained
and as the Company's operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates
and refinements in estimation methodologies are reflected in reported results of operations and if material, the effects of changes in estimates
are disclosed in the notes to the financial statements. Significant estimates and assumptions by management affect revenue recognition, the
allowance for doubtful accounts, the subscription cancellations reserve, the carrying value of long-lived assets, the depreciation and
amortization period of long-lived assets, the provision for income taxes and related deferred tax accounts, the sale tax accrual, the build-out of
the new headquarters facility, stock-based compensation and the fair value of the Company's common stock.

Cash and Cash Equivalents

     The Company considers all highly liquid investments with an original or remaining maturity from the Company's date of purchase of
90 days or less to be cash equivalents. The cash and cash equivalents reflected in the Company's balance sheets include demand deposits held
in banks and interest bearing money market funds. Deposits held with financial institutions are likely to exceed the amount of insurance on
these deposits. Cash equivalents consist of money market accounts which are readily convertible into cash and are stated at cost which
approximates fair market value. Cash equivalents were $25.8 million and $70.1 million as of December 31, 2006 and 2007, respectively.

     The Company has a book overdraft for certain of its disbursement cash accounts of $28.4 million as of December 31, 2007. A book
overdraft represents transactions that have not cleared the bank at the end of the period. The Company transfers cash on an as-needed basis to
fund these items as they clear the bank in subsequent periods. The change in the book overdraft is reported as cash flows from financing
activities.

                                                                       F-8
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Restricted Cash

     As of December 31, 2006 and 2007, restricted cash totaled $1.0 million, and relates to an agreement with the Company's merchant card
provider and a certificate of deposit securing a letter of credit for the benefit of the Company's landlord. These balances are recorded within
other assets on the balance sheet.

Short-Term Investments

     The Company has classified its short-term investments as available-for-sale securities under Statement of Financial Accounting Standards
("FAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"). In accordance with FAS 115, these
securities are reported at fair value with any changes in market value reported as a part of comprehensive income (loss).

Fair Value of Financial Instruments

     The Company's financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, are carried at cost,
which approximates fair value because of the short-term nature of those instruments. The carrying value of the preferred stock warrant liability
represents fair value (see Note 8). Based on borrowing rates available to the Company for loans with similar terms, the carrying value of
borrowings, including the financing liability (see Note 5), approximate fair value.

Concentration of Credit Risk

     Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, short-term
investments and accounts receivable.

     The Company limits its concentration of risk in cash equivalents and short-term investments by diversifying its investment amount among
a variety of industries and issuers and by limiting the average maturity to approximately one year or less. The Company's professional portfolio
managers adhere to this investment policy as approved by the Company's board of directors.

     The Company's investment policy is to invest only in fixed income instruments denominated and payable in U.S. dollars. Investment in
obligations of the U.S. government and its agencies, money market instruments, commercial paper, certificates of deposit, bankers'
acceptances, corporate bonds of U.S. companies, municipal securities and asset backed securities are allowed. The Company does not invest in
auction rate securities, futures contracts, or hedging instruments. Securities of a single issuer valued at cost at the time of purchase, should not
exceed 5% of the market value of the portfolio or $1 million, whichever is greater, but securities issued by the U.S. Treasury and U.S.
government agencies are specifically exempted from these restrictions. Issue size should normally be greater than $50 million for corporate
bonds. No single position in any issue will equal more than 10% of that issue. The final maturity of each security within the portfolio shall not
exceed 24 months.

     The Company's revenue is derived primarily from clients in the healthcare, pharmaceutical and insurance industries within the United
States. One customer accounted for 22% of net accounts receivable as of December 31, 2006. No single customer accounted for more than 10%
of net accounts receivable as of December 31, 2007. For the years ended December 31, 2005, 2006 and 2007, no single customer accounted for
more than 10% of revenue.

                                                                        F-9
                                                             EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Allowance for Doubtful Accounts

     The allowance for doubtful accounts reflects the Company's best estimate of probable losses inherent in the Company's receivables
portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available
evidence. The Company has not experienced significant credit losses from its accounts receivable and none are currently expected. The
Company performs a regular review of its customers' payment histories and associate credit risks and it does not require collateral from its
customers.

Property and Equipment

    Property and equipment, including equipment under capital leases, are stated at historical cost less accumulated depreciation and
amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets.

     Generally, the useful lives of the property and equipment are as follows:

                     Building                                                   40 years
                     Fixtures in connection with build-out of facility          29 years
                     Computer equipment                                         36 months
                     Office equipment, furniture and fixtures                   36–44 months
                     Software                                                   36 months
                     Leasehold improvements                                     Shorter of useful life or lease term

     Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is
reflected in operations. Major additions and improvements are capitalized while repairs and maintenance that do not extend the life of the asset
are charged to operations as incurred.

Software Development Costs

     The Company applies the principles of FAS No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed" ("FAS 86"). FAS 86 requires that software development costs incurred in conjunction with product development be charged to
research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software
development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The
Company does not consider a product in development to have passed the technological feasibility milestone until the Company has completed a
model of the product that contains essentially all the functionality and features of the final product and has tested the model to ensure that it
works as expected. To date, the Company has not incurred significant costs between the establishment of technological feasibility and the
release of a product for sale. Thus, the Company has expensed all software development costs as incurred.

Internal Software and Website Development Costs

     The Company accounts for internal use software development costs in accordance with the American Institute of Certified Public
Accountant's ("AICPA") Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" and

                                                                         F-10
                                                               EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)



Emerging Issues Task Force ("EITF") 00-2 "Accounting for the Costs of Developing a Web Site." Accordingly, the Company expenses all
costs incurred that relate to planning and post implementation phases of development. Costs incurred in the development phase are capitalized
and amortized over the product's estimated useful life which is generally three years. For the years ended December 31, 2006 and 2007, the
Company capitalized $0.7 million and $0.9 million of software development costs related to software for internal use, respectively. Internal
software development costs are generally amortized on a straight-line basis over three years beginning with the date the software is placed into
service. Amortization of software developed for internal use was $0.1 million, $0.5 million and $0.9 million for the years ended December 31,
2005, 2006 and 2007, respectively. Costs associated with minor enhancement and maintenance of the Company's website are expensed as
incurred.

Impairment of Long-Lived Assets

      The Company evaluates long-lived assets for potential impairment under FAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Asset" ("FAS 144"). The Company assesses the recoverability of its long-lived assets whenever adverse events or changes in
circumstances or business climate indicate that expected undiscounted future cash flows related to such long-lived assets may not be sufficient
to support the net book value of such assets. For purposes of FAS 144, impairment exists when the carrying value of a long-lived asset exceeds
its fair value. An impairment loss is recognized only if the carrying value of a long-lived asset is not recoverable and exceeds its fair value. The
carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and
eventual disposition of the asset. There were no such impairment losses during the years ended December 31, 2005, 2006, or 2007.

Freestanding Preferred Stock Warrants

      The Company accounts for freestanding warrants in accordance with Financial Accounting Standards Board ("FASB") Staff
Position 150-5, "Issuer's Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That
Are Redeemable" ("FSP 150-5"). Under FSP 150-5, the freestanding warrants that are related to the Company's Convertible Preferred Stock are
classified as liabilities on its balance sheet. The warrants are subject to reassessment at each balance sheet date, and any change in fair value is
recognized as a component of other income (expense), net. The Company will continue to adjust the liability for changes in fair value until the
earlier of the exercise or expiration of the warrants or the completion of a liquidation event, including the completion of an initial public
offering, at which time all preferred stock warrants will be converted into warrants to purchase common stock, and accordingly, the liability
will be reclassified to stockholders equity (deficit).

Revenue Recognition

     Stand Alone Sales of Subscriptions Services

     The Company generates revenue from the sale of Subscriptions. Subscriptions include subscription services which allow a customer
access to the Company's decision support tools using a handheld device and license codes, as well as site licenses which allow a customer
internet access to the Company's decision support tools. Subscription services and license codes contain elements of software code that are
essential to the functionality of the service being provided. For these services, the

                                                                       F-11
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Company recognizes revenue in accordance with Statement of Position ("SOP") 97-2, "Software Revenue Recognition," as amended
("SOP 97-2"). Site licenses do not contain any software elements that are essential to the services being provided; therefore site license revenue
is recognized in accordance with SEC Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," ("SAB 104"). Subscriptions are
recognized as revenue ratably over the term of the subscription as services are delivered. Billings for Subscriptions typically occur in advance
of services being performed; therefore these amounts are recorded as deferred revenue when billed.

     If a paid subscriber is unsatisfied for any reason during the first 30 days of the subscription and wishes to cancel the subscription, the
Company provides a refund. In accordance with FAS No. 48, "Revenue Recognition When a Right of Return Exists" ("FAS 48"), the Company
records a reserve based on estimated future cancellations using historical data. To date, such returns reserve has not been material and within
management's expectations.

     Stand Alone Sales of Other Services

     The Company also generates revenue by providing healthcare companies with interactive information services, or Interactive Services,
through targeted access to its network of subscribers. Interactive Services include clinical messaging, formulary, market research and medical
education services. Interactive Services do not contain any software elements that are essential to the services being provided; therefore
revenue is recognized in accordance with SAB 104.

      For market research services, the Company receives a single payment from the customer, a portion of which is paid to survey participants
to induce them to participate. The Company considered Emerging Issues Task Force ("EITF") 99-19, "Reporting Revenue Gross as a Principal
versus Net as an Agent," and concluded that the Company acts as the primary obligor. Accordingly, the Company recognizes the entire fee paid
by its customers as revenue upon confirmation of completion of the survey by the customer, and the compensation paid by the Company to
survey participants is recorded as a cost of revenue in the period in which the survey is completed by the participant.

     All Services

     For all services, revenue is recognized only when there is:

     1)
            Persuasive evidence that an arrangement exists, which generally is in the form of a written contract, amendments to that contract,
            or purchase orders from a third party;

     2)
            Delivery has occurred or services have been rendered;

     3)
            Price is fixed or determinable after evaluating the risk of concession; and

     4)
            Collectibility is probable and/or reasonably assured based on customer creditworthiness and past history of collection.

     When collectibility is not considered probable, revenue is deferred until collection. Extended payment terms beyond normal terms may
cause a deferral of revenue until such amounts become due.

     Allowances are established for uncollectible amounts and potential returns based on historical experience.

                                                                      F-12
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

     Multiple Element Arrangements

     The Company often enters into arrangements that contain both Subscriptions and Interactive Services. In such arrangements, the Company
has concluded that Subscriptions are not essential to the functionality of the Interactive Services because Interactive Services function
independently and are frequently delivered without Subscriptions. In accordance with EITF 03-05, "Applicability of AICPA SOP 97-2 to
Non-Software Deliverables in an Arrangement Containing More Than Incidental Software," in multiple element arrangements where some of
the services in the bundle contain elements of software and some of the services do not contain any elements of software, consideration is
allocated among the various elements in accordance with EITF 00-21, "Revenue Arrangements with Multiple Deliverables." Revenue is then
recognized in accordance with SOP 97-2 for the software elements and in accordance with SAB 104 for the non-software elements.

     Vendor specific objective evidence ("VSOE") of fair value has been established for subscription services and license codes and represents
the price charged when that element is sold separately. Vendor objective evidence ("VOE") of fair value for site licenses and Interactive
Services is also established based on the price paid when such services are sold separately. To date, VOE of fair value for site licenses has not
been established nor has VOE of fair value been established for Interactive Services due to the wide variability in the pricing of most
Interactive Services.

     The Company has had a customary business practice and historical pattern of making concessions that were not required under the original
provisions of its Interactive Services or site license arrangements. These concessions have generally been in the form of providing the
Company's Interactive Services and site license customers with a limited number of license codes which may be redeemed for free
Subscriptions. Because of this historical pattern of making concessions in association with these arrangements, all revenue has been deferred
for such arrangements until the risk of concession has passed, which is generally when delivery of the last item in the contract has been
completed.

     Effective April 2007, the Company established controls to prevent these concessions. The Company granted its Interactive Services
customers a right to receive a specified number of license codes at anytime during the term of the agreement. These license codes may be
redeemed for a one-year subscription within six-months of issuance. Due to this change in practice, all Interactive Services agreements include
subscription services for which VSOE of fair value exists and Interactive Services for which VOE of fair value does not exist. Revenue for
these arrangements is deferred until only one undelivered element remains.

     Commission and royalty costs are expensed as incurred.

     Stock-Based Compensation

     Effective January 1, 2006, the Company adopted FAS No. 123(R), "Accounting for Stock-Based Compensation" ("FAS 123(R)") using
the prospective application transition method. Accordingly, stock-based compensation cost is measured at grant date based on the fair value of
the award and is expensed on a straight-line basis over the requisite service period. The Company adopted FAS 123(R) using the prospective
transition method, which requires that for nonpublic entities that used the minimum value method for either proforma or financial statement
recognition purposes, FAS 123(R) shall be applied to option grants after the required effective date. For options granted prior to the

                                                                      F-13
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

FAS 123(R) effective date for which the requisite service period had not been performed as of January 1, 2006, the Company will continue to
recognize compensation expense on the remaining unvested awards under the intrinsic-value method of Accounting Principles Board Opinion
("APB") No. 25 "Accounting for Stock Issued to Employees" ("APB 25").

     The Company has elected to use the "with and without" approach as described in EITF Topic No. D-32 in determining the order in which
tax attributes are utilized. As a result, the Company will only recognize a tax benefit from stock based awards in addition paid-in capital if an
incremental tax benefit is realized after all other tax attributes currently available to the Company have been utilized. In addition, the Company
has elected to account for the indirect effects of stock based awards on other tax attributes, such as the research tax credit, through its statement
of operations.

    The Company accounts for equity instruments issued to non-employees in accordance with the provisions of FAS 123, "Accounting for
Stock-Based Compensation" and EITF Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for
Acquiring or in Conjunction with Selling Goods or Services."

Research and Development

     Research and development costs are expensed as incurred, except for certain internal use software development costs, which may be
capitalized as noted above. Research and development costs include salaries, stock-based compensation expense, benefits and other operating
costs such as outside services, supplies and allocated overhead costs.

Advertising

    Advertising costs are expensed as incurred and included in sales and marketing expense in the accompanying statements of operations.
Advertising expense totaled $0.4 million, $0.5 million and $0.3 million for the years ended December 31, 2005, 2006 and 2007, respectively.

Income Taxes

     The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using
enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized.

Sales Taxes

      When sales and other taxes are billed, such amounts are recorded as accounts receivable with a corresponding increase to sales tax
payable, respectively. The balances are then removed from the balance sheet as cash is collected from the customer and as remitted to the tax
authority. Since inception, the Company has not charged sales tax nor remitted sales tax for any of its sales. The Company has recorded a
liability for uncollected and unremitted sales taxes and associated interest and penalties (see Note 4).

                                                                        F-14
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Comprehensive Income (Loss)

     For the years ended December 31, 2005 and 2006, comprehensive loss was equal to net loss. For the year ended December 31, 2007,
comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to gains
and losses that under generally accepted accounting principles are recorded as an element of stockholders' equity but are excluded from net
income. The Company's other comprehensive income currently includes only unrealized gains on available for sale securities (see Note 3).

     Comprehensive income consists of the following components net of related tax effects (in thousands):

                                                                                                           Year Ended
                                                                                                           December 31,
                                                                                                               2007

                      Net income                                                                       $            25,739
                      Change in unrealized gains on available for sale securities, net of tax effect                     9

                      Comprehensive income                                                             $            25,748

Net Income (Loss) Per Share

     Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the sum of the weighted
average number of common shares outstanding during the period, net of shares subject to repurchase. Net income available to common
stockholders is calculated using the two class method as the net income less Preferred Stock dividend for the period and amount allocated to
Preferred Stock to reflect the rights of the Preferred Stock to receive dividends in preference to common stock.

     Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. The computation of
diluted income (loss) per share does not assume conversion, exercise, or contingent exercise of securities that would have an anti-dilutive effect
on earnings. The dilutive effect of outstanding stock options and warrants is computed using the treasury stock method.

                                                                       F-15
                                                             EPOCRATES, INC.

                                          NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

    The following table sets forth the computation of basic and diluted net income (loss) per common share for the years ended December 31,
2005, 2006 and 2007 (in thousands, except per share data):

                                                                                                            Years Ended December 31,

                                                                                                    2005               2006                  2007

Numerator:
  Net income (loss)                                                                            $      (2,910 ) $          (1,441 ) $           25,739
  Less: Accrued dividend on Series B mandatorily redeemable convertible preferred stock                2,824               2,840                2,840
  Less: Allocation of net income to participating preferred shares                                        —                   —                15,582

   Numerator for basic and diluted calculation                                                 $      (5,734 ) $          (4,281 ) $                7,317


Denominator:
  Denominator for basic calculation, weighted average number number of common shares
  outstanding                                                                                          5,449               6,888                    7,592
  Dilutive effect of options using treasury stock method                                                  —                   —                     2,201
  Early exercised options not included in denominator for basic calculation                               —                   —                       342

   Denominator for diluted calculation                                                                 5,449               6,888               10,135


Net income (loss) per share:
  Basic net income (loss) per common share                                                     $       (1.05 ) $           (0.62 ) $                 0.96

   Diluted net income (loss) per common share                                                  $       (1.05 ) $           (0.62 ) $                 0.72

     Diluted income (loss) per share would give effect to the dilutive impact of common stock equivalents which consists of convertible
preferred stock and stock options and warrants (using the treasury stock method). Potentially dilutive securities have been excluded from the
diluted loss per share computations as such securities have an anti-dilutive effect on loss per share.

     The loss per common share applicable to the cumulative effect of a change in accounting principle for the year ended December 31, 2005
was less than $0.01 (see Note 8).

     For the years ended December 31, 2005, 2006 and 2007 the following securities were not included in the calculation of fully diluted shares
outstanding as the effect would have been anti-dilutive (in thousands):

                                                                                                                  Years Ended December 31,

                                                                                                           2005               2006            2007

Warrants                                                                                                       52                 18               18
Outstanding unexercised options                                                                             3,256              3,110              559
Mandatorily redeemable convertible preferred stock                                                         15,237             15,271           15,201

Total outstanding                                                                                          18,545             18,399           15,778

                                                                     F-16
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Segment Reporting

     The Company reports segment information in accordance with FAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." The Company is managed as one operating segment. The Chief Executive Officer is the chief operating decision maker. The
Company has multiple services, all of which are marketed to clients in the healthcare, pharmaceutical and insurance industries primarily
located within the United States. All of the Company's long lived assets are located in the United States.

     Revenue from Subscriptions and Interactive Services were as follows for the years ended December 31, 2005, 2006 and 2007 (in
thousands):

                                                                                                              Years Ended December 31,

                                                                                                      2005              2006                 2007

Subscriptions                                                                                   $       13,177     $       17,706        $     19,732
Interactive Services                                                                                    19,359             31,811              45,879

                                                                                                $       32,536     $       49,517        $     65,611

Unaudited Proforma Stockholders' Equity

     If the offering contemplated by this prospectus is consummated, all of the convertible preferred stock outstanding will automatically
convert into 14.1 million shares of common stock, based on the shares of convertible preferred stock outstanding at December 31, 2007. In
addition, the warrant to purchase 18,214 shares of the Company's convertible preferred stock outstanding at the consummation of the offering
will automatically convert into a warrant to purchase 21,044 shares of the Company's common stock. Unaudited proforma stockholders' equity,
as adjusted for the assumed conversion of the convertible preferred stock and the change in the classification of the preferred stock warrants
from a liability to additional paid-in capital, is set forth on the balance sheet.

Recent Accounting Pronouncements

     In September 2006, the FASB issued FAS No. 157, "Fair Value Measurements" ("FAS 157") which defines fair value, establishes a
framework for measuring fair value in GAAP and expands disclosures about fair value measurements. FAS 157 does not require any new fair
value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the
information. FAS 157 is effective for the Company beginning January 1, 2008. In February 2005 the FASB issued FSP No. FAS 157-2,
"Effective Date of FASB Statement No. 157," which delays the effective date of FAS 157, "Fair Value Measurements," by one year for
nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.
The Company is currently evaluating whether adoption of FAS 157 will result in a change to its fair value measurements.

     In February 2007, the FASB issued FAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an
amendment of FASB Statement No. 115" ("FAS 159"). FAS 159 permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently without

                                                                        F-17
                                                                EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)



having to apply complex hedge accounting provisions. FAS 159 is expected to expand the use of fair value measurement, which is consistent
with the FASB's long-term measurement objectives for accounting for financial instruments. FAS 159 is effective for the Company beginning
January 1, 2008. The Company is currently evaluating whether adoption of FAS 159 will result in a change to the Company's fair value
measurements.

     In December 2007, the FASB issued FAS No. 141(R), "Business Combinations" ("FAS 141(R)"), which replaces FAS 141, "Business
Combinations." FAS 141(R) retains the fundamental requirements in FAS 141 that the acquisition method of accounting (which FAS 141
called the purchase method ) be used for all business combinations and for an acquirer to be identified for each business combination.
FAS 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the
acquisition date as the date that the acquirer achieves control. FAS 141(R) is effective for the Company beginning January 1, 2009. The
Company does not expect the adoption of FAS 141(R) to have a material impact on its results of operations, financial position, or cash flows.

    In December 2007, the FASB issued FAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of
ARB No. 51" ("FAS 160"). FAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that
should be reported as equity in the consolidated financial statements. FAS 160 is effective for the Company beginning January 1, 2009. The
Company does not expect the adoption of FAS 160 to have a material impact on its results of operations, financial position, or cash flows.

3. Short-Term Investments

     The Company accounts for short-term marketable securities in accordance with FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Marketable securities are classified as available-for-sale. Premiums (discounts) are amortized (accreted) to interest
income over the life of the investment. Marketable securities are classified as short-term investments if the remaining maturity, from the date of
purchase is in excess of ninety days. Investments with contractual maturities of more than one year are included current in short-term
investments since the Company intends to convert them into cash as necessary to meet liquidity needs.

     The Company determines the fair value amounts by using available market information. At December 31, 2007, the average portfolio
duration was less than one year and the contractual maturity of any single investment did not exceed 24 months. The gross unrealized gains on
available-for-sale securities at December 31, 2007 were $15,000. There were no gross unrealized losses on available-for-sale securities at
December 31, 2007.

                                                                         F-18
                                                          EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

3. Short-Term Investments (Continued)

     At December 31, 2006, the Company did not hold any short-term investments. At December 31, 2007, short-term investments were
classified as available-for-sale securities and are reported at fair value as follows (in thousands):

                                                                                          Gross                          Gross
                                                                    Amortized           Unrealized                     Unrealized
                                                                      Cost                Gains                         Losses              Fair Value

Cash and Available-for-Sale Securities
Obligations of U.S. government agencies                         $             502   $                   4      $                    —   $           506
Obligations of U.S. corporations                                            1,387                      11                           —             1,398
Obligations of Non-U.S. corporations                                          600                      —                            —               600
Money market funds                                                         70,116                      —                            —            70,116

                                                                $          72,605   $                  15      $                    —   $        72,620


Amounts included in cash and cash equivalents                   $          70,116   $                  —       $                    —   $        70,116
Amounts included in short-term investments (contractual
maturities less than one year)                                              1,198                      —                            —             1,198
Amounts included in short-term investments (contractual
maturities more than one year)                                              1,291                      15                           —             1,306

                                                                $          72,605   $                  15      $                    —   $        72,620

4. Balance Sheet Components

    The following table shows the components of prepaid expenses and other current assets as of December 31, 2006 and 2007 (in thousands):

                                                                                                           As of
                                                                                                        December 31,

                                                                                                     2006               2007

                     Prepaid expenses                                                         $        1,421       $      1,048
                     Other current assets                                                                711                519

                                                                                              $        2,132       $      1,567

                                                                    F-19
                                                             EPOCRATES, INC.

                                          NOTES TO FINANCIAL STATEMENTS (Continued)

4. Balance Sheet Components (Continued)

    The following table shows the components of property and equipment as of December 31, 2006 and 2007 (in thousands):

                                                                                                         As of
                                                                                                      December 31,

                                                                                               2006                    2007

                    Building (see Note 5)                                                  $          —        $        17,884
                    Computer equipment and purchased software                                      4,495                 4,853
                    Software developed for internal use                                            2,627                 3,502
                    Furniture and fixtures                                                         1,356                 6,152
                    Leasehold improvements                                                           148                   164

                                                                                                    8,626               32,555
                         Less: accumulated depreciation and amortization                           (5,366 )             (6,629 )

                                                                                           $       3,260       $        25,926


     Depreciation and amortization expense for the years ended December 31, 2005, 2006 and 2007 was $0.5 million, $1.1 million and
$1.9 million, respectively.

    The following table shows the components of other accrued expenses as of December 31, 2006 and 2007 (in thousands):

                                                                                                           As of
                                                                                                        December 31,

                                                                                                     2006               2007

                      Accrued employee compensation                                            $       2,356       $      3,288
                      Uncollected and unremitted sales tax                                             1,793              2,577
                      Accrued market research honoraria                                                1,659              1,446
                      Other accrued expenses                                                           1,240              2,361

                                                                                               $       7,048       $      9,672

     Since inception, the Company has neither charged nor remitted sales tax on any of its sales. The Company recorded expense of
$0.6 million, $0.7 million and $0.8 million related to uncollected and unremitted sales tax including estimated penalties and interest of
$0.1 million, $0.2 million and $0.2 million for the years ended December 31, 2005, 2006 and 2007, respectively. The expense related to sales
tax was recorded to cost of revenues and the expense related to penalties and interest was recorded in other income (expense), net.

5. Financing Liability

     In April 2007, the Company began a build-out of existing office space which would become the Company's new headquarters facility.
From April 2007 through September 2007, the Company incurred approximately $4.0 million in construction costs. Per the terms of the lease
with the sublandlord of the property, the sublandlord will reimburse up to $2.7 million of these construction costs. Because certain
improvements constructed by the Company were considered structural in nature and because the Company was responsible for any cost
overruns, the Company is considered to be the owner of the construction project for accounting purposes under EITF 97-10, "The Effect of
Lessee Involvement in Asset Construction."

                                                                    F-20
                                                             EPOCRATES, INC.

                                             NOTES TO FINANCIAL STATEMENTS (Continued)

5. Financing Liability (Continued)

     Therefore, in accordance with EITF 97-10, the Company capitalized the fair value of the portion of the building that it occupies at
$17.6 million with a corresponding credit to financing liability. The fair value was determined as of May 2007 using an average of the sales
comparison and income approaches. In addition, the Company has capitalized approximately $4.0 million in construction costs from April
2007 through September 2007. Each major construction element has been capitalized and is being amortized over their useful life. The
reimbursement from the sublandlord of approximately $2.7 million has also been recorded as a financing liability as of December 31, 2007.
The total amount recorded as a financing liability was $20.3 million.

     Subsequent to completion of construction, the Company did not qualify for sale-leaseback accounting under FAS 98, "Accounting for
Leases." Therefore, the Company expects the building to remain on its books throughout the term of the lease. Rent payments throughout the
term of the lease are recorded as interest expense and the building will be depreciated on a straight-line basis over 40 years.

6. Income Taxes

    The Company's effective tax expense differs from the expense computed using statutory tax rates for the years ended December 31, 2005,
2006 and 2007 as follows (in thousands):

                                                                                                               Years Ended December 31,

                                                                                                       2005             2006               2007

Tax computed at the federal statutory rate                                                     $           (998 ) $        (451 ) $            1,614
State tax, federally effected                                                                              (100 )            (1 )                398
Stock compensation                                                                                          306             371                  784
Tax credits                                                                                                (355 )          (456 )               (310 )
Permanent differences and other                                                                              64              36                  161
Net operating loss and credit limitation                                                                     —               —                 1,800
Valuation allowance                                                                                       1,140             529              (25,573 )

Income tax provision (benefit)                                                                 $               57   $          28   $        (21,126 )


     The provision (benefit) for income taxes for the years ended December 31, 2005, 2006 and 2007, are as follows (in thousands):

                                                                                                                Years Ended December 31,

                                                                                                        2005            2006               2007

Current tax expense (benefit):
  Federal                                                                                          $           44   $          16   $             375
  State                                                                                                        13              12                 131

                                                                                                               57              28                 506

Deferred tax expense (benefit):
  Federal                                                                                                      —               —             (17,015 )
  State                                                                                                        —               —              (4,617 )

                                                                                                               —               —             (21,632 )
Income tax provision (benefit)                                                                     $           57   $          28   $        (21,126 )


                                                                     F-21
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

6. Income Taxes (Continued)

     Significant components of the Company's deferred tax assets and liabilities from federal and state income taxes as of December 31, 2006
and 2007 are as follows (in thousands):

                                                                                                          As of
                                                                                                       December 31,

                                                                                                2006                  2007

                     Deferred tax assets:
                       Net operating losses                                                $      20,831        $      11,586
                       Tax credits                                                                 2,082                2,772
                       Intangible assets                                                             685                  559
                       Deferred revenue                                                            1,511                5,172
                       Stock compensation                                                             88                  461
                       Accrued expenses                                                            1,095                2,113
                       Other                                                                          44                   43

                     Total deferred tax assets                                                     26,336              22,706
                        Valuation allowance                                                       (25,573 )                —

                                                                                                        763            22,706
                        Fixed assets                                                                   (763 )          (1,074 )
                        Other                                                                            —                 (6 )

                     Net deferred tax assets                                               $             —      $      21,626


     A valuation allowance of $25.6 million at December 31, 2006 had been recorded to offset net deferred tax assets as the Company was
unable to conclude at such date that it is more likely than not that such deferred tax assets would be realized. As of December 31, 2007, the
Company believes it is more likely than not that it will be able to realize its deferred tax assets through expected future taxable income.
Therefore, the Company recorded a $21.1 million tax benefit resulting primarily from the release of the deferred tax asset valuation allowance.
Although realization is not assured, the Company has concluded that it is more likely than not that the deferred tax assets at December 31, 2007
for which a valuation allowance was determined to be unnecessary will be realized in the ordinary course of operations based on the available
positive and negative evidence, primarily the Company's projected earnings. The amount of the net deferred tax assets considered realizable,
however, could be reduced in the near term if actual future earnings are lower than estimated, or if there are differences in the timing or amount
of future reversals of existing taxable or deductible temporary differences.

     At December 31, 2007, the Company had federal and state tax net operating loss carryforwards of approximately $31.5 million and
$17.2 million, respectively. The federal and state net operating losses will begin to expire in 2020 and 2010, respectively. At December 31,
2007, the Company had federal and state research tax credit carryforwards of approximately $1.3 million and $1.4 million, respectively. The
federal research credit carryforward begins to expire in 2020. The state research credit carryforwards do not expire. At December 31, 2007, the
Company had federal and state alternative minimum tax ("AMT") credit carryforwards of approximately $0.4 million and $0.1 million,
respectively. The federal and state AMT credit carryforwards do not expire.

    The future utilization of the Company's net operating loss and research and development credit carryforwards to offset future taxable
income may be subject to an annual limitation as a result of

                                                                      F-22
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

6. Income Taxes (Continued)



ownership changes. The Company has had two "change of ownership" events that limit the utilization of net operating loss and credit
carryforwards. The "change of ownership" events occurred in September 1999 and August 2000. As a result, utilization of net operating loss
and tax credits prior to the "change of ownership" events will be significantly limited. The limitation will result in the expiration of unused
federal and state tax net operating loss and federal tax credit carryforwards of approximately $4.3 million, $4.2 million and $0.1 million,
respectively.

     In June 2006, FASB issued FASB Interpretation, ("FIN") No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of
FASB Statement No. 109" ("FIN 48") FIN 48 establishes a single model to address accounting for uncertain tax positions. FIN No. 48 clarifies
the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in
the consolidated financial statements. FIN No. 48 also provides guidance on derecognition, measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition.

      The Company adopted the provisions of FIN 48 on January 1, 2007. As of the date of adoption, the Company's unrecognized tax benefits
totaled $1.3 million, which if recognized would affect our effective tax rate. The adoption of FIN 48 did not result in an adjustment to
accumulated deficit. The Company will recognize interest and penalties related to unrecognized tax benefits as a component of income tax
expense.

     The rollforward of gross unrecognized tax benefits is as follows (in thousands):

                        Balance at January 1, 2007                                                           $     1,647
                        Additions based on tax positions related to the current year                                  —
                        Additions for tax positions of prior years                                                    —
                        Reductions for tax positions of prior years                                                   —
                        Settlements                                                                                   —

                        Balance at December 31, 2007                                                         $     1,647

     On date of adoption and at December 31, 2007, the amount of interest and penalties associated with the unrecognized tax benefits were
insignificant. The Company does not expect any significant increases or decreases to its unrecognized tax benefit within the next 12 months.

     The Company is subject to U.S. federal and state income tax. The Company is no longer subject to U.S. federal and state income tax
examinations for years before 2004 and 2003, respectively. However, to the extent allowed by law, the tax authorities may have the right to
examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of
the net operating loss or credit carry forward amount. The Company is not currently under U.S. federal or state tax examinations.

7. Commitments and Contingencies

Operating Lease

     Rent expense for the years ended December 31, 2005, 2006 and 2007 was $0.8 million, $0.9 million and $0.7 million, respectively.

                                                                      F-23
                                                             EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

7. Commitments and Contingencies (Continued)

     The Company leases office space in New Jersey under a non-cancelable operating lease which expires in January 2012. Future minimum
lease payments under this lease as of December 31, 2007 are as follows (in thousands):

                                                                                                              Operating
                       Years Ending December 31,                                                               Leases

                       2008                                                                               $           293
                       2009                                                                                           315
                       2010                                                                                           321
                       2011                                                                                           327
                       2012                                                                                           332
                       Thereafter                                                                                      28

                                                                                                          $         1,616

Minimum Royalty and Development Commitments

     The Company's royalty and development expenses consist of fees that it pays to branded content owners for the use of their intellectual
property. Royalty and development expenses are expensed as incurred. The Company's contracts with some licensors include minimum
guaranteed royalty payments, which are payable regardless of the ultimate sales of subscriptions. Effective January 1, 2006, the Company
adopted FSP FIN 45-3, "Application of FASB Interpretation No. 45 to Minimum Revenues Guarantees Granted to a Business or Its Owners."
Because significant performance remains with the content owner, the Company records royalty payments as a liability when incurred, rather
than upon execution of the agreement. Future minimum payments under various royalty and product development agreements with vendors as
of December 31, 2007 are as follows (in thousands):

                                                                                                           Royalty and
                                                                                                          Development
                      Years Ending December 31,                                                           Arrangements

                      2008                                                                           $                1,258
                      2009                                                                                              116
                      2010                                                                                              100

                                                                                                     $                1,474

Subscription Cancellation Reserve

     If a paid subscriber is unsatisfied for any reason during the first 30 days of the subscription and wishes to cancel the subscription, the
Company will provide a full refund. Refunds made by the Company under this obligation have not been material during all periods presented
and have been within management's expectations. The Company maintains an allowance for estimated future returns based on historical data.
The provision for estimated future returns is included in deferred revenue.

Legal Matters

   From time to time, the Company may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property,
commercial, employment and other matters, which arise

                                                                      F-24
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

7. Commitments and Contingencies (Continued)



in the ordinary course of business. In accordance with FAS 5, "Accounting for Contingencies," the Company makes a provision for a liability
when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are
reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling, advice of legal counsel and other information
and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling were to occur in any specific period,
there exists the possibility of a material adverse impact on the results of operations of that period or on the Company's cash and/or liquidity.
Currently, the Company is not involved in any litigation; however, one of the Company's competitors, WebMD, has made assertions about the
Company's business and its business practices. WebMD has retained outside counsel and has asserted that they are prepared to pursue claims
against the Company including claims under the Lanham Act and state laws regarding unfair competition and false advertising. They have also
asserted their rights to contact governmental agencies to investigate the Company's business practices. Although the Company believes that
their claims are without merit and that its business practices are both legal and ethical, WebMD may nevertheless choose to pursue legal action.
Nothing has been accrued for this contingent liability as of December 31, 2007 because the amount is not estimable.

Indemnification

      The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, each party
may indemnify, defend and hold the other party harmless with respect to such claim, suit or proceeding brought against it by a third party
alleging that the indemnifying party's intellectual property infringes upon the intellectual property of the third party, or results from a breach of
the indemnifying party's representations and warranties or covenants, or that results from any acts of negligence or willful misconduct. The
term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of
future payments the Company could be required to make under these indemnification agreements is unlimited. Historically, the Company has
not been obligated to make significant payments for these obligations and no liabilities have been recorded for these obligations on the balance
sheet as of December 31, 2006 or 2007.

     The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer is or
was serving at the Company's request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the
Company has a Director and Officer Insurance Policy that limits its exposure and enables the Company to recover a portion of any future
amounts paid. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been
recorded for these obligations on the balance sheet as of December 31, 2006 or 2007.

Other Contingencies

     The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company's management does
not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company's financial position,
results of operations or cash flows.

                                                                        F-25
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

8. Mandatorily Redeemable Convertible Preferred Stock

     As of December 31, 2007, the holders of mandatorily redeemable convertible preferred stock ("Series A Stock," "Series B Stock" and
"Series C Stock") have various rights and preferences as follows (in thousands):

                                                                                                                                   Proceeds
                                                                   Shares             Shares             Liquidation                Net of
Series                                                            Authorized        Outstanding          Preference             Issuance Costs

A                                                                       5,050               4,195    $           4,195    $                   4,150
B                                                                       6,250               6,217               56,310                       35,455
C                                                                       4,004               2,730                4,348                        4,302

                                                                       15,304             13,142     $          64,853    $                  43,907

Voting

   Each share of Series A Stock, Series B Stock and Series C Stock has voting rights equal to an equivalent whole number of shares of
common stock into which it is convertible and votes together as one class with the common stock.

     Series A Stock and Series C Stock, voting together as a single class, have certain protective provisions so long as at least 1,515,000 shares
of Series A Stock and 1,130,000 shares of Series C Stock remain outstanding (collectively, the "Series A and C Threshold Amount"). Series B
Stock has separate protective provisions, so long as at least 1,839,000 shares of Series B remain outstanding (the "Series B Threshold
Amount"). The Series A Stock, Series B Stock and Series C Stock (collectively, the "Series Preferred") have certain protective provisions so
long as the Series A and C Threshold Amount and the Series B Threshold Amount remain outstanding.

     If the Series A and C Threshold Amount and the Series B Threshold Amount remain outstanding, the Company must obtain approval from
a majority of the holders of Series A Stock and Series C Stock, voting together as a single class, and the holders of Series B Stock, voting as a
separate class, in order to amend or alter the terms of the Company's Certificate of Incorporation as they relate to mandatorily redeemable
convertible preferred stock, change the authorized number of shares of mandatorily redeemable convertible preferred stock, repurchase any
shares of common stock other than shares subject to the right of repurchase by the Company, authorize a dividend for any class or series of
stock other than mandatorily redeemable convertible preferred stock, or create a new class of stock.

     If the above numbers of shares of Series A Stock, Series B Stock and Series C Stock remain outstanding, the Company must obtain
approval from a majority of the holders of Series Preferred, voting together as a single class, in order to change the authorized number of
directors of the Company, effect a voluntary dissolution or liquidation of the Company, or effect a merger, consolidation or sale of assets where
the existing stockholders retain less than 50% of the voting stock of the surviving entity.

Dividends

     Holders of Series A Stock are entitled to receive non-cumulative dividends at the per annum rate of 8% of the original issue price of $1.00
on each outstanding share of Series A Stock, when and if declared by the board of directors. The holders of Series A Stock will also be entitled
to participate in

                                                                       F-26
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

8. Mandatorily Redeemable Convertible Preferred Stock (Continued)



dividends on common stock when, as and if declared by the board of directors, based on the number of shares of common stock held on an as-if
converted basis. From the inception of the Company through December 31, 2007, the Company's board of directors has not declared any
dividends on its preferred or common stock.

     Holders of Series B Stock are entitled to receive dividends, in preference to the holders of Series A Stock, Series C Stock and common
stock, at the simple rate of 8% of the original issue price of $5.71 on each outstanding share of Series B Stock. The dividends are cumulative
and shall be payable, in cash or stock, as determined by the board of directors, only upon any consolidation or merger of the Company in which
in excess of 50% of the Company's voting power is transferred; the sale, lease or other disposition of all or substantially all of the assets of the
Company; upon the automatic conversion in connection with either an initial public offering or the requisite vote of the outstanding preferred
stock; or upon the first redemption date. The Company accrued dividends related to Series B Stock of $2.8 million for each of the years ended
December 31, 2006 and 2007. As of December 31, 2006 and 2007 the aggregate amount accrued for such dividends was $18.0 million and
$20.8 million, respectively. The holders of Series B Stock will also be entitled to participate in dividends on common stock when, as and if
declared by the board of directors, based on the number of shares of common stock held on an as-if converted basis.

     Holders of Series C Stock are entitled to receive non-cumulative dividends at the per annum rate of 8% of the original issue price of
$1.5926 on each outstanding share of Series C Stock, when, as and if declared by the board of directors. The holders of Series C Stock will also
be entitled to participate in dividends on common stock when, as and if declared by the board of directors, based on the number of shares of
common stock held on an as-if converted basis. From the inception of the Company through December 31, 2007, the Company's board of
directors has not declared any dividends on its preferred or common stock.

Liquidation

      In the event of any liquidation, dissolution or winding up of the Company whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any Series A Stock or junior stock, the holders of Series C Stock and Series B Stock shall be entitled to
be paid out of the assets of the Company legally available for distribution an amount per share of Series C Stock and Series B Stock equal to
the respective original issue price of the applicable series plus all declared and unpaid dividends on the Series C Stock and all accrued and
unpaid dividends on the Series B Stock for each share of Series C Stock and Series B Stock held by them. If, upon any such liquidation,
distribution or winding up, the assets of the Company legally available for distribution shall be insufficient to make payment in full to all
holders of Series C Stock and Series B Stock then such assets shall be distributed among the holders of Series C Stock and Series B Stock at
the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.

     After the payment of the full liquidation preference of the Series C Stock and Series B Stock, before any distribution or payment shall be
made to the holders of any junior stock, the holders of Series A Stock shall be entitled to be paid out of the assets of the Company legally
available for distribution an amount per share of Series A Stock equal to the original issue price of the Series A Stock plus all declared and
unpaid dividends on the Series A Stock for each share of Series A Stock

                                                                       F-27
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

8. Mandatorily Redeemable Convertible Preferred Stock (Continued)



held by them. If, upon any such liquidation, distribution or winding up, the assets of the Company legally available for distribution shall be
insufficient to make payment in full to all holders of Series A Stock, then such assets shall be distributed among the holders of Series A Stock
at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.

      After the payment of the full liquidation preferences of the Series Preferred, the remaining assets of the Company legally available for
distribution, if any, shall be distributed ratably to the holders of the common stock and Series B on an as-if-converted to common stock basis
until such time as the holders of Series B Stock have received an aggregate amount per share of Series B Stock equal to three times the original
issue price of the Series B Stock plus all accrued and unpaid dividends on the Series B Stock; and thereafter the remaining assets of the
Company legally available for distribution, if any, shall be distributed ratably to the holders of the common stock.

Conversion

     Each share of Series Preferred is convertible, at the option of the holder, according to a conversion ratio, subject to adjustment for dilution.
Each share of Series Preferred automatically converts into the number of shares of common stock into which such shares are convertible at the
then-effective conversion ratio upon: (1) the closing of a public offering of common stock at a per share price of at least $6.00 per share with
gross proceeds to the Company of at least $30.0 million, or (2) with respect to Series A Stock and Series C Stock, the consent of the holders of
the majority of Series A Stock and Series C Stock, voting together and, with respect to the Series B Stock, the consent of the holders of a
majority of Series B Stock. As of December 31, 2006 and 2007, the conversion ratio for Series A, Series B and Series C was 1-to-1, 1-to-1.16,
and 1-to-1, respectively.

    At December 31, 2006 and 2007 the Company had 16.2 million and 14.1 million shares of common stock available for the conversion of
mandatorily redeemable convertible preferred stock, respectively.

Redemption

      Pursuant to the Company's Amended and Restated Certificate of Incororation the holders of at least a majority of the then outstanding
shares of Series Preferred voting together as a separate class, had the right to require the Company to redeem the Series Preferred in three
annual installments beginning at the fourth anniversary of the original issue date of the Series B and ending on the date two years from such
first redemption date. The mandatory redemption feature of all Series Preferred expired on August 9, 2006, however, the Company has
continued to accrue dividends on the Series B Stock even after the expiration of the redemption feature because the holders of Series Preferred
own a sufficient number of shares of the Company's capital stock to approve, on behalf of the Company's stockholders, a sale of the Company
approved by the Board.

     If the Company were to have effected the mandatory redemption, it would have done so by paying cash in exchange for the shares of
Series Preferred to be redeemed a sum equal to the original issue price per share of Series Preferred (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such shares), plus unpaid cumulative dividends with respect to such shares.

                                                                        F-28
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

8. Mandatorily Redeemable Convertible Preferred Stock (Continued)

Preferred Stock Warrants

      In May 2000, the Company issued warrants to purchase 87,537 shares of Series B Stock at $5.71 per share. These warrants were issued in
connection with a note and warrant purchase agreement. These warrants were to expire on the earlier of the closing of an initial public offering
or five years from date of issuance. The warrants were valued at $0.1 million using the Black-Scholes option pricing model. The value of the
warrants was recorded as interest expense during the year ended December 31, 2000. In May 2005, all of these warrants were exercised in full.

     Also in May 2000, the Company issued a warrant to purchase 18,214 shares of Series B Stock at $5.71 per share. This warrant was issued
in connection with a bridge loan agreement. This warrant expires on the later date of June 2, 2010, or seven years from closing of the
Company's initial public offering. Given the lack of an active public market for our outstanding common and preferred stock, our board of
directors established an estimate of fair value for these securities as well as for options and warrants to purchase these securities. The warrants
were initially valued at $70,727 using the Black-Scholes option pricing model and was recorded to interest expense.

     On July 1, 2005, the Company adopted FASB Staff Position ("FSP") 150-5, "Issuer's Accounting under FASB Statement No. 150 for
Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable" with respect to these warrants. FSP 150-5 affirms that
the outstanding warrants to purchase the Company's Series B Stock are required to be classified as liabilities which must be adjusted to fair
value at each reporting period. The warrants were originally valued at $70,727 and classified in mandatorily redeemable convertible preferred
stock. Upon adoption, the Company reclassified $70,727 from mandatorily redeemable convertible preferred stock to other liabilities and
recorded a charge of $2,576 as a cumulative effect of a change in accounting principle to adjust the warrant to its fair value of $73,303 as of the
adoption date. For the year ended December 31, 2005, the impact of the change in accounting principle was to increase net loss by $2,576 (less
than $0.01 per share), which was less than $0.01 per share for both basic and fully diluted loss per share.

      These warrants are subject to revaluation at each period end and any change in fair value will be recorded as an expense until the earlier of
their exercise or expiration or the completion of a liquidation event, including the completion of an initial public offering, at which time the
preferred stock warrant liability will be reclassified to stockholders' equity (deficit). The Company recorded $23,414 and $58,414 of additional
expense for the year ended December 31, 2005 and 2006, respectively and a reduction to expense of $22,842 for the year ended December 31,
2007, to reflect the change in the fair value of these outstanding warrants.

                                                                       F-29
                                                             EPOCRATES, INC.

                                                 NOTES TO FINANCIAL STATEMENTS

9. Common Stock

     As of December 31, 2006 and 2007, the Company was authorized to issue 28.3 million shares and 38.3 million shares, respectively, of
$0.001 par value common stock. Reserved shares of common stock were as follows (in thousands):

                                                                                                         December 31,

                                                                                                      2006          2007

                       Warrants                                                                           21            21
                       Options                                                                         4,080         4,710
                       Mandatorily redeemable convertible preferred stock                             16,237        14,108

                       Total outstanding                                                              20,338        18,839

Issuance of Common Stock

     On December 20, 2007, the Company completed a tender offer for the purchase of approximately 4.0 million shares of its common stock
for an aggregate purchase price of approximately $41.7 million and immediately thereafter issued approximately 3.8 million shares of common
stock to a single accredited investor for an aggregate sale price of approximately $40.0 million.

     The tender offer was made to existing holders of common stock that were not current employees of the Company and to holders of
Series A Stock and Series C Stock who were required to convert such preferred shares into common shares in order to participate in the offer.
The holders of approximately 0.8 million shares of Series A Stock and approximately 1.3 million shares of Series C Stock converted their
shares into common stock in order to participate in the tender offer.

      The approximate 0.2 million of shares repurchased pursuant to the tender offer that were not subsequently issued to the new investor, were
retired. In connection with the retirement of these shares, approximately $1.6 million, representing the difference between the repurchase price
and the average original issuance price of the retired shares was recorded to accumulated deficit.

     If the closing of an initial underwritten public offering of the Company's common stock does not occur on or before October 15, 2008, if
the board of directors of the Company determines not to proceed with the Company's initial offering, or if the board of directors of the
Company determines to delay the closing of the Company's initial offering later than October 15, 2008, the holder of the newly issued common
stock shall have the right, at its option, to exchange such Common Shares into shares of the Company's Series D Preferred Stock (the "Series D
Stock") on a 1-to-1 basis.

     The Series D Stock shall have the same par value and the same rights as the Series C Stock with the following exceptions:

     •
            The original issue price of the Series D Stock shall be equal to the price per share at which the common shares were purchased.

     •
            In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, holders of the
            Series D Stock shall be entitled to receive an amount per share equal to the greater of: (i) the price per share at which the common
            shares were purchased plus all declared and unpaid dividends (as adjusted for any stock dividends, combinations, splits,
            recapitalizations and the like with respect to such shares) on a pari passu basis with the holders of the Series C Stock and (ii) the
            amount that would be payable to the holder of that number of

                                                                      F-30
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

9. Common Stock (Continued)

          shares of the Company's Common Stock into which each such share of Series D Stock would then be convertible if such share of
          Series D Stock were converted into such Common Stock immediately prior to such liquidation, dissolution, or winding up of the
          Company.

     •
            The Series D Preferred conversion price shall be the original issue price of the Series D Stock provided that if any event occurs
            prior to the deadline date for an initial public offering of the Company discussed above that would result in an adjustment to the
            Series D Stock conversion price if the Series D Stock were then outstanding, then the conversion price for the Series D Stock will
            be adjusted accordingly.

     •
            Each share of Series D Stock shall automatically be converted into shares of common stock at any time upon the affirmative
            election of the holders of at least a majority of the outstanding shares of the Series D Stock.

10. Stock Option Plan

     The Company's board of directors adopted and the stockholders approved, the 1999 Stock Option Plan in August 1999 ("1999 Plan").

     The 1999 Plan provides for the grant of incentive stock options under the federal tax laws and nonstatutory stock options. Only employees
may receive incentive stock options, but nonstatutory stock options may be granted to employees, non-employee directors and consultants. The
exercise price of incentive stock options may not be less than 100% of the fair market value of the Company's common stock on the date of
grant. The exercise price of nonstatutory stock options may not be less than 85% of the fair market value of the Company's common stock on
the date of grant. Shares subject to options under the 1999 Plan generally vest in a series of installments over an optionee's period of service,
generally four years.

      The term of options granted under the 1999 Plan may not exceed ten years. Unless the terms of an optionee's stock option agreement
provide otherwise, if an optionee's service relationship with the Company, or any of its affiliates, ceases for any reason other than disability or
death, the optionee may exercise the vested portion of any options for three months after the date of such termination. If an optionee's service
relationship with the Company, or any of its affiliates, ceases due to disability or death (or an optionee dies within a certain period following
cessation of service), the optionee or a beneficiary may exercise any vested options for a period of 12 months in the event of disability and
18 months in the event of death. In no event, however, may an option be exercised beyond the expiration of its term.

     As of December 31, 2007, the Company had reserved 4.7 million shares of common stock for issuance under the Plan.

      The 1999 Plan provides certain employee option holders the right to elect to exercise unvested options in exchange for restricted common
stock. Unvested shares, which amounted to 0.7 million, 0.5 million and 0.2 million at December 31, 2005, 2006 and 2007, respectively, were
subject to a repurchase right held by the Company at the lesser of the exercise price or fair market value in the event the optionees' employment
is terminated either voluntarily or involuntarily. For exercises of employee options, this right lapses 25% on the first anniversary of the vesting
start date and in 36 equal monthly amounts thereafter. These repurchase terms are considered to be a forfeiture provision and do not result in
variable accounting. In accordance with EITF 00-23, "Issues Related to the

                                                                        F-31
                                                               EPOCRATES, INC.

                                            NOTES TO FINANCIAL STATEMENTS (Continued)

10. Stock Option Plan (Continued)



Accounting for Stock Compensation under APB 25" and FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation," such shares are not considered outstanding when calculating net income (loss) per share. In addition, cash received for exercise
of unvested options is treated as additional paid in capital in the Company's financial statements. Assuming that these shares were repurchased
at the original exercise price, the cost would be $0.2 million, $0.2 million and $0.1 million as of December 31, 2005, 2006 and 2007,
respectively.

     Certain employees have received grants for which the ultimate number of shares that will be subject to vesting is dependent upon the
achievement of certain financial targets for the year, and such determination is not made until the Company's audited financial statements are
available, the "vesting determination date." The grant is initially recorded for that number of shares that is most likely to be subject to vesting
based on available financial forecasts as of the date of grant. This amount is adjusted on a quarterly basis as new financial forecasts become
available. Stock-based compensation expense is recorded over the requisite service period, generally four years. Such options generally vest
ratably for 36 months from the vesting determination date.

     A summary of activity under the 1999 Plan is as follows (in thousands, except weighted average exercise price):

                                                                                                Options Outstanding

                                                                   Options                                                        Weighted Average
                                                                  Available         Number              Weighted Average            Contractual
                                                                  for Grant        of Options            Exercise Price            Term (Years)

Balances, January 1, 2005                                                 621          3,435 $                             0.26
Authorized                                                                500             —
Granted                                                                  (883 )          883                               0.96
Forefited, cancelled, or expired                                          132           (132 )                             0.26
Exercised                                                                  —          (1,213 )                             0.25

Balances, December 31, 2005                                               370          2,973 $                             0.47
Authorized                                                              1,500             —
Granted                                                                (1,477 )        1,477                               3.97
Forefited, cancelled, or expired                                          141           (141 )                             2.20
Exercised                                                                  —            (763 )                             0.33

Balances, December 31, 2006                                               534          3,546      $                        1.89

Authorized                                                              1,000             —
Granted                                                                (1,574 )        1,574                               5.09
Forefited, cancelled, or expired                                          126           (126 )                             3.19
Exercised                                                                  —            (370 )                             1.06

Balances, December 31, 2007                                                   86       4,624      $                        3.01                  7.80


Options vested and expected to vest at December 31,
2007                                                                                   4,417      $                        2.94                  7.73


Options vested at December 31, 2007                                                    2,163      $                        1.54                  6.62

                                                                        F-32
                                                               EPOCRATES, INC.

                                             NOTES TO FINANCIAL STATEMENTS (Continued)

10. Stock Option Plan (Continued)

     The weighted average grant date fair value of options granted for the years ended December 31, 2005, 2006 and 2007 was $0.48, $1.57
and $4.78, respectively.

     The following table summarizes information about stock options outstanding at December 31, 2007 (in thousands, except weighted
average exercise price):

                                                        Options Outstanding                                                         Options Vested

                                                    Weighted Average
                               Number             Remaining Contractual              Weighted Average                Number                  Weighted Average
Exercise Price                Outstanding             Life (Years)                    Exercise Price                Exercisable               Exercise Price

$0.10-$0.25                          1,057                            5.60       $                      0.21                 981       $                        0.21
$0.35-$3.21                          1,002                            7.00       $                      1.55                 651       $                        1.32
$3.37-$4.26                            390                            8.18       $                      3.73                 226       $                        3.71
$4.32                                1,611                            9.15       $                      4.32                 201       $                        4.32
$4.56-$10.35                           564                            9.14       $                      6.61                 104       $                        5.38

                                     4,624                            7.78       $                      3.01                2,163      $                        1.54


11. Stock-Based Compensation

     The following table summarizes all stock based compensation charges for the years ended December 31, 2005, 2006 and 2007 (in
thousands):

                                                                                                                          Years Ended December 31,

                                                                                                                   2005               2006               2007

Employee stock-based compensation expense in accordance with FAS 123R                                          $       —      $              295     $      1,782
Amortization of employee deferred stock-based compensation                                                            269                    286              221
Stock-based compensation associated with outstanding repriced options                                                 680                    659            1,184
Non-employee stock-based compensation expense                                                                          16                     29               —

Total stock-based compensation                                                                                 $      965     $            1,269     $      3,187

Employee Stock-Based Compensation Expense in Accordance With FAS 123R

     Effective January 1, 2006, the Company adopted FAS 123(R), using the prospective application transition method. Accordingly,
stock-based compensation cost is measured at grant date based on the fair value of the award and is expensed over the requisite service period.
The Company adopted FAS 123(R) using the prospective transition method, which requires that for nonpublic entities that used the minimum
value method for either proforma or financial statement recognition purposes, FAS 123(R) shall be applied to option grants after the required
effective date. For options granted prior to the FAS 123(R) effective date for which the requisite service period had not been performed as of
January 1, 2006, the Company will continue to recognize compensation expense on the remaining unvested awards under the intrinsic-value
method of APB 25.

      As a result of adopting FAS 123(R), loss from operations, net loss before income taxes, net loss and basic and diluted earnings per share
for the years ended December 31, 2006 were $0.3 million, $0.3 million, $0.3 million and $0.04 lower, respectively, than if the Company had
continued to account for new awards under APB 25.

                                                                          F-33
                                                               EPOCRATES, INC.

                                             NOTES TO FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

     The Company uses the Black-Scholes option pricing model to estimate the fair value of traded options. This model requires the input of
highly subjective assumptions including the expected term of the option, expected stock price volatility and expected forfeitures.

    The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards with the following
assumptions:

                                                                                              Years Ended December 31,

                                                                                             2006                  2007

                         Dividend yield                                                      0%                   0%
                         Expected volatility                                                65%                51%–62%
                         Risk-free interest rate                                         4.2%–5.0%            3.3%–4.9%
                         Expected life of options (in years)                               4.5–5.0              4.5–5.0
                         Weighted-average grant-date fair value                             $1.57                $4.78

     The assumptions above are based on multiple factors, including historical exercise patterns of employees in relatively homogeneous
groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same
homogeneous groups and the volatility of similar public companies in terms of type of business, industry, stage of life cycle, size and
geographical market. The risk free interest rate for the expected term of the option is based on the U.S. Treasury Constant Maturity Rate as of
the date of grant.

    As permitted by FAS 123(R), the Company has deferred the recognition of its excess tax benefit from stock option exercises of
approximately $0.4 million until it is actually realized.

    There were no net cash proceeds from the exercise of stock options accounted for under FAS 123(R) for the year ended December 31,
2006. Cash proceeds from the exercise of 0.1 million stock options accounted for under FAS 123(R) for the year ended December 31, 2007
were $0.3 million.

     Compensation expense is recognized ratably over the requisite service period. At December 31, 2007, there was $7.1 million of
unrecognized compensation cost related to options being accounted for under FAS 123(R), which is expected to be recognized over a
weighted-average period of 3.2 years.

        At December 31, 2007, there were 0.1 million shares available for future stock option grants to employees and directors under the existing
plan.

     For options that are exercised after they are vested, the Company's policy is to issue new shares immediately upon exercise. The issuance
of these new shares is from the Company's pool of common stock reserved for future issuance as approved by the Company's stockholders.

Options Granted Prior to Adoption of FAS123(R)

     Prior to January 1, 2006, the Company accounted for stock-based employee compensation arrangements in accordance with APB 25 and
complied with the disclosure provisions of FAS No. 123 and FAS No. 148. Compensation cost is recognized based on the difference, if any, on
the date of grant between the fair value of the Company's common stock and the amount an employee must pay to acquire the stock. As the
company adopted the prospective method of FAS 123(R), it continues to

                                                                        F-34
                                                              EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)



amortize stock-based compensation related to options granted prior to January 1, 2006 under the provisions of APB 25, unless such options are
modified subsequent to January 1, 2006.

Amortization of Employee Deferred Stock-Based Compensation

     Given the lack of an active public market for the Company's outstanding common and preferred stock, the Company's board of directors
established an estimate of fair value for these securities as well as for options and warrants to purchase these securities. The fair value of the
Company's common stock as used in the determination of grant price was estimated by the board of directors based on factors such as the
liquidation preference, dividends and other rights of the outstanding preferred stock; recent financial and operating performance; the risk of
future plans not being achieved; the likelihood and proximity of an initial public offering; and the valuation of comparable companies that are
publicly traded.

    Prior to the adoption of FAS 123(R), during the period from January 1, 2004 through December 31, 2005, the Company granted options to
employees to purchase a total of 3.4 million shares of common stock at exercise prices ranging from $0.25 to $1.65 per share.

     During the period from January 1, 2006 through December 31, 2007, the Company granted options to employees to purchase a total of
3.0 million shares of common stock at exercise prices ranging from $3.21 to $10.35 per share.

     Subsequently, it was determined that these exercise prices were below the fair value of the Company's common stock at the date of grant.
The Company retrospectively estimated the fair value of its common stock at December 31, 2005, 2006 and 2007 based upon several factors,
including its operating and financial performance, progress and milestones attained it its business, recent transactions for the purchase of our
common stock, and the expected valuation that the Company would obtain in an initial public offering. The retrospective valuations utilized the
probability-weighted expected return and the option pricing valuation methodologies.

     On December 20, 2007, the Company completed a tender offer for the purchase of approximately 4.0 million shares of our common stock
for an aggregate purchase price of approximately $41.7 million and simultaneously issued approximately 3.8 million shares of common stock
to The Goldman Sachs Group, Inc., an accredited investor, for an aggregate sale price of approximately $40.0 million. The tender offer was
made to existing holders of common stock that who were not current employees of Epocrates and to holders of Series A Stock and Series C
Stock, who were required to first convert such preferred shares into shares of common stock in order to participate in the offer. The holders of
approximately 0.8 million shares of Series A Stock and approximately 1.3 million shares of Series C Stock converted their shares into common
stock. The approximate 0.2 million of shares repurchased pursuant to the tender offer that were not subsequently issued to The Goldman Sachs
Group, Inc. were retired.

     The new investor paid $10.42 per share resulting in an enterprise valuation of $300 million. The Company has considered this recent arms'
length transaction as well as the retrospective valuation discussed above to conclude that the fair value of its common stock on December 31,
2007 was $10.42 per share.

                                                                       F-35
                                                            EPOCRATES, INC.

                                          NOTES TO FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

    Also on December 20, 2007, the Company entered into an agreement with Hudson Street Services, a Goldman Sachs & Co business, to
co-market our market research services to its institutional investing clients. No revenue was recognized pursuant to this agreement in 2007.

     The Company has reviewed these key factors and events between each date and has determined that the combination of these factors and
events reflect a true measurement of the Company's fair value over an extended period of time and believes that the fair value of its common
stock is appropriately reflected in the chart below.

                                                                           Options                                 Reassessed          Intrinsic
                                                                           Granted                Exercise         Fair Value            Value
Date of Grant                                                          (In Thousands)              Price           Per Share           Per Share

January 21, 2005                                                                        131   $         0.45   $            0.83   $           0.38
April 13, 2005                                                                          157             0.65                1.07               0.42
July 20, 2005                                                                           344             0.95                1.36               0.41
September 8, 2005                                                                        40             0.95                1.46               0.51
October 18, 2005                                                                         40             0.95                1.58               0.63
October 21, 2005                                                                        124             1.65                1.63                 —
November 16, 2005                                                                        47             1.65                1.71               0.06
January 9, 2006                                                                         348             3.21                1.91                 —
January 25, 2006                                                                        182             3.37                2.03                 —
April 12, 2006                                                                          126             3.84                2.60                 —
July 18, 2006                                                                           297             4.68                3.32                 —
October 18, 2006                                                                        109             4.26                4.01                 —
November 15, 2006                                                                       415             4.32                4.22                 —
March 1, 2007                                                                            97             4.32                6.01               1.69
April 13, 2007                                                                          828             4.32                7.04               2.72
April 30, 2007                                                                          319             4.32                7.45               3.13
June 12, 2007                                                                            96             4.56                8.49               3.93
July 18, 2007                                                                            16             5.50                9.36               3.86
August 16, 2007                                                                          35             6.50                9.92               3.42
November 6, 2007                                                                        153            10.35               10.35                 —
December 11, 2007                                                                        28            10.35               10.35                 —

      For the years ended December 31, 2004 and 2005, the Company recorded deferred stock-based compensation for the difference between
the reassessed fair value of the Company's common stock and the amount the employee must pay to acquire the stock. The Company amortizes
this deferred stock-based compensation using the straight-line method over the vesting periods of the stock options, which is generally four
years. From January 1, 2004 through December 31, 2005, the Company recorded unearned stock-based compensation of $1.2 million. Deferred
stock-based compensation amortized to expense was $0.3 million during each of the years ended December 31, 2005 and 2006 and $0.2 million
during the year ended December 31, 2007. At December 31, 2007, the Company had a total of $0.2 million related to these options remaining
to be amortized over the vesting periods of the stock options.

                                                                     F-36
                                                             EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

Stock-Based Compensation Associated With Outstanding Repriced Options

     In November 2003, the Company's board of directors approved a stock option repricing program. Under this program, eligible employees
could elect to exchange certain outstanding stock options with an exercise price greater than or equal to $1.00 for a new option to purchase the
same number of shares of common stock. As of the cancellation date, the Company had accepted 0.9 million shares for exchange and
0.9 million stock options were granted six months and one day after they were exchanged for an average exercise price of $0.25 per share.

     Because of the subsequent reassessment of the fair market value of the Company's common stock, the options repriced were issued at
below fair value and therefore became subject to variable accounting, which requires all such vested options repriced be marked to market until
such options are cancelled, expire, or are exercised. Vesting is calculated in accordance with FIN 28, "Accounting for Stock Appreciation
Rights and other Variable Stock Option or Award Plans." Stock-based compensation expensed for this repricing during the years ended
December 31, 2005, 2006 and 2007 was $0.7 million, $0.7 million and $1.2 million, respectively.

Non-Employee Stock Options

     The Company accounts for equity instruments issued to non-employees prior to the adoption of FAS 123(R) in accordance with the
provisions of FAS No. 123 and EITF 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services," which require that such equity instruments are recorded at their fair value on the measurement
date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. The fair value
of options granted to consultants is expensed over the vesting period.

     During the year ended December 31, 2005, the Company granted options to purchase 13,000 shares of common stock to non-employees at
an exercise price of $0.95 per share. The Company determined an estimated fair value on the grant date using the Black-Scholes option pricing
model and the following assumptions: dividend yield of 0%, expected volatility of 65% to 75%, risk-free interest rate of 4.48% to 5.19% and a
contractual life of 9.0 to 9.8 years. For the years ended December 31, 2005, 2006 and 2007, the Company recorded compensation costs for
options granted to consultants of $15,674 and $29,307 and $0, respectively.

12. Employee Benefit Plans

     The Company sponsors a 401(k) defined contribution plan covering all employees. The board of directors determines contributions made
by the Company annually. The Company made no contributions under this plan for the years ended December 31, 2005, 2006 and 2007.

13. Related Party Transactions

Revenue from Related Parties

    The Company recorded revenue from an advertising agency whose parent company's chief executive officer is a member of the Epocrates
board of directors. The Company recorded revenue from this entity of $1.0 million, $0.7 million and $1.8 million, for the years ended
December 31, 2005,

                                                                      F-37
                                                            EPOCRATES, INC.

                                           NOTES TO FINANCIAL STATEMENTS (Continued)

13. Related Party Transactions (Continued)



2006 and 2007, respectively. There was $0.3 million and $0 of accounts receivable from this entity as of December 31, 2006 and 2007,
respectively.

     The Company recorded revenue from another firm whose parent company's chief executive officer is a member of the Epocrates board of
directors. The Company recorded revenue from this entity of $0, $0 and $0.3 million, for the years ended December 31, 2005, 2006 and 2007,
respectively. There was no accounts receivable from this entity as of December 31, 2006 and 2007.

     The Company recorded revenue from a pharmaceutical company who has a significant investor who is also on the Epocrates board of
directors. The Company recorded revenue from this entity of $0.5 million, $0.4 million and $0.4 million for the years ended December 31,
2005, 2006 and 2007, respectively. There were no accounts receivable from this entity as of December 31, 2006 and 2007.

     The Company recorded revenue from a venture capital firm whose general partner is a member of the Epocrates board of directors. The
Company recorded revenue from this entity of $35,977, $18,400 and $14,400 for the years ended December 31, 2005, 2006 and 2007,
respectively. There were no accounts receivable from this entity as of December 31, 2006 and 2007.

     The Company's Senior Vice President of Sales and Marketing consulted for a firm who was a customer of the Company. The Company
recorded revenue from this firm of $32,724, $0 and $0 for the years ended December 31, 2005, 2006 and 2007, respectively. There were no
accounts receivable from this firm as of December 31, 2006 and 2007.

Consulting Services from Related Parties

    The Company used the services of a public relations firm whose parent company's chief executive officer is a member of the Epocrates
board of directors. The Company recorded expense related to services provided by this entity of $0.4 million, $0 and $0 during the years ended
December 31, 2005, 2006 and 2007, respectively. There were no accounts payable to this public relations firm as of December 31, 2006 and
2007.

    The Company's former Vice President of Product Development is the owner of a Company that performs consulting services for the
Company. The Company recorded expense related to services provided by this entity of $27,500, $26,205 and $20,000 during the years ended
December 31, 2005, 2006 and 2007, respectively. There were no accounts payable to this entity as of December 31, 2006 and 2007.

     The Company entered an independent contractor services agreement with one of our directors, John E. Voris, on August 1, 2004, after he
resigned as the Company's Chief Executive Officer on July 31, 2004. The Company recorded expense related to services provided by Mr. Voris
of $68,750, $14,583 and $0 during the years ended December 31, 2005, 2006 and 2007, respectively. There were no accounts payable to
Mr. Voris as of December 31, 2006 and 2007.

     On October 1, 2003, the Company signed an independent contractor services agreement with Richard A. Fiedotin, one of the Company's
founders who at the time was a member of the Company's board of directors. The Company recorded expense related to services provided by
Mr. Fiedotin of $0.1 million, $0.1 million and $0 during the years ended December 31, 2005, 2006 and 2007, respectively. There were no
accounts payable to Mr. Fiedotin as of December 31, 2006 and 2007.

                                                                     F-38
                                                            EPOCRATES, INC.

                                          NOTES TO FINANCIAL STATEMENTS (Continued)

14. Proforma Net Income Per Share (Unaudited)

    Proforma basic and diluted net income per share have been computed to give effect to convertible preferred stock that will convert to
common stock immediately prior to the closing of the Company's initial public offering for the year ended December 31, 2007 as if the closing
occurred at the beginning of 2007.

     The following table sets forth the computation of proforma basic and diluted net income per share (in thousands, except per share data)
and assumes that the price at which the convertible preferred stock automatically converts to common stock in accordance with the conversion
terms:

                                                                                                 Twelve Months Ended
                                                                                                    December 31,
                                                                                                         2007

                          Numerator:
                            Net income                                                       $                25,739
                          Denominator:
                            Weighted average number of common shares outstanding                                7,592
                            Add: Adjustments to reflect the weighted average effect of the
                            assumed conversion of Series A, B and C preferred stock
                            from the date of issuance                                                         16,188

                             Denominator for basic calculation                                                23,780
                             Dilutive effect of options using treasury stock method                            2,201
                             Dilutive effect of warrants using treasury stock method                               9
                             Early exercised options not included in denominator for basic
                             calculation                                                                          342

                             Denominator for diluted calculation                                              26,332

                          Proforma net income per share—basic                                $                   1.08


                          Proforma net income per share—diluted                              $                   0.98

                                                                    F-39
                 Shares

   Epocrates, Inc.
     Common Stock



      PROSPECTUS

            , 2008



         Citi
     Piper Jaffray
William Blair & Company
Needham & Company, LLC
                                                                        PART II

                                             INFORMATION NOT REQUIRED IN PROSPECTUS

 Item 13.    Other Expenses of Issuance and Distribution

     The following table sets forth all expenses, other than the underwriting discounts and commissions, payable by the registrant in connection
with the sale of the common stock being registered. All the amounts shown are estimates except the registration fee, the FINRA filing fee and
The NASDAQ Global Market entry fee. We intend to pay all expenses of registration, issuance and distribution.

                                                                                                                           Total

                    SEC registration fee                                                                             $         2,948
                    FINRA filing fee                                                                                           8,000
                    NASDAQ Global Market entry fee                                                                           105,000
                    Blue sky qualification fees and expenses
                    Printing and engraving expenses
                    Legal fees and expenses
                    Accounting fees and expenses
                    Transfer agent and registrar fees
                    Miscellaneous

                          Total                                                                                      $

 Item 14.    Indemnification of Officers and Directors

      The registrant's amended and restated certificate of incorporation provides that a director will not be personally liable to the registrant or to
its stockholders for monetary damages for any breach of fiduciary duty as a director to the fullest extent permitted by Section 102 of Delaware
General Corporation Law.

     As permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the registrant provide that (i) the registrant is
required to indemnify its directors and officers to the fullest extent not prohibited by the Delaware General Corporation Law, (ii) the registrant
may, in its discretion, indemnify its other employees and agents as set forth in the Delaware General Corporation Law, (iii) the registrant is
required to advance all expenses incurred by its directors and officers in connection with certain legal proceedings, (iv) the rights conferred in
the bylaws are not exclusive and (v) the registrant is authorized to enter into indemnification agreements with its directors, officers, employees
and agents.

      The registrant has entered into agreements with its directors and officers that require the registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts that any such person becomes legally obligated to pay (including with respect to a
derivative action) in connection with any proceeding, whether actual or threatened, to which such person may be made a party by reason of the
fact that such person is or was a director or officer of the registrant or any of its affiliates. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification thereunder. At present, no litigation or proceeding is pending that
involves a director or officer of the registrant regarding which indemnification is sought, nor is the registrant aware of any threatened litigation
that may result in claims for indemnification.

     The form of underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification under certain
circumstances by the underwriters of the registrant, its directors, certain of its officers and its controlling persons for certain liabilities arising
under the Securities Act of 1933, as amended, or otherwise.

                                                                           II-1
     The registrant maintains a directors' and officers' insurance and registrant reimbursement policy. The policy (i) insures directors and
officers against losses for which the registrant does not indemnify and which losses arise from certain wrongful acts in the indemnified parties'
capacities as directors and officers and (ii) reimburses the registrant for those losses for which the registrant has lawfully indemnified the
directors and officers. The policy contains various exclusions, none of which apply to this offering.

    The Amended and Restated Investor Rights Agreement between the registrant and certain investors provides for cross-indemnification in
connection with registration of the registrant's common stock on behalf of such investors.

 Item 15.   Recent Sales of Unregistered Securities

     From inception through the date of this prospectus, the registrant has sold and issued the following unregistered securities:

     1.
            In March 1999, the registrant issued 2,050,000 shares of common stock, at $0.004 per share, to three accredited investors, for
            aggregate cash consideration of $8,200.00.

     2.
            In May 1999, the registrant issued 8,000 shares of common stock, at $0.004 per share, to two accredited investors, for aggregate
            cash consideration of $32.00.

     3.
            In June 1999, the registrant issued 40,000 shares of common stock, at $0.01 per share, to an accredited investor, for aggregate cash
            consideration of $400.00.

     4.
            In August 1999, the registrant issued 1,200,000 shares of common stock, at $0.01 per share, to two accredited investors, for
            aggregate cash consideration of $12,000.00.

     5.
            In September 1999, the registrant issued 5,050,000 shares of Series A preferred stock, at $1.00 per share, to eight accredited
            investors for aggregate cash consideration of $5,050,000.00.

     6.
            In May 2000, the registrant issued warrants to purchase Series B preferred stock with an exercise price of $5.71 per share to five
            accredited investors which were subsequently exercised in May 2005.

     7.
            In May 2000, the registrant also issued a warrant to purchase Series B preferred stock with an exercise price of $5.71 per share to
            an accredited investor in connection with a credit facility.

     8.
            In August 2000, the registrant issued 6,129,598 shares of Series B preferred stock, at $5.71 per share, to eight accredited investors
            for aggregate cash consideration of $35,000,004.58.

     9.
            In July 2002 and September 2004, the registrant issued an aggregate of 4,003,866 shares of Series C preferred stock, at $1.5926 per
            share, to 12 accredited investors for aggregate cash consideration of $6,376,557.00.

     10.
            In December 2007, the registrant issued 3,838,771 shares of common stock, at $10.42 per share, to an accredited investor, for
            aggregate cash consideration of $39,999,993.82.

     11.
            Since inception, the registrant has issued to directors, officers, employees and consultants options to purchase 13,336,112 shares of
            common stock with per share exercise prices ranging from $0.004 to $10.42, of which options to purchase 2,886,542 shares were
            cancelled without being exercised, and 5,172,848 shares of common stock were issued upon exercise of such options and 411,568
            shares were repurchased at the original exercise price.
     The sales and issuances of securities in the transactions described in paragraphs (1) through (10), were exempt from registration pursuant
to the Securities Act by virtue of Section 4(2) and/or Regulation D promulgated thereunder as transactions not involving any public offering.
All of the purchasers of securities for which the registrant relied on Rule 506 of Regulation D and/or Section 4(2)

                                                                      II-2
represented that they were accredited investors as defined under the Securities Act or a person described under Rule 506(b)(2)(ii) under the
Securities Act. The registrant believes that the issuances are exempt from the registration requirements of the Securities Act on the basis that
(a) the purchasers in each case represented that they intended to acquire the securities for investment only and not with a view to the
distribution thereof and that they either received adequate information about the registrant or had access, through employment or other
relationships, to such information and (b) appropriate legends were affixed to the stock certificates issued in such transactions.

      The issuances described in paragraph (11) above in this Item 15 were deemed exempt from registration under the Securities Act in
reliance on either (a) Rule 701 promulgated under the Securities Act as offers and sale of securities pursuant to certain compensatory benefit
plans and contracts relating to compensation in compliance with Rule 701 or (b) Section 4(2) of the Securities Act, as transactions by an issuer
not involving any public offering. The recipients of securities in each of these transactions represented their intention to acquire the securities
for investment only and not with view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the
share certificates and instruments issued in such transactions. All recipients had adequate access, through their relationships with us, to
information about us.

 Item 16.     Exhibits and Financial Statement Schedules

     (a)
              Exhibits.


Exhibit
Number                                                                   Description of Document

            1.1*    Form of Underwriting Agreement.
             3.1    Certificate of Incorporation, as amended.
             3.2    Form of Amended and Restated Certificate of Incorporation to be effective upon the closing of the offering.
             3.3    Bylaws.
            3.4*    Form of Amended and Restated Bylaws to be effective upon the closing of the offering.
            4.1*    Specimen common stock certificate.
             4.2    Form of Warrant to purchase Series B convertible preferred stock.
            5.1*    Opinion of Cooley Godward Kronish LLP.
            10.1    Amended and Restated Investor Rights Agreement dated October 2, 2007.
           10.2*    Form of Indemnity Agreement entered into between Registrant and each of its directors and officers.
           10.3+    1999 Stock Option Plan, as amended.
           10.4+    Form of Stock Option Agreement under 1999 Stock Option Plan, as amended.
           10.5+    Form of 2007 Performance-Based Option Grant Notice under 1999 Stock Option Plan, as amended.
           10.6+    Form of 2008 Performance-Based Option Grant Notice under 1999 Stock Option Plan, as amended.
           10.7+    2008 Equity Incentive Plan.
           10.8+    Form of Stock Option Agreement and Form of Option Grant Notice under 2008 Equity Incentive Plan.
           10.9+    2008 Employee Stock Purchase Plan.
           10.10    Sublease Agreement, dated December 3, 2006, by and between Oracle USA, Inc. and the Registrant, as amended on May 2,
                    2007, and Consent to Sublease, by and among Bay Meadows Park Place Investors, LLC, Oracle USA and the Registrant,
                    dated December 14, 2006.
          10.11+    Offer Letter, dated June 14, 1999, by and between the Registrant and Jeffrey A. Tangney, as amended March 11, 2008.


                                                                        II-3
       10.12+       Offer Letter, dated August 24, 2000, by and between the Registrant and Paul F. Banta, as amended March 11, 2008.
       10.13+       Offer Letter, dated May 15, 2002, by and between the Registrant and Robert J. Quinn, as amended March 11, 2008.
       10.14+       Offer Letter, dated June 18, 2004, by and between the Registrant and Kirk M. Loevner, as amended March 11, 2008.
       10.15+       Offer Letter, dated October 18, 2006, by and between the Registrant and Richard H. Van Hoesen as amended March 11,
                    2008.
       10.16+       2008 Cash Bonus Plan.
       10.17+       Amended and Restated Director Compensation Policy.
       10.18#       License Agreement, by and between the Registrant and Mistletoe Health Partners, PA, formerly Mark R. Dambro, MD, PA,
                    dated October 27, 2003, as amended by Amendment to License Agreement, dated November 10, 2005, and Addendum to
                    License Agreement, dated January 31, 2007.
            23.1    Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
           23.2*    Consent of Cooley Godward Kronish LLP. Reference is made to Exhibit 5.1.
            24.1    Power of Attorney. Reference is made to the signature page hereto.


*
       To be filed by amendment.

#
       Confidential Treatment has been requested with respect to portions of this exhibit. Omitted portions have been filed separately with the
       Securities and Exchange Commission.

+
       Management contract or compensatory plan.



 Item 17.     Undertakings

      The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

     The undersigned registrant undertakes that:

     (1)
              for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part
              of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to
              Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it
              was declared effective, and

     (2)
              for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of
              prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such
              securities at that time shall be deemed to be the initial bona fide offering thereof.

                                                                         II-4
                                                                  SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Epocrates, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Mateo, State of California, on the 17th day of April, 2008.

                                                                          EPOCRATES, INC.

                                                                          By:                      /s/ KIRK M. LOEVNER

                                                                                                         Kirk M. Loevner
                                                                                           Chairman, President and Chief Executive Officer


                                                            POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Kirk
M. Loevner and Richard H. Van Hoesen and each of them, his or her true and lawful agent, proxy and attorney-in-fact, with full power of
substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with
the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together
with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933,
as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other
documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this
registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he
or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his
substitutes may lawfully do or cause to be done by virtue thereof.

     Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities
and on the dates indicated.

                       Signatures                                                      Title                                         Date




           /s/ KIRK M. LOEVNER                                Chairman, President and Chief Executive Officer (                April 17, 2008
                                                                        Principal Executive Officer )
                KIRK M. LOEVNER

       /s/ RICHARD H. VAN HOESEN                             Senior Vice President, Finance and Chief Financial                April 17, 2008
                                                            Officer ( Principal Financial and Accounting Officer )
            RICHARD H. VAN HOESEN

         /s/ PHILIPPE O. CHAMBON                                                    Director                                   April 17, 2008

      PHILIPPE O. CHAMBON, M.D., PH.D.


                                                                        II-5
/s/ JOHN D. HALAMKA               Director   April 17, 2008

 JOHN D. HALAMKA, M.D.

                                  Director
  THOMAS L. HARRISON

 /s/ PATRICK S. JONES             Director   April 17, 2008

    PATRICK S. JONES

/s/ GILBERT H. KLIMAN             Director   April 17, 2008

 GILBERT H. KLIMAN, M.D.

 /s/ DAVID C. NAGEL               Director   April 17, 2008

  DAVID C. NAGEL, PH.D.

  /s/ JOHN E. VORIS               Director   April 17, 2008

      JOHN E. VORIS

  /s/ MARK A. WAN                 Director   April 17, 2008

      MARK A. WAN

                           II-6
                                                                                                                           Schedule II


                                                 Epocrates, Inc.
                                 Valuation and Qualifying Accounts and Reserves
                                 Years Ended December 31, 2005, 2006 and 2007
                                                 (in thousands)

                                         Beginning                  Charged to                                              Ending
Description                               Balance               Costs and Expenses        Reversals     Utilizations        Balance

Accounts receivable allowance:
    2005                             $                1                              26           —              (27 ) $              —
    2006                             $               —                               57           —               — $                 57
    2007                             $               57                              42           —              (61 ) $              38

Tax valuation allowance:
    2005                             $        23,858                             1,136           —                 —   $       24,994
    2006                             $        24,994                               579           —                 —   $       25,573
    2007                             $        25,573                                —       (25,573 )                  $           —

                                                          S-1
                                                                    Exhibit Index

Exhibit
Number                                                                    Description of Document

            1.1*     Form of Underwriting Agreement.
             3.1     Certificate of Incorporation, as amended.
             3.2     Form of Amended and Restated Certificate of Incorporation to be effective upon the closing of the offering.
             3.3     Bylaws.
            3.4*     Form of Amended and Restated Bylaws to be effective upon the closing of the offering.
            4.1*     Specimen common stock certificate.
             4.2     Form of Warrant to purchase Series B convertible preferred stock.
            5.1*     Opinion of Cooley Godward Kronish LLP.
            10.1     Amended and Restated Investor Rights Agreement dated October 2, 2007.
           10.2*     Form of Indemnity Agreement entered into between Registrant and each of its directors and officers.
           10.3+     1999 Stock Option Plan, as amended.
           10.4+     Form of Stock Option Agreement under 1999 Stock Option Plan, as amended.
           10.5+     Form of 2007 Performance-Based Option Grant Notice under 1999 Stock Option Plan, as amended.
           10.6+     Form of 2008 Performance-Based Option Grant Notice under 1999 Stock Option Plan, as amended.
           10.7+     2008 Equity Incentive Plan.
           10.8+     Form of Stock Option Agreement and Form of Option Grant Notice under 2008 Equity Incentive Plan.
           10.9+     2008 Employee Stock Purchase Plan.
           10.10     Sublease Agreement, dated December 3, 2006, by and between Oracle USA, Inc. and the Registrant, as amended on May 2,
                     2007, and Consent to Sublease, by and among Bay Meadows Park Place Investors, LLC, Oracle USA and the Registrant,
                     dated December 14, 2006.
          10.11+     Offer Letter, dated June 14, 1999, by and between the Registrant and Jeffrey A. Tangney, as amended March 11, 2008.
          10.12+     Offer Letter, dated August 24, 2000, by and between the Registrant and Paul F. Banta, as amended March 11, 2008.
          10.13+     Offer Letter, dated May 15, 2002, by and between the Registrant and Robert J. Quinn, as amended March 11, 2008.
          10.14+     Offer Letter, dated June 18, 2004, by and between the Registrant and Kirk M. Loevner, as amended March 11, 2008.
          10.15+     Offer Letter, dated October 18, 2006, by and between the Registrant and Richard H. Van Hoesen as amended March 11,
                     2008.
          10.16+     2008 Cash Bonus Plan.
          10.17+     Amended and Restated Director Compensation Policy.
          10.18#     License Agreement, by and between the Registrant and Mistletoe Health Partners, PA, formerly Mark R. Dambro, MD, PA,
                     dated October 27, 2003, as amended by Amendment to License Agreement, dated November 10, 2005, and Addendum to
                     License Agreement, dated January 31, 2007.
            23.1     Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
           23.2*     Consent of Cooley Godward Kronish LLP. Reference is made to Exhibit 5.1.
            24.1     Power of Attorney. Reference is made to the signature page hereto.


*
          To be filed by amendment.

#
          Confidential Treatment has been requested with respect to portions of this exhibit. Omitted portions have been filed separately with the
          Securities and Exchange Commission.

+
          Management contract or compensatory plan.
QuickLinks

TABLE OF CONTENTS
 SUMMARY
Our Business
Market Opportunity
Our Strengths
Our Strategy
Company Information
 THE OFFERING
 SUMMARY FINANCIAL DATA
 RISK FACTORS
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
USE OF PROCEEDS
DIVIDEND POLICY
 CAPITALIZATION
DILUTION
 SELECTED FINANCIAL DATA
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 BUSINESS
 MANAGEMENT
 EXECUTIVE COMPENSATION
 2007 Summary Compensation
2007 Grants of Plan Based Awards
2007 Outstanding Equity Awards at Fiscal Year-End
2007 Option Exercises and Stock Vested
 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 PRINCIPAL AND SELLING STOCKHOLDERS
 DESCRIPTION OF CAPITAL STOCK
 CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES FOR NON-UNITED STATES HOLDERS
SHARES ELIGIBLE FOR FUTURE SALE
 UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
 INDEX TO FINANCIAL STATEMENTS
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 EPOCRATES, INC. BALANCE SHEETS (in thousands, except per share data)
EPOCRATES, INC. STATEMENTS OF OPERATIONS (in thousands, except per share data)
 EPOCRATES, INC. STATEMENTS OF CASH FLOWS (in thousands)
 PART II INFORMATION NOT REQUIRED IN PROSPECTUS
    Item 13. Other Expenses of Issuance and Distribution
    Item 14. Indemnification of Officers and Directors
    Item 15. Recent Sales of Unregistered Securities
    Item 16. Exhibits and Financial Statement Schedules
    Item 17. Undertakings
SIGNATURES
POWER OF ATTORNEY
    Schedule II
Epocrates, Inc. Valuation and Qualifying Accounts and Reserves Years Ended December 31, 2005, 2006 and 2007 (in thousands)
 Exhibit Index
QuickLinks -- Click here to rapidly navigate through this document
                                                                                                                                         Exhibit 3.1


                                                    CERTIFICATE OF INCORPORATION
                                                                 OF
                                                     EPOCRATES (DELAWARE), INC.

      The undersigned, a natural person (the " Sole Incorporator "), for the purpose of organizing a corporation to conduct business and
promote the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware hereby
certifies that:


                                                                          I.

     The name of this corporation is EPOCRATES (DELAWARE), INC. (the " Company ").


                                                                          II.

    The address of the registered office of the Company in the State of Delaware is 160 Greentree Drive, Suite 101, City of Dover, County of
Kent, and the name of the registered agent of the corporation in the State of Delaware at such address is National Registered Agents, Inc.


                                                                         III.

    The purpose of the Company is to engage in any lawful act or activity for which a corporation may be organized under the Delaware
General Corporation Law (" DGCL ").


                                                                         IV.

      A. The Company is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Company is authorized to issue is forty-three million six hundred thirty-six thousand four hundred
forty-one (43,636,441) shares, twenty-eight million three hundred thirty-two thousand five hundred seventy-five (28,332,575) shares of which
shall be Common Stock (the " Common Stock ") and fifteen million three hundred three thousand eight hundred sixty-six (15,303,866) shares
of which shall be Preferred Stock (the " Preferred Stock "). The Preferred Stock shall have a par value of $0.001 per share and the Common
Stock shall have a par value of $0.001 per share.

      B. Five million fifty thousand (5,050,000) of the authorized shares of Preferred Stock are hereby designated " Series A Preferred Stock
." Six million two hundred fifty thousand (6,250,000) of the authorized shares of Preferred Stock are hereby designated " Series B Preferred
Stoc k ." Four million three thousand eight hundred sixty-six (4,003,866) of the authorized shares of Preferred Stock are hereby designated "
Series C Preferred Stock ." Collectively, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock are
referred to as the " Series Preferred ."

     C. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares of Common
Stock then outstanding) by the affirmative vote of the holders of at least two thirds of the outstanding stock of the Company (voting together on
an as-if-converted basis), irrespective of Section 242(b)(2) of the DGCL.

     D.    The rights, preferences, privileges, restrictions and other matters relating to the Series Preferred are as follows:

           1.   DIVIDEND RIGHTS.

                (a) Holders of Series B Preferred, in preference to the holders of Series C Preferred Stock, Series A Preferred Stock and the
          holders of Common Stock or any other stock of the Company, whether currently outstanding or hereafter issued, shall be entitled to
          receive, but only out of funds that are legally available therefor, dividends at the rate of eight percent (8%) of the Original Issue Price
          (as defined below) per annum on the basis of a 365-day year
on each outstanding share of Series B Preferred (as adjusted for any stock dividends, combinations, splits recapitalizations and the
like with respect to such shares). The " Original Issue Price " of the Series B Preferred shall be five dollars and seventy-one cents
($5.71). Such dividends shall be cumulative and shall be payable only upon an Acquisition (as defined in Section 3(d)(i) hereof), or
upon an Asset Transfer (as defined in Section 3(d)(ii) hereof), or upon the first Redemption Date (as defined in Section 5(a)(i) hereof)
or upon a Qualified Offering (as defined in Section 4(l)(i) hereof) (each, a " Dividend Payment Date "). Such cumulated dividends
shall be payable in cash or in shares of Series B Preferred, with the determination of whether the dividend is paid in cash or in shares
of Series B Preferred to be made by the Board of Directors of the Company (the " Board "). If such dividends are determined by the
Board to be paid in shares of Series B Preferred, then (i) the value of the Series B Preferred for such dividend shall be as determined
by the Board as of the Dividend Payment Date and (ii) the Company shall issue no fractional shares of Series B Preferred, and instead
the equivalent value of such fractional shares shall be paid in cash. At the time of declaration during any calendar year of any
dividend on the Series C Preferred or the Series A Preferred which, when added to all prior dividends declared on the Series C
Preferred or Series A Preferred during such calendar year would result in a cumulative amount of dividends declared during such
year on Series C Preferred or Series A Preferred in excess of forty-five and sixty-eight hundredths cents ($0.4568) per share of
Series C Preferred or Series A Preferred (as adjusted for any stock dividends, combinations, splits recapitalizations and the like with
respect to such shares), then simultaneously with the declaration of such last dividend on the Series C Preferred or Series A Preferred,
there shall also be declared a dividend on the Series B Preferred Stock, in addition to the cumulative dividend payable to the Series B
Preferred for such year, in an amount per share equal to such excess.

       (b) Holders of Series C Preferred and Series A Preferred, in preference to the holders of any Common Stock or any other
stock of the Company, whether currently outstanding or hereafter issued, other than the Series B Preferred, (the " Junior Stock "),
shall be entitled to receive, when and as declared by the Board, but only out of funds that are legally available therefor, dividends at
the rate of eight percent (8%) of the Original Issue Price (as defined below) per annum on each outstanding share of Series C
Preferred and Series A Preferred (as adjusted for any stock dividends, combinations, splits recapitalizations and the like with respect
to such shares). The " Original Issue Price " of the Series C Preferred shall be one dollar and fifty-nine and twenty-six hundredths
cents ($1.5926). The " Original Issue Price " of the Series A Preferred shall be one dollar ($1.00). Such dividends shall be payable
only when, as and if declared by the Board and shall be non-cumulative.

       (c) So long as any shares of Series Preferred shall be outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Stock, nor shall any shares of any Junior Stock of the Company be
purchased, redeemed, or otherwise acquired for value by the Company (except for acquisitions of Common Stock by the Company
pursuant to agreements which permit the Company to repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer) until all dividends (set forth in Section 1(a) and 1(b) above)
on the Series Preferred shall have been paid or declared and set apart. In the event dividends are paid on any share of Common Stock,
an additional dividend shall be paid with respect to all outstanding shares of Series Preferred in an amount equal per share (on an
as-if-converted to Common Stock basis) to the amount paid or set aside for each share of Common Stock. The provisions of this
Section 1(c) shall not, however, apply to (i) a dividend payable in Common Stock, (ii) the acquisition of shares of any Junior Stock in
exchange for shares of any other Junior Stock, or (iii) any repurchase of any outstanding securities of the Company that is
unanimously approved by the Board. The holders of the Series Preferred expressly waive their rights, if any, as described in Sections
502 and 503 of
the California Corporations Code as they relate to the repurchase of shares upon termination of employment or service as a consultant
or director.

 2.    VOTING RIGHTS.

      (a) General Rights. Except as otherwise provided herein or as required by law, the Series Preferred shall be voted
equally with the shares of the Common Stock of the Company and not as a separate class, at any annual or special meeting of
stockholders of the Company, and may act by written consent in the same manner as the Common Stock, in either case upon the
following basis: each holder of shares of Series Preferred shall be entitled to such number of votes as shall be equal to the whole
number of shares of Common Stock into which such holder's aggregate number of shares of Series Preferred are convertible
(pursuant to Section 5 hereof) immediately after the close of business on the record date fixed for such meeting or the effective date
of such written consent.

       (b) Separate Vote of Series A Preferred and Series C Preferred. For so long as at least one million five hundred
fifteen thousand (1,515,000) shares of Series A Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares) or one million one hundred thirty thousand (1,130,000) shares of Series C Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) remain outstanding,
in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of
the outstanding Series A Preferred and Series C Preferred voting together as a class shall be necessary for effecting or validating the
following actions:

            (i) Any amendment, alteration, or repeal of any provision of the Certificate of Incorporation of the Company (including
      any filing of a Certificate of Designation) that changes the rights, preferences, or privileges of the Series A Preferred or Series C
      Preferred;

            (ii)   Any increase or decrease in the authorized number of shares of Preferred Stock;

            (iii) Any authorization or any designation, whether by reclassification or otherwise, of any new class or series of stock or
      any other securities convertible into equity securities of the Company ranking on a parity with or senior to the Series Preferred
      or any increase in the authorized or designated number of any such new class or series;

            (iv) Any redemption, repurchase, payment of dividends or other distributions with respect to Junior Stock (except for
      acquisitions of Common Stock by the Company pursuant to agreements which permit the Company to repurchase such shares
      upon termination of services to the Company or in exercise of the Company's right of first refusal upon a proposed transfer);

          (v) Any sale of equity by any subsidiary of the Company to anyone other than the Company or an affiliate of the
      Company;

            (vi) Any redemption or repurchase of any Preferred Stock (except as set forth herein); or

            (vii) Any action that results in the payment or declaration of a dividend on any shares of Common Stock.

      (c) Separate Vote of Series B Preferred. For so long as at least one million eight hundred thirty-nine thousand
(1,839,000) shares of Series B Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) remain outstanding, in addition to any other vote or consent required herein or by law, the
vote or written consent of the holders of at least a majority of the outstanding Series B Preferred shall be necessary for effecting or
validating the following actions:

           (i) Any amendment, alteration, or repeal of any provision of the Certificate of Incorporation of the Company (including
     any filing of a Certificate of Designation) that changes the rights, preferences or privileges of the Series B Preferred;

            (ii)   Any increase or decrease in the authorized number of shares of Series B Preferred;

           (iii) Any authorization or any designation, whether by reclassification or otherwise, of any new class or series of stock or
     any other securities convertible into equity securities of the Company ranking on a parity with or senior to the Series B Preferred
     or any increase in the authorized or designated number of any such new class or series;

           (iv) Any redemption, repurchase, payment of dividends or other distributions with respect to Junior Stock (except for
     acquisitions of Common Stock by the Company pursuant to agreements which permit the Company to repurchase such shares
     upon termination of services to the Company or in exercise of the Company's right of first refusal upon a proposed transfer);

         (v) Any sale of equity by any subsidiary of the Company to anyone other than the Company or an affiliate of the
     Company;

            (vi) Any redemption or repurchase of any Preferred Stock (except as set forth herein); or

            (vii) Any action that results in the payment or declaration of a dividend on any shares of Common Stock.

       (d) Separate Vote of Series Preferred. For so long as either one million five hundred fifteen thousand (1,515,000)
shares of Series A Preferred, at least one million eight hundred thirty-one thousand (1,839,000) shares of Series B Preferred or one
million one hundred thirty thousand (1,130,000) shares of Series C Preferred (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) remain outstanding, in addition to any other vote or consent required
herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series Preferred, voting together
as a class, shall be necessary for effecting or validating the following actions:

           (i) Any agreement by the Company or its stockholders, regarding an Asset Transfer or Acquisition (each as defined in
     Section 3(d) hereof);

            (ii)   Any voluntary dissolution or liquidation of the Company; or

      (e)   Any increase or decrease in the authorized number of members of the Board.

       (f) Election of Board of Directors. (i) For so long as at least at least one million five hundred fifteen thousand
(1,515,000) shares of Series A Preferred remain outstanding (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) the holders of Series A Preferred, voting as a separate class, shall be entitled
to elect two (2) members of the Board at each meeting or pursuant to each consent of the Company's stockholders for the election of
directors, and to remove from office such director and to fill any vacancy caused by the resignation, death or removal of such
director; (ii) for so long as at least one million eight hundred thirty-nine thousand (1,839,000) shares of Series B Preferred remain
outstanding (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) the
holders of Series B Preferred, voting as a separate class, shall be entitled to elect one (1) member of the Board at each meeting or
pursuant to each consent of the Company's stockholders for the election of directors, and to remove from office such director and to
fill any vacancy caused by the resignation, death or removal of such director; (iii) the holders of Common Stock, voting as a
separate class, shall be entitled to elect one (1) member of the Board at each meeting or pursuant to each consent of the Company's
stockholders for the election of directors, and to remove from office such directors and to fill any vacancy caused by the resignation,
death or removal of such directors; and (iv) the holders of Common Stock and Series Preferred, voting together as a single class on an
as-if-converted basis, shall be entitled to elect all remaining members of the Board at each meeting or pursuant to each consent of the
Company's stockholders for the election of directors, and to remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors.

      (g) Cumulative Voting. No stockholder entitled to vote at an election for directors may cumulate votes to which such
stockholder is entitled, unless, at the time of such election, the Company is subject to Section 2115 of the California General
Corporation Law (" CGCL "). During such time or times that the Company is subject to Section 2115(b) of the CGCL, every
stockholder entitled to vote at an election for directors may cumulate such stockholder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder's shares are
otherwise entitled, or distribute the stockholder's votes on the same principle among as many candidates as such stockholder desires.
No stockholder, however, shall be entitled to so cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the
voting, of such stockholder's intention to cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate
votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative
voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

        (h) Removal. During such time or times that the Company is subject to Section 2115(b) of the CGCL, the Board or any
individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority
of the outstanding shares entitled to vote for such director or directors; provided, however , that unless the entire Board is removed,
no individual director may be removed when the votes cast against such director's removal, or not consenting in writing to such
removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast
(or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at
the time of such director's most recent election were then being elected.

 3.   LIQUIDATION RIGHTS.

       (a) Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any
distribution or payment shall be made to the holders of any Series A Preferred or Junior Stock, the holders of Series C Preferred and
Series B Preferred shall be entitled to be paid out of the assets of the Company legally available for distribution an amount per share
of Series C Preferred and Series B Preferred equal to the respective Original Issue Price of the applicable Series plus all declared and
unpaid dividends on the Series C Preferred and accrued and unpaid dividends on the Series B Preferred (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to such shares) for each share of Series C Preferred and
Series B Preferred held by them. If, upon any such liquidation, distribution or winding up, the assets of the Company legally
available for distribution shall be insufficient to make payment in full to all holders of Series C Preferred and Series B Preferred of
the liquidation preference set forth in this Section 3(a), then such assets shall be distributed among the holders of Series C Preferred
and Series B Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be
respectively entitled.
      (b) After the payment of the full liquidation preference of the Series C Preferred and Series B Preferred as set forth in
Section 3(a) above, before any distribution or payment shall be made to the holders of any Junior Stock, the holders of Series A
Preferred shall be entitled to be paid out of the assets of the Company legally available for distribution an amount per share of
Series A Preferred equal to the Original Issue Price of the Series A Preferred plus all declared and unpaid dividends on the Series A
Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) for each
share of Series A Preferred held by them. If, upon any such liquidation, distribution or winding up, the assets of the Company legally
available for distribution shall be insufficient to make payment in full to all holders of Series A Preferred of the liquidation
preference set forth in this Section 3(b), then such assets shall be distributed among the holders of Series A Preferred at the time
outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.

       (c) After the payment of the full liquidation preference of the Series Preferred as set forth in Sections 3(a) and 3(b) above, the
remaining assets of the Company legally available for distribution, if any, shall be distributed ratably to the holders of the Common
Stock and Series B Preferred on an as-if-converted to Common Stock basis until such time as the holders of Series B Preferred have
received pursuant to Section 3(a) above and this Section 3(c), together, an aggregate amount per share of Series B Preferred equal to
three (3) times the Original Issue Price of the Series B Preferred (as adjusted for any stock, dividends, combinations, splits,
recapitalizations and the like with respect to such shares), plus all accrued and unpaid dividends on the Series B Preferred; and
thereafter the remaining assets of the Company legally available for distribution, if any, shall be distributed ratably to the holders of
the Common Stock.

      (d)     The following events shall be considered a liquidation under this Section 3:

           (i) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any
     other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or
     reorganization, own less than fifty percent (50%) of the Company's voting power immediately after such consolidation, merger
     or reorganization, or any transaction or series of related transactions to which the Company is a party in which in excess of fifty
     percent (50%) of the Company's voting power is transferred, excluding any consolidation or merger effected exclusively to
     change the domicile of the Company (an " Acquisition ");

             (ii)     a sale, lease or other disposition of all or substantially all of the assets of the Company (an " Asset Transfer ");

           (iii) in any of such events, if the consideration received by this corporation is other than cash, its value will be deemed its
     fair market value as determined in good faith by the Board. Any securities shall be valued as follows:

                  (A) Securities not subject to investment letter or other similar restrictions on free marketability covered by
            (B) below:

                          (1) If traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be
                    the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three
                    (3) days prior to the closing;

                          (2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale
                    prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and

                         (3)    If there is no active public market, the value shall be the fair market value thereof, as determined by the
                    Board.
                     (B) The method of valuation of securities subject to investment letter or other restrictions on free marketability
               (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make
               an appropriate discount from the market value determined as above in (A)(1), (2) or (3) to reflect the approximate fair
               market value thereof, as determined by the Board.

      4.   CONVERSION RIGHTS.

   The holders of the Series Preferred shall have the following rights with respect to the conversion of the Series Preferred into shares of
Common Stock (the " Conversion Rights "):

           (a) Optional Conversion. Subject to and in compliance with the provisions of this Section 4, any shares of Series
     Preferred may, at the option of the holder, be converted at any time into fully-paid and nonassessable shares of Common Stock. The
     number of shares of Common Stock to which a holder of Series Preferred shall be entitled upon conversion shall be the product
     obtained by multiplying the relevant Series Preferred Conversion Rate then in effect (determined as provided in Section 4(b) hereof)
     by the number of shares of relevant Series Preferred being converted.

            (b) Series Preferred Conversion Rate. The conversion rate in effect at any time for conversion of the Series Preferred
     (the " Series Preferred Conversion Rate ") shall be the quotient obtained by dividing the Original Issue Price of the relevant Series
     Preferred by the relevant "Series Preferred Conversion Price," calculated as provided in Section 4(c) hereof.

            (c) Conversion Price. The conversion price for the Series Preferred shall initially be the relevant Original Issue Price of
     the relevant Series Preferred (the " Series Preferred Conversion Price "). Such initial Series Preferred Conversion Price shall be
     adjusted from time to time in accordance with this Section 4. All references to the relevant Series Preferred Conversion Price herein
     shall mean the relevant Series Preferred Conversion Price as so adjusted.

           (d) Mechanics of Conversion. Each holder of Series Preferred who desires to convert the same into shares of Common
     Stock pursuant to this Section 4 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or
     any transfer agent for the Series Preferred, and shall give written notice to the Company at such office that such holder elects to
     convert the same. Such notice shall state the number of shares of Series Preferred being converted. Thereupon, the Company shall
     promptly issue and deliver at such office to such holder a certificate or certificates for the number of shares of Common Stock to
     which such holder is entitled and shall promptly pay (i) in cash or, to the extent sufficient funds are not then legally available
     therefor, in Common Stock (at the Common Stock's fair market value determined by the Board as of the date of such conversion),
     any declared and unpaid dividends on the shares of Series Preferred being converted and (ii) in cash (at the Common Stock's fair
     market value determined by the Board as of the date of conversion) the value of any fractional share of Common Stock otherwise
     issuable to any holder of Series Preferred. Such conversion shall be deemed to have been made at the close of business on the date of
     such surrender of the certificates representing the shares of Series Preferred to be converted, and the person entitled to receive the
     shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of
     Common Stock on such date.

            (e) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the date
     that the first share of Series B Preferred is issued (the " Original Issue Date ") effect a subdivision of the outstanding Common Stock
     without a corresponding subdivision of the Preferred Stock, the Series Preferred Conversion Price in effect immediately before that
     subdivision shall be proportionately decreased. Conversely, if the Company shall at any time or from time to time after the Original
     Issue Date combine the outstanding shares of Common Stock into a smaller number of shares without a corresponding
combination of the Preferred Stock, the Series Preferred Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 4(e) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

       (f) Adjustment for Common Stock Dividends and Distributions. If the Company at any time or from time to time after
the Original Issue Date makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of Common Stock, in each such event the Series Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close
of business on such record date, by multiplying the Series Preferred Conversion Price then in effect by a fraction (i) the numerator of
which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date, and (ii) the denominator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or distribution; provided, however , that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series Preferred Conversion Price
shall be recomputed accordingly as of the close of business on such record date and thereafter the Series Preferred Conversion Price
shall be adjusted pursuant to this Section 4(f) to reflect the actual payment of such dividend or distribution.

       (g) Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original
Issue Date, the Common Stock issuable upon the conversion of the Series Preferred is changed into the same or a different number of
shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than an Acquisition or Asset
Transfer as defined in Section 3(d) hereof or a subdivision or combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 4), in any such event each holder of Series Preferred shall have
the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such
shares of Series Preferred could have been converted immediately prior to such recapitalization, reclassification or change, all subject
to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

       (h) Reorganizations, Mergers or Consolidations. If at any time or from time to time after the Original Issue Date, there
is a capital reorganization of the Common Stock or the merger or consolidation of the Company with or into another corporation or
another entity or person (other than an Acquisition or Asset Transfer as defined in Section 3(d) hereof or a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 4), as a part of
such capital reorganization, provision shall be made so that the holders of the Series Preferred shall thereafter be entitled to receive
upon conversion of the Series Preferred the number of shares of stock or other securities or property of the Company to which a
holder of the number of shares of Common Stock deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of Series
Preferred after the capital reorganization to the end that the provisions of this Section 4 (including adjustment of the Series Preferred
Conversion Price then in effect and the number of shares issuable upon conversion of the Series Preferred) shall be applicable after
that event and be as nearly equivalent as practicable.
 (i)   Sale of Shares Below Series Preferred Conversion Price.

       (i) If at any time or from time to time after the Original Issue Date, the Company issues or sells, or is deemed by the
express provisions of this subsection (i) to have issued or sold, Additional Shares of Common Stock (as defined in subsection
(i)(iv) below)), other than as a dividend or other distribution on any class of stock as provided in Section 4(f) above, and other
than a subdivision or combination of shares of Common Stock as provided in Section 4(e) above, for an Effective Price (as
defined in subsection (i)(iv) below) less than the then effective Series Preferred Conversion Price, then and in each such case the
then existing Series Preferred Conversion Price shall be reduced, as of the opening of business on the date of such issue or sale,
to a price determined by multiplying the Series Preferred Conversion Price by a fraction (i) the numerator of which shall be
(A) the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale, plus
(B) the number of shares of Common Stock which the aggregate consideration received (as defined in subsection i(ii) hereof) by
the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Series Preferred
Conversion Price, and (ii) the denominator of which shall be the number of shares of Common Stock deemed outstanding (as
defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued.
For the purposes of the preceding sentence, the number of shares of Common Stock deemed to be outstanding as of a given date
shall be the sum of (A) the number of shares of Common Stock actually outstanding, (B) the number of shares of Common
Stock into which the then outstanding shares of Series Preferred could be converted if fully converted on the day immediately
preceding the given date, and (C) the number of shares of Common Stock which could be obtained through the exercise or
conversion of all other rights, options and convertible securities outstanding. No adjustment shall be made to the Series
Preferred Conversion Price in an amount less than one cent per share. Any adjustment otherwise required by this
Section 4(i) that is not required to be made due to the preceding sentence shall be included in any subsequent adjustment to the
Series Preferred Conversion Price.

       (ii) For the purpose of making any adjustment required under this Section 4(i), the consideration received by the
Company for any issue or sale of securities shall (A) to the extent it consists of cash, be computed at the net amount of cash
received by the Company after deduction of any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale but without deduction of any expenses payable by the Company,
(B) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith
by the Board, and (C) if Additional Shares of Common Stock, Convertible Securities (as defined in subsection (i)(iii) below) or
rights or options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together
with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good faith by the Board to be allocable to such Additional
Shares of Common Stock, Convertible Securities or rights or options.

       (iii) For the purpose of the adjustment required under this Section 4(i), if the Company issues or sells any (i) stock or
other securities convertible into, Additional Shares of Common Stock (such convertible stock or securities being herein referred
to as " Convertible Securities ") or (ii) rights or options for the purchase of Additional Shares of Common Stock or Convertible
Securities and if the Effective Price of such Additional Shares of Common Stock is less than the Series Preferred Conversion
Price, in each case the Company shall be deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration
for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Company for the
issuance of such rights or options or Convertible Securities, plus, in the case of such rights or options, the minimum amounts of
consideration, if any, payable to the Company upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the conversion thereof; provided that if in the case of Convertible
Securities the minimum amounts of such consideration cannot be ascertained, but are a function of antidilution or similar
protective clauses, the Company shall be deemed to have received the minimum amounts of consideration without reference to
such clauses; provided further that if the minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified
events other than by reason of antidilution adjustments, the Effective Price shall be recalculated using the figure to which such
minimum amount of consideration is reduced; provided further that if the minimum amount of consideration payable to the
Company upon the exercise or conversion of such rights, options or Convertible Securities is subsequently increased, the
Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Company upon
the exercise or conversion of such rights, options or Convertible Securities. No further adjustment of the Series Preferred
Conversion Price, as adjusted upon the issuance of such rights, options or Convertible Securities, shall be made as a result of the
actual issuance of Additional Shares of Common Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion privilege represented by any such Convertible
Securities shall expire without having been exercised, the Series Preferred Conversion Price as adjusted upon the issuance of
such rights, options or Convertible Securities shall be readjusted to the Series Preferred Conversion Price which would have
been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted, plus the consideration, if any, actually received by the Company (other
than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible
Securities; provided that such readjustment shall not apply to prior conversions of Series Preferred.

       (iv) " Additional Shares of Common Stock " shall mean all shares of Common Stock issued by the Company or deemed
to be issued pursuant to this Section 4(i), whether or not subsequently reacquired or retired by the Company, other than
(A) shares of Common Stock issued upon conversion of the Series Preferred; (B) shares of Common Stock and/or options,
warrants or other Common Stock purchase rights and the Common Stock issued pursuant to such options, warrants or other
rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like) after the date that the first share
of Series C Preferred is issued (the " Series C Original Issue Date ") to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that are
approved by the Board; (C) shares of Common Stock issued pursuant to the exercise of options, warrants or convertible
securities outstanding as of the Series C Original Issue Date; (D) shares of Common Stock issued and/or options, warrants or
other Common Stock purchase rights, and the Common Stock issued pursuant to such options, warrants or
     other rights for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination
     approved by the Board (including the representatives of the Series Preferred); and (E) shares of Common Stock issued pursuant
     to any equipment leasing arrangement, or debt financing from a bank approved by the Board (including the representatives of
     the Series Preferred). References to Common Stock in the subsections of this clause (iv) above shall mean all shares of Common
     Stock issued by the Company or deemed to be issued pursuant to this Section 4(i). The " Effective Price " of Additional Shares
     of Common Stock shall mean the quotient determined by dividing the total number of Additional Shares of Common Stock
     issued or sold, or deemed to have been issued or sold by the Company under this Section 4(i), into the aggregate consideration
     received, or deemed to have been received by the Company for such issue under this Section 4(i), for such Additional Shares of
     Common Stock.

       (j) Certificate of Adjustment. In each case of an adjustment or readjustment of the Series Preferred Conversion Price for
the number of shares of Common Stock or other securities issuable upon conversion of the Series Preferred, if the Series Preferred is
then convertible pursuant to this Section 4, the Company, at its expense, shall compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to each registered holder of Series Preferred at the holder's address as shown in the
Company's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Company
for any Additional Shares of Common Stock issued or sold or deemed to have been issued or sold, (ii) the Series Preferred
Conversion Price at the time in effect, (iii) the number of Additional Shares of Common Stock and (iv) the type and amount, if any,
of other property which at the time would be received upon conversion of the Series Preferred.

       (k) Notices of Record Date. Upon (i) any taking by the Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any Acquisition
(as defined in Section 3(d) hereof or other capital reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company, any merger or consolidation of the Company with or into any other corporation, or any Asset Transfer
(as defined in Section (3c) hereof), or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the
Company shall mail to each holder of Series Preferred at least ten (10) days prior to the record date specified therein (or such shorter
period approved by at least a majority of the outstanding Series Preferred) a notice specifying (A) the date on which any such record
is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which
any such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common
Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer,
dissolution, liquidation or winding up.

      (l)   Automatic Conversion.

            (i) Each share of Series A Preferred and Series C Preferred shall automatically be converted into shares of Common
     Stock, based on the then-effective Series Preferred Conversion Price, at any time upon the affirmative election of the holders of
     at least a majority of the outstanding shares of the Series A Preferred and Series C Preferred, voting together as a class. Upon
     such automatic conversion, any declared and unpaid dividends shall be paid in accordance with the provisions of Section 4(d)
     hereof.
           (ii) Each share of Series B Preferred shall automatically be converted into shares of Common Stock, based on the
     then-effective Series Preferred Conversion Price, at any time upon the affirmative election of the holders of at least a majority of
     the outstanding shares of the Series B Preferred. Upon such automatic conversion, any declared and unpaid dividends shall be
     paid in accordance with the provisions of Section 4(d) hereof.

           (iii) Each share of Series Preferred shall automatically convert immediately upon the closing of a firmly underwritten
     public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer
     and sale of Common Stock for the account of the Company in which (i) the per share price is at least six dollars ( $ 6.00) (as
     adjusted for stock splits, dividends, recapitalizations and the like), and (ii) the gross cash proceeds to the Company (before
     underwriting discounts, commissions and fees) are at least thirty million dollars ($30,000,000.00) (a " Qualified Offering ").
     Upon such automatic conversion, any declared and unpaid dividends shall be paid in accordance with the provisions of
     Section 4(d) hereof.

            (iv) Upon the occurrence of either of the events specified in Sections 4(l)(i), 4(l)(ii) and 4(1)(iii) above, the outstanding
     shares of Series Preferred shall be converted automatically without any further action by the holders of such shares and whether
     or not the certificates representing such shares are surrendered to the Company or its transfer agent; provided, however, that the
     Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion
     unless the certificates evidencing such shares of Series Preferred are either delivered to the Company or its transfer agent as
     provided below, or the holder notifies the Company or its transfer agent that such certificates have been lost, stolen or destroyed
     and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection
     with such certificates. Upon the occurrence of such automatic conversion of the Series Preferred, the holders of Series Preferred
     shall surrender the certificates representing such shares at the office of the Company or any transfer agent for the Series
     Preferred. Thereupon, there shall be issued and delivered to such holder promptly at such office and in its name as shown on
     such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the
     shares of Series Preferred surrendered were convertible on the date on which such automatic conversion occurred, and any
     declared and unpaid dividends shall be paid in accordance with the provisions of Section 4(d) hereof.

       (m) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Series Preferred. All
shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series Preferred by a
holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Company
shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the Common Stock's fair
market value (as determined by the Board) on the date of conversion.

       (n) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series
Preferred, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series Preferred. If at any time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series Preferred, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
      (o) Notices. Any notice required by the provisions of this Section 4 shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices shall be addressed to each holder of record at the address
of such holder appearing on the books of the Company.

      (p) Payment of Taxes. The Company will pay all taxes (other than taxes based upon income) and other governmental
charges that may be imposed with respect to the issue or delivery of shares of Common Stock upon conversion of shares of Series
Preferred, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series Preferred so converted were registered.

       (q) No Dilution or Impairment. Without the consent of the holders of the then outstanding Series Preferred, as required
under Section 2(b) hereof, the Company shall not amend its Certificate of Incorporation or participate in any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or take any other voluntary action, for the purpose of avoiding
or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but
shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect
the conversion rights of the holders of the Series Preferred against dilution or other impairment.

 5.    REDEMPTION.

       (a)   The Company shall be obligated to redeem the Series Preferred as follows:

             (i) The holders of at least a majority of the then outstanding shares of Series Preferred, voting together as a separate
      class, may require the Company, to the extent it may lawfully do so, to redeem the Series Preferred in three (3) annual
      installments beginning on the fourth anniversary of the Original Issue Date, and ending on the date two (2) years from such first
      redemption date (each a " Redemption Date "); provided that the Company shall receive at least sixty (60) days prior to such
      fourth anniversary written notice of such consent of the Series Preferred. The Company shall effect such redemptions on the
      applicable Redemption Date by paying in cash in exchange for the shares of Series Preferred to be redeemed a sum equal to the
      Original Issue Price per share of Series Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and
      the like with respect to such shares), plus declared and unpaid dividends with respect to such shares. The total amount to be paid
      for the Series Preferred is hereinafter referred to as the "Redemption Price." Interest at the rate of eight percent (8%) per annum
      on the total remaining Redemption Price will be paid on the second and third Redemption Date. The number of shares of Series
      Preferred that the Company shall be required to redeem on any one Redemption Date shall be equal to the amount determined
      by dividing (A) the aggregate number of shares of Series Preferred outstanding immediately prior to the Redemption Date by
      (B) the number of remaining Redemption Dates (including the Redemption Date to which such calculation applies). Shares
      subject to redemption pursuant to this Section 5(a) shall be redeemed from each holder of Series Preferred on a pro rata basis.

             (ii) At least thirty (30) days but no more than sixty (60) days prior to the first Redemption Date, the Company shall send
      a notice (a "Redemption Notice") to all holders of Series Preferred to be redeemed setting forth (A) the Redemption Price for the
      shares to be redeemed; and (B) the place at which such holders may obtain payment of the Redemption Price upon surrender of
      their share certificates. If the Company does
                not have sufficient funds legally available to redeem all shares to be redeemed at the Redemption Date (including, if applicable,
                those to be redeemed at the option of the Company), then it shall redeem such shares pro rata (based on the portion of the
                aggregate Redemption Price payable to them) to the extent possible and shall redeem the remaining shares to be redeemed as
                soon as sufficient funds are legally available.

                (b) On or prior to the Redemption Date, the Company shall deposit the Redemption Price of all shares to be redeemed with a
          bank or trust company having aggregate capital and surplus in excess of one hundred million dollars ($100,000,000.00), as a trust
          fund, with irrevocable instructions and authority to the bank or trust company to pay, on and after such Redemption Date, the
          Redemption Price of the shares to their respective holders upon the surrender of their share certificates. Any moneys deposited by the
          Company pursuant to this Section 5(b) for the redemption of shares thereafter converted into shares of Common Stock pursuant to
          Section 4 hereof no later than the fifth (5th) day preceding the Redemption Date shall be returned to the Company forthwith upon
          such conversion. The balance of any funds deposited by the Company pursuant to this Section 5(b) remaining unclaimed at the
          expiration of one (1) year following such Redemption Date shall be returned to the Company promptly upon its written request.

                 (c) On or after such Redemption Date, each holder of shares of Series Preferred to be redeemed shall surrender such holder's
          certificates representing such shares to the Company in the manner and at the place designated in the Redemption Notice, and
          thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or
          certificates as the owner thereof and each surrendered certificate shall be canceled. In the event less than all the shares represented by
          such certificates are redeemed, a new certificate shall be issued representing the unredeemed shares. From and after such Redemption
          Date, unless there shall have been a default in payment of the Redemption Price or the Company is unable to pay the Redemption
          Price due to not having sufficient legally available funds, all rights of the holders of such shares as holders of Series Preferred (except
          the right to receive the Redemption Price without interest upon surrender of their certificates), shall cease and terminate with respect
          to such shares; provided that in the event that shares of Series Preferred are not redeemed due to a default in payment by the
          Company or because the Company does not have sufficient legally available funds, such shares of Series Preferred shall remain
          outstanding and shall be entitled to all of the rights and preferences provided herein.

                (d) In the event of a call for redemption of any shares of Series Preferred, the Conversion Rights (as defined in Section 4
          hereof) for such Series Preferred shall terminate as to the shares designated for redemption at the close of business on the fifth (5th)
          day preceding the Redemption Date, unless default is made in payment of the Redemption Price.

           6.    NO REISSUANCE OF SERIES PREFERRED.

     No share or shares of Series Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be
reissued; and in addition, the Certificate of Incorporation shall be appropriately amended to effect the corresponding reduction in the
Company's authorized stock.


                                                                         V.

       A. The liability of the directors of the Company for monetary damages shall be eliminated to the fullest extent permissible under
applicable law. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated to the fullest extent permitted by the DGCL, as amended.

    B. The Company is authorized to provide indemnification of agents (as defined in Section 317 of the CGCL) for breach of duty to the
Company and its stockholders through bylaw provisions or
through agreements with the agents, or through stockholder resolutions, or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the CGCL, subject, at any time or times that the Company is subject to Section 2115(b) of the CGCL, to the limits on such
excess indemnification set forth in Section 204 of the CGCL.

      C. Any repeal or modification of this Article V shall be prospective and shall not affect the rights under this Article V in effect at the
time of the alleged occurrence of any action or omission to act giving rise to liability or indemnification.


                                                                        VI.

     For the management of the business and for the conduct of the affairs of the Company, and in further definition, limitation and regulation
of the powers of the Company, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

      A. The management of the business and the conduct of the affairs of the Company shall be vested in its Board. The number of
directors which shall constitute the whole Board shall be fixed by the Board in the manner provided in the Bylaws, subject to any restrictions
which may be set forth in this Certificate of Incorporation.

      B. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Company. The stockholders shall also
have the power to adopt, amend or repeal the Bylaws of the Company; provided however , that, in addition to any vote of the holders of any
class or series of stock of the Company required by law or by this Amended and Restated Certificate of Incorporation, the affirmative vote of
the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Company entitled to vote
generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws
of the Company.

      C.    The directors of the Company need not be elected by written ballot unless the Bylaws so provide.


                                                                       VII.

     The name and the mailing address of the Sole Incorporator is as follows:

                                                                 Paul F. Banta
                                                           Epocrates (Delaware), Inc.
                                                         1800 Gateway Drive, Suite 300
                                                             San Mateo, CA 94404
     IN WITNESS WHEREOF , this Certificate of Incorporation has been subscribed this 16th day of November, 2005 by the undersigned
who affirms that the statements made herein are true and correct.


                                                                                         /s/ PAUL F. BANTA

                                                                                         Paul F. Banta
                                                                                         Sole Incorporator
                                                 CERTIFICATE OF AMENDMENT TO
                                               CERTIFICATE OF INCORPORATION OF
                                                        EPOCRATES, INC.

    Kirk M. Loevner hereby certifies that:

      ONE: The original name of this company is Epocrates (Delaware), Inc. and the date of filing the original Certificate of Incorporation of
this company with the Secretary of State of the State of Delaware was November 17, 2005.

    TWO:       He is the duly elected and acting President and Chief Executive Officer of Epocrates, Inc., a Delaware corporation.

     THREE: Article IV, Paragraph A of the Certificate of Incorporation of this company is hereby amended and restated to read in its
entirety as follows:

         " A. The Company is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
         The total number of shares which the Company is authorized to issue is fifty-three million six hundred thirty-six thousand four
         hundred forty-one (53,636,441) shares, thirty-eight million three hundred thirty-two thousand five hundred seventy-five (38,332,575)
         shares of which shall be Common Stock (the " Common Stock ") and fifteen million three hundred three thousand eight hundred
         sixty-six (15,303,866) shares of which shall be Preferred Stock (the " Preferred Stock "). The Preferred Stock shall have a par value
         of $0.001 per share and the Common Stock shall have a par value of $0.001 per share.

                                                                    ****

     This Certificate of Amendment to Certificate of Incorporation was approved by the holders of the requisite number of shares of said
corporation in accordance with Section 228 of the DGCL. This Certificate of Amendment to Certificate of Incorporation has been duly adopted
in accordance with the provisions of Section 242 of the DGCL by the stockholders of the Company.

      IN WITNESS WHEREOF, EPOCRATES, INC. has caused this Certificate of Amendment to Certificate of Incorporation to be
signed by its President and Chief Executive Officer this 20 th day of December, 2007.



                                                                         EPOCRATES, INC.

                                                                         /s/ KIRK M. LOEVNER

                                                                         Kirk M. Loevner
                                                                         President and Chief Executive Officer
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CERTIFICATE OF INCORPORATION OF EPOCRATES (DELAWARE), INC.
I.
II.
III.
IV.
 V.
VI.
VII.
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF EPOCRATES, INC.
                                                                                                                                     Exhibit 3.2

                                                     AMENDED AND RESTATED
                                                  CERTIFICATE OF INCORPORATION
                                                               OF
                                                         EPOCRATES, INC.

       EPOCRATES, INC. , a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby
certify as follows:

      FIRST :     The name of the corporation is Epocrates, Inc.

     SECOND : The date of filing the original Certificate of Incorporation of this corporation with the Secretary of State of the State of
Delaware is November 17, 2005.

      THIRD :      The Certificate of Incorporation of this corporation is hereby amended and restated to read as follows:

                                                                       I.

    The name of this corporation is EPOCRATES, INC. (the " Company ").

                                                                       II.

    The address of the registered office of the corporation in the State of Delaware is 160 Greentree Drive, Suite 101, City of Dover, County
of Kent, and the name of the registered agent of the corporation in the State of Delaware at such address is National Registered Agents, Inc.

                                                                      III.

    The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware
General Corporation Law (" DGCL ").

                                                                      IV.

          A. This corporation is authorized to issue two classes of stock to be designated, respectively, " Common Stock " and " Preferred
    Stock ." The total number of shares which the corporation is authorized to issue is one hundred ten million (110,000,000) shares. One
    hundred million (100,000,000) shares shall be Common Stock, each having a par value of one-tenth of one cent ($0.001). Ten million
    (10,000,000) shares shall be Preferred Stock, each having a par value of one-tenth of one cent ($0.001).

           B. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby expressly
    authorized to provide for the issue of all of any of the shares of the Preferred Stock in one or more series, and to fix the number of shares
    and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences,
    and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and
    expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be
    permitted by the DGCL. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series
    subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number
    of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the
    status that they had prior to the adoption of the resolution

                                                                       1
     originally fixing the number of shares of such series. The number of authorized shares of Preferred Stock may be increased or decreased
     (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock,
     without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the
     terms of any certificate of designation filed with respect to any series of Preferred Stock.

            C. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the
     stockholders of the Corporation for their vote; provided, however , that, except as otherwise required by law, holders of Common Stock
     shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation filed with
     respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders
     of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon
     by law or pursuant to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred
     Stock).

                                                                         V.

      For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided
that:

      A.

           1.    MANAGEMENT OF THE BUSINESS. The management of the business and the conduct of the affairs of the
     corporation shall be vested in its Board of Directors. The number of directors which shall constitute the Board of Directors shall be fixed
     exclusively by resolutions adopted by a majority of the authorized number of directors constituting the Board of Directors.

            2.    BOARD OF DIRECTORS

                 a.    Directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Each
           director shall hold office either until the expiration of the term for which elected or appointed and until a successor has been elected
           and qualified, or until such director's death, resignation or removal. No decrease in the number of directors constituting the Board of
           Directors shall shorten the term of any incumbent director.

                  b.    No stockholder entitled to vote at an election for directors may cumulate votes to which such stockholder is entitled,
           unless, at the time of such election, the corporation is subject to Section 2115(b) of the California General Corporation Law (" CGCL
           "). During such time or times that the corporation is subject to Section 2115(b) of the CGCL, every stockholder entitled to vote at an
           election for directors may cumulate such stockholder's votes and give one candidate a number of votes equal to the number of
           directors to be elected multiplied by the number of votes to which such stockholder's shares are otherwise entitled, or distribute the
           stockholder's votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, shall be
           entitled to so cumulate such stockholder's votes unless (i) the names of such candidate or candidates have been placed in nomination
           prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder's intention to
           cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their
           votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest
           number of votes, up to the number of directors to be elected, are elected.

                                                                          2
       3.     REMOVAL OF DIRECTORS

             a.    During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any
      individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority
      of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual
      director may be removed when the votes cast against such director's removal, or not consenting in writing to such removal, would be
      sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action
      is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such
      director's most recent election were then being elected.

            b.     At any time or times that the corporation is not subject to Section 2115(b) of the CGCL and subject to any limitations
      imposed by law, Section A(3)(a) above shall not apply and the Board of Directors or any director may be removed from office at any
      time (i) with cause by the affirmative vote of the holders of a majority of the voting power of all then-outstanding shares of capital
      stock of the corporation, entitled to vote generally at an election of directors or (ii) without cause by the affirmative vote of the
      holders of at least sixty-six and two-thirds percent (66 2 / 3 %) of the voting power of all then-outstanding shares of capital stock of
      the corporation entitled to vote generally at an election of directors.

       4.     VACANCIES

            a.     Subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting
      from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in
      the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created
      directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a
      majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any
      director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which
      the vacancy was created or occurred and until such director's successor shall have been elected and qualified.

             b.    At any time or times that the corporation is subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy by
      the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office,
      then

                  (i) Any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time
            outstanding having the right to vote for those directors may call a special meeting of stockholders; or

                  (ii) The Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily
            order a special meeting of stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL.
            The term of office of any director shall terminate upon that election of a successor.

 B.

       1.    BYLAW AMENDMENTS. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the
corporation. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the corporation; provided, however, that, in
addition to any vote of the holders of any class or series of stock of the corporation required by law or by this Certificate of Incorporation,
the affirmative vote of the holders of at least sixty-six and two-thirds percent

                                                                     3
     (66 2 / 3 %) of the voting power of all of the then-outstanding shares of the capital stock of the corporation entitled to vote generally in the
     election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the
     corporation.

           2.     BALLOTS .         The directors of the corporation need not be elected by written ballot unless the Bylaws so provide.

            3.    ACTION BY STOCKHOLDERS. No action shall be taken by the stockholders of the corporation except at an annual or
     special meeting of stockholders called in accordance with the Bylaws and following the closing of the Initial Public Offering no action
     shall be taken by the stockholders by written consent or electronic transmission.

           4.    ADVANCE NOTICE. Advance notice of stockholder nominations for the election of directors and of business to be
     brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in the Bylaws of
     the Company.

                                                                          VI.

     A. The liability of the directors for monetary damages shall be eliminated to the fullest extent under applicable law. If the DGCL is
amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the
corporation shall be eliminated to the fullest extent permitted by the DGCL, as so amended.

      B. This corporation is authorized to provide indemnification of agents (as defined in Section 317 of the CGCL) for breach of duty to
the corporation and its shareholders through bylaw provisions or through agreements with the agents, or through shareholder resolutions, or
otherwise, in excess of the indemnification otherwise permitted by Section 317 of the CGCL, subject, at any time or times the corporation is
subject to Section 2115(b) to the limits on such excess indemnification set forth in Section 204 of the CGCL.

      C. Any repeal or modification of this Article VI shall be prospective and shall not affect the rights under this Article VI in effect at the
time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

                                                                          VII.

      A. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, except as provided in paragraph B. of this Article VII, and all rights conferred upon the
stockholders herein are granted subject to this reservation.

       B. Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the corporation required by law
or by this Certificate of Incorporation or any certificate of designation filed with respect to a series of Preferred Stock, the affirmative vote of
the holders of at least the holders of at least sixty-six and two-thirds percent (66 2 / 3 %) of the voting power of all then-outstanding shares of
capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter,
amend or repeal Articles V, VI, and VII.

                                                                          ***

     FOUR:       This Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of the Company.

                                                                            4
     FIVE: This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of
Sections 242 and 245 of the DGCL by the Board of Directors and the stockholders of the Company. This Amended and Restated Certificate of
Incorporation was approved by the holders of the requisite number of shares of the Company in accordance with Section 228 of the DGCL.

     IN WITNESS WHEREOF , Epocrates, Inc. has caused this Amended and Restated Certificate to be signed by the Chairman, President
and Chief Executive Officer in San Mateo, California this day of   , 2008.

                                                                        EPOCRATES, INC.


                                                                        Kirk M. Loevner
                                                                        Chairman, President and Chief Executive Officer

                                                                    5
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                                                                      Exhibit 3.3


                                                      BYLAWS

                                                         OF

                                                 EPOCRATES, INC.
                                           (A DELAWARE CORPORATION)
                                            TABLE OF CONTENTS

                                                                PAGE

ARTICLE I       OFFICES                                                1

  Section 1.    Registered Office                                      1

  Section 2.    Other Offices                                          1

ARTICLE II      CORPORATE SEAL                                         1

  Section 3.    Corporate Seal                                         1

ARTICLE III     STOCKHOLDERS' MEETINGS                                 1

  Section 4.    Place Of Meetings                                      1

  Section 5.    Annual Meetings                                        1

  Section 6.    Special Meetings                                       1

  Section 7.    Notice Of Meetings                                     2

  Section 8.    Quorum                                                 2

  Section 9.    Adjournment And Notice Of Adjourned Meetings           3

  Section 10.   Voting Rights                                          3

  Section 11.   Joint Owners Of Stock                                  3

  Section 12.   List Of Stockholders                                   4

  Section 13.   Action Without Meeting                                 4

  Section 14.   Organization                                           5

ARTICLE IV      DIRECTORS                                              6

  Section 15.   Number And Term Of Office                              6

  Section 16.   Powers                                                 6

  Section 17.   Board of Directors                                     6

  Section 18.   Vacancies                                              6

  Section 19.   Resignation                                            7

  Section 20.   Removal                                                7

  Section 21.   Meetings                                               7

  Section 22.   Quorum And Voting                                      8

  Section 23.   Action Without Meeting                                 8

  Section 24.   Fees And Compensation                                  9

  Section 25.   Committees                                             9
Section 26.   Lead Independent Director       10

Section 27.   Organization                    10


                                          i
ARTICLE V       OFFICERS                                                                                       10

  Section 28.   Officers Designated                                                                            10

  Section 29.   Tenure And Duties Of Officers                                                                  11

  Section 30.   Delegation Of Authority                                                                        12

  Section 31.   Resignations                                                                                   12

  Section 32.   Removal                                                                                        12

ARTICLE VI      EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY
                THE CORPORATION                                                                                12

  Section 33.   Execution Of Corporate Instruments                                                             12

  Section 34.   Voting Of Securities Owned By The Corporation                                                  12

ARTICLE VII     SHARES OF STOCK                                                                                13

  Section 35.   Form And Execution Of Certificates                                                             13

  Section 36.   Lost Certificates                                                                              13

  Section 37.   Transfers                                                                                      13

  Section 38.   Fixing Record Dates                                                                            13

  Section 39.   Registered Stockholders                                                                        14

ARTICLE VIII    OTHER SECURITIES OF THE CORPORATION                                                            15

  Section 40.   Execution Of Other Securities                                                                  15

ARTICLE IX      DIVIDENDS                                                                                      15

  Section 41.   Declaration Of Dividends                                                                       15

  Section 42.   Dividend Reserve                                                                               15

ARTICLE X       FISCAL YEAR                                                                                    15

  Section 43.   Fiscal Year                                                                                    15

ARTICLE XI      INDEMNIFICATION                                                                                16

  Section 44.   Indemnification Of Directors, Executive Officers, Other Officers, Employees And Other Agents   16

ARTICLE XII     NOTICES                                                                                        18

  Section 45.   Notices                                                                                        18

ARTICLE XIII    AMENDMENTS                                                                                     19

  Section 46.   Amendments                                                                                     19

ARTICLE XIV     LOANS TO OFFICERS                                                                              20

  Section 47.   Loans To Officers                                                                              20
ARTICLE XV      RIGHT OF FIRST REFUSAL        20

  Section 48.   Right of First Refusal        20

                                         ii
                                                                    BYLAWS

                                                                        OF

                                                            EPOCRATES, INC.
                                                      (A DELAWARE CORPORATION)

                                                                   ARTICLE I

                                                                    OFFICES

     Section 1. Registered Office.         The registered office of the corporation in the State of Delaware shall be in the City of Dover, County
of Kent. (Del. Code Ann., tit. 8, § 131)

      Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may
be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the corporation may require. (Del. Code Ann., tit. 8, § 122(8))


                                                                   ARTICLE II

                                                              CORPORATE SEAL

     Section 3. Corporate Seal. The Board of Directors may adopt a corporate seal. The corporate seal shall consist of a die bearing the
name of the corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise. (Del. Code Ann., tit. 8, § 122(3))


                                                                  ARTICLE III

                                                       STOCKHOLDERS' MEETINGS

      Section 4. Place Of Meetings. Meetings of the stockholders of the corporation may be held at such place, either within or without
the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion,
determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under
the Delaware General Corporation Law (" DGCL "). (Del. Code Ann., tit. 8, § 211(a))

       Section 5. Annual Meetings. The annual meeting of the stockholders of the corporation, for the purpose of election of directors and
for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by
the Board of Directors. Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record
at the time of giving the stockholder's notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied
with the notice procedures set forth in Section 6. (Del. Code Ann., tit. 8, § 211(b))

      Section 6.   Special Meetings.

            (a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of the
     Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the
     total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such
     resolution is presented to the Board of Directors for adoption).

                                                                         1
     At any time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law (" CGCL "),
     stockholders holding ten percent (10%) or more of the outstanding shares shall have the right to call a special meeting of stockholders only
     as set forth in Section 18(b) herein. If a special meeting is properly called by such stockholders, the request shall be in writing, specifying
     the general nature of the business proposed to be transacted, and shall be delivered personally or sent by certified or registered mail, return
     receipt requested, to the Secretary of the corporation.

           (b) The Board of Directors shall determine the time and place of such special meeting. Upon determination of the time and place
     of the meeting, the Secretary shall cause a notice of meeting to be given to the stockholders entitled to vote, in accordance with the
     provisions of Section 7 of these Bylaws. No business may be transacted at such special meeting otherwise than specified in the notice of
     meeting. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting of
     stockholders called by action of the Board of Directors may be held.

            (c) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which
     directors are to be elected pursuant to the corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any
     stockholder of the corporation who is a stockholder of record at the time of giving notice provided for in this paragraph who shall be
     entitled to vote at the meeting and who complies with the notice procedures set forth in Section 5 of these Bylaws. In the event the
     corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such
     stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation's notice
     of meeting, if the stockholder's notice required by Section 6(a) of these Bylaws shall be delivered to the Secretary at the principal
     executive offices of the corporation not earlier than the close of business on the one hundred twentieth (120 th ) day prior to such special
     meeting and not later than the close of business on the later of the ninetieth (90 th ) day prior to such meeting or the tenth (10 th ) day
     following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the
     Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting
     commence a new time period for the giving of a stockholder's notice as described above.

       Section 7. Notice Of Meetings. Except as otherwise provided by law, notice, given in writing or by electronic transmission, of each
meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder
entitled to vote at such meeting, such notice to specify the place, if any, date and hour, in the case of special meetings, the purpose or purposes
of the meeting, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in
person and vote at any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the corporation. Notice of the time, place, if any, and purpose of any
meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, or by electronic transmission by such person,
either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person, by remote communication, if
applicable, or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting
shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. (Del. Code Ann., tit. 8, §§ 222,
229, 232)

      Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of
Incorporation, or by these Bylaws, the presence, in person, by remote

                                                                         2
communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to
time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall
be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise
provided by statute or by applicable stock exchange or Nasdaq rules, or by the Certificate of Incorporation or these Bylaws, in all matters other
than the election of directors, the affirmative vote of the majority of shares present in person, by remote communication, if applicable, or
represented by proxy at the meeting and entitled to vote generally on the subject matter shall be the act of the stockholders. Except as otherwise
provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present
in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the election of
directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate
of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person, by remote
communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote
on that matter. Except where otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of shares of such class or classes or series present in person, by remote
communication, if applicable, or represented by proxy at the meeting shall be the act of such class or classes or series. (Del. Code Ann., tit. 8,
§ 216)

       Section 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be
adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares present in person, by remote
communication, if applicable, or represented by proxy at the meeting. When a meeting is adjourned to another time or place, if any, notice need
not be given of the adjourned meeting if the time and place, if any, thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment
is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the meeting. (Del. Code Ann., tit. 8, § 222(c))

       Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders,
except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as
provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the
right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance
with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation
unless the proxy provides for a longer period. (Del. Code Ann., tit. 8, §§ 211(e), 212(b))

       Section 11. Joint Owners Of Stock. If shares or other securities having voting power stand of record in the names of two (2) or
more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two
(2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary
and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with
respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority
so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter,

                                                                           3
each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the
DGCL, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or
even-split for the purpose of subsection (c) shall be a majority or even-split in interest. (Del. Code Ann., tit. 8, § 217(b))

      Section 12. List Of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, (a) on a reasonably accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the
corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take
reasonable steps to ensure that such information is available only to stockholders of the corporation. The list shall be open to examination of
any stockholder during the time of the meeting as provided by law. (Del. Code Ann., tit. 8, § 219)

      Section 13.   Action Without Meeting.

           (a) Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or
     special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken
     without a meeting, without prior notice and without a vote, if a consent in writing, or by electronic transmission setting forth the action so
     taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to
     authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. (Del. Code Ann., tit. 8,
     § 228)

           (b) Every written consent or electronic transmission shall bear the date of signature of each stockholder who signs the consent,
     and no written consent or electronic transmission shall be effective to take the corporate action referred to therein unless, within sixty
     (60) days of the earliest dated consent delivered to the corporation in the manner herein required, written consents or electronic
     transmissions signed by a sufficient number of stockholders to take action are delivered to the corporation by delivery to its registered
     office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which
     proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or
     registered mail, return receipt requested. (Del. Code Ann., tit. 8, § 228)

            (c) Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to
     those stockholders who have not consented in writing or by electronic transmission and who, if the action had been taken at a meeting,
     would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a
     sufficient number of stockholders to take action were delivered to the corporation as provided in Section 228 (c) of the DGCL. If the
     action which is consented to is such as would have required the filing of a certificate under any section of the DGCL if such action had
     been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement
     required by such section concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the
     DGCL.

            (d) A telegram, cablegram or other electronic transmission consent to an action to be taken and transmitted by a stockholder or
     proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated
     for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth

                                                                         4
or is delivered with information from which the corporation can determine (i) that the telegram, cablegram or other electronic transmission
was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and
(ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic
transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on
which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been
delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be made by
hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by
telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the corporation or to
an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the
extent and in the manner provided by resolution of the board of directors of the corporation. Any copy, facsimile or other reliable
reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the
original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire
original in writing. (Del. Code Ann., tit. 8, § 228(d))

      (e) Notwithstanding the foregoing, no such action by written consent or by electronic transmission may be taken following the
closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "
1933 Act "), covering the offer and sale of Common Stock of the corporation to the public (the " Initial Public Offering ").

 Section 14.   Organization.

      (a) At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled
to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his or her absence, an Assistant Secretary directed to do
so by the President, shall act as secretary of the meeting.

       (b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any,
the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as,
in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without
limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the
safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the
commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and
closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls
for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Unless and to the extent
determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in
accordance with rules of parliamentary procedure.

                                                                    5
                                                                   ARTICLE IV

                                                                  DIRECTORS

      Section 15. Number And Term Of Office. The authorized number of directors of the corporation shall be fixed in accordance with
the Certificate of Incorporation. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the
directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws. (Del. Code Ann., tit. 8, §§ 141(b), 211(b), (c))

     Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the
Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation. (Del. Code Ann., tit. 8, § 141(a))

      Section 17.   Board of Directors.

            (a) Directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Each director
     shall hold office either until the expiration of the term for which elected or appointed and until a successor has been elected and qualified,
     or until such director's earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors
     shall shorten the term of any incumbent director.

           (b) No stockholder entitled to vote for directors may cumulate votes to which such stockholder is entitled, unless, at the time of
     such election, the corporation is subject to §2115(b) of the CGCL. During such time or times that the corporation is subject to
     Section 2115(b) of the CGCL, every stockholder entitled to vote at an election for directors may cumulate such stockholder's votes and
     give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such
     stockholder's shares are otherwise entitled, or distribute the stockholder's votes on the same principle among as many candidates as such
     stockholder thinks fit. No stockholder, however, shall be entitled to cumulate such stockholder's votes unless (i) the names of such
     candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to
     the voting, of such stockholder's intention to cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate
     votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative
     voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

      Section 18.   Vacancies.

            (a) Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred
     Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly
     created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution
     that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority
     of the directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, provided,
     however , that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the
     provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series shall, unless the
     Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be
     filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so
     elected. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director
     for which the vacancy was created or occurred and until such director's successor shall

                                                                         6
     have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death,
     removal or resignation of any director. (Del. Code Ann., tit. 8, § 223(a), (b))

           (b) At any time or times that the corporation is subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy, the
     directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then

               (1) Any holder or holders of an aggregate of ten percent (10%) or more of the total number of shares at the time outstanding
          having the right to vote for those directors may call a special meeting of stockholders; or

                (2) The Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily order a
          special meeting of stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL. The term of
          office of any director shall terminate upon that election of a successor. (CGCL § 305(c))

       Section 19. Resignation. Any director may resign at any time by delivering his or her notice in writing or by electronic transmission
to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of
the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or
more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall
become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be
vacated and until his successor shall have been duly elected and qualified. (Del. Code Ann., tit. 8, §§ 141(b), 223(d))

      Section 20.   Removal.

            (a) During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any
     individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of
     the outstanding shares entitled to vote on such removal; provided, however , that unless the entire Board is removed, no individual director
     may be removed when the votes cast against such director's removal, or not consenting in writing to such removal, would be sufficient to
     elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written
     consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director's most recent
     election were then being elected.

            (b) At any time or times that the corporation is not subject to Section 2115(b) of the CGCL and subject to any limitations imposed
     by law, Section 20(a) above shall no longer apply and the Board of Directors or any director may be removed from office at any time
     (i) with cause by the affirmative vote of the holders of a majority of the voting power of all then-outstanding shares of capital stock of the
     corporation entitled to vote generally at an election of directors or (ii) without cause by the affirmative vote of the holders of at least
     sixty-six and two-thirds percent (66 2 / 3 %) of the voting power of all then-outstanding shares of capital stock of the corporation entitled to
     vote generally at an election of directors.

      Section 21.   Meetings.

           (a) Regular Meetings. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of
     Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the
     Board of Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging

                                                                         7
     system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other
     electronic means. No further notice shall be required for regular meetings of the Board of Directors. (Del. Code Ann., tit. 8, § 141(g))

           (b) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of
     Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board, the
     Chief Executive Officer or by any two (2) directors. (Del. Code Ann., tit. 8, § 141(g))

           (c) Meetings by Electronic Communications Equipment. Any member of the Board of Directors, or of any committee
     thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all
     persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person
     at such meeting. (Del. Code Ann., tit. 8, § 141(i))

            (d) Notice of Special Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally
     or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate
     messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four
     (24) hours before the date and time of the meeting. If notice is sent by US mail, it shall be sent by first class mail, charges prepaid, at least
     three (3) days before the date of the meeting. Notice of any meeting may be waived in writing, or by electronic transmission, at any time
     before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the
     express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called
     or convened. (Del. Code Ann., tit. 8, § 229)

           (e) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof,
     however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a
     quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice shall sign a
     written waiver of notice or shall waive notice by electronic transmission. All such waivers shall be filed with the corporate records or
     made a part of the minutes of the meeting. (Del. Code Ann., tit. 8, § 229)

      Section 22.   Quorum And Voting.

           (a) Unless the Certificate of Incorporation requires a greater number, and except with respect to questions related to
     indemnification arising under Section 44 for which a quorum shall be one-third of the exact number of directors fixed from time to time, a
     quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of
     Directors in accordance with the Certificate of Incorporation; provided, however, at any meeting whether a quorum be present or
     otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board
     of Directors, without notice other than by announcement at the meeting. (Del. Code Ann., tit. 8, § 141(b))

           (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the
     affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these
     Bylaws. (Del. Code Ann., tit. 8, § 141(b))

      Section 23. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all
members of the

                                                                          8
Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or
transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper
form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. (Del. Code
Ann., tit. 8, § 141(f))

      Section 24. Fees And Compensation. Directors shall be entitled to such compensation for their services as may be approved by the
Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for
attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing
herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee,
or otherwise and receiving compensation therefor. (Del. Code Ann., tit. 8, § 141(h))

      Section 25.   Committees.

            (a) Executive Committee. The Board of Directors may appoint an Executive Committee to consist of two (2) or more
     members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board
     of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and
     affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such
     committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or
     matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or
     (ii) adopting, amending or repealing any bylaw of the corporation. (Del. Code Ann., tit. 8, § 141(c))

           (b) Other Committees. The Board of Directors may, from time to time, appoint such other committees as may be permitted
     by law. Such other committees appointed by the Board of Directors shall consist of two (2) or more members of the Board of Directors
     and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in
     no event shall any such committee have the powers denied to the Executive Committee in these Bylaws. (Del. Code Ann., tit. 8, § 141(c))

           (c) Term. The Board of Directors, subject to any requirements of any outstanding series of Preferred Stock and the provisions
     of subsections (a) or (b) of this Section 25, may at any time increase or decrease the number of members of a committee or terminate the
     existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from
     the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee
     member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of
     members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may
     replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any
     member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or
     they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any
     such absent or disqualified member. (Del. Code Ann., tit. 8, §141(c))

           (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any
     other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors,
     or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular
     meetings need be given thereafter. Special meetings of any such committee

                                                                       9
     may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a
     member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the
     manner provided for the giving of notice to members of the Board of Directors of the time and place of special meetings of the Board of
     Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be
     waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting,
     at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Unless
     otherwise provided by the Board of Directors in the resolutions authorizing the creation of the committee, a majority of the authorized
     number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those
     present at any meeting at which a quorum is present shall be the act of such committee. (Del. Code Ann., tit. 8, §§ 141(c), 229)

       Section 26. Lead Independent Director. The Chairman of the Board of Directors, or if the Chairman is not an independent
director, one of the independent directors, may be designated by the Board of Directors as lead independent director to serve until replaced by
the Board of Directors (" Lead Independent Director "). The Lead Independent Director will, with the Chairman of the Board of Directors,
establish the agenda for regular Board meetings and serve as chairman of Board of Directors meetings in the absence of the Chairman of the
Board of Directors; establish the agenda for meetings of the independent directors; coordinate with the committee chairs regarding meeting
agendas and informational requirements; preside over meetings of the independent directors; preside over any portions of meetings of the
Board of Directors at which the evaluation or compensation of the Chief Executive Officer is presented or discussed; preside over any portions
of meetings of the Board of Directors at which the performance of the Board of Directors is presented or discussed; and coordinate the
activities of the other independent directors and perform such other duties as may be established or delegated by the Chairman of the Board of
Directors.

       Section 27. Organization. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been
appointed or is absent, Lead Independent Director, or if the Lead Independent Director is absent, the Chief Executive Officer (if a director), or,
if a Chief Executive Officer is absent, the President (if a director), or if the President is absent, the most senior Vice President (if a director), or,
in the absence of any such person, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The
Secretary, or in his absence, any Assistant Secretary or other officer or director directed to do so by the President, shall act as secretary of the
meeting.


                                                                     ARTICLE V

                                                                      OFFICERS

      Section 28. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors,
the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer and the Treasurer. The
Board of Directors may also appoint one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall
deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom
by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of
Directors. (Del. Code Ann., tit. 8, §§ 122(5), 142(a), (b))

                                                                           10
 Section 29.    Tenure And Duties Of Officers.

      (a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been
duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time
by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.
(Del. Code Ann., tit. 8, § 141(b), (e))

      (b) Duties of Chief Executive Officer. The Chief Executive Officer shall preside at all meetings of the stockholders and at all
meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present or the Lead
Independent Director is present. Unless another officer has been appointed Chief Executive Officer of the corporation, the President shall
be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. To the extent that a Chief Executive Officer has been appointed, all
references in these Bylaws to the President shall be deemed references to the Chief Executive Officer. The Chief Executive Officer shall
perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of
Directors shall designate from time to time.

       (c) Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of
Directors, unless the Chairman of the Board of Directors, the Lead Independent Director, or the Chief Executive Officer has been
appointed and is present. Unless another officer has been appointed Chief Executive Officer of the corporation, the President shall be the
chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction
and control of the business and officers of the corporation. The President shall perform other duties commonly incident to the office and
shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. (Del. Code
Ann., Tit. 8, § 142(a))

       (d) Duties of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or
disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident
to their office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive
Officer, or, if the Chief Executive Officer has not been appointed or is absent, the President shall designate from time to time. (Del. Code
Ann., tit. 8, § 142(a))

       (e) Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall
record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these
Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The
Secretary shall perform all other duties provided for in these Bylaws and other duties commonly incident to the office and shall also
perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The President may
direct any Assistant Secretary or other officer to assume and perform the duties of the Secretary in the absence or disability of the
Secretary, and each Assistant Secretary shall perform other duties commonly incident to the office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

      (f) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as
often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board

                                                                  11
     of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties
     commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the
     President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any
     Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial
     Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly
     incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall
     designate from time to time. (Del. Code Ann., tit. 8, § 142(a))

      Section 30. Delegation Of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer
to any other officer or agent, notwithstanding any provision hereof.

      Section 31. Resignations. Any officer may resign at any time by giving notice in writing or by electronic transmission to the Board
of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom
such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless
otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be
without prejudice to the rights, if any, of the corporation under any contract with the resigning officer. (Del. Code Ann., tit. 8, § 142(b))

      Section 32. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of
a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee
or by the Chief Executive Officer or by other superior officers upon whom such power of removal may have been conferred by the Board of
Directors.

                                                                  ARTICLE VI

                          EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
                                          OWNED BY THE CORPORATION

      Section 33. Execution Of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and
designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or
document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation,
except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation. (Del. Code
Ann., tit. 8, §§ 103(a), 142(a), 158)

    All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the
corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do.

     Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for
any amount. (Del. Code Ann., tit. 8, §§ 103(a), 142(a), 158)

      Section 34. Voting Of Securities Owned By The Corporation. All stock and other securities of other corporations owned or held
by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the
person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of
Directors, the Chief Executive Officer, the President, or any Vice President. (Del. Code Ann., tit. 8, § 123)

                                                                        12
                                                                   ARTICLE VII

                                                               SHARES OF STOCK

       Section 35. Form And Execution Of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is
consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a
certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by
the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation.
Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall
state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or
restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the
corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights. (Del. Code Ann., tit. 8, § 158)

       Section 36. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or the owner's legal representative, to agree to indemnify the
corporation in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity
against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. (Del.
Code Ann., tit. 8, § 167)

      Section 37.     Transfers.

           (a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or
     by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares. (Del.
     Code Ann., tit. 8, § 201, tit. 6, § 8- 401(1))

           (b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or
     more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by
     such stockholders in any manner not prohibited by the DGCL. (Del. Code Ann., tit. 8, § 160 (a))

      Section 38.     Fixing Record Dates.

           (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or
     any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon
     which the resolution

                                                                          13
    fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than sixty
    (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for
    determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next
    preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the
    meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any
    adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

           (b) Prior to the Initial Public Offering, in order that the corporation may determine the stockholders entitled to consent to
    corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date
    upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days
    after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to
    have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of
    Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a
    request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten
    (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate
    action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on
    which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its
    registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the
    book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand
    or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by
    the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing
    without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior
    action.

           (c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution
    or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or
    for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede
    the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to
    such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business
    on the day on which the Board of Directors adopts the resolution relating thereto. (Del. Code Ann., tit. 8, § 213)

       Section 39. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware. (Del. Code Ann., tit. 8, §§ 213(a), 219)

                                                                       14
                                                                 ARTICLE VIII

                                             OTHER SECURITIES OF THE CORPORATION

       Section 40. Execution Of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than
stock certificates (covered in Section 35), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or
such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal
imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate
security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate
security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such
other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any
officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or
on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such
officer of the corporation.

                                                                  ARTICLE IX

                                                                  DIVIDENDS

      Section 41. Declaration Of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the
Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special
meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of
Incorporation and applicable law. (Del. Code Ann., tit. 8, §§ 170, 173)

      Section 42. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other
purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created. (Del. Code Ann., tit. 8, § 171)

                                                                  ARTICLE X

                                                                 FISCAL YEAR

      Section 43.    Fiscal Year.     The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

                                                                        15
                                                              ARTICLE XI

                                                         INDEMNIFICATION

 Section 44.    Indemnification Of Directors, Executive Officers, Other Officers, Employees And Other Agents.

       (a) Directors and Executive Officers. The corporation shall indemnify its directors and executive officers (for the purposes
of this Article XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act ) to the fullest extent
not prohibited by the DGCL or any other applicable law; provided, however, that the corporation may modify the extent of such
indemnification by individual contracts with its directors and executive officers; and, provided, further, that the corporation shall not be
required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless
(i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the
corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the DGCL or any other applicable law or (iv) such indemnification is required to be made under subsection (d).

       (b) Other Officers, Employees and Other Agents. The corporation shall have power to indemnify its other officers
employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate
the determination of whether indemnification shall be given to any such person to such officers or other persons as the Board of Directors
shall determine.

       (c) Expenses. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or executive officer, of the corporation, or is or was serving at the request of the corporation as a director or
executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding,
promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding
provided, however , that if the DGCL requires, an advancement of expenses incurred by a director or executive officer in his or her
capacity as a director or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by
final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section 44 or otherwise.

      Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Section 44, no advance shall be made
by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of
the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by a majority vote of directors who were not parties to the
proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less
than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the
facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

                                                                     16
       (d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to
directors and executive officer under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if
provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted
by this Section 44 to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be
entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the corporation shall be
entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the
DGCL or any other applicable law for the corporation to indemnify the claimant for the amount claimed. Neither the failure of the
corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the corporation (including its Board
of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that claimant has not met the applicable standard of conduct.

      (e) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right
which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another
capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DGCL, or by any other
applicable law.

      (f) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a
director or executive officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

     (g) Insurance. To the fullest extent permitted by the DGCL or any other applicable law, the corporation, upon approval by the
Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Section 44.

      (h) Amendments. Any repeal or modification of this Section 44 shall only be prospective and shall not affect the rights under
this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any
agent of the corporation.

      (i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any
applicable portion of this Section 44 that shall not have been invalidated, or by any other applicable law. If this Section 44 shall be invalid
due to the application of the indemnification provisions of another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.

                                                                    17
     (j)   Certain Definitions.     For the purposes of this Bylaw, the following definitions shall apply:

          (1) The term " proceeding " shall be broadly construed and shall include, without limitation, the investigation, preparation,
    prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed
    action, suit or proceeding, whether civil, criminal, administrative or investigative.

           (2) The term " expenses " shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness
    fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection
    with any proceeding.

          (3) The term the " corporation " shall include, in addition to the resulting corporation, any constituent corporation (including
    any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had
    power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer,
    employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director,
    officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position
    under the provisions of this Section 44 with respect to the resulting or surviving corporation as he would have with respect to such
    constituent corporation if its separate existence had continued.

          (4) References to a " director ," " executive officer ," " officer ," " employee ," or " agent " of the corporation shall include,
    without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive
    officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

           (5) References to " other enterprises " shall include employee benefit plans; references to " fines " shall include any excise
    taxes assessed on a person with respect to an employee benefit plan; and references to " serving at the request of the corporation "
    shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by,
    such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who
    acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee
    benefit plan shall be deemed to have acted in a manner " not opposed to the best interests of the corporation " as referred to in this
    Section 44.

                                                           ARTICLE XII

                                                              NOTICES

 Section 45.   Notices.

      (a) Notice To Stockholders. Written notice to stockholders of stockholder meetings shall be given as provided in Section 7
herein. Without limiting the manner by which notice may otherwise be given effectively to stockholders under any agreement or contract
with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder
meetings may be sent by US mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or
other electronic means. (Del. Code Ann., tit. 8, §§ 222, 232)

      (b) Notice To Directors. Any notice required to be given to any director may be given by the method stated in subsection (a),
as otherwise provided in these Bylaws, or by overnight delivery service, facsimile, telex or telegram, except that such notice other than
one which is

                                                                  18
     delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such
     filing, to the last known post office address of such director.

            (c) Affidavit Of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation
     or its transfer agent appointed with respect to the class of stock affected, or other agent, specifying the name and address or the names and
     addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time
     and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained. (Del. Code Ann., tit.
     8, § 222)

           (d) Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all recipients
     of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may
     be employed in respect of any other or others.

            (e) Notice To Person With Whom Communication Is Unlawful. Whenever notice is required to be given, under any
     provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful,
     the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency
     for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such
     person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that
     the action taken by the corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate shall
     state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with
     whom communication is unlawful.

           (f) Notice to Stockholders Sharing an Address. Except as otherwise prohibited under DGCL, any notice given under the
     provisions of DGCL, the Certificate of Incorporation or the Bylaws shall be effective if given by a single written notice to stockholders
     who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall have been
     deemed to have been given if such stockholder fails to object in writing to the corporation within 60 days of having been given notice by
     the corporation of its intention to send the single notice. Any consent shall be revocable by the stockholder by written notice to the
     corporation.

                                                                 ARTICLE XIII

                                                                AMENDMENTS

       Section 46. Amendments. Subject to the limitations set forth in Section 44(h) of these Bylaws or the provisions of the Certificate
of Incorporation, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the corporation. The stockholders
also shall have power to adopt, amend or repeal the Bylaws of the corporation; provided, however , that, in addition to any vote of the holders
of any class or series of stock of the corporation required by law or by the Certificate of Incorporation, such action by stockholders shall require
the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the
corporation entitled to vote generally in the election of directors, voting together as a single class.

                                                                         19
                                                                  ARTICLE XIV

                                                             LOANS TO OFFICERS

     Section 47. Loans To Officers. Except as otherwise prohibited by applicable law, the corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee
who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance
may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be
unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the
corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute. (Del. Code Ann., tit. 8, §143)

                                                                  ARTICLE XV

                                                         RIGHT OF FIRST REFUSAL

      Section 48. Right of First Refusal. No stockholder shall sell, assign, pledge, or in any manner transfer any of the shares of stock of
the corporation or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which
meets the requirements hereinafter set forth in this bylaw:

           (a) If the stockholder desires to sell or otherwise transfer any of his shares of stock, then the shareholder shall first give written
     notice thereof to the corporation. The notice shall name the proposed transferee and state the number of shares to be transferred, the
     proposed consideration, and all other terms and conditions of the proposed transfer.

            (b) For thirty (30) days following receipt of such notice, the corporation shall have the option to purchase all (but not less than all)
     of the shares specified in the notice at the price and upon the terms set forth in such notice; provided, however, that, with the consent of
     the stockholder, the corporation shall have the option to purchase a lesser portion of the shares specified in said notice at the price and
     upon the terms set forth therein. In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying
     the full price for the shares, and that is not otherwise exempted from the provisions of this Section 48, the price shall be deemed to be the
     fair market value of the stock at such time as determined in good faith by the Board of Directors. In the event the corporation elects to
     purchase all of the shares or, with consent of the stockholder, a lesser portion of the shares, it shall give written notice to the transferring
     stockholder of its election and settlement for said shares shall be made as provided below in paragraph (d).

           (c)   The corporation may assign its rights hereunder.

            (d) In the event the corporation and/or its assignee(s) elect to acquire any of the shares of the transferring stockholder as specified
     in said transferring stockholder's notice, the Secretary of the corporation shall so notify the transferring stockholder and settlement thereof
     shall be made in cash within thirty (30) days after the Secretary of the corporation receives said transferring stockholder's notice; provided
     that if the terms of payment set forth in said transferring stockholder's notice were other than cash against delivery, the corporation and/or
     its assignee(s) shall pay for said shares on the same terms and conditions set forth in said transferring stockholder's notice.

           (e) In the event the corporation and/or its assignees(s) do not elect to acquire all of the shares specified in the transferring
     stockholder's notice, said transferring stockholder may, within the sixty-day period following the expiration of the option rights granted to
     the corporation and/or

                                                                         20
its assignees(s) herein, transfer the shares specified in said transferring stockholder's notice which were not acquired by the corporation
and/or its assignees(s) as specified in said transferring stockholder's notice. All shares so sold by said transferring stockholder shall
continue to be subject to the provisions of this bylaw in the same manner as before said transfer.

      (f) Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from the provisions of
this bylaw:

            (1) A stockholder's transfer of any or all shares held either during such stockholder's lifetime or on death by will or intestacy
     to such shareholder's immediate family or to any custodian or trustee for the account of such shareholder or such stockholder's
     immediate family or to any limited partnership of which the stockholder, members of such stockholder's immediate family or any
     trust for the account of such stockholder or such stockholder's immediate family will be the general of limited partner(s) of such
     partnership. "Immediate family" as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the
     stockholder making such transfer.

          (2) A stockholder's bona fide pledge or mortgage of any shares with a commercial lending institution, provided that any
     subsequent transfer of said shares by said institution shall be conducted in the manner set forth in this bylaw.

          (3) A stockholder's transfer of any or all of such stockholder's shares to the corporation or to any other shareholder of the
     corporation.

           (4) A stockholder's transfer of any or all of such stockholder's shares to a person who, at the time of such transfer, is an
     officer or director of the corporation.

           (5) A corporate stockholder's transfer of any or all of its shares pursuant to and in accordance with the terms of any merger,
     consolidation, reclassification of shares or capital reorganization of the corporate stockholder, or pursuant to a sale of all or
     substantially all of the stock or assets of a corporate stockholder.

           (6)   A corporate stockholder's transfer of any or all of its shares to any or all of its shareholders.

           (7)   A transfer by a stockholder which is a limited or general partnership to any or all of its partners or former partners.

     In any such case, the transferee, assignee, or other recipient shall receive and hold such stock subject to the provisions of this bylaw,
and there shall be no further transfer of such stock except in accord with this bylaw.

       (g) The provisions of this bylaw may be waived with respect to any transfer either by the corporation, upon duly authorized action
of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the
corporation (excluding the votes represented by those shares to be transferred by the transferring shareholder). This bylaw may be
amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent
of the owners of a majority of the voting power of the corporation.

      (h) Any sale or transfer, or purported sale or transfer, of securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this bylaw are strictly observed and followed.

                                                                     21
      (i)   The foregoing right of first refusal shall terminate on either of the following dates, whichever shall first occur:

            (1)   On November 16, 2015; or

            (2)   Upon the date of the closing of the Initial Public Offering, as amended.

      (j) The certificates representing shares of stock of the corporation shall bear on their face the following legend so long as the
foregoing right of first refusal remains in effect:

        "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN
     FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION."

                                                                    22
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BYLAWS OF EPOCRATES, INC. (A DELAWARE CORPORATION)
 ARTICLE I OFFICES
ARTICLE II CORPORATE SEAL
ARTICLE III STOCKHOLDERS' MEETINGS
ARTICLE IV DIRECTORS
ARTICLE V OFFICERS
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                                                                                                                                        Exhibit 4.2

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.


                                                     WARRANT TO PURCHASE STOCK

Corporation: ePocrates, Inc. , a California corporation.
Number of Shares: Warrant Coverage is 13% (subject to the provisions below).
Class of Stock: Series A Preferred, provided, however, if the Series B Preferred round closes on or before the Bridge Loan Maturity Date, (as
defined in that certain Loan and Security Agreement of even date herewith, the "Loan Agreement") the Class of Stock shall be that of Series B
Preferred.
Initial Exercise Price: If the Class of Stock is Series A Preferred the Initial Exercise Price shall be $1.00 per share, provided, however, if the
Class of Stock is Series B Preferred, the Share Price shall be that given at the close of the Series B Preferred round.
Issue Date: June 2, 2000 .
Expiration Date: Is the later occurrence of any of the following events: (i) June 2, 2010; or (ii) seven (7) years from closing of Company's
initial public offering .
Warrant Coverage shall be defined as $                   divided by the Initial Exercise Price multiplied by the applicable Warrant Coverage
percentage.

Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement.

     THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and valuable
consideration,                         ("Holder") is entitled to purchase the number of fully paid and nonassessable shares of the class of
securities (the "Shares") of the corporation (the "Company") at the initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

      In the event Company does not request Bridge Loan Advances in excess of the Cap Amount, as defined in the Loan Agreement, Holder
shall not be entitled to 3% of the 13% of the Warrant Coverage, as described in the Number of Shares above.

     In the event the Company does not repay in full all amounts outstanding under that certain Bridge Loan on or before Bridge Loan Maturity
Date (described therein), the Company shall grant Holder additional shares equal to 2% Warrant Coverage, plus an additional 4% Warrant
Coverage (pro rated) if the Bridge Loan is not paid off 30 days after the Bridge Loan Maturity Date, plus an additional 6% Warrant Coverage
(pro rated) if the Bridge Loan is not paid off 60 days after the Bridge Loan Maturity Date (collectively, the "Additional Shares").
Notwithstanding the foregoing, such grant of the Additional Shares shall not be construed in any way as Holder's agreement to (i) waive an
Event of Default under the Loan Agreement; (ii) forbear from exercising its rights and remedies if an Event of Default occurs, exists or
continues under the Loan Agreement; or (iii) extend the Bridge Loan Maturity Date.

     In addition to above Number of Shares, in the event Company request Equipment Advances, as defined in Loan Agreement, Holder shall
be entitled to an additional 3% Warrant Coverage, provided, however, if any Equipment Advances are used to finance Other Equipment then
Holder shall be entitled to an additional 5.5% Warrant Coverage.
ARTICLE 1. EXERCISE.

      1.1 Method of Exercise. Holder may exercise this Warrant by delivering a duly executed Notice of Exercise in substantially the
form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2,
Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.

      1.2 Conversion Right. In lieu of exercising this Warrant as specified in Section 1,1, Holder may from time to time convert this
Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other
securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of
one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.

       1.3 Fair Market Value. If the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of
the Shares (or the closing price of the Company's stock into which the Shares are convertible) reported for the business day immediately before
Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public market, the Board of Directors of the Company
shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding, if Holder advises the Board of
Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such investment banking firm is greater than that determined by the
Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company. In all other circumstances, such
fees and expenses shall be paid by Holder.

      1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this Warrant, the Company shall deliver
to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant
representing the Shares not so acquired.

       1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company shall execute and deliver,
in lieu of this Warrant, a new warrant of like tenor.

      1.6   Assumption Upon Sale, Merger, or Consolidation of the Company.

            1.6.1     "Acquisition". For the purpose of this Warrant, "Acquisition" means any sale, license, or other disposition of all or
     substantially all of the assets of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the
     Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity
     after the transaction.

           1.6.2     Assumption of Warrant. Upon the closing of any Acquisition the successor entity shall assume the obligations of this
     Warrant, and this Warrant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon
     exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and
     subsequent closing. The Warrant Price shall be adjusted accordingly.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

      2.1 Stock Dividends, Splits, Etc. lf the Company (i) declares or pays a dividend on its common stock (or the Shares if the Shares
are securities other than common stock) payable in common stock, or other securities, or (ii) subdivides the outstanding common stock into a
greater amount of common stock, or, if the Shares are securities other than common stock, subdivides the Shares in a transaction

                                                                       2
that increases the amount of common stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder
owned the Shares of record as of the date the dividend or subdivision occurred.

       2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive,
upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if
this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event shall include
any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock
pursuant to the terms of the Company's Articles of Incorporation upon the closing of a registered public offering of the Company's common
stock. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant
shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2
including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

       2.3 Adjustments for Combinations, Etc. If the outstanding shares are combined or consolidated, by reclassification or otherwise,
into a lesser number of shares, the Warrant Price shall be proportionately increased.

      2.4 Adjustments for Diluting Issuances. The Warrant Price and the number of Shares issuable upon exercise of this Warrant or, if
the Shares are Preferred Stock, the number of shares of common stock issuable upon conversion of the Shares, shall be subject to adjustment,
from time to time in the manner set forth in the Company's Articles (Certificate) of Incorporation. The provisions set forth for the Shares in the
Company's Articles (Certificate) of Incorporation relating to the above in effect as of the Issue Date may not be amended, modified or waived,
without the prior written consent of Holder unless such amendment, modification or waiver effects Holder in the same manner as they effect all
other shareholders of the Shares.

      2.5 No Impairment. The Company shall not, by amendment of its Articles of Incorporation or through a reorganization, transfer of
assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder's rights
under this Article against impairment. If the Company takes any action affecting the Shares or its common stock other than as described above
that adversely affects Holder's rights under this Warrant, the Warrant Price shall be adjusted downward and the number of Shares issuable upon
exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.

       2.6 Fractional Shares. No fractional shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares
to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional
interest by the fair market value of a full Share.

      2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute
such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such
adjustment is based. The

                                                                        3
Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

      3.1    Representations and Warranties.         The Company hereby represents and warrants to the Holder as follows:

           (a) The initial Warrant Price referenced on the first page of this Warrant is not greater than (i) the price per share at which the
     Shares were last issued in an arms-length transaction in which at least $500,000 of the Shares were sold and (ii) the fair market value of
     the Shares as of the date of this Warrant.

           (b) All Shares which may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any,
     issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of
     any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

            (c)   The Capitalization table attached hereto is true and correct.

       3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon its common
stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to
the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification
or recapitalization of common stock; (d) to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an
underwritten public offering of the company's securities far cash, then, in connection with each such event, the Company shall give Holder
(1) at least 20 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; (2) in the case of the matters referred to in (c) and (d) above at least 20 days prior written notice of the
date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common
stock for securities or other property deliverable upon the occurrence of such event); and (3) in the case of the matter referred to in (e) above,
the same notice as is given to the holders of such registration rights.

      3.3 Information Rights. So long as the Holder holds this Warrant and/or any of the Shares, the Company shall deliver to the Holder
(a) promptly after mailing, copies of all notices or other written communications to the shareholders of the Company, (b) within 90 days after
the end of each fiscal year of the Company, the annual audited financial statements of the Company certified by independent public accountants
of recognized standing and (c) such other financial statements required under and in accordance with any loan documents between Holder and
the Company (or if there are no such requirements or if the subject loan(s) no longer are outstanding), then within 45 days after the end of each
of the first three quarters of each fiscal year, the Company's quarterly, unaudited financial statements.

       3.4 Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares or, if the Shares are convertible
into common stock of the Company, such common stock, shall be subject to the registration rights set forth in the Company's Investors' Rights
Agreement or similar agreement. The provisions set forth in Company's Investors' Right Agreement or similar agreement relating to the above
in effect as of the Issue Date may not be amended, modified or waived without

                                                                            4
the prior written consent of Holder unless such amendment, modification or waiver effects Holder in the same manner as they effect all other
shareholders of the Shares.

ARTICLE 4. MISCELLANEOUS.

       4.1 Term.       This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set
forth above.

       4.2 Legends. This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any)
shall be imprinted with a legend in substantially the following form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
     SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
     ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION
     AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

       4.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise of this Warrant (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of
investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The
Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question
as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder's
notice of proposed sale.

      4.4 Transfer Procedure. Subject to the provisions of Section 4.3, Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) at any time
to                      , or, to any other transferee by giving the Company notice of the portion of the Warrant being transferred setting forth
the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the
transferee(s) (and Holder if applicable). Unless the Company is filing financial information with the SEC pursuant to the Securities Exchange
Act of 1934, the Company shall have the right to refuse to transfer any portion of this Warrant to any person who directly competes with the
Company.

       4.5 Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and
effective when given personally or mailed by first-class registered or certified mail, at such address as may have been furnished to the
Company or the Holder, as the case may be, in writing by the Company or such holder from time to time. All notices to be provided under this
Warrant shall be sent to the following address:




      4.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

                                                                         5
      4.7 Attorneys Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.

     4.8 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California,
without giving effect to its principles regarding conflicts of law.

                                                                           "COMPANY"

                                                                           ePocrates, Inc.

                                                                           By:


                                                                           Name:

                                                                                       (Print)

                                                                           Title:      Chairman of the Board, President or
                                                                                       Vice President

                                                                           By:


                                                                           Name:

                                                                                       (Print)

                                                                           Title:      Chief Financial Officer, Secretary,
                                                                                       Assistant Treasurer or Assistant
                                                                                       Secretary

                                                                          6
                                                                  APPENDIX 1

                                                            NOTICE OF EXERCISE

    1. The undersigned hereby elects to purchase                    shares of the Common/Preferred Series [Strike one] Stock of
ePocrates, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

or

     1. The undersigned hereby elects to convert the attached Warrant into Shares/cash [strike one] in the manner specified in the Warrant.
This conversion is exercised with respect to             of the Shares covered by the Warrant.

    2.   Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified
below:




                                                                     (Name)




                                                                    (Address)

     3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with
a view toward the resale or distribution thereof except in compliance with applicable securities laws.




                                                                                                                 (Signature)



               (Date)
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WARRANT TO PURCHASE STOCK
APPENDIX 1 NOTICE OF EXERCISE
                                                 Exhibit 10.1

                  EPOCRATES, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
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SECTION 1    GENERAL                                                                 1
   1.1       Definitions                                                             1

SECTION 2.   REGISTRATION; RESTRICTIONS ON TRANSFER                               2
   2.1       Restrictions on Transfer                                             2
   2.2       Demand Registration                                                  3
   2.3       Piggyback Registrations                                              5
   2.4       Form S-3 Registration                                                6
   2.5       Expenses of Registration                                             7
   2.6       Obligations of the Company                                           7
   2.7       Termination of Registration Rights                                  10
   2.8       Delay of Registration; Furnishing Information                       10
   2.9       Indemnification                                                     10
   2.10      Assignment of Registration Rights                                   12
   2.11      Amendment of Registration Rights                                    12
   2.12      Limitation on Subsequent Registration Rights                        12
   2.13      "Market Stand-Off" Agreement; Agreement to Furnish Information      12
   2.14      Other Agreements                                                    13
   2.15      Rule 144 Reporting                                                  13

SECTION 3.   COVENANTS OF THE COMPANY                                            13
   3.1       Basic Financial Information and Reporting                           13
   3.2       Inspection Rights                                                   14
   3.3       Confidentiality of Records                                          14
   3.4       Exchange of Shares                                                  14
   3.5       Reservation of Common Stock                                         15
   3.6       Stock Vesting                                                       15
   3.7       Proprietary Information and Inventions Agreement                    16
   3.8       Directors' Liability and Indemnification                            16
   3.9       Board Observer Rights                                               16
   3.10      Termination of Covenants                                            16

SECTION 4.   RIGHTS OF FIRST REFUSAL                                             17
   4.1       Subsequent Offerings                                                17
   4.2       Exercise of Rights                                                  17
   4.3       Issuance of Equity Securities to Other Persons                      17
   4.4       Termination and Waiver of Rights of First Refusal                   17
   4.5       Transfer of Rights of First Refusal                                 18
   4.6       Excluded Securities                                                 18

SECTION 5.   MISCELLANEOUS                                                       18
   5.1       Governing Law                                                       18
   5.2       Survival                                                            18
   5.3       Successors and Assigns                                              19
   5.4       Amendment of Charter to Effect Common Stock Issuance                19
   5.5       Amendment of Charter to Effect Common Stock Exchange                19
   5.6       Entire Agreement                                                    20
   5.7       Severability                                                        20
   5.8       Amendment and Waiver                                                21
   5.9       Delays or Omissions                                                 21
   5.10      Notices                                                             21
   5.11      Attorneys' Fees                                                     21
   5.12      Titles and Subtitles                                                21
   5.13      Additional Investors                                                21
   5.14      Counterparts                                                        22
   5.15      Termination of Prior Agreement                                      22
                                                            EPOCRATES, INC.

                                  AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

      THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of the 2 nd day of
October 2007, by and among EPOCRATES, INC. , a Delaware corporation (the "Company") and the investors listed on Exhibit A hereto,
referred to hereinafter as the "Investors" and each individually as an "Investor."

                                                                RECITALS

       WHEREAS , certain of the Investors are purchasing shares of the Company's Common Stock (the "Subject Common Shares"), pursuant
to that certain Common Stock Purchase Agreement (the "Purchase Agreement") of even date herewith (the "Financing");

     WHEREAS , the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement;

      WHEREAS , certain of the Investors (the "Prior Investors") are holders of the Company's Series A Preferred Stock (the "Series A
Stock,"), Series B Preferred Stock (the "Series B Stock,"), and the Series C Preferred Stock (the "Series C Stock");

      WHEREAS , the Prior Investors and the Company are parties to an Amended and Restated Investor Rights Agreement dated July l, 2002
(the "Prior Agreement");

       WHEREAS , the parties to the Prior Agreement desire to terminate the Prior Agreement and accept the rights and covenants hereof in
lieu of their rights and covenants under the Prior Agreement; and

       WHEREAS , in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration
rights, information rights, and other rights as set forth below.

     NOW, THEREFORE , in consideration of these premises and for other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1.        GENERAL.

     1.1     Definitions.   As used in this Agreement the following terms shall have the following respective meanings:

        "Charter" means the Company's Amended and Restated Certificate of Incorporation as in effect on the date hereof and as be amended
    from time to time.

           Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Form S-3" means such form under the Securities Act as in effect on the date hereof or any successor similar registration form under
    the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to
    other documents filed by the Company with the SEC.

         "Holder" means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of
    such Registrable Securities in accordance with Section 2.10 hereof.

        "Initial Offering" means the Company's first firm commitment underwritten public offering of its Common Stock registered under the
    Securities Act.

         "Preferred Shares" shall mean the shares of Series A Stock, Series B Stock, and Series C Stock held by the Investors, the Series B
    Stock issued pursuant to outstanding warrants, the Series A Stock held by the Investors listed on Exhibit A hereto and their permitted
    assigns and the

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   Series D Stock (as defined herein), if and when issued pursuant to the Common Stock Exchange (as defined herein).

       "Register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in
   compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

        "Registrable Securities" means (a) Common Stock of the Company issued or issuable upon conversion of the Preferred Shares;
   (b) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security
   which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described
   securities, and (c) the Subject Common Shares. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold
   by a person to the public either pursuant to a registration statement or Rule 144 or sold in a private transaction in which the transferor's
   rights under Section 2 of this Agreement are not assigned.

        "Registrable Securities then outstanding" shall be the number of shares determined by calculating the total number of shares of the
   Company's Common Stock that are Registrable Securities and either (a) are then issued and outstanding or (b) are issuable pursuant to
   then exercisable or convertible securities.

        "Registration Expenses" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof,
   including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company,
   reasonable fees and disbursements not to exceed twenty-five thousand dollars ($25,000.00) of a single special counsel for the Holders,
   blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the
   compensation of regular employees of the Company which shall be paid in any event by the Company).

          "SEC" or "Commission" means the Securities and Exchange Commission.

          "Securities Act" shall mean the Securities Act of 1933, as amended.

          "Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale.

       "Special Registration Statement" shall mean a registration statement relating to any employee benefit plan or with respect to any
   corporate reorganization or other transaction under Rule 145 of the Securities Act.

SECTION 2.        REGISTRATION; RESTRICTIONS ON TRANSFER.

    2.1      Restrictions on Transfer.

         (a) Each Holder agrees not to make any disposition of all or any portion of the Subject Common Shares, Preferred Shares or
   Registrable Securities unless and until:

                (i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such
          disposition is made in accordance with such registration statement; or

                (ii) (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have notified
          the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding
          the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an
          opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under
          the Securities Act. It is

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       agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual
       circumstances.

              (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall
       be necessary for a transfer by a Holder to a Permitted Transferee or by a Holder which is (A) a partnership to its partners or former
       partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the
       corporation, (C) a limited liability company to its members or former members in accordance with their interest in the limited
       liability company, (D) to the Holder's family member or trust for the benefit of an individual Holder or (E) a venture fund to affiliated
       venture funds; provided that in each case the transferee will be subject to the terms of this Agreement to the same extent as if he were
       an original Holder hereunder. For purposes hereof, a "Permitted Transferee" means, with respect to a Holder, (1) any affiliate of a
       Holder. (2) any person or entity that acquires substantially all of the assets of such Holder, so long as such Holder has, immediately
       prior to such acquisition, material assets and/or operations other than Registrable Securities, and (3) any person or entity who,
       through a merger, consolidation, recapitalization, sale of equity interests or other transaction or series of transactions involving such
       Holder, owns in the surviving entity after the closing a majority of the outstanding equity interests when it did not own a majority of
       the equity interests in such Holder immediately prior to such transaction, so long as such Holder or the other affiliates of such Holder
       involved in such transactions and which such person or entity controls after the closing had material assets and/or operations other
       than the Registrable Securities immediately prior to such closing.

      (b) Each certificate representing Common Shares, Preferred Shares or Registrable Securities shall (unless otherwise permitted by
the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any
legend required under applicable state securities laws):

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
            OF 1933 (THE " ACT " ) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
            PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE
            COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL
            THAT SUCH REGISTRATION IS NOT REQUIRED.

       (c) The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder
shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the
effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend.

      (d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with
respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such
removal.

 2.2      Demand Registration.

      (a) Subject to the conditions of this Section 2.2, if the Company shall receive a written request from the Holders of at least forty
percent (40%) of the Registrable Securities (the "Initiating Holders") that the Company file a registration statement under the Securities
Act covering the registration of Registrable Securities with an anticipated aggregate offering price, net of underwriting discounts and
commissions, of at least one million dollars ($1.000,000.00) (a

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"Qualified Public Offering"), then the Company shall, within thirty (30) days after the receipt thereof, give written notice of such request
to all Holders, and subject to the limitations of this Section 2.2, use its best efforts to effect, as expeditiously as reasonably possible, the
registration under the Securities Act of all Registrable Securities that the Holders request to be registered.

       (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to this Section 2.2 or any request pursuant to Section 2.4 hereof
and the Company shall include such information in the written notice referred to in Section 2.2(a) or Section 2.4(a) hereof, as applicable.
In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in
customary form (subject to the last two sentences of this paragraph) with the underwriter or underwriters selected for such underwriting by
the Initiating Holders holding at least a majority of the Registrable Securities then outstanding held by the Initiating Holders (which
underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.2 or
Section 2.4 hereof, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the
Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders); provided , however , that the number of shares of Registrable Securities to be included in such
underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the
underwriting and registration. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the
registration. All of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of
the underwriters included in each such underwriting agreement shall also be made to and for the benefit of such Holders and any or all of
the conditions precedent to the obligations of such underwriters under such underwriting agreement shall be conditions precedent to the
obligations of such Holders. The Company shall use its reasonable efforts to ensure that no Holder shall be required in any such
underwriting agreement to make any representations or warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities, such Holder's intended method of
distribution and any other representations required by law or reasonably required by the underwriters.

(c)
        The Company shall not be required to effect a registration pursuant to this Section 2.2:

            (i) prior to the earlier of (A) the fourth anniversary of the date of this Agreement or (B) one hundred eighty (180) days
      following the effective date of the registration statement pertaining to the Initial Offering;

            (ii) after the Company has effected two (2) registrations pursuant to this Section 2.2, and such registrations have been
      declared or ordered effective;

             (iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the
      effective date of the registration statement pertaining to the Initial Offering; provided that the Company makes reasonable good faith
      efforts to cause such registration statement to become effective;

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              (iv) if within thirty (30) days of receipt of a written request from Initiating Holders pursuant to Section 2.2(a) hereof, the
          Company gives notice to the Holders of the Company's intention to make its Initial Offering within ninety (90) days;

                (v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a certificate
          signed by the Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be
          seriously detrimental to the Company and its shareholders for such registration statement to be effected at such time, in which event
          the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the
          request of the Initiating Holders; provided that such right to delay a request shall be exercised by the Company not more than once in
          any twelve (12) month period; or

               (vi) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on
          Form S-3 pursuant to a request made pursuant to Section 2.4 below.

       2.3      Piggyback Registrations. The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days
prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special
Registration Statements) and will afford each such Holder an opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable
Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with
respect to offerings of its securities, all upon the terms and conditions set forth herein.

            (a)     Underwriting. If the registration statement under which the Company gives notice under this Section 2.3 is for an
     underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be
     included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder's participation in such underwriting and the
     inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute
     their Registrable Securities through such underwriting shall enter into an underwriting agreement (subject to the last two sentences of this
     paragraph) in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any
     other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of
     shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second,
     to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any shareholder of
     the Company (other than a Holder) on a pro rata basis. No such reduction shall (i) reduce the securities being offered by the Company for
     its own account to be included in the registration and underwriting, or (ii) reduce the amount of securities of the selling Holders included
     in the registration below twenty-five percent (25%) of the total amount of securities included in such registration, unless such offering is
     the Initial Offering and such registration does not include shares of any other selling shareholders, in which event any or all of the
     Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. If any Holder disapproves
     of the terms of any such underwriting, such Holder may elect to withdraw

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     therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the
     registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from
     the registration. For any Holder which is a partnership or corporation, the partners, retired partners, shareholders and affiliates of such
     Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing
     person shall be deemed to be a single Holder, and any pro rata reduction with respect to such Holder shall be based upon the aggregate
     amount of shares carrying registration rights owned by all entities and individuals included in such Holder. All of the representations and
     warranties by, and the other agreements on the part of, the Company to and for the benefit of the underwriters included in each such
     underwriting agreement shall also be made to and for the benefit of such Holders and any or all of the conditions precedent to the
     obligations of such underwriters under such underwriting agreement shall be conditions precedent to the obligations of such Holders. The
     Company shall use its reasonable efforts to ensure that no Holder shall be required in any such underwriting agreement to make any
     representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements
     regarding such Holder, such Holder's Registrable Securities, such Holder's intended method of distribution and any other representations
     required by law or reasonably required by the underwriters.

            (b)    Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated
     by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in
     such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with
     Section 2.5 hereof.

      2.4     Form S-3 Registration. In case the Company shall receive from any Holder or Holders of Registrable Securities a written
request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration
statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:

           (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of
     Registrable Securities; and

            (b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as
     would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified
     in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are
     specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided , however ,
     that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:

                (i)   if Form S-3 is not available for such offering by the Holders, or

                (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration,
          propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than one million
          dollars ($1,000,000.00), or

                (iii) if within thirty (30) days of receipt of a written request from any Holder or Holders pursuant to this Section 2.4, the
          Company gives notice to such Holder or Holders of the Company's intention to make a public offering within ninety (90) days, other
          than pursuant to a Special Registration Statement, or

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                 (iv) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors of the
          Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the
          Company and its shareholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the
          right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the
          request of the Holder or Holders under this Section 2.4; provided , that such right to delay a request shall be exercised by the
          Company not more than once in any twelve (12) month period, or

                (v) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two
          (2) registrations on Form S-3 for the Holders pursuant to this Section 2.4, or

               (vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general
          consent to service of process in effecting such registration, qualification or compliance.

            (c) Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and
     other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations
     effected pursuant to this Section 2.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 2.2 or
     2.3 hereof, respectively. All such Registration Expenses incurred in connection with registrations requested pursuant to this Section 2.4
     after the first two (2) registrations shall be paid by the selling Holders pro rata in proportion to the number of shares sold by each.

       2.5     Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 2.2 hereof or any registration under Section 2.3 or Section 2.4 herein shall be
borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the
securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for
expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4 hereof, the request of which has been subsequently withdrawn by
the Initiating Holders unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Initiating
Holders were not aware at the time of such request, (b) such withdrawal is caused by a material adverse change in the business or operations of
the Company after such request for registration, (c) the registration is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court for any reason other than a misrepresentation or omission by any Initiating Holder, or
(d) the Holders of at least a majority of the Registrable Securities then outstanding agree to forfeit their right to one requested registration
pursuant to Section 2.2 or Section 2.4 hereof, as applicable, in which event such right shall be forfeited by all Holders). If the Holders are
required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities)
requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the
Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to
Section 2.2 or Section 2.4 hereof to a demand registration.

      2.6    Obligations of the Company.         Whenever required to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:

           (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts
     to cause such registration statement to become effective, and, upon the request of the Holders of at least a majority of the Registrable
     Securities registered thereunder, keep such registration statement effective for up to ninety (90) days or, if earlier, until

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the Holder or Holders have completed the distribution related thereto. The Company shall not be required to file, cause to become
effective or maintain the effectiveness of any registration statement that contemplates a distribution of securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.

      (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement for the period set forth in paragraph (a) above.

       (c) As far in advance as practicable but at least five (5) business days prior to filing a registration statement or prospectus (or any
amendment or supplement thereto), furnish to each Holder selling Registrable Securities in the offering, for its review, copies of such
registration statement or prospectus (or amendment or supplement) as proposed to be filed (including, upon the request of such Holder,
documents to be incorporated by reference therein); and comply with each reasonable request made by a Holder for changes to such
registration statement or prospectus (or amendment or supplement) (i) if such Holder reasonably believes that the provisions in question
would have an impact or effect on such Holder or (ii) solely to the extent necessary, if at all, to lawfully complete the filing or maintain the
effectiveness thereof.

      (d) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.

      (e) Use its reasonable efforts to register and qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.

       (f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriters) of such offering. Each Holder participating in such underwriting shall, subject
to the last two sentences of Section 2.3(a), also enter into and perform its obligations under such an agreement.

       (g) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will
use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.

       (h) Use its reasonable efforts to furnish to each Holder and to any underwriter of such Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters (or if such offering
is not underwritten, on the effective date of the registration statement), (i) an opinion, dated as of such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to each Holder and (ii) a letter dated as of such date, from the independent certified
public accountants of the Company, in form and substance as is customarily

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given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters and
each Holder.

      (i) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.

      (j) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of such registration.

      (k) Give the Holders and the underwriters, if any, and their respective counsel and accountants such reasonable and customary
access to the Company's books, records and properties and such opportunities to discuss the business and affairs of the Company with its
officers and the independent public accountants who have certified the financial statements of the Company as shall be necessary, in the
opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the
Securities Act; provided , that such Holders and the underwriters and their respective counsel and accountants shall use their reasonable
best efforts to coordinate any such investigation of the books, records and properties of the Company; and provided , further , that if
requested by a Holder the Company shall (x) enter into a customary non-disclosure agreement with such Holder, (y) not provide material
non-public information to the Holder in connection with diligence and/or (z) adopt other reasonable procedures and measures reasonably
acceptable to the Holder designed to ensure compliance with applicable securities laws.

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      2.7     Termination of Registration Rights. All registration rights granted under this Section 2 shall terminate and be of no further
force and effect three (3) years after the date of the Company's Initial Offering. In addition, a Holder's registration rights shall expire if (a) the
Company has completed its Initial Offering and is subject to the provisions of the Exchange Act, (b) such Holder (together with its affiliates,
partners and former partners) holds less than one percent (1%) of the Company's outstanding Common Stock (treating all shares of convertible
Preferred Shares on an as converted basis) and (c) all Registrable Securities held by and issuable to such holder (and its affiliates, partners,
former partners, members and former members) may be sold under Rule 144 during any ninety (90) day period.

      2.8     Delay of Registration; Furnishing Information.

            (a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the
     result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

            (b) It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 hereof
     that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and
     the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.

            (c) The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or Section 2.4 hereof
     if, due to the operation of subsection 2.2(b), the number of shares or the anticipated aggregate offering price of the Registrable Securities
     to be included in the registration does not equal or exceed the number of shares or the anticipated aggregate offering price required to
     originally trigger the Company's obligation to initiate such registration as specified in Section 2.2 or Section 2.4 hereof, whichever is
     applicable.

      2.9     Indemnification.      In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4
hereof:

            (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers and
     directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such
     Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities
     (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as
     such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements,
     omissions or violations (collectively a " Violation ") by the Company: (i) any untrue statement or alleged untrue statement of a material
     fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any
     amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or
     necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act,
     the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state
     securities law in connection with the offering covered by such registration statement; and the Company will pay as incurred to each such
     Holder, partner, officer, director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in
     connection with investigating or defending any such loss, claim, damage, liability or action; provided , however , that the indemnity
     agreement contained in this Section 2.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action
     if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the
     Company be liable in any such case for any such loss, claim, damage, liability or action to the

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extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder or a partner, officer, director, underwriter or controlling person of
such Holder.

        (b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as
to which such registration, qualifications or compliance is/are being effected, indemnify and hold harmless the Company, each of its
directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and
any other Holder selling securities under such registration statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder
will pay as incurred any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided , however
, that the indemnity agreement contained in this Section 2.9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably
withheld; provided further , that in no event shall any indemnity under this Section 2.9 exceed the net proceeds from the offering received
by such Holder.

       (c) Promptly after receipt by an indemnified party under this Section 2.9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under
this Section 2.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying panty so desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties; provided , however , that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party, otherwise than under
this Section 2.9.

      (d) If the indemnification provided for in this Section 2.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall, to the extent permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in
such

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     loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of
     the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue
     statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the
     indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or
     omission; provided , that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by
     such Holder.

            (e) The obligations of the Company and Holders under this Section 2.9 shall survive completion of any offering of Registrable
     Securities in a registration statement and the termination of this agreement. No Indemnifying Party, in the defense of any such claim or
     litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which
     does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all
     liability in respect to such claim or litigation.

       2.10     Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this
Section 2 may be assigned by a 1-folder to a transferee or assignee of Registrable Securities which (a) is a subsidiary, parent, general partner,
limited partner, retired partner, member, retired member or Permitted Transferee of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, or (c) acquires at least fifty thousand (50.000) shares of Registrable Securities (as adjusted for stock splits and
combinations); provided , however , (i) the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of
the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and
(ii) such transferee shall agree to be subject to all restrictions set forth in this Agreement.

      2.11     Amendment of Registration Rights. Any provision of this Section 2 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and
the Holders of at least a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this
Section 2.11 shall be binding upon each Holder and the Company. By acceptance of any benefits under this Section 2, Holders of Registrable
Securities hereby agree to be bound by the provisions hereunder.

       2.12     Limitation on Subsequent Registration Rights. Other than as provided in Section 5.11 hereof, after the date of this
Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder
registration rights (a) senior to those granted to the Holders hereunder; or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either of the dates set forth in subsection 2.2(c)(i) hereof or within one
hundred twenty (120) days of the effective date of any registration effected pursuant to Section 2.2 hereof,

      2.13       "Market Stand-Off" Agreement; Agreement to Furnish Information. Each Holder hereby agrees that such Holder shall
not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Registrable Securities of the Company held by such Holder (other than those included in the registration) for a
period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred
eighty (184) days following the effective date of a registration statement of the Company filed under the Securities Act; provided that:

                (i)   such agreement shall apply only to the Company's Initial Offering; and

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                  (ii)   all officers and directors of the Company enter into similar agreements.

      2.14     Other Agreements. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if
requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall
provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with
the completion of any public offering of the Company's securities pursuant to a registration statement tiled under the Securities Act. The
obligations described in this Section 2.14 shall not