Greenfield Online (SRVY) 10-Q 2007 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 000-50698

GREENFIELD ONLINE, INC.

(Exact name of registrant as specified in its charter)

Delaware	06-1440369
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

21 River Road, Wilton, CT 06897
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (203) 834-8585

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filero           Accelerated filerþ           Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

As of August 3, 2007, there were 25,936,719 shares of Common Stock outstanding.

GREENFIELD ONLINE, INC.

FORM 10-Q
TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 2007 (unaudited) and December 31, 2006		1
Unaudited Consolidated Statements of Income for the three and six months ended June 30, 2007 and 2006		2
Unaudited Consolidated Statement of Changes in Stockholders’ Equity for the six months ended June 30, 2007		3
Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006		4
Notes to Unaudited Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		28
Part II. Other Information
Item 1. Legal Proceedings		29
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. Submission of Matters to a Vote of Security Holders		31
Item 5. Other Information		31
Item 6. Exhibits		32
Signatures		33
Exhibit Index		34
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

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GREENFIELD ONLINE, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

	June 30,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	30,985		$	20,873
Investments in marketable securities		18,934			16,167
Accounts receivable trade, net (net of allowances of $1,574 and $1,875 at June 30, 2007 and December 31, 2006, respectively)		23,382			23,485
Prepaid expenses and other current assets		2,000			1,550
Deferred tax assets, current		1,895			4,905
Total current assets		77,196			66,980
Property and equipment, net		6,586			6,447
Other intangible assets, net		15,995			17,644
Goodwill		70,901			70,149
Deferred tax assets, long-term		21,224			17,740
Security deposits and other long-term assets		817			884
Total assets	$	192,719		$	179,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,024		$	4,283
Accrued expenses and other current liabilities		14,863			15,141
Income taxes payable		9,252			6,765
Current portion of capital lease obligations		13			25
Deferred revenue		622			440
Total current liabilities		28,774			26,654
Capital lease obligations, long-term		15			22
Deferred tax liabilities, long-term		2,883			3,457
Income taxes payable, long-term		1,646			—
Other long-term liabilities		84			90
Total liabilities		33,402			30,223
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock; par value $0.0001 per share; 100,000,000 shares authorized; 25,865,923 and 25,490,221 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively		3			3
Additional paid-in capital		294,401			290,459
Accumulated deficit		(131,347	)		(136,176	)
Accumulated other comprehensive loss		(3,609	)		(4,534	)
Treasury stock, at cost — 9,643 shares		(131	)		(131	)
Total stockholders’ equity		159,317			149,621
Total liabilities and stockholders’ equity	$	192,719		$	179,844

The accompanying notes are an integral part of these consolidated financial statements.

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Net revenues	$	30,826		$	24,453		$	58,295		$	45,985
Cost of revenues		8,258			5,560			15,397			11,108
Gross profit		22,568			18,893			42,898			34,877
Operating expenses:
Selling, general and administrative		14,208			10,717			27,188			20,252
Panel acquisition		778			1,231			1,826			2,937
Depreciation and amortization		2,168			2,401			4,321			4,717
Research and development		1,004			821			2,136			1,762
Restructuring charges		—			20			—			188
Total operating expenses		18,158			15,190			35,471			29,856
Operating income		4,410			3,703			7,427			5,021
Other income (expense):
Interest income (expense), net		408			85			551			(82	)
Other expense, net		(6	)		(206	)		(29	)		(154	)
Total other income (expense), net		402			(121	)		522			(236	)
Income before income taxes		4,812			3,582			7,949			4,785
Provision for income taxes		1,712			1,328			2,890			1,690
Net income	$	3,100		$	2,254		$	5,059		$	3,095
Net income per share available to common stockholders:
Basic	$	0.12		$	0.09		$	0.20		$	0.12
Diluted	$	0.11		$	0.09		$	0.19		$	0.12
Weighted average shares outstanding:
Basic		25,702			25,353			25,615			25,331
Diluted		27,004			25,541			26,886			25,523

The accompanying notes are an integral part of these consolidated financial statements.

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)
(Unaudited)

					Additional										Accumulated Other			Total
	Common Stock				Paid-In		Treasury Stock					Accumulated			Comprehensive			Stockholders’			Comprehensive
	Shares		Amount		Capital		Shares		Amount			Deficit			Income (Loss)			Equity			Income
Balance at December 31, 2006		25,490	$	3	$	290,459		9	$	(131	)	$	(136,176	)	$	(4,534	)	$	149,621
Six months ended June 30, 2007:
Net income for the period													5,059						5,059		$	5,059
Impact of the adoption of FIN 48													(230	)					(230	)		—
Tax benefit from exercise of stock options						55													55			—
Issuance of shares related to the Employee Stock Purchase Plan		10		—		64													64			—
Exercise of stock options		366		—		2,180													2,180			—
Unrealized gain on available-for-sale securities, net of related income tax effects																85			85			85
Translation adjustments, net of related income tax effects																840			840			840
Comprehensive income																					$	5,984
Stock-based compensation						1,643													1,643
Balance at June 30, 2007		25,866	$	3	$	294,401		9	$	(131	)	$	(131,347	)	$	(3,609	)	$	159,317

The accompanying notes are an integral part of these consolidated financial statements.

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended
	June 30,
	2007			2006
Cash flows from operating activities:
Net income	$	5,059		$	3,095
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax benefit		(1,181	)		(619	)
Depreciation and amortization		5,931			6,190
Stock based compensation		1,643			1,218
Restructuring charges		—			188
Loss on disposal of property and equipment		—			31
Provision for doubtful accounts		277			52
Changes in assets and liabilities, net:
Accounts receivable		67			(525	)
Deferred project costs		(243	)		41
Other current assets		(99	)		42
Security deposits		174			427
Other long-term assets		(97	)		(17	)
Accounts payable		(271	)		(403	)
Accrued expenses and other current liabilities		(280	)		(275	)
Payments of management change accrual		(219	)		(226	)
Payments of restructuring charges		—			(459	)
Income taxes payable		3,000			1,290
Deferred project revenues		180			23
Net cash provided by operating activities		13,941			10,073
Cash flows from investing activities:
Purchases of marketable securities		(9,279	)		—
Sales of marketable securities		6,421			—
Proceeds from sale of property and equipment		1			2
Additions to property and equipment and intangibles		(4,158	)		(1,882	)
Net cash used in investing activities		(7,015	)		(1,880	)
Cash flows from financing activities:
Decrease in other long-term liabilities		(12	)		(28	)
Proceeds of options exercised		2,173			104
Proceeds of employee stock purchase plan		78			61
Excess tax deduction on stock option exercises		55			—
Principal payments under capital lease obligations		(19	)		(4,291	)
Net cash provided by (used in) financing activities		2,275			(4,154	)
Effect of exchange rate changes		911			508
Net increase in cash and cash equivalents		10,112			4,547
Cash and cash equivalents at beginning of the period		20,873			20,623
Cash and cash equivalents at end of the period	$	30,985		$	25,170
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	5		$	372
Income taxes		1,013			1,018
Supplemental Schedule of Non-cash Investing and Financing Activities:
Purchase of equipment and internal use software financed through capital lease obligations	$	—		$	263

The accompanying notes are an integral part of these consolidated financial statements.

4

GREENFIELD ONLINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 —Basis of Presentation:

          References herein to “we,” “us” or “our” refer to Greenfield Online, Inc. and its consolidated subsidiaries unless the context specifically requires otherwise.

Segment information.Our reportable segments are consistent with how we manage our business and view the markets we serve. We view the two major geographic areas in which we operate, North America and Europe (including the rest of the world), as separate markets. Both the North American and European operations derive revenues from Internet survey solutions and in addition, the European operations include an online comparison shopping business. Therefore, we have three reportable segments: North American Internet survey solutions, which operates through Greenfield Online, Inc. and its consolidated subsidiaries, Ciao Internet survey solutions, which we operate through Ciao Surveys GmbH and its consolidated subsidiaries and Ciao comparison shopping, which we operate through Ciao GmbH and its consolidated subsidiaries. Revenue transactions between segments are recorded at amounts similar to those charged to our large clients. These inter-segment transactions are eliminated in consolidation. We manage our businesses separately in North America and Europe, and allocate our European business between the Internet survey solutions and comparison shopping businesses, as components of an enterprise about which separate information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. During the second quarter of 2007, we completed the separation of the two European businesses, the Ciao Internet survey solutions business and the Ciao comparison shopping business. Prior to the separation of the Ciao Internet survey solutions and the Ciao comparison shopping businesses, the Ciao comparison shopping segment had no inter-segment revenues. Effective with the legal separation, the Ciao comparison shopping segment records inter-segment revenues for panelists it refers to the Ciao Internet survey solutions segment. Financial information about our reportable segments is included in Note 10.

          Basis of consolidation.The accompanying unaudited consolidated financial statements of Greenfield Online, Inc. and its wholly-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in compliance with the rules and regulations of the Securities and Exchange Commission. All significant intercompany accounts and transactions have been eliminated in consolidation. Accordingly, these financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements reflect all adjustments, consisting of normal recurring adjustments necessary to present fairly these financial statements. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2006.

Note 2 — Summary of Significant Accounting Policies:

     Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission and the instructions to Form 10-Q. The accounting policies we follow are set forth in our Annual Report on Form 10-K for the year ended December 31, 2006 which was filed on March 15, 2007, and have not materially changed.

     Concentration of Credit Risk.Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of trade accounts receivable. We periodically review our accounts receivable for collectibility and provide for an allowance for doubtful accounts to the extent that such amounts are not expected to be collected. In our North American and Ciao Internet survey solutions segments, many of our top 10 clients operate through numerous subsidiaries, affiliates or divisions that we call customers and with which we have separate business relationships. For the six months ended June 30, 2007, no single client accounted for more than 10% of our consolidated net revenues, or our North American Internet survey solutions third-party segment revenues. One

5

client, Taylor Nelson Sofres, Plc (“TNS”), operating through 18 separate customers, accounted for approximately 13% of our Ciao Internet survey solutions third-party segment revenues. Two clients, Google, Inc. and eBay, Inc., accounted for approximately 24% and 20%, respectively, of our Ciao comparison shopping segment revenues.

          Use of Estimates.The preparation of these consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant assumptions and estimates relate to the determination of accrued expenses, liabilities for panelist incentives and stock-based compensation, certain asset valuations including deferred tax asset valuations, allowance for doubtful accounts and the useful lives of property and equipment and internal use software. Future events and their effects cannot be predicted with certainty. Accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Actual results could differ from those estimates.

     Recently Issued Accounting Pronouncements

     Fair Value Measurements.In September 2006, the FASB released SFAS No. 157 “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but provides guidance relating to methods used to measure fair value and expands disclosures about fair values, which should result in increased consistency and comparability in fair value measures. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with early adoption being permitted. We believe that the adoption of this statement will not have a material effect on our financial condition, results of operations or cash flows.

     Fair Value Option for Financial Assets and Financial Liabilities.In February 2007, the FASB released SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“SFAS 159”), which provides entities with an option to report selected financial assets and liabilities at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. We are currently evaluating the impact that SFAS 159 will have on our consolidated financial statements.

     Accounting for Uncertainty in Income Taxes.We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (FIN 48”) on January 1, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. See Note 11 for additional information, including the effects of adoption on our Consolidated Balance Sheet.

Note 3 — Earnings Per Share:

     Net Income per Share.We report net income per share in accordance with Statement of Financial Accounting Standards No. 128 “Earnings per Share” (“SFAS 128”). Under SFAS 128, basic earnings per share, which excludes dilution, is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net income or loss available to common stockholders by the weighted average of common shares outstanding plus the potentially dilutive common shares. Diluted earnings per share includes in-the-money stock options using the treasury stock method. During a loss period, the assumed exercise of in-the-money stock options has an anti-dilutive effect and therefore, these instruments are excluded from the computation of dilutive earnings per share. Out-of-the-money weighted average potential common shares of approximately 116,000 and 223,000, respectively for the three and six months ended June 30, 2007 and 3.3 million and 2.9 million, respectively for the three and six months ended June 30, 2006, were excluded from the computation of diluted earnings per share, as they would be anti-dilutive.

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     The following is a reconciliation of weighted average basic number of common shares outstanding to weighted average diluted number of common and common stock equivalent shares outstanding (in thousands):

	Three Months				Six Months
	Ended				Ended
	June 30,				June 30,
	2007		2006		2007		2006
Weighted average number of common and potential common shares outstanding:
Basic number of common shares outstanding		25,702		25,353		25,615		25,331
Dilutive effect of stock option grants and the employee stock purchase plan		1,302		188		1,271		192
Diluted number of common and potential common shares outstanding		27,004		25,541		26,886		25,523

Note 4 — Accumulated Other Comprehensive Income (Loss):

     Accumulated Other Comprehensive Income (Loss) (“AOCI”) is comprised of various items that affect equity and result from recognized transactions and other economic events, other than transactions with owners in their capacity as owners. AOCI consists of the following at June 30, 2007 and December 31, 2006 (in thousands):

	June 30,			December 31,
	2007			2006
Cumulative translation adjustment	$	(3,859	)	$	(4,699	)
Unrealized gain on available-for-sale securities, net of deferred taxes of $173 and $114 at June 30, 2007 and December 31, 2006, respectively		250			165
Total accumulated other comprehensive loss	$	(3,609	)	$	(4,534	)

Note 5 — Prepaid Expenses and Other Current Assets:

     Prepaid expenses and other current assets consisted of the following at June 30, 2007 and December 31, 2006 (in thousands):

	June 30,		December 31,
	2007		2006
Prepaid maintenance and license contracts	$	450	$	273
Prepaid expenses		712		422
Prepaid insurance		121		461
Deferred project costs		342		97
Prepaid and refundable taxes		233		168
Other		142		129
Total prepaid expenses and other current assets	$	2,000	$	1,550

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Note 6 — Property and Equipment, net:

Property and equipment, net consisted of the following at June 30, 2007 and December 31, 2006
(in thousands):

	Estimated
	Useful			June 30,			December 31,
	Life-Years			2007			2006
Computer and data processing equipment		2 – 4		$	13,030		$	14,070
Leasehold improvements		2 – 5	*		2,127			1,872
Furniture and fixtures		7-8			2,613			2,595
Telephone systems		4-5			1,121			1,121
Automobile(s)		4			14			43
					18,905			19,701
Less: Accumulated depreciation					(12,319	)		(13,254	)
Property and equipment, net				$	6,586		$	6,447

* Lesser of the estimated life of the asset or the life of the underlying lease.

          Depreciation expense amounted to $868,000 and $1.7 million, respectively for the three and six months ended June 30, 2007 and $1.4 million and $2.8 million, respectively for the three and six months ended June 30, 2006, including assets recorded under capital leases. The net book value of disposals of property and equipment were immaterial for all periods presented, however, during the six months ended June 30, 2007 and 2006, we retired assets with an historical cost of approximately $2.7 million and $2.0 million, respectively.

Note 7 — Goodwill and Other Intangible Assets:

     Goodwill

     Goodwill represents the excess purchase price over the fair values of the net assets and identifiable intangible assets acquired in a business combination. We allocated the goodwill previously reported in our European segment to the Ciao Internet survey solutions segment and the Ciao comparison shopping segment based on an independent fair value review as of December 31, 2005. In accordance with the provisions of SFAS 142, we conducted our annual review as of October 31, 2006. We determined the fair value of our goodwill by discounting the cash flow projections at a 16.5% discount rate for our market research segments and 17.0% discount rate for our comparison shopping segment, reflecting a risk-adjusted weighted average cost of capital. The results of our analysis indicated that the fair value of goodwill exceeded the carrying value and therefore, goodwill was not impaired for the year ended December 31, 2006. As of June 30, 2007, we are not aware of any circumstances that would indicate an impairment may exist.

     The following table summarizes the changes in the carrying value of goodwill by operating segment for the six months ended June 30, 2007 (in thousands):

			Europe
			Ciao
			Internet			Ciao
			Survey			Comparison
Goodwill	North America		Solutions			Shopping		Total
Balance as of December 31, 2006	$	31,153	$	9,450		$	29,546	$	70,149
Goodwill adjustment*		—		(59	)		—		(59	)
Foreign currency translation adjustment		—		196			615		811
Balance as of June 30, 2007	$	31,153	$	9,587		$	30,161	$	70,901

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* Goodwill associated with the Ciao acquisition has been adjusted by $59,000 to reflect an increase in our foreign deferred tax assets associated with NOLs acquired as a result of our Ciao acquisition.

     Other Intangible Assets

     Other intangible assets consists of the following at June 30, 2007 and December 31, 2006 (in thousands):

			As of June 30, 2007						As of December 31, 2006
	Estimated		Gross						Gross
	Useful		Carrying		Accumulated		Net		Carrying		Accumulated		Net
	Life-Years		Cost		Amortization		Amount		Cost		Amortization		Amount
Internal use software		2-3	$	7,830	$	3,393	$	4,437	$	5,521	$	2,117	$	3,404
Other software acquired		0.42		159		159		—		159		159		—
Panel members		3-4		6,849		4,305		2,544		6,819		3,399		3,420
Backlog		0.25		—		—		—		447		447		—
Affiliate network		3		347		275		72		347		217		130
Customer relationships		5		7,829		3,582		4,247		7,694		2,761		4,933
Non-competition agreements		2.75-3		2,619		2,133		486		2,578		1,652		926
Domain names and service marks		5-10		7,382		3,173		4,209		7,242		2,411		4,831
Other intangible assets, net			$	33,015	$	17,020	$	15,995	$	30,807	$	13,163	$	17,644

     We have capitalized costs associated with the development and management of our panelist database and internal use software. During the three and six months ended June 30, 2007, we capitalized to internal use software approximately $1.3 million and $2.3 million, respectively. During the three and six months ended June 30, 2006 we capitalized to internal use software approximately $758,000 and $1.2 million, respectively.

     Amortization of internal use software amounted to $669,000 and $1.3 million, respectively for the three and six months ended June 30, 2007 and $376,000 and $682,000, respectively for the three and six months ended June 30, 2006. For the three and six months ended June 30, 2007, $375,000 and $719,000, respectively is included in cost of revenues and $294,000 and $604,000, respectively is included in depreciation and amortization in the consolidated statements of income. For the three and six months ended June 30, 2006, $283,000 and $561,000, respectively is included in cost of revenues and $93,000 and $121,000, respectively is included in depreciation and amortization in the consolidated statements of income.

     Amortization of other intangible assets (excluding internal use software) amounted to $1.5 million and $2.9 million, respectively for the three and six months ended June 30, 2007 and $1.4 million and $2.8 million, respectively for the three and six months ended June 30, 2006. For the three and six months ended June 30, 2007, $448,000 and $891,000, respectively is included in panel acquisition, and $1.0 million and $2.0 million, respectively is included in depreciation and amortization in the consolidated statements of income. For the three and six months ended June 30, 2006, $440,000 and $912,000, respectively is included as panel asset amortization, and $937,000 and $1.8 million, respectively is included in depreciation and amortization in the consolidated statements of income. During 2007, we wrote off acquired backlog with a net book value of zero and a cost of $447,000 as this acquired backlog has been fully amortized.

     The weighted average remaining life for intangible assets at June 30, 2007 was approximately 2.0 years and amortization expense for the six months ended June 30, 2007 was $4.2 million. Estimated amortization expense for each of the five succeeding years is as follows (in thousands):

	Amount
For the remaining six months ended December 31, 2007	$	4,401
2008	$	6,783
2009	$	3,859
2010	$	753
2011	$	52
2012	$	52

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Note 8 — Accrued Expenses and Other Current Liabilities:

     Accrued expenses and other current liabilities consisted of the following at June 30, 2007 and December 31, 2006 (in thousands):

	June 30,		December 31,
	2007		2006
Accrued payroll, bonus and commissions	$	3,688	$	4,710
Panelist incentives		5,712		4,905
Accrued panel costs		164		212
Accrued management change costs		100		319
Non-income tax accruals		1,437		1,387
Software license liability		172		332
Accrued audit and tax costs		375		717
Outside sample accruals		765		643
Real-Time Sampling accruals		283		187
Other		2,167		1,729
Total accrued expenses and other current liabilities	$	14,863	$	15,141

     For the three and six months ended June 30, 2007, we reversed a portion of the panelist incentives accrual by the amounts of $594,000 and $1.1 million, respectively, to record the expirations of the incentives. For the three and six months ended June 30, 2006, we reversed a portion of the panelist incentives accrual by the amounts of $765,000 and $1.5 million, respectively, to record the expirations of the incentives.

Note 9 — Stock-Based Compensation:

     We maintain the following share-based compensation plans: the 2004 Employee Stock Purchase Plan, the 1999 Stock Option Plan (the “1999 Plan”) and the 2004 Equity Incentive Plan (the “2004 Equity Plan”). Also, during 2005 and 2006, we granted certain options outside of either of the 1999 Plan or the 2004 Equity Plan and without shareholder approval pursuant to Nasdaq Marketplace Rule 4350(i)(1)(A)(iv), (the “2005 Inducement Options”). The total pre-tax compensation cost that has been charged against income for these plans and the 2005 Inducement Options was approximately $742,000 and $1.6 million, respectively for the three and six months ended June 30, 2007 and $636,000 and $1.2 million, respectively for the three and six months ended June 30, 2006. The related income tax benefit recognized in the income statement for share-based compensation expense was approximately $288,000 and $639,000, respectively for the three and six months ended June 30, 2007 and $266,000 and $472,000, respectively for the three and six months ended June 30, 2006, respectively.

     On May 15, 2007, the 2004 Equity Plan was amended to increase, by 350,000 shares, the aggregate number of shares that may be issued pursuant to awards granted under the 2004 Equity Plan. As a result, the number of shares that may be issued pursuant to awards granted thereunder is 3,635,714 plus the number of shares that are subject to awards under the 1999 Plan that are canceled, expire or otherwise become available for re-grant in accordance with the provisions of the 1999 Plan prior to the expiration of the 1999 Plan, but in no event will the aggregate number of such shares exceed 4,622,758. As of June 30, 2007, options to purchase 3,481,935 shares, 244,904 shares and 675,000 shares of common stock were outstanding under the 2004 Equity Plan, the 1999 Plan and the 2005 Inducement Options, respectively and options to purchase 155,536 shares and 23,054 shares of common stock were available for future grants under the 2004 Equity Plan and the 1999 Plan, respectively.

Note 10 — Segment Reporting:

     Our reportable segments are consistent with how we manage our business and view the markets we serve. We view the two major geographic areas in which we operate, North America and Europe (including the rest of the world), as separate markets. Both the North American and European operations derive revenues from Internet survey solutions and in addition, the European operations include an online comparison shopping business. Therefore, we have three reportable segments: North American Internet survey solutions, which operates through Greenfield Online, Inc. and its consolidated subsidiaries, Ciao Internet survey solutions, which we operate through Ciao Surveys GmbH and its consolidated subsidiaries and Ciao comparison shopping, which we operate through Ciao GmbH and its consolidated subsidiaries. Revenue transactions between segments are recorded at amounts similar to those charged to our large clients. These inter-segment transactions are eliminated in consolidation. During the second quarter of 2007, we completed the separation of the two European businesses, the Ciao Internet survey solutions business

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and the Ciao comparison shopping business. We manage our businesses separately in North America and Europe, and previously allocated our European business between the Internet survey solutions and comparison shopping businesses, as components of an enterprise about which separate information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. An operating segment’s performance is primarily evaluated based on segment operating income, which excludes depreciation and amortization expense, stock-based compensation expense, restructuring charges and certain corporate costs not associated with the operations of the segment. These corporate costs are separately stated below and include costs that are primarily related to public company expenses. These include certain costs such as personnel costs, filing fees, legal fees, accounting fees, fees associated with Sarbanes-Oxley compliance, directors and officers insurance, board of directors fees and investor relations costs. We believe that segment operating income as defined above is an appropriate measure of evaluating the operational performance of our segments. However, this measure should be considered in addition to, not as a substitute for, or superior to, income from operations or other measures of financial performance prepared in accordance with generally accepted accounting principles. The accounting policies of all of our segments are the same as those in the summary of significant accounting policies included in Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2006.

     The tables below present information about reported segments for the three and six months ended June 30, 2007 and 2006 (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Gross segment revenues:
North American Internet survey solutions
Third-party revenues	$	17,108		$	14,832		$	32,562		$	28,403
Inter-segment revenues		220			278			353			522
Gross segment revenues	$	17,328		$	15,110		$	32,915		$	28,925
Ciao Internet survey solutions
Third-party revenues	$	6,223		$	5,390		$	11,478		$	9,944
Inter-segment revenues		1,999			2,303			3,485			3,494
Gross segment revenues	$	8,222		$	7,693		$	14,963		$	13,438
Ciao comparison shopping *
Third-party revenues	$	7,495		$	4,231		$	14,255		$	7,638
Inter-segment revenues		143			—			143			—
Gross segment revenues	$	7,638		$	4,231		$	14,398		$	7,638
Net revenues:
North American Internet survey solutions	$	17,328		$	15,110		$	32,915		$	28,925
Ciao Internet survey solutions		8,222			7,693			14,963			13,438
Ciao comparison shopping		7,638			4,231			14,398			7,638
Elimination of inter-segment revenues		(2,362	)		(2,581	)		(3,981	)		(4,016	)
Total net revenues	$	30,826		$	24,453		$	58,295		$	45,985
Segment operating income (as defined above):
North American Internet survey solutions	$	3,448		$	3,186		$	6,287		$	6,202
Ciao Internet survey solutions		2,066			3,351			3,929			5,117
Ciao comparison shopping		4,205			2,642			8,188			4,292
Segment operating income		9,719			9,179			18,404			15,611
Depreciation and amortization		(2,990	)		(3,124	)		(5,931	)		(6,190	)
Stock-based compensation		(742	)		(636	)		(1,643	)		(1,218	)
Restructuring charges		—			(20	)		—			(188	)
Corporate		(1,577	)		(1,696	)		(3,403	)		(2,994	)
Total operating income		4,410			3,703			7,427			5,021
Interest income (expense), net		408			85			551			(82	)
Currency exchange gain (loss), net		(6	)		(206	)		(29	)		(154	)
Income before income taxes	$	4,812		$	3,582		$	7,949		$	4,785

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* Prior to the separation of the Ciao Internet survey solutions and the Ciao comparison shopping businesses, the Ciao comparison shopping segment did not have any inter-segment revenues. The legal separation was completed, and effective May 1, 2007, the Ciao comparison shopping segment began recording inter-segment revenues from the sale of panelists to the Ciao Internet survey solutions segment, which panelists are sourced from the Ciao comparison shopping portals.

Note 11 — Income Taxes:

     Income (loss) before income taxes and the provision (benefit) for income taxes were comprised of (in thousands):

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2007			2006			2007			2006
Income (loss) before income taxes:
Domestic	$	712		$	(234	)	$	311		$	(462	)
Foreign		4,100			3,816			7,638			5,247
	$	4,812		$	3,582		$	7,949		$	4,785
Provision for income taxes:
Currently payable:
Federal	$	15		$	307		$	44		$	384
State		27			59			79			146
Foreign		2,719			1,344			3,948			1,779
Total current income tax provision		2,761			1,710			4,071			2,309
Deferred income tax provision (benefit):
Federal		(252	)		(583	)		(806	)		(932	)
State		(19	)		(86	)		(5	)		(19	)
Foreign		(778	)		287			(370	)		332
Total deferred income tax (benefit)		(1,049	)		(382	)		(1,181	)		(619	)
Total income tax provision	$	1,712		$	1,328		$	2,890		$	1,690

     Deferred income taxes are provided on temporary differences between the financial reporting basis and tax basis of our assets and liabilities. The principal temporary differences, which give rise to deferred tax assets and liabilities at June 30, 2007 and December 31, 2006 are as follows (in thousands):

	June 30,			December 31,
	2007			2006
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	16,344		$	16,265
Stock-based compensation		4,764			4,581
Capitalized panel costs		564			449
Intangible assets acquired		(4,515	)		(5,157	)
Foreign exchange		(1,605	)		(875	)
Fixed assets		1,459			1,281
Federal and state tax credits		2,250			2,256
Other deferred tax assets		1,098			589
Net deferred tax assets		20,359			19,389
Valuation allowance		(123	)		(201	)
Total net deferred tax assets	$	20,236		$	19,188

     At June 30, 2007 and December 31, 2006, net operating loss carryforwards (“NOLs”) of $43.5 million and $41.4 million, respectively are available to reduce future income taxes. Of these amounts, $30.8 million ($30.1 million at December 31, 2006) relates to domestic NOLs and $12.7 million ($11.3 million at December 31, 2006) relates to foreign NOLs. The majority of the domestic NOLs begin to expire in 2020. The majority of the foreign NOLs are subject to an indefinite carryforward period. Of our total domestic NOLs as of June 30, 2007, $1.9 million relates to exercises of stock options that resulted in a tax deduction prior to the realization of that tax deduction due to our domestic NOL carryforward position. If this tax benefit is realized in the future, $0.8 million

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will be credited against APIC. At June 30, 2007 and December 31, 2006, foreign tax credits of approximately $1.6 million are available to reduce future domestic income taxes, and the majority will expire in 2015. The majority of the remaining Federal income tax credits at June 30, 2007 and December 31, 2006 are subject to an indefinite carryforward period. During the year ended December 31, 2003, we began operations in India. The Indian tax authority granted us a “tax holiday” for a six-year period ending in June 2009.

     In July 2006, the FASB released Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. We adopted the provisions of FIN 48 on January 1, 2007. Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As a result of the implementation of FIN 48, we recognized an increase of approximately $230,000 in the liability for unrecognized tax benefits as of January 1, 2007. This additional liability resulted in an increase to the Accumulated deficit of approximately $230,000, a decrease to the long-term deferred tax assets of approximately $325,000 and a decrease to long-term income taxes payable of approximately $95,000 as of January 1, 2007.

     As of January 1, 2007, our unrecognized tax benefits were $1.0 million. The amount that would impact the effective tax rate, if recognized, is $0.7 million.

     We recognize accrued interest and penalties related to uncertain tax positions as part of income tax expense. As of January 1, 2007, approximately $9,000 in interest and penalties had been recorded as a liability.

     It is expected that the amount of unrecognized tax benefits will change in the next twelve months. However, we do not expect the change to have a significant impact on our results of operations or the financial position.

     The majority of our operations reside in the United States and Germany. As of January 1, 2007, the U.S. Federal and state statutes of limitations remain open for the years ended December 31, 1999 and forward due to our net operating loss carryforward position. However, the Internal Revenue Service completed its examination of our 2004 Federal income tax return in June 2006 and did not report any changes to the tax return as originally filed by us. In Germany, tax years subsequent to December 31, 2003 are still subject to examination.

     In July 2007, German tax reform was passed that reduces the combined corporate and trade tax rates for businesses. This tax rate reduction becomes effective January 1, 2008. Due to the future reduction in the overall German tax rate, our net deferred tax asset as of June 30, 2007 must be restated during the month of enactment of the tax reform and therefore, reflected in our financial statements for the period ending September 30, 2007. We expect the tax rate reduction to result in an increase in our overall net deferred tax asset as of June 30, 2007 of

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approximately $0.5 million. Of this amount, approximately $0.2 million will be credited to provision for income taxes and $0.3 million will be credited directly to stockholder’s equity during the period ending September 30, 2007.

Note 12 — Commitments and Contingencies:

Legal Contingencies:

     From time to time, in the ordinary course of business, we are subject to legal proceedings. While it is not possible to determine the ultimate outcome of such matters, it is management’s opinion that the resolution of any pending issues will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. In July and August 2007, two putative class action lawsuits were filed in the United States District Court for the District of Connecticut on behalf of persons who purchased the Company’s stock between February 9, 2005 and September 30, 2005. See Note 14.

Note 13 – Management Change:

     On September 28, 2005 we entered into an agreement with Dean A. Wiltse, our former President and Chief Executive Officer, and agreed on the terms of his separation of service with us (the “Separation Agreement”). In addition, we agreed to a severance payment equal to 2 years of his base salary in effect on September 28, 2005 and the payment by us of certain insurance premiums for a period of twelve months following the date of separation. In the third quarter of 2005, we recorded pre-tax expense in the amount of $876,000, relating to the Separation Agreement. We made payments of $124,000 and $433,000 during 2005 and 2006, respectively and the remaining liability at December 31, 2006 was $319,000. Additionally, we made payments of $219,000 during 2007 and the remaining liability at June 30, 2007 was $100,000, which is expected to be paid by September 30, 2007.

Note 14 – Subsequent event:

     In July and August 2007, two putative federal securities law class actions were filed in the United States District Court for the District of Connecticut on behalf of persons who purchased the Company’s stock between February 9, 2005 and September 30, 2005. These substantially similar lawsuits assert claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, against the Company, its current Executive Vice President and Chief Financial Officer and its former President and Chief Executive Officer. These claims are related to statements the Company made on August 9, 2005 and September 29, 2005 regarding its financial projections for fiscal year 2005. Potential plaintiffs have until September 24, 2007, to move the court for appointment as lead plaintiff. At this time the Company has not responded to the complaints and is not required to do so until after a lead plaintiff is appointed and a consolidated complaint is filed. The Company believes that the allegations contained within these class action lawsuits are without merit and intends to vigorously defend the litigation.

     The Company’s management does not expect that the outcome of any of its currently ongoing legal proceedings individually or collectively, will have a material adverse effect on the Company’s financial condition, results of operations or cash flow.

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Item 2.

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 in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section entitled “Risk Factors” in our Annual Report onForm 10-K for the fiscal year ended December 31, 2006 and in this Quarterly Report onForm 10-Q. Also see the section entitled “Cautionary Note Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q.

Segment Information

     We have three reportable segments: North American Internet survey solutions, which operates through Greenfield Online, Inc. and its consolidated subsidiaries, Ciao Internet survey solutions, which operates through Ciao Surveys GmbH and its consolidated subsidiaries and Ciao comparison shopping, which operates through Ciao GmbH and its consolidated subsidiaries. Our North American and Ciao Internet survey solutions segments conduct substantially similar businesses within a global marketplace, and the description of their businesses, market opportunities, customers, products and competitors is presented as a single business, except in circumstances where we believe that separate information related to a particular segment is necessary to understand our business as a whole. Financial information about our reportable segments is included in our consolidated financial statements accompanying this Quarterly Report on Form 10-Q.

     On July 25, 2006, we announced plans to start the process of separating the previously combined Ciao Internet survey solutions and comparison shopping business segments from an operational and legal perspective. The legal separation was completed, and effective May 1, 2007, the Ciao comparison shopping segment began recording inter-segment revenues from the sale of panelists to the Ciao Internet survey solutions segment, which panelists are sourced from the Ciao comparison shopping portals.

Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. On an on-going basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     For further information regarding our critical accounting policies, please refer to the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006. There have been no material changes to our critical accounting policies during the six months ended June 30, 2007.

     Recently Issued Accounting Pronouncements.See Note 2 to our consolidated financial statements included herein for a description of recently issued accounting pronouncements, including the respective dates of adoption and effects on our consolidated financial statements.

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Results of Operations

     Three Months Ended June 30, 2007 compared to Three Months Ended June 30, 2006

     Consolidated Results

     The following table sets forth our consolidated results of operations based on the amounts and percentage relationship of the items listed to net revenues for the periods presented:

	Three Months Ended June 30,
	2007			%			2006			%
	($ in thousands)
Net revenues	$	30,826			100.0	%	$	24,453			100.0	%
Cost of revenues		8,258			26.8			5,560			22.7
Gross profit		22,568			73.2			18,893			77.3
Operating expenses:
Selling, general and administrative		14,208			46.1			10,717			43.8
Panel acquisition		778			2.5			1,231			5.0
Depreciation and amortization		2,168			7.0			2,401			9.8
Research and development		1,004			3.3			821			3.4
Restructuring charges		—			—			20			0.1
Total operating expenses		18,158			58.9			15,190			62.1
Operating income		4,410			14.3			3,703			15.2
Other income (expense):
Interest income, net		408			1.3			85			0.3
Other expense, net		(6	)		(0.0	)		(206	)		(0.8	)
Total other income (expense), net		402			1.3			(121	)		(0.5	)
Income before income taxes		4,812			15.6			3,582			14.7
Provision for income taxes		1,712			5.6			1,328			5.5
Net income	$	3,100			10.0	%	$	2,254			9.2	%

     Net Revenues.Net revenues for the three months ended June 30, 2007 were $30.8 million, compared to $24.5 million for the three months ended June 30, 2006, an increase of $6.3 million, or 26.1%. Fluctuations in currency rates increased net revenues by approximately $0.9 million. Excluding the effects of currency rate fluctuations, net revenues would have increased by approximately $5.4 million. Net revenues increased primarily as a result of our comparison shopping business, which accounted for approximately $2.7 million and to a lesser extent to our North American Internet survey solutions segment, which accounted for approximately $2.3 million, and our Ciao Internet survey solutions segment, which accounted for approximately $0.4 million.

     Net revenues at our comparison shopping business increased as a result of increased traffic visitation by unique visitors, improved site content, expanded product catalogues, increased merchant relationships, improved product search capabilities as well as growth in the core e-Commerce markets in Europe.

     Net revenues at our Internet survey solutions segments increased as a result of improvement in survey respondent supply via our panel, our Real-Time Sampling™ capability and our outside sample suppliers, in conjunction with a significant investment in our selling, marketing and business development team in North America as well as at the Ciao Internet survey solutions team in Europe. Furthermore, improvement in quality, contributed to our overall revenue growth.

     Gross Profit.Gross profit for the three months ended June 30, 2007 was $22.6 million, compared to $18.9 million for the three months ended June 30, 2006, an increase of $3.7 million, or 19.5%. Gross profit for the three months ended June 30, 2007 was 73.2% of net revenues, compared to 77.3% for the three months ended June 30, 2006. Fluctuations in currency rates increased gross profit by approximately $0.7 million. Excluding the effects of currency rate fluctuations, gross profit would have increased by approximately $3.0 million. Gross profit increased primarily due to the additional revenues described above, offset by higher supply chain costs associated with the increased use of our Real-Time Sampling capability to fill surveys and higher outside sample and incentive costs, as well as higher direct project personnel costs. Gross profit as a percentage of revenues decreased due primarily to increased supply chain costs associated with higher Real-Time Sampling, outside sample and incentive

16

costs and increased direct project labor. The increased Real-Time Sampling costs are partially offset by a reduction in our Panel acquisition costs.

     We expect gross profit to remain variable from period to period as a result of shifts in product mix among full service, sample only, business-to-business, healthcare and projects requiring outside sample, which product mix remains largely unpredictable. Additionally, gross profit will be affected by the timing and amount of comparison shopping revenue recognized in each period. We believe our overall margins could experience downward pressure as a result of the increasingly competitive environment and the resulting pricing pressure in the Internet survey solutions segment.

     Selling, General and Administrative.Selling, general and administrative expenses for the three months ended June 30, 2007 were $14.2 million, compared to $10.7 million for the prior year, an increase of $3.5 million, or 32.6%. Fluctuations in currency rates increased selling, general and administrative expenses by approximately $0.5 million. Excluding the effects of currency rate fluctuations, selling, general and administrative expenses would have increased by approximately $3.0 million. Selling, general and administrative expenses increased primarily as a result of increased compensation costs of approximately $1.6 million, increased comparison shopping advertising of approximately $0.4 million and higher facility and lease costs of approximately $0.4 million, and other costs including costs associated with the bifurcation of the European businesses and higher marketing costs.

     Selling expenses increased approximately $0.7 million for the three months ended June 30, 2007, primarily related to personnel costs including commissions, travel costs, and stock-based compensation.

     Marketing and promotion costs increased approximately $0.7 million for the three months ended June 30, 2007, primarily related to advertising and marketing programs associated with our comparison shopping business.

     General and administrative expenses increased approximately $1.6 million for the three months ended June 30, 2007, primarily as a result of higher personnel costs of approximately $0.9 million, higher facilities costs of approximately $0.4 million, and other costs including higher consulting fees and bad debt costs, and costs incurred in connection with the bifurcation of our European businesses.

     Personnel costs associated with general and administrative expenses increased approximately $0.9 million for the three months ended June 30, 2007, primarily as a result of an increase in incentive compensation accruals for G&A employees and senior management, related to our improved performance in 2007 over 2006 as well as additional investment in the latter part of 2006 in finance and administrative staff, primarily in our European businesses as a result of the initial implementation of Sarbanes-Oxley Section 404 compliance in Europe.

     Selling, general and administrative expenses as a percentage of net revenues increased to 46.1% for the three months ended June 30, 2007 from 43.8% of net revenues for the three months ended June 30, 2006, but decreased from 47.3% when compared with the previous quarter ended March 31, 2007. In the near term, we expect selling, general and administrative expenses as a percentage of net revenues to decline as revenues increase during the year.

     Panel Acquisition.Panel acquisition expenses were $0.8 million for the three months ended June 30, 2007, compared to $1.2 million for the three months ended June 30, 2006, a decrease of $0.4 million, or 36.8%. Fluctuations in currency rates were immaterial in panel acquisition expenses in the current period. Panel acquisition expenses decreased primarily as a result of our increased use of our Real-Time Sampling capability to obtain respondent data, resulting in lower production demand placed upon our panels. As noted in our discussion regarding gross profit, we experienced an increase in our Real-Time Sampling expense as a result of this production shift.

     Panel acquisition expenses were 2.5% of net revenues for the three months ended June 30, 2007 and 5.0% for the three months ended June 30, 2006. Excluding the effects of amortization costs of acquired panel members, we expect our panel acquisition costs to remain variable from period to period as a percentage of revenues as we continue to utilize our Real-Time Sampling capabilities to supplement our panel production, and we strategically expand the breadth and depth of our Internet panels in Europe, Latin America, Asia, Eastern Europe and North America and as we develop new panels in Europe for use with our Unified Panel System.

     Depreciation and Amortization.Depreciation and amortization expenses (excluding amortization included in Cost of revenues and Panel acquisition) for the three months ended June 30, 2007 were $2.2 million, compared to

17

$2.4 million for the three months ended June 30, 2006, a decrease of $0.2 million, or 9.7%. Fluctuations in currency rates increased depreciation and amortization expenses by approximately $0.1 million. Excluding the effects of currency rate fluctuations, depreciation and amortization expenses would have decreased by approximately $0.3 million. This decrease in depreciation and amortization expense occurred as a result of reduced amortization of certain software applications and certain of the amortizable intangible assets acquired in the acquisition of OpinionSurveys, Rapidata, goZing and Ciao in late 2004 and early 2005 as these amortizable intangible assets become fully amortized. This decline was partially offset by increases in capital expenditures, including higher capital expenditures related to internal use software, which has a shorter estimated useful life than other capital expenditures. The internal use software expenditures relate primarily to:

i)	the continuing development of our Unified Panel System, our Survey Management System, and other Internet survey solutions operating systems in North America;
ii)	the expansion of our North American Internet survey solutions operating systems to a worldwide enterprise system; and,
iii)	ongoing enhancements and software re-engineering in our comparison shopping segment’s operating systems.

     In the near-term, we expect acquisition-related amortization to continue to decline, but to be offset by increased depreciation and amortization related to the internal use software development and expanding infrastructure needed to support growth in our comparison shopping and Internet survey solutions segments.

     Research and Development.Research and development expenses for the three months ended June 30, 2007 were $1.0 million, compared to $0.8 million for the three months ended June 30, 2006, an increase of $0.2 million, or 22.3%. Research and development expenses increased as a result of increased research and development staff in our European businesses due primarily to the increased growth in our comparison shopping segment. In addition, during the latter part of 2006, and as part of separating the European businesses, we required additional personnel to separate and maintain our European technology platforms and to continue to integrate and develop new software applications to automate manual processes in our Internet survey solutions operating environment in both our North American and Ciao Internet survey solutions business platforms. Further, we increased spending on research and development in our comparison shopping segment in order to improve scalability of our infrastructure and enhance the content and user experience on our comparison shopping websites. We expect research and development expenses to increase in the future as we continue on the path of automating, evolving and improving our internal technologies.

     Interest Income, Net.Net interest income for the three months ended June 30, 2007 was $0.4 million, compared to $0.1 million for the three months ended June 30, 2006, an increase of $0.3 million. We have continued to increase our excess cash position and have continued to invest our excess cash, including increased investments in marketable securities, which resulted in additional interest income.

     Other Expense, Net.Other expense decreased by approximately $0.2 million for the three months ended June 30, 2007 when compared to the same period in the prior year. Other expense relates primarily to the effects of currency rate changes on transactions denominated in currencies other than the recording currency of the environment where our subsidiaries operate.

     Provision for Income Taxes.We recorded an income tax provision for the three months ended June 30, 2007 of $1.7 million, compared to $1.3 million for the three months ended June 30, 2006. Our effective tax rate was 35.6% and 37.1% for the three months ended June 30, 2007 and 2006, respectively. The increase in the tax provision is primarily a result of our increased profitability.

     Net Income.Our net income for the three months ended June 30, 2007 was $3.1 million, compared to $2.3 million for the three months ended June 30, 2006. The increase in net income was primarily the result of our increased revenues and resulting operating profit, slightly offset by a higher income tax provision. Net income available to common stockholders for the three months ended June 30, 2007 was $0.12 per share for basic and $0.11 per share for diluted, as compared to $0.09 per share for basic and diluted for the three months ended June 30, 2006.

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     North American Segment Results

     The following table sets forth the results of our North American Internet survey solutions segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the periods presented.

	Three Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	17,328		100.0	%	$	15,110		100.0	%
Segment operating income		3,448		19.9			3,186		21.1

     Gross Segment revenues.Gross segment revenues for the three months ended June 30, 2007 were $17.3 million, compared to $15.1 million for the three months ended June 30, 2006, an increase of $2.2 million, or 14.7%. Gross segment revenues increased primarily as a result of the following:

i)	the improvement in survey respondent supply via our panel, our Real-Time Sampling capability and our outside sample suppliers;
ii)	a significant investment in the selling, marketing and business development team in North America; and
iii)	improved product quality.

     Segment Operating Income.Segment operating income for the three months ended June 30, 2007 was $3.4 million, compared to $3.2 million for the three months ended June 30, 2006, an increase of $0.2 million or 8.2%. Segment operating income increased primarily as a result our increased revenues and corresponding gross profit on the additional revenues, offset by increased costs, primarily in the areas of selling, marketing and business development teams, and higher personnel and consulting costs.

     Ciao Internet Survey Solutions Segment Results

     The following table sets forth the results of our Ciao Internet survey solutions operating segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the period presented.

	Three Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	8,222		100.0	%	$	7,693		100.0	%
Segment operating income		2,066		25.1			3,351		43.6

     Gross Segment Revenues.Gross segment revenues for the three months ended June 30, 2007 were $8.2 million, compared to $7.7 million for the three months ended June 30, 2006, an increase of $0.5 million or 6.9%. Fluctuations in currency rates increased net revenues by approximately $0.4 million. Excluding the effects of currency rate fluctuations, gross segment revenues would have increased by approximately $0.1 million, which was primarily due to the extension of the client base in Europe and to data supplied to our North American Internet survey solutions segment for European sourced data.

     Segment Operating Income.Segment operating income for the three months ended June 30, 2007 was $2.1 million, compared to $3.4 million for the three months ended June 30, 2006, a decrease of $1.3 million or 38.3%. Fluctuations in currency rates increased segment operating income by approximately $0.1 million. Excluding the effects of currency rate fluctuations, segment operating income would have decreased by approximately $1.4 million. Segment operating income decreased due primarily to increased project personnel costs, increased outside sample and incentive costs, and to increased marketing and administrative costs, partially offset by increased revenues and decreased panel acquisition costs. Additionally, beginning in May 2007, effective with the completion of the separation of the European businesses, the Ciao Internet survey solutions segment began purchasing panelists from the Ciao comparison shopping segment, which panelists are sourced from the Ciao comparison shopping portals.

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     Ciao Comparison Shopping Segment Results

     The following table sets forth the results of our Ciao comparison shopping operating segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the period presented.

	Three Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	7,638		100.0	%	$	4,231		100.0	%
Segment operating income		4,205		55.1			2,642		62.4

     Gross Segment Revenues.Gross segment revenues for the three months ended June 30, 2007 were $7.6 million, compared to $4.2 million for the three months ended June 30, 2006, an increase of $3.4 million or 80.5%. Fluctuations in currency rates increased net revenues by approximately $0.6 million. Excluding the effects of currency rate fluctuations, net revenues would have increased by approximately $2.8 million. Gross segment revenues increased primarily as a result of increased traffic visitation by unique visitors, improved site content, expanded product catalogues, increased merchant relationships and improved product search capabilities as well as growth in the core e-Commerce markets in Europe. Additionally, beginning in May 2007, effective with the completion of the separation of the European businesses, the Ciao comparison shopping segment began recording inter-segment revenues from the sale of panelists to the Ciao Internet survey solutions segment, which panelists are sourced from the Ciao comparison shopping portals. These revenues are included in the Gross segment revenues shown above.

     Segment Operating Income.Segment operating income for the three months ended June 30, 2007 was $4.2 million, compared to $2.6 million for the three months ended June 30, 2006, an increase of $1.6 million or 59.2%. Fluctuations in currency rates increased segment operating income by approximately $0.3 million. Excluding the effects of currency rate fluctuations, segment operating income would have increased by approximately $1.3 million. Segment operating income increased primarily as a result of the additional revenue growth noted above in conjunction with the high operating leverage in this segment.

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Six Months Ended June 30, 2007 compared to Six Months Ended June 30, 2006

     Consolidated Results

     The following table sets forth our consolidated results of operations based on the amounts and percentage relationship of the items listed to net revenues for the periods presented:

	Six Months Ended June 30,
	2007			%			2006			%
	($ in thousands)
Net revenues	$	58,295			100.0	%	$	45,985			100.0	%
Cost of revenues		15,397			26.4			11,108			24.2
Gross profit		42,898			73.6			34,877			75.8
Operating expenses:
Selling, general and administrative		27,188			46.6			20,252			44.0
Panel acquisition		1,826			3.1			2,937			6.4
Depreciation and amortization		4,321			7.4			4,717			10.3
Research and development		2,136			3.7			1,762			3.8
Restructuring charges		—			0.0			188			0.4
Total operating expenses		35,471			60.8			29,856			64.9
Operating income		7,427			12.8			5,021			10.9
Other expense:
Interest income (expense), net		551			0.9			(82	)		(0.2	)
Other expense, net		(29	)		(0.0	)		(154	)		(0.3	)
Total other income (expense), net		522			0.9			(236	)		(0.5	)
Income before income taxes		7,949			13.7			4,785			10.4
Provision for income taxes		2,890			5.0			1,690			3.7
Net income	$	5,059			8.7	%	$	3,095			6.7	%

     Net Revenues.Net revenues for the six months ended June 30, 2007 were $58.3 million, compared to $46.0 million for the six months ended June 30, 2006, an increase of $12.3 million, or 26.8%. Fluctuations in currency rates increased net revenues by approximately $2.0 million. Excluding the effects of currency rate fluctuations, net revenues would have increased by approximately $10.3 million. Net revenues increased primarily as a result of our comparison shopping business, which accounted for approximately $5.5 million and to a lesser extent to our North American Internet survey solutions segment, which accounted for approximately $4.2 million, and our Ciao Internet survey solutions segment, which accounted for approximately $0.6 million.

     Net revenues at our comparison shopping business increased as a result of increased traffic visitation by unique visitors, improved site content, expanded product catalogues, increased merchant relationships, improved product search capabilities as well as growth in the core e-Commerce markets in Europe.

     Net revenues at our Internet survey solutions segments increased as a result of improvement in survey respondent supply via our panel, our Real-Time Sampling™ capability and our outside sample suppliers, in conjunction with a significant investment in our selling, marketing and business development team in North America as well as at the Ciao Internet survey solutions team in Europe. Furthermore, improvement in quality, contributed to our overall revenue growth.

     Gross Profit.Gross profit for the six months ended June 30, 2007 was $42.9 million, compared to $34.9 million for the six months ended June 30, 2006, an increase of $8.0 million, or 23.0%. Gross profit for the six months ended June 30, 2007 was 73.6% of net revenues, compared to 75.8% for the six months ended June 30, 2006. Fluctuations in currency rates increased gross profit by approximately $1.6 million. Excluding the effects of currency rate fluctuations, gross profit would have increased by approximately $6.4 million. Gross profit increased primarily due to the additional revenues described above, offset by higher supply chain costs associated with the increased use of our Real-Time Sampling capability to fill surveys and higher outside sample and incentive costs, as well as higher direct project personnel costs. Gross profit as a percentage of revenues decreased due primarily to increased supply chain costs associated with higher Real-Time Sampling, outside sample and incentive costs and increased direct

21

project labor. The increased Real-Time Sampling costs are partially offset by a reduction in our Panel acquisition costs.

     We expect gross profit to remain variable from period to period as a result of shifts in product mix among full service, sample only, business-to-business, healthcare and projects requiring outside sample, which product mix remains largely unpredictable. Additionally, gross profit will be affected by the timing and amount of comparison shopping revenue recognized in each period. We believe our overall margins could experience downward pressure as a result of the increasingly competitive environment and the resulting pricing pressure in the Internet survey solutions segment.

     Selling, General and Administrative.Selling, general and administrative expenses for the six months ended June 30, 2007 were $27.2 million, compared to $20.3 million for the prior year, an increase of $6.9 million, or 34.2%. Fluctuations in currency rates increased selling, general and administrative expenses by approximately $0.9 million. Excluding the effects of currency rate fluctuations, selling, general and administrative expenses would have increased by approximately $6.0 million. Selling, general and administrative expenses increased primarily as a result of increased personnel costs of approximately $3.4 million, increased comparison shopping advertising of approximately $0.8 million, costs associated with the bifurcation of the European businesses of approximately $0.6 million, and higher consulting costs of approximately $0.4 million.

     Selling expenses increased approximately $1.5 million for the six months ended June 30, 2007, primarily related to personnel costs including commissions, travel costs, and stock-based compensation.

     Marketing and promotion costs increased approximately $1.1 million for the six months ended June 30, 2007, primarily related to advertising and marketing programs associated with our comparison shopping business.

     General and administrative expenses increased approximately $3.4 million for the six months ended June 30, 2007, primarily as a result of higher personnel costs of approximately $1.9 million, costs incurred in connection with the bifurcation of our European businesses of approximately $0.6 million, higher facilities costs of approximately $0.5 million, higher consulting fees of approximately $0.4 million and other costs including higher bad debt costs.

     Personnel costs associated with general and administrative expenses increased approximately $1.9 million for the six months ended June 30, 2007, primarily as a result of an increase in incentive compensation accruals for G&A employees and senior management, related to our improved performance in 2007 over 2006 as well as additional investment in the latter part of 2006 in finance and administrative staff, primarily in our European businesses as a result of the initial implementation of Sarbanes-Oxley Section 404 compliance in Europe.

     Selling, general and administrative expenses as a percentage of net revenues increased to 46.6% for the six months ended June 30, 2007 from 44.0% of net revenues for the six months ended June 30, 2006. In the near term, we expect selling, general and administrative expenses as a percentage of net revenues to decline as revenues increase during the year.

     Panel Acquisition.Panel acquisition expenses were $1.8 million for the six months ended June 30, 2007, compared to $2.9 million for the six months ended June 30, 2006, a decrease of $1.1 million, or 37.8%. Fluctuations in currency rates were immaterial in panel acquisition expenses in the current period. Panel acquisition expenses decreased primarily as a result of our increased use of our Real-Time Sampling capability to obtain respondent data, resulting in lower production demand placed upon our panels. As noted in our discussion regarding gross profit, we experienced an increase in our Real-Time Sampling expense as a result of this production shift.

     Panel acquisition expenses were 3.1% of net revenues for the six months ended June 30, 2007 and 6.4% for the six months ended June 30, 2006. Excluding the effects of amortization costs of acquired panel members, we expect our panel acquisition costs to remain variable from period to period as a percentage of revenues as we continue to utilize our Real-Time Sampling capabilities to supplement our need for panelists, as we strategically expand the breadth and depth of our Internet panels in Europe, Latin America, Asia, Eastern Europe and North America and as we replenish panelist attrition we experience in the normal course of business.

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     Depreciation and Amortization.Depreciation and amortization expenses (excluding amortization included in Cost of revenues and Panel acquisition) for the six months ended June 30, 2007 were $4.3 million, compared to $4.7 million for the six months ended June 30, 2006, a decrease of $0.4 million, or 8.4%. Fluctuations in currency rates increased depreciation and amortization expenses by approximately $0.2 million. Excluding the effects of currency rate fluctuations, depreciation and amortization expenses would have decreased by approximately $0.6 million. This decrease in depreciation and amortization expense occurred as a result of reduced amortization of certain software applications and certain of the amortizable intangible assets acquired in the acquisition of OpinionSurveys, Rapidata, goZing and Ciao in late 2004 and early 2005 as these amortizable intangible assets become fully amortized. This decline was partially offset by increases in capital expenditures, including higher capital expenditures related to internal use software, which has a shorter estimated useful life than other capital expenditures. The internal use software expenditures relate primarily to:

i)	the continuing development of our Unified Panel System, our Survey Management System, and other Internet survey solutions operating systems in North America;
ii)	the expansion of our North American Internet survey solutions operating systems to a worldwide enterprise system; and,
iii)	ongoing enhancements and software re-engineering in our comparison shopping segment’s operating systems.

     In the near-term, we expect acquisition-related amortization to continue to decline, but to be offset by increased depreciation and amortization related to the internal use software development and expanding infrastructure needed to support growth in our comparison shopping and Internet survey solutions segments.

     Research and Development.Research and development expenses for the six months ended June 30, 2007 were $2.1 million, compared to $1.8 million for the six months ended June 30, 2006, an increase of $0.4 million, or 21.2%. Research and development expenses increased as a result of increased research and development staff in our European businesses due primarily to the increased growth in our comparison shopping segment. In addition, during the latter part of 2006, and as part of separating the European businesses, we required additional personnel to separate and maintain our European technology platforms and to continue to integrate and develop new software applications to automate manual processes in our Internet survey solutions operating environment in both our North American and Ciao Internet survey solutions business platforms. Further, we increased spending on research and development in our comparison shopping segment in order to improve scalability of our infrastructure and enhance the content and user experience on our comparison shopping websites. We expect research and development expenses to increase in the future as we continue on the path of automating, evolving and improving our internal technologies.

     Restructuring Charges.In December 2005, we announced a rightsizing plan which involved a restructuring and rightsizing of our North American business. During the six months ended June 30, 2006, we included pre-tax restructuring expenses of approximately $0.2 million associated with office closings and personnel employment termination. We have completed the restructuring activities under this plan and these restructuring expenses associated with our rightsizing plan did not have a material impact on our results of operations, cash flows, liquidity, or capital resources.

     Interest Income (Expense), Net.Net interest income for the six months ended June 30, 2007 was $0.5 million, compared to net interest expense of $0.1 million for the six months ended June 30, 2006, an increase in net interest income of $0.6 million. We have continued to increase our excess cash position and have continued to invest our excess cash, including increased investments in marketable securities, which resulted in additional interest income. In addition, during the six months ended June 30, 2006, we incurred interest expense associated with capital lease obligations with Somerset Capital. In March 2006, we paid off the balance of the capital lease obligations with Somerset Capital.

     Other Expense, Net.Other expense decreased by approximately $0.1 million for the six months ended June 30, 2007 when compared to the same period in the prior year. Other expense relates primarily to the effects of currency rate changes on transactions denominated in currencies other than the recording currency of the environment where our subsidiaries operate.

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     Provision for Income Taxes.We recorded an income tax provision for the six months ended June 30, 2007 of $2.9 million, compared to $1.7 million for the six months ended June 30, 2006. Our effective tax rate was 36.4% and 35.3% for the six months ended June 30, 2007 and 2006, respectively. The increase in the tax provision is primarily a result of our increased profitability.

     In July 2006, the FASB released Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. We adopted FIN 48 on January 1, 2007 and recognized an increase of approximately $230,000 in the liability for unrecognized tax benefits. This additional liability resulted in an increase to the accumulated deficit of approximately $230,000, a decrease to long-term deferred tax assets of approximately $325,000 and a decrease to long-term income taxes payable of approximately $95,000 as of January 1, 2007.

     In July 2007, German tax reform was passed that reduces the combined corporate and trade tax rates for businesses. This tax rate reduction becomes effective January 1, 2008. Due to the future reduction in the overall German tax rate, our net deferred tax asset as of June 30, 2007 must be restated during the month of enactment of the tax reform and therefore, reflected in our financial statements for the period ending September 30, 2007. We expect the tax rate reduction to result in an increase in our overall net deferred tax asset as of June 30, 2007 of approximately $0.5 million. Of this amount, approximately $0.2 million will be credited to provision for income taxes and $0.3 million will be credited directly to stockholder’s equity during the period ending September 30, 2007.

     Net Income.Our net income for the six months ended June 30, 2007 was $5.1 million, compared to $3.1 million for the six months ended June 30, 2006. The increase in net income was primarily the result of our increased revenues and resulting operating profit, and increased net interest income, slightly offset by a higher income tax provision. Net income available to common stockholders for the six months ended June 30, 2007 was $0.20 per share for basic and $0.19 per share for diluted, as compared to $0.12 per share for basic and diluted for the six months ended June 30, 2006.

     North American Segment Results

     The following table sets forth the results of our North American Internet survey solutions segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the periods presented.

	Six Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	32,915		100.0	%	$	28,925		100.0	%
Segment operating income		6,287		19.1			6,202		21.4

     Gross Segment revenues.Gross segment revenues for the six months ended June 30, 2007 were $32.9 million, compared to $28.9 million for the six months ended June 30, 2006, an increase of $4.0 million, or 13.8%. Gross segment revenues increased primarily as a result of the following:

i)	the improvement in survey respondent supply via our panel, our Real-Time Sampling capability and our outside sample suppliers;
ii)	a significant investment in the selling, marketing and business development team in North America; and
iii)	improved product quality.

     Segment Operating Income.Segment operating income for the six months ended June 30, 2007 was $6.3 million, compared to $6.2 million for the six months ended June 30, 2006, an increase of $0.1 million or 1.4%. Segment operating income increased primarily as a result our increased revenues and corresponding gross profit on the additional revenues. This was offset by increased costs, primarily in the areas of selling, marketing and business development teams, and higher personnel and consulting costs.

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     Ciao Internet Survey Solutions Segment Results

     The following table sets forth the results of our Ciao Internet survey solutions operating segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the period presented.

	Six Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	14,963		100.0	%	$	13,438		100.0	%
Segment operating income		3,929		26.3			5,117		38.1

     Gross Segment Revenues.Gross segment revenues for the six months ended June 30, 2007 were $14.9 million, compared to $13.4 million for the six months ended June 30, 2006, an increase of $1.5 million or 11.3%. Fluctuations in currency rates increased net revenues by approximately $0.9 million. Excluding the effects of currency rate fluctuations, gross segment revenues would have increased by approximately $0.6 million, which was primarily due to the extension of the client base in Europe and to data supplied to our North American Internet survey solutions segment for European sourced data.

     Segment Operating Income.Segment operating income for the six months ended June 30, 2007 was $3.9 million, compared to $5.1 million for the six months ended June 30, 2006, a decrease of $1.2 million or 23.2%. Fluctuations in currency rates increased segment operating income by approximately $0.2 million. Excluding the effects of currency rate fluctuations, segment operating income would have decreased by approximately $1.4 million. Segment operating income decreased due primarily to increased project personnel costs, increased incentive costs, and to increased marketing and administrative costs, partially offset by increased revenues and decreased panel acquisition costs.

     Ciao Comparison Shopping Segment Results

     The following table sets forth the results of our Ciao comparison shopping operating segment based on the amounts and percentage relationship of the items listed to gross segment revenues for the period presented.

	Six Months Ended June 30,
	2007		%			2006		%
	($ in thousands)
Gross segment revenues	$	14,398		100.0	%	$	7,638		100.0	%
Segment operating income		8,188		56.9			4,292		56.2

     Gross Segment Revenues.Gross segment revenues for the six months ended June 30, 2007 were $14.4 million, compared to $7.6 million for the six months ended June 30, 2006, an increase of $6.8 million or 88.5%. Fluctuations in currency rates increased net revenues by approximately $1.1 million. Excluding the effects of currency rate fluctuations, net revenues would have increased by approximately $5.7 million. Gross segment revenues increased primarily as a result of increased traffic visitation by unique visitors, improved site content, expanded product catalogues, increased merchant relationships and improved product search capabilities as well as growth in the core e-Commerce markets in Europe. Additionally, beginning in May 2007, effective with the completion of the separation of the European businesses, the Ciao comparison shopping segment began selling panelists which it refers to the Ciao Internet survey solutions segment. These revenues are included in the Gross segment revenues shown above.

     Segment Operating Income.Segment operating income for the six months ended June 30, 2007 was $8.2 million, compared to $4.3 million for the six months ended June 30, 2006, an increase of $3.9 million or 90.8%. Fluctuations in currency rates increased segment operating income by approximately $0.6 million. Excluding the effects of currency rate fluctuations, segment operating income would have increased by approximately $3.3 million. Segment operating income increased primarily as a result of the additional revenue growth noted above in conjunction with the high operating leverage in this segment.

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Liquidity and Capital Resources

     The following table summarizes our cash flows, and cash, cash equivalents and short-term investments as of and for the six months ended June 30, 2007 and 2006:

	Six Months Ended June 30,
	2007			2006			Change
	($ in thousands)
Net cash provided by operating activities	$	13,941		$	10,073		$	3,868
Net cash used in investing activities		(7,015	)		(1,880	)		(5,135	)
Net cash provided by (used in) financing activities		2,275			(4,154	)		6,429
Effect of exchange rate changes on cash and cash equivalents		911			508			403
Increase in cash and cash equivalents		10,112			4,547			5,565
Cash and cash equivalents at beginning of period		20,873			20,623			250
Cash and cash equivalents at end of period		30,985			25,170			5,815
Short-term investments in marketable securities		18,934			—			18,934
Total cash, cash equivalents and short-term investments	$	49,919		$	25,170		$	24,749

     Net cash provided by operating activities for the six months ended June 30, 2007 was $13.9 million, compared to $10.1 million for the six months ended June 30, 2006. The increase in cash flow from operating activities was primarily attributable to our increased profitability and to improved working capital usage.

     Net cash used in investing activities was $7.0 million for the six months ended June 30, 2007 compared to $1.9 million for the six months ended June 30, 2006. The increase in cash used by investing activities was primarily due to additional net investments in marketable securities of our excess cash and higher capital expenditures in the current year period.

     Net cash provided by financing activities was $2.3 million for the six months ended June 30, 2007 compared to net cash used in financing activities of $4.2 million for the six months ended June 30, 2006. The increase in net cash provided by financing activities was primarily due to the pay-off of our capital lease obligations in the prior year period and the increased proceeds from stock option exercises in the current year period.

     Our working capital at June 30, 2007 was $48.4 million, compared to $40.3 million at December 31, 2006, an increase of $8.1 million. The increase in working capital was primarily due to our increased profitability for the six months ended June 30, 2007 and our resulting increased cash balances as we paid off our capital lease obligations in the prior year period. This was partially offset by increased net tax liabilities associated with our increased profitability.

     In March 2006, we repaid all of the outstanding capital lease obligations that we had with Somerset Capital of approximately $3.8 million, as we were generating cash flow from operations sufficient to support the needs of our on-going operations and capital expenditures. Currently, we maintain an on-going relationship with Somerset Capital to finance the acquisition of equipment, software and office furniture pursuant to leases in the event we determine that financing our capital expenditures would be beneficial to us. If, in the future, Somerset Capital declines to continue to finance our capital expenditure requirements, we believe that alternative sources of such funding would be available to us to satisfy such needs.

     At June 30, 2007 and December 31, 2006, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which

26

would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

     During the six months ended June 30, 2007, we incurred capital expenditures of $4.2 million, of which $2.3 million and $1.9 million is related to North America and Europe, respectively. For fiscal 2007, we expect capital expenditures to total approximately $8.0 to $9.0 million. The capital expenditures are primarily for developing internal use software for our Internet survey solutions and comparison shopping businesses as well as for adding computer and networking capacity in North America and Europe. Due to the bifurcation of the European business into separate businesses, we anticipate that we will increase our capital expenditures over the near-term as certain redundant systems and platforms may need to be created in order to operate as separate businesses. In the United States and Europe, capital expenditures were applied primarily to the development of internal use software and to upgrade computer servers and networking equipment to manage increased Internet-based survey production and data collection. We expect to fund these capital expenditures by cash flow from operations.

Contractual Cash Obligations and Other Commercial Commitments and Contingencies

     There were no material changes outside the ordinary course of business in our contractual obligations during the six months ended June 30, 2007. The following table summarizes our contractual obligations at June 30, 2007 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

	Total at		Years Ended December 31,
	June 30,												2012 and
	2007		2007 (1)		2008		2009		2010		2011		Thereafter
Contractual obligations:
Capital lease obligations	$	28	$	7	$	14	$	7	$	—	$	—	$	—
Non-cancelable operating lease obligations		10,999		2,050		3,364		2,911		1,477		745		452
Management change commitments*		100		100		—		—		—		—		—
Total contractual cash obligations	$	11,127	$	2,157	$	3,378	$	2,918	$	1,477	$	745	$	452

(1)	Includes only the remaining six months of the year ending December 31, 2007.
*	These management change commitments are a result of our management change announced in the third quarter of 2005 as described in Note 13 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

     Based on our current level of operations and anticipated growth, we believe that cash generated from operations will be adequate to fund our working capital and other capital expenditure requirements through the foreseeable future, although no assurance can be given in this regard. We believe we are more likely than not to realize our domestic and certain of our foreign deferred tax assets in the future, which could result in a reduction of our tax obligations in the future, although no assurance can be given in this regard. Poor financial results, unanticipated expenses, acquisitions of technologies, businesses or assets or strategic investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current stockholders.

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Item 3: Quantitative and Qualitative Disclosures About Market Risk

     We operate primarily in the United States and Europe, and our business is expanding internationally. As a result we are exposed to certain market risks that arise in the normal course of business, including fluctuations in interest rates and currency exchange rates, primarily changes in the U.S. Dollar to Euro exchange rate. These risks are not expected to be material. However, no assurance can be given that such risks will not become material. While we have not used derivative financial instruments in the past, we may, on occasion, use them in the future in order to manage or reduce these risks. We do not expect to enter into derivative or other financial instruments for trading or speculative purposes.

Item 4: Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

     We performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (together, our “Certifying Officers”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities and Exchange Act of 1934, as amended). Based on their evaluation, as of the end of the period covered by this Quarterly Report, our Certifying Officers concluded that our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by us in our periodic reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms relating to Greenfield Online, Inc., including our consolidated subsidiaries and was accumulated and communicated to our management, including our Certifying Officers, or persons performing similar functions as appropriate, to allow timely decisions regarding disclosure.

(b) Change in Internal Controls

     There has been no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     In July and August 2007, two putative federal securities law class actions were filed in the United States District Court for the District of Connecticut on behalf of persons who purchased the Company’s stock between February 9, 2005 and September 30, 2005. These substantially similar lawsuits assert claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, against the Company, its current Executive Vice President and Chief Financial Officer and its former President and Chief Executive Officer. These claims are related to statements the Company made on August 9, 2005 and September 29, 2005 regarding its financial projections for fiscal year 2005. Potential plaintiffs have until September 24, 2007, to move the court for appointment as lead plaintiff. At this time the Company has not responded to the complaints and is not required to do so until after a lead plaintiff is appointed and a consolidated complaint is filed. The Company believes that the allegations contained within these class action lawsuits are without merit and intends to vigorously defend the litigation.

     The Company’s management does not expect that the outcome of any of its currently ongoing legal proceedings individually or collectively, will have a material adverse effect on the Company’s financial condition, results of operations or cash flow.

Item 1A. Risk Factors

     Our Annual Report on Form 10-K for the year ended December 31, 2006, includes a detailed discussion of our risk factors. The risks described in our Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. The information set forth below updates and should be read in conjunction with the risk factors disclosed in Item 1A of Part 1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Cautionary Note Regarding Forward-Looking Statements

     This Quarterly Report contains forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. All statements other than statements of historical facts contained herein, including statements of our expectations regarding Internet survey solutions revenue, selling, general and administrative expenses, profitability, financial position and performance, business strategy and plans and objectives of management for future operations, services and products, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, typically identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward looking statements. Such risk, uncertainties and assumptions are described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2006 and this Quarterly Report, including, among other things:

• risks related to the separation of our Ciao Internet survey solutions and comparison shopping businesses;

• risks related to the success of new business initiatives;

• the growing competitiveness of our marketplace and our ability to compete therein;

• our ability to develop and deploy new technologies;

• risks related to our reliance on search engine algorithm optimization to generate internet traffic;

• our client satisfaction levels;

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• our ability to build and maintain the size and demographic composition of the Greenfield Online panel;

• our panelists’ responsiveness to our surveys;

• issues related to the development, success and client acceptance of our real-time sampling methodology for recruiting survey takers on the Internet;

• our ability to accurately predict future revenue levels and our ability to manage expense commensurate with such revenue levels;

• our ability to manage pricing pressure in North America and Europe;

• our reliance on our largest customers;

• our ability to manage or accelerate our growth and international expansion;

• our ability to restore and sustain sales growth in our European survey business;

• our ability to manage or accelerate our growth and international expansion;

• risks related to foreign currency rate fluctuations;

• our ability to integrate successfully the businesses we have recently acquired or may acquire in the future;

• risks related to the pending class action lawsuits;

• the seasonality of demand for Internet survey solutions and comparison shopping services; and

• the strength of our brand.

     These risks are not exhaustive. Other sections of this Quarterly Report include additional factors, which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by federal securities laws.

     You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

     We and some of our current and former officers are the subject of securities class action lawsuits that could require us to pay substantial damages or otherwise have a material adverse effect on us.

     In July and August 2007, two putative federal securities law class actions were filed in the United States District Court for the District of Connecticut on behalf of persons who purchased the our stock between February 9, 2005 and September 30, 2005. These substantially similar lawsuits assert claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, against the Company, its current Executive Vice President and Chief Financial Officer and its former President and Chief Executive Officer. These claims are related to statements the Company made on August 9, 2005 and September 29, 2005 regarding its financial projections for fiscal year 2005. Specifically the complaints allege, among other things, that the these statements were materially false and misleading because (1) they failed to disclose that we were experiencing several adverse trends in our business that were negatively impacting our revenues, (2) they failed to disclose that our recent acquisition of Ciao AG in April 2005 was not a success and that Ciao AG was not performing to expectations, (3) they failed to disclose that we were materially overvaluing Ciao AG, and should have, but did not, write down the value attributed to Ciao AG and (4) that we lacked adequate internal and financial controls. The lawsuits are in the early stages and we cannot predict the results that will be achieved or the effect that any adverse findings in such lawsuits may have on us. An unfavorable determination in either of the lawsuits could result in the payment by us of monetary damages which may not be fully covered by insurance. Further, the defense of such lawsuits, even if we are ultimately successful, could have a material adverse effect on our financial results and on management’s attention to the operation of our business.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

     Our annual meeting of stockholders, or the Annual Meeting, for which proxies were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, was held on May 15, 2007 for the purposes of (1) electing three Class III directors to serve for a three year term until our annual meeting of stockholders in 2010 and until their successors are duly elected and qualified; (2) ratifying the selection of PricewaterhouseCoopers LLP as our independent registered accounting firm for the fiscal year ending December 31, 2007; and (3) approving the amendment to the Greenfield Online, Inc. 2004 Equity Incentive Plan to increase the number of shares reserved for issuance under the plan by 350,000 shares.

     The nominees for director listed in our proxy statement, each of whom was elected at the Annual Meeting, are named below, and each received the number of votes for election as indicated below (with each share of our common stock being entitled to one vote):

	Number of Shares		Number of Shares
	Voted For		Withheld
Peter Sobiloff		21,554,935		61,232
Joel R. Mesznik		21,119,010		497,157
Albert Angrisani		21,555,085		61,082

     Additionally, there are four directors whose term of office continues after the Annual Meeting. Lise J. Buyer and Charles W. Stryker will continue in office until the 2008 annual meeting of stockholders. Burton J. Manning and Joseph A. Ripp will continue in office until the 2009 annual meeting of stockholders.

     The ratification of the selection of PricewaterhouseCoopers LLP as our independent registered accounting firm for the fiscal year ending December 31, 2007 was approved at the Annual Meeting. There were 21,165,069 votes cast ratifying such selection, 51,277 votes cast against ratification of such selection and 399,821 votes abstaining.

     The amendment to the Greenfield Online, Inc. 2004 Equity Incentive Plan was approved at the Annual Meeting. There were 13,494,456 votes cast approving such amendment, 5,250,130 votes cast against such amendment, 8,934 votes abstaining and 2,862,647 broker non-votes.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibits

Exhibit
No.	Description of Exhibits
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (Filed herewith).
32.2	Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (Filed herewith).

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GREENFIELD ONLINE, INC.
By:	/s/ Robert E. Bies
	Robert E. Bies
	Executive Vice President and Chief Financial Officer

Dated: August 9, 2007

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EXHIBIT INDEX

Exhibit
No.	Description of Exhibits
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (Filed herewith).
32.2	Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (Filed herewith).

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