##### Table of Contents

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-Q



---



|x | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2006.
|- | ---------------------------------------------------------------------------------------------------------------------------------------

or



| ̈ | 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: 000-26393



---

Jupitermedia Corporation

(Exact name of Registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 06-1542480                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|23 Old Kings Highway South Darien, Connecticut                 |  | 06820                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(203) 662-2800

(Registrants telephone number, including area code)



---

Not Applicable

(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.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act: (Check one):

Large accelerated
filer ̈Accelerated filer  x        Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x

The number of outstanding shares the Registrants common stock, par value $.01 per share, as of May 5, 2006 was 35,326,437.



---



---

##### Table of Contents

Jupitermedia Corporation

Index



|           |  |                                                                                                                |  |     
|---------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                |  | Page
|PART I.    |  | Financial Information                                                                                          |  |     
|           |  |                                                                                                               
|Item 1.    |  | Financial Statements                                                                                           |  |     
|           |  |                                                                                                               
|           |  | Unaudited Consolidated Condensed Balance Sheets  December 31, 2005 and March 31, 2006                         |  | 3   
|           |  |                                                                                                               
|           |  | Unaudited Consolidated Condensed Statements of Operations  For the Three Months Ended March 31, 2005 and 2006 |  | 4   
|           |  |                                                                                                               
|           |  | Unaudited Consolidated Condensed Statements of Cash Flows  For the Three Months Ended March 31, 2005 and 2006 |  | 5   
|           |  |                                                                                                               
|           |  | Notes to Consolidated Condensed Financial Statements                                                           |  | 6   
|           |  |                                                                                                               
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 14  
|           |  |                                                                                                               
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 22  
|           |  |                                                                                                               
|Item 4.    |  | Controls and Procedures                                                                                        |  | 22  
|           |  |                                                                                                               
|PART II.   |  | Other Information                                                                                              |  |     
|           |  |                                                                                                               
|Item 1.    |  | Legal Proceedings                                                                                              |  | 23  
|           |  |                                                                                                               
|Item 1A.   |  | Risk Factors                                                                                                   |  | 23  
|           |  |                                                                                                               
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                    |  | 23  
|           |  |                                                                                                               
|Item 3.    |  | Defaults Upon Senior Securities                                                                                |  | 23  
|           |  |                                                                                                               
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                            |  | 23  
|           |  |                                                                                                               
|Item 5.    |  | Other Information                                                                                              |  | 24  
|           |  |                                                                                                               
|Item 6.    |  | Exhibits                                                                                                       |  | 24  
|           | 
|Signatures |  | 25                                                                                                            



2



---

##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Balance Sheets

December 31, 2005 and March 31, 2006

(in thousands, except share and per share amounts)



|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                                                                                                                                          |  | December 31,2005 |         |   | March 31,2006 |  
|ASSETS                                                                                                                                                    |  |                  |         |   |               |   |         |  
|Current assets:                                                                                                                                           |  |                  |         |   |               |   |         |  
|Cash and cash equivalents                                                                                                                                 |  | $                | 18,546  |   |               | $ | 26,637  |  
|Accounts receivable, net of allowances of $1,935 and $1,648, respectively                                                                                 |  |                  | 20,640  |   |               |   | 23,309  |  
|Prepaid expenses and other                                                                                                                                |  |                  | 3,517   |   |               |   | 3,723   |  
|Deferred income taxes                                                                                                                                     |  |                  | 425     |   |               |   | 797     |  
|Assets of discontinued operations                                                                                                                         |  |                  | 8,763   |   |               |   |        |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total current assets                                                                                                                                      |  |                  | 51,891  |   |               |   | 54,466  |  
|                                                                                                                                                          |  |                 
|Property and equipment, net of accumulated depreciation of $10,211 and $11,027, respectively                                                              |  |                  | 9,807   |   |               |   | 10,736  |  
|Intangible assets, net                                                                                                                                    |  |                  | 66,799  |   |               |   | 74,120  |  
|Goodwill                                                                                                                                                  |  |                  | 169,960 |   |               |   | 177,474 |  
|Deferred income taxes                                                                                                                                     |  |                  | 8,690   |   |               |   | 6,484   |  
|Investments and other assets                                                                                                                              |  |                  | 1,766   |   |               |   | 2,248   |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total assets                                                                                                                                              |  | $                | 308,913 |   |               | $ | 325,528 |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                      |  |                  |         |   |               |   |         |  
|Current liabilities:                                                                                                                                      |  |                  |         |   |               |   |         |  
|Accounts payable                                                                                                                                          |  | $                | 6,552   |   |               | $ | 6,080   |  
|Accrued payroll and related expenses                                                                                                                      |  |                  | 2,390   |   |               |   | 2,357   |  
|Accrued expenses and other                                                                                                                                |  |                  | 13,287  |   |               |   | 13,978  |  
|Current portion of long-term debt                                                                                                                         |  |                  | 16,000  |   |               |   | 16,000  |  
|Deferred revenues                                                                                                                                         |  |                  | 11,743  |   |               |   | 12,453  |  
|Liabilities of discontinued operations                                                                                                                    |  |                  | 7,211   |   |               |   |        |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total current liabilities                                                                                                                                 |  |                  | 57,183  |   |               |   | 50,868  |  
|                                                                                                                                                          |  |                 
|Long-term debt                                                                                                                                            |  |                  | 46,214  |   |               |   | 57,214  |  
|Deferred revenues                                                                                                                                         |  |                  | 156     |   |               |   | 182     |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total liabilities                                                                                                                                         |  |                  | 103,553 |   |               |   | 108,264 |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Commitments on contingencies (see notes)                                                                                                                  |  |                  |         |   |               |   |         |  
|                                                                                                                                                          |  |                 
|Stockholders equity:                                                                                                                                     |  |                  |         |   |               |   |         |  
|Preferred stock, $.01 par value, 4,000,000 shares authorized, no shares issued                                                                            |  |                  |        |   |               |   |        |  
|Common stock, $.01 par value, 75,000,000 shares authorized, 34,937,025 and 35,205,197 shares issued at December 31, 2005 and
March 31, 2006, respectively |  |                  | 349     |   |               |   | 352     |  
|Additional paid-in capital                                                                                                                                |  |                  | 251,919 |   |               |   | 254,417 |  
|Accumulated deficit                                                                                                                                       |  |                  | (45,291 | ) |               |   | (36,100 | )
|Treasury stock, 65,000 shares at cost                                                                                                                     |  |                  | (106    | ) |               |   | (106    | )
|Accumulated other comprehensive income                                                                                                                    |  |                  | (1,511  | ) |               |   | (1,299  | )
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total stockholders equity                                                                                                                                |  |                  | 205,360 |   |               |   | 217,264 |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  
|Total liabilities and stockholders equity                                                                                                                |  | $                | 308,913 |   |               | $ | 325,528 |  
|                                                                                                                                                          |  |                  |         |   |               |   |         |  

See notes to consolidated financial statements.



3



---

##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Operations

For the Three Months Ended March 31, 2005 and 2006

(in thousands, except per share amounts)



|                                                                                       |  |                             |        |   |      |   |        |  
|-------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                       |  | Three Months EndedMarch 31, |       
|                                                                                       |  | 2005                        |        |   | 2006 |  
|Revenues                                                                               |  | $                           | 19,711 |   |      | $ | 33,941 |  
|                                                                                       |  |                            
|Cost of revenues (exclusive of items shown separately below)                           |  |                             | 6,256  |   |      |   | 11,925 |  
|Advertising, promotion and selling                                                     |  |                             | 3,369  |   |      |   | 7,166  |  
|General and administrative                                                             |  |                             | 3,144  |   |      |   | 6,231  |  
|Depreciation                                                                           |  |                             | 278    |   |      |   | 653    |  
|Amortization                                                                           |  |                             | 829    |   |      |   | 2,271  |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Total operating expenses                                                               |  |                             | 13,876 |   |      |   | 28,246 |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Operating income                                                                       |  |                             | 5,835  |   |      |   | 5,695  |  
|                                                                                       |  |                            
|Income (loss) on investments and other, net                                            |  |                             | (30    | ) |      |   | 73     |  
|Interest income                                                                        |  |                             | 119    |   |      |   | 117    |  
|Interest expense                                                                       |  |                             | (88    | ) |      |   | (1,319 | )
|                                                                                       |  |                             |        |   |      |   |        |  
|Income before income taxes, minority interests and equity income from investments, net |  |                             | 5,836  |   |      |   | 4,566  |  
|Provision for income taxes                                                             |  |                             | 678    |   |      |   | 1,715  |  
|Minority interests                                                                     |  |                             | (23    | ) |      |   | (9     | )
|Equity income from investments, net                                                    |  |                             |       |   |      |   | (9     | )
|                                                                                       |  |                             |        |   |      |   |        |  
|Income from continuing operations                                                      |  |                             | 5,135  |   |      |   | 2,833  |  
|Income from discontinued operations, net of taxes                                      |  |                             | 411    |   |      |   | 67     |  
|Gain on sale of discontinued operations, net of taxes                                  |  |                             |       |   |      |   | 6,291  |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Net income                                                                             |  | $                           | 5,546  |   |      | $ | 9,191  |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Earnings per share:                                                                    |  |                             |        |   |      |   |        |  
|Basic                                                                                  |  |                             |        |   |      |   |        |  
|Income from continuing operations                                                      |  | $                           | 0.16   |   |      | $ | 0.08   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Net income                                                                             |  | $                           | 0.17   |   |      | $ | 0.26   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Diluted                                                                                |  |                             |        |   |      |   |        |  
|Income from continuing operations                                                      |  | $                           | 0.14   |   |      | $ | 0.08   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Net income                                                                             |  | $                           | 0.16   |   |      | $ | 0.25   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Shares used in computing earnings per share:                                           |  |                             |        |   |      |   |        |  
|Basic                                                                                  |  |                             | 32,733 |   |      |   | 35,111 |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Diluted                                                                                |  |                             | 35,693 |   |      |   | 36,735 |  
|                                                                                       |  |                             |        |   |      |   |        |  

See notes to consolidated financial statements.



4



---

##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2005 and 2006

(in thousands)



|                                                                                                         |  |                             |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                         |  | Three Months EndedMarch 31, |        
|                                                                                                         |  | 2005                        |         |   | 2006 |  
|Cash flows from operating activities:                                                                    |  |                             |         |   |      |   |         |  
|Income from continuing operations                                                                        |  | $                           | 5,135   |   |      | $ | 2,833   |  
|Adjustments to reconcile income from continuing operations to net cash provided by operating activities: |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                                                            |  |                             | 1,107   |   |      |   | 2,924   |  
|Stock-based compensation                                                                                 |  |                             |        |   |      |   | 761     |  
|Provision (benefit) for losses on accounts receivable                                                    |  |                             | (38     | ) |      |   | (9      | )
|Minority interests                                                                                       |  |                             | 23      |   |      |   | 9       |  
|Equity loss from investments, net                                                                        |  |                             |        |   |      |   | 9       |  
|(Income) loss on investments and other, net                                                              |  |                             | 30      |   |      |   | (73     | )
|Deferred income taxes                                                                                    |  |                             |        |   |      |   | 589     |  
|Excess tax benefit from stock-based compensation                                                         |  |                             |        |   |      |   | (636    | )
|Changes in current assets and liabilities (net of businesses acquired):                                  |  |                             |         |   |      |   |         |  
|Accounts receivable, net                                                                                 |  |                             | 1,580   |   |      |   | (3,000  | )
|Prepaid expenses and other                                                                               |  |                             | 265     |   |      |   | (241    | )
|Accounts payable and accrued expenses                                                                    |  |                             | (2,830  | ) |      |   | (3,223  | )
|Deferred revenues                                                                                        |  |                             | (586    | ) |      |   | 736     |  
|Discontinued operations                                                                                  |  |                             | 2,532   |   |      |   | 1,110   |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash provided by operating activities                                                                |  |                             | 7,218   |   |      |   | 1,789   |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Cash flows from investing activities:                                                                    |  |                             |         |   |      |   |         |  
|Purchases of property and equipment                                                                      |  |                             | (221    | ) |      |   | (492    | )
|Acquisitions of businesses and other                                                                     |  |                             | (37,830 | ) |      |   | (15,591 | )
|Proceeds from sales of assets and other                                                                  |  |                             |        |   |      |   | 152     |  
|Proceeds from sale of discontinued operations                                                            |  |                             |        |   |      |   | 9,600   |  
|Discontinued operations                                                                                  |  |                             |        |   |      |   |        |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                                    |  |                             | (38,051 | ) |      |   | (6,331  | )
|                                                                                                         |  |                             |         |   |      |   |         |  
|Cash flows from financing activities:                                                                    |  |                             |         |   |      |   |         |  
|Borrowings under credit facilities                                                                       |  |                             | 20,000  |   |      |   | 15,000  |  
|Debt issuance costs                                                                                      |  |                             | (75     | ) |      |   | (12     | )
|Repayment of borrowings under credit facilities                                                          |  |                             |        |   |      |   | (4,000  | )
|Proceeds from exercise of stock options                                                                  |  |                             | 330     |   |      |   | 1,027   |  
|Excess tax benefit from stock-based compensation                                                         |  |                             |        |   |      |   | 636     |  
|Discontinued operations                                                                                  |  |                             |        |   |      |   |        |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                                |  |                             | 20,255  |   |      |   | 12,651  |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Effects of exchange rates on cash                                                                        |  |                             | (15     | ) |      |   | (18     | )
|                                                                                                         |  |                             |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                                     |  |                             | (10,593 | ) |      |   | 8,091   |  
|Cash and cash equivalents, beginning of period                                                           |  |                             | 30,179  |   |      |   | 18,546  |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                                                 |  | $                           | 19,586  |   |      | $ | 26,637  |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Supplemental disclosures of cash flow:                                                                   |  |                             |         |   |      |   |         |  
|Cash paid for income taxes                                                                               |  | $                           | 227     |   |      | $ | 5,069   |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Cash paid for interest                                                                                   |  | $                           | 5       |   |      | $ | 1,201   |  
|                                                                                                         |  |                             |         |   |      |   |         |  
|Non-cash investing activities:                                                                           |  |                             |         |   |      |   |         |  
|Common stock issued for acquisitions                                                                     |  | $                           | 21,611  |   |      | $ |        |  
|                                                                                                         |  |                             |         |   |      |   |         |  

See notes to consolidated financial statements.



5



---

##### Table of Contents

Jupitermedia Corporation

Notes to Consolidated Condensed Financial Statements

March 31, 2006

(unaudited)

1.    THE COMPANY

Jupitermedia Corporation (Jupitermedia) is a global provider of original images and online information for information technology (IT), business and creative professionals. Jupitermedia includes Jupiterimages, which
serves creative professionals with over 7.0 million images online with brands like BananaStock, Brand X, FoodPix, Botanica, Nonstock, The Beauty Archive, Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images,
Thinkstock Footage, Bigshot Media, Goodshoot, ITStockFree, Stock Image, Pixland, Photos.com, Ablestock.com, PhotoObjects.net, Clipart.com, FlashFoundry.com and AnimationFactory.com; and JupiterWeb, the online media division of Jupitermedia, operates
four distinct online networks: internet.com and EarthWeb.com for IT and business professionals; DevX.com for developers; and Graphics.com for creative professionals.

2.    BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed
financial statements have been prepared from the books and records of Jupitermedia in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q.
Accordingly, they 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. The consolidated statements of operations for the three
months ended March 31, 2006 are not necessarily indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes
thereto included in Jupitermedias Annual Report on Form 10-K for the year ended December 31, 2005. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the interim periods presented
have been reflected in such consolidated financial statements.

The consolidated financial statements include the accounts of Jupitermedia
and its majority-owned and wholly-owned subsidiaries. All intercompany transactions have been eliminated.

3.    ACCOUNTING FOR
SHARE-BASED COMPENSATION

Effective January 1, 2006, Jupitermedia adopted Financial Accounting Standards Board (FASB)
Statement No. 123 (revised), Share-Based Payment (SFAS 123R). Among its provisions, SFAS 123R requires Jupitermedia to recognize compensation expense for equity awards over the vesting period based on their grant-date
fair value. Prior to the adoption of SFAS 123R, Jupitermedia utilized the intrinsic-value based method of accounting under APB Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and adopted the
disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123). Under the intrinsic-value based method of accounting, compensation expense for stock options granted to Jupitermedias
employees was measured as the excess of the quoted market price of common stock at the grant date over the amount the employee must pay for the stock. Jupitermedias policy is to grant stock options with an exercise price equal to or greater
than the fair value on the date of grant and as a result no compensation expense was historically recognized for stock options.

Jupitermedia adopted SFAS 123R in the first quarter of 2006 using the modified prospective approach. Under this transition method, the measurement and our method of amortization of costs for share-based payments granted prior to, but not
vested as of January 1, 2006, would be based on the same estimate of the grant-date fair value and the same amortization method that was previously used in our SFAS 123 pro forma disclosure. Results for prior periods have not been restated as
provided for under the modified prospective approach. For equity awards granted after the date of adoption, Jupitermedia will amortize share-based compensation expense on a straight-line basis over the vesting term.



6



---

##### Table of Contents

Compensation expense is recognized only for share-based payments expected to vest. Jupitermedia estimates
forfeitures at the date of grant based on Jupitermedias historical experience and future expectations. Prior to the adoption of SFAS 123R, the effect of forfeitures on the pro forma expense amounts was recognized based on actual forfeitures.

The adoption of SFAS 123R reduced our basic and diluted earnings per share by $0.01 for the three months ended March 31, 2006.
Total share-based compensation expense recognized in continuing and discontinued operations was $761,000 and $77,000, respectively, for the three months ended March 31, 2006, which is before an income tax benefit of $350,000, resulting in a
decrease to net income of $488,000.

The following table shows the effect on net income and earnings per share for the three months ended
March 31, 2005 had compensation expense been recognized based upon the estimated fair value on the grant date of awards, in accordance with SFAS 123, as amended by SFAS No. 148 Accounting for Stock-Based Compensation 
Transition and Disclosure (amounts in thousands, except per share amounts):



|                                                                                                                |  |                                   |        |  
|--------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ------ | -
|                                                                                                                |  | Three Months Ended March 31, 2005 |       
|Net income                                                                                                      |  | $                                 | 5,546  |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                                   | (1,072 | )
|                                                                                                                |  |                                   |        |  
|Pro forma net income                                                                                            |  | $                                 | 4,474  |  
|                                                                                                                |  |                                   |        |  
|Basic earnings per share                                                                                        |  |                                   |        |  
|As reported                                                                                                     |  | $                                 | 0.17   |  
|                                                                                                                |  |                                   |        |  
|Pro forma                                                                                                       |  | $                                 | 0.14   |  
|                                                                                                                |  |                                   |        |  
|Diluted earnings per share                                                                                      |  |                                   |        |  
|As reported                                                                                                     |  | $                                 | 0.16   |  
|                                                                                                                |  |                                   |        |  
|Pro forma                                                                                                       |  | $                                 | 0.13   |  
|                                                                                                                |  |                                   |        |  

As of March 31, 2006, there was approximately $3.4 million of total unrecognized compensation
cost related to nonvested share-based compensation arrangements granted under the stock incentive plans. That cost is expected to be recognized over a weighted-average period of 7.6 months.

No stock options were issued during the first quarter of 2006. The fair value of Jupitermedia stock options issued in the first quarter of 2005 was
estimated at the date of grant using the Black-Scholes multiple option valuation model utilizing the following assumptions: expected volatility of 57%, a risk free rate of return of 3.66%, and expected life of three years and no expected dividend.

The expected stock price volatility is based on a combination of historical volatility of Jupitermedias stock and the implied
volatility of its traded options. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time
until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior.



7



---

##### Table of Contents

Each stock option has a ten year term from date of grant except for stock options granted to the Chairman
and Chief Executive Officer, which have a five year term. All stock option grants vest equally on each of the first three anniversaries of their respective grant dates. The plan will terminate on April 15, 2009. As of March 31, 2006, there
were 986,880 options remaining for future issuance under this plan.

The following table summarizes option activity during the three months
ended March 31, 2006:



|                                 |  |           |   |  |                               |       |                                                 |      |                                         |   |       
|-------------------------------- |  | --------- | - |  | ----------------------------- | ----- | ----------------------------------------------- | ---- | --------------------------------------- | - | ------
|Shares in Options                |  | Shares    |   |  | WeightedAverageExercise Price |       | WeightedAverageRemainingContractualTerm (years) |      | AggregateIntrinsic Value (in thousands)
|Outstanding at December 31, 2005 |  | 5,187,416 |   |  | $                             | 9.50  |                                                 |      |                                         |   |       
|Granted                          |  |          |   |  |                               |      |                                                 |      |                                         |   |       
|Exercised                        |  | (262,669  | ) |  |                               | 3.95  |                                                 |      |                                         |   |       
|Forfeited or expired             |  | (11,864   | ) |  |                               | 10.69 |                                                 |      |                                         |   |       
|                                 |  |           |   |  |                               |       |                                                 |      |                                         |   |       
|Outstanding at March 31, 2006    |  | 4,912,883 |   |  | $                             | 9.81  |                                                 | 6.36 |                                         | $ | 40,160
|                                 |  |           |   |  |                               |       |                                                 |      |                                         |   |       
|Exercisable at March 31, 2006    |  | 3,285,978 |   |  | $                             | 10.25 |                                                 | 6.29 |                                         | $ | 25,397
|                                 |  |           |   |  |                               |       |                                                 |      |                                         |   |       

The aggregate intrinsic value in the table above is before income taxes, based on the
Companys closing stock price of $17.98 as of the last business day of the period ended March 31, 2006.

During the three months
ended March 31, 2006, the total intrinsic value of stock options exercised was $3.4 million.

4.    COMPUTATION OF EARNINGS PER
SHARE

Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the exercise of stock
options. Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.

Computations of basic and diluted
earnings per share for the three months ended March 31, 2005 and 2006 are as follows (in thousands, except per share amounts):



|                                                                      |  |                             |        |      |   |       
|--------------------------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                                      |  | Three Months EndedMarch 31,
|                                                                      |  | 2005                        |        | 2006
|Income from continuing operations                                     |  | $                           | 5,135  |      | $ | 2,833 
|Income from discontinued operations, net of taxes                     |  |                             | 411    |      |   | 67    
|Gain on sale of discontinued operations, net of taxes                 |  |                             |       |      |   | 6,291 
|                                                                      |  |                             |        |      |   |       
|Net income                                                            |  | $                           | 5,546  |      | $ | 9,191 
|                                                                      |  |                             |        |      |   |       
|Basic weighted average common shares outstanding                      |  |                             | 32,733 |      |   | 35,111
|Effect of dilutive stock options                                      |  |                             | 2,960  |      |   | 1,624 
|                                                                      |  |                             |        |      |   |       
|Total basic weighted average common shares and dilutive stock options |  |                             | 35,693 |      |   | 36,735
|                                                                      |  |                             |        |      |   |       
|Earnings Per Share:                                                   |  |                             |        |      |   |       
|Basic                                                                 |  |                             |        |      |   |       
|Income from continuing operations                                     |  | $                           | 0.16   |      | $ | 0.08  
|                                                                      |  |                             |        |      |   |       
|Net income                                                            |  | $                           | 0.17   |      | $ | 0.26  
|                                                                      |  |                             |        |      |   |       
|Diluted                                                               |  |                             |        |      |   |       
|Income from continuing operations                                     |  | $                           | 0.14   |      | $ | 0.08  
|                                                                      |  |                             |        |      |   |       
|Net income                                                            |  | $                           | 0.16   |      | $ | 0.25  
|                                                                      |  |                             |        |      |   |       



8



---

##### Table of Contents

The following table summarizes the number of outstanding stock options excluded for the calculation of
diluted earnings per share for the periods presented because the result would have been anti-dilutive (in thousands, except weighted average exercise price):



|                                      |  |                             |       |      |   |      
|------------------------------------- |  | --------------------------- | ----- | ---- | - | -----
|                                      |  | Three MonthsEnded March 31,
|                                      |  | 2005                        |       | 2006
|Number of anti-dilutive stock options |  |                             | 77    |      |   | 872  
|Weighted average exercise price       |  | $                           | 26.50 |      | $ | 18.73

5.    INTANGIBLE ASSETS AND GOODWILL

Intangible assets and goodwill include the preliminary allocation of the purchase prices relating to the acquisitions of Goodshoot S.A.S. on May 19,
2005, PictureArts Corporation on July 18, 2005, BananaStock Limited on October 13, 2005 and the assets of Animation Factory, Inc. on December 23, 2005. Jupitermedia is in the process of obtaining third party valuations of certain
intangible assets, thus the allocation of the purchase prices relating to these acquisitions is subject to refinement.



9



---

##### Table of Contents

Amortized Intangible Assets

The following table sets forth the intangible assets that are subject to amortization, including the related accumulated amortization (in thousands):



|                           |  |                   |        |                         |   |         |                   |  |   |       
|-------------------------- |  | ----------------- | ------ | ----------------------- | - | ------- | ----------------- |  | - | ------
|                           |  | December 31, 2005
|                           |  | Cost              |        | AccumulatedAmortization |   |         | Net CarryingValue
|Image library              |  | $                 | 49,602 |                         | $ | (3,531  | )                 |  | $ | 46,071
|Customer lists             |  |                   | 4,484  |                         |   | (915    | )                 |  |   | 3,569 
|Web site development costs |  |                   | 5,179  |                         |   | (2,431  | )                 |  |   | 2,748 
|Trademarks                 |  |                   | 3,053  |                         |   | (2,458  | )                 |  |   | 595   
|Non-compete agreements     |  |                   | 1,549  |                         |   | (647    | )                 |  |   | 902   
|                           |  |                   |        |                         |   |         |                   |  |   |       
|Total                      |  | $                 | 63,867 |                         | $ | (9,982  | )                 |  | $ | 53,885
|                           |  |                   |        |                         |   |         |                   |  |   |       
|                           | 
|                           |  | March 31, 2006   
|                           |  | Cost              |        | AccumulatedAmortization |   |         | Net CarryingValue
|Image library              |  | $                 | 56,180 |                         | $ | (4,753  | )                 |  | $ | 51,427
|Customer lists             |  |                   | 5,028  |                         |   | (1,180  | )                 |  |   | 3,848 
|Web site development costs |  |                   | 5,648  |                         |   | (2,865  | )                 |  |   | 2,783 
|Supplier contracts         |  |                   | 593    |                         |   | (98     | )                 |  |   | 495   
|Trademarks                 |  |                   | 3,284  |                         |   | (2,558  | )                 |  |   | 726   
|Non-compete agreements     |  |                   | 1,485  |                         |   | (769    | )                 |  |   | 716   
|                           |  |                   |        |                         |   |         |                   |  |   |       
|Total                      |  | $                 | 72,218 |                         | $ | (12,223 | )                 |  | $ | 59,995
|                           |  |                   |        |                         |   |         |                   |  |   |       

Intangibles that are subject to amortization are amortized on a straight-line basis over their
expected useful lives. The image library is amortized over periods ranging from seven to fifteen years, customer lists and supplier contracts are amortized over periods ranging from three to eight years, Web site development costs are amortized over
three or five years and trademarks are amortized over three years. Non-compete agreements are amortized over the period of the agreements.

Amortization expense related to intangible assets subject to amortization was approximately $2.3 million for the three months ended March 31, 2006. Estimated annual amortization expense for the next five years, including the remainder
of 2006, is expected to be as follows (in thousands):



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending
December 31,
|2006                     |  | $ | 6,169 
|2007                     |  |   | 7,482 
|2008                     |  |   | 6,989 
|2009                     |  |   | 5,387 
|2010                     |  |   | 5,134 
|Thereafter               |  |   | 28,834
|                         |  |   |       
|                         |  | $ | 59,995
|                         |  |   |       

Unamortized Intangible Assets



|             |  |                  |        |               |   |       
|------------ |  | ---------------- | ------ | ------------- | - | ------
|             |  | December 31,2005 |        | March 31,2006
|Domain names |  | $                | 12,914 |               | $ | 14,125
|             |  |                  |        |               |   |       
|Total        |  | $                | 12,914 |               | $ | 14,125
|             |  |                  |        |               |   |       



10



---

##### Table of Contents

Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2006, are as follows:



|                                |  |              |         |             |   |       |  |   |        
|------------------------------- |  | ------------ | ------- | ----------- | - | ----- |  | - | -------
|                                |  | OnlineImages |         | OnlineMedia |   | Total
|Balance as of December 31, 2005 |  | $            | 163,042 |             | $ | 6,918 |  | $ | 169,960
|Goodwill acquired during period |  |              | 6,466   |             |   |      |  |   | 6,466  
|Purchase accounting adjustments |  |              | 1,048   |             |   |      |  |   | 1,048  
|                                |  |              |         |             |   |       |  |   |        
|Balance as of March 31, 2006    |  | $            | 170,556 |             | $ | 6,918 |  | $ | 177,474
|                                |  |              |         |             |   |       |  |   |        

Purchase accounting adjustments pertain primarily to adjustments made to the fair value of certain
assets purchased in conjunction with the acquisitions of Goodshoot S.A.S. and PictureArts Corporation.

6.    DISPOSITION AND
DISCONTINUED OPERATIONS

On March 28, 2006, Jupitermedia sold its JupiterResearch division for $10.1 million in cash, of which
$500,000 is being held in escrow, and the assumption of certain liabilities by the purchaser, subject to certain post-closing adjustments. The purchaser is JupiterResearch, LLC a subsidiary of JupiterKagan, Inc., which is a portfolio company of MCG
Capital Corporation (Nasdaq: MCGC). The carrying value of the net assets of the JupiterResearch division at the time of sale was $615,000 and the sale of the JupiterResearch division resulted in a gain of $6.2 million, net of income taxes of $2.8
million. As a result of the sale of the JupiterResearch division, the Research segment is now reflected as a discontinued operation in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. Income from discontinued operations for the three months ended March 31, 2006 was net of income taxes of $48,000. Prior year financial results have been presented to reflect Jupitermedias Research segment as a discontinued
operation.

The following table summarizes the revenue and income before income taxes of the discontinued Research operation (in
thousands):



|                           |  |                              |       |      |   |      
|-------------------------- |  | ---------------------------- | ----- | ---- | - | -----
|                           |  | Three Months Ended March 31,
|                           |  | 2005                         |       | 2006
|Revenue                    |  | $                            | 2,555 |      | $ | 2,388
|Income before income taxes |  | $                            | 15    |      | $ | 119  

Assets and liabilities of discontinued operations were as follows (in thousands):



|                                       |  |                   |      
|-------------------------------------- |  | ----------------- | -----
|                                       |  | December 31, 2005
|Current assets                         |  | $                 | 5,916
|Goodwill                               |  |                   | 2,632
|Other assets                           |  |                   | 215  
|                                       |  |                   |      
|Assets of discontinued operations      |  | $                 | 8,763
|                                       |  |                   |      
|Accounts payable and accrued expenses  |  | $                 | 377  
|Deferred revenues                      |  |                   | 6,834
|                                       |  |                   |      
|Liabilities of discontinued operations |  | $                 | 7,211
|                                       |  |                   |      



11



---

##### Table of Contents

7.    DEBT

On December 22, 2005, Jupitermedia entered into a Credit Agreement (the Credit Agreement) with JPMorgan Chase Bank N.A., as Administrative Agent and lender. The Credit Agreement provides for a $100.0
million senior credit facility (comprised of a $50.0 million term loan facility and a $50.0 million revolving credit facility). The future minimum payments under the Credit Agreement are $12.0 million, $16.0 million and $45.2 million for the years
ended December 31, 2006, 2007 and 2008, respectively. Jupitermedias outstanding debt, relating to the Credit Agreement, as of December 31, 2005 and March 31, 2006, respectively, is reflected in the unaudited consolidated
condensed balance sheet.

8.    SEGMENT INFORMATION

The following tables summarize the results of the segments of Jupitermedia for the three months ended March 31, 2005 and 2006. Online images consists
of the JupiterImages business that includes BananaStock, Brand X, Food Pix, Botanica, Nonstock, The Beauty Archive, Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images, Thinkstock Footage, Bigshot Media, Goodshoot,
ITStockFree, Stock Image, Pixland, Photos.com, Ablestock.com, PhotoObjects.net, Clipart.com, FlashFoundry.com and AnimationFactory.com. Online media consists of the JupiterWeb business that includes the internet.com, EarthWeb.com, DevX.com and
Graphics.com Networks. Other includes corporate overhead, depreciation, amortization and venture fund related activities. With the exception of goodwill, Jupitermedia does not identify or allocate assets by operating segment. See Note 5 for the
allocation of goodwill to Jupitermedias reportable segments.

Summary information by segment for the three months ended
March 31, 2005 and 2006 is as follows (in thousands):



|                         |  |                             |        |   |      |   |        |  
|------------------------ |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                         |  | Three Months EndedMarch 31, |       
|                         |  | 2005                        |        |   | 2006 |  
|Revenues:                |  |                             |        |   |      |   |        |  
|Online images            |  | $                           | 12,163 |   |      | $ | 26,565 |  
|Online media             |  |                             | 7,540  |   |      |   | 7,370  |  
|Other                    |  |                             | 8      |   |      |   | 6      |  
|                         |  |                             |        |   |      |   |        |  
|                         |  |                             | 19,711 |   |      |   | 33,941 |  
|                         |  |                             |        |   |      |   |        |  
|Operating expenses:      |  |                             |        |   |      |   |        |  
|Online images            |  |                             | 5,359  |   |      |   | 16,176 |  
|Online media             |  |                             | 5,045  |   |      |   | 5,179  |  
|Other                    |  |                             | 3,472  |   |      |   | 6,891  |  
|                         |  |                             |        |   |      |   |        |  
|                         |  |                             | 13,876 |   |      |   | 28,246 |  
|                         |  |                             |        |   |      |   |        |  
|Operating income (loss): |  |                             |        |   |      |   |        |  
|Online images            |  |                             | 6,804  |   |      |   | 10,389 |  
|Online media             |  |                             | 2,495  |   |      |   | 2,191  |  
|Other                    |  |                             | (3,464 | ) |      |   | (6,885 | )
|                         |  |                             |        |   |      |   |        |  
|                         |  | $                           | 5,835  |   |      | $ | 5,695  |  
|                         |  |                             |        |   |      |   |        |  



12



---

##### Table of Contents

9. INCOME TAXES

In connection with the sale of the JupiterResearch division, Jupitermedia was able to utilize all its capital loss carry forwards of approximately $1.1 million. The reversal of the valuation allowance related to the
capital loss carry forward was recorded during the three months ended March 31, 2006 and is included in the gain on sale of discontinued operations in the accompanying consolidated statements of operations.

10.    COMMITMENTS AND CONTINGENCIES

On May 12, 2004, Jupitermedia filed a lawsuit against eMarketer, Inc. (eMarketer) in United States District Court for the Southern District of New York, alleging that eMarketer violated Jupitermedias copyright,
trademark and related rights. Jupitermedia is seeking an injunction, damages and legal costs. On June 30, 2004, eMarketer filed an answer and counterclaim seeking a declaratory judgment that the conduct of which Jupitermedia complains is not
violative of Jupitermedias rights and is not seeking damages. Jupitermedia replied to the counterclaim on July 30, 2004, and discovery has commenced. The eMarketer litigation has been assumed by JupiterKagan, Inc. as of March 28,
2006 in connection with Jupitermedias sale of the JupiterResearch business. Jupitermedia no longer has any involvement in the lawsuit.

On August 3, 2004, Mario Cisneros and Michael Voight filed a class action lawsuit in the Superior Court of the State of California, County of San Francisco, on behalf of themselves and all others situated and/or the general public
against Jupitermedia and twelve co-defendant companies that operate Internet search engines. Cisneros et al. allege that defendants posting of paid advertising providing links to Internet gambling Web sites constitutes unfair competition and
unlawful business acts and practices under California law. Plaintiffs seek declaratory and injunctive relief, disgorgement of profits and restitution. On September 3, 2004, Jupitermedia blocked all advertisements from being published on its Web
properties from third-party search engines for the gambling-related terms specified in the Complaint. Moreover, Jupitermedia does not accept advertisements for gambling-related Web sites directly from companies that operate them. Jupitermedia has
demanded contractual indemnity from two companies that supplied advertisements that are the subject matter of the lawsuit. Neither of these two companies, however, has stated a final position as whether it will provide indemnity. Jupitermedia
intends to vigorously defend itself. In December 2005, the plaintiffs filed a motion for preliminary injunction, which accuses some of the defendants of continuing to provide links to gambling Web sites. Jupitermedia is not named or implicated in
this motion. On April 3, 2006, the plaintiffs filed a motion for leave to amend the complaint to add a new named plaintiff. A hearing on both motions has been set for May 23, 2006.

Jupitermedia is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the financial statements of Jupitermedia.



13



---

##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion should be read in conjunction with our unaudited financial statements and the accompanying notes, which appear elsewhere in this filing. Statements in this Form 10-Q, which are not historical facts, are forward-looking
statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. The potential risks and uncertainties address a variety of subjects including, for example: the competitive environment in which Jupitermedia competes; the unpredictability of Jupitermedias
future revenues, expenses, cash flows and stock price; Jupitermedias ability to integrate acquired businesses, products and personnel into its existing businesses; Jupitermedias dependence on a limited number of advertisers; and
Jupitermedias ability to protect its intellectual property. For a more detailed discussion of such risks and uncertainties, refer to Jupitermedias reports filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934. The forward-looking statements included herein are made as of the date of this Form 10-Q, and we are under no obligation to update the forward-looking statements after the date hereof.

Overview

We are a leading global provider of
original images and online information for information technology (IT), business and creative professionals. Our operations are classified into two principal segments: Online images and Online media.

Online images.Jupiterimages, our Online images business, is one of the leading images companies in the world with over 7.0 million
images online serving creative professionals with brands like Bananastock, Brand X, FoodPix, Botanica, Nonstock, The Beauty Archive, IFA Bilderteam, Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images, Thinkstock
Footage, Bigshot Media, Goodshoot, ITStockFree, Stock Image, Pixland, Photos.com, Ablestock.com, PhotoObjects.net, Clipart.com, FlashFoundry.com and AnimationFactory.com.

We generate our Online images revenues from paid subscriptions that provide access to our image libraries. Customers may purchase subscriptions, which are offered based on a variety of prices and terms, to access our
image libraries. Once a customer becomes a subscriber, they have the ability to obtain copies of images within our image libraries.

We
also derive revenue from granting rights to use images that are downloaded or delivered on CD-ROMs. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or
determinable and collectibility is reasonably assured. Delivery occurs upon shipment or the availability of the image for downloading by the customer.

Our images are licensed online through our networks, through our direct sales force and through third party relationships. We also have agreements with a number of distributors of digital images and footage clips,
whereby the distributors make sales to third party customers and remit a percentage of the sales to us. We recognize the revenue from the sale by the distributor at the time of the sale.

We also license a portion of our images to third parties for royalties based on the licensees revenues generated by the licensed images.

The principal costs of our Online images business relate to commissions paid to third party image suppliers, payroll and benefits costs
for technology, production, sales and marketing personnel, technology infrastructure, lead generation fees for sales referrals and credit card processing fees.



14



---

##### Table of Contents

Online media.Online media includes JupiterWeb, which consists of our internet.com,
EarthWeb.com, DevX.com and Graphics.com networks of over 150 Web sites and over 150 e-mail newsletters that generated, as of March 2006, over 350 million page views monthly. Online media also includes the STEP Inside Design and Dynamic Graphics
print magazines. These magazines are geared towards graphic design professionals and provide the reader with ideas and information to help them with both online and offline graphic design and publishing projects.

We generate our Online media revenues from:



| |  |  | advertising and custom publishing on our Web sites and e-mail newsletters;
| | - |  | --------------------------------------------------------------------------



| |  |  | e-commerce agreements, which generally include a fixed advertising fee;
| | - |  | -----------------------------------------------------------------------



| |  |  | advertiser sponsorships for our Webcasts;
| | - |  | -----------------------------------------



| |  |  | advertising, subscriptions and newsstand sales for our print magazines;
| | - |  | -----------------------------------------------------------------------



| |  |  | paid subscription services for our paid e-mail newsletters and services;
| | - |  | ------------------------------------------------------------------------



| |  |  | renting our permission based opt-in e-mail list names; and
| | - |  | ----------------------------------------------------------



| |  |  | licensing our editorial content, software and brands to third parties for fixed fees and royalties based on the licensees revenues generated by the licensed property.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The principal costs of our Online media business relate to payroll and benefits for our editorial, technology and sales
personnel as well as technology related costs for facilities and equipment.

JupiterResearch Disposition

On March 28, 2006, Jupitermedia sold its JupiterResearch business division to JupiterResearch, LLC, a subsidiary of JupiterKagan, Inc., for $10.1
million in cash, of which $500,000 is being held in escrow, and the assumption of certain liabilities by the purchaser, subject to certain post-closing adjustments. As a result of the sales of JupiterResearch, the Research segment is now reflected
as a discontinued operation in accordance with Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Results of Operations

Revenues

The following tables sets forth, for the periods indicated, a comparison of our revenues by segment (dollars in thousands):



|              |  |                             |        |               |   |        |  |   |        |   |  |     |  
|------------- |  | --------------------------- | ------ | ------------- | - | ------ |  | - | ------ | - |  | --- | -
|              |  | Three Months EndedMarch 31, |        | 2005 vs. 2006 |  
|              |  | 2005                        |        | 2006          |   | $      |  |   | %      |  
|Online images |  | $                           | 12,163 |               | $ | 26,565 |  | $ | 14,402 |   |  | 118 | %
|Online media  |  |                             | 7,540  |               |   | 7,370  |  |   | (170   | ) |  | (2  | )
|Other         |  |                             | 8      |               |   | 6      |  |   | (2     | ) |  | (25 | )
|              |  |                             |        |               |   |        |  |   |        |   |  |     |  
|              |  | $                           | 19,711 |               | $ | 33,941 |  | $ | 14,230 |   |  | 72  | %
|              |  |                             |        |               |   |        |  |   |        |   |  |     |  



15



---

##### Table of Contents

Online images. We acquired Dynamic Graphics Group on March 7, 2005, Goodshoot S.A.S. on
May 19, 2005, PictureArts Corporation on July 18, 2005, BananaStock Limited on October 13, 2005 and the assets of Animation Factory, Inc. on December 23, 2005 and, therefore, there are no financial results for these businesses
included in our financial statements prior to these respective dates. These acquisitions contributed $3.3 million and $13.1 million to revenues for the three months ended March 31, 2005 and 2006, respectively.

The following table sets forth, for the three months ended March 31, 2005 and 2006, the components of our Online images revenues (dollars in
thousands):



|                                  |  |                             |        |      |   |       
|--------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                  |  | Three Months EndedMarch 31,
|                                  |  | 2005                        |        | 2006
|Single images and CD-ROMs         |  | $                           | 5,221  |      | $ | 15,598
|Subscriptions                     |  |                             | 3,948  |      |   | 6,166 
|Distributors, licensing and other |  |                             | 2,994  |      |   | 4,801 
|                                  |  |                             |        |      |   |       
|Total Online images               |  | $                           | 12,163 |      | $ | 26,565
|                                  |  |                             |        |      |   |       

Online media. The decrease in revenues during the three months ended March 31, 2006
was due primarily to the sale of the ClickZ.com Network of Web sites on August 5, 2005, which had revenues of $743,000 for the three months ended March 31, 2005. This decrease was partially offset by an overall increase in Online media
revenues of $573,000 for the three months ended March 31, 2006 due primarily to an increase in advertising revenues and the full quarter impact of the acquisition of Dynamic Graphics Group. We acquired Dynamic Graphics Group on March 7,
2005 and this acquisition contributed $94,000 and $312,000 to Online media revenues during the three months ended March 31, 2005 and 2006, respectively. We expect our Online media revenues to increase in the second quarter of 2006 in comparison
to the first quarter based on the seasonality of the advertising business.

The following table sets forth a quarter-by-quarter comparison
of the number of our Online media online advertisers and the average revenue derived from each advertiser (dollars in thousands):



|                   |  |                       |  |                                |   
|------------------ |  | --------------------- |  | ------------------------------ | --
|                   |  | Number of Advertisers |  | Average Revenue per Advertiser
|March 31, 2005     |  | 213                   |  | $                              | 26
|June 30, 2005      |  | 219                   |  |                                | 32
|September 30, 2005 |  | 193                   |  |                                | 29
|December 31, 2005  |  | 158                   |  |                                | 40
|March 31, 2006     |  | 155                   |  |                                | 36

Other.Other revenues represent management fees from our management of internet.com Venture
Fund I LLC. These revenues will continue to be negligible in the future.

Cost of revenues

The following table sets forth, for the periods indicated, a comparison of our cost of revenues by segment (dollars in thousands):



|              |  |                             |       |               |   |        |  |   |       |  |     |  
|------------- |  | --------------------------- | ----- | ------------- | - | ------ |  | - | ----- |  | --- | -
|              |  | Three Months EndedMarch 31, |       | 2005 vs. 2006 |  
|              |  | 2005                        |       | 2006          |   | $      |  | % |      
|Online images |  | $                           | 3,185 |               | $ | 8,817  |  | $ | 5,632 |  | 177 | %
|Online media  |  |                             | 3,071 |               |   | 3,108  |  |   | 37    |  | 1   |  
|              |  |                             |       |               |   |        |  |   |       |  |     |  
|              |  | $                           | 6,256 |               | $ | 11,925 |  | $ | 5,669 |  | 91  | %
|              |  |                             |       |               |   |        |  |   |       |  |     |  



16



---

##### Table of Contents

Online images. Cost of revenues primarily consists of commissions paid to third party image
suppliers, payroll and benefits costs for technology and production personnel, communications infrastructure, Web site hosting, storage for our image library and royalties. Cost of revenues excludes depreciation and amortization. The year over year
increase in cost of revenues is primarily due to an increase in commission expense of $3.3 million and an increase in employee related costs of $1.4 million, which includes $29,000 in stock-based compensation expense. These increases were primarily
a result of the numerous acquisitions made by the company.

We intend to make investments through internal development and, where
appropriate opportunities arise, acquisitions to continue to expand our image library and to substitute licensed images with images that we own that will result in reduced royalty expense in the future. As we continue to make investments to increase
the size of our image library, we may need to increase our spending for Web site hosting and storage costs.

Online media. Cost of
revenues primarily consists of payroll and benefits costs for technology and editorial personnel, freelance costs, communications infrastructure and Web site hosting. Cost of revenues excludes depreciation and amortization. The increase in cost of
revenues from 2005 to 2006 was due primarily to increased costs resulting from the full quarter impact of the acquisition of Dynamics Graphics Group. Cost of revenues includes $75,000 in stock-based compensation expense for the three months ended
March 31, 2006.

We intend to make investments through internal development and, where appropriate opportunities arise, acquisitions to
continue to expand our content offerings. We may need to increase our spending in order to create additional content related to new topics or offerings.

Advertising, promotion and selling

The following table sets forth, for the periods indicated, a
comparison of our advertising, promotion and selling expenses by segment (dollars in thousands):



|              |  |                             |       |               |   |       |  |   |       |  |     |  
|------------- |  | --------------------------- | ----- | ------------- | - | ----- |  | - | ----- |  | --- | -
|              |  | Three Months EndedMarch 31, |       | 2005 vs. 2006 |  
|              |  | 2005                        |       | 2006          |   | $     |  | % |      
|Online images |  | $                           | 1,576 |               | $ | 5,262 |  | $ | 3,686 |  | 234 | %
|Online media  |  |                             | 1,793 |               |   | 1,904 |  |   | 111   |  | 6   |  
|              |  |                             |       |               |   |       |  |   |       |  |     |  
|              |  | $                           | 3,369 |               | $ | 7,166 |  | $ | 3,797 |  | 113 | %
|              |  |                             |       |               |   |       |  |   |       |  |     |  

Online images. Advertising, promotion and selling expenses primarily consists of payroll
and benefits costs for sales and marketing personnel and advertising. The year over year increase in advertising, promotion and selling is due to an increase in employee related costs of $2.1 million, which includes $12,000 in stock-based
compensation expense, and an increase in advertising expense of $1.3 million. These increases were primarily due to the impact of the numerous acquisitions made by the company.

Online media. Advertising, promotion and selling expenses primarily consists of payroll and benefits costs for sales and marketing personnel. In
addition, advertising, promotion and selling expenses includes costs related to marketing activities including barter. The increase from 2005 to 2006 in advertising, promotion and selling expenses relates primarily to an increase in employee payroll
and benefits costs, which includes $93,000 in stock-based compensation expense.



17



---

##### Table of Contents

General and administrative

The following table sets forth, for the periods indicated, a comparison of our general and administrative expenses by segment (dollars in thousands):



|              |  |                             |       |               |   |       |  |   |       |   |  |     |  
|------------- |  | --------------------------- | ----- | ------------- | - | ----- |  | - | ----- | - |  | --- | -
|              |  | Three Months EndedMarch 31, |       | 2005 vs. 2006 |  
|              |  | 2005                        |       | 2006          |   | $     |  |   | %     |  
|Online images |  | $                           | 598   |               | $ | 2,097 |  | $ | 1,499 |   |  | 251 | %
|Online media  |  |                             | 181   |               |   | 169   |  |   | (12   | ) |  | (7  | )
|Other         |  |                             | 2,365 |               |   | 3,965 |  | $ | 1,600 |   |  | 68  |  
|              |  |                             |       |               |   |       |  |   |       |   |  |     |  
|              |  | $                           | 3,144 |               | $ | 6,231 |  | $ | 3,087 |   |  | 98  | %
|              |  |                             |       |               |   |       |  |   |       |   |  |     |  

Online images. General and administrative expenses primarily consists of payroll and
benefits costs for administrative personnel, office related costs and professional fees. The year over year increase in general and administrative expense is due to an increase in employee related expenses of $525,000, an increase in office related
costs of $501,000 and an increase in professional fees of $219,000. These increases were primarily due to the impact of the numerous acquisitions made by the company.

Online media. General and administrative expenses primarily consist of office related costs and provisions for losses on accounts receivable. The decrease in general and administrative expenses from 2005 to
2006 was due primarily to a decrease in office related costs.

Other. General and administrative expenses primarily consist of
payroll and benefits costs for administrative personnel, office related costs and professional fees. The year over year increase in general and administrative expense is due to an increase in employee related costs of $887,000, which includes
$551,000 in stock-based compensation expense, an increase in office related costs of $245,000 and an increase in professional fees of $510,000. These increases were primarily due to the impact of the numerous acquisitions made by the company.

Depreciation and amortization

The following table sets forth, for the periods indicated, a comparison of our depreciation and amortization expenses (dollars in thousands):



|             |  |                             |       |               |   |       |  |   |       |  |     |  
|------------ |  | --------------------------- | ----- | ------------- | - | ----- |  | - | ----- |  | --- | -
|             |  | Three Months EndedMarch 31, |       | 2005 vs. 2006 |  
|             |  | 2005                        |       | 2006          |   | $     |  | % |      
|Depreciation |  | $                           | 278   |               | $ | 653   |  | $ | 375   |  | 135 | %
|Amortization |  |                             | 829   |               |   | 2,271 |  |   | 1,442 |  | 174 |  
|             |  |                             |       |               |   |       |  |   |       |  |     |  
|             |  | $                           | 1,107 |               | $ | 2,924 |  | $ | 1,817 |  | 164 | %
|             |  |                             |       |               |   |       |  |   |       |  |     |  

Depreciation and amortization expense increased during the three months ended March 31, 2006
due primarily to the impact of acquisitions of Dynamic Graphics Group, Goodshoot, PictureArts and BananaStock.

These acquisitions added
$285,000 and $1.1 million, respectively, to depreciation and amortization expense for the three months ended March 31, 2006.

Our
depreciation and amortization expenses may vary in future periods based upon a change in our capital expenditure levels, any purchase accounting adjustments relating to our acquisitions or any acquisitions that may be completed during the remainder
of 2006.



18



---

##### Table of Contents

Interest income and interest expense

The following table sets forth, for the periods indicated, a comparison of our interest income and interest expense (dollars in thousands):



|                 |  |                             |     |   |               |   |        |   |  |   |        |   |  |        |   
|---------------- |  | --------------------------- | --- | - | ------------- | - | ------ | - |  | - | ------ | - |  | ------ | --
|                 |  | Three Months EndedMarch 31, |     |   | 2005 vs. 2006 |  
|                 |  | 2005                        |     |   | 2006          |   |        | $ |  |   | %      |  
|Interest income  |  | $                           | 119 |   |               | $ | 117    |   |  | $ | (2     | ) |  | (2     | )%
|Interest expense |  |                             | (88 | ) |               |   | (1,319 | ) |  |   | (1,231 | ) |  | (1,399 | ) 

Interest expense relates primarily to borrowings under a senior credit facility with JPMorgan
Chase Bank N.A. (see Liquidity and Capital Resources).

Provision for income taxes

In connection with the sale of the JupiterResearch division, Jupitermedia was able to utilize all its capital loss carry forwards of approximately $1.1
million. The reversal of the valuation allowance related to the capital loss carry forward was recorded during the three months ended March 31, 2006 and is included in the gain on sale of discontinued operations in the accompanying consolidated
statements of operations.

Minority interests

Minority interests represent the minority stockholders proportionate share of profits or losses of our majority-owned Japanese subsidiaries, Japan.internet.com KK and Jupiterimages Japan, which represent our
online media and online images business, respectively, focused on Japan.

Liquidity and Capital Resources

The following table sets forth, for the periods indicated, a comparison of the key components of our liquidity and capital resources (dollars in
thousands):



|                           |  |                             |         |   |               |   |         |   |  |   |        |   |  |      |   
|-------------------------- |  | --------------------------- | ------- | - | ------------- | - | ------- | - |  | - | ------ | - |  | ---- | --
|                           |  | Three Months EndedMarch 31, |         |   | 2005 vs. 2006 |  
|                           |  | 2005                        |         |   | 2006          |   |         | $ |  |   | %      |  
|Operating cash flows       |  | $                           | 7,218   |   |               | $ | 2,425   |   |  | $ | (4,793 | ) |  | (66  | )%
|Investing cash flows       |  | $                           | (38,051 | ) |               | $ | (6,331  | ) |  | $ | 31,720 |   |  | 83   | % 
|Financing cash flows       |  | $                           | 20,255  |   |               | $ | 12,015  |   |  | $ | (8,240 | ) |  | (41  | )%
|Acquisitions of businesses |  | $                           | (37,830 | ) |               | $ | (15,591 | ) |  | $ | 22,239 |   |  | (59  | )%
|Capital expenditures       |  | $                           | (221    | ) |               | $ | (492    | ) |  | $ | (271   | ) |  | (123 | )%



19



---

##### Table of Contents

|                          |  |                  |        |               |                |   |        |  |   |        |  |     |  
|------------------------- |  | ---------------- | ------ | ------------- | -------------- | - | ------ |  | - | ------ |  | --- | -
|                          |  | As of            |        | 2005 vs. 2006 |               
|                          |  | December 31,2005 |        |               | March 31, 2006 |   | $      |  | % |       
|Cash and cash equivalents |  | $                | 18,546 |               |                | $ | 26,637 |  | $ | 8,091  |  | 44  | %
|Accounts receivable, net  |  | $                | 20,640 |               |                | $ | 23,309 |  | $ | 2,669  |  | 13  | %
|Working capital           |  | $                | (5,292 | )             |                | $ | 3,598  |  | $ | 8,890  |  | 168 | %
|Long-term debt            |  | $                | 46,214 |               |                | $ | 57,214 |  | $ | 11,000 |  | 24  | %

Since inception, we have funded operations through various means including our initial and
follow-on public offerings of our common stock in June 1999, February 2000 and May 2004, respectively, the sale of our Events and Research businesses, through various credit agreements and through cash flows from operating activities. Cash
increased in 2006 primarily due to the sale our Jupitermedias Research business and cash flows from operations.

Cash provided by
operating activities increased in 2006 due primarily to increases in our net income and our deferred revenues as well as decreases in accounts receivables offset by decreases in accounts payable and accrued expenses. In 2006, deferred revenues
increased primarily due to the increased bookings for our Online images business.

The amounts of cash used in investing activities vary in
correlation to the number and value of the acquisitions consummated. Net cash used in investing activities in 2005 related primarily to the acquisition of Dynamic Graphics Group.

Cash provided from financing activities in 2005 relates primarily to borrowings under a senior credit facilities with JPMorgan Chase Bank N.A. obtained
in connection with the acquisitions of Dynamic Graphics Group.

On December 22, 2005, Jupitermedia entered into a Credit Agreement
(the Credit Agreement) with JPMorgan Chase Bank N.A., as Administrative Agent and lender. The Credit Agreement provides for a $100.0 million senior credit facility (comprised of a $50.0 million term loan facility and a $50.0 million
revolving credit facility). The future minimum payments under the Credit Agreement are $12.0 million, $16.0 million and $45.2 million for the years ended December 31, 2006, 2007 and 2008, respectively. Jupitermedias outstanding debt,
relating to the Credit Agreement, as of December 31, 2005 and March 31, 2006, respectively, is reflected in the unaudited consolidated condensed balance sheet.



20



---

##### Table of Contents

We expect to continue our investing activities, which includes the potential to strategically acquire
companies, content and images that are complementary to our business. Although we are currently considering potential strategic acquisitions, we have no binding commitments or agreements with respect to any such acquisitions. We expect to finance
future acquisition through a combination of long-term and short-term financing including debt, equity and cash and internally generated cash flow. We may obtain additional long-term financing through the issuance of equity securities and the
incurrence of additional long-term secured or unsecured debt.

Our existing cash and investment balances may decline during 2006 in the
event of a downturn in the general economy or changes in our planned cash outlay. However, based on our current business plan and revenue prospects, we believe that our existing balances together with our anticipated cash flows from operations will
be sufficient to meet our working capital and operating resource expenditure requirements for the next twelve months.

Recent Accounting Pronouncements

Effective January 1, 2006, we adopted Financial Accounting Standards Board (FASB) Statement No. 123 (revised),
Share-Based Payment (SFAS 123R). Among its provisions, SFAS 123R requires that we recognize compensation expense for equity awards over the vesting period based on their grant-date fair value. Prior to the adoption of SFAS
123R, we utilized the intrinsic-value based method of accounting under APB Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and adopted the disclosure requirements of SFAS No. 123,
Accounting for Stock-Based Compensation (SFAS 123). Under the intrinsic-value based method of accounting, compensation expense for stock options granted to our employees was measured as the excess of the quoted market price
of common stock at the grant date over the amount the employee must pay for the stock. Our policy is to grant stock options with an exercise price equal to or greater than the fair value on the date of grant and as a result no compensation expense
was historically recognized for stock options.

We adopted SFAS 123R in the first quarter of 2006 using the modified prospective approach.
Under this transition method, the measurement and our method of amortization of costs for share-based payments granted prior to, but not vested as of January 1, 2006, would be based on the same estimate of the grant-date fair value and the same
amortization method that was previously used in our SFAS 123 pro forma disclosure. Results for prior periods have not been restated as provided for under the modified prospective approach. For equity awards granted after the date of adoption, we
will amortize share-based compensation expense on a straight-line basis over the vesting term.

Compensation expense is recognized only for
share-based payments expected to vest. We estimate forfeitures at the date of grant based on our historical experience and future expectations. Prior to the adoption of SFAS 123R, the effect of forfeitures on the pro forma expense amounts was
recognized based on actual forfeitures.

The adoption of SFAS 123R reduced our basic and diluted earnings per share by $0.01 for the
three months ended March 31, 2006. Total share-based compensation expense recognized in continuing and discontinued operations was $761,000 and $77,000, respectively, for the three months ended March 31, 2006, which is before an income tax
benefit of $350,000, resulting in a decrease to net income of $488,000.



21



---

##### Table of Contents

Critical Accounting Policies

There have been no changes to our critical accounting policies from those included in our most recent Form 10-K for the year ended December 31, 2005.

Item 3. Quantitative and Qualitative Disclosure about Market Risks

We have no derivative financial instruments
or derivative commodity instruments. We invest our excess cash primarily in debt instruments of the U.S. Government and its agencies.

We
invest in equity instruments of privately held, online media and technology companies for business and strategic purposes. These investments are included in investments and other assets and are accounted for under the cost method, as we do not have
the ability to exert significant influence over the companies or their operations. For these non-quoted investments, our policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the
carrying values. We identify and record impairment losses on long-lived assets when events and circumstances indicate that such assets might be impaired.

We are the portfolio manager of, and an investor in, internet.com Venture Fund I LLC, or Fund I, a $5.0 million venture fund formed in March 1999. This fund invested in early-stage content-based Internet properties
that are not competitive with our business. We invested $700,000 in Fund I, all of which is now fully invested. The remaining $4.3 million of capital raised and funded in Fund I was sourced from third party investors. We no longer have any
outstanding capital commitments related to Fund I. The aggregate carrying value of our investment in Fund I was $57,000 as of March 31, 2006.

Our transactions are generally conducted, and as of March 31, 2006, 86% of our cash is held in accounts that are denominated, in United States dollars. Accordingly, we are not exposed to significant foreign currency risk.

Item 4. Controls and Procedures

The Companys management, including the Chief Executive Officer and Chief
Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures as of March 31, 2006. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure
controls and procedures are effective in ensuring that all material information required to be to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no changes in the Companys internal control over financial reporting during the period covered by this report that
have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



22



---

##### Table of Contents

PART IIOTHER INFORMATION



|         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1.  |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|         | 
|         |  | On May 12, 2004, Jupitermedia filed a lawsuit against eMarketer, Inc. (eMarketer) in United States District
Court for the Southern District of New York, alleging that eMarketer violated Jupitermedias copyright, trademark and related rights. Jupitermedia is seeking an injunction, damages and legal costs. On June 30, 2004, eMarketer filed an
answer and counterclaim seeking a declaratory judgment that the conduct of which Jupitermedia complains is not violative of Jupitermedias rights and is not seeking damages. Jupitermedia replied to the counterclaim on July 30, 2004, and
discovery has commenced. The eMarketer litigation has been assumed by JupiterKagan, Inc. as of March 28, 2006 in connection with Jupitermedias sale of the JupiterResearch business. Jupitermedia no longer has any involvement in the
lawsuit.  On August 3, 2004, Mario Cisneros and Michael Voight
filed a class action lawsuit in the Superior Court of the State of California, County of San Francisco, on behalf of themselves and all others situated and/or the general public against Jupitermedia and twelve co-defendant companies that operate
Internet search engines. Cisneros et al. allege that defendants posting of paid advertising providing links to Internet gambling Web sites constitutes unfair competition and unlawful business acts and practices under California law. Plaintiffs seek
declaratory and injunctive relief, disgorgement of profits and restitution. On September 3, 2004, Jupitermedia blocked all advertisements from being published on its Web properties from third-party search engines for the gambling-related terms
specified in the Complaint. Moreover, Jupitermedia does not accept advertisements for gambling-related web sites directly from companies that operate them. Jupitermedia has demanded contractual indemnity from two companies that supplied
advertisements that are the subject matter of the lawsuit. Neither of these two companies, however, has stated a final position as whether it will provide indemnity. Jupitermedia continues to vigorously defend itself. In December 2005, the
plaintiffs filed a motion for preliminary injunction, which accuses some of the defendants of continuing to provide links to gambling Web sites. Jupitermedia is not named or implicated in this motion. On April 3, 2006, the plaintiffs filed a
motion for leave to amend the complaint to add a new named plaintiff. A hearing on both motions has been set for May 23, 2006.  Jupitermedia is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the financial statements of Jupitermedia.
|         | 
|Item 1A. |  | RISK FACTORS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|         | 
|         |  | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|         | 
|Item 2.  |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         | 
|         |  | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|         | 
|Item 3.  |  | DEFAULTS UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|         | 
|         |  | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|         | 
|Item 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | 
|         |  | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



23



---

##### Table of Contents

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 5. |  | OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                    
|        | 
|        |  | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                       
|        | 
|Item 6. |  | EXHIBITS                                                                                                                                                                                                                                                                                                                                                                                             
|        | 
|        |  | The following is a list of exhibits filed as part of this Report on Form 10-Q. Where so indicated by footnote, exhibits, which were previously filed, are incorporated by reference. For exhibits
incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically except for in those situations where the exhibit number was the same as set forth below.

| |  |               |  |                                                                                                                                      
| |  | ------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
| |  |              
| |  | ExhibitNumber |  | Description                                                                                                                          
| |  | 3.1*          |  | Registrants Amended and Restated Certificate of Incorporation, as amended                                                           
| |  |              
| |  | 3.2**         |  | Registrants Bylaws                                                                                                                  
| |  |              
| |  | 11***         |  | Statement Regarding Computation of Per Share Earnings (Loss) (included in notes to consolidated financial statements)                
| |  |              
| |  | 31.1          |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                              
| |  |              
| |  | 31.2          |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                              
| |  |              
| |  | 32.1          |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002               
| |  |              
| |  | 32.2          |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002               
| |  |              
| |  | *             |  | Incorporated herein by reference to the Registrants Form 10-K filed on March 5, 2004.                                               
| |  | **            |  | Incorporated herein by reference to the Registrants Registration Statement on Form S-1 (File No. 333-76331) filed on April 15, 1999.
| |  | ***           |  | Included in notes to consolidated financial statements.                                                                              



24



---

##### Table of Contents

SIGNATURES

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



|                    |  |                          |  | 
|------------------- |  | ------------------------ |  | 
|Dated: May 10, 2006 |  | Jupitermedia Corporation |  | 

| |  |                                                      |  | 
| |  | ---------------------------------------------------- |  | 
| |  |                                                     
| |  | /s/ Christopher S. Cardell                           |  | 
| |  | Christopher S. Cardell                               |  | 
| |  | Director, President and Chief Operating Officer      |  | 
| |  |                                                     
| |  | /s/ Christopher J. Baudouin                          |  | 
| |  | Christopher J. Baudouin                              |  | 
| |  | Executive Vice President and Chief Financial Officer |  | 



25