##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from   to
 Commission file number 000-50698
 GREENFIELD ONLINE, INC.
  Delaware
    
    06-1440369(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 21 River Road, Wilton, CT 06897
 : (203) 834-8585
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o þ




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GREENFIELD ONLINE, INC.
 FORM 10-Q
TABLE OF CONTENTS
 PagePart I Financial InformationItem 1.
    
    Financial StatementsUnaudited Consolidated Balance Sheets at June 30, 2005 and December 31, 2004
    
    1Unaudited Consolidated Statements of Income for the three months and six months ended June 30, 2005 and 2004
    
    2Unaudited Consolidated Statements of Changes in Stockholders Equity for the six months ended June 30, 2005
    
    3Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004
    
    4Notes to Unaudited Consolidated Financial Statements
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial  Condition and Results of Operations
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    34Item 4.
    
    Controls and Procedures
    
    34Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    35Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    35Item 3
    
    Defaults Upon Senior Securities
    
    35Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    35Item 5.
    
    Other Information
    
    35Item 6.
    
    Exhibits
    
    36Signatures
    
    
    
    37Exhibit Index
    
    
    
    38EX-10.51: EMPLOYMENT AGREEMENTEX-10.52: EMPLOYMENT AGREEMENTEX-10.53: EMPLOYMENT AGREEMENTEX-10.54: LETTER OF ENGAGEMENTEX-10.55: AMENDED AND RESTATED PARTNER AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
 June 30,
    
    December 31,2005
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,809
    
    
    $
    96,082Investments in marketable securities
    
    
    
    
    
    
    17,400Accounts receivable trade (net of allowances
of $1,220 and $429 at June 30, 2005 and
December 31, 2004, respectively)
    
    
    21,847
    
    
    
    10,537Prepaid expenses and other current assets
    
    
    1,359
    
    
    
    1,245Deferred tax assets, current
    
    
    13,576
    
    
    
    Total current assets
    
    
    58,591
    
    
    
    125,264Restricted
cash
    
    
    10,000
    
    
    
    Property and equipment, net
    
    
    8,535
    
    
    
    5,611Other intangible assets, net
    
    
    23,981
    
    
    
    3,647Goodwill
    
    
    159,236
    
    
    
    Deferred tax assets, long-term
    
    
    6,443
    
    
    
    Security deposits and other long term assets
    
    
    1,228
    
    
    
    784Total assets
    
    $
    268,014
    
    
    $
    135,306LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,089
    
    
    $
    2,868Accrued expenses and other current liabilities
    
    
    16,047
    
    
    
    5,892Current portion of long term debt
    
    
    3,333
    
    
    
    Current portion of capital lease obligations
    
    
    1,728
    
    
    
    1,253Deferred revenue
    
    
    381
    
    
    
    225Total current liabilities
    
    
    25,578
    
    
    
    10,238Long-term debt
    
    
    14,959
    
    
    
    Capital lease obligations
    
    
    1,969
    
    
    
    1,877Deferred tax liabilities, long-term
    
    
    5,790
    
    
    
    Other long-term liabilities
    
    
    91
    
    
    
    113Total liabilities
    
    
    48,387
    
    
    
    12,228Commitments and contingenciesStockholders deficit:Common stock; par value $0.0001 per share;
100,000,000 shares authorized; 25,279,447 and
21,001,103 shares issued and outstanding at
June 30, 2005 and December 31, 2004,
respectively
    
    
    3
    
    
    
    2Additional paid-in capital
    
    
    288,493
    
    
    
    204,635Accumulated deficit
    
    
    (57,079
    )
    
    
    (78,671
    )Unearned stock-based compensation
    
    
    (1,792
    )
    
    
    (2,757
    )Accumulated other comprehensive loss
    
    
    (9,867
    )
    
    
    Treasury stock, at cost;Common stock; 9,643
shares at June 30, 2005 and December 31,
2004, respectively
    
    
    (131
    )
    
    
    (131
    )Total stockholders equity
    
    
    219,627
    
    
    
    123,078Total liabilities and stockholders equity
    
    $
    268,014
    
    
    $
    135,306
  1




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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net revenue
    
    $
    26,283
    
    
    $
    10,229
    
    
    $
    41,534
    
    
    $
    18,852Cost of revenue
    
    
    7,162
    
    
    
    2,180
    
    
    
    11,587
    
    
    
    4,993Gross profit
    
    
    19,121
    
    
    
    8,049
    
    
    
    29,947
    
    
    
    13,859Operating expenses:Selling, general and administrative
    
    
    11,174
    
    
    
    5,109
    
    
    
    17,872
    
    
    
    9,363Panel acquisition expenses
    
    
    833
    
    
    
    484
    
    
    
    1,287
    
    
    
    1,172Depreciation and amortization
    
    
    2,020
    
    
    
    245
    
    
    
    2,803
    
    
    
    463Research and development
    
    
    570
    
    
    
    265
    
    
    
    916
    
    
    
    481Total operating expenses
    
    
    14,597
    
    
    
    6,103
    
    
    
    22,878
    
    
    
    11,479Operating income
    
    
    4,524
    
    
    
    1,946
    
    
    
    7,069
    
    
    
    2,380Other income (expense):Interest income (expense), net
    
    
    (232
    )
    
    
    (74
    )
    
    
    222
    
    
    
    (130
    )Related party interest expense, net
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    (40
    )Other income (expense), net
    
    
    22
    
    
    
    (11
    )
    
    
    (19
    )
    
    
    (16
    )Total other income (expense)
    
    
    (210
    )
    
    
    (98
    )
    
    
    203
    
    
    
    (186
    )Income before income taxes
    
    
    4,314
    
    
    
    1,848
    
    
    
    7,272
    
    
    
    2,194Provision (benefit) for income taxes
    
    
    (14,812
    )
    
    
    121
    
    
    
    (14,320
    )
    
    
    142Net income
    
    
    19,126
    
    
    
    1,727
    
    
    
    21,592
    
    
    
    2,052Less: Cumulative dividends on Series B convertible preferred stock
    
    
    
    
    
    
    (168
    )
    
    
    
    
    
    
    (336
    )Income allocable to participating preferred securities
    
    
    
    
    
    
    (1,302
    )
    
    
    
    
    
    
    (1,433
    )Net income available to common stockholders
    
    $
    19,126
    
    
    $
    257
    
    
    $
    21,592
    
    
    $
    283Net income per share available to common stockholders:Basic
    
    $
    0.76
    
    
    $
    0.13
    
    
    $
    0.93
    
    
    $
    0.14Diluted
    
    $
    0.75
    
    
    $
    0.10
    
    
    $
    0.92
    
    
    $
    0.10Weighted average shares outstanding:Basic
    
    
    25,041
    
    
    
    2,052
    
    
    
    23,118
    
    
    
    2,053Diluted
    
    
    25,422
    
    
    
    2,693
    
    
    
    23,555
    
    
    
    2,707
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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(Dollars and shares in thousands)
(Unaudited)
 Additional
    

Treasury Stock
    
    Unearned
    
    
    
    
    
    Accumulated other
    
    TotalCommon Stock
    

Paid-In
    

Common Stock
    

Stock-Based
    

Accumulated
    

comprehensive
    

Stockholders
    

ComprehensiveShares
    

Amount
    

Capital
    

Shares
    

Amount
    

Compensation
    

Deficit
    

Income (loss)
    

Equity
(Deficit)
    

Income (loss)Balance at December 31, 2004
    
    
    21,001
    
    
    $
    2
    
    
    $
    204,635
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (2,757
    )
    
    $
    (78,671
    )
    
    $
    
    
    
    $
    123,078Six months ended June 30, 2005:Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,592
    
    
    
    
    
    
    
    21,592
    
    
    $
    21,592Issuance of shares related to the Employee Stock Purchase Plan
    
    
    3
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65Exercise of warrants
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    82
    
    
    
    
    
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203Stock option forfeitures
    
    
    
    
    
    
    
    
    
    
    (489
    )
    
    
    
    
    
    
    
    
    
    
    489
    
    
    
    
    
    
    
    
    
    
    
    Shares
purchased by the executive officers of Rapidata.net, Inc.
    
    
    33
    
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600Shares purchased by the executive officers of Zing Wireless
    
    
    196
    
    
    
    
    
    
    
    3,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600Shares
issued in connection with acquisition of Ciao AG
    
    
    3,947
    
    
    
    1
    
    
    
    79,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,698Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,867
    )
    
    
    (9,867
    )
    
    
    (9,867
    )Income tax effects of translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    547Comprehensive
income, net of income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,272Adjustment to fees paid related to stock issuance
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155Contribution to capital
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Amortization of unearned stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476
    
    
    
    
    
    
    
    
    
    
    
    476Balance at June 30, 2005
    
    
    25,279
    
    
    $
    3
    
    
    $
    288,493
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (1,792
    )
    
    $
    (57,079
    )
    
    $
    (9,867
    )
    
    $
    219,627
  3




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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 Six MonthsJune 30,2005
    
    2004Cash flows from operating activities:Net income
    
    $
    21,592
    
    
    $
    2,052Adjustments to reconcile net income to net cash provided by operating activities:Deferred income tax provision
    
    
    (15,503
    )
    
    
    Depreciation and amortization
    
    
    4,004
    
    
    
    638Amortization of contract asset
    
    
    
    
    
    
    17Amortization
of stock-based compensation
    
    
    476
    
    
    
    847Non-cash interest expense (income)
    
    
    
    
    
    
    40Loss on sale of property and equipment
    
    
    16
    
    
    
    1Provision for doubtful accounts and other sales allowances
    
    
    121
    
    
    
    9Changes in assets and liabilities, net:Accounts receivable
    
    
    (3,544
    )
    
    
    (3,512
    )Deferred project costs
    
    
    (68
    )
    
    
    (94
    )Other current assets
    
    
    781
    
    
    
    (537
    )Security deposits
    
    
    12
    
    
    
    (165
    )Other assets
    
    
    (533
    )
    
    
    Accounts payable
    
    
    20
    
    
    
    547Accrued expenses and other current liabilities
    
    
    1,560
    
    
    
    227Other, net
    
    
    (55
    )
    
    
    Deferred project revenue
    
    
    117
    
    
    
    69Net cash provided by operating activities
    
    
    8,996
    
    
    
    139Cash flows from investing activities:Purchases of marketable securities
    
    
    (8,249
    )
    
    
    Sales of marketable securities
    
    
    25,649
    
    
    
    Proceeds from sale of property and equipment
    
    
    
    
    
    
    2Purchases of businesses, net of cash acquired
    
    
    (110,658
    )
    
    
    Additions to property and equipment and intangibles
    
    
    (1,795
    )
    
    
    (860
    )Net cash used in investing activities
    
    
    (95,053
    )
    
    
    (858
    )Cash flows from financing activities:Proceeds from borrowings under credit facility
    
    
    18,848
    
    
    
    1,000Repayments under credit facility
    
    
    (555
    )
    
    
    Other long-term liabilities
    
    
    (37
    )
    
    
    (60
    )Proceeds of options exercised
    
    
    203
    
    
    
    Contribution to capital
    
    
    27
    
    
    
    Net proceeds from issuance of common stock
    
    
    4,200
    
    
    
    Deferred IPO costs
    
    
    
    
    
    
    (1,361
    )Principal payments under capital lease obligations
    
    
    (694
    )
    
    
    (510
    )Net cash provided by (used in) financing activities
    
    
    21,992
    
    
    
    (931
    )Effect of exchange rate changes
    
    
    (208
    )
    
    
    (4
    )Net decrease
in cash, restricted cash and cash equivalents
    
    
    (64,273
    )
    
    
    (1,654
    )Cash, restricted cash and cash equivalents at beginning of the period
    
    
    96,082
    
    
    
    3,721Cash, restricted cash and cash equivalents at end of the period
    
    $
    31,809
    
    
    $
    2,067Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    387
    
    
    $
    129Income taxes
    
    
    690
    
    
    
    151Supplemental Schedule of Non-cash Investing and Financing Activities:Purchase of equipment and internal use software financed through capital lease obligations
    
    $
    1,062
    
    
    $
    380Repossession of shares in payment of note receivable from officer
    
    
    
    
    
    
    169Cumulative dividends on Series B convertible preferred stock
    
    
    
    
    
    
    336
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GREENFIELD ONLINE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1 Basis of presentation:
   Follow-on Public Offering.
 Note 2  Summary of significant accounting policies:
  Cash, restricted cash and
cash equivalents.
 Investments in Marketable Securities.
  Fair Value
    
    Fair ValueJune 30,
    
    December 31,2005
    
    2004Investment TypeU.S. State debt obligations
    
    $
    
    
    
    $
    14,500Other debt securities
    
    
    
    
    
    
    2,900Fair value
    
    $
    
    
    
    $
    17,400
 5




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##### Table of Contents



Panelist Incentives.
 Comprehensive income (loss).
 Foreign Currency Translation.
 Income Taxes.
 Concentration of Credit Risk.
 Goodwill.
 Rapidata
    
    goZing
    
    Ciao
    
    TotalGoodwillBalance as of December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Goodwill associated with the acquisition*
    
    
    4,965
    
    
    
    26,179
    
    
    
    136,625
    
    
    
    167,769Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (8,533
    )
    
    
    (8,533
    )Balance as of June 30, 2005
    
    $
    4,965
    
    
    $
    26,179
    
    
    $
    128,092
    
    
    $
    159,236
 
 *
    
    Goodwill associated with the goZing acquisition has been adjusted by $232,000 as a result of
changes in the net assets acquired from goZing. 6




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Stock-Based Compensation.
 Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based
Compensation, Transition and Disclosure, an amendment of SFAS 123
 Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Net income as reported
    
    $
    19,126
    
    
    $
    1,727
    
    
    $
    21,592
    
    
    $
    2,052Add: Stock-based employee compensation expense included in net
income as recorded
    
    
    223
    
    
    
    268
    
    
    
    476
    
    
    
    847Deduct: Total stock-based employee compensation expense determined
under the fair value method for all awards, net of related tax effects
    
    
    (473
    )
    
    
    (443
    )
    
    
    (1,079
    )
    
    
    (1,211
    )Pro forma net income
    
    
    18,876
    
    
    
    1,552
    
    
    
    20,989
    
    
    
    1,688Less: Cumulative dividends on Series B convertible preferred stock
    
    
    
    
    
    
    (168
    )
    
    
    
    
    
    
    (336
    )Income allocable to participating preferred securities
    
    
    
    
    
    
    (1,156
    )
    
    
    
    
    
    
    (1,129
    )Pro forma net income available to common stockholders
    
    $
    18,876
    
    
    $
    228
    
    
    $
    21,083
    
    
    $
    223Net income per share as reported:Basic
    
    $
    0.76
    
    
    $
    0.13
    
    
    $
    0.93
    
    
    $
    0.14Diluted
    
    $
    0.75
    
    
    $
    0.10
    
    
    $
    0.92
    
    
    $
    0.10Pro forma income per share:Basic
    
    $
    0.75
    
    
    $
    0.11
    
    
    $
    0.91
    
    
    $
    0.11Diluted
    
    $
    0.74
    
    
    $
    0.08
    
    
    $
    0.89
    
    
    $
    0.08
 7




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Note 3  Prepaid expenses and other current assets:
  June 30,
    
    December 31,2005
    
    2004Prepaid expenses
    
    $
    957
    
    
    $
    356Prepaid insurance
    
    
    81
    
    
    
    367Other non-trade receivables
    
    
    28
    
    
    
    56Deferred project costs
    
    
    160
    
    
    
    92Other
    
    
    133
    
    
    
    374$
    1,359
    
    
    $
    1,245
 Note 4  Property and equipment, net:
  EstimatedUseful
    
    June 30,
    
    December 31,Life-Years
    
    2005
    
    2004Computer and data processing equipment
    
    2  5
    
    $
    12,031
    
    
    
    $8,498Leasehold improvements
    
    2  5 *
    
    
    1,526
    
    
    
    1,505Furniture and fixtures
    
    
    7
    
    
    
    2,084
    
    
    
    1,732Telephone systems
    
    
    5
    
    
    
    854
    
    
    
    606Automobile(s)
    
    
    4
    
    
    
    101
    
    
    
    8816,596
    
    
    
    12,429Less: Accumulated depreciation
    
    
    
    
    
    
    (8,061
    )
    
    
    (6,818
    )Property and equipment, net
    
    
    
    
    
    $
    8,535
    
    
    
    $5,611
 
 *
    
    Lesser of the estimated life of the asset or the life of the underlying lease. 8




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##### Table of Contents



June 30,
    
    December 31,2005
    
    2004Computer and data processing equipment
    
    $
    6,101
    
    
    $
    5,066Leasehold improvements
    
    
    30
    
    
    
    30Furniture and fixtures
    
    
    1,298
    
    
    
    1,232Telephone system
    
    
    840
    
    
    
    594Automobile(s)
    
    
    58
    
    
    
    588,327
    
    
    
    6,980Accumulated depreciation
    
    
    (4,396
    )
    
    
    (3,639
    )Assets under capital leases, net
    
    $
    3,931
    
    
    $
    3,341
 Note 5  Other intangible assets, net:
  EstimatedUseful
    
    June 30,
    
    December 31,Life-Years
    
    2005
    
    2004Internal use software
    
    
    0.42  2
    
    
    $
    2,238
    
    
    $
    2,317Other software acquired
    
    
    0.42  2
    
    
    
    591
    
    
    
    Panel members
    
    
    4  8
    
    
    
    6,838
    
    
    
    2,849Backlog
    
    
    0.25
    
    
    
    424
    
    
    
    Affiliate network
    
    
    3
    
    
    
    347
    
    
    
    Customer relationships
    
    
    5
    
    
    
    8,117
    
    
    
    Non-competition agreements
    
    
    2.75  3
    
    
    
    2,804
    
    
    
    Domain names and service marks
    
    
    1  10
    
    
    
    6,660
    
    
    
    34028,019
    
    
    
    5,506Less: Accumulated amortization
    
    
    
    
    
    
    (4,038
    )
    
    
    (1,859
    )Other intangible assets, net
    
    
    
    
    
    $
    23,981
    
    
    $
    3,647
  9




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##### Table of Contents



At June 30, 2005Gross Carrying
    
    AccumulatedAmount
    
    AmortizationInternal use software
    
    $
    2,238
    
    
    $
    1,764Other intangible assets
    
    
    25,781
    
    
    
    2,274Total intangible assets
    
    $
    28,019
    
    
    $
    4,038
   AmountFor the remaining six months ending December 31, 2005
    
    $
    3,368For the calendar year ending December 31, 2006
    
    
    6,275For the calendar year ending December 31, 2007
    
    
    5,946For the calendar year ending December 31, 2008
    
    
    4,596For the calendar year ending December 31, 2009
    
    
    3,684For the calendar year ending December 31, 2010
    
    
    973
 Note 6  Acquisition of businesses:
   10




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##### Table of Contents



  
  goZing
    
    CiaoFebruary 8,
    
    April 6,2005
    
    2005Cash
    
    $
    833
    
    
    $
    1,775Trade receivables
    
    
    2,150
    
    
    
    5,602Other current assets
    
    
    91
    
    
    
    647Property and equipment
    
    
    276
    
    
    
    1,602Other intangible assets
    
    
    4,549
    
    
    
    18,683Deferred tax asset
    
    
    
    
    
    
    6,060Goodwill
    
    
    26,179
    
    
    
    136,625Total assets acquired
    
    
    34,078
    
    
    
    170,994Accounts payable
    
    
    (712
    )
    
    
    (535
    )Accrued expenses
    
    
    (1,274
    )
    
    
    (3,950
    )Other current liabilities
    
    
    (31
    )
    
    
    (1,041
    )Deferred tax liability
    
    
    
    
    
    
    (7,442
    )Long term liabilities
    
    
    (78
    )
    
    
    Net assets acquired
    
    $
    31,983
    
    
    $
    158,026
 11




---



##### Table of Contents



Estimated
    
    goZing
    
    Estimated
    
    CiaoUseful
    
    February 8,
    
    Useful
    
    April 6,Life-Years
    
    2005
    
    Life-Years
    
    2005Internal use software
    
    
    0.42
    
    
    $
    159
    
    
    
    2
    
    
    $
    489Panel members
    
    
    5
    
    
    
    2,369
    
    
    
    4
    
    
    
    1,565Domain names and service marks
    
    
    10
    
    
    
    116
    
    
    
    5
    
    
    
    6,542Customer relationships
    
    
    5
    
    
    
    975
    
    
    
    5
    
    
    
    7,483Non-competition agreements
    
    
    3
    
    
    
    459
    
    
    
    2.75
    
    
    
    2,340Affiliate network
    
    
    3
    
    
    
    347
    
    
    
    
    
    
    
    Backlog
    
    
    0.25
    
    
    
    124
    
    
    
    0.25
    
    
    
    264Total other intangible assets
    
    
    
    
    
    $
    4,549
    
    
    
    
    
    
    $
    18,683
   Actual
    
    Pro Forma
    
    Pro Forma
    
    Pro FormaThree Months Ended
    
    Three Months Ended
    
    Six Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004Net revenue
    
    $
    26,283
    
    
    $
    18,146
    
    
    $
    49,328
    
    
    $
    33,418Operating income *
    
    
    4,524
    
    
    
    3,364
    
    
    
    6,854
    
    
    
    4,137Net income
    
    
    19,126
    
    
    
    2,832
    
    
    
    20,270
    
    
    
    3,599Earnings per share-Basic
    
    
    0.76
    
    
    
    0.11
    
    
    
    0.80
    
    
    
    0.15Earnings per share-Diluted
    
    
    0.75
    
    
    
    0.11
    
    
    
    0.79
    
    
    
    0.14
 
 *
    
    Included in pro forma operating income for each of the three and six month periods is
amortization of approximately $1.4 million and $3.2 million, respectively, related to
the step up in fair value of the identifiable intangible assets associated with the acquisition.
Additionally, pro forma operating income was negatively impacted in the six months ended June 30,
2005 by approximately $308,000 ($257,000 after tax) or $0.01 per share basic and diluted for legal
and consulting fees associated with the sale of the goZing business. Certain amounts included in
pro forma operating income are subject to fair value adjustments during the allocation period,
which ends December 31, 2005 for goZing and March 31, 2006 for Ciao. Note 7  Accrued expenses and other current liabilities:
  June 30,
    
    December 31,2005
    
    2004Accrued payroll and commissions
    
    $
    2,328
    
    
    $
    1,439Panelist incentives
    
    
    3,743
    
    
    
    896Accrued panel costs
    
    
    224
    
    
    
    1,076Income and other taxes payable
    
    
    3,781
    
    
    
    481Fees associated with the follow-on public offering
    
    
    
    
    
    
    350Fees associated with the acquisition of Ciao
    
    
    2,950
    
    
    
    Software license liability
    
    
    127
    
    
    
    269Customer deposits
    
    
    366
    
    
    
    118Other
    
    
    2,528
    
    
    
    1,263$
    16,047
    
    
    $
    5,892
  12




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##### Table of Contents



Note 8  Revolving credit facility:
 SVB Credit Facility.
  Commerce Bank Credit Facility .
 13




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##### Table of Contents



Note 9  Earnings per share:
 Net income (loss) per share.
  Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Weighted average number of common and potential common shares
outstanding:Basic number of common shares outstanding
    
    
    25,041
    
    
    
    2,052
    
    
    
    23,118
    
    
    
    2,053Dilutive effect of stock option grants
    
    
    381
    
    
    
    620
    
    
    
    437
    
    
    
    631Dilutive effect of warrants
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    23Diluted number of common and potential common shares outstanding
    
    
    25,422
    
    
    
    2,693
    
    
    
    23,555
    
    
    
    2,707
 Note 10  Segment Reporting:
   Three Months
    
    Six MonthsEnded June 30, 2005
    
    Ended June 30, 2005Consol-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consol-N.A.
    
    Europe
    
    Elim
    
    idated
    
    N.A.
    
    Europe
    
    Elim
    
    idatedSegment Revenue:Net revenue from external
customers
    
    $
    18,202
    
    
    $
    8,081
    
    
    $
    
    
    
    $
    26,283
    
    
    $
    33,453
    
    
    $
    8,081
    
    
    $
    
    
    
    $
    41,534Intersegment revenue
    
    
    46
    
    
    
    516
    
    
    
    (562
    )
    
    
    0
    
    
    
    46
    
    
    
    516
    
    
    
    (562
    )
    
    
    0Net revenue by segment
    
    $
    18,248
    
    
    $
    8,597
    
    
    $
    (562
    )
    
    $
    26,283
    
    
    $
    33,499
    
    
    $
    8,597
    
    
    $
    (562
    )
    
    $
    41,534
 14




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##### Table of Contents



Three Months
    
    Six MonthsEnded June 30, 2005
    

Ended
June 30, 2005Consol-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consol-N.A.
    
    Europe
    
    Elim
    
    idated
    
    N.A.
    
    Europe
    
    Elim
    
    idatedSegment Operating Profit:Operating profit by segment
    
    $
    2,524
    
    
    $

    2,000
    
    
    $
    
    
    
    $
    4,524
    
    
    $
    5,069
    
    
    $
    2,000
    
    
    $
    
    
    
    $
    7,069Interest income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (232
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    222Currency exchange gain
(loss), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,272Included in Segment
Operating Profit:Depreciation and amortization
    
    $
    1,473
    
    
    $
    1,311
    
    
    $
    
    
    
    $
    2,784
    
    
    $
    2,593
    
    
    $
    1,311
    
    
    $
    
    
    
    $
    4,004Stock based compensation
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    476
    
    
    
    
    
    
    
    
    
    
    
    476$
    1,696
    
    
    $
    1,311
    
    
    $
    
    
    
    $
    3,007
    
    
    $
    3,069
    
    
    $
    1,311
    
    
    $
    
    
    
    $
    4,480
 June 30, 2005N.A.
    
    Europe
    
    ConsolidatedTotal Assets:Total assets by
segment
    
    $
    105,928
    
    
    $
    162,086
    
    
    $
    268,014
 Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2005
    
    2005Sales by Major Country:United States
    
    $
    18,202
    
    
    $
    33,453Germany
    
    
    3,798
    
    
    
    3,798United Kingdom
    
    
    2,848
    
    
    
    2,848Other, all foreign
    
    
    1,435
    
    
    
    1,435Total sales by major country
    
    $
    26,283
    
    
    $
    41,534
 June 30,2005Long-Lived Assets* by Major Country:United States
    
    $
    45,024Germany
    
    
    145,848Other, all foreign
    
    
    880Total long-lived assets by major country
    
    $
    191,752
 
 *
    
    Long-lived assets include the net book value of Property and equipment, Intangibles, such as
domain and trade names, service marks, customer relationships, panel members, and non-competition
agreements, Internal use software and Goodwill. Note 11  Taxes on income:
  For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Income before income taxes:Domestic
    
    $
    3,222
    
    
    $
    1,848
    
    
    $
    6,029
    
    
    $
    2,132Foreign
    
    
    1,092
    
    
    
    
    
    
    
    1,243
    
    
    
    62
 15




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##### Table of Contents



For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004$
    4,314
    
    
    $
    1,848
    
    
    $
    7,272
    
    
    $
    2,194Provision (benefit) for income taxes:Currently payable:Federal
    
    $
    (61
    )
    
    $
    93
    
    
    $
    188
    
    
    $
    66State
    
    
    48
    
    
    
    23
    
    
    
    281
    
    
    
    69Foreign
    
    
    704
    
    
    
    5
    
    
    
    714
    
    
    
    7Total current income tax provision (benefit)
    
    $
    691
    
    
    $
    121
    
    
    $
    1,183
    
    
    $
    142Deferred income tax provision (benefit):Federal
    
    $
    (11,878
    )
    
    $
    
    
    
    $
    (11,878
    )
    
    $
    State
    
    
    (3,838
    )
    
    
    
    
    
    
    (3,838
    )
    
    
    Foreign
    
    
    213
    
    
    
    
    
    
    
    213
    
    
    
    Total deferred income tax provision (benefit)
    
    $
    (15,503
    )
    
    $
    
    
    
    $
    (15,503
    )
    
    $
    Total income tax provision (benefit)
    
    $
    (14,812
    )
    
    $
    121
    
    
    $
    (14,320
    )
    
    $
    142
   June 30,
    
    December 31,2005
    
    2004Deferred tax assets (liabilities):Net operating loss carryforwards
    
    $
    10,427
    
    
    $
    14,108Unearned stock-based compensation
    
    
    3,686
    
    
    
    3,544Capitalized panel costs
    
    
    1,001
    
    
    
    1,102Federal and state tax credits
    
    
    2
    
    
    
    664Amortization of intangible assets acquired
    
    
    (1,325
    )
    
    
    Other deferred tax assets
    
    
    438
    
    
    
    399Net deferred tax asset
    
    
    14,229
    
    
    
    19,817Valuation allowance
    
    
    
    
    
    
    (19,817
    )Total net deferred tax assets
    
    $
    14,229
    
    
    $
    
    16




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##### Table of Contents



Note 12  Commitments and Contingencies:
 Legal Contingencies:
  17




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##### Table of Contents



Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our consolidated financial statements and related notes included
elsewhere in this Quarterly Report. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those discussed in
the section entitled Risk Factors in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 and in this Quarterly Report. Also see the section entitled Cautionary Note
Regarding Forward-Looking Statement contained in this Quarterly Report.
 Critical Accounting Policies and Estimates
   Goodwill.
 Results of Operations
 Three Months Ended June 30, 2005 Versus Three Months Ended June 30, 2004
 Net Revenue.
 18




---



##### Table of Contents



Gross Profit
 Selling, General and Administrative Expenses.
    19




---



##### Table of Contents



Panel Acquisition Expenses.
 Depreciation and Amortization Expenses.
 Research and Development Expenses.
 Interest Income (Expense), Net.
 Related Party Interest Income (Expense), Net.
 Other Income (Expense), Net.
 Provision (Benefit) for Income Taxes.
 20




---



##### Table of Contents



Net Income.
 Net Income per Common Share.
 Six Months Ended June 30, 2005 Versus Six Months Ended June 30, 2004
 Net Revenue.
 21




---



##### Table of Contents

'

Gross Profit
 Selling, General and Administrative Expenses.
    22




---



##### Table of Contents



Panel Acquisition Expenses.
 Depreciation and Amortization Expenses.
 Research and Development Expenses.
 Interest Income (Expense), Net.
 Related Party Interest Income (Expense), Net.
 Other Income (Expense), Net.
 Provision (Benefit) for Income Taxes.
  23




---



##### Table of Contents



Net Income.
 Net Income per Common Share.
 Liquidity and Capital Resources
      24




---



##### Table of Contents



25




---



##### Table of Contents



Years Ended December 31,Total atJune 30,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010 and2005
    
    2005 (1)
    
    2006
    
    2007
    
    2008
    
    2009
    
    thereafterContractual obligations:Capital lease payments
    
    $
    3,697
    
    
    $
    832
    
    
    $
    1,703
    
    
    $
    1,010
    
    
    $
    144
    
    
    $
    8
    
    
    $
    Long-term debt
    
    
    18,292
    
    
    
    1,667
    
    
    
    3,333
    
    
    
    3,333
    
    
    
    9,959
    
    
    
    
    
    
    
    Non-cancelable operating lease obligations
    
    
    13,483
    
    
    
    1,456
    
    
    
    3,110
    
    
    
    2,978
    
    
    
    2,658
    
    
    
    2,179
    
    
    
    1,102Other long-term liabilities
    
    
    141
    
    
    
    27
    
    
    
    58
    
    
    
    50
    
    
    
    6
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    35,613
    
    
    $
    3,982
    
    
    $
    8,204
    
    
    $
    7,371
    
    
    $
    12,767
    
    
    $
    2,187
    
    
    $
    1,102
 
 (1)
    
    Includes only the remaining six months of the year ending December 31, 2005.  Risk Factors
  If we are unable to maintain the size or demographic composition of the Greenfield Online panel,
our clients may stop using our products and services.
  26




---



##### Table of Contents



If the rate at which our panelists respond to our surveys decreases, we may not be able to meet our
clients needs.
  
    
    our email-based survey invitations are not received by our panelists due to the use of
spam-filtering and blocking software by individuals, corporations and Internet service
providers;
    
    our panelists become dissatisfied with the forms of participation incentives we offer;
or
    
    our panelists respond less frequently to our surveys, or stop responding altogether due
to excessive requests for participation from us or other researchers.
  If the rate at which our panelists respond to our surveys decreases, we may be required to expend
additional funds to retain our panelists or provide additional incentives to encourage panelist
participation.
  We derived approximately 37% of our total net revenue from ten clients in each of fiscal year 2004
and the three months ended June 30, 2005. If we were to lose, or if there were a material reduction
in business from, these clients, our net revenue might decline substantially.
  We may not be able to successfully compete with marketing research firms and other potential
competitors which may cause us to lose sales or experience lower margins on sales.
  27




---



##### Table of Contents



Consolidation in the marketing research industry may result in fewer potential clients for us and a
smaller market in general if companies with existing Internet-based panels combine with companies
without such panels.
  If our clients develop their own Internet-based panels, we may lose some or all of their business.
  If the marketplace significantly slows its migration from traditional data collection methods to
Internet-based marketing research data collection, our growth may slow or cease altogether.
  If we do not keep pace with technological change, we may be unable to implement our business
strategy successfully.
  28




---



##### Table of Contents



If we are unable to manage and support our growth effectively, we may not be able to execute our
business strategy successfully.
    If we are unable to achieve international growth of the Greenfield Online panel or to overcome
other risks of international operations, we may be unable to conduct business on a global level.
  
    
    more restrictive privacy laws;
    
    difficulty in recruiting and managing employees in foreign countries;
    
    aversion to U.S. companies or non-domestic companies in the regions where we plan to expand;
    
    unexpected changes in regulatory requirements;
    
    export controls relating to encryption technology;
    
    currency exchange rate fluctuations;
    
    problems collecting accounts receivable and longer collection periods;
    
    potentially adverse tax consequences;
    
    political instability; and
    
    Internet access restrictions.
  29




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##### Table of Contents



Currency
exchange rate fluctuations could lower our revenue and net income.
  We have significant operations in India that could be limited or prohibited by changes in the
political or economic stability of India or government policies in India or the United States.
  Acquisitions or investments in other companies may have a negative impact on our business and our
stock price.
  
    
    difficulties with the integration and assimilation of the acquired business, including
maintaining the frequency of survey participation of panelists who join our panel through
acquisitions, and operational inefficiencies resulting from operating with multiple and
potentially incompatible systems until integration is complete;
    
    diversion of our management teams attention from other business concerns;
    
    availability of favorable acquisition or investment financing;
    
    potential undisclosed liabilities associated with acquisitions;
    
    loss of clients resulting from their desire to diversify their online sample data
sources as we increase our market share by acquiring or investing in complementary
businesses;
    
    loss of key employees of any acquired business; and
    
    our ability to successfully operate and grow business units within the acquired
companies that provide products and services other than Internet survey solutions.
  Our success depends on our ability to retain the current members of our senior management team and
other key personnel.
  30




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##### Table of Contents



If we fail to continue to attract and retain project management professionals and other
highly-skilled personnel, we may be unable to successfully execute our business strategy.
  We may be at a competitive disadvantage if we are unable to protect our proprietary rights or if we
infringe on the proprietary rights of others, and related litigation could be time consuming and
costly.
   Fluctuations in our quarterly operating results may cause our stock price to decline and limit our
stockholders ability to sell our common stock in the public market.
  
    
    fluctuations in general economic conditions;
    
    demand for marketing research products and services generally;
    
    fluctuations in the marketing research budgets of the end-users serviced by our
marketing research clients;
    
    the failure of our large clients to win Internet-based marketing research project;
    
    fluctuations in foreign currency exchange rates;
    
    the development of products and services by our competitors; and
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##### Table of Contents




    
    project cancellations by our clients or changes in project completion dates by our
clients, effecting the timing of our recognition of revenue.
   We might have difficulty obtaining additional capital, which could prevent us from achieving our
business objectives. If we are successful in raising additional capital, it may have a dilutive
effect on our stockholders.
  Government regulations could limit our Internet activities or result in additional costs of doing
business and conducting marketing research on the Internet.
    32




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##### Table of Contents




    
    user privacy and expression;
    
    the rights and safety of children;
    
    intellectual property;
    
    information security;
    
    anti-competitive practices;
    
    the convergence of offline channels with Internet commerce; and
    
    taxation and pricing.
  Cautionary Note Regarding Forward-Looking Statements
  
    
    the acceptance of our Internet-based marketing research data collection products and
services by existing and potential clients;
    
    our ability to maintain and expand the Greenfield Online panel both domestically and internationally;
    
    our ability to successfully integrate our recent acquisitions;
    
    our ability to market our Internet survey solutions;
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##### Table of Contents




    
    our ability to continue to develop and improve our technology infrastructure;
    
    significant increases in competitive pressures in the marketing research data collection industry;
    
    our ability to attract and retain experienced project management professionals;
    
    the effect that the Do Not Call registry and other regulations may have on the adoption
of Internet-based marketing research data collection;
    
    the growth of Internet penetration outside the United States;
    
    our ability to expand internationally; and
    
    our ability to identify, consummate and integrate potential acquisition targets.
   
 Item 3: Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4: Controls and Procedures
   34




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##### Table of Contents



PART II   OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Number of Shares
    
    Number of SharesVoted For
    
    WithheldLise J. Buyer
    
    
    22,754,959
    
    
    
    188,587Charles W. Stryker
    
    
    22,877,113
    
    
    
    66,433
   
 Item 5. Other Information
  35




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##### Table of Contents



Item 6. Exhibits
  ExhibitNo.
    
    Description of Exhibits10.51
    
    Employment Agreement between Ciao AG and Maximillian Ulrich
Cartellieri with an effective date of April 6, 2005 (filed
herewith).10.52
    
    Employment Agreement between Ciao AG and Marcus Fredrick Paul
with an effective date of April 6, 2005 (filed herewith).10.53
    
    Employment Agreement between Ciao AG and Gunnar Piening with
an effective date of April 6, 2005 (filed herewith).10.54
    
    Letter of Engagement between Ciao SAS and Nicolas Metzke,
effective August 1, 2005 (filed herewith).10.55
    
    Amended and Restated Partner Agreement dated May 11, 2005 by
and between OTX Corporation, Zing Wireless, Inc. and
Greenfield Online, Inc. (filed herewith) (Certain information
in this Exhibit was omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential
treatment request under Rule 24b-2 of the Securities Exchange
Act of 1934, as amended).31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (filed herewith).
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##### Table of Contents



SIGNATURE
  GREENFIELD ONLINE, INC.By:
    
    /s/ Robert E. BiesRobert E. BiesExecutive Vice President andChief Financial Officer (and dulyauthorized officer)Dated: August 15, 2005
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description of Exhibits10.51
    
    Employment Agreement between Ciao AG and Maximillian Ulrich
Cartellieri with an effective date of April 6, 2005 (filed
herewith).10.52
    
    Employment Agreement between Ciao AG and Marcus Fredrick Paul
with an effective date of April 6, 2005 (filed herewith).10.53
    
    Employment Agreement between Ciao AG and Gunnar Piening with
an effective date of April 6, 2005 (filed herewith).10.54
    
    Letter of Engagement between Ciao SAS and Nicolas Metzke,
effective August 1, 2005 (filed herewith).10.55
    
    Amended and Restated Partner Agreement dated May 11, 2005 by
and between OTX Corporation, Zing Wireless, Inc. and
Greenfield Online, Inc. (filed herewith) (Certain information
in this Exhibit was omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential
treatment request under Rule 24b-2 of the Securities Exchange
Act of 1934, as amended).31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (filed herewith).
 38