**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
 
 **FORM
        10-K/A**
 **Amendment
        No. 2**
 
 (Mark
        one)
 x
              Annual
                  report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the fiscal year ended December 31,
                  2006
 
 
 o
              Transition
                  report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934
 Commission
        file number 001-15169
 
 **PERFICIENT,
        INC.**
 (Exact
        Name of Registrant as Specified in Its Charter)
  **Delaware**
                (State
                  or other jurisdiction
                  of
                incorporation
                  or organization)
              **No.
                  74-2853258**
                (I.R.S.
                  Employer Identification No.)
 
 **1120
        South Capital of Texas Highway, Building 3, Suite 220**
 **Austin,
        Texas 78746**
 (Address
        of principal executive offices)
  **(512)
        531-6000**
 (Registrant's
        telephone number, including area code)
  Securities
        registered pursuant to Section 12(b) of the
        Act:****
 **Common
        Stock, $0.001 par value**
 (Title
        of
        Class)
  Securities
        registered pursuant to Section 12(g) of the Act:**None**
  Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act. Yeso Noþ
  Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act. Yeso Noþ
 
 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 þ Noo
 
 Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K (Sec.229.405 of this chapter) is not contained herein, and
        will
        not be contained, to the best of registrant's knowledge, in definitive proxy
        or
        information statements incorporated by reference in Part III of this Form
        10-K
        or any amendment to this Form 10-K.  ̈
 
 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.
 
 Large
                  accelerated
                  filero
              Accelerated
                  filerþ
              Non-accelerated
                  filero
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Act). Yeso Noþ
  The
        aggregate market value of the voting stock held by non-affiliates of the
        Company
        was approximately $275.5 million on June 30, 2006 based on the last
        reported sale price of the Company's common stock on the NASDAQ National
        Market
        on June 30, 2006.
 
 As
        of
        February 26, 2007, there were 27,288,210 shares of Common Stock
        outstanding.
 
 Portions
        of the definitive proxy statement in connection with the 2007 Annual Meeting
        of
        Stockholders, which will be filed with the Securities and Exchange Commission
        no
        later than April 30, 2007, are incorporated by reference in Part III of this
        Form 10-K.
   
  **Perficient,
        Inc.**
 **Form
        10-K/A**
 **Introductory
        Note**
 
 
 This
        Amendment No. 2 to annual report on Form 10-K/A (“Form  10-K/A”) is
        being filed to amend our annual report on Form 10-K for the year ended December
        31, 2006, which was originally filed on March 5, 2007 and amended on March
        7,
        2007 (Original Form 10-K). Accordingly, pursuant to rule 12b-15 under the
        Securities Exchange Act of 1934, as amended, this Form 10-K/A contains the
        complete text of Items 7, 8 and 9A of Part II, Item 5 of Part IV and currently
        dated certificates are included as exhibits. Unaffected items have not been
        repeated in this Amendment No. 2.
 
 In
        August
        2007, it was determined that certain previously reported payments associated
        with our business acquisitions were incorrectly included as a component of
        cash
        flows provided by operating activities in the Company’s Consolidated Statements
        of Cash Flows. As a result, we have restated our Consolidated Statement of
        Cash
        Flows for the years ended December 31, 2006 and 2005 to reclassify such payments
        from cash flows provided by operating activities to cash flows used in investing
        activities. We have also revised our Notes to Consolidated Financial Statements
        as necessary to reflect the adjustments.
  The
        restatement adjustments had no impact on the previously issued Consolidated
        Balance Sheets, Consolidated Statements of Income and Consolidated Statements
        of
        Stockholders' Equity.
  **This
        amendment does not reflect events
        occurring after the filing of the Original Form 10-K, and does not modify
        or
        update the disclosures therein in any way other than as required to reflect
        the
        adjustments described above. Such events include among others, the events
        described in our quarterly report on Form 10-Q for the quarter ended March
        31,
        2007, the quarterly report on Form 10-Q for the quarter and year-to-date
        period
        ended June 30, 2007, and the events described in our current reports on Form
        8-K
        filed after the filing of the original Form 10-K. We will file with the
        Securities and Exchange Commission an amendment to our quarterly report on
        Form
        10-Q for the quarter ended March 31, 2007 to reflect changes therein required
        as
        a consequence of the adjustments described above.**
   
  **TABLE
        OF CONTENTS**
  PART IIItem
                    7.
                Management's
                    Discussion and Analysis of Financial Condition and Results of
                    Operations.
                1Item
                    8.
                Financial
                    Statements and Supplementary Data.
                11Item
                    9A.
                Controls
                    and Procedures.
                35PART
                    IVItem
                    15.
                Exhibits
                    and Financial Statement Schedules.
                38Signatures
                
                39
 i
  **PART
        II**
  **Item
                  7.**
              **Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations.**
  *You
        should read the following summary together with the more detailed business
        information and consolidated financial statements and related notes that
        appear
        elsewhere in this annual report and in the documents that we incorporate
        by
        reference into this annual report. This annual report may contain certain
        “forward-looking” information within the meaning of the Private Securities
        Litigation Reform Act of 1995. This information involves risks and
        uncertainties. Our actual results may differ materially from the results
        discussed in the forward-looking statements. Factors that might cause such
        a
        difference include, but are not limited to, those discussed in “Risk
        Factors.”*
 
 **Overview**
  We
        are an
        information technology consulting firm serving Global 2000 and large enterprise
        companies throughout the United States and Canada. We help clients gain
        competitive advantage by using Internet-based technologies to make their
        businesses more responsive to market opportunities and threats, strengthen
        relationships with customers, suppliers and partners, improve productivity
        and
        reduce information technology costs. Our solutions enable these benefits
        by
        integrating, automating and extending business processes, technology
        infrastructure and software applications end-to-end within an organization
        and
        with key partners, suppliers and customers. This provides real-time access
        to
        critical business applications and information and a scalable, reliable,
        secure
        and cost-effective technology infrastructure.
  *Services
        Revenues*
  Services
        revenues are derived from professional services performed developing,
        implementing, integrating, automating and extending business processes, and
        technology infrastructure and software applications. Most of our projects
        are
        performed on a time and materials basis, and a smaller amount of revenues
        is
        derived from projects performed on a fixed fee basis. Fixed fee engagements
        represented approximately 9% of our services revenues for the year ended
        December 31, 2006. For time and material projects, revenues is recognized
        and
        billed by multiplying the number of hours our professionals expend in the
        performance of the project by the established billing rates. For fixed fee
        projects, revenues are generally recognized using the proportionate performance
        method. Revenues on uncompleted projects are recognized on a
        contract-by-contract basis in the period in which the portion of the fixed
        fee
        is complete. Amounts invoiced to clients in excess of revenues recognized
        are
        classified as deferred revenues. The Company's average bill rates increased
        slightly in 2006. The Company is anticipating modest additional increases
        in
        2007. On most projects, we are also reimbursed for out-of-pocket expenses
        such
        as airfare, lodging and meals. These reimbursements are included as a component
        of revenues. The aggregate amount of reimbursed expenses will fluctuate
        depending on the location of our customers, the total number of our projects
        that require travel, and whether our arrangements with our clients provide
        for
        the reimbursement of travel and other project related expenses.
  *Software
        Revenues*
  Software
        revenues are derived from sales of third-party software. Revenues from sales
        of
        third-party software are recorded on a gross basis provided we act as a
        principal in the transaction. In the event we do not meet the requirements
        to be
        considered a principal in the software sale transaction and act as an agent,
        the
        revenues are recorded on a net basis. Software revenues are expected to
        fluctuate from quarter-to-quarter depending on our customers' demand for
        software products.
  *Cost
        of revenues*
  Cost
        of
        revenues consists primarily of cash and non-cash compensation and benefits
        associated with our technology professionals and subcontractors. Non-cash
        compensation includes stock compensation expenses arising from restricted
        stock
        and option grants to employees. Cost of revenues also includes third-party
        software costs, reimbursable expenses and other unreimbursed project related
        expenses. Project related expenses will fluctuate generally depending on
        outside
        factors including the cost and frequency of travel and the location of our
        customers. Cost of revenues does not include depreciation of assets used
        in the
        production of revenues.
    1
  *Gross
        Margins*
  Our
        gross
        margins for services are affected by the utilization rates of our professionals,
        defined as the percentage of our professionals' time billed to customers
        divided
        by the total available hours in the respective period, the salaries we pay
        our
        consulting professionals and the average billing rate we receive from our
        customers. If a project ends earlier than scheduled or we retain professionals
        in advance of receiving project assignments, or if demand for our services
        declines, our utilization rate will decline and adversely affect our gross
        margins. Subject to fluctuations resulting from our acquisitions, we expect
        these key metrics of our services business to remain relatively constant
        for the
        foreseeable future assuming there are no further declines in the demand for
        information technology software and services. Gross margin percentages of
        third
        party software sales are typically lower than gross margin percentages for
        services and the mix of services and software for a particular period can
        significantly impact total combined gross margin percentage for such period.
        In
        addition, gross margin for software sales can fluctuate due to pricing and
        other
        competitive pressures.****
  *Selling,
        General and Administrative Expenses*
  Selling,
        general and administrative expenses (“SG&A”) consist of salaries, bonuses,
        non-cash compensation, office costs, recruiting, professional fees, sales
        and
        marketing activities, training, and other miscellaneous expenses. Non-cash
        compensation includes stock compensation expenses related to restricted stock
        and option grants to employees and non-employee directors. We work to minimize
        selling costs by focusing on repeat business with existing customers and
        by
        accessing sales leads generated by our software business partners, most notably
        IBM, whose products we use to design and implement solutions for our clients.
        These partnerships enable us to reduce our selling costs and sales cycle
        times
        and increase win rates through leveraging our partners' marketing efforts
        and
        endorsements. A substantial portion of our SG&A costs are relatively fixed.
        As a result, we expect SG&A costs as a percentage of revenue to decline as
        we continue to increase revenues in 2007.
  *Plans
        for Growth and Acquisitions*
  Our
        goal
        is to continue to build one of the leading independent information technology
        consulting firms in North America by expanding our relationships with existing
        and new clients, leveraging our operations to expand nationally and continuing
        to make disciplined acquisitions. We believe the United States represents
        an
        attractive market for growth, primarily through acquisitions. As demand for
        our
        services grows, we believe we will attempt to increase the number of
        professionals in our 15 North American offices and to add new offices throughout
        the United States, both organically and through acquisitions. In addition,
        we
        believe our track record for identifying acquisitions and our ability to
        integrate acquired businesses helps us complete acquisitions efficiently
        and
        productively, while continuing to offer quality services to our clients,
        including new clients resulting from the acquisitions.
  Consistent
        with our strategy of growth through disciplined acquisitions, we consummated
        six
        acquisitions since January 1, 2005, including one in February
        2007.
  2
  **Results
        of Operations**
  The
        following table summarizes our results of operations as a percentage of total
        revenues:
  Revenues:
              
              **2006**
              
              
              **2005**
              
              
              **2004**Services
                  revenues
              
              
              85.6
              %
              
              
              86.3
              %
              
              
              73.6
              %Software
                  revenues
              
              
              9.0
              
              
              
              9.7
              
              
              
              22.4Reimbursed
                  expenses
              
              
              5.4
              
              
              
              4.0
              
              
              
              4.0Total
                  revenues
              
              
              100.0
              
              
              
              100.0
              
              
              
              100.0Cost
                  of revenues (exclusive of depreciation and amortization, shown
                  separately
                  below):Project
                  personnel costs
              
              
              52.3
              
              
              
              52.7
              
              
              
              44.3Software
                  costs
              
              
              7.5
              
              
              
              8.0
              
              
              
              19.3Reimbursable
                  expenses
              
              
              5.4
              
              
              
              4.0
              
              
              
              4.0Other
                  project related expenses
              
              
              1.3
              
              
              
              1.9
              
              
              
              0.5Total
                  cost of revenues
              
              
              66.5
              
              
              
              66.6
              
              
              
              68.1Services
                  gross margin
              
              
              37.4
              
              
              
              36.7
              
              
              
              39.2Software
                  gross margin
              
              
              16.1
              
              
              
              17.8
              
              
              
              13.9Total
                  gross margin
              
              
              35.3
              
              
              
              34.8
              
              
              
              33.3Selling,
                  general and administrative
              
              
              20.1
              
              
              
              18.5
              
              
              
              18.8Depreciation
                  and amortization
              
              
              2.7
              
              
              
              2.3
              
              
              
              2.1Income
                  from operations
              
              
              10.7
              
              
              
              12.6
              
              
              
              11.0Interest
                  expense, net
              
              
              (0.2
              )
              
              
              (0.7
              )
              
              
              (0.2
              )Income
                  before income taxes
              
              
              10.5
              
              
              
              11.9
              
              
              
              10.8Provision
                  for income taxes
              
              
              4.5
              
              
              
              4.6
              
              
              
              4.3Net
                  income
              
              
              6.0
              %
              
              
              7.3
              %
              
              
              6.5
              %
  
 **Year
        Ended December 31, 2006 Compared to Year Ended December 31,
        2005**
  *Revenues*.
        Total revenues increased 66% to $160.9 million for the year ended December
        31,
        2006 from $97.0 million for the year ended December 31, 2005. Services revenues
        increased 65% to $137.7 million in 2006 from $83.7 million in 2005. These
        increases were attributable to increased demand for the Company's services
        and
        to the acquisitions of Bay Street Solutions Inc. (“Bay Street”), Insolexen Corp.
        (“Insolexen”), and the Energy, Government and General Business (“EGG”) division
        of Digital Consulting & Software Services, Inc. in 2006 and the full year
        impact of the acquisitions of iPath and Vivare in 2005. Services revenue
        increased 23% due to organic services revenue growth for the year ended December
        31, 2006 compared to 14% for the year ended December 31, 2005. The Company
        calculates organic services revenue growth by measuring the trailing four
        quarters sequential quarterly services revenue growth for businesses that
        have
        been owned for at least two quarters.
 
 Additionally,
        the increase in services revenues resulted from increases in the number of
        projects. The average utilization rate of our professionals, excluding
        subcontractors, remained consistent at 83% for the years ended December 31,
        2006
        and 2005. The Company believes utilization rates will be similar in 2007.
        Software revenues increased 54% to $14.4 million in 2006 from $9.4 million
        in
        2004 mainly due to acquisitions and corresponding services revenue growth.
        Reimbursable expenses increased 127% to $8.8 million in 2006 from $3.9 million
        in 2005 due to acquisitions and an increased number of projects requiring
        consultant travel. We do not realize any profit on reimbursable
        expenses.
  *Cost
        of revenues*. Cost of revenues increased 66% to $107.2 million for the year
        ended December 31, 2006 from $64.6 million for the year ended December 31,
        2005.
        The increase in cost of revenues is attributable to an increase in the number
        of
        professionals as a result of organic growth in addition to the acquisitions
        of
        Bay Street, Insolexen, and EGG, an increase in bonus costs associated with
        strong operating performance, and stock compensation expense. The average
        number
        of professionals performing services, including subcontractors, increased
        to 686
        for the year ended December 31, 2006 from 431 for the year ended December
        31,
        2005. Stock compensation expense included in cost of revenues for the year
        ended
        December 31, 2006 was nearly $1 million. No stock compensation expense was
        recognized in cost of revenues prior to January 1, 2006. The increase in
        stock
        compensation expense is the result of our adoption of Statement of Financial
        Accounting Standards No. 123 (revised) (“SFAS 123R”),*Share Based
        Payment,*  on January 1, 2006. Costs associated with software
        sales increased 57% to $12.1 million in 2006 from $7.7 million in 2005 in
        connection with the increased software revenues in 2006 compared to
        2005.
   3
  *Gross
        Margin*. Gross margin increased 66% to $53.8 million for the year ended
        December 31, 2006 from $32.4 million for the year ended December 31, 2005.
        Gross
        margin as a percentage of revenues remained consistent at 33.4% for the years
        ended December 31, 2006 and 2005. Services gross margin increased to 37.4%
        in
        2006 from 36.7% in 2005 primarily due to**** an increase in
        average billing rates and improved project pricing. This increase was partially
        offset by $1 million of non-cash stock compensation expense recognized in
        cost
        of revenues during the year ended December 31, 2006, as discussed above.
        Excluding stock compensation expense, gross margin increased to 34% for the
        year
        ended December 31, 2006 from 33% for the year ended December 31, 2005. Software
        gross margin decreased to 16.1% in 2006 from 17.7% in 2005 primarily as a
        result
        of fluctuations in selling prices to customers due to fluctuations in vendor
        pricing based on market conditions at the time of the sales.
  *Selling,
        General and Administrative*. Selling, general and administrative expenses
        increased 80% to $32.3 million for the year ended December 31, 2006 from
        $17.9
        million for the year ended December 31, 2005 due primarily to an increase
        in
        bonus costs associated with strong operating performance of $3.5 million.
        We
        also experienced increases in sales related costs of $3.2 million, management
        personnel, support personnel and facilities related to our investment in
        our
        infrastructure, including improvements related to Sarbanes-Oxley of $2.3
        million. The acquisitions of Bay Street, Insolexen, and EGG during 2006 also
        contributed to the increase. Stock compensation expense included in selling,
        general and administrative expenses for the year ended December 31, 2006
        was
        $2.1 million compared to $264,000 for the year ended December 31, 2005. The
        increase in stock compensation expense is the result of our adoption of SFAS
        123R on January 1, 2006. Selling, general and administrative expenses as
        a
        percentage of revenues, excluding stock compensation, increased to 19% for
        the
        year ended December 31, 2006 from 18% for the year ended December 31, 2005
        due
        primarily to higher bonus and recruiting, partially offset by lower office
        costs, salaries, and professional fees. Stock compensation expense, as a
        percentage of services revenues, increased to 1.6% for the year ended December
        31, 2006 compared to 0.3% for the year ended December 31,
        2005.
  *Depreciation*. Depreciation expense increased 54% to $948,000 during 2006
        from approximately $615,000 during 2005. The increase in depreciation expense
        is
        due to the addition of software programs, servers, and other computer equipment
        to enhance our technology infrastructure and support our growth, both organic
        and acquisition-related. Depreciation expense as a percentage of total revenues
        was 0.6% for the years ended December 31, 2006 and 2005.
  *Intangibles
        Amortization*. Intangibles amortization expenses increased 115% to $3.5
        million for the year ended December 31, 2006 from approximately $1.6 million
        for
        the year ended December 31, 2005. The increase in amortization expense reflects
        the acquisition of intangibles acquired from Bay Street, Insolexen, and EGG
        and
        full year amortization of intangible assets acquired for iPath and
        Vivare.
  *Interest
        Expense*. Interest expense decreased 23% to $509,000 for the year ended
        December 31, 2006 compared to approximately $658,000 during the year ended
        December 31, 2005. This decrease is primarily due to a lower average amount
        of
        debt outstanding during 2006 compared to 2005. As of December 31, 2006, there
        was approximately $1.3 million outstanding on the acquisition line of credit
        and
        no amounts outstanding on the accounts receivable line of credit. Our
        outstanding borrowings on the acquisition line of credit had an average interest
        rate of 7.0% for the year ended December 31, 2006 while the average interest
        rate on our accounts receivable line of credit borrowings for the year ended
        December 31, 2006 was 7.96%. During 2006, we drew down $34.9 million on the
        accounts receivable line of credit and repaid $38.9 million.
  *Provision
        for Income Taxes*. We accrue a provision for federal, state and foreign
        income tax at the applicable statutory rates adjusted for non-deductible
        expenses. Our effective tax rate increased to 43.2% for the year ended December
        31, 2006 from 38.5% for the year ended December 31, 2005 as a result of
        non-deductible stock compensation related to incentive stock options included
        in
        our statement of operations in 2006 as a result of the adoption of SFAS 123R
        on
        January 1, 2006 and certain non-deductible compensation required by Section
        162(m) of the Internal Revenue Code, which imposes a limitation on the
        deductibility of certain compensation in excess of $1 million paid to covered
        employees .
   4
  **Year
        Ended December 31, 2005 Compared to Year Ended December 31,
        2004**
  *Revenues*.
        Total revenues increased 65% to $97.0 million for the year ended December
        31,
        2005 from $58.8 million for the year ended December 31, 2004. Services revenues
        increased 93% to $83.7 million in 2005 from $43.3 million in 2004. These
        increases were attributable to increased demand for the Company's services
        and
        to the acquisitions of iPath Solutions, Ltd. (“iPath”) and Vivare, LP (“Vivare”)
        in 2005 and the full year impact of the acquisitions of Genisys Consulting,
        Inc.
        (“Genisys”), Meritage Technologies, Inc. (“Meritage”) and ZettaWorks LLC
        (“Zettaworks”) in 2004.
  Additionally,
        the increase in services revenues resulted from increases in average project
        size and quantity of projects. The average utilization rate of our
        professionals, excluding subcontractors, remained relatively stable at 83%
        for
        the year ended December 31, 2005. For the years ended December 31, 2005 and
        2004, 9% and 17%, respectively, of our revenues was derived from sales to
        IBM.
        While the dollar amount of revenues from IBM has remained relatively constant
        over the past two years, the percentage of total revenues from IBM has decreased
        as a result of the Company's growth and corresponding customer diversification.
        Software revenues decreased 29% to $9.4 million in 2005 from $13.2 million
        in
        2004 due to lower client demand in the fourth quarter of 2005 compared to
        2004.
        Software revenues are generated from the sale of third party software except
        for
        approximately $282,000 from the sale of internally developed software recognized
        in 2005. Reimbursable expenses increased 65% to $3.9 million in 2005 from
        $2.3
        million in 2004.
  *Cost
        of revenues*. Cost of revenues increased 61% to $64.6 million for the year
        ended December 31, 2005 from $40.0 million for the year ended December 31,
        2004.
        The increase in cost of revenues is attributable to an increase in the number
        of
        professionals due to hiring and the acquisitions of ZettaWorks, iPath, and
        Vivare. The average number of professionals performing services, including
        subcontractors, increased to 431 for the year ended December 31, 2005 from
        220
        for the year ended December 31, 2004. In addition, the Company changed its
        internal policy for the carry-over of billable employee's accrued vacation
        hours
        which we had allowed as of December 31, 2004, but discontinued this policy
        and
        allowed no more vacation hour carry-overs as of December 31, 2005. As a result,
        the Company had approximately $237,000 of billable employee's accrued vacation
        expense as of December 31, 2004 which was forfeited during 2005. Costs
        associated with software sales decreased 32% to $7.7 million in 2005 from
        $11.3
        million in 2004 in connection with the decreased software revenues in 2005
        compared to 2004.
 
 *Gross
        Margin*. Gross margin increased 72% to $32.4 million for the year ended
        December 31, 2005 from $18.8 million for the year ended December 31, 2004.
        Gross
        margin as a percentage of total revenues increased to 33.4% in 2005 from
        32.0%
        in 2004. The increase in gross margin as a percentage of total revenues is
        due
        to a mix of improved software margins off-set by lower services margins.
        Services gross margin decreased slightly to 36.7% in 2005 from 39.2% in 2004
        primarily due to lower gross margins on consulting services contracts acquired
        in the acquisitions of ZettaWorks and iPath. These businesses are national
        practices rather than local practices and, as a result, they incur a greater
        amount of unreimbursed travel expenses for delivery of services outside of
        their
        local geographic market. Unreimbursed expenses negatively impact our services
        gross margins. Services gross margins have also been impacted by the acquisition
        of Vivare which has slightly lower services gross margins than our historical
        average. Software gross margin increased to 17.7% in 2005 from 13.9% in 2004
        primarily as a result of fluctuations in selling prices to customers based
        on
        fluctuations in vendor pricing based on market conditions at the time of
        the
        sales and from the sale of internally developed software representing software
        revenues of approximately $282,000 for which there was no associated cost
        of
        revenues.
  *Selling,
        General and Administrative*. Selling, general and administrative expenses
        increased 62% to $17.9 million for the year ended December 31, 2005 from
        $11.1
        million for the year ended December 31, 2004 due primarily to increases in
        the
        cost of compliance with the Sarbanes-Oxley Act of 2002, professional service
        fees associated with external audits, and additions of sales personnel,
        management personnel, support personnel and facilities related to the
        acquisitions of iPath and Vivare in 2005 and the full year impact of the
        acquisitions of Genisys, Meritage and Zettaworks in 2004. However, selling,
        general and administrative expenses as a percentage of total revenues decreased
        to 18.5% for the year ended December 31, 2005 from 18.8% for the year ended
        December 31, 2004. The decrease in selling, general and administrative expenses
        as a percentage of services revenues is the result of operational efficiencies
        and economies of scale as the Company has grown. However, these cost
        efficiencies have been off-set by the cost of compliance with the Sarbanes-Oxley
        Act of 2002 and regular external audit costs which resulted in total costs
        to
        the Company during 2005 of approximately $837,000 compared to approximately
        $145,000 in 2004. In addition, the Company changed its internal policy for
        the
        carry-over of selling, general and administrative employee's accrued vacation
        hours which we had allowed as of December 31, 2004, but discontinued this
        policy
        and allowed no more vacation hour carry-overs as of December 31, 2005. As
        a
        result, the Company had approximately $48,000 of selling, general and
        administrative employee's accrued vacation expense as of December 31, 2004
        which
        was forfeited during 2005. Also, during 2005, the Company reduced its allowance
        for doubtful accounts by approximately $104,000 as a result of improved
        collections on accounts receivable. Finally, during 2005, the Company realized
        approximately $300,000 in reduced organizational meeting expenses as compared
        to
        2004.
  *Depreciation*.
        Depreciation expense increased 20% to approximately $615,000 during 2005
        from
        approximately $512,000 during 2004. The increase is due to a general increase
        in
        purchases of fixed assets to accommodate growth.
 
 *Intangibles
        Amortization*. Intangibles amortization expenses, arising from acquisitions,
        increased 131% to approximately $1.6 million for the year ended December
        31,
        2005 from approximately $0.7 million for the year ended December 31, 2004.
        The
        increase in amortization expense is the result of increased acquisition
        activity.
 
  5
  *Interest
        Expense*. Interest expense increased 380% to approximately $659,000 for the
        year ended December 31, 2005 compared to approximately $137,000 during the
        year
        ended December 31, 2004. This increase in interest expense is due to the
        interest expense related to the acquisition line of credit which was drawn
        down
        in connection with the acquisitions of Meritage in June 2004 and ZettaWorks
        in
        December 2004, and on draws on the accounts receivable line of credit in
        connection with the acquisitions of iPath and Vivare. As of December 31,
        2005,
        there was approximately $2.7 million outstanding on the acquisition line
        of
        credit and approximately $4.0 million outstanding on the accounts receivable
        line of credit. During 2005, we drew down $12 million on the accounts receivable
        line of credit and repaid $8 million.
  *Provision
        for Income Taxes*. We accrue a provision for federal, state and foreign
        income tax at the applicable statutory rates adjusted for non-deductible
        expenses. Our effective tax rate decreased slightly to 38.5% for the year
        ended
        December 31, 2005 from 39.2% for the year ended December 31, 2004 as a result
        of
        a decrease in certain non-deductible expenses. We had deferred tax assets
        resulting from net operating and capital losses of acquired companies amounting
        to approximately $2.8 million for which we had a valuation allowance of
        approximately $2.3 million. We had additional deferred tax assets of
        approximately $0.4 million from temporary differences between book and tax
        valuations. These combined deferred tax assets of $0.9 million were off-set
        by
        deferred tax liabilities of $0.7 million related to identifiable intangibles,
        goodwill, and cash to accrual adjustments. Any reversal of the valuation
        allowance on the deferred tax assets will be adjusted against goodwill and
        will
        not have an impact on our statement of operations. All of the net operating
        and
        capital losses relate to acquired entities, and as such are subject to annual
        limitations on usage under the “change in control” provisions of the Internal
        Revenues Code.
 
 **Liquidity
        and Capital Resources**
  In August 2007, it was determined that the Consolidated Statement of Cash
        Flows
        should be restated to properly reflect certain transactions related to our
        business acquisitions that were incorrectly classified as operating cash
        flows.  As a result of these errors and as more fully discussed in the
        Introductory Note to this Amendment No. 2, certain financial and other
        information contained herein have been restated to reflect adjustments described
        in Note 2 to the accompanying consolidated financial statements. Please
        read Note 2 for a discussion of the adjustments. The discussion of
        liquidity and capital resources below is based on the restated Consolidated
        Statements of Cash Flows.
 
 Selected
        measures of liquidity and capital resources are as follows (in
        millions):
  **As
                  of December 31,****2006**
              
              
              **2005**Cash
                  and cash equivalents
              
              $
              4.5
              
              
              $
              5.1Working
                  capital
              
              
              24.9
              
              
              
              17.1
  ***Net
        Cash Provided By Operating Activities***
  We
        expect
        to fund our operations from cash generated from operations and short-term
        borrowings as necessary from our credit facility. We believe that these capital
        resources will be sufficient to meet our needs for at least the next twelve
        months. Net cash generated by operations for the year ended December 31,
        2006
        was $13.1 million compared to $9.2 million for the year ended December 31,
        2005.
        The primary components of operating cash flows for the year ended December
        31,
        2006 were net income after adding back non-cash expenses of $17.1 million
        offset
        by increases to accounts receivable of $5.8 million, decreases to accounts
        payable of $1.3 million, and decreases to other liabilities of $0.7 million.
        The
        increase in operating cash flow is due primarily to an increase in non-cash
        stock compensation of $2.9 million and intangibles amortization of $1.8
        million. The increase in accounts receivable is primarily related to
        acquisitions. No significant changes occurred in the average days sales
        outstanding.
 
 ***Net
        Cash Used in Investing Activities***
  For
        the
        year ended December 31, 2006, we used approximately $17.2 million in cash,
        net
        of cash acquired, primarily to acquire Bay Street, Insolexen, and EGG. In
        addition, we used approximately $1.5 million during 2006 to purchase equipment
        fixed assets and used approximately $136,000 for software capitalized for
        internal use to expand our information management systems. For the year ended
        December 31, 2005, we used approximately $11.2 million in cash, net of cash
        acquired, primarily to acquire iPath and Vivare. In addition, during 2005
        we
        used approximately $691,000 to purchase equipment fixed assets and used
        approximately $599,000 for software capitalized for internal use to expand
        our
        information management systems.
 
 ***Net
        Cash from Financing Activities***
  Our
        financing activities consisted primarily of net payments totaling $4.0 million
        on our accounts receivable line of credit and $1.3 million of payments on
        long
        term debt. During 2006, we received $4.2 million from exercises of stock
        options
        and warrants and sales of stock through the Company's Employee Stock Purchase
        Program. In addition, we realized tax benefits on stock option exercises
        of $6.6
        million during 2006. Prior to the adoption of Statement of Financial Accounting
        Standards No. 123R (As Amended),*Share Based
        Payment*  (“SFAS 123R”) in 2006, the tax benefit on stock option
        exercises was classified as an activity in operating cash flows.
   6
  ***Availability
        of Funds from Bank Line of Credit Facilities***
  We
        have a
        $51.3 million credit facility with Silicon Valley Bank and Key Bank
        National Association (“Key Bank”) comprising a $25 million accounts
        receivable line of credit and a $26.3 million acquisition line of credit.
        Borrowings under the accounts receivable line of credit bear interest at
        the
        bank's prime rate, or 8.25%, as of December 31, 2006. As of
        December 31, 2006, there were no amounts outstanding under the accounts
        receivable line of credit and $25 million of available borrowing capacity,
        excluding $450,000 reserved for two outstanding letters of credit to secure
        facility leases. In January 2007, the letters of credit decreased $50,000.
        This accounts receivable line of credit matures in June 2008.
 
 Our
        $26.3 million term acquisition line of credit with Silicon Valley Bank and
        Key Bank provides an additional source of financing for certain qualified
        acquisitions. As of December 31, 2006 the balance outstanding under this
        acquisition line of credit was $1.3 million. Borrowings under this
        acquisition line of credit bear interest equal to the four year U.S. Treasury
        note yield plus 3% based on the spot rate on the day the draw is processed
        (7.69% at December 31, 2006). Borrowings under this acquisition line are
        repayable in thirty-six equal monthly installments, after the initial interest
        only period which continues through June 29, 2007. Draws under this acquisition
        line may be made through June 29, 2008. We currently have $25 million of
        available borrowing capacity under this acquisition line of credit.
  As
        of
        December 31, 2006, we were in compliance with all covenants under our credit
        facility and we expect to be in compliance during the next twelve months.
        Substantially all of our assets are pledged to secure the credit
        facility.
  There
        were no material changes outside the ordinary course of our business in lease
        obligations or other contractual obligations in 2006. We believe that the
        current available funds, access to capital from our credit facilities, possible
        capital from registered placements of equity through the shelf registration,
        and
        cash flows generated from operations will be sufficient to meet our working
        capital requirements and meet our capital needs to finance acquisitions for
        the
        next twelve months.
 
 We
        have
        filed a shelf registration statement with the Securities and Exchange Commission
        to allow for offers and sales of our common stock from time to time.
        Approximately 5 million shares of common stock may be sold under this
        registration statement if we choose to do so.
  ***Contractual
        Obligations***
  In
        connection with certain of our acquisitions, we were required to
        establish various letters of credit totaling $450,000 to serve as
        collateral to secure facility leases. The letters of credit reduce the
        borrowings available under our accounts receivable line of credit. In January
        2007, the letters of credit decreased $50,000.
  In
        connection with the acquisition of Javelin, we issued $1.5 million in notes,
        which have been fully repaid since April 2006.
  We
        have
        incurred commitments to make future payments under contracts such as leases
        and
        certain long-term liabilities. Maturities, including estimated interest,
        under
        these contracts are set forth in the following table as of December 31, 2006
        (in
        thousands):
  **Payments
                  Due by Period****Contractual
                  Obligations**
              
              **Total**
              
              
              **Less
                  Than**
                **1
                  Year**
              
              
              **1-3**
                **Years**
              
              
              **3-5**
                **Years**
              
              
              **More**
                **Than
                  5**
                **Years**Long-term
                  debt obligations, including estimated interest
              
              $
              1,390
              
              
              $
              1,251
              
              
              $
              139
              
              
              $
              --
              
              
              $
              --Operating
                  lease obligations
              
              
              4,683
              
              
              
              1,355
              
              
              
              2,148
              
              
              
              1,119
              
              
              
              61Total
              
              $
              6,073
              
              
              $
              2,606
              
              
              $
              2,287
              
              
              $
              1,119
              
              
              $
              61
 
 See
        Note
        10 - "Income Taxes" in Notes to Consolidated Financial Statements for
        information related to the Company's obligations for taxes.
 
 If
        our
        capital is insufficient to fund our activities in either the short or long
        term,
        we may need to raise additional funds. In the ordinary course of business,
        we
        may engage in discussions with various persons in connection with additional
        financing. If we raise additional funds through the issuance of equity
        securities, our existing stockholders' percentage ownership will be diluted.
        These equity securities may also have rights superior to our common stock.
        Additional debt or equity financing may not be available when needed or on
        satisfactory terms. If adequate funds are not available on acceptable terms,
        we
        may be unable to expand our services, respond to competition, pursue acquisition
        opportunities or continue our operations.
   7
  **Subsequent
        Event**
 
 On
        February 20, 2007, the Company consummated the acquisition of E-Tech
        Solutions.  The Company paid approximately $12.2 million consisting of
        approximately $6.1 million in cash and $6.1 million worth of the Company's
        common stock, subject to certain post-closing adjustments.  As required, we
        will use the closing price of the Company's common stock at or near the close
        date in reporting the value of the stock consideration paid in the acquisition,
        which was $20.34. The Company issued 306,248 shares of its common stock in
        connection with the acquisition.
 
 **Critical
        Accounting Policies**
  The
        Company's accounting policies are described in Note 3 to the Consolidated
        Financial Statements. The Company believes its most critical accounting policies
        include revenue recognition, estimating the allowance for doubtful accounts,
        accounting for goodwill and intangible assets, purchase accounting allocation,
        accounting for stock-based compensation, deferred income taxes and estimating
        the related valuation allowances.
 
 *Revenue
        Recognition and Allowance for Doubtful Accounts*
  Consulting
        revenues are comprised of revenues from professional services fees recognized
        primarily on a time and materials basis as performed. For fixed fee engagements,
        revenues is recognized using the proportionate performance method based on
        the
        ratio of hours expended to total estimated hours. Revenues on uncompleted
        projects are recognized on a contract-by-contract basis in the period in
        which
        the portion of the fixed fee is complete. Billings in excess of costs plus
        earnings are classified as deferred revenues. Our normal payment terms are
        net
        30 days. Reimbursements for out-of-pocket expenses are included in gross
        revenues. Revenues from the sale of third-party software are recorded on
        a gross
        basis provided that we act as the principal in the transaction. In the event
        we
        do not meet the requirements to be considered the principal in the software
        sale
        transaction, we record the revenues on a net basis. There is no effect on
        net
        income between recording the software sales on a gross basis versus a net
        basis.
  Revenues
        are recognized when the following criteria are met: (1) persuasive evidence
        of the customer arrangement exists, (2) fees are fixed and determinable,
        (3) delivery and acceptance has occurred, and (4) collectibility is
        deemed probable. We consider a non-cancelable fully executed agreement or
        client
        purchase order to be persuasive evidence of an arrangement. We consider delivery
        to have occurred upon the rendering of services or delivery of software to
        the
        client. We consider the fee to be fixed or determinable if the fee is not
        subject to adjustment, or if we have not granted extended payment terms to
        the
        client. We consider collection to be probable if our internal credit analysis
        indicates that the client will be able to pay amounts as they become due
        under
        the arrangement.
  For
        our
        sales arrangements that contain multiple revenue elements, such as software
        licenses, professional services and software maintenance, we first determine
        whether the arrangement is within the scope of Emerging Issues Task Force
        ("EITF") EITF No. 00-21 ("EITF 00-21"), "Revenue Arrangements with Multiple
        Deliverables" or Statement of Position ("SOP") 97-2 ("SOP 97-2"), "Software
        Revenue Recognition". Under EITF 00-21, separate contracts to provide services
        or for the sale of software to the same client must be evaluated as a multiple
        element arrangement if they are entered into in the same time frame. We
        recognize revenue on arrangements with multiple deliverables as separate
        units
        of accounting only if certain criteria are met. In general, a deliverable
        meets
        the separation criteria if the deliverable has standalone value to the client
        and if there is objective and reliable evidence of the fair value of all
        remaining undelivered elements in the arrangement. We allocate the total
        arrangement consideration to each separate unit of accounting based on the
        relative fair value of each separate unit of accounting. The amount of
        arrangement consideration that is allocated to a delivered unit of accounting
        is
        limited to the amount that is not contingent upon the delivery of another
        separate unit of accounting. All deliverables of the Company's multiple element
        arrangements meet these criteria.
 
 We
        follow
        very specific and detailed guidelines, discussed above, in determining revenues;
        however, certain judgments and estimates are made and used to determine revenues
        recognized in any accounting period. Material differences may result in the
        amount and timing of revenues recognized for any period if different conditions
        were to prevail.
  Revenues
        from internally developed software are allocated to maintenance and support
        and
        are recognized ratably over the maintenance term (typically one
        year).
  Revenues
        allocated to training and consulting service elements is recognized as the
        services are performed. Our consulting services are not essential to the
        functionality of our products as such services are available from other
        vendors.
  Our
        allowance for doubtful accounts is based upon specific identification of
        likely
        and probable losses. Each accounting period, we evaluate accounts receivable
        for
        risk associated with a client's inability to make contractual payments or
        unresolved issues with the adequacy of our services. Billed and unbilled
        receivables that are specifically identified as being at risk are provided
        for
        with a charge to revenue in the period the risk is identified. We use
        considerable judgment in assessing the ultimate realization of these
        receivables, including reviewing the financial stability of the client,
        evaluating the successful mitigation of service delivery disputes, and gauging
        current market conditions. If our evaluation of service delivery issues or
        a
        client's ability to pay is incorrect, we may incur future reductions to
        revenue.
   8
  
 *Goodwill,
        Other Intangible Assets and Impairment of Long-Lived Assets*
 
 Business
        acquisitions typically result in goodwill and other intangible assets, and
        the
        recorded values of those assets may become impaired in the future. The
        determination of the value of such intangible assets requires us to make
        estimates and assumptions that affect our consolidated financial statements.
        The
        Company follows Statement of Financial Accounting Standards (“SFAS”) No.
        142,*Goodwill and Other Intangible Assets.*  In accordance
        with SFAS No. 142, we assess our goodwill on October 1 of each year or more
        frequently if events or changes in circumstances indicate that goodwill might
        be
        impaired. Our judgments regarding the existence of impairment indicators
        and
        future cash flows related to intangible assets are based on operational
        performance of the businesses, market conditions and other factors. Future
        events could cause us to conclude that impairment indicators exist and that
        goodwill is impaired. Any resulting impairment loss could have an adverse
        impact
        on our results of operations by decreasing net income. Management assessed
        goodwill for impairment at October 1, 2006. This analysis indicated that
        there
        was no impairment of the carrying values of goodwill.
 
 We
        evaluate long-lived tangible assets and intangible assets other than goodwill
        in
        accordance with SFAS No. 144,*Accounting for the Impairment of
        Long-Lived Assets*. Long-lived assets held and used are reviewed for
        impairment whenever events or changes in circumstances indicate that their
        net
        book value may not be entirely recoverable. When such factors and circumstances
        exist, we compare the projected undiscounted future cash flows associated
        with
        the related asset or group of assets over their estimated useful lives against
        their respective carrying amounts. Impairment, if any, is based on the excess
        of
        the carrying amount over the fair value of those assets and is recorded in
        the
        period in which the determination was made.
 
 *Purchase
        Price Allocation*
 
 We
        allocate the purchase price of our acquisitions to the assets and liabilities
        acquired, including identifiable intangible assets, based on their respective
        fair values at the date of acquisition. Some of the items, including accounts
        receivable, property and equipment, other intangible assets, certain accrued
        liabilities, and other reserves require a high degree of management judgment.
        Certain estimates may change as additional information becomes available.
        Goodwill is assigned at the enterprise level and is deductible for tax purposes
        for certain types of acquisitions. The purchase price is allocated to
        intangibles based on management's estimate and an independent valuation.
        Management finalizes the purchase price allocation within twelve months of
        the
        acquisition date as certain initial accounting estimates are
        resolved.
 
 *Accounting
        for Stock-Based Compensation*
  We
        adopted SFAS No. 123R,*Share-Based Payment*, on January 1, 2006, using
        the modified prospective application transition method. SFAS No. 123R requires
        that the costs of employee share-based payments be measured at fair value
        on the
        awards' grant date and recognized in the financial statements over the requisite
        service period.
  The
        Company estimates the fair value of stock option awards on the date of grant
        utilizing a modified Black-Scholes option pricing model. The Black-Scholes
        option valuation model was developed for use in estimating the fair value
        of
        short-term traded options that have no vesting restrictions and are fully
        transferable. However, certain assumptions used in the Black-Scholes model,
        such
        as expected term, can be adjusted to incorporate the unique characteristics
        of
        the Company's stock option awards. Option valuation models require the input
        of
        somewhat subjective assumptions including expected stock price volatility
        and
        expected term. The Company believes it is unlikely that materially different
        estimates for the assumptions used in estimating the fair value of stock
        options
        granted would be made based on the conditions suggested by actual historical
        experience and other data available at the time estimates were made. Restricted
        stock awards are valued at the price of our common stock on the date of the
        grant.
  Prior
        to
        January 1, 2006, the Company accounted for share-based compensation using
        the intrinsic value method prescribed by Accounting Principles Board Opinion
        No. 25,*Accounting for Stock Issued to Employees* , and
        related interpretations and elected the disclosure option of SFAS No. 123
        as
        amended by SFAS No. 148,*Accounting for Stock-Based Compensation
        - Transition and Disclosure* . SFAS No. 123 required that companies either
        recognize compensation expense for grants of stock, stock options and other
        equity instruments based on fair value, or provide pro forma disclosure of
        net
        income and earnings per share in the notes to the financial statements.
        Accordingly, the Company measured compensation expense for stock options
        as the
        excess, if any, of the estimated fair market value of the Company's stock
        at the
        date of grant over the exercise price. The Company provided pro forma effects
        of
        this measurement in a footnote to its financial statements.
  *Income
        Taxes*
  To
        record
        income tax expense, we are required to estimate our income taxes in each
        of the
        jurisdictions in which we operate. In addition, income tax expense at interim
        reporting dates requires us to estimate our expected effective tax rate for
        the
        entire year. This involves estimating our actual current tax liability together
        with assessing temporary differences that result in deferred tax assets and
        liabilities and expected future tax rates.
   9
 
 Management believes that our net deferred tax asset should continue to be
        reduced by a valuation allowance to an amount we believe is more likely than
        not
        to be realized. Future operating results and projections could alter this
        conclusion, potentially resulting in an increase or decrease in the valuation
        allowance. Since the valuation allowance relates solely to net operating
        and
        capital losses from acquired companies which are subject to usage limitations,
        any decrease in the valuation allowance will be applied first to reduce goodwill
        and then to reduce other acquisition related non-current intangible assets
        to
        zero. Any remaining decrease in the valuation allowance would be recognized
        as a
        reduction of income tax expense.
  **Recent
        Accounting Pronouncements**
  In
        September 2006, the SEC issued Staff Accounting Bulletin 108 (“SAB 108”), which
        expresses the Staff's views regarding the process of quantifying financial
        statement misstatements. The bulletin was effective at fiscal year end 2006.
        The
        implementation of this bulletin had no impact on the Company's results of
        operations, cash flows or financial position.
 
 In
        September 2006, the FASB issued Statement No. 157,*Fair Value
        Measurements* ("SFAS 157"). SFAS 157 defines fair value, establishes a
        framework for measuring fair value in GAAP, and expands disclosures about
        fair
        value measurements. SFAS 157 will be applied prospectively and will be effective
        for periods beginning after November 15, 2007. The Company is currently
        evaluating the effect, if any, of SFAS 157 on the Company's consolidated
        financial statements.
 
 In
        June
        2006, the FASB issued FASB Interpretation ("FIN") No. 48,*Accounting for
        Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109*
        ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute
        for the financial statement recognition and measurement of a tax position
        taken
        or expected to be taken in a tax return. FIN 48 also provides guidance on
        derecognition, classification, treatment of interest and penalties, and
        disclosure of such positions. FIN 48 will be applied prospectively and will
        be
        effective for fiscal years beginning after December 31, 2006. The Company
        will
        adopt the provisions of FIN 48 in the first quarter of 2007 as required.
        The
        adoption of FIN 48 is not expected to have a material effect on the Company's
        consolidated financial statements.
 
 In
        June
        2006, the EITF ratified EITF Issue 06-3,*How Taxes Collected From Customers
        and Remitted to Governmental Authorities Should Be Presented in the Income
        Statement (That Is, Gross versus Net Presentation)* . A consensus was
        reached that entities may adopt a policy of presenting taxes in the income
        statement on either a gross or net basis. An entity should disclose its policy
        of presenting taxes and the amount of any taxes presented on a gross basis
        should be disclosed, if significant. The guidance is effective for periods
        beginning after December 15, 2006. We present revenues net of taxes. EITF
        06-3
        will not impact the method for recording these sales taxes in our consolidated
        financial statements.
 
 **Off-Balance
        Sheet Arrangements**
  The
        Company currently has no off-balance sheet arrangements, except operating
        lease
        commitments as disclosed in Footnote 11 to the consolidated financial
        statements.
 
  10
  
 **Item
        8.** **Financial Statements and Supplementary
        Data.**
  **PERFICIENT,
        INC.**
  **CONSOLIDATED
        BALANCE SHEETS**
 **AS
        OF DECEMBER 31, 2006 AND 2005**
 
 **December
                  31,****2006**
              
              
              **2005****ASSETS**
              
              (In
                  thousands, except share data)Current
                  assets:Cash
                  and cash equivalents
              
              $
              4,549
              
              
              $
              5,096Accounts
                  receivable, net of allowance for doubtful accounts of $707 in 2006
                  and
                  $367 in 2005
              
              
              38,600
              
              
              
              23,251Prepaid
                  expenses
              
              
              1,171
              
              
              
              887Other
                  current assets
              
              
              2,799
              
              
              
              1,530Total
                  current assets
              
              
              47,119
              
              
              
              30,764Property
                  and equipment, net
              
              
              1,806
              
              
              
              960Goodwill
              
              
              69,170
              
              
              
              46,263Intangible
                  assets, net
              
              
              11,886
              
              
              
              5,768Other
                  non-current assets
              
              
              1,019
              
              
              
              1,180Total
                  assets
              
              $
              131,000
              
              
              $
              84,935**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Accounts
                  payable
              
              $
              5,025
              
              
              $
              3,774Current
                  portion of long-term debt
              
              
              1,201
              
              
              
              1,337Other
                  current liabilities
              
              
              16,034
              
              
              
              8,331Note
                  payable to related parties
              
              
              --
              
              
              
              244Total
                  current liabilities
              
              
              22,260
              
              
              
              13,686Long-term
                  debt, less current portion
              
              
              137
              
              
              
              5,338Deferred
                  income taxes
              
              
              1,251
              
              
              
              --Total
                  liabilities
              
              
              23,648
              
              
              
              19,024Commitments
                  and contingencies (see Note 6 and 11)Stockholders'
                  equity:Common
                  stock ($0.001 par value per share; 50,000,000 shares authorized
                  and
                  26,699,974 shares issued and outstanding as of December 31, 2006;
                  23,294,509 shares issued and outstanding as of December 31, 2005)
              
              
              27
              
              
              
              23Additional
                  paid-in capital
              
              
              147,028
              
              
              
              115,120Accumulated
                  other comprehensive loss
              
              
              (125
              )
              
              
              (87
              )Accumulated
                  deficit
              
              
              (39,578
              )
              
              
              (49,145
              )Total
                  stockholders' equity
              
              
              107,352
              
              
              
              65,911Total
                  liabilities and stockholders' equity
              
              $
              131,000
              
              
              $
              84,935
  *See
        accompanying notes to consolidated financial statements.*
   11
  
 **PERFICIENT, INC.**
  **CONSOLIDATED
        STATEMENTS OF INCOME**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**
 
 **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Revenues
              
              (In
                  thousands, except share data)Services
              
              $
              137,722
              
              
              $
              83,740
              
              
              $
              43,331Software
              
              
              14,435
              
              
              
              9,387
              
              
              
              13,170Reimbursable
                  expenses
              
              
              8,769
              
              
              
              3,870
              
              
              
              2,347Total
                  revenues
              
              
              160,926
              
              
              
              96,997
              
              
              
              58,848Cost
                  of revenues (exclusive of depreciation and amortization, shown
                  separately
                  below):Project
                  personnel costs
              
              
              84,161
              
              
              
              51,140
              
              
              
              26,073Software
                  costs
              
              
              12,118
              
              
              
              7,723
              
              
              
              11,341Reimbursable
                  expenses
              
              
              8,769
              
              
              
              3,870
              
              
              
              2,347Other
                  project related expenses
              
              
              2,122
              
              
              
              1,846
              
              
              
              267Total
                  cost of revenues
              
              
              107,170
              
              
              
              64,579
              
              
              
              40,028Gross
                  margin
              
              
              53,756
              
              
              
              32,418
              
              
              
              18,820Selling,
                  general and administrative
              
              
              32,268
              
              
              
              17,917
              
              
              
              11,068Depreciation
              
              
              948
              
              
              
              615
              
              
              
              512Amortization
                  of intangible assets
              
              
              3,458
              
              
              
              1,611
              
              
              
              697Income
                  from operations
              
              
              17,082
              
              
              
              12,275
              
              
              
              6,543Interest
                  income
              
              
              102
              
              
              
              15
              
              
              
              3Interest
                  expense
              
              
              (509
              )
              
              
              (658
              )
              
              
              (137
              )Other
                  income
              
              
              174
              
              
              
              43
              
              
              
              32Income
                  before income taxes
              
              
              16,849
              
              
              
              11,675
              
              
              
              6,441Provision
                  for income taxes
              
              
              7,282
              
              
              
              4,498
              
              
              
              2,528Net
                  income
              
              $
              9,567
              
              
              $
              7,177
              
              
              $
              3,913Basic
                  net income per share
              
              $
              0.38
              
              
              $
              0.33
              
              
              $
              0.22Diluted
                  net income per share
              
              $
              0.35
              
              
              $
              0.28
              
              
              $
              0.19Shares
                  used in computing basic net income per share
              
              
              25,033,337
              
              
              
              22,005,154
              
              
              
              17,648,575Shares
                  used in computing diluted net income per share
              
              
              27,587,449
              
              
              
              25,242,496
              
              
              
              20,680,507
 
 *See
        accompanying notes to consolidated financial statements.*
   12
  **PERFICIENT, INC.**
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**
 (In
        thousands)
  **Common**
                **Stock**
                **Shares**
              
              
              **Common**
                **Stock**
                **Amount**
              
              
              **Additional**
                **Paid-in**
                **Capital**
              
              
              **Accumulated**
                **Other**
                **Comprehensive**
                **Loss**
              
              
              **Accumulated**
                **Deficit**
              
              
              **Total**
                **Stockholders'**
                **Equity**Balance
                  at January 1, 2004
              
              
              14,039
              
              
              $
              14
              
              
              $
              76,289
              
              
              $
              (52
              )
              
              $
              (60,235
              )
              
              $
              16,016Warrants
                  exercised
              
              
              1,277
              
              
              
              1
              
              
              
              2,539
              
              
              
              --
              
              
              
              --
              
              
              
              2,540Stock
                  options exercised
              
              
              492
              
              
              
              1
              
              
              
              656
              
              
              
              --
              
              
              
              --
              
              
              
              657Issuance
                  of stock for Genisys, Meritage, and ZettaWorks
                  acquisitions
              
              
              4,049
              
              
              
              4
              
              
              
              18,770
              
              
              
              --
              
              
              
              --
              
              
              
              18,774Issuance
                  of stock for private placement
              
              
              800
              
              
              
              1
              
              
              
              2,359
              
              
              
              --
              
              
              
              --
              
              
              
              2,360Tax
                  benefit of stock option exercises
              
              
              --
              
              
              
              --
              
              
              
              342
              
              
              
              --
              
              
              
              --
              
              
              
              342Stock
                  compensation
              
              
              --
              
              
              
              --
              
              
              
              27
              
              
              
              --
              
              
              
              --
              
              
              
              27Foreign
                  currency translation adjustment
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (6
              )
              
              
              --
              
              
              
              (6
              )Net
                  income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              3,913
              
              
              
              3,913Total
                  comprehensive income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              3,907Balance
                  at December 31, 2004
              
              
              20,657
              
              
              
              21
              
              
              
              100,982
              
              
              
              (58
              )
              
              
              (56,322
              )
              
              
              44,623Warrants
                  exercised
              
              
              88
              
              
              
              --
              
              
              
              157
              
              
              
              --
              
              
              
              --
              
              
              
              157Stock
                  options exercised
              
              
              1,354
              
              
              
              1
              
              
              
              2,703
              
              
              
              --
              
              
              
              --
              
              
              
              2,704Issuance
                  of stock for iPath and Vivare acquisitions
              
              
              1,196
              
              
              
              1
              
              
              
              8,708
              
              
              
              --
              
              
              
              --
              
              
              
              8,709Tax
                  benefit of stock option exercises
              
              
              --
              
              
              
              --
              
              
              
              2,306
              
              
              
              --
              
              
              
              --
              
              
              
              2,306Stock
                  compensation
              
              
              --
              
              
              
              --
              
              
              
              264
              
              
              
              --
              
              
              
              --
              
              
              
              264Foreign
                  currency translation adjustment
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (29
              )
              
              
              --
              
              
              
              (29
              )Net
                  income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              7,177
              
              
              
              7,177Total
                  comprehensive income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              7,148Balance
                  at December 31, 2005
              
              
              23,295
              
              
              
              23
              
              
              
              115,120
              
              
              
              (87
              )
              
              
              (49,145
              )
              
              
              65,911Issuance
                  of stock for Bay Street, Insolexen, and EGG
                  acquisitions
              
              
              1,499
              
              
              
              2
              
              
              
              17,989
              
              
              
              --
              
              
              
              --
              
              
              
              17,991Warrants
                  exercised
              
              
              145
              
              
              
              --
              
              
              
              146
              
              
              
              --
              
              
              
              --
              
              
              
              146Stock
                  options exercised
              
              
              1,672
              
              
              
              2
              
              
              
              4,001
              
              
              
              --
              
              
              
              --
              
              
              
              4,003Purchases
                  of stock from Employee Stock
                Purchase
                  Plan
              
              
              6
              
              
              
              --
              
              
              
              86
              
              
              
              --
              
              
              
              --
              
              
              
              86Tax
                  benefit of stock option exercises
              
              
              --
              
              
              
              --
              
              
              
              6,554
              
              
              
              --
              
              
              
              --
              
              
              
              6,554Stock
                  compensation
              
              
              --
              
              
              
              --
              
              
              
              3,132
              
              
              
              --
              
              
              
              --
              
              
              
              3,132Vested
                  stock compensation
              
              
              83
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Foreign
                  currency translation adjustment
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (38
              )
              
              
              --
              
              
              
              (38
              )Net
                  income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              9,567
              
              
              
              9,567Total
                  comprehensive income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              9,529**Balance
                  at December 31, 2006**
              
              ****
              **26,700**
              
              
              **$**
              **27**
              
              
              **$**
              **147,028**
              
              
              **$**
              **(125**
              **)**
              
              **$**
              **(39,578**
              **)**
              
              **$**
              **107,352**
 
 *See
        accompanying notes to consolidated financial
        statements.*****
   13
  
 **PERFICIENT, INC.**
  **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**
 
 **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**(As
                  Restated)
              
              
              (As
                  Restated)**OPERATING
                  ACTIVITIES**
              
              
              
              
              (In
                  thousands)Net
                  income
              
              $
              9,567
              
              
              $
              7,177
              
              
              $
              3,913Adjustments
                  to reconcile net income to net cash provided by
                  operations:Depreciation
              
              
              948
              
              
              
              615
              
              
              
              512Amortization
                  of intangibles
              
              
              3,458
              
              
              
              1,611
              
              
              
              697Non-cash
                  stock compensation
              
              
              3,132
              
              
              
              264
              
              
              
              27Non-cash
                  interest expense
              
              
              6
              
              
              
              24
              
              
              
              --Tax
                  benefit on stock option exercises
              
              
              --
              
              
              
              2,306
              
              
              
              342Changes
                  in operating assets and liabilities, net of acquisitions:Accounts
                  receivable
              
              
              (5,771
              )
              
              
              148
              
              
              
              (8,120
              )Other
                  assets
              
              
              (152
              )
              
              
              (1,866
              )
              
              
              76Accounts
                  payable
              
              
              1,251
              
              
              
              (3,155
              )
              
              
              5,297Other
                  liabilities
              
              
              708
              
              
              
              2,090
              
              
              
              1,294Net
                  cash provided by operating activities
              
              
              13,147
              
              
              
              9,214
              
              
              
              4,038**INVESTING
                  ACTIVITIES**Purchase
                  of property and equipment
              
              
              (1,518
              )
              
              
              (691
              )
              
              
              (430
              )Capitalization
                  of software developed for internal use
              
              
              (136
              )
              
              
              (599
              )
              
              
              --Purchase
                  of businesses, net of cash acquired
              
              
              (17,210
              )
              
              
              (11,231
              )
              
              
              (10,734
              )Payments
                  on Javelin notes
              
              
              (250
              )
              
              
              (250
              )
              
              
              --Net
                  cash used in investing activities
              
              
              (19,114
              )
              
              
              (12,771
              )
              
              
              (11,164
              )**FINANCING
                  ACTIVITIES**Proceeds
                  from revolving line of credit
              
              
              34,900
              
              
              
              12,000
              
              
              
              4,000Payments
                  on revolving line of credit
              
              
              (38,900
              )
              
              
              (8,000
              )
              
              
              --Payments
                  on long-term debt
              
              
              (1,338
              )
              
              
              (1,135
              )
              
              
              (522
              )Deferred
                  offering costs
              
              
              --
              
              
              
              (942
              )
              
              
              --Tax
                  benefit on stock option exercises
              
              
              6,554
              
              
              
              --
              
              
              
              --Proceeds
                  from the exercise of stock options and Employee Stock Purchase
                  Plan
              
              
              4,089
              
              
              
              2,704
              
              
              
              657Proceeds
                  from the exercise of warrants
              
              
              146
              
              
              
              157
              
              
              
              2,540Proceeds
                  from stock issuances, net
              
              
              --
              
              
              
              --
              
              
              
              2,373Net
                  cash provided by financing activities
              
              
              5,451
              
              
              
              4,784
              
              
              
              9,048Effect
                  of exchange rate on cash and cash equivalents
              
              
              (31
              )
              
              
              (37
              )
              
              
              (6
              )Change
                  in cash and cash equivalents
              
              
              (547
              )
              
              
              1,190
              
              
              
              1,916Cash
                  and cash equivalents at beginning of period
              
              
              5,096
              
              
              
              3,906
              
              
              
              1,990Cash
                  and cash equivalents at end of period
              
              $
              4,549
              
              
              $
              5,096
              
              
              $
              3,906**Supplemental
                  disclosures:**Interest
                  paid
              
              $
              540
              
              
              $
              594
              
              
              $
              141Cash
                  paid for income taxes
              
              $
              3,156
              
              
              $
              3,684
              
              
              $
              2,256**Non-cash
                  activities:**Common
                  stock and options issued in purchase of businesses
              
              $
              17,991
              
              
              $
              8,709
              
              
              $
              18,774Change
                  in goodwill
              
              $
              318
              
              
              $
              670
              
              
              $
              644
 
 *See
        accompanying notes to consolidated financial statements.*
   14
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **1. 
        Description of Business and Principles of Consolidation**
  Perficient, Inc.
        (the “Company”) is an information technology consulting firm. The Company helps
        its clients use Internet-based technologies to make their businesses more
        responsive to market opportunities and threats, strengthen relationships
        with
        customers, suppliers and partners, improve productivity and reduce information
        technology costs. The Company designs, builds and delivers solutions using
        a
        core set of middleware software products developed by third party vendors.
        The
        Company's solutions enable its clients to operate a real-time enterprise
        that
        adapts business processes and the systems that support them to the changing
        demands of an increasingly global, Internet-driven and competitive
        marketplace.
  The
        Company is incorporated in Delaware. The consolidated financial statements
        include the accounts of the Company and its wholly owned subsidiaries. All
        material intercompany accounts and transactions have been eliminated in
        consolidation.
  **2. 
        Restatement of Financial Information**
 
 The
        Company is restating
        its financial statements to present the changes from certain misclassifications
        in the Consolidated Statement of Cash Flows primarily related to certain
        previously reported payments associated with its business
        acquisitions.  This includes an adjustment from cash flows provided by
        operating activities to cash flows used in investing activities for payments
        made related to prior acquisitions.  There is no change to the total
        change in cash and cash equivalents in the affected
        periods.  Additionally, the restatement does not affect the previously
        reported consolidated income statements, consolidated balance sheets or
        consolidated statements of stockholders’ equity amounts, including earnings per
        share.
 
 The effect of the restatement on specific line items in the Consolidated
        Statements of Cash Flows is as follows:
  **Year
                  Ended,****2006**
              
              
              **2006**
              
              
              **2005**
              
              
              **2005****As
                  previously reported**
              
              
              **As
                  restated**
              
              
              **As
                  previously reported**
              
              
              **As
                  restated****(In
                  thousands)****Cash
                  flows from operating activities:**Other
                  liabilities
              
              $
              (2,824
              )
              
              $
              708
              
              
              $
              563
              
              
              $
              2,090Net
                  cash provided by operating activities
              
              
              9,615
              
              
              
              13,147
              
              
              
              7,687
              
              
              
              9,214**Cash
                  flows from investing activities:**Purchase
                  of businesses, net of cash acquired
              
              
              (13,678
              )
              
              
              (17,210
              )
              
              
              (9,704
              )
              
              
              (11,231
              )Net
                  cash used in investing activities
              
              
              (15,582
              )
              
              
              (19,114
              )
              
              
              (11,244
              )
              
              
              (12,771
              )
 
 **3. 
        Summary of Significant Accounting Policies**
  **Use
        of Estimates**
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting periods. Actual results could differ from those estimates, and
        such
        differences could be material to the financial statements.
 
 **Reclassification**
 
 The
        Company has reclassified the presentation of certain prior period information
        to
        conform to the 2006 presentation.
  **Revenue
        Recognition**
  Revenues
        are primarily derived from professional services provided on a time and
        materials basis. For time and material contracts, revenues is recognized
        and
        billed by multiplying the number of hours expended in the performance of
        the
        contract by the established billing rates. For fixed fee projects, revenues
        is
        generally recognized using the proportionate performance method based on
        the
        ratio of hours expended to total estimated hours. Revenues on uncompleted
        projects are recognized on a contract-by-contract basis in the period in
        which
        the portion of the fixed fee is complete. Billings in excess of costs plus
        earnings are classified as deferred revenues. On many projects the Company
        is
        also reimbursed for out-of-pocket expenses such as airfare, lodging and meals.
        These reimbursements are included as a component of revenues. Revenues from
        software sales are recorded on a gross basis based on the Company's role
        as
        principal in the transaction. The Company is considered a “principal” if the
        Company is the primary obligator and bears the associated credit risk in
        the
        transaction. In the event the Company does not meet the requirements to be
        considered a principal in the software sale transaction and acts as an agent,
        the revenues would be recorded on a net basis.
  15
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 Revenues
        are recognized when the following criteria are met: (1) persuasive evidence
        of the customer arrangement exists, (2) fees are fixed and determinable,
        (3) delivery and acceptance has occurred, and (4) collectibility is
        deemed probable. The Company's policy for revenue recognition in instances
        where
        multiple deliverables are sold contemporaneously to the same counterparty
        is in
        accordance with Emerging Issues Task Force ("EITF") Issue No. 00-21, Revenue
        Arrangements with Multiple Deliverables, and SEC Staff Accounting Bulletin
        No.
        104, Revenue Recognition. Specifically, if the Company enters into contracts
        for
        the sale of services and software, then the Company evaluates whether it
        has
        objective fair value evidence for each deliverable in the transaction. If
        the
        Company has objective fair value evidence for each deliverable of the
        transaction, then it accounts for each deliverable in the transaction
        separately, based on the relevant revenue recognition policies. All deliverables
        of the Company's multiple element arrangements meet these criteria. We follow
        very specific and detailed guidelines, discussed above, in determining revenues;
        however, certain judgments and estimates are made and used to determine revenues
        recognized in any accounting period. Material differences may result in the
        amount and timing of revenues recognized for any period if different conditions
        were to prevail.
 
 Revenues
        from internally developed software are allocated to maintenance and support
        and
        are recognized ratably over the maintenance term (typically one
        year).
  Revenues
        allocated to training and consulting service elements is recognized as the
        services are performed. Our consulting services are not essential to the
        functionality of our products as such services are available from other
        vendors.
  **Cash
        and Cash Equivalents**
  Cash
        equivalents consist primarily of cash deposits and investments with original
        maturities of ninety days or less when purchased.
  **Accounts
        Receivable and Allowance for Doubtful Accounts**
  Accounts
        receivable are recorded at the invoiced amount. The allowance for doubtful
        accounts is the Company's best estimate of the amount of uncollectible amounts
        in its existing accounts receivable. Management analyzes historical collection
        trends and changes in its customer payment patterns, customer concentration,
        and
        credit worthiness when evaluating the adequacy of its allowance for doubtful
        accounts. The Company includes any receivables balances that are determined
        to
        be uncollectible in its overall allowance for doubtful accounts. The Company
        reviews its allowance for doubtful accounts monthly. Account balances are
        charged off against the allowance when the Company believes that it is probable
        the receivable will not be recovered.
 
 **Property
        and Equipment**
  Property
        and equipment are recorded at cost. Depreciation of property and equipment
        is
        computed using the straight-line method over the useful lives of the assets
        (generally one to five years). Leasehold improvements are amortized over
        the shorter of the life of the lease or the estimated useful life of the
        assets.
  **Intangible
        Assets**
  Goodwill
        represents the excess purchase price over the fair value of net assets acquired,
        or net liabilities assumed, in a business combination. In accordance with
        Statement of Financial Accounting Standards (“SFAS”) No. 142,*Goodwill and
        Other Intangible Assets*, the Company performs an annual impairment test of
        goodwill. The Company evaluates goodwill at the enterprise level as of October
        1
        each year or more frequently if events or changes in circumstances indicate
        that
        goodwill might be impaired. As required by SFAS No.142, the impairment test
        is
        accomplished using a two-stepped approach. The first step screens for impairment
        and, when impairment is indicated, a second step is employed to measure the
        impairment. The Company also reviewed other factors to determine the likelihood
        of impairment. No impairment was indicated using data as of October 1,
        2006.
  Other
        intangible assets include customer relationships, customer backlog, non-compete
        arrangements and internally developed software, and are being amortized over
        the
        assets' estimated useful lives using the straight-line method. Estimated
        useful
        lives range from nine months to eight years. Amortization of customer
        relationships, customer backlog, non-compete arrangements and internally
        developed software are considered operating expenses and are included in
        “Amortization of intangible assets” in the accompanying consolidated Statements
        of Income. The Company periodically reviews the estimated useful lives of
        its
        identifiable intangible assets, taking into consideration any events or
        circumstances that might result in a lack of recoverability or revised useful
        life.
   16
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **Impairment
        of Long-Lived Assets**
  Long-lived
        assets held and used by the Company are reviewed for impairment whenever
        events
        or changes in circumstances indicate that their net book value may not be
        entirely recoverable. When such factors and circumstances exist, the Company
        compares the projected undiscounted future cash flows associated with the
        related asset or group of assets over their estimated useful lives against
        their
        respective carrying amounts. Impairment, if any, is based on the excess of
        the
        carrying amount over the fair value of those assets and is recorded in the
        period in which the determination was made.
 
 **Deferred
        Offering Costs**
 
 Costs
        incurred related to equity offerings under effective registration statements
        are
        deferred until the offering occurs or management does not intend to complete
        the
        offering. At the time that the issuance of new equity occurs, these costs
        are
        netted against the proceeds received. These costs are expensed if the offering
        does not occur. Approximately $943,000 of these costs were recorded as part
        of
        Other Non-Current Assets on the Balance Sheet as of December 31,
        2006.
  **Income
        Taxes**
  The
        Company accounts for income taxes in accordance with SFAS No. 109,*Accounting for Income Taxes*. This Statement prescribes the use of the
        liability method whereby deferred tax asset and liability account balances
        are
        determined based on differences between financial reporting and tax bases
        of
        assets and liabilities and are measured using the enacted tax rates and laws
        that will be in effect when the differences are expected to reverse. Deferred
        tax assets are subject to tests of recoverability. A valuation allowance
        is
        provided for such deferred tax assets to the extent realization is not judged
        to
        be more likely than not.
  **Earnings
        Per Share**
  Basic
        earnings per share is computed by dividing net income available to common
        stockholders by the weighted-average number of common shares outstanding
        during
        the period. Diluted earnings per share includes the weighted average number
        of
        common shares outstanding and the number of equivalent shares which would
        be
        issued related to the stock options and warrants using the treasury method,
        contingently issuance shares, and convertible preferred stock using the
        if-converted method, unless such additional equivalent shares are
        anti-dilutive.
  **Stock-Based
        Compensation**
  Effective
        January 1, 2006, the Company adopted the provisions of Statement of
        Financial Accounting Standards No. 123R (As Amended),*Share Based
        Payment*  (“SFAS 123R”), using the modified prospective
        application transition method. Under this method, compensation cost for the
        portion of awards for which the requisite service has not yet been rendered
        that
        are outstanding as of the adoption date is recognized over the remaining
        service
        period. The compensation cost for that portion of awards is based on the
        grant-date fair value of those awards as calculated for pro forma disclosures
        under SFAS No. 123. All new awards and awards that are modified,
        repurchased, or cancelled after the adoption date are accounted for under
        the
        provisions of SFAS No. 123R. Prior periods are not restated under this
        transition method. The Company recognizes share-based compensation ratably
        using
        the straight-line attribution method over the requisite service period. In
        addition, pursuant to SFAS No. 123R, the Company is required to estimate
        the amount of expected forfeitures when calculating share-based compensation,
        instead of accounting for forfeitures as they occur, which was the Company's
        practice prior to the adoption of SFAS No. 123R.
 
 **Fair
        Value of Financial Instruments**
  Cash
        equivalents, accounts receivable, accounts payable, other accrued liabilities,
        and debt are stated at amounts which approximate fair value due to the near
        term
        maturities of these instruments and the variable interest rates on the Company's
        accounts receivable line of credit.
 
 **Recently
        Issued Accounting Standards**
  In
        September 2006, the SEC issued Staff Accounting Bulletin 108 (“SAB 108”), which
        expresses the Staff's views regarding the process of quantifying financial
        statement misstatements. The bulletin was effective at fiscal year end 2006.
        The
        implementation of this bulletin had no impact on the Company's results of
        operations, cash flows or financial position.
 
 In
        September 2006, the FASB issued Statement No. 157,*Fair Value
        Measurements* ("SFAS 157"). SFAS 157 defines fair value, establishes a
        framework for measuring fair value in generally accepted accounting principles
        (GAAP), and expands disclosures about fair value measurements. SFAS 157 will
        be
        applied prospectively and will be effective for periods beginning after November
        15, 2007. The Company is currently evaluating the effect, if any, of SFAS
        157 on
        the Company's consolidated financial statements.
 
  17
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 In
        June
        2006, the FASB issued FASB Interpretation ("FIN") No. 48,*Accounting for
        Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109*
        ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute
        for the financial statement recognition and measurement of a tax position
        taken
        or expected to be taken in a tax return. FIN 48 also provides guidance on
        derecognition, classification, treatment of interest and penalties, and
        disclosure of such positions. FIN 48 will be applied prospectively and will
        be
        effective for fiscal years beginning after December 31, 2006. The Company
        will
        adopt the provisions of FIN 48 in the first quarter of 2007 as required.
        The
        Company is still evaluating the effect of adopting FIN 48 and does not expect
        it
        to have a material effect on the Company's consolidated financial
        statements.
  In
        June
        2006, the Emerging Issues Task Force ("EITF") ratified EITF Issue 06-3,*How
        Taxes Collected From Customers and Remitted to Governmental Authorities Should
        Be Presented in the Income Statement (That Is, Gross versus Net
        Presentation)* . A consensus was reached that entities may adopt a policy of
        presenting taxes in the income statement on either a gross or net basis.
        An
        entity should disclose its policy of presenting taxes and the amount of any
        taxes presented on a gross basis should be disclosed, if significant. The
        guidance is effective for periods beginning after December 15, 2006. We present
        revenues net of taxes. EITF 06-3 will not impact the method for recording
        these
        sales taxes in our consolidated financial statements.
 
 **4.
        Net Income Per Share**
  The
        following table presents the calculation of basic and diluted net income
        per
        share (in thousands, except per share information):
  **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Net
                  income
              
              $
              9,567
              
              
              $
              7,177
              
              
              $
              3,913Basic:Weighted-average
                  shares of common stock outstanding
              
              
              23,783
              
              
              
              20,868
              
              
              
              16,964Weighted-average
                  shares of common stock subject to contingency (i.e. restricted
                  stock)
              
              
              1,250
              
              
              
              1,137
              
              
              
              685Shares
                  used in computing basic net income per share
              
              
              25,033
              
              
              
              22,005
              
              
              
              17,649Effect
                  of dilutive securities:Stock
                  options
              
              
              2,281
              
              
              
              3,088
              
              
              
              2,836Warrants
              
              
              74
              
              
              
              149
              
              
              
              196Restricted
                  stock subject to vesting
              
              
              199
              
              
              
              --
              
              
              
              --Shares
                  used in computing diluted net income per share
              
              
              27,587
              
              
              
              25,242
              
              
              
              20,681Basic
                  net income per share
              
              $
              0.38
              
              
              $
              0.33
              
              
              $
              0.22Diluted
                  net income per share
              
              $
              0.35
              
              
              $
              0.28
              
              
              $
              0.19
 
 **5.  
        Concentration of Credit Risk and Significant Customers**
  Cash
        and
        accounts receivable potentially expose the Company to concentrations of credit
        risk. Cash is placed with highly rated financial institutions. The Company
        provides credit, in the normal course of business, to its customers. The
        Company
        generally does not require collateral or up-front payments. The Company performs
        periodic credit evaluations of its customers and maintains allowances for
        potential credit losses. Customers can be denied access to services in the
        event
        of non-payment. A substantial portion of the services the Company provides
        are
        built on IBM WebSphere(R)  platforms
        and a significant number of its clients are identified through joint selling
        opportunities conducted with IBM and through sales leads obtained from the
        relationship with IBM. Revenues from IBM accounted for approximately 8%,
        9%, and
        17% of total revenues for 2006, 2005 and 2004, respectively, and accounts
        receivable from IBM accounted for approximately 9% of total accounts receivable
        as of December 31, 2006 and 2005. While the dollar amount of revenues from
        IBM has remained relatively constant over the past three years, the percentage
        of total revenues from IBM has decreased as a result of the Company's growth
        and
        corresponding customer diversification. The loss of the Company's relationship
        with IBM or a significant reduction in the services the Company provides
        for IBM
        would result in significantly decreased revenues. Due to the Company's
        significant fixed operating expenses, the loss of sales to IBM or any
        significant customer could result in the Company's inability to generate
        net
        income or positive cash flow from operations for some time in the
        future.
  **6.  
        Employee Benefit Plan**
  The
        Company has a qualified 401(k) profit sharing plan available to full-time
        employees who meet the plan's eligibility requirements. This defined
        contribution plan permits employees to make contributions up to maximum limits
        allowed by the Internal Revenue Code.
  18
 
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 The
        Company, at its discretion, matches a portion of the employee's contribution
        under a predetermined formula based on the level of contribution and years
        of
        vesting services. The Company made matching contributions equal to 25% of
        the
        first 6% of employee contributions totaling approximately $0.5 million, $0.5
        million, and $0.3 million during 2006, 2005 and 2004, respectively, which
        vest
        over a three year period of service.
 
 **7.  
        Intangible Assets**
  *Intangible
        Assets with Indefinite Lives*
  The
        changes in the carrying amount of goodwill for the year ended December 31,
        2006
        are as follows (in thousands):
 
 **Goodwill**Balance
                  at December 31, 2004
              
              $
              32,818Acquisitions
                  consummated during 2005 (Note 14)
              
              
              14,115Utilization
                  of net operating loss carryforwards, forfeiture of restricted stock
                  used
                  for
                acquisition
                  purchase consideration and changes in estimated acquisition transaction
                  costs
              
              
              (670
              )Balance
                  at December 31, 2005
              
              
              46,263Acquisitions
                  consummated during 2006 (Note 14)
              
              
              22,589Utilization
                  of net operating loss carryforwards and adjustment to goodwill
                  related to
                  deferred taxes associated with acquisitions
              
              
              318Balance
                  at December 31, 2006
              
              $
              69,170
 
 *Intangible
        Assets with Definite Lives*
  Following
        is a summary of the Company's intangible assets that are subject to amortization
        (in thousands):
  **Year
                  ended December 31,****2006**
              
              
              **2005****Gross
                  Carrying Amount**
              
              
              **Accumulated
                  Amortization**
              
              
              **Net**
                **Carrying
                  Amount**
              
              
              **Gross
                  Carrying Amount**
              
              
              **Accumulated
                  Amortization**
              
              
              **Net**
                **Carrying
                  Amount****Customer
                  relationships**
              
              $
              12,860
              
              
              $
              (2,808
              )
              
              $
              10,052
              
              
              $
              4,820
              
              
              $
              (1,122
              )
              
              $
              3,698**Non-compete
                  agreements**
              
              
              2,393
              
              
              
              (1,094
              )
              
              
              1,299
              
              
              
              2,073
              
              
              
              (621
              )
              
              
              1,452**Customer
                  backlog**
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              130
              
              
              
              (57
              )
              
              
              73**Internally
                  developed software**
              
              
              755
              
              
              
              (220
              )
              
              
              535
              
              
              
              599
              
              
              
              (54
              )
              
              
              545**Total**
              
              $
              16,008
              
              
              $
              (4,122
              )
              
              $
              11,886
              
              
              $
              7,622
              
              
              $
              (1,854
              )
              
              $
              5,768
 
 The
        estimated useful lives of acquired identifiable intangible assets are as
        follows:
  Customer
                  relationships
              3
                  - 8 yearsNon-compete
                  agreements
              2
                  - 5 yearsCustomer
                  backlog
              4
                  months to 1 yearInternally
                  developed software
              5
                  years
  The
        weighted average amortization periods for customer relationships and non-compete
        agreements are 6 years and 5 years, respectively. Total amortization expense
        for
        the years ended December 31, 2006, 2005, and 2004 was approximately $3.5
        million, $1.6 million, and $0.7 million respectively.
  Estimated
        annual amortization expense for the next five years ended December 31 is
        as
        follows (in thousands):
  2007
              
              $
              2,8822008
              
              
              2,6892009
              
              
              2,3082010
              
              
              1,7482011
              
              
              1,619Thereafter
              
              
              641
  19
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
  **8.  
        Equity Based Compensation**
  **Stock
        Option Plans**
  In
        May 1999, the Company's Board of Directors and stockholders approved the
        1999 Stock Option/Stock Issuance Plan (the “1999 Plan”). The 1999 Plan contains
        programs for (i) the discretionary granting of stock options to employees,
        non-employee board members and consultants for the purchase of shares of
        the
        Company's commons stock, (ii) the discretionary issuance of common stock
        directly to eligible individuals, and (iii) the automatic issuance of stock
        options to non-employee board members. The Compensation Committee of the
        Board
        of Directors administers the 1999 Plan, and determines the exercise price
        and
        vesting period for each grant. Options granted under the 1999 Plan have a
        maximum term of 10 years. In the event that the Company is acquired,
        whether by merger or asset sale or board-approved sale by the stockholders
        of
        more than 50% of the Company's voting stock, each outstanding option under
        the
        discretionary option grant program which is not to be assumed by the successor
        corporation or otherwise continued will automatically accelerate in full,
        and
        all unvested shares under the discretionary option grant and stock issuance
        programs will immediately vest, except to the extent the Company's repurchase
        rights with respect to those shares are to be assigned to the successor
        corporation or otherwise continued in effect. The Compensation Committee
        may
        grant options under the discretionary option grant program that will accelerate
        in the acquisition even if the options are assumed or that will accelerate
        if
        the optionee's service is subsequently terminated.
 
 The
        Compensation Committee may grant options and issue shares that accelerate
        in
        connection with a hostile change in control effected through a successful
        tender
        offer for more than 50% of the Company's outstanding voting stock or by proxy
        contest for the election of board members, or the options and shares may
        accelerate upon a subsequent termination of the individual's
        service.
 
 On
        December 15, 2004, the Company granted restricted stock awards of 262,500
        shares
        of common stock under the 1999 Stock Option/Stock Issuance Plan. This equity
        grant vests over seven years, with an original vesting schedule that was
        back-loaded but was converted to pro-rata or straight-line vesting over the
        seven year period due to the achievement of certain performance targets and
        compensation committee approval. On December 28, 2005, the Company granted
        restricted stock awards of approximately 323,000 shares of common stock under
        the 1999 Stock Option/Stock Issuance Plan. This equity grant vests over six
        years, with an original vesting schedule that was back-end loaded but was
        converted to pro-rata or straight-line vesting over the six year period due
        to
        the achievement of certain performance targets and compensation committee
        approval. On December 21, 2006, the Company granted restricted stock awards
        of
        approximately 843,000 shares of common stock under the 1999 Stock Option/Stock
        Issuance Plan. This equity grant vests ratably over five years.
 
  20
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
  A
        summary
        of changes in common stock options during 2006, 2005 and 2004 is as follows
        (in
        thousands, except exercise price information):
 **Shares**
                
                
                **Range
                    of Exercise Prices**
                
                
                **Weighted-Average
                    Exercise Price**
                
                **Aggregate
                    Intrinsic Value**Options
                    outstanding at January 1, 2004
                5,726
                
                $
                0.02
                    - $26.00
                
                $
                2.42Options
                    granted
                1,459
                
                $
                3.00
                    - $ 6.31
                
                $
                4.67Options
                    exercised
                (492)
                
                $
                0.03
                    - $ 4.50
                
                $
                1.34Options
                    canceled
                (254)
                
                $
                0.50
                    - $13.25
                
                $
                3.37Options
                    outstanding at December 31, 2004
                6,439
                
                $
                0.02
                    - $26.00
                
                $
                2.97Options
                    granted
                415
                
                $
                7.34
                    - $ 9.19
                
                $
                7.81Options
                    exercised
                (1,354)
                
                $
                0.03
                    - $ 8.10
                
                $
                2.00Options
                    canceled
                (232)
                
                $
                0.03
                    - $16.00
                
                $
                5.37Options
                    outstanding at December 31, 2005
                5,268
                
                $
                0.02
                    - $16.94
                
                $
                3.53Options
                    granted
                --
                
                
                --
                
                
                --Options
                    exercised
                (1,672)
                
                $
                0.02
                    - $12.13
                
                $
                2.40Options
                    canceled
                (44)
                
                $
                1.01
                    - $13.25
                
                $
                5.41Options
                    outstanding at December 31, 2006
                3,552
                
                $
                0.02
                    - $16.94
                
                $
                4.03
                
                43,975Options
                    vested, December 31, 2004
                3,227
                
                $
                0.02
                    - $16.94
                
                $
                2.85Options
                    vested, December 31, 2005
                3,305
                
                $
                0.02
                    - $16.94
                
                $
                3.00Options
                    vested or expected to vest, December 31, 2006
                2,347
                
                $
                0.02
                    - $16.94
                
                $
                3.62
                
                41,400
  The
        total
        aggregate intrinsic value of options exercised during the years ended
        December 31, 2006, 2005, and 2004, was $18.6 million, $8.4 million,
        and $1.5 million, respectively. The total fair value of restricted shares
        vesting during the year ended December 31, 2006 was $1.4 million. For
        the years ended December 31, 2005 and 2004, the total fair value of restricted
        shares vesting during the year was $0.
   21
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
  
 Restricted
        stock activity for the year ended December 31, 2006 was as follows (in
        thousands, except fair value information):
  **Shares**
              
              
              **Weighted-Average**
                **Grant
                  Date Fair**
                **Value**Restricted
                  stock awards outstanding at January 1, 2006
              
              
              614
              
              
              $
              7.69Awards
                  granted
              
              
              911
              
              
              
              15.61Awards
                  released
              
              
              (83
              )
              
              
              7.62Awards
                  canceled
              
              
              (13
              )
              
              
              8.04Restricted
                  stock awards outstanding at December 31, 2006
              
              
              1,429
              
              
              $
              12.74
 
 The
        following is additional information related to stock options outstanding
        at
        December 31, 2006 (in thousands, except exercise price
        information):
 **Options
                    Outstanding**
                
                **Options
                    Exercisable****Weighted****Weighted**
                
                **Average**
                
                
                
                **Weighted****Average**
                
                **Remaining**
                
                
                
                **Average****Range
                    of Exercise**
                
                
                
                **Exercise**
                
                **Contractual**
                
                
                
                **Exercise****Prices**
                
                **Options**
                
                **Price**
                
                **Life
                    (Years)**
                
                **Options**
                
                **Price**$0.02
                    - $1.15
                
                468
                
                $0.62
                
                4.94
                
                468
                
                $0.62$1.21
                    - $2.28
                
                1,101
                
                $2.09
                
                6.53
                
                808
                
                $2.02$2.77
                    - $3.75
                
                796
                
                $3.42
                
                5.5
                
                578
                
                $3.54$4.40
                    - $6.31
                
                733
                
                $6.04
                
                7.61
                
                182
                
                $5.51$6.97
                    - $16.94
                
                454
                
                $10.10
                
                6.22
                
                311
                
                $11.30$0.02
                    - $16.94
                
                3,552
                
                $4.03
                
                6.27
                
                2,347
                
                $3.62
 The
        fair
        value of options was calculated at the date of grant using the Black-Scholes
        pricing model with the following weighted-average assumptions for the year
        ended
        December 31, 2005 and 2004, as follows, with a weighted-average life of
        options of 5 years used for each of the years presented:
  Year
                  End
                December
                  31,
              
              Risk-Free
                Interest
                  Rate
              
              Dividend
                Yield
              
              Volatility
                Factor2004
              
              
              3.61%
              
              
              0%
              
              
              1.3882005
              
              
              3.72%
              
              
              0%
              
              
              1.405
  No
        stock
        options were granted in 2006.
 
 At
        December 31, 2006, 2005 and 2004, the weighted-average remaining
        contractual life of outstanding options was 6.27, 7.17, and 7.89 years,
        respectively. The weighted-average grant-date fair value per share of options
        granted during 2005 and 2004 at market prices was approximately $7.81 and
        $4.67,
        respectively. There were no option grants at below or above market prices
        during
        2005 and 2004. No option grants occurred in 2006.
 
 The
        Company recognized $3.1 million and $0.3 million of stock compensation expense
        during 2006 and 2005, respectively. Tax benefits recognized on stock option
        exercises were $0.8 million and $0.2 million during 2006 and 2005. For the
        year
        ended December 31, 2004, stock compensation expense and the related tax benefits
        recognized on stock option exercises were immaterial. As of December 31,
        2006,
        there was $19.7 million of total unrecognized compensation cost related to
        non-vested share-based awards. This cost is expected to be recognized over
        a
        weighted-average period of 2.8 years. Our estimated forfeiture rate for the
        year
        ended December 31, 2006 of approximately 12% for share based awards was based
        on
        historical forfeiture experience to anticipate actual forfeitures in the
        future.
   22
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 Prior
        to
        the adoption of SFAS No. 123R, the Company accounted for employee stock-based
        compensation using the intrinsic value method prescribed by APB 25. As presented
        below, the Company applied the disclosure provisions of SFAS 123, as amended
        by
        SFAS 148,*Accounting for Stock-Based Compensation - Transition and
        Disclosure,*  as if the fair value method had been applied. If
        this method had been used, the Company's net income and net income per share
        for
        the years ended December 31, 2005 and 2004 would have been adjusted to the
        pro
        forma amounts below (in thousands except per share data):
  **Year
                  ended December 31,****2005**
              
              
              **2004**Net
                  income -- as reported
              
              $
              7,177
              
              
              $
              3,913Total
                  stock-based compensation costs, net of tax, included in the determination
                  of net income as reported
              
              
              162
              
              
              
              27The
                  stock-based employee compensation cost, net of tax, that would
                  have been
                  included in the determination of net income if the fair value based
                  method
                  had been applied to all awards
              
              
              (2,609
              )
              
              
              (1,016
              )Pro
                  forma net income
              
              $
              4,730
              
              
              $
              2,924Earnings
                  per shareBasic
                  - as reported
              
              $
              0.33
              
              
              $
              0.22Basic
                  - pro forma
              
              $
              0.23
              
              
              $
              0.17Diluted
                  - as reported
              
              $
              0.28
              
              
              $
              0.19Diluted
                  -  pro forma
              
              $
              0.20
              
              
              $
              0.14
 
 At
        December 31, 2006, 3.6 million shares were reserved for future issuance
        upon exercise of outstanding options and 8,575 shares were reserved for future
        issuance upon exercise of outstanding warrants. At December 31, 2006, there
        were
        1.4 million shares of restricted stock outstanding under the 1999 Plan and
        classified as equity.
  The
        following table summarizes information regarding warrants outstanding and
        exercisable as of December 31, 2006 (in thousands, except exercise price
        information):
  **Warrants
                  Outstanding and Exercisable****Exercise
                  Price**
              **Warrants**$1.98
              9**$1.98**
              **9**
  The
        majority of the outstanding warrants expire in December 2011.
 
 **Employee
        Stock Purchase Plan**
  In
        2005,
        the Compensation Committee approved the Employee Stock Purchase Plan (the
        “ESPP”) to be available to employees starting January 1, 2006. The ESPP is a
        broadly-based stock purchase plan in which any eligible employee may elect
        to
        participate by authorizing the Company to make payroll deductions in a specific
        amount or designated percentage to pay the exercise price of an option. In
        no
        event will an employee be granted an option under the ESPP that would permit
        the
        purchase of Common Stock with a fair market value in excess of $25,000 in
        any
        calendar year and the Compensation Committee of the Company has set the current
        annual participation limit at $12,500. For the year ended December 31, 2006,
        approximately 6,000 shares had been purchased under the ESPP.
  There
        are four three-month offering periods in each calendar year beginning on
        January
        1, April 1, July 1, and October 1, respectively. The exercise price of options
        granted under the ESPP is an amount equal to 95% of the fair market value
        of the
        Common Stock on the date of exercise (occurring on, respectively, March 31,
        June
        30, September 30, and December 31). The ESPP is designed to comply with Section
        423 of the Code and thus is eligible for the favorable tax treatment afforded
        by
        Section 423.
  
  23
 
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **9.  
        Line of Credit and Long Term Debt**
  On
        June 29, 2006, the Company entered into an Amended and Restated Loan and
        Security Agreement with Silicon Valley Bank and KeyBank National Association.
        The amended agreement increased the total size of the Company's senior bank
        credit facilities from $28.5 million to $51.3 million by increasing the
        accounts receivable line of credit from $15 million to $25 million and
        increasing the acquisition term line of credit from $13.5 million to
        $26.3 million.
 
 The
        accounts receivable line of credit, which expires in June 2009, provides
        for a borrowing capacity equal to all eligible accounts receivable, including
        80% of unbilled revenues, subject to certain borrowing base calculations
        as
        defined in the agreement, but in no event more than $25 million. Borrowings
        under this line of credit bear interest at the bank's prime rate (8.25% at
        December 31, 2006). As of December 31, 2006, there were no amounts outstanding
        under the accounts receivable line of credit and $25 million of available
        borrowing capacity, excluding $450,000 reserved for two outstanding letters
        of credit to secure facility leases. In January 2007, the letters of
        credit decreased $50,000.
  The
        Company's $26.3 million term acquisition line of credit provides an additional
        source of financing for certain qualified acquisitions. As of December 31,
        2006,
        the balance outstanding under this acquisition line of credit was approximately
        $1.3 million. Borrowings under this acquisition line of credit bear interest
        equal to the four year U.S. Treasury note yield plus 3% based on the spot
        rate
        on the day the draw is processed (7.69% at December 31, 2006). Borrowings
        under
        this acquisition line are repayable in thirty-six equal monthly installments
        after the initial interest only period which continues through June 29, 2007.
        Draws under this acquisition line may be made through June 29, 2008. As of
        December 31, 2006, the balance outstanding under this acquisition line of
        credit
        of $1.3 million had an average interest rate of 7.00%. The
        Company currently has approximately $25.0 million of available borrowing
        capacity under this acquisition line of credit.
 
 The
        Company is required to comply with various financial covenants under the
        $51.3
        million credit facility. Specifically, the Company is required to maintain
        a
        ratio of after tax earnings before interest, depreciation and amortization,
        and
        other non-cash charges, including but not limited to stock and stock option
        compensation expense on trailing three months annualized, to current maturities
        of long-term debt and capital leases plus interest of at least 1.50 to 1.00,
        a
        ratio of cash plus eligible accounts receivable including 80% of unbilled
        revenues less principal amount of all outstanding advances on accounts
        receivable line of credit to advances under the term acquisition line of
        credit
        of at least 0.75 to 1.00, and a maximum ratio of all outstanding advances
        under
        the entire credit facility to earnings before taxes, interest, depreciation,
        amortization and other non-cash charges, including but not limited to, stock
        and
        stock option compensation expense including pro forma adjustments for
        acquisitions on a trailing twelve month basis of no more than 2.50 to 1.00.
        As
        of December 31, 2006, the Company was in compliance with all covenants under
        this facility. This credit facility is secured by substantially all assets
        of
        the Company.
  Notes
        payable to related party at December 31, 2005 consisted of non
        interest-bearing notes issued to the shareholders of Javelin
        Solutions, Inc. (“Javelin”) in April 2002 in connection with the
        Company's acquisition of Javelin. The note was fully repaid in
        2006.
  Future
        minimum term debt repayments as of December 31, 2006 are as follows (in
        thousands):
 
 **Debt
                  Payments**2007
              
              $
              1,2012008
              
              
              137Present
                  value of debt commitments
              
              
              1,338Less
                  current portion
              
              
              1,201Long
                  term portion
              
              $
              137
 
 **10.  
        Income Taxes**
 
 As
        of
        December 31, 2006, the Company had U.S. Federal tax net operating loss
        carry forwards of approximately $6.3 million that will begin to expire in
        2020 if not utilized. The Company has established a valuation allowance against
        these net operating loss carry forwards of $2.0 million.
  Utilization
        of net operating losses may be subject to an annual limitation due to the
        “change in ownership” provisions of the Internal Revenues Code of 1986. The
        annual limitation may result in the expiration of net operating losses before
        utilization.
   24
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 Significant
        components of the provision for income taxes attributable to continuing
        operations are as follows (in thousands):
  
 **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Current:Federal
              
              $
              1,138
              
              
              $
              1,148
              
              
              $
              1,412Foreign
              
              
              102
              
              
              
              223
              
              
              
              255State
              
              
              260
              
              
              
              241
              
              
              
              235Total
                  current
              
              
              1,500
              
              
              
              1,612
              
              
              
              1,902Tax
                  benefit on acquired net operating loss carryforward
              
              
              246
              
              
              
              353
              
              
              
              312Tax
                  benefit from stock options
              
              
              6,554
              
              
              
              2,306
              
              
              
              342Deferred:Federal
              
              
              (902
              )
              
              
              201
              
              
              
              (26
              )Foreign
              
              
              --
              
              
              
              --
              
              
              
              --State
              
              
              (116
              )
              
              
              26
              
              
              
              (2
              )Total
                  deferred
              
              
              (1,018
              )
              
              
              227
              
              
              
              (28
              )Total
                  provision for income taxes
              
              $
              7,282
              
              
              $
              4,498
              
              
              $
              2,528
 
 The
        components of pretax income for the years ended December 31, 2006, 2005 and
        2004
        are as follows (in thousands):
 
 **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Domestic
              
              $
              16,565
              
              
              $
              11,267
              
              
              $
              5,804Foreign
              
              
              284
              
              
              
              408
              
              
              
              637Total
              
              $
              16,849
              
              
              $
              11,675
              
              
              $
              6,441
  Foreign
        operations include Canada and the United Kingdom for the years ended December
        31, 2004 and 2005. In 2006, foreign operations only included Canada. As of
        December 31, 2006, the Company's location in the United Kingdom was
        dormant.
   25
  
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
  Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. Significant components of the
        Company's deferred taxes as of December 31, 2006 and 2005 are as
        follows:
 
 **December
                  31,****2006**
              
              
              **2005**Deferred
                  tax assets:
              
              (In
                  thousands)Current
                  deferred tax assets:Accrued
                  liabilities
              
              $
              298
              
              
              $
              140Net
                  operating losses
              
              
              243
              
              
              
              246Bad
                  debt reserve
              
              
              268
              
              
              
              110809
              
              
              
              496Valuation
                  allowance
              
              
              (457
              )
              
              
              (361
              )Net
                  current deferred tax assets
              
              $
              352
              
              
              $
              135Non-current
                  deferred tax assets:Net
                  operating losses
              
              $
              2,339
              
              
              $
              2,577Fixed
                  assets
              
              
              53
              
              
              
              49Deferred
                  compensation
              
              
              435
              
              
              
              1022,827
              
              
              
              2,728Valuation
                  allowance
              
              
              (1,599
              )
              
              
              (1,984
              )Net
                  non-current deferred tax assets
              
              $
              1,228
              
              
              $
              744Deferred
                  tax liabilities:Current
                  deferred tax liabilities:Deferred
                  income
              
              $
              308
              
              
              $
              93Non-current
                  deferred tax liabilities:Deferred
                  income
              
              $
              431
              
              
              $
              94Foreign
                  withholding tax on undistributed earnings
              
              
              65
              
              
              
              45Intangibles
              
              
              1,983
              
              
              
              461Total
                  non-current deferred tax liabilities
              
              $
              2,479
              
              
              $
              600Net
                  current deferred tax asset
              
              $
              44
              
              
              $
              42Net
                  non-current deferred tax asset (liability)
              
              $
              (1,251
              )
              
              $
              144
  The
        Company has established a valuation allowance to offset a portion of the
        Company's deferred tax assets due to uncertainties regarding the realization
        of
        deferred tax assets based on the Company's earnings history and limitations
        on
        the utilization of acquired net operating losses. The valuation allowance
        decreased by approximately $0.3 million during 2006 and decreased by
        approximately $0.7 million during 2005. These decreases are primarily due
        to the
        benefit of acquired net operating loss carryforwards. As of December 31,
        2006,
        all of the valuation allowance relates to acquired entities, and as such,
        if
        realized, will reduce goodwill or other non-current assets prior to resulting
        in
        an income tax benefit.
 
 Changes
        to the valuation allowance are summarized as follows for the years presented
        (in
        thousands):
 
 **Year
                  ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Balance,
                  beginning of year
              
              $
              2,345
              
              
              $
              3,027
              
              
              $
              1,057Benefit
                  realized
              
              
              (289
              )
              
              
              (446
              )
              
              
              --Additions
                  resulting from purchase accounting
              
              
              --
              
              
              
              --
              
              
              
              1,970Write-offs
              
              
              --
              
              
              
              (236
              )
              
              
              --Balance,
                  end of year
              
              $
              2,056
              
              
              $
              2,345
              
              
              $
              3,027
   26
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 During
        2005, the Company determined that its undistributed earnings of foreign
        subsidiaries were no longer permanently reinvested. All of the undistributed
        earnings were deemed to have been repatriated during 2005 under U.S. tax
        law,
        and current federal and state taxes on the deemed repatriated amounts (less
        applicable foreign tax credits) are included in the respective current
        provisions. Upon actual repatriation of these earnings, in the form of dividends
        or otherwise, the Company will be subject to withholding taxes payable to
        the
        various foreign countries. A deferred tax liability has been recorded to
        reflect
        the foreign withholding tax. The foreign entities have minimal temporary
        items
        and thus no deferred taxes have been provided thereon.
  The
        federal corporate statutory rate is reconciled to the Company's effective
        income
        tax rate as follows:
 
 **Year
                  Ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Federal
                  corporate statutory rate
              
              
              34.3
              %
              
              
              34.0
              %
              
              
              34.0
              %State
                  taxes, net of federal benefit
              
              
              4.6
              
              
              
              4.3
              
              
              
              2.8Intangibles
                  amortization
              
              
              --
              
              
              
              --
              
              
              
              0.7Effect
                  of foreign operations
              
              
              --
              
              
              
              0.1
              
              
              
              0.6Stock
                  compensation
              
              
              2.1
              
              
              
              --
              
              
              
              --Other
              
              
              2.2
              
              
              
              0.1
              
              
              
              1.1Effective
                  income tax rate
              
              
              43.2
              %
              
              
              38.5
              %
              
              
              39.2
              %
  The
        effective income tax rate increased to 43.2% for the year ended December
        31,
        2006 from 38.5% for the year ended December 31, 2005 as a result of
        non-deductible stock compensation related to incentive stock options included
        in
        the Company's statement of operations in 2006 as a result of the adoption
        of
        SFAS 123R on January 1, 2006 and certain non-deductible compensation required
        by
        Section 162(m) of the Internal Revenue Code, which imposes a limitation on
        the
        deductibility of certain compensation in excess of $1 million paid to covered
        employees .
 
 **11.
        Commitments and Contingencies**
  The
        Company leases its office facilities and certain equipment under various
        operating lease agreements, as amended. The Company has the option to extend
        the
        term of certain of its office facilities leases. Future minimum commitments
        under these lease agreements as of December 31, 2006 are as follows (in
        thousands):
  **Operating**
                **Leases**2007
              
              $
              1,3552008
              
              
              1,1282009
              
              
              1,0202010
              
              
              7682011
              
              
              351Thereafter
              
              
              61Total
                  minimum lease payments
              
              $
              4,683
  Rent
        expense for the years ended December 31, 2006, 2005 and 2004 was
        approximately $1.7 million, $1.5 million and $1.4 million
        respectively.
  In
        connection with certain of its acquisitions, the Company was required to
        establish various letters of credit totaling $450,000 with Silicon
        Valley Bank to serve as collateral for certain office space leases. These
        letters of credit reduce the borrowings available under the Company's line
        of
        credit with Silicon Valley Bank. In January 2007, these letters of credit
        decreased $50,000. One letter of credit for $200,000 will remain in effect
        through October 2009, and the other letter of credit for $250,000 will remain
        in
        effect through June 2007.
  27
   **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
  **12.
        Balance Sheet Components**
  **December
                  31,****2006**
              
              
              **2005**(In
                  thousands)**Accounts
                  receivable:**Accounts
                  receivable
              
              $
              29,461
              
              
              $
              17,037Unbilled
                  revenues
              
              
              9,846
              
              
              
              6,581Allowance
                  for doubtful accounts
              
              
              (707
              )
              
              
              (367
              )**Total**
              
              $
              38,600
              
              
              $
              23,251**Other
                  current assets:**Income
                  tax receivable
              
              $
              2,150
              
              
              $
              1,367Other
                  current assets
              
              
              649
              
              
              
              163**Total**
              
              $
              2,799
              
              
              $
              1,530**Other
                  current liabilities:**Accrued
                  bonus
              
              $
              9,851
              
              
              $
              3,525Accrued
                  subcontractor fees
              
              
              1,803
              
              
              
              1,842Deferred
                  revenues
              
              
              1,318
              
              
              
              1,084Payroll
                  related costs
              
              
              1,258
              
              
              
              503Sales
                  and use taxes
              
              
              326
              
              
              
              150Accrued
                  acquisition costs related to Insolexen and EGG
              
              
              563
              
              
              
              --Other
                  accrued expenses
              
              
              915
              
              
              
              1,227**Total**
              
              $
              16,034
              
              
              $
              8,331
 
 **Property
                  and Equipment:**Hardware (useful
                  life of 2 years)
              
              $
              3,933
              
              
              $
              2,708Furniture
                  and fixtures (useful life of 5 years)
              
              
              980
              
              
              
              781Leasehold
                  improvements (useful life of 3 years)
              
              
              275
              
              
              
              150Software (useful
                  life of 1 year)
              
              
              702
              
              
              
              474Accumulated
                  depreciation and amortization
              
              
              (4,084
              )
              
              
              (3,153
              )**Property
                  and equipment, net**
              
              $
              1,806
              
              
              $
              960
 
 **13.
        Allowance for Doubtful Accounts**
 
 Activity
        in the allowance for doubtful accounts is summarized as follows for the years
        presented (in thousands):
 
 **Year
                  ended December 31,****2006**
              
              
              **2005**
              
              
              **2004**Balance,
                  beginning of year
              
              $
              367
              
              
              $
              654
              
              
              $
              623Charged
                  to expense
              
              
              264
              
              
              
              32
              
              
              
              33Additions
                  resulting from purchase accounting
              
              
              371
              
              
              
              24
              
              
              
              --Uncollected
                  balances written off, net of recoveries
              
              
              (295
              )
              
              
              (343
              )
              
              
              (2
              )Balance,
                  end of year
              
              $
              707
              
              
              $
              367
              
              
              $
              654
  28
  
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **14.
        Business Combinations**
  Acquisition
        of iPath Solutions, Ltd.
  On
        June 10, 2005, the Company acquired iPath Solutions, Ltd. (“iPath”), a
        privately held technology consulting company, for $9.9 million. The
        purchase price consists of $3.9 million in cash, $900,000 of
        liabilities repaid on behalf of iPath, transaction costs of $600,000, and
        623,803 shares of the Company's common stock valued at approximately $7.24
        per
        share (approximately $4.5 million worth of Company's common stock). The
        total purchase price has been allocated to the assets acquired, including
        identifiable intangible assets, based on their respective fair values at
        the
        date of acquisition. Goodwill is assigned at the enterprise level. The purchase
        price was allocated to intangibles based on management's estimate and an
        independent valuation. The results of the iPath operations have been included
        in
        the Company's consolidated financial statements since June 10,
        2005.
 
 The
        purchase price allocation is as follows (in millions):
 
 Intangibles:Customer
                  relationships
              
              $
              0.7Customer
                  backlog
              
              
              0.2Non-compete
                  agreements
              
              
              0.1Goodwill
              
              
              7.3Tangible
                  assets and liabilities acquired:Accounts
                  receivable
              
              
              1.6Property
                  and equipment
              
              
              0.1Accrued
                  expenses
              
              
              (0.1
              )Net
                  assets acquired
              
              $
              9.9
 
 The
        Company estimates that the intangible assets acquired have useful lives of
        six
        months to five years.
 
 Acquisition
        of Vivare, LP
  On
        September 2, 2005, the Company acquired Vivare, LP (“Vivare”), a privately
        held technology consulting company, for $9.8 million. The purchase price
        consists of $4.9 million in cash, transaction costs of approximately
        $500,000, and 618,500 shares of the Company's common stock valued at
        approximately $7.03 per share (approximately $4.4 million worth of
        Company's common stock). The total purchase price has been allocated to the
        assets acquired, including identifiable intangible assets, based on their
        respective fair values at the date of acquisition. Goodwill is assigned at
        the
        enterprise level. The purchase price was allocated to intangibles based on
        management's estimate and an independent valuation. The results of Vivare's
        operations have been included in the Company's consolidated financial statements
        since September 2, 2005.
 
 The
        purchase price allocation is as follows (in millions):
  Intangibles:Customer
                  relationships
              
              $
              1.0Customer
                  backlog
              
              
              0.1Non-compete
                  agreements
              
              
              0.1Goodwill
              
              
              6.8Tangible
                  assets acquired:Accounts
                  receivable
              
              
              1.7Property
                  and equipment
              
              
              0.1Net
                  assets acquired
              
              $
              9.8
 
 The
        Company estimates that the intangible assets acquired have useful lives of
        nine
        months to six years.
   29
  
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 Acquisition
        of Bay Street Solutions, Inc.
  On
        April
        7, 2006, the Company acquired Bay Street Solutions, Inc. (“Bay Street”), a
        national customer relationship management consulting firm, for approximately
        $9.8 million.  The purchase price consists of approximately $4.1 million in
        cash, transaction costs of $636,000, and 464,569 shares of the Company's
        common
        stock valued at approximately $12.18 per share (approximately $5.7 million
        worth
        of the Company's common stock) less the value of those shares subject to
        a lapse
        acceleration right of approximately $630,000, as determined by a third party
        valuation firm.  The total purchase price has been allocated to the assets
        acquired, including identifiable intangible assets, based on their respective
        fair values at the date of acquisition. Goodwill is assigned at the enterprise
        level. The purchase price was allocated to intangibles based on management's
        estimate and an independent valuation. Management expects to finalize the
        purchase price allocation within twelve months of the acquisition date as
        certain initial accounting estimates are resolved. The results of Bay Street's
        operations have been included in the Company's consolidated financial statements
        since April 7, 2006.
  The
        preliminary purchase price allocation is as follows (in millions):
  Intangibles:Customer
                  relationships
              
              $
              1.6Customer
                  backlog
              
              
              0.2Non-compete
                  agreements
              
              
              0.1Goodwill
              
              
              6.4Tangible
                  assets acquired:Accounts
                  receivable
              
              
              2.4Other
                  assets
              
              
              0.6Property
                  and equipment
              
              
              0.1Accrued
                  expenses
              
              
              (1.6
              )Net
                  assets acquired
              
              $
              9.8
 
 The
        Company estimates that the intangible assets acquired have useful lives of
        four
        months to six years.
 
 Acquisition
        of Insolexen, Corp.
  On
        May
        31, 2006, the Company acquired Insolexen, Corp. (“Insolexen”), a business
        integration consulting firm, for approximately $15.1 million. The purchase
        price
        consists of approximately $7.7 million in cash, transaction costs of
        $695,000, and 522,944 shares of the Company's common stock valued at
        approximately $13.72 per share (approximately $7.2 million worth of the
        Company's common stock) less the value of those shares subject to a lapse
        acceleration right of approximately $613,000, as determined by a third party
        valuation firm. The total purchase price has been allocated to the assets
        acquired, including identifiable intangible assets, based on their respective
        fair values at the date of acquisition. Goodwill is assigned at the enterprise
        level. The purchase price was allocated to intangibles based on management's
        estimate and an independent valuation. Management expects to finalize the
        purchase price allocation within twelve months of the acquisition date as
        certain initial accounting estimates are resolved. The results of Insolexen's
        operations have been included in the Company's consolidated financial statements
        since May 31, 2006.
   30
  
 **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 The
        preliminary purchase price allocation is as follows (in millions):
  Intangibles:Customer
                  relationships
              
              $
              2.8Customer
                  backlog
              
              
              0.4Non-compete
                  agreements
              
              
              0.1Goodwill
              
              
              10.5Tangible
                  assets and liabilities acquired:Accounts
                  receivable
              
              
              3.9Other
                  assets
              
              
              2.1Accrued
                  expenses
              
              
              (4.7
              )Net
                  assets acquired
              
              $
              15.1
 
 The
        Company estimates that the intangible assets acquired have useful lives of
        seven
        months to six years.
 
 Acquisition
        of the Energy, Government and General Business (EGG) division of Digital
        Consulting & Software Services, Inc.
 
 On
        July
        21, 2006, the Company acquired the Energy, Government and General Business
        (“EGG”) division of Digital Consulting & Software Services, Inc., a systems
        integration consulting business, for approximately $13.1 million. The purchase
        price consists of approximately $6.4 million in cash, transaction costs of
        approximately $275,000, and 511,382 shares of the Company's common stock
        valued
        at approximately $12.71 per share (approximately $6.5 million worth of the
        Company's common stock) less the value of those shares subject to a lapse
        acceleration right of approximately $92,000, as determined by a third party
        valuation firm. The total purchase price has been allocated to the assets
        acquired, including identifiable intangible assets, based on their respective
        fair values at the date of acquisition. Goodwill is assigned at the enterprise
        level. The purchase price was allocated to intangibles based on management's
        estimate and an independent valuation. Management expects to finalize the
        purchase price allocation within twelve months of the acquisition date as
        certain initial accounting estimates are resolved. The results of EGG's
        operations have been included in the Company's consolidated financial statements
        since July 21, 2006.
 
 The
        preliminary purchase price allocation is as follows (in millions):
 Intangibles:Customer
                  relationships
              
              $
              3.7Customer
                  backlog
              
              
              0.5Non-compete
                  agreements
              
              
              0.1Goodwill
              
              
              6.3Tangible
                  assets and liabilities acquired:Accounts
                  receivable
              
              
              3.7Other
                  assets
              
              
              0.4Accrued
                  expenses
              
              
              (1.6
              )Net
                  assets acquired
              
              $
              13.1
 
 The
        Company estimates that the intangible assets acquired have useful lives of
        five
        months to six years.
   31
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 Pro-forma
        Results of Operations
  The
        following presents the unaudited pro forma combined results of operations
        of the
        Company with iPath, Vivare, Bay Street, Insolexen, and EGG for the years
        ended
        December 31, 2006 and 2005, after giving effect to certain pro forma adjustments
        related to the amortization of acquired intangible assets and assuming these
        companies were acquired as of the beginning of each period presented. These
        unaudited pro forma results are not necessarily indicative of the actual
        consolidated results of operations had the acquisitions actually occurred
        on
        January 1, 2005 and January 1, 2006 or of future results of operations of
        the
        consolidated entities (in thousands, except per share
        information):
  **December
                  31,****2006**
              
              
              **2005**Revenues
              
              $
              181,953
              
              
              $
              148,833Net
                  income
              
              $
              9,132
              
              
              $
              8,464Basic
                  income per share
              
              $
              0.36
              
              
              $
              0.35Diluted
                  income per share
              
              $
              0.32
              
              
              $
              0.31
 
 **15.
        Quarterly Financial Results (Unaudited)**
  The
        following tables set forth certain unaudited supplemental quarterly financial
        information for the years ended December 31, 2006 and 2005. The quarterly
        operating results are not necessarily indicative of future results of
        operations. The financial data presented is not directly comparable between
        periods as a result of the adoption of Statement of Financial Accounting
        Standards No. 123R (As Amended),*Share Based Payment* (“SFAS 123R”)
        in the first quarter of 2006 and three acquisitions in 2006 and two
        acquisitions in 2005 (in thousands, except per share data):
  **Three
                  Months Ended,****March
                  31,**
                **2006**
              
              
              **June
                  30,**
                **2006**
              
              
              **September
                  30,**
                **2006**
              
              
              **December
                  31,**
                **2006****(Unaudited)**Revenues:Services
              
              $
              25,606
              
              
              $
              32,751
              
              
              $
              40,219
              
              
              $
              39,145Software
              
              
              2,682
              
              
              
              2,587
              
              
              
              1,532
              
              
              
              7,635Reimbursable
                  expenses
              
              
              1,356
              
              
              
              2,172
              
              
              
              2,543
              
              
              
              2,698Total
                  revenues
              
              $
              29,644
              
              
              $
              37,510
              
              
              $
              44,294
              
              
              $
              49,478Gross
                  margin
              
              $
              9,288
              
              
              $
              13,178
              
              
              $
              15,854
              
              
              
              15,437Income
                  from operations
              
              $
              3,057
              
              
              $
              4,027
              
              
              $
              4,840
              
              
              $
              5,159Income
                  before income taxes
              
              $
              3,034
              
              
              $
              3,900
              
              
              $
              4,675
              
              
              $
              5,241Net
                  income
              
              $
              1,705
              
              
              $
              2,255
              
              
              $
              2,834
              
              
              $
              2,774Basic
                  net income per share
              
              $
              0.07
              
              
              $
              0.09
              
              
              $
              0.11
              
              
              $
              0.10Diluted
                  net income per share
              
              $
              0.07
              
              
              $
              0.08
              
              
              $
              0.10
              
              
              $
              0.10**Three
                  Months Ended,****March
                  31,**
                **2005**
              
              **June
                  30,**
                **2005**
              
              **September
                  30,**
                **2005**
              
              **December
                  31,**
                **2005****(Unaudited)**Revenues:Services
              
              $
              17,657
              
              
              $
              19,234
              
              
              $
              23,157
              
              
              $
              23,691Software
              
              
              1,407
              
              
              
              1,393
              
              
              
              1,918
              
              
              
              4,669Reimbursable
                  expenses
              
              
              660
              
              
              
              1,034
              
              
              
              1,048
              
              
              
              1,129Total
                  revenues
              
              $
              19,724
              
              
              $
              21,661
              
              
              $
              26,123
              
              
              $
              29,489Gross
                  margin
              
              $
              6,720
              
              
              $
              7,283
              
              
              $
              9,298
              
              
              
              9,117Income
                  from operations
              
              $
              2,532
              
              
              $
              2,756
              
              
              $
              3,555
              
              
              $
              3,432Income
                  before income taxes
              
              $
              2,420
              
              
              $
              2,650
              
              
              $
              3,359
              
              
              $
              3,245Net
                  income
              
              $
              1,488
              
              
              $
              1,627
              
              
              $
              2,066
              
              
              $
              1,996Basic
                  net income per share
              
              $
              0.07
              
              
              $
              0.08
              
              
              $
              0.09
              
              
              $
              0.09Diluted
                  net income per share
              
              $
              0.06
              
              
              $
              0.07
              
              
              $
              0.08
              
              
              $
              0.08
 
  32
  **PERFICIENT,
        INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 
 **16.
        Subsequent Event**
 
 On
        February 20, 2007, the Company consummated the acquisition of E-Tech
        Solutions.  The Company paid approximately $12.2 million consisting of
        approximately $6.1 million in cash and $6.1 million worth of the Company's
        common stock, subject to certain post-closing adjustments.  As required,
        the Company will use the closing price of the its common stock at or near
        the
        close date in reporting the value of the stock consideration paid in the
        acquisition, which was $20.34. The Company issued 306,248 shares of its common
        stock in connection with the acquisition.
 
 
  33
  
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 The
        Board
        of Directors and Stockholders
 Perficient,
        Inc.
 Austin,
        Texas
  We
        have
        audited the accompanying consolidated balance sheets of Perficient, Inc.
        as of
        December 31, 2006 and 2005 and the related consolidated statements of income,
        stockholders' equity and comprehensive income, and cash flows for each of
        the
        three years in the period ended December 31, 2006. These financial statements
        are the responsibility of the Company's management. Our responsibility is
        to
        express an opinion on these financial statements based on our
        audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements, assessing the accounting principles used and significant estimates
        made by management, as well as evaluating the overall financial statement
        presentation. We believe that our audits provide a reasonable basis for our
        opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Perficient, Inc. at December
        31, 2006 and 2005, and the results of its operations and its cash flows for
        each
        of the three years in the period ended December 31, 2006**,**  in conformity with accounting principles generally
        accepted in the United States of America.
  As
        discussed in Note 1 to the consolidated financial statements, effective
        January 1, 2006, the Company adopted Statement of Financial Accounting
        Standards No. 123(R),*Share-Based Payment*
        .
  We
        also
        have audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), the effectiveness of Perficient, Inc.'s
        internal control over financial reporting as of December 31, 2006, based
        on
        criteria established in*Internal Control - Integrated
        Framework*  issued by the Committee of Sponsoring Organizations of
        the Treadway Commission (COSO) and our report dated March 1, 2007 expressed
        an
        unqualified opinion thereon.
 
 /s/
        BDO Seidman, LLP
 Houston,
        Texas
 March
        1,
        2007, except Note 2
 as
        to
        which date is August 13, 2007
 
  34
  
 **Item
        9A.** **Controls and Procedures.**
  *Evaluation
        of Disclosure Controls and Procedures*
  We
        have
        established disclosure controls and procedures to ensure that material
        information relating to the Company, including its consolidated subsidiaries,
        is
        made known to the officers who certify the Company's financial reports and
        to
        other members of senior management and the Board of Directors.
  We
        maintain disclosure controls and procedures that are designed to ensure that
        information required to be disclosed in the Company's reports under the Exchange
        Act is recorded, processed, summarized and reported within the time periods
        specified in the SEC's rules and forms, and that such information is accumulated
        and communicated to management, including the principal executive officer
        and
        principal financial officer of the Company, as appropriate, to allow timely
        decisions regarding required disclosure. The Company's management, with the
        participation of the Company's principal executive officer and principal
        financial officer, has evaluated the effectiveness of the Company's disclosure
        controls and procedures as of the end of the fiscal year covered by this
        Annual
        Report on Form 10-K/A. As described below under Management's Annual Report
        on
        Internal Control Over Financial Reporting, the Company has determined that
        its
        disclosure controls and procedures were effective.
  *Management's
        Report on Internal Control over Financial Reporting*
  Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting, as such term is defined in Exchange Act
        Rules
        13a-15(f). In fulfilling this responsibility, estimates and judgments by
        management are required to assess the expected benefits and related costs
        of
        control procedures. The objectives of internal control include providing
        management with reasonable, but not absolute, assurance that assets are
        safeguarded against loss from unauthorized use or disposition, and that
        transactions are executed in accordance with management's authorization and
        recorded properly to permit the preparation of consolidated financial statements
        in conformity with accounting principles generally accepted in the United
        States
        of America. Under the supervision and with the participation of our management,
        including our principal executive officer and principal financial officer,
        we
        conducted an evaluation of the effectiveness of our internal control over
        financial reporting based on the framework in Internal Control - Integrated
        Framework issued by the Committee of Sponsoring Organizations of the Treadway
        Commission. Based on our assessment under those criteria, management concluded
        that the Company's internal control over financial reporting was effective
        as of
        December 31, 2006.
 
 The Company acquired Bay Street, Insolexen, and EGG in April, May, and July
        of
        2006, respectively. As permitted by SEC guidance, management excluded these
        acquired companies from its assessment of the effectiveness of the Company's
        internal control over financial reporting as of December 31, 2006. In total,
        Bay
        Street, Insolexen, and EGG represented 29% and 17% of the Company's total
        assets
        and total revenues, respectively, as of and for the year ended December 31,
        2006. Excluding identifiable intangible assets and goodwill recorded in the
        business combination, Bay Street, Insolexen, and EGG represented 6% of the
        Company's total assets as of December 31, 2006.
  Our
        management's assessment of the effectiveness of our internal control over
        financial reporting as of December 31, 2006 has been audited by BDO Seidman,
        LLP, an independent registered public accounting firm, as stated in their
        report
        which is included herein.
 
 *Changes
        in Internal Control Over Financial Reporting*
  During
        the quarter ended December 31, 2006, we continued our remediation efforts
        from
        the prior quarters in order to fully remediate our previously reported material
        weakness. This includes performing the following:
 
 ·
              Verified
                  employee security access to our automated general ledger system
                  is
                  appropriate related to the employee's responsibilities and further
                  strengthened our controls surrounding general ledger access granted
                  to our
                  new accounting personnel;·
              Established
                  certain spreadsheet controls including required detail review of
                  key
                  spreadsheets, limited access to key spreadsheets on a central server
                  and
                  assignment of appropriate rights, a controlled process for requesting
                  changes to a spreadsheet, and a process to back up spreadsheets
                  on a
                  regular basis so that complete and accurate information is available
                  for
                  financial reporting;·
              Activated
                  certain additional application and prevent controls with the assistance
                  of
                  our general ledger software provider and our internal technology
                  personnel; and·
              Engaged
                  a third party to assist with project management and strategic oversight
                  of
                  our remediation of the 2005 significant deficiencies and material
                  weakness
                  and the 2006 control review process.
   35
  In
        addition, during the year ended December 31, 2006, we have hired several
        new
        employees to further diversify accounting responsibilities, most notably
        the
        addition of a new Chief Financial Officer, but also including various senior
        and
        staff accountants.
  The
        cumulative impact of these activities established during 2006 occurred and
        management obtained sufficient evidence of the operating effectiveness of
        such
        additional controls during the year ended December 31, 2006. Accordingly,
        management has concluded that our previously reported material weakness caused
        principally by inadequate staffing levels has been remediated.
 
 As
        discussed in Note 2 to the Notes to Consolidated Financial Statements, in
        August
        2007, it was determined that certain previously reported payments associated
        with our business acquisitions were incorrectly included as a component of
        cash
        flows from operating activities instead of from investing activities in the
        Company’s Consolidated Statement of Cash Flows. These errors were promptly
        brought to the attention of our audit committee and former auditors as we
        worked
        to resolve such errors with our current auditors. As a result of correcting
        these misclassifications, in the annual report of Form 10-K/A, we have restated
        our Consolidated Statements of Cash Flows for the years ended December 31,
        2006
        and 2005. We have also revised our Notes to Consolidated Financial Statements
        as
        necessary to reflect these errors.
 
 These
        errors resulted from a significant deficiency in the procedures to reconcile
        and
        review the impact of acquisitions on the Consolidated Statement of Cash Flows.
        The controls in place regarding reconciliation and review of cash flows related
        to acquisition activity represent a very narrow subset of the Company’s
        financial closing and disclosure controls and an even narrower element of
        the
        Company’s overall financial control structure. The Company does not believe that
        this restatement resulted from a breakdown in its general controls; rather
        represents an isolated classification error for specific types of acquisition
        payments.  In light of these reclassification errors identified, we
        have implemented new procedures for reconciling and reviewing the Consolidated
        Statement of Cash Flows related to business acquisitions.  Management
        believes that controls are now in place to ensure similar errors do not occur
        again.
 
 In
        connection with the restatement and the filing of this Form 10-K/A, the Company
        re-evaluated, with the participation of management, including the Company’s
        Chief Executive Officer and Chief Financial Officer, the effectiveness of
        the
        design and operation of the Company’s disclosure controls and procedures as of
        December 31, 2006.  The Company considered that the restatement of
        financial statements in prior filings made with the SEC may be an indicator
        of
        the existence of weaknesses in the design or operation of internal control
        over
        financial reporting.  Based on such evaluation, the Chief Executive
        Officer and the Chief Financial Officer concluded that the Company’s original
        conclusions with respect to the effectiveness of disclosure controls and
        procedures remain appropriate and that the disclosure controls and procedures
        were effective at a reasonable assurance level as of December 31, 2006. In
        arriving at such conclusion, management considered the facts and circumstances
        that resulted in the reclassifications in the statements of cash flows,
        including considerations with respect to its internal controls over financial
        reporting. Management determined that the reclassifications were not the
        result
        of a material weakness within internal control over financial
        reporting.
 
 In
        concluding that the Company’s disclosure controls and procedures were effective
        as of December 31, 2006, management considered, among other things, the
        circumstances that resulted in the restatement of its previously issued
        financial statements as more fully described in Note 2, Restatement of Financial
        Information, to the consolidated financial statements included within this
        Form
        10-K/A.
 
 
  36
  
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To
        the
        Board of Directors and Stockholders
 Perficient,
        Inc.
 Austin,
        Texas
  We
        have
        audited management's assessment, included in the accompanying Management's
        Report on Internal Control over Financial Reporting, that Perficient, Inc.
        (“the
        Company”) maintained effective internal control over financial reporting as of
        December 31, 2006, based on the criteria established in Internal
        Control-Integrated Framework, issued by the Committee of Sponsoring
        Organizations, or COSO, of the Treadway Commission. The Company's management
        is
        responsible for maintaining effective internal control over financial reporting
        and for its assessment of the effectiveness of internal control over financial
        reporting. Our responsibility is to express an opinion on management's
        assessment and an opinion on the effectiveness of the Company's internal
        control
        over financial reporting based on our audit.
  We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether effective
        internal control over financial reporting was maintained in all material
        respects. Our audit included obtaining an understanding of internal control
        over
        financial reporting, evaluating management's assessment, testing and evaluating
        the design and operating effectiveness of internal control, and performing
        such
        other procedures as we considered necessary in the circumstances. We believe
        that our audit provides a reasonable basis for our opinion.
  A
        company's internal control over financial reporting is a process designed
        to
        provide reasonable assurance regarding the reliability of financial reporting
        and the preparation of financial statements for external purposes in accordance
        with generally accepted accounting principles. A company's internal control
        over
        financial reporting includes those policies and procedures that:
        (1) pertain to the maintenance of records that, in reasonable detail,
        accurately and fairly reflect the transactions and dispositions of the assets
        of
        the Company; (2) provide reasonable assurance that transactions are
        recorded as necessary to permit preparation of financial statements in
        accordance with generally accepted accounting principles, and that receipts
        and
        expenditures of the Company are being made only in accordance with
        authorizations of management and directors of the Company; and (3) provide
        reasonable assurance regarding prevention or timely detection of unauthorized
        acquisition, use, or disposition of the Company's assets that could have
        a
        material effect on the financial statements.
  Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that the degree of compliance
        with the policies or procedures may deteriorate.
  As
        indicated in the accompanying Management's Report on Internal Control Over
        Financial Reporting, the scope of management's assessment of the effectiveness
        of internal control over financial reporting includes all of the Company's
        consolidated operations, except for the acquired operations of Bay Street
        Solutions, Inc., Insolexen Corporation, and the Energy, Government and General
        Business (“EGG”) division of Digital Consulting & Software Services, Inc.
        (collectively the “Acquired Companies”), each of which the Company acquired
        during 2006. The Acquired Companies represented 29% of the Company's total
        assets as of December 31, 2006, and 17% of the Company's revenues for the
        year
        ended December 31, 2006. Our audit of internal control over financial reporting
        of the Company also excluded an evaluation of the internal control over
        financial reporting of the Acquired Companies' operations.
  In
        our
        opinion, management's assessment that Perficient, Inc. maintained effective
        internal control over financial reporting as of December 31, 2006 is fairly
        stated in all material respects, based on the criteria established in Internal
        Control-Integrated Framework issued by COSO. Also in our opinion, the Company
        maintained, in all material respects, effective internal control over financial
        reporting as of December 31, 2006, based on the criteria established in Internal
        Control-Integrated Framework issued by COSO.
  We
        have
        also audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), the consolidated balance sheets of Perficient,
        Inc. as of December 31, 2006 and 2005, and the related consolidated statements
        of income, stockholders' equity, and cash flows for each of the three years
        in
        the period ended December 31, 2006. Our report on these financial
        statements dated, March 1, 2007, expressed an unqualified opinion
        thereon.
 
 /s/
        BDO Seidman, LLP
 Houston,
        Texas
 March
        1, 2007, except Note 2
 as
        to
        which date is August 13, 2007
 
  37
  **PART
        IV**
  **Item
        15.** **Exhibits, Financial Statement
        Schedules.**
  (a)
                  1.
              Financial
                  Statements
  The
        following consolidated statements are included within Item 8 under the following
        captions:
  **Index**
              
              
              **Page**Consolidated
                  Balance Sheets
              
              
              11Consolidated
                  Statements of Income
              
              
              12Consolidated
                  Statements of Changes in Stockholders' Equity
              
              
              13Consolidated
                  Statements of Cash Flows
              
              
              14Notes
                  to Consolidated Financial Statements
              
              
              15-33Report
                  of Independent Registered Public Accounting Firm
              
              
              34
  2.
              Financial
                  Statement Schedules
  No financial statement schedules are required to be filed by Items 8 and
        15(d)
        because they are not required or are not applicable, or the required information
        is set forth in the applicable financial statements or notes
        thereto.
  3.
              Exhibits
  See Index to Exhibits on page 40.
 
 
 38
  
 **SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) 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.
 PERFICIENT,
                  INC.Date:
                  August 13, 2007
              By:
              /s/ John
                  T. McDonaldJohn
                  T. McDonaldChief
                  Executive Officer*(Principal Executive
                  Officer)*
  Date:
                  August 13, 2007
              By:
              /s/ Paul
                  E. MartinPaul
                  E. MartinChief
                  Financial Officer*(Principal Financial
                  Officer)*
  Date:
                  August 13, 2007
              By:
              /s/ Richard
                  T. KalbfleishRichard
                  T. KalbfleishVice
                  President of Finance and Administration*(Principal Accounting
                  Officer)*
 
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
  **Signature**
              
              **Title**
              
              **Date**/s/
                  John T. McDonald
              
              
              Chief
                  Executive Officer and
              
              
              August
                  13, 2007John
                  T. McDonald
              
              
              Chairman
                  of the Board (*Principal Executive Officer)*/s/
                  Ralph C. Derrickson*
              
              
              Director
              
              
              August
                  13, 2007Ralph
                  C. Derrickson/s/
                  Max D. Hopper*
              
              
              Director
              
              
              August
                  13, 2007Max
                  D. Hopper/s/
                  Kenneth R. Johnsen*
              
              
              Director
              
              
              August
                  13, 2007Kenneth
                  R. Johnsen/s/
                  David S. Lundeen*
              
              
              Director
              
              
              August
                  13, 2007David
                  S. Lundeen
 
 
 *BY:
                  /s/ Paul E. MartinPaul
                  E. Martin
 *Attorney-in-Fact*
 
  39
  **INDEX
        TO EXHIBITS**
 
 **Exhibit**
                **Number**
              **Description**2.1
              Asset
                  Purchase Agreement, dated as of June 10, 2005, by and among
                  Perficient, Inc., Perficient iPath, Inc. and iPath Solutions, Ltd.,
                  previously filed with the Securities and Exchange Commission as
                  an Exhibit
                  to our Current Report on Form 8-K filed on June 15, 2005 and incorporated
                  herein by reference2.2
              Asset
                  Purchase Agreement, dated as of September 2, 2005, by and among
                  Perficient, Inc., Perficient Vivare, Inc., Vivare, LP and the other
                  signatories thereto, previously filed with the Securities and Exchange
                  Commission as an Exhibit to our Current Report on Form 8-K filed
                  on
                  September 9, 2005 and incorporated herein by reference2.3
              Agreement
                  and Plan of Merger, dated as of April 6, 2006, by and among Perficient,
                  Inc., PFT MergeCo, Inc., Bay Street Solutions, Inc. and the other
                  signatories thereto, previously filed with the Securities and Exchange
                  Commission as an Exhibit to our Current Report on Form 8-K filed
                  on April
                  12, 2006 and incorporated herein by reference2.4
              Agreement
                  and Plan of Merger, dated as of May 31, 2006, by and among Perficient,
                  Inc., PFT MergeCo II, Inc., Insolexen, Corp., HSU Investors, LLC,
                  Hari
                  Madamalla, Steve Haglund and Uday Yallapragada, previously filed
                  with the
                  Securities and Exchange Commission as an Exhibit to our Current
                  Report on
                  Form 8-K filed on June 5, 2006 and incorporated herein by
                  reference2.5
              Asset
                  Purchase Agreement, dated as of July 20, 2006, by and among Perficient,
                  Inc., Perficient DCSS, Inc. and Digital Consulting & Software
                  Services, Inc., previously filed with the Securities and Exchange
                  Commission as an Exhibit to our Current Report on Form 8-K filed
                  on July
                  26, 2006 and incorporated herein by reference3.1
              Certificate
                  of Incorporation of Perficient, Inc., previously filed with the
                  Securities
                  and Exchange Commission as an Exhibit to our Registration Statement
                  on
                  Form SB-2 (File No. 333-78337) declared effective on July 28, 1999
                  by the
                  Securities and Exchange Commission and incorporated herein by
                  reference3.2
              Certificate
                  of Amendment to Certificate of Incorporation of Perficient, Inc.,
                  previously filed with the Securities and Exchange Commission as
                  an Exhibit
                  to our Form 8-A filed with the Securities and Exchange Commission
                  pursuant
                  to Section 12(g) of the Securities Exchange Act of 1934 on February
                  15,
                  2005 and incorporated herein by reference3.3
              Certificate
                  of Amendment to Certificate of Incorporation of Perficient, Inc.,
                  previously filed with the Securities and Exchange Commission as
                  an Exhibit
                  to our Registration Statement on Form S-8 (File No. 333-130624)
                  filed on
                  December 22, 2005 and incorporated herein by reference3.4
              Bylaws
                  of Perficient, Inc., previously filed with the Securities and Exchange
                  Commission as an Exhibit to our Registration Statement on Form
                  SB-2 (File
                  No. 333-78337) declared effective on July 28, 1999 by the Securities
                  and
                  Exchange Commission and incorporated herein by
                  reference4.1
              Specimen
                  Certificate for shares of common stock, previously filed with the
                  Securities and Exchange Commission as an Exhibit to our Registration
                  Statement on Form SB-2 (File No. 333-78337) declared effective
                  on July 28,
                  1999 by the Securities and Exchange Commission and incorporated
                  herein by
                  reference4.2
              Warrant
                  granted to Gilford Securities Incorporated, previously filed with
                  the
                  Securities and Exchange Commission as an Exhibit to our Registration
                  Statement on Form SB-2 (File No. 333-78337) declared effective
                  on July 28,
                  1999 by the Securities and Exchange Commission and incorporated
                  herein by
                  reference
   40
   **Exhibit**
                **Number**
              **Description**4.3
              Form
                  of Common Stock Purchase Warrant, previously filed with the Securities
                  and
                  Exchange Commission as an Exhibit to our Current Report on Form
                  8-K filed
                  on January 17, 2002 and incorporated herein by
                  reference4.4
              Form
                  of Warrant, previously filed with the Securities and Exchange Commission
                  as an Exhibit to our Registration Statement on Form S-3 (File No.
                  333-117216) and incorporated by reference herein10.1
              Perficient,
                  Inc. Amended and Restated 1999 Stock Option/Stock Issuance Plan,
                  previously filed with the Securities and Exchange Commission as
                  an Exhibit
                  to our annual report on Form 10-K for the year ended December 31,
                  2005 and
                  incorporated by reference herein10.2
              Form
                  of Stock Option Agreement, previously filed with the Securities
                  and
                  Exchange Commission as an Exhibit to our Annual Report on Form
                  10-KSB for
                  the fiscal year ended December 31, 2004 and incorporated herein
                  by
                  reference10.3
              Perficient,
                  Inc. Employee Stock Purchase Plan, previously filed with the Securities
                  and Exchange Commission as Appendix A to the Registrant's Schedule
                  14A
                  (File No. 001-15169) on October 13, 2005 and incorporated herein
                  by
                  reference10.4
              Form
                  of Restricted Stock Agreement, previously filed with the Securities
                  and
                  Exchange Commission as an Exhibit to our annual report on Form
                  10-K for
                  the year ended December 31, 2005 and incorporated by reference
                  herein10.5
              Form
                  of Indemnity Agreement between Perficient, Inc. and each of our
                  directors
                  and officers, previously filed with the Securities and Exchange
                  Commission
                  as an Exhibit to our Registration Statement on Form SB-2 (File
                  No.
                  333-78337) declared effective on July 28, 1999 by the Securities
                  and
                  Exchange Commission and incorporated herein by
                  reference10.6
              Offer
                  Letter, dated July 20, 2006, by and between Perficient, Inc. and
                  Mr. Paul
                  E. Martin, previously filed with the Securities and Exchange Commission
                  as
                  an Exhibit to our Current Report on Form 8-K filed on July 26,
                  2006 and
                  incorporated herein by reference10.7
              Offer
                  Letter Amendment, dated August 31, 2006, by and between Perficient,
                  Inc.
                  and Mr. Paul E. Martin, previously filed with the Securities and
                  Exchange
                  Commission as an Exhibit to our Current Report on Form 8-K filed
                  on
                  September 1, 2006 and incorporated herein by reference10.8†
              Employment
                  Agreement between Perficient, Inc. and John T. McDonald dated March
                  28,
                  2006, and effective as of January 1, 2006, previously filed with
                  the
                  Securities and Exchange Commission as an Exhibit to our annual
                  report on
                  Form 10-K for the year ended December 31, 2005 and incorporated
                  by
                  reference herein10.9†
              Employment
                  Agreement between Perficient, Inc. and Jeffrey Davis dated August
                  3, 2006,
                  and effective as of July 1, 2006 filed with the Securities and
                  Exchange
                  Commission as an Exhibit to our Quarterly Report on Form 10-Q filed
                  on
                  August 9, 2006 and incorporated herein by reference10.10
              Amended
                  and Restated Loan and Security Agreement by and among Silicon Valley
                  Bank,
                  KeyBank National Association, Perficient, Inc., Perficient Canada
                  Corp.,
                  Perficient Genisys, Inc., Perficient Meritage, Inc. and Perficient
                  Zettaworks, Inc. dated effective as of June 3, 2005, previously
                  filed with
                  the Securities and Exchange Commission as an Exhibit to our annual
                  report
                  on Form 10-K for the year ended December 31, 2005 and incorporated
                  herein
                  by reference10.11
              Amendment
                  to Amended and Restated Loan and Security Agreement, dated as of
                  June 29,
                  2006, by and among Silicon Valley Bank, KeyBank National Association,
                  Perficient, Inc., Perficient Genisys, Inc., Perficient Canada Corp.,
                  Perficient Meritage, Inc., Perficient Zettaworks, Inc., Perficient
                  iPath,
                  Inc., Perficient Vivare, Inc., Perficient Bay Street, LLC and Perficient
                  Insolexen, LLC, previously filed with the Securities and Exchange
                  Commission as an Exhibit to our Current Report on Form 8-K filed
                  on July
                  5, 2006 and incorporated herein by
                  reference
 
  41
   **Exhibit**
                **Number**
              **Description**10.12
              Lease
                  by and between Cornerstone Opportunity Ventures, LLC and Perficient,
                  Inc.,
                  previously filed with the Securities and Exchange Commission as
                  an Exhibit
                  to our annual report on Form 10-K for the year ended December 31,
                  2005 and
                  incorporated by reference herein10.13
              First
                  Amended and Restated Investor Rights Agreements dated as of June
                  26, 2002
                  by and between Perficient, Inc. and the Investors listed on Exhibits
                  A and
                  B thereto, previously filed with the Securities and Exchange Commission
                  as
                  an Exhibit to our Current Report on Form 8-K filed on July 18,
                  2002 and
                  incorporated by reference herein10.14
              Securities
                  Purchase Agreement, dated as of June 16, 2004, by and among Perficient,
                  Inc., Tate Capital Partners Fund, LLC, Pandora Select Partners,
                  LP, and
                  Sigma Opportunity Fund, LLC, previously filed with the Securities
                  and
                  Exchange Commission as an Exhibit to our Current Report on Form
                  8-K filed
                  on June 23, 2004 and incorporated by reference herein14.1
              Corporate
                  Code of Business Conduct and Ethics, previously filed with the
                  Securities
                  and Exchange Commission on Form 10-KSB/A for the year ended December
                  31,
                  2003 and incorporated by reference herein14.2
              Financial
                  Code of Ethics, previously filed with the Securities and Exchange
                  Commission on Form 10-KSB/A for the year ended December 31, 2003
                  and
                  incorporated by reference herein21.1
              Subsidiaries
                  (included as an exhibit to our Annual Report on Form 10-K filed
                  on March
                  5, 2007)23.1*
              Consent
                  of BDO Seidman, LLP24.1
              Power
                  of Attorney (included on the signature page to our Annual Report
                  on Form
                  10-K filed on March 5, 2007)31.1*
              Certification
                  by the Chief Executive Officer of Perficient, Inc. as required
                  by Section
                  302 of the Sarbanes-Oxley Act of 200231.2*
              Certification
                  by the Chief Financial Officer of Perficient, Inc. as required
                  by Section
                  302 of the Sarbanes-Oxley Act of 200232.1*
              Certification
                  by the Chief Executive Officer and Chief Financial Officer of Perficient,
                  Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section
                  906 of the Sarbanes-Oxley Act of
                  2002
  
 †
              Identifies
                  an Exhibit that consists of or includes a management contract or
                  compensatory plan or arrangement.
  *
              Filed
                  herewith.
   42