Item 6.                                                            Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this annual report on Form 10-KSB constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical, including statements regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future and are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “will,” “should” and “could.”  These forward-looking statements involve numerous risks and uncertainties that could cause our actual results to be materially different from those set forth in the forward-looking statements including, without limitation, our lack of profitable operating history, changes in our business, potential need for additional capital and the other additional risks and uncertainties identified under the caption “Risk Factors,” beginning on page 29 and elsewhere in this annual report or in any supplement we may file. The following discussion should also be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this annual report on Form 10-KSB.

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Overview

We are a Nevada corporation headquartered in Northbrook, Illinois, a suburb of Chicago. Through our wholly-owned direct and indirect subsidiaries we provide world class technology solutions to businesses and individuals. Our business is organized into three segments:  Think Technology Services, Think Marketing Services and Think Consumer Services.

We were incorporated in the State of Nevada in October 1987. At our last annual meeting of shareholders, held March 14, 2006, our shareholders formally approved our proposal to change our legal name to Think Partnership Inc. As of March 17, 2006 we employed, through our operating subsidiaries, 287 persons. Our principal executive offices are located at 5 Revere Drive, Suite 510, Northbrook, Illinois 60062. Our telephone number is (847) 562-0177. The address of our website is www.thinkpartnership.com.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We evaluate estimates, including those related to bad debts, inventories and income taxes, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies, among others, involve more significant judgments and estimates used in the preparation of our financial statements:

•                   We recognize revenues in accordance with the following principles with respect to our different business services:

•                   We recognize revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements”. Under SAB, we recognize revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed and determinable, no significant obligations remain and collection of the related receivable is reasonably assured.

•       MarketSmart Interactive, Inc.

•                   Search Engine Enhancement Services . Prior to September 2005, we recognized revenue in the period that they were deemed to be earned and collectible under the accrual method of accounting using the straight-line basis over the term of the contract. Beginning in October 2005, we began selling the services

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previously packaged as separate products in our Search Engine Enhancement business, and now treat each product as a separate deliverable in accordance with EITF 00-21 “Revenue Arrangements with Multiple Deliverables”.  As such, each deliverable is treated as a separate product or deliverable.  We therefore recognize revenue for each deliverable either on a straight line basis over the term of the contract, or when value is provided to the customer, as appropriate.

•     Pay Per Click Management Fees . We recognize revenue on pay per click management services in the month the services are performed.

•       Cherish, Inc. We recognize income on monthly and multi- monthly subscription contracts on a straight line basis over the term of the contract.

•                   Personals Plus, Inc. We recognize revenue on monthly and multi-monthly subscription contracts on a straight-line basis over the term of the contract.

•                   The MarketSmart Companies . We recognize revenue in the period in which services are performed.

•                   Kowabunga! Marketing, Inc. We recognize revenue the month in which the software is utilized.  Customers are invoiced on the first of the month for the monthly services.  All overages for the month are billed at the end of the month and are included in our accounts receivable.

•                   Ozona Online Networks, Inc. We recognize revenue through a monthly hosting fee and additional usage fees as provided.

•                   PrimaryAds, Inc.

•                     Revenue is recognized when the related services are performed.

•                   Additionally, consistent with the provisions of EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” we recognize revenue as an agent in affiliate marketing transactions. Accordingly, service fee revenue is recognized on a net basis because any affiliate expenses are the responsibility of our advertising customer.

•                   Real Estate School Online, Inc. We recognize commission income at the time of sale.  We recognize income on the sale of compact disks upon shipment .

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•                   Vintacom Holdings, Inc. Substantially all of our revenues are derived from subscription fees. Revenue is recognized when the related services are performed.  Fees collected in advance for subscriptions are deferred and recognized as revenue using the straight line method over the subscription term.

•                   All assets are depreciated over their estimated useful life using the straight line method. Intangible assets are amortized over their estimated lives using the straight line method. Goodwill is tested for impairment annually per SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”).

•                   We reserve for federal and state income taxes on items included in the Consolidated Statements of Operations regardless of the period when the taxes are payable. Deferred taxes are recognized for temporary differences between financial and income tax.

•                   Additional consideration payable in connection with certain acquisitions, if earned, is accounted for using the following principles:

•                   In accordance with SFAS No. 141, Business Combinations (“SFAS 141”) contingent consideration is recorded when a contingency is satisfied and additional consideration is issued or becomes issuable. We record the additional consideration issued or issuable in connection with the relevant acquisition when the contingency is satisfied.

•                   In accordance with EITF Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination (“EITF 95-8”) and FIN 44, the portion of additional consideration issuable to holders of unrestricted (i.e. not subject to risk of forfeiture) common stock and fully vested options as of the acquisition date is recorded as additional purchase price because the consideration is unrelated to continuing employment with us and is allocated to goodwill.

•                   In accordance with EITF 95-8, the intrinsic value associated with additional consideration related to stock or options that vest between the acquisition date and the date at which the contingency is satisfied is recorded as an immediate charge to stock-based compensation expense at the time of vesting because the consideration is related to continuing employment with us or the acquired subsidiary.

•                   We have granted incentive stock options to employees and non-qualified stock options have been granted to employees, non-employee members of the board of directors and other persons. We account for stock-based awards to employees in accordance with Accounting Principles Board (“APB”) Opinion No. 25,

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Accounting for Stock Issued to Employees (“APB 25”) and related interpretations, and have adopted the disclosure-only alternative of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”) and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. The fair value of options granted to non-employees, as defined under SFAS 123, has been expensed in accordance with SFAS 123. In accordance with APB 25, stock-based compensation expense is not recorded in connection with stock options granted with exercise prices equal to or greater than the fair market value of our common stock on the date of grant, unless certain modifications are subsequently made. We record deferred compensation in connection with stock options granted with exercise prices less than the fair market value of our common stock on the date of grant. The amount of such deferred compensation per share is equal to the excess of such fair market value over the exercise price.

Since 2002 we have acquired a total of nine companies which now serve as the platform for all of our business operations. We anticipate continuing to acquire companies that we believe will strategically fit into our business segments and to grow by expanding our current operations. We expect that we will incur future capital expenditures relating to this growth. For example, certain events occurring subsequent to December 31, 2005 have had, and will have, an impact on our liquidity and capital resources. On January 20, 2006, we acquired Morex for an aggregate of approximately $9.4 million in cash and approximately 5.8 million shares of our common stock. On January 19, 2006, we entered into loan agreements with Wachovia Bank, N.A. pursuant to which we borrowed an aggregate amount of $16.8 million, comprised of a $2.5 million installment loan payable and $14.3 million drawn under a line of credit. We used approximately $7.2 million of the proceeds to repay amounts due Wachovia under our previous line of credit (which was cancelled as a result of the loan agreements) with all of the remaining proceeds used to fund the cash portion of the purchase price of Morex. Further, on February 17, 2006, we entered into a definitive agreement to acquire Litmus Media, Inc., pursuant to which we agree to the shareholders of Litmus an aggregate of $6.5 million in cash and 3.25 million shares of our common stock at the closing which must occur on or before April 5, 2006. On March 20, 2006, we entered into a definitive securities purchase agreement with institutional investors, to sell in a private placement, $26.5 million of Series A Convertible Preferred Shares and warrants, the closing of which is conditioned on receiving approval of the American Stock Exchange to list, among other things, the shares of our common stock into which the shares of preferred stock are convertible. We expect to use the proceeds of this transaction to fund the cash portion of the Litmus purchase price and for general working capital purposes. For a description of the loan agreement with Wachovia, the acquisition of Morex, the terms of the Litmus acquisition and the terms of the securities purchase agreement, see “Recent Developments” below.

The following table summarizes our Consolidated Statement of Cash Flows for the fiscal years ended December 31, 2005 and 2004, respectively:

Cash Flows From Operating Activities

We received approximately $240,000 in cash from operating activities during the fiscal year ended December 31, 2005, as compared to approximately $2.6 million during the fiscal year ended December 31, 2004. This decrease in cash received results from several factors:

•                   Our net income decreased from approximately $1.8 million to a loss of approximately $3,600. This decrease was due to a $2.2 million increase in expenses incurred at the corporate level and cumulative losses in our Think Technology Services segment of approximately $400,000. The losses from

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operations of our Think Technology Services segment resulted primarily from increased payroll costs in an effort to expand our capabilities and attract larger customers. Our Think Marketing Services segment also had a decrease in operating profits of $1.7 million from 2004 which was offset by an increase in operating profits of our Think Consumer Services segment of $1.45 million. The decrease in operating profits from our Think Marketing Services segment resulted primarily from increased employee costs at our MarketSmart Interactive subsidiary. The increase in operating profits from our Think Consumer Services segment resulted primarily from the acquisitions of Personals Plus, Inc. in the first quarter of 2005 and Real Estate School Online in July of 2005.; and

•                   Non-cash items affecting cash flow from operating activities included depreciation and amortization which totaled approximately $2.2 million during the year ended December 31, 2005, an increase of approximately $1.9 million over 2004. Amortization of purchased intangible assets accounted for approximately $1.4 million of this increase while the remaining increase of approximately $500,000 was a result of depreciation increase due to the addition of equipment and software caused by our expansion. Deferred income taxes negatively affected cash flows from operations during 2005 in the amount of $73,788 after having a positive effect during 2004 of $872,086. Due to the structure of our acquisitions the amortization of purchased intangibles is not tax deductible resulting in deferred tax liabilities. Deferred income taxes are the result of timing differences between book and tax depreciation, book and tax amortization of intangible assets, allowance for doubtful accounts and net operating loss carry-forwards; and

•                   During the year ended December 31, 2005, our accounts receivable increased by approximately $2.3 million of which $1.0 million was the result of internal growth and the remainder due to acquisitions. Also, our refundable corporate income taxes increased by approximately $1.52 million. Our prepaid corporate income taxes increased as we were submitting estimated tax payments throughout the year prior to amending our corporate tax returns from 2002 through 2004 increasing our Net Operating Loss carry-forward to 2005. Deferred revenue also decreased during the same period by approximately $575,000 primarily due to the reduction of clients in our MarketSmart Interactive subsidiary. These decreases in cash flow from operations were partially offset by an approximate $2.7 million increase in our accounts payable of which $1.0 million was from internal growth and the remaining $1.6 million from acquisitions.

Cash Flows From Investing Activities

We used cash in investing activities during 2005 and 2004. During the fiscal year ended December 31, 2005 we used approximately $1.7 million to acquire fixed assets. We also used approximately $19.3 million to fund the acquisitions that occurred in 2005. An additional $308,088 was used for pending acquisitions during 2005.

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Cash Flows From Financing Activities

We generated approximately $6.5 million in cash from financing activities during the fiscal year ended December 31, 2005, as compared to approximately $14.95 million during fiscal year ended 2004. The primary source of cash generated from financing activities in 2005 was proceeds, totaling approximately $7.36 million, from our lines of credit with Wachovia. These proceeds were offset by cash used to repay principal on outstanding debt totaling $764,250. During the same period in 2004, we generated approximately $17.15 million in proceeds from sale of common stock. These sources were offset by cash used to repay debt of approximately $2.34 million.

Balance Sheet

Our total assets as of December 31, 2005 were approximately $57.5 million compared to approximately $31.9 million as of December 31, 2004. We have acquired approximately $10.8 million in intangible assets and allocated approximately $25.2 million to goodwill during 2005 relating to certain acquisitions. Our accounts receivable have increased by approximately $2.3 million in 2005. One other factor contributing to the increase in our total assets is the purchase of additional equipment associated with internal growth across all divisions in 2005 totaling $1.7 million. Prepaid corporate income taxes also increased during the year ended December 31, 2005 by approximately $1.46 million. These increases were offset by the decrease in cash during the year, as discussed earlier, by approximately $14.6 million.

Total debt at December 31, 2005 was approximately $7.9 million compared to approximately $1.0 million at December 31, 2004. Our debt increased primarily to fund certain acquisitions throughout the year. The accounts payable increased during 2005, from $706,467 at December 31, 2004 to $3,443,603 on December 31, 2005. This increase was due to our internal growth and acquisitions. Our accrued liabilities also increased substantially due to our internal growth and acquisitions.

The following table presents, as of December 31, 2005, the principal amount of our debt maturing each year, including monthly annual amortization of principal, through December 31, 2010 and thereafter:

*As described in “Recent Developments” below, we entered into a new loan agreement with Wachovia pursuant to which we borrowed a total of $17.5 million and used approximately $7.5 million of

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the proceeds to repay amounts due Wachovia under our previous line of credit which amounts due are reflected in this table.

Amortization expense increased to approximately $1.55 million (3.8% of sales) in 2005 from $108,489 (0.6% of sales) in 2004. This was a direct result of the seven acquisitions that occurred during 2005. We expect this trend to continue as we amortize purchased intangibles over their estimate lives.

Our net income for the fiscal year ended December 31, 2005 was a loss of approximately $3,600 compared to income of approximately $1.8 million for the fiscal year ended December 31, 2004. Basic earnings per common share for the fiscal year ended December 31, 2005 were $0.00 versus $0.07 for the fiscal year ended December 31, 2004. Fully diluted earnings per share for the fiscal ended December 31, 2005 was $0.00 versus $0.06 for the year ended December 31, 2004. The decrease in our earnings per share was due to many of the factors listed above including a substantial increase in the amortization of purchased intangibles and corporate overhead.

Fiscal Year Ended December 31, 2004

Sales for the fiscal year ended December 31, 2004 tripled to approximately $17.6 million from the prior fiscal year. Sales from our Think Marketing Services segment increased from approximately $5.8 million to approximately $15.2 million during this period. This increase was due to the addition of new customers resulting from an almost three-fold increase in our sales force. Additionally, during 2004, we entered into the Think Consumer Services segment. Sales from this segment were approximately $2.4 million during 2004.

The gross profits for the fiscal year ended December 31, 2004 were approximately $13.5 million (77%). In contrast, the gross profits for the equivalent period in 2003 were approximately $4.8 million (83%). The decrease in our gross profit as a percentage of revenues was due to the increase in our operations, engineering and production department from twenty to seventy-five employees to better serve our client base.

General and administrative expenses were approximately $10.76 million (61.0% of sales) for the fiscal year ended December 31, 2004. For the fiscal year ended December 31, 2003, these expenses totaled approximately $5.4 million (94% of sales). The percentage decrease in relation to sales is due to our increased sales covering our fixed operating and overhead costs.

Our net income for the fiscal year ended December 31, 2004 was approximately $1.8 million compared to a loss of approximately $665,000 for the fiscal year ended December 31, 2003. Basic earnings per common share for the fiscal year ended December 31, 2004 were $0.07 versus a loss of $0.04 for the fiscal year ended December 31, 2003. Fully diluted earnings per share for the fiscal ended December 31, 2004 was $0.06 versus a loss of $0.03 for the year ended December 31, 2003. The increase in our earnings per share was due to an increase in the net income from our Think Marketing Services segment as well as the net income generated from entering the Think Consumer Services segment. This was partially offset by an increase in the number of shares

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outstanding as a result of shares, options and warrants issued as part of acquisitions and shares issued pursuant to private placements.

Segment Analysis

Our operations are divided into operating segments using individual products or services or groups of related products and services. During the fourth quarter of 2005, we consolidated certain subsidiaries containing similiar products, services and customer classes into three segments. All prior periods have been adjusted for the new presentation. The chief executive officer of each subsidiary reports to the chief executive officer of the Company, who makes decisions about performance assessment and resource allocation for all segments.  We had three operating segments as of December 31, 2005: Think Technology Services segment, Think Marketing Services segment and Think Consumer Services segment.  We evaluate the performance of each segment using pre-tax income or loss from continuing operations.

Listed below is a presentation of sales, operating profit and total assets for all reportable segments.    The “corporate” category in the “Pre Tax Profit From Continuing Operations” table consists of expenses not allocated to other segments including corporate legal and accounting expenses, corporate salaries and corporate travel expenses.  The “corporate” category in the “Total Assets By Industry Segment” table consists of assets that the Company owns that are not otherwise allocated to a particular segment.

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Subsequent Events

Loan Agreement with Wachovia

In January 2006, we entered into a loan agreement with Wachovia Bank, National Association. Pursuant to the loan agreement, on January 20, 2006, we borrowed $15 million from Wachovia, evidenced by a revolving credit promissory note which bears interest at the LIBOR Market Index Rate plus 2.10% as such rate may change from day to day, and $2.5 million, evidenced by a term promissory note which bears interest at the LIBOR Market Index Rate plus 2.15% as such rate may change from day to day. Amounts due under the revolving credit note are payable in consecutive monthly payments of accrued interest only until January 19, 2009, the revolving credit note’s maturity, at which time all principal and any accrued but unpaid interest is due and payable. Amounts due under the term note are payable in 12 consecutive monthly payments of equal principal in the amount of $208,333 plus accrued interest with the final payment due on January 19, 2007, the term note’s maturity. Our obligations under the Loan Agreement and the Notes are secured by a first priority lien, in favor of Wachovia, on all of our assets, including the stock of each of our operating subsidiaries and are subject to certain financial covenants. Further, each of our operating subsidiaries has guaranteed the performance of our obligations under the Loan Agreement and the Notes and the guaranty is secured by a first priority lien on each subsidiary’s assets.

Acquisition of Litmus Media, Inc.

On February 17, 2006, we entered into an agreement, subsequently amended on March 17, 2006, to acquire Litmus Media, Inc which offers integrated solutions for performance-based advertising, search marketing and e-retailing industries.

At the closing of the acquisition, we will pay to the shareholders of Litmus, an aggregate of $6,500,000 in cash and issue to them an aggregate of 3,250,000 shares of our common stock. Further, the shareholders of Litmus may receive additional payments of up to $19,950,000 in the aggregate based on the aggregate pre-tax earnings of Litmus for the first 12 calendar quarters following the closing. To the extent earned, up to $10,500,000 of the additional payments will be paid in shares of our common stock valued at the average closing price per share of the 30 trading days prior to issuance and up to $9,450,000 will be paid in cash. At the closing the parties will enter into an escrow agreement pursuant to which a portion of the additional payments will be held in escrow to the extent we may have any claims for indemnification under the acquisition agreement. In addition, in the event the shareholders of Litmus are entitled to any additional payments, we agreed to capitalize a bonus pool for the pre-acquisition employees of Litmus in an amount not to exceed $1,050,000.

In addition, we agreed to, at the closing: (i) issue to certain shareholders of Litmus warrants to purchase an aggregate of 90,000 shares of our common stock, (ii) establish a pool of warrants to purchase up to 40,000 shares of our common stock to be issued to certain employees of Litmus, (iii) grant to the shareholders of Litmus registration rights

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with respect to shares of our common stock issued as part of the consideration of the acquisition, pursuant to a definitive registration rights agreement, and (iv) enter into employment agreements with certain employees of Litmus.

The closing of the transaction is subject to numerous conditions and the agreement will terminate if the closing does not occur by April 5, 2006. As a result, there can be no assurances that we will be able to complete the acquisition of Litmus.

Agreement to Issue Convertible Preferred Stock

On March 20, 2006, we entered into a definitive Securities Purchase Agreement with institutional investors, to sell in a private placement, $26.5 million of Series A Convertible Preferred Shares which are convertible into shares of our common stock upon the occurrence of certain events and warrants. If not converted, we will be required to redeem the preferred stock on the second anniversary of its issuance. The holders of the preferred stock will initially be paid dividends on the preferred stock equal to 10% of the face value of the preferred stock. The holders of the preferred stock will have the right to convert their holdings into shares of common stock at a price of $2.00 per share subject to possible adjustments from time to time. In connection with the preferred stock offering, we will also issue warrants to the institutional investors, exercisable for five years, to purchase up to 5,300,000 shares of common stock at an initial exercise price of $2.50 per share, subject to certain adjustments.

We also granted to the institutional investors registration rights pursuant to which we will be obligated to file, within 45 business days following the closing of the transactions contemplated by the Securities Purchase Agreement, a registration statement covering the shares of common stock issuable upon conversion of the preferred stock, and the shares of common stock issuable upon the exercise of the warrants. If the registration statement does not become effective within 120 days following the closing, then the dividend rate on the preferred stock will increase to 15%. The maximum potential damages payable by us in regard to a default, including the increase in the amount of the dividends payable if the registration statement does not become effective within 120 days following the closing, are capped at 10% of the aggregate purchase price of the preferred stock, or $2.65 million. If the registration statement does not become effective within 180 days following the closing, we will be deemed to be in default and the preferred stock will be subject to mandatory redemption at the option of the holders. If the registration statement becomes effective within the required timeframe, the dividend rate on the preferred stock will be reduced to 6% per annum.

The preferred stock will be subject to mandatory conversion at our option, if among other things, the registration statement is effective, and the closing price of our common stock is $5 or higher for twenty consecutive trading days with an average daily trading volume of at least 100,000 shares during the twenty day period.

We intend to use the net proceeds of the private placement, estimated to be $24.8 million, to complete the previously announced purchase of Litmus Media, to pay down the line of credit with Wachovia Inc. and for general corporate purposes. As previously disclosed, the closing of the transactions

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contemplated by the Securities Purchase Agreement is subject to numerous closing conditions and, as a result, there can be no assurances that the transactions contemplated by the Securities Purchase Agreement and described herein will close on the terms described herein, if at all.

Announcement to Sell Think Consumer Services Segment

On March 22, 2006, we announced that we signed a letter of intent to sell our Think Consumer Services segment to Mountains West Exploration Inc. for an aggregate of $21,000,000 in cash and unregistered common stock of Mountains West valued at $9,000,000 at the closing of the transaction. Additionally, Mountains West will assume all of our contingent obligations in regard to any additional or earnout obligations or other payments owed to the former shareholders of the subsidiaries that make up our Think Consumer Services segment.

Mountains West has paid us a deposit of $250,000 to be credited against the purchase price if the transaction is completed. We will return the $250,000 deposit and pay an additional breakup fee of $250,000 if we fail to consummate the contemplated transaction as a result of a competing offer from a third party to acquire our Think Consumer Services segment.

If the transaction is completed, until the later of three years after the closing or the date when we are no longer the largest stockholder of Mountains West, we will have the right to appoint not less than 40% of the board of directors of Mountains West and we anticipate that Gerard M. Jacobs and Scott P. Mitchell will join the board of directors of Mountains West while continuing to serve as our CEO and our president, respectively.

As previously disclosed, the closing of the transaction is subject to a number of conditions and, as such we cannot provide any assurances that the sale of our Think Consumer Services segment will be completed on the terms described herein, if at all.

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Risk Factors

An investment in our common stock involves a high degree of risk and should be considered only by those persons who are able to afford a loss of their entire investment. In evaluating our business, prospective investors should carefully consider the following risk factors in addition to the other information included in this prospectus.

Our limited operating history and relatively new business model in emerging and rapidly evolving markets make it difficult to evaluate our future prospects. We have only a limited operating history, have lost money during three of the last five years ended December 31, 2005. There is no assurance we will generate net income in future periods. Failure to generate net income could have a material adverse effect on the trading price of our common stock.

We may not be able to identify, negotiate, finance or close acquisitions. A significant component of our growth strategy focuses on acquiring additional companies or assets. We may not, however, be able to identify or acquire companies or assets on acceptable terms if at all. Additionally, we may need to finance all or a portion of the purchase price for an acquisition by incurring indebtedness or issuing additional equity. For example, we have entered into a definitive agreement to acquire Litmus Media, Inc. The closing of the transaction is subject to numerous conditions and the definitive agreement terminates if the closing does not occur by April 5, 2006. Additionally, we entered into a definitive agreement with institutional investors, to sell in a private placement, $26.5 million of Series A Convertible Preferred Shares, a portion of the proceeds from which will be used to finance the purchase price of litmus. The closing of the sale of preferred stock is subject to certain conditions and if we fail to close thereon, we will be unable to close the acquisition of Litmus on or before the April 5, 2006 deadline. Failure to close on either Litmus or the sale of the preferred stock in particular and our failure to acquire additional companies or assets on acceptable terms, if at all, in general, would have a material adverse effect on our ability to increase assets, revenues and net income and on the trading price of our common stock.

The terms and conditions of any acquisition could require us to take actions that would not require your approval. In order to acquire certain companies or assets, we may issue additional shares of common or preferred stock, borrow money or issue debt instruments including debt convertible into capital stock. Not all of these actions would require your approval even if these actions dilute your economic or voting interest as a shareholder.

We may be unable to successfully integrate acquired businesses. Even if we are able to acquire additional companies or assets, we may not be able to successfully integrate these companies or assets. For example, we may need to integrate widely dispersed operations with different corporate cultures, operating margins, competitive environments, computer systems, compensation schemes, business plans and growth potential requiring significant management time and attention. Failure to successfully integrate acquired businesses could have a material adverse effect on our business, results of operations and financial condition and the trading price of our common stock.

We cannot assure you that we will effectively manage our growth. The continued growth and expansion of our businesses, including new service offerings and new geographic markets, requires significant management time, as well as operational and financial resources. There is no assurance that we will be able to continue managing our growth or that we will have the operational or financial

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resources necessary to manage our growth. Failure to do so could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our future growth heavily depends on our key personnel, the loss of whom would materially adversely affect our business. Our ability to grow depends on our ability to retain certain key personnel, including Gerard M. Jacobs, our chief executive officer and Scott P. Mitchell, our president. We do not have an employment agreement with Mr. Jacobs and could be required to spend significant time, attention and money in finding his replacement should he no longer be employed by us. There is no assurance we would be able to find similarly qualified replacements which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We lack long-term contracts with clients. Few of our clients retain us under contracts longer than twelve months. As a result, our revenues may be difficult to predict and may vary significantly. Because we sometimes incur costs based on expectations of future revenues, our failure to predict future revenues accurately could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our brands are not well known. We have not been able to develop widespread awareness of our brands. Moreover, our brands may be closely associated with the success or failure of some of our Internet clients, some of whom are pursuing unproven business models in competitive markets. Lack of brand awareness or the failure or difficulty of one of our clients may damage our reputation, all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our business depends in part on the growth and maintenance of the Internet and telecommunications infrastructure. The success of our business depends in part on the continued growth and maintenance of the Internet and telecommunications infrastructure. This includes maintaining a reliable network backbone with the necessary speed, data capacity and security for providing reliable Internet services. Internet infrastructure may be unable to support the demands placed on it if the number of Internet users continues to increase or if existing or future Internet users access the Internet more often or increase their bandwidth requirements. We have no control over the providers of access services to the Internet. Interruptions, delays or capacity problems with any points of access between the Internet and our websites could adversely affect our ability to provide services to users of our websites. The temporary or permanent loss of all or a portion of our services on the Internet, the Internet infrastructure generally, or our users’ ability to access the Internet, could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

The telecommunications industry is a regulated industry. Amendments to current regulations could disrupt or adversely affect the profitability of our business. In addition, if any of our current agreements with telecommunications providers are terminated, we may not be able to replace the terminated agreement on favorable terms and conditions, if at all. There can be no assurance that we will be able to renew any of our current agreements when they expire or expand our agreements on favorable terms, if at all, all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

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Growth of our business depends upon increased adoption of the Internet and the use of search engines as a means for commerce. The growth of our business depends heavily on the continued use and acceptance of the Internet and of search engines as a means for commerce. If commercial use of the Internet and search engines does not continue to grow, or grows more slowly than expected, our business and prospects would be seriously harmed. Individuals and businesses may reject the Internet or search engines as a viable commercial medium or marketing tool. Failure of the Internet and search engines to grow as a means of commerce would have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We compete with many companies, some of whom are more established and better capitalized than us. We compete with a variety of companies on a worldwide basis both through the Internet and in traditional markets. Some of these companies are larger and better capitalized than us. There are also few barriers to entry in our markets and thus above average profit margins will likely attract additional competitors. Our competitors may develop services that are superior to, or have greater market acceptance than our services. For example, many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than us. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer requirements. Our competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies which may allow them to build larger registrant and membership bases. In addition, current and potential competitors are making, and are expected to continue to make, strategic acquisitions or establish cooperative, and, in some cases, exclusive relationships with significant companies or competitors to expand their businesses or to offer more comprehensive products and services. To the extent these competitors or potential competitors establish exclusive relationships with major portals, search engines and ISPs, our ability to reach potential members through online advertising may be restricted. Any of these competitors could cause us difficulty in attracting and retaining registrants and converting registrants into members and could jeopardize our existing affiliate program and relationships with portals, search engines, ISPs and other Internet properties. Failure to compete effectively including by developing and enhancing our services offerings would have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Search Engine Optimization may become more difficult or less desirable over time. Search engines generally seek to rank websites based upon their degree of relevancy to the key words in question. The search engines are frequently changing their algorithms and criteria in order to try to prevent their rankings from being manipulated creating a risk that over time the search engines may succeed in limiting the efficacy of our services either through continued refinement of their ranking system or in some other way hindering search engine optimization efforts. The search engine optimization industry is relatively new with limited technological barriers to entry. Increased competition over time may reduce the overall efficiency of our efforts as other competitors produce similar results for their clients. Search engines are increasing the number of “pay per click” listings in their search results, generally lessening the desirability of our SEO services. Although we perform “pay per click” campaign management, there is no assurance that the revenues from “pay per click” campaign management will offset any decline in demand for our SEO services. All of these factors could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

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Increasing government regulations or taxation could adversely affect our business. We are affected not only by regulations applicable to businesses generally, but also by federal, state, local and foreign laws, rules, regulations and taxes directly applicable to electronic communications, telecommunications and the Internet. Laws and regulations related to the Internet are becoming more prevalent, and new laws and regulations are under consideration in various jurisdictions. Many areas of law affecting the Internet remain unsettled, and it may take years to determine whether and how existing laws such as those governing consumer protection, intellectual property, libel and taxation apply to the Internet. New, or amendments to existing laws and regulations, including laws and regulations that govern, restrict, tax or affect things such as user privacy, the pricing and taxation of goods and services offered over the Internet, the content of websites, access to websites, linking of websites, outgoing email solicitations, consumer protection and the characteristics and quality of products and services offered over the Internet could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

The ability of our online dating business to generate cash flow and operating profits depends on a number of factors that are difficult to predict . The ability of our online dating business to generate cash flow and profits, if any, depends on acceptance of online dating services and our ability to, among other things, (1) create and increase brand awareness and attract and retain a large number of members and subscribers, including converting members into paying subscribers; (2) maintain current, and develop new, relationships with portals, search engines, ISPs and other Internet properties and entities capable of attracting individuals who might subscribe to our fee-generating services; (3) implement expansion plans or integrate newly acquired companies, including controlling the costs associated with expansion or acquisitions; (4) control general infrastructure costs including the amount and timing of operating and capital expenditures; (5) introduce new websites, features and functionality on a timely basis; (6) achieve economies of scale across our various websites; (7) protect our data from loss or electronic or magnetic corruption; (8) provide failure and disaster recovery programs; (9) upgrade our technology and protect our sites from technology failures; and (10) anticipate and adapt to changing Internet business strategies. Failure to accurately predict or respond to these factors could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We need to attract and retain a large number of paying members on an ongoing basis . Our online dating business must attract and retain a large number of paying members. To do so, we must continue to invest significant resources in order to enhance our existing products and services and to introduce new high-quality products and services. There is no assurance we will have the resources, financial or otherwise, required to enhance or develop services. Further, if we are unable to predict user preferences or industry changes, or if we are unable to modify our products and services on a timely basis, we may lose existing members and may fail to attract new registrants. Failure to enhance or develop services or to respond to the needs of our members in an effective or timely manner could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our member acquisition costs may increase significantly. The member acquisition costs of our online dating business depend in part upon our ability to purchase advertising at a reasonable cost. Advertising costs vary over time, depending upon a number of factors, some of which are beyond our control. Historically, we have used online advertising as the primary means of marketing our services. In general, the costs of online advertising have increased substantially and are expected to continue to

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increase as long as the demand for online advertising remains robust. We may not be able to pass these costs on in the form of higher user fees. Continuing increases in advertising costs could thus have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our online dating business must keep pace with rapid technological change to remain competitive because our services are not well-suited to many alternate Internet access devices . Our online dating business operates in a market characterized by rapidly changing technology, evolving industry standards, frequent new product and service announcements, enhancements, and changing customer demands. We must adapt to rapidly changing technologies and industry standards and continually improve the speed, performance, features, ease of use and reliability of our services. Introducing new technology into our systems involves numerous technical challenges, requires substantial amounts of capital and personnel resources, and often takes many months to complete. We may not successfully integrate new technology into our websites on a timely basis, which may degrade the responsiveness and speed of our websites. Technology, once integrated, may not function as expected. In addition, the number of people who access the Internet through devices other than desktop and laptop computers, including mobile telephones and other handheld computing devices, has increased dramatically in the past few years. The lower resolution, functionality and memory currently associated with mobile devices makes the use of our online dating services through mobile devices more difficult and generally impairs the member experience relative to access via desktop and laptop computers. Failure to attract and retain a substantial number of mobile device users to our online dating services, or failure to develop services that are more compatible with mobile communications devices, or failure to generally keep pace with the rapid technological change could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our online dating services may be interrupted due to problems with our server, our network hardware and software, or our inability to obtain network capacity . The performance of our server and networking hardware and software infrastructure is critical to our business and reputation and our ability to attract Internet users, advertisers, members and e-commerce partners to our websites and to convert members to subscribers. We have experienced occasional system interruptions as a result of unexpected increases in usage. We cannot assure you we will not incur similar or more serious interruptions in the future. An unexpected or substantial increase in the use of our websites could strain the capacity of our systems, which could lead to a slower response time or system failures. Any slowdowns or system failures could adversely affect the speed and responsiveness of our websites and would diminish the experience for our members and visitors. Further, if usage of our websites substantially increases, we may need to purchase additional servers and networking equipment to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be significant. Any system failure that causes an interruption in service or a decrease in the responsiveness of our websites could reduce traffic on our websites and, if sustained or repeated, could impair our reputation and the attractiveness of our brands all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock. Furthermore, we rely on many different hardware and software systems. Failure of these systems or inability to rapidly expand our transaction-processing systems and network infrastructure in response to a significant unexpected increase in usage could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

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The failure to establish and maintain affiliate agreements and relationships could limit the growth of our online dating business . We have entered into, and expect to continue to enter into, arrangements with affiliates to increase our member base, increase traffic to our websites and enhance our brands. If any of the current agreements are terminated, we may not be able to replace the terminated agreement with an equally beneficial arrangement. We cannot assure you that we will be able to renew any of our current agreements when they expire on acceptable terms, if at all. We also do not know whether we will be successful in entering into additional agreements or that any relationships, if entered into, will be on terms favorable to us. Failure to establish and maintain affiliate agreements and relationships could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our online dating business relies on a number of third-party providers, and their failure to perform or termination of our relationships with them could harm our business . We rely on third parties to provide important services and technologies to our online dating business, including third parties that manage and monitor our onsite data center, Internet services providers and credit card processors. In addition, we license technologies from third parties to facilitate our ability to provide our services. Any failure on our part to comply with the terms of these licenses could result in the loss of our rights to continue using the licensed technology, and we could experience difficulties obtaining licenses for alternative technologies. Furthermore, any failure of these third parties to provide these and other services, or errors, failures, interruptions or delays associated with licensed technologies, could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our online dating business may incur liability for information retrieved from or transmitted through its websites or websites linked to it . Because our online dating business publishes or makes various information available on its websites or though linked websites, we may be sued for, or incur liability related to, defamation, civil rights infringement, negligence, copyright or trademark infringement, invasion of privacy, personal injury, product liability or other legal claims. Our online dating business also offers email services subjecting us to liabilities or claims relating to unsolicited email or spamming, lost or misdirected messages, security breaches, illegal or fraudulent use of email or interruptions or delays in email service. Our insurance does not specifically provide coverage for liability or expenses for these types of claims or losses. Liability or expense relating to these types of claims could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our online dating business could be significantly impacted by the occurrence of natural disasters such as hurricanes and other catastrophic events . The data center for our online dating business is located in Clearwater, Florida and is therefore susceptible to damage from hurricanes or other tropical storms. We do not have adequate back-up. We may not be able to prevent outages and downtime caused by these storms or other events out of our control, which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We must continually seek new members to maintain or increase our current level of revenue. Internet users, in general, and users of online personal services specifically, freely navigate and switch among a large number of websites. We cannot assure you that we will be able to add more members than we lose each month. Failure to increase our membership on a cost-effective basis could have a

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material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

The display of adult content on our websites could be restricted by regulation. We display adult content on some of our websites. The display of adult content is subject to significant regulation. Changes or increases in these regulations could restrict our ability to provide adult content in various jurisdictions. Any increase in these regulations or restrictions on the content that may be provided on our website could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We face certain risks related to the physical and emotional safety of the users of our online dating websites. We cannot control the offline behavior of users of our websites. There is a possibility that one or more of the users of our websites could be physically or emotionally harmed following interaction with another user of our websites. We do not screen the users of our websites, and cannot ensure personal safety on a meeting arranged following contact initiated via our websites. If an unfortunate incident were to occur in a meeting of people following contact initiated on one of our websites or a website of one of our competitors, any resulting negative publicity could materially and adversely affect the online dating industry in general and our business in particular and could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock. In addition, the affected users of our websites might initiate legal action against us, which could cause us to incur significant expense, regardless of whether liability is imposed on us which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock. Further, legislation is currently being considered in various jurisdictions that may require us to conduct background checks on the users of our online dating websites. If legislation requiring us to perform background checks is enacted, we would incur additional costs and expenses to comply with these legislative requirements. These costs and expenses may be material and may have and adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We may incur liability if we fail to adequately protect personal information. Our online dating business handles personally identifiable information pertaining to our members and visitors residing in the United States as well as foreign countries. Many jurisdictions have adopted privacy, security, and data protection laws and regulations intended to prevent improper use and disclosure of personally identifiable information. In addition, some jurisdictions impose database registration requirements for which significant monetary and other penalties may be imposed for failure to comply. These laws, which are subject to change and may be inconsistent, may impose costly administrative requirements, limit our handling of information, and subject us to increased government oversight and financial liabilities all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Security breaches and inappropriate Internet use could damage our business. Concerns over the security of transactions conducted on the Internet and the privacy of users may inhibit the growth of the Internet and other online services generally, and online commerce in particular. Failure to successfully prevent security breaches could significantly harm our business and expose us to lawsuits. Anyone who is able to circumvent our security measures could misappropriate proprietary information, including customer credit card and personal data, cause interruptions in our operations, or damage our brand and reputation. Breach of our security measures could result in the disclosure of personally

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identifiable information and could expose us to legal liability. We cannot assure you that our financial systems and other technology resources are completely secure from security breaches or sabotage. We have experienced security breaches and attempts at “hacking.”  We may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches. Further, any well-publicized compromise of our security or the security of any other Internet provider could deter people from using our services or the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials, which might adversely affect our online dating business. All of these factors could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Computer viruses could damage our business. Computer viruses, worms and similar programs may cause our systems to incur delays or other service interruptions and could damage our reputation and ability to provide our services and expose us to legal liability, all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We are exposed to risks associated with credit card fraud and credit payment. Many of our customers use credit cards to pay for our services. We have suffered losses, and may continue to suffer losses, as a result of membership orders placed with fraudulent credit card data, even though the associated financial institution approved payment. Under current credit card practices, a merchant is liable for fraudulent credit card transactions when the merchant does not obtain a cardholder’s signature. A failure to adequately control fraudulent credit card transactions would result in significantly higher credit card-related costs and could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

We may be unable to protect our intellectual property. We cannot guaranty that we can safeguard or deter misappropriation of our intellectual property. In addition, we may not be able to detect unauthorized use of our intellectual property and take appropriate steps to enforce our rights. If former employees or third parties infringe or misappropriate our trade secrets, copyrights, trademarks or other proprietary information or intellectual property, our business could be seriously harmed. In addition, although we believe that our proprietary rights do not infringe the intellectual property rights of others, other parties may assert infringement claims against us or claim that we have violated their intellectual property rights. These claims, even if not true, could result in significant legal and other costs all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

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We have agreed, and may agree in the future, to pay additional amounts in connection with acquisitions. As part of the agreements to acquire WebCapades, the MarketSmart Companies, Personals Plus, Ozline, KowaBunga!, PrimaryAds, RESO, Vintacom and Morex, we agreed to pay the stockholders of these entities additional consideration, or contingent payments, if the financial performance of these respective entities satisfy certain financial hurdles. As of March 31, 2006, the cash portion of these potential contingent payments totaled approximately $22.5 million. We will likely also agree to contingent payout arrangements in connection with future acquisitions. There is no assurance that we will have cash available to pay these amounts if these financial hurdles are satisfied. Thus, we may have to borrow additional monies or sell additional equity to raise the needed funds, all of which may have a material adverse effect on our results of operations, financial condition, business prospects and the trading price of our common stock.

We have experienced significant debt collection issues and bad debt writeoffs in our search engine enhancement business. In connection with our search engine enhancement business, our contracts have typically permitted our customers to pay us for services in equal monthly installments over the life of the contract. This payment structure has involved our search engine enhancement business in significant debt collection issues during the past year, and has resulted in significant bad debt writeoffs. As described herein, we have made changes to the payment terms of the contracts for certain new clients. There can be no assurance, however, that these changes will reduce our debt collection issues or bad debt writeoffs in the future. Additionally, these changes may adversely affect our ability to enter into new contracts for search engine enhancement services. All of these factors may have a material adverse effect on our results of operations, financial condition, business prospects and the trading price of our common stock.

A significant portion of our stock is owned or controlled by insiders. Our officers, directors or entities controlled by us or these individuals own or control a significant portion of our common stock. Accordingly, these persons have substantial influence over our policies and management. We may take actions supported by these individuals that may not be viewed by some stockholders to be in our best interest.

We have not paid dividends since our inception and do not expect to do so in the foreseeable future. We have never paid dividends on our common stock and have no plans to do so for the foreseeable future. We presently anticipate that all earnings, if any, will be retained to develop our business and acquire additional companies and assets.

Certain provisions of Nevada corporate law may limit or discourage actions in your best interest. Certain provisions of Nevada corporate law limit the circumstances under which a person or entity may acquire a controlling interest in the stock of a Nevada corporation or cause a merger, consolidation or other “combination” to occur involving a Nevada corporation. These laws may discourage companies or persons interested in acquiring a significant interest in or control of us, or delay or make an acquisition or transaction more difficult or expensive to consummate, regardless of whether the acquisition or transaction is in the best interest of our stockholders all of which may limit or prevent you from receiving a “control premium” for your common stock.

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