UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission file number 000-50698

GREENFIELD ONLINE, INC.

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

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

N/A

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 No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares of Common Stock outstanding as of April 30, 2005 was 25,241,206 shares.

GREENFIELD ONLINE, INC.

FORM 10-Q
TABLE OF CONTENTS

GREENFIELD ONLINE, INC.

CONSOLIDATED BALANCE SHEETS

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

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENTS OF INCOME

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

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

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GREENFIELD ONLINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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GREENFIELD ONLINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 —Basis of Presentation:

Basis of Presentation

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

     The accompanying unaudited consolidated financial statements of Greenfield Online, Inc. and its wholly-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in compliance with the rules and regulations of the Securities and Exchange Commission, and all significant intercompany accounts and transactions have been eliminated in consolidation. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements reflect all adjustments, consisting of normal recurring adjustments necessary to present fairly these financial statements. Operating results for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2004.

Follow-on Public Offering

     In December 2004, we completed a follow-on public offering of 4.5 million shares of our common stock at a public offering price of $18.16 per share, and raised approximately $76.5 million in net proceeds after payment of underwriters’ commissions of $4.5 million and costs associated with our follow-on public offering amounting to approximately $0.7 million. The proceeds have been utilized to fund the acquisition of Ciao AG in April 2005.

Note 2 — Summary of Significant Accounting Policies:

     Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission and the instructions to Form 10-Q. The accounting policies we follow are set forth in our recently filed Annual Report on Form 10-K for the year ended December 31, 2004 which was filed on March 31, 2005, and have not materially changed.

     Investments in Marketable Securities. As of March 31, 2005, the Company had an investment in certain marketable securities, corporate commercial paper, with an original maturity greater than 90 days. This position has been liquidated in April 2005. As of December 31, the Company had investments in certain marketable securities with original maturities greater than 90 days, which have interest rates that reset periodically in an auction process. These securities are classified as current Investments in Marketable Securities as available-for-sale securities in accordance with Statement of Financial Accounting Standards No. 115 “Accounting for Certain Investments in Debt and Equity Securities”. Further, the Company’s position in these securities has been liquidated subsequent to December 31, 2004.

     The table below provides the fair value of available-for-sale securities by type as of March 31, 2005 and December 31, 2004 (in thousands):

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     Panelist Incentives. Our panelists receive incentives for participating in our surveys, which are earned by the panelist when we receive a timely and complete survey response. A panelist has the right to claim his or her incentive payment at any time prior to its expiration, which is generally one year. We accrue incentives as incurred, and reverse expirations to the statement of operations as they occur. Prior to April 2004, unclaimed incentives historically have represented less than 10% of total incentives incurred. However, for the three months ended March 31, 2005, unclaimed incentives represented approximately 15% of total incentives incurred. This increase in the percentage of unclaimed incentives is due primarily to the shift in our incentive program away from cash payments to a program emphasizing prize-based incentives, which we instituted in April 2004. As a result of this shift, the amount of unclaimed incentives resulting from our historically cash-based program has increased relative to the diminishing amount of total incentives we award. The amount of unclaimed incentives is representative of unclaimed incentives experienced in prior periods, but fluctuations in the amount of unclaimed incentives may affect our results of operations in future periods.

     Concentration of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of trade accounts receivable. We periodically review our accounts receivable for collectibility and provide for an allowance for doubtful accounts to the extent that amounts are not expected to be collected. No customer accounted for more than 10% of our net sales for the three months ended March 31, 2005.

     Goodwill. Goodwill represents the excess purchase price over the fair values of the net assets and identifiable intangible assets acquired in a business combination. In accordance with the provisions of Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets”, (“SFAS 142”), we do not amortize goodwill, and instead it will be tested for impairment at least annually. In performing the annual impairment test, we compare the fair value of our reporting unit with its carrying amount, including goodwill. In the event that a reporting unit’s carrying value exceeds its fair value, we would record an adjustment to the respective reporting unit’s goodwill for the difference between the implied fair value of goodwill and the carrying value. In addition to the annual impairment analysis, we also assess the carrying value of goodwill whenever events or changes in circumstances indicate that the carrying amount of the underlying asset may not be recoverable. The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2005 (in thousands).

     Stock-Based Compensation. We have awarded certain stock option and warrant grants in which the fair value of the underlying stock on the date of grant exceeded the exercise price. As a result, we have recorded unearned stock-based compensation, which is being amortized over the service period, generally four years. Accordingly, we have amortized $253,000 and $579,000 of stock based compensation expense in the statement of operations for the three months ended March 31, 2005 and 2004, respectively, related to these option and warrant grants. Stock-based compensation expense for the three months ended March 31, 2004 totaled $579,000, including compensation cost of $48,000 related to the notes receivable from a stockholder that were repaid in May 2004. In connection with options forfeited during the three months ended March 31, 2005, we wrote-off $53,000 of unearned stock-based compensation as a reduction of additional paid-in capital.

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     We account for stock-based compensation using the intrinsic-value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), and related interpretations, and have adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) as amended by Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation, Transition and Disclosure, an amendment of SFAS 123” (“SFAS No. 148”), for such awards. If we had elected to recognize compensation expense using a fair value approach, and therefore determined compensation based on the value as determined by the modified Black-Scholes option pricing model, our pro-forma income (loss) and income (loss) per share for the three months ended March 31, 2005 and 2004 would have been as follows ($ in thousands except per share data):

     In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (“SFAS 123R”), an amendment of SFAS 123, “Accounting for Stock Based Compensation”. SFAS 123R eliminates the ability to account for share-based payments using Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and instead requires companies to recognize compensation expense using a fair-value based method for costs related to share-based payments including stock options and employee stock purchase plans. The expense will be measured as the fair value of the award at its grant date based on the estimated number of awards that are expected to vest, and is recorded over the applicable service period. In the absence of an observable market price for a share-based award, the fair value would be based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price, the expected dividends on the underlying shares and the risk-free interest rate. The requirements of SFAS 123R are effective for our fiscal year beginning January 1, 2006 as a result of the SEC’s recent decision to delay the effective date of SFAS 123R by six months in order to provide companies more time to implement the standard. SFAS 123R will be applicable to all awards granted, modified or cancelled after that date. Prior to the SEC’s decision, we had previously disclosed in our 2004 Annual Report that we planned to adopt the standard prospectively as of July 1, 2005.

     The standard also provides for different transition methods for past award grants, including the restatement of prior period results. We have elected to apply the modified prospective transition method to all past awards outstanding and unvested as of the effective date of January 1, 2006 and will recognize the associated expense over the remaining vesting period based on the fair values previously determined and disclosed as part of our pro-forma disclosures. We will not restate the results of prior periods. Prior to the effective date of SFAS 123R, we will continue to provide the pro-forma disclosures for past awards as required under SFAS 123. We are currently evaluating the impact of this standard on future earnings.

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Note 3 — Prepaid expenses and other current assets:

     Prepaid expenses and other current assets consisted of the following at March 31, 2005 and December 31, 2004 ($ in thousands):

Note 4 — Property and Equipment, net:

     Property and equipment, net consisted of the following at March 31, 2005 and December 31, 2004 ($ in thousands):

     Depreciation expense amounted to $584,000 and $218,000 for the three months ended March 31, 2005 and 2004, respectively, including amounts recorded under capital leases.

     Included in property and equipment above are assets acquired under capital leases, which are summarized below at March 31, 2005 and December 31, 2004 ($ in thousands):

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Note 5 — Other intangible assets, net:

     Other intangible assets consists of the following at March 31, 2005 and December 31, 2004 ($ in thousands):

     Amortization of internal use software amounted to $194,000 and $86,000 for the three months ended March 31, 2005 and 2004, respectively, which is included in cost of revenues in the accompanying income statement. Amortization of panel members amounted to $242,000 and zero for the three months ended March 31, 2005 and 2004, respectively, which is included in panel acquisition expenses in the accompanying income statement. Amortization of other intangible assets (excluding internal use software and panel members) amounted to $200,000 and zero for the three months ended March 31, 2005 and 2004, respectively.

Note 6 — Acquisition of businesses:

     On January 25, 2005, we completed the acquisition of Rapidata.net, Inc., a privately held North Carolina corporation (“Rapidata”), pursuant to the terms and conditions of a Stock Purchase Agreement dated January 25, 2005 (the “Stock Purchase Agreement”) among us, Rapidata and all of the shareholders of Rapidata. Pursuant to the Stock Purchase Agreement, we acquired all of the outstanding common stock of Rapidata for $5.5 million in cash, subject to certain closing and post closing adjustments. The results of operations of Rapidata were included in our results of operations beginning January 26, 2005. The parties agreed that $1.05 million of the purchase price would be held in escrow for a period not to exceed 18 months as security for any indemnification claims we may have under the Stock Purchase Agreement and for possible adjustment to the purchase price based on Rapidata’s 2004 financial performance (as specified in the Stock Purchase Agreement) as reflected in its audited financial statements. In February 2005, we released $500,000 from the escrow, as Rapidata’s 2004 financial performance, as reflected in their audited financial statements, exceeded the thresholds required in the Stock Purchase Agreement. Simultaneously with the closing, Rapidata’s two executive officers, who together owned a majority of Rapidata’s common stock, each purchased 16,225 shares of Greenfield Online common stock for an aggregate purchase price of $600,000. Both executives also entered into non-competition agreements and employment agreements with us.

     On February 8, 2005, we completed the acquisition of Zing Wireless, Inc., a privately held California corporation (“goZing”), pursuant to the terms and conditions of an Agreement and Plan of Reorganization, dated February 8, 2005 (the “Plan of Reorganization”), among us, goZing and our wholly-owned acquisition subsidiary, Greenfield Acquisition Sub, Inc. (“Sub”). Pursuant to the Plan of Reorganization, we acquired all of the outstanding shares of common stock of goZing for an aggregate consideration of approximately $31.9 million in cash, subject to certain closing and post closing adjustments. The parties agreed that $3.0 million of the purchase price would be held in escrow for a period not to exceed 18 months ($2.0 million of which is to be released after 12 months if there are no pending claims) as security for any indemnification claims we may have under the Plan of Reorganization and an additional $2.5 million will be held for possible adjustment to the purchase price based on goZing’s 2004 financial

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performance (as specified in the Plan of Reorganization) as reflected in its audited financial statements. In March 2005 the Company released $2.5 million from escrow, as goZing’s 2004 financial performance, as reflected in their audited financial statements, exceeded the thresholds required under the Plan of Reorganization. Simultaneously with the closing, goZing’s three executive officers purchased a total of 195,650 shares of Greenfield Online common stock for an aggregate purchase price of $3.6 million. All three executives also entered into non-competition agreements and employment agreements with us. As of May 15, 2005 all three executives had resigned their positions with us.

     We acquired goZing primarily to increase our panel size and panel demographics as well as our customer base. Under the purchase method of accounting, the total purchase price as shown in the following table allocates the estimated fair values (in thousands) of the assets acquired and liabilities assumed at the date of this acquisition.

     Other intangible assets consists of the following at the date of acquisition for goZing (in thousands):

     The actual results of goZing were included in our consolidated financial statements beginning February 9, 2005, the day following the date of the acquisition.

     The following table provides the combined pro forma financial information for the goZing business as if the business was acquired at the beginning of each of the periods presented ($ in thousands except per share data):

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Note 7 — Accrued expenses and other current liabilities:

     Accrued expenses and other current liabilities consisted of the following at March 31, 2005 and December 31, 2004 ($ in thousands):

     For the three months ended March 31, 2005 and 2004, we reversed panelist incentives accrual of zero and $55,000, respectively, for the expirations of the incentives.

     We have arrangements with Microsoft Corporation through Microsoft Network (“MSN”). Through these arrangements, we pay MSN for network traffic routed to our website where participants respond to our surveys. We also incur a fee to MSN for surveys completed and delivered to clients. Fees for first time traffic routed to our website through MSN, which are included in panel acquisition expense, amounted to $9,000 and $84,000 for the three months ended March 31, 2005 and 2004, respectively. In 2003, MSN began charging us fees for surveys completed and delivered through MSN referrals. Such fees for completed surveys, which are included in cost of revenues, amounted to $206,000 and $222,000, respectively for the three months ended March 31, 2005 and 2004. In November 2004, Microsoft Corporation gave us notice that it intended to terminate the contract between us and cease recruiting panelists as of February 8, 2005. As of February 8, 2005 MSN stopped recruiting panelists for us, but we continue to pay fees related to surveys completed by panelists recruited through MSN.

Note 8 — Revolving Credit Facility:

     We had a credit facility (the “SVB Credit Facility”) with Silicon Valley Bank (“SVB”) in the amount of $1.875 million at March 31, 2005 and December 31, 2004 based upon an 80% advance rate on eligible accounts receivable (the “Borrowing Base”). The SVB Credit Facility bore interest at a rate equal to the prime rate plus 1%, plus a collateral handling fee of 0.375% of the monthly average daily financed receivable balance. The SVB Credit Facility was collateralized by our general assets, scheduled to mature on August 22, 2005 and was subject to a covenant, which required us to achieve certain performance targets each quarter that the SVB Credit Facility was outstanding. Although we had outstanding borrowings during 2004, we did not have an outstanding balance at March 31, 2005 or December 31, 2004. In addition, we incurred interest expense in the amount of $15,000 and $16,000, respectively, for each of the three months ended March 31, 2005 and 2004 associated with the SVB Credit Facility.

     On July 15, 2004, we amended the SVB Credit Facility to allow us to maintain our primary depository account outside of SVB until October 15, 2004. On October 15, 2004, we further amended the SVB Credit Facility to convert our previously monthly-based performance covenants to quarterly-based covenants, and to allow us to maintain our primary depository account outside of SVB until December 31, 2004, when a portion of our excess funds was deposited with SVB, the amount of which was later determined between us and SVB. In December 2004 we further amended the SVB Credit Facility to allow us to incur purchase money obligations, including capital leases of up to $4.0 million in the aggregate. In April 2005, subsequent to our balance sheet date, we terminated the SVB Credit Facility and obtained a larger facility with Commerce Bank as more fully described in Note 11.

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Note 9 — Earnings per share:

     Net income (loss) per share. We report net income (loss) per share in accordance with Statement of Financial Accounting Standards No. 128 “Earnings per Share” (“SFAS 128”). Under SFAS 128, basic earnings per share, which excludes dilution, is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net income or loss available to common stockholders by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share includes in-the-money stock options and warrants using the treasury stock method and in 2004 also includes the assumed conversion of preferred stock using the if-converted method if such conversion would be dilutive. In 2004, due to the participation features of our Series A, Series B and Series C-1 Preferred Stock, basic and diluted earnings per share has been calculated using the “two-class” method, which is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In loss periods, no amounts are allocated to the participating securities. During a loss period, the assumed exercise of in-the-money stock options and warrants and the conversion of convertible preferred stock noted above have anti-dilutive effects and therefore, these instruments are excluded from the computation of dilutive earnings per share. Weighted average potential common shares of 18,000 and 15,000, respectively for the three months ended March 31, 2005 and 2004 were excluded from the computation of diluted earnings per share as they would be anti-dilutive.

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

Note 10 — Commitments and Contingencies:

Legal Contingencies:

From time to time, in the ordinary course of business, we are subject to legal proceedings. While it is not possible to determine the ultimate outcome of such matters, it is management’s opinion that the resolution of any pending issues will not have a material adverse effect on our consolidated financial position, cash flows or results of operations.

Note 11 — Subsequent Events:

Termination of SVB Credit Facility:

     On April 1, 2005, we provided SVB notice of our intention to terminate the SVB Credit Facility. At such time, we had no outstanding borrowings under the SVB Credit Facility, under which we were able to borrow amounts based on our eligible accounts receivable as defined under the SVB Credit Facility. The SVB Credit Facility terminated on April 5, 2005 and we have paid all amounts due thereunder, including fees and costs associated with the termination,

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of approximately $15,000. The termination of the SVB Credit Facility will not have a material affect on our liquidity or capital resources.

Entry into a Commerce Bank Credit Facility:

     On April 6, 2005, we entered into a Credit Agreement with Commerce Bank NA (“Commerce Bank”) that provides for a term loan of $10,000,000 and a revolving loan of up to $15,000,000 (the “Commerce Bank Credit Facility”). The amounts available to be borrowed under the revolving loan are based on eligible accounts receivable as defined in the Commerce Bank Credit Facility. The initial interest rate on both the term loan and the revolving loan is 3.5% above the Eurodollar rate for a one month period. Under the terms of the Commerce Bank Credit Facility we may choose to have the interest rate be 3.5% above the Eurodollar rate for a one month, two month or three month period, or we may choose to have the interest rate be 0.75% above the prime rate. The Commerce Bank Credit Facility requires that monthly payments of principal and interest be made on the term loan, and both the term loan and revolving loan mature on April 6, 2008. The Commerce Bank Credit Facility is secured by security interests in substantially all of our personal property. Two of our subsidiaries, Zing Wireless, Inc. and Rapidata.Net, Inc. have guaranteed to Commerce Bank our obligations under the Commerce Bank Credit Facility and have also granted security interests in substantially all of their personal property. In addition, the Commerce Bank Credit Facility requires that as of the last day of each fiscal quarter, beginning with the second quarter of 2005, we must have achieved a minimum EBITDA of $20 million (as such term is defined in the Commerce Bank Credit Facility), for the 12 months then ended. We are also required to maintain a minimum of $10.0 million in deposits in accounts with Commerce Bank. On April 6, 2005, we drew approximately $18.8 million under the Commerce Bank Credit Facility, of which $10.0 million was drawn under the term loan and the balance of which was drawn under the revolving loan. We utilized approximately $7.4 million of the loan proceeds to fund a portion of the acquisition described below under the caption “Ciao Acquisition” and approximately $11.4 million for working capital and general corporate purposes.

     In connection with the Ciao acquisition, we entered into an amendment (the “Registration Rights Amendment”) to our Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) dated as of December 16, 2002, among us and certain of our stockholders. The Registration Rights Amendment grants the former shareholders of Ciao AG who now hold shares of our common stock as a result of the Ciao acquisition the same registration rights under the Registration Rights Agreement as are held by the former holders of our Series C-1 Convertible Participating Preferred Stock.

Ciao Acquisition:

     On April 6, 2005, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) to acquire all of the outstanding stock of Ciao AG, a privately held German company (“Ciao”), by and among us, Ciao, the shareholders of Ciao as the sellers, the representative of the sellers, our wholly-owned acquisition subsidiary SRVY Acquisition GmbH and its wholly owned subsidiary Ciao Holding GmbH as buyers, and the Company Trustee (as identified therein). The signing and closing under the Share Purchase Agreement occurred on April 6, 2005. Pursuant to the Share Purchase Agreement, we acquired all of the outstanding shares of stock of Ciao for €57,692,250 (approximately $74.3 million) in cash and 3,947,367 shares of Greenfield Online Common Stock valued at $20.19 per share (the closing price of the Greenfield Online Common Stock on Nasdaq on April 6, 2005). We funded a portion of the cash proceeds delivered in the transaction from the Commerce Bank Credit Facility as described in “Entry into a Commerce Bank Credit Facility” and the remaining balance from the proceeds of our follow-on public offering (see Note 1). In addition to the €57,692,250 (approximately $74.3 million) set forth above, the cash portion of the consideration was adjusted to reflect the estimated amount of cash on hand at Ciao in excess of a specified amount of working capital as of the closing date. Such amount is subject to a post closing adjustment based on the final closing date balance sheet of Ciao. The parties agreed that €3,846,152 (approximately $5.0 million) and 263,158 shares of Greenfield Online Common Stock from the purchase consideration will be held in escrow for a period not to exceed 18 months (the stock portion of the escrow will be released after 12 months if there are less than $2.0 million of claims pending against the escrow at that time), as security for any indemnification claims we may have under the Share Purchase Agreement. Simultaneously with the closing, Ciao’s four Managing Directors each entered into non-competition agreements and employment agreements with us.

     We acquired Ciao primarily to increase our European panel size and panel demographics as well as our customer base. We are currently in the process of obtaining third-party valuations of certain intangible assets acquired.

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     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K and in this Form 10-Q. See “Cautionary Note Regarding Forward-Looking Statements.”

Critical Accounting Policies and Estimates

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

     For further information regarding our critical accounting policies, please refer to the Management’s Discussion and Analysis section of our Annual Report on Form 10-K. There have been no material changes during the three months ended March 31, 2005, except as they may relate to certain policies and estimates associated with the recent acquisitions and as noted below.

     Goodwill. We will complete an impairment test on an annual basis. In performing this annual test, we will compare the fair value of a reporting unit with its carrying amount, including goodwill. In the event that a reporting unit’s carrying value exceeds its fair value, we would record an adjustment to the respective reporting unit’s goodwill for the difference between the implied fair value of goodwill and the carrying value. In addition to the annual impairment analysis, we will also assess the carrying value of goodwill whenever events or changes in circumstances indicate that the carrying amount of the underlying asset may not be recoverable.

Results of Operations

     Quarter Ended March 31, 2005 Versus Quarter Ended March 31, 2004

     Net Revenues. Net revenues for the three months ended March 31, 2005 were $15.3 million, compared to $8.6 million for the three months ended March 31, 2004, an increase of $6.7 million, or 76.9%. Net revenues increased due primarily to an increase in the number of survey projects completed and the additional revenue provided via the acquisitions of Rapidata and goZing. This increase was seen primarily in our full-service and sample-only solutions, with the increase in sample only solutions being primarily associated with the acquisition of goZing, which has historically sold only sample only solutions. In addition, increased demand for our services was driven by market factors, including the need for the marketing research industry to improve profitability by using less costly Internet-based marketing research data and the impact of the Do Not Call registry on marketing research firms, which had previously relied heavily on telephone-based data collection methods. We believe that the revenue growth from our Internet survey solutions will continue to be strong for the remainder of 2005, but the growth rate may decline as compared with the year over year revenue growth experienced in 2004 as compared to 2003.

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     Gross Profit. Gross profit for the three months ended March 31, 2005 was $10.8 million, compared to $5.8 million for the three months ended March 31, 2004, an increase of $5.0 million, or 86.3%. Gross profit for the three months ended March 31, 2005 was 71.0% of net revenues, compared to 67.4% for the three months ended March 31, 2004. Gross margin increased primarily due to the additional revenues described above and to the more productive use of panelist incentives as a result of a shift from cash incentive payments to a prize-based program, which positively impacted our gross margin by approximately 2.9 percentage points for the three months ended March 31, 2005. This increase was diminished slightly by goZing’s traditionally higher incentive payment structure. Continued reliance on goZing’s incentive structure, which utilizes a higher rate of cash incentives than our program, may increase our overall incentive costs. Additionally, gross margin increased due to a decline in costs related to direct project personnel as a result of the increased percentage of sample-only business, which is less labor intensive, and to our India expansion, whereby we moved a significant portion of survey production and data processing to our India facility during 2003 and 2004. Combined, these added approximately 3.1 percentage points our gross margin for the three months ended March 31, 2005. Our gross margin was reduced by approximately 4.0 percentage points for the three months ended March 31, 2005 as a result of the increased use of outside sample. We utilized outside sample to supplement our panel when completing certain surveys, which we could not complete solely through the use of our panel. Our gross margin was further improved by approximately 1.6 percentage points due primarily to the reduction of revenue share and other delivery costs.

     Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended March 31, 2005 were $6.7 million, compared to $4.3 million for the three months ended March 31, 2004, an increase of $2.4 million, or 57.5%. Selling expenses, primarily personnel costs and related commissions, increased approximately $776,000 for the three months ended March 31, 2005 as a result of the recent acquisitions of Rapidata and goZing and hiring new sales and sales-support personnel in order to better promote our products and services. Personnel costs associated with panel, marketing and administration, increased approximately $705,000 for the three months ended March 31, 2005 as a result of the additional costs of the Rapidata and goZing acquired entities, hiring in panel and marketing management, staffing required in finance and administration to operate as a public company as well as the addition of personnel in panel management and administration in our India operation. Advertising and promotion increased approximately $208,000 in the three months ended March 31, 2005 as we increased our spending in direct mail, print and web advertising, and marketing materials and as we hosted seminars and conferences as well as issued additional press releases associated with our acquisition activities. General and administrative expenses, excluding personnel costs, increased approximately $755,000 in the three months ended March 31, 2005 primarily as a result of public company expenses, recruitment fees for personnel additions, additional rent, supplies and infrastructure usage for office expansion in India, Europe and Canada, as well as other professional fees incurred to support our revenue growth and international expansion. Selling, general and administrative expenses as a percentage of net revenues decreased 5.4% to 43.9% from 49.3% for the three months ended March 31, 2005 primarily as a result of the additional revenues, partially offset by the additional costs from the acquired entities. We expect selling, general and administrative expenses to remain relatively consistent as a percentage of revenues in the near term and expect it to decline as a percentage of revenues toward the latter half of 2005, as we realize the benefit of low incremental variable costs associated with future revenue growth.

     Panel Acquisition Expenses. Panel acquisition expenses were $454,000 for the three months ended March 31, 2005, compared to $688,000 for the three months ended March 31, 2004, a decrease of $234,000, or 34.0%. Panel acquisition expenses decreased as a result of our recent acquisitions, which added significantly to our panel, and which were offset partially by $242,000 of amortization expense associated with the panelists acquired in these acquisitions. Our panel recruiting through MSN has declined significantly in the three months ended March 31, 2005 compared to March 31, 2004, primarily as a result of the termination of the MSN panel recruiting arrangement as described below, our acquisitions and our continuing efforts to expand the number of our panelist recruiting sources and to find lower cost alternatives to recruiting than through MSN.

     Depreciation and Amortization Expenses. Depreciation and amortization expenses for the three months ended March 31, 2005 were $783,000, compared to $218,000 for the three months ended March 31, 2004, an increase of $565,000, or 259.2%. This increase in depreciation and amortization expense occurred primarily as a result of the amortization of the step up in basis of the amortizable intangible assets acquired in our recent acquisitions and to our 2004 capital expenditures associated with retooling our infrastructure, as well as the build out of our India facility.

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     Research and Development Expenses. Research and development expenses were $346,000 for the three months ended March 31, 2005, compared to $216,000 for the three months ended March 31, 2004, an increase of $130,000, or 60.2%. Research and development expenses amounted to approximately 2.3% and 2.5% of revenues for the three months ended March 31, 2005 and 2004, respectively. Research and development expenses increased as a result of our recent acquisitions, which require additional technological support to integrate the various panels and technology infrastructures.

     Interest Income (Expense), Net. Net interest income for the three months ended March 31, 2005 was $454,000, compared to net interest expense of $56,000 for the three months ended March 31, 2004. The increase in net interest income was due primarily to the interest earned on the proceeds that were invested from our initial public offering completed in July 2004 and our follow-on public offering completed in December 2004.

     Related Party Interest Income (Expense), Net. Related party interest expense was zero and $27,000, respectively, for the three months ended March 31, 2005 and 2004. The decrease in the related party interest expense was due to the acceleration of unamortized debt discount associated with our Series C-2 Redeemable Non-Voting Preferred Stock, par value $0.0001 (“Series C-2”), which was redeemed on July 25, 2004 using proceeds from our initial public offering.

     Other Income (Expense), Net. Other expense for the three months ended March 31, 2005 was $41,000, compared to $5,000 for the three months ended March 31, 2004. Other expense relate primarily to the effects of currency translation associated with our operations in India, Europe and Canada. Our expansion during 2004 gave rise to currency risk associated with transactions in currencies other than the US Dollar.

     Provision for Income Taxes. We recorded an income tax provision for the three months ended March 31, 2005 and 2004 of $492,000 and $21,000, respectively. Our effective tax rate was 16.6% and 6.1%, respectively, for the three months ended March 31, 2005 and 2004. The increase in the effective rate of our tax provision is primarily due to the Internal Revenue Code Section 382, which limits the amount of net operating losses (“NOL’s”) that we may utilize to offset our income tax liabilities on an annual basis. We currently estimate that our use of NOL’s to offset future taxable income will be limited to between $11 million and $14 million annually.

     Net Income. Our net income for the three months ended March 31, 2005 was $2.5 million compared to $325,000 for the three months ended March 31, 2004. The increase in net income was primarily the result of increased revenues partially offset by increased selling, general and administrative expenses and depreciation and amortization expenses. Net income per common share in the prior period includes the effects of using the two-class method, which allocates earnings among common stock and participating preferred securities. Net income available to common stockholders for the three months ended March 31, 2005 was $0.12 and $0.11, respectively, for basic and diluted, as compared to net income per share of $0.01 and $0.01, respectively, for basic and diluted for the three months ended March 31, 2004.

Liquidity and Capital Resources

     Since our inception, we have financed our operations primarily through sales of equity and debt securities, from borrowings under our credit facilities, from the proceeds from the sale of our Custom Research Business and, more recently, through cash flows from operations. We have received a total of $43.0 million from private offerings of our equity and debt securities. In July 2004, we completed our initial public offering of shares of our common stock at a public offering price of $13.00 per share, and raised approximately $34.8 million in net proceeds after payment of underwriters commissions, mandatory conversion and dividend payments, mandatory redemption payments and costs associated with our initial public offering. In December 2004, we completed a follow-on public offering of shares of our common stock at a public offering price of $18.16 per share, and raised approximately $76.5 million in net proceeds after payment of underwriters’ commissions and costs associated with our follow-on public offering. At March 31, 2005, we had approximately $81.1 million in cash and cash equivalents on hand, compared to $96.1 million at December 31, 2004. This reduction was primarily due to the use of cash to acquire Rapidata and goZing, and was partially offset by the reduction in marketable securities of approximately $16.7 million, which were liquidated and utilized for these purchases.

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     Cash provided by operations for the three months ended March 31, 2005 was $2.3 million, compared to cash utilized by operations of $101,000 for the three months ended March 31, 2004. The increase in cash flow from operations in the 2005 period was primarily attributable to our increased profitability.

     Cash used by investing activities was $21.1 million for the three months ended March 31, 2005, compared to $282,000 for the three months ended March 31, 2004. This increase in cash used by investing activities of $20.8 million was due to our acquisitions of Rapidata and goZing and to a lesser extent to increased additions to our property, equipment and intangibles. This increase was partially offset by our net liquidation of marketable securities of $16.7 million to effect these acquisitions.

     Cash provided by financing activities was $4.0 million for the three months ended March 31, 2005, compared to $693,000 for the three months ended March 31, 2004. The difference was primarily the result of the net proceeds from the issuance of our common stock to the former executives of Rapidata and goZing who each purchased shares of our common stock with the proceeds from the sales of their respective businesses.

     Our working capital at March 31, 2005 was $85.8 million, compared to $115.0 million at December 31, 2004, a decrease of $29.2 million. The decrease in working capital was primarily due to the use of cash and marketable securities to acquire the Rapidata and goZing businesses, offset by cash generated from the period.

     We have maintained a banking relationship with Silicon Valley Bank (“SVB”) since September 2001. In August 2003, we amended our credit facility with SVB to extend the maturity date until August 2005 and reduce the applicable interest rate. This credit facility allows for borrowings of up to $1.9 million, based upon an 80% advance rate on eligible accounts receivable (the “Borrowing Base”), and bears interest at a rate equal to the prime rate plus 1%, plus a collateral handling fee of 0.375% of the monthly average daily financed receivable balance. The credit facility is collateralized by a pledge of our general assets and contains a covenant that requires us to achieve EBITDA (as defined in the credit facility) of $1.00 or more during each quarter that the facility is outstanding. In October 2003, we repaid the entire outstanding balance under the facility, and at December 31, 2003 the entire amount was available for borrowing, subject to the sufficiency of the Borrowing Base. On March 31, 2005, the Borrowing Base was sufficient to allow us to borrow the entire amount available under the credit facility, although we had no outstanding borrowings under the credit facility. Interest on the facility is payable monthly, and the entire balance of the facility, including principal, interest and unpaid charges, if any, is payable on August 22, 2005. In April 2004, we amended the credit facility to allow us to incur purchase money obligations, including capital leases, of up to $2.5 million in the aggregate. In July 2004, we amended the credit facility again to allow us to maintain our primary deposit account outside of SVB through October 15, 2004. Upon the completion of our initial public offering, we deposited the net proceeds in a cash management account maintained by one of our underwriters. On October 15, 2004, we further amended the credit facility to convert our previously monthly-based performance covenants to quarterly-based covenants, and to allow us to maintain our primary depository account outside of SVB until December 31, 2004, when a portion of our excess funds will be deposited with SVB, the amount of which will later be determined between us and SVB. In December 2004 we further amended the SVB credit facility to allow us to incur purchase money obligations, including capital leases of up to $4.0 million in the aggregate. In April 2005, subsequent to our balance sheet date, we terminated the SVB credit facility and obtained a larger facility with Commerce Bank as more fully described in Note 11 to the accompanying financial statements. We utilized a portion of these funds from Commerce Bank to effect the acquisition of Ciao. Immediately after such acquisition, our consolidated cash balance was approximately $26.5 million, including $10 million of cash which we must maintain on deposit with Commerce Bank in order to comply with the terms of the Commerce Bank Credit Facility.

     We also maintain an ongoing relationship with Somerset Capital Group Ltd. (“Somerset Capital”), a leasing company, to finance the acquisition of equipment, software and office furniture pursuant to leases, which we have recorded as capital leases. While we do not have a firm commitment from Somerset Capital to provide additional financing, Somerset Capital has indicated that it intends to finance our budgeted capital expenditures for 2005 within the United States if we request it to do so. In the event that Somerset Capital declined to continue to finance our capital expenditure requirements, we believe that alternative sources of such funding would be available to us to satisfy such needs.

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     At March 31, 2005 and December 31, 2004, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

     We have an agreement with MSN under which we pay fees for panelists recruited via the MSN website, plus fees associated with surveys taken by these panelists. Our agreement with MSN, as amended, required us to make guaranteed quarterly payments, which would be credited against recruiting and survey fees. Our obligation to make these guaranteed payments has lapsed but we continue to be obligated to make current payments to MSN for panelists they recruit and for surveys taken by MSN recruited panelists. In 2004 and continuing in 2005 there has been a continued decline in panel recruitment through MSN and a decline in our use of MSN recruited panelists, resulting in lower payments to MSN, and we anticipate this decline will continue over the next twelve months. We anticipate that any increased liquidity associated with this decreasing reliance on MSN and MSN panelists will be offset by additional expenditures that we make to gain access to other panel recruiting sources. In November 2004, Microsoft Corporation gave us notice that it intended to terminate the contract between us and cease recruiting panelists as of February 8, 2005. As of February 8, 2005, MSN stopped recruiting panelists for us, but we continue to pay fees related to surveys completed by panelists recruited through MSN.

     In the three months ended March 31, 2005, we incurred capital expenditures of $112,000 and $592,000 related to India and North America, respectively. For fiscal 2005, we expect capital expenditures to total approximately $5.0 million. In the United States, capital expenditures were applied primarily to upgrade computer servers and networking equipment to manage increased Internet-based survey production and data collection, to upgrade personal computers for employees and to new Internet telephony equipment to facilitate international communications. These capital expenditures will be funded by a combination of capital leases from Somerset Capital and cash flow from operations. In India, our 2005 capital expenditures consisted primarily of leasehold improvements, office furniture, computer equipment, Internet telephony equipment and other costs associated with building our Indian facility. These expenditures were funded from our cash flow from operations. In addition, costs we have incurred and may incur in the development, enhancement and integration of software programs, technologies and methodologies, in order to keep pace with technological changes and enhance our Internet survey solutions, have and will also be funded from our cash flow from operations and other available financing sources, including our credit facility.

     There were no material changes outside the ordinary course of business in our contractual obligations during the three months ending March 31, 2005. The following table summarizes our contractual obligations at March 31, 2005 and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

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     Based on our current level of operations and anticipated growth, we believe that our cash generated from operations, amounts available under our credit facility and future capital leasing arrangements with Somerset Capital, together with the net cash and investments on hand, will be adequate to finance our working capital and other capital expenditure requirements through the foreseeable future, although no assurance can be given in this regard. Poor financial results, unanticipated expenses, acquisitions of technologies, businesses or assets or strategic investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current stockholders.

Risk Factors

     You should carefully consider the risks described below and elsewhere in this quarterly report, which could materially and adversely affect our business, results of operations or financial condition. If any of the following risks actually occurs, the market price of our common stock would likely decline.

If we are unable to maintain the size or demographic composition of the Greenfield Online panel, our clients may stop using our products and services.

     The commercial viability of our marketing research data and our overall business is dependent on our ability to attract and maintain active panelists and ensure optimal panel composition to accommodate a broad variety of marketing research requests. There is currently no historical benchmark by which to predict the optimal size of research panels to ensure high response rates and maximum revenue generation per panelist. If we are unable to accurately determine or build optimal-sized panels, our current panelists may become overused and unresponsive to our requests to participate in surveys. If we fail to regenerate our panel with new and active panelists on a regular basis, the size and demographic diversity of the Greenfield Online panel may decrease and our clients may reduce or stop using our products and services, which may lead to a decline in our revenues.

     If the number of panelists participating in the Greenfield Online panel decreases, the cost of acquiring new panelists becomes excessive or the demographic composition of our panel narrows, our ability to provide our clients with accurate and statistically relevant information could suffer. This risk is likely to increase as our clients’ needs expand, and as more demographically diverse surveys are requested by our clients.

If the rate at which our panelists respond to our surveys decreases, we may not be able to meet our clients’ needs.

     Our panelists participate in our surveys on a voluntary basis only, and there can be no assurance that they will continue to do so. Our ability to maintain adequate response rates may be harmed if:

	•	our email-based survey invitations are not received by our panelists due to the use of spam-filtering and blocking software by individuals, corporations and Internet service providers;
	•	our panelists become dissatisfied with the forms of participation incentives we offer; or
	•	our panelists respond less frequently to our surveys, or stop responding altogether due to excessive requests for participation from us or other researchers.

     If we fail to maintain adequate response rates, we may be unable to meet current or future demand for our products and services and our revenues may decline.

If the rate at which our panelists respond to our surveys decreases, we may be required to expend additional funds to retain our panelists or provide additional incentives to encourage panelist participation.

     In the past, the responsiveness of our panelists has been variable and a function of the length of the surveys to be completed and the incentives offered to our panelists in exchange for their participation. The incentives we offer panelists to participate in surveys generally consist of the opportunity to enter into sweepstakes and win prizes or direct cash incentives. In April 2004, we shifted our incentive program away from cash-based payments to a program emphasizing prize-based incentives. If we are required to shift back to a cash based payment incentive program,

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otherwise increase incentives or undertake more costly campaigns to retain our current panelists, our operating expenses may increase and our operating income may decline.

We derived approximately 37% and 33% of our total net revenues from ten clients in fiscal 2004 and during the three months ended March 31, 2005, respectively. If we were to lose, or if there were a material reduction in business from, these clients, our net revenues might decline substantially.

     Our ten largest clients accounted for approximately 37% and 33%, of our total net revenues for the year ended December 31, 2004 and the three months ended March 31, 2005, respectively. Additionally, two of our ten largest clients for the three months ended March 31, 2005 were owned by the same parent company. Together they accounted for approximately 13% and 9% of our net revenues for the year ended December 31, 2004 and the three months ended March 31, 2005, respectively. If we lose business from any of our top ten clients, our net revenues might decline substantially.

We may not be able to successfully compete with marketing research firms and other potential competitors.

     The market for our products and services is highly competitive. We compete for clients with other Internet-based marketing research data collection firms, such as SPSS Service Bureau and Harris Interactive Service Bureau; firms offering respondent-only services, such as Survey Sampling, Inc., and e-Rewards, Inc.; and large marketing research companies, such as The Kantar Group and Harris Interactive, Inc. We expect to face intense competition in the future from other marketing research data collection firms that develop Internet-based products and services.

     We also expect to face competition from other companies with access to large databases of individuals with whom they can communicate through the Internet, such as email service providers and Internet-based direct marketers, as well as companies that develop and maintain a large volume of Internet traffic on their websites, such as large Internet portals, networks and search engines. These companies may, either alone or in alliance with other firms, enter the Internet-based marketing research data collection market.

     Many of our current and potential competitors have longer operating histories, greater brand recognition and significantly greater financial and other resources than we do. These competitors may be able to undertake more extensive sales and marketing campaigns offering their services, adopt more aggressive pricing policies, and make more attractive offers to potential employees, strategic partners, panelists and customers than we can. In addition, these competitors and potential competitors may develop technologies that are superior to ours, or that achieve greater market acceptance than our own. If we do not successfully compete with these companies, we might experience a loss of market share and reduced revenues and profitability.

Consolidation in the marketing research industry may result in fewer potential clients for us and a smaller market in general if companies with existing Internet-based panels combine with companies without such panels.

     Consolidations within the marketing research industry in general and among our clients in particular, such as the acquisition of NFO Worldgroup, Inc. by Taylor Nelson Sofres, Plc, the acquisition of ARBOR, Inc., by GfK-AG, and GfK-AG’s recently announced intention to acquire NOP World, could cause us to lose business from clients that acquire companies with Internet-based panels of their own. Similarly, our smaller clients could be acquired by larger marketing research companies that have their own Internet-based panel such as the recent acquisition of Wirthlin Worldwide by Harris Interactive, Inc., and their need for our products and services could be reduced or eliminated as a result. In either case, our net revenues would be reduced.

If our clients develop their own Internet-based panels, we may lose some or all of their business.

     Some of our large clients have the financial resources and sufficient need for Internet survey solutions that they may decide to build their own Internet-based panels. Should some or all of these clients decide to build their own Internet-based panels and succeed in doing so, their need for our products and services could be reduced or eliminated. Additionally, should our smaller clients consolidate and achieve sufficient scale, it may become

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economically feasible for them to build their own Internet-based panels. If they do so, their need for our products and services could be reduced or eliminated. In either case, our revenues would decline.

If the marketplace significantly slows its migration from traditional data collection methods to Internet-based marketing research data collection, our growth may slow or cease altogether.

     The marketplace must continue to accept the Internet as a medium for collecting marketing research survey data and convert to Internet data collection methodologies in order for our business to grow at the rate that we anticipate. In addition, the success of our business depends on our ability to develop and market Internet survey solutions that achieve broad market acceptance and facilitate the transition from traditional data collection methods. If the marketplace slows its migration to Internet-based data collection products and services, we may have difficulty obtaining new clients and our revenues could decline.

If we do not keep pace with technological change, we may be unable to implement our business strategy successfully.

     The marketing research data collection industry, particularly the Internet-based marketing research data collection industry, is characterized by intense competition, rapid new product and service developments and evolving methodologies. To succeed, we will need to effectively develop and integrate various software programs, technologies and methodologies required to enhance and improve our Internet survey solutions. Any enhancements of new products or services must meet the needs of our current and potential clients and achieve significant market acceptance. Our success will also depend on our ability to adapt to changing technologies by continually improving the performance features and reliability of our products and services. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of new products and services. We could also incur substantial costs if we need to modify our products and services or infrastructure to adapt to these changes.

If we are unable to manage and support our growth effectively, we may not be able to execute our business strategy successfully.

     We are rapidly expanding our international operations, but have limited experience expanding sales and operations facilities in foreign countries. If we fail to successfully integrate our acquisition of Ciao AG in Europe and expand our sales and marketing efforts there we will be unable to adequately address a sizeable portion of the worldwide market for Internet-based survey data collection and may not be able to grow our business at the rate we anticipate. We are integrating new personnel to support our growth, which makes it difficult to maintain our standards, controls and procedures. Members of our senior management team will be required to devote considerable amounts of their time and attention to this expansion, which may reduce the time and attention they will have available to manage our operations and pursue strategic opportunities.

     Our employee base has grown from 54 in February 2002 to 339 as of March 31, 2005, including employees of our subsidiaries in India, the United Kingdom and Canada. If our business continues to grow, we could be required to hire a significant number of additional employees in the United States and abroad. The recruiting, hiring, training and integration of a large number of employees throughout the world will place a significant strain on our management and operational resources. If we are unable to successfully develop, implement, maintain and enhance our financial and accounting systems and controls, integrate new personnel and manage expanded operations, we may not be able to effectively manage our growth.

     We are concentrating a significant portion of our operational capacity in our facility located in India and Canada and may open additional facilities elsewhere in the world. If we fail to successfully build or maintain our operations in India, Canada or elsewhere, we may suffer interruptions in the delivery of our products and services to our clients. In addition, if we fail in this regard, we may be required to relocate these international operations to the United States or elsewhere and thereby incur higher labor costs and additional transitional costs.

If we are unable to achieve international growth of the Greenfield Online panel or to overcome other risks of international operations, we may be unable to conduct business on a global level.

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     Expanding our business and the Greenfield Online panel to operate on a global level could pose the following risks to us:

	•	more restrictive privacy laws;
	•	difficulty in recruiting and managing employees in foreign countries;
	•	aversion to U.S. companies or non-domestic companies in the regions where we plan to expand;
	•	unexpected changes in regulatory requirements;
	•	export controls relating to encryption technology;
	•	currency exchange rate fluctuations;
	•	problems collecting accounts receivable and longer collection periods;
	•	potentially adverse tax consequences;
	•	political instability; and
	•	Internet access restrictions.

     Additionally, in the process of expanding our global operations, we may encounter more restrictive regulations and laws in Europe or elsewhere, especially laws related to privacy rights, that could inhibit our ability to expand the Greenfield Online panel. In particular, we self-certify to the U.S. Department of Commerce Safe Harbor framework, which is designed to meet the data privacy rules under the European Commission’s Directive on Data Protection and prohibits the transfer of personal data to non-European Union nations that do not meet the European “adequacy” standard for privacy protection. We have little or no control over the risks listed above and may experience some or all of these risks.

We have significant operations in India that could be limited or prohibited by changes in the political or economic stability of India or government policies in India or the United States.

     We have a substantial team of professionals in India who provide us with data processing and other services. The development of our operations center in India has been facilitated partly by the liberalization policies pursued by the Indian government over the past decade. A significant change in India’s economic liberalization and deregulation policies could increase our labor costs or create new regulatory expenses for us. Also, numerous states have introduced legislation aimed at restricting overseas outsourcing and encouraging U.S. businesses to keep their operations within the United States. The U.S. Senate has recently approved an amendment that would prohibit companies from using money from federal contracts to outsource jobs overseas, and would prohibit state contract work from being performed overseas with money received from federal grants. If these or similar laws or regulations are enacted, our ability to continue overseas operations could be harmed and our competitive position would be damaged.

Acquisitions or investments in other companies may have a negative impact on our business and our stock price.

     As part of our strategy to expand the Greenfield Online panel, our technology infrastructure and products and services, we may consider acquiring or making investments in complementary businesses, services, products or technologies as appropriate opportunities arise, such as our acquisition of OpinionSurveys.com and our current integration of our recent acquisitions of Rapidata.net, Zing Wireless, Inc. and Ciao AG. The risks we may face in acquiring or investing in complementary businesses include:

	•	difficulties with the integration and assimilation of the acquired business, including maintaining the frequency of survey participation of panelist who join our panel through acquisitions;
	•	diversion of our management team’s attention from other business concerns;
	•	availability of favorable acquisition or investment financing;
	•	potential undisclosed liabilities associated with acquisitions
	•	loss of key employees of any acquired business; and
	•	our ability to successfully operate and grow business untis within the acquired companies that provide products and services other than Internet survey solutions.

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     Acquisitions or investments may require us to expend significant amounts of cash. This would result in our inability to use these funds for other business purposes. Additionally, if we fund acquisitions through further issuances of our common stock, our stockholders will be diluted, which may cause the market price of our common stock to decline. The potential impairment or complete write-off of goodwill and other intangible assets related to any such acquisition may reduce our overall earnings, which in turn could negatively affect the price of our common stock.

Our success depends on our ability to retain the current members of our senior management team and other key personnel.

     Our success depends to a significant extent on the continued services of our core senior management team of Dean A. Wiltse, our CEO; Robert E. Bies, our Executive Vice President and CFO; and Jonathan A. Flatow, our Vice President and General Counsel. If one or more of these individuals were unable or unwilling to continue in his present position, our business would be disrupted and we might not be able to find replacements on a timely basis or with the same level of skill and experience. Finding and hiring any such replacements could be costly and might require us to grant significant equity awards or other incentive compensation, which could adversely impact our financial results. We do not maintain key-person life insurance for any of our management personnel or other key employees.

If we fail to continue to attract and retain project management professionals and other highly-skilled personnel, we may be unable to successfully execute our business strategy.

     Our business model is based and our success depends upon our ability to attract, retain and motivate highly-skilled project management professionals and other technical, managerial, marketing, sales and client support personnel throughout the world. Because competition to attract trained technical and project management personnel is intense in the marketing research data collection industry, we may experience difficulty attracting, integrating or retaining the number of qualified personnel needed to successfully implement our business strategy. If we are delayed in recruiting key employees, we may be forced to incur significant additional recruitment, compensation and relocation expenses. If we are unable to hire and retain such personnel in the future, we may not be able to operate our business as we do today or meet the needs of our clients.

We may be at a competitive disadvantage if we are unable to protect our proprietary rights or if we infringe on the proprietary rights of others, and related litigation could be time consuming and costly.

     Because we operate our business through websites and rely heavily on computer hardware and software, proprietary rights, particularly trade secrets and copyrights, are critical to our success and competitive position. The actions we take to protect our proprietary rights may be inadequate. In addition, effective copyright, trademark and trade secret protection may be unenforceable or limited in certain countries and, due to the global nature of the Internet, we may be unable to control the dissemination of our content and products and the use of our products and services. In addition, third-parties may claim that we have violated their intellectual property rights. For example, companies have recently brought claims against other Internet companies regarding alleged infringement of patent rights relating to methods of doing business over the Internet. To the extent that we violate a patent or other intellectual property right of another party, we may be prevented from operating our business as planned or may be required to pay damages, obtain a license, if available, for the use of the patent or other right to use a non-infringing method to accomplish our objectives.

     Our ability to execute our business strategy will suffer if a successful claim of infringement is brought against us and we are unable to introduce new trademarks, develop non-infringing technology or license the infringed or similar technology on a timely basis. Moreover, our general liability insurance may not be adequate to cover all or any of the costs incurred defending patent or trademark infringement claims, or to indemnify us for liability that may be imposed.

Fluctuations in our quarterly operating results may cause our stock price to decline and limit our stockholders’ ability to sell our common stock in the public market.

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     In the past, our operating results have fluctuated significantly from quarter to quarter and we expect them to continue to do so in the future due to a variety of factors, many of which are outside of our control. Our operating results may in some future quarter fall below the expectations of securities analysts and investors. In this event, the trading price of our common stock could decline significantly. In addition to the risks disclosed elsewhere in this report, factors outside of our control that have caused our quarterly operating results to fluctuate in the past and that may affect us in the future, include:

	•	fluctuations in general economic conditions;
	•	demand for marketing research products and services generally;
	•	fluctuations in the marketing research budgets of the end-users serviced by our marketing research clients;
	•	the failure of our large clients to win Internet-based marketing research project;
	•	the development of products and services by our competitors; and
	•	Project cancellations by our clients or changes in project completion dates by our clients, effecting the timing of our recognition of revenue.

     In addition, factors within our control, such as our capacity to deliver projects to our clients in a timely fashion, have caused our operating results to fluctuate in the past and may affect us similarly in the future.

     The factors listed above may affect both our quarter-to-quarter operating results as well as our long-term success. Given the fluctuations in our operating results, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance or to determine any trend in our performance. Fluctuations in our quarterly operating results could cause the market price of and demand for our common stock to fluctuate substantially, which may limit your ability to sell our common stock on the public market.

We might have difficulty obtaining additional capital, which could prevent us from achieving our business objectives. If we are successful in raising additional capital, it may have a dilutive effect on our stockholders.

     We may need to raise additional capital in the future to fund the expansion of the Greenfield Online panel and the marketing of our products and services, or to acquire or invest in complementary businesses, technologies or services. If additional financing is not available, or available only on terms that are not acceptable to us, we may be unable to fund the development and expansion of our business, attract qualified personnel, promote our brand name, take advantage of business opportunities or respond to competitive pressures. Any of these events may harm our business. Also, if we raise funds by issuing additional shares of our common stock or debt securities convertible into common stock, our stockholders will experience dilution, which may be significant, to their ownership interest in us. If we raise funds by issuing shares of a different class of stock other than our common stock or by issuing debt, the holders of such different classes of stock or debt securities may have rights senior to the rights of the holders of our common stock.

Government regulations could limit our Internet activities or result in additional costs of doing business and conducting marketing research on the Internet.

     The federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”), which took effect on January 1, 2004, imposes a series of new requirements on the use of commercial email messages and directs the FTC to issue new regulations that define relevant criteria and to enforce the Act. Among other things, one proposal being examined by the FTC is a federal “Do Not Email” registry. The CAN-SPAM Act and the regulations enforcing the Act may significantly impact the manner in which we recruit and communicate with our panelists. It may also expose us to potential liability or require us to change or abandon our webmaster affiliate program and other recruitment techniques. We may also need to develop technology or systems to comply with the Act’s requirements for honoring “opt-out” requests. Additionally, there are many state statutes that purport to regulate the distribution of commercial email. If we cannot comply with the requirements of the CAN-SPAM Act or these state statutes, we may need to cease operating portions of our business, which could reduce our revenues.

     The Internet Tax Freedom Act (the “ITFA”) that was originally passed in 1995 prohibited states or political subdivisions from (i) imposing taxes on Internet access and (ii) imposing multiple and discriminatory taxes on e-

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commerce. The ITFA expired on November 1, 2003 and has not been renewed. As a result of the expiration of the ITFA, states are no longer prohibited under federal law from imposing taxes that were covered by the ITFA. In the absence of a renewal of the ITFA, states may begin to impose taxes on Internet access, related charges and other e-commerce products and services. If one or more states impose such taxes in a manner that results in the taxation of Internet access providers, ourselves, our customers or other parties upon whom these parties or our panelists rely for access to the Internet or other products or services, our expenses may increase and it may become difficult to recruit and maintain our panelists or sell our products and services. Proposed legislation has been introduced in Congress to reinstate and broaden the ITFA. It is unclear whether or not this legislation will be enacted and, if so, the substance of its provisions.

     A number of states within the United States are participants in the Streamlined Sales Tax Project (the “SSTP”), which seeks to establish a uniform, nationwide state-based taxation system that requires remote sellers to administer and collect their respective sales taxes even though they do not maintain a presence within that state. If the SSTP is successful in implementing such a system, and if our products or services are subject to this system, our resulting tax, administrative and compliance burden will increase.

     Separately, countries belonging to the European Union (the “EU”) impose a value added tax (“VAT”) on the sale of goods and services, including digital goods and services. An EU Directive that took effect on July 1, 2003 requires businesses that sell digital goods and services from outside the EU to certain customers within the EU to collect, administer and remit the VAT. To the extent that our products or services are subject to the EU Directive, our resulting administrative and compliance burden will increase.

     In February 1999, the FCC issued a declaratory ruling interpreting the Telecommunications Act of 1996 to allow local exchange carriers to receive reciprocal compensation for traffic delivered to information service providers, particularly Internet service providers, on the basis that traffic bound for Internet service providers is largely interstate. As a result of this ruling, the costs of transmitting data over the Internet may increase. If this occurs, our tax liability and operating expenses may increase.

     In addition to those described above, we expect more stringent laws and regulations to be enacted both domestically and globally in the near future due to the increasing popularity and use of the Internet. Any new legislation or regulations or the application of existing laws and regulations to the Internet could limit our effectiveness in conducting Internet-based marketing research and increase our operating expenses. In addition, the application of existing laws to the Internet could expose us to substantial liability for which we might not be indemnified by content providers or other third-parties. Existing laws and regulations currently address, and new laws and regulations and industry self-regulatory initiatives are likely to address, a variety of issues that could have a direct impact on our business, including:

	•	user privacy and expression;
	•	the rights and safety of children;
	•	intellectual property;
	•	information security;
	•	anti-competitive practices;
	•	the convergence of offline channels with Internet commerce; and
	•	taxation and pricing.

     Current laws that explicitly apply to the Internet have not yet been interpreted by the U.S. courts and their applicability and scope are not yet defined. Any new laws or regulations relating to the Internet could have an impact on the growth of the Internet and, as a result, might limit our ability to administer our surveys and provide our products and services.

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Cautionary Note Regarding Forward-Looking Statements

     This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained herein, including statements of our expectations regarding Internet survey solutions revenues, selling, general and administrative expenses, profitability, financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2004, including, among other things:

	•	the acceptance of our Internet-based marketing research data collection products and services by existing and potential clients;
	•	our ability to maintain and expand the Greenfield Online panel both domestically and internationally;
	•	our ability to market our Internet survey solutions;
	•	our ability to continue to develop and improve our technology infrastructure;
	•	significant increases in competitive pressures in the marketing research data collection industry;
	•	our ability to attract and retain experienced project management professionals;
	•	the effect that the Do Not Call registry and other regulations may have on the adoption of Internet-based marketing research data collection;
	•	the growth of Internet penetration outside the United States;
	•	our ability to expand internationally; and
	•	our ability to successfully integrate our recent acquisitions and our ability to identify, consummate and integrate potential acquisition targets in the future.

     These risks are not exhaustive. Other sections of this report on Form 10-Q include additional factors, which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by federal securities laws.

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

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Item 3: Quantitative and Qualitative Disclosures About Market Risk

     We operate primarily in the United States. However, we have recently expanded internationally and are exposed to certain market risks arising from transactions that in the normal course of business include fluctuations in interest rates and currency exchange rates. These risks are not expected to be material. However, no assurance can be given that such risks will not become material. While we have not used derivative financial instruments in the past, we may, on occasion, use them in the future in order to manage or reduce these risks. We do not expect to enter into derivative or other financial instruments for trading or speculative purposes.

Item 4: Controls and Procedures

     As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (together, our “certifying officers”), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on their evaluation, our certifying officers concluded that our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by us in our periodic reports filed with the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. There has been no change in our internal control over financial reporting that occurred during the three months ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

     We believe that a controls system, no matter how well designed and operated, is based in part upon certain assumptions about the likelihood of future events, and therefore can only provide reasonable, not absolute, assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities; Use of Proceeds and Issuer Purchases of Equity Securities

(a) In connection with the acquisition of Rapidata.net, Inc. (“Rapidata”), we issued and sold an aggregate of 32,450 shares of Greenfield Online common stock in a private placement to Benjamin Douglas Feldman and John Gilmer Mebane, III, each an executive officer of Rapidata for an aggregate offering price of $600,000. The purchase price for the shares issued and sold in the private offering to the Rapidata executives was $18.49 per share. The sales to the Rapidata executives were exempt from registration under Section 4(2) of the Securities Act of 1933 (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. The Rapidata executives that purchased shares represented that they were accredited investors, as that term is defined in Regulation D, and each such executive represented his intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

In connection with the acquisition of Zing Wireless, Inc. (“goZing”), we issued and sold an aggregate of 195,650 shares of Greenfield Online common stock in a private placement to Matthew D. Dusig, Gregg Lavin and Lance Suder, each an executive officer of goZing for an aggregate offering price of $3.6 million. The purchase price for the shares issued and sold in the private offering to the goZing executives was $18.40 per share. The sales to the goZing executives were exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. All of the goZing executives that purchased shares represented that they were accredited investors, as that term is defined in Regulation D, and each such executive represented his intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

(b) On December 6, 2004, our registration statement on Form S-1 was declared effective for our follow-on public offering, pursuant to which we sold 4.5 million shares of common stock. The stock was offered to the public at $18.16 per share and we received net proceeds of approximately $76.5 million (after underwriters’ commissions of $4.5 million and expenses of approximately $0.7 million). The proceeds from the follow-on offering have been utilized to fund the acquisition of Ciao AG in April 2005.

Item 3. Defaults Upon Senior Securities

None.

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

No matter has been submitted to a vote of security holders during the period covered by this report.

Item 5. Other Information

None.

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Item 6. Exhibits

  Exhibits

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SIGNATURE

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

Dated: May 16, 2005

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