FIND SVP INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period_____________ to _____________

_________________________________

Commission file no. 0-15152

FIND/SVP, INC.

(Exact name of Registrant as specified in its charter)

New York		13-2670985
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

625 Avenue of the Americas, New York, NY 10011

(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (212) 645-4500

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x

NO 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 x

Number of shares of Common Stock, $.0001 par value per share outstanding at May 9, 2005: 20,291,281

FIND/SVP, Inc. and Subsidiaries

Index

		Page
PART I. Financial Information

ITEM 1. Financial Statements

	Condensed Consolidated Balance Sheets March 31, 2005 (unaudited) and December 31, 2004	3

	Condensed Consolidated Statements of Operations Three Months Ended March 31, 2005 and 2004 (as restated) (unaudited)	4

	Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2005 and 2004 (as restated) (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk		32

ITEM 4. Controls and Procedures		33

PART II. Other Information

ITEM 6. Exhibits		34

Signatures		35

Index to Exhibits		36

PART I.

FINANCIAL INFORMATION

ITEM 1.

Financial Statements

FIND/SVP, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

Assets	March 31, 2005			December 31, 2004
	(unaudited)
Current assets:
Cash and cash equivalents	$	6,100		$	4,519
Accounts receivable, net		6,968			6,215
Deferred tax assets		577			696
Prepaid expenses and other current assets		1,404			1,240

Total current assets		15,049			12,670

Equipment, software development and leasehold improvements, at cost, less accumulated depreciation and amortization of $11,075 at March 31, 2005 and $10,865 at December 31, 2004		2,202			2,336

Goodwill, net		12,417			12,214
Intangibles, net		968			1,002
Deferred tax assets		783			783
Deferred rent		292			335
Cash surrender value of life insurance		127			127
Non-marketable equity securities		23			23
Other assets		551			532
	$	$32,412		$	30,022

Liabilities and Shareholders’ Equity

Current liabilities:
Trade accounts payable	$	2,305		$	1,267
Accrued expenses and other		4,701			5,099
Unearned retainer income		5,063			3,472

Total current liabilities		12,069			9,838

Deferred compensation and other liabilities		379			404

Total liabilities		12,448			10,242

Redeemable convertible preferred stock, $.0001 par value. Authorized 2,000,000 shares; issued and outstanding 333,333 shares at March 31, 2005 and December 31, 2004, and accrued dividends		580			570

Redeemable common stock, $.0001 par value. Issued and outstanding 571,237 shares at March 31, 2005 and December 31, 2004		1,090			1,090

Commitments and contingencies (Note K)

Shareholders’ equity:
Common stock, $.0001 par value. Authorized 100,000,000 shares; issued and outstanding 18,831,254 shares at March 31, 2005 18,828,416 shares at December 31, 2004		2			2
Capital in excess of par value		26,137			25,850
Deferred stock-based compensation		(378	)		(214	)
Loan receivable for stock purchase		(50	)		(50	)
Accumulated deficit		(7,417	)		(7,468	)

Total shareholders’ equity		18,294			18,120
	$	32,412		$	30,022

See accompanying notes to condensed consolidated financial statements.

FIND/SVP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended March 31,

(in thousands, except share and per share data)

	2005			2004
				(As restated for the adoption of SFAS No. 123 See Note A)

Revenues	$	8,786		$	9,606

Operating expenses:
Direct costs		5,274			5,455
Selling, general and administrative expenses		3,299			3,912
Total operating expenses		8,573			9,367

Operating income		213			239

Other income		14			--
Impairment of investment		--			(95	)
Equity loss on investment		(47	)		--
Interest expense		(4	)		(226	)

Income (loss) before (provision) benefit for income taxes		176			(82	)

(Provision) benefit for income taxes		(125	)		4

Net income (loss)		51			(78	)

Less: Preferred dividends		(10	)		(10	)

Less: Accretion on redeemable common shares		--			(113	)

Income (loss) attributable to common shareholders	$	41		$	(201	)

Earnings per common share:
Basic	$	0.00		$	(0.02	)
Diluted	$	0.00		$	(0.02	)


Weighted average number of common shares:
Basic		19,401,923			13,246,906
Diluted		21,502,585			13,246,906

See accompanying notes to condensed consolidated financial statements.

FIND/SVP, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows

(unaudited)
Three months ended March 31

(in thousands)

	2005			2004
				(As restated for the adoption of SFAS No. 123 See Note A)
Cash flows from operating activities:
Net income (loss)	$	51		$	(78	)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		267			314
Allowance for doubtful accounts		35			70
Unearned retainer income		1,591			1,302
Deferred income taxes		119			(27	)
Compensation from option grants		138			96
Deferred compensation		(11	)		(8	)
Non-cash interest		1			84
Impairment of investment		--			95
Unrealized loss on investment		47			--

Changes in assets and liabilities:
Increase in accounts receivable		(788	)		(618	)
Increase in prepaid expenses and other current assets		(164	)		(161	)
Decrease in rental asset		43			30
Decrease in cash surrender value of life insurance		--			87
Increase in other assets		(29	)		(57	)
Increase (decrease) in accounts payable and accrued expenses		380			(1,213	)

Net cash provided by (used in) operating activities		1,680			(84	)

Cash flows from investing activities:
Capital expenditures		(87	)		(151	)
Purchase of Guideline		--			(8	)
Purchase of Teltech		--			(160	)

Net cash used in investing activities		(87	)		(319	)

Cash flows from financing activities:
Principal borrowings under notes payable, net of closing costs		--			200
Principal payments under notes payable		--			(100	)
Proceeds from exercise of stock options and warrants		2			25
Payments under capital leases		(14	)		(2	)

Net cash (used in) provided by financing activities		(12	)		123

Net increase (decrease) in cash and cash equivalents		1,581			(280	)

Cash and cash equivalents at beginning of period		4,519			821

Cash and cash equivalents at end of period	$	6,100		$	541

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid	$	4		$	142

Taxes paid	$	33		$	22

See accompanying notes to condensed consolidated financial statements.

FIND/SVP, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

A. Management's Statement

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position at March 31, 2005, the results of operations for the three month period ended March 31, 2005 and 2004, and cash flows for the three months ended March 31, 2005 and 2004. All such adjustments are of a normal and recurring nature. Operating results for the three-month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

References in this report to “Company”, “we,” “us,” or “our” refer to FIND/SVP, Inc. and its subsidiaries.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2004 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

In 2004, the Company adopted the fair value method of accounting for stock based compensation prescribed by SFAS No. 123, as amended by SFAS No. 148, under the modified prospective method. The adoption of SFAS No. 123 was effective January 1, 2004 and was reflected in the Company’s annual consolidated financial statements for the year ended December 31, 2004. Accordingly, the March 31, 2004 interim condensed consolidated financial statements presented herein have been restated to reflect the adoption of SFAS No. 123.

The following is a summary of the effects of the adoption on the Company’s previously reported consolidated financial statements as of and for the three months ended March 31, 2004.

	As Previously Reported			As Restated for the Adoption of SFAS No. 123
For the three months ended:
Direct costs	$	5,675		$	5,455
Selling, general and administrative expenses		4,478			3,912
Operating income (loss)		(547	)		239
Loss before benefit for income taxes		(868	)		(82	)
Net loss		(864	)		(78	)
Net loss attributable to common shareholders		(987	)		(201	)
Net loss per common share - basic and diluted	$	(0.07	)	$	(0.02	)

B. Revenue Recognition

The Company’s subscription services are provided under two different types of subscription contracts - retainer contracts and deposit contracts. Retainer contracts, which are used primarily in the Company’s Quick Consulting business segment (“QCS”), charge customers fixed monthly subscription fees to access QCS services, and revenues are recognized ratably over the term of each subscription. Retainer fees are required to be paid in advance by customers on either a monthly, quarterly or annual basis, and all billed amounts relating to future periods are recorded as an unearned retainer income liability on the Company’s balance sheet. In the case of deposit contracts, which are used primarily in the Company’s Teltech business segment, a customer pays a fixed annual fee, which entitles it to access any of the Company’s service offerings throughout the contract period, up to the total amount of the annual deposit fee. Since deposit account customers can “spend” their contract fee at any time within the annual contract period, deposit account revenues are only recognized within the contract period as services are actually provided to customers, with any unused deposit amounts recognized as revenue in the final month of the contract. As with retainer fees, deposit contract fees are required to be paid in advance, primarily annually, and any billed amounts relating to future periods are recorded as unearned retainer income, a current liability on the Company’s balance sheet.

With regard to the Company’s non-subscription based services, including quantitative market research, in-depth consulting and outsourced information services, revenues are recognized primarily on a percentage-of-completion basis. The Company typically enters into discrete contracts with customers for these services on a project-by-project basis. Payment milestones differ from contract to contract based on the client and the type of work performed. Generally, the Company invoices a client for a portion of a project in advance of work performed, with the balance invoiced throughout the fulfillment period and/or after the work is completed. However, revenue and costs are only recognized to the extent of each contract’s percentage-of-completion. Any revenue earned in excess of billings is recorded as a current asset on the Company’s balance sheet, while any billings in excess of revenue earned, which represent billed amounts relating to future periods, are recorded as unearned revenue, a current liability on the Company’s balance sheet.

C. Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by a diluted weighted average number of common shares outstanding. Diluted earnings (loss) per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock, unless they are anti-dilutive.



	Three months ended March 31,
	2005		2004

Basic number of common shares		19,401,923		13,246,906

Effect of dilutive securities:

Warrants		998,815		--
Restricted stock		223,567		--
Stock options		878,280		--

Diluted number of common shares		21,502,585		13,246,906

Warrants to purchase 3,000,000 shares of common stock at a price of $3.00 per share, were outstanding during the three months ended March 31, 2005, and options and redeemable convertible preferred shares, including accrued preferred dividends, to purchase 1,247,816 shares of common stock at prices ranging from $1.50 to $3.6875 per share, were outstanding during the three months ended March 31, 2005, but were not included in the computation of diluted EPS because the warrants, options, preferred shares and dividends had exercise prices greater than the average market price of the common shares for the three months ended March 31, 2005.

Warrants to purchase 2,125,515 shares of common stock at prices ranging from $0.01 to $2.25 per share, were outstanding during the three months ended March 31, 2004, and options and redeemable convertible preferred shares, including accrued preferred dividends, to purchase 2,863,775 shares of common stock at prices ranging from $1.40 to $3.6875 per share, were outstanding during the three months ended March 31, 2004, but were not included in the computation of diluted EPS because the Company had a net loss attributable to common shareholders for the three months ended March 31, 2004.

D. Non-marketable Equity Securities

In 1999, the Company entered into an agreement with idealab! and Find.com, Inc. whereby it assigned the domain name “find.com” and licensed the use of certain rights to the trademarks “find.com” and “find” to Find.com, Inc. idealab! and Find.com, Inc. are not otherwise related to the Company. Under terms of the agreement, the Company received cash and non-marketable preferred shares in idealab!, and is entitled to certain future royalties. The preferred shares received were initially valued at $500,000, and carried various rights including the ability to convert them into common shares of Find.com, Inc., and a put option to resell the shares to idealab! The put option became exercisable in December 2002. Under the terms of the put option, idealab! could either repurchase the preferred shares for $1,500,000 in cash, or elect to return the find.com domain name to us. In the latter case, the Company would retain the preferred shares.

In January 2003, the Company exercised its put option and idealab! declined to repurchase the preferred shares. This information was considered in the recurring evaluation of the carrying value of the preferred shares at the lower of historical cost or estimated net realizable value. Using this information together with other publicly available information about idealab!, the Company concluded the net realizable value of its idealab! preferred shares had declined to an estimated $185,000 at December 31, 2003.

Subsequent to the quarter ended March 31, 2004 in a letter dated April 23, 2004 from idealab! to its shareholders, idealab! announced that it had reached a settlement with certain holders of its Series D Preferred Stock, which does not include the Company (the “plaintiffs”), whereby the plaintiffs agreed to vote their shares in favor of an amendment to idealab!’s charter that would reduce the liquidation preference of idealab!’s Series D Preferred Stock from $100.00 per share to $19.00 per share. Furthermore, upon completion of the above settlement, idealab! also stated in its April 23, 2004 letter that it plans to commence a tender offer for its Series D shares, including those held by the Company, for $19.00 per share. The settlement agreement requires that the purchase price be reduced by the tendering holders’ pro rata share of the plaintiffs’ litigation expenses. These expenses will range from $1.00 to $1.50 per share. As a result of this pending settlement, the Company concluded the net realizable value of its idealab! preferred shares had declined to an estimated $89,000 at March 31, 2004, and took a charge to operations of $95,000 during the quarter then ended. Since the idealab! preferred shares continue to be an investment in a start-up enterprise, it is reasonably possible in the near term that our estimate of the net realizable value of the preferred shares could be further reduced.

In June 2004, 75% (or 3,750 shares) of the preferred shares held by the Company in idealab! were redeemed for $66,806. As of March 31, 2005, the carrying value of these preferred share securities is $22,500.

E. Goodwill and Intangibles

Goodwill:

The changes in the carrying amount of goodwill for the quarter ended March 31, 2005 are as follows:

					Quantitative
					Market
	QCS		SCRG		Research		Teltech
	Segment		Segment		Segment		Segment		Total
Balance as of January 1, 2005	$	--	$	50,000	$	7,409,000	$	4,755,000	$	12,214,000
Contingent consideration accrued related to acquisition of Guideline		--		--		203,000		--		203,000
Goodwill related to acquisition of Teltech		--		--		--		--		--

Balance as of March 31, 2005	$	--	$	50,000	$	7,612,000	$	4,755,000	$	12,417,000

Intangibles:

The table below represents the gross carrying amount, accumulated amortization, and amortization expense related to the Company’s intangible assets:

	Gross
	Carrying		Accumulated
	Amount		Amortization
Amortized intangible assets as of December 31, 2004
Customer relationships	$	948,000	$	(218,000	)
Unamortized intangible assets as of December 31, 2004
Trade names	$	272,000
Amortized intangible assets as of March 31, 2005
Customer relationships	$	948,000	$	(252,000	)
Unamortized intangible assets as of March 31, 2005
Trade names	$	272,000
Aggregate Amortization Expense:
For the three months ended March 31, 2005 and 2004	$	34,000

F. Other Assets

On September 29, 2004, the Company, Empire Media, LLC (“Empire”), and TripleHop Technologies, Inc. (“TripleHop”) (the Company, Empire, and TripleHop are hereinafter referred to individually as a "Member" and collectively as "Members"), entered into an Operating Agreement (the “Agreement”) in order to formally establish the Find.com joint venture. Find.com has been organized as a Delaware limited liability company, with the Company and Empire owning 47.5% each, and TripleHop owning the balance. In exchange for its 47.5% voting interest, the Company initially contributed $50,000 cash in March 2004 and entered into a license agreement with Find.com related to Find.com’s use of the “find.com” URL. In exchange for its 47.5% voting interest, Empire contributed $100,000 cash and will enter into a license agreement with Find.com related to Find.com’s rights to public Empire produced content. In exchange for its 5.0% non-voting interest, TripleHop entered into a license agreement with Find.com related to Find.com’s use of the underlying software which serves as the core search functionality powering the “find.com” website.

Subsequent to its initial investment, the Company contributed an additional $222,000. During the quarter ended March 31, 2005, the Company recorded an unrealized loss of $47,000 on its investment in Find.com. This represents the Company’s share of the net loss of Find.com as of and for the quarter ended March 31, 2005. As of March 31, 2005, the Company’s investment in Find.com is $134,000. The Company accounts for its investment in Find.com under the equity method of accounting for investments.

Find.com was formed for the purpose of developing, launching, owning and operating a business-focused Internet search portal utilizing the "find.com" URL, to provide search-initiated access to proprietary content and generic World Wide Web-based search results. The site is intended to be advertising supported in whole or in part, and content shall be free and/or sold on a pay-per-view basis, or on such basis as Find.com shall determine from time to time.

We have a 9.1% interest in Strategic Research Institute, L.P. (“SRI”). We share in profits of SRI, but do not share in losses. SRI is a business conference and event company. The value of this investment is zero.

G. Debt

During May 2004, the Company repaid the $1,100,000 outstanding balance on a term note with JP Morgan Chase Bank (the “Term Note”), of which $400,000 was previously classified as current. The Term Note bore interest at prime plus 1.25%. During the first quarter of 2004, the Company also paid its then scheduled principal payment of $100,000. Interest expense related to the Term Note amounted to $16,000 for the three months ended March 31, 2004. The Term Note was terminated effective March 31, 2005.

The Company maintained a $1,000,000 line of credit with JP Morgan Chase Bank (the “Line of Credit”). The Line of Credit bears interest at prime plus 0.50% (6.25% at March 31, 2005). During May 2004, the Company repaid the $876,000 outstanding balance. Interest expense related to the Line of Credit amounted to $8,000 for the three months ended March 31, 2004. The Line of Credit contained certain restrictions on the conduct of the Company’s business, including, among other things, restrictions on incurring debt, and creating or suffering liens. The Line of Credit was terminated effective March 31, 2005.

The Line of Credit was secured by a general security interest in substantially all of the Company’s assets. Pursuant to Amendment No. 2 and Consent to Amended and Restated Senior Grid Promissory Note, dated May 20, 2004, all financial covenants previously related to the Line of Credit were eliminated. Effective March 31, 2005, all liens and encumbrances related to the Term Note and the Line of Credit were released.

On April 1, 2003, the Company issued a Promissory Note (the “Note”) with a face value of $3,000,000 and a stated interest rate of 13.5%, as a part of the financing for the acquisition of Guideline. The Note was recorded at its initial relative fair value of $1,868,000. The difference between the initial relative fair value and the stated value will be accreted as additional interest expense over the maturities of the Note, and the resulting effective interest rate is approximately 25%. During May 2004, the Company repaid the outstanding principal balance of $3,000,000. Related interest expense was $159,000 for the three months ended March 31, 2004, of which $58,000 related to the non-cash accretion of the carrying value of the Note to the stated value of the Note for the three months ended March 31, 2004. The Note was terminated effective May 20, 2004.

On July 1, 2003, the Company issued a Second Promissory Note (the “Second Note”) with a face value of $500,000 and a stated interest rate of 13.5%, as a part of the financing for the acquisition of Teltech, a former business unit of Sopheon Corporation (“Teltech”). The Second Note was recorded at its initial relative fair value of $320,000. The difference between the initial relative fair value and the stated value will be accreted as additional interest expense over the maturities of the Second Note, and the resulting effective interest rate is approximately 25%. During May 2004, the Company repaid the outstanding principal balance of $500,000. Related interest expense was $27,000 for the three months ended March 31, 2004, of which $10,000 related to the non-cash accretion of the carrying value of the Second Note to the stated value of the Second Note for the three months ended March 31, 2004. The Second Note was terminated effective May 20, 2004.

See Note P. “Subsequent Events” for information on the Company’s new credit agreement.

H. Income Taxes

The $125,000 income tax provision for the three months ended March 31, 2005 and the $4,000 income tax benefit for the three months ended March 31, 2004, represent 71.0% and 0.5%, respectively, of the income/loss before provision/benefit for income taxes. The difference between these rates and the statutory rate primarily relates to expenses that are not deductible for income tax purposes.

Of the net deferred tax asset, $577,000 and $696,000 is classified as current as of March 31, 2005 and December 31, 2004, respectively.

I. Shareholders’ Equity

Private Placement

On May 10, 2004 (the “Closing Date”), the Company raised $13,500,000 through a private placement of (i) 6,000,000 shares of the Company’s Common Stock, and (ii) warrants to purchase an aggregate of 3,000,000 shares of Common Stock. The Company sold these shares and warrants through 6,000,000 units at $2.25 per unit, with each unit consisting of one share of Common Stock and one warrant to purchase one-half of one share of Common Stock at an exercise price of $3.00 per full share. The warrants are exercisable at any time before May 10, 2009. The net proceeds of the sale of the Common Stock and the warrants were partially used by the Company to pay off its debt of approximately $5.6 million, and is also intended to be used for working capital and general corporate purposes, including the financing of potential acquisitions. Transaction costs related to the private placement were approximately $1,332,000, which were recorded in capital in excess of par value as a partial offset against gross proceeds received from the private placement. The fair value of the warrants as of the Closing Date of approximately $3,231,000 was determined using the Black-Scholes option pricing model with the following weighted-average assumptions: expected dividend yield of 0%, risk-free interest rate range of 3.95%, volatility of 46% and an expected life of 5 years.

Stock Options

During the three-month period ended March 31, 2005, no options to purchase shares of common stock were granted. During the three-month period ended March 31, 2004, options to purchase 37,500 shares of common stock were granted under the Company’s Stock Option Plans, with an exercise price of $1.79, which represents the fair market value of such shares on the dates of grant. Stock based compensation expense was $103,000 and $96,000 for the three months ended March 31, 2005 and 2004, respectively.

During the three-month periods ended March 31, 2005 and 2004, 60,462 and 76,352 options, respectively, were cancelled or terminated under the Company’s Stock Option Plans, at prices ranging from $0.50 to $2.40 and $0.50 to $3.6875, respectively.

Stock options were granted in November 2001 for future services to be rendered to the Company by the Chief Executive Officer (“CEO”), the Chairman and a consultant. In 2003, the Board approved the acceleration of the vesting of 105,000 and 117,000 options granted to the Chairman and CEO, respectively, which the CEO and Chairman then exercised for cash. Compensation expense related to these grants was $0 and $30,000 for the three-month periods ended March 31, 2005 and 2004, respectively.

Restricted Stock

On January 1, 2005, 100,000 shares of restricted stock were granted to the Company’s Chief Executive Officer. Deferred compensation expense related to these shares was calculated at fair value on the date of grant, and is being amortized over a vesting period of three years. Compensation expense related to these shares was $13,000 for the three months ended March 31, 2005. Deferred compensation expense was $146,000 at March 31, 2005 and is included in Shareholders’ Equity on the accompanying Consolidated Balance Sheet.

On January 1, 2005, 25,000 shares of restricted stock were granted to the Company’s Chief Financial Officer. Deferred compensation expense related to these shares was calculated at fair value on the date of grant, and is being amortized over a vesting period of three years. Compensation expense related to these shares was $3,000 for the three months ended March 31, 2005. Deferred compensation expense was $37,000 at March 31, 2005 and is included in Shareholders’ Equity on the accompanying Consolidated Balance Sheet.

During 2004, 100,000 shares of restricted stock were granted to the Company’s Chief Operating Officer. Deferred compensation expense related to these shares was calculated at fair value on the date of grant, and is being amortized over the vesting period of four years. Compensation expense related to these shares was $19,000 for the quarter ended March 31, 2005. Deferred compensation expense was $195,000 at March 31, 2005 and is included in Shareholders’ Equity on the accompanying Consolidated Balance Sheet.

Redeemable Convertible Preferred Stock

The Company has authorized preferred stock consisting of 2,000,000 shares at $.0001 par value. At March 31, 2005, there were 333,333 shares of redeemable convertible preferred stock outstanding. See Note O “Acquisitions” for a further explanation of redeemable convertible preferred stock issued during 2003 in connection with the Guideline acquisition.

Loan Receivable for Stock Purchase

In 2002, the Company made a $50,000 loan to a then employee for the purchase of shares of the Company’s stock in conjunction with a private equity offering. The loan was interest-free, and was repaid by the former employee on its due date of April 15, 2005.

J. Segment Reporting

The Company manages its consulting and business advisory services in the following four business segments: Quick Consulting (“QCS”), Strategic Consulting (“SCRG”), Quantitative Market Research and Teltech. The Company operates primarily in the United States. References to “Corporate” and “Other” in our financial statements refer to the portion of assets and activities that are not allocated to a segment.


(in thousands)	Three Months Ended March 31,
	2005			2004^{(2) (3)}			$ Change			% Change
Revenues
QCS	$	3,950		$	4,373		$	(423	)		(9.7	)%
SCRG		403			407			(4	)		(1.0	)%
Quantitative Market Research		2,382			2,713			(331	)		(12.2	)%
Teltech		2,051			2,113			(62	)		(2.9	)%
Revenues	$	8,786		$	9,606		$	(820	)		(8.5	)%

Operating income (loss)
QCS	$	145		$	467		$	(322	)		(69.0	)%
SCRG		83			(85	)		168			197.6	%
Quantitative Market Research		158			310			(152	)		(49.0	)%
Teltech		161			271			(110	)		(40.6	)%
Total segment operating income		547			963			(416	)		(43.2	)%
Corporate & other (1)		(334	)		(724	)		390			53.9	%
Operating income	$	213		$	239		$	(26	)		(10.9	)%

Income (loss) Before Income Taxes
QCS	$	145		$	467		$	(322	)		(69.0	)%
SCRG		83			(85	)		168			197.6	%
Quantitative Market Research		158			217			(59	)		(27.2	)%
Teltech		160			177			(17	)		(9.6	)%
Total segment income before income taxes		546			776			(230	)		(29.6	)%
Corporate & other (1)		(370	)		(858	)		488			56.9	%
Income (loss) before income taxes	$	176		$	(82	)	$	258			314.6	%

(1) Represents the effect of direct costs and selling, general, and administrative expenses not attributable to a single segment.

(2) On April 21, 2004, the Company sold its Information Advisor newsletter business, which was part of the Company’s QCS segment, to Information Today. The decision to sell this business was made by management due to the fact that it became an extremely insignificant portion of the Company’s business. The sale proceeds to the Company consisted of $52,500 in cash, $15,000 of free advertising, and the buyer’s assumption of an unearned income liability, less modest transaction expenses. The Company recorded a gain on sale of assets of $92,000.

(3) As restated for the adoption of SFAS No. 123. See Note A.

K. Commitments and Contingencies

See Note O. “Acquisitions” for information regarding contingent payments related to the acquisition of Guideline and see Note P. “Subsequent Events” for information regarding contingent payments related to the acquisitions of Atlantic Research & Consulting and Signia Partners, and for information regarding the new Credit Agreement.

L. Accrued Expenses

As of December 31, 2004, a balance of $478,000 remained accrued for charges under a severance plan approved by the Board of Directors. Payments totaling $231,000 were made to 9 individuals during the three months ended March 31, 2005. The remaining balance of $247,000 will be paid through June 2005.

During 2004, the Company formally abandoned its lease for one of its three New York City locations. This lease had been substantially unutilized by the Company during 2004. As a result, the Company recorded a charge to earnings of $530,000 during the second quarter of 2004, representing the total value of all remaining rent and commercial rent tax obligations, and the amortization of remaining leasehold improvements which was included in selling, general and administrative expenses. As of March 31, 2005, the Company was released from its lease of the space, and the remaining accrual of $37,000 was reversed and recorded as a reduction of rent expense.

M. Deferred Compensation

The Company has a deferred compensation arrangement with Andrew Garvin, the founder and former President of the Company. In November 2003, Mr. Garvin announced his early retirement as of December 31, 2003. The Company revised the calculation of Mr. Garvin’s accrued deferred compensation to reflect his announced date of retirement. Accordingly, the present value of the obligation as of December 31, 2003 was approximately $243,000. This will be paid over the contractual term of 10 years, which began in January 2004. On September 29, 2004, the Company and Mr. Garvin executed Amendment No. 1 to the Separation Agreement dated as of December 31, 2003 in order to restructure the timing and reduced amount of certain deferred compensation payments. During the quarters ended March 31, 2005 and 2004, payments totaling approximately $3,000 and $5,000, respectively, were made. The remaining liability at March 31, 2005 is approximately $135,000.

N. Supplemental Disclosure of Non-Cash Investing and Financing Activities

Non-cash investing activities:

As of March 31, 2005, the Company has accrued approximately $2.2 million, which represents the estimated Two Year Deferred Consideration earned as of that date in connection with the Guideline acquisition.

Non-cash financing activities:

During the three months ended March 31, 2005, the Company recorded the exercise of 500 options at a price of $0.50, in exchange for 338 shares of common stock at a price of $1.53.

During the three months ended March 31, 2004, the Company recorded the exercise of 94,975 options at prices ranging from $0.50 to $1.062, in exchange for 67,224 shares of common stock at prices ranging from $1.70 to $2.50.

During the quarter ended March 31, 2005, the Company recorded preferred dividends of $10,000.

During the quarter ended March 31, 2004, the Company recorded preferred dividends of $10,000 and accretion on redeemable common shares of $113,000.

O. Acquisitions

Guideline

On April 1, 2003, the Company purchased all of the issued and outstanding stock of Guideline. Guideline is a provider of quantitative custom market research. Guideline’s ability to provide high-level analytic survey research was a strategic fit with the Company’s efforts to address its clients’ critical business needs. The integration of Guideline’s services allowed the Company to address the requirements of its many marketing and market research clients. The addition of Guideline will also make the Company one of the first fully comprehensive research and advisory firms to offer an inclusive suite of both primary and secondary specialized business intelligence, strategic research and consulting services. These factors contributed to a purchase price that resulted in the recognition of goodwill of $7.4 million.

The consideration for this acquisition consisted of the following:

· Approximately $5,027,000 paid in cash (includes $431,000 of paid transaction costs during the year ended December 31, 2003, and $86,000 of paid transaction costs during the year ended December 31, 2004), net of cash acquired;

· Of the amount paid in cash, a deferred consideration amount (the “One Year Deferred Consideration”) of $1 million was paid on May 24, 2004 as Guideline achieved adjusted EBITDA (as defined in the purchase agreement) for the twelve-month period following the acquisition (“One Year Adjusted EBITDA”) of at least $1.2 million. On the same date, an additional $50,000 of advanced earnout was paid by the Company to an executive of Guideline, pursuant to an agreement between this executive, the former owners of Guideline and the Company;

· 571,237 common shares valued at $760,000 (295,043 of the common shares were placed in escrow to secure the indemnification obligations of the sellers); and

· Within thirty days after the date of determination following the second anniversary date of the acquisition, a potential deferred consideration amount (the “Two Year Deferred Consideration”) of $1.845 million contingent upon Guideline achieving adjusted EBITDA (as defined in the purchase agreement) for the 24-month period following the acquisition (“Two Year Adjusted EBITDA”) of $2.65 million plus 25% of the amount by which Two Year Adjusted EBITDA exceeds $2.65 million would be due. If Two Year Adjusted EBITDA is less than $2.65 million, but greater than $2.2 million, the Two Year Deferred Consideration would be between $0 and $1.845 million based on a specific formula set forth in the purchase agreement. Given the potential likelyhood that Guideline should achieve the prescribed levels of EBITDA, as of March 31, 2005 the Company has accrued approximately $2.2 million, which represents the estimated Two Year Deferred Consideration earned as of that date.

The 571,237 shares issued to the former owners of Guideline may be put back to the Company during a 120-day period beginning April 5, 2005. Such shares are classified in the balance sheet as redeemable common stock. If the shares are put back to the Company, the cash to be paid by the Company will be equal to 150% of the initial redemption value of the shares, or $1,090,000. Based on the fair value of the shares as of March 31, 2004, the Company recorded accretion on redeemable common stock of $113,000 for the quarter ended March 31, 2004, resulting in redeemable common stock having a carrying value of $1,090,000.

This acquisition was financed at closing with the combination of the Company’s cash resources, the assumption of certain liabilities of Guideline and by the receipt of cash of $3,303,000 (net of financing costs of $197,000) in connection with the issuance to Petra Mezzanine Fund, L.P. of (a) a promissory note with a $3,000,000 face value; (b) 333,333 shares of convertible, redeemable, Series A preferred stock (“Preferred Stock”); and (c) a warrant to purchase 675,000 common shares.

The 333,333 shares of Preferred Stock were issued pursuant to a Series A Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”) dated April 1, 2003. These shares have been recorded at estimated fair value of $693,000 using the relative fair value method. The Preferred Stock is convertible into shares of the Company’s common stock one-for-one, subject to adjustment for certain dilutive issuances, splits and combinations. The Preferred Stock is also redeemable at the option of the holders of the Preferred Stock beginning April 1, 2009, at a redemption price of $1.50 per share, or $500,000 in the aggregate, plus all accrued but unpaid dividends. The holders of the Preferred Stock are entitled to receive cumulative dividends, prior and in preference to any declaration or payment of any dividend on the common stock of the Company, at the rate of 8% on the $500,000 redemption value, per annum, payable in cash or through the issuance of additional shares of Preferred Stock at the Company’s discretion. The holders of shares of Preferred Stock have the right to one vote for each share of common stock into which shares of the Preferred Stock could be converted into, and with respect to such vote, each holder of shares of Preferred Stock has full voting rights and powers equal to the voting rights and powers of the holders of the Company’s common stock. For the three months ended March 31, 2005, the Company recorded preferred dividends of $10,000 resulting in a redemption value for the Preferred Stock of $580,000 at March 31, 2005.

The Company finalized its valuation of the assets and liabilities acquired for the allocation of the purchase price of the Guideline transaction as of March 31, 2005, with the exception of the Two Year Deferred Consideration, which is contingent upon the financial performance of Guideline through April 1, 2005.

Teltech

As of July 1, 2003, Ttech Acquisition Corp. (“Ttech”), a subsidiary of the Company, purchased from Sopheon Corporation (“Sopheon”) assets and assumed certain specified liabilities of Sopheon’s Teltech business unit. Teltech is a provider of custom research and information services, focused on R&D and engineering departments of larger corporations, markets into which the Company was interested in expanding. The Company believed this acquisition offered significant cross-selling opportunities and cost synergies. These factors contributed to a purchase price that resulted in the recognition of goodwill of $4.8 million.

The consideration for this acquisition consisted of the following:

· Approximately $3,320,000 paid in cash (including $245,000 of transaction costs);

· Of the amount paid in cash, consideration of $200,000 was paid by the Company to Sopheon during the quarter ended June 30, 2004 in full satisfaction of an earnout, as defined in the purchase agreement dated June 25, 2003; and

· 32,700 unregistered shares of the Company’s Common Stock, valued at $50,000. These shares were placed in escrow to secure the indemnification obligations of the sellers set forth in the purchase agreement through June 25, 2004, pursuant to an escrow agreement among Sopheon, the Company, Ttech and Kane Kessler, P.C. (the “Escrow Agreement”). These shares were previously released to Sopheon from escrow during the second quarter of 2004.

The Company finalized its valuation of the assets and liabilities acquired for its allocation of the purchase price of the Teltech transaction as of March 31, 2005.

The following table sets forth the components of the purchase price for both the Guideline and Teltech acquisitions:



	Guideline		Teltech		Total
Cash paid	$	5,027,000	$	3,520,000	$	8,547,000
Accrued estimate of Two Year Deferred Consideration		2,233,000		--		2,233,000
Common stock issued to sellers		760,000		50,000		810,000
Total purchase consideration	$	8,020,000	$	3,570,000	$	11,590,000

The following table provides the fair value of the acquired assets and assumed liabilities:



	Guideline			Teltech			Total
Current assets	$	1,786,000		$	1,235,000		$	3,021,000
Property and equipment		89,000			287,000			376,000
Other assets		267,000			--			267,000
Liabilities assumed, current		(2,236,000	)		(3,358,000	)		(5,594,000	)
Liabilities assumed, non-current		(67,000	)		--			(67,000	)
Fair value of net liabilities assumed		(161,000	)		(1,836,000	)		(1,997,000	)
Goodwill		7,612,000			4,755,000			12,367,000
Amortizable intangible assets		421,000			527,000			948,000
Indefinite-lived intangible assets		148,000			124,000			272,000
Total purchase consideration	$	8,020,000		$	3,570,000		$	11,590,000

Amortizable intangible assets, which generally include customer lists, are amortized over a period of 7 years. Amortization of intangible assets was $34,000 for the three-month period ended March 31, 2005 and 2004.

Goodwill related to our Guideline and Teltech businesses is evaluated for impairment annually on July 1st.

P. Subsequent Events

New Credit Agreement

On March 31, 2005, the Company entered into a new senior secured credit facility pursuant to the Credit Agreement, dated as of March 31, 2005 (the “Credit Agreement”), between the Company and Fleet National Bank, a Bank of America company (the “Lender”). Funds under this facility were available to the Company as of April 1, 2005.

The Credit Agreement establishes a commitment to the Company to provide up to $9,000,000 in the aggregate of loans and other financial accommodations consisting of a senior secured term loan facility in an aggregate principal amount of $4,500,000 (the “Term Facility”) and a senior secured revolving credit facility in an aggregate principal amount of up to $4,500,000 (the “Revolving Facility” and, together with the Term Facility, the “Senior Secured Facilities”). The Revolving Facility includes a sublimit of up to an aggregate amount of $500,000 in letters of credit.

On April 1, 2005, the full amount of the Term Facility was drawn in a single drawing and applied, among other things, to consummate the acquisition of Atlantic Research & Consulting, Inc., consummate the acquisition of Signia Partners Incorporated, and pay transaction-related costs and expenses.

The aggregate principal amount of the Term Facility is payable in twenty (20) consecutive quarterly principal installments, the first nineteen (19) of which are each in the amount of $225,000 and payable on the first day of each January, April, July and October, commencing July 1, 2005 through and including April 1, 2010, and the final and twentieth (20th) such principal installment is payable on April 1, 2010 and is in an amount equal to the entire then remaining outstanding principal balance, together with all accrued and unpaid interest.

Loans under the Revolving Facility will be made available after April 1, 2005 and until the earlier of (i) April 1, 2008 and (ii) the date of termination of the commitment of the Lender to make revolving credit loans and of the obligation of the Lender to make letter of credit extensions.

Loans under the Senior Secured Facilities will bear interest, at the option of the Borrower, at one of the following rates:

·	the Applicable Rates of .75% and 1.00% related to the Revolving Credit Facility and the Term Facility, respectively, plus the Base Rate, each as defined in the Credit Agreement, or

·	the Applicable Rates of 2.75% and 3.00% related to the Revolving Credit Facility and the Term Facility, respectively, plus LIBOR, as defined in the Credit Agreement.

The foregoing Applicable Rates are subject to reduction of .25% in the event that the Company meets certain Reduction Event criteria, as defined in the Credit Agreement.

The Credit Agreement contains certain normal and customary restrictions on the conduct of the Company’s and its subsidiaries’ businesses, including, among other things, restrictions, generally, on:

·	creating or suffering liens on the Company’s and its subsidiaries’ assets, with permitted exceptions;

·	making investments, with permitted exceptions;

·	incurring debt, with permitted exceptions;

·	paying dividends, with permitted exceptions;

·	transactions with affiliates; and

·	changing the nature of the Company’s business.

The Credit Agreement also requires the Company to maintain certain financial covenants, as set forth in the Credit Agreement.

Acquisition of Atlantic Research & Consulting, Inc.

On April 1, 2005, the Company acquired all of the capital stock of Atlantic Research & Consulting, Inc. upon the terms and subject to the conditions contained in the Stock Purchase Agreement (the “Atlantic Purchase Agreement”) between the Company and Peter Hooper (“Hooper”), as the sole stockholder of Atlantic. The consideration for this acquisition consisted of $3,600,000 in cash paid at closing, 312,598 shares of common stock, and an aggregate of up to $2,250,000 in deferred consideration payable in cash over three years, which deferred payments are contingent upon Atlantic achieving certain prescribed amounts of EBITDA (as defined in the Atlantic Purchase Agreement). If EBITDA for the three-year period beginning on May 1, 2005 exceeds $3,300,000, Hooper will also receive additional deferred consideration equal to the amount of such excess multiplied by 0.50.

Atlantic, headquartered in Boston, Massachusetts, provides quantitative and qualitative custom market research, focusing on financial services, management consulting, health care, and public sectors.

Simultaneously with the Company’s acquisition of Atlantic, Atlantic entered into new employment agreements with Hooper and two other senior executives of Atlantic.

The Company’s acquisition of Atlantic was financed at closing with the combination of (i) funds borrowed upon the closing of a senior secured credit facility with Fleet National Bank (see description of “New Credit Agreement” above), and (ii) cash on hand.

Acquisition of Signia Partners Incorporated

On April 1, 2005, the Company agreed to acquire all of the capital stock of Signia Partners Incorporated upon the terms and subject to the conditions contained in the Stock Purchase Agreement (the “Signia Purchase Agreement”) between the Company and Charles Douglas House (“House”), as the sole stockholder of Signia. The consideration for this acquisition consisted of approximately $3,400,000 in cash paid at closing (after taking into account certain closing adjustments), 187,559 shares of common stock, and an aggregate of up to $1,400,000 in deferred consideration payable in cash over three years, which deferred payments are contingent upon Signia achieving certain prescribed amounts of Adjusted EBITDA (as defined in the Signia Purchase Agreement). If aggregate Adjusted EBITDA for the three-year period beginning on February 1, 2005 exceeds $2,550,000, House will also receive additional deferred consideration equal to the amount of such excess multiplied by 0.25.

Signia, headquartered just outside of Washington, D.C., is a provider of in-depth business research and fact-based decision support, focusing on the financial services, health care and consumer sectors.

Simultaneously with the Company’s acquisition of Signia, Signia entered into new employment agreements with House and two other senior executives of Signia.

The Company’s acquisition of Signia was financed at closing with the combination of (i) funds borrowed upon the closing of a senior secured credit facility with Fleet National Bank (see description of “New Credit Agreement” above), and (ii) cash on hand.

ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this form 10-Q and in conjunction with our consolidated financial statements and notes thereto for the fiscal year ended December 31, 2004 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

Three months ended March 31, 2005 compared to three months ended March 31, 2004.

General

FIND/SVP, Inc. and our wholly owned subsidiaries provide a full range of custom research, consulting, quantitative market research and outsourced information services that are designed to address our customers’ critical business information needs. We function as many of our customers’ primary information and business intelligence resource on an outsourced basis, especially among companies that have downsized their internal research staffs and information resources. We also serve as a reliable supplemental resource to customers’ internal capabilities. As a result of our acquisitions in 2003 of each of Guideline and Teltech, combined with further internal development of new service offerings, we provide a range of specialized higher priced research and consulting services. For example, we currently provide quantitative custom market research and due diligence research services which serve to address particular strategic business information needs within specific markets such as R&D, healthcare, marketing and private equity/money management.

We are organized into four business segments: Quick Consulting Service, which is a subscription-based service that functions like an in-house corporate research center for our customers; Strategic Consulting and Research Group, which provides in-depth custom research and competitive intelligence services for larger projects; Quantitative Market Research, which provides full service quantitative custom market research services, such as large-scale consumer surveys; and Teltech, which provides a full range of outsourced information and consulting services to customers in R&D and related technical sectors.

Results of Operations - Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

The Company manages its consulting and business advisory services in the following four business segments: Quick Consulting Service (“QCS”), Strategic Consulting and Research Group (“SCRG”), Quantitative Market Research and Teltech. The Company operates primarily in the United States. References to “Corporate” and “Other” in our financial statements refer to the portion of assets and activities that are not allocated to a segment.


(in thousands)	Three Months Ended March 31,
	2005			2004^{(2) (3)}			$ Change			% Change
Revenues
QCS	$	3,950		$	4,373		$	(423	)		(9.7	)%
SCRG		403			407			(4	)		(1.0	)%
Quantitative Market Research		2,382			2,713			(331	)		(12.2	)%
Teltech		2,051			2,113			(62	)		(2.9	)%
Revenues	$	8,786		$	9,606		$	(820	)		(8.5	)%

Operating income (loss)
QCS	$	145		$	467		$	(322	)		(69.0	)%
SCRG		83			(85	)		168			197.6	%
Quantitative Market Research		158			310			(152	)		(49.0	)%
Teltech		161			271			(110	)		(40.6	)%
Total segment operating income		547			963			(416	)		(43.2	)%
Corporate & other (1)		(334	)		(724	)		390			53.9	%
Operating income	$	213		$	239		$	(26	)		(10.9	)%

Income (loss) Before Income Taxes
QCS	$	145		$	467		$	(322	)		(69.0	)%
SCRG		83			(85	)		168			197.6	%
Quantitative Market Research		158			217			(59	)		(27.2	)%
Teltech		160			177			(17	)		(9.6	)%
Total segment income before income taxes		546			776			(230	)		(29.6	)%
Corporate & other (1)		(370	)		(858	)		488			56.9	%
Income (loss) before income taxes	$	176		$	(82	)	$	258			314.6	%

(1) Represents the effect of direct costs and selling, general, and administrative expenses not attributable to a single segment.

(3) As restated for the adoption of SFAS No. 123. See Note A to our condensed consolidated financial statements appearing elsewhere in this Form 10-Q.

Revenues

Revenues decreased from $9,606,000 for the three months ended March 31, 2004 to $8,786,000 for the three months ended March 31,2005, which represents a decrease of 8.5% from 2004 to 2005. The decrease in revenue was due to decreases in all segments of the business.

QCS

QCS revenues, which result from annual retainer contracts paid by clients on a monthly, quarterly, semi-annual or annual basis, decreased by $423,000, or 9.7%, from $4,373,000 for the three months ended March 31, 2004 to $3,950,000 for the three months ended March 31, 2005. The decrease from 2004 to 2005 was a result of cancellations that were not sufficiently offset by an increase in new client business despite increased retainer rates. We believe that cancellations were primarily a result of the perception among certain customers that they can satisfy their day-to-day research needs internally through the use of the internet.

SCRG

SCRG revenues, which result from more in-depth research and consulting engagements, decreased by $4,000, or 1.0%, from $407,000 for the three months ended March 31, 2004 to $403,000 for the three months ended March 31, 2005. The decrease from 2004 to 2005 was due to fewer projects in the first quarter of 2005 as compared with the first quarter of 2004, partially offset by an increase in the average fee per project in 2005 as compared with 2004.

Quantitative Market Research

Quantitative Market Research revenues, which result from custom market research consulting engagements, such as conducting surveys and focus groups, decreased by $331,000, or 12.2%, from $2,713,000 for the three months ended March 31, 2004 to $2,382,000 for the three months ended March 31, 2005. This is primarily the result of a delay in the commencement of booked projects, partially offset by an increase in demand from certain customers within the healthcare division.

Teltech

Teltech revenues, which result from on-demand research, outsourced information services and in-depth projects, decreased by $62,000, or 2.9%, from $2,113,000 for the three months ended March 31, 2004 to $2,051,000 for the three months ended March 31, 2005. This was primarily the result of a lower usage of deposit accounts, where revenue is recognized based on usage, partially offset by increases in project revenue.

Costs of products and services sold

Direct costs, which are those costs directly related to generating revenue, such as direct labor, expenses incurred on behalf of clients and the costs of electronic resources and databases, decreased by $181,000, or 3.3%, from $5,455,000 for the three months ended March 31, 2004 to $5,274,000 for the three months ended March 31, 2005. Direct costs represented 60.0% and 56.8% of revenues for the three months ended March 31, 2005 and 2004, respectively. The decrease in total direct costs was primarily the result of the decrease in revenue of $820,000 and a decrease in purchases made on behalf of clients of $234,000, partially offset by an increase in direct labor costs, including stock compensation expense, of $143,000.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $613,000, or 15.7%, from $3,912,000, or 40.7% of revenue, for the three months ended March 31, 2004 to $3,299,000, or 37.5% of revenue, for the three months ended March 31, 2005. The decrease in selling, general and administrative was due primarily to a decrease in indirect labor costs, including stock compensation expense, of $352,000, a decrease in rent expense of $125,000 due to the abandonment of one of the Company’s leases in 2004, and a decrease in depreciation expense of $44,000.

Interest expense

Interest expense decreased by $222,000 from $226,000 for the three months ended March 31, 2004 to $4,000 for the three months ended March 31, 2005. The decrease was due to the repayment of all outstanding debt in May 2004.

Impairment of investment

In March 2004, the Company reduced the value of its investment in idealab! to $90,000, representing the value of the shares based on the latest contemplated tender offer by idealab!. Accordingly, the Company recorded a $95,000 pre-tax charge during the quarter ended March 31, 2004.

Equity loss on investments

During the quarter ended March 31, 2005, the Company recorded an equity loss of $47,000 on its investment in Find.com, a joint venture in which the Company has a 47.5% interest. This represents the Company’s share of the net loss of Find.com as of and for the three months ended March 31, 2005.

Operating Income

Our results of operations declined by $26,000 from operating income of $239,000 for the three months ended March 31, 2004 to operating income of $213,000 for the three months ended March 31, 2005. This was primarily the result of the decreases in selling, general and administrative expenses, partially offset by the decline in revenues, as discussed above.

Income Taxes

The $125,000 income tax provision for the three months ended March 31, 2005 represents 71.0% of pre-tax income. The $4,000 income tax benefit for the three months ended March 31, 2004 represents 4.9% of pre-tax loss. These rates are different than the statutory rate primarily because certain variable stock compensation expense in addition to meals and entertainment and key-man life insurance premiums, are not deductible for tax purposes, and result in a different effective tax rate than the statutory rate.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. Our preparation of our financial statements requires us to make estimates and judgments that affect reported amounts of assets, liabilities and revenues and expenses. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowances for doubtful accounts, useful lives of property, plant and equipment and intangible assets, goodwill, deferred tax asset valuation allowances, valuation of non-marketable equity securities, other investments, and other accrued expenses. We base our estimates on historical experience and on various other assumptions, which we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. We have identified the accounting policies below as critical to our business operations and the understanding of our results of operations.

Revenue Recognition

Approximately 55% of the Company’s revenues were derived from subscription contracts with customers, including all of the revenues of the QCS business segment and approximately 50% of the revenues of the Teltech business segment. The remaining 45% of the Company’s revenues consisted of quantitative market research projects, in-depth consulting projects and outsourced information services.

The Company’s subscription services are provided under two different types of subscription contracts - retainer contracts and deposit contracts. Retainer contracts, which are used primarily by QCS, charge customers fixed monthly subscription fees to access QCS services, and revenues are recognized ratably over the term of each subscription. Retainer fees are required to be paid in advance by customers on either a monthly, quarterly or annual basis, and all billed amounts relating to future periods are recorded as an unearned retainer income liability on the Company’s balance sheet. In the case of deposit contracts, which are used primarily by Teltech, a customer pays a fixed annual fee, which entitles it to access any of the Company’s service offerings throughout the contract period, up to the total amount of the annual deposit fee. Since deposit account customers can “spend” their contract fee at any time within the annual contract period, deposit account revenues are only recognized within the contract period as services are actually provided to customers, with any unused deposit amounts recognized as revenue in the final month of the contract. As with retainer fees, deposit contract fees are required to be paid in advance, primarily annually, and any billed amounts relating to future periods are recorded as unearned retainer income, a current liability on the Company’s balance sheet.

Goodwill and Intangibles

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Effective January 1, 2002 we adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” under which goodwill is no longer amortized. Instead, goodwill is evaluated for impairment using a two-step process that is performed at least annually (On January 1^st for goodwill related to our CSSR business, which is part of the SCRG segment, and July 1^st for goodwill related to our Guideline and Teltech businesses) and whenever events or circumstances indicate impairment may have occurred. The first step is a comparison of the fair value of an internal reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, a second test is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied value of the goodwill. If the carrying amount of the goodwill is greater than the implied value, an impairment loss is recognized for the difference. The implied value of the goodwill is determined as of the test date by performing a purchase price allocation as if the reporting unit had just been acquired, using currently estimated fair values of the individual assets and liabilities of the reporting unit, together with an estimate of the fair value of the reporting unit taken as a whole. The estimate of the fair value of the reporting unit is based upon information available regarding prices of similar groups of assets, or other valuation techniques including present value techniques based upon estimates of future cash flow.

Intangible Assets, including customer relationships, trademarks and other intangible assets are amortized over their estimated useful lives unless they are deemed to have indefinite useful lives. Upon the adoption of SFAS 142, intangible assets deemed to have indefinite useful lives, such as trade names, are not amortized and are subject to annual impairment tests. An impairment exists if the carrying value of the indefinite-lived intangible asset exceeds its fair value. For other intangible assets subject to amortization, an impairment is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible asset. Amortizable intangibles are tested for impairment if a triggering event occurs.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We have tax loss carryforwards that have been recognized as assets on our balance sheet. These assets are subject to expiration from 2013 to 2023. Realization of the net deferred tax assets is dependent on future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing temporary differences and carryforwards. In 2004 and 2002, after we performed an analysis of our deferred tax assets and projected future taxable income, a valuation allowance was provided for certain state and local carryforward tax operating loss assets, as we determined that it was more likely than not that these assets would not be realized during the carryforward period.

Liquidity and Capital Resources

Historically, our primary sources of liquidity and capital resources have been cash flow from retainer accounts (including prepaid retainer fees from clients) and borrowings. Cash balances were $6,100,000 and $4,519,000 at March 31, 2005 and December 31, 2004, respectively. Our working capital position (current assets less current liabilities) at March 31, 2005 was $2,980,000 as compared to $2,832,000 at December 31, 2004. Included in current liabilities is unearned retainer income of $5,063,000 as of March 31, 2005 and $3,472,000 as of December 31, 2004. Such amounts reflect amounts billed, but not yet earned.

Cash of $1,680,000 was provided by operating activities during the three months ended March 31, 2005 and cash of $(84,000) was used in operating activities during the three months ended March 31, 2004. During the three months ended March 31, 2005, operating cash was provided primarily by unearned retainer income of $1,591,000, an increase in accounts payable and accrued expenses of $380,000, and depreciation and amortization of $267,000 partially offset by an increase in accounts receivable of $788,000 and cash used for other general operating purposes.

Cash used in investing activities was $(87,000) and $(319,000) in the three-month periods ended March 31, 2005 and 2004, respectively. In 2005, the primary use of cash was related to capital expenditures for computer hardware upgrades and leasehold improvements. In 2004, the primary uses of cash related to capital expenditures for computer hardware and software upgrades and leasehold improvements, as well as for additional fees incurred in connection with the acquisitions of Guideline and Teltech. During 2005 the Company expects to spend approximately $600,000 for capital items, which will relate primarily to computer hardware and software upgrades and for leasehold improvements.

Cash of $(12,000) was used for financing activities during the three months ended March 31, 2005 and cash of $123,000 was provided by financing activities during the three months ended March 31, 2004. In 2005, the cash was used for payments under capital leases of $14,000, offset by proceeds from exercise of stock options of $2,000. In 2004, the most significant items were $200,000 borrowed under notes payable, offset by repayments of the notes in the amount of $100,000.

During May 2004, the Company repaid the entire outstanding balance on a term note with JP Morgan Chase Bank (the “Term Note”). The Term Note bore interest at prime plus 1.25%. The Term Note was terminated effective March 31, 2005.

The Company maintained a $1,000,000 line of credit with JP Morgan Chase Bank (the “Line of Credit”). The Line of Credit bears interest at prime plus 0.50% (6.25% at March 31, 2005) and is renewable annually. During May 2004, the Company repaid the entire outstanding balance. The Line of Credit contained certain restrictions on the conduct of the Company’s business, including, among other things, restrictions on incurring debt and creating or suffering liens. The Line of Credit was terminated effective March 31, 2005.

On April 1, 2003, the Company issued a Promissory Note (the “Note”), along with preferred stock and warrants, with a face value of $3,000,000 and a stated interest rate of 13.5%, as a part of the financing for the acquisition of Guideline. The Note was recorded at its initial relative fair value of $1,868,000. The difference between the initial relative fair value and the stated value was accreted as additional interest expense over the maturities of the Note, and the resulting effective interest rate was approximately 25%. During May 2004, the Company repaid the outstanding principal balance of $3,000,000. Related interest expense was $159,000 for the quarter ended March 31, 2004, of which $58,000 related to the non-cash accretion of the carrying value of the Note to the stated value of the Note for the quarter ended March 31, 2004. The repayment effectively terminates the Note and any remaining obligations under the Note. The Note was terminated effective May 20, 2004.

On July 1, 2003, the Company issued a Second Promissory Note (the “Second Note”), along with warrants, with a face value of $500,000 and a stated interest rate of 13.5%, as a part of the financing for the acquisition of Teltech, a former business unit of Sopheon Corporation. The Second Note was recorded at its initial relative fair value of $320,000. The difference between the initial relative fair value and the stated value was accreted as additional interest expense over the maturities of the Second Note, and the resulting effective interest rate was approximately 25%. During May 2004, the Company repaid the outstanding principal balance of $500,000. Related interest expense was $27,000 for the quarter ended March 31, 2004, of which $10,000 related to the non-cash accretion of the carrying value of the Second Note to the stated value of the Second Note for the quarter ended March 31, 2004. The repayment effectively terminates the Second Note and any remaining obligations under the Second Note. The Second Note was terminated effective May 20, 2004.

See Note P. “Subsequent Events” for information on the Company’s new credit agreement.

We believe that our cash and cash equivalents on hand, cash generated from operations and collections of our accounts receivable, and the availability of the Line of Credit with JP Morgan Chase, will be sufficient to fund our operations for the foreseeable future.

Other Commitments and Contingencies

See Note. O “Acquisitions - Guideline” for information regarding the Two Year Deferred Consideration payable as a result of the acquisition of Guideline.

See Note. O “Acquisitions - Guideline” for information regarding the 571,237 shares of common stock issued to the former owners of Guideline, which may be put back to the Company.

See Note. P “Subsequent Events” for information regarding the Stock Purchase Agreements entered into with Atlantic Research & Consulting, Inc. and Signia Partners Incorporated, and for information regarding the new credit agreement.

Acquisitions

Guideline

The consideration for this acquisition consisted of the following:

· 571,237 common shares valued at $760,000 (295,043 of the common shares were placed in escrow to secure the indemnification obligations of the sellers); and

· Within thirty days after the date of determination following the second anniversary date of the acquisition, a potential deferred consideration amount (the “Two Year Deferred Consideration”) of $1.845 million contingent upon Guideline achieving adjusted EBITDA (as defined in the purchase agreement) for the 24-month period following the acquisition (“Two Year Adjusted EBITDA”) of $2.65 million plus 25% of the amount by which Two Year Adjusted EBITDA exceeds $2.65 million would be due. If Two Year Adjusted EBITDA is less than $2.65 million, but greater than $2.2 million, the Two Year Deferred Consideration would be between $0 and $1.845 million based on a specific formula set forth in the purchase agreement. Given the potential likelyhood that Guideline should achieve the prescribed level of EBITDA, as of March 31, 2005 the Company has accrued approximately $2.2 million, which represents the estimated Two Year Deferred Consideration earned as of that date.

Teltech

The consideration for this acquisition consisted of the following:

· Approximately $3,320,000 paid in cash (including $245,000 of transaction costs);

The Company finalized its valuation of the assets and liabilities acquired for its allocation of the purchase price of the Teltech transaction as of March 31, 2005.

The following table sets forth the components of the purchase price for both the Guideline and Teltech acquisitions:



	Guideline		Teltech		Total
Cash paid	$	5,027,000	$	3,520,000	$	8,547,000
Accrued estimate of Two Year Deferred Consideration		2,233,000		--		2,233,000
Common stock issued to sellers		760,000		50,000		810,000
Total purchase consideration	$	8,020,000	$	3,570,000	$	11,590,000

The following table provides the fair value of the acquired assets and assumed liabilities:



	Guideline			Teltech			Total
Current assets	$	1,786,000		$	1,235,000		$	3,021,000
Property and equipment		89,000			287,000			376,000
Other assets		267,000			--			267,000
Liabilities assumed, current		(2,236,000	)		(3,358,000	)		(5,594,000	)
Liabilities assumed, non-current		(67,000	)		--			(67,000	)
Fair value of net liabilities assumed		(161,000	)		(1,836,000	)		(1,997,000	)
Goodwill		7,612,000			4,755,000			12,367,000
Amortizable intangible assets		421,000			527,000			948,000
Indefinite-lived intangible assets		148,000			124,000			272,000
Total purchase consideration	$	8,020,000		$	3,570,000		$	11,590,000

Goodwill related to our Guideline and Teltech businesses is evaluated for impairment annually on July 1st.

Inflation

The Company has in the past been able to increase the price of its products and services sufficiently to offset the effects of inflation on direct costs, and anticipates that it will be able to do so in the future.

Forward Looking Information: Certain Cautionary Statements

In this report, and from time to time, we may make or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products and services, and similar matters. Such statements are necessarily estimates reflecting management's best judgment based on current information. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Such statements are usually identified by the use of words or phrases such as “believes,” “anticipates,” “expects,” “estimates,” “planned,” “outlook,” and “goal.” Because forward-looking statements involve risks and uncertainties, our actual results could differ materially. In order to comply with the terms of the safe harbor, we note that a variety of risks and uncertainties could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in forward-looking statements. While it is impossible to identify all such factors, the risks and uncertainties that may affect the operations, performance and results of our business include the risks and uncertainties set forth in the section headed “Factors That Could Affect Our Future Results” of Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

Subsequent Events

New Credit Agreement

Loans under the Revolving Facility will be made available after April 1, 2005 and until the earlier of (i) April 1, 2008; and (ii) the date of termination of the commitment of the Lender to make revolving credit loans and of the obligation of the Lender to make letter of credit extensions.

Loans under the Senior Secured Facilities will bear interest, at the option of the Borrower, at one of the following rates:

·	the Applicable Rates of .75% and 1.00% related to the Revolving Credit Facility and the Term Facility, respectively, plus the Base Rate, each as defined in the Credit Agreement, or

·	the Applicable Rates of 2.75% and 3.00% related to the Revolving Credit Facility and the Term Facility, respectively, plus LIBOR, as defined in the Credit Agreement.

The foregoing Applicable Rates are subject to reduction of .25% in the event that the Company meets certain Reduction Event criteria, as defined in the Credit Agreement.

·	creating or suffering liens on the Company’s and its subsidiaries’ assets, with permitted exceptions;

·	making investments, with permitted exceptions;

·	incurring debt, with permitted exceptions;

·	paying dividends, with permitted exceptions;

·	transactions with affiliates; and

·	changing the nature of the Company’s business.

The Credit Agreement also requires the Company to maintain certain financial covenants, as set forth in the Credit Agreement.

Acquisition of Atlantic Research & Consulting, Inc.

Atlantic, headquartered in Boston, Massachusetts, provides quantitative and qualitative custom market research, focusing on financial services, management consulting, health care, and public sectors.

Simultaneously with the Company’s acquisition of Atlantic, Atlantic entered into new employment agreements with Hooper and two other senior executives of Atlantic.

The Company’s acquisition of Atlantic was financed at the closing with the combination of (i) funds borrowed upon the closing of a senior secured credit facility with Fleet National Bank (see description of “New Credit Agreement” above), and (ii) cash on hand.

Acquisition of Signia Partners Incorporated

Simultaneously with the Company’s acquisition of Signia, Signia entered into new employment agreements with House and two other senior executives of Signia.

The Company’s acquisition of Signia was financed at the closing with the combination of (i) funds borrowed upon the closing of a senior secured credit facility with Fleet National Bank (see description of “New Credit Agreement” above), and (ii) cash on hand.

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

The Company maintains the Line of Credit and any future borrowings thereunder, would increase our exposure to market risk. Our objective in maintaining the Line of Credit is the ability to obtain funding that provides flexibility regarding early repayment without penalties, and that has a lower overall cost as compared with fixed-rate borrowings. Management does not believe that the risk inherent in the variable-rate nature of the Line of Credit, were the Company to borrow thereunder, would have a material adverse effect on our consolidated financial statements. However, no assurance can be given that such a risk will not have a material adverse effect on our financial statements in the future.

There has been no material change in our assessment of our sensitivity to market risk as of March 31, 2005, as compared to the information included in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, of our Form 10-K for the fiscal year ended December 31, 2004, as filed with the Securities and Exchange Commission on March 18, 2005.

We do not invest or trade in any derivative financial or commodity instruments, nor do we invest in any foreign financial instruments.

ITEM 4.

Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the Company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there have been no such changes during the period covered by this report.

PART II.

OTHER INFORMATION

ITEM 6.

Exhibits

Exhibit	Description

2.1	Stock Purchase Agreement, dated as of March 14, 2005, by and between Find/SVP, INC. and Peter Hooper. (incorporated by reference to the Company’s Form 8-K filed on March 15, 2005)

2.2	Stock Purchase Agreement, dated as of March 14, 2005, by and among Find/SVP, Inc. and Charles Douglas House. (incorporated by reference to the Company’s Form 8-K filed on March 15, 2005)

10.1	First Amendment to Employment Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and David Walke. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.2	Restricted Stock Award Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and David Walke. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.3	First Amendment to Employment Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and Peter Stone. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.4	Restricted Stock Award Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and Peter Stone. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

*31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18. U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Act of 1934 and 18. U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith.

SIGNATURES

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


	FIND/SVP, Inc. (REGISTRANT)

Date: May 13, 2005	By:	/s/ David Walke
		David Walke
		Chief Executive Officer



Date: May 13, 2005	By:	/s/ Peter Stone
		Peter Stone
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Exhibit Index

Number	Exhibit

2.1	Stock Purchase Agreement, dated as of March 14, 2005, by and between Find/SVP, INC. and Peter Hooper. (incorporated by reference to the Company’s Form 8-K filed on March 15, 2005)

2.2	Stock Purchase Agreement, dated as of March 14, 2005, by and among Find/SVP, Inc. and Charles Douglas House. (incorporated by reference to the Company’s Form 8-K filed on March 15, 2005)

10.1	First Amendment to Employment Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and David Walke. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.2	Restricted Stock Award Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and David Walke. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.3	First Amendment to Employment Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and Peter Stone. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

10.4	Restricted Stock Award Agreement, dated January 1, 2005, by and between Find/SVP, Inc. and Peter Stone. (incorporated by reference to the Company’s Form 8-K filed on January 6, 2005)

*31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18. U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Act of 1934 and 18. U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith.