The emergence of the Internet as a publishing medium is changing the way consumers seek information and engage in commerce. Vertical websites provide highly targeted content focused on specific categories of products and services, reducing the need for consumers to engage in the time-consuming process of collecting information from books, offline periodicals and untargeted horizontal portals and search websites. Horizontal portals, such as Google, Yahoo!, and AOL, are websites that provide a broad range of undifferentiated content and services.

According to IDC, a provider of information technology data, the number of global Internet users is projected to increase from approximately 968 million in 2005 to over 1.5 billion in 2009.

A media consumption report prepared by JupiterResearch, a technology and market research company, found that U.S. consumers spent the same amount of time going online as they did watching television in 2006, but the report also found that advertising expenditures for television were approximately four times greater than online advertising expenditures in 2006.

The Internet has made available a tremendous volume of data to consumers seeking information to assist in purchasing decisions. Vertical websites provide these consumers with the tools necessary to access the targeted information they seek quickly, comprehensively and efficiently. Advertisers are similarly honing the precision of their targeting.

The Company’s automotive websites capture a variety of focused audiences, from those researching and purchasing new and used vehicles to active communities of automotive enthusiasts. In September 2007, the Company’s automotive websites attracted 11.5 million unique visitors, and a total of 161 million page views. The Company’s automotive websites are divided into two sub-categories:

- the Company’s e-commerce and classifieds automotive websites enable consumers to research new and used vehicles, and to price, configure, order, purchase and finance vehicles online;

- the Company operates more than 60 automotive-related enthusiast websites.

The Company’s travel and leisure websites are comprised of substantial worldwide user communities that share travel-related experiences and interests, as well as websites offering specific lodging or leisure activities. The Company’s travel and leisure websites are further divided into two sub-categories:

- the Company’s e-commerce and classifieds travel and leisure websites provide reviews, online communities and rental functionality enabling consumers to research and book diverse lodging types including bed and breakfast inns, hotels, vacation rentals, timeshare rentals and cruise ships;

- the Company’s enthusiast community websites provide visitors access to content, online communities and e-commerce addressing areas of passion, such as photography, cycling, boating aircraft piloting, and travel.

Websites in the Company’s home and home improvement category provide visitors with access to content and services spanning the lifecycle of home-related activities, including housing selection, financing, purchasing, leasing and home improvement. The Company’s home websites are further divided into two sub-categories:

- the Company’s e-commerce and classifieds websites in the home and home improvement category afford consumers access to valuable resources and information regarding residential properties for sale;

- Enthusiast community websites in the Company’s home and home improvement category provide information and services for inside the home, related to the surrounding community, and related to the mortgage industry.

Total cost of revenues increased $2.5 million, or 15.5%, for the nine-month period ended September 30, 2007 compared to the nine months ended September 30, 2006.

Sales and marketing expenses increased $495,000, or 3.2%, for the nine-month period ended September 30, 2007 compared to the nine months ended September 30, 2006.

Technology and product development expenses increased $224,000, or 5.3%, for the nine-month period ended September 30, 2007 compared to the nine months ended September 30, 2006.

Investment and other income increased $892,000, or 18.4%, for the nine-month period ended September 30, 2007 compared to the nine months ended September 30, 2006.