Talent management is a complex process with multiple, interconnected elements that together play a vital role in attracting, assessing and enhancing the quality and satisfaction of an organization’s valuable human capital. Organizations no longer view human capital solely as an expense to be minimized, but instead as an asset to be maximized. This shift in thinking has mirrored the evolution of talent management from a manual, paper-based practice to a technology-enabled, organization-wide process.

Historically, companies used manual, paper-based processes and a variety of internally developed practices to manage distinct elements of enterprise staffing including recruiting, hiring, retention and internal mobility, as well as processes associated with non-permanent staff, whether project-based consultants or contingent staff. These inconsistent, inefficient, and time consuming processes resulted in significant expenses, a high degree of risk associated with regulatory non-compliance and variance in the quality of individual hires and deployment of personnel.

According to data from the Bureau of Economic Analysis, an agency of the U.S. Department of Commerce, the amount spent on U.S. labor in 2004 was approximately $6.6 trillion, or 57% of total gross domestic product. With labor comprising such a significant percentage of corporate cost structures, many organizations have acquired technologies and outsourced staffing-related functions in an effort to reduce costs and improve efficiency of their human capital assets. In October 2004, an independent market research firm, International Data Corporation, or IDC, estimated that recruiting and staffing service spending would grow from $29.9 billion in 2003 to $47.1 billion by 2008, a compound annual growth rate of 9.5% during that period. A fast growing component of this aggregate IDC forecast, the end-to-end hiring process automation solutions market, is expected to grow from $239 million in 2003 to approximately $727.9 million in 2008, which represents a compound annual growth rate of 24.9%.

The Company offers two suites of talent management solutions: Enterprise Edition and Business Edition. The Company’s Enterprise Edition is designed for medium to large-sized, multi-national organizations and addresses multiple staffing types, including professional, hourly, traditional contingent and project-based contractors with support for multiple languages as well as differing geographic and cultural requirements.

The Company specifically designs solutions to be delivered primarily on demand through a standard web browser. The Company’s solutions are accessed through intuitive applications designed for corporate recruiters, managers and system administrators. The candidate-facing portions of the company’s Enterprise Edition are available in 13 languages, including Chinese and Japanese. Its Business Edition is currently available in 2 languages.

The Company’s Enterprise Edition includes three primary product offerings that enable large, complex organizations to successfully manage talent. The Company also provides add-on modules that allow its solutions to be tailored, meeting the specific needs of its customers.

The Company’s Business Edition is on demand talent management solution for small to medium-sized organizations, stand-alone departments and divisions of larger organizations, and staffing companies. The intuitive nature of the user interface allows users to create a custom talent management system with easily configurable fields, layouts, views, workflow, reports, and integration.

The Company offers four service options. The Company’s Business Edition — Personal provides applicant tracking for individual users. It includes candidate recruiting life-cycle management, requisition management and contact management. The Company’s Business Edition — Standard makes all the functionality of the Personal Service available to recruiting departments and teams. The Company’s Business Edition — plus includes all the functionality of the Standard Service with additional capabilities to have multiple career websites and multiple application forms.

Total cost of revenue was $13.1 million in the six months ended June 30, 2005, as compared to $11.0 million in the six months ended June 30, 2004, an increase of $2.1 million, or 19%.

Gross profit increased to $24.4 million in the six months ended June 30, 2005, representing a 65% gross profit margin, as compared to $17.3 million in the six months ended June 30, 2004, or a 61% gross profit margin.

Sales and marketing expenses increased to $11.2 million in the six months ended June 30, 2005, as compared to $9.2 million in the six months ended June 30, 2004, an increase of $2.0 million, or 22%.

Research and development expenses decreased to $8.1 million in the six months ended June 30, 2005 as compared to $8.5 million in the six months ended June 30, 2004, a decrease of $0.4 million, or 5%.